SPOUSES DANTE AND MA. TERESA L. GALURA, PETITIONERS, VS. MATH-AGRO CORPORATION, RESPONDENT.

Galura versus Math-Agro Corporation

The Case

This is a petition for review on certiorari brought by the spouses Dante and Ma. Teresa Galura against Math-Agro Corporation, a creditor that had obtained a default judgment against them for an unpaid balance on poultry products. The spouses asked the Supreme Court to reverse the Court of Appeals, which had dismissed their petition to annul the trial court's judgment and order of execution. The case matters because it is a clean teaching vehicle on two points every litigator must know: the strict requirements of substituted service of summons, and the rule that a judgment rendered without jurisdiction over the person of the defendant is void and may be attacked by a petition for annulment of judgment without first exhausting the ordinary remedies.

Procedural History

Math-Agro Corporation filed a complaint for collection before the Regional Trial Court of Malolos, Bulacan, Branch 22. The spouses failed to file an answer, and the trial court declared them in default and allowed the plaintiff to present evidence ex parte. The trial court then rendered judgment in favor of Math-Agro Corporation, ordering the spouses to pay the unpaid balance, attorney's fees, and costs. The decision became final and executory, and the trial court later issued an order granting a motion for execution.

The spouses then filed with the Court of Appeals a petition for annulment of judgment and final order under Rule 47 of the Rules of Court, with a prayer for a writ of preliminary injunction or temporary restraining order. The Court of Appeals dismissed the petition for lack of merit, holding that there was a valid substituted service of summons, that the allegation of extrinsic fraud was unbelievable, and that the spouses should have first availed of the ordinary remedies of new trial, appeal, or petition for relief. The spouses moved for reconsideration, and the Court of Appeals denied the motion. Hence, the spouses elevated the matter to the Supreme Court by petition for review on certiorari, and the Court issued a temporary restraining order enjoining the Court of Appeals from implementing its resolutions.

Facts

In March 1997, the spouses purchased broiler starters and finishers worth 426,000 pesos from Math-Agro Corporation. They paid 72,500 pesos, leaving an unpaid balance of 353,500 pesos. Despite several demands, they did not pay. Math-Agro Corporation engaged counsel, who sent a demand letter dated 13 November 1998 giving the spouses five days to pay, with a warning that a case would be filed if they did not.

In June 2000, Math-Agro Corporation filed its complaint, stating that the spouses were residents of G.L. Calayan Agro System, Inc. in Barrio Kalayaan, Gerona, Tarlac, and, alternatively, of 230 Apo Street, Sta. Mesa Heights, Quezon City. Summons was issued. On 17 September 2000, the process server went to the Apo Street address, where Dante Galura's father, Dominador Galura, told him the spouses were then residing at Tierra Pura Subdivision, Tandang Sora, Quezon City. On 22 September 2000, the process server went to the Gerona, Tarlac address and learned that the property had been foreclosed and the spouses no longer resided there. On 26 September 2000, he went to Tierra Pura Subdivision and served the summons on Teresa Galura's sister, Victoria Lapuz.

The spouses never filed an answer. The trial court declared them in default, received the plaintiff's evidence ex parte, and rendered its decision in June 2001. The decision became final, and in November 2004 the trial court granted a motion for execution. The spouses received a copy of the execution order from their parents-in-law in December 2004, and in January 2005 they filed their petition for annulment of judgment before the Court of Appeals, claiming lack of jurisdiction over their persons due to invalid substituted service, and extrinsic fraud.

Issues

• Whether or not there was a valid substituted service of summons upon the spouses.
• Whether or not the allegation of extrinsic fraud was believable.
• Whether or not the spouses should have first availed of the ordinary remedies of new trial, appeal, or petition for relief before filing a petition for annulment of judgment.

Applicable Provisions

Section 6, Rule 14 of the Rules of Court provides:

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 fixes personal service as the rule, so that substituted service is only an exception.

Section 7, Rule 14 of the Rules of Court provides:

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 the Court construes strictly, because the validity of the entire default judgment depends on whether its requisites were met.

Ruling

On the first issue, the Court ruled that there was no valid substituted service. The Court enumerated the requisites of a valid substituted service: first, service of summons within a reasonable time is impossible; second, the person serving the summons exerted efforts to locate the defendant; third, the person to whom the summons is served is of sufficient age and discretion; fourth, that person resides at the defendant's place of residence; and fifth, the pertinent facts showing these circumstances are stated in the return of service. The Court stressed that the statutory restrictions for substituted service must be strictly, faithfully, and fully observed.

Here, the return of service did not show the impossibility of personal service within a reasonable time, did not state that Lapuz was of suitable age and discretion, and did not state that she resided in the spouses' residence. The process server had been told the correct address but served on Lapuz without explanation. Consequently, the trial court never acquired jurisdiction over the persons of the spouses, and they were not bound by its decision and execution order. The Court quoted its earlier ruling:

Service of summons upon the defendant is the means by which the court may acquire jurisdiction over his person. In the absence of a valid waiver, trial and judgment without such service are null and void.

On the second issue, the Court found the claim of extrinsic fraud to be a bare allegation unsupported by any receipts of payment, and thus unworthy of belief.

On the third issue, the Court ruled in favor of the spouses. When a petition for annulment of judgment under Rule 47 is grounded on lack of jurisdiction over the person of the defendant, the petitioner need not allege that the ordinary remedies of new trial, appeal, or petition for relief are no longer available through no fault of his or her own. The Court explained:

This is so because a judgment rendered or final order issued by the RTC without jurisdiction is null and void and may be assailed any time either collaterally or in a direct action or by resisting such judgment or final order an any action or proceeding whenever it is invoked, unless barred by laches.

Doctrine

First, substituted service of summons is extraordinary and in derogation of the usual method of service; it may be used only in the circumstances authorized by statute, and its requisites must be strictly, faithfully, and fully observed. The return of service must state the efforts made to find the defendant personally and the fact that those efforts failed, because impossibility of prompt personal service is what justifies the substitution.

Second, service of summons is the means by which the court acquires jurisdiction over the person of the defendant; without valid service, trial and judgment are null and void, and the defendant is not bound by them.

Third, a petition for annulment of judgment under Rule 47 grounded on lack of jurisdiction over the person need not allege that the ordinary remedies are no longer available through no fault of the petitioner, because a void judgment may be assailed at any time, unless barred by laches.

Disposition

The Court granted the petition, set aside the resolutions of the Court of Appeals, made permanent the temporary restraining order, and set aside the trial court's decision and order of execution. The spouses won.

Remember This

Memorize this line: substituted service is extraordinary and must be strictly, faithfully, and fully observed, and a judgment rendered without valid service of summons is void. Examiners use this case to test the requisites of substituted service and the Rule 47 rule that lack of jurisdiction over the person excuses the exhaustion of ordinary remedies.