Spouses Abayon vs. Bank of the Philippine Islands

A trial court commits grave abuse of discretion, in violation of due process, when it ignores a pending motion for reconsideration and proceeds to issue orders in the case; however, a defendant may be estopped from contesting substituted service of summons when it instructed that the summons be received by another, and may be deemed to have voluntarily submitted to the court's jurisdiction by seeking affirmative relief without unequivocal objection.

Respondent Bank of the Philippine Islands issued a credit card in favor of petitioners Spouses Eloisa Clarito Abayon and Rommil Regenio Abayon, creating a creditor-cardholder relationship. The dispute implicated the jurisdictional threshold of first-level courts and the procedure under Section 8, Rule 40 of the Rules of Court for appeals from MeTC dismissals where the RTC has jurisdiction over the amount claimed. It also implicated the Rules of Court provisions on service of summons and the constitutional and administrative directives requiring lower courts to resolve pending motions and incidents without delay.

Respondent Bank of the Philippine Islands issued a credit card in favor of petitioners Spouses Eloisa Clarito Abayon and Rommil Regenio Abayon. Through the use of that card, petitioners incurred an outstanding principal obligation of ₱285,260.56 as of October 6, 2014. Because BPI's several demands for payment remained unheeded, it instituted a complaint for sum of money before the Metropolitan Trial Court of Makati City, Branch 67. After evaluating the complaint's allegations, Branch 21 of the MeTC, acting for Branch 67, issued an Order dismissing the complaint for lack of jurisdiction. The MeTC declared that the amounts prayed for exceeded the jurisdictional threshold of the first-level court because BPI failed to include finance and late payment charges amounting to ₱121,850.97 in determining the principal amount. BPI filed a notice of appeal and elevated the case to the Regional Trial Court of Makati City, where it was docketed as Civil Case No. 15-659 and raffled to Branch 142. The RTC ordered BPI to file its memorandum within 15 days from receipt of the order and directed petitioners to file their own memorandum within 15 days from receipt of BPI's memorandum, after which the case would be submitted for decision.

In its Order dated April 15, 2016, the RTC affirmed the MeTC's dismissal of the complaint for lack of jurisdiction but held that it would take cognizance of the case pursuant to Section 8, Rule 40 of the Rules of Court because it had jurisdiction over the claimed amount. It also directed BPI to pay the required fees. Petitioners filed a Motion for Reconsideration Ad Cautelam, averring that the April 15, 2016 Order was premature and that they were deprived of their right to due process. They explained that they received BPI's memorandum on April 7, 2016, giving them until April 22, 2016 to file their own memorandum, but the assailed Order was already rendered before they could do so. They also contended that the MeTC's lack of jurisdiction over the case could not vest the RTC with appellate jurisdiction, and they sought reconsideration without voluntarily submitting to the RTC's jurisdiction. In its Order dated September 9, 2016, the RTC denied the motion and reiterated that it had jurisdiction over the case. Subsequently, in its Order dated September 20, 2016, the RTC dismissed the case without prejudice for BPI's failure to pay the required fees. BPI then filed a Motion for Reconsideration dated October 26, 2016, praying that the dismissal be reversed in the interest of substantial justice. The RTC issued an Order dated March 9, 2017, reversing its earlier Order and directing BPI to comply with the payment of all required fees lest the case be dismissed with prejudice pursuant to Section 3, Rule 17 of the Rules of Court.

Petitioners filed a Motion for Reconsideration dated March 20, 2017, challenging the March 9, 2017 Order for again violating their right to due process. They posited that the RTC erred in issuing the Order despite initially setting BPI's October 26, 2016 Motion for Reconsideration for hearing on April 10, 2017. They argued that the motion was litigious in nature and that they should have been afforded an opportunity to be heard and to oppose it, and they prayed that the March 9, 2017 Order be vacated for depriving them of their day in court. Finding merit in petitioners' motion and noting BPI's failure to attend the scheduled hearing, the RTC vacated the March 9, 2017 Order and directed petitioners to file their comment or opposition to BPI's October 26, 2016 Motion for Reconsideration within three days, after which the matter would be submitted for resolution. Petitioners filed their Opposition on April 17, 2017, arguing that BPI's lackadaisical attitude in prosecuting its case, evidenced by its failure to pay the required fees, amounted to inexcusable negligence that should result in the denial of BPI's motion for reconsideration. Petitioners also asked that the proceedings be suspended as a matter of judicial courtesy owing to their pending petition for certiorari before the Court of Appeals, docketed as CA-G.R. No. 148337, which questioned the Orders dated April 15, 2016 and September 9, 2016. In its Order dated May 9, 2017, the RTC still granted BPI's October 26, 2016 Motion for Reconsideration in the interest of substantial justice, highlighting that procedural technicalities should never defeat substantive rights, and then issued summons to petitioners.

Petitioners moved for reconsideration on June 6, 2017. Before the RTC could act on that motion, summons was served on petitioners on June 23, 2017. Petitioners filed a Motion to Dismiss via Special Appearance on July 7, 2017, contending that the service of summons was premature because their motion for reconsideration on the May 9, 2017 Order was still pending, and that the service was defective because it was not served personally as required by the Rules of Court. In its Order dated August 4, 2017, the RTC denied the motion to dismiss and directed petitioners to file their answer. The RTC noted that the Officer's Return dated June 27, 2017 reflected that the summons was received by a certain Apollo Mangaya, the mailing receiver of Globe Tower, Bonifacio Global City, Taguig, per the instruction of petitioner Eloisa herself to the building receptionist. In light of this, the RTC held that petitioners could not claim they were improperly served. Petitioners again moved for reconsideration, stressing that their June 6, 2017 motion for reconsideration remained unresolved and that, notwithstanding the Officer's Return, serious attempts to personally serve the summons were necessary before substituted service could be availed of. The RTC denied this motion in its Order dated February 1, 2018.

Petitioners then filed a petition for certiorari before the Court of Appeals, arguing that the Orders dated August 4, 2017 and February 1, 2018 were attended with grave abuse of discretion amounting to lack or excess of jurisdiction. The CA dismissed the petition for lack of merit. It held that an unacted motion within due time was deemed denied, and that the motion was impliedly denied by the RTC when it rendered its August 4, 2017 Order upholding the service of summons. The CA also observed that certiorari generally may not lie against a denial of a motion to dismiss because the movant would still have an adequate remedy before the trial court by filing an answer and subsequently appealing. As to the service of summons, the CA agreed that the process server's efforts to personally serve the summons were lacking, but noted that petitioners never denied that it was upon their instruction that the service of summons was received by Mangaya. The CA declared that the peculiar circumstances of the case belied petitioners' argument that the trial court failed to acquire jurisdiction over them, stressing that petitioners, on more than one occasion, sought affirmative relief from the RTC, amounting to voluntary submission to its jurisdiction. Petitioners sought reconsideration, but the CA denied it, prompting the present Petition for Review on Certiorari under Rule 45, which also sought a writ of preliminary injunction and/or temporary restraining order to enjoin the RTC from continuing the proceedings in Civil Case No. 15-659.

• Due Process and Prematurity: Petitioners argued that the RTC's April 15, 2016 Order was premature and deprived them of due process because they received BPI's memorandum on April 7, 2016 and had until April 22, 2016 to file their own memorandum, yet the Order was rendered before they could do so.
• Jurisdiction and Non-Submission: Petitioners contended that the MeTC's lack of jurisdiction over the case could not vest the RTC with appellate jurisdiction, and they sought reconsideration without voluntarily submitting to the RTC's jurisdiction.
• Due Process in Resolving BPI's Motion: Petitioners challenged the March 9, 2017 Order as violative of due process because the RTC issued it despite setting BPI's October 26, 2016 Motion for Reconsideration for hearing on April 10, 2017; they argued the motion was litigious and they should have been afforded an opportunity to be heard and to oppose it.
• BPI's Negligence and Judicial Courtesy: Petitioners maintained that BPI's failure to pay the required fees amounted to inexcusable negligence warranting denial of its motion for reconsideration, and that the proceedings should be suspended as a matter of judicial courtesy due to their pending certiorari petition before the CA, docketed as CA-G.R. No. 148337.
• Premature and Defective Service of Summons: Petitioners argued that the service of summons was premature because their June 6, 2017 motion for reconsideration remained pending, and that it was defective because it was not served personally as required by the Rules of Court; they added that serious attempts at personal service were necessary before substituted service could be availed of.
• Grave Abuse of Discretion: Petitioners argued before the CA that the RTC's Orders dated August 4, 2017 and February 1, 2018 were attended with grave abuse of discretion amounting to lack or excess of jurisdiction.

• Substantial Justice: Respondent sought reversal of the RTC's September 20, 2016 dismissal, which was without prejudice for failure to pay required fees, praying that the dismissal be reversed in the interest of substantial justice.

• Due Process in Pending Motion for Reconsideration: Whether the CA erred in upholding the RTC's Orders dated August 4, 2017 and February 1, 2018 despite the RTC's failure to resolve petitioners' pending motion for reconsideration before issuing them.
• Acquisition of Jurisdiction over Petitioners: Whether the CA erred in concluding that the RTC acquired jurisdiction over petitioners notwithstanding the allegedly improper service of summons.

• Due Process in Pending Motion for Reconsideration: Yes. The CA erred in upholding the RTC's Orders dated August 4, 2017 and February 1, 2018. The RTC violated petitioners' right to due process by failing to timely act on their pending motion for reconsideration before issuing the assailed orders; the orders were annulled and set aside.
• Acquisition of Jurisdiction over Petitioners: No. The CA did not err in concluding that the RTC acquired jurisdiction over petitioners. Although personal service was wanting, petitioners were estopped from contesting substituted service and, in any event, voluntarily submitted to the RTC's jurisdiction by seeking affirmative relief without unequivocal objection.

• Due Process in Pending Motion for Reconsideration: The Court's review was limited to determining whether the CA correctly found grave abuse of discretion on the part of the RTC. The CA relied on Orosa vs. Court of Appeals for the rule that a motion not acted upon in due time is deemed denied. The Court held the reliance misplaced because Orosa involved a mere motion for additional time to file an answer; subsequent cases applied the doctrine to a motion for extension of time to file compliance and a motion to withdraw. A motion for reconsideration is not in the nature of a motion for additional time to file a pleading. A motion for extension is an accommodation grounded on sufficient reason and left to the court's sound discretion, while a motion for reconsideration is filed to convince the court that its ruling is erroneous and improper, contrary to law or evidence, thus affording the court an opportunity to rectify the same. By arbitrarily ignoring such a motion and continuing the proceedings, the trial court impairs the movant's right to be heard, a basic tenet of due process. This was especially significant because the Order sought to be reconsidered was the RTC's resumption of jurisdiction over a case it had previously dismissed. The Constitution, Article VIII, Section 15(1), requires lower courts to resolve matters within three months, and Supreme Court Administrative Circular No. 1-88 directs presiding judges to act promptly on all motions and interlocutory matters. Grave abuse of discretion arises when a lower court patently violates the Constitution, law, or existing jurisprudence. The RTC's failure to timely act on the motion for reconsideration rendered the assailed Orders dated August 4, 2017 and February 1, 2018 in violation of due process; they were annulled and set aside. However, the nullification did not result in dismissal of the case because those orders dealt only with the resolution of petitioners' Motion to Dismiss. Even disregarding them, the status quo was determined by the RTC's Order dated May 9, 2017, which affirmed its jurisdiction over the subject matter of BPI's complaint. Further inquiry into the propriety of the RTC's determination would be beyond the scope of review and futile. Litigation is preferred to be decided on the merits, not on technicality.
• Acquisition of Jurisdiction over Petitioners: The CA correctly observed that the process server's attempts to personally serve the summons were wanting. As the preferred mode of service, the return must indicate the steps taken by the sheriff to comply with personal service before substituted service may be availed of. Failure to properly serve summons generally means the court did not acquire jurisdiction over the person of the defendant. However, the peculiar circumstances warranted relaxation. Petitioners never denied that the summons was received by Mangaya per instruction of petitioner Eloisa herself to the building receptionist. Nothing in their Motion to Dismiss or their petition before the Court showed that they denied giving such instruction. While this did not do away with the express requirement of personal service under the Rules of Court, it estopped petitioners from raising the argument to divest the RTC of jurisdiction over their persons, because estoppel renders an admission conclusive upon the person making it under Article 1431 of the Civil Code. In any event, even assuming the summons were invalid, the RTC would still have acquired jurisdiction over petitioners by their voluntary submission. Defendants voluntarily submit to the court's jurisdiction when they participate in the proceedings despite improper service of summons. Filing pleadings without unequivocal objections to jurisdiction over the person is equivalent to valid service. Petitioners' Motion for Reconsideration to the April 15, 2016 Order was filed ad cautelam, but their Motion for Reconsideration to the March 9, 2017 Order was filed without reservations and was granted by the trial court. Their Opposition to the October 26, 2016 Motion for Reconsideration and their Motion for Reconsideration to the May 9, 2017 Order also lacked similar reservations. It was only in their Motion to Dismiss that they again made a reservation via special appearance. They had actively participated and sought affirmative relief from the RTC; their numerous pleadings showed notice was effected and they were adequately notified to defend their interests. Consequently, the RTC properly acquired jurisdiction over petitioners.

• Due Process and Pending Motions for Reconsideration — A motion for reconsideration is not a mere motion for extension of time; it seeks to convince the court that its ruling is erroneous and gives the court an opportunity to rectify the same. Arbitrarily ignoring it and continuing the proceedings impairs the movant's right to be heard, a basic tenet of due process. The Court applied this to annul the RTC's Orders dated August 4, 2017 and February 1, 2018, which were issued before the RTC resolved petitioners' pending motion for reconsideration.
• Grave Abuse of Discretion — Grave abuse of discretion arises when a lower court or tribunal patently violates the Constitution, the law, or existing jurisprudence. The RTC's failure to timely act on the pending motion for reconsideration, contrary to Article VIII, Section 15(1) of the 1987 Constitution and Supreme Court Administrative Circular No. 1-88, constituted grave abuse of discretion.
• Estoppel in Service of Summons — Although failure to properly serve summons generally means the court did not acquire jurisdiction over the person of the defendant, a defendant may be estopped from contesting substituted service when the defendant instructed that the summons be received by another. Article 1431 of the Civil Code renders such an admission conclusive. The Court applied this to petitioner Eloisa's instruction that the summons be received by Mangaya.
• Voluntary Submission to Jurisdiction — Defendants voluntarily submit to the court's jurisdiction when they participate in the proceedings despite improper service of summons. Filing pleadings without unequivocal objections to jurisdiction over the person is equivalent to valid service. The Court applied this to petitioners' numerous pleadings seeking affirmative relief from the RTC.
• Relaxation of Procedural Rules and Merits over Technicalities — Litigation is preferred to be decided on the merits and not on technicality, to afford both party-litigants ample opportunity to ventilate their rights. The Court applied this in declining to dismiss the case despite annulling the RTC orders, and in relaxing the strict service requirement due to estoppel and voluntary submission.

• "A motion for reconsideration is not in the nature of a motion for additional time to file a pleading." — This distinguishes Orosa vs. Court of Appeals and explains why the deemed-denied doctrine for extensions does not apply to motions for reconsideration.
• "By arbitrarily ignoring such a motion and continuing the proceedings, the trial court would be impairing the movant-party's right to be heard, which is a basic tenet of the fundamental right to due process." — This states the ratio for annulling the RTC orders issued before resolving the pending motion for reconsideration.
• "Generally, defendants voluntarily submit to the court's jurisdiction when they participate in the proceedings despite improper service of summons." — This states the doctrine on voluntary submission to jurisdiction applied to petitioners.
• "While this fact would not operate to do away with the express requirement under the Rules of Court on personal service, it should operate to estop petitioners from raising such an argument to divest the RTC of jurisdiction over their persons given that estoppel operates to render an admission conclusive upon the person making the same." — This explains why defective substituted service did not prevent jurisdiction due to estoppel.

• Orosa vs. Court of Appeals, 330 Phil. 67 (1996) — Cited by the CA for the rule that a motion not acted upon in due time is deemed denied; the Supreme Court distinguished it because it involved a mere motion for additional time to file an answer, not a motion for reconsideration.
• Sps. Salise vs. Salcedo, 787 Phil. 586, 596 (2016) — Cited as a subsequent application of the deemed-denied doctrine, but with respect to a motion for extension of time to file compliance.
• Eversley Childs Sanitarium vs. Sps. Barbarona, 829 Phil. 111 (2018) — Cited for the reiteration of the deemed-denied doctrine in the context of a motion to withdraw, but the Court emphasized its spirit of liberality to prevent deprivation of the right to be heard due to technicalities.
• Fluor Daniel, Inc.-Philippines vs. Fil-Estate Properties, Inc., G.R. No. 212895, November 27, 2019 — Cited to distinguish a motion for extension of time to file a pleading, which is an accommodation left to the court's sound discretion, from a motion for reconsideration.
• Valencia (Bukidnon) Farmers Cooperative Marketing Association, Inc. vs. Heirs of Cabotaje, 851 Phil. 95, 104 (2019) — Cited for the definition of a motion for reconsideration and the rule that grave abuse of discretion arises when a lower court patently violates the Constitution, law, or existing jurisprudence.
• People's General Insurance Corp. vs. Guansing, 843 Phil. 197, 215-216 (2018) — Cited on service of summons, failure to properly serve summons, and voluntary submission to jurisdiction through participation despite improper service.
• Denila vs. Republic, G.R. No. 206077, July 15, 2020 — Cited for the scope of review, limited to determining and correcting errors of judgment committed in the exercise of jurisdiction.
• Esturas vs. Lu, A.M. No. RTJ-11-2281, September 16, 2019 — Cited for the mandate that judges resolve motions and incidents without delay and decide cases within the required period.

• Article VIII, Section 15(1), 1987 Constitution — Requires cases or matters filed after the Constitution's effectivity to be decided or resolved within 24 months for the Supreme Court, 12 months for lower collegiate courts, and 3 months for all other lower courts; applied to hold that the RTC failed to timely resolve the pending motion for reconsideration.
• Supreme Court Administrative Circular No. 1-88 — Directs all Presiding Judges to endeavor to act promptly on all motions and interlocutory matters pending before their courts; applied to the RTC's failure to act on petitioners' motion for reconsideration.
• Article 1431, Civil Code — Provides that estoppel renders an admission conclusive upon the person making it; applied to estop petitioners from contesting the substituted service of summons because Eloisa had instructed that it be received by Mangaya.
• Section 8, Rule 40, Rules of Court — Cited by the RTC as basis for taking cognizance of the appealed case because it had jurisdiction over the amount claimed.
• Section 3, Rule 17, Rules of Court — Cited in the RTC's March 9, 2017 Order directing BPI to pay required fees lest the case be dismissed with prejudice.
• Rules of Court — service of summons — The Court referred to the preferred mode of personal service and the requirement that the return indicate steps taken before substituted service may be availed of; applied to find the process server's efforts wanting but ultimately not fatal due to estoppel and voluntary submission.

Caguioa (Chairperson), Inting, Gaerlan, and Singh, JJ., concurred. No separate concurring opinion is noted in the text.