Rebollido v. Court of Appeals
REITERATIONFacts
1. The Antecedents: This case stems from a vehicular accident that occurred on March 1, 1984. The accident involved a Mazda Minibus, used as a schoolbus and owned by petitioner Crisostomo Rebollido, driven by petitioner Fernando Valencia, and a truck trailer owned by Pepsi Cola Bottling Company of the Philippines, Inc. (Pepsi Cola) and driven by Alberto Alva. The petitioners filed a civil case for damages against Pepsi Cola and its driver. 2. Procedural History: The petitioners filed their complaint for damages with the Regional Trial Court (RTC) of Makati. Summons was served on Pepsi Cola on September 21, 1984, and upon its failure to answer, the RTC declared Pepsi Cola in default and proceeded to hear the case ex-parte. On June 24, 1985, the RTC rendered a decision holding Pepsi Cola and its driver jointly and severally liable for damages. Subsequently, on August 5, 1985, the petitioners filed a motion for execution. Private respondent PEPSICO, Inc., which had occupied Pepsi Cola's business premises and assumed its liabilities, opposed the motion and moved to vacate the judgment, arguing lack of jurisdiction due to improper service of summons. The RTC denied this motion. PEPSICO, Inc. then filed a special civil action for certiorari and prohibition with the Court of Appeals (CA), which granted the petition, ruling that there was no valid service of summons and remanding the case. The CA denied a subsequent motion for reconsideration, leading to the present petition. 3. The Petition: The petitioners seek review on certiorari of the CA's decision, raising two main issues: (1) whether Pepsi Cola, a dissolved corporation, was the real party in interest to whom summons should have been served, and (2) whether the service of summons through Nanette Sison constituted valid service. The petitioners argue that Pepsi Cola was the real party in interest as it owned the truck and the cause of action accrued while it was still a corporation. They contend that service through Ms. Sison, the secretary of the legal department, constituted substantial compliance with the rules on service of summons, especially given PEPSICO's assumption of Pepsi Cola's liabilities and its presence at the same business address. The petitioners assert that the CA erred in finding no valid service of summons, which should bind PEPSICO, Inc. due to its undertaking to satisfy Pepsi Cola's liabilities.
Issue(s)
Whether Pepsi Cola, a dissolved corporation, was the real party in interest to whom summons should have been served. Whether the service of summons through Nanette Sison, allegedly the secretary of the legal department of Pepsi Cola, was valid and vested jurisdiction upon the lower court over the person of the respondent corporation. Whether the service of summons upon Pepsi Cola validly vested jurisdiction on the lower court over the person of the respondent corporation, considering its dissolution and the assumption of liabilities by PEPSICO, Inc.
Ruling
The petition is GRANTED. The decision of the Court of Appeals is REVERSED and SET ASIDE. The judgment of the lower court and its order denying the motion to vacate judgment are REINSTATED. The private respondent (PEPSICO, Inc.) is bound to satisfy the judgment by default which has become final and executory.
Ratio Decidendi
On the first issue, whether Pepsi Cola was the real party in interest: The Court held that Pepsi Cola was the real party in interest-defendant in the civil case. The accident occurred on March 1, 1984, one day before Pepsi Cola's legal dissolution, and Pepsi Cola was the registered owner of the truck involved. Under Articles 2176 and 2180 of the Civil Code, Pepsi Cola was solidarily liable with its driver for the damages. The definition of a real party in interest is one who stands to be benefited or injured by the judgment, or is entitled to the avails of the suit. In this case, Pepsi Cola had a correlative legal obligation arising from the vehicular accident. On the second issue, whether there was valid service of summons through Nanette Sison: The Court ruled that service of summons upon a dissolved corporation is allowed. Section 122 of the Corporation Code provides that a dissolved corporation shall continue as a body corporate for three (3) years after dissolution for the purpose of prosecuting and defending suits. While there is no special provision on how process shall be served upon a dissolved defendant corporation, the Rules of Court on service of summons upon a private domestic corporation are applicable. Section 13, Rule 14 enumerates persons on whom service may be made, including an agent. The Court noted that service on a mere employee or clerk is generally insufficient, but invoked a liberal interpretation based on substantial compliance, as seen in G & G Trading Corporation v. Court of Appeals. The purpose of the rule is to ensure that the corporation receives prompt and proper notice. Even if Nanette Sison worked for PEPSICO, Inc., PEPSICO, Inc. had the obligation to act upon the summons received pursuant to its undertaking to settle Pepsi Cola's liabilities. Therefore, there was substantial compliance with the rule on service of summons because the purpose of notice was satisfied. On the third issue, whether such service validly vested jurisdiction: The Court found that the service of summons upon Pepsi Cola was proper and validly vested jurisdiction on the lower court. The private respondent, PEPSICO, Inc., had assumed all the debts, liabilities, and obligations of Pepsi Cola, including liabilities for damages, and agreed to pay them as if they were incurred by PEPSICO, Inc. itself. PEPSICO, Inc. was aware that Pepsi Cola's liabilities were enforceable against it. By failing to defend the civil suit after receiving notice of the action, PEPSICO, Inc. acted with gross negligence and bad faith. The substantive right of the petitioners to be considered should prevail over PEPSICO, Inc.'s attempt to avoid jurisdiction based on a technical defect. The Court concluded that the valid service of summons upon Pepsi Cola operated as a sufficient service of summons upon PEPSICO, Inc., binding it to satisfy the judgment.
Main Doctrine
A dissolved corporation continues to exist for three years for the purpose of prosecuting and defending suits. Service of summons upon a dissolved corporation may be made through any of the persons enumerated in Section 13, Rule 14 of the Rules of Court, and substantial compliance with the rule on service of summons is sufficient to vest jurisdiction in the court, provided the purpose of notice is attained.