Filmerco Commercial v. Bank of the Philippine Islands
REITERATIONFacts
The Antecedents: Filmerco Commercial Co., Inc. (Filmerco) obtained two loans from the Bank of the Philippine Islands (BPI). Spouses Jaime and Ana Maria Miguel executed a deed of continuing suretyship, binding themselves jointly and solidarily with Filmerco for the repayment of these loans. When the loans became due and remained outstanding, BPI filed a complaint for the recovery of a sum of money against Filmerco and the Miguels before the Regional Trial Court (RTC) of Makati. Procedural History: The defendants failed to file an answer within the reglementary period, leading to their being declared in default upon motion by BPI. The RTC allowed BPI to present its evidence ex parte and subsequently rendered a decision in favor of BPI, ordering the defendants to pay the outstanding loan amount, interest, penalties, and attorney's fees. BPI then filed a motion for execution of judgment, which was granted, and a writ of execution was issued. Sheriff Villapana levied on and attached properties of Filmerco and the Miguels, scheduling them for sale. On September 25, 1984, the defendants filed a motion to set aside the decision, writ of execution, and notice of levy, arguing that the court lacked jurisdiction due to invalid summons. This motion was denied by the RTC on November 26, 1984. Despite a pending motion for reconsideration, the defendants filed a petition for certiorari and prohibition with the Intermediate Appellate Court (IAC), which also dismissed their petition, and a subsequent motion for reconsideration was denied. The Petition: The petitioners, Filmerco Commercial Co., Inc. and Spouses Jaime and Ana Maria Miguel, seek review of the IAC's decision. Their primary argument is that no valid summons was served upon them, and therefore, the RTC never acquired jurisdiction over their persons, rendering the decision null and void. They contend that the substituted service of summons on the spouses through Mrs. Angle Morger at an address that was not their residence was invalid. Furthermore, they argue that summons was never served on Filmerco, and the RTC's application of the doctrine of piercing the corporate veil to assert jurisdiction over the corporation was improper, as jurisdiction must be acquired before such a doctrine can be applied.
Issue(s)
Whether the lower court acquired jurisdiction over the persons of the petitioners (Spouses Miguel) due to allegedly invalid service of summons. Whether the substituted service of summons upon Spouses Miguel through Mrs. Angle Morger was valid. Whether the lower court acquired jurisdiction over the petitioner corporation, Filmerco, due to allegedly invalid service of summons. Whether the doctrine of piercing the veil of corporate fiction was correctly applied by the appellate court to establish jurisdiction over Filmerco.
Ruling
The petition is GRANTED. The lower court's decision in Civil Case No. 2807 is SET ASIDE. The case is remanded to the trial court for proper service of summons and trial.
Ratio Decidendi
On the validity of service of summons upon Spouses Miguel: The Court held that there was no valid substituted service of summons upon Spouses Jaime and Ana Maria Miguel. The sheriff's return indicated that the initial personal service at their given address failed because they had vacated the premises. Subsequently, alias summons were served through Mrs. Angle Morger at No. 18 Yuchengco Drive, Alabang, Muntinlupa. However, Mrs. Morger, in her affidavits, stated that she and her husband were the bona fide residents and lessees of the premises since September 1, 1983, and that the Miguels did not reside there. She explicitly informed the sheriff that she was not authorized to receive papers for the Miguels and refused to sign the summons. The Court emphasized that substituted service must strictly comply with statutory requirements, and the premises must be the defendant's dwelling house or residence at the time of service. Leaving a copy at a former dwelling house after removal is insufficient. Mrs. Morger's unrefuted testimony negated any relationship of confidence that would qualify her to receive summons on behalf of the Miguels, thus rendering the substituted service ineffective and the court without jurisdiction over their persons. On the validity of substituted service of summons upon Spouses Miguel through Mrs. Angle Morger: The Court emphasized that substituted service must strictly comply with statutory requirements, and the premises must be the defendant's dwelling house or residence at the time of service. Leaving a copy at a former dwelling house after removal is insufficient. Mrs. Morger's unrefuted testimony negated any relationship of confidence that would qualify her to receive summons on behalf of the Miguels, thus rendering the substituted service ineffective and the court without jurisdiction over their persons. On the validity of service of summons upon Filmerco: The Court found that no valid summons was served upon the petitioner corporation, Filmerco. The sheriff's return explicitly stated that the alias summons for Filmerco was "not and could not be served" and was returned unserved. Furthermore, the plaintiff's motion to declare defendants in default did not include Filmerco, yet the trial court declared all defendants, including Filmerco, in default. Since no valid summons was served on Filmerco, the trial court never acquired jurisdiction over the corporation, rendering the judgment against it null and void. On the application of the doctrine of piercing the veil of corporate fiction: The Court reiterated that the doctrine of piercing the veil of corporate fiction is applied when the corporate form is used to perpetrate fraud, evade obligations, or achieve illegal purposes. However, this doctrine is invoked to determine liability and not to establish jurisdiction. For a court to acquire jurisdiction over a domestic corporation, summons must be served upon its officers as enumerated in the Rules of Court. In this case, there was no semblance of any effort to serve summons upon an officer of Filmerco in their official capacity. Therefore, the appellate court erred in applying the doctrine to cure the lack of jurisdiction over Filmerco.
Main Doctrine
A court acquires jurisdiction over the person of the defendant through valid service of summons. Substituted service must strictly comply with statutory requirements, and any deviation renders the service ineffective. The doctrine of piercing the corporate veil applies to determine liability, not jurisdiction, and requires prior acquisition of jurisdiction over the corporation.