Velayo-Fong vs. Velayo

In an action in personam against a non-resident defendant who is physically present in the Philippines, personal service of summons within the forum is essential and valid to acquire jurisdiction over the person; extraterritorial service is not required.

Raymond Velayo and his wife filed a complaint for sum of money and damages against his half-sister, Erlinda R. Velayo-Fong, a resident of Hawaii, and her brothers. The complaint alleged that Erlinda and her brothers maliciously filed an estafa and kidnapping complaint against Raymond before the NBI and a petition before the SEC, resulting in the spouses being placed on the hold departure list and their business operations paralyzed. Because Erlinda was a non-resident, respondents initially prayed for a writ of preliminary attachment to acquire jurisdiction, but later moved to serve summons at her local addresses after she was found physically present in the Philippines.

• The Complaint: Spouses Raymond and Maria Hedy Velayo filed a complaint for sum of money and damages against Erlinda R. Velayo-Fong and her brothers, alleging malicious prosecution via an NBI complaint and SEC petition that resulted in a hold departure order and paralyzed business operations.
• Service of Summons: Respondents initially sought preliminary attachment due to petitioner's non-resident status but later moved to serve summons at her local condominium addresses. The process server, after failed attempts at the given addresses, served the summons personally on petitioner at the lobby of the Intercontinental Hotel in Makati. Petitioner refused to sign the receipt.
• Default and Trial: Petitioner failed to file an answer. Upon respondents' ex-parte motions, the RTC declared petitioner in default and allowed ex-parte presentation of evidence. The RTC rendered a judgment by default ordering defendants to pay actual damages, moral damages, attorney's fees, and costs.
• Post-Judgment Motions: Petitioner filed a Motion to Set Aside Order of Default, claiming no valid service occurred and that papers were merely hurled at her. The RTC denied the motion, upholding the presumption of regularity of the process server's return. The RTC later denied respondents' motion for execution against petitioner because she had not been served a copy of the decision. After being served the decision, petitioner appealed to the CA, which affirmed the RTC.

• Extraterritorial Service Required: Petitioner argued that as a non-resident, summons should have been served through extraterritorial service.
• Invalid Service and Fraud: Petitioner maintained that she was prevented from filing a responsive pleading due to fraud, accident, or mistake, claiming the officer's return was inaccurate and that a man merely hurled papers at her at the elevator, which she threw back.
• Meritorious Defense: Petitioner claimed she had a valid and meritorious defense, asserting that the cases against Raymond were filed at the instance of her father.
• Liberal Interpretation: Petitioner argued that the RTC should have lifted the order of default under a liberal interpretation of the rules to afford parties their day in court.

• Validity of Personal Service: Respondent countered that personal service was validly effected because the rules do not require service at the residence stated in the complaint, and extraterritorial service applies only when the defendant does not reside and is not found in the Philippines.
• Improper Remedy: Respondent argued that petitioner erred in filing a motion to set aside the order of default after a default judgment was already rendered; the proper remedy was a motion for new trial or petition for relief from judgment.
• Jurisdictional Issue: Respondent contended that the issue on summons was a pure question of law, which the CA had no jurisdiction to resolve under Rule 41.

• Jurisdiction of the Court of Appeals: Whether the appeal before the CA raised a pure question of law, depriving the CA of jurisdiction.
• Service of Summons on Non-Resident: Whether extraterritorial service of summons is required for a non-resident defendant in an action in personam who is physically present in the Philippines.
• Validity of Service: Whether the service of summons on petitioner was valid, notwithstanding her claim that the papers were merely hurled at her.
• Lifting of Default Order: Whether the order of default should be set aside on grounds of fraud, accident, or mistake, and the existence of a meritorious defense.

• Jurisdiction of the Court of Appeals: The CA properly took cognizance of the appeal. While the propriety of service on a non-resident is a question of law, the validity of the service actually made upon petitioner is a question of fact, as its resolution entails reviewing the factual circumstances leading to the RTC's conclusion.
• Service of Summons on Non-Resident: Extraterritorial service is not required. In an action in personam, where jurisdiction over the person of the defendant is necessary, personal service of summons within the forum is essential when the non-resident defendant is physically present in the country. Extraterritorial service applies only to in rem or quasi in rem actions.
• Validity of Service: The service was valid. The process server's certificate of service is prima facie evidence of the facts stated therein, fortified by the presumption of regularity in the performance of official duty. Petitioner's bare allegation that papers were hurled at her was insufficient clear and convincing evidence to overcome this presumption.
• Lifting of Default Order: The default order was correctly maintained. To lift an order of default, the defendant must show that her failure to answer was due to fraud, accident, mistake, or excusable neglect, and that she has a meritorious defense. Petitioner failed on both counts: her allegation of hurled papers was unsubstantiated, and her affidavit of merit merely stated that the cases were filed at her father's instance—a conclusion that failed to controvert the facts alleged by respondents.

• Modes of Service on Non-Resident Defendants — Extraterritorial service of summons under Section 17, Rule 14 of the Rules of Court applies only when the defendant does not reside and is not found in the Philippines, and the action is in rem or quasi in rem (i.e., affects personal status, involves property within the Philippines in which the defendant claims an interest, seeks to exclude the defendant from property, or the defendant's property has been attached). In an action in personam against a non-resident physically present in the Philippines, personal service of summons within the forum is essential to acquire jurisdiction over the person.
• Presumption of Regularity of Official Duty — A process server's certificate of service is prima facie evidence of the facts set out therein. Between a party's claim of non-receipt and an official's assertion of service, the latter is fortified by the presumption that official duty has been regularly performed. Clear and convincing evidence is required to overcome this presumption.
• Lifting an Order of Default — A party seeking to lift an order of default must demonstrate: (1) that the failure to file a responsive pleading was due to fraud, accident, mistake, or excusable neglect; and (2) that she has a meritorious defense. A meritorious defense requires a showing of facts, not mere conclusions, that would warrant a reasonable belief that the result would probably be otherwise if a new trial were granted.

• "Where the action is in personam, that is, one brought against a person on the basis of her personal liability, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. When the defendant is a non-resident, personal service of summons within the state is essential to the acquisition of jurisdiction over the person."
• "Between the claim of non-receipt of summons by a party against the assertion of an official whose duty is to send notices, the latter assertion is fortified by the presumption that official duty has been regularly performed."
• "The term meritorious defense implies that the applicant has the burden of proving such a defense in order to have the judgment set aside... The defendant must show that she has a meritorious defense otherwise the grant of her motion will prove to be a useless exercise."

• Murillo v. Consul — Followed. Clarified the three modes of appeal from RTC decisions under the 1997 Rules of Civil Procedure, distinguishing ordinary appeals (questions of fact or mixed) from petitions for review to the Supreme Court (questions of law only).
• Asiavest Limited v. Court of Appeals — Followed. Established that extrajudicial service of summons applies only in in rem or quasi in rem actions, where jurisdiction over the res, not the person, is the prerequisite.
• Banco Do Brasil v. Court of Appeals — Followed. Held that in actions in personam against a non-resident, personal service of summons within the state is essential to the acquisition of jurisdiction over the person.
• Romualdez-Licaros v. Licaros — Followed. Stated that a process server's certificate of service is prima facie evidence of the facts set out therein.
• Villareal v. Court of Appeals — Followed. Enumerated the requisites for lifting an order of default: failure to answer due to fraud, accident, mistake, or excusable neglect, and the existence of a meritorious defense.

• Section 17, Rule 14 of the Rules of Court (now Sec. 15, Rule 14 of the 1997 Rules of Civil Procedure) — Governs extraterritorial service of summons. Applied to delineate that this mode is proper only when the defendant does not reside and is not found in the Philippines, and the action is in rem or quasi in rem.
• Section 7, Rule 14 of the Rules of Court — Governs personal service of summons. Applied to establish that summons must be served by handing a copy to the defendant in person, or by tendering it if refused.
• Section 3(m), Rule 131 of the Revised Rules on Evidence — Provides the presumption that official duty has been regularly performed. Applied to uphold the validity of the process server's return over petitioner's bare denial.
• Section 3, Rule 18 of the Revised Rules of Court (now Section 3(b), Rule 9 of the 1997 Rules of Civil Procedure) — Governs default. Applied to require that a party must show fraud, accident, mistake, or excusable neglect and a meritorious defense to lift an order of default.

Panganiban, C.J. (Chairperson), Ynares-Santiago, Callejo, Sr., and Chico-Nazario, JJ.