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PLANTERS DEVELOPMENT BANK v. JULIE CHANDUMAL

FACTS:

This case revolves around a contract to sell a parcel of land between BF Homes, Inc. and Julie Chandumal. Planters Development Bank (PDB) bought all of BF Homes' rights under the contract. Chandumal initially paid her monthly amortizations but started defaulting in May 1994. PDB issued a Notice of Delinquency and Rescission of Contract with Demand to Vacate, giving Chandumal 30 days to settle her arrears or else the contract would be rescinded. Chandumal did not settle her obligation, leading PDB to file an action for judicial confirmation of notarial rescission and delivery of possession.

When the summons was served on Chandumal, she was unavailable. The summons was subsequently served through Chandumal's mother, who acknowledged receipt. Chandumal failed to file an answer within the prescribed period, leading PDB to file a motion to declare her in default. The court granted the motion and denied Chandumal's motion to set aside the order of default.

The Regional Trial Court (RTC) rendered a decision in favor of PDB, confirming the rescission and directing PDB to deposit the cash surrender value of the property with the Land Bank of the Philippines. Chandumal appealed to the Court of Appeals (CA), which nullified the RTC decision due to improper service of summons. PDB filed a motion for reconsideration, which was denied by the CA. PDB then filed this petition for review, arguing that there was valid service of summons and that Chandumal voluntarily submitted to the jurisdiction of the court.

ISSUES:

  1. Whether there was a valid substituted service of summons in this case.

  2. Whether the respondent voluntarily submitted to the jurisdiction of the trial court.

  3. Whether there is a valid rescission of the contract to sell by notarial act pursuant to Section 3(b), R.A. No. 6552.

RULING:

  1. The Court ruled that there was no valid substituted service of summons. The sheriff's return failed to justify resorting to substituted service as it did not specify the necessary details of the failed attempts to effect personal service. The return only stated the alleged whereabouts of the defendant without indicating that such information was verified from a person who had knowledge thereof. The efforts made by the sheriff were deemed insufficient, rendering the service ineffective.

  2. Despite the lack of valid substituted service of summons, the Court found that the respondent voluntarily submitted to the jurisdiction of the trial court. The filing of an Urgent Motion to Set Aside Order of Default and to Admit Attached Answer effectively submitted the respondent's person to the jurisdiction of the trial court. The Court considered this as equivalent to service of summons, as the filing of a pleading seeking affirmative relief vests the trial court with jurisdiction over the defendant's person. The respondent's subsequent actions, such as appealing the RTC decision to the CA, demonstrated her recognition of the trial court's jurisdiction.

  3. The Supreme Court ruled that there was no valid rescission of the contract to sell by notarial act pursuant to Section 3(b), R.A. No. 6552. The seller is required to refund to the buyer the cash surrender value of the payments on the property, and the actual cancellation of the contract can only be deemed to take place upon the expiry of a thirty-day period following the receipt by the buyer of the notice of cancellation or demand for rescission by a notarial act and the full payment of the cash surrender value. In this case, it is an admitted fact that the seller failed to give the buyer the full payment of the cash surrender value. Thus, there was no valid rescission of the contract and the judicial confirmation of the rescission should not have been granted.

PRINCIPLES:

  • Jurisdiction over a defendant in a civil case is acquired either through service of summons or through voluntary appearance in court and submission to its authority. If a defendant has not been properly summoned, the court acquires no jurisdiction over its person, and a judgment rendered against it is null and void.

  • Service of summons in an action in personam may be made through personal service, with substituted service being an option if personal service cannot be made within a reasonable time.

  • For substituted service of summons to be valid, the following requisites must be met: (1) impossibility of prompt personal service, (2) specific details in the return, (3) a person of suitable age and discretion, and (4) a competent person in charge.

  • Voluntary appearance by the defendant in the action is equivalent to service of summons. Filing a pleading seeking affirmative relief vests the trial court with jurisdiction over the defendant's person. Including other grounds aside from lack of jurisdiction over the person of the defendant in a motion to dismiss does not constitute voluntary appearance.

  • R.A. No. 6552 recognizes the right of the seller to cancel a contract to sell upon non-payment of an installment by the buyer, provided that the cancellation is done in conformity with the requirements of the law.

  • The seller must refund to the buyer the cash surrender value of the payments on the property, and the actual cancellation of the contract can only take place after a thirty-day period following the receipt by the buyer of the notice of cancellation or demand for rescission by a notarial act and the full payment of the cash surrender value.