E.B. Villarosa v. Judge Benito and Imperial Development Corp.

, 312 SCRA 65

FACTS: Private respondent Imperial Development Corporation sued petitioner E.B.

Villarosa & Partner Co. Ltd. for breach of contract and damages before the RTC Makati.
Summons together with the complaint were served upon petitioner (defendant) through
its Branch Manager at its branch office at Kolambog, Lapasan, Cagayan de Oro but the
Sheriff’s Return of Service stated that the summons was duly served upon petitioner
(defendant) through its Branch Manager at their new office at Villa Gonzalo, Nazareth,
Cagayan de Oro. The petitioner filed a special appearance with motion to dismiss on the
ground of improper service of summons and for lack of jurisdiction contending that the
trial court did not acquire jurisdiction over its person since the summons was improperly
served upon its employee in its Cagayan de Oro branch who is not one of the persons
named in the 1997 Rules of Civil Procedure upon whom service of summons may be
made. The private respondent opposed the motion. The trial court denied the motion
and held that it validly acquired jurisdiction over the person of the defendant since the
summons and complaint were received by the corporation through its branch manager
which was substantial compliance with the rule on service of summons. The petitioner’s
motion for reconsideration was denied. Petitioner ascribes grave abuse of discretion
tantamount to lack or excess of jurisdiction on the part of the trial court.

ISSUE: Whether or not the trial court acquired jurisdiction over the person of petitioner
upon service of summons on its Branch Manager.

HELD: No. Sec. 11, Rule 14 of the 1997 Rules of Civil Procedure provides that when
the defendant is a corporation, partnership or association organized under the laws of
the Philippines with a juridical personality, service may be made on the president,
managing partner, general manager, corporate secretary, treasurer, or in-house
counsel. The designation of persons or officers who are authorized to accept summons
for a domestic corporation or partnership is now limited and more clearly specified. The
rule must be strictly observed. Service of summons upon persons other than those
specified in Section 11, Rule 14 has been held as improper. Accordingly, the service of
summons upon the branch manager of petitioner at its branch office at Cagayan de
Oro, instead of upon the general manager at its principal office at Davao City is
improper. Consequently, the trial court did not acquire jurisdiction over the person of
the petitioner. Any proceeding undertaken by the trial court will consequently be null
and void.
GONZAGA-REYES, J.:

Before this Court is a petition for certiorari and prohibition with prayer for the issuance of a temporary
restraining order and/or writ of preliminary injunction seeking to annul and set aside the Orders
dated August 5, 1998 and November 20, 1998 of the public respondent Judge Herminio I. Benito of
the Regional Trial Court of Makati City, Branch 132 and praying that the public respondent court be
ordered to desist from further proceeding with Civil Case No. 98-824.

Petitioner E.B. Villarosa & Partner Co., Ltd. is a limited partnership with principal office address at
102 Juan Luna St., Davao City and with branch offices at 2492 Bay View Drive, Tambo, Parañaque,
Metro Manila and Kolambog, Lapasan, Cagayan de Oro City. Petitioner and private respondent
executed a Deed of Sale with Development Agreement wherein the former agreed to develop certain
parcels of land located at Barrio Carmen, Cagayan de Oro belonging to the latter into a housing
subdivision for the construction of low cost housing units. They further agreed that in case of
litigation regarding any dispute arising therefrom, the venue shall be in the proper courts of Makati.

On April 3, 1998, private respondent, as plaintiff, filed a Complaint for Breach of Contract and
Damages against petitioner, as defendant, before the Regional Trial Court of Makati allegedly for
failure of the latter to comply with its contractual obligation in that, other than a few unfinished low
cost houses, there were no substantial developments therein. 1

Summons, together with the complaint, were served upon the defendant, through its Branch
Manager Engr. Wendell Sabulbero at the stated address at Kolambog, Lapasan, Cagayan de Oro
City2 but the Sheriff's Return of Service3stated that the summons was duly served "upon defendant
E.B. Villarosa & Partner Co., Ltd. thru its Branch Manager Engr. WENDELL SALBULBERO on May
5, 1998 at their new office Villa Gonzalo, Nazareth, Cagayan de Oro City, and evidenced by the
signature on the face of the original copy of the summons. 1âwphi1.nêt

On June 9, 1998, defendant filed a Special Appearance with Motion to Dismiss 4 alleging that on May
6, 1998, "summons intended for defendant" was served upon Engr. Wendell Sabulbero, an
employee of defendant at its branch office at Cagayan de Oro City. Defendant prayed for the
dismissal of the complaint on the ground of improper service of summons and for lack of jurisdiction
over the person of the defendant. Defendant contends that the trial court did not acquire jurisdiction
over its person since the summons was improperly served upon its employee in its branch office at
Cagayan de Oro City who is not one of those persons named in Section 11, Rule 14 of the 1997
Rules of Civil Procedure upon whom service of summons may be made.

Meanwhile, on June 10, 1998, plaintiff filed a Motion to Declare Defendant in Default 5 alleging that
defendant has failed to file an Answer despite its receipt allegedly on May 5, 1998 of the summons
and the complaint, as shown in the Sheriffs Return.

On June 22, 1998, plaintiff filed an Opposition to Defendant's Motion to Dismiss 6 alleging that the
records show that defendant, through its branch manager, Engr. Wendell Sabulbero actually
received the summons and the complaint on May 8, 1998 as evidenced by the signature appearing
on the copy of the summons and not on May 5, 1998 as stated in the Sheriffs Return nor on May 6,
1998 as stated in the motion to dismiss; that defendant has transferred its office from Kolambog,
Lapasan, Cagayan de Oro to its new office address at Villa Gonzalo, Nazareth, Cagayan de Oro;
and that the purpose of the rule is to bring home to the corporation notice of the filing of the action.
On August 5, 1998, the trial court issued an Order 7 denying defendant's Motion to Dismiss as well as
plaintiffs Motion to Declare Defendant in Default. Defendant was given ten (10) days within which to
file a responsive pleading. The trial court stated that since the summons and copy of the complaint
were in fact received by the corporation through its branch manager Wendell Sabulbero, there was
substantial compliance with the rule on service of summons and consequently, it validly acquired
jurisdiction over the person of the defendant.

On August 19, 1998, defendant, by Special Appearance, filed a Motion for Reconsideration 8 alleging
that Section 11, Rule 14 of the new Rules did not liberalize but, on the contrary, restricted the service
of summons on persons enumerated therein; and that the new provision is very specific and clear in
that the word "manager" was changed to "general manager", "secretary" to "corporate secretary",
and excluding therefrom agent and director.

On August 27, 1998, plaintiff filed an Opposition to defendant's Motion for Reconsideration 9 alleging
that defendant's branch manager "did bring home" to the defendant-corporation the notice of the
filing of the action and by virtue of which a motion to dismiss was filed; and that it was one (1) month
after receipt of the summons and the complaint that defendant chose to file a motion to dismiss.

On September 4, 1998, defendant, by Special Appearance, filed a Reply 10 contending that the
changes in the new rules are substantial and not just general semantics.

Defendant's Motion for Reconsideration was denied in the Order dated November 20, 1998. 11

Hence, the present petition alleging that respondent court gravely abused its discretion tantamount
to lack or in excess of jurisdiction in denying petitioner's motions to dismiss and for reconsideration,
despite the fact that the trial court did not acquire jurisdiction over the person of petitioner because
the summons intended for it was improperly served. Petitioner invokes Section 11 of Rule 14 of the
1997 Rules of Civil Procedure.

Private respondent filed its Comment to the petition citing the cases Kanlaon Construction
Enterprises Co., Inc. vs.NLRC12 wherein it was held that service upon a construction project
manager is valid and in Gesulgon vs. NLRC13which held that a corporation is bound by the service of
summons upon its assistant manager.

The only issue for resolution is whether or not the trial court acquired jurisdiction over the person of
petitioner upon service of summons on its Branch Manager.

When the complaint was filed by Petitioner on April 3, 1998, the 1997 Rules of Civil Procedure was
already in force.14

Sec. 11, Rule 14 of the 1997 Rules of Civil Procedure provides that:

When the defendant is a corporation, partnership or association organized under the laws of
the Philippines with a juridical personality, service may be made on the president, managing
partner, general manager, corporate secretary, treasurer, or in-house counsel. (emphasis
supplied).

This provision revised the former Section 13, Rule 14 of the Rules of Court which provided that:

Sec. 13. Service upon private domestic corporation or partnership. — If the defendant is a
corporation organized under the laws of the Philippines or a partnership duly registered,
 service may be made on the president, manager, secretary, cashier, agent, or any of its
directors. (emphasis supplied).

Petitioner contends that the enumeration of persons to whom summons may be served is "restricted,
limited and exclusive" following the rule on statutory construction expressio unios est exclusio
alterius and argues that if the Rules of Court Revision Committee intended to liberalize the rule on
service of summons, it could have easily done so by clear and concise language.

We agree with petitioner.

Earlier cases have uphold service of summons upon a construction project manager 15; a
corporation's assistant manager 16; ordinary clerk of a corporation17; private secretary of corporate
executives18; retained counsel19; officials who had charge or control of the operations of the
corporation, like the assistant general manager 20; or the corporation's Chief Finance and
Administrative Officer21. In these cases, these persons were considered as "agent" within the
contemplation of the old rule.22 Notably, under the new Rules, service of summons upon an agent of
the corporation is no longer authorized.

The cases cited by private respondent are therefore not in point.

In the Kanlaon case, this Court ruled that under the NLRC Rules of Procedure, summons on the
respondent shall be served personally or by registered mail on the party himself; if the party is
represented by counsel or any other authorized representative or agent, summons shall be served
on such person. In said case, summons was served on one Engr. Estacio who managed and
supervised the construction project in Iligan City (although the principal address of the corporation is
in Quezon City) and supervised the work of the employees. It was held that as manager, he had
sufficient responsibility and discretion to realize the importance of the legal papers served on him
and to relay the same to the president or other responsible officer of petitioner such that summons
for petitioner was validly served on him as agent and authorized representative of petitioner. Also in
the Gesulgon case cited by private respondent, the summons was received by the clerk in the office
of the Assistant Manager (at principal office address) and under Section 13 of Rule 14 (old rule),
summons may be made upon the clerk who is regarded as agent within the contemplation of the
rule.

The designation of persons or officers who are authorized to accept summons for a domestic
corporation or partnership is now limited and more clearly specified in Section 11, Rule 14 of the
1997 Rules of Civil Procedure. The rule now states "general manager" instead of only "manager";
"corporate secretary" instead of "secretary"; and "treasurer" instead of "cashier." The phrase "agent,
or any of its directors" is conspicuously deleted in the new rule.

The particular revision under Section 11 of Rule 14 was explained by retired Supreme Court Justice
Florenz Regalado, thus:23

. . . the then Sec. 13 of this Rule allowed service upon a defendant corporation to "be made
on the president, manager, secretary, cashier, agent or any of its directors." The aforesaid
terms were obviously ambiguous and susceptible of broad and sometimes illogical
interpretations, especially the word "agent" of the corporation. The Filoil case, involving the
litigation lawyer of the corporation who precisely appeared to challenge the validity of service
of summons but whose very appearance for that purpose was seized upon to validate the
defective service, is an illustration of the need for this revised section with limited scope and
specific terminology. Thus the absurd result in the Filoil case necessitated the amendment
permitting service only on the in-house counsel of the corporation who is in effect an
 employee of the corporation, as distinguished from an independent practitioner. (emphasis
supplied).

Retired Justice Oscar Herrera, who is also a consultant of the Rules of Court Revision Committee,
stated that "(T)he rule must be strictly observed. Service must be made to one named in (the) statute
. . . .24

It should be noted that even prior to the effectivity of the 1997 Rules of Civil Procedure, strict
compliance with the rules has been enjoined. In the case of Delta Motor Sales Corporation
vs. Mangosing,25 the Court held:

A strict compliance with the mode of service is necessary to confer jurisdiction of the court
over a corporation. The officer upon whom service is made must be one who is named in the
statute; otherwise the service is insufficient. . . .

The purpose is to render it reasonably certain that the corporation will receive prompt and
proper notice in an action against it or to insure that the summons be served on a
representative so integrated with the corporation that such person will know what to do with
the legal papers served on him. In other words, "to bring home to the corporation notice of
the filing of the action." . . . .

The liberal construction rule cannot be invoked and utilized as a substitute for the plain legal
requirements as to the manner in which summons should be served on a domestic
corporation. . . . . (emphasis supplied).

Service of summons upon persons other than those mentioned in Section 13 of Rule 14 (old rule)
has been held as improper.26 Even under the old rule, service upon a general manager of a firm's
branch office has been held as improper as summons should have been served at the firm's
principal office. In First Integrated Bonding & Inc. Co., Inc. vs. Dizon,27 it was held that the service of
summons on the general manager of the insurance firm's Cebu branch was improper; default order
could have been obviated had the summons been served at the firm's principal office.

And in the case of Solar Team Entertainment, Inc. vs. Hon. Helen Bautista Ricafort, et al.28 the Court
succinctly clarified that, for the guidance of the Bench and Bar, "strictest" compliance with Section 11
of Rule 13 of the 1997 Rules of Civil Procedure (on Priorities in modes of service and filing) is
mandated and the Court cannot rule otherwise, lest we allow circumvention of the innovation by the
1997 Rules in order to obviate delay in the administration of justice.

Accordingly, we rule that the service of summons upon the branch manager of petitioner at its
branch office at Cagayan de Oro, instead of upon the general manager at its principal office at
Davao City is improper. Consequently, the trial court did not acquire jurisdiction over the person of
the petitioner.

The fact that defendant filed a belated motion to dismiss did not operate to confer jurisdiction upon
its person. There is no question that the defendant's voluntary appearance in the action is equivalent
to service of summons.29Before, the rule was that a party may challenge the jurisdiction of the court
over his person by making a special appearance through a motion to dismiss and if in the same
motion, the movant raised other grounds or invoked affirmative relief which necessarily involves the
exercise of the jurisdiction of the court.30 This doctrine has been abandoned in the case of La Naval
Drug Corporation vs. Court of Appeals, et al.,31 which became the basis of the adoption of a new
provision in the former Section 23, which is now Section 20 of Rule 14 of the 1997 Rules. Section 20
now provides that "the inclusion in a motion to dismiss of other grounds aside from lack of
jurisdiction over the person of the defendant shall not be deemed a voluntary appearance." The
emplacement of this rule clearly underscores the purpose to enforce strict enforcement of the rules
on summons. Accordingly, the filing of a motion to dismiss, whether or not belatedly filed by the
defendant, his authorized agent or attorney, precisely objecting to the jurisdiction of the court over
the person of the defendant can by no means be deemed a submission to the jurisdiction of the
court. There being no proper service of summons, the trial court cannot take cognizance of a case
for lack of jurisdiction over the person of the defendant. Any proceeding undertaken by the trial court
will consequently be null and void.32

WHEREFORE, the petition is hereby GRANTED. The assailed Orders of the public respondent trial
court are ANNULLED and SET ASIDE. The public respondent Regional Trial Court of Makati, Branch
132 is declared without jurisdiction to take cognizance of Civil Case No. 98-824, and all its orders
and issuances in connection therewith are hereby ANNULLED and SET ASIDE. 1âwphi1.nêt

SO ORDERED.