Friday, November 24, 2017
Close  

Almost gone!

  • share this
PROPERTY RULES

Almost gone!

Ely and his wife Lita went to the Registry of Deeds of Pasig City to obtain a certified true copy of the title of their Pasig property. They were happily discussing the prospect of selling it at a high price.

Much to their horror, however, they discovered that a writ of preliminary attachment was annotated on their title.

Worse, they found out that a court decision against Lita had already attained finality.

ADVERTISEMENT

Upon further verification, Ely and Lita found out that ABC Bank filed a complaint for sum of money against TC Corporation, its corporate officers, including Lita.

It appears that TC Corporation obtained a loan from ABC Bank, and that Lita and the other corporate officers executed continuing security agreements to guarantee the obligations of TC Corporation. An ex parte writ of attachment was issued against all the defendants.

The couple also found out that the court sheriff served the summons addressed to Lita at the old office of TC Corporation.

Understandably, the process server filed an Officer’s Return stating that summons remained unserved as the defendants are no longer holding office at the TC Office. It further appears that, after the single attempt at personal service on Lita and her co-defendants, the summons addressed to all defendants were served by publication.

All the defendants in the civil case were thereafter declared in default. Accordingly, the RTC of Makati rendered a decision holding all the defendants solidarily liable for the unpaid amount. The Makati RTC decision was thereafter published in a newspaper of general circulation.

Following the discovery of the public auction and sale of their property, Ely executed an affidavit of adverse claim.

He also filed a Complaint for Annulment of Surety Agreements, Notice of Levy on Attachment, Auction Sale and Other Documents with the RTC of Pasig City.

He alleged in his Complaint that the subject property is a family home that belongs to the conjugal partnership of gains he established with his wife.

ADVERTISEMENT

He argued that the alleged surety agreements upon which the attachment of the property was anchored were signed by his wife without his consent and did not redound to benefit their family. He asked that the surety agreements and all other documents and processes, including the ensuing attachment, levy and execution sale, based thereon be nullified.

Q: Is the RTC Makati decision against Lita valid as to her?

A: No, since Lita was not properly summoned.

As a rule, summons should be personally served on a defendant. When summons cannot be served personally within a reasonable period of time, substituted service may be resorted to.

Service of summons by publication can be resorted to only if the defendant’s “whereabouts are unknown and cannot be ascertained by diligent inquiry.”

For substituted service of summons to be available, there must be several attempts by the sheriff to personally serve the summons within a reasonable period [of one month) which eventually resulted in failure to prove impossibility of prompt service.

“Several attempts” means at least three tries, preferably on at least two different dates. In addition, the sheriff must cite why such efforts were unsuccessful. It is only then that impossibility of service can be confirmed or accepted.

Thus, the single attempt at personal service shows that there was no diligent effort made to find Lita and properly serve her the summons before the service by publication was allowed. Neither was it impossible to locate the residence of petitioner and her whereabouts.

As held in one case, service of summons is a vital and indispensable ingredient of due process. As a rule, if defendants have not been validly summoned, the court acquires no jurisdiction over their person, and a judgment rendered against them is null and void.

Since the RTC never acquired jurisdiction over the person of the defendant, the judgment rendered by the court could not be considered binding upon him for being null and void.

Q: Can Ely file an independent action for the annulment of the attachment of their conjugal property?

A: Yes, he can can. Section 16, Rule 39 of the Rules of Court allows third-party claimants or “strangers” of properties under execution to vindicate their claims to the property in a separate action with another court.

Q: Is the husband, who was not a party to the suit but whose conjugal property was executed on account of the other spouse’s debt, a “stranger” to the suit?

A: It depends. It must first be determined whether the debt had redounded to the benefit of the conjugal partnership or not. In the negative, the spouse is a stranger to the suit who can file an independent separate action, distinct from the action in which the writ was issued.

Q: Can the spouses’ conjugal property be used for the obligation contracted by Lita?

A: No. the conjugal property cannot be held liable for the personal obligation contracted by one spouse, unless some advantage or benefit is shown to have accrued to the conjugal partnership.

In the present case, it is not disputed that the conjugal property was attached on the basis of a surety agreement allegedly signed by Lita for and in behalf of TC. There is no presumption that the conjugal partnership is benefited when a spouse enters into a contract of surety.

The benefits must be those directly resulting from the loan. They cannot merely be a by-product or a spin-off of the loan itself.

(Sources: Borlongan vs. BDO, G.R. No. 217617, April 5, 2017; see also Chu vs. Mach Asia Trading Corp., G.R. No. 184333, April 1, 2013)

Ma. Soledad Deriquito-Mawis is currently the Dean for the Lyceum of the Philippines University; president of the Philippines Association of Law Schools; and Senior Partner, Gatchalian Castro & Mawis Law Office

Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.

TAGS: Business, property
For feedback, complaints, or inquiries, contact us.




© Copyright 1997-2016 INQUIRER.net | All Rights Reserved