Santiago v. Bank of the Philippine Islands
REITERATIONFacts
The Antecedents: Spouses Julian and Leonila Santiago originally owned three parcels of land which they mortgaged to Spouses Bienvenido and Theresa Deloria to secure a loan of P2,370,000.00. Subsequently, Far East Bank and Trust Company (FEBTC) approved a term loan for Spouses Lim Jose and Mimi Ong Lim, with the condition that the loan proceeds would be used to purchase the mortgaged properties from the Spouses Santiago, and the P2,370,000.00 would be paid to the Spouses Deloria for the release of their mortgage. After the sale, Spouses Lim executed a real estate mortgage over the same properties in favor of FEBTC to secure a P2,500,000.00 loan. Spouses Lim later defaulted on their obligations to FEBTC, which merged with Bank of the Philippine Islands (BPI), the respondent. Procedural History: BPI, as the successor-in-interest of FEBTC, initiated an extra-judicial foreclosure of the real estate mortgage due to Spouses Lim's unpaid indebtedness amounting to P18,630,011.96. In response, the Spouses Santiago and Spouses Lim filed a complaint for injunction, damages, and accounting with the Regional Trial Court (RTC) of Dumaguete City, seeking to halt the foreclosure sale. The RTC issued a temporary restraining order (TRO) but later dismissed the case and the prayer for a TRO due to improper service of summons on BPI. The petitioners then filed a petition for certiorari with the Court of Appeals (CA), which initially issued a TRO and a writ of preliminary injunction. However, the CA ultimately dismissed the petition, affirming the RTC's ruling that it lacked jurisdiction over BPI due to invalid service of summons. The CA also found no merit in BPI's contention regarding improper service of the certiorari petition. The Petition: The petitioners, Spouses Julian and Leonila Santiago and Spouses Lim Jose and Mimi Ong Lim, filed a Petition for Review on Certiorari with the Supreme Court, seeking to reverse the CA's decision. They argue that the service of summons upon two branch managers of BPI in Dumaguete City constituted substantial compliance with the rules, that BPI's motion to dismiss violated the three-day notice rule, and that there was no speedy and adequate remedy in the ordinary course of law available to them. The core issue before the Supreme Court is whether the service of summons on the branch managers of BPI's separate branches in Dumaguete City was a substantial compliance with Section 11, Rule 14 of the 1997 Rules of Civil Procedure, which specifies the persons authorized to receive summons for a domestic corporation. The Supreme Court ultimately denied the petition, affirming the CA's decision.
Issue(s)
Whether service of summons upon two (2) branch managers of BPI in Dumaguete City constitutes substantial compliance with the Rules. Whether BPI's motion to dismiss violates the three-day notice rule. Whether there is a speedy and adequate remedy in the ordinary course of law available for the petitioners when CA G.R. SP No. 73110 was filed.
Ruling
The petition is denied. The Decision and Resolution of the Court of Appeals are affirmed.
Ratio Decidendi
On the issue of substantial compliance with service of summons: The Court held that the service of summons upon the branch managers of BPI's San Jose Street and Perdeces Street, Dumaguete City branches did not constitute substantial compliance with Section 11, Rule 14 of the 1997 Rules of Civil Procedure. This rule explicitly enumerates the officers authorized to receive summons for a domestic private juridical entity, namely, the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel. The Court reiterated its ruling in E.B. Villarosa & Partner Co., Ltd v. Benito and Bank of Philippine Islands v. Santiago, emphasizing that the enumeration under the new rule is restricted, limited, and exclusive, following the principle of expressio unios est exclusio alterius. The Court stressed that strict compliance with the mode of service is necessary to confer jurisdiction, and service upon a person not named in the statute is insufficient and void. The purpose of the rule is to ensure that the corporation receives prompt and proper notice through a representative integrated with the corporation. The Court explicitly stated that the cases cited by petitioners, which upheld the doctrine of substantial compliance, were decided under the old rules and are deemed overturned by the later ruling in Villarosa. On the issue of the three-day notice rule: The Court found no merit in petitioners' contention that BPI's motion to dismiss violated the three-day notice rule. While BPI filed a memorandum that appeared to be a motion to dismiss on the same day as the hearing for the TRO, the Court noted that the issue of lack of jurisdiction over BPI had already been raised by BPI's counsel during the initial hearing for the TRO on September 13, 2002. Petitioners' counsel had also presented arguments and jurisprudence to support the validity of the service of summons. Therefore, there was no element of surprise, as petitioners were aware that BPI was questioning the court's jurisdiction. The Court reiterated that procedural due process is not based solely on a mechanistic application of rules and that lapses in literal observance may be overlooked if they do not prejudice the adverse party or deprive the court of authority. Moreover, the RTC would have resolved the issue of jurisdiction regardless of the memorandum, as it was a prerequisite to issuing the TRO. On the issue of speedy and adequate remedy: The Court implicitly addressed this by affirming the CA's dismissal of the petition. The CA found that the RTC did not commit grave abuse of discretion in dismissing the case for lack of jurisdiction. Therefore, the subsequent proceedings, including the issuance of the TRO and preliminary injunction by the CA, were based on a flawed premise of jurisdiction. The proper remedy, as determined by the RTC and affirmed by the CA and the Supreme Court, was to dismiss the case due to improper service of summons, which prevented the court from acquiring jurisdiction over the respondent.
Main Doctrine
Service of summons upon a domestic private juridical entity must strictly comply with Section 11, Rule 14 of the 1997 Rules of Civil Procedure, which enumerates specific officers authorized to receive summons. Substantial compliance is not applicable under the said rule, and service upon a branch manager, who is not among the enumerated officers, is void and does not confer jurisdiction over the corporation.