Santos, Jr. vs. PNOC Exploration Corporation

Service of summons by publication under Section 14, Rule 14 of the Rules of Court is applicable to any civil action, including actions in personam, and is no longer limited to actions in rem; furthermore, a defendant's voluntary appearance in the action, as evidenced by the filing of an omnibus motion for reconsideration and admission of answer, is equivalent to service of summons under Section 20, Rule 14 and vests the court with jurisdiction over the defendant's person.

The dispute arose from a car loan obtained by petitioner Pedro T. Santos, Jr. during his tenure as a member of the board of directors of respondent PNOC Exploration Corporation. Upon his separation from the corporation, an unpaid balance of P698,502.10 remained on the loan, which was secured by a promissory note and chattel mortgage on a Honda CRV. The respondent subsequently filed a collection suit to recover the outstanding amount.

• Respondent PNOC Exploration Corporation filed a complaint for sum of money against petitioner Pedro T. Santos, Jr. in the Regional Trial Court of Pasig City, Branch 167, docketed as Civil Case No. 69262, to collect P698,502.10 representing the unpaid balance of a car loan advanced to the petitioner during his tenure as a member of the respondent's board of directors.
• The car loan was originally for P966,000.00 and was used to procure a Honda CRV for the petitioner, evidenced by a promissory note and secured by a chattel mortgage containing a condition that any unpaid balance becomes immediately due upon separation from service.
• Personal service of summons to the petitioner failed because he could not be located at his last known address despite earnest efforts to locate him.
• Upon respondent's motion, the trial court allowed service of summons by publication in Remate, a newspaper of general circulation, on May 20, 2003.
• Respondent submitted an affidavit of publication from the advertising manager of Remate and an affidavit of service from its employee regarding the sending of a copy of the summons by registered mail to the petitioner's last known address.
• When the petitioner failed to file his answer within the prescribed period, respondent moved to set the case for the reception of evidence ex parte, which the trial court granted in an order dated September 11, 2003.
• On October 28, 2003, the petitioner filed an "Omnibus Motion for Reconsideration and to Admit Attached Answer," seeking reconsideration of the September 11, 2003 order and admission of his belatedly filed answer.
• The trial court denied the motion in an order dated February 6, 2004, holding that the affidavit of service need not be executed by the clerk of court, that due process was observed as a copy of the order was mailed to the petitioner's last known address, and that the answer was filed beyond the reglementary period.
• During the pendency of the petition for certiorari in the Court of Appeals, the trial court rendered its decision on the merits on May 19, 2004, ordering the petitioner to pay the outstanding loan amount plus legal interest and costs of suit.

• The trial court lacked jurisdiction over his person due to improper service of summons, contending that service by publication under Section 14, Rule 14 of the Rules of Court applies only to actions in rem and not to actions in personam such as a complaint for sum of money.
• The affidavit of service showing the deposit of a copy of the summons by registered mail should have been executed by the clerk of court, not by respondent's employee or messenger, to comply with Section 19, Rule 14.
• He was denied due process because the trial court failed to furnish him with copies of its orders and processes, particularly the September 11, 2003 order allowing the ex parte presentation of evidence.
• The trial court improperly preferred technicality over equity and justice by denying the admission of his answer despite his willingness to present his defenses on the merits.

• Service of summons was properly effected by publication after diligent efforts to locate the petitioner failed, and the rules on substituted service were fully complied with.
• The rules do not require that the affidavit of complementary service by registered mail be executed by the clerk of court.
• The petitioner was deemed in default for failure to file an answer within the prescribed period, justifying the ex parte presentation of evidence and the denial of the belatedly filed answer.

• Procedural Issues:
  • Whether the Court of Appeals committed grave abuse of discretion in upholding the trial court's orders despite the alleged lack of jurisdiction over the person of the petitioner due to defective service of summons.
  • Whether the trial court properly denied the petitioner's motion to admit his belatedly filed answer.
  • Whether the petitioner was entitled to notice of the trial court's orders and processes despite his unknown whereabouts.
• Substantive Issues:
  • Whether Section 14, Rule 14 of the Rules of Court, governing service by publication, applies only to actions in rem or to any action, including actions in personam.
  • Whether the affidavit of complementary service by registered mail under Section 19, Rule 14 must be executed by the clerk of court.

• Procedural:
  • The Supreme Court held that even assuming the service of summons was defective, the trial court acquired jurisdiction over the person of the petitioner by his voluntary appearance when he filed the "Omnibus Motion for Reconsideration and to Admit Attached Answer," which is equivalent to service of summons under Section 20, Rule 14 of the Rules of Court.
  • The Court ruled that the trial court did not abuse its discretion in denying the admission of the petitioner's answer because it was filed way beyond the reglementary period, and equity cannot be applied in contravention of clear and express rules of procedure.
  • Regarding notice, the Court held that while the trial court effectively issued an order of default without the required motion (which was procedurally infirm), the petitioner could not reasonably demand notice of subsequent proceedings given that his whereabouts were unknown, applying the principle that the law does not require the impossible (nemo tenetur ad impossibile).
• Substantive:
  • The Court ruled that Section 14, Rule 14 of the Rules of Court applies to any action, whether in personam, in rem, or quasi in rem, and not merely to actions in rem as was the case under the old rule. The current rule expressly states it applies "[i]n any action where the defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry."
  • The Court held that the affidavit of complementary service by registered mail need not be executed by the clerk of court; the duty to make such service is imposed on the party who resorts to service by publication, and the affidavit may be executed by any person showing the deposit of the copy in the post office.

• Service by Publication in Any Action — Under the current Section 14, Rule 14 of the Rules of Court, service of summons by publication is no longer limited to actions in rem but applies to any action where the defendant's whereabouts are unknown, including actions in personam. The Court overruled the limitation imposed under the 1964 Rules which restricted such service to in rem actions due to the rule's silence on the type of action.
• Voluntary Appearance as Equivalent to Service — Section 20, Rule 14 provides that a defendant's voluntary appearance in the action is equivalent to service of summons. The filing of an omnibus motion seeking reconsideration of an order and admission of an attached answer constitutes a voluntary appearance that cures any defect in the service of summons and vests the trial court with jurisdiction over the defendant's person.
• Nemo Tenetur ad Impossibile — The legal maxim that "no one is obliged to perform an impossibility" was applied to hold that a party whose whereabouts are unknown cannot demand notice of court proceedings, as the law does not require the impossible to be done. Laws and rules must be interpreted in accordance with logic, common sense, reason, and practicality.
• Equity in Relation to Law — Equity is available only in the absence of law and not as its replacement; it may be applied only in the absence of rules of procedure, never in contravention thereof.

• "The defendant's voluntary appearance in the action shall be equivalent to service of summons."
• "Nemo tenetur ad impossibile. The law obliges no one to perform an impossibility."
• "Equity is available only in the absence of law, not as its replacement."
• "Laws and rules must be interpreted in a way that they are in accordance with logic, common sense, reason and practicality."

• Consolidated Plywood Industries, Inc. v. Breva — Cited to establish that under the old Section 16, Rule 14 of the 1964 Rules, service by publication was limited to actions in rem due to the rule's silence on the type of action.
• Asiavest Limited v. Court of Appeals — Cited as precedent affirming the limitation of the old rule to actions in rem.
• Valmonte v. Court of Appeals — Cited as precedent affirming the limitation of the old rule to actions in rem.
• Europa v. Intermediate Appellate Court — Cited for the principle that voluntary appearance is equivalent to service of summons.
• Mediserv, Inc. v. China Banking Corporation — Cited to establish that an order of default can be made only upon motion of the claiming party.
• Akbayan-Youth v. Commission on Elections — Cited for the maxim nemo tenetur ad impossibile and the principle that laws must be interpreted with logic and practicality.
• Heirs of Spouses de la Cruz v. Heirs of Quintos, Sr. — Cited for the principle that equity is available only in the absence of law, not as its replacement.

• Section 14, Rule 14 of the Rules of Court — Governs service upon defendant whose identity or whereabouts are unknown; interpreted to apply to any action, not just actions in rem.
• Section 19, Rule 14 of the Rules of Court — Governs proof of service by publication; clarified that the affidavit of complementary service by registered mail need not be executed by the clerk of court.
• Section 20, Rule 14 of the Rules of Court — Provides that voluntary appearance is equivalent to service of summons.
• Section 3, Rule 9 of the Rules of Court — Governs declaration of default, which requires a motion by the claiming party.
• Section 4, Rule 9 of the Rules of Court — Provides that a party in default is entitled to notice of subsequent proceedings but not to take part in the trial.