Bank of the Philippine Islands v. Spouses Santiago
REITERATIONFacts
The Antecedents: Private respondent Centrogen, Inc. (Centrogen) obtained loans from Far East Bank and Trust Company (FEBTC), totaling ₱4,650,000.00. As security, Ireneo M. Santiago executed a Real Estate Mortgage over a parcel of land (subject property) for a principal loan of ₱490,000.00, which later also secured another loan of ₱1,504,280.00. Centrogen defaulted on its loan obligations. FEBTC merged with petitioner Bank of the Philippine Islands (BPI), with BPI as the surviving corporation. BPI initiated an extra-judicial foreclosure of the real estate mortgage. Spouses Santiago and Centrogen filed a complaint seeking injunctive relief and annulment of the mortgage, alleging full payment of the initial loan and breach of contract regarding the release of subsequent loan amounts. Procedural History: BPI filed a Motion to Dismiss, questioning the jurisdiction over its person due to improper service of summons and the lack of a certificate of non-forum shopping and proper verification. The Regional Trial Court (RTC) denied the Motion to Dismiss, citing extreme urgency and the applicability of rules on TROs. The RTC issued a Temporary Restraining Order (TRO) enjoining the foreclosure sale. Subsequently, new summons were issued and served on BPI's Corporate Secretary. The RTC then issued a Writ of Preliminary Injunction, enjoining the foreclosure sale pending resolution of the main action. BPI's Motion for Reconsideration was denied. The Court of Appeals affirmed the RTC's orders, holding that jurisdiction was acquired upon proper service of the new summons. The Petition: BPI filed a Petition for Review on Certiorari before the Supreme Court, questioning (I) whether the RTC acquired jurisdiction over its person, and (II) whether the RTC committed grave abuse of discretion in issuing the writ of preliminary injunction.
Issue(s)
Whether the RTC acquired jurisdiction over the person of BPI when the original summons was served upon its Branch Manager; specifically, whether the subsequent service cured the defect. Whether the RTC committed a grave abuse of discretion in issuing the writ of preliminary injunction, considering the requisites for its issuance and the evidence presented.
Ruling
The Supreme Court denied the petition, affirming the Decision and Resolution of the Court of Appeals. The Court held that while the initial service of summons on the Branch Manager was invalid, the defect was cured by the subsequent proper service of a new summons on BPI's Corporate Secretary, thereby conferring jurisdiction upon the RTC. The Court also found that the RTC did not commit grave abuse of discretion in issuing the writ of preliminary injunction, as the requisites for its issuance were met, and the injunction was necessary to preserve the status quo pending the resolution of the main case.
Ratio Decidendi
On the issue of jurisdiction: The Court reiterated that strict compliance with the modes of service of summons is necessary to confer jurisdiction. While a Branch Manager is not an authorized recipient, a case should not be dismissed due to an original wrongful service. The subsequent valid service on BPI's Corporate Secretary cured the defect and conferred jurisdiction. Substantial justice takes precedence over technicality, and the ultimate test is whether the corporation received the summons and complaint with full opportunity to present its defense. On the issue of grave abuse of discretion in issuing the writ of preliminary injunction: The issuance of a writ of preliminary injunction is a matter of discretion. The requisites are: (1) a right in esse; (2) violation of that right; and (3) an urgent necessity to prevent serious damage. The Spouses Santiago, as registered owners, had a clear right. The threatened foreclosure sale violated that right. Preventing foreclosure without resolving the claim of payment was an urgent necessity. The RTC's assessment that the evidence of the plaintiffs carried more weight and that allowing foreclosure would probably work injustice was a valid exercise of discretion, not a grave abuse thereof.
Main Doctrine
The defect in the original service of summons is cured by the subsequent valid service of a new summons, thereby conferring jurisdiction upon the court. The issuance of a writ of preliminary injunction is a matter of discretion, and its propriety hinges on the existence of a clear legal right, violation thereof, and urgent necessity to prevent serious damage, aiming to preserve the status quo.