Sahagun v. Court of Appeals
REITERATIONFacts
1. The Antecedents: The underlying dispute originated from a civil case filed by Filinvest Credit Corporation (Filinvest) against Abel Sahagun, manager of Rallye Motor Co., Inc. Filinvest alleged that Sahagun facilitated a fraudulent sale of a motor vehicle, using a promissory note and chattel mortgage as security, which was subsequently assigned to Filinvest. When the note matured, the buyer failed to pay, and Filinvest discovered the mortgaged vehicle had not been delivered. Subsequently, Filinvest initiated legal action, leading to the attachment of a house and lot registered in Abel Sahagun's name, where his wife, Carmelita Pelaez Sahagun (the petitioner), resided. 2. Procedural History: The case began in the Court of First Instance of Rizal. After Filinvest filed suit, a writ of attachment was levied on Abel Sahagun's property. The trial court initially denied a motion to declare Sahagun in default but ordered steps for extraterritorial service of summons. Subsequently, the complaint was dismissed without prejudice due to failure to serve summons. Filinvest moved for reconsideration, seeking to declare Sahagun in default and to deny petitioner's intervention. The trial court granted petitioner time to intervene but denied the motion for default. Petitioner intervened, questioning jurisdiction, but was declared in default for failing to appear at pre-trial, as was Abel Sahagun. The trial court rendered judgment against Abel Sahagun. Petitioner appealed to the Intermediate Appellate Court (IAC), which set aside the trial court's decision, ruling petitioner was deprived of due process. Filinvest's petition for review to the Supreme Court was denied. Later, Filinvest sought leave to serve summons by publication, which the trial court granted. An amended complaint impleaded Carmelita Sahagun and Rallye as defendants. Summons was purportedly served on Abel Sahagun by publication, though with conflicting addresses. Petitioner filed an answer, but Abel Sahagun and Rallye did not. Filinvest moved for default against them. The trial court declared Abel Sahagun in default but not Rallye. Petitioner again sought certiorari from the Court of Appeals, which dismissed her petition. This led to the present Supreme Court recourse. 3. The Petition: Petitioner Carmelita Pelaez Sahagun assails the Court of Appeals' decision and resolution, raising the fundamental issue of whether the respondent trial court acquired jurisdiction over defendant Abelardo Sahagun through publication of summons in the Manila Evening Post, thereby empowering it to declare him in default. The petition argues that the publication of summons in a local newspaper was insufficient for extraterritorial service, contending that it should have been published in a newspaper circulating in the United States where Abel Sahagun allegedly resides, to satisfy due process requirements. The Supreme Court, while acknowledging the defect in service due to failure to send copies of the summons and amended complaint by registered mail to the correct last known address, remanded the case for proper extraterritorial service of summons, holding that publication in a local newspaper is permissible under existing rules, but strict compliance with mailing requirements is essential.
Issue(s)
Whether the trial court acquired jurisdiction over defendant Abelardo Sahagun through publication of summons, considering the requirements for extraterritorial service in a quasi in rem action. Whether the failure to serve copies of the summons and amended complaint by registered mail to the defendant's last known correct address constitutes a fatal defect in the service of summons. What is the consequence of defective service of summons in this case.
Ruling
The petition is GRANTED. The decision of the Court of Appeals is SET ASIDE. The case is REMANDED to the lower court for proper extra-territorial service of summons to defendant Abel Sahagun in accordance with Section 17, Rule 14 of the Rules of Court and for appropriate proceedings.
Ratio Decidendi
On the sufficiency of service of summons by publication: The Court reiterated that extraterritorial service of summons by publication is permissible in quasi in rem actions, such as attachment proceedings, to satisfy the constitutional requirement of due process. The purpose is to notify the non-resident defendant of the pendency of the action and the possibility that his property in the Philippines may be subjected to a judgment, thereby giving him an opportunity to defend himself. The Court affirmed that publication in a local newspaper of general circulation is a valid mode of service, as authorized by Section 17, Rule 14 of the Rules of Court, and that the trial court has discretion in determining the place and time of publication. The Court rejected the argument that publication must necessarily be in a foreign newspaper published in the defendant's country of residence, citing historical practice and the practical difficulties such a requirement would entail. On the necessity of mailing copies of summons and order: Despite upholding the validity of publication in a local newspaper, the Court found the service of summons in this case to be defective. It emphasized that as a complement to publication and in compliance with the trial court's order, copies of the summons and the amended complaint must be duly served at the defendant's last known correct address by registered mail. The failure to strictly comply with this requirement, as mandated by Section 17, Rule 14 of the Rules of Court, was deemed a fatal defect. The Court stressed that the fullest compliance with all requirements of statutes permitting service by publication should be exacted to prevent abuses and protect the rights of persons and property. On the consequence of defective service: Because the service of summons was found to be defective due to the failure to mail copies to the correct last known address, the declaration of default against Abel Sahagun was set aside. The Court remanded the case to the lower court for proper extra-territorial service of summons. However, the Court noted that even if Abel Sahagun were ultimately declared in default, his interest could be represented by the non-defaulting defendant, Carmelita Sahagun, as a common cause of action appeared to be involved, and the success of one could inure to the benefit of the other.
Main Doctrine
While service of summons by publication in a local newspaper of general circulation is permissible for extraterritorial service in quasi in rem actions, strict compliance with the requirement of mailing copies of the summons and order to the defendant's last known address is essential for due process and to confer jurisdiction.