United Coconut Planters Bank v. Ongpin
REITERATIONFacts
The Antecedents: Philippine Apparel, Inc. (PAI) entered into a credit agreement with United Coconut Planters Bank (UCPB) for US$500,000.00. Roberto V. Ongpin (Ongpin), controlling stockholder of PAI, signed as surety, jointly and severally liable with PAI. PAI availed of the credit line, incurring obligations amounting to US$650,986.34. PAI failed to pay. Procedural History: UCPB filed a complaint against Ongpin to enforce his surety obligation, seeking a writ of preliminary attachment on grounds of fraud, transfer of residence, lack of collateral, and non-disclosure of customs claims against PAI. The Regional Trial Court (RTC) granted the writ and issued notices of garnishment on Ongpin's shares. Ongpin, through special appearance, moved to dismiss and quash the writ, arguing lack of jurisdiction due to unserved summons. The RTC denied the motion. Ongpin filed a petition for certiorari with the Court of Appeals (CA). During pendency, UCPB attempted to serve summons by publication, but the publication was held in abeyance. The CA, in a decision, validated the writ of attachment but prohibited its implementation until jurisdiction over Ongpin was acquired. UCPB's motion for reconsideration was denied. UCPB filed a petition with the Supreme Court. Subsequently, UCPB attempted substituted service of summons on Ongpin at the PILTEL office, where he was chairman of the board, by serving Anne V. Morallo, the executive secretary of PILTEL's president. Morallo was authorized to receive court processes for Ongpin. The sheriff then implemented the writ of attachment. Ongpin filed an Omnibus Motion to dismiss, prohibit implementation of the writ, quash garnishment, and release properties. The RTC denied the motion. Ongpin again filed a petition for certiorari with the CA. The Petition: The Court of Appeals annulled and set aside the RTC orders, ruling that PILTEL was not Ongpin's regular place of business and Morallo was not a competent person in charge of his office. UCPB filed this petition for review on certiorari.
Issue(s)
Whether respondent Ongpin, through numerous special appearances over five years, should be deemed to have voluntarily submitted to the trial court's jurisdiction. Whether the substituted service of summons on respondent Ongpin on November 27, 1997, was valid. Whether PILTEL's office constituted respondent Ongpin's regular place of business. Whether Anne V. Morallo was a competent person authorized to receive summons on behalf of respondent Ongpin.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals. The Court ruled that the implementation of the writ of attachment and garnishment is prohibited until the court acquires jurisdiction over the person of the respondent, either through voluntary appearance or valid service of summons.
Ratio Decidendi
On the issue of voluntary appearance: The Court held that a party who makes a special appearance to challenge the court's jurisdiction based on invalid service of summons does not submit to the court's jurisdiction. The numerous pleadings filed by respondent Ongpin were precisely to contest the jurisdiction of the court over his person due to the failure to serve summons or the invalidity of such service. It would be absurd to hold that by making such appearances, he thereby submitted himself to the jurisdiction of the court. The Court distinguished this case from Macapagal v. Court of Appeals, where the defendant's "feigned unawareness" was considered voluntary appearance due to widespread publicity and counsel's authority to receive summons, unlike the present case where summons was served on the executive secretary of a company not party to the suit. On the validity of substituted service of summons: The Court affirmed the CA's ruling that the substituted service of summons was invalid. Rule 14, Section 7 of the 1997 Revised Rules of Civil Procedure provides that service may be effected by leaving copies at the defendant's office or regular place of business with some competent person in charge thereof. The PILTEL office, where the substituted service was attempted, was not respondent Ongpin's regular place of business. He was sued in his personal capacity as surety for PAI, not in his capacity as chairman of PILTEL. The sheriff's initial inquiries revealed that respondent was not holding office at PILTEL and that his actual office was elsewhere. Therefore, Anne V. Morallo, the executive secretary of PILTEL's president, could not be considered a competent person in charge of respondent's office or regular place of business. On the nature of respondent's place of business: The Court reiterated that the term "office" or "regular place of business" refers to the office or place of business of the defendant at the time of service. Even if respondent was the chairman of the board of PILTEL, it does not automatically mean that PILTEL's office is his regular place of business, as he could hold office elsewhere. The facts showed that respondent's actual office was at the BA Lepanto Building, Paseo de Roxas, Makati City, not at PILTEL. Thus, the service at PILTEL was not at his regular place of business. On the authority of Anne V. Morallo: Since the PILTEL office was not respondent Ongpin's regular place of business, Anne V. Morallo, as the executive secretary of PILTEL's president, could not be considered authorized to receive service of process on behalf of respondent Ongpin. Her authority was limited to receiving court processes for PILTEL, not for Ongpin in his personal capacity. The fact that she was advised by PILTEL's legal counsel to receive the summons did not confer upon her the authority to bind Ongpin personally, especially when the service was not made at his proper place of business.
Main Doctrine
A party who makes a special appearance to challenge the court's jurisdiction based on invalid service of summons does not submit to the court's jurisdiction. Substituted service of summons must be made at the defendant's actual office or regular place of business with a competent person in charge thereof.