Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 78328 June 3, 1991

CARMELITA PELAEZ SAHAGUN, petitioner,

Ven V. Paculan for petitioner.

REGALADO, J.:

The case at bar commenced on June 25, 1982 when Civil Case No. 465561 was filed in the defunct Court of First Instance of
Rizal, Branch XXIV,2 by private respondent Filinvest Credit Corporation (hereinafter, Filinvest) against petitioner's spouse,
Abel (alias Abelardo) Sahagun, manager of Rallye Motor Co., Inc. (Rallye, for brevity). It was alleged that Abel Sahagun
made it appear that his company had sold a motor vehicle to one Ernesto Salazar who issued a promissory note for the price
and executed as security for the payment of the note a chattel mortgage on the motor vehicle in favor of Rallye.
Subsequently, Rallye, through said Abel Sahagun., assigned the note and the chattel mortgage to Filinvest for valuable
consideration. When the note matured, Salazar failed to pay the value thereof to the assignee, respondent Filinvest,
compelling it to sue. However, Filinvest discovered later that the mortgaged car had not been delivered to Salazar by
Sahagun.3

After Filinvest brought suit against Abel Sahagun, a writ of attachment was issued and subsequently levied on the house and
lot4 registered in his name, located at No. 16 Mangga Chupoy St., Pilar Village Subdivision, Las Piñas, Metro Manila.
Petitioner and her children have been residing continuously in that house since then and up to now and she claims that house
as her own, having allegedly paid for it with her own earnings.

On June 2, 1983, the trial court issued an order denying private respondent's motion to declare defendant Abel Sahagun in
default but directed it to "'take steps to effect service of the summons and complaint upon defendant, who is out of this
country and his whereabouts in the United States of America is unknown, as per information from his wife contained in her
motion for intervention, pursuant to Sec. 17, Rule 14, Rules of Court.5 However, on June 23, 1983, the trial court dismissed
without prejudice the complaint of Filinvest for its failure to serve summons extra-territorially upon defendant Abel Sahagun
despite the aforesaid order.6

Filinvest filed a motion for reconsideration,7 dated June 23, 1983, praying that the order of June 2, 1983 be reconsidered and
set aside and that defendant Abel Sahagun be declared in default. It also prayed that the order granting petitioner's motion for
leave to intervene be denied, and that said motion be expunged from the records.

On July 7, 1983, the trial court issued an order granting petitioner time to file a complaint in intervention and denying
reconsideration of the denial of private respondent's motion to declare defendant Abel Sahagun in default.8

Petitioner Carmelita Sahagun, intervened9 on July 27, 1983, questioning the jurisdiction of the trial court. However, for failure
to appear at the pre-trial conference held on November 25, 1983, she was declared "in default." Abel Sahagun was also
declared in default for failing to answer the complaint.10 Subsequently, on February 20, 1984 the court a quo rendered
judgment against Abel Sahagun, with the following decretal portion:

WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendant Abel Sahagun, ordering the latter to
pay the former the sum of NINETY-SEVEN THOUSAND SIXTY-SIX PESOS AND FIFTY-NINE CENTAVOS (P97,066.59),
Philippine Currency, with interest at the rate of 14% per annum from July 27, 1977 until fully paid; the sum equivalent to 25%
of the principal obligation due as and for liquidated damages; the further sum equivalent to 25% of the obligation due as and
for attorney's fees; and to pay the costs of this suit.

SO ORDERED.11

Thereupon, petitioner Carmelita Sahagun, elevated the case to the then Intermediate Appellate Court in AC-G.R. SP No.
05044 which, in a decision12 promulgated on February 27, 1985, granted her petition for certiorari with prohibition and set
aside the trial court's aforesaid decision and the order, dated November 28, 1984, granting execution. The appellate court,
ruled that petitioner was deprived of the opportunity to present evidence in support of her complaint in intervention, including
evidence to support her claim that since 1970 she and her husband had been living separately.

In turn, Filinvest filed with the Court in G.R. No. 70357 a petition for review of the Intermediate Appellate Court's decision, but
said petition was denied in our resolution of July 8, 1985.13

On September 26, 1985, Filinvest filed a motion for leave to serve summons by publication on defendant Abel Sahagun. The
court below granted the motion, stating in its order dated November 15, 1985, as follows:

. . . pursuant to Sec. 17, Rule 14 of the Revised Rules of Court, let service of the summons upon defendant Abel (Abelardo)
Sahagun be effected out of the Philippines by publication in a newspaper of general circulation in the Philippines, to which
this matter may be assigned after due raffle in accordance with existing law, for three successive days; and said defendant is
hereby ordered to file his answer in Court within a reasonable time, which shall not be less than sixty (60) days after notice.

The Clerk of Court is hereby directed to send copies of the summons and tills Order by registered mail with registry return
card to the last known address of said defendant. No. 16 Mangga Chupoy Street, Pilar Village Subdivision, Las Piñas, Metro
Manila.

Plaintiff is hereby ordered to implead Rallye Motors Co., Inc. as co-defendant, within one (1) month from notice hereof

SO ORDERED.14

On December 11, 1985, Filinvest filed an amended complaint for the same sum of money against Abel Sahagun, this time
impleading Carmelita Pelaez Sahagun and Rallye as additional defendants.15

On January 10, 1986, the respondent trial court issued an order admitting the amended complaint and directing service of
summons and the amended complaint upon defendant Abel Sahagun at a different address at his last known address — "at
1228-A Antipolo Street, Makati, Metro Manila."16

Afterwards, summons was supposedly served on Abel Sahagun through publication in the Manila Evening Post on March 7,
14, and 21, 1986, according to the affidavit of publication of its president,17 with a confusing entry in the notice of order18
that his last known address was at "No. 16 Mangga Chupoy, Pilar Village Subdivision, Las Piñas, Metro Manila" and to which
address said notice was directed, thus clearly contradicting the address stated in the January 10, 1986 order of the trial court,
which was "No. 1228-A Antipolo Street, Makati, Metro Manila."

On March 11, 1986, petitioner filed her answer to the amended complaint.19 Since no answer was filed by the two other
defendants Abel Sahagun and Rallye, Filinvest filed an omnibus motion20 on June 26, 1986 that they be declared in default.

On July 18, 1986, Judge Job Madayag of Branch 145, Regional Trial Court of Makati, issued an order granting in part the
omnibus motion of Filinvest dated June 26, 1986, and denying it in part.21 Apparently, since only defendants Abel and
Carmelita Sahagun were allegedly served with summons, the former through publication and the latter by personal service as
in fact she had filed her answer, only defendant Abel Sahagun was declared in default for failure to file his answer. Defendant
Rallye, on the other hand, was not declared in default because summons had not been served upon it.

Petitioner went on certiorari to the Court of Appeals, in a petition docketed as CA-G.R. SP No. 09909, assailing as grave
abuse of discretion the declaration of default of defendant Abel Sahagun. On February 6, 1987, respondent Court of Appeals
promulgated a decision dismissing the petition, and on April 22, 1987, it denied the subsequent motion for reconsideration for
lack of merit.22 Hence, the present recourse.

Petitioner assails the appellate court's decision and resolution, raising the basic issue as to whether or not respondent trial
court acquired jurisdiction over defendant Abelardo Sahagun, by the publication of summons in the Manila Evening Post
(Annexes "G" and "G-1" thereof), so as to empower it to declare him in default for failure to file his answer (Annex "H"
thereof).23

There is no question that the facts of the present case warrant extraterritorial service of summons as authorized by Section
17, Rule 14 of the Rules of Court. Admittedly, one of the defendants, Abel Sahagun, has left the Philippines and has been
residing somewhere in the United States. Per the certification of the Commission on Immigration and Deportation dated July
22, 1983, Abel Sahagun left on April 23, 197824 hence he was a nonresident defendant at the time private respondent
brought suit in the court below. Also, since the suit involves real property wherein said defendant ostensibly has an interest
and which property has in fact been attached at the instance of private respondent, the court a quo correctly ordered service
of summons on said defendant out of the Philippines, adopting for such service one of the modes authorized by the aforecited
provision of the Rules, that is, "by publication in a newspaper of general circulation in such places and for such time as the
court may order."

It was posited during the deliberations on this case that such publication of summons in a local newspaper, as sanctioned by
the trial court, was wrong and that the publication should have been made in a newspaper published in the state and county
of the United States where Abel Sahagun now allegedly resides. Such publication in a foreign newspaper, it is claimed, would
most likely give notice to the person to be served, although it is also conceded that such condition has not been incorporated
in Section 17 of Rule 14. We believe, however, that such a sweepimg doctrine would virtually unsettle a long standing
interpretation of the aforesaid rule on extraterritorial service of summons by publication, as well as its implementation
sanctioned by the practice followed in this jurisdiction.1âwphi1

True it is that there is no specific proscription against resorting to publication of summons in a foreign publication circulating in
the place where the defendant resides. To illustrate, in Tolaram Menghra vs. Bulchand Tarachand, et al.25 it is reported that
the summons therein was served by publication in the territory of Hawaii where the defendant resided. However, as early as
the case of El Banco Español-Filipino vs. Palanca, etc.26 where the defendant mortgagor had returned to the City of Amoy,
China and was residing therein when the foreclosure suit was instituted against him, the lower court ordered the publication of
summons in a newspaper in the City of Manila, and the service of a copy thereof to the last known address of defendant in
accordance with the provisions of Sections 398 and 399 of the Code of Civil Procedure, which provisions have been
reproduced in the aforestated Section 17, Rule 14 of the 1964 Rules of Court.

While what was involved in the aforesaid case was a foreclosure proceeding and the present case is based on the
attachment of defendant's property here, the difference is inconsequential. In both cases, the actions are quasi in rem27
since, in the language of El Banco Español-Filipino, there is an instructive analogy between foreclosure and attachment
proceedings. In both instances, summons by publication is allowed and the rationale for that is explained in said case thus:

Passing at once to the requisite that the defendant shall have an opportunity to be heard, we observe that in a foreclosure,
case some notification of the proceedings to the non-resident owner, prescribing the time within which appearance must be
made, is everywhere recognized as essential. To answer this necessity the statutes generally provide for publication, and
usually in addition thereto, for the mailing of notice to the defendant, if his residence is known. Though commonly called
constructive, or substituted service, such notification does not constitute a service of process in any true sense. It is merely a
means provided by law whereby the owner may be admonished that his property is the subject of judicial proceedings and
that it is incumbent upon him to take such steps as he sees fit to protect it. . . .

xxx xxx xxx

It will be observed that this mode of notification does not involve any absolute assurance that the absent owner shall thereby
receive actual notice. The periodical containing the publication may never come to his hands, and the chances that he should
discover the notice may often be very slight. Even where notice is sent by mail the probability of his receiving it, though much
increased, is dependent upon the correctness of the address to which it is forwarded as well as upon the regularity and
security of the mail service. It will be noted, furthermore, that the provision of our law relative to the mailing of notice does not
absolutely require the mailing of notice unconditionally and in every event, but only in the case where the defendant's
residence is known. In the light of all these facts, it is evident that actual notice to the defendant in cases of this kind is not,
under the law, to be considered absolutely necessary.

In De Midgely vs. Ferandos, etc., et al.,28 we adverted to the disquisition in Perkins vs. Dizon, etc., et al.29 in this wise:

This Court clarified that in a quasi in rem action jurisdiction over the person of a nonresident defendant is not essential. The
service of summons by publication is required "merely to satisfy the constitutional requirement of due process". The judgment
of the court in the case would settle the title to the shares of stock and to that extent it partakes of the nature of a judgment in
rem. Consequently, the lower court had jurisdiction to try the case even if it had not acquired jurisdiction over the person of
Idonah Slade Perkins. The judgment would be confined to the res. No personal judgment could be rendered against the non-
resident.

What further compounds the difficulty in the proposed requirement for foreign publication of the summons in the case at bar is
the fact that it does not appear in what state or county of the United States the defendant Abel Sahagun presently resides.
Necessarily, if the trial court should be required to resort to publication in a foreign newspaper it must have at hand not only
the name and availability of such newspaper or periodical but also the laws and rules governing the publication of judicial
processes and notices in said place. Here, we only have a defendant in the United States to contend with, but we can very
well anticipate the plethora of problems that would arise if the same question on nonresident defendants is replicated in the
other countries of the world. In this jurisdiction, at least, we have the corresponding regulatory guidelines in Presidential
Decree No. 1079.
In fine. while there is no prohibition against availing of a foreign newspaper in extraterritorial service of summons, neither
should such publication in a local newspaper of general circulation be altogether interdicted since, after all, the rule
specifically authorizes the same to be made in such places and for such time as the court concerned may order. If it is felt
that adjective policy would be better served by denying such discretion to the trial court, then the corresponding amendment
of the present rule would be indicated but subject to empirical proof of the necessity for and the wisdom of such a change.

Accordingly, for the nonce, the matter should continue to be addressed to the sound discretion of the trial court in each
particular case since it has the facts before it, and we should interfere only in the exercise of our corrective power over an
error or abuse in its actuations in a specific case. Undeniably, some controversies may present factual features which would
justify resort to local publication of summons. There is the possibility of debtors escaping the jurisdiction of our courts through
the simple expedient of seeking a foreign refuge, probably with their subsequent whereabouts unknown or unascertainable.
For that matter, it is on that very rationale that summons by publication is authorized whenever the address of a defendant is
unknown and cannot be ascertained by diligent even if he is in the Philippines.

We repeat, service of summons on a nonresident defendant who is not found in the country is required, not for purposes of
physically acquiring jurisdiction over his person but simply in pursuance of the requirements of fair play, so that he may be
informed of the pendency of the action against him and the possibility that property in the Philippines belonging to him or in
which he has an interest may be subjected to a judgment in favor of a resident, and that he may thereby be accorded an
opportunity to defend in the action, if he be so minded. The only relief that may be granted in such an action against such a
nonresident defendant, who does not choose to submit himself to the jurisdiction of the Philippine court, is limited to the res.

However, despite our holding that publication in the Philippines is sufficient, the service of summons in this case is still
defective, there being no showing that copies of the summons and the amended complaint were duly served at the
defendant's last known correct address by registered mail, as a complement to the publication30 and in compliance with the
order of the lower court dated January 10, 1986,31 as hereinbefore noted. The failure to strictly comply correctly with the
requirements of the rules regarding the mailing of copies of the summons and the order for its publication is a fatal defect in
the service of summons.32 As held by to Court:

It is the duty of the court to require the fullest compliance with all the requirements of the statute permitting service by
publication. Where service is obtained by publication, the entire proceeding should be closely scrutinized by the courts and a
strict compliance with every condition of law should be exacted. Otherwise great abuses may occur, and the rights of persons
and property may be made to depend upon the elastic conscience of interested parties rather than enlightened judgment of
the court or judge.33

The foregoing notwithstanding, we are not inclined to order the dismissal of the case below for non-compliance by private
respondent of the trial court's order of January 10, 1986. The attachment of property registered in the name of defendant Abel
Sahagun justifies summons by publication and, although that ownership appears to be disputed and should precisely be a
priority concern of the trial court to resolve, nonetheless a prima facie justification for extraterritorial service of summons on
said nonresident defendant clearly exists. The erroneous transmission of copies of the summons and the complaint to what
appears as an incorrect last known address of said defendant is a matter which the trial court can more readily ascertain and
remedy.

It also bears mention that even if said nonresident defendant should ultimately be declared in default, his interest can be duly
represented by the non-defaulting defendant since a common cause of action appears to be involved, which fact may be
more adequately determined at the trial, and the success of the latter in the suit shall inure to the benefit of the former.34

WHEREFORE, the petition is GRANTED and the decision, dated February 6, 1987, and the resolution, dated April 22, 1987,
of respondent Court of Appeals are SET ASIDE. The case is, however, REMANDED to the lower court for proper extra-
territorial service of summons to defendant Abel Sahagun in accordance with the provisions of Section 17, Rule 14 of the
Rules of Court consonant with our above pronouncements, and for appropriate proceedings in accordance with our
observations in tills decision and the courses of action indicated therein.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano, Gancayco, Bidin, Griño-Aquino, Medialdea and
Davide, Jr., JJ., concur.
Paras, J., and Padilla, J., took no part.

Separate Opinions
SARMIENTO, J.: concurring and dissenting

I concur, but only in the result. I am agreed that the failure of the trial court to serve, by registered mail, copies of the
summons and complaint to the defendant's last known correct address1 is a defect which can not justify an order of default. I
am also agreed that at any rate, assuming that default were proper, it will not preclude the non-defaulting party (the petitioner)
from presenting evidence to defeat the private respondent's claims.

I dissent, however, insofar as the majority would sustain the correctness of extrajudicial service of summons by publication in
a newspaper of general circulation in the Philippines, ordered by the court. I hold that extrajudicial service of summons by
publication, to be valid, must be effected in the territory in which the absent defendant may be found. I believe that the Rules
support this view.

Under the Rules of Court:

Sec. 17. Extraterritorial service. — When the defendant does not reside and is not found in the Philippines and the
action affects the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in
which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or
in part, in excluding the defendant from any interest therein, or the poperty of the defendant has been attached within the
Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under section 7; or by
publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a
copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in
any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall
not be less than sixty (60) days after notice, within which the defendant must answer.2

a non-resident defendant may be served with summons by extraterritorial service in four cases: (1) when the action affects
the personal status of the plaintiff; (2) when the action relates to, or the subject of which is, property within the Philippines, in
which the defendant has or claims a lien or interest, actual or contingent; (3) when the relief demanded consists, wholly or in
part, in excluding the defendant from any interest in property located in the Philippines; or (4) when the property of the
defendant has been attached within the Philippines. Extraterritorial service itself is done in three modes: (1) by personal
service; or (2) by publication and sending a copy of the summons and order of the court by registered mail to the defendant's
last known (and correct) address; or (3) by any other means the judge may consider sufficient.

Personal service under the first mode is accomplished by having the sheriff3 serve it personally on the defendant as in
Section 7, of Rule 14. Service by any other means satisfactory to the court mentioned as the third mode, on the other hand,
pertains to the sound discretion of the judge. Service through the Philippine chancery in the forum concerned has been
sustained as a valid service,4 as was service through the Philippine Consul, assisted by the Solicitor General.5

With respect to service by publication, the Rule, it is to be noted, does not specify which newspaper the summons shall be
published, that is, whether in the Philippines or in the forum of which the defendant is actually a resident. In one case,6 the
Court suggested that publication in a newspaper of general circulation in the Philippines was compliance enough with the
Rule, provided that the corresponding order was sent by registered mail to the last known address of the defendant.

I have, however, taken a harder look at the provisions in question and I am not inclined to say anymore that publication within
the Philippines is substantial compliance with these provisions.

At the heart of the matter is the question of due process. Summons, by detention, is a writ by which a defendant is notified of
a pending action against him.7 The notice, of course, need not be personally made in all cases because precisely, it may be
by publication, and second, because due process is not as exacting, considering especially the State's own inability, through
no fault of the State, to reach defendants who have travelled beyond its border. Whether personal or constructive, however,
notice is indispensable, without which, and unless the defendant has meanwhile voluntarily submitted to the court's
jurisdiction, the court acquires no jurisdiction over his person.

A bit of legal history: Section 17, supra, was "taken substantially from section 17 of former Rule 7, [which] was taken mostly
from Article 7, section 22 of the Rules of Civil Procedure by the American Judicature Society and is in substantial conformity
with sections 398 and 399 of Act No. 190 as construed and applied by our Supreme Court.8 Sections 398 and 399 of Act No.
190, on the other hand, were an adoption of Part II, of Title V, of the Code of Civil Procedure of the State of California, which
reads, in part, as follows:

413. [Publication: Manner: Mailing copy: personal service outside state: When service complete: What "post office"
includes.] The order must direct the publication to be made in a newspaper, to be named and designated as most likely to
give notice to the person to be served . . .9
Note that the newspaper in which publication has to be made must be one "most likely to give notice to the person to be
served." For obvious reasons, publication in a newspaper circulating in the Philippines is not "likely" to provide notice to a
U.S. resident, and while publication in a newspaper in the United States is no assurance either that the defendant actually
residing there will be actually notified, it is more "likely", than where the publication was done here, to give the notice in
question.

I therefore hold that extraterritorial service of summons by publication, to be an effective and valid service, must be done in a
newspaper of general circulation in the state in which the absent defendant is found and, conformably with the Rule, "for such
time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to
the last known [and correct] address of the defendant. . . ."10 Publication in the Philippines, so I hold, can not operate to
confer on the court the jurisdiction over the defendant's person.

I am aware that in two early cases, Banco Español-Filipino v. Palanca11 and Perkins v. Dizon,12 and in a fairly recent one,
De Midgely v. Ferandos,13 it was held that in actions quasi in rem, jurisdiction over the person of the defendant is not
"necessary",14 jurisdiction over the res having been in any event acquired (in the case at bar, by virtue of a prior attachment).
It is to be noted, however, that in so holding, neither Palanca nor Perkins dispensed with the necessity of service of summons
(by any of the three modes of extraterritorial service), precisely, "to satisfy the constitutional requirement of due process.15

At any rate, I can not allow the lower court to act on the case in the absence of a valid extraterritorial service of summons, in
spite of the existing attachment. As Palanca, Perkins, and Ferandos indicated, service of summons is nonetheless essential
for due process purposes, and insofar as Palanca, Perkins and Ferandos paid but lip service to due process (insofar as they
permitted the court to act nonetheless), I think that a reexamination is in order.

Justice Malcolm himself differed with the majority in Palanca, and he said:

xxx xxx xxx

I dissent. It will not take me long to state my reasons. An immutable attribute –– the fundamental idea –– of due process of
law is that no man shall be condemned in his person or property without notice and an opportunity of being heard in his
defense. Protection of the parties demands a strict and an exact compliance with this constitutional provision in our organic
law and of the statutory provisions in amplification. Literally hundreds of precedents could be cited in support of the axiomatic
principles. Whereas in the instant case the defendant received no notice and had no opportunity to be heard, certainly we
cannot say that there is due process of law. Resultantly, "A judgment which is void upon its face, and which requires only an
inspection of the judgment roll to demonstrate its want of vitality is a dead limb upon the judicial tree, which should be lopped
off, if the power so to do exists. It can bear no fruit to the plaintiff, but is a constant menace to the defendant.16

In his classic formulation, Webster put due process as "a law which hears before it condemns, which proceeds upon inquiry
and renders judgment only after trial.17

The Constitution likewise decrees:

Section 1. No person shall be deprived of life, liberty or property without due process of law . . .18

I find the rationalization underlying Palanca, Perkins and Ferandos, that is, that the court may act since it has jurisdiction over
the res, to be an effort to glorify form over substance. The truth is that although the court has acquired jurisdiction over the
res, the res belongs to the defendant and we believe that a defendant has the right, as a matter of fair play, to be heard
whenever his possessions are imperilled.

The fact that judgment over the absent defendant shall be confined to the res seems to me to be more apparent than real,
because although the court can not grant any money award by way of relief, the judgment condemning the res will invariably
yield the same result, i.e., liability against the defendant.

The above ruling would also have, if they have not, set to naught Section 17 of Rule 14, which requires extraterritorial service
notwithstanding the in rem nature of the proceedings. After all, if the court has already jurisdiction over the thing, it need not
serve summons on the defendant. It was never the contemplation of the Rules to stipulate a useless provision.

I am not to be understood as condoning sheer acts of embezzlement by indebted defendants, in order to escape the
jurisdiction of our courts. and neither am I precluding our courts from entertaining complaints of creditors. I am concerned,
rather, with the fundamental injustice of a trial in absentia, if it were to permit the courts to dispose of the res without
reasonable notice to the owner, especially considering the wave upon wave of immigrations of Filipinos, whether workers,
professionals or travellers, to distant lands, which necessity, rather than choice, has forced on them. Compliance with the
Rules is not asking too much.