Ellice Agro-Industrial v. Young
REITERATIONFacts
1. The Antecedents: Rodel T. Young, Delfin Chan, and Jim Wee (respondents) entered into a Contract to Sell with Ellice Agro-Industrial Corporation (EAIC), represented by Guia G. Domingo, for the purchase of a 30,000 square-meter parcel of land. The respondents paid P545,000.00 as partial payment. EAIC failed to deliver the owner's duplicate certificate of title and the deed of sale as stipulated in the contract. Consequently, the respondents annotated an Affidavit of Adverse Claim and a Notice of Lis Pendens on the property's Transfer Certificate of Title (TCT) No. T-157038. 2. Procedural History: The respondents filed a Complaint for specific performance against EAIC and Domingo before the Regional Trial Court (RTC) of Lucena City, Branch 60, docketed as Civil Case No. 96-177. After unsuccessful attempts to serve summons on EAIC, alias summons was served on Domingo. EAIC, through Domingo, filed an Answer with Counterclaim. However, EAIC failed to appear at the pre-trial conference, leading the RTC to allow the respondents to present their evidence ex parte. The RTC rendered a decision ordering EAIC to deliver the title and execute a deed of sale. This decision became final and executory. Subsequently, EAIC, represented by Raul E. Gala, filed a Petition for Relief from Judgment, which was denied by the RTC for being filed out of time. EAIC then filed a Petition for Annulment of Judgment with the Court of Appeals (CA), arguing lack of jurisdiction and extrinsic fraud. The CA dismissed this petition, and its resolution was later denied by the CA upon motion for reconsideration. 3. The Petition: EAIC, represented by its Chairman and President, Raul E. Gala, filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the CA's decision and resolution. The petition argues that the CA erred in ruling that there was valid service of summons upon EAIC, that Guia G. Domingo was a director authorized to receive summons, and that EAIC could no longer avail of the petition for annulment of judgment after filing a petition for relief. The core issue presented to the Supreme Court is whether the RTC validly acquired jurisdiction over the person of EAIC.
Issue(s)
Whether the Regional Trial Court (RTC) validly acquired jurisdiction over the person of Ellice Agro-Industrial Corporation (EAIC) in Civil Case No. 96-177, and whether the service of summons upon Guia G. Domingo was valid and binding on EAIC. Whether EAIC's filing of an Answer with Counterclaim constituted voluntary appearance, thereby submitting it to the RTC's jurisdiction, and the effect of actual knowledge and annotations on the property title. Whether the Court of Appeals erred in ruling that EAIC could no longer avail of a Petition for Annulment of Judgment after filing a Petition for Relief from Judgment. On the CA's reasoning regarding constructive notice and waiver, and the validity of service of summons.
Ruling
The petition is GRANTED. The July 1, 2003 Decision and August 8, 2006 Resolution of the Court of Appeals are REVERSED. The November 11, 1999 Decision of the RTC is declared VACATED and SET ASIDE. The case is remanded to the RTC for proper service of summons and other appropriate proceedings.
Ratio Decidendi
On the issue of valid service of summons and jurisdiction: The Court held that jurisdiction over the defendant is acquired either by valid service of summons or by voluntary appearance. The purpose of summons is to notify the defendant of the action and afford an opportunity to be heard, and its requirements must be strictly followed. Section 13, Rule 14 of the 1964 Rules of Civil Procedure, applicable at the time, stipulated that service of summons on a private domestic corporation must be made on its president, manager, secretary, cashier, agent, or any of its directors. The General Information Sheets (GIS) of EAIC showed that Guia G. Domingo was not any of these officers at the time summons was served upon her. Therefore, her honest belief that she was authorized was mistaken, and the service of summons upon her was not valid, thus the RTC did not acquire jurisdiction over EAIC. On the issue of voluntary appearance: The Court ruled that EAIC did not voluntarily submit to the RTC's jurisdiction. While EAIC, through Domingo, filed an Answer with Counterclaim, Domingo was not an officer of EAIC and lacked the authority to file such pleading on behalf of the corporation. The Court noted that Domingo's Answer with Counterclaim indicated she was acting in representation of Alicia E. Gala, not EAIC, based on a General Power of Attorney. Therefore, EAIC cannot be bound by the act of an unauthorized stranger, and its filing of the Answer with Counterclaim did not constitute voluntary appearance. The Court reiterated that even if EAIC had actual knowledge of the case, jurisdiction over its person could not be acquired without valid service of summons. The annotations of an Adverse Claim and Notice of Lis Pendens on the TCT, while serving to apprise third persons of the controversy, do not place a party under the court's jurisdiction. The respondents' duty to prosecute their case diligently includes ensuring proper parties are impleaded and properly served with summonses. On the availability of the Petition for Annulment of Judgment: The Court found that since the RTC did not validly acquire jurisdiction over EAIC, its proceedings and decision were null and void. Pursuant to Section 7, Rule 47 of the Rules of Court, a judgment of annulment shall set aside the questioned judgment and render it null and void. The CA erred in dismissing EAIC's petition for annulment on the grounds that it had already availed of the remedy of relief from judgment or that the issues of jurisdiction and fraud were already passed upon, as the fundamental issue was the lack of jurisdiction from the outset. On the CA's reasoning regarding constructive notice and waiver: The Court disagreed with the CA's conclusion that constructive notices and the corporation's reticence amounted to a waiver of its right to participate. The Court emphasized that the validity of service of summons is paramount for acquiring jurisdiction, and mere constructive notice does not substitute for proper legal service. The fact that the board headed by Gala was declared illegitimate in a separate SEC case did not cure the defect in the service of summons in Civil Case No. 96-177.
Main Doctrine
A court acquires jurisdiction over the person of a defendant either through valid service of summons or voluntary appearance. If summons is not validly served and the defendant does not voluntarily appear, any judgment rendered by the court is void for lack of jurisdiction. Service of summons on a private domestic corporation must be made on its president, manager, secretary, cashier, agent, or any of its directors; service on any other person is invalid.