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[G.R. No.

160736, March 23 : 2011] former counsel,[8] explaining that the substitute third party
complaint was being filed to avoid putting ACCRA Law Office in
AIR ADS INCORPORATED, PETITIONER, VS. TAGUM an awkward situation, and to avoid the appearance that new
AGRICULTURAL DEVELOPMENT CORPORATION counsel Dominguez Law Office was merely adopting the
(TADECO), RESPONDENT. previous third party complaint.

DECISION It is noted that the substitute third party complaint contained


allegations pertaining only to Pioneer as third party defendant,
to wit:
BERSAMIN, J.:
xxx

Assailed via petition for review on certiorari are the two


resolutions promulgated on February 24, 2003[1]and November 5. Under the heading "ADMISSIONS" of the answer of
13, 2003,[2] whereby the Court of Appeals (CA) respectively TADECO it alleged:
dismissed the petitioner's petition for certiorari and prohibition,
"TADECO admits the allegations in the following paragraphs of
and denied the petitioner's motion for reconsideration of the
the complaint:
dismissal.
xxx xxx xxx xxx
We find no reversible error on the part of the CA, and affirm
the dismissal of the petitioner's petition for certiorari.
Antecedents "1.3 Paragraph 3 only in so far as it is alleged that TADECO is
the owner of the CESSNA 550 Citation jetplane; and that the
aircraft is duly registered with the Air Transportation Office."
This case stemmed from Civil Case No. 27802-2000 of the
Regional Trial Court, Branch 15, in Davao City (RTC) 6. The CESSNA 550 Citation jetplane, hereinafter referred to as
entitled Elva O. Pormento v. Tagum Agricultural Development the Citation jetplane, was insured by PIONEER INSURANCE
Corporation and Edwin Yap, an action to recover damages for under Aircraft Insurance Policy No. AV-HO-96-60014 effective
the death of the plaintiffs husband and attorney's fees December 02, 1996 to December 02, 1997, a copy of which is
attached as Annex "C" by virtue of which PIONEER
On April 6, 2000, respondent Tagum Agricultural Development INSURANCE agreed to be bound by the following stipulation:
Corporation (TADECO), as defendant, filed through counsel
"SECTION II - Third Party Liability
ACCRA Law Office an answer with compulsory counterclaims
and motion for leave to file third party complaint,[3] impleading
The Company will indemnify the Assured for all sums which
petitioner Air Ads, Inc. and Pioneer Insurance and Surety
the Assured shall become legally liable to pay and shall pay as
Corporation (Pioneer) as third-party defendants. The RTC
compensation, including costs awarded, in respect of
admitted TADECO's third party complaint on April 14,
accidental bodily injury (fatal or non-fatal) or accidental
2000.[4] On June 16, 2000, however, ACCRA Law Office, upon
damage to property provided such injury or damage is caused
realizing that Pioneer was a client of its Makati Office, filed
directly by the Aircraft or by objects falling therefrom."
a notice of dismissal without prejudice to third party complaint
only against Pioneer Insurance and Surety Corporation .[5]
7. Should TADECO be found liable to the plaintiff under the
Ten days later, TADECO filed through another counsel complaint, the third-party plaintiff is entitled to recover from
Dominguez Paderna & Tan Law Offices (Dominguez Law PIONEER INSURANCE indemnification for its liability to the
Office) a motion to withdraw notice of dismissal without plaintiff.
prejudice of third party complaint only against Pioneer
Insurance & Surety Corporation or motion for WHEREFORE, the third party plaintiff respectfully prays that in
reconsideration,[6] alleging that the notice of dismissal without the remote probability that TADECO would be held liable to the
prejudice etc. filed by ACCRA Law Office had been made plaintiffs under the complaint, that judgment be rendered
without its consent. On June 29, 2000, the RTC granted ordering Pioneer Insurance to indemnify TADECO all sums
the notice of dismissal without prejudice etc.[7] which the latter maybe found liable to the plaintiffs.

Nearly a month later, the RTC also granted the motion to xxx[9]
withdraw notice of dismissal without prejudice of third party
complaint only against Pioneer Insurance & Surety Corporation
or motion for reconsideration, and set aside the dismissal of On August 28, 2000, the RTC granted the motion to admit
the third party complaint against Pioneer. third party complaint in substitution of the third party
complaint filed by the third party plaintiff s former
Following the grant of its motion to withdraw the notice of counsel,[10] viz:
dismissal etc., TADECO, still through Dominguez Law Office, The dismissal of defendant and Third Party Plaintiffs-Tagum
filed a motion to admit third party complaint in substitution of Agricultural Development Corporation complaint was without
the third party complaint filed by the third party plaintiff's prejudice. Considering further that the dismissal was filed by
1
its former counsel who is also the lawyer of Pioneer Insurance Third Party defendant Air Ads' Motion for Reconsideration is
and Surety Corporation, the Motion to Admit Third Party denied for lack of merit. This issue was repeatedly discussed
complaint in substitution of the Third Party complaint that was by the parties in their pleadings and the court resolution on
dismissed is hereby granted. this matter is clear. The pre-trial conference shall be on
October 4, 2002 at 2:30 p.m.
xxx
SO ORDERED.

SO ORDERED.
After receiving the order of denial on October 4, 2002,[16] Air
Ads brought a petition for i>certiorari and prohibition docketed
Air Ads then filed a motion to dismiss against the third party in the CA (C.A.-G.R. SP No. 73418).[17] However, on November
complaint,[11] averring that it had been dropped as third party 13, 2002, the CA dismissed the petition for failure to attach the
defendant under TADECO's substitute third party complaint; board resolution designating the petitioner's duly authorized
and arguing that the filing of the substitute third party representative to sign the verification and certification against
complaint had the effect of entirely superseding the forum shopping in its behalf.[18]
original third party complaint, which should consequently be
stricken out from the records. Instead of filing a motion for reconsideration, Air Ads filed a
new petition for certiorari and prohibition on December 2,
TADECO, represented by ACCRA Law Office, countered that it 2002 in the CA (C.A.-G.R. SP No. 74152),[19] already including
had never been the intention of Dominguez Law Office to file a the proper board certificate.
new third party complaint against Air Ads because Dominguez
Law Office represented TADECO only in regards to the third While C.A.-G.R. SP No. 74152 was pending, the CA's resolution
party complaint against Pioneer.[12] dismissing C.A.-G.R. SP No. 73418 became final and executory
on December 10, 2002.[20]
On July 25, 2002, the RTC denied Air Ads' motion to
dismiss,[13] holding that the notice of dismissal etc.filed by On February 24, 2003, the CA issued the first assailed
ACCRA Law Office did not have the effect of dropping Air Ads resolution in C.A.-G.R. SP No. 74152,[21] viz:
as a third party defendant due to the notice of dismissal
xxx
etc. being expressly restrictive about the dismissal being only
with respect to Pioneer, to wit: Petitioner's reasoning is specious. The notice of dismissal
clearly stated that the dismissal pertains only to the third party
xxx
complaint against Pioneer Insurance, not as against petitioner
The first, third party complaint as against Air-ads was not Air Ads. The third-party complaint against petitioner was never
dismissed so there is no reason to grant Air-ads' Motion to dismissed. Thus, when TADECO's new counsel sought to revive
Dismiss. the third-party complaint against Pioneer, the allegations in the
substitute third-party complaint pertain only to Pioneer since
It should be emphasized that the Notice of Dismissal filed by petitioner Air Ads was never dropped as third-party defendant
the former counsel of third party plaintiff was restrictive that in the proceedings. Petitioner's motion to dismiss was correctly
the dismissal was its third complaint against Pioneer only, Air- denied by the trial court.
ads is still a third party defendant there is nothing to show that
it was dropped as a third party defendant by virtue of the said ACCORDINGLY, the petition is DENIED due course and
dismissal. DISMISSED.

The motion that the first third party complaint filed by the SO ORDERED.
former counsel of Tadeco be removed from the record and
declared as no longer existing and that Air-ads should no
The CA denied Air Ads's motion for reconsideration through the
longer be treated as a party is without any legal basis.
second assailed resolution of November 13, 2003.[22]
In view whereof the Motion to Dismissed [sic] is denied for
Hence, this appeal by petition for review on certiorari.
lack of merit. Air-ads is given ten (10) days from receipt of this
order to file its answer.
TADECO, through ACCRA Law Office, filed its comment on
March 30, 2004,23 but on April 26, 2004, TADECO, through
The pre-trial shall be on September 18, 2002.
Dominguez Law Office, filed a motion to dispense with
comment of Tagum Agricultural Development Corporation as
Notify all the parties of this order.
third-party plaintiff against Pioneer Insurance Corporation[24]
Accordingly, the Court directed TADECO to manifest which
SO ORDERED.
between ACCRA Law Office and Dominguez Law Office was its
principal counsel.[25] In compliance, TADECO manifested that
Air Ads filed a motion for reconsideration,[14] but the RTC ACCRA Law Office was its counsel in Civil Case No. 27802-2000
denied the motion for reconsideration on September 20, and in the third party complaint against Air Ads, while
2002,[15] stating: Dominguez Law Office was its counsel in the third party
complaint against Pioneer.[26] After the Court directed the
2
parties to submit their respective memoranda,27 TADECO,
through Dominguez Law Office and as third-party plaintiff Section 5, Rule 7 of the 1997 Rules of Civil Procedure, defines
against Pioneer, filed a manifestation and motion,[28] praying the effect of the failure to comply with the requirements for
that it be excused from filing a memorandum considering that the certification against forum shopping, viz:
Pioneer was not involved in the present recourse. On June 20,
Section 5. Certification against forum shopping. — The
2005, the Court granted the manifestation and motion[29]
plaintiff or principal party shall certify under oath in the
complaint or other initiatory pleading asserting a claim for
Issues
relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore
The issues to be resolved are as follows:
commenced any action or filed any claim involving the same
I. issues in any court, tribunal or quasi-judicial agency and, to
the best of his knowledge, no such other action or claim is
DOES THE FILING OF AN IDENTICAL PETITION FOLLOWING
pending therein; (b) if there is such other pending action or
THE DISMISSAL OF THE FIRST PETITION ON THE GROUND
claim, a complete statement of the present status thereof; and
OF DEFECTIVE AND INSUFFICIENT VERIFICATION AND
(c) if he should thereafter learn that the same or similar action
CERTIFICATION CONSTITUTE FORUM SHOPPING?
or claim has been filed or is pending, he shall report that fact
II. within five (5) days therefrom to the court wherein his
aforesaid complaint or initiatory pleading has been filed.
DOES A SUBSTITUTE THIRD PARTY COMPLAINT HAVE THE
EFFECT OF SUPERSEDING THE ORIGINAL THIRD PARTY Failure to comply with the foregoing requirements shall
COMPLAINT? not be curable by mere amendment of the complaint or
other initiatory pleading but shall be cause for the
Air Ads insists that the filing of the substitute third party dismissal of the case without prejudice, unless
complaint had the effect of dropping it as third party defendant otherwise provided, upon motion and after hearing.
in Civil Case No. 27802-2000; and that the substitute third The submission of a false certification or non-compliance with
party complaint superseded the original third party complaint. any of the undertakings therein shall constitute indirect
contempt of court, without prejudice to the corresponding
On the other hand, TADECO counters that the filing of the administrative and criminal actions. If the acts of the party or
second petition for certiorari and prohibition in the CA violated his counsel clearly constitute willful and deliberate forum
the rule against forum shopping and was already barred by res shopping, the same shall be ground for summary dismissal
judicata due to the dismissal of the first being an adjudication with prejudice and shall constitute direct contempt, as well as
on the merits; and that Air Ads continued to be a third party a cause for administrative sanctions. (n)
defendant because the third party complaint against Air Ads
had not been withdrawn or dismissed. The first sentence of the second paragraph expressly provides
Ruling that the dismissal of a petition due to failure to comply with
the requirements therein is without prejudice unless otherwise
provided by the court. Accordingly, the plaintiff or petitioner is
not precluded from filing a similar action in order to rectify the
The petition for review lacks merit. defect in the certification where the court states in its order
I. that the action is dismissed due to such defect, unless the
Refiling of the petition for certiorari did not court directs that the dismissal is with prejudice, in which case
constitute forum shopping or res judicata the plaintiff is barred from filing a similar action by res
judicata. In the context of the aforequoted rule, the dismissal
of C.A.-G.R. SP No. 73418, being without any qualification, was
a dismissal without prejudice, plainly indicating that Air Ads
TADECO's contention, that Air Ads' filing of the second petition could not be barred from filing the second petition.
while the first petition was still pending was a clear case of
forum shopping; and that, accordingly, the second petition of TADECO cited Denoso v. Court of Appeals, supra, to buttress
Air Ads was already barred by res judicata due to the dismissal its contention that the present recourse was already barred
of the first petition having resulted in an adjudication upon the by res judicata. There, the petitioners had failed to attach the
merits, conformably with Denoso v. Court of Appeals[30] has no necessary copies of the relevant pleadings to their petition
substance. for certiorari, thereby causing the dismissal of the petition.
They had then sought reconsideration by submitting the
The dispositive portion of the CA's resolution of November 13, omitted documents, but the CA denied their motion for
2002 in C.A.-G.R. SP No. 73418, which dismissed the first reconsideration. On appeal, the Court upheld the dismissal of
petition, reads: the petition on the ground that it amounted to an adjudication
WHEREFORE, the instant petition is hereby DISMISSED for upon the merits pursuant to Section 3, Rule 17 of the Rules of
defective and insufficient verification and certification against
Court,[31] which provides that failure to comply with the rules
forum shopping. shall result in the dismissal that has the effect of an
adjudication upon the merits. The lack of any qualification that
the dismissal of the petition was without prejudice rendered
SO ORDERED.
the dismissal an adjudication on the merits.

3
Herein, however, Section 5 of Rule 7, supra, promulgated after The records indicate that: firstly, both TADECO and Pioneer
the Denoso pronouncement, provides that "the dismissal of the were clients of ACCRA Law Office; secondly,TADECO engaged
case (is) without prejudice, unless otherwise provided." In this Dominguez Law Office as its counsel in lieu of ACCRA Law
connection, the apt precedent is Heirs of Juan Valdez v. Court Office with respect only to its third party complaint against
of Appeals,[32] where the respondent corporation filed two Pioneer; thirdly, the RTC dismissed the third party complaint
petitions for certiorari in the CA, the first of which was only against Pioneer upon the notice of withdrawal filed by
dismissed without prejudice due to insufficient certification. TADECO through ACCRA Law Office; and fourthly, the RTC
After receiving the resolution dismissing the first petition, the granted the motion to admit the substitute third party
respondent corporation refiled its petition, which was docketed complaint only against Pioneer. These rendered it plain and
and raffled to another division of the CA. The issue of whether clear that the substitute third party complaint merely replaced
the filing of the second petition constituted forum shopping the third party complaint earlier filed against Pioneer.
reached this Court, which resolved the issue thuswise:
Air Ads' urging that the filing of the substitute third party
We have no doubt that it was within the CA's power and
complaint effectively superseded the third party
prerogative to issue what either resolution decreed without
complaint impleading it as third party defendant ostensibly
committing an abuse of discretion amounting to lack of excess
harks back to Section 8 of Rule 10 of the Rules of Court, which
of jurisdiction. In the first May 5, 2003 Resolution, the CA
states that the amended pleading supersedes the pleading that
correctly dismissed the petition for the deficiency it found in
it amends.[35]However, the substitution of the third party
the non-forum shopping certification. Section 5, Rule 7 of the
complaint could not produce the effect that an amendment of
Revised Rules of Court provides that "Failure to comply with
an existing pleading produces. Under Section I,[36] Rule 10 of
the foregoing requirements shall not be curable by mere
the Rules of Court, an amendment is done
amendment of the complaint or other initiatory pleading but
by adding or striking out an allegation or the name of any
shall be cause for the dismissal of the case without prejudice,
party, or by correcting a mistake in the name of a party or a
unless otherwise provided, upon motion and after hearing." On
mistaken or inadequate allegation or description in any other
the other hand, the requirement specific to petitions filed with
respect. A perusal of the original and the substitute third party
the appellate court simply provides as a penalty that the failure
complaints shows that their averments are substantially the
of the petitioner to comply with the listed requirements,
same; and that the substitute third party complaint did not
among them the need for a certification against forum
strike out any allegation of the prior one.
shopping, "shall be sufficient ground for the dismissal of the
petition." Thus, the Ninth Division correctly dismissed the
Lastly, Air Ads attributes error to the CA and the RTC for
petition without prejudice.
disregarding the caption and the allegations of the
xxx substitute third party complaint that would have led them to
rule that the original third party complaint was effectively
The question of whether Lopez Resources forum shopped superseded and supplanted by the substitute third party
when it re-filed its petition is largely rendered moot and complaint. It submits that "substitution" signifies "to put in the
academic by the terms of the assailed May 5, 2003 order place of another;" and "something that is put in place of
which dismissed the case without prejudice. Lopez Resources, something else or is available for use instead of something
who cannot be blamed for the CA's mistake, only followed else."
what the assailed order allowed. Thus, we cannot say that
it forum shopped by filing another petition while the Air Ads' submission is flawed. It is not the caption of the
first petition was pending. Insofar as it was concerned, pleading that determines the nature of the complaint but
its first petition had been dismissed without prejudice; rather its allegations.[37] Although Air Ads' observation that the
hence, there was no bar, either by way of forum substitute third party complaint contained allegations only
shopping, litis pendentia or res adjudicata, to the against Pioneer is correct, sight should not be lost of the fact
petition it re-filed.[33] that Dominguez Law Office represented TADECO in its third
party complaint only against Pioneer, which was precisely why
Indeed, Air Ads' options to correct its dire situation included the substitute third party complaint referred only to Pioneer.
the refiling, for, although the Rules of Courtdeclares that the
failure to comply with the requirements of Section 5 of Rule 7 WHEREFORE, we deny the petition for review on certiorari,
shall not be cured by amendment, nowhere does the rule and affirm the resolutions the Court of Appeals promulgated
prohibit the filing of a similar complaint or pleading following on February 24, 2003 and November 13, 2003.
the dismissal without qualification of the earlier one.
Costs against the petitioner.
II.
Substitute third party complaint did not SO ORDERED.
supersede original third party complaint
Carpio Morales, (Chairperson), Brion, Villarama,
Jr., and Sereno, JJ., concur.
The posture of Air Ads that the original third party
complaint was automatically expunged from the records upon
the admission of the substitute third party complaint[34] is
bereft of any basis in fact and in law.
4
notary public referred to in the notice as the one requested by
[ GR No. 211113, Jun 29, 2015 ] Atty. Nethercott to conduct the auction of the pledged stocks.

In the complaint, petitioner argued that the planned auction


ADERITO Z. YUJUICO v. UNITED RESOURCES ASSET
sale of the stocks pledged under the Pledge Agreements is
MANAGEMENT +
void as the same suffers from a multitude of fatal defects; one
of which is the supposed lack of authority of Atty. Nethercott
DECISION to initiate such a sale on behalf of URAMI. As petitioner
elaborated:

(k) [Atty. Nethercott] has no valid authority to represent


PEREZ, J.:
URAMI for any purpose, xxx. He is neither the counsel nor the
This case is an appeal[1] from the Decision[2] dated 12 August agent of URAMI, whose authorized representative under
2013 and Resolution[3] dated 29 January 2014 of the Court of Section 9, paragraph 10 of the Loan Agreement is its Chief
Appeals in CA-G.R. SP No. 117431. Operating Officer, Ms. Lorna P. Feliciano. There has been no
modification of this provision in accordance with paragraph
The antecedents: 9.04 of the same provision.[13]
The injunction complaint, which also contained prayers for the
issuance of a temporary restraining order and of a writ of
Prelude preliminary injunction, was docketed in the RTC as Civil Case
No. 70027.
The Strategic Alliance Development Corporation (STRADEC) is
a domestic corporation operating as a business development
and investment company. The Sale and URAMI's Answer with Counterclaim

In 2000, several stockholders[4] of STRADEC executed Pledge


As the RTC did not issue a temporary restraining order in Civil
Agreements[5] whereby they pledged a certain amount of their
Case No. 70027, the public auction of the pledged STRADEC
stocks[6] in the said company in favor of the respondent United
stocks pushed through, as scheduled, on 23 June 2004. In that
Resources Asset Management, Inc. (URAMI). These pledges
auction, URAMI emerged as the winning bidder for all of the
were meant to secure the loan obligations of STRADEC to
stocks pledged under the Pledge Agreements.
URAMI under their Loan Agreement[7] of 28 December 2000.
On 5 July 2004, however, the RTC issued a writ of preliminary
One of the stockholders of STRADEC who so pledged his
injunction, which effectively prevented URAMI from
shares in STRADEC was petitioner Aderito Z. Yujuico.
appropriating the stocks it had purchased during the auction
sale. On the same day, Atty. Nethercott filed his answer
denying the material allegations of the injunction complaint.
The Notice and Civil Case No. 70027
More than a year later, or on 21 April 2006, URAMI—which
until then was still not able to file an answer of its own—filed
Apparently, STRADEC had not been able to comply with its
with the RTC a motion for leave to file an answer. Attached to
payment obligations under the Loan Agreement.
the motion was a copy of URAMFs answer.[14] On 5 September
2006, the RTC granted URAMI's motion and allowed the
On 18 June 2004, STRADEC and its stockholders received
admission of its answer.
a notice[8] informing them about an impending auction sale of
the stocks pledged under the Pledge Agreements in order to
In its answer, URAMI agreed with the petitioner that the 23
satisfy STRADEC's outstanding obligations[9] under the Loan
June 2004 auction sale was void; URAMI admitted that it never
Agreement. The noticewas sent and signed by respondent
authorized Atty. Nethercott to cause the sale of the stocks
Atty. Richard J. Nethercott (Atty. Nethercott), who claimed to
pledged under the Pledge Agreements. URAMI, however,
be the attorney-in-fact of URAMI.
pointed out that, since it never sanctioned the 23 June 2004
auction sale, it similarly cannot be held liable to the petitioner
The notice stated that, pursuant to the request[10] earlier filed
for any prejudice that may be caused by the conduct of such
by Atty. Nethercott before "the notary public of Bayambang,
auction sale, viz.:
Pangasinan" the public auction of the pledged STRADEC stocks
had been set at 8:30 in the morning of 23 June 2004 in front
of the municipal building of Bayambang, Pangasinan.[11] 4.1 The [injunction complaint] dated 28 June 2004 fails to
state a cause of action only insofar as it seeks judgment
On 21 June 2004, petitioner filed before the Regional Trial ordering URAMI to pay [petitioner] the amounts of Five
Court (RTC) of Pasig City an injunction complaint[12] seeking to Hundred Thousand Pesos (Php 500,000.00) as attorney's fees
enjoin the sale at public auction mentioned in Atty. and One Hundred Thousand Pesos (Php 100,000.00) as legal
Nethercott's notice. Impleaded as defendants in such expenses.
complaint were URAMI, Atty. Nethercott and herein
respondent Atty. Honorato R. Mataban (Atty. Mataban)—the
5
4.1.1. It bears emphasizing that the extra-judicial foreclosure On 12 March 2009, petitioner filed with the RTC a motion to
of the pledged shares conducted by [Atty. Nethercott] was strike out URAMI's amended answer on the grounds that: (1) it
without valid authority from URAMI. Consequently, it cannot was not timely filed; (2) it was filed without leave of court; and
be made liable for the acts of another. (3) its admission would prejudice petitioner's rights. In an
order of even date, however, the RTC denied petitioner's
4.1.2. URAMI never sanctioned or directed the questioned motion and allowed admission of URAMI's amended answer.
auction sale. Neither did URAMI give its consent, explicit or
otherwise, to said foreclosure or any subsequent acts of [Atty. On 27 March 2009, petitioner filed with the RTC a motion for
Nethercott] pursuant thereto. Hence, no liability whatsoever reconsideration of the order allowing admission of
may be imputed to URAMI. URAMI's amended answer.

4.1.3. If at all, the recourse of the plaintiff is solely against On 18 August 2009, the RTC issued an order granting
[Atty. Nethercott].[15] petitioner's motion for reconsideration and setting aside its
earlier order allowing admission of URAMI's amended answer.
Hence, overall, URAMI prayed for the dismissal of the
In the said order, the RTC explained that the amended
injunction complaint against it.
answer could not be admitted just yet as the same had been
filed by URAMI without first securing leave of court.

Petitioner's Motion for Summary Judgment and the Suspension Thus, on 21 September 2009, URAMI filed with the RTC
of Civil Case No. 70027 a motion for leave to file an amended answer (motion for
leave).[22] In the said motion, URAMI formally asked
permission from the RTC to allow it to file the amended
On 29 May 2007, petitioner filed with the RTC a motion for answer explaining that the original answer filed by its previous
summary judgment[16] arguing that, in view of the admissions counsel "does not bear truthful factual allegations and is
made by URAMI in its answer regarding Atty. Nethercott's lack indubitably not supported by evidence on record."[23]
of authority to cause the auction sale of pledged stocks, there
was no longer any genuine issue left to be resolved in trial. On 10 November 2009, the RTC issued an Order[24] granting
URAMI's motion for leave.
URAMI and Atty. Nethercott both filed comments on
petitioner's motion for summary judgment. Petitioner filed a motion for reconsideration against the 10
November 2009 Order, but the same was denied by the RTC in
The resolution of petitioner's motion for summary judgment, its Order[25] of 27 September 2010.
however, was deferred when, on 25 July 2007, this Court
issued in G.R. No. 177068[17] a temporary restraining
order[18] calling to a halt the conduct of further proceedings in
Civil Case No. 70027. This temporary restraining order CA-G.R. SP No. 117431 and the Present Appeal
remained in effect for more than a year until it was finally lifted
by this Court on 13 October 2008.[19]
Defeated but undeterred, petitioner next challenged the Orders
dated 10 November 2009 and 27 September 2010 of the RTC
Thereafter, proceedings in Civil Case No. 70027 resumed.
through a certiorari petition before the Court of Appeals.
This certiorari petition was docketed in the Court of Appeals
as CA-G.R. SP No. 117431.
URAMI's Change of Counsel and Amended Answer
On 12 August 2013, the Court of Appeals rendered a
Decision[26] sustaining the challenged orders of the RTC and
On 26 January 2009, URAMI changed its counsel of record for dismissing petitioner's certiorari petition. Petitioner moved for
Civil Case No. 70027. The law firm Villlanueva, Gabionza & De reconsideration, but the Court of Appeals remained
Santos (VGD law firm), which hitherto had been URAMI's steadfast.[27]
counsel of record, was thus replaced by Atty. Edward P. Chico
(Atty. Chico). Hence, the present appeal.

Under the counsel of Atty. Chico, URAMI filed with the RTC In the present appeal, petitioner argues that the Court of
an amended answer with compulsory counterclaim (amended Appeals erred in sustaining the orders of the RTC allowing
answer)[20]on 23 February 2009. The amended answer was URAMI to file its amended answer. Petitioner argues that
meant to supplant URAMI's original answer, which had been URAMI should not have been so allowed for the following
prepared by the VGD law firm. reasons:[28]

In its amended answer, URAMI still vouched for the dismissal


of the injunction complaint but reneged from its previous
admissions under the original answer. This time, URAMI 1. URAMI had not shown that the admissions it made
claimed that the 23 June 2004 auction sale was valid and that under the original answer were made through
it duly authorized Atty. Nethercott to initiate such sale on its "palpable mistake" Hence, pursuant to Section 4 of
behalf.[21] Rule 129 of the Rules of Court,[29] URAMI is barred
from contradicting such admissions through the filing
6
of its amended answer. through "palpable mistake"—can still be corrected or amended
provided that the amendment is sanctioned under Rule 10 of
the Rules of Court.
2. The amended answer is merely a ploy of URAMI to
further delay the proceedings in Civil Case No. 70027.
Nevertheless, even if we are to apply Section 4 of Rule 129 to
Thus, petitioner prays that we set aside the decision of the the present case, we still find the allowance of
Court of Appeals, disallow URAMI's amended answer and direct URAMI's amended answer to be in order. To our mind, a
the RTC in Civil Case No. 70027 to resolve his motion for consideration of the evidence that URAMI plans to present
summary judgment with dispatch.[30] during trial indubitably reveals that the admissions made by
URAMI under its original answer were a product of clear and
patent mistake.

OUR RULING One of the key documents that URAMI plans to present during
trial, which it also attached in its amended answer as "Annex
Our rules of procedure allow a party in a civil action to amend 8" thereof, is URAMI's Board Resolution[38] dated 21 June 2004
his pleading as a matter of right, so long as the pleading is that evinces Atty. Nethercott's authority to cause the
amended only once and before a responsive pleading is foreclosure on the pledged stocks on behalf of URAMI. With
served (or, if the pleading sought to be amended is a reply, the existence of such board resolution, the statement in
within ten days after it is served).[31]Otherwise, a party can URAMI's original answer pertaining to the lack of authority of
only amend his pleading upon prior leave of court.[32] Atty. Nethercott to initiate the 23 June 2004 auction sale thus
appears mistaken, if not entirely baseless and unfounded.
As a matter of judicial policy, courts are impelled to treat Hence, we find it only right and fair, that URAMI should be
motions for leave to file amended pleadings given a chance to file its amended answer in order to rectify
with liberality.[33] This is especially true when a motion for such mistakes in its original answer.
leave is filed during the early stages of proceedings or, at
least, before trial.[34] Our case law had long taught that bona Second. We also cannot agree with the petitioner's accusation
fide amendments to pleadings should be allowed in the that the amended answer was only interposed to further delay
interest of justice so that every case may, so far as possible, the proceedings in Civil Case No. 70027. As the previous
be determined on its real facts and the multiplicity of suits thus discussion reveal, the amended answer aims to correct certain
be prevented.[35] Hence, as long as it does not appear that the allegations of fact in the original answer which, needless to
motion for leave was made with bad faith or with intent to state, are crucial to a full and proper disposition of Civil Case
delay the proceedings,[36] courts are justified to grant leave No. 70027. It is, therefore, in the best interest of justice and
and allow the filing of an amended pleading. Once a court equity that URAMI should be allowed to file the amended
grants leave to file an amended pleading, the same becomes answer.
binding and will not be disturbed on appeal unless it appears
that the court had abused its discretion.[37] Third. The mere fact that URAMI filed its motion for
leave years after the original answer is also not reason enough
In this case, URAMI filed its motion for leave seeking the in itself to discredit the amended answer as a sheer dilatory
admission of its amended answer more than two (2) years measure. Readily observable from the established facts is that
after it filed its original answer. Despite the considerable lapse the perceived delay between the filing of the motion for
of time between the filing of the original answer and leave and the filing of the original answer is not purely
the motion for leave, the RTC still granted the said motion. attributable to URAMI. It must be remembered that some time
Such grant was later affirmed on appeal by the Court of after the original answer was filed, we issued a temporary
Appeals. restraining order in G.R. No. 177068 that effectively suspended
the proceedings in Civil Case No. 70027 for more than a year.
Petitioner, however, opposes the grant of leave arguing that Thus, even if it wanted to, URAMI really could not have filed a
URAMI is precluded from filing an amended answer by Section motion for leave to file amended answer sooner than it already
4 of Rule 129 of the Rules of Court and claiming that had. On this score, we note that it only took URAMI a little
URAMI's amended answer was only interposed for the purpose over three months after the lifting of the temporary restraining
of delaying the proceedings in Civil Case No. 70027. order to replace its previous counsel of record in Civil Case No.
70027 and to file its amended answer.
We rule in favor of allowing URAMI's amended answer. Hence,
we deny the present appeal. Fourth. All in all, we find absolutely no cause to overrule the
grant of leave granted to URAMI to file its amended answer.
First. We cannot subscribe to petitioner's argument that The said grant is consistent with our time-honored judicial
Section 4 of Rule 129 of the Rules of Court precludes URAMI policy of affording liberal treatment to amendments to
from filing its amended answer. To begin with, the said pleadings, especially those made before the conduct of trial.
provision does not set the be-all and end-all standard upon
which amendments to pleadings may or may not be allowed. We should always remember that our rules of procedure are
Matters involving the amendment of pleadings are primarily mere tools designed to facilitate the attainment of justice.
governed by the pertinent provisions of Rule 10 and not by Their application should never be allowed to frustrate the truth
Section 4 of Rule 129 of the Rule of Court. Hence, allegations and the promotion of substantial justice.[39] Were we to
(and admissions) in a pleading—even if not shown to be made succumb to petitioner's arguments today, however, we would

7
have sanctioned an outcome totally inconsistent with the
underlying purpose of our procedural laws. That, we simply
cannot countenance.

WHEREFORE, premises considered, the petition is


hereby DENIED. The Decision dated 12 August 2013 and
Resolution dated 29 January 2014 of the Court of Appeals in
CA-G.R. SP No. 117431 are hereby AFFIRMED.

SO ORDERED.

Sereno, C. J., (Chairperson), Leonardo-De Castro, Bersamin,


and Perlas-Bernabe, JJ., concur.

8
HENRY CHING TIU, G.R. No. 151932 of the Surety Agreement, except two, were kept by PBCOM. Of
CHRISTOPHER HALIN GO, the two copies kept by the notary public, one copy was
and GEORGE CO, retained for his notarial file and the other was sent to the
Present: Records Management and Archives Office, through the Office
Petitioners,
of the RTC Clerk of Court.[6]

CARPIO
MORALES, J.,* Thereafter, on December 16, 1998, AWRI informed
the bank of its desire to surrender and/or assign in its favor, all
CHICO-NAZARIO, the present properties of the former to apply as dacion en
- versus - pago for AWRIs existing loan obligation to the bank.[7] On
Acting Chairperson,**
January 11, 1999, PBCOM sent a reply denying the request. On
VELASCO, JR., May 12, 1999, PBCOM sent a letter to petitioners demanding
NACHURA, and full payment of its obligation to the bank.[8]

PERALTA, JJ.
PHILIPPINE BANK OF Its demands having remained unheeded, PBCOM
COMMUNICATIONS, instructed its counsel to file a complaint for collection against
Promulgated: petitioners. The case was docketed as Civil Case No. 99-352.
Respondent.

August 19, 2009 On July 3, 1999, petitioners filed their Answer. It


alleged, among other things, that they were not personally
x----------------------------------------
- - - - - - - - - - -x liable on the promissory notes, because they signed the Surety
Agreement in their capacities as officers of AWRI. They
claimed that the Surety Agreement attached to the complaint
as Annexes A to A-2[9]were falsified, considering that when
DECISION
they signed the same, the words In his personal capacity did
not yet appear in the document and were merely intercalated
thereon without their knowledge and consent.[10]
PERALTA, J.:

In support of their allegations, petitioners attached to


This is a petition for review on certiorari, under Rule their Answer a certified photocopy of the Surety Agreement
45 of the Rules of Court, seeking to annul and set aside the issued on March 25, 1999 by the Records Management and
Decision[1] dated September 28, 2001, rendered by the Court Archives Office in Davao City,[11] showing that the words In his
of Appeals (CA) in CA-G.R. SP No. 57732, dismissing the personal capacity were not found at the foot of page two of
petition and affirming the assailed Orders of the Regional Trial the document where their signatures appeared.[12]
Court (RTC) of Cagayan de Oro City, Branch 21 in Civil Case
No. 99-352, dated December 14, 1999 and January 11, 2000.
The factual and procedural antecedents are as Because of this development, PBCOMs counsel
follows: searched for and retrieved the file copy of the Surety
Agreement. The notarial copy showed that the words In his
personal capacity did not appear on page two of the Surety
In June 1993, Asian Water Resources, Inc. (AWRI), Agreement.[13]
represented by herein petitioners, applied for a real estate loan
with the Philippine Bank of Communications (PBCOM) to fund
its purified water distribution business. In support of the loan Petitioners counsel then asked PBCOM to explain the
application, petitioners submitted a Board Resolution[2] dated alteration appearing on the agreement. PBCOM subsequently
June 7, 1993. The loan was guaranteed by collateral over the discovered that the insertion was ordered by the bank
property covered by Transfer Certificate of Title No. T- auditor. It alleged that when the Surety Agreement was
13020.[3] The loan was eventually approved.[4] inspected by the bank auditor, he called the attention of the
loans clerk, Kenneth Cabahug, as to why the words In his
personal capacity were not indicated under the signature of
In August 1996, AWRI applied for a bigger loan from each surety, in accordance with bank standard operating
PBCOM for additional capitalization using the same Board procedures. The auditor then ordered Mr. Cabahug to type the
Resolution, but without any additional real estate words In his personal capacity below the second signatures of
collateral. Considering that the proposed additional loan was petitioners. However, the notary public was never informed of
unsecured, PBCOM required all the members of the Board of the insertion.[14] Mr. Cabahug subsequently executed an
Directors of AWRI to become sureties. Thus, on August 16, affidavit[15] attesting to the circumstances why the insertion
1996, a Surety Agreement[5] was executed by its Directors and was made.
acknowledged by a notary public on the same date. All copies

9
PBCOM then filed a Reply and Answer to Aggrieved, petitioners sought recourse before the
Counterclaim with Motion for Leave of Court to Substitute CA via a petition for certiorari under Rule 65 of the Rules of
Annex A of the Complaint,[16] wherein it attached the duplicate Court, docketed as CA-G.R. SP No. 57732.
original copy retrieved from the file of the notary
public. PBCOM also admitted its mistake in making the
insertion and explained that it was made without the Petitioners claimed that the RTC acted without or in
knowledge and consent of the notary public. PBCOM excess of jurisdiction, or with grave abuse of discretion
maintained that the insertion was not a falsification, but was amounting to lack or excess of jurisdiction in denying their
made only to speak the truth of the parties intentions. PBCOM motion for reconsideration and in allowing PBCOM to substitute
also contended that petitioners were already primarily liable on the altered copy of the Surety Agreement with the duplicate
the Surety Agreement whether or not the insertion was made, original notarial copy thereof considering that the latters cause
having admitted in their pleadings that they voluntarily of action was solely and principally founded on the falsified
executed and signed the Surety Agreement in the original document marked as Annexes A to A-2.[20]
form. PBCOM, invoking a liberal application of the Rules,
emphasized that the motion incorporated in the pleading can
be treated as a motion for leave of court to amend and admit On September 28, 2001, the CA rendered a Decision
the amended complaint pursuant to Section 3, Rule 10 of the dismissing the petition for lack of merit, the decretal portion of
Rules of Court. which reads:

On December 14, 1999, the RTC issued an WHEREFORE, foregoing considered,


Order[17] allowing the substitution of the altered document with the instant petition is hereby DENIED DUE
the original Surety Agreement, the pertinent portion of which COURSE and, accordingly, DISMISSED for
reads: lack of merit. The assailed Orders dated
December 14, 1999 and January 11, 2000 of
the Regional Trial Court of Cagayan de Oro
August 16, 1996 attached as Annexes A City, Branch 21, are hereby AFFIRMED in
to A-2 of the reply and answer Resolving the toto.
Motion to Substitute Annexes A to A-2 of the
complaint and the opposition thereto by the
defendant, this Court, in the interest of SO ORDERED.[21]
justice, hereby allows the substitution of said
Annexes A to A-2 of the complaint with the
duplicate original of notarial copy of the Hence, the petition assigning the following errors:
Agreement dated to counter-claim.
SO ORDERED.
I
THE COURT COMMITTED A REVERSIBLE
Petitioners filed a motion for reconsideration,[18] but it ERROR IN AFFIRMING IN TOTO THE ORDER
was denied in the Order[19] dated January 11, 2000, to wit: OF THE LOWER COURT ALLOWING THE
SUBSTITUTION OF THE FALSIFIED
DOCUMENT BY RELYING ON THE
Resolving the motion for PROVISION OF SECTION 3, RULE 10 OF THE
reconsideration and the opposition thereto, RULES OF COURT.
the Court finds the motion substantially a
reiteration of the opposition to plaintiffs
motion. II
ACTING AS THE COURT ON THE PETITION
Additionally, the instant motion for FOR CERTIORARI, THE COURT COMMITTED
reconsideration treats on evidentiary matter A REVERSIBLE ERROR HAVING NO
which can be properly ventilated in the trial JURISDICTION TO RULE ON THE
proper, hence, there is no cogent reason to OBLIGATION OF THE PETITIONERS BASED
disturb the Courts order of December 14, ON THE FALSIFIED DOCUMENT
1999.

III
SO ORDERED. THE COURT ERRED IN GIVING CREDENCE
TO THE ALLEGATION OF RESPONDENT
BANK THAT FROM AUGUST 15 TO
DECEMBER 9, 1997 ASIAN WATER
RESOURCES INC. OBTAINED SEVERAL
10
AVAILMENTS OF NEW BIGGER AND credence to the statement of fact of PBCOM that From August
ADDITIONAL LOANS 15 to December 9, 1997, Asian Water Resources, Inc. obtained
TOTALLING P2,030,000.00 EVIDENCED BY 4 several availments on its additional loans
PROMISSORY NOTES MARKED AS ANNEXES totalling P2,030,000.00 as evidenced by 4 promissory notes
B, B-1, B-2 AND B-3. marked as Annexes B, B-1, B-2, and B-3. Thus, the conclusion
of the CA in declaring the petitioners liable as sureties violated
their right to due process.[25]
IV
THE COURT FAILED TO CONSIDER THE
For its part, PBCOM argues that since the complaint is
MISAPPLICATION OF THE PRINCIPLE OF
based on an actionable document, i.e., the surety agreement,
EQUITY COMMITTED BY THE LOWER
the original or a copy thereof should be attached to the
COURT IN ORDERING THE SUBSTITUTION
pleading as an exhibit, which shall be deemed part of the
OF THE FALSIFIED DOCUMENT.[22]
pleading. Considering that the surety agreement is annexed to
the complaint, it is an integral part thereof and its substitution
with another copy is in the nature of a substantial amendment,
which is allowed by the Rules, but with prior leave of court.
Petitioners argue that the CA committed a reversible
error in affirming the Order of the RTC allowing the
substitution of the document by relying on Section 3, Rule 10 Moreover, PBCOM alleges that since the Rules
of the Rules of Court. Petitioners assert that the Rules do not provides that substantial amendments may be made upon
allow the withdrawal and substitution of a falsified document leave of court, the authority of the RTC to allow the
once discovered by the opposing party. amendment is discretionary. Thus, the CA correctly held that
the act of granting the said substitution was within the clear
and proper discretion of the RTC.
Petitioners maintain that PBCOMs cause of action was
solely and principally founded on the alleged falsified
document originally marked as The petition is without merit.

Annexes A to A-2. Thus, the withdrawal of the document


results in the automatic withdrawal of the whole complaint on
As to the substitution of the earlier surety agreement
the ground that there is no more cause of action to be
that was annexed to the complaint with the original thereof,
maintained or enforced by plaintiff against petitioners. Also,
this Court finds that the RTC did not err in allowing the
petitioners argue that if the substitution will be allowed, their
substitution.
defenses that were anchored on Annexes A to A-2 would be
gravely affected. Moreover, considering that the said document The pertinent rule on actionable documents is found
was already removed, withdrawn, and disregarded by the RTC, in Section 7, Rule 8 of the Rules of Court, which provides that
the withdrawal and substitution of the document would when the cause of action is anchored on a document, its
prevent petitioners from introducing the falsified documents substance must be set forth, and the original or a copy thereof
during the trial as part of their evidence.[23] shall be attached to the pleading as an exhibit and deemed a
part thereof, to wit:

Petitioners submit that the RTC misapplied the


principle of equity when it allowed PBCOM to substitute the Section 7. Action or defense based on
document with the original agreement. Petitioners also claim document. Whenever an action or defense is
that the remedy of appeal after the termination of the case in based upon a written instrument or
the RTC would become ineffective and inadequate if the Order document, the substance of such instrument
of the RTC allowing the withdrawal and substitution of the or document shall be set forth in the
document would not be nullified, because the falsified pleading, and the original or a copy thereof
document would no longer be found in the records of the case shall be attached to the pleading as an
during the appeal.[24] exhibit, which shall be deemed to be a part
of the pleading, or said copy may with like
effect be set forth in the pleading.
Petitioners contend that the CA went beyond the
issue raised before it when it interpreted the provisions of the
Surety Agreement, particularly paragraph 4 thereof, and then
ruled on the obligations of the parties based on
With respect to PBCOMs right to amend its complaint,
the document. Petitioners posit that the CA prematurely ruled including the documents annexed thereto, after petitioners
on petitioners obligations, considering that their obligations have filed their answer, Section 3, Rule 10 of the Rules of
should be determined during trial on the merits, after the Court specifically allows amendment by leave of court. The
parties have been given the opportunity to present their said Section states:
evidence in support of their respective claims. Petitioners
stress that the CA went into the merit of the case when it gave
11
SECTION 3. Amendments by leave of Furthermore, amendments to pleadings are generally
court. Except as provided in the next favored and should be liberally allowed in furtherance of
preceding section, substantial amendments justice in order that every case, may so far as possible, be
may be made only upon leave of court. But determined on its real facts and in order to speed up the trial
such leave may be refused if it appears to of the case or prevent the circuity of action and unnecessary
the court that the motion was made with expense. That is, unless there are circumstances such as
intent to delay. Orders of the court upon the inexcusable delay or the taking of the adverse party by
matters provided in this section shall be surprise or the like, which might justify a refusal of permission
made upon motion filed in court, and after to amend.[30]
notice to the adverse party, and an
opportunity to be heard.
In the present case, there was no fraudulent intent
on the part of PBCOM in submitting the altered surety
This Court has emphasized the import of Section 3, Rule 10 of agreement. In fact, the bank admitted that it was a mistake on
the 1997 Rules of Civil Procedure in Valenzuela v. Court of their part to have submitted it in the first place instead of the
Appeals,[26] thus: original agreement. It also admitted that, through
inadvertence, the copy that was attached to the complaint was
the copy wherein the words IN HIS PERSONAL CAPACITY were
inserted to conform to the banks standard practice. This
alteration was made without the knowledge of the notary
Interestingly, Section 3, Rule 10 of the public. PBCOMs counsel had no idea that what it submitted
1997 Rules of Civil Procedure amended the was the altered document, thereby necessitating the
former rule in such manner that the phrase substitution of the surety agreement with the original thereof,
or that the cause of action or defense is in order that the case would be judiciously resolved.
substantially altered was stricken-off and not
retained in the new rules. The clear import
of such amendment in Section 3, Rule 10 is
Verily, it is a cardinal rule of evidence, not just one of
that under the new rules, the amendment
technicality but of substance, that the written document is the
may (now) substantially alter the cause of
best evidence of its own contents. It is also a matter of both
action or defense. This should only be true,
principle and policy that when the written contract is
however, when despite a substantial change
established as the repository of the parties stipulations, any
or alteration in the cause of action or
other evidence is excluded, and the same cannot be used to
defense, the amendments sought to be
substitute for such contract, or even to alter or contradict the
made shall serve the higher interests of
latter.[31] The original surety agreement is the best evidence
substantial justice, and prevent delay and
that could establish the parties respective rights and
equally promote the laudable objective of
obligations. In effect, the RTC merely allowed the amendment
the rules which is to secure a just, speedy
of the complaint, which consequently included the substitution
and inexpensive disposition of every action
of the altered surety agreement with a copy of the original.
and proceeding.[27]
The granting of leave to file amended pleading is a
matter particularly addressed to the sound discretion of the It is well to remember at this point that rules of
trial court; and that discretion is broad, subject only to the procedure are but mere tools designed to facilitate the
limitations that the amendments should not substantially attainment of justice. Their strict and rigid application that
change the cause of action or alter the theory of the case, or would result in technicalities that tend to frustrate rather than
that it was not made to delay the action. [28] Nevertheless, as promote substantial justice must always be avoided.[32] Applied
enunciated in Valenzuela, even if the amendment substantially to the instant case, this not only assures that it would be
alters the cause of action or defense, such amendment could resolved based on real facts, but would also aid in the speedy
still be allowed when it is sought to serve the higher interest of disposition of the case by utilizing the best evidence possible to
substantial justice; prevent delay; and secure a just, speedy determine the rights and obligations of the party- litigants.
and inexpensive disposition of actions and proceedings.

Moreover, contrary to petitioners contention, they


The courts should be liberal in allowing amendments could not be prejudiced by the substitution since they can still
to pleadings to avoid a multiplicity of suits and in order that present the substituted documents, Annexes A to A-2, as part
the real controversies between the parties are presented, their of the evidence of their affirmative defenses. The substitution
rights determined, and the case decided on the merits without did not prejudice petitioners or delay the action. On the
unnecessary delay. This liberality is greatest in the early stages contrary, it tended to expedite the determination of the
of a lawsuit, especially in this case where the amendment was controversy. Besides, the petitioners are not precluded from
made before the trial of the case, thereby giving the filing the appropriate criminal action against PBCOM for
petitioners all the time allowed by law to answer and to attaching the altered copy of the surety agreement to the
prepare for trial.[29] complaint. The substitution of the documents would not, in
any way, erase the existence of falsification, if any. The case
before the RTC is civil in nature, while the alleged falsification
12
is criminal, which is separate and distinct from another. Thus, more cautious and not have gone beyond the issues submitted
the RTC committed no reversible error when it allowed the before it in the petition for certiorari; instead, it should have
substitution of the altered surety agreement with that of the squarely addressed whether or not there was grave abuse of
original. discretion on the part of the RTC in issuing the Orders dated
December 14, 1999 and January 11, 2000.

A Petition for Certiorari under Rule 65 of the Rules of


Court is intended for the correction of errors of jurisdiction only WHEREFORE, premises considered, the petition
or grave abuse of discretion amounting to lack or excess of is DENIED. Subject to the above disquisitions, the Decision of
jurisdiction. Its principal office is only to keep the inferior court the Court of Appeals in CA-G.R. SP No. 57732, dated
within the parameters of its jurisdiction or to prevent it from September 28, 2001, and the Orders of the Regional Trial
committing such a grave abuse of discretion amounting to lack Court of Cagayan de Oro City, Branch 21, in Civil Case No. 99-
or excess of jurisdiction.[33] 352, dated December 14, 1999 and January 11, 2000,
are AFFIRMED.

For a petition for certiorari to prosper, the essential


requisites that have to concur are: (1) the writ is directed SO ORDERED.
against a tribunal, a board or any officer exercising judicial or
quasi-judicial functions; (2) such tribunal, board or officer has
acted without or in excess of jurisdiction, or with grave abuse
of discretion amounting to lack or excess of jurisdiction; and
(3) there is no appeal or any plain, speedy and adequate
remedy in the ordinary course of law.[34]

The phrase without jurisdiction means that the court


acted with absolute lack of authority or want of legal power,
right or authority to hear and determine a cause or causes,
considered either in general or with reference to a particular
matter. It means lack of power to exercise authority. Excess of
jurisdiction occurs when the court transcends its power or acts
without any statutory authority; or results when an act, though
within the general power of a tribunal, board or officer (to do)
is not authorized, and is invalid with respect to the particular
proceeding, because the conditions which alone authorize the
exercise of the general power in respect of it are
wanting. Grave abuse of discretion implies such capricious and
whimsical exercise of judgment as to be equivalent to lack or
excess of jurisdiction; simply put, power is exercised in an
arbitrary or despotic manner by reason of passion, prejudice,
or personal hostility; and such exercise is so patent or so gross
as to amount to an evasion of a positive duty or to a virtual
refusal either to perform the duty enjoined or to act at all in
contemplation of law.[35]

The present case failed to comply with the above-


stated requisites. In the instant case, the soundness of the
RTCs Order allowing the substitution of the document involves
a matter of judgment and discretion, which cannot be the
proper subject of a petition for certiorari under Rule 65. This
rule is only intended to correct defects of jurisdiction and not
to correct errors of procedure or matters in the trial courts
findings or conclusions.

However, this Court agrees with the petitioners


contention that the CA should not have made determinations
as regards the parties respective rights based on the surety
agreement. The CA went beyond the issues brought before it
and effectively preempted the RTC in making its own
determinations. It is to be noted that the present case is still
pending determination by the RTC. The CA should have been
13
G.R. No. 174433 February 24, 2014 from a certain Benito Tan upon arrangements made by
Antoninus Yuvienco, then the General Manager of PNB’s
PHILIPPINE NATIONAL BANK, Petitioner, Bangkal Branch where they had transacted; that they had
vs. been made to understand and had been assured that the
SPOUSES ENRIQUE MANALO & ROSALINDA JACINTO, ₱1,000,000.00 would be used to update their account, and
ARNOLD J. MANALO, ARNEL J. MANALO, and ARMA J. that their loan would be restructured and converted into a
MANALO, Respondents. long-term loan;5 that they had been surprised to learn,
therefore, that had been declared in default of their
obligations, and that the mortgage on their property had been
DECISION
foreclosed and their property had been sold; and that PNB did
not comply with Section 3 of Act No. 3135, as amended.6
BERSAMIN, J.:
PNB and Antoninus Yuvienco countered that the ₱1,000,000.00
Although banks are free to determine the rate of interest they loan obtained by the Spouses Manalo from Benito Tan had
could impose on their borrowers, they can do so only been credited to their account; that they did not make any
reasonably, not arbitrarily. They may not take advantage of assurances on the restructuring and conversion of the Spouses
the ordinary borrowers' lack of familiarity with banking Manalo’s loan into a long-term one;7 that PNB’s right to
procedures and jargon. Hence, any stipulation on interest foreclose the mortgage had been clear especially because the
unilaterally imposed and increased by them shall be struck Spouses Manalo had not assailed the validity of the loans and
down as violative of the principle of mutuality of contracts. of the mortgage; and that the Spouses Manalo did not allege
having fully paid their indebtedness.8
Antecedents
Ruling ofthe RTC
Respondent Spouses Enrique Manalo and Rosalinda Jacinto
(Spouses Manalo) applied for an All-Purpose Credit Facility in After trial, the RTC rendered its decision in favor of PNB,
the amount of ₱1,000,000.00 with Philippine National Bank holding thusly:
(PNB) to finance the construction of their house. After PNB
granted their application, they executed a Real Estate
In resolving this present case, one of the most significant
Mortgage on November 3, 1993 in favor of PNB over their
matters the court has noted is that while during the pre-trial
property covered by Transfer Certificate of Title No. S- 23191
held on 8 September 2003, plaintiff-spouses Manalo with the
as security for the loan.1 The credit facility was renewed and
assistance counsel had agreed to stipulate that defendants had
increased several times over the years. On September 20,
the right to foreclose upon the subject properties and that the
1996, the credit facility was again renewed for ₱7,000,000.00.
plaintiffs[‘] main thrust was to prove that the foreclosure
As a consequence, the parties executed a Supplement to and
proceedings were invalid, in the course of the presentation of
Amendment of Existing Real Estate Mortgage whereby the
their evidence, they modified their position and claimed [that]
property covered by TCT No. 171859 was added as security for
the loan document executed were contracts of adhesion which
the loan.
were null and void because they were prepared entirely under
the defendant bank’s supervision. They also questioned the
The additional security was registered in the names of interest rates and penalty charges imposed arguing that these
respondents Arnold, Arnel, Anthony, and Arma, all surnamed were iniquitous, unconscionable and therefore likewise void.
Manalo, who were their children.2
Not having raised the foregoing matters as issues during the
It was agreed upon that the Spouses Manalo would make pre-trial, plaintiff-spouses are presumably estopped from
monthly payments on the interest. However, PNB claimed that allowing these matters to serve as part of their evidence, more
their last recorded payment was made on December, 1997. so because at the pre-trial they expressly recognized the
Thus, PNB sent a demand letter to them on their overdue defendant bank’s right to foreclose upon the subject property
account and required them to settle the account. PNB sent (See Order, pp. 193-195).
another demand letter because they failed to heed the first
demand.3
However, considering that the defendant bank did not
interpose any objection to these matters being made part of
After the Spouses Manalo still failed to settle their unpaid plaintiff’s evidence so much so that their memorandum
account despite the two demand letters, PNB foreclose the contained discussions rebutting plaintiff spouses arguments on
mortgage. During the foreclosure sale, PNB was the highest these issues, the court must necessarily include these matters
bidder for ₱15,127,000.00 of the mortgaged properties of the in the resolution of the present case.9
Spouses Manalo. The sheriff issued to PNB the Certificate of
Sale dated November 13, 2000.4
The RTC held, however, that the Spouses Manalo’s "contract of
adhesion" argument was unfounded because they had still
After more than a year after the Certificate of Sale had been accepted the terms and conditions of their credit agreement
issued to PNB, the Spouses Manalo instituted this action for with PNB and had exerted efforts to pay their obligation; 10 that
the nullification of the foreclosure proceedings and damages. the Spouses Manalo were now estopped from questioning the
They alleged that they had obtained a loan for ₱1,000,000.00 interest rates unilaterally imposed by PNB because they had

14
paid at those rates for three years without protest; 11 and that need of money rendered them to be not on an equal footing
their allegation about PNB violating the notice and publication with PNB. Consequently, the CA, relying on Eastern Shipping
requirements during the foreclosure proceedings was Lines, v. Court of Appeals,19 fixed the interest rate to be paid
untenable because personal notice to the mortgagee was not by the Spouses Manalo at 12% per annum, computed from
required under Act No. 3135.12 their default.

The Spouses Manalo appealed to the CA by assigning a The CA deemed to be untenable the Spouses Manalo’s
singular error, as follows: allegation that PNB had failed to comply with the requirements
for notice and posting under Section 3 of Act 3135. The CA
THE COURT A QUO SERIOUSLY ERRED IN DISMISSING stated that Sheriff Norberto Magsajo’s testimony was sufficient
PLAINTIFF-APPELLANTS’ COMPLAINT FOR BEING (sic) LACK proof of his posting of the required Notice of Sheriff’s Sale in
OF MERIT NOTWITHSTANDING THE FACT THAT IT WAS three public places; that the notarized Affidavit of Publication
CLEARLY SHOWN THAT THE FORECLOSURE PROCEEDINGS presented by Sheriff Magsajo was prima facie proof of the
WAS INVALID AND ILLEGAL.13 publication of the notice; and that the Affidavit of Publication
enjoyed the presumption of regularity, such that the Spouses
Manalo’s bare allegation of non-publication without other proof
The Spouses Manalo reiterated their arguments, insisting that:
did not overcome the presumption.
(1) the credit agreements they entered into with PNB were
contracts of adhesion;14 (2) no interest was due from them
because their credit agreements with PNB did not specify the On August 29, 2006, the CA denied the Spouses Manalo’s
interest rate, and PNB could not unilaterally increase the Motion for Reconsideration and PNB’s Partial Motion for
interest rate without first informing them;15 and (3) PNB did Reconsideration.20
not comply with the notice and publication requirements under
Section 3 of Act 3135.16 On the other hand, PNB and Yuvienco Issues
did not file their briefs despite notice.17
In its Memorandum,21 PNB raises the following issues:
Ruling ofthe CA
I
In its decision promulgated on March 28, 2006,18 the CA
affirmed the decision of the RTC insofar as it upheld the WHETHER OR NOT THE COURT OF APPEALS WAS CORRECT
validity of the foreclosure proceedings initiated by PNB, but IN NULLIFYING THE INTEREST RATES IMPOSED ON
modified the Spouses Manalo’s liability for interest. It directed RESPONDENT SPOUSES’ LOAN AND IN FIXING THE SAME AT
the RTC to see to the recomputation of their indebtedness, and TWELVE PERCENT (12%) FROM DEFAULT, DESPITE THE FACT
ordered that should the recomputed amount be less than the THAT (i) THE SAME WAS RAISED BY THE RESPONDENTS
winning bid in the foreclosure sale, the difference should be ONLY FOR THE FIRST TIME ON APPEAL (ii) IT WAS NEVER
immediately returned to the Spouses Manalo. PART OF THEIR COMPLAINT (iii) WAS EXLUDED AS AN ISSUE
DURING PRE-TRIAL, AND WORSE, (iv) THERE WAS NO
The CA found it necessary to pass upon the issues of PNB’s FORMALLY OFFERED PERTAINING TO THE SAME DURING
failure to specify the applicable interest and the lack of TRIAL.
mutuality in the execution of the credit agreements considering
the earlier cited observation made by the trial court in its II
decision. Applying Article 1956 of the Civil Code, the CA held
that PNB’s failure to indicate the rate of interest in the credit
WHETHER OR NOT THE COURT OF APPEALS CORRECTLY
agreements would not excuse the Spouses Manalo from their
RULED THAT THERE WAS NO MUTUALITY OF CONSENT IN
contractual obligation to pay interest to PNB because of the
THE IMPOSITION OF INTEREST RATES ON THE RESPONDENT
express agreement to pay interest in the credit agreements.
SPOUSES’ LOAN DESPITE THE EXISTENCE OF FACTS AND
Nevertheless, the CA ruled that PNB’s inadvertence to specify
CIRCUMSTANCES CLEARLY SHOWING RESPONDENTS’ ASSENT
the interest rate should be construed against it because the
TO THE RATES OF INTEREST SO IMPOSED BY PNB ON THE
credit agreements were clearly contracts of adhesion due to
LOAN.
their having been prepared solely by PNB.

Anent the first issue, PNB argues that by passing upon the
The CA further held that PNB could not unilaterally increase
issue of the validity of the interest rates, and in nullifying the
the rate of interest considering that the credit agreements
rates imposed on the Spouses Manalo, the CA decided the
specifically provided that prior notice was required before an
case in a manner not in accord with Section 15, Rule 44 of the
increase in interest rate could be effected. It found that PNB
Rules of Court, which states that only questions of law or fact
did not adduce proof showing that the Spouses Manalo had
raised in the trial court could be assigned as errors on appeal;
been notified before the increased interest rates were
that to allow the Spouses Manalo to raise an issue for the first
imposed; and that PNB’s unilateral imposition of the increased
time on appeal would "offend the basic rules of fair play,
interest rate was null and void for being violative of the
justice and due process;"22 that the resolution of the CA was
principle of mutuality of contracts enshrined in Article 1308 of
limited to the issues agreed upon by the parties during pre-
the Civil Code. Reinforcing its "contract of adhesion"
trial;23 that the CA erred in passing upon the validity of the
conclusion, it added that the Spouses Manalo’s being in dire
interest rates inasmuch as the Spouses Manalo did not present
15
evidence thereon; and that the Judicial Affidavit of Enrique PNB cross-examined Enrique Manalo upon his Judicial Affidavit.
Manalo, on which the CA relied for its finding, was not offered There is no showing that PNB raised any objection in the
to prove the invalidity of the interest rates and was, therefore, course of the cross examination.26 Consequently, the RTC
inadmissible for that purpose.24 rightly passed upon such issues in deciding the case, and its
having done so was in total accord with Section 5, Rule 10 of
As to the substantive issues, PNB claims that the Spouses the Rules of Court, which states:
Manalo’s continuous payment of interest without protest
indicated their assent to the interest rates imposed, as well as Section 5. Amendment to conform to or authorize presentation
to the subsequent increases of the rates; and that the CA of evidence. – When issues not raised by the pleadings are
erred in declaring that the interest rates and subsequent tried with the express or implied consent of the parties, they
increases were invalid for lack of mutuality between the shall be treated in all respects as if they had been raised in the
contracting parties. pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to
Ruling raise these issues may be made upon motion of any party at
any time, even after judgment; but failure to amend does not
affect the result of the trial of these issues. If evidence is
The appeal lacks merit.
objected to at the trial on the ground that it is not within the
issues made by the pleadings, the court may allow the
1. pleadings to be amended and shall do so with liberality if the
Procedural Issue presentation of the merits of the action and the ends of
substantial justice will be subserved thereby. The court may
Contrary to PNB’s argument, the validity of the interest rates grant a continuance to enable the amendment to be made.
and of the increases, and on the lack of mutuality between the
parties were not raised by the Spouses Manalo’s for the first In Bernardo Sr. v. Court of Appeals,27 we held that:
time on appeal. Rather, the issues were impliedly raised during
the trial itself, and PNB’s lack of vigilance in voicing out a
It is settled that even if the complaint be defective, but the
timely objection made that possible.
parties go to trial thereon, and the plaintiff, without objection,
introduces sufficient evidence to constitute the particular cause
It appears that Enrique Manalo’s Judicial Affidavit introduced of action which it intended to allege in the original complaint,
the issues of the validity of the interest rates and the and the defendant voluntarily produces witnesses to meet the
increases, and the lack of mutuality between the parties in the cause of action thus established, an issue is joined as fully and
following manner, to wit: as effectively as if it had been previously joined by the most
perfect pleadings. Likewise, when issues not raised by the
5. True to his words, defendant Yuvienco, after pleadings are tried by express or implied consent of the
several days, sent us a document through a personnel parties, they shall be treated in all respects as if they had been
of defendant PNB, Bangkal, Makati City Branch, who raised in the pleadings.
required me and my wife to affix our signature on the
said document; The RTC did not need to direct the amendment of the
complaint by the Spouses Manalo. Section 5, Rule 10 of the
6. When the document was handed over me, I was Rules of Court specifically declares that the "failure to amend
able to know that it was a Promissory Note which was does not affect the result of the trial of these issues."
in ready made form and prepared solely by the According to Talisay-Silay Milling Co., Inc. v. Asociacion de
defendant PNB; Agricultores de Talisay-Silay, Inc.:28

xxxx The failure of a party to amend a pleading to conform to the


evidence adduced during trial does not preclude an
adjudication by the court on the basis of such evidence which
21. As above-noted, the rates of interest imposed by
may embody new issues not raised in the pleadings, or serve
the defendant bank were never the subject of any
as a basis for a higher award of damages. Although the
stipulation between us mortgagors and the defendant
pleading may not have been amended to conform to the
PNB as mortgagee;
evidence submitted during trial, judgment may nonetheless be
rendered, not simply on the basis of the issues alleged but also
22. The truth of the matter is that defendant bank on the basis of issues discussed and the assertions of fact
imposed rate of interest which ranges from 19% to as proved in the course of trial.1âwphi1 The court may treat the
high as 28% and which changes from time to time; pleading as if it had been amended to conform to the
evidence, although it had not been actually so amended.
23. The irregularity, much less the invalidity of the Former Chief Justice Moran put the matter in this way:
imposition of iniquitous rates of interest was
aggravated by the fact that we were not informed, When evidence is presented by one party, with the expressed
notified, nor the same had our prior consent and or implied consent of the adverse party, as to issues not
acquiescence therefor. x x x25 alleged in the pleadings, judgment may be rendered validly as
regards those issues, which shall be considered as if they have
16
been raised in the pleadings. There is implied, consent to the PNB thereby arrogated unto itself the sole prerogative to
evidence thus presented when the adverse party fails to object determine and increase the interest rates imposed on the
thereto." (Emphasis supplied) Spouses Manalo. Such a unilateral determination of the
interest rates contravened the principle of mutuality of
Clearly, a court may rule and render judgment on the basis of contracts embodied in Article 1308 of the Civil Code.32
the evidence before it even though the relevant pleading had
not been previously amended, so long as no surprise or The Court has declared that a contract where there is no
prejudice is thereby caused to the adverse party. Put a little mutuality between the parties partakes of the nature of a
differently, so long as the basic requirements of fair play had contract of adhesion,33 and any obscurity will be construed
been met, as where litigants were given full opportunity to against the party who prepared the contract, the latter being
support their respective contentions and to object to or refute presumed the stronger party to the agreement, and who
each other's evidence, the court may validly treat the caused the obscurity.34 PNB should then suffer the
pleadings as if they had been amended to conform to the consequences of its failure to specifically indicate the rates of
evidence and proceed to adjudicate on the basis of all the interest in the credit agreement. We spoke clearly on this in
evidence before it. Philippine Savings Bank v. Castillo,35 to wit:

There is also no merit in PNB’s contention that the CA should The unilateral determination and imposition of the increased
not have considered and ruled on the issue of the validity of rates is violative of the principle of mutuality of contracts under
the interest rates because the Judicial Affidavit of Enrique Article 1308 of the Civil Code, which provides that ‘[t]he
Manalo had not been offered to prove the same but only "for contract must bind both contracting parties; its validity or
the purpose of identifying his affidavit."29 As such, the affidavit compliance cannot be left to the will of one of them.’ A perusal
was inadmissible to prove the nullity of the interest rates. of the Promissory Note will readily show that the increase or
decrease of interest rates hinges solely on the discretion of
We do not agree. petitioner. It does not require the conformity of the maker
before a new interest rate could be enforced. Any contract
which appears to be heavily weighed in favor of one of the
Section 5, Rule 10 of the Rules of Court is applicable in two
parties so as to lead to an unconscionable result, thus
situations.1âwphi1 The first is when evidence is introduced on
partaking of the nature of a contract of adhesion, is void. Any
an issue not alleged in the pleadings and no objection is
stipulation regarding the validity or compliance of the contract
interposed by the adverse party. The second is when evidence
left solely to the will of one of the parties is likewise invalid.
is offered on an issue not alleged in the pleadings but an
(Emphasis supplied)
objection is raised against the offer.30 This case comes under
the first situation. Enrique Manalo’s Judicial Affidavit would
introduce the very issues that PNB is now assailing. The PNB could not also justify the increases it had effected on the
question of whether the evidence on such issues was interest rates by citing the fact that the Spouses Manalo had
admissible to prove the nullity of the interest rates is an paid the interests without protest, and had renewed the loan
entirely different matter. The RTC accorded credence to PNB’s several times. We rule that the CA, citing Philippine National
evidence showing that the Spouses Manalo had been paying Bank v. Court of Appeals,36 rightly concluded that "a borrower
the interest imposed upon them without protest. On the other is not estopped from assailing the unilateral increase in the
hand, the CA’s nullification of the interest rates was based on interest made by the lender since no one who receives a
the credit agreements that the Spouses Manalo and PNB had proposal to change a contract, to which he is a party, is
themselves submitted. obliged to answer the same and said party’s silence cannot be
construed as an acceptance thereof."37
Based on the foregoing, the validity of the interest rates and
their increases, and the lack of mutuality between the parties Lastly, the CA observed, and properly so, that the credit
were issues validly raised in the RTC, giving the Spouses agreements had explicitly provided that prior notice would be
Manalo every right to raise them in their appeal to the CA. necessary before PNB could increase the interest rates. In
PNB’s contention was based on its wrong appreciation of what failing to notify the Spouses Manalo before imposing the
transpired during the trial. It is also interesting to note that increased rates of interest, therefore, PNB violated the
PNB did not itself assail the RTC’s ruling on the issues stipulations of the very contract that it had prepared. Hence,
obviously because the RTC had decided in its favor. In fact, the varying interest rates imposed by PNB have to be vacated
PNB did not even submit its appellee’s brief despite notice from and declared null and void, and in their place an interest rate
the CA. of 12% per annum computed from their default is fixed
pursuant to the ruling in Eastern Shipping Lines, Inc. v. Court
of Appeals.38
2.
Substantive Issue
The CA’s directive to PNB (a) to recompute the Spouses
Manalo’s indebtedness under the oversight of the RTC; and (b)
The credit agreement executed succinctly stipulated that the
to refund to them any excess of the winning bid submitted
loan would be subjected to interest at a rate "determined by
during the foreclosure sale over their recomputed
the Bank to be its prime rate plus applicable spread, prevailing
indebtedness was warranted and equitable. Equally warranted
at the current month."31 This stipulation was carried over to or
and equitable was to make the amount to be refunded, if any,
adopted by the subsequent renewals of the credit agreement.
bear legal interest, to be reckoned from the promulgation of
17
the CA’s decision on March 28, 2006.39Indeed, the Court said SO ORDERED.
in Eastern Shipping Lines, Inc. v. Court of Appeals40 that
interest should be computed from the time of the judicial or LUCAS P. BERSAMIN
extrajudicial demand. However, this case presents a peculiar Associate Justice
situation, the peculiarity being that the Spouses Manalo did not
demand interest either judicially or extrajudicially. In the RTC,
they specifically sought as the main reliefs the nullification of
the foreclosure proceedings brought by PNB, accounting of the
payments they had made to PNB, and the conversion of their
loan into a long term one.41 In its judgment, the RTC even
upheld the validity of the interest rates imposed by PNB.42 In
their appellant’s brief, the Spouses Manalo again sought the
nullification of the foreclosure proceedings as the main
relief.43 It is evident, therefore, that the Spouses Manalo made
no judicial or extrajudicial demand from which to reckon the
interest on any amount to be refunded to them. Such demand
could only be reckoned from the promulgation of the CA’s
decision because it was there that the right to the refund was
first judicially recognized. Nevertheless, pursuant to Eastern
Shipping Lines, Inc. v. Court of Appeals,44 the amount to be
refunded and the interest thereon should earn interest to be
computed from the finality of the judgment until the full refund
has been made.

Anent the correct rates of interest to be applied on the amount


to be refunded by PNB, the Court, in Nacar v. Gallery
Frames45 and S.C. Megaworld Construction v. Parada,46 already
applied Monetary Board Circular No. 799 by reducing the
interest rates allowed in judgments from 12% per annum to
6% per annum.47 According to Nacar v. Gallery Frames, MB
Circular No. 799 is applied prospectively, and judgments that
became final and executory prior to its effectivity on July 1,
2013 are not to be disturbed but continue to be implemented
applying the old legal rate of 12% per annum. Hence, the old
legal rate of 12% per annum applied to judgments becoming
final and executory prior to July 1, 2013, but the new rate of
6% per annum applies to judgments becoming final and
executory after said dater.

Conformably with Nacar v. Gallery Frames and S.C. Megaworld


Construction v. Parada, therefore, the proper interest rates to
be imposed in the present case are as follows:

1. Any amount to be refunded to the Spouses Manalo


shall bear interest of 12% per annum computed from
March 28, 2006, the date of the promulgation of the
CA decision, until June 30, 2013; and 6% per annum
computed from July 1, 2013 until finality of this
decision; and

2. The amount to be refunded and its accrued interest


shall earn interest of 6% per annum until full refund.

WHEREFORE, the Court AFFIRMS the decision promulgated by


the Court of Appeals on March 28, 2006 in CA-G.R. CV No.
84396, subject to the MODIFICATION that any amount to be
refunded to the respondents shall bear interest of 12% per
annum computed from March 28, 2006 until June 30, 2013,
and 6% per annum computed from July 1, 2013 until finality
hereof; that the amount to be refunded and its accrued
interest shall earn interest at 6o/o per annum until full refund;
and DIRECTS the petitioner to pay the costs of suit.
18
G.R. No. 172825 October 11, 2012 Respondent made the following payments, to wit: (1)
P500,000.00 by way of downpayment; (2) P500,000.00 on
SPOUSES MINIANO B. DELA CRUZ and LETA L. DELA May 30, 1996; (3) P500,000.00 paid on January 22, 1997; and
CRUZ, Petitioners, (4) P500,000.00 bounced check dated June 30, 1997 which
vs. was subsequently replaced by another check of the same
ANA MARIE CONCEPCION, Respondent. amount, dated July 7, 1997. Respondent was, therefore, able
to pay a total of P2,000,000.00.5
DECISION
Before respondent issued the P500,000.00 replacement check,
she told petitioners that based on the computation of her
PERALTA, J.:
accountant as of July 6, 1997, her unpaid obligation which
includes interests and penalties was only
Assailed in this petition for review on certiorari under Rule 45 P200,000.00.6 Petitioners agreed with respondent and said "if
of the Rules of Court filed by petitioners spouses Miniano B. P200,000.00 is the correct balance, it is okay with us."7
Dela Cruz and Leta L. Dela Cruz against respondent Ana Marie
Concepcion are the Court of Appeals (CA) Decision1 dated
Meanwhile, the title to the property was transferred to
March 31, 2005 and Resolution2 dated May 24, 2006 in CA-G.R.
respondent. Petitioners later reminded respondent to pay
CV No. 83030.
P209,000.00 within three months.8 They claimed that the said
amount remained unpaid, despite the transfer of the title to
The facts of the case are as follows: the property to respondent. Several months later, petitioners
made further demands stating the supposed correct
On March 25, 1996, petitioners (as vendors) entered into a computation of respondent’s liabilities.9 Despite repeated
Contract to Sell3 with respondent (as vendee) involving a house demands, petitioners failed to collect the amounts they claimed
and lot in Cypress St., Phase I, Town and Country Executive from respondent. Hence, the Complaint for Sum of Money With
Village, Antipolo City for a consideration of P2,000,000.00 Damages10 filed with the Regional Trial Court (RTC)11 of
subject to the following terms and conditions: Antipolo, Rizal. The case was docketed as Civil Case No. 98-
4716.
a) That an earnest money of P100,000.00 shall be
paid immediately; In her Answer with Compulsory Counterclaim,12 respondent
claimed that her unpaid obligation to petitioners is only
P200,000.00 as earlier confirmed by petitioners and not
b) That a full down payment of Four Hundred
P487,384.15 as later alleged in the complaint. Respondent
Thousand Pesos (P400,000.00) shall be paid on
thus prayed for the dismissal of the complaint. By way of
February 29, 1996;
counterclaim, respondent prayed for the payment of moral
damages and attorney’s fees. During the presentation of the
c) That Five Hundred Thousand Pesos (P500,000.00) parties’ evidence, in addition to documents showing the
shall be paid on or before May 5, 1996; and statement of her paid obligations, respondent presented a
receipt purportedly indicating payment of the remaining
d) That the balance of One Million Pesos balance of P200,000.00 to Adoracion Losloso (Losloso) who
(P1,000,000.00) shall be paid on installment with allegedly received the same on behalf of petitioners.13
interest of Eighteen Percent (18%) per annum or One
and a half percent (1-1/2 %) interest per month, On March 8, 2004, the RTC rendered a Decision14 in favor of
based on the diminishing balance, compounded respondent, the dispositive portion of which reads:
monthly, effective May 6, 1996. The interest shall
continue to run until the whole obligation shall have
WHEREFORE, premises considered, this case is hereby
been fully paid. The whole One Million Pesos shall be
DISMISSED. The plaintiff is hereby ordered to pay the
paid within three years from May 6, 1996;
defendant’s counterclaim, amounting to wit:

e) That the agreed monthly amortization of Fifty


a) P300,000 as moral damages; and
Thousand Pesos (P50,000.00), principal and interest
included, must be paid to the Vendors, without need
of prior demand, on or before May 6, 1996, and every b) P100,000 plus P2,000 per court appearance as
month thereafter. Failure to pay the monthly attorney’s fees.
amortization on time, a penalty equal to Five Percent
(5%) of the amount due shall be imposed, until the SO ORDERED.15
account is updated. In addition, a penalty of One
Hundred Pesos per day shall be imposed until the
The RTC noted that the evidence formally offered by
account is updated;
petitioners have not actually been marked as none of the
markings were recorded. Thus, it found no basis to grant their
f) That after receipt of the full payment, the Vendors claims, especially since the amount claimed in the complaint is
shall execute the necessary Absolute Deed of Sale different from that testified to. The court, on the other hand,
covering the house and lot mentioned above x x x4 granted respondent’s counterclaim.16
19
On appeal, the CA affirmed the decision with modification by computed for failure to compound the monthly interest agreed
deleting the award of moral damages and attorney’s fees in upon.25 Petitioners also claim that the RTC and the CA erred in
favor of respondent.17 It agreed with the RTC that the evidence giving credence to the receipt presented by respondent to
presented by petitioners cannot be given credence in show that her unpaid obligation had already been paid having
determining the correct liability of respondent.18 Considering been allegedly given to a person who was not armed with
that the purchase price had been fully paid by respondent authority to receive payment.26
ahead of the scheduled date agreed upon by the parties,
petitioners were not awarded the excessive penalties and The petition is without merit.
interests.19 The CA thus maintained that respondent’s liability is
limited to P200,000.00 as claimed by respondent and originally
It is undisputed that the parties entered into a contract to sell
admitted by petitioners.20 This amount, however, had already
a house and lot for a total consideration of P2 million.
been paid by respondent and received by petitioners’
Considering that the property was payable in installment, they
representative.21 Finally, the CA pointed out that the RTC did
likewise agreed on the payment of interest as well as penalty
not explain in its decision why moral damages and attorney’s
in case of default. It is likewise settled that respondent was
fees were awarded. Considering also that bad faith cannot be
able to pay the total purchase price of P2 million ahead of the
attributed to petitioners when they instituted the collection
agreed term. Afterwhich, they agreed on the remaining
suit, the CA deleted the grant of their counterclaims.22
balance by way of interest and penalties which is P200,000.00.
Considering that the term of payment was not strictly followed
Aggrieved, petitioners come before the Court in this petition and the purchase price had already been fully paid by
for review on certiorari under Rule 45 of the Rules of Court respondent, the latter presented to petitioners her computation
raising the following errors: of her liabilities for interests and penalties which was agreed to
by petitioners. Petitioners also manifested their conformity to
I. the statement of account prepared by respondent.

"THE TRIAL COURT ERRED IN DISMISSING THE In paragraph (9) of petitioners’ Complaint, they stated that:
COMPLAINT ON THE GROUND THAT PLAINTIFF
FAILED TO FORMALLY OFFER THEIR EVIDENCE AS 9) That the Plaintiffs answered the Defendant as follows: "if
DEFENDANT JUDICIALLY ADMITTED IN HER ANSWER P200,000 is the correct balance, it is okay with us." x x x.27
WITH COMPULS[O]RY COUNTERCLAIM HER
OUTSTANDING OBLIGATION STILL DUE TO
But in paragraph (17) thereof, petitioners claimed that
PLAINTIFFS AND NEED NO PROOF.
defendant’s outstanding liability as of November 6, 1997 was
P487,384.15.28 Different amounts, however, were claimed in
II. their demand letter and in their testimony in court.

THE TRIAL COURT ERRED IN DISMISSING THE With the foregoing factual antecedents, petitioners cannot be
COMPLAINT FOR ALLEGED FAILURE OF PLAINTIFFS permitted to assert a different computation of the correct
TO PRESENT COMPUTATION OF THE AMOUNT BEING amount of respondent’s liability.
CLAIMED AS DEFENDANT JUDICIALLY ADMITTED
HAVING RECEIVED THE DEMAND LETTER DATED
It is noteworthy that in answer to petitioners’ claim of her
OCTOBER 22, 1997 WITH COMPUTATION OF THE
purported unpaid obligation, respondent admitted in her
BALANCE DUE.
Answer with Compulsory Counterclaim that she paid a total
amount of P2 million representing the purchase price of the
III. subject house and lot. She then manifested to petitioners and
conformed to by respondent that her only balance was
THE TRIAL COURT ERRED IN DISMISSING THE P200,000.00. Nowhere in her Answer did she allege the
COMPLAINT ON THE GROUND THAT THE defense of payment. However, during the presentation of her
DEFENDANT FULLY PAID THE CLAIMS OF evidence, respondent submitted a receipt to prove that she
PLAINTIFFS BASED ON THE ALLEGED RECEIPT OF had already paid the remaining balance. Both the RTC and the
PAYMENT BY ADORACION LOSLOSO FROM ANA CA concluded that respondent had already paid the remaining
MARIE CONCEPCION MAGLASANG WHICH HAS balance of P200,000.00. Petitioners now assail this, insisting
NOTHING TO DO WITH THE JUDICIALLY ADMITTED that the court should have maintained the judicial admissions
OBLIGATION OF APPELLEE."23 of respondent in her Answer with Compulsory Counterclaim,
especially as to their agreed stipulations on interests and
Invoking the rule on judicial admission, petitioners insist that penalties as well as the existence of outstanding obligations.
respondent admitted in her Answer with Compulsory
Counterclaim that she had paid only a total amount of P2 It is, thus, necessary to discuss the effect of failure of
million and that her unpaid obligation amounts to respondent to plead payment of its obligations.
P200,000.00.24 They thus maintain that the RTC and the CA
erred in concluding that said amount had already been paid by Section 1, Rule 9 of the Rules of Court states that "defenses
respondent. Petitioners add that respondent’s total liability as and objections not pleaded either in a motion to dismiss or in
shown in the latter’s statement of account was erroneously the answer are deemed waived." Hence, respondent should
20
have been barred from raising the defense of payment of the had not been actually amended. x x x Clearly, a court may rule
unpaid P200,000.00. However, Section 5, Rule 10 of the Rules and render judgment on the basis of the evidence before it
of Court allows the amendment to conform to or authorize even though the relevant pleading had not been previously
presentation of evidence, to wit: amended, so long as no surprise or prejudice is thereby caused
to the adverse party. Put a little differently, so long as the
Section 5. Amendment to conform to or authorize presentation basic requirements of fair play had been met, as where the
of evidence. – When issues not raised by the pleadings are litigants were given full opportunity to support their respective
tried with the express or implied consent of the parties, they contentions and to object to or refute each other's evidence,
shall be treated in all respects as if they had been raised in the the court may validly treat the pleadings as if they had been
pleadings. Such amendment of the pleadings as may be amended to conform to the evidence and proceed to
necessary to cause them to conform to the evidence and to adjudicate on the basis of all the evidence before it. (Emphasis
raise these issues may be made upon motion of any party at supplied)35
any time, even after judgment; but failure to amend does not
affect the result of the trial of these issues. If evidence is To be sure, petitioners were given ample opportunity to refute
objected to at the trial on the ground that it is not within the the fact of and present evidence to prove payment.
issues made by the pleadings, the court may allow the
pleadings to be amended and shall do so with liberality if the With the evidence presented by the contending parties, the
presentation of the merits of the action and the ends of more important question to resolve is whether or not
substantial justice will be subserved thereby. The court may respondent’s obligation had already been extinguished by
grant a continuance to enable the amendment to be made. payment.

The foregoing provision envisions two scenarios, namely, when We rule in the affirmative as aptly held by the RTC and the CA.
evidence is introduced in an issue not alleged in the pleadings
and no objection was interjected; and when evidence is
Respondent’s obligation consists of payment of a sum of
offered on an issue not alleged in the pleadings but this time
money. In order to extinguish said obligation, payment should
an objection was raised.29 When the issue is tried without the
be made to the proper person as set forth in Article 1240 of
objection of the parties, it should be treated in all respects as if
the Civil Code, to wit:
it had been raised in the pleadings.30 On the other hand, when
there is an objection, the evidence may be admitted where its
admission will not prejudice him.31 Article 1240. Payment shall be made to the person in whose
favor the obligation has been constituted, or his successor in
interest, or any person authorized to receive it. (Emphasis
Thus, while respondent judicially admitted in her Answer that
supplied)
she only paid P2 million and that she still owed petitioners
P200,000.00, respondent claimed later and, in fact, submitted
an evidence to show that she already paid the whole amount The Court explained in Cambroon v. City of Butuan,36 cited in
of her unpaid obligation. It is noteworthy that when Republic v. De Guzman,37 to whom payment should be made in
respondent presented the evidence of payment, petitioners did order to extinguish an obligation:
not object thereto. When the receipt was formally offered as
evidence, petitioners did not manifest their objection to the Payment made by the debtor to the person of the creditor or
admissibility of said document on the ground that payment to one authorized by him or by the law to receive it
was not an issue. Apparently, petitioners only denied receipt of extinguishes the obligation. When payment is made to the
said payment and assailed the authority of Losloso to receive wrong party, however, the obligation is not extinguished as to
payment. Since there was an implied consent on the part of the creditor who is without fault or negligence even if the
petitioners to try the issue of payment, even if no motion was debtor acted in utmost good faith and by mistake as to the
filed and no amendment of the pleading has been person of the creditor or through error induced by fraud of a
ordered,32 the RTC cannot be faulted for admitting third person.
respondent’s testimonial and documentary evidence to prove
payment.33
In general, a payment in order to be effective to discharge an
obligation, must be made to the proper person. Thus, payment
As stressed by the Court in Royal Cargo Corporation v. DFS must be made to the obligee himself or to an agent having
Sports Unlimited, Inc.,34 authority, express or implied, to receive the particular
payment. Payment made to one having apparent authority to
The failure of a party to amend a pleading to conform to the receive the money will, as a rule, be treated as though actual
evidence adduced during trial does not preclude adjudication authority had been given for its receipt. Likewise, if payment is
by the court on the basis of such evidence which may embody made to one who by law is authorized to act for the creditor, it
new issues not raised in the pleadings. x x x Although, the will work a discharge. The receipt of money due on a judgment
pleading may not have been amended to conform to the by an officer authorized by law to accept it will, therefore,
evidence submitted during trial, judgment may nonetheless be satisfy the debt.38
rendered, not simply on the basis of the issues alleged but also
on the issues discussed and the assertions of fact proved in Admittedly, payment of the remaining balance of P200,000.00
the course of the trial. The court may treat the pleading as if it was not made to the creditors themselves. Rather, it was
had been amended to conform to the evidence, although it allegedly made to a certain Losloso. Respondent claims that
21
Losloso was the authorized agent of petitioners, but the latter
dispute it.

Losloso’s authority to receive payment was embodied in


petitioners’ Letter39 addressed to respondent, dated August 7,
1997, where they informed respondent of the amounts they
advanced for the payment of the 1997 real estate taxes. In
said letter, petitioners reminded respondent of her remaining
balance, together with the amount of taxes paid. Taking into
consideration the busy schedule of respondent, petitioners
advised the latter to leave the payment to a certain "Dori" who
admittedly is Losloso, or to her trusted helper. This is an
express authority given to Losloso to receive payment.

Moreover, as correctly held by the CA:

Furthermore, that Adoracion Losloso was indeed an agent of


the appellant spouses is borne out by the following admissions
of plaintiff-appellant Atty. Miniano dela Cruz, to wit:

Q: You would agree with me that you have authorized this


Doiry Losloso to receive payment of whatever balance is due
you coming from Ana Marie Concepcion, that is correct?

A: In one or two times but not total authority, sir.

Q: Yes, but you have authorized her to receive payment?

A: One or two times, yes x x x. (TSN, June 28, 1999, pp. 16-
17)40

Thus, as shown in the receipt signed by petitioners’ agent and


pursuant to the authority granted by petitioners to Losloso,
payment made to the latter is deemed payment to petitioners.
We find no reason to depart from the RTC and the CA
conclusion that payment had already been made and that it
extinguished respondent's obligations.

WHEREFORE, premises considered, the petition is DENIED for


lack of merit. The Court of Appeals Decision dated March 31,
2005 and Resolution dated May 24, 2006 in CA-G.R. CV No.
83030, are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

22
FIRST DIVISION
You are hereby re-appointed Dean of the College of Physical
Therapy and Doctor-In-Charge of the Rehabilitation Clinic at
[ G.R. No. 193857, November 28, 2012 ]
Rodolfo N. Pelaez Hall, City Memorial Hospital and other
rehabilitation clinics under the management of Liceo de
MA. MERCEDES L. BARBA, PETITIONER, VS. LICEO DE Cagayan University for a period of three years effective July 1,
CAGAYAN UNIVERSITY, RESPONDENT. 2002 unless sooner revoked for valid cause or causes.

DECISION Your position is one of trust and confidence and the


appointment is subject to the pertinent provisions of the
VILLARAMA, JR., J.:
University Administrative Personnel and Faculty Manuals, and
Before the Court is a petition for review on certiorari assailing Labor Code.
the March 29, 2010 Amended Decision[1] and September 14,
2010 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP xxxx
No. 02508-MIN. The CA had reconsidered its earlier
Decision[3] dated October 22, 2009 and set aside the
Petitioner accepted her appointment and assumed the position
September 25, 2007 and June 30, 2008 Resolutions[4] of the
of Dean of the College of Physical Therapy. In the school year
National Labor Relations Commission (NLRC) as well as the
2003 to 2004, the College of Physical Therapy suffered a
September 29, 2006 Decision[5] of the Labor Arbiter. The CA
dramatic decline in the number of enrollees from a total of
held that the Labor Arbiter and NLRC had no jurisdiction over
1,121 students in the school year 1995 to 1996 to only 29
the illegal dismissal case filed by petitioner against respondent
students in the first semester of school year 2003 to 2004.
because petitioner's position as Dean of the College of Physical
This worsened in the next year or in school year 2004 to 2005
Therapy of respondent is a corporate office.
where a total of only 20 students enrolled.[8]
The facts follow.
Due to the low number of enrollees, respondent decided to
freeze the operation of the College of Physical Therapy
Petitioner Dr. Ma. Mercedes L. Barba was the Dean of the
indefinitely. Respondent's President Dr. Rafaelita Pelaez-Golez
College of Physical Therapy of respondent Liceo de Cagayan
wrote petitioner a letter[9] dated March 16, 2005 informing her
University, Inc., a private educational institution with school
that her services as dean of the said college will end at the
campus located at Carmen, Cagayan de Oro City.
close of the school year. Thereafter, the College of Physical
Therapy ceased operations on March 31, 2005, and petitioner
Petitioner started working for respondent on July 8, 1993 as
went on leave without pay starting on April 9, 2005.
medical officer/school physician for a period of one school year
Subsequently, respondent's Executive Vice President, Dr.
or until March 31, 1994. In July 1994, she was chosen by
Mariano M. Lerin, through Dr. Glory S. Magdale, respondent's
respondent to be the recipient of a scholarship grant to pursue
Vice President for Academic Affairs, sent petitioner a
a three-year residency training in Rehabilitation Medicine at
letter[10] dated April 27, 2005 instructing petitioner to return to
the Veterans Memorial Medical Center (VMMC). The
work on June 1, 2005 and report to Ma. Chona Palomares, the
Scholarship Contract[6] provides:
Acting Dean of the College of Nursing, to receive her teaching
load and assignment as a full-time faculty member in that
department for the school year 2005-2006.
5. That the SCHOLAR after the duration of her study and
training shall serve the SCHOOL in whatever position the In reply, petitioner informed Dr. Lerin that she had not
SCHOOL desires related to the SCHOLAR's studies for a period committed to teach in the College of Nursing and that as far as
of not less than ten (10) years; she can recall, her employment is not dependent on any
teaching load. She then requested for the processing of her
separation benefits in view of the closure of the College of
After completing her residency training with VMMC in June
Physical Therapy.[11] She did not report to Palomares on June
1997, petitioner returned to continue working for respondent.
1, 2005.
She was appointed as Acting Dean of the College of Physical
Therapy and at the same time designated as Doctor-In-Charge
On June 8, 2005, petitioner followed up her request for
of the Rehabilitation Clinic of the Rodolfo N. Pelaez Hall, City
separation pay and other benefits but Dr. Lerin insisted that
Memorial Hospital.
she report to Palomares; otherwise, sanctions will be imposed
on her. Thus, petitioner through counsel wrote Dr. Golez
On June 19, 2002, petitioner's appointment as Doctor-In-
directly, asking for her separation pay and other benefits.
Charge of the Rehabilitation Clinic was renewed and she was
appointed as Dean of the College of Physical Therapy by
On June 21, 2005, Dr. Magdale wrote petitioner a
respondent's President, Dr. Jose Ma. R. Golez. The
letter[12] directing her to report for work and to teach her
appointment letter[7] reads:
assigned subjects on or before June 23, 2005. Otherwise, she
will be dismissed from employment on the ground of
abandonment. Petitioner, through counsel, replied that
x x x x teaching in the College of Nursing is in no way related to her
scholarship and training in the field of rehabilitation medicine.
Dear Dr. Barba: Petitioner added that coercing her to become a faculty
23
member from her position as College Dean is a great demotion that petitioner was constructively dismissed. The NLRC held
which amounts to constructive dismissal.[13] that petitioner was demoted when she was assigned as a
professor in the College of Nursing because there are functions
Dr. Magdale sent another letter[14] to petitioner on June 24, and obligations and certain allowances and benefits given to a
2005 ordering her to report for work as she was still bound by College Dean but not to an ordinary professor. The NLRC
the Scholarship Contract to serve respondent for two more ruled:
years. But petitioner did not do so. Hence, on June 28, 2005,
Dr. Magdale sent petitioner a notice terminating her services
on the ground of abandonment.
WHEREFORE, in view of the foregoing, the assailed decision is
hereby MODIFIED in that complainant is hereby considered as
Meanwhile, on June 22, 2005, prior to the termination of her
constructively dismissed and thus entitled to backwages and
services, petitioner filed a complaint before the Labor Arbiter
separation pay of one (1) month salary for every year of
for illegal dismissal, payment of separation pay and retirement
service, plus attorney's fees, which shall be computed at the
benefits against respondent, Dr. Magdale and Dr. Golez. She
execution stage before the Arbitration Branch of origin.
alleged that her transfer to the College of Nursing as a faculty
member is a demotion amounting to constructive dismissal.
SO ORDERED.[18]
Respondent claimed that petitioner was not terminated and
that it was only petitioner's appointment as College Dean in The NLRC denied respondent's motion for reconsideration in a
the College of Physical Therapy that expired as a necessary Resolution[19] dated June 30, 2008.
consequence of the eventual closure of the said college.
Respondent further averred that petitioner's transfer as full- Ruling of the Court of Appeals
time professor in the College of Nursing does not amount to
constructive dismissal since the transfer was without loss of Respondent went to the CA on a petition for certiorari alleging
seniority rights and without diminution of pay. Also, that the NLRC committed grave abuse of discretion when it
respondent added that pursuant to the Scholarship Contract, declared that petitioner's transfer to the College of Nursing as
petitioner was still duty bound to serve respondent until 2007 full-time professor but without diminution of salaries and
in whatever position related to her studies the school desires. without loss of seniority rights amounted to constructive
dismissal because there was a demotion involved in the
Labor Arbiter's Ruling transfer and because petitioner was compelled to accept her
new assignment.
In a Decision[15] dated September 29, 2006, the Labor Arbiter
found that respondent did not constructively dismiss petitioner; Respondent also filed a Supplemental Petition[20] raising for the
therefore, she was not entitled to separation pay. The Labor first time the issue of lack of jurisdiction of the Labor Arbiter
Arbiter held that petitioner's assignment as full-time professor and the NLRC over the case. Respondent claimed that a
in the College of Nursing was not a demotion tantamount to College Dean is a corporate officer under its by-laws and
constructive dismissal. The dispositive portion of the Labor petitioner was a corporate officer of respondent since her
Arbiter's decision reads: appointment was approved by the board of directors.
Respondent posited that petitioner was a corporate officer
since her office was created by the by-laws and her
appointment, compensation, duties and functions were
WHEREFORE, in view of the foregoing, judgment is hereby
approved by the board of directors. Thus, respondent
rendered dismissing the complaint for illegal dismissal for utter
maintained that the jurisdiction over the case is with the
lack of merit, but ordering the respondent Liceo de Cagayan
regular courts and not with the labor tribunals.
University to reinstate complainant to an equivalent position
without loss of seniority rights, but without back wages.
In its original Decision[21] dated October 22, 2009, the CA
reversed and set aside the NLRC resolutions and reinstated the
However, if reinstatement is no longer feasible or if there is no
decision of the Labor Arbiter. The CA did not find merit in
equivalent position to which complainant may be reinstated,
respondent's assertion in its Supplemental Petition that the
respondent may opt to pay complainant her separation pay
position of petitioner as College Dean was a corporate office.
equivalent to one-half (1/2) month pay for every year of
Instead, the appellate court held that petitioner was
service or in the sum of P195,000.00, subject to deduction for
respondent's employee, explaining thus:
advances or accountabilities which complainant may have had.

Other claims are ordered dismissed for lack of merit.


Corporate officers in the context of PD 902-A are those officers
SO ORDERED.[16] of a corporation who are given that character either by the
Corporation Code or by the corporation's By-Laws. Under
Section 25 of the Corporation Code, the "corporate officers"
NLRC's Ruling
are the president, secretary, treasurer and such other officers
as may be provided for in the By-Laws.
Petitioner appealed the above decision to the NLRC. On
September 25, 2007, the NLRC issued a
True, the By-Laws of LDCU provides that there shall be a
Resolution[17] reversing the Labor Arbiter's decision and holding
College Director. This means a College Director is a corporate
24
officer. However, contrary to the allegation of petitioner, the participated in the proceedings below. Hence, respondent is
position of Dean does not appear to be the same as that of a estopped from questioning the jurisdiction of the labor
College Director. tribunals.

Aside from the obvious disparity in name, the By-Laws of LDCU Unsatisfied, both petitioner and respondent sought
provides for only one College Director. But as shown by LDCU reconsideration of the CA decision. Petitioner prayed for the
itself, numerous persons have been appointed as Deans. They reversal of the ruling that there was no constructive dismissal.
could not be the College Director contemplated by the By-Laws Respondent meanwhile maintained that the labor tribunals
inasmuch as the By-Laws authorize only the appointment of have no jurisdiction over the case, petitioner being a corporate
one not many. If it is indeed the intention of LDCU to officer.
give its many Deans the rank of College Director, then
it exceeded the authority given to it by its By-Laws On March 29, 2010, the CA issued the assailed Amended
because only one College Director is authorized to be Decision[23] setting aside its earlier ruling. This time the CA
appointed. It must amend its By-Laws. Prior to such an held that the position of a College Dean is a corporate office
amendment, the office of College Dean is not a corporate and therefore the labor tribunals had no jurisdiction over the
office. complaint for constructive dismissal. The CA noted that
petitioner's appointment as Dean of the College of Physical
Another telling sign that a College Director is not the same as Therapy was approved by the respondent's board of directors
a Dean is the manner of appointment. A College Director is thereby concluding that the position of a College Dean is a
directly appointed by the Board of Directors. However, corporate office. Also, the CA held that the College Director
a College Dean is appointed by the President upon the mentioned in respondent's by-laws is the same as a College
recommendation of the Vice President for Academic Affairs and Dean and no one has ever been appointed as College Director.
the Executive Vice President and approval of the Board of The CA added that in the Administrative Manual the words
Directors. There is a clear distinction on the manner of "college" and "department" were used in the same context in
appointment indicating that the offices are not one and the the section on the Duties and Responsibilities of the College
same. Dean, and that there could not have been any other "head of
department" being alluded to in the by-laws but the college
x x x x dean.

This shows that it was not the intention of LDCU to The dispositive portion of the Amended Decision reads:
make Dr. Barba a corporate officer as it was stated in her
letter of appointment that the same shall be subject to the
provisions of the Labor Code. Otherwise, the appointment
WHEREFORE, in view of the foregoing, We reconsider Our
letter should have stated that her appointment is governed by
Decision on October [22], 2009, and declare that the position
the Corporation Code. Thus, We find the arguments in the
of College Dean is a corporate office of Petitioner [Liceo de
Supplemental Petition on the matter of lack of jurisdiction of
Cagayan University], thereby divesting the Labor Arbiter and
the Labor Arbiter and the NLRC to be without merit. Dr. Barba,
the National Labor Relations Commission of jurisdiction over
being a College Dean, was not a corporate
the instant case. Hence, the Resolutions of the Public
officer.[22] (Emphasis not ours)
Respondent dated September 25, 2007 and June 30, 2008 as
well as that of the Regional Labor Arbiter dated 29 September
2006 are VACATED and SET ASIDEas they were rendered by
The CA further found that no constructive dismissal occurred tribunals that had no jurisdiction over the case.
nor has petitioner abandoned her work. According to the CA, a
transfer amounts to constructive dismissal when the transfer is SO ORDERED.[24]
unreasonable, unlikely, inconvenient, impossible, or prejudicial
to the employee or it involves a demotion in rank or a
Petitioner filed a motion for reconsideration from the above
diminution of salary and other benefits. In the case of
decision, but her motion was denied by the CA in its
petitioner, the CA held that she was never demoted and her
Resolution[25] dated September 14, 2010. Hence, petitioner
transfer, being a consequence of the closure of the College of
filed the present petition.
Physical Therapy, was valid.
Petitioner argues that the CA erred in ruling that she was a
The CA also noted that petitioner's appointment as Dean of the
corporate officer and asserts that the CA's previous finding that
College of Physical Therapy was for a term of three years.
she was respondent's employee is more in accord with law and
Hence, when her appointment as College Dean was no longer
jurisprudence. Petitioner adds that the appellate court erred
renewed on June 1, 2005 or after her three-year term had
when it ruled that the labor tribunals had no jurisdiction over
expired, it cannot be said that there was a demotion or that
her complaint for illegal dismissal against respondent. She
she was dismissed. Her term as Dean had expired and she can
faults the CA for allowing respondent to raise the issue of
no longer claim to be entitled to the benefits emanating from
jurisdiction in a Supplemental Petition after respondent has
such office.
actively participated in the proceedings before the labor
tribunals. Petitioner also asserts that the CA erred in denying
On the issue of alleged lack of jurisdiction, the CA observed
her motion for reconsideration from its Amended Decision on
that respondent never raised the issue of jurisdiction before
the ground that it is a second motion for reconsideration which
the Labor Arbiter and the NLRC and respondent even actively
25
is a prohibited pleading. Lastly, petitioner claims that period granted by the Court to file the petition, her petition
respondent violated the rule against forum shopping when it was filed on time.
failed to inform the CA of the pendency of the complaint for
breach of contract which it filed against petitioner before the Now on the main issue.
Regional Trial Court of Misamis Oriental, Branch 23.
As a general rule, only questions of law may be allowed in a
Respondent, for its part, counters that the petition was filed petition for review on certiorari.[26] Considering, however, that
out of time and petitioner's motion for reconsideration from the CA reversed its earlier decision and made a complete
the Amended Decision was a prohibited pleading since turnaround from its previous ruling, and consequently set aside
petitioner has already filed a motion for reconsideration from both the findings of the Labor Arbiter and the NLRC for
the original decision of the CA. It is respondent's posture that allegedly having been issued without jurisdiction, it is
an Amended Decision is not really a new decision but the necessary for the Court to reexamine the records and resolve
appellate court's own modification of its prior decision. More the conflicting rulings.
importantly, respondent points out that the arguments raised
by petitioner do not justify a reversal of the Amended Decision After a careful review and examination of the records, we find
of the appellate court. Respondent insists on the correctness of that the CA's previous ruling that petitioner was respondent's
the Amended Decision and quotes the assailed decision in its employee and not a corporate officer is supported by the
entirety. totality of the evidence and more in accord with law and
prevailing jurisprudence.

Corporate officers are elected or appointed by the directors or


Issue
stockholders, and are those who are given that character
either by the Corporation Code or by the corporation's by-
The decisive issue in the present petition is whether petitioner laws.[27] Section 25[28] of the Corporation Code enumerates
was an employee or a corporate officer of respondent corporate officers as the president, the secretary, the treasurer
university. Resolution of this issue resolves the question of and such other officers as may be provided for in the by-laws.
whether the appellate court was correct in ruling that the In Matling Industrial and Commercial Corporation v.
Labor Arbiter and the NLRC had no jurisdiction over petitioner's Coros,[29] the phrase "such other officers as may be provided
complaint for constructive dismissal against respondent. for in the by-laws" has been clarified, thus:

Our Ruling Conformably with Section 25, a position must be expressly


mentioned in the By-Laws in order to be considered as
a corporate office. Thus, the creation of an office pursuant
We grant the petition. to or under a By-Law enabling provision is not enough to make
a position a corporate office. Guerrea v. Lezama, the first
Prefatorily, we first discuss the procedural matter raised by ruling on the matter, held that the only officers of a
respondent that the present petition is filed out of time. corporation were those given that character either by
Respondent claims that petitioner's motion for reconsideration the Corporation Code or by the By-Laws; the rest of the
from the Amended Decision is a second motion for corporate officers could be considered only as
reconsideration which is a prohibited pleading. Respondent's employees of subordinate officials. Thus, it was held
assertion, however, is misplaced for it should be noted that the in Easycall Communications Phils., Inc. v. King:
CA's Amended Decision totally reversed and set aside its
previous ruling. Section 2, Rule 52 of the 1997 Rules of Civil
Procedure, as amended, provides that no second motion for
reconsideration of a judgment or final resolution by the same An "office" is created by the charter of the
party shall be entertained. This contemplates a situation where corporation and the officer is elected by the directors or
a second motion for reconsideration is filed by the same party stockholders. On the other hand, an employee occupies no
assailing the same judgment or final resolution. Here, the office and generally is employed not by the action of the
motion for reconsideration of petitioner was filed after the directors or stockholders but by the managing officer of
appellate court rendered an Amended Decision totally the corporation who also determines the compensation
reversing and setting aside its previous ruling. Hence, to be paid to such employee. (Emphasis supplied)
petitioner is not precluded from filing another motion for
reconsideration from the Amended Decision which held that
In declaring petitioner a corporate officer, the CA considered
the labor tribunals lacked jurisdiction over petitioner's
respondent's by-laws and gave weight to the certifications of
complaint for constructive dismissal. The period to file an
respondent's secretary attesting to the resolutions of the board
appeal should be reckoned not from the denial of her motion
of directors appointing the various academic deans for the
for reconsideration of the original decision, but from the date
School Years 1991-2002 and 2002-2005, including petitioner.
of petitioner's receipt of the notice of denial of her motion for
However, an assiduous perusal of these documents does not
reconsideration from the Amended Decision. And as petitioner
convince us that petitioner occupies a corporate office position
received notice of the denial of her motion for reconsideration
in respondent university.
from the Amended Decision on September 23, 2010 and filed
her petition on November 8, 2010, or within the extension
The relevant portions of respondent's by-laws[30] are hereby
26
quoted as follows: Ma. Mercedes Vivares
2,660.00
Physical Therapy
Article III
xxxx
The Board of Directors

Sec. 3. The Board of Directors shall appoint a College Director,


RESOLVE, as it is hereby resolved, that pursuant to Section
define his powers and duties, and determine his compensation;
3[,] Article III and Section 1[,] Article V of the Corporation's
approve or disapprove recommendations for appointment or
By-laws, the various academic deans for the school years
dismissal of teachers and employees submitted to it by the
2002-2005 of the University, as recommended by the President
College Director; and exercise other powers and perform such
of the Corporation, are hereby appointed, whose names are
duties as may be required of it hereafter for the proper
enumerated hereunder and their respective colleges and their
functioning of the school.
honoraria are indicated opposite their names, all of them
having a three (3) year term, to wit:
x x x x

Name and College


Article IV
Honorarium
Officers
Ma. Mercedes Vivares
Sec. 1. The officers of the corporation shall consist of 2,450.00
a President, a Vice President, and a Secretary- Physical Therapy
Treasurer, who shall be chosen from the directors and by the
directors themselves. They shall be elected annually at the first x x x x[32]
meeting of the directors immediately after their election, and
shall hold office for one (1) year and until their successors are
In respondent's by-laws, there are four officers specifically
elected and qualified.
mentioned, namely, a president, a vice president, a secretary
and a treasurer. In addition, it is provided that there shall be
x x x x
other appointive officials, a College Director and heads of
departments whose appointments, compensations, powers and
duties shall be determined by the board of directors. It is
Article V worthy to note that a College Dean is not among the corporate
Other Appointive Officials officers mentioned in respondent's by-laws. Petitioner, being
an academic dean, also held an administrative post in the
university but not a corporate office as contemplated by law.
Sec. 1. The Liceo de Cagayan shall have a College Petitioner was not directly elected nor appointed by the board
Director and such heads of departments as may exist in the of directors to any corporate office but her appointment was
said college whose appointments, compensations, powers and merely approved by the board together with the other
duties shall be determined by the Board of academic deans of respondent university in accordance with
Directors.[31] (Emphasis supplied) the procedure prescribed in respondent's Administrative
Manual.[33] The act of the board of directors in approving the
On the other hand, the pertinent portions of the two board appointment of petitioner as Dean of the College of Therapy
resolutions appointing the various academic deans in the did not make her a corporate officer of the corporation.
university including petitioner, read as follows:
Moreover, the CA, in its amended decision erroneously equated
x x x x the position of a College Director to that of a College Dean
thereby concluding that petitioner is an officer of respondent.
RESOLVE, as it is hereby resolved, that pursuant to Section
3[,] Article III and Section 1[,] Article V of the Corporation's It bears stressing that the appointive officials mentioned in
By-laws, the various academic deans for the school years Article V of respondent's by-laws are not corporate officers
1999-2002 of the University, as recommended by the President under the contemplation of the law. Though the board of
of the Corporation, are hereby appointed, whose names are directors may create appointive positions other than the
enumerated hereunder and their respective colleges and their positions of corporate officers, the persons occupying such
honoraria are indicated opposite their names, all of them positions cannot be deemed as corporate officers as
having a three (3) year term, to wit: contemplated by Section 25 of the Corporation Code. On this
point, the SEC Opinion dated November 25, 1993 quoted in
the case of Matling Industrial and Commercial Corporation v.
Coros,[34] is instructive:
Name and College
Honorarium

27
Thus, pursuant to the above provision (Section 25 of the Deans the rank of College Director, then it exceededthe
Corporation Code), whoever are the corporate officers authority given to it by its By-Laws because only one
enumerated in the by-laws are the exclusive Officers of the College Director is authorized to be appointed. It must
corporation and the Board has no power to create other amend its By-Laws. Prior to such amendment, the office of
Offices without amending first the corporate By-laws. [the] College Dean is not a corporate office.
However, the Board may create appointive positions
other than the positions of corporate Officers, but the Another telling sign that a College Director is not the same as
persons occupying such positions are not considered as a Dean is the manner of appointment. A College Director is
corporate officers within the meaning of Section 25 of directly appointed by the Board of Directors. However, a
the Corporation Code and are not empowered to College Dean is appointed by the President upon the
exercise the functions of the corporate Officers, except recommendation of the Vice President for Academic Affairs and
those functions lawfully delegated to them. Their functions and the Executive Vice President and approval of the Board of
duties are to be determined by the Board of Directors. There is a clear distinction on the manner of
Directors/Trustees. appointment indicating that the offices are not one and the
same.[36](Additional emphasis supplied)
But even assuming that a College Director may be considered
a corporate officer of respondent, a review of the records as Undoubtedly, petitioner is not a College Director and she is not
well as the other documents submitted by the parties fails to a corporate officer but an employee of respondent. Applying
persuade that petitioner was the "College Director" mentioned the four-fold test concerning (1) the selection and engagement
in the by-laws of respondent. Nowhere in petitioner's of the employee; (2) the payment of wages; (3) the power of
appointment letter was it stated that petitioner was designated dismissal; (4) the employer's power to control the employee
as the College Director or that petitioner was to assume the with respect to the means and methods by which the work is
functions and duties of a College Director. Neither can it be to be accomplished, it is clear that there exists an employer-
inferred in respondent's by-laws that a dean of a college is the employee relationship between petitioner and respondent.
same as a College Director of respondent. Respondent's lone Records show that petitioner was appointed to her position as
surviving incorporating director Yolanda Rollo even admitted Dean by Dr. Golez, the university president and was paid a
that no College Director has ever been appointed by salary of P32,500 plus transportation allowance. It was evident
respondent. In her affidavit, Yolanda also explained the that respondent had the power of control over petitioner as
reason for the creation of the position of a College Director, to one of its deans. It was also the university president who
wit: informed petitioner that her services as Dean of the College of
Physical Therapy was terminated effective March 31, 2005 and
she was subsequently directed to report to the Acting Dean of
the College of Nursing for assignment of teaching load.
4. At the time we signed the By-Laws of the Corporation, we,
as directors, did envision to form only a college of law as that
Thus, petitioner, being an employee of respondent, her
was the main thrust of our president, the late Atty. Rodolfo N.
complaint for illegal/constructive dismissal against respondent
Pelaez. The original plan then was to have a "College Director"
was properly within the jurisdiction of the Labor Arbiter and
as the head of the college of law and below him within the
the NLRC. Article 217 of the Labor Code provides:
college were heads of departments. The appointments,
remuneration, duties and functions of the "College Director"
and the heads of departments were to be approved by the
Board of Directors. x x x[35] ART. 217. Jurisdiction of Labor Arbiters and the
Commission. (a) Except as otherwise provided under this
Code, the Arbiters shall have original and exclusive jurisdiction
Notably, the CA has sufficiently explained why petitioner could
to hear and decide xxx the following cases involving all
not be considered a College Director in its previous decision.
workers, whether agricultural or non-agricultural:
The appellate court explained:
1. Unfair labor practice cases;

True, the By-Laws of [Liceo de Cagayan University] provides 2. Termination disputes;


that there shall be a College Director. This means a College
Director is a corporate officer. However, contrary to the 3. If accompanied with a claim for reinstatement, those cases
allegation of petitioner, the position of Dean does not appear that workers may file involving wage, rates of pay, hours of
to be the same as that of a College Director. work and other terms and conditions of employment;

Aside from the obvious disparity in name, the By-Laws of 4. Claims for actual, moral, exemplary and other forms of
[Liceo de Cagayan University] provides for only one College damages arising from the employer-employee relations;
Director. But as shown by [Liceo de Cagayan University]
itself, numerous persons have been appointed as Deans. 5. Cases arising from any violation of Article 264 of this Code,
They could not be the College Director contemplated by the including questions involving the legality of strikes and
By-Laws inasmuch as the By-Laws authorize only the lockouts; and
appointment of one not many. If it is indeed the intention
of [Liceo de Cagayan University] to give its many 6. Except claims for Employees Compensation, Social Security,

28
Medicare and maternity benefits, all other claims arising from appurtenance: overseas employment contracts, for one, to
employer-employee relations, including those of persons in which, whatever the nature of the engagement, the concept of
domestic or household service, involving an amount exceeding regular employment with all that it implies does not appear
five thousand pesos (P5,000.00) regardless of whether ever to have been applied, Article 280 of the Labor Code
accompanied with a claim for reinstatement. notwithstanding; also appointments to the positions of dean,
assistant dean, college secretary, principal, and other
(b) The Commission shall have exclusive appellate jurisdiction administrative offices in educational institutions, which are by
over all cases decided by Labor Arbiters. practice or tradition rotated among the faculty members, and
where fixed terms are a necessity without which no reasonable
xxxx rotation would be possible. x x x (Emphasis supplied)

Moreover, we agree with the CA's earlier pronouncement that In constructive dismissal cases, the employer has the burden
since respondent actively participated in the proceedings of proving that its conduct and action or the transfer of an
before the Labor Arbiter and the NLRC, it is already estopped employee are for valid and legitimate grounds such as genuine
from belatedly raising the issue of lack of jurisdiction. In this business necessity.[39] Particularly, for a transfer not to be
case, respondent filed position papers and other supporting considered a constructive dismissal, the employer must be able
documents to bolster its defense before the labor tribunals but to show that such transfer is not unreasonable, inconvenient,
in all these pleadings, the issue of lack of jurisdiction was or prejudicial to the employee. In this case, petitioner's
never raised. It was only in its Supplemental Petition filed transfer was not unreasonable, inconvenient or prejudicial to
before the CA that respondent first brought the issue of lack of her. On the contrary, the assignment of a teaching load in the
jurisdiction. We have consistently held that while jurisdiction College of Nursing was undertaken by respondent to
may be assailed at any stage, a party's active participation in accommodate petitioner following the closure of the College of
the proceedings will estop such party from assailing its Physical Therapy. Respondent further considered the fact that
jurisdiction. It is an undesirable practice of a party participating petitioner still has two years to serve the university under the
in the proceedings and submitting his case for decision and Scholarship Contract.
then accepting the judgment, only if favorable, and attacking it
for lack of jurisdiction, when adverse.[37] Petitioner's subsequent transfer to another department or
college is not tantamount to demotion as it was a valid
Under Section 6, Rule 10 of the 1997 Rules of Civil Procedure, transfer. There is therefore no constructive dismissal to speak
as amended, governing supplemental pleadings, the court of. That petitioner ceased to enjoy the compensation,
"may" admit supplemental pleadings, such as the supplemental privileges and benefits as College Dean was but a logical
petition filed by respondent before the appellate court, but the consequence of the valid revocation or termination of such
admission of these pleadings remains in the sound discretion fixed-term position. Indeed, it would be absurd and unjust for
of the court. Nevertheless, we have already found no credence respondent to maintain a deanship position in a college or
in respondent's claim that petitioner is a corporate officer, department that has ceased to exist. Under the circumstances,
consequently, the alleged lack of jurisdiction asserted by giving petitioner a teaching load in another
respondent in the supplemental petition is bereft of merit. College/Department that is related to Physical Therapy -- thus
enabling her to serve and complete her remaining two years
On the issue of constructive dismissal, we agree with the Labor under the Scholarship Contract -- is a valid exercise of
Arbiter and the appellate court's earlier ruling that petitioner management prerogative on the part of respondent.
was not constructively dismissed. Petitioner's letter of
appointment specifically appointed her as Dean of the College Lastly, as to whether respondent was guilty of forum shopping
of Physical Therapy and Doctor-in-Charge of the Rehabilitation when it failed to inform the appellate court of the pendency of
Clinic "for a period of three years effective July 1, 2002 unless Civil Case No. 2009-320, a complaint for breach of contract
sooner revoked for valid cause or causes." Evidently, filed by respondent against petitioner, we rule in the negative.
petitioner's appointment as College Dean was for a fixed term, Forum shopping exists when the elements of litis pendentia are
subject to reappointment and revocation or termination for a present or where a final judgment in one case will amount
valid cause. When respondent decided to close its College of to res judicata in another. Litis pendentia requires the
Physical Therapy due to drastic decrease in enrollees, concurrence of the following requisites: (1) identity of parties,
petitioner's appointment as its College Dean was validly or at least such parties as those representing the same
revoked and her subsequent assignment to teach in the interests in both actions; (2) identity of rights asserted and
College of Nursing was justified as it is still related to her reliefs prayed for, the reliefs being founded on the same facts;
scholarship studies in Physical Therapy. and (3) identity with respect to the two preceding particulars
in the two cases, such that any judgment that may be
As we observed in Brent School, Inc. v. Zamora,[38] also cited rendered in the pending case, regardless of which party is
by the CA, it is common practice in educational institutions to successful, would amount to res judicata in the other case. [40]
have fixed-term contracts in administrative positions, thus:
While there is identity of parties in the two cases, the causes
of action and the reliefs sought are different. The issue raised
in the present case is whether there was constructive dismissal
Some familiar examples may be cited of employment contracts
committed by respondent. On the other hand, the issue in the
which may be neither for seasonal work nor for specific
civil case pending before the RTC is whether petitioner was
projects, but to which a fixed term is an essential and natural
guilty of breach of contract. Hence, respondent is not guilty of
29
forum shopping.

WHEREFORE, the petition for review on certiorari


is GRANTED. The Amended Decision dated March 29, 2010
and Resolution dated September 14, 2010 of the Court of
Appeals in CA-G.R. SP No. 02508-MIN are hereby SET ASIDE.
The earlier Decision dated October 22, 2009 of the Court of
Appeals in said case is REINSTATED and UPHELD.

No pronouncement as to costs.

SO ORDERED.

30
FIRST DIVISION Milan. The complaint was docketed as Civil Case No. Q-00-
40010 in the RTC of Quezon City, Branch 226.

PCI LEASING and G.R. No. 151215


FINANCE, INC., PCI Leasing alleged that it extended loans to
respondents on September 4, 1997, September 26,
Petitioner,
Present: 1997 and November 5, 1997, for which Deeds of
Assignment[7] were duly executed by respondents. Under the
terms of the Deeds, respondents sold, assigned and
PUNO, C.J., transferred to PCI Leasing the formers rights to various checks
- versus - for and in consideration of the various amounts obtained. In
Chairperson, case of default or nonpayment of the checks, respondents
CARPIO MORALES, were obligated to pay the face value of the checks, interests
and late payment charges. Subsequently, when PCI Leasing
LEONARDO-DE CASTRO, presented the checks for payment, the same were dishonored
ANTONIO C. MILAN, for different reasons, i.e., Payment Stopped,[8] Drawn Against
BERSAMIN, and
Doing Business Under Insufficient Funds,[9] and Account Closed.[10] Despite repeated
the Name and Style of VILLARAMA, JR., JJ. demands, respondents failed to settle their obligation, which
A. MILAN TRADING, amounted to P2,327,833.33 as of January 15, 2000. PCI
and LAURA M. MILAN, Leasing was then compelled to litigate to enforce payment of
April 5, 2010 the total loan obligation, plus interests, penalties, attorneys
Respondents.
fees, expenses of litigation and costs of suit.

Promulgated:
On March 2, 2000, the RTC issued summons[11] to
_____________________ respondents, addressed to their place of residence as stated in
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - the complaint, which is at No. 47 San Ildefonso
- - - - - - - - - -x Drive, Torres Village, Novaliches, Quezon City.

On March 10, 2000, the process server of the RTC


filed his Officers Return,[12] stating that he went to the
DECISION aforementioned address on two occasions to serve the
summons and the copy of the complaint to the respondents. At
both times, however, the process server was told by the
people he encountered there that respondents had already
LEONARDO DE CASTRO, J.: transferred to an unknown location. The summons and the
copy of the complaint were, thus, returned unserved.

This Petition for Review on Certiorari[1] under Rule 45


of the Rules of Court is directed against the Resolutions of the In view of the above situation, PCI Leasing filed
Court of Appeals dated September 20, 2001[2] and December on April 10, 2000 a Motion to Archive[13] Civil Case No. Q-00-
20, 2001[3] in CA-G.R. SP No. 66546. The Resolution dated 40010, asserting that it was then conducting an investigation
September 20, 2001 of the Court of Appeals dismissed the in order to ascertain the whereabouts of the respondents. PCI
Petition for Certiorari filed by herein petitioner, which assailed Leasing prayed that the case be archived, subject to its
the Resolution[4] dated August 3, 2001 of the Regional Trial reinstatement after the whereabouts of the respondents was
Court (RTC) of Quezon City, Branch 226, in Civil Case No. Q- determined.
00-40010, dismissing the appeal of herein petitioner for having
been taken out of time. The Motion for Reconsideration of the
September 20, 2001 Resolution was denied by the Court of In an Order[14] dated April 13, 2000, the RTC denied
Appeals in the Resolution dated December 20, the Motion to Archive given that the circumstances of the case
2001. Furthermore, the instant petition seeks the reversal of were not within the purview of the provisions of paragraph II
the Order[5] dated October 13, 2000 of the RTC in Civil Case (c) of Administrative Circular No. 7-A-92 (Guidelines in the
No. Q-00-40010, which dismissed the complaint filed by Archiving of Cases),[15] which read:
petitioner against the herein respondents.

In civil cases, the court may motu


The instant case was commenced on February 18, proprio or upon motion, order that a civil
2000, upon the filing of a Complaint for Sum of Money[6] by case be archived only in the following
petitioner PCI Leasing and Finance, Inc. (PCI Leasing) against instances:
herein respondents Antonio C. Milan (Antonio) and Laura M. xxxx

31
c) When defendant, without fault or neglect [I]t is clear that [PCI Leasing] had been
of plaintiff, cannot be served with summons remiss in its duty to prosecute this case
within six (6) months from issuance of diligently.
original summons.

The Court has already given [PCI


Leasing] several chances within a span of
almost one (1) year to prosecute the instant
Subsequently, on July 13, 2000, the RTC issued an
case but [PCI Leasing] failed to do so.
Order,[16] directing PCI Leasing to take the necessary steps to
actively prosecute the instant case within ten days from receipt
under pain of dismissal of the case for lack of interest.
If only to serve as a lesson to
[PCI Leasing] to be more considerate
of the time and resources of the Court,
On July 31, 2000, PCI Leasing filed a Motion for
the Court resolves to DENY the instant
Issuance of Alias Summons.[17] Said motion was, however,
motion for reconsideration.
denied by the RTC via an Order[18] dated August 3, 2000 on
the ground that the same was a mere scrap of paper for
apparently containing a defective notice of hearing.[19]
WHEREFORE, premises considered,
the Motion for Reconsideration is DENIED,
for lack of merit. (Emphases ours.)
On September 5, 2000, PCI Leasing filed another
Motion for Issuance of Alias Summons,[20] which the RTC
scheduled for hearing on October 13, 2000.[21] During the
hearing of the motion on said date, there was no appearance
from both counsels of PCI Leasing and On January 26, 2001, PCI Leasing filed an Ex
respondents.[22] Accordingly, the RTC issued an Order Parte Motion for Reconsideration,[26] once more seeking a
dated October 13, 2000 in Civil Case No. Q-00-40010, reconsideration of the dismissal of its case.Given the alleged
declaring thus: amount of the respondents liability, PCI Leasing stressed that
it had a valid cause of action against the former and it never
lost interest in the prosecution of its case. PCI Leasing then
When this case was called for implored the RTC to revisit the Order dated October 13,
hearing on the Motion for Issuance of Alias 2000 and the Resolution dated January 4, 2001 to make the
Summons, there was no appearance for [PCI dismissal without prejudice, in order for PCI Leasing to
Leasing]. It should be recalled that as early maintain its right to re-file its legal claim against respondents.
as July 13, 2000, [PCI Leasing] had been
ordered to take the necessary steps to
actively prosecute this case, otherwise, the The RTC denied the Ex Parte Motion for
same shall be dismissed. In view of the Reconsideration in a Resolution[27] dated April 6, 2001. The
absence of the counsel for [PCI trial court observed, inter alia, that the Ex ParteMotion was
Leasing] today, the case is hereby already the second motion for reconsideration filed by PCI
DISMISSED.[23] (Emphasis ours.) Leasing. Also, the RTC made mention of the provisions of
Section 3, Rule 17[28] of the Rules of Court relating to the
dismissal of a case due to the fault of a plaintiff.

PCI Leasing sought a reconsideration[24] of the above


On May 11, 2001, PCI Leasing filed a Notice of
Order, explaining that its counsel was already in the courtroom
Appeal[29] in an attempt to challenge the Order dated October
when Judge Leah S. Domingo-Regala of the RTC was dictating
13, 2000 of the RTC, as well as the Resolutions dated January
the order of dismissal. Allegedly, the counsel of PCI Leasing
4, 2001 and April 6, 2001. The Notice of Appeal recited, thus:
even expressed profuse apologies to the trial court for his late
appearance. PCI Leasing prayed that the order of dismissal be
reconsidered and the second Motion for Issuance of Alias
Summons be considered submitted for resolution. NOTICE OF APPEAL

In a Resolution[25] dated January 4, 2001, the RTC Plaintiff, through counsel, to this Honorable
denied the Motion for Reconsideration. After briefly Court respectfully gives notice that it is
summarizing the incidents of the case before it, the trial court appealing to the Honorable Court of Appeals
declared that: its 13 October 2000 Order received on 13
November 2000 which dismissed the case,
its 04 January 2001 Resolution received
on 17 January 2001 denying the Motion for
Reconsideration dated 17 October 2000 and
32
its 06 April 2001 Resolution received on Although in a few instances, the
03 May 2001 denying the Ex-parte Motion court had disregarded procedural lapses so
for Reconsideration dated 23 January 2001, as to give due course to appeals beyond the
on the ground that said Order and reglementary period, the court did so on the
Resolutions are contrary to the applicable basis of strong and compelling reasons, such
laws and jurisprudence on the as serving the ends of justice and preventing
matter. (Emphases ours.) a grave miscarriage thereof. (Vide Retoni, Jr.
vs. CA, 218 SCRA 468)

Thus, the perfection of an appeal


On August 3, 2001, the RTC rendered a Resolution
within the reglementary period fixed by the
dismissing the Notice of Appeal, given that the same was filed
rules is mandatory and jurisdictional and the
beyond the reglementary period, to wit:
failure to do so renders the questioned
decision final and executory that deprives
the appellate court of jurisdiction to alter the
At any rate, the Notice of Appeal was filed final judgment much less to entertain the
late. Record shows that the Resolution appeal. (De Castro, Jr. vs. CA, 158 SCRA
of January 4, 2001 [which denied the Motion 288.)[31]
for Reconsideration of the Order
dated October 13, 2000, dismissing Civil
Case No. Q-00-40010] was received by [the
counsel of PCI Leasing] on January 17,
2001. On January 26, 2001 (or on the The RTC decreed, thus:
9th day from receipt of the Resolution
of January 4, 2001), [PCI Leasing] filed
its Ex-Parte Motion for WHEREFORE, the Notice of Appeal
Reconsideration. On April 6, 2001, the Court is DISMISSED, for having been taken
issued a Resolution denying the Ex-Parte out of time.[32] (Emphasis ours.)
Motion for Reconsideration. The Resolution
of April 6, 2001 was received by [the counsel
of PCI Leasing] on May 3, 2001.

Without filing a Motion for Reconsideration, PCI


Thus [PCI Leasing] had only seven Leasing assailed the above Resolution before the Court of
(7) days from receipt of the Resolution Appeals through a Petition for Certiorariunder Rule 65 of the
of April 6, 2001 within which to file the Rules of Court, which was docketed as CA-G.R. SP No.
Notice of Appeal, or up to May 10, 66546.
2001. The Notice of Appeal was filed
on May 11, 2001.[30] (Emphases ours.)
The appellate court, however, dismissed outright the
aforesaid petition in a Resolution dated September 20, 2001,
holding:

Quoting the pertinent doctrines on the finality of


judgments, the RTC underlined that: This is a petition for certiorari
seeking to set aside the Resolutions of
respondent Judge dismissing the appeal of
On this score, the Hon. Supreme [PCI Leasing] for having been taken out of
Court has time and again emphasized that time.
an award or judgment becomes final and
executory upon the expiration of the period
to appeal and no appeal was made within Section 13, Rule 41 of the 1997
the reglementary period. The basic rule of Rules of Civil Procedure provides that the
finality of judgment is applicable trial court may, motu proprio or on motion,
indiscriminately to one and all since the rule dismiss the appeal for having been taken out
is grounded on fundamental considerations of time.
of public policy and sound practice that at
the risk of occasional error, the judgments of
courts must become final at some definite Settled is the rule that the
date fixed by law. (Alto Sales Corporation vs. perfection of an appeal in the manner and
IAC, 197 SCRA 618) within the period permitted by law is not
only mandatory, but jurisdictional and the

33
failure to perfect that appeal renders On February 4, 2002, the Court resolved[36] to require
the judgment of the court final and the respondents to comment on the petition within ten days
executory. Moreover, the notice of appeal from notice. This resolution was sent to the address of
filed by [PCI Leasing] states that it is respondents set forth in the petition, which is at No. 47 San
appealing the assailed Order and resolutions Ildefonso Drive, Torres Village, Novaliches, 1100 Quezon
to the Court of Appeals on the ground that City. The same, however, was returned unserved with the
the same are contrary to the applicable laws postmasters notation RTS moved. We, thereafter, directed PCI
and jurisprudence on the matter. In Reyes Leasing to inform the Court of the correct address of the
vs. Zamora, it was pointed out that when respondents within ten days from notice, or else the petition
one alleges that an order is contrary to law would be dismissed.[37]
and jurisprudence, plain common sense
On July 10, 2002, PCI Leasing submitted its
dictates that the order is being attacked on
Compliance,[38] stating that the respondents new address is
question of law. Section 2(c), Rule 41 of the
at Vista Verde North Executive Village,
1997 Rules of Civil Procedure provides
Kaybiga, Caloocan City. On January 31, 2003, the Court
that in all cases where only questions of
Resolution dated February 4, 2002 was sent again to the new
law are raised or involved, the appeal
address.[39]
shall be to the Supreme Court by
petition for review on certiorari in
accordance with Rule 45. (Emphases
ours.) Considering that respondents still failed to file their comment
to the petition within the period required therefor, the Court
issued a Resolution[40] dated May 17, 2004, ordering
respondent Antonio[41] to (a) SHOW CAUSE why he should
WHEREFORE, the petition
not be held in contempt of court for such failure, and
is DISMISSED for lack of
(b) COMPLY with the said resolution of February 4, 2002,
merit.[33] (Emphases ours, citations omitted.)
both within ten days from notice hereof.

The above resolution was apparently not complied with as


Petitioner filed a Motion for Reconsideration[34] of the well. Thus, in a Resolution[42] dated August 18, 2004, the Court
aforementioned Court of Appeals Resolution but the same was imposed a fine of P1,000.00 against Antonio, payable to the
denied in a Resolution issued on December 20, 2001, to wit: Court within ten days from notice. If the fine is not paid within
said period, a penalty of imprisonment of five days would
instead be imposed. Antonio was also required to file a
[The motion for reconsideration of comment to the petition filed by PCI Leasing within ten days
PCI Leasing] dated September 20, from notice. The said Resolution was once more returned
2001 must be denied for lack of merit. unserved, with the postmasters notation RTS, Mr. Antonio
Milan, unknown; Ms. Laura Milan, deceased; ML Merchandising
PG Dealer refused to received.[43]
Admittedly, the filing of the notice
of appeal was late by one day. Moreover,
[PCI Leasing] has not disputed that as stated Accordingly, we again required[44] PCI Leasing to notify this
in the notice of appeal, it is appealing the Court of the correct address of Antonio within a non-extendible
assailed Orders and Resolutions of period of ten days from notice; otherwise, the case will be
respondent Judge to this Court on the dismissed.
ground that the same are contrary to the
applicable law and jurisprudence and,
therefore, this Court has no jurisdiction over On January 27, 2005, PCI Leasing filed its
the intended appeal as only questions of law Compliance,[45] stating that it sent its Credit
would be raised therein. Investigator/Appraiser to the place where Antonio was
reportedly maintaining his business, M.L. Merchandising PG
Dealer, at Gen. Luis Street, Novaliches, Quezon City to
WHEREFORE, the motion for determine the address of said respondent. The person found in
reconsideration is DENIED for lack of the store at the said address allegedly refused to reply to
merit.[35] inquiries made or to reveal his identity to the Credit
Investigator/Appraiser.

On February 28, 2005, the Court ordered[46] that copies of the


On January 16, 2002, PCI Leasing elevated this case Resolutions dated February 4, 2002, May 17, 2004 and August
to the Court by way of the instant Petition for Review 18, 2004 be sent to respondent Antonio at the address stated
on Certiorari under Rule 45 of the Rules of Court. in the Compliance filed by PCI Leasing. The same were also

34
returned unserved with the postmasters notation RTS-refused PCI Leasing thereafter filed its Reply[57] on May 22, 2006.
to accept. On June 27, 2005, the Court resolved:

In the Resolution[58] dated June 14, 2006, we decided to give


(a) to let the said copies of the resolutions due course to the petition and required both parties to submit
of February 4, 2002, May 17, their respective memoranda within 30 days from notice. PCI
2004 and August 18, 2004 be DEEMED Leasing and Antonio filed their memoranda, respectively,
SERVED on respondent Milan; on August 17, 2006[59] and September 15, 2006.[60]

(b) to ISSUE an ALIAS WARRANT OF In its Memorandum, PCI Leasing put forward only one
ARREST against respondent Milan, issue for our resolution, to wit:
directing the NBI to cause his immediate
arrest and to DETAIN him until he
complies with the said resolutions of THE COURT OF APPEALS, IN
February 4, 2002, May 17, 2004 and DISMISSING THE PETITION FILED BY
August 18, 2004; and PETITIONER BEFORE IT AND, IN EFFECT,
DEPRIVING PETITIONER OF ITS RIGHT TO
RECOVER THE SUMS IT HAD LOANED TO
(c) to require the NBI to make THE PRIVATE RESPONDENTS, HAS DECIDED
a RETURN thereof within ten (10) days A QUESTION OF SUBSTANCE IN A
from notice hereof.[47] WAY PROBABLY NOT IN ACCORD WITH THE
APPLICABLE DECISIONS OF THIS
HONORABLE COURT.[61]

On March 24, 2006, Antonio was arrested and detained by the


National Bureau of Investigation (NBI)[48] by virtue of a
Warrant of Arrest[49] issued against him by the Court on June As what it emphasized in the Petition for Certiorari filed before
27, 2005. the Court of Appeals, PCI Leasing likewise brings to the
attention of the Court the details of the so-called procedural
path that was taken by the RTC and the supposed mistakes it
On March 28, 2006, Antonio paid[50] the fine earlier imposed committed along the way.[62] On the basis of its allegations,
upon him. He likewise filed an Explanation on Failure to File PCI Leasing points out that the case it laid out before the
Comment with Urgent Motion for Immediate Release from Court of Appeals involved not only questions of law but a
Detention with Prayer for Time to File combination of facts and law, such that the said case would
Comment,[51] maintaining that he had not received any of the fall within the purview of the appellate courts
Resolutions of the Court, hence, the failure to abide by the jurisdiction. However, PCI Leasing laments that the Court of
same. Appeals ignored the formers efforts to seek a rectification of
the acts of the RTC. PCI Leasing accuses both the Court of
Appeals and the RTC of defeating its right to recover the sums
In a Resolution[52] dated March 29, 2006, the Court denied of money it had loaned to the respondents simply because it
Antonios motion for immediate release from detention and allegedly committed some procedural lapses in the prosecution
granted him ten days from notice within which to file his of its case. If the rulings of the Court of Appeals and the RTC
comment. would be allowed to stand, the respondents would allegedly be
enriched by the amounts they had obtained from PCI
Leasing. Although it acknowledges that there was some
On March 30, 2006, Antonio filed an Urgent Motion for measure of breach of procedure on its part, PCI Leasing
Immediate Release from Detention,[53] as well as a contends that the consequence imposed by the Court of
Compliance[54] with the above resolution, wherein he Appeals and the RTC was disproportionate to the breach
incorporated his comment to the petition filed by PCI committed. Calling for a liberal application of the pertinent
Leasing. Antonio also manifested therein that his wife, rules of procedure and invoking the inherent equity jurisdiction
respondent Laura M. Milan, passed away on March 15, of courts, PCI Leasing ultimately prays for the reinstatement of
2004.[55] Civil Case No. Q-00-40010, which it previously filed before the
RTC.

On April 3, 2006, the Court ordered[56] the immediate


release of Antonio from detention at the NBI, unless he was We grant the petition.
otherwise lawfully detained for some other causes. PCI Leasing
was also directed to file a REPLY to the comment within ten
days from notice. The Court of Appeals indeed committed a mistake in
issuing the Resolutions dated September 20,
2001 and December 20, 2001 in CA-G.R. SP No. 66546,

35
which dismissed outright the Petition for Certiorari filed by PCI rule regarding the period within which an appeal may be taken
Leasing and denied the latters Motion for Reconsideration. should a motion for new trial or reconsideration be filed. Thus:

To recall, the Court of Appeals based the dismissal of To standardize the appeal periods
the Petition for Certiorari on the fact that (1) the appeal of PCI provided in the Rules and to afford litigants
Leasing was filed out of time and (2) the Notice of Appeal fair opportunity to appeal their cases, the
supposedly involved pure questions of law. Court deems it practical to allow a
fresh period of 15 days within which to
file the notice of appeal in the Regional
For purposes of clarity and organization, the Court deems it Trial Court, counted from receipt of the
proper to address the second of the above grounds first. order dismissing a motion for a new
trial or motion for reconsideration.

The Court of Appeals concluded that the Notice of Appeal


involved pure questions of law on the basis of the statement Henceforth, this fresh period rule
therein that the Order dated October 13, 2000, the Resolution shall also apply to Rule 40 governing appeals
dated January 4, 2001 and the Resolution dated April 6, 2001 from the Municipal Trial Courts to the
of the RTC would be appealed to the Court of Appeals on the Regional Trial Courts; Rule 42 on petitions
ground that the same were contrary to the applicable laws and for review from the Regional Trial Courts to
jurisprudence on the matter. The Court of Appeals was of the the Court of Appeals; Rule 43 on appeals
opinion that it would not have jurisdiction over the intended from quasi-judicial agencies to the Court of
appeal since the same should be raised to the Supreme Appeals and Rule 45 governing appeals by
Court via a Petition for Review on Certiorari under Rule 45 of certiorari to the Supreme Court. The new
the Rules of Court. rule aims to regiment or make the
appeal period uniform, to be counted
from receipt of the order denying the
We hold that the Court of Appeals was unreasonably hasty in motion for new trial, motion for
inferring its lack of jurisdiction over the intended appeal of PCI reconsideration (whether full or
Leasing. The above-stated conclusion of the Court of Appeals partial) or any final order or resolution.
was simply uncalled for, notwithstanding the said statement in
the Notice of Appeal.
xxxx

Under Rule 41, Section 5 of the Rules of Court, a notice of


appeal is only required to indicate (a) the parties to the appeal, To recapitulate, a party litigant may
(b) the final judgment or order or part thereof appealed from, either file his notice of appeal within 15 days
(c) the court to which the appeal is being taken, and (d) the from receipt of the Regional Trial Courts
material dates showing the timeliness of the appeal. In usual decision or file it within 15 days from receipt
court practice, a notice of appeal would consist of one or two of the order (the final order) denying his
pages. motion for new trial or motion for
reconsideration. Obviously, the new 15-day
Only after the specific issues and arguments of PCI Leasing are period may be availed of only if either
laid out in detail before the Court of Appeals in the appropriate motion is filed; otherwise, the decision
substantive pleading can it make a conclusion as to whether or becomes final and executory after the lapse
not the issues raised therein involved pure questions of law. of the original appeal period provided in Rule
41, Section 3. (Emphases ours.)

As regards the ruling of the Court of Appeals that the appeal of


PCI Leasing was filed out of time, the same was in
concurrence with the findings of the RTC that the Notice of
Appeal was filed one day late. On this matter, we hold that the In the case at bar, PCI Leasing filed a Motion for
conclusion of the RTC that PCI Leasing belatedly filed its Reconsideration of the RTC Order dated October 13,
appeal was correct, but the premise therefor was evidently 2000, which dismissed Civil Case No. Q-00-
mistaken. 40010. On January 4, 2001, the RTC rendered a Resolution,
denying the Motion for Reconsideration. Said Resolution was
received by PCI Leasing on January 17, 2001.[65] Therefore,
In accordance with Section 3, Rule 41[63] of the Rules of Court, PCI Leasing should have filed its Notice of Appeal within 15
an ordinary appeal of a judgment by the RTC shall be taken days from January 17, 2001 or until February 1, 2001. PCI
within fifteen (15) days from notice of the judgment or final Leasing actually filed its Notice of Appeal on May 11, 2001 or
order appealed from. Said period shall be interrupted by a 114 days after receipt of the Resolution denying its Motion for
timely motion for new trial or reconsideration. In Neypes v. Reconsideration.
Court of Appeals,[64] the Court had the occasion to clarify the
36
Contrary to the findings of the RTC, the period within which to
file the Notice of Appeal should not be reckoned from May 3,
The doctrine of immutability and
2001,[66] the date of receipt of the RTC Resolution dated April
inalterability of a final judgment has a two-
6, 2001, which denied the Ex Parte Motion for Reconsideration
fold purpose: (1) to avoid delay in the
of PCI Leasing.
administration of justice and thus,
procedurally, to make orderly the discharge
of judicial business and (2) to put an end to
The aforesaid Ex Parte Motion for Reconsideration was already
judicial controversies, at the risk of
the second attempt on the part of PCI Leasing to seek a
occasional errors, which is precisely why
reconsideration of the RTC Order dated October 13, 2000,
courts exist.Controversies cannot drag on
dismissing Civil Case No. Q-00-40010. It is, thus, in the nature
indefinitely. The rights and obligations of
of a second motion for reconsideration. Under Section 5, Rule
every litigant must not hang in suspense for
37 of the Rules of Court, such motion for reconsideration is a
an indefinite period of time.
prohibited pleading, which does not toll the period within
which an appeal may be taken, to wit:

SEC. 5. Second motion for new Notwithstanding the doctrine on immutability of final
trial. A motion for new trial shall include all judgments, the Court finds, after a through review of the
grounds then available and those not so records, that compelling circumstances are extant in this case,
included shall be deemed waived. A second which clearly warrant the exercise of our equity jurisdiction.
motion for new trial, based on a ground not
existing nor available when the first motion
was made, may be filed within the time Relevantly, Barnes v. Padilla[68] states an exception to the rule
herein provided excluding the time during on the finality of judgments in this wise:
which the first motion had been pending.

However, this Court has relaxed


No party shall be allowed a this rule in order to serve substantial justice
second motion for reconsideration of a considering (a) matters of life, liberty, honor
judgment or final order. (Emphasis ours.) or property, (b) the existence of special or
compelling circumstances, (c) the merits of
the case, (d) a cause not entirely attributable
to the fault or negligence of the party
favored by the suspension of the rules, (e) a
As PCI Leasing was not able to file the Notice of Appeal within
lack of any showing that the review sought
the reglementary period allowed therefor, the RTC Order
is merely frivolous and dilatory, and (f) the
dated October 13, 2000, dismissing Civil Case No. Q-00-
other party will not be unjustly prejudiced
40010, should be deemed final and executory.
thereby.
Social Security System v. Isip[67] reiterates the well-established
doctrine regarding finality of judgments, thus:
Invariably, rules of procedure
should be viewed as mere tools designed to
A judgment becomes "final and executory" facilitate the attainment of justice. Their
by operation of law. Finality becomes a fact strict and rigid application, which would
when the reglementary period to appeal result in technicalities that tend to frustrate
lapses and no appeal is perfected within rather than promote substantial justice, must
such period. As a consequence, no court always be eschewed. Even the Rules of
(not even this Court) can exercise appellate Court reflects this principle. The power to
jurisdiction to review a case or modify a suspend or even disregard rules can be so
decision that has became final. pervasive and compelling as to alter even
that which this Court itself had already
declared to be final.
When a final judgment is executory,
it becomes immutable and unalterable. It
may no longer be modified in any respect
either by the court which rendered it or even
In the instant case, the crux of the controversy involves the
by this Court. The doctrine is founded on
property of PCI Leasing, i.e., the sum of money supposedly
considerations of public policy and sound
owed to it by the respondents. To our mind, it will not serve
practice that, at the risk of occasional errors,
the ends of substantial justice if the RTCs dismissal of the case
judgments must become final at some
with prejudice on pure technicalities would be perfunctorily
definite point in time.
upheld by appellate courts likewise on solely procedural

37
grounds, unless the procedural lapses committed were so whether, under the circumstances, plaintiff is chargeable with
gross, negligent, tainted with bad faith or tantamount to abuse want of due diligence in failing to proceed with reasonable
or misuse of court processes. promptitude. In the absence of a pattern or scheme to delay
the disposition of the case or a wanton failure to observe the
mandatory requirement of the rules on the part of the plaintiff,
In this instance, PCI Leasing would be left without any judicial as in the case at bar, courts should decide to dispense with
recourse to collect the amount of P2,327,833.33 it loaned to rather than wield their authority to dismiss.
the respondents. Corollarily, if PCI Leasing would be forever
barred from collecting the aforesaid amount, respondent
Antonio stands to be unjustly enriched at the expense of PCI Guided by the foregoing principles, we find that the RTC
Leasing. grievously erred in dismissing Civil Case No. Q-00-40010.

Thus, in order to obviate the occurrence of the above- According to the RTC Order dated October 13, 2000,
mentioned scenario, the Court finds it necessary to subject to the trial court dismissed the case filed by PCI Leasing in view
judicial review the RTC Order dated October 13, 2000, of the absence of the latters counsel at the hearing scheduled
dismissing Civil Case No. Q-00-40010. for that day. PCI Leasing had also been directed, on July 13,
2000, to take the necessary steps to actively prosecute [its]
case, otherwise, the same shall be dismissed.
Section 3, Rule 17 of the Rules of Court is the applicable rule in
the instant case, which provision reads:
To our mind, the above circumstances do not
constitute sufficient bases to warrant the conclusion that PCI
Sec. 3. Dismissal due to fault of Leasing had lost interest in prosecuting Civil Case No. Q-00-
plaintiff. If, for no justifiable cause, the 40010.
plaintiff fails to appear on the date of the
presentation of his evidence in chief on the
complaint, or to prosecute his action for an In its Motion for Reconsideration of the Order
unreasonable length of time, or to comply dated October 13, 2000, PCI Leasing explained that its counsel
with these Rules or any order of the court, merely came late during the hearing scheduled for the said
the complaint may be dismissed upon date, arriving at the time when Judge Domingo-Regala was
motion of the defendant or upon the courts already dictating the order of dismissal. Said hearing was not
own motion, without prejudice to the right of even for the presentation of the evidence in chief of PCI
the defendant to prosecute his counterclaim Leasing, where the latters presence would be indispensable,
in the same or in a separate action. This but merely for the issuance of Alias Summons.Incidentally, the
dismissal shall have the effect of an Motion for Issuance of Alias Summons filed by PCI Leasing is
adjudication upon the merits, unless non-litigious in nature, which does not require a hearing under
otherwise declared by the court. the Rules, as the same could have been acted upon by the
RTC without prejudicing the rights of the respondents.[71] All
facts necessary for the determination of the motion are already
specified therein or a matter of record and there was yet no
adverse party to dispute the same as the court had not even
Gomez v. Alcantara[69] explains that [t]he aforequoted acquired jurisdiction over the person of the respondents. It
provision enumerates the instances when a complaint may be was serious error on the part of the trial court to have denied
dismissed due to the plaintiff's fault: (1) if he fails to appear on the first motion for issuance of alias summons for want of
the date for the presentation of his evidence in chief on the notice of hearing. It was also not mandatory for the trial court
complaint; (2) if he fails to prosecute his action for an to set the second motion for hearing.
unreasonable length of time; or (3) if he fails to comply with
the Rules or any order of the court. The dismissal of a case
for failure to prosecute has the effect of adjudication on the
Despite this, the RTC still dismissed the case and
merits, and is necessarily understood to be with prejudice to
eventually denied the Motion for Reconsideration
the filing of another action, unless otherwise provided in the
thereof. While trial courts have the discretion to impose
order of dismissal. Stated differently, the general rule is that
sanctions on counsels or litigants for tardiness or absence at
dismissal of a case for failure to prosecute is to be regarded as
hearings, such sanctions should be proportionate to the
an adjudication on the merits and with prejudice to the filing of
offense and should still conform to the dictates of justice and
another action, and the only exception is when the order of
fair play.
dismissal expressly contains a qualification that the dismissal is
without prejudice.
Likewise, only a period of one month has passed
since PCI Leasing was ordered by the RTC to actively pursue
Furthermore, in Marahay v. Melicor,[70]
we pronounced that
its case, up to the time when Civil Case No. Q-00-40010 was
[w]hile a court can dismiss a case on the ground of non
actually dismissed. It does not escape this Courts notice that
prosequitur, the real test for the exercise of such power is
PCI Leasing failed to successfully prosecute the case for
38
several months due to the difficulties it encountered in locating
respondents, who appeared to have a propensity for changing
addresses and refusing to accept court processes. Under these
circumstances, the delay in the trial court proceedings was not
entirely the fault of PCI Leasing.

Verily, it can hardly be said that PCI Leasing engaged


in a pattern or scheme to delay the disposition of Civil Case
No. Q-00-40010 or committed a wanton failure to observe the
mandatory requirement of the rules.

On this score, Calalang v. Court of


Appeals[72] underscores that [u]nless a party's conduct is so
negligent, irresponsible, contumacious, or dilatory as to
provide substantial grounds for dismissal for non-appearance,
the courts should consider lesser sanctions which would still
amount into achieving the desired end.

WHEREFORE, premises considered, the Petition for


Review on Certiorari under Rule 45 of the Rules of Court
is GRANTED. The assailed Resolutions dated September 20,
2001 and December 20, 2001 of the Court of Appeals in CA-
G.R. SP No. 66546, as well as the Order dated October 13,
2000 and the Resolution dated August 3, 2001 of the Regional
Trial Court of Quezon City, Branch 226, in Civil Case No. Q-00-
40010, are hereby REVERSED and SET ASIDE. Civil Case No.
Q-00-40010 is hereby ordered REINSTATED. No costs.

SO ORDERED.

39
FIRST DIVISION On 31 July 1999, petitioner and respondent entered into an
Agreement wherein petitioner agreed to render rip rapping
construction services at respondents Ampeloquio International
Resort in Ternate, Cavite, for the contract price of P50 million.
On the same day, the parties entered into a second Agreement
for the same construction project, stipulating a contract price
B. D. LONG SPAN G.R. No. 169919 of P30 million, hence bringing the total contract price of the
BUILDERS, INC., project to P80 million. Both Agreements required petitioner to
deposit with respondent a cash bond of one percent (1%) of
Petitioner, Present: the contract price, to be returned to petitioner upon
completion of the project. In compliance, petitioner deposited
with respondent a cash bond amounting to P800,000.
PUNO, C.J.,
Chairperson,
CARPIO, Respondent failed to fulfill its obligations under the
Agreements, resulting in the cancellation of the project.
CORONA, Petitioner demanded the return of the P800,000 cash bond,
- versus -
but respondent refused to do so. Petitioners legal counsel sent
LEONARDO-DE CASTRO,
two (2) demand letters dated 19 April 2002 and 10 May 2002
and
to respondent, but the latter still refused to return
BERSAMIN, JJ. the P800,000 cash bond.

R. S. AMPELOQUIO Promulgated: On 24 September 2002, petitioner (plaintiff) filed with the RTC
REALTY a complaint for rescission of contract and damages against
DEVELOPMENT, INC., respondent (defendant). On 17 October 2002, summons and a
copy of the complaint were served on respondent, through its
Respondent. September 11, 2009
staff member, Romel Dolahoy.[4]
x---------------------------------------------------------------------------
--------------x

Respondent failed to file an Answer or any responsive pleading


to the complaint. Upon motion of petitioner, the RTC issued an
DECISION Order dated 29 November 2002, declaring respondent in
default, and allowing petitioner to present evidence ex parte.

CARPIO, J.:
The Trial Courts Ruling

On 14 January 2003, the RTC rendered a Decision, the


The Case dispositive portion of which reads:

This is a petition for review[1] of the Court of Appeals WHEREFORE, finding preponderance of
Decision[2] dated 14 July 2005 and Resolution dated 30 evidence in support of the instant complaint,
September 2005 in CA-G.R. CV No. 78259. The Court of the same is granted.
Appeals reversed the Decision[3] dated 14 January 2003 of the
Regional Trial Court of Muntinlupa City, Branch 206 (RTC).
Judgment is rendered declaring the aforesaid contracts
entered into by plaintiff with defendant, both dated July 31,
1999 for the rip rapping construction project at the
The Antecedent Facts Ampeloquio International Resort in Ternate, Cavite, as
RESCINDED.

Petitioner B. D. Long Span Builders, Inc. and respondent R. S.


Ampeloquio Realty Development, Inc. are corporations duly Moreover, defendant corporation is ordered to:
organized and existing under the laws of the Republic of the
Philippines.

40
1) Return the amount of P800,000.00 posted by the plaintiff as
cash bond with legal interest accruing thereto from the time of
The sole issue for resolution in this case is whether the Court
its demand until fully paid;
of Appeals erred in ruling that there was invalid service of
summons upon respondent, and hence the trial court did not
acquire jurisdiction over said respondent.
2) Pay the plaintiff the amount of P50,000.00 as nominal
damages;

3) Pay the plaintiff the amount of P100,000.00 as exemplary


damages;
The Courts Ruling

4) Pay the plaintiff the amount of P50,000.00 as and by way of


We find the appeal without merit.
attorney's fees; and
Courts acquire jurisdiction over the plaintiffs upon the filing of
the complaint. On the other hand, jurisdiction over the
5) Pay the cost of suit in the amount of P10,539.00. defendants in a civil case is acquired either through the service
of summons upon them or through their voluntary appearance
in court and their submission to its authority.[9] The service of
SO ORDERED.[5] summons is a vital and indispensable ingredient of due
process.[10] 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.[11]

Section 11 of Rule 14 of the 1997 Rules of Civil Procedure


states:
The Court of Appeals Ruling

SEC. 11 .Service upon domestic


Upon receipt of the RTC decision, respondent filed a Notice of private juridical entity. When the defendant
Appeal dated 12 February 2003 with the Court of Appeals. is a corporation, partnership or association
After considering the pleadings filed by petitioner and organized under the laws of the Philippines
respondent, the Court of Appeals rendered judgment[6] which with a juridical personality, service may be
reversed and set aside the decision of the RTC. The dispositive made on the president, managing partner,
portion of the Court of Appeals Decision reads: general manager, corporate secretary,
treasurer, or in-house counsel.

WHEREFORE, in view of the


foregoing, the decision dated January 14, As a rule, summons should be personally served on the
2003 of the Regional Trial Court, Branch defendant. In case of a domestic private juridical entity, the
206, Muntinlupa City in Civil Case No. 02- service of summons must be made upon an officer who is
217 is hereby REVERSED and SET ASIDE. named in the statute (i.e., the president, managing partner,
general manager, corporate secretary, treasurer, or in-house
counsel), otherwise, the service is insufficient.[12] The purpose
is to render it reasonably certain that the corporation will
SO ORDERED.[7]
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.[13] However, if
Petitioner filed a Motion for Reconsideration, but this was the summons cannot be served on the defendant personally
denied by the Court of Appeals in its Resolution of 30 within a reasonable period of time, then substituted service
September 2005.[8] may be resorted to.Section 7 of Rule 14 provides:

Hence, this appeal. SEC. 7 .Substituted service. If, for


justifiable causes, the defendant cannot be
served within a reasonable time as provided in
the preceding section, service may be effected
(a) by leaving copies of the summons at the
The Issue
41
defendant's residence with some person of Moreover, nothing on record shows that Romel
suitable age and discretion then residing Dolahoy, the staff member who received the summons in
therein, or (b) by leaving the copies at respondents behalf, shared such relation of confidence
defendant's office or regular place of business ensuring that respondent would surely receive the summons.
with some competent person in charge Thus, following our ruling in Orion, we are unable to accept
thereof. petitioners contention that service on Romel Dolahoy
constituted substantial compliance with the requirements of
substituted service.
Nonetheless, the impossibility of prompt personal service must
be shown by stating that efforts have been made to find the
defendant personally and that such efforts have failed. [14] This Petitioners contention that respondents filing of Notice
is necessary because substituted service is in derogation of the of Appeal effectively cured any defect in the service of
usual method of service. It is a method extraordinary in summons is devoid of merit. It is well-settled that a defendant
character and hence may be used only as prescribed and in who has been declared in default has the following remedies,
the circumstances authorized by statute.[15] The statutory to wit: (1) he may, at any time after discovery of the default
requirements of substituted service must be followed strictly, but before judgment, file a motion, under oath, to set aside
faithfully and fully, and any substituted service other than that the order of default on the ground that his failure to answer
authorized by statute is considered ineffective.[16] was due to fraud, accident, mistake or excusable neglect, and
that he has a meritorious defense; (2) if judgment has already
been rendered when he discovered the default, but before the
In Orion Security Corporation v. Kalfam Enterprises, same has become final and executory, he may file a motion for
Inc.,[17] this Court held that in case of substituted service, new trial under Section 1(a) of Rule 37; (3) if he discovered
there should be a report indicating that the person who the default after the judgment has become final and
received the summons in the defendants behalf was one with executory, he may file a petition for relief under Section 2 of
whom the defendant had a relation of confidence ensuring that Rule 38; and (4) he may also appeal from the judgment
the latter would actually receive the summons. rendered against him as contrary to the evidence or to the law,
even if no petition to set aside the order of default has been
presented by him.[19] Thus, respondent, which had been
In this case, the Return by Process Server provides: declared in default, may file a notice of appeal and question
the validity of the trial courts judgment without being
This is to certify that: considered to have submitted to the trial courts authority.
On October 17, 2002 at about 11:00
o'clock in the morning, undersigned tried to WHEREFORE, we DENY the petition. We AFFIRM the Court
cause the service of the Summons together of Appeals Decision dated 14 July 2005 and Resolution dated
with the attached complaint & its annexes in 30 September 2005 in CA-G.R. CV No. 78259. Let the case
the above-entitled case to the defendant at be REMANDED to the trial court for further proceedings upon
his given address on record. Mr Romel valid service of summons to respondent.
Dalahoy, a staff of said Realty received the
said Summons with the attached complaint &
its annexes as evidenced by the former's
signature as appearing on the original copy of
the aforesaid Summons. SO ORDERED.

Henceforth, the said Summons with the attached complaint &


its annexes to Atty. Evangeline V. Tiongson, Clerk of Court V,
this Court, is respectfully returned, DULY SERVED, by
substituted service.
October 17, 2002, Muntinlupa City
Angelito C. Reyes
Process Server[18]

Clearly, the summons was not served personally on the


defendant (respondent) through any of the officers
enumerated in Section 11 of Rule 14; rather, summons was
served by substituted service on the defendants staff member,
Romel Dolahoy. Substituted service was resorted to on the
servers first attempt at service of summons, and there was no
indication that prior efforts were made to render prompt
personal service on the defendant.

42
See pdf for full text cancellation or demand for rescission by a notarial act and the
full payment of the cash surrender value, is mandatory.
Planters Development Bank v Chandumal (Civil
Procedure)
Planters Development Bank v Chandumal
GR No. 195619, September 5, 2012

FACTS:

BF Homes, Inc. and Chandumal entered into a contract to sell


a parcel of land. BF Homes then sold to PDB all its rights and
interests over the contract. On June 18, 1999, an action for
judicial confirmation of notarial rescission and delivery of
possession was filed by PDP against Chandumal.

Consequently, summons was issued. According to the Sheriff's


return, Sheriff Galing attempted to personally serve the
summons upon Chandumal on three dates but it was
unavailing as she was always out of the house on said dates.
Hence, the sheriff caused substituted service of summons by
serving the same through Chandumal's mother who
acknowledged receipt thereof.

For her failure to file within the prescribed period, PDB filed an
ex parte motion to declare Chandumal in default which was
granted by the RTC. On February 23, 2001, Chandumal filed
an Urgent Motion to Set Aside Order of Default maintaining
that she did not receive the summons and/or was not notified
of the same. RTC denied Chandumal's motion which was
reversed by the Court of Appeals due to invalid and ineffective
substituted service of summons.

ISSUES:
(1) Whether there was valid substituted service of summons
(2) Whether Chandumal voluntarily submitted to the
jurisdiction of the trial court
(3) Whether there was proper rescission by notarial act of the
contract to sell

HELD:
(1) There was no valid substitute service of summons.

The Return of Summons does not specifically show or indicate


in detail the actual exertion of efforts or any positive step
taken by the officer or process server in attempting to serve
the summons personally to the defendant. The return merely
states the alleged whereabouts of the defendant without
indicating that such information was verified from a person
who had knowledge thereof.

(2) Respondent voluntarily submitted to the jurisdiction of the


trial court.

Section 20, Rule 14 of the Rules of Court states "The


defendant's voluntary appearance in the action shall be
equivalent to service of summons"

(3) There is no valid rescission of the contract to sell by


notarial act.

The allegation that Chandumal made herself unavailable for


payment is not an excuse as the twin requirements for a valid
and effective cancellation under the law, i.e. notice of

43
G.R. No. 183370, August 17, 2015 attachment are hereto attached.

NATION PETROLEUM GAS, INCORPORATED, NENA WHEREFORE, the original copies of the Summonses, Order,
ANG, MARIO ANG, ALISON A. SY, GUILLERMO G. SY, Writ of Attachment and all pertinent papers are hereby
NELSON ANG, LUISA ANG, RENATO C. ANG, PAULINE T. returned to the Court of origin for record and information.7
ANG, RICKY C. ANG,1 AND MELINDA Petitioners filed through counsel a Special Appearance with
ANG, Petitioners, v. RIZAL COMMERCIAL BANKING Motion to Dismiss8 on November 15, 2006. They asserted that
CORPORATION, SUBSTITUTED BY PHILIPPINE ASSET the trial court did not acquire jurisdiction over the corporation
GROWTH ONE, INC., Respondent. since the summons was improperly served upon Claudia
Abante (Abante), who is a mere liaison officer and not one of
DECISION the corporate officers specifically enumerated in Section 11,
Rule 14 of the Rules. Likewise, the individual petitioners
PERALTA, J.: argued that the sheriff and/or process server did not
personally approach them at their respective address as stated
in the Complaint. Neither did he resort to substituted service of
This petition for review on certiorari under Rule 45 of the 1997 summons, and that, even if he did, there was no strict
Revised Rules of Civil Procedure (Rules) seeks to reverse and compliance with Section 7, Rule 14 of the Rules. The Court's
set aside the December 12, 2007 Decision2 and June 17, 2008 pronouncements in Spouses Mason v. Court of Appeals,9E. B.
Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. Villarosa & Partner Co., Ltd. v. Judge Benito,10Laus v. Court of
98787, which affirmed the March 29, 2007 Order4 of the Appeals,11 and Samartino v. Raon12 were invoked in praying for
Regional Trial Court (RTC), Branch 66, Makati City, in Civil the dismissal of the complaint and the discharge of the writ of
Case No. 06-882, denying petitioners' Special Appearance with attachment.
Motion to Dismiss for alleged improper service of summons.
Respondent countered in its Opposition with Motion to Declare
On October 16, 2006, respondent Rizal Commercial Banking Defendants in Default13 that there was valid service of
Corporation filed against petitioner corporation and its summons upon petitioners. With respect to the corporation,
directors/officers a Complaint5 for civil damages arising from Abante received the summons upon the express authority and
estafa in relation to violations of the Trust Receipts Law. On instruction of the corporate secretary, petitioner Melinda Ang
October 26, 2006, after an ex parte hearing was conducted, (Ang). As regards the individual petitioners, the Sheriffs Report
respondent's prayer for a writ of preliminary attachment was reflects that they were served "at their given addresses, but
granted and the corresponding writ was issued.6 Thereafter, they refused to acknowledge receipt thereof." Respondent
Sheriff Leodel N. Roxas served upon petitioners a copy of the stressed that said Report is prima facie evidence of the facts
summons, complaint, application for attachment, respondent's stated therein and that the sheriff enjoys the presumption of
affidavit and bond, and the order and writ of attachment. The regularity in the performance of his official functions. In any
Sheriffs Report dated November 13, 2006 case, it averred that, according to Oaminal v.
narrated:LawlibraryofCRAlaw Castillo,14 petitioners already voluntarily submitted to the
ChanRoblesVirtualawlibrary court's jurisdiction when they prayed for the discharge of the
The undersigned sheriff respectfully submits the following writ of attachment, which is an affirmative relief apart from the
report to wit:LawlibraryofCRAlaw dismissal of the case.

On 26 October 2006, [a] copy of Writ of Attachment dated 26 A Reply with Comment/Opposition (to the motion to declare
October 2006, issued by the Court in the above-entitled case defendants in default)15 was then filed by petitioners. In
was received by the undersigned for service and support of their contention that the court lacks jurisdiction over
implementation. their persons, they submitted their Joint Affidavit16 and the
Affidavit17 of Abante, claiming, among others, that they neither
On even date, the undersigned served the Summons, copy of personally met the sheriff and/or the process server nor were
[the] Complaint, application for attachment, the plaintiffs handed a copy of the court documents; that Ang did not give
affidavit and bond, and the Order and Writ of Attachment, on Abante telephone instructions to receive the same; and that
the defendants Nation Petroleum Gas et al, at BPI Building, Abante did not receive any instruction from Ang. Petitioners
Rizal Street, Candelaria, Quezon. Said summons and all further held that Oaminal finds no application in the instant
pertinent papers, upon telephone instruction of defendant case since they only filed one motion and that the additional
Melinda Ang, were received by Claudia Abante, [defendants'] relief prayed for, which is the discharge of the writ, is
[Liaison] Officer, as evidenced by her signature at the original complementary to and a necessary consequence of a finding
copy of Summons and Writ. I also served copies to other that the court has no jurisdiction over their persons. Instead,
defendants at their given addresses, but they refused to Our ruling in Avon Insurance PLC v. Court of Appeals18 was
acknowledge receipt thereof. relied upon.

On the same day, at the instance of the plaintiff's counsel and In its Rejoinder with Motion to Strike,19 respondent stood firm
representative, the undersigned levied the real properties of in defending the court's jurisdiction. The denials of Ang and
the defendants at the Register of Deeds of Lucena City, Makati Abante were viewed as self-serving and could not prevail over
City, Pasig City, Quezon City and the Register of Deeds of the presumption of regularity which the sheriff enjoys as an
Manila. I also levied a property (plant equipment) in NPGI officer of the court. Even assuming that the Sheriffs Return
plant in Sariaya, Quezon. Copies of the notices of levy on does not state in detail the fact that the summons was served
44
upon the individual petitioners through substituted service, jurisdiction. The essence of due process is to be found in the
respondent asserted that this does not conclusively prove that reasonable opportunity to be heard and submit any evidence
such service is invalid because it may still be shown through one may have in support of his defense. It is elementary that
extraneous evidence similar to the case of BPI v. Spouses before a person can be deprived of his property, he should first
Evangelista.20redarclaw be informed of the claim against him and the theory on which
such claim is premised."26redarclaw
On March 29, 2007, the RTC denied petitioners' motion to
dismiss and respondent's motion to declare them in default. In Service of summons on domestic corporation, partnership or
upholding the jurisdiction of the court over the persons of other juridical entity is governed by Section 11, Rule 14 of
petitioners and requiring them to file an Answer, the Order the Rules, which states:LawlibraryofCRAlaw
ratiocinated:LawlibraryofCRAlaw ChanRoblesVirtualawlibrary
ChanRoblesVirtualawlibrary
SECTION 11. Service upon domestic private juridical entity. -
The very essence of service of summons is for the defendants When the defendant is a corporation, partnership or
to be aware of an existing suit against them and for them to association organized under the laws of the Philippines with a
file an answer or responsive pleading thereto. When corporate juridical personality, service may be made on the president,
and individual defendants were served with summons through managing partner, general manager, corporate secretary,
the [liaison] officer who received the same for and in their treasurer, or in-house counsel.
behalf as per instruction of defendant Melinda Ang, and when
When the defendant is a domestic corporation like herein
defendants filed a responsive pleading in the form of a Motion
petitioner, service of summons may be made only upon the
to Dismiss, the essence of service of summons was met and
persons enumerated in Section 11, Rule 14 of the Rules.27 The
defendants are deemed to have ultimately received the
enumeration of persons to whom summons may be served is
summons despite their protestations. There is no reason for
restricted, limited and exclusive following the rule on statutory
the Court to doubt the regularity of the Sheriffs service of
construction expressio unios est exclusio alterius.28 Substantial
summons as in fact its regularity is presumed. It bears
compliance cannot be invoked.29 Service of summons upon
stressing that defendants did not per se deny having received
persons other than those officers specifically mentioned in
summonses. Perforce, they are challenging the manner of
Section 11, Rule 14 is void, defective and not binding to said
service of the same. Having ultimately received the
corporation.30
summonses upon them and considering the rules on service of
ChanRoblesVirtualawlibrary
the same was substantially complied with, the Court finds no
reason to deny the instant Motion to Dismiss.21 Basic is the rule that a strict compliance with the mode of
service is necessary to confer jurisdiction of the court over a
Petitioners elevated the jurisdictional issue to the
corporation. The officer upon whom service is made must be
CA via petition for certiorari and prohibition.22 As afore-stated,
one who is named in the statute; otherwise, the service is
the appellate court later dismissed the petition and denied the
insufficient. The purpose is to render it reasonably certain that
motion for reconsideration; hence, this petition raising the
the corporation will receive prompt and proper notice in an
following issues for resolution:LawlibraryofCRAlaw
action against it or to insure that the summons be served on a
ChanRoblesVirtualawlibrary
representative so integrated with the corporation that such
I. person will know what to do with the legal papers served on
him.31
WHETHER OR NOT THE TRIAL COURT ACQUIRED As correctly argued by petitioners, Sps. Mason already resolved
JURISDICTION OVER THE PERSON OF THE DEFENDANT that substantial compliance on service of summons upon a
CORPORATION BY SERVICE OF SUMMONS UPON ITS MERE domestic corporation is no longer an excuse.
EMPLOYEE. Thus:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
II.
The question of whether the substantial compliance rule is still
applicable under Section 11, Rule 14 of the 1997 Rules of Civil
WHETHER OR NOT THE TRIAL COURT ACQUIRED
Procedure has been settled in Villarosa which applies squarely
JURISDICTION OVER THE PERSONS OF THE INDIVIDUAL
to the instant case. In the said case, petitioner E.B. Villarosa &
DEFENDANTS BY RESORTING TO SUBSTITUTED SERVICE OF
Partner Co. Ltd.(hereafter Villarosa) with principal office
SUMMONS DESPITE ABSENCE OF EARNEST EFFORTS ON THE
address at 102 Juan Luna St., Davao City and with branches at
PART OF THE SERVING OFFICER TO SERVE SUMMONS
2492 Bay View Drive, Tambo, Parailaque, Metro Manila and
PERSONALLY.23
Kolambog, Lapasan, Cagayan de Oro City, entered into a sale
We deny. with development agreement with private respondent Imperial
Development Corporation. As Villarosa failed to comply with its
Summons is a writ by which the defendant is notified of the contractual obligation, private respondent initiated a suit for
action brought against him or her.24 Its purpose is two-fold: to breach of contract and damages at the Regional Trial Court of
acquire jurisdiction over the person of the defendant and to Makati. Summons, together with the complaint, was served
notify the defendant that an action has been commenced so upon Villarosa through its branch manager at Kolambog,
that he may be given an opportunity to be heard on the claim Lapasan, Cagayan de Oro City. Villarosa filed a Special
against him.25 "[C]ompliance with the rules regarding the Appearance with Motion to Dismiss on the ground of improper
service of summons is as much an issue of due process as of service of summons and lack of jurisdiction. The trial court
denied the motion and ruled that there was substantial
45
compliance with the rule, thus, it acquired jurisdiction over may be true that there was no direct, physical handing of the
Villarosa. The latter questioned the denial before us in its summons to Ang, the latter could at least be charged with
petition for certiorari. We decided in Villarosa's favor and having constructively received the same, which in Our view,
declared the trial court without jurisdiction to take cognizance amounts to a valid service of summons.
of the case. We held that there was no valid service of
summons on Villarosa as service was made through a person Having herself instructed Abante to receive the summons, Ang,
not included in the enumeration in Section 11, Rule 14 of the and for that matter, petitioner corporation, is thus now
1997 Rules of Civil Procedure, which revised the Section 13, precluded from impugning the jurisdiction of the trial court on
Rule 14 of the 1964 Rules of Court. We discarded the trial the ground of invalid service of summons. In point in this
court's basis for denying the motion to dismiss, namely, private regard is the principle of estoppel which, under our remedial
respondent's substantial compliance with the rule on service of laws, is an effective bar against any claim of lack of
summons, and fully agreed with petitioner's assertions that the jurisdiction. Under said doctrine, an admission or
enumeration under the new rule is restricted, limited and representation is rendered conclusive upon the person making
exclusive, following the rule in statutory construction it and cannot be denied or disproved as against the person
that expressio unios est exclusio alterius. Had the Rules of relying thereon.
Court Revision Committee intended to liberalize the rule on
service of summons, we said, it could have easily done so by Thus, despite the assertions of Ang and Abante that, as
clear and concise language. Absent a manifest intent to between them, no such instruction had been relayed and
liberalize the rule, we stressed strict compliance with Section received, the sheriffs statement belying the allegations should
11, Rule 14 of the 1997 Rules of Civil Procedure. be accorded weight.

Neither can herein petitioners invoke our ruling The sheriffs report is further bolstered by the presumption of
in Millennium to support their position for said case is not on regularity in the performance of public duty as the same is
all fours with the instant case. We must stress provided for in Rule 131 of the Rules of Court. The
that Millennium was decided when the 1964 Rules of Court presumption applies so long as it is shown that the officer, in
were still in force and effect, unlike the instant case which falls performing his duties, is not inspired by any improper motive,
under the new rule. Hence, the cases cited by petitioners a fact that is true with the sheriff in the case at bar. And, if the
where we upheld the doctrine of substantial compliance must presumption may be made to apply to public officers in
be deemed overturned by Villarosa, which is the later case. general, with more reason should its benefit be accorded to
the sheriff, who is an officer of the court.
At this juncture, it is worth emphasizing that notice to enable
the other party to be heard and to present evidence is not a True, the presumption is disputable, but to overcome the
mere technicality or a trivial matter in any administrative or same, more concrete evidence than the affidavit of Abante is
judicial proceedings. The service of summons is a vital and required. As correctly pointed out by the respondent, in line
indispensable ingredient of due process. x x x32 with the ruling of the Supreme Court in R. Transport
Corporation vs. Court of Appeals and Talsan Enterprises, Inc.
The foregoing notwithstanding, We agree with the CA that
vs. Baliwag, Abante's affidavit is self-serving in nature, and
there was a valid and effective service of summons upon
being so, is not sufficient to overturn the said presumption.
petitioner corporation through its liaison officer who acted as
the agent of the corporate secretary. It
On this aspect, petitioners score the respondent, asserting that
ruled:LawlibraryofCRAlaw
the two above-cited cases are not applicable to the case at
ChanRoblesVirtualawlibrary
hand inasmuch as these were decided before the advent of the
Petitioner corporation asserts that based on the said rule 1997 Revised Rules of Civil Procedure, adding likewise that the
[Section 11, Rule 14 of the Rules], the service of summons cited cases and the instant case differ in their respective
made by the sheriff upon its liaison officer, Claudia Abante, factual milieus. We are not persuaded. Under either the former
was defective for the reason that a liaison officer is not one of or the present rules, it is clear that Abante's denial that she
the corporate officers enumerated therein upon whom service received instructions from Ang is evidence that would pale in
of summons is authorized to be made. It contends that there comparison to the declaration of an officer of the court
having been no valid service, the trial court consequently did indisputably performing his duty objectively and free from any
not acquire jurisdiction to hear the complaint a quo. malicious and ill motives.33
Petitioner corporation cannot conveniently rely on the sworn
The contention deserves full credence only if it is to be
statements of the individual petitioners and Abante. Upon
assumed that Claudia Abante received the summons in her
examination, Ang's denial of having spoken with any process
official capacity as petitioner corporation's liaison officer.
server to give instruction to serve the summons and other
However, this is not true in the instant case, since according to
pertinent papers to Abante34 is not incompatible with the
the sheriff, Abante proceeded to receive the summons and
Sheriffs Report stating that "[s]aid summons and all pertinent
accompanying documents only after receiving instructions to
papers, upon telephone instruction of defendant Melinda Ang,
do so from Melinda Ang, an individual petitioner herein and the
were received by Claudia Abante, [defendants'] [Liaison]
petitioner corporation's corporate secretary. It is clear,
Officer, as evidenced by her signature at the original copy of
therefore, that Abante, in so receiving the summons, did so in
Summons and Writ." While it may be true that Ang had not
representation of Ang who, as corporate secretary, is one of
talked to the sheriff or process server, it still does not rule out
the officers competent under the Rules of Court to receive
the possibility that she in fact spoke to Abante and instructed
summons on behalf of a private juridical person. Thus, while it
the latter to receive the documents in her behalf. As to the
46
Affidavit of Abante, her disavowal of having spoken to Ang or The party relying on substituted service or the sheriff must
receiving telephone instructions from her is truly self-serving. show that defendant cannot be served promptly or there is
Evidence as simple as a telephone billing statement or an impossibility of prompt service. Section 8, Rule 14 provides
affidavit of a disinterested third person, among others, could that the plaintiff or the sheriff is given a "reasonable time" to
have been presented to refute the sheriffs claim, but there was serve the summons to the defendant in person, but no specific
none. Likewise, no substantial proofs were credibly shown to time frame is mentioned. "Reasonable time" is defined as "so
support Abante's allegation that the sheriff insisted on having much time as is necessary under the circumstances for a
the court processes received and that she was "intimidated by reasonably prudent and diligent man to do, conveniently, what
the presence of a court personnel who was quite earnest in the contract or duty requires that should be done, having a
accomplishing his task."35redarclaw regard for the rights and possibility of loss, if any[,] to the
other party." Under the Rules, the service of summons has no
It is well to note that the certificate of service of the process set period. However, when the court, clerk of court, or the
server is prima facie evidence of the facts as set out therein. plaintiff asks the sheriff to make the return of the summons
This is fortified by the presumption of the regularity of and the latter submits the return of summons, then the validity
performance of official duty. To overcome the presumption of of the summons lapses. The plaintiff may then ask for
regularity of official functions in favor of such sheriffs return, an alias summons if the service of summons has failed. What
the evidence against it must be clear and convincing. Sans the then is a reasonable time for the sheriff to effect a personal
requisite quantum of proof to the contrary, the presumption service in order to demonstrate impossibility of prompt
stands deserving of faith and credit.36redarclaw service? To the plaintiff, "reasonable time" means no more
than seven (7) days since an expeditious processing of a
The same conclusion, however, could not be said with respect complaint is what a plaintiff wants. To the sheriff, "reasonable
to the service of summons upon the individual petitioners. time" means 15 to 30 days because at the end of the month, it
is a practice for the branch clerk of court to require the sheriff
Section 7, in relation to Section 6, Rule 14 of the Rules, to submit a return of the summons assigned to the sheriff for
provides for substituted service of service. The Sheriffs Return provides data to the Clerk of
summons:LawlibraryofCRAlaw Court, which the clerk uses in the Monthly Report of Cases to
ChanRoblesVirtualawlibrary be submitted to the Office of the Court Administrator within
the first ten (10) days of the succeeding month. Thus, one
Section 6. Service in person on defendant. - Whenever
month from the issuance of summons can be considered
practicable, the summons shall be served by handling a copy
"reasonable time" with regard to personal service on the
thereof to the defendant in person, or, if he refuses to receive
defendant.
and sign for it, by tendering it to him.
Sheriffs are asked to discharge their duties on the service of
Section 7. Substituted service. - If, for justifiable causes, the
summons with due care, utmost diligence, and reasonable
defendant cannot be served within a reasonable time as
promptness and speed so as not to prejudice the expeditious
provided in the preceding section, service may be effected (a)
dispensation of justice. Thus, they are enjoined to try their
by leaving copies of the summons at the defendant's residence
best efforts to accomplish personal service on defendant. On
with some person of suitable age and discretion then residing
the other hand, since the defendant is expected to try to avoid
therein, or (b) by leaving the copies at defendant's office or
and evade service of summons, the sheriff must be
regular place of business with some competent person in
resourceful, persevering, canny, and diligent in serving the
charge thereof.
process on the defendant. For substituted service of summons
Sections 6 and 7 of the Rules cannot be construed to apply to be available, there must be several attempts by the sheriff
simultaneously and do not provide for alternative modes of to personally serve the summons within a reasonable period
service of summons which can either be resorted to on the [of one month] which eventually resulted in failure to prove
mere basis of convenience to the parties for, under our impossibility of prompt service. "Several attempts" means at
procedural rules, service of summons in the persons of the least three (3) tries, preferrably on at least two different dates.
defendants is generally preferred over substituted In addition, the sheriff must cite why such efforts were
service.37 Resort to the latter is permitted when the summons unsuccessful. It is only then that impossibility of service can be
cannot be promptly served on the defendant in person and confirmed or accepted.
after stringent formal and substantive requirements have been
complied with.38 The failure to comply faithfully, strictly and (2) Specific Details in the Return
fully with all the requirements of substituted service renders
the service of summons ineffective.39redarclaw The sheriff must describe in the Return of Summons the facts
and circumstances surrounding the attempted personal
Manotoc v. Court of Appeals40 painstakingly elucidated the service. The efforts made to find the defendant and the
requirements of the Rules as follows:LawlibraryofCRAlaw reasons behind the failure must be clearly narrated in detail in
ChanRoblesVirtualawlibrary the Return. The date and time of the attempts on personal
service, the inquiries made to locate the defendant, the
We can break down this section into the following name/s of the occupants of the alleged residence or house of
requirements to effect a valid substituted defendant and all other acts done, though futile, to serve the
service:LawlibraryofCRAlaw summons on defendant must be specified in the Return to
justify substituted service. The form on Sheriffs Return of
(1) Impossibility of Prompt Personal Service Summons on Substituted Service prescribed in the Handbook

47
for Sheriffs published by the Philippine Judicial Academy and reasonable efforts.43 The Court requires that the Sheriffs
requires a narration of the efforts made to find the defendant Return clearly and convincingly show the impracticability or
personally and the fact of failure. Supreme Court hopelessness of personal service.44 The impossibility of
Administrative Circular No. 5 dated November 9, 1989 requires personal service justifying availment of substituted service
that "impossibility of prompt service should be shown by should be explained in the proof of service; why efforts
stating the efforts made to find the defendant personally and exerted towards personal service failed. The pertinent facts
the failure of such efforts," which should be made in the proof and circumstances attendant to the service of summons must
of service. be stated in the proof of service or Officer's Return; otherwise,
the substituted service cannot be upheld.45redarclaw
(3) A Person of Suitable Age and Discretion
Under exceptional terms, the circumstances warranting
If the substituted service will be effected at defendant's house substituted service of summons may be proved by
or residence, it should be left with a person of "suitable age evidence aliunde.46 Substituted service will still be considered
and discretion then residing therein." A person of suitable age as regular if other evidence of the efforts to serve summons
and discretion is one who has attained the age of full legal was presented.47BPI v. Spouses Evangelista48 teaches Us that
capacity (18 years old) and is considered to have enough a defect in the service of summons, which is apparent on the
discernment to understand the importance of a summons. face of the return, does not necessarily constitute conclusive
"Discretion" is defined as "the ability to make decisions which proof that the actual service has in fact been improperly made.
represent a responsible choice and for which an understanding In the interest of speedy justice, the trial court has to
of what is lawful, right or wise may be presupposed". Thus, to immediately ascertain whether the patent defect is real and, if
be of sufficient discretion, such person must know how to read so, to fully determine whether prior attempts at personal
and understand English to comprehend the import of the service have in fact been done and resort to the substituted
summons, and fully realize the need to deliver the summons service was justified. Should the returns not show compliance
and complaint to the defendant at the earliest possible time for with the Rules on substituted service, actual and correct
the person to take appropriate action. Thus, the person must service may still be proven by evidence extraneous to it. If
have the "relation of confidence" to the defendant, ensuring substituted service is indeed improper, the trial court must
that the latter would receive or at least be notified of the issue new summons and serve it in accordance with the Rules.
receipt of the summons. The sheriff must therefore determine
if the person found in the alleged dwelling or residence of In the present case, while no actual hearing was conducted to
defendant is of legal age, what the recipient's relationship with verify the validity of the grounds for substituted service of
the defendant is, and whether said person comprehends the summons, the parties exchanged pleadings in support of their
significance of the receipt of the summons and his duty to respective positions. To justify, respondent
immediately deliver it to the defendant or at least notify the contends:LawlibraryofCRAlaw
defendant of said receipt of summons. These matters must be ChanRoblesVirtualawlibrary
clearly and specifically described in the Return of Summons.
34. In the instant case, representatives of the undersigned
counsel and plaintiff RCBC personally observed the service of
(4) A Competent Person in Charge
summons on the defendants. Based on their account, the
following facts and circumstances
If the substituted service will be done at defendant's office or
transpired:LawlibraryofCRAlaw
regular place of business, then it should be served on a
ChanRoblesVirtualawlibrary
competent person in charge of the place. Thus, the person on
whom the substituted service will be made must be the one a. On [October 26, 2006], the Sheriff served summons on
managing the office or business of defendant, such as the defendant NPGI at the G/F BPI Building, Rizal Street,
president or manager; and such individual must have sufficient Candelaria, Quezon, the reported office address of defendant
knowledge to understand the obligation of the defendant in NPGI in the latter's General Information Sheet submitted with
the summons, its importance, and the prejudicial effects the Securities and Exchange Commission.
arising from inaction on the summons. Again, these details ChanRoblesVirtualawlibrary
must be contained in the Return.41
a. 1. In the said address, the Sheriff met a person who
In resorting to the substituted service, the sheriff in this case introduced herself as Ms. Claudia Abante, the Liaison [Officer]
pithily declared in his Report that he "also served copies to of defendant NPGI.
other defendants at their given addresses, but they refused to
acknowledge receipt thereof." Obviously, the Sheriffs Report a.2. Upon inquiry, the Sheriff was informed that defendants
dated November 13, 2006 does not particularize why NPGI Officers were all not around to receive the summons for
substituted service was resorted to and the precise manner by defendant NPGI considering that, according to Ms. Abante, the
which the summons was served upon the individual defendant NPGI Directors do not hold office at said address.
petitioners. The disputable presumption that an official duty
has been regularly performed will not apply where it is patent a.3. However, Ms. Abante volunteered to call defendant
from the sheriffs or server's return that it is Melinda Ang on the phone to inform her that summons was
defective.42redarclaw beings served upon defendant NPGI.

To avail themselves of substituted service of summons, courts a.4. Subsequently, Ms. Abante informed the Sheriff that
must rely on a detailed enumeration of the sheriffs actions and defendant Melinda Ang authorized her to receive the summons
a showing that the defendant cannot be served despite diligent for defendant NPGI.
48
a.5. Considering that she claimed to be authorized by xxxx
defendant Melinda Ang, who is the Corporate Secretary of
36. Indeed, in the instant case, contrary to the allegations
defendant NPGI, to receive the summons on behalf of
contained in the Motion to Dismiss, the summons were
defendant NPGI, the Sheriff entrusted the same to her, as well
properly served to the individual defendants through
as the Complaint and the Writ of Attachment, among others,
substituted service considering that there were justifiable
and Ms. Abante voluntarily signed the receiving copy thereof.
causes existing which prevented personal service upon all the
individual defendants within a reasonable time.
a.6 the Sheriff did not intimidate Ms. Abante into receiving the
ChanRoblesVirtualawlibrary
summons. In fact, she volunteered to receive the same.
36.1. It should be noted that aside from defendant NPGI, there
b. Copies of the Complaint, summons and Writ of Attachment,
are ten (10) other individual defendants in the instant
among others, were likewise served to defendant NPGI at its
case who are residing in addresses which are far apart (i.e.,
office located at 39thFloor, Yuchengco Tower, RCBC Plaza,
Makati City, Pasig City, City of Manila and Quezon Province).
6819 Ayala Avenue, corner Sen. Gil Puyat Avenue, Makati City,
Metro Manila ('RCBC Plaza Office').
36.2. Summons were attempted to be served to all defendant
ChanRoblesVirtualawlibrary
NPGI Directors, Luisa Ang, Guillermo Sy and Pauline Ang on
b.1. The personnel from said office also stated that all the the following addresses:LawlibraryofCRAlaw
defendant NPGI Directors were not around and were probably
at home. As such, a copy of the Complaint, summons and Writ 1. Renato Ang, Nena Ang,
of Attachment, among others, were left with said office. Melinda Ang, Pauline Ang -
c. Thereafter, summons on the individual defendants were 1348 Palm Avenue,
served at the following addresses:LawlibraryofCRAlaw Dasmarinas Village, Makati
ChanRoblesVirtualawlibrary City;chanRoblesvirtualLawli
brary
c. 1. Renato Ang, Nena Ang, Melinda Ang, Pauline Ang - 1348
Palm Avenue, Dasmarinas Village, Makati City; 2. Guillermo Sy and Alison Sy
- 1320 Glorioso Streets,
c.2. Guillermo Sy and Alison Sy - 1320 Glorioso Streets, Dasmarinas Village, Makati
Dasmarinas Village, Makati City; City;chanRoblesvirtualLawli
brary
c.3. Nelson Ang, Luisa Ang - 19 Swallow Drive, 3. Nelson Ang, Luisa Ang - 19
Greenmeadows, Quezon City; Swallow Drive,
Greenmeadows, Quezon
c.4. Mario Ang - Diamond Furniture, Cabunyag Street, City;chanRoblesvirtualLawli
Candelaria, Quezon; and brary

c.5. Ricky Ang - Rizal Street, Candelaria, Quezon. 4. Mario Ang - Diamond
Furniture, Cabunyag
d. Upon service of the summons upon them, it became Street, Candelaria,
apparent that the individual defendants were evading service Quezon; and
of summons considering that the sheriff was being given a
run-around. 5. Ricky Ang - Rizal Street,
ChanRoblesVirtualawlibrary Candelaria, Quezon.

d.1. In their respective residences, their house helpers stated 36.3. To require the sheriff to return several times at the
that the individual defendants were not at home but in the residences of the ten (10) defendants as suggested by the
RCBC Plaza Office. defendants, despite the apparent intention of the defendants
to evade service of summons, and the considerable distances
d.2. However, considering that the Sheriff had already been to between all their residences (i.e., Makati City, Pasig City, City
the RCBC Plaza Office and the personnel at said office of Manila and Quezon Province), would clearly be
previously stated that all the defendants were not at said unreasonable.49
office, it became apparent that all the defendants were trying
to evade service of summons. According to respondent's version, copies of the complaint,
summons and writ of attachment, among others, were served
d.3. Given the obvious attempt of defendants to evade service to petitioner corporation at its offices in Candelaria, Quezon
of summons, it was futile for the Sheriff to go back to the and RCBC Plaza. In the Quezon office, the sheriff was informed
RCBC Plaza Office. that the individual petitioners were all not around to receive
the summons for the corporation considering that they do not
d.4. Hence, summons were served to the individual defendants hold office at said address. Likewise, a staff from the RCBC
through substituted service by entrusting the same to their Plaza office stated that all them were not around and were
house helpers residing at the respective addresses, all of probably at home. Thereafter, summons was served on the
whom are of suitable age and discretion. individual petitioners at their respective addresses in Makati
City, Quezon City, and Candelaria, Quezon. Their house
49
helpers told that they were not at home but were in the RCBC were no actual efforts exerted and no positive steps
Plaza office. Considering that the sheriff already went there undertaken to earnestly locate the individual petitioners, there
and its personnel said that they were not at said office, it is no basis to convincingly say that they evaded the personal
became apparent on the sheriff that the individual petitioners service of summons and merely gave the sheriff a run-around,
were trying to evade service of summons. Thus, given this thus, justifying substituted service upon them.
predicament, it was futile for him to go back to the RCBC Plaza
office. Despite improper service of summons upon their persons, the
individual petitioners are deemed to have submitted to the
It is argued that the summons was properly served to the jurisdiction of the court through their voluntary appearance.
individual petitioners through substituted service because there The second sentence of Section 20,50 Rule 14 of the Rules that
were justifiable causes existing which prevented personal "[t]he inclusion in a motion to dismiss of other grounds aside
service within a reasonable period of time. Respondent asserts from lack of jurisdiction over the person of the defendant shall
that requiring the sheriff to return several times at the not be deemed a voluntary appearance" clearly refers
residences of the ten (10) individual petitioners despite their to affirmative defenses, not affirmative reliefs.51redarclaw
intention to evade service of summons and the considerable
distances of their residences would clearly be unreasonable. In the present case, the individual petitioners prayed, among
others, for the following: (1) discharge of the writ of
Respondent's explanations do not suffice. attachment on their properties; (2) denial of the motion to
declare them in default; (3) admission of the
In the instant case, it appears that the sheriff hastily and Comment/Opposition (to the motion to declare them in
capriciously resorted to substituted service of summons default) filed on December 19, 2006; and (4) denial of
without actually exerting any genuine effort to locate the respondent's motion to strike off from the records (their
individual petitioners. The "reasonable time" within which to opposition to the motion to declare them in default). By
personally serve the summons - 7 days for the plaintiff or 15- seeking affirmative reliefs from the trial court, the individual
30 days for the sheriff as stated in Manotoc - has not yet petitioners are deemed to have voluntarily submitted to the
elapsed at the time the substituted service was opted to. jurisdiction of said court. A party cannot invoke the jurisdiction
Remarkably, based on the Sheriffs Report and the narration of of a court to secure affirmative relief against his opponent and
petitioners, the personal service of summons upon the after obtaining or failing to obtain such relief, repudiate or
corporation and the individual petitioners as well as the levy of question that same jurisdiction.52 Therefore, the CA cannot be
their personal and real properties were all done in just one considered to have erred in affirming the trial court's denial of
day. Manotoc stresses that for substituted service of summons the Special Appearance with Motion to Dismiss for alleged
to be available, there must be several attempts by the sheriff improper service of summons.
to personally serve the summons within a reasonable period
which eventually resulted in failure in order to prove WHEREFORE, premises considered, the petition is DENIED.
impossibility of prompt service. To reiterate, "several attempts" The December 12, 2007 Decision and June 17, 2008
means at least three (3) tries, preferrably on at least two Resolution of the Court of Appeals in CA-G.R. SP No. 98787,
different dates. which sustained the March 29, 2007 Order of the Regional
Trial Court, Branch 66, Makati City, in Civil Case No. 06-882,
Further, except for the Quezon Province, there is, in fact, no are hereby AFFIRMED.
considerable distance between the residences of the individual
petitioners since the cities of Makati and Quezon are part of SO ORDERED.cralawlawlibrary
the National Capital Region; hence, accessible either by private
or public modes of transportation. Assuming that there is, the
distance would not have been insurmountable had respondent
took its time and not unnecessarily rushed to accomplish
personal service in just a single day.

Finally, respondent alleges that the summons was served to


the individual petitioners through substituted service by
entrusting the same to their house helpers, all of whom are of
suitable age and discretion. It did not, however, elaborate that
these persons know how to read and understand English to
comprehend the import of the summons, and fully realize the
need to deliver the summons and complaint to the individual
petitioners at the earliest possible time for them to take
appropriate action. There is no way for Us to conclusively
ascertain that the sheriff ensured, among others, that the
persons found in the alleged dwelling or residence comprehend
the significance of the receipt of the summons and the duty to
immediately deliver it to the individual petitioners or at least
notify them of said receipt of summons.

The foregoing considered, it can be deduced that since there

50
MA. IMELDA M. MANOTOC, G.R. No. 130974 for wrongful death of deceased Archimedes Trajano committed
by military intelligence officials of the Philippines allegedly
Petitioner,
under the command, direction, authority, supervision,
Present: tolerance, sufferance and/or influence of defendant Manotoc,
pursuant to the provisions of Rule 39 of the then Revised Rules
- versus - QUISUMBING, J., Chairperson, of Court.
CARPIO,
CARPIO MORALES, Based on paragraph two of the Complaint, the trial
HONORABLE COURT OF TINGA, and court issued a Summons[3] on July 6, 1993 addressed to
petitioner at Alexandra Condominium Corporation
APPEALS and AGAPITA VELASCO, JR., JJ. or Alexandra Homes, E2 Room 104, at No. 29 Meralco
TRAJANO on behalf of the Estate Avenue, Pasig City.

of ARCHIMEDES TRAJANO, Promulgated:


Respondents. August 16, 2006 On July 15, 1993, the Summons and a copy of the
Complaint were allegedly served upon (Mr.) Macky de la Cruz,
an alleged caretaker of petitioner at the condominium unit
mentioned earlier.[4] When petitioner failed to file her Answer,
x---------------------------------------------------------------------------
the trial court declared her in default through an
--------------x
Order[5] dated October 13, 1993.

DECISION
On October 19, 1993, petitioner, by special
appearance of counsel, filed a Motion to Dismiss[6] on the
ground of lack of jurisdiction of the trial court over her person
VELASCO, JR., J.:
due to an invalid substituted service of summons. The grounds
to support the motion were: (1) the address of defendant
indicated in the Complaint (Alexandra Homes) was not her
The courts jurisdiction over a defendant is founded on dwelling, residence, or regular place of business as provided in
a valid service of summons. Without a valid service, the court Section 8, Rule 14 of the Rules of Court; (2) the party (de la
cannot acquire jurisdiction over the defendant, unless the Cruz), who was found in the unit, was neither a representative,
defendant voluntarily submits to it. The defendant must be employee, nor a resident of the place; (3) the procedure
properly apprised of a pending action against him and assured prescribed by the Rules on personal and substituted service of
of the opportunity to present his defenses to the suit. Proper summons was ignored; (4) defendant was a resident of
service of summons is used to protect ones right to due Singapore; and (5) whatever judgment rendered in this case
process. would be ineffective and futile.

The Case During the hearing on the Motion to Dismiss,


petitioner Manotoc presented Carlos Gonzales, who testified
that he saw defendant Manotoc as a visitor
This Petition for Review on Certiorari[1] under Rule 45 presents in Alexandra Homes only two times. He also identified the
the core issue whether there was a valid substituted service of Certification of Renato A. de Leon, which stated that Unit E-
summons on petitioner for the trial court to acquire 2104 was owned by Queens Park Realty, Inc.; and at the time
jurisdiction. Petitioner Manotoc claims the court a quo should the Certification was issued, the unit was not being leased by
have annulled the proceedings in the trial court for want of anyone. Petitioner also presented her Philippine passport and
jurisdiction due to irregular and ineffective service of the Disembarkation/Embarkation Card[7] issued by the
summons. Immigration Service of Singapore to show that she was a
resident of Singapore. She claimed that the person referred to
in plaintiffs Exhibits A to EEEE as Mrs. Manotoc may not even
The Facts be her, but the mother of Tommy Manotoc, and granting that
she was the one referred to in said exhibits, only 27 out of 109
entries referred to Mrs. Manotoc. Hence, the infrequent
Petitioner is the defendant in Civil Case No. 63337 number of times she allegedly entered Alexandra Homes did
entitled Agapita Trajano, pro se, and on behalf of the Estate of not at all establish plaintiffs position that she was a resident of
Archimedes Trajano v. Imelda Imee R. Marcos-Manotoc[2] for said place.
Filing, Recognition and/or Enforcement of Foreign
Judgment. Respondent Trajano seeks the enforcement of a On the other hand, Agapita Trajano, for plaintiffs
foreign courts judgment rendered on May 1, 1991 by the estate, presented Robert Swift, lead counsel for plaintiffs in the
United States District Court of Honolulu, Hawaii, United States Estate of Ferdinand Marcos Human Rights Litigation, who
of America, in a case entitled Agapita Trajano, et al. v. Imee testified that he participated in the deposition taking of
Marcos-Manotoc a.k.a. Imee Marcos, Civil Case No. 86-0207 Ferdinand R. Marcos, Jr.; and he confirmed that Mr. Marcos,

51
Jr. testified that petitioners residence was at the Alexandra On April 2, 1997, petitioner filed a Motion for
Apartment, Greenhills.[8] In addition, the entries[9] in the Reconsideration[15] which was denied by the CA in its
logbook of Alexandra Homes from August 4, 1992 to August 2, Resolution[16] dated October 8, 1997.
1993, listing the name of petitioner Manotoc and the Sheriffs
Return,[10] were adduced in evidence.
Hence, petitioner has come before the Court for
review on certiorari.
On October 11, 1994, the trial court rejected
Manotocs Motion to Dismiss on the strength of its findings that
her residence, for purposes of the Complaint,
was Alexandra Homes, Unit E-2104, No. 29 Meralco
Avenue, Pasig, Metro Manila, based on the documentary The Issues
evidence of respondent Trajano. The trial court relied on the
presumption that the sheriffs substituted service was made in
the regular performance of official duty, and such presumption Petitioner raises the following assignment of errors for
stood in the absence of proof to the contrary. [11] the Courts consideration:

On December 21, 1994, the trial court discarded I. RESPONDENT COURT OF APPEALS
Manotocs plea for reconsideration for lack of merit.[12] COMMITTED [A] SERIOUS ERROR IN
RENDERING THE DECISION AND
RESOLUTION IN QUESTION
Undaunted, Manotoc filed a Petition for Certiorari and (ANNEXES A AND B) IN DEFIANCE
Prohibition[13] before the Court of Appeals (CA) on January 20, OF LAW AND JURISPRUDENCE IN
1995, docketed as CA-G.R. SP No. 36214 seeking the RULING THAT THE TRIAL COURT
annulment of the October 11, 1994 and December 21, 1994 ACQUIRED JURISDICTION OVER THE
Orders of Judge Aurelio C. Trampe. PERSON OF THE PETITIONER
THROUGH A SUBSTITUTED SERVICE
OF SUMMONS IN ACCORDANCE
WITH SECTION 8, RULE 14 OF THE
REVISED RULES OF COURT.

II. RESPONDENT COURT OF APPEALS


Ruling of the Court of Appeals COMMITTED [A] SERIOUS ERROR
WHEN IT RULED THAT THERE WAS A
VALID SERVICE OF SUMMONS ONAN
On March 17, 1997, the CA rendered the assailed ALLEGED CARETAKER OF
Decision,[14] dismissing the Petition for Certiorari and PETITIONERS RESIDENCE IN
Prohibition. The court a quo adopted the findings of the trial COMPLETE DEFIANCE OF THE
court that petitioners residence was at Alexandra Homes, Unit RULING IN CASTILLO VS. CFI OF
E-2104, at No. 29 Meralco Avenue, Pasig, Metro Manila, which BULACAN, BR. IV, G.R. NO. L-
was also the residence of her husband, as shown by the 55869, FEBRUARY 20, 1984, 127
testimony of Atty. Robert Swift and the Returns of the SCRA 632 WHICH DEFINES THE
registered mails sent to petitioner. It ruled that the PROPRIETY OF SUCH SERVICE UPON
Disembarkation/Embarkation Card and the Certification MERE OVERSEERS OF PREMISES
dated September 17, 1993 issued by Renato A. De Leon, WHERE A PARTY SUPPOSEDLY
Assistant Property Administrator of Alexandra Homes, were RESIDES.
hearsay, and that said Certification did not refer to July
1993the month when the substituted service was effected.
III. RESPONDENT COURT OF
APPEALS COMMITTED [A] SERIOUS
In the same Decision, the CA also rejected petitioners ERROR IN CONCLUDING THAT THE
Philippine passport as proof of her residency in Singapore as it RESIDENCE OF THE HUSBAND IS
merely showed the dates of her departure from and arrival in ALSO THE RESIDENCE OF HIS WIFE
the Philippines without presenting the boilerplates last two (2) CONTRARY TO THE RULING IN THE
inside pages where petitioners residence was indicated. The BANK OF THE
CA considered the withholding of those pages as suppression PHILIPPINE ISLANDS VS. DE
of evidence. Thus, according to the CA, the trial court had COSTER, G.R. NO. 23181, MARCH 16,
acquired jurisdiction over petitioner as there was a valid 1925, 47 PHIL. 594.
substituted service pursuant to Section 8, Rule 14 of the old
Revised Rules of Court.
IV. RESPONDENT COURT OF
APPEALS COMMITTED [A] SERIOUS
ERROR IN FAILING TO APPLY THE
52
RULE ON EXTRA-TERRITORIAL We can break down this section into the following
SERVICE OF SUMMONS UNDER requirements to effect a valid substituted service:
SECTIONS 17 AND 18, RULE 14 OF
THE REVISED RULES OF COURT.[17]
(1) Impossibility of Prompt Personal Service

The party relying on substituted service or the sheriff


The assigned errors bring to the fore the crux of the
must show that defendant cannot be served promptly or there
disagreementthe validity of the substituted service of summons
is impossibility of prompt service.[22]Section 8, Rule 14 provides
for the trial court to acquire jurisdiction over petitioner.
that the plaintiff or the sheriff is given a reasonable time to
serve the summons to the defendant in person, but no specific
time frame is mentioned. Reasonable time is defined as so
The Courts Ruling
much time as is necessary under the circumstances for a
reasonably prudent and diligent man to do, conveniently, what
the contract or duty requires that should be done, having a
We GRANT the petition. regard for the rights and possibility of loss, if any[,] to the
Acquisition of Jurisdiction other party.[23] Under the Rules, the service of summons has
no set period. However, when the court, clerk of court, or the
plaintiff asks the sheriff to make the return of the summons
Jurisdiction over the defendant is acquired either and the latter submits the return of summons, then the validity
upon a valid service of summons or the defendants voluntary of the summons lapses. The plaintiff may then ask for an alias
appearance in court. When the defendant does not voluntarily summons if the service of summons has failed.[24] What then is
submit to the courts jurisdiction or when there is no valid a reasonable time for the sheriff to effect a personal service in
service of summons, any judgment of the court which has no order to demonstrate impossibility of prompt service? To the
jurisdiction over the person of the defendant is null and plaintiff, reasonable time means no more than seven (7) days
void.[18] In an action strictly in personam, personal service on since an expeditious processing of a complaint is what a
the defendant is the preferred mode of service, that is, by plaintiff wants. To the sheriff, reasonable time means 15 to 30
handing a copy of the summons to the defendant in person. If days because at the end of the month, it is a practice for the
defendant, for excusable reasons, cannot be served with the branch clerk of court to require the sheriff to submit a return
summons within a reasonable period, then substituted service of the summons assigned to the sheriff for service. The
can be resorted to. While substituted service of summons is Sheriffs Return provides data to the Clerk of Court, which the
permitted, it is extraordinary in character and in derogation of clerk uses in the Monthly Report of Cases to be submitted to
the usual method of service.[19] Hence, it must faithfully and the Office of the Court Administrator within the first ten (10)
strictly comply with the prescribed requirements and days of the succeeding month. Thus, one month from the
circumstances authorized by the rules. Indeed, compliance issuance of summons can be considered reasonable time with
with the rules regarding the service of summons is as much regard to personal service on the defendant.
important as the issue of due process as of jurisdiction.[20]

Sheriffs are asked to discharge their duties on the


Requirements for Substituted Service service of summons with due care, utmost diligence, and
reasonable promptness and speed so as not to prejudice the
expeditious dispensation of justice. Thus, they are enjoined to
try their best efforts to accomplish personal service on
Section 8 of Rule 14 of the old Revised Rules of Court
defendant. On the other hand, since the defendant is expected
which applies to this case provides:
to try to avoid and evade service of summons, the sheriff must
be resourceful, persevering, canny, and diligent in serving the
process on the defendant. For substituted service of summons
SEC. 8. [21] Substituted
to be available, there must be several attempts by the sheriff
service. If the defendant cannot be
to personally serve the summons within a reasonable period
served within a reasonable time as
[of one month] which eventually resulted in failure to prove
provided in the preceding section
impossibility of prompt service. Several attempts means at
[personal service on defendant],
least three (3) tries, preferably on at least two different
service may be effected (a) by
dates. In addition, the sheriff must cite why such efforts were
leaving copies of the summons at the
unsuccessful. It is only then that impossibility of service can be
defendants residence with some
confirmed or accepted.
person of suitable age and discretion
then residing therein, or (b) by
leaving the copies at defendants
(2) Specific Details in the Return
office or regular place of business
with some competent person in
charge thereof.
The sheriff must describe in the Return of Summons
the facts and circumstances surrounding the attempted
53
personal service.[25] The efforts made to find the defendant
and the reasons behind the failure must be clearly narrated in
Invalid Substituted Service in the Case at Bar
detail in the Return. The date and time of the attempts on
personal service, the inquiries made to locate the defendant,
the name/s of the occupants of the alleged residence or house
of defendant and all other acts done, though futile, to serve Let us examine the full text of the Sheriffs Return,
the summons on defendant must be specified in the Return to which reads:
justify substituted service. The form on Sheriffs Return of
Summons on Substituted Service prescribed in the Handbook
for Sheriffs published by the Philippine Judicial Academy THIS IS TO CERTIFY that on
requires a narration of the efforts made to find the defendant many occasions several
personally and the fact of failure.[26] Supreme Court attempts were made to serve the
Administrative Circular No. 5 dated November 9, 1989 requires summons with complaint and
that impossibility of prompt service should be shown by stating annexes issued by this Honorable
the efforts made to find the defendant personally and the Court in the above entitled case,
failure of such efforts, which should be made in the proof of personally upon the
service. defendant IMELDA IMEE MARCOS-
MANOTOC located at Alexandra
Condominium Corpration [sic] or
(3) A Person of Suitable Age and Discretion Alexandra Homes E-2 Room 104
No. 29 Merlaco [sic] Ave., Pasig,
Metro-Manila at reasonable
hours of the day but to no
If the substituted service will be effected at
avail for the reason that said
defendants house or residence, it should be left with a person
defendant is usually out of her place
of suitable age and discretion then residing therein.[27] A
and/or residence or premises. That
person of suitable age and discretion is one who has attained
on the 15th day of July, 1993,
the age of full legal capacity (18 years old) and is considered
substituted service of summons was
to have enough discernment to understand the importance of
resorted to in accordance with the
a summons. Discretion is defined as the ability to make
Rules of Court in the Philippines
decisions which represent a responsible choice and for which
leaving copy of said summons with
an understanding of what is lawful, right or wise may be
complaint and annexes thru
presupposed.[28] Thus, to be of sufficient discretion, such
[sic] (Mr) Macky de la Cruz,
person must know how to read and understand English to
caretaker of the said defendant,
comprehend the import of the summons, and fully realize the
according to (Ms) Lyn Jacinto,
need to deliver the summons and complaint to the defendant
Receptionist and Telephone Operator
at the earliest possible time for the person to take appropriate
of the said building, a person of
action. Thus, the person must have the relation of confidence
suitable age and discretion, living
to the defendant, ensuring that the latter would receive or at
with the said defendant at the given
least be notified of the receipt of the summons. The sheriff
address who acknowledged the
must therefore determine if the person found in the alleged
receipt thereof of said processes but
dwelling or residence of defendant is of legal age, what the
he refused to sign (emphases
recipients relationship with the defendant is, and whether said
supplied).
person comprehends the significance of the receipt of the
summons and his duty to immediately deliver it to the
defendant or at least notify the defendant of said receipt of
summons. These matters must be clearly and specifically WHEREFORE, said summons is
described in the Return of Summons. hereby returned to this Honorable
Court of origin, duly served for its
record and information.
(4) A Competent Person in Charge

Pasig, Metro-Manila July 15,


1993.[29]
If the substituted service will be done at defendants
office or regular place of business, then it should be served on
a competent person in charge of the place. Thus, the person
on whom the substituted service will be made must be the one A meticulous scrutiny of the aforementioned Return
managing the office or business of defendant, such as the readily reveals the absence of material data on the serious
president or manager; and such individual must have sufficient efforts to serve the Summons on petitioner Manotoc in
knowledge to understand the obligation of the defendant in person. There is no clear valid reason cited in the Return why
the summons, its importance, and the prejudicial effects those efforts proved inadequate, to reach the conclusion that
arising from inaction on the summons. Again, these details personal service has become impossible or unattainable
must be contained in the Return. outside the generally couched phrases of on many occasions
several attempts were made to serve the summons x x x

54
personally, at reasonable hours during the day, and to no avail convincingly show the impracticability or hopelessness of
for the reason that the said defendant is usually out of her personal service.
place and/or residence or premises. Wanting in detailed
Granting that such a general description be
information, the Return deviates from the rulingin Domagas v.
considered adequate, there is still a serious nonconformity
Jensen[30] and other related cases[31]that the pertinent facts
from the requirement that the summons must be left with a
and circumstances on the efforts exerted to serve the
person of suitable age and discretion residing in defendants
summons personally must be narrated in the Return. It cannot
house or residence. Thus, there are two (2) requirements
be determined how many times, on what specific dates, and at
under the Rules: (1) recipient must be a person of suitable age
what hours of the day the attempts were made. Given the fact
and discretion; and (2) recipient must reside in the house or
that the substituted service of summons may be assailed, as in
residence of defendant. Both requirements were not met. In
the present case, by a Motion to Dismiss, it is imperative that
this case, the Sheriffs Return lacks information as to residence,
the pertinent facts and circumstances surrounding the service
age, and discretion of Mr. Macky de la Cruz, aside from the
of summons be described with more particularity in the Return
sheriffs general assertion that de la Cruz is the resident
or Certificate of Service.
caretaker of petitioner as pointed out by a certain Ms. Lyn
Jacinto, alleged receptionist and telephone operator
of Alexandra Homes. It is doubtful if Mr. de la Cruz is residing
Besides, apart from the allegation of petitioners
with petitioner Manotoc in the condominium unit considering
address in the Complaint, it has not been shown that
that a married woman of her stature in society would unlikely
respondent Trajano or Sheriff Caelas, who served such
hire a male caretaker to reside in her dwelling. With the
summons, exerted extraordinary efforts to locate
petitioners allegation that Macky de la Cruz is not her
petitioner. Certainly, the second paragraph of the Complaint
employee, servant, or representative, it is necessary to have
only states that respondents were informed, and so [they]
additional information in the Return of Summons. Besides, Mr.
allege about the address and whereabouts of petitioner. Before
Macky de la Cruzs refusal to sign the Receipt for the summons
resorting to substituted service, a plaintiff must demonstrate
is a strong indication that he did not have the necessary
an effort in good faith to locate the defendant through more
relation of confidence with petitioner. To protect petitioners
direct means.[32] More so, in the case in hand, when the
right to due process by being accorded proper notice of a case
alleged petitioners residence or house is doubtful or has not
against her, the substituted service of summons must be
been clearly ascertained, it would have been better for
shown to clearly comply with the rules.
personal service to have been pursued persistently.

It has been stated and restated that substituted


In the case Umandap v. Sabio, Jr.,[33] it may be true
service of summons must faithfully and strictly comply with the
that the Court held that a Sheriffs Return, which states that
prescribed requirements and in the circumstances authorized
despite efforts exerted to serve said process personally upon
by the rules. [34]
the defendant on several occasions the same proved futile,
conforms to the requirements of valid substituted
service. However, in view of the numerous claims of
Even American case law likewise stresses the principle
irregularities in substituted service which have spawned the
of strict compliance with statute or rule on substituted service,
filing of a great number of unnecessary special civil actions of
thus:
certiorari and appeals to higher courts, resulting in prolonged
litigation and wasteful legal expenses, the Court rules in the The procedure prescribed by a
case at bar that the narration of the efforts made to find the statute or rule for substituted or
defendant and the fact of failure written in broad and constructive service must be strictly
imprecise words will not suffice. The facts and circumstances pursued.[35] There must be strict
should be stated with more particularity and detail on the compliance with the requirements of
number of attempts made at personal service, dates and times statutes authorizing substituted or
of the attempts, inquiries to locate defendant, names of constructive service.[36]
occupants of the alleged residence, and the reasons for failure
should be included in the Return to satisfactorily show the
efforts undertaken. That such efforts were made to personally Where, by the local law,
serve summons on defendant, and those resulted in failure, substituted or constructive service is
would prove impossibility of prompt personal service. in certain situations authorized in the
place of personal service when the
latter is inconvenient or impossible, a
Moreover, to allow sheriffs to describe the facts and strict and literal compliance with the
circumstances in inexact terms would encourage routine provisions of the law must be shown
performance of their precise duties relating to substituted in order to support the judgment
servicefor it would be quite easy to shroud or conceal based on such substituted or
carelessness or laxity in such broad terms. Lastly, considering constructive service.[37] Jurisdiction is
that monies and properties worth millions may be lost by a not to be assumed and exercised on
defendant because of an irregular or void substituted service, the general ground that the subject
it is but only fair that the Sheriffs Return should clearly and matter of the suit is within the power
of the court. The inquiry must be as
55
to whether the requisites of the On the issue whether petitioner Manotoc is a resident
statute have been complied with, and of Alexandra Homes, Unit E-2104, at No. 29 Meralco
such compliance must appear on the Avenue, Pasig City, our findings that the substituted service is
record.[38] The fact that the void has rendered the matter moot and academic. Even
defendant had actual knowledge of assuming that Alexandra Homes Room 104 is her actual
attempted service does not render residence, such fact would not make an irregular and void
the service effectual if in fact the substituted service valid and effective.
process was not served in accordance
with the requirements of the
statute.[39] IN VIEW OF THE FOREGOING, this Petition for
Review is hereby GRANTED and the assailed March 17, 1997
Decision and October 8, 1997 Resolution of the Court of
Appeals and the October 11, 1994 and December 21, 1994
Orders of the Regional Trial Court, National Capital Judicial
Based on the above principles, respondent Trajano
Region, Pasig City, Branch 163 are
failed to demonstrate that there was strict compliance with the
hereby REVERSED and SET ASIDE. No costs.
requirements of the then Section 8, Rule 14 (now Section 7,
Rule 14 of the 1997 Rules of Civil Procedure).
SO ORDERED.
Due to non-compliance with the prerequisites for valid
substituted service, the proceedings held before the trial
court perforce must be annulled.

The court a quo heavily relied on the presumption of


regularity in the performance of official duty. It reasons out
that [t]he certificate of service by the proper officer is prima
facie evidence of the facts set out herein, and to overcome the
presumption arising from said certificate, the evidence must be
clear and convincing.[40]

The Court acknowledges that this ruling is still a valid


doctrine. However, for the presumption to apply, the Sheriffs
Return must show that serious efforts or attempts were
exerted to personally serve the summons and that said efforts
failed. These facts must be specifically narrated in the
Return. To reiterate, it must clearly show that the substituted
service must be made on a person of suitable age and
discretion living in the dwelling or residence of
defendant. Otherwise, the Return is flawed and the
presumption cannot be availed of. As previously explained, the
Return of Sheriff Caelas did not comply with the stringent
requirements of Rule 14, Section 8 on substituted service.

In the case of Venturanza v. Court of Appeals,[41] it


was held that x x x the presumption of regularity in the
performance of official functions by the sheriff is not
applicable in this case where it is patent that the
sheriffs return is defective (emphasis supplied). While the
Sheriffs Return in the Venturanza case had no statement on
the effort or attempt to personally serve the summons, the
Return of Sheriff Caelas in the case at bar merely described
the efforts or attempts in general terms lacking in details as
required by the ruling in the case of Domagas v. Jensen and
other cases. It is as if Caelas Return did not mention any effort
to accomplish personal service. Thus, the substituted service is
void.

56
G.R. No. 156759 June 5, 2013 SHERIFF’S RETURN

ALLEN A. MACASAET, NICOLAS V. QUIJANO, JR., This is to certify that on September 18, 2000, I caused the
ISAIAS ALBANO, LILY REYES, JANET BAY, JESUS R. service of summons together with copies of complaint and its
GALANG, AND RANDY HAGOS, Petitioners, annexes attached thereto, upon the following:
vs.
FRANCISCO R. CO, JR., Respondent. 1. Defendant Allen A. Macasaet, President/Publisher
of defendant AbanteTonite, at Monica Publishing
DECISION Corporation, Rooms 301-305 3rd Floor, BF
Condominium Building, Solana corner A. Soriano
BERSAMIN, J.: Streets, Intramuros, Manila, thru his secretary Lu-Ann
Quijano, a person of sufficient age and discretion
working therein, who signed to acknowledge receipt
To warrant the substituted service of the summons and copy
thereof. That effort (sic) to serve the said summons
of the complaint, the serving officer must first attempt to effect
personally upon said defendant were made, but the
the same upon the defendant in person. Only after the attempt
same were ineffectual and unavailing on the ground
at personal service has become futile or impossible within a
that per information of Ms. Quijano said defendant is
reasonable time may the officer resort to substituted service.
always out and not available, thus, substituted service
was applied;
The Case
2. Defendant Nicolas V. Quijano, at the same address,
Petitioners – defendants in a suit for libel brought by thru his wife Lu-Ann Quijano, who signed to
respondent – appeal the decision promulgated on March 8, acknowledge receipt thereof. That effort (sic) to serve
20021 and the resolution promulgated on January 13, the said summons personally upon said defendant
2003,2 whereby the Court of Appeals (CA) respectively were made, but the same were ineffectual and
dismissed their petition for certiorari, prohibition and unavailing on the ground that per information of (sic)
mandamus and denied their motion for reconsideration. his wife said defendant is always out and not
Thereby, the CA upheld the order the Regional Trial Court available, thus, substituted service was applied;
(RTC), Branch 51, in Manila had issued on March 12, 2001
denying their motion to dismiss because the substituted
3. Defendants Isaias Albano, Janet Bay, Jesus R.
service of the summons and copies of the complaint on each of
Galang, Randy Hagos and Lily Reyes, at the same
them had been valid and effective.3
address, thru Rene Esleta, Editorial Assistant of
defendant AbanteTonite, a person of sufficient age
Antecedents and discretion working therein who signed to
acknowledge receipt thereof. That effort (sic) to serve
On July 3, 2000, respondent, a retired police officer assigned the said summons personally upon said defendants
at the Western Police District in Manila, sued Abante Tonite, a were made, but the same were ineffectual and
daily tabloid of general circulation; its Publisher Allen A. unavailing on the ground that per information of (sic)
Macasaet; its Managing Director Nicolas V. Quijano; its Mr. Esleta said defendants is (sic) always roving
Circulation Manager Isaias Albano; its Editors Janet Bay, Jesus outside and gathering news, thus, substituted service
R. Galang and Randy Hagos; and its Columnist/Reporter Lily was applied.
Reyes (petitioners), claiming damages because of an allegedly
libelous article petitioners published in the June 6, 2000 issue Original copy of summons is therefore, respectfully returned
of Abante Tonite. The suit, docketed as Civil Case No. 00- duly served.
97907, was raffled to Branch 51 of the RTC, which in due
course issued summons to be served on each defendant,
Manila, September 22, 2000.
including Abante Tonite, at their business address at Monica
Publishing Corporation, 301-305 3rd Floor, BF Condominium
Building, Solana Street corner A. Soriano Street, Intramuros, On October 3, 2000, petitioners moved for the dismissal of the
Manila.4 complaint through counsel’s special appearance in their behalf,
alleging lack of jurisdiction over their persons because of the
invalid and ineffectual substituted service of summons. They
In the morning of September 18, 2000, RTC Sheriff Raul
contended that the sheriff had made no prior attempt to serve
Medina proceeded to the stated address to effect the personal
the summons personally on each of them in accordance with
service of the summons on the defendants. But his efforts to
Section 6 and Section 7, Rule 14 of the Rules of Court. They
personally serve each defendant in the address were futile
further moved to drop Abante Tonite as a defendant by virtue
because the defendants were then out of the office and
of its being neither a natural nor a juridical person that could
unavailable. He returned in the afternoon of that day to make
be impleaded as a party in a civil action.
a second attempt at serving the summons, but he was
informed that petitioners were still out of the office. He
decided to resort to substituted service of the summons, and At the hearing of petitioners’ motion to dismiss, Medina
explained why in his sheriff’s return dated September 22, testified that he had gone to the office address of petitioners in
2005,5 to wit: the morning of September 18, 2000 to personally serve the
57
summons on each defendant; that petitioners were out of the he was informed that they were not around to personally
office at the time; that he had returned in the afternoon of the receive the same is untenable. During the hearing of the
same day to again attempt to serve on each defendant herein motion, Sheriff Raul Medina of this Branch of the Court
personally but his attempt had still proved futile because all of testified that on September 18, 2000 in the morning, he went
petitioners were still out of the office; that some competent to the office address of the defendants to personally serve
persons working in petitioners’ office had informed him that summons upon them but they were out. So he went back to
Macasaet and Quijano were always out and unavailable, and serve said summons upon the defendants in the afternoon of
that Albano, Bay, Galang, Hagos and Reyes were always out the same day, but then again he was informed that the
roving to gather news; and that he had then resorted to defendants were out and unavailable, and that they were
substituted service upon realizing the impossibility of his always out because they were roving around to gather news.
finding petitioners in person within a reasonable time. Because of that information and because of the nature of the
work of the defendants that they are always on field, so the
On March 12, 2001, the RTC denied the motion to dismiss, and sheriff resorted to substituted service of summons. There was
directed petitioners to file their answers to the complaint substantial compliance with the rules, considering the difficulty
within the remaining period allowed by the Rules of to serve the summons personally to them because of the
Court,6 relevantly stating: nature of their job which compels them to be always out and
unavailable. Additional matters regarding the service of
summons upon defendants were sufficiently discussed in the
Records show that the summonses were served upon Allen A. Order of this Court dated March 12, 2001.
Macasaet, President/Publisher of defendant AbanteTonite,
through LuAnn Quijano; upon defendants Isaias Albano, Janet
Bay, Jesus R. Galang, Randy Hagos and Lily Reyes, through Regarding the impleading of Abante Tonite as defendant, the
Rene Esleta, Editorial Assistant of defendant Abante Tonite (p. RTC held, viz:
12, records). It is apparent in the Sheriff’s Return that on
several occasions, efforts to served (sic) the summons "Abante Tonite" is a daily tabloid of general circulation. People
personally upon all the defendants were ineffectual as they all over the country could buy a copy of "Abante Tonite" and
were always out and unavailable, so the Sheriff served the read it, hence, it is for public consumption. The persons who
summons by substituted service. organized said publication obviously derived profit from it. The
information written on the said newspaper will affect the
Considering that summonses cannot be served within a person, natural as well as juridical, who was stated or
reasonable time to the persons of all the defendants, hence implicated in the news. All of these facts imply that "Abante
substituted service of summonses was validly applied. Tonite" falls within the provision of Art. 44 (2 or 3), New Civil
Secretary of the President who is duly authorized to receive Code. Assuming arguendo that "Abante Tonite" is not
such document, the wife of the defendant and the Editorial registered with the Securities and Exchange Commission, it is
Assistant of the defendant, were considered competent deemed a corporation by estoppels considering that it
persons with sufficient discretion to realize the importance of possesses attributes of a juridical person, otherwise it cannot
the legal papers served upon them and to relay the same to be held liable for damages and injuries it may inflict to other
the defendants named therein (Sec. 7, Rule 14, 1997 Rules of persons.
Civil Procedure).
Undaunted, petitioners brought a petition for certiorari,
WHEREFORE, in view of the foregoing, the Motion to Dismiss is prohibition, mandamusin the CA to nullify the orders of the
hereby DENIED for lack of merit.. RTC dated March 12, 2001 and June 29, 2001.

Accordingly, defendants are directed to file their Answers to Ruling of the CA


the complaint within the period still open to them, pursuant to
the rules. On March 8, 2002, the CA promulgated its questioned
decision,8 dismissing the petition for certiorari, prohibition,
SO ORDERED. mandamus, to wit:

Petitioners filed a motion for reconsideration, asserting that the We find petitioners’ argument without merit. The rule is that
sheriff had immediately resorted to substituted service of the certiorari will prosper only if there is a showing of grave abuse
summons upon being informed that they were not around to of discretion or an act without or in excess of jurisdiction
personally receive the summons, and that Abante Tonite, committed by the respondent Judge. A judicious reading of the
being neither a natural nor a juridical person, could not be questioned orders of respondent Judge would show that the
made a party in the action. same were not issued in a capricious or whimsical exercise of
judgment. There are factual bases and legal justification for
the assailed orders. From the Return, the sheriff certified that
On June 29, 2001, the RTC denied petitioners’ motion for
"effort to serve the summons personally xxx were made, but
reconsideration.7 It stated in respect of the service of
the same were ineffectual and unavailing xxx.
summons, as follows:

The allegations of the defendants that the Sheriff immediately


resorted to substituted service of summons upon them when
58
and upholding the trial court’s finding that there was a rulings rendered in the action – is an element of due process
substantial compliance with the rules that allowed the that is essential in all actions, civil as well as criminal, except in
substituted service. actions in rem or quasi in rem. Jurisdiction over the
defendantin an action in rem or quasi in rem is not required,
Furthermore, the CA ruled: and the court acquires jurisdiction over an actionas long as it
acquires jurisdiction over the resthat is thesubject matter of
the action. The purpose of summons in such action is not the
Anent the issue raised by petitioners that "Abante Tonite is
acquisition of jurisdiction over the defendant but mainly to
neither a natural or juridical person who may be a party in a
satisfy the constitutional requirement of due process.12
civil case," and therefore the case against it must be dismissed
and/or dropped, is untenable.
The distinctions that need to be perceived between an action
in personam, on the one hand, and an action inrem or quasi in
The respondent Judge, in denying petitioners’ motion for rem, on the other hand, are aptly delineated in Domagas v.
reconsideration, held that:
Jensen,13 thusly:

xxxx
The settled rule is that the aim and object of an action
determine its character. Whether a proceeding is in rem, or in
Abante Tonite’s newspapers are circulated nationwide, personam, or quasi in rem for that matter, is determined by its
showing ostensibly its being a corporate entity, thus the nature and purpose, and by these only. A proceeding in
doctrine of corporation by estoppel may appropriately apply. personam is a proceeding to enforce personal rights and
obligations brought against the person and is based on the
An unincorporated association, which represents itself to be a jurisdiction of the person, although it may involve his right to,
corporation, will be estopped from denying its corporate or the exercise of ownership of, specific property, or seek to
capacity in a suit against it by a third person who relies in good compel him to control or dispose of it in accordance with the
faith on such representation. mandate of the court. The purpose of a proceeding in
personam is to impose, through the judgment of a court, some
responsibility or liability directly upon the person of the
There being no grave abuse of discretion committed by the
defendant. Of this character are suits to compel a defendant to
respondent Judge in the exercise of his jurisdiction, the relief
specifically perform some act or actions to fasten a pecuniary
of prohibition is also unavailable.
liability on him. An action in personam is said to be one which
has for its object a judgment against the person, as
WHEREFORE, the instant petition is DENIED. The assailed distinguished from a judgment against the property to
Orders of respondent Judge are AFFIRMED. determine its state. It has been held that an action in
personam is a proceeding to enforce personal rights or
SO ORDERED.9 obligations; such action is brought against the person. As far
as suits for injunctive relief are concerned, it is well-settled
On January 13, 2003, the CA denied petitioners’ motion for that it is an injunctive act in personam. In Combs v. Combs,
reconsideration.10 the appellate court held that proceedings to enforce personal
rights and obligations and in which personal judgments are
rendered adjusting the rights and obligations between the
Issues affected parties is in personam. Actions for recovery of real
property are in personam.
Petitioners hereby submit that:
On the other hand, a proceeding quasi in rem is one brought
1. THE COURT OF APPEALS COMMITTED AN ERROR against persons seeking to subject the property of such
OF LAW IN HOLDING THAT THE TRIAL COURT persons to the discharge of the claims assailed. In an action
ACQUIRED JURISDICTION OVER HEREIN quasi in rem, an individual is named as defendant and the
PETITIONERS. purpose of the proceeding is to subject his interests therein to
the obligation or loan burdening the property. Actions quasi in
2. THE COURT OF APPEALS COMMITTED rem deal with the status, ownership or liability of a particular
REVERSIBLE ERROR BY SUSTAINING THE property but which are intended to operate on these questions
INCLUSION OF ABANTE TONITE AS PARTY IN THE only as between the particular parties to the proceedings and
INSTANT CASE.11 not to ascertain or cut off the rights or interests of all possible
claimants. The judgments therein are binding only upon the
parties who joined in the action.
Ruling

As a rule, Philippine courts cannot try any case against a


The petition for review lacks merit.
defendant who does not reside and is not found in the
Philippines because of the impossibility of acquiring jurisdiction
Jurisdiction over the person, or jurisdiction in personam –the over his person unless he voluntarily appears in court; but
power of the court to render a personal judgment or to subject when the case is an action in rem or quasi in rem enumerated
the parties in a particular action to the judgment and other in Section 15, Rule 14 of the Rules of Court, Philippine courts

59
have jurisdiction to hear and decide the case because they Under the Rules of Court, the service of the summons should
have jurisdiction over the res, and jurisdiction over the person firstly be effected on the defendant himself whenever
of the non-resident defendant is not essential. In the latter practicable. Such personal service consists either in handing a
instance, extraterritorial service of summons can be made copy of the summons to the defendant in person, or, if the
upon the defendant, and such extraterritorial service of defendant refuses to receive and sign for it, in tendering it to
summons is not for the purpose of vesting the court with him.24 The rule on personal service is to be rigidly enforced in
jurisdiction, but for the purpose of complying with the order to ensure the realization of the two fundamental
requirements of fair play or due process, so that the defendant objectives earlier mentioned. If, for justifiable reasons, the
will be informed of the pendency of the action against him and defendant cannot be served in person within a reasonable
the possibility that property in the Philippines belonging to him time, the service of the summons may then be effected either
or in which he has an interest may be subjected to a judgment (a) by leaving a copy of the summons at his residence with
in favor of the plaintiff, and he can thereby take steps to some person of suitable age and discretion then residing
protect his interest if he is so minded. On the other hand, therein, or (b) by leaving the copy at his office or regular place
when the defendant in an action in personam does not reside of business with some competent person in charge
and is not found in the Philippines, our courts cannot try the thereof.25 The latter mode of service is known as substituted
case against him because of the impossibility of acquiring service because the service of the summons on the defendant
jurisdiction over his person unless he voluntarily appears in is made through his substitute.
court.14
It is no longer debatable that the statutory requirements of
As the initiating party, the plaintiff in a civil action voluntarily substituted service must be followed strictly, faithfully and
submits himself to the jurisdiction of the court by the act of fully, and any substituted service other than that authorized by
filing the initiatory pleading. As to the defendant, the court statute is considered ineffective.26 This is because substituted
acquires jurisdiction over his person either by the proper service, being in derogation of the usual method of service, is
service of the summons, or by a voluntary appearance in the extraordinary in character and may be used only as prescribed
action.15 and in the circumstances authorized by statute.27 Only when
the defendant cannot be served personally within a reasonable
Upon the filing of the complaint and the payment of the time may substituted service be resorted to. Hence, the
requisite legal fees, the clerk of court forthwith issues the impossibility of prompt personal service should be shown by
corresponding summons to the defendant.16 The summons is stating the efforts made to find the defendant himself and the
directed to the defendant and signed by the clerk of court fact that such efforts failed, which statement should be found
under seal. It contains the name of the court and the names of in the proof of service or sheriff’s return.28 Nonetheless, the
the parties to the action; a direction that the defendant requisite showing of the impossibility of prompt personal
answers within the time fixed by the Rules of Court; and a service as basis for resorting to substituted service may be
notice that unless the defendant so answers, the plaintiff will waived by the defendant either expressly or impliedly.29
take judgment by default and may be granted the relief
applied for.17 To be attached to the original copy of the There is no question that Sheriff Medina twice attempted to
summons and all copies thereof is a copy of the complaint serve the summons upon each of petitioners in person at their
(and its attachments, if any) and the order, if any, for the office address, the first in the morning of September 18, 2000
appointment of a guardian ad litem.18 and the second in the afternoon of the same date. Each
attempt failed because Macasaet and Quijano were "always
The significance of the proper service of the summons on the out and not available" and the other petitioners were "always
defendant in an action in personam cannot be roving outside and gathering news." After Medina learned from
overemphasized. The service of the summons fulfills two those present in the office address on his second attempt that
fundamental objectives, namely: (a) to vest in the court there was no likelihood of any of petitioners going to the office
jurisdiction over the person of the defendant; and (b) to afford during the business hours of that or any other day, he
to the defendant the opportunity to be heard on the claim concluded that further attempts to serve them in person within
brought against him.19 As to the former, when jurisdiction in a reasonable time would be futile. The circumstances fully
personam is not acquired in a civil action through the proper warranted his conclusion. He was not expected or required as
service of the summons or upon a valid waiver of such proper the serving officer to effect personal service by all means and
service, the ensuing trial and judgment are void.20 If the at all times, considering that he was expressly authorized to
defendant knowingly does an act inconsistent with the right to resort to substituted service should he be unable to effect the
object to the lack of personal jurisdiction as to him, like personal service within a reasonable time. In that regard, what
voluntarily appearing in the action, he is deemed to have was a reasonable time was dependent on the circumstances
submitted himself to the jurisdiction of the court. 21 As to the obtaining. While we are strict in insisting on personal service
latter, the essence of due process lies in the reasonable on the defendant, we do not cling to such strictness should the
opportunity to be heard and to submit any evidence the circumstances already justify substituted service instead. It is
defendant may have in support of his defense. With the proper the spirit of the procedural rules, not their letter, that
service of the summons being intended to afford to him the governs.30
opportunity to be heard on the claim against him, he may also
waive the process.21 In other words, compliance with the rules In reality, petitioners’ insistence on personal service by the
regarding the service of the summons is as much an issue of serving officer was demonstrably superfluous. They had
due process as it is of jurisdiction.23 actually received the summonses served through their

60
substitutes, as borne out by their filing of several pleadings in
the RTC, including an answer with compulsory counterclaim ad
cautelam and a pre-trial brief ad cautelam. They had also
availed themselves of the modes of discovery available under
the Rules of Court. Such acts evinced their voluntary
appearance in the action.

Nor can we sustain petitioners’ contention that Abante Tonite


could not be sued as a defendant due to its not being either a
natural or a juridical person. In rejecting their contention, the
CA categorized Abante Tonite as a corporation by estoppel as
the result of its having represented itself to the reading public
as a corporation despite its not being incorporated. Thereby,
the CA concluded that the RTC did not gravely abuse its
discretion in holding that the non-incorporation of Abante
Tonite with the Securities and Exchange Commission was of no
consequence, for, otherwise, whoever of the public who would
suffer any damage from the publication of articles in the pages
of its tabloids would be left without recourse. We cannot
disagree with the CA, considering that the editorial box of the
daily tabloid disclosed that basis, nothing in the box indicated
that Monica Publishing Corporation had owned Abante Tonite.

WHEREFORE, the Court AFFIRMS the decision promulgated on


March 8, 2002; and ORDERS petitioners to pay the costs of
suit.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice

61
G.R. No. 200693, April 18, 2016 acknowledged receipt thereof but refused to sign in the
original copy of summons, and the receptionist of the said firm
NENA C. ANG, SPOUSES RENATO C. ANG AND PAULINE informed that the other defendants have not yet arrived and it
ANG, SPOUSES GUILLERMO SY AND ALISON ANG-SY, would be better if we will return in the afternoon.
NELSON C. ANG, RICKY C. ANG , AS SUBSTITUTED BY
HIS HEIRS, AND MELINDA C. That in the afternoon on even date, said processes were
ANG, Petitioners, v. CHINATRUST (PHILIPPINES) served thru Ms. MELINDA ANG, Corporate Secretary of
COMMERCIAL BANK CORPORATION AND THE ASIAN defendant NATION PETROLEUM CORPORATION and instructed
DEBT FUND, Respondents. Ms. Charlotte Magpayo, Administrative Assistant of the said
corporation to received [sic] the same.
DECISION
That despite diligent efforts to locate the whereabouts of the
other defendants MARIO ANG, NENA ANG, RENATO ANG,
BRION, J.: PAULINE ANG, GUILLERMO SY, ALISON ANG-SY and NELSON
ANG outside the premises of their office, considering that said
This petition for review on certiorari seeks to reverse the April process server and his group were not allowed to enter,
29, 2011 decision and January 30, 2012 resolution of the Court substituted service was made by leaving their respective court
of Appeals (CA) in CA-G.R. SP No. 99391.1 The CA only processes at their office or regular place of business through
partly granted the petitioners' petition for certiorari against the the same Ms. Charlotte Magpayo by affixing the "receiving
May 17, 2007 order of the Regional Trial Court of Makati City stamp" of Nation Petroleum and her notation, as shown in the
(RTC), Branch 56 in Civil Case No. 06-872.2 The RTC denied original copy of summons.3ChanRoblesVirtualawlibrary
the petitioners' motion to dismiss the complaint for lack of On November 21, 2006, the defendants entered a Special
jurisdiction over their person. Appearance with a Motion to Dismiss the case for lack of
ANTECEDENTS jurisdiction.4 The defendants argued: (1) that the RTC failed to
acquire jurisdiction over Nation because service of summons
was made on Charlotte Magpayo, a mere property supply
On October 11, 2006, respondent Chinatrust (Philippines) custodian,5instead of the president, managing partner, general
Banking Corporation (Chinatrust) filed a money claim (with an manager, corporate secretary, or in-house counsel;6and (2)
application for the issuance of a writ of preliminary that the individual defendants were not validly served
attachment) amounting to US $458,614.84 against Nation summons7 because (3) the process server improperly resorted
Petroleum Corporation (Nation) and petitioners Mario Ang, to substituted service and failed to comply with its strict
Nena Ang, Renato Ang, Pauline Ang, Guillermo Sy, Alison Ang- requirements.8
Sy, Nelson Ang, Ricky Ang, and Melinda Ang ( collectively the
defendants). The complaint was filed before the RTC and Chinatrust opposed the Motion to Dismiss,9 insisting: (1) that
docketed as Civil Case No. 06-872. Nation was validly served summons because as a property
supply custodian, Magpayo occupies a very responsible
On October 12, 2006, the RTC, through its Branch Clerk of position that enjoys the highest degree of trust and
Court Atty. Richard C. Jamora issued summonses to the confidence;10 (2) that the individual defendants likewise
defendants. The summonses indicated Nation's address as authorized Magpayo to receive the summons on their
"Ground Floor, BPI Building, Rizal Street, Candelaria Quezon behalf;11 (3) that the process server properly resorted to
and/or 39th Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala substituted service;12 and (4) that Ricky Ang is estopped from
Avenue corner Sen. Gil J. Puyat Avenue, Makati City." It also contesting the validity of substituted service because he was
indicated the address of the individual defendants as served in person.13
"39th Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala Avenue
corner Sen. Gil J. Puyat Avenue, Makati City." On May 17, 2007, the RTC denied the defendants' Motion to
Dismiss. The RTC held that Nation's corporate secretary
The RTC heard ex parte the application for a preliminary Melinda Ang authorized Charlotte Magpayo as her agent for
attachment on October 18, 2006. On October 27, 2006, the the limited purpose of receiving the summons.14 It further held
RTC granted Chinatrust's application for a writ of attachment that Melinda's denial of this fact is self-serving as she was
conditioned on its posting of a P25,000,000.00 bond. never presented in court for cross-examination.

On November 6, 2006, Process Server Joseph R. Dela Cruz and The RTC also held that Ricky Ang was validly served summons
Assisting Sheriff Robert V. Alejo executed an Officer's Return because he acknowledged receipt of the process even though
reporting their service of the summons. It reads: he refused to sign the original copy.15
chanRoblesvirtualLawlibrary
That on 30 October 2006, the undersigned Process Server of With respect to the remaining defendants, the RTC held that
this Court together with one of the assisting Sheriff Robert V. the process server's resort to substituted service on Charlotte
Alejo, and plaintiffs counsel and its representative served the Magpayo was warranted. The Court found: (1) that the
copy of summons together with complaint, its annexes, writ, process server and his group attempted to serve summons on
order and bond, upon defendants at 39th Floor, Yuchengco the defendants on the morning of October 30, 2006 at their
Tower, RCBC Plaza, 6819 Ayala Ave. cor. Sen. Gil J. Puyat place of work; (2) that aside from Mr. Ricky Ang, the
Ave., Makati City, thru Mr. RICKY ANG, personally, who defendants had not yet arrived; (3) that the process server left
and exerted diligent efforts to locate the defendants'
62
whereabouts; (4) that he returned to the defendants' office on
the afternoon of the same day but was denied entry to the We find the petition partly meritorious.
defendants' offices; and (5) therefore, he was forced to resort
to substituted service through Charlotte Magpayo.16 In civil cases, jurisdiction over a party is acquired either
through his voluntary appearance in court or upon a valid
On June 22, 2007, the defendants filed a petition service of summons. When a party was not validly served
for certiorari before the CA challenging the RTC's jurisdiction summons and did not voluntarily submit to the court's
over them. The petition was docketed as CA-G.R. SP No. jurisdiction, the court cannot validly grant any relief against
99391. him.

In the meantime, Chinatrust assigned its rights to the trust In an action strictly in personam, summons shall be served
receipt subject of Civil Case No. 06-872 to respondent The personally on the defendant whenever practicable.29 Personal
Asian Debt Fund, Ltd. (ADF). Thus, the CA allowed ADF to be service is made by personally handing a copy of the summons
substituted for Chinatrust on March 9, 2010. to the defendant or by tendering it to him if he refuses to
receive and sign for it.
On April 29, 2011, the CA affirmed the RTC's May 17, 2007
order but dismissed the suit as against Nation.17 The CA held While personal service is the preferred method of serving
that RTC did not acquire jurisdiction over Nation because the summons, the Rules of Court are also mindful that this is
list of corporate officers authorized to receive summons for a sometimes impracticable or even impossible. Thus, Rule 14
corporation is exclusive.18 The CA found insufficient evidence also allows the sheriff (or other proper court officer) to resort
to support the RTC's conclusion that Nation's corporate to substituted service instead:
secretary granted Charlotte Magpayo, a property supply chanRoblesvirtualLawlibrary
custodian, a special power of attorney to receive summons for
SEC. 7. Substituted service.
the corporation on her behalf.19

However, the CA upheld the process server's resort to


substituted service with respect to the individual
defendants.20 The CA held that the process server exerted
efforts to personally serve the summons on the individual
defendants but was prohibited from entering their individual
offices. This made personal service impossible, leaving the
process server no choice but to resort to substituted service by
leaving a copy of the summons with Charlotte Magpayo, a
competent person of sufficient age and discretion in the
defendants' office.21

On April 4, 2012, the individual defendants, now petitioners,


filed the present petition for review on certiorari.
THE PETITION

The petitioners argue: (1) that the Officer's return failed to


establish the impossibility of personal service;22 (2) that
Charlotte Magpayo is not a competent person in charge of
their business;23 and (3) that the failure to comply with the
strict requirements of substituted service renders the service of
summons void.24

On the other hand, ADF maintains that the questions of the


impossibility of personal service and whether diligent efforts
were exerted to locate the petitioners are factual matters that
should not be passed upon in a petition for review
on certiorari.25 ADF continues that nevertheless, circumstances
showed an impossibility of service because upon the server's
return to the office, the petitioners' staff prevented them from
entering the offices;26 thus, the officers resorted to service of
summons to a Charlotte Magpayo, a competent person
authorized to receive summons in the Nation Petroleum
office.27cralawred

ADF also insists that Ricky Ang was personally tendered


summons despite his refusal to sign the original.28
OUR RULING
63
G.R. No. 163584 December 12, 2006 thereof, so he will be the one to give the same to the
defendant.
REMELITA M. ROBINSON, petitioner,
vs. Eventually, respondent filed a motion to declare petitioner in
CELITA B. MIRALLES, respondent. default for her failure to file an answer seasonably despite
service of summons.

On February 28, 2003, the trial court granted respondent’s


motion declaring petitioner in default and allowing respondent
DECISION
to present her evidence ex parte.

On June 20, 2003, the trial court issued an Order, the


dispositive portion of which reads:
SANDOVAL-GUTIERREZ, J.:
WHEREFORE, judgment is hereby rendered in favor of
Before us is the instant petition for review on certiorari the plaintiff and against defendant ordering the
assailing the Resolutions dated February 111 and May 11, defendant to pay the plaintiff as follows:
20042 of the Regional Trial Court (RTC), Branch 274,
Parañaque City, in Civil Case No. 00-0372. 1. The sum of US$20,054.00 as the unpaid obligation,
plus the stipulated interest of 3% a month from May
On August 25, 2000, Celita Miralles, respondent, filed with the 2000 (date of default) until fully paid;
said court a complaint for sum of money against Remelita
Robinson, petitioner, docketed as Civil Case No. 00-0372. 2. Php100,000.00 for moral damages;
Respondent alleged that petitioner borrowed from her
US$20,054.00 as shown by a Memorandum of Agreement they
3. Php50,000.00 plus Php1,500.00 per appearance as
both executed on January 12, 2000.
attorney’s fees;

Summons was served on petitioner at her given address.


4. Costs of suit.
However, per return of service of Sheriff Maximo Potente
dated March 5, 2001, petitioner no longer resides at such
address. SO ORDERED.

On July 20, 2001, the trial court issued an alias summons to be A copy of the Order was sent to petitioner by registered mail at
served at No. 19 Baguio St., Alabang Hills, Muntinlupa City, her new address.
petitioner’s new address.
Upon respondent’s motion, the trial court, on September 8,
Again, the summons could not be served on petitioner. Sheriff 2003, issued a writ of execution.
Potente explained that:
On September 26, 2003, petitioner filed with the trial court a
The Security Guard assigned at the gate of Alabang petition for relief from the judgment by default. She claimed
Hills refused to let me go inside the subdivision so that summons was improperly served upon her, thus, the trial
that I could effect the service of the summons to the court never acquired jurisdiction over her and that all its
defendant in this case. The security guard alleged proceedings are void.
that the defendant had given them instructions not to
let anybody proceed to her house if she is not On February 11, 2004, the trial court issued a Resolution
around. I explained to the Security Guard that I am a denying the petition for relief. Petitioner filed a motion for
sheriff serving the summons to the defendant, and if reconsideration, but it was denied by the trial court in a
the defendant is not around, summons can be Resolution dated May 11, 2004.
received by any person of suitable age and discretion
living in the same house. Despite of all the Hence, the instant recourse.
explanation, the security guard by the name of A.H.
Geroche still refused to let me go inside the
subdivision and served (sic) the summons to the The sole issue for our resolution is whether the trial court
defendant. The same thing happened when I correctly ruled that a substituted service of summons upon
attempted to serve the summons previously. petitioner has been validly effected.

Therefore, the summons was served by leaving a Summons is a writ by which the defendant is notified of the
copy thereof together with the copy of the complaint action brought against him or her.3 In a civil action, service of
to the security guard by the name of A.H. Geroche, summons is the means by which the court acquires jurisdiction
who refused to affix his signature on the original copy over the person of the defendant.4 Any judgment without such
service, in the absence of a valid waiver, is null and
64
void.5 Where the action is in personamand the defendant is in court that summons has been properly served upon petitioner
the Philippines, the service of summons may be made through and that it has acquired jurisdiction over her.
personal or substituted service in the manner provided for in
Sections 6 and 7, Rule 14 of the 1997 Rules of Procedure, as WHEREFORE, we DENY the petition and we AFFIRM the
amended,6 thus: assailed Orders of the RTC, Branch 274, Parañaque City, in
Civil Case No. 00-0372. Costs against petitioner.
SEC. 6. Service in person on defendant. – Whenever
practicable, the summons shall be served by handing SO ORDERED.
a copy thereof to the defendant in person, or if he
refuses to receive and sign for it, by tendering it to
him.
Puno, C.J., Chairperson, Corona, Azcuna, and Garcia,
JJ., concur.
SEC. 7. Substituted service. – If, for justifiable causes,
the defendant cannot be served within a reasonable
time as provided in the preceding section, service
may be effected (a) by leaving copies of the
summons at the defendant’s residence with some
person of suitable age and discretion then residing
therein; or (b) by leaving the copies at the
defendant’s office or regular place of business with
some competent person in charge thereof.

Under our procedural rules, personal service is generally


preferred over substituted service, the latter mode of service
being a method extraordinary in character.7 For substituted
service to be justified, the following circumstances must be
clearly established: (a) personal service of summons within a
reasonable time was impossible; (b) efforts were exerted to
locate the party; and (c) the summons was served upon a
person of sufficient age and discretion residing at the party’s
residence or upon a competent person in charge of the party’s
office or place of business.8 Failure to do so would invalidate
all subsequent proceedings on jurisdictional grounds.9

Petitioner contends that the service of summons upon the


subdivision security guard is not in compliance with Section 7,
Rule 14 since he is not related to her or staying at her
residence. Moreover, he is not duly authorized to receive
summons for the residents of the village. Hence, the
substituted service of summons is not valid and that the trial
court never acquired jurisdiction over her person.

We have ruled that the statutory requirements of substituted


service must be followed strictly, faithfully, and fully and any
substituted service other than that authorized by the Rules is
considered ineffective.10 However, we frown upon an overly
strict application of the Rules. It is the spirit, rather than the
letter of the procedural rules, that governs.

In his Return, Sheriff Potente declared that he was refused


entry by the security guard in Alabang Hills twice. The latter
informed him that petitioner prohibits him from allowing
anybody to proceed to her residence whenever she is out.
Obviously, it was impossible for the sheriff to effect personal or
substituted service of summons upon petitioner. We note that
she failed to controvert the sheriff’s declaration. Nor did she
deny having received the summons through the security
guard.

Considering her strict instruction to the security guard, she


must bear its consequences. Thus, we agree with the trial

65
[G.R. No. 136426. August 6, 1999] branch office at Cagayan de Oro, instead of upon the
general manager at its principal office at Davao City is
E. B. VILLAROSA & PARTNER CO., LTD., petitioner, vs. improper. Consequently, the trial court did not acquire
HON. HERMINIO I. BENITO, in his capacity as jurisdiction over the person of the petitioner.
Presiding Judge, RTC, Branch 132, Makati City
and IMPERIAL DEVELOPMENT 4. ID.; ID.; ID.; INEFFECTIVE SERVICE OF SUMMONS;
CORPORATION, respondent. FILING OF MOTION TO DISMISS DOES NOT
CONSTITUTE VOLUNTARY APPEARANCE. - The fact
that defendant filed a belated motion to dismiss did not
SYNOPSIS operate to confer jurisdiction upon its person. There is no
question that the defendants voluntary appearance in the
In this instant petition, E.B. Villarosa and Partner Co., action is equivalent to service of summons. Before, the
Ltd. contended that the trial court did not acquire jurisdiction rule was that a party may challenge the jurisdiction of the
over its person because the summons intended for it was court over his person by making a special appearance
improperly served on its Branch Manager. through a motion to dismiss and if in the same motion,
the movant raised other grounds or invoked affirmative
The Court agreed with petitioner. Designation of persons relief which necessarily involves the exercise of the
or officers who are authorized to accept summons for a jurisdiction of the court, the party is deemed to have
domestic corporation or partnership is now limited and more submitted himself to the jurisdiction of the court. This
clearly specified in the 1997 Rules of Civil Procedure. The rule doctrine has been abandoned in the case of La Naval
must be strictly observed, service must be made to one named Drug Corporation vs. Court of Appeals, et al., which
in the statute. became the basis of the adoption of a new provision in
Petitioners filing of a motion to dismiss, precisely the former Section 23, which is now Section 20 of Rule
objecting to the jurisdiction of the court over the person of the 14 of the 1997 Rules. Section 20 now provides that the
defendant, can by no means be deemed a submission to the inclusion in a motion to dismiss of other grounds aside
jurisdiction of the court. from lack of jurisdiction over the person of the defendant
shall not be deemed a voluntary appearance. The
SYLLABUS emplacement of this rule clearly underscores the purpose
to enforce strict enforcement of the rules on
1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; summons. Accordingly, the filing of a motion to dismiss,
AGENTS NO LONGER AUTHORIZED TO RECEIVE whether or not belatedly filed by the defendant, his
SUMMONS FOR CORPORATION. - Earlier cases have authorized agent or attorney, precisely objecting to the
uphold service of summons upon a construction project jurisdiction of the court over the person of the defendant
manager; a corporations assistant manager; ordinary can by no means be deemed a submission to the
clerk of a corporation; private secretary of corporate jurisdiction of the court. There being no proper service of
executives; retained counsel; officials who had charge or summons, the trial court cannot take cognizance of a
control of the operations of the corporation, like the case for lack of jurisdiction over the person of the
assistant general manager; or the corporations Chief defendant. Any proceeding undertaken by the trial court
Finance and Administrative Officer. In these cases, these will consequently be null and void.
persons were considered as agent within the
contemplation of the old rule. Notably, under the new APPEARANCES OF COUNSEL
Rules, service of summons upon an agent of the
corporation is no longer authorized.
Capuyan Quimpo & Salazar for petitioner.
Ermintao, Sangco, Manzano & Associates for private
2. ID.; ID.; ID.; DESIGNATION OF PERSONS OR
respondent.
OFFICERS AUTHORIZED TO RECEIVE SUMMONS
FOR DOMESTIC CORPORATIONS, LIMITED. - The
designation of persons or officers who are authorized to
accept summons for a domestic corporation or
partnership is now limited and more clearly specified in
GONZAGA-REYES, J.:
Section 11, Rule 14 of the 1997 Rules of Civil
Procedure. The rule now states general manager instead Before this Court is a petition for certiorari and
of only manager; corporate secretary instead of prohibition with prayer for the issuance of a temporary
secretary; and treasurer instead of cashier. The phrase restraining order and/or writ of preliminary injunction seeking
agent, or any of its directors is conspicuously deleted in to annul and set aside the Orders dated August 5, 1998 and
the new rule. x x x It should be noted that even prior to November 20, 1998 of the public respondent Judge Herminio I.
the effectivity of the 1997 Rules of Civil Procedure, strict Benito of the Regional Trial Court of Makati City, Branch 132
compliance with the rules has been enjoined. (Delta and praying that the public respondent court be ordered to
Motor Sales Corporation vs. Mangosing, 70 SCRA 598 desist from further proceeding with Civil Case No. 98-824.
[1976])
Petitioner E.B. Villarosa & Partner Co., Ltd. is a limited
3. ID.; ID.; ID.; JURISDICTION NOT ACQUIRED WHERE partnership with principal office address at 102 Juan Luna St.,
SERVICE OF SUMMONS WAS MADE ON BRANCH Davao City and with branch offices at 2492 Bay View Drive,
MANAGER. -Accordingly, we rule that the service of Tambo, Paraaque, Metro Manila and Kolambog, Lapasan,
summons upon the branch manager of petitioner at its Cagayan de Oro City. Petitioner and private respondent
66
executed a Deed of Sale with Development Agreement wherein copy of the complaint were in fact received by the corporation
the former agreed to develop certain parcels of land located at through its branch manager Wendell Sabulbero, there was
Barrio Carmen, Cagayan de Oro belonging to the latter into a substantial compliance with the rule on service of summons
housing subdivision for the construction of low cost housing and consequently, it validly acquired jurisdiction over the
units.They further agreed that in case of litigation regarding person of the defendant.
any dispute arising therefrom, the venue shall be in the proper
courts of Makati. On August 19, 1998, defendant, by Special Appearance,
filed a Motion for Reconsideration[8] alleging that Section 11,
On April 3, 1998, private respondent, as plaintiff, filed a Rule 14 of the new Rules did not liberalize but, on the
Complaint for Breach of Contract and Damages against contrary, restricted the service of summons on persons
petitioner, as defendant, before the Regional Trial Court of enumerated therein; and that the new provision is very specific
Makati allegedly for failure of the latter to comply with its and clear in that the word manager was changed to general
contractual obligation in that, other than a few unfinished low manager, secretary to corporate secretary, and excluding
cost houses, there were no substantial developments therefrom agent and director.
therein.[1]
On August 27, 1998, plaintiff filed an Opposition to
Summons, together with the complaint, were served defendants Motion for Reconsideration[9] alleging that
upon the defendant, through its Branch Manager Engr. defendants branch manager did bring home to the defendant-
Wendell Sabulbero at the stated address at Kolambog, corporation the notice of the filing of the action and by virtue
Lapasan, Cagayan de Oro City[2] but the Sheriffs Return of of which a motion to dismiss was filed; and that it was one (1)
Service[3] stated that the summons was duly served upon month after receipt of the summons and the complaint that
defendant E. B. Villarosa & Partner Co., Ltd. thru its Branch defendant chose to file a motion to dismiss.
Manager Engr. WENDELL SALBULBERO on May 5, 1998 at their
new office Villa Gonzalo, Nazareth, Cagayan de Oro City, and On September 4, 1998, defendant, by Special
evidenced by the signature on the face of the original copy of Appearance, filed a Reply[10] contending that the changes in
the summons. the new rules are substantial and not just general semantics.

On June 9, 1998, defendant filed a Special Appearance Defendants Motion for Reconsideration was denied in the
with Motion to Dismiss[4]alleging that on May 6, 1998, Order dated November 20, 1998.[11]
summons intended for defendant was served upon Engr. Hence, the present petition alleging that respondent
Wendell Sabulbero, an employee of defendant at its branch court gravely abused its discretion tantamount to lack or in
office at Cagayan de Oro City. Defendant prayed for the excess of jurisdiction in denying petitioners motions to dismiss
dismissal of the complaint on the ground of improper service of and for reconsideration, despite the fact that the trial court did
summons and for lack of jurisdiction over the person of the not acquire jurisdiction over the person of petitioner because
defendant. Defendant contends that the trial court did not the summons intended for it was improperly served. Petitioner
acquire jurisdiction over its person since the summons was invokes Section 11 of Rule 14 of the 1997 Rules of Civil
improperly served upon its employee in its branch office at Procedure.
Cagayan de Oro City who is not one of those persons named in
Section 11, Rule 14 of the 1997 Rules of Civil Procedure upon Private respondent filed its Comment to the petition citing
whom service of summons may be made. the cases of Kanlaon Construction Enterprises Co., Inc. vs.
NLRC[12] wherein it was held that service upon a construction
Meanwhile, on June 10, 1998, plaintiff filed a Motion to project manager is valid and in Gesulgon vs. NLRC[13] which
Declare Defendant in Default[5] alleging that defendant has held that a corporation is bound by the service of summons
failed to file an Answer despite its receipt allegedly on May 5, upon its assistant manager.
1998 of the summons and the complaint, as shown in the
Sheriffs Return. The only issue for resolution is whether or not the trial
court acquired jurisdiction over the person of petitioner upon
On June 22, 1998, plaintiff filed an Opposition to service of summons on its Branch Manager.
Defendants Motion to Dismiss[6] alleging that the records show
that defendant, through its branch manager, Engr. Wendell When the complaint was filed by Petitioner on April 3,
Sabulbero actually received the summons and the complaint 1998, the 1997 Rules of Civil Procedure was already in
on May 8, 1998 as evidenced by the signature appearing on force.[14]
the copy of the summons and not on May 5, 1998 as stated in
the Sheriffs Return nor on May 6, 1998 as stated in the motion Section 11, Rule 14 of the 1997 Rules of Civil
to dismiss; that defendant has transferred its office from Procedure provides that:
Kolambog, Lapasan, Cagayan de Oro to its new office address
at Villa Gonzalo, Nazareth, Cagayan de Oro; and that the When the defendant is a corporation, partnership or
purpose of the rule is to bring home to the corporation notice association organized under the laws of the Philippines with a
of the filing of the action. juridical personality, service may be made on the president,
managing partner, general manager, corporate secretary,
On August 5, 1998, the trial court issued an treasurer, or in-house counsel. (underscoring supplied).
Order[7] denying defendants Motion to Dismiss as well as
plaintiffs Motion to Declare Defendant in Default. Defendant This provision revised the former Section 13, Rule 14 of the
was given ten (10) days within which to file a responsive Rules of Court which provided that:
pleading. The trial court stated that since the summons and

67
SEC. 13. Service upon private domestic corporation or x x x the then Sec. 13 of this Rule allowed service upon a
partnership. If the defendant is a corporation organized under defendant corporation to be made on the president, manager,
the laws of the Philippines or a partnership duly registered, secretary, cashier, agent or any of its directors. The aforesaid
service may be made on the president, manager, secretary, terms were obviously ambiguous and susceptible of broad and
cashier, agent, or any of its directors. (underscoring supplied). sometimes illogical interpretations, especially the word agent
of the corporation. The Filoil case, involving the litigation
Petitioner contends that the enumeration of persons to lawyer of the corporation who precisely appeared to challenge
whom summons may be served is restricted, limited and the validity of service of summons but whose very appearance
exclusive following the rule on statutory construction expressio for that purpose was seized upon to validate the defective
unios est exclusio alterius and argues that if the Rules of Court service, is an illustration of the need for this revised section
Revision Committee intended to liberalize the rule on service of with limited scope and specific terminology. Thus the absurd
summons, it could have easily done so by clear and concise result in the Filoil case necessitated the amendment permitting
language. service only on the in-house counsel of the corporation who is
We agree with petitioner. in effect an employee of the corporation, as distinguished from
an independent practitioner. (underscoring supplied)
Earlier cases have uphold service of summons upon a
construction project manager[15]; a corporations assistant Retired Justice Oscar Herrera, who is also a consultant of
manager[16]; ordinary clerk of a corporation[17]; private the Rules of Court Revision Committee, stated that (T)he rule
secretary of corporate executives[18]; retained counsel[19]; must be strictly observed. Service must be made to one named
officials who had charge or control of the operations of the in (the) statute x x x.[24]
corporation, like the assistant general manager[20]; or the It should be noted that even prior to the effectivity of the
corporations Chief Finance and Administrative Officer[21]. In 1997 Rules of Civil Procedure, strict compliance with the rules
these cases, these persons were considered as agent within has been enjoined. In the case of Delta Motor Sales
the contemplation of the old rule.[22] Notably, under the new Corporation vs. Mangosing,[25] the Court held:
Rules, service of summons upon an agent of the corporation is
no longer authorized.
A strict compliance with the mode of service is necessary to
The cases cited by private respondent are therefore not confer jurisdiction of the court over a corporation. The officer
in point. upon whom service is made must be one who is named in the
statute; otherwise the service is insufficient. x x x.
In the Kanlaon case, this Court ruled that under the NLRC
Rules of Procedure, summons on the respondent shall be
served personally or by registered mail on the party himself; if The purpose is to render it reasonably certain that the
the party is represented by counsel or any other authorized corporation will receive prompt and proper notice in an action
representative or agent, summons shall be served on such against it or to insure that the summons be served on a
person. In said case, summons was served on one Engr. representative so integrated with the corporation that such
Estacio who managed and supervised the construction project person will know what to do with the legal papers served on
in Iligan City (although the principal address of the corporation him. In other words, to bring home to the corporation notice of
is in Quezon City) and supervised the work of the the filing of the action. x x x.
employees. It was held that as manager, he had sufficient
responsibility and discretion to realize the importance of the The liberal construction rule cannot be invoked and utilized as
legal papers served on him and to relay the same to the a substitute for the plain legal requirements as to the manner
president or other responsible officer of petitioner such that in which summons should be served on a domestic
summons for petitioner was validly served on him as agent and corporation.x x x. (underscoring supplied).
authorized representative of petitioner. Also in the Gesulgon
Service of summons upon persons other than those
case cited by private respondent, the summons was received
mentioned in Section 13 of Rule 14 (old rule) has been held as
by the clerk in the office of the Assistant Manager (at principal
improper.[26] Even under the old rule, service upon a general
office address) and under Section 13 of Rule 14 (old rule),
manager of a firms branch office has been held as improper as
summons may be made upon the clerk who is regarded as
summons should have been served at the firms principal
agent within the contemplation of the rule.
office. In First Integrated Bonding & Ins. Co., Inc. vs.
The designation of persons or officers who are authorized Dizon,[27] it was held that the service of summons on the
to accept summons for a domestic corporation or partnership general manager of the insurance firms Cebu branch was
is now limited and more clearly specified in Section 11, Rule 14 improper; default order could have been obviated had the
of the 1997 Rules of Civil Procedure. The rule now states summons been served at the firms principal office.
general manager instead of only manager; corporate secretary
And in the case of Solar Team Entertainment, Inc. vs.
instead of secretary; and treasurer instead of cashier. The
Hon. Helen Bautista Ricafort, et al.[28] the Court succinctly
phrase agent, or any of its directors is conspicuously deleted in
clarified that, for the guidance of the Bench and Bar, strictest
the new rule.
compliance with Section 11 of Rule 13 of the 1997 Rules of
The particular revision under Section 11 of Rule 14 was Civil Procedure (on Priorities in modes of service and filing) is
explained by retired Supreme Court Justice Florenz Regalado, mandated and the Court cannot rule otherwise, lest we allow
thus:[23] circumvention of the innovation by the 1997 Rules in order to
obviate delay in the administration of justice.

68
Accordingly, we rule that the service of summons upon housing subdivision for the construction of low cost housing
the branch manager of petitioner at its branch office at units.They further agreed that in case of litigation regarding
Cagayan de Oro, instead of upon the general manager at its any dispute arising therefrom, the venue shall be in the proper
principal office at Davao City is improper. Consequently, the courts of Makati.
trial court did not acquire jurisdiction over the person of the
petitioner. On April 3, 1998, private respondent, as plaintiff, filed a
Complaint for Breach of Contract and Damages against
The fact that defendant filed a belated motion to dismiss petitioner, as defendant, before the Regional Trial Court of
did not operate to confer jurisdiction upon its person. There is Makati allegedly for failure of the latter to comply with its
no question that the defendants voluntary appearance in the contractual obligation in that, other than a few unfinished low
action is equivalent to service of summons.[29] Before, the rule cost houses, there were no substantial developments
was that a party may challenge the jurisdiction of the court therein.[1]
over his person by making a special appearance through a
motion to dismiss and if in the same motion, the movant raised Summons, together with the complaint, were served
other grounds or invoked affirmative relief which necessarily upon the defendant, through its Branch Manager Engr.
involves the exercise of the jurisdiction of the court, the party Wendell Sabulbero at the stated address at Kolambog,
is deemed to have submitted himself to the jurisdiction of the Lapasan, Cagayan de Oro City[2] but the Sheriffs Return of
court.[30] This doctrine has been abandoned in the case of La Service[3] stated that the summons was duly served upon
Naval Drug Corporation vs. Court of Appeals, et al.,[31] which defendant E. B. Villarosa & Partner Co., Ltd. thru its Branch
became the basis of the adoption of a new provision in the Manager Engr. WENDELL SALBULBERO on May 5, 1998 at their
former Section 23, which is now Section 20 of Rule 14 of the new office Villa Gonzalo, Nazareth, Cagayan de Oro City, and
1997 Rules. Section 20 now provides that the inclusion in a evidenced by the signature on the face of the original copy of
motion to dismiss of other grounds aside from lack of the summons.
jurisdiction over the person of the defendant shall not be On June 9, 1998, defendant filed a Special Appearance
deemed a voluntary appearance. The emplacement of this rule with Motion to Dismiss[4]alleging that on May 6, 1998,
clearly underscores the purpose to enforce strict enforcement summons intended for defendant was served upon Engr.
of the rules on summons. Accordingly, the filing of a motion to Wendell Sabulbero, an employee of defendant at its branch
dismiss, whether or not belatedly filed by the defendant, his office at Cagayan de Oro City. Defendant prayed for the
authorized agent or attorney, precisely objecting to the dismissal of the complaint on the ground of improper service of
jurisdiction of the court over the person of the defendant can summons and for lack of jurisdiction over the person of the
by no means be deemed a submission to the jurisdiction of the defendant. Defendant contends that the trial court did not
court. There being no proper service of summons, the trial acquire jurisdiction over its person since the summons was
court cannot take cognizance of a case for lack of jurisdiction improperly served upon its employee in its branch office at
over the person of the defendant. Any proceeding undertaken Cagayan de Oro City who is not one of those persons named in
by the trial court will consequently be null and void.[32] Section 11, Rule 14 of the 1997 Rules of Civil Procedure upon
WHEREFORE, the petition is hereby GRANTED. The whom service of summons may be made.
assailed Orders of the public respondent trial court are Meanwhile, on June 10, 1998, plaintiff filed a Motion to
ANNULLED and SET ASIDE. The public respondent Regional Declare Defendant in Default[5] alleging that defendant has
Trial Court of Makati, Branch 132 is declared without failed to file an Answer despite its receipt allegedly on May 5,
jurisdiction to take cognizance of Civil Case No. 98-824, and all 1998 of the summons and the complaint, as shown in the
its orders and issuances in connection therewith are hereby Sheriffs Return.
ANNULLED and SET ASIDE.
On June 22, 1998, plaintiff filed an Opposition to
SO ORDERED. Defendants Motion to Dismiss[6] alleging that the records show
GONZAGA-REYES, J.: that defendant, through its branch manager, Engr. Wendell
Sabulbero actually received the summons and the complaint
Before this Court is a petition for certiorari and on May 8, 1998 as evidenced by the signature appearing on
prohibition with prayer for the issuance of a temporary the copy of the summons and not on May 5, 1998 as stated in
restraining order and/or writ of preliminary injunction seeking the Sheriffs Return nor on May 6, 1998 as stated in the motion
to annul and set aside the Orders dated August 5, 1998 and to dismiss; that defendant has transferred its office from
November 20, 1998 of the public respondent Judge Herminio I. Kolambog, Lapasan, Cagayan de Oro to its new office address
Benito of the Regional Trial Court of Makati City, Branch 132 at Villa Gonzalo, Nazareth, Cagayan de Oro; and that the
and praying that the public respondent court be ordered to purpose of the rule is to bring home to the corporation notice
desist from further proceeding with Civil Case No. 98-824. of the filing of the action.

Petitioner E.B. Villarosa & Partner Co., Ltd. is a limited On August 5, 1998, the trial court issued an
partnership with principal office address at 102 Juan Luna St., Order[7] denying defendants Motion to Dismiss as well as
Davao City and with branch offices at 2492 Bay View Drive, plaintiffs Motion to Declare Defendant in Default. Defendant
Tambo, Paraaque, Metro Manila and Kolambog, Lapasan, was given ten (10) days within which to file a responsive
Cagayan de Oro City. Petitioner and private respondent pleading. The trial court stated that since the summons and
executed a Deed of Sale with Development Agreement wherein copy of the complaint were in fact received by the corporation
the former agreed to develop certain parcels of land located at through its branch manager Wendell Sabulbero, there was
Barrio Carmen, Cagayan de Oro belonging to the latter into a substantial compliance with the rule on service of summons

69
and consequently, it validly acquired jurisdiction over the service may be made on the president, manager, secretary,
person of the defendant. cashier, agent, or any of its directors. (underscoring supplied).

On August 19, 1998, defendant, by Special Appearance, Petitioner contends that the enumeration of persons to
filed a Motion for Reconsideration[8] alleging that Section 11, whom summons may be served is restricted, limited and
Rule 14 of the new Rules did not liberalize but, on the exclusive following the rule on statutory construction expressio
contrary, restricted the service of summons on persons unios est exclusio alterius and argues that if the Rules of Court
enumerated therein; and that the new provision is very specific Revision Committee intended to liberalize the rule on service of
and clear in that the word manager was changed to general summons, it could have easily done so by clear and concise
manager, secretary to corporate secretary, and excluding language.
therefrom agent and director.
We agree with petitioner.
On August 27, 1998, plaintiff filed an Opposition to
defendants Motion for Reconsideration[9] alleging that Earlier cases have uphold service of summons upon a
defendants branch manager did bring home to the defendant- construction project manager[15]; a corporations assistant
corporation the notice of the filing of the action and by virtue manager[16]; ordinary clerk of a corporation[17]; private
of which a motion to dismiss was filed; and that it was one (1) secretary of corporate executives[18]; retained counsel[19];
month after receipt of the summons and the complaint that officials who had charge or control of the operations of the
defendant chose to file a motion to dismiss. corporation, like the assistant general manager[20]; or the
corporations Chief Finance and Administrative Officer[21]. In
On September 4, 1998, defendant, by Special these cases, these persons were considered as agent within
Appearance, filed a Reply[10] contending that the changes in the contemplation of the old rule.[22] Notably, under the new
the new rules are substantial and not just general semantics. Rules, service of summons upon an agent of the corporation is
no longer authorized.
Defendants Motion for Reconsideration was denied in the
Order dated November 20, 1998.[11] The cases cited by private respondent are therefore not
in point.
Hence, the present petition alleging that respondent
court gravely abused its discretion tantamount to lack or in In the Kanlaon case, this Court ruled that under the NLRC
excess of jurisdiction in denying petitioners motions to dismiss Rules of Procedure, summons on the respondent shall be
and for reconsideration, despite the fact that the trial court did served personally or by registered mail on the party himself; if
not acquire jurisdiction over the person of petitioner because the party is represented by counsel or any other authorized
the summons intended for it was improperly served. Petitioner representative or agent, summons shall be served on such
invokes Section 11 of Rule 14 of the 1997 Rules of Civil person. In said case, summons was served on one Engr.
Procedure. Estacio who managed and supervised the construction project
in Iligan City (although the principal address of the corporation
Private respondent filed its Comment to the petition citing is in Quezon City) and supervised the work of the
the cases of Kanlaon Construction Enterprises Co., Inc. vs. employees. It was held that as manager, he had sufficient
NLRC[12] wherein it was held that service upon a construction responsibility and discretion to realize the importance of the
project manager is valid and in Gesulgon vs. NLRC[13] which legal papers served on him and to relay the same to the
held that a corporation is bound by the service of summons president or other responsible officer of petitioner such that
upon its assistant manager. summons for petitioner was validly served on him as agent and
The only issue for resolution is whether or not the trial authorized representative of petitioner. Also in the Gesulgon
court acquired jurisdiction over the person of petitioner upon case cited by private respondent, the summons was received
service of summons on its Branch Manager. by the clerk in the office of the Assistant Manager (at principal
office address) and under Section 13 of Rule 14 (old rule),
When the complaint was filed by Petitioner on April 3, summons may be made upon the clerk who is regarded as
1998, the 1997 Rules of Civil Procedure was already in agent within the contemplation of the rule.
force.[14]
The designation of persons or officers who are authorized
Section 11, Rule 14 of the 1997 Rules of Civil to accept summons for a domestic corporation or partnership
Procedure provides that: is now limited and more clearly specified in Section 11, Rule 14
of the 1997 Rules of Civil Procedure. The rule now states
When the defendant is a corporation, partnership or general manager instead of only manager; corporate secretary
association organized under the laws of the Philippines with a instead of secretary; and treasurer instead of cashier. The
juridical personality, service may be made on the president, phrase agent, or any of its directors is conspicuously deleted in
managing partner, general manager, corporate secretary, the new rule.
treasurer, or in-house counsel. (underscoring supplied). The particular revision under Section 11 of Rule 14 was
This provision revised the former Section 13, Rule 14 of the explained by retired Supreme Court Justice Florenz Regalado,
Rules of Court which provided that: thus:[23]

SEC. 13. Service upon private domestic corporation or x x x the then Sec. 13 of this Rule allowed service upon a
partnership. If the defendant is a corporation organized under defendant corporation to be made on the president, manager,
the laws of the Philippines or a partnership duly registered, secretary, cashier, agent or any of its directors. The aforesaid

70
terms were obviously ambiguous and susceptible of broad and principal office at Davao City is improper. Consequently, the
sometimes illogical interpretations, especially the word agent trial court did not acquire jurisdiction over the person of the
of the corporation. The Filoil case, involving the litigation petitioner.
lawyer of the corporation who precisely appeared to challenge
the validity of service of summons but whose very appearance The fact that defendant filed a belated motion to dismiss
for that purpose was seized upon to validate the defective did not operate to confer jurisdiction upon its person. There is
service, is an illustration of the need for this revised section no question that the defendants voluntary appearance in the
with limited scope and specific terminology. Thus the absurd action is equivalent to service of summons.[29] Before, the rule
result in the Filoil case necessitated the amendment permitting was that a party may challenge the jurisdiction of the court
service only on the in-house counsel of the corporation who is over his person by making a special appearance through a
in effect an employee of the corporation, as distinguished from motion to dismiss and if in the same motion, the movant raised
an independent practitioner. (underscoring supplied) other grounds or invoked affirmative relief which necessarily
involves the exercise of the jurisdiction of the court, the party
Retired Justice Oscar Herrera, who is also a consultant of is deemed to have submitted himself to the jurisdiction of the
the Rules of Court Revision Committee, stated that (T)he rule court.[30] This doctrine has been abandoned in the case of La
must be strictly observed. Service must be made to one named Naval Drug Corporation vs. Court of Appeals, et al.,[31] which
in (the) statute x x x.[24] became the basis of the adoption of a new provision in the
former Section 23, which is now Section 20 of Rule 14 of the
It should be noted that even prior to the effectivity of the 1997 Rules. Section 20 now provides that the inclusion in a
1997 Rules of Civil Procedure, strict compliance with the rules motion to dismiss of other grounds aside from lack of
has been enjoined. In the case of Delta Motor Sales jurisdiction over the person of the defendant shall not be
Corporation vs. Mangosing,[25] the Court held: deemed a voluntary appearance. The emplacement of this rule
clearly underscores the purpose to enforce strict enforcement
A strict compliance with the mode of service is necessary to of the rules on summons. Accordingly, the filing of a motion to
confer jurisdiction of the court over a corporation. The officer dismiss, whether or not belatedly filed by the defendant, his
upon whom service is made must be one who is named in the authorized agent or attorney, precisely objecting to the
statute; otherwise the service is insufficient. x x x. jurisdiction of the court over the person of the defendant can
by no means be deemed a submission to the jurisdiction of the
The purpose is to render it reasonably certain that the court. There being no proper service of summons, the trial
corporation will receive prompt and proper notice in an action court cannot take cognizance of a case for lack of jurisdiction
against it or to insure that the summons be served on a over the person of the defendant. Any proceeding undertaken
representative so integrated with the corporation that such by the trial court will consequently be null and void.[32]
person will know what to do with the legal papers served on
WHEREFORE, the petition is hereby GRANTED. The
him. In other words, to bring home to the corporation notice of
assailed Orders of the public respondent trial court are
the filing of the action. x x x.
ANNULLED and SET ASIDE. The public respondent Regional
Trial Court of Makati, Branch 132 is declared without
The liberal construction rule cannot be invoked and utilized as jurisdiction to take cognizance of Civil Case No. 98-824, and all
a substitute for the plain legal requirements as to the manner its orders and issuances in connection therewith are hereby
in which summons should be served on a domestic ANNULLED and SET ASIDE.
corporation.x x x. (underscoring supplied).
SO ORDERED.
Service of summons upon persons other than those
mentioned in Section 13 of Rule 14 (old rule) has been held as
improper.[26] Even under the old rule, service upon a general
manager of a firms branch office has been held as improper as
summons should have been served at the firms principal
office. In First Integrated Bonding & Ins. Co., Inc. vs.
Dizon,[27] it was held that the service of summons on the
general manager of the insurance firms Cebu branch was
improper; default order could have been obviated had the
summons been served at the firms principal office.

And in the case of Solar Team Entertainment, Inc. vs.


Hon. Helen Bautista Ricafort, et al.[28] the Court succinctly
clarified that, for the guidance of the Bench and Bar, strictest
compliance with Section 11 of Rule 13 of the 1997 Rules of
Civil Procedure (on Priorities in modes of service and filing) is
mandated and the Court cannot rule otherwise, lest we allow
circumvention of the innovation by the 1997 Rules in order to
obviate delay in the administration of justice.

Accordingly, we rule that the service of summons upon


the branch manager of petitioner at its branch office at
Cagayan de Oro, instead of upon the general manager at its

71
Petitioner BPI is a banking institution duly organized and
existing as such under the Philippine laws.
THIRD DIVISION

Private respondent Centrogen, Inc. (Centrogen) is a domestic


corporation engaged in pharmaceutical business, duly
BANK OF THE PHILIPPINE ISLANDS, organized
G.R. No. 169116 and existing as such under the Philippine laws and
represented in this act by its President, Edwin Santiago, son of
Petitioner, Present:
private respondents Spouses Ireneo M. Santiago
and Liwanag P. Santiago.

YNARES-SANTIAGO, J.,
- versus - On several occasions, private respondent Centrogen obtained
Chairperson,
loans from Far East Bank and Trust Company (FEBTC) in
AUSTRIA-MARTINEZ,
different amounts, the total of which reached the
sumSR.,
CALLEJO, P4,650,000.00, as evidenced by promissory notes
executed by Edwin Santiago.
SPS. IRENEO M. SANTIAGO and LIWANAG P. CHICO-NAZARIO, and
SANTIAGO, CENTROGEN, INC., REPRSENTED
NACHURA, JJ.
BY EDWIN SANTIAGO, As a security for a fraction of the loan obligation, Ireneo M.
Respondent. Santiago executed a Real Estate Mortgage over a parcel of
land covered by TCT No. T-131382 registered under his name
Promulgated:
and located at Sta Cruz, Laguna, with an area of 2,166 square
meters (subject property).[4] The mortgage secured the
principal loan in the amount of P490,000.00. Later on, the
March 28, 2007
same property secured another loan obligation in the amount
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - of P1,504,280.00.[5]
- - - - - - - - - -x
Subsequently, however, Centrogen incurred default and
therefore the loan obligation became due and demandable.

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

CHICO-NAZARIO, J.: On 13 December 2002, BPI filed an Extra-Judicial


Foreclosure of Real Estate Mortgage[6] over the subject
property before the RTC of Sta. Cruz, Laguna.In order to
validly effect the foreclosure, a Notice of Sale was issued by
the Provincial Sheriff on 21 January 2003. On the same day,
Before this Court is a Petition for Review on Certiorari filed by the Spouses Santiago were served with the copy of the Notice
petitioner Bank of the Philippine Islands (BPI) seeking to of Sale.
reverse and set aside the Decision[1] of the Court of Appeals
dated 3 March 2005 and its Resolution[2] dated 28 July 2005
affirming the Order[3] of the Regional Trial Court (RTC) of Upon receipt of the Notice of Sale, the Spouses
Santa Cruz, Laguna, Branch 91, dated 20 March 2003 Santiago and Centrogen filed a Complaint seeking the issuance
enjoining the extrajudicial foreclosure sale of a parcel of land of a Temporary Restraining Order and Preliminary and Final
covered by Transfer Certificate of Title (TCT) No. T-131382 Injunction and in the alternative, for the annulment of the Real
registered under the name of Estate Mortgage with BPI.
Spouses Ireneo and Liwanag Santiago. The dispositive portion
of the Court of Appeals Decision reads:
The complaint alleged that the initial loan obligation
in the amount of P490,000.00, including interest thereon was
WHEREFORE, premises considered, the fully paid as evidenced by Union Bank Check No. 0363020895
petition is DISMISSED. The assailed orders dated 20 December 2001 in the amount of P648,521.51 with
dated March 20, 2003 and August 25, BPI as payee. Such payment notwithstanding, the amount was
2003 of the respondent court in Civil Case still included in the amount of computation of the arrears as
No. SC-4259 are hereby AFFIRMED. shown by the document of Extra-Judicial Foreclosure of Real
Estate Mortgage filed by the latter.

72
In addition, the Spouses Santiago and Centrogen asseverated merited its removal from the purview of Section 11, Rule 14 of
that the original loan agreement was for the amount of Five the Revised Rules of Court. Based on the provisions of Section
Million Pesos. Such amount will be supposedly utilized to 5, Rule 58 of the Revised Rules of Court,[13] the RTC declared
finance the squalene project of the company. However, after that the instant Order is still valid and binding despite non-
the amount of Two Million Pesos was released and was compliance with the provisions of Section 11, Rule 14 of the
accordingly used in funding the erection of the structural same Rules. The dispositive portion of the Order reads:
details of the project, FEBTC, in gross violation of the
agreement, did not release the balance of Three Million Pesos
that will supposedly finance the purchase of machineries and WHEREFORE, premises considered,
equipment necessary for the operation. As a result, the motion to dismiss is hereby denied
the squalene project failed and the company groped for funds because of the presence of extreme urgency
to pay its loan obligations. wherein the Court has jurisdiction to act on
the TRO despite lack of proper service of
summons. Let the instant case be called for
On 27 February 2003, BPI was summoned to file and summary hearing on plaintiffs application for
serve its Answer to the Complaint filed by Spouses Santiago temporary restraining order.
and Centrogen. On the same day, the Sheriff served a copy of
the summons to the Branch Manager of BPI Sta. Cruz, Laguna
Branch, as evidenced by the Sheriffs Return,[7] which reads:

After summary hearing on the Spouses Santiago


and Centrogens application for Temporary Restraining Order,
SHERIFFS RETURN
the RTC, on 28 February 2003, issued an Order[14] enjoining
the Provincial Sheriff from proceeding with the extra-judicial
foreclosure sale of the subject property until the propriety of
Respectfully returned the original
granting a preliminary injunction is
summons and order dated February 2003
ascertained. The decretal portion of the said Order reads:
with the information that on February 27,
2003 the undersigned served the copy of
summons together with the corresponding
Wherefore, premises considered,
copy of complaint and its Annexes and order
the Court orders that pending the resolution
dated February 27, 2003, to defendants (sic)
of the plaintiffs prayer for preliminary
Bank of the Philippine Islands (BPI) thru the
injunction:
manager Ms. Glona Ramos at Sta. Cruz
Laguna Branch, at Sta. Cruz, Laguna, to
defendant Sheriff Marcial Opinion at the
Office of the Provincial Sheriff of Laguna, 1. The Defendant Provincial Sheriff,
R.T.C. (sic) Sta. Cruz, Laguna as shown by his deputies, employees, and agents are
their signatures on the original summons enjoined from proceeding with the
and order. threatened extra-judicial foreclosure sale (to
be conducted today) of the parcel of land
owned by plaintiffs Spouses Ireneo M.
Santiago and Liwanag P. Santiago located in
(sic) Brgy. Sto. Angel Norte, Sta. Cruz,
Instead of filing an Answer, BPI filed a Motion to Dismiss[8] the Laguna.
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 2. The application for a preliminary
claimed that the Branch Manager of its Sta. Cruz, Laguna injunction is hereby set for hearing on March
Branch, was not one of those authorized by Section 11, Rule 10, 2003 at 1:30 pm. Further, the plaintiffs
14 of the Revised Rules of Court[9] to receive summons on are hereby ordered to immediately file a
behalf of the corporation. The summons served upon its bond amounting to One Hundred Thousand
Branch Manager, therefore, did not bind the corporation. In Pesos (P100,000.00) to answer for damages
addition, it was alleged that the complaint filed by the Spouses that Defendant Bank may sustain if the court
Santiago and Centrogenlacked a Certificate of Non-Forum should finally decide that the plaintiffs are
Shopping[10] and was therefore dismissible. Finally, BPI not entitled thereto.
underscored that the person who verified the complaint was
not duly authorized by Centrogens Board of Directors to
institute the present action as required by Section 23 of the
Corporation Code.[11]
On 6 March 2003, the RTC ordered the service of
new summons to BPI in accordance with the provisions of
In an Order[12] dated 28 February 2003, the RTC denied the the Revised Rules of Court. The aforesaid Order reads:
Motion to Dismiss and emphasized that the nature of the case

73
To avoid further argument as TCT No. T-131382 owned
regards the proper service of summons to by Plaintiffs
Defendant Bank, the Branch Clerk of Court is Spouses Ireneo M.
hereby directed to issue another summons Santiago
and serve copy of the same together with and Liwanag P. Santiago l
the complaint and its annexes to any of the ocated in Brgy. Sto.
officers of the Defendant Bank as provided Angel, Sta. Cruz, Laguna.
by the rules of civil procedure.[15]
2. The bond in
the amount of One
Hundred Thousand
(P100,000.00) Pesos
In compliance with the aforesaid Order, the Branch Clerk of ordered by the Court to
Court caused the issuance of a new summons on 7 March be posted by the plaintiffs
2003, a copy of which was served upon the Office of the to answer for damages
Corporate Secretary of the BPI on 11 March 2003, as that defendant bank may
evidenced by the Sheriffs Return,[16] which reads: sustain if the court should
finally decide that the
plaintiffs are entitled
Sheriffs Return thereto still stands.

This is to Certify that on March 11,


2003 the undersigned caused the service of The Motion for Reconsideration filed by BPI was denied by the
summons together with the copy of RTC in its Order[17] dated 25 August 2003.
complaint and its annexes to defendant Bank
of the Philippine Islands (BPI) and receive
(sic) by the Office of the Corporate Secretary
Aggrieved, BPI filed a Petition for Certiorari before the Court of
dated March 11, 2003 at the BPI Building
Appeals seeking the reversal of the adverse Orders of the RTC.
Ayala Avenue, Makati City.

On 3 March 2005, the Court of Appeals rendered a


On 20 March 2003, the RTC issued an Order granting
Decision[18] affirming the assailed Orders of the RTC and
the application for the issuance of a Writ of Preliminary
dismissing the Petition for Certiorari filed by BPI.The Court of
Injunction filed by the Spouses Santiago and Centrogen. It
Appeals declared that jurisdiction was acquired upon the
enjoined the extra-judicial foreclosure sale of the subject
service of new summons. Before the assailed Orders were
property pending resolution of the main action for Annulment
therefore issued, the RTC properly acquired jurisdiction over
of Real Estate Mortgage or until further orders of the trial
the person of BPI.
court. In issuing the Writ of Preliminary Injunction, it
rationalized that to allow the foreclosure without hearing the
main case would work injustice to the complainant and since
Undaunted, BPI filed this instant Petition for Review
Spouses Santiago and Centrogen claimed that the first loan in
on Certiorari under Rule 45 of the Revised Rules of Court. For
the amount of P490,000.00 secured by the property subject of
our resolution are the following issues:
the extra-judicial sale had long been paid
by Centrogen through a Union Bank Check No. 0363020895
presented as evidence. The dispositive part of the Order reads:
I.

Wherefore, premises considered,


the Court orders that pending the resolution WHETHER OR NOT THE RTC ACQUIRED
of the main action for the annulment of the JURISDICTION OVER THE PERSON OF BPI
real estate mortgage, etc., and /or order WHEN THE ORIGINAL SUMMONS WAS
from this Court: SERVED UPON THE BRANCH MANAGER OF
ITS STA. CRUZ, LAGUNA BRANCH.

1. The Defendant
Provincial Sheriff, his II.
deputies, employees, and
agents are enjoined from
proceeding with the WHETHER OR NOT THE RTC COMMITTED A
threatened extra-judicial GRAVE ABUSE OF DISCRETION IN ISSUING
foreclosure sale of the THE WRIT OF PRELIMINARY INJUNCTION.
parcel of land covered by

74
narration of facts and therefore enjoys the presumption that
official duty has been regularly performed.[20] The Process
BPI vehemently insists that the court a quo did not
Servers Certificate of Service of Summons is a prima
acquire jurisdiction over its person and consequently, the
facie evidence of facts set out in that certificate.[21]
Order issued by the RTC, permanently enjoining the
foreclosure sale, was therefore void and does not bind BPI.
Inarguably, before the Order granting the application
for Writ of Preliminary Injunction was issued, the RTC already
We are not persuaded.
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
The pertinent provision of the Revised Rules of Court moment since jurisdiction over BPI was subsequently acquired
provides: by the service of a new summons.

Sec. 11, Rule 14. Service upon In the case of The Philippine American Life and
domestic private juridical entity When the General Insurance Company v. Brevea,[22] we ruled:
defendant is a corporation, partnership or
association organized under the laws of the
Philippines with a juridical personality service
A case should
may be made on the president, managing
not be dismissed
partner, general manager, corporate
simply because an
secretary, treasurer or in-house counsel.
original summons was
wrongfully served. It
should be difficult to
conceive, for example,
Basic is the rule that a strict compliance with the that when a defendant
mode of service is necessary to confer jurisdiction of the court personally appears before
over a corporation. The officer upon whom service is made a Court complaining that
must be one who is named in the statute; otherwise, the he had not been validly
service is insufficient.[19] The purpose is to render it reasonably summoned, that the case
certain that the corporation will receive prompt and proper against him should be
notice in an action against it or to insure that the summons be dismissed. An alias sum
served on a representative so integrated with the corporation mons can be actually
that such person will know what to do with the legal papers served on said
served on him. defendant.

Applying the aforestated principle in the case at bar, xxxx


we rule that the service of summons on BPIs Branch Manager
did not bind the corporation for the branch manager is not
included in the enumeration of the statute of the persons upon x x x It is not pertinent whether the
whom service of summons can be validly made in behalf of the summons is designated as an original
corporation.Such service is therefore void and ineffectual. or an alias summons as long as it has
adequately served its purpose. What is
essential is that the summons complies
However, upon the issuance and the proper with the requirements under the Rules
service of new summons on 11 March 2003, before the Writ of Court and it has been duly served on
of Preliminary Injunction was issued on 20 March the defendant together with the
2003, whatever defect attended the service of the prevailing complaint. x x x Moreover, the
original summons, was promptly and accordingly second summons was technically not an alias
cured. summons but more of a new summons on
the amended complaint. It was not a
continuation of the first summons
It bears stressing, that on 7 March 2003, the Branch Clerk of considering that it particularly referred to the
Court issued a new summons which was properly served amended complaint and not to the original
upon BPIs Corporate Secretary on 11 March 2003, as complaint. (Emphases supplied.)
evidenced by the Sheriffs Return.

The subsequent service of summons was neither BPIs lamentation, at every turn, on the invalidity of
disputed nor was it mentioned by BPI except in a fleeting the service of summons made on the Branch Manager and its

75
deliberate neglect to acknowledge the fact that a new defendant was validly acquired by the court by the valid
summons was accordingly served on its Corporate Secretary, is service of a new summons before the writ of preliminary
an attempt in futility to mislead this Court into believing that injunction was issued and guided by jurisprudential
the court a quo never acquired jurisdiction over the case and pronouncements heretofore adverted to, we hold that the
thus the issuance of the Writ of Preliminary Injunction was proceedings attendant to the issuance of the writ of
invalid. preliminary injunction were regular.

We are not drawn into petitioners sophistry. Having settled this issue necessitates us to look into
the propriety of the issuance of the Writ of Preliminary
Injunction.
In the case of G&G Trading Corporation v. Court of
Appeals,[23] this Court made the following pronouncements:
BPI asserts that the RTC gravely abused its discretion
in granting the Spouses Santiago and Centrogens application
Although it may be true that the for the Writ of Preliminary Injunction in the absence of
service of summons was made on a person showing that the latter have a clear legal right sought to be
not authorized to receive the same in behalf protected.
of the petitioner, nevertheless since it
appears that the summons and complaint
were in fact received by the corporation Again, we do not agree.
through its said clerk, the Court finds that
there was substantial compliance with the
rule on service of summons. x x x The need An injunction is a preservative remedy for the
for speedy justice must prevail over a protection of ones substantive right or interest; it is not a
technicality. cause of action by itself but merely a provisional remedy, an
adjunct to the main suit.[25] The purpose of injunction is to
prevent threatened or continuous irremediable injury to some
of the parties before their claims can be thoroughly studied
and educated. Its sole aim is to preserve the status quo until
In explaining the test on the validity of service of
the merits of the case is heard fully.[26]
summons, Justice Florenz Regalado[24] stressed that
substantial justice must take precedence over technicality and
thus stated:
The issuance of the writ of preliminary injunction as
an ancillary or preventive remedy to secure the rights of a
party in a pending case is entirely within the discretion of the
The ultimate test on the validity
court taking cognizance of the case, the only limitation being
and sufficiency on service of summons is
that the discretion should be exercised based upon the
whether the same and the attachments
grounds and in a manner provided by law. Before a writ of
thereto where ultimately received by the
preliminary injunction may be issued, the following requisites
corporation under such circumstances that
must be complied with: (1) a right in esse or a clear or
no undue prejudice is sustained by it from
unmistakable right to be protected; (2) violation of that right;
the procedural lapse and it was afforded full
and (3) that there is an urgent and permanent act and urgent
opportunity to present its responsive
necessity for the writ to prevent serious damage.[27]
pleadings. This is but in accord with the
entrenched rule that the ends of substantial
justice should not be subordinated to
Verily, the aforestated requisites for the issuance
technicalities and, for which purpose, each
of the Writ of Preliminary Injunction have been fully
case should be examined within the factual
complied with. The right of Spouses Santiago over the
milieu peculiar to it.
property clearly exists since they are the registered
owners thereof, and the existence of a Real Estate
Mortgage does not undermine the right of the absolute
owner over the property. The violation of such right is
Prescinding from the above, we deem it best to manifest in the threatened foreclosure proceedings
underscore that there is no hard and fast rule pertaining to the commenced by BPI amidst the claim that the principal
manner of service of summons. Rather, substantial justice obligation has been fully paid. Finally, to allow the
demands that every case should be viewed in light of the foreclosure of the subject property without first calibrating
peculiar circumstances attendant to each. the evidence of opposing parties pertaining to the action
for the annulment of mortgage would cause irreparable
damage to the registered owner.
In any event, as it is glaringly evident from the
records of the case that jurisdiction over the person of the

76
The right of BPI to foreclose the subject property is more weight. The evidence of [the
under dispute upon the claim interposed by the Spouses spouses Santiago and Centrogen]
Santiago and Centrogen that payments for the loan secured by established that to allow extra-judicial
the property subject to the threatened foreclosure proceedings foreclosure without hearing the main action
were already made. To support their assertions, Spouses for the annulment of mortgage would
Santiago and Centrogenpresented as evidence Union Bank probably work injustice to the plaintiffs and
Check No. 0363020895 dated 20 December 2001 in the would probably violate their rights over the
amount of P648,521.51, with BPI as payee. From this, we can subject lot.
deduce that the right of BPI to foreclose the subject property
is questionable. We cannot therefore allow the foreclosure of
the Real Estate Mortgage to proceed without first setting the Furthermore, this case involves
main case for hearing so that based on the evidence presented complicated issues that must be resolved
by the parties, the trial court can determine who between first before altering the status quo. The issue
them has the better right over the subject property. To rule of payment and non-payment of the loan
otherwise would cause a grave irreparable damage to the and the issue of breach of the second loan
Spouses Santiago and Centrogen. directly affect the rights of the plaintiffs over
the subject lot. Hence, the last actual,
peaceable, uncontested status of the parties
Parenthetically, this petition affords us the before the controversy must be preserved.
opportunity to once again reiterate the rule that the issuance
of the writ of preliminary injunction rests entirely within the
discretion of the court and generally not interfered with except
in case of manifest abuse. The assessment and evaluation of
evidence in the issuance of the writ of preliminary injunction The unyielding posture of BPI that its right to
involve finding of facts ordinarily left to the trial court for its foreclose the subject property was violated since it is
conclusive determination.[28] permanently barred from proceeding with the auction sale is
patently erroneous. The RTC, in the exercise of its discretion
merely intended to preserve the status quo while the principal
action for the annulment of mortgage is heard with the end
In Toyota Motor Phils. Corp. Workers Association
view that no irreversible damage may be caused to the
v. Court of Appeals,[29] citing Ubanes, Jr. v. Court of
opposing parties. We find nothing whimsical, arbitrary or
Appeals,[30] we made the following declaration:
capricious in the exercise of the RTC of its discretion.

[T]he matter of the issuance of writ of a


WHEREFORE, IN VIEW OF THE FOREGOING, the
preliminary injunction is addressed to the
instant petition is DENIED. The Decision dated 3 March 2005,
sound discretion of the trial court, unless the
and the Resolution dated 28 July 2005, rendered by the Court
court commits a grave abuse of
of Appeals in CA-G.R. SP No. 80643, are
discretion. Grave abuse of discretion in the
hereby AFFIRMED. Costs against petitioner.
issuance of writs of preliminary injunction
implies a capricious and whimsical exercise
of judgment that is equivalent to lack of
jurisdiction or whether the power is SO ORDERED.
exercised in an arbitrary or despotic manner
by reason of passion, prejudice or personal
aversion amounting to an evasion of positive
duty or to a virtual refusal to perform the
duty enjoined, or to act at all in
contemplation of law. x x x.

In the case at bar, after summary hearing and


evaluation of evidence presented by both contending parties,
the RTC ruled that justice would be better served if status
quo is preserved until the final determination of the merits of
the case, to wit:

For purposes of preliminary


injunction, between the evidence presented
by [the spouses Santiago and Centrogen]
and [BPI], the evidence of the former carries

77
G.R. No. 181517, July 06, 2015 February 3, 2004. Private Respondents' Amended Complaint
for Damages filed against Petitioner Nissin-Universal Robina
GREEN STAR EXPRESS, INC. AND FRUTO SAYSON, Corporation is accordingly dismissed for lack of jurisdiction.
JR., Petitioners, v. NISSIN-UNIVERSAL ROBINA
CORPORATION, Respondent. SO ORDERED.4
Aggrieved, Green Star and Sayson moved for reconsideration,
DECISION but the same was denied. Hence, this petition.

PERALTA, J.: The lone issue is whether or not the summons was properly
served on NURC, vesting the trial court with jurisdiction.
For resolution is a Petition for Review under Rule 45 of the
Rules of Court which petitioners Green Star Express, Inc. and The petition is bereft of merit.
Fruto Sayson, Jr. brought before the Court, assailing the
Decision1 of the Court of Appeals (CA) dated September 17, It is a well-established rule that the rules on service of
2007 and its Resolution2 dated January 22, 2008 in CA-G.R. SP summons upon a domestic private juridical entity must be
No. 86824. The CA nullified the Resolution dated May 5, 2004 strictly complied with. Otherwise, the court cannot be said to
of the Regional Trial Court (RTC) of San Pedro, Laguna, Branch have acquired jurisdiction over the person of the
31, in Civil Case No. SPL-0969, and dismissed the complaint for defendant.5chanrobleslaw
lack of jurisdiction.
NURC maintains that the RTC did not acquire jurisdiction over
The following are the antecedents of the it as the summons was received by its cost accountant, Francis
case:ChanRoblesVirtualawlibrary Tinio. It argues that under Section 11, Rule 14 of the 1997
Rules of Court, which provides the rule on service of summons
On February 25, 2003, a Mitsubishi L-300 van which Universal upon a juridical entity, in cases where the defendant is a
Robina Corporation (URC) owned figured in a vehicular domestic corporation like NURC, summons may be served only
accident with petitioner Green Star Express, Inc.'s ( Green Star) through its officers.6 Thus:chanRoblesvirtualLawlibrary
passenger bus, resulting in the death of the van's driver. Thus,
the bus driver, petitioner Fruto Sayson, Jr., was charged with Section 11. Service upon domestic private juridical entity. —
the crime of reckless imprudence resulting in homicide. When the defendant is a corporation, partnership or
association organized under the laws of the Philippines with a
Thereafter, Green Star sent a demand letter to respondent juridical personality, service may be made on the president,
Nissin-Universal Robina Corporation (NURC) for the repair of managing partner, general manager, corporate
its passenger bus amounting to P567,070.68. NURC denied secretary, treasurer, or in-house counsel.7
any liability therefor and argued that the criminal case shall This provision replaced the former Section 13, Rule 14 of the
determine the ultimate liabilities of the parties. Thereafter, the 1964 Rules of Court which read:chanRoblesvirtualLawlibrary
criminal case was dismissed without prejudice, due to
insufficiency of evidence. Section 13. Service upon private domestic corporation or
partnership. — If the defendant is a corporation organized
Sayson and Green Star then filed a complaint for damages under the laws of the Philippines or a partnership duly
against NURC before the RTC of San Pedro, Laguna. Francis registered, service may be made on the president, manager,
Tinio, one of NURC's employees, was the one who received the secretary, cashier, agent, or any of its directors.8
summons. On February 6, 2004, NURC filed a Motion to In the past, the Court upheld service of summons upon a
Dismiss claiming lack of jurisdiction due to improper service. construction project manager, a corporation's assistant
manager, ordinary clerk of a corporation, private secretary of
On May 5, 2004, the RTC issued a Resolution denying NURC's corporate executives, retained counsel, and officials who had
motion to dismiss. It ruled that there was substantial control over the operations of the corporation like the assistant
compliance because there was actual receipt of the summons general manager or the coiporation's Chief Finance and
by NURC. The dispositive portion of said Resolution thus Administrative Officer. The Court then considered said persons
reads:chanRoblesvirtualLawlibrary as "agent" within the contemplation of the old rule. Notably,
WHEREFORE, in view of the foregoing, defendant's "Motion to under the new Rules, service of summons upon an agent of
Dismiss" is hereby DENIED.3 the corporation is no longer authorized.9 The rule now likewise
states "general manager" instead of "manager"; "corporate
Since its Motion for Reconsideration was denied, NURC secretary" instead of merely "secretary"; and "treasurer"
elevated the case to the CA via a Petition for Certiorari. On instead of "cashier."10 It has now become restricted, limited,
September 17, 2007, the CA reversed the RTC ruling, and exclusive only to the persons enumerated in the
hence:chanRoblesvirtualLawlibrary aforementioned provision, following the rule in statutory
WHEREFORE, the instant Petition construction that the express mention of one person excludes
for Certiorari is GRANTED. The assailed Resolutions, dated all others, or expressio unios est exclusio alterius. Service
May 5, 2004 and dated July 26, 2004, of the Regional Trial must, therefore, be made only on the persons expressly listed
Court of San Pedro, Laguna, Branch 31, in Civil Case No. SPL- in the rules.11 If the revision committee intended to liberalize
0969, are hereby NULLIFIED and a new the rule on service of summons, it could have easily done so
one rendered granting Petitioner's Motion to Dismiss, dated by clear and concise language.12chanrobleslaw

78
Here, Tinio, a member of NURC's accounting staff, received
the summons on January 22, 2004. Green Star claims that it
was received upon instruction of Junadette Avedillo, the
general manager of the corporation. Such fact, however, does
not appear in the Sheriffs Return.13 The Return did not even
state whether Avedillo was present at the time the summons
was received by Tinio, the supposed assistant manager. Green
Star further avers that the sheriff tendered the summons, but
Avedillo simply refused to sign and receive the same. She then
allegedly instructed Tinio to just receive it in her behalf.
However, Green Star never presented said sheriff as witness
during the hearing of NURC's motion to dismiss to attest to
said claim. And while the sheriff executed an affidavit which
appears to support such allegation, the same was likewise not
presented as evidence. It was only when the case was already
before the CA that said affidavit first surfaced. Since the
service of summons was made on a cost accountant, which is
not one of the designated persons under Section 11 of Rule
14, the trial court did not validly acquire jurisdiction over
NURC,14 although the corporation may have actually received
the summons.15 To rule otherwise will be an outright
circumvention of the rules, aggravating further the delay in the
administration of justice.16chanrobleslaw

At this juncture, it is worth emphasizing that notice to enable


the other party to be heard and to present evidence is not a
mere technicality or a trivial matter in any administrative or
judicial proceedings. The service of summons is a vital and
indispensable ingredient of due process. Corporations would be
easily deprived of their right to present their defense in a
multi-million peso suit, if the Court would disregard the
mandate of the Rules on the service of summons.

WHEREFORE, the petition is DENIED. The Court of Appeals


Decision dated September 17, 2007 and Resolution dated
January 22, 2008 in CA-G.R. SP No. 86824 are
hereby AFFIRMED.

SO ORDERED.cralawlawlibrary

79
G.R. No. 172204 July 2, 2014 title with the Regional Trial Court of Tagaytay City.12 It served
a copy of the petition by registered mail to respondent's
CATHAY METAL CORPORATION, Petitioner, alleged official address at "Barangay Mayapa, Calamba,
vs. Laguna."13 The petition was returned to sender because
LAGUNA WEST MULTI-PURPOSE COOPERATIVE, respondent could not be found at that address. 14 The postman
INC., Respondent. issued a certification stating that the reason for the return was
that the "cooperative [was] not existing."15 Petitioner allegedly
attempted to serve the petition upon respondent
DECISION
personally.16 However, this service failed for the same
reason.17
LEONEN, J.:
Upon petitioner's motion, the Regional Trial Court issued an
The Rules of Court governs court procedures, including the order on December 15, 2000 declaring petitioner’s substituted
rules on service of notices and summons. The Cooperative service, apparently by registered mail,18 to have been
Code p~ovisions on notices cannot replace the rules on effected,19 thus:
summons under the Rules of Court. Rule 14, Section 11 of the
Rules of Court provides an-exclusive enumeration of the
Acting on the "Manifestation And Motion For Substituted
persons authorized to receive summons for juridical entities.
Service" filed by petitioner Cathay Metal Corporation, thru
These persons are the juridical entity's president, managing
counsel, and finding the reasons therein statedto be
partner, general manager, corporate secretary, treasurer, or
meritorious, the same is hereby GRANTED.
in-house counsel.

Accordingly, this Court hereby declares that substituted service


This petition under Rule45 assails the Court of Appeals’
of the Consolidated Petition for Cancellation of Adverse Claim
decision dated November 25, 2005, and its resolution dated
on the President of Laguna West Multi-Purpose Cooperative,
April 5, 2006. The Court of Appeals remanded the case to the
Inc. has been effected. The latter ishereby given a period of
trial court for respondent’s presentation of evidence.
fifteen (15) days from the delivery of said pleadings to the
Clerk of Court within which to file their opposition to the
Respondent Laguna West Multi-Purpose Cooperative is a Consolidated petition for cancellation of adverse claim.20
cooperative recognized under Republic Act No. 6657 or the
Comprehensive Agrarian Reform Law.1 It allegedly entered into
Petitioner was later allowed to present its evidence ex parte.21
a joint venture agreement with farmer-beneficiaries through
Certificates of Land Ownership Award (CLOA) in Silang,
Cavite.2 While respondent was negotiating with the farmer- Upon learning that a case involvingits adverse claim was
beneficiaries, petitioner CathayMetal Corporation entered into pending, respondent, through Mr. Orlando dela Peña, filed a
Irrevocable Exclusive Right to Buy (IERB) contracts with the manifestation and motion, alleging that respondent never
same farmerbeneficiaries.3 Under the IERB, the farmer- received a copy of the summons and the petition.22 It moved
beneficiaries committed themselves to sell to petitioner their for the service of the summons and for a copy of the petition
agricultural properties upon conversion to industrial or to be sent to No. 160, Narra Avenue, Looc, Calamba, Laguna.23
commercial properties or upon expiration of the period of
prohibition from transferringtitle to the properties.4 The Regional Trial Court granted respondent's manifestation
and motion on March 16, 2001.24 It ordered that respondent
In 1996, respondent caused the annotation of its adverse claim be furnished with a copy of the petition at its new address. 25
on the farmer-beneficiaries’ certificates of title.5
Instead of furnishing respondent with a copy of the petition,
On November 9, 1998, the Department of Agrarian Reform petitioner filed on April 16, 2001 a motion for reconsideration
issued an order converting the properties from agricultural to of the March 16, 2001 Regional Trial Court order.26 In its
mixed use.6 motion for reconsideration, petitioner argued that the case was
already submitted for decision after all of petitioner’s evidence
had been admitted, and a memorandum had been
In 1999, petitioner and the farmer-beneficiaries executed
filed.27 Therefore, it was too late for respondent to ask the
contracts of sale of the properties.7 Transfer certificates of
court that it be furnished with a copy of the
titlewere also issued in the name of petitioner in the same
petition.28 Moreover, because respondent was already in
year.8 The annotations in the original titles were copied to
default, a manifestation and motion, without allegations of
petitioner's titles.9
grounds for a motion to lift order of default, would not give it
personality to participate in the proceedings.29 Petitioner sent a
Respondent’s Vice-President, Orlando dela Peña, sent two copy of the motion for reconsideration to respondent by
letters dated March 20, 2000 and April 12, 2000 to petitioner, registered mail and set the motion for hearing on April 20,
informing it of respondent’s claim to the properties.10 Petitioner 2001.30 Respondent failed to appear atthe hearing on the
did not respond.11 motion for reconsideration. On April 20, 2001, the Regional
Trial Court submitted the motion for resolution.31
On September 15, 2000,petitioner filed a consolidated petition
for cancellation of adverse claims on its transfer certificates of

80
Respondent received a copy of the motion for reconsideration West Multi-Purpose Cooperative, Inc., RECALL and RESCIND
after the hearing. On August 13, 2001, respondent filed a its Decision which was prematurely rendered.46
motion for leave to admit attached opposition32 and opposition
to petitioner’s motion for reconsideration of the March 16,2001 In an order dated May 26, 2003, the Regional Trial Court
Regional Trial Court order.33 Respondent argued that since denied respondent’s motion for reconsideration of the January
petitioner’s ex parte presentation of evidence was secured 16, 2003 order.47
through extrinsic fraud, there should be a new trial to give
respondent a fair day in court.34This was opposed by petitioner
On June 23, 2003, the Regional Trial Court decided to
on September 6, 2001.35 Petitioner emphasized its alleged
grant48 petitioner's petition for cancellation of annotation on
compliance with the Cooperative Code rule on notices and
the basis of the following facts:49
respondent’s failure to file its comment despite the court’s
order that approved petitioner’s substituted
service.36 Petitioner further pointed out that it had always . . . These annotations were subsequently copied to the
questioned the authority of Mr. dela Peñato act for Transfer Certificates of Titles over the parcels of land subject
respondent.37 of this suit that were issued in the name of Cathay. . . . Upon
verification, Cathay found that Laguna did not file any claim
against the farmer-beneficiaries or Cathay since the time the
On January 16, 2003, the Regional Trial Court granted
annotations were made. . . . Moreover, affidavits of adverse
petitioner's motion for reconsideration.38 It found that
claim and supporting documents that Laguna supposedly
respondent's alleged representatives failed to prove their
submitted to the Register of Deeds of Cavite were certified
authorities to represent respondent.39 It ruled that service
bythe Register of Deeds to be inexistent in the registry's vault.
should be made to the address indicated in its Cooperative
. . . Moreover, the Cooperative Development Authority likewise
Development Authority Certificate of Registration.40 The case
certified that Laguna has been inoperative since 1992 and
was declared submitted for decision.41
during the period when the annotations were made in 1996.
The Bureau ofPosts has also certified that Laguna's office at
Respondent filed a motion for reconsideration of the January Barangay Mayapa, Calamba, Laguna, its official address as
16, 2003 order of the Regional Trial Court.42 indicated in its Articles of Incorporation and Confirmation of
Registration is "closed".50
On March 21, 2003, the Regional Trial Court issued a decision
granting petitioner’s petition for cancellation of According to the Regional Trial Court, since respondent was
annotations.43 The Register of Deeds of Cavite was ordered to inoperative at the time when its adverse claims were
cancel the annotations onthe certificates of title.44 annotated, "there [was] no reason for [it] to believe that the
person who caused the annotations of adverse claim on the
On April 3, 2003, the Regional Trial Court issued an titles of the farmer-beneficiaries . . . was authorized to do
order45 rescinding its March 21, 2003 decision for having been so."51
prematurely rendered, thus:
The Regional Trial Court ordered the Register of Deeds to
This is regard to the Decision dated March 21, 2003 which the cancel the annotations on the transfer certificates of title. 52 It
Court has rendered in this particular case. held that Section 70 of Presidential Decree No. 1529 or the
Property Registration Decree declares that "an adverse claim is
A review of the records show that the court for reasons effective [only]for a period of thirty (30) days and may be
unexplained, has committed an error in judgment in rendering cancelled upon filing of a verified petition after the lapse of this
said decision unmindful of the fact thatthere is still a pending period."53 Since the 30-day period had already lapsed, the
incident (Oppositor Laguna’s Motion for Reconsideration) which annotations were already the subject of cancellation.54
has first to be resolved.
Respondent appealed to the Court of Appeals based on two
Fully aware that the error if allowed to remain unrectified grounds:
would cause a grave injustice and deeply prejudiced [sic] the
herein respondent, the Court, faithfully adhering to the 1) Petitioner-appellee secured the favorable orders of
principle enunciated by the Honorable Supreme Court in the the lower court in fraud of appellant LagunaWest by
case of Astraquilio vs Javier, 13 CRA 125 which provides that: sending the petition, all other pleadings, and notices
to its former address, thus, denying its day in court;
"It is one of the inherent powers of the court to amend and and
control its process and orders so as to make them conformable
to law and justice. This power includes the right to reverse 2) The trial court erred in applying the rule on
itself, especially when in its opinion it has committed an error substituted service, thus, it did not validly acquire
or mistake in judgment, and that to adhere to its decision will jurisdiction over the appellant.55
cause injustice to a party litigant."
The Court of Appeals granted respondent's appeal on
do hereby, with deep and sincere apologies to the party- November 25, 2005. The dispositive portion of the Court of
litigants, more particularly to the herein respondent Laguna Appeals' decision reads:

81
WHEREFORE, premises considered, the appeal is hereby Petitioner’s motion for reconsideration of the trial court order
granted. The case is ordered remanded for appellant's allowing respondent to file an answer or opposition to the
presentation of evidence and thereafter, for the trial court to petition for cancellation of annotation was granted because of
render judgment, albeit with dispatch.56 Mr. dela Peña’s and Mr. Dragon’s failure to show evidence
ofauthority to act on behalf of respondent.77
The Court of Appeals ruled thatthere was no valid service of
summons upon respondent in accordance with Rule 14, Petitioner argued that summons could only be validly served to
Section 11 of the Revised Rules of Civil Procedure.57 Hence, respondent’s official address as indicated in its registration with
the "court acquire[d] no jurisdiction to pronounce a judgment the Cooperative Development Authority.78 This is because
in the case."58 respondent as a registered cooperative is governed by
Republic Act No. 6938, a substantive law that requires
The Court of Appeals denied petitioner's motion for summons to be servedto respondent’s official address.79
reconsideration on April 5, 2006.59
Substantive law takes precedence over procedural rules.80
The issue in this case is whether respondent was properly
served with summons or notices of the hearing on the petition Petitioner cites Article 52 of Republic Act No. 6938:
for cancellation of annotations of adverse claim on the
properties. Article 52. Address. – Every cooperative shall have an official
postal address to which all notice and communications shall be
Petitioner emphasized the following points: sent. Such address and every change thereof shall be
registered with the Cooperative Development Authority.
Summons was served upon respondentat its official registered
address at Barangay Mayapa, Calamba, Laguna.60Since no one Further, petitioner argues that there is no law that requires
received the summons, petitioner insisted that the trial court parties to serve summons to "every unsubstantiated address
issue an order to effect substituted service.61 Respondent still alleged by [a] party."81
did not file its answer.62
Petitioner also argued that the Court of Appeals erred when it
Later, a certain Orlando dela Peña would filea manifestation remanded the case for trial because respondent already
and motion dated February 27, 2001 purportedly on behalf of admitted that its adverse claims were based not on a right
respondent.63 Mr. dela Peña claimed that he was an authorized over the property but on the "alarm[ing] . . . possibility of
representative of respondent and that respondent was already losing the deal"82 with the owners of the property. There was
holding office at No. 160, Narra Avenue, Looc, Calamba, no agreement yet vesting in respondent any right over the
Laguna, which was not the official address of respondent.64 Mr. properties.83 Moreover, the annotations on the title were made
dela Peña never submitted proof of his authority torepresent in 1996 when respondent was already inoperative.84
respondent. He was also never a memberof respondent
cooperative.65 Meanwhile, respondent emphasized thatit entered into a joint
venture agreement with the farmer-beneficiaries.85While in the
However, Mr. dela Peña was stillallowed to file an answer or process of negotiations, petitioner suddenly entered into the
opposition.66 Petitioner filed a motion for reconsideration picture by offering the farmer-beneficiaries an
opposing the order allowing him to file an answer or opposition IrrevocableExclusive Right to Buy (IERB) contracts.86 It was
on behalf of respondent.67Respondent failed to oppose this. He then that respondent caused the annotation of an adverse
did not participate further.68 Later, a certain Mr. Geriberto claim on the titles.87
Dragon would claim to be an officer of respondent. He would
file an opposition on its behalf after the period to file an Respondent, through its Vice President, Mr. dela Peña, wrote
opposition had lapsed.69 Mr. Dragon alleged that respondent’s two letters between March and April 2000 relative to its
address was at No. 167, Barangay Looc, Calamba, adverse claims in an attempt to amicably settle what seemed
Laguna.70 Like Mr. dela Peña, Mr. Dragon had never been a then as a brewing dispute.88 These letters were written on
member or officer of respondent.71 respondent’s letterheads indicating the address, No. 167,
Barangay Looc, Calamba, Laguna.89
Petitioner argued that Mr. dela Peña and Mr. Dragon never
submitted proof of their authority to represent Petitioner deliberately served summons upon respondent to its
respondent.72 They were never officers or members of old address.90 Later, petitioner would be allowed to present
respondent cooperative.73 Therefore, petitioner cannot be evidence ex parte.91
blamed for being skeptical about Mr. dela Peña’s and Mr.
Dragon’s claims of authority.74
Moreover, respondent was unable to appear at the hearing on
the motion for reconsideration of the court order allowing
Moreover, Mr. dela Peña and Mr. Dragon could not claim to respondent to file its answer or opposition. Basedon the
have been authorized to represent respondent because it was records, respondent’s failure to appear was due to petitioner
determined to be inoperative since 1992.75 In 2002, setting the hearing on April 20, 2001 and mailing respondent’s
respondent was dissolved by the Cooperative Development
Authority.76
82
a copy of the motion on April 16, 2001 or just four (4) days 4.2.4 Presented Laguna West’s authorized
before the hearing.92 representatives, Orlando dela Peña, Geriberto Dragon
and Ediza Saliva, and one or two of the original
Respondent filed a motion for leave to admit attached landowners to testify on their dealings with Laguna
opposition to petitioner’s motion for reconsideration. This was West.
opposed by petitioner. Pending respondent’s motion for leave
toadmit attached opposition, the trial court already issued its 4.2.5 Called on the officers of the CD on questions
order dated January 16, 2013, granting petitioner’s motion for about a cooperative’s address of record vis-à-vis its
reconsideration of the order allowing respondent to file its actualaddress as known to the party that the
answer or opposition to the petition for cancellation of adverse cooperativehad previously been communicating with,
claims.93 in this case, petitioner.101

Respondent filed a motion for reconsideration of the order We rule that respondent was not validly served with summons
dated January 16, 2003. While the said incidents were or notice of the hearing. However, its annotations of adverse
pending,the trial court rendered its decision dated March 21, claims should be cancelled for being based on a future claim.
2003, granting petitioner’s petition to cancel the annotations of
adverse claims.94 This, according to respondent, was a I
premature decision.95 Respondent was not validly served with summons

The trial court rescinded the March 21, 2003 decision. On May Republic Act No. 6938 of 1990 or the Cooperative Code of the
26, 2003, the trial court denied respondent’s motion for Philippines provides that cooperatives are mandated to have
reconsideration.96 an official postal address to which notices shall be sent, thus:

Within the period allowed for respondent to file its petition for Art. 52. Address. – Every cooperative shall have an official
certiorari, the trial court rendered judgment granting postal address to which all notices and communications shall
petitioner’s petition to cancel the annotations of adverse claims be sent. Such address and every change thereof shall be
on the title.97 registered with the Cooperative Development Authority.

Respondent appealed to the Court of Appeals. The appellate This provision was retained in Article 51 of RepublicAct No.
court remanded the case to the lower court so that respondent 9520 or the Philippine Cooperative Codeof 2008. Article 51
could be allowed to present evidence.98 provides:

Respondent argued that petitioner was not being fair when it Art. 51. Address. Every cooperativeshall have an official postal
served summons to respondent’s old address despite address to which all notices and communications shall be sent.
knowledge of its actual address.99 Such address and every change thereof shall be registered
with the Authority.
Moreover, respondent argued that itsrights over the property
should be best determined after trial.100 Relying on the above provision, petitioner argued that
respondent was sufficiently served with summons and a copy
According to respondent, had there been a trial, it would have: of its petition for cancellation of annotations because it
allegedly sent these documents to respondent’s official address
4.2.1 Presented documentary evidence that its as registered with the Cooperative Development Authority.
negotiation with the former landowners had earned Petitioner further argued that the Rules of Procedure cannot
for it part-ownership of the properties, or at the very trump the Cooperative Code with respect to notices. This is
least, the exclusive authority to deal with potential because the Cooperative Code is substantive law, as opposed
buyers or developers of the properties such as to the Rules of Procedure, which pertains only to matters of
petitioner. procedure.

4.2.2 Offered in evidence the actual Joint Venture Petitioner is mistaken.


Agreements ("JVA") between the former landowners
and Laguna West whereby Laguna West had made The promulgation of the Rules of Procedure is among the
partial payment of the former landowners’ 40% share powers vested only in this court. Article VIII, Section 5(5)
in the joint venture. Laguna Westhad thus acquired provides:
interest over the properties, or had the same or
better right than the registered owner thereof. Sec. 5. The Supreme Court shall have the following powers:

4.2.3 Proved by competent evidence that the ....


annotation sought to be cancelled was not a simple
adverse claim but qualifies as a registration of an
(5) Promulgate rules concerning the protection and
interest over the subject properties;
enforcement of constitutional rights, pleading, practice, and
83
procedure in all courts, the admission to the practice of law,the excuse from sending or attempting to send to respondent
integrated bar, and legal assistance to the copies of the petition and the summons. The Rules of Court
underprivileged.Such rules shall provide a simplified and provides that noticesshould be sent to the enumerated officers.
inexpensive procedure for the speedy disposition of cases, Petitioner failed to do this. Nonotice was ever sent to any of
shall be uniform for all courts of the same grade, and shall not the enumerated officers.
diminish, increase, or modifysubstantive rights. Rules of
procedure of special courts and quasi-judicial bodies shall Petitioner insists that it should not be made to inquire further
remain effective unless disapproved by the Supreme Court. as to the whereabouts of respondent after the attempt to
serve the summons by registered mail to respondent’s address
This means that on matters relating toprocedures in court, it as allegedly indicated in its Articles of Incorporation. The Rules
shall be the Rules of Procedure that will govern. Proper court does not provide that it needs to do so. However, it provides
procedures shall be determined by the Rules as promulgated for service by publication. Service by publication is available
by this court. when the whereabouts of the defendant is unknown. Section
14, Rule 14 of the Rules of Court provides:
Service of notices and summons on interested parties in a civil,
criminal, or special proceeding is court procedure. Hence, it Sec. 14. Service upon defendant whose identity or
shall be governed by the Rules of Procedure. whereabouts are unknown. – In any action where the
defendant is designated as an unknown owner, or the like, or
The Cooperative Code provisions may govern matters relating whenever his whereabouts are unknown and cannot be
to cooperatives’ activities as administered by the Cooperative ascertained by diligent inquiry, service may, by leave of court,
Development Authority. However, they are not procedural be effected upon him by publication in a newspaper of general
rules that will govern court processes. A Cooperative Code circulation and in such places and for such time as the court
provision requiring cooperatives to have an official address to may order. (Emphasis supplied)
which all notices and communications shall be sent cannot take
the place of the rules on summonsunder the Rules of Court This is not a matter of acquiringjurisdiction over the person of
concerning a court proceeding. respondent since this is an action in rem. In an action in rem,
jurisdiction over the person is not required as long asthere is
This is not to say that the noticescannot be sent to jurisdiction over the res. This case involves the issue of fair
cooperatives in accordance with the Cooperative Code. Notices play and ensuring that parties are accorded due process.
may be sent to a cooperative’s official address. However,
service of notices sent to the official address in accordance In this case, petitioner served summons upon respondent by
with the Cooperative Code may not be used as a defense for registered mail and, allegedly, by personal service at the office
violations of procedures, specially when such violation affects address indicated in respondent’s Certificate of Registration.
another party’s rights. Summons was not served upon respondent’s officers. It was
also not published in accordance with the Rules of Court. As a
Section 11, Rule 14 of the Rules ofCourt provides the rule on result, respondent was not given an opportunity to present
service of summons upon a juridical entity. It provides that evidence, and petitioner was able to obtain from the Regional
summons may be served upon a juridical entity only through Trial Court an order cancelling respondent’s annotations of
its officers. Thus: adverse claims.

Sec. 11. Service upon domestic private juridical entity. – When Respondent was, therefore, not validly served with summons.
the defendant is a corporation, partnership or association
organized under the laws of the Philippines with a juridical II
personality, service may be made on the president, managing Respondent’s alleged non-
partner, general manager, corporate secretary, treasurer, or operation does not bar it from
in-house counsel. authorizing a person to act on
its behalf in court
We have already established that the enumeration in Section proceedings
11 of Rule 14 is exclusive.102 Service of summons upon
persons other than those officers enumerated in Section 11 is Petitioner argues that failure to serve the summons upon
invalid.103 Even substantial compliance is not sufficient service respondent was due to respondent's non-operation and failure
of summons.104 to amend its Articles of Incorporation to reflectits new address.
Petitioner's conclusion that respondent was no longer
This provision of the rule does not limit service to the officers’ operating was based only on the postmaster's certification.
places of residence or offices. If summons may not be served According to the postmaster’s certification, it failed to serve the
upon these persons personally at their residences or offices, petition for cancellation of annotation to respondent’s official
summons may be served upon any of the officers wherever address becauseof respondent’s nonexistence or closure.
they may be found. Petitioner failed to consider that the postmaster was not in the
position to make a reliable statement as to the existence or
closure of an entity.
Hence, petitioner cannot use respondent's failure to amend its
Articles of Incorporation to reflect its new address as an
84
Moreover, the Cooperative Development Authority's The resolution of the issue of representation could have
certification stating that respondent was not submitting any facilitated the resolution of the case on the merits.
financial report since 1992, which was proof of its non-
operation, was a mere statement of what was indicative of III
non-operation. It was not yet a conclusive statement that The trial court could have
respondent was not in operation. resolved the issue of
representation; premature
In any case, even assuming that respondent was not decisions elicit suspicion
operating, it might still exercise its powers as a cooperative
until it would get dissolved. Section 9 of Republic Act No. 6938 The court must not trifle with jurisdictional issues. It is
provides the powers and capacities of registered cooperatives. inexcusable that a case involving issues that the trial court had
full control of had to be elevated to this court for
Section 9. Cooperative Powers and Capacities.- A cooperative determination.
registered under this Code shall have the following powers and
capacities: The trial court had every opportunityto resolve the validity of
Mr. dela Peña’s and Mr. Dragon’s alleged authority to act on
(1) To sue and be sued in its cooperative name; behalf of respondent. The trial court had, in fact, already
allowed respondent to file its answer and oppose petitioner’s
(2) Of succession; petitionfor cancellation of annotation. It could have easily
ordered Mr. dela Peña or Mr. Dragon to produce evidence of
their authority to represent respondent.
(3) To amend its articles of cooperation in accordance
with the provisions of this code;
Moreover, there had been at least two motions for
reconsideration filed before the trial court finallydecided the
(4) To adopt by-laws not contrary to law, morals or
petitioner’s petition for cancellation of annotation.
public policy, and to amend and repeal the same in
accordance with this Code;
The first was filed by petitioner when the trial court granted
respondent’s manifestation and motion on March 16, 2001.
(5) To purchase, receive, take orgrant, hold, convey, The trial court could have heard the parties on the issue of
sell, lease, pledge, mortgage, and otherwise deal with
representation at this instance had it noted petitioner’s non-
such real and personal property as the transaction of
compliance with the rule that the notice of hearing must "be
the lawful affairs of the cooperative may reasonably
served in such a manner as to ensure its receipt by the other
and necessarily require, subject to the limitations
party at least three (3) days before the date of the
prescribed by law and the Constitution;
hearing."105 Section 4, Rule 15 provides:

(6) To enter into division, mergeror consolidation, as


Sec. 4. Hearing of motion. – Except for motions which the
provided in this Code;
court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing by
(7) To join federations or unions, as provided in this the applicant. Every written motion required to be heard and
Code; the notice of the hearing thereof shall be served in such a
manner as to ensure its receipt by the other party at least
(8) To accept and receive grants, donations and three (3) days before the date of hearing, unless the court for
assistance from foreign and domestic sources; and good cause sets the hearing on shorter notice.

(9) To exercise such other powers granted in this In this case, petitioner set the case for hearing on April 20,
Code or necessary to carry out its purpose or 2001. It served a copy upon respondent by registered mail
purposes as stated in its articles of cooperation. only on April 16, 2001 or four (4) days before the set date for
hearing. To be covered by the three-day rule under Rule 15,
Section 4, petitioner should ensure respondent’s receipt of the
Prior to dissolution, a cooperative isentitled to the exercise of
notice by April 17, 2001. We take judicial notice that service by
these powers. It may engage indeals involving its properties or
registered mail in our jurisdiction does not take place in one
rights. It may cause the annotation of claims it deems to have
day. Service of notice by registered mail only four (4) days
in order to protect such claim. Contrary to petitioner’s claim,
before the date of hearing, therefore, does not amount to
respondent is not prevented from authorizing persons to act on
ensuring the other party’s receipt at least three (3) days before
its behalf.
the hearing.

In any case, even if petitioner alleged that respondent was


The second motion for reconsideration was filed by respondent
already dissolved by virtue of a November7, 2002 resolution of
when the Regional Trial Court granted petitioner’s motion for
Cooperative Development Authority, the relevant acts of
reconsideration of its order of March 16, 2001.Hence, for the
respondent had occurred before such resolution.
second time, the trial court had an opportunity to hear

85
whether Mr. dela Peña or Mr. Dragon was properly authorized Ordinarily, this case would be remanded to the trial court for
to act on behalf of respondent. the presentation of respondent’s evidence. However, this case
has been pending in this court for about eight (8) years.In the
On one hand, nobody’s rights would have been prejudiced had interest of judicial economy and efficiency, and given that the
respondent been allowed to prove the alleged representatives’ court records are sufficient to make a determination on the
authorities. On the other hand, there is a likelihood validity of respondent’s adverse claim, we shall rule on the
ofprejudice, in this case, if the court relied purely on issue. Respondent had been assailing the lack of service of
technicalities. summons upon it and the resulting cancellation of its alleged
adverse claim on the titles. Its claim is anchored on its
disrupted negotiations with the farmer-beneficiaries involving
Thus, we reiterate this court’s ruling in Alonso v. Villamor:106
the properties. In its memorandum filed on March 1, 2007,
respondent stated:
. . . In other words, [processes] are a means to an end. When
they lose the character of the one and become the other, the
1.2 Some ten (10) years ago, Laguna West entered into [sic]
administration of justice is at fault and courts are
Joint Venture Agreement ("JVA") with various farmer-CLOA
correspondingly remiss in the performance of their obvious
beneficiaries in the Kaong-Kalayugan area of Silang, Cavite for
duty.
a total lot area of Eight Hundred Fifty Five Thousand and Nine
Hundred Fourteen (855,914) square meters.
. . . To take advantage of [a purely technical error] for other
purposes than to cure it, does not appeal to a fair sense of
1.3 To hold the CLOA beneficiaries to their commitment to
justice. Its presentation as fatal to [a party]’s case smacks of
submit their respective lots to the JVA, Laguna West promised
skill rather than right. A litigation is not a game of technicalities
them a guaranteed share of 40% in the proceeds of the
in which one, more deeply schooled and skilled in the subtle
project.
art of movement and position, entraps and destroys the other.
It is, rather, a contest in which each contending party fully and
fairly lays before the court the facts in issue and then, 1.4 But, while Laguna West was still in the process of finalizing
brushing aside as wholly trivial and indecisive all imperfections the negotiations with these farmer-beneficiaries, petitioner
of form and technicalities of procedure, asks that justice be entered the picture by offering an alleged "Irrevocable
done upon the merits. Lawsuits, unlike duels, are not to be Exclusive Right to Buy (IERB)" contracts with the same farmer-
won by a rapier’s thrust. Technicality, when it deserts its landowners for the purpose of converting the subject vast
proper office as anaid to justice and becomes its great track [sic] of land into an industrial, commercial and residential
hindrance and chief enemy, deservesscant consideration from area.
courts. There should be no vested rights in technicalities. No
litigant should be permitted to challenge a record of a court of 1.5 Alarmed with the possibility that it could lose the deal to a
these Islands for defect of form when his substantial rights big and moneyed corporation, Laguna Westcaused the
have not been prejudiced thereby. annotation of adverse claims on the thirty-nine (39) TCTs in
1996.107 Respondent’s annotations on petitioner’s certificates
Both motions for reconsideration filed in the trial court were of title are similarly worded, thus:
opportunities to hear the parties on the issue of representation
and to ensure that all parties were given their fair opportunity Entry No. . . . -AFFIDAVIT OF ADVERSE CLAIM- Covering the
to be heard. The trial court ignored both opportunities and parcel of land described in this title as per Affidavit of Adverse
chose to rule based on technicalities to the prejudice of Claim executed by Calisto M. Dela Pena [sic] of Laguna West
respondent. Multi-Purpose Cooperative Inc., wherein the registered owner
entered into a Joint Venture Agreement, as per Affidavit
The rules cannot be interpreted asa means to violate due ofAdverse Claim, subs. and sworn to before the Not. Public for
process rights. Courts should, as much as possible, give parties . . ., a copy is on file in this registry.
the opportunity to present evidence as to their claims so that
decisions will be made based on the merits of the case. Date of inst.- . . . .

The trial court issued a decision pending incidents yet to be Date of inscription- . . . .
resolved. We take this opportunity to remind courtsthat the
issuance of fair decisions is the heart of our functions. The NOTE: The foregoing annotations were copied from TCT. . .
judiciary is expected to take seriously its task of crafting .108
decisions with utmostjudiciousness. Premature decisions only
elicit suspicion of the courts and diminish our role as
administrator of justice. Another version of the annotation is worded as follows:

Entry No. . . . -ADVERSE CLAIM- Signed and executed by


IV
Calixto M. dela Pena [sic], president and Chairman of
Rights still under negotiations
Cooperative, [alleging] therein the existence of Joint Venture
are not adverse claims
Agreement with the registered owner and that there are
aboutto dispose said lot, exec. before the Not. Public . . . Copy

86
is on file in this registry. Date of inst.- . . . . Date of inscription- property based on possession, ownership, lien, or any valid
. . . .109 deed of transfer.

NOTE: The foregoing annotations were copied from TCT. . . . Respondent’s claim was not based on any of
those.1awp++i1 Its claim was based on a deal with the CLOA
The purpose of annotations of adverse claims on title is to farmer-beneficiaries, which did not materialize.
apprise the whole world of the controversy involving a
property. These annotations protect the adverse claimant's Respondent alleged that had there been a trial, it could have
rights before or during the pendency of a case involving a "[p]resented documentary evidence that its negotiation with
property. It notifies third persons that rights that may be the former landowners had earned for it part-ownership of the
acquired with respect to a property are subject to the results properties, or . . . the exclusive authority to deal with potential
of the case involving it. buyers or developers."110 Respondent contradicts itself. For
there to be a contract, there must be a meeting of the minds
Section 70 of Presidential Decree No. 1529 or the Property between the parties. There could not have been any contract
Registration Decree governs adverse claims. It describes an earning for respondent part-ownership or any right since it was
adverse claim as a statement in writing setting forth a still undergoing negotiations with the farmer-beneficiaries. At
subsequent right or interest claimed involving the property, that stage, meeting of the minds was absent. The terms were
adverse tothe registered owner. Thus: not yet final. Hence, no right or obligation could attach to the
parties. In essence, parties cannot claim, much less make an
adverse claim of any right, from terms that are still under
Section 70. Adverse claim. – Whoever claims any part or
negotiations.
interest in registered land adverse to the registered owner,
arising subsequent to the date of the original registration, may,
if no other provision is made in this Decree for registering the Respondent also alleged that had it been allowed to offer as
same, make a statement in writing setting forth fully his evidence the joint venture agreement it entered with the
alleged right or interest, and how or under whom acquired, a farmer-beneficiaries, it would have shown that it "had made
reference to the number of the certificate of title of the partial payment of the former landowners’ 40% share in the
registered owner, the name of the registered owner, and a joint venture,"111 acquiring for itself an "interest over the
description of the land in which the right or interest is claimed. properties, or . . . better right than the registered
owner[s]."112 Respondent was mistaken.
The statement shall be signed and sworn to, and shall state
the adverse claimant’s residence, and a place at which all Republic Act No. 6657 or the Comprehensive Agrarian Reform
notices may be served upon him. This statement shall be Law prohibits its own circumvention. The prohibition on
entitled to registration as an adverse claim on the certificate of disposition includes all rights relating to disposition such as
title. The adverse claim shall be effective for a period of thirty sale, and promise of sale of property upon the happening of
days from the date of registration. After the lapse ofsaid conditions that remove the restrictions on disposition.
period, the annotation of adverse claim may be cancelled upon
filing of a verified petition therefor by the party in interest: Republic Act No. 6657 prohibits the sale, transfer, or
Provided, however, that after cancellation, no second adverse conveyance of awarded lands within ten (10) years, subject
claim based on the same ground shall be registered by the only to a few exceptions. Section 27 of the Act provides:
same claimant.
SECTION 27. Transferability of Awarded Lands. —Lands
Before the lapse of thirty days aforesaid, any party in interest acquired by beneficiaries underthis Act may not be sold,
may file a petition in the court of First Instance where the land transferred or conveyed except through hereditary succession,
is situated for the cancellation of the adverse claim, and the or to the government, or the LBP, or to other qualified
court shall grant a speedy hearing upon the question of the beneficiaries for a period of ten (10) years: provided, however,
validity of such adverse claim, and shall render judgment as that the children or the spouse of the transferorshall have a
may be just and equitable. If the adverse claim is adjudged to right to repurchase the land from the government or LBP
be invalid, the registration thereof shall be ordered cancelled. withina period of two (2) years. Due notice of the availability of
If, in any case, the court, after notice and hearing, shall find the land shall be given by the LBP to the Barangay Agrarian
that the adverse claim thus registered was frivolous, it may Reform Committee (BARC) of the barangay where the land is
fine the claimant in an amount not less than one thousand situated. The Provincial Agrarian Reform Coordinating
pesos nor more than five thousand pesos, in its discretion. Committee (PARCCOM) as herein provided, shall, in turn, be
Before the lapse of thirty days, the claimant may withdraw his given due notice thereof by the BARC.
adverse claim by filing with the Register of Deeds a sworn
petition to that effect. If the land has not yet been fully paid by the beneficiary, the
rights to the land may be transferred orconveyed, with prior
A claim based on a future right does notripen into an adverse approval of the DAR, to any heir of the beneficiary or to any
claim as defined in Section 70 of Presidential Decree No. 1529. other beneficiary who, as a condition for such transferor
A right still subject to negotiations cannot be enforced against conveyance, shall cultivate the land himself. Failing compliance
a title holder or against one that has a legitimate title to the herewith, the land shall be transferred to the LBP which shall

87
give due notice of the availability of the land in the manner of conveyance in the Register of Deeds with respect to titled
specified in the immediately preceding paragraph. lands and the date of the issuance ofthe tax declaration to the
transferee of the property with respect to unregistered lands,
In the event of such transfer to the LBP, the latter shall as the case may be, shall be conclusive for the purpose of this
compensate the beneficiary in one lump sum for the amounts Act. (f) The sale, transfer or conveyance by a beneficiary of
the latter has already paid, together with the value of the right to use or any other usufructuary right over the land
improvements he has made on the land Republic Act No. 6657 he acquired by virtue of being a beneficiary, in order to
also provides that the awarded lands may be converted to circumvent the provisions of this Act. (Emphasis supplied)
residential, commercial,or industrial use if these are not
economically feasible anymore or because of urbanization, The prohibition from disposition of the properties encompasses
greater economic value will be derived with their conversion. all rights relating to disposition, including the right to convey
Section 65 of the Act provides: ownership or to promise the sale and transfer of property from
the farmer-beneficiaries to anyone upon the happening of
SECTION 65. Conversion of Lands. — After the lapse of five (5) certain conditions that will remove the conveyance restrictions.
years from its award, when the land ceases to be economically
feasible and sound for agricultural purposes, or the locality has The conveyance of the property withinthe prohibited period or
become urbanized and the land will have a greater economic before its conversion to non-agricultural use isan outright
value for residential, commercial or industrial purposes, the violation of Republic Act No. 6657. Meanwhile, the promise of
DAR, upon application of the beneficiary or the landowner, sale of properties upon the happening of conditions that will
with due notice to the affected parties, and subject to existing remove restrictions carry with it an intent to circumvent the
laws, may authorize the reclassification or conversion of the provisions of Republic Act No. 6657. This law prohibits its
land and its disposition: provided, that the beneficiary shall circumvention.
have fully paid his obligation.
In this case, the CLOAs were awarded to the farmer-
These provisions imply the following on rules on sale of beneficiaries between 1990 and 1992.114 Since the affidavit of
awarded lands: adverse claim annotated on petitioner’s certificates of title was
annotated in 1996 and the properties were converted only in
1) Subject to a few exceptions, landsacquired by 1998, respondent’sjoint venture agreement with the farmer-
beneficiaries may be conveyed to non-beneficiaries beneficiaries could not have validly transferred rights to
after ten (10) years. respondent.

2) Before the lapse of ten (10) years but after the The 10-year period of prohibition against conveyance had not
lapse of five (5) years, a beneficiary may dispose of yet lapsed at that time.1âwphi1 Neither were the properties
the acquired land if it "ceases to be economically already converted to non-agricultural use at that time.
feasible and sound for agricultural purposes, or the Respondent's adverse claim, therefore, based on its alleged
locality has become urbanized and the land will have payment of the farmer-beneficiaries' 40% could not be valid.
a greater economic value"113 with its residential,
commercial, or industrial use. In sum, whether or not there were provisions on transfer of
rights or promise to transfer rights in the joint venture
These implications are easily abused. Hence, Republic Act No. agreement, there could be no basis for respondent’s adverse
6657 included among the prohibitions any act that will claim. Lack of that provision means that respondent does not
circumvent its provisions. Thus: have any valid claim or right over the properties at all.
Meanwhile, inclusion of such provision is illegal and, therefore,
void.
SECTION 73. Prohibited Acts and Omissions. — The following
are prohibited: (a) The ownership or possession, for the
purpose of circumventing the provisions of this Act, of This ruling is also applicable to petitioner, which entered into
agricultural lands in excess of the total retention limits or irrevocable exclusive right to buy contracts from the farmer-
award ceilings by any person, natural or juridical, except those beneficiaries. These contracts provided that the farmer-
under collective ownership by farmer-beneficiaries. (b) The beneficiaries committed themselves to selling their properties
forcible entry or illegal detainer by persons who are not to petitioner upon expiration of the period of prohibition to
qualified beneficiaries under thisAct to avail themselves of the transfer or upon conversion of the properties from agricultural
rights and benefits of the Agrarian Reform Program. (c) The to industrial or commercial use, whichever comes first. These
conversion by any landowner of his agricultural land into any contracts were execl!ted between farmer-beneficiaries and
nonagricultural use with intent to avoid the application of this petitioner during the period of prohibition and before the
Act to his landholdings and to dispossess his tenant farmers of properties' conversion from agricultural to mixed use. Upon
the land tilled by them. (d) The willful prevention or conversion of the properties, these were immediately sold to
obstruction by any person, association or entity of the petitioner. Intent to circumvent the provisions of Republic Act
implementation of the CARP. (e) The sale, transfer, No. 6657 is, therefore, apparent. Petitioner's contracts are,
conveyance or change of the nature of lands outside of urban therefore, also illegal and void. Hence, this decision is without
centers and city limits either in whole or in part after the prejudice to the right of interested parties. to seek the
effectivity of this Act. The date ofthe registration of the deed cancellation of petitioner's certificates of title obtained in
violation of the law.
88
WHEREFORE, the petition is GRANTED. The Register of Deeds
of Cavite is ORDERED to cancel the annotations of adverse
claims on the transfer certificates· of title.

SO ORDERED.

89
[G.R. No. 159590. October 18, 2004] Enterprise Center, Tower 1, Ayala Avenue corner Paseo de
Roxas Street, Makati City.
HONGKONG AND SHANGHAI BANKING CORPORATION
LIMITED, petitioner, vs. CECILIA DIEZ Sometime in March 1997, Thomson issued five HSBANK
CATALAN, respondent. checks payable to Catalan, to wit:

CHECK NO. DATE AMOUNT


807852 Mar. 15, 1997 $600,000.00
[G.R. No. 159591. October 18, 2004]
807853 Mar. 17, 1997 800,000.00
HSBC INTERNATIONAL TRUSTEE LIMITED, petitioner,
vs. CECILIA DIEZ CATALAN, respondent. 807854 Mar. 17, 1997 600,000.00
807855 Mar. 22, 1997 600,000.00
DECISION
807856 Mar. 23, 1997 600,000.00
AUSTRIA-MARTINEZ, J.:
TOTAL $3,200,00
Before us are two petitions for review on certiorari under 0.00
Rule 45 of the Rules of Court separately filed by the Hongkong
and Shanghai Banking Corporation Limited (HSBANK) and The checks when deposited were returned by HSBANK
HSBC International Trustee Limited (HSBC TRUSTEE). They purportedly for reason of payment stopped pending
seek the reversal of the consolidated Decision,[1] dated August confirmation, despite the fact that the checks were duly
14, 2003, of the Court of Appeals (CA) in CA-G.R. SP Nos. funded. On March 18, 1997, Thomson wrote a letter to a
75756 and 75757, which dismissed the petitions for certiorari certain Ricky Sousa[7] of HSBANK confirming the checks he
of herein petitioners assailing the Order, dated May 15, 2002, issued to Catalan and requesting that all his checks be
of the Regional Trial Court, Branch 44, Bacolod City (RTC) in cleared. On March 20, 1997, Thomson wrote another letter to
Civil Case No. 01-11372 that denied their respective motions to Sousa of HSBANK requesting an advice in writing to be sent to
dismiss the amended complaint of respondent Cecilia Diez the Philippine National Bank, through the fastest means, that
Catalan. the checks he previously issued to Catalan were already
cleared. Thereafter, Catalan demanded that HSBANK make
The factual antecedents are as follows: good the checks issued by Thomson. On May 16, 1997,
Marilou A. Lozada, personal secretary and attorney-in-fact of
On January 29, 2001, respondent filed before the RTC, a Thomson, wrote a letter to Sousa of HSBANK informing him
complaint for a sum of money with damages against petitioner that HSBANKs failure to clear all the checks had saddened
HSBANK, docketed as Civil Case No. 01-11372, due to Thomson and requesting that the clearing of the checks be
HSBANKs alleged wanton refusal to pay her the value of five facilitated. Subsequently, Thomson died and Catalan forwarded
HSBANK checks issued by Frederick Arthur Thomson her demand to HSBC TRUSTEE. Catalan sent photocopies of
(Thomson) amounting to HK$3,200,000.00.[2] the returned checks to HSBC TRUSTEE. Not satisfied, HSBC
On February 7, 2001, summons was served on HSBANK TRUSTEE through deceit and trickery, required Catalan, as a
at the Enterprise Center, Tower I, Ayala Avenue corner Paseo condition for the acceptance of the checks, to submit the
de Roxas St., Makati City.[3] HSBANK filed a Motion for original copies of the returned checks, purportedly, to hasten
Extension of Time to File Answer or Motion to Dismiss dated payment of her claim. HSBC TRUSTEE succeeded in its
February 21, 2001.[4] Then, it filed a Motion to Dismiss, dated calculated deception because on April 21, 1999, Catalan and
March 8, 2001, on the grounds that (a) the RTC has no her former counsel went to Hongkong at their own expense to
jurisdiction over the subject matter of the complaint; (b) the personally deliver the originals of the returned checks to the
RTC has not acquired jurisdiction for failure of the plaintiff to officers of HSBC TRUSTEE, anxious of receiving the money
pay the correct filing or docket fees; (c) the RTC has no value of the checks but HSBC TRUSTEE despite receipt of the
jurisdiction over the person of HSBANK; (d) the complaint does original checks, refused to pay Catalans claim. Having seen
not state a cause of action against HSBANK; and (e) plaintiff and received the original of the checks, upon its request, HSBC
engages in forum-shopping.[5] TRUSTEE is deemed to have impliedly accepted the
checks. Moreover, the refusal of HSBANK and HSBC TRUSTEE
On September 10, 2001, Catalan filed an Amended to pay the checks is equivalent to illegal freezing of ones
Complaint impleading petitioner HSBC TRUSTEE as co- deposit. On the assurance of HSBC TRUSTEE that her claim
defendant and invoking Article 19 of the Civil Code as basis for will soon be paid, as she was made to believe that payments
her cause of action.[6] of the checks shall be made by HSBC TRUSTEE upon sight, the
unsuspecting Catalan left the originals of the checks with HSBC
The Amended Complaint alleges: TRUSTEE and was given only an acknowledgment
Defendants HSBANK and HSBC TRUSTEE, doing business receipt. Catalan made several demands and after several more
in the Philippines, are corporations duly organized under the follow ups, on August 16, 1999, Phoenix Lam, Senior Vice
laws of the British Virgin Islands with head office at 1 Grenville President of HSBC TRUSTEE, in obvious disregard of her valid
Street, St. Helier Jersey, Channel Islands and with branch claim, informed Catalan that her claim is disapproved. No
offices at Level 12, 1 Queens Road Central, Hongkong and reason or explanation whatsoever was made why her claim
may be served with summons and other court processes was disapproved, neither were the checks returned to
through their main office in Manila with address at HSBC, the her. Catalan appealed for fairness and understanding, in the

90
hope that HSBC TRUSTEE would act fairly and justly on her maintain any office in Makati or anywhere in the Philippines; 3)
claim but these demands were met by a stonewall of it has not appointed any agent in Philippines; and 4) HSBANK
silence. On June 9, 2000, Catalan through counsel sent a last Makati has no authority to receive any summons or court
and final demand to HSBC TRUSTEE to remit the amount processes for HSBC TRUSTEE.[12]
covered by the checks but despite receipt of said letter, no
payment was made. Clearly, the act of the HSBANK and HSBC On May 15, 2002, the RTC issued an Order denying the
TRUSTEE in refusing to honor and pay the checks validly two motions to dismiss.[13] The RTC held that it has jurisdiction
issued by Thomson violates the abuse of rights principle under over the subject matter of the action because it is an action for
Article 19 of the Civil Code which requires that everyone must damages under Article 19 of the Civil Code for the acts of
act with justice, give everyone his due and observe honesty unjustly refusing to honor the checks issued by Thomson and
and good faith. The refusal of HSBANK and HSBC TRUSTEE to not a money claim against the estate of Thomson; that Catalan
pay the checks without any valid reason is intended solely to did not engage in forum-shopping because the elements
prejudice and injure Catalan. When they declined payment of thereof are not attendant in the case; that the question of
the checks despite instructions of the drawer, Thomson, to cause of action should be threshed out or ventilated during the
honor them, coupled with the fact that the checks were duly proceedings in the main action and after the plaintiff and
funded, they acted in bad faith, thus causing damage to defendants have adduced evidence in their favor; that it
Catalan. A person may not exercise his right unjustly or in a acquired jurisdiction over the person of defendants because
manner that is not in keeping with honesty or good faith, the question of whether a foreign corporation is doing business
otherwise he opens himself to liability for abuse of right.[8] or not in the Philippines cannot be a subject of a Motion to
Dismiss but should be ventilated in the trial on the merits; and
Catalan prays that HSBANK and HSBC TRUSTEE be defendants voluntarily submitted to the jurisdiction of the RTC
ordered to pay P20,864,000.00 representing the value of the setting up in their Motions to Dismiss other grounds aside from
five checks at the rate of P6.52 per HK$1 as of January 29, lack of jurisdiction.
2001 for the acts of HSBANK and HSBC TRUSTEE in refusing to
pay the amount justly due her, in addition to moral and HSBANK and HSBC TRUSTEE filed separate motions for
exemplary damages, attorneys fees and litigation expenses.[9] reconsideration[14] but both proved futile as they were denied
by the RTC in an Order dated December 20, 2002.[15]
On October 2, 2001, HSBANK filed a Motion to Dismiss
Amended Complaint on the grounds that: (a) the RTC has no On February 21, 2003, Catalan moved to declare HSBANK
jurisdiction over the subject matter of the complaint since the and HSBC TRUSTEE in default for failure to file their answer to
action is a money claim for a debt contracted by Thomson the amended complaint.
before his death which should have been filed in the estate or On March 5, 2003, HSBANK and HSBC TRUSTEE filed
intestate proceedings of Thomson; (b) Catalan engages in separate petitions for certiorari and/or prohibition with the CA,
forum shopping by filing the suit and at the same time filing a docketed as CA-G.R. SP Nos. 75756[16] and
claim in the probate proceeding filed with another branch of 75757,[17] respectively.
the RTC; (c) the amended complaint states no cause of action
against HSBANK since it has no obligation to pay the checks as Subsequently, HSBANK and HSBC TRUSTEE filed before
it has not accepted the checks and Catalan did not re-deposit the RTC separate Answers ad cautelam, both dated March 18,
the checks or make a formal protest; (d) the RTC has not 2003, as a precaution against being declared in default and
acquired jurisdiction over the person of HSBANK for improper without prejudice to the separate petitions for certiorari and/or
service of summons; and, (e) it did not submit to the prohibition then pending with the CA.[18]
jurisdiction of the RTC by filing a motion for extension of time
to file a motion to dismiss.[10] Meanwhile, the two petitions for certiorari before the CA
were consolidated and after responsive pleadings were filed,
Meanwhile, on October 17, 2001, summons for HSBC the cases were deemed submitted for decision.
TRUSTEE was tendered to the In House Counsel of HSBANK
(Makati Branch) at the Enterprise Center, Tower 1, Ayala In a consolidated Decision dated August 14, 2003, the CA
Avenue corner Paseo de Roxas, Makati. Without submitting dismissed the two petitions for certiorari.[19] The CA held that
itself to the jurisdiction of the RTC, HSBC TRUSTEE filed a the filing of petitioners answers before the RTC rendered moot
Special Appearance for Motion to Dismiss Amended Complaint, and academic the issue of the RTCs lack of jurisdiction over
dated October 29, 2001, questioning the jurisdiction of the the person of the petitioners; that the RTC has jurisdiction
RTC over it.[11] HSBC TRUSTEE alleges that tender of summons over the subject matter since it is one for damages under
through HSBANK Makati did not confer upon the RTC Article 19 of the Civil Code for the alleged unjust acts of
jurisdiction over it because: (a) it is a corporation separate and petitioners and not a money claim against the estate of
distinct from HSBANK; (b) it does not hold office at the Thomson; and, that the amended complaint states a cause of
HSBANK Makati or in any other place in the Philippines; (c) it action under Article 19 of the Civil Code which could merit a
has not authorized HSBANK Makati to receive summons for it; favorable judgment if found to be true. The CA noted that
and, (d) it has no resident agent upon whom summons may be Catalan may have prayed for payment of the value of the
served because it does not transact business in the Philippines. checks but ratiocinated that she merely used the value as basis
for the computation of the damages.
Subsequently, HSBC TRUSTEE filed a Submission, dated
November 15, 2001, attaching the Affidavit executed in Hence, the present petitions.
Hongkong by Phoenix Lam, Senior Vice-President of HSBC In G.R. No. 159590, HSBANK submits the following
TRUSTEE, attesting to the fact that: 1) HSBC TRUSTEE has not assigned errors:
done nor is it doing business in the Philippines; 2) it does not
91
I. HSBANK claims that the money claim should be dismissed
on the ground of forum-shopping since Catalan also filed a
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN petition for probate of the alleged last will of Thomson before
HOLDING THAT THE COURT A QUO, ACTING AS AN (SIC) RTC, Branch 48, Bacolod City, docketed as Spec. Proc No. 00-
REGULAR COURT, HAS JURISDICTION OVER THE AMENDED 892. In addition, HSBANK imputes error upon the CA in holding
COMPLAINT SEEKING TO ORDER HSBC TRUSTEE, THE that by filing an answer to the amended complaint, petitioners
EXECUTOR OF THE DECEASED FREDERICK ARTHUR are estopped from questioning the jurisdiction of the RTC.
THOMSON, TO PAY SUBJECT CHECKS ISSUED BY THE LATE HSBC TRUSTEE maintains that the RTC did not acquire
FREDERICK ARTHUR THOMSON, ADMITTEDLY IN PAYMENT jurisdiction over it for improper service of summons.
OF HIS INDEBTEDNESS TO CATALAN.
In her Comment, Catalan insists that her complaint is one
II. for damages under Article 19 of the Civil Code for the wanton
refusal to honor and pay the value of five checks issued by the
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN Thomson amounting to HK$3,200,000.00. She argues that the
HOLDING THAT THE AMENDED COMPLAINT DOES NOT SEEK issue of jurisdiction has been rendered moot by petitioners
TO ORDER HSBANK AND HSBC INTERNATIONAL TRUSTEE participation in the proceedings before the RTC.
LIMITED TO PAY THE OBLIGATION OF THE (SIC) FREDERICK
ARTHUR THOMSON AS EVIDENCED BY THE CHECKS, BUT Succinctly, the issues boil down to the following:
PRAYS FOR DAMAGES EQUIVALENT OR COMPUTED ON THE 1) Does the complaint state a cause of action?
BASIS OF THE VALUE OF THE CHECKS BECAUSE THE
DEFENDANTS FAILED TO COMPLY WITH THE MANDATES OF 2) Did Catalan engage in forum-shopping by filing the
ARTICLE 19 OF THE NEW CIVIL CODE. complaint for damages when she also filed a petition for
probate of the alleged last will of Thomson with another
III.
branch of the RTC? and,

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN 3) Did the RTC acquire jurisdiction over HSBANK and
HOLDING THAT ALLEGATIONS IN THE AMENDED COMPLAINT HSBC TRUSTEE? Corollary thereto, did the filing of the answer
MAKE OUT A CAUSE OF ACTION WHICH COULD MERIT A before the RTC render the issue of lack of jurisdiction moot
FAVORABLE JUDGMENT IF FOUND TO BE TRUE, OR IN NOT and academic?
HOLDING THAT THE AMENDED COMPLAINT STATES NO
We shall resolve the issue in seriatim.
CAUSE OF ACTION AGAINST HSBANK, AS DRAWEE BANK.
Does the complaint state a cause of action against
IV.
HSBANK and HSBC TRUSTEE?

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN The elementary test for failure to state a cause of action
DISREGARDING THE FACT THAT CATALAN ENGAGED IN is whether the complaint alleges facts which if true would
FORUM SHOPPING BY FILING THE AMENDED COMPLAINT justify the relief demanded. Stated otherwise, may the court
WHILE HER PETITION FOR THE PROBATE OF THE SUPPOSED render a valid judgment upon the facts alleged therein? [23] The
WILL OF THE DECEASED FREDERICK ARTHUR THOMSON IS inquiry is into the sufficiency, not the veracity of the material
PENDING WITH ANOTHER BRANCH OF THE COURT A QUO. allegations.[24] If the allegations in the complaint furnish
sufficient basis on which it can be maintained, it should not be
V. dismissed regardless of the defense that may be presented by
the defendants.[25]
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
Catalan anchors her complaint for damages on Article 19
HOLDING THAT HSBANK HAD SUBMITTED TO THE
of the Civil Code. It speaks of the fundamental principle of law
JURISDICTION OF THE COURT A QUO BY SUBMITTING AN
and human conduct that a person "must, in the exercise of his
ANSWER TO THE AMENDED COMPLAINT.[20]
rights and in the performance of his duties, act with justice,
In G.R. No. 159591, HSBC TRUSTEE also assigns the give every one his due, and observe honesty and good
foregoing first, second and fifth errors as its own. [21] In faith." It sets the standards which may be observed not only in
addition, it claims that: the exercise of ones rights but also in the performance of ones
duties. When a right is exercised in a manner which does not
conform with the norms enshrined in Article 19 and results in
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
damage to another, a legal wrong is thereby committed for
NOT ORDERING THE DISMISSAL OF THE AMENDED
which the wrongdoer must be held responsible.[26] But a right,
COMPLAINT AGAINST HSBC TRUSTEE DESPITE THE FACT IT
though by itself legal because recognized or granted by law as
HAS NOT BEEN DULY SERVED WITH SUMMONS. [22]
such, may nevertheless become the source of some illegality. A
HSBANK and HSBC TRUSTEE contend in common that person should be protected only when he acts in the legitimate
Catalan has no cause of action for abuse of rights under Article exercise of his right, that is, when he acts with prudence and
19 of the Civil Code; that her complaint, under the guise of a in good faith; but not when he acts with negligence or
claim for damages, is actually a money claim against the estate abuse.[27] There is an abuse of right when it is exercised for
of Thomson arising from checks issued by the latter in her the only purpose of prejudicing or injuring another. The
favor in payment of indebtedness. exercise of a right must be in accordance with the purpose for

92
which it was established, and must not be excessive or unduly Thus, there is forum-shopping when there exist: a)
harsh; there must be no intention to injure another.[28] identity of parties, or at least such parties as represent the
same interests in both actions, b) identity of rights asserted
Thus, in order to be liable under the abuse of rights and relief prayed for, the relief being founded on the same
principle, three elements must concur, to wit: (a) that there is facts, and c) the identity of the two preceding particulars is
a legal right or duty; (b) which is exercised in bad faith; and such that any judgment rendered in the pending case,
(c) for the sole intent of prejudicing or injuring another.[29] regardless of which party is successful would amount to res
In this instance, after carefully examining the amended judicata in the other.[32]
complaint, we are convinced that the allegations therein are in Applying the foregoing requisites to the case before us in
the nature of an action based on tort under Article 19 of the relation to Spec. Proc No. 00-892, the probate proceeding
Civil Code. It is evident that Catalan is suing HSBANK and brought by Catalan before RTC, Branch 48, Bacolod City, it is
HSBC TRUSTEE for unjustified and willful refusal to pay the obvious that forum-shopping does not exist.
value of the checks.
There is no identity of parties. HSBANK is not a party in
HSBANK is being sued for unwarranted failure to pay the the probate proceeding. HSBC TRUSTEE is only a party in the
checks notwithstanding the repeated assurance of the drawer probate proceeding because it is the executor and trustee
Thomson as to the authenticity of the checks and frequent named in the Hongkong will of Thomson. HSBC TRUSTEE is
directives to pay the value thereof to Catalan. Her allegations representing the interest of the estate of Thomson and not its
in the complaint that the gross inaction of HSBANK on own corporate interest.
Thomsons instructions, as well as its evident failure to inform
Catalan of the reason for its continued inaction and non- With respect to the second and third requisites, a scrutiny
payment of the checks, smack of insouciance on its part, are of the entirety of the allegations of the amended complaint in
sufficient statements of clear abuse of right for which it may this case reveals that the rights asserted and reliefs prayed for
be held liable to Catalan for any damages she incurred therein are different from those pleaded in the probate
resulting therefrom. HSBANKs actions, or lack thereof, proceeding, such that a judgment in one case would not bar
prevented Catalan from seeking further redress with Thomson the prosecution of the other case.Verily, there can be no
for the recovery of her claim while the latter was alive. forum-shopping where in one proceeding a party raises a claim
for damages based on tort and, in another proceeding a party
HSBANK claims that Catalan has no cause of action seeks the allowance of an alleged last will based on ones claim
because under Section 189 of the Negotiable Instruments Law, as an heir. After all, the merits of the action for damages is not
a check of itself does not operate as an assignment of any part to be determined in the probate proceeding and vice
of the funds to the credit of the drawer with the bank, and the versa.Undeniably, the facts or evidence as would support and
bank is not liable to the holder unless and until it accepts or establish the two causes of action are not the
certifies it. However, HSBANK is not being sued on the value of same.[33] Consequently, HSBANKs reliance on the principle of
the check itself but for how it acted in relation to Catalans forum-shopping is clearly misplaced.
claim for payment despite the repeated directives of the
drawer Thomson to recognize the check the latter Did the RTC acquire jurisdiction over HSBANK and HSBC
issued. Catalan may have prayed that she be paid the value of TRUSTEE?
the checks but it is axiomatic that what determines the nature
of an action, as well as which court has jurisdiction over it, are The Rules of Court provides that a court generally
the allegations of the complaint, irrespective of whether or not acquires jurisdiction over a person through either a valid
the plaintiff is entitled to recover upon all or some of the service of summons in the manner required by law or the
claims asserted therein.[30] persons voluntary appearance in court.[34]

Anent HSBC TRUSTEE, it is being sued for the baseless In holding that it acquired jurisdiction over HSBANK and
rejection of Catalans claim. When Catalan parted with the HSBC TRUSTEE, the RTC held that both voluntarily submitted
checks as a requirement for the processing of her claim, even to the jurisdiction of the court by setting up in their Motions to
going to the extent of traveling to Hongkong to deliver Dismiss other grounds aside from lack of jurisdiction. On the
personally the checks, HSBC TRUSTEE summarily disapproved other hand, the CA ruled that HSBANK and HSBC TRUSTEE are
her claim with nary a reason. HSBC TRUSTEE gave no heed to estopped from challenging the jurisdiction of the RTC because
Catalans incessant appeals for an explanation. Her pleas fell on they filed their respective answers before the RTC.
deaf and uncaring corporate ears. Clearly, HSBC TRUSTEEs We find that both lower courts overlooked Section 20
acts are anathema to the prescription for human conduct of Rule 14 of the 1997 Rules of Civil Procedure which provides
enshrined in Article 19 of the Civil Code. that the inclusion in a motion to dismiss of other grounds aside
Did Catalan engage in forum-shopping? from lack of jurisdiction over the person of the defendant shall
not be deemed a voluntary appearance. Nonetheless, such
It has been held that forum-shopping exists where a omission does not aid HSBANKs case.
litigant sues the same party against whom another action or
actions for the alleged violation of the same right and the It must be noted that HSBANK initially filed a Motion for
enforcement of the same relief is/are still pending, the defense Extension of Time to File Answer or Motion to
of litis pendentia in one case is a bar to the others; and, a final Dismiss.[35] HSBANK already invoked the RTCs jurisdiction over
judgment in one would constitute res judicata and thus would it by praying that its motion for extension of time to file
cause the dismissal of the rest.[31] answer or a motion to dismiss be granted. The Court has held
that the filing of motions seeking affirmative relief, such as, to
93
admit answer, for additional time to file answer, for business undertakings in the country. Absent from the
reconsideration of a default judgment, and to lift order of amended complaint is an allegation that HSBC TRUSTEE had
default with motion for reconsideration, are considered performed any act in the country that would place it within the
voluntary submission to the jurisdiction of the sphere of the courts jurisdiction.
court.[36] Consequently, HSBANKs expressed reservation in its
Answer ad cautelam that it filed the same as a mere We have held that a general allegation, standing alone,
precaution against being declared in default, and without that a party is doing business in the Philippines does not make
prejudice to the Petition for Certiorari and/or Prohibition xxx it so; a conclusion of fact or law cannot be derived from the
now pending before the Court of Appeals[37] to assail the unsubstantiated assertions of parties notwithstanding the
jurisdiction of the RTC over it is of no moment. Having earlier demands of convenience or dispatch in legal actions,
invoked the jurisdiction of the RTC to secure affirmative relief otherwise, the Court would be guilty of sorcery; extracting
in its motion for additional time to file answer or motion to substance out of nothingness.[41]
dismiss, HSBANK, effectively submitted voluntarily to the Besides, there is no allegation in the amended complaint
jurisdiction of the RTC and is thereby estopped from asserting that HSBANK is the domestic agent of HSBC TRUSTEE to
otherwise, even before this Court. warrant service of summons upon it. Thus, the summons
In contrast, the filing by HSBC TRUSTEE of a motion to tendered to the In House Counsel of HSBANK (Makati Branch)
dismiss cannot be considered a voluntary submission to the for HSBC TRUSTEE was clearly improper.
jurisdiction of the RTC. It was a conditional appearance, There being no proper service of summons, the RTC
entered precisely to question the regularity of the service of cannot take cognizance of the case against HSBC TRUSTEE for
summons. It is settled that a party who makes a special lack of jurisdiction over it. Any proceeding undertaken by the
appearance in court challenging the jurisdiction of said RTC is therefore null and void.[42] Accordingly, the complaint
court, e.g., invalidity of the service of summons, cannot be against HSBC TRUSTEE should have been dismissed for lack of
considered to have submitted himself to the jurisdiction of the jurisdiction over it.
court.[38] HSBC TRUSTEE has been consistent in all its
pleadings in assailing the service of summons and the WHEREFORE, the petition in G.R. No. 159590
jurisdiction of the RTC over it. Thus, HSBC TRUSTEE cannot be is DENIED. The Decision of the Court of Appeals, dated August
declared in estoppel when it filed an Answer ad 14, 2003, in CA-G.R. SP No. 75757 dismissing the petition for
cautelam before the RTC while its petition for certiorari was certiorari of the Hongkong and Shanghai Banking Corporation
pending before the CA. Such answer did not render the Limited is AFFIRMED.
petition for certiorari before the CA moot and academic. The
Answer of HSBC TRUSTEE was only filed to prevent any The petition in G.R. No. 159591 is GRANTED. The
declaration that it had by its inaction waived the right to file Decision of the Court of Appeals, dated August 14, 2003, in
responsive pleadings. CA-G.R. SP No. 75756 dismissing the petition for certiorari of
the HSBC International Trustee Limited is REVERSED and SET
Admittedly, HSBC TRUSTEE is a foreign corporation, ASIDE. The Regional Trial Court, Branch 44, Bacolod City is
organized and existing under the laws of the British Virgin declared without jurisdiction to take cognizance of Civil Case
Islands. For proper service of summons on foreign No. 01-11372 against the HSBC International Trustee Limited,
corporations, Section 12 of Rule 14 of the Revised Rules of and all its orders and issuances with respect to the latter are
Court provides: hereby ANNULLED and SET ASIDE. The said Regional Trial
Court is hereby ORDERED to DESIST from maintaining further
SEC. 12. Service upon foreign private juridical entity. When the proceedings against the HSBC International Trustee Limited in
defendant is a foreign private juridical entity which has the case aforestated.
transacted business in the Philippines, service may be made on SO ORDERED.
its resident agent designated in accordance with law for that
purpose, or if there be no such agent, on the government Puno, (Chairman), Callejo, Sr., and Tinga, JJ., concur.
official designated by law to that effect, or on any of its
Chico-Nazario, J., on leave.
officers or agents within the Philippines.

In French Oil Mill Machinery Co., Inc. vs. Court of


Appeals,[39] we had occasion to rule that it is not enough to
merely allege in the complaint that a defendant foreign
corporation is doing business. For purposes of the rule on
summons, the fact of doing business must first be "established
by appropriate allegations in the complaint" and the court in
determining such fact need not go beyond the allegations
therein.[40]

The allegations in the amended complaint subject of the


present cases did not sufficiently show the fact of HSBC
TRUSTEEs doing business in the Philippines. It does not appear
at all that HSBC TRUSTEE had performed any act which would
give the general public the impression that it had been
engaging, or intends to engage in its ordinary and usual

94
G.R. No. 182153 April 7, 2014 policy as Taiwan is not a signatory to the New York
Convention.9
TUNG HO STEEL ENTERPRISES
CORPORATION, Petitioner, The RTC denied the motion in an order dated November 21,
vs. 2005 and ruled that Ting Guan had voluntarily submitted to
TING GUAN TRADING CORPORATION, Respondent. the court’s jurisdiction when it raised other arguments apart
from lack of jurisdiction in its motion to dismiss.
DECISION
The Proceedings before the CA
BRION, J.:
Ting Guan responded to the denials by filing a petition for
We resolve the petition for review on, certiorari 1
filed by certiorari before the CA with an application for the issuance of
petitioner Tung Ho Steel Enterprises Corp. (Tung Ho) to a temporary restraining order and a writ of preliminary
challenge the July 5, 2006 decision2 and the March 12, 2008 injunction.10
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No.
92828. In its Memorandum, Tung Ho argued that a Rule 65 petition is
not the proper remedy to assail the denial of a motion to
The Factual Antecedents dismiss. It pointed out that the proper recourse for Ting Guan
was to file an answer and to subsequently appeal the case. It
also posited that beyond the reglementary period for filing an
Tung Ho is a foreign corporation organized under the laws of
answer, Ting Guan was barred from raising other grounds for
Taiwan, Republic of China.4 On the other hand, respondent
the dismissal of the case. Tung Ho also claimed that the RTC
Ting Guan Trading Corp. (Ting Guan) is a domestic corporation
acquired jurisdiction over the person of Ting Guan since the
organized under the laws of the Philippines.5
return of service of summons expressly stated that Tejero was
a corporate secretary.11
On January 9, 2002, Ting Guan obligated itself under a
contract of sale to deliver heavy metal scrap iron and steel to
In its decision dated July 5, 2006, the CA dismissed the
Tung Ho. Subsequently, Tung Ho filed a request for arbitration
complaint for lack of jurisdiction over the person of Ting Guan.
before the ICC International Court of Arbitration (ICC) in
The CA held that Tung Ho failed to establish that Tejero was
Singapore after Ting Guan failed to deliver the full quantity of
Ting Guan’s corporate secretary. The CA also ruled that a
the promised heavy metal scrap iron and steel.6
petition for certiorari is the proper remedy to assail the denial
of a motion to dismiss if the ground raised in the motion is lack
The ICC ruled in favor of Tung Ho on June 18, 2004 and of jurisdiction. Furthermore, any of the grounds for the
ordered Ting Guan to pay Tung Ho the following: (1) actual dismissal of the case can be raised in a motion to dismiss
damages in the amount of US$ 659,646.15 with interest of 6% provided that the grounds were raised before the filing of an
per annum from December 4, 2002 until final payment; (2) answer. The CA likewise ruled that Tung Ho properly filed the
cost of arbitration in the amount of US $ 47,000.00; and (3) complaint before the RTC-Makati.12
legal costs and expenses in the amount of NT $ 761,448.00
and US $ 34,552.83.7
Subsequently, both parties moved to partially reconsider the
CA decision. Tung Ho reiterated that there was proper service
On October 24, 2004, Tung Ho filed an action against Ting of summons. On the other hand, Ting Guan sought to modify
Guan for the recognition and enforcement of the arbitral award the CA decision with respect to the proper venue of the case.
before the Regional Trial Court (RTC) of Makati, Branch 145. The CA denied Ting Guan’s motion for partial reconsideration
Ting Guan moved to dismiss the case based on Tung Ho’s lack in an order dated December 5, 2006.13
of capacity to sue and for prematurity. Ting Guan subsequently
filed a supplemental motion to dismiss based on improper
Ting Guan immediately proceeded to file a petition for review
venue. Ting Guan argued that the complaint should have been
on certiorari before this Court to question the CA’s rulings as
filed in Cebu where its principal place of business was located.8
discussed below. In the interim (on February 11, 2008), Tung
Ho (whose motion for reconsideration of the CA decision was
The Proceedings before the RTC still pending with that court) filed a "Motion to Supplement and
Resolve Motion for Reconsideration" before the CA. In this
The RTC denied Ting Guan’s motion to dismiss in an order motion, Tung Ho prayed for the issuance of an alias summons
dated May 11, 2005. Ting Guan moved to reconsider the order if the service of summons had indeed been defective, but its
and raised the RTC’s alleged lack of jurisdiction over its person motion proved unsuccessful.14
as additional ground for the dismissal of the complaint. Ting
Guan insisted that Ms. Fe Tejero, on whom personal service It was not until March 12, 2008, after the developments
was served, was not its corporate secretary and was not a described below, that the CA finally denied Tung Ho’s partial
person allowed under Section 11, Rule 14 of the Rules of Court motion for reconsideration for lack of merit.
to receive a summons. It also asserted that Tung Ho cannot
enforce the award in the Philippines without violating public
Ting Guan’s Petition before this Court

95
(G.R. No. 176110) and the March 12, 2008 resolution of the CA. This is the
present G.R. No. 182153 now before us.
Ting Guan’s petition before this Court was docketed as G.R.
No. 176110. Ting Guan argued that the dismissal of the case Tung Ho reiterates that the RTC acquired jurisdiction over the
should be based on the following additional grounds: first, the person of Ting Guan. It also claims that the return of service of
complaint was prematurely filed; second, the foreign arbitral summons is a prima facie evidence of the recited facts i.e.,
award is null and void; third, the venue was improperly laid in that Tejero is a corporate secretary as stated therein and that
Makati; and lastly, the enforcement of the arbitral award was the sheriff is presumed to have regularly performed his official
against public policy.15 duties in serving the summons. In the alternative, Tung Ho
argues that Ting Guan’s successive motions before the RTC are
On April 24, 2007, Tung Ho filed its Comment dated April 24, equivalent to voluntary appearance. Tung Ho also prays for the
2007 in G.R. No. 176110, touching on the issue of jurisdiction, issuance of alias summons to cure the alleged defective service
albeit lightly. Tung Ho complained in its Comment that Ting of summons.16
Guan engaged in dilatory tactics when Ting Guan belatedly
raised the issue of jurisdiction in the motion for reconsideration Respondent Ting Guan’s Position
before the RTC. However, Tung Ho did not affirmatively seek
the reversal of the July 5, 2006 decision. Instead, it merely (G.R. No. 182153)
stated that Ting Guan’s petition "cannot be dismissed on the
ground that the summons was wrongfully issued as the
In its Comment, Ting Guan submits that the appeal is already
petitioner can always move for the issuance of an alias
barred by res judicata. It also stresses that the Court has
summons to be served". Furthermore, Tung Ho only prayed
already affirmed with finality the dismissal of the
that Ting Guan’s petition be denied in G.R. No. 176110 and for
complaint.17 Ting Guan also argues that Tung Ho raises a
other just and equitable reliefs. In other words, Tung Ho failed
factual issue that is beyond the scope of a petition for review
to effectively argue its case on the merits before the Court in
on certiorari under Rule 45 of the Rules of Court.18
G.R. No. 176110.

The Issues
On June 18, 2007, we issued our Resolution denying Ting
Guan’s petition for lack of merit. On November 12, 2007, we
also denied Ting Guan’s motion for reconsideration. On This case presents to us the following issues:
January 8, 2008, the Court issued an entry of judgment in Ting
Guan’s petition, G.R. No. 176110. 1) Whether the present petition is barred by res
judicata; and
After the entry of judgment, we referred the matter back to
the RTC for further proceedings. On January 16, 2008, the 2) Whether the trial court acquired jurisdiction over
RTC declared the case closed and terminated. Its order stated: the person of Ting Guan, specifically:

Upon examination of the entire records of this case, an answer a) Whether Tejero was the proper person to
with caution was actually filed by the respondent to which a receive the summons; and
reply was submitted by the petitioner. Since the answer was
with the qualification that respondent is not waiving its claim
b) Whether Ting Guan made a voluntary
of lack of jurisdiction over its person on the ground of
appearance before the trial court.
improper service of summons upon it and that its petition to
this effect filed before the Court of Appeals was acted
favorably and this case was dismissed on the aforementioned The Court’s Ruling
ground and it appearing that the Decision as well as the Order
denying the motion for reconsideration of the petitioner now We find the petition meritorious.
final and executory, the Order of November 9, 2007 referring
this petition to the Court Annexed Mediation for possible I. The Court is not precluded from ruling on the jurisdictional
amicable settlement is recalled it being moot and academic. issue raised in the petition
This case is now considered closed and terminated.
A. The petition is not barred by res judicata
On February 6, 2008, Tung Ho moved to reconsider the RTC
order. Nothing in the records shows whether the RTC granted
or denied this motion for reconsideration. Res judicata refers to the rule that a final judgment or decree
on the merits by a court of competent jurisdiction is conclusive
on the rights of the parties or their privies in all later suits on
Tung Ho’s Petition before this Court all points and matters determined in the former suit.19 For res
judicata to apply, the final judgment must be on the merits of
(G.R. No. 182153) the case which means that the court has unequivocally
determined the parties’ rights and obligations with respect to
On May 7, 2008, Tung Ho seasonably filed a petition for review the causes of action and the subject matter of the case.20
on certiorari to seek the reversal of the July 5, 2006 decision
96
Contrary to Ting Guan’s position, our ruling in G.R. No. 176110 not a trier of facts; we cannot re-examine, review or re-
does not operate as res judicata on Tung Ho’s appeal; G.R. No. evaluate the evidence and the factual review made by the
176110 did not conclusively rule on all issues raised by the lower courts. In the absence of compelling reasons, we will not
parties in this case so that this Court would now be barred deviate from the rule that factual findings of the lower courts
from taking cognizance of Tung Ho’s petition. Our disposition are final and binding on this Court.22
in G.R. No. 176110 only dwelt on technical or collateral aspects
of the case, and not on its merits. Specifically, we did not rule B. Ting Guan voluntarily appeared before the trial court
on whether Tung Ho may enforce the foreign arbitral award
against Ting Guan in that case.
However, we cannot agree with the legal conclusion that the
appellate court reached, given the established facts.23To our
B. The appellate court cannot be ousted of jurisdiction until it mind, Ting Guan voluntarily appeared before the trial court in
finally disposes of the case view of the procedural recourse that it took before that court.
Its voluntary appearance is equivalent to service of
The court’s jurisdiction, once attached, cannot be ousted until summons.24
it finally disposes of the case. When a court has already
obtained and is exercising jurisdiction over a controversy, its As a basic principle, courts look with disfavor on piecemeal
jurisdiction to proceed to the final determination of the case is arguments in motions filed by the parties. Under the omnibus
retained.21 A judge is competent to act on the case while its motion rule, a motion attacking a pleading, order, judgment,
incidents remain pending for his disposition. or proceeding shall include all objections then available.25 The
purpose of this rule is to obviate multiplicity of motions and to
The CA was not ousted of its jurisdiction with the promulgation discourage dilatory motions and pleadings. Party litigants
of G.R. No. 176110. The July 5, 2006 decision has not yet should not be allowed to reiterate identical motions,
become final and executory for the reason that there remained speculating on the possible change of opinion of the courts or
a pending incident before the CA – the resolution of Tung Ho’s of the judges thereof.
motion for reconsideration – when this Court promulgated G.R.
No. 176110. In this latter case, on the other hand, we only In this respect, Section 1, Rule 16 of the Rules of Court
resolved procedural issues that are divorced from the present requires the defendant to file a motion to dismiss within the
jurisdictional question before us. Thus, what became time for, but before filing the answer to the complaint or
immutable in G.R. No. 176110 was the ruling that Tung Ho’s pleading asserting a claim. Section 1, Rule 11 of the Rules of
complaint is not dismissible on grounds of prematurity, nullity Court, on the other hand, commands the defendant to file his
of the foreign arbitral award, improper venue, and the foreign answer within fifteen (15) days after service of summons,
arbitral award’s repugnance to local public policy. This leads us unless a different period is fixed by the trial court. Once the
to the conclusion that in the absence of any ruling on the trial court denies the motion, the defendant should file his
merits on the issue of jurisdiction, res judicata on this point answer within the balance of fifteen (15) days to which he was
could not have set in. entitled at the time of serving his motion, but the remaining
period cannot be less than five (5) days computed from his
C. Tung Ho’s timely filing of a motion for reconsideration and receipt of the notice of the denial.26
of a petition for review on certiorari prevented the July 5, 2006
decision from attaining finality Instead of filing an answer, the defendant may opt to file a
motion for reconsideration. Only after the trial court shall have
Furthermore, under Section 2, Rule 45 of the Rules of Court, denied the motion for reconsideration does the defendant
Tung Ho may file a petition for review on certiorari before the become bound to file his answer.27 If the defendant fails to file
Court within (15) days from the denial of its motion for an answer within the reglementary period, the plaintiff may file
reconsideration filed in due time after notice of the judgment. a motion to declare the defendant in default. This motion shall
Tung Ho’s timely filing of a motion for reconsideration before be with notice to the defendant and shall be supported by
the CA and of a Rule 45 petition before this Court prevented proof of the failure.28
the July 5, 2006 CA decision from attaining finality. For this
Court to deny Tung Ho’s petition would result in an anomalous The trial court’s denial of the motion to dismiss is not a license
situation where a party litigant is penalized and deprived of his for the defendant to file a Rule 65 petition before the CA. An
fair opportunity to appeal the case by faithfully complying with order denying a motion to dismiss cannot be the subject of a
the Rules of Court. petition for certiorari as the defendant still has an adequate
remedy before the trial court – i.e., to file an answer and to
II. The trial court acquired jurisdiction over the person of Ting subsequently appeal the case if he loses the case.29 As
Guan exceptions, the defendant may avail of a petition for certiorari
if the ground raised in the motion to dismiss is lack of
A. Tejero was not the proper person to receive the summons jurisdiction over the person of the defendant30 or over the
subject matter.31
Nonetheless, we see no reason to disturb the lower courts’
finding that Tejero was not a corporate secretary and, We cannot allow and simply passively look at Ting Guan’s
therefore, was not the proper person to receive the summons blatant disregard of the rules of procedure in the present case.
under Section 11, Rule 14 of the Rules of Court. This Court is The Rules of Court only allows the filing of a motion to dismiss

97
once.32 Ting Guan’s filing of successive motions to dismiss, Court, as provided in Section 4, Rule 56 of the Rules of
under the guise of "supplemental motion to dismiss" or Court.39
"motion for reconsideration", is not only improper but also
dilatory.33 Ting Guan’s belated reliance on the improper service In the present case, Tung Ho timely filed its motion for
of summons was a mere afterthought, if not a bad faith ploy to reconsideration with the CA and seasonably appealed the CA’s
avoid the foreign arbitral award’s enforcement which is still at rulings with the Court through the present petition (G.R. No.
its preliminary stage after the lapse of almost a decade since 182153).
the filing of the complaint.
To now recognize the finality of the Resolution of Ting Guan
Furthermore, Ting Guan’s failure to raise the alleged lack of petition (G.R. No. 176110) based on its entry of judgment and
jurisdiction over its person in the first motion to dismiss is fatal to allow it to foreclose the present meritorious petition of Tung
to its cause. Ting Guan voluntarily appeared before the RTC Ho, would of course cause unfair and unjustified injury to Tung
when it filed a motion to dismiss and a "supplemental motion Ho. First, as previously mentioned, the Ting Guan petition did
to dismiss" without raising the RTC’s lack of jurisdiction over its not question or assail the full merits of the CA decision. It was
person. In Anunciacion v. Bocanegra,34 we categorically stated Tung Ho, the party aggrieved by the CA decision, who
that the defendant should raise the affirmative defense of lack substantially questioned the merits of the CA decision in its
of jurisdiction over his person in the very first motion to petition; this petition showed that the CA indeed committed
dismiss. Failure to raise the issue of improper service of error and Tung Ho’s complaint before the RTC should properly
summons in the first motion to dismiss is a waiver of this proceed. Second, the present case is for the enforcement of an
defense and cannot be belatedly raised in succeeding motions arbitral award involving millions of pesos. Tung Ho already
and pleadings. won in the foreign arbitration and the present case is simply
for the enforcement of this arbitral award in our jurisdiction.
Even assuming that Ting Guan did not voluntarily appear Third, and most importantly, Tung Ho properly and timely
before the RTC, the CA should have ordered the RTC to issue availed of the remedies available to it under the Rules of Court,
an alias summons instead. In Lingner & Fisher GMBH vs. which provide that filing and pendency of a motion for
Intermediate Appellate Court35, we enunciated the policy that reconsideration stays the execution of the CA judgment.
the courts should not dismiss a case simply because there was Therefore, at the time of the entry of judgment in G.R. No.
an improper service of summons. The lower courts should be 176110 in the Supreme Court on January 8, 2008, the CA
cautious in haphazardly dismissing complaints on this ground decision which the Court affirmed was effectively not yet be
alone considering that the trial court can cure this defect and final.
order the issuance of alias summons on the proper person in
the interest of substantial justice and to expedite the Significantly, the rule that a timely motion for reconsideration
proceedings. stays the execution of the assailed judgment is in accordance
with Rule 51, Section 10 (Rules governing the CA proceedings)
III. A Final Note which provides that "entry of judgments may only be had if
there is no appeal or motion for reconsideration timely filed.
As a final note, we are not unaware that the present case has The date when the judgment or final resolution becomes
been complicated by its unique development. The complication executory shall be deemed as the date of its entry."
arose when the CA, instead of resolving the parties’ separate Incidentally, this procedure also governs before Supreme Court
partial motions for reconsideration in one resolution, proceedings.40 Following these rules, therefore, the pendency
proceeded to first resolve and to deny Ting Guan’s partial of Tung Ho’s MR with the CA made the entry of the judgment
motion. Ting Guan, therefore, went to this Court via a petition of the Court in the Ting Guan petition premature and
for review on certiorari while Tung Ho’s partial motion for inefficacious for not being final and executory.
reconsideration was still unresolved.
Based on the above considerations, the Court would not be in
Expectedly, Ting Guan did not question the portions of the CA error if it applies its ruling in the case of Realty Sales
decision favorable to it when it filed its petition with this Court. Enterprises, Inc. and Macondray Farms, Inc. v. Intermediate
Instead, Ting Guan reiterated that the CA should have included Appellate Court, et al.41 where the Court, in a per curiam
additional grounds to justify the dismissal of Tung Ho’s resolution, ruled that an entry of judgment may be recalled or
complaint with the RTC. The Court denied Ting Guan’s petition, lifted motu proprio when it is clear that the decision assailed of
leading to the entry of judgment that improvidently followed. has not yet become final under the rules:
Later, the CA denied Tung Ho’s partial motion for
reconsideration, prompting Tung Ho’s own petition with this The March 6, 1985 resolution denying reconsideration of the
Court, which is the present G.R. No. 182153. January 30, 1985 resolution was, to repeat, not served on the
petitioners until March 20, 1985 - and therefore the Jan. 30,
Under the Rules of Court, entry of judgment may only be 1985 resolution could not be deemed final and executory until
made if no appeal or motion for reconsideration was timely one (1) full day (March 21) had elapsed, or on March 22, 1985
filed.36 In the proceedings before the CA, if a motion for (assuming inaction on petitioners' part.) The entry of judgment
reconsideration (including a partial motion for relative to the January 30, 1985 resolution, made on March 18,
reconsideration37) is timely filed by the proper party, execution 1985, was therefore premature and inefficacious. An entry of
of the CA’s judgment or final resolution shall be stayed.38 This judgment does not make the judgment so entered final and
rule is applicable even to proceedings before the Supreme execution when it is not so in truth. An entry of judgment
98
merely records the fact that a judgment, order or resolution
has become final and executory; but it is not the operative act
that make the judgment, order or resolution final and
executory. In the case at bar, the entry of judgment on March
18, 1985 did not make the January 30, 1985 resolution subject
of the entry, final and executory, As of the date of entry,
March 18, 1985, notice of the resolution denying
reconsideration of the January 30, 1985 resolution had not yet
been served on the petitioners or any of the parties, since
March 18, 1985 was also the date of the notice (and release)
of the March 6, 1985 resolution denying
reconsideration.1âwphi1

According to this ruling, the motu proprio recall or setting


aside of the entry of final judgment was proper and "entirely
consistent with the inherent power of every court inter alia to
amend and control its process and orders so as to make them
conformable to law and justice [Sec. 5(g), Rule 135, Rules of
Court,]. That the recall has in fact served to achieve a verdict
consistent with law and justice is clear from the judgment
subsequently rendered on the merits." This course of action is
effectively what the Court undertook today, adapted of course
to the circumstances of the present case.

In light of these premises, we hereby REVERSE and SET ASIDE


the July 5, 2006 decision and the March 12, 2008 resolution of
the Court of Appeals in CA-G.R. SP No. 92828. SP. Proc. No.
11.-5954 is hereby ordered reinstated. Let the records of this
case be remanded to the court of origin for further
proceedings. No costs.

SO ORDERED.

ARTURO D. BRION
Associate Justice

99
G.R. No. 200072, June 20, 2016 without the knowledge and consent of respondent and her
assaulting respondent with a 10-inch knife are those
PHILIP YU, Petitioner, v. VIVECA LIM YU, Respondent. contemplated in pars. 10 and 9 of the same code.

Notwithstanding the foregoing Court's findings, the


DECISION
same becomes moot with the declaration of nullity of
the marriage of the parties, on the ground of the
PERALTA, J.: psychological incapacity of petitioner, Viveca Yu,
pursuant to the Decision of Branch 10, RTC of Balayan,
Before the Court is a petition for review on certiorari under Batangas, which attained its finality on October 13,
Rule 45 of the Rules of Court seeking to reverse and set aside 2008. Since the marriage of the parties was declared a nullity
the Decision1 dated September 30, 2011 and Resolution2 dated there is, therefore, no legal basis to issue a decree of legal
January 5, 2012 of the Court of Appeals (CA) in CA-G.R. SP separation to the spouses whose marriage has already been
No. 111414 which granted the petition for the annulment of declared of no force and effect.
the Decision3 dated August 20, 2008 of the Regional Trial
Court (RTC), Fourth Judicial Region, Branch 10, Balayan, WHEREFORE, premises considered, this petition should be, as
Batangas. it is hereby DISMISSED, for lack of merit.

The factual antecedents are as follows. SO ORDERED.8chanroblesvirtuallawlibrary


Claiming to be completely unaware of the proceedings before
Petitioner Philip Yu and respondent Viveca Lim Yu were the RTC of Balayan, Batangas, nullifying her marriage with
married on November 18, 1984. They had four children and Philip on the ground of her psychological incapacity, Viveca
maintained their conjugal home at Room 1603 Horizon filed a Petition for Annulment of Judgment9 before the CA
Condominium, Meralco Avenue, Pasig, Metro Manila. In 1993, seeking to annul the Decision dated August 20, 2008 of said
however, Viveca left the conjugal home with their four children court. According to Viveca, jurisdiction over her person did not
and filed a Petition for Legal Separation against Philip before properly vest since she was not duly served with Summons.
the RTC of Pasig City, Branch 261, for repeated physical She alleged that she was deprived of her right to due process
violence, grossly abusive conduct against her and the children, when Philip fraudulently declared that her address upon which
sexual infidelity, and attempt on her life. She prayed for she may be duly summoned was still at their conjugal home,
permanent custody over the children, support, and the when he clearly knew that she had long left said address for
dissolution and distribution of their conjugal partnership valued the United States of America. Viveca likewise maintained that
at approximately P5,000,000.00.4chanrobleslaw had Philip complied with the legal requirements for an effective
service of summons by publication, she would have been able
Philip denied the accusations against him claiming that it was to rightly participate in the proceedings before the Batangas
Viveca who actually attacked him a few times. He narrated court.
that his marriage to Viveca was arranged according to the
Chinese tradition and that it was much later when he On September 30, 2011, the CA granted Viveca's petition
discovered Viveca's excessively jealous, cynical, and insecure ruling as follows:ChanRoblesVirtualawlibrary
behaviour. He countered that since she abandoned the family
home, taking their four children away, she was not entitled to The Petition for Declaration of Nullity of Marriage affecting the
support. She was, likewise, unqual