Japrl Development Corporation v. Security Bank Corporation
REITERATIONFacts
The Antecedents: JAPRL Development Corporation (JAPRL) applied for and was granted a credit facility of ₱50,000,000.00 by Security Bank Corporation (SBC), effective July 15, 1996. On November 5, 2001, JAPRL Chairman Peter Rafael C. Limson (Limson) and President Jose Uy Arollado (Arollado) executed a Continuing Suretyship Agreement (CSA) guaranteeing JAPRL's obligations. In 2002, SBC extended the period for JAPRL's obligations. In 2003, JAPRL's financial statements from 1998-2001 were provided to creditors, including SBC, for loan restructuring. SBC discovered material inconsistencies between these statements and those submitted during the credit facility application, leading SBC to conclude JAPRL committed misrepresentation. Paragraph 10(c) of the Credit Agreement stipulated that any untrue representation or warranty would constitute an event of default. Based on Item 2 of the CSA, SBC sent a demand letter dated August 20, 2003, to JAPRL, Limson, and Arollado for the payment of ₱43,926,021.41. Petitioners failed to comply. Procedural History: SBC filed a complaint for sum of money with application for writ of preliminary attachment against JAPRL, Limson, and Arollado before the RTC of Makati City. During a hearing on September 16, 2003, SBC's counsel manifested receipt of a Stay Order dated September 8, 2003, from the RTC of Quezon City, Branch 90, concerning JAPRL's petition for rehabilitation. The Makati RTC initially ordered the archiving of SBC's complaint. However, when reduced to writing, the RTC dismissed the complaint without prejudice. Upon SBC's motion for reconsideration, the Makati RTC, by Order of January 9, 2004, reverted to archiving the complaint. SBC moved to clarify that the suspension should only apply to JAPRL, not Limson and Arollado. The Makati RTC, by Order of February 25, 2004, maintained the archiving of the complaint against all petitioners. SBC moved for reconsideration, and Limson and Arollado filed an "Opposition (Ad Cautelam)" claiming lack of summons and raising defenses against their surety liability. Meanwhile, the rehabilitation plan before the Quezon City RTC was disapproved on May 9, 2005. On SBC's motion, the Makati RTC reinstated its complaint on February 27, 2006. Petitioners filed another Manifestation (Ad Cautelam) informing of a new Stay Order from the Calamba RTC, Branch 34, in a new rehabilitation petition filed by JAPRL and its subsidiary, RAPID Forming Corporation, and prayed for archiving. By Order of June 30, 2006, the Makati RTC again archived the complaint. SBC moved for reconsideration, arguing the complaint should not be archived with respect to sureties Limson and Arollado and that they should be declared in default for failing to file answers. The Makati RTC denied SBC's motion on October 2, 2006, prompting SBC to file a petition for certiorari with the Court of Appeals (CA). The Petition: By Decision of September 25, 2008, the CA held that Limson and Arollado voluntarily submitted to the Makati RTC's jurisdiction by seeking affirmative relief (archiving the case), which is equivalent to service of summons. The CA also ruled that SBC's claim against Limson and Arollado as sureties could proceed independently of JAPRL's rehabilitation, citing Rule 4, Section 6(b) of the Interim Rules of Procedure on Corporate Rehabilitation. The CA denied petitioners' motion for reconsideration by Resolution of October 29, 2009, leading to the present petition for review on certiorari.
Issue(s)
Whether the Makati RTC acquired jurisdiction over the persons of Limson and Arollado. Whether the Stay Order issued in JAPRL's rehabilitation proceedings bars SBC from pursuing its claim against Limson and Arollado as sureties.
Ruling
The petition is denied. The Court of Appeals' decision is affirmed.
Ratio Decidendi
On the issue of jurisdiction over the persons of Limson and Arollado: The Supreme Court held that Limson and Arollado voluntarily submitted themselves to the jurisdiction of the Makati RTC. Despite their prefatory statements of special appearance and claims of lack of summons, their pleadings, specifically their "Opposition (Ad Cautelam)" and "Manifestation (Ad Cautelam)," sought affirmative relief by praying for the archiving of SBC's complaint. The Court reiterated the principle that any voluntary appearance in court, except for the sole purpose of objecting to jurisdiction, is equivalent to service of summons under Rule 14, Section 20 of the Rules of Court. By seeking affirmative relief, they implicitly acknowledged the court's authority over the case and their persons, thereby waiving any objection to the lack of summons. Their subsequent discussion of defenses against SBC's claim further demonstrated their voluntary submission to the court's jurisdiction. On the issue of whether the Stay Order bars SBC's claim against the sureties: The Supreme Court affirmed the appellate court's ruling that SBC's claim against Limson and Arollado in their capacity as sureties could proceed independently of JAPRL's rehabilitation proceedings. The Court cited Rule 4, Section 6(b) of the Interim Rules of Procedure on Corporate Rehabilitation, which states that a stay order stays the enforcement of claims against the debtor, its guarantors, and sureties not solidarily liable with the debtor. The Court emphasized that the Continuing Suretyship Agreement explicitly stated the sureties' liability was solidary with JAPRL. Citing Banco de Oro-EPCI, Inc. v. JAPRL Development Corporation, the Court held that a creditor can demand payment from a surety solidarily liable with a corporation undergoing rehabilitation, as such surety is not included in the list of stayed claims. The Court further invoked Article 1216 of the Civil Code, which allows a creditor to proceed against any one or all of the solidary debtors simultaneously, and that a demand against one does not preclude demands against others until the debt is fully collected. Therefore, the stay order in the rehabilitation proceedings did not preclude SBC from pursuing its claim against the solidary sureties, Limson and Arollado.
Main Doctrine
A surety who voluntarily submits to the jurisdiction of a court by seeking affirmative relief, despite a prefatory statement of special appearance and lack of summons, cannot later claim lack of jurisdiction. Furthermore, a stay order in corporate rehabilitation proceedings does not apply to sureties who are solidarily liable with the debtor, as they are not the financially distressed corporation and the rehabilitation court has no jurisdiction over them.