UTI (GLOBAL LOGISTICS), INC., PLAINTIFF-APPELLEE, VS. SEAMAN MARINE PRODUCTS, OWNED AND MANAGED BY SPS. YIN SHIN NG AND FE ACOYMO, DEFENDANTS-APPELLANTS.

UTI Global Logistics versus Seaman Marine Products

The Case

This is a civil action for the recovery of the value of freight forwarding and customs brokerage services, brought by UTI Global Logistics, Incorporated against Seaman Marine Products, which is owned and managed by the spouses Yin Shin Ng and Fe Acoymo. The plaintiff sued to collect what it was owed for services rendered, and the defendants never filed an answer. The trial court declared them in default and rendered judgment for the plaintiff. The defendants then appealed, insisting that the trial court never acquired jurisdiction over their persons because the summons was served by substituted service that they say was invalid. The case matters because it is the Supreme Court's clean statement of what a valid substituted service of summons requires, and of how much weight a sheriff's return carries when a defendant tries to overturn it.

Procedural History

The action began in the Regional Trial Court of Parañaque City, Branch 258. The defendants were served with summons and a copy of the complaint at their residence through a certain Marlon Suan. When they failed to answer within the reglementary period, the plaintiff moved to declare them in default. The trial court granted the motion by an order dated December 11, 2002, declared the defendants in default, and allowed the plaintiff to present its evidence ex parte. The defendants moved to lift the order of default, arguing that the court had acquired no jurisdiction over them because they were not personally served by a person duly authorized to effect service, and because no proper substituted service was made. The trial court denied that motion on March 27, 2003. The plaintiff then presented its evidence ex parte, and on February 10, 2004 the trial court rendered judgment ordering the defendants to pay the actual obligation with interest, liquidated damages, attorney's fees, and the costs of suit.

The defendants appealed to the Court of Appeals, raising three errors: that the trial court took cognizance of the case despite invalid substituted service of summons, that it erred in ruling them in default and allowing the presentation of evidence ex parte, and that it erred in rendering judgment by default. The Court of Appeals found the appeal devoid of merit. The case then reached the Supreme Court, which affirmed the decision of the Regional Trial Court.

Facts

UTI Global Logistics rendered freight forwarding and customs brokerage services for Seaman Marine Products, which is owned and managed by the spouses Yin Shin Ng and Fe Acoymo. When the account went unpaid, the plaintiff sued for the value of those services in the Regional Trial Court of Parañaque City.

On August 20, 2002, the summons and a copy of the complaint were served at the spouses' residence in Bu-ot, Punta Engaño, Lapu-Lapu City, through Marlon Suan, a cousin of Fe Acoymo. The sheriff's return dated August 30, 2002 recited that the sheriff had gone to the residence twice before August 20, 2002, but the defendants were always out of the house, and that this was why substituted service was made. The defendants did not answer within the reglementary period, and the trial court declared them in default.

The defendants then moved to lift the order of default on the ground that the court had no jurisdiction over their persons. They argued that the sheriff's return should have stated the date and time of his attempts at personal service, the impossibility of such service, and the identity of the person who told him they were always out. The trial court denied the motion, received the plaintiff's evidence ex parte, and rendered judgment against the defendants, who then appealed.

Issues

• Whether or not the lower court acquired jurisdiction over the persons of the defendants through substituted service of summons.
• Whether or not the trial court erred in declaring the defendants in default and in allowing the presentation of the plaintiff's evidence ex parte.
• Whether or not the trial court erred in rendering judgment by default.

Applicable Provisions

Section 6 of Rule 14 of the 1997 Rules of Civil Procedure provides:

Sec. 6. Service in person on defendant. – Whenever practicable, the summons shall be served by handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him.

This establishes personal service as the primary mode, so that substituted service is available only when personal service cannot be made.

Section 7 of Rule 14 of the 1997 Rules of Civil Procedure provides:

Sec. 7. Substituted service. – If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant's residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendant's office or regular place of business with some competent person in charge thereof.

This is the provision whose requirements the Court measured the sheriff's return against, and which the Court held was complied with.

Ruling

On the first issue, the Court held that the lower court validly acquired jurisdiction over the persons of the defendants through substituted service. The Court laid down the requirements for a proper substituted service of summons: first, the return must indicate the impossibility of service of summons within a reasonable time; second, it must specify the efforts exerted to locate the defendants; and third, it must state that service was made on a person of sufficient age and discretion residing therein. The Court explained that "within a reasonable time" contemplates a period longer than that demarcated by the word "prompt," and presupposes that a prior attempt at personal service, within a justifiable time frame, had failed.

Applying these requirements, the Court found that positive steps were taken before resorting to substituted service. The sheriff's return showed that he had gone twice to the defendants' residence but did not find them, as they were always out of the house, thereby indicating the impossibility of personal service. The Court rejected the argument that the return had to state the date and time of the attempts and the identity of the informant, noting that even the return in the earlier case of Umandap versus Sabio, which merely stated that efforts to serve the defendant personally on several occasions proved futile because the defendant was not around, was held to comply with the requirements. As to the third requisite, the Court found no question that Suan was a person of sufficient age and discretion residing at the defendants' residence. The Court also stressed that the sheriff's return is prima facie evidence of the facts therein set out, and that to overcome the presumption of regularity of official functions, the evidence against it must be clear and convincing. The defendants failed to overcome that presumption.

On the second and third issues, which rest on the same jurisdictional objection, the Court found the appeal devoid of merit. Since jurisdiction over the persons of the defendants was validly acquired, the order of default and the judgment by default that followed were proper.

Doctrine

A valid substituted service of summons requires three things, and a Bar candidate should be able to recite them: the return must indicate the impossibility of service within a reasonable time; it must specify the efforts exerted to locate the defendant; and it must state that service was made on a person of sufficient age and discretion residing at the defendant's residence. These requirements flow from Section 7 of Rule 14, which allows substituted service only if, for justifiable causes, the defendant cannot be served within a reasonable time as provided in Section 6.

The phrase "within a reasonable time" means a period longer than what is "prompt," and it presupposes a prior failed attempt at personal service. The sheriff's return need not state the exact date and time of the attempts or the identity of the informant; it is enough that it recites the material facts and circumstances showing that personal service was impossible. Finally, the sheriff's return is prima facie evidence of the facts set out in it, and the presumption of regularity of official functions may be overcome only by clear and convincing evidence.

Disposition

The Supreme Court affirmed the decision of the Regional Trial Court of Parañaque City, Branch 258, and the defendants lost.

Remember This

Memorize the three requisites of substituted service and the rule that the sheriff's return is prima facie evidence of regularity, overcome only by clear and convincing evidence. Examiners use this case to test the validity of substituted service of summons and the effect of a defendant's failure to rebut the sheriff's return.