Millenium Industrial Commercial Corporation v. Jackson Tan
REITERATIONFacts
The Antecedents: Millenium Industrial Commercial Corporation (petitioner) executed a Deed of Real Estate Mortgage over its property in favor of Jackson Tan (respondent) to secure a P2 million debt, payable as P4 million on June 10, 1995. On November 9, 1995, respondent filed a complaint for foreclosure of mortgage. Summons was served on November 21, 1995, upon Lynverd Cinches, described as a "Draftsman, a person of sufficient age and (discretion) working therein, he is the highest ranking officer or Officer-in-Charge of defendant's Corporation, to receive processes of the Court. Procedural History: Petitioner moved to dismiss the complaint, arguing invalid service of summons as Cinches was not an authorized person and not even an employee. Petitioner also claimed the obligation was extinguished as respondent opted for payment in shares of stock as per a stipulation in the mortgage contract. The Regional Trial Court (RTC) denied the motion to dismiss, holding that by interposing the second ground (payment), petitioner availed of an affirmative defense, thereby submitting to the court's jurisdiction and curing any defect in summons. The RTC's motion for reconsideration was denied. Petitioner filed a petition for certiorari with the Court of Appeals (CA), which dismissed the petition, ruling that petitioner's filing of the motion to dismiss substantially achieved the purpose of summons and that by including an affirmative defense and praying for other reliefs, petitioner voluntarily submitted to the court's jurisdiction. The Petition: Petitioner filed a petition for review with the Supreme Court, assailing the CA's decision and raising issues on the validity of summons service, the effect of including affirmative defenses in a motion to dismiss, and the grounds for dismissal.
Issue(s)
Whether the service of summons upon a draftsman, who is not among the persons authorized by Rule 14, Section 13 of the 1964 Rules of Court for service on a corporation, is valid. Whether the inclusion of an affirmative defense and a prayer for other reliefs in a motion to dismiss, which also pleads lack of jurisdiction, constitutes abandonment or waiver of the defense of lack of jurisdiction. Whether there are legal grounds to grant petitioner's motion to dismiss the complaint.
Ruling
The Supreme Court reversed the decision of the Court of Appeals and dismissed the complaint against the petitioner. The Court held that the service of summons was invalid and that the petitioner did not voluntarily submit to the jurisdiction of the court.
Ratio Decidendi
On the Validity of Service of Summons: The Court held that the enumeration of persons on whom service of summons on a corporation may be effected in Rule 14, Section 13, is generally exclusive and mandatory. While substantial compliance may be allowed, it requires actual receipt of the summons by the corporation through the person served. In this case, there was no direct proof that Lynverd Cinches, the alleged recipient, was an employee or that he actually turned over the summons to any corporate officer. The Court emphasized that actual receipt by the corporation must be shown, and it cannot be merely inferred from the filing of a motion to dismiss, especially when there is doubt about the status of the person served. The Court found the appellate court's reliance on inference to be erroneous. On Jurisdiction by Estoppel and the Effect of Prayer for "Other Reliefs": The Court clarified that the doctrine of estoppel by jurisdiction must be unequivocal and intentional. Citing La Naval Drug Corporation v. Court of Appeals, the Court ruled that the assertion of affirmative defenses in a motion to dismiss does not constitute a waiver of the defense of lack of jurisdiction. The Court found that the trial court and the Court of Appeals erred in holding that by raising the affirmative defense of payment and praying for other reliefs, the petitioner waived its objection to the court's jurisdiction. The Court stated that it would be absurd to hold that the petitioner unequivocally submitted to jurisdiction by seeking other reliefs when its primary request was the dismissal of the complaint. The Court reiterated that the ruling in La Naval Drug Corporation supersedes prior rulings, such as De Midgely v. Fernandos, which held that a prayer for "other reliefs" in a motion to dismiss amounted to voluntary appearance. The Court emphasized that estoppel by jurisdiction must be unequivocal and intentional, and seeking other reliefs does not meet this standard, especially when the main prayer is for dismissal. Therefore, the petitioner's prayer for "other reliefs" did not constitute a waiver of its defense of lack of jurisdiction. On Legal Grounds to Grant the Motion to Dismiss: The Court's rulings on the validity of service of summons and jurisdiction by estoppel provide legal grounds to grant the petitioner's motion to dismiss the complaint. If service of summons was invalid and the court did not acquire jurisdiction over the petitioner, the motion to dismiss should be granted.
Main Doctrine
Service of summons on a corporation must be made on its president, manager, secretary, cashier, agent, or any of its directors. While substantial compliance may be allowed, there must be actual receipt of the summons by the corporation through the person served. Filing a motion to dismiss that includes affirmative defenses does not constitute voluntary appearance or waiver of the defense of lack of jurisdiction, especially if the assertion of affirmative defenses is made in conjunction with the objection to jurisdiction.