Remedial Law

BPI vs. SPS SANTIAGO G.R. No. 169116 March 28, 2007 Jurisdiction, Service of Summons

FACTS: 

Petitioner BPI is a banking institution duly organized and existing as such under the Philippine laws.

Private respondent Centrogen, Inc. (Centrogen) is a domestic corporation engaged in pharmaceutical business, represented in this act by its President, Edwin Santiago, son of private respondents Spouses Ireneo M. Santiago and Liwanag P. Santiago.

On several occasions, private respondent Centrogen obtained loans from Far East Bank and Trust Company (FEBTC) in different amounts, the total of which reached the sum P4,650,000.00, as evidenced by promissory notes executed by Edwin Santiago.

As a security for a fraction of the loan obligation, Ireneo Santiago executed a Real Estate Mortgage over a parcel of land  registered under his name. The mortgage secured the principal loan in the amount of P490,000.00. Later on, the same property secured another loan obligation in the amount of P1,504,280.00.

Centrogen incurred default and therefore the loan obligation became due and demandable.

Meanwhile, FEBTC merged with the BPI with the latter as the surviving corporation. As a result, BPI assumed all the rights, privileges and obligations of FEBTC.

BPI filed an Extra-Judicial Foreclosure of Real Estate Mortgage over the subject property. In order to validly effect the foreclosure, a Notice of Sale was issued by the Provincial Sheriff AND On the same day, the Spouses Santiago were served with the copy of the Notice of Sale.

Upon receipt of the Notice of Sale, the Spouses Santiago and Centrogen filed a Complaint seeking the issuance of a TRO and Preliminary and Final Injunction and in the alternative, for the annulment of the Real Estate Mortgage with BPI.

The complaint alleged that the initial loan obligation  including interest thereon was fully paid as evidenced by A Union Bank Check  in the amount ofP648,521.51 with BPI as payee.

The Spouses Santiago and Centrogen asseverated that the original loan agreement was for the amount of Five Million Pesos. However, only Two Million Pesos was released. FEBTC, in gross violation of the agreement, did not release the balance of Three Million Pesos. As a result, the squalene project failed and the company groped for funds to pay its loan obligations.

On 27 February 2003, BPI was summoned to file and serve its Answer to the Complaint filed by Spouses Santiago and Centrogen. On the same day, the Sheriff served a copy of the summons to the Branch Manager of BPI Sta. Cruz, Laguna Branch.

Instead of filing an Answer, BPI filed a Motion to Dismiss the complaint on the ground of lack of jurisdiction over the person of the defendant and other procedural infirmities attendant to the filing of the complaint. In its Motion to Dismiss, BPI claimed that the Branch Manager of its Sta. Cruz, Laguna Branch, was not one of those authorized by Section 11, Rule 14 of the Revised Rules of Court to receive summons on behalf of the corporation. The summons served upon its Branch Manager, therefore, did not bind the corporation.

 

ISSUE:

 WHETHER OR NOT THE RTC ACQUIRED JURISDICTION OVER THE PERSON OF BPI WHEN THE ORIGINAL SUMMONS WAS SERVED UPON THE BRANCH MANAGER OF ITS STA. CRUZ, LAGUNA BRANCH.

 

RULING:

Basic is the rule that a strict compliance with the mode of service is necessary to confer jurisdiction of the court over a corporation. The officer upon whom service is made must be one who is named in the statute; otherwise, the service is insufficient. The purpose is to render it reasonably certain that the corporation will receive prompt and proper notice in an action against it or to insure that the summons be served on a representative so integrated with the corporation that such person will know what to do with the legal papers served on him.

Applying the aforestated principle in the case at bar, we rule that the service of summons on BPI’s Branch Manager did not bind the corporation for the branch manager is not included in the enumeration of the statute of the persons upon whom service of summons can be validly made in behalf of the corporation. Such service is therefore void and ineffectual.

However, upon the issuance and the proper service of new summons on 11 March 2003, before the Writ of Preliminary Injunction was issued on 20 March 2003, whatever defect attended the service of the original summons, was promptly and accordingly cured.

It bears stressing, that on 7 March 2003, the Branch Clerk of Court issued a new summons which was properly served upon BPI’s Corporate Secretary on 11 March 2003, as evidenced by the Sheriff’s Return.

The subsequent service of summons was neither disputed nor was it mentioned by BPI except in a fleeting narration of facts and therefore enjoys the presumption that official duty has been regularly performed. The Process Server’s Certificate of Service of Summons is a prima facie evidence of facts set out in that certificate.

Inarguably, before the Order granting the application for Writ of Preliminary Injunction was issued, the RTC already acquired jurisdiction over the person of BPI by virtue of the new summons validly served on the Corporate Secretary. The fact that the original summons was invalidly served is of no moment since jurisdiction over BPI was subsequently acquired by the service of a new summons.

In the case of The Philippine American Life and General Insurance Company v. Brevea, we ruled:

A case should not be dismissed simply because an original summons was wrongfully served. It should be difficult to conceive, for example, that when a defendant personally appears before a Court complaining that he had not been validly summoned, that the case against him should be dismissed. An alias summons can be actually served on said defendant.

x x x x

x x x It is not pertinent whether the summons is designated as an “original” or an “alias” summons as long as it has adequately served its purpose. What is essential is that the summons complies with the requirements under the Rules of Court and it has been duly served on the defendant together with the prevailing complaint. x x x Moreover, the second summons was technically not an alias summons but more of a new summons on the amended complaint. It was not a continuation of the first summons considering that it particularly referred to the amended complaint and not to the original complaint.

BPI’s lamentation, at every turn, on the invalidity of the service of summons made on the Branch Manager and its deliberate neglect to acknowledge the fact that a new summons was accordingly served on its Corporate Secretary, is an attempt in futility to mislead this Court into believing that the court a quo never acquired jurisdiction over the case and thus the issuance of the Writ of Preliminary Injunction was invalid.

We are not drawn into petitioner’s sophistry.

In the case of G&G Trading Corporation v. Court of Appeals, this Court made the following pronouncements:

Although it may be true that the service of summons was made on a person not authorized to receive the same in behalf of the petitioner, nevertheless since it appears that the summons and complaint were in fact received by the corporation through its said clerk, the Court finds that there was substantial compliance with the rule on service of summons. x x x The need for speedy justice must prevail over a technicality.

In explaining the test on the validity of service of summons, Justice Florenz Regalado stressed that substantial justice must take precedence over technicality and thus stated:

The ultimate test on the validity and sufficiency on service of summons is whether the same and the attachments thereto where ultimately received by the corporation under such circumstances that no undue prejudice is sustained by it from the procedural lapse and it was afforded full opportunity to present its responsive pleadings. This is but in accord with the entrenched rule that the ends of substantial justice should not be subordinated to technicalities and, for which purpose, each case should be examined within the factual milieu peculiar to it.

 

 

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