And Service of Process Even Though Dissolved. The Rules of Court On Service of Summons

G.R. No.
81123 February 28, 1989
REBOLLIDO vs. CA
Facts: Petitioners filed a case for damages against Pepsi Cola Bottling Company of the
Philippines, Inc. and Alberto Alva before the RTC. The case arose out of a vehicular accident
involving a Minibus used as a schoolbus owned and driven by petitioners Rebollido and
Valencia respectively and a truck trailer owned at that time by Pepsi Cola and driven by Alva.
Sheriff of the lower court served summons addressed to the defendants. It was received by
Nanette Sison who represented herself to be the authorized person receiving court processes as
she was the secretary of the legal department of Pepsi Cola. Pepsi Cola failed to file an answer
and was later declared in default. RTC heard the case ex-parte and adjudged the defendants
jointly and severally liable for damages. When the default judgment became final and executory,
petitioners filed a motion for execution, a copy of which was received no longer by the Pepsi
Cola but by respondent PEPSICO, Inc. At that time, PEPSICO was already occupying the place of
business of Pepsi Cola. It is a foreign corporation that held offices here for the purpose of
settling Pepsi Cola's debts, liabilities and obligations preparatory to the expected dissolution of
Pepsi Cola. Pepsi Cola, with SEC’s approval, dissolved a day after the accident occurred. Realizing
that the judgment of RTC would eventually be executed against it, PEPSICO opposed the motion
for execution and moved to vacate the judgment for lack of jurisdiction, questioning the validity
of the service of summons to a mere clerk. RTC denied the motion, holding that despite the
assumption of liabilities by PEPSICO, there was proper service of summons upon Pepsi Cola.
Through petition for certiorari, CA ruled that there was lack of jurisdiction because of no valid
service of summons.
Issue: Whether or not there was valid service of summons through Nanette Sison, allegedly the
secretary of the legal department of Pepsi Cola.
Ruling: Yes. At the time of the issuance and receipt of the summons, Pepsi Cola was already
dissolved. Service is allowed in such a situation. A defendant corporation is subject to suit
and service of process even though dissolved. The Rules of Court on service of summons
upon a private domestic corporation is also applicable to a corporation which is no longer a
going concern.
When an action that might have been instituted against a foreign or domestic corporation while
it was a going concern is instituted after its dissolution, process in the action may be served
upon the same person upon whom the process could be served before the dissolution.
Section 13, Rule 14 mandates that 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.
This Court has ruled that service on a mere employee or clerk of a corporation is not sufficient.
The persons who should receive the summons should be those named in the statute; otherwise,
those who have charge or control of the operations of the company or who may be relied upon
to deliver the papers served upon them. Although it may be true that the service of summons
was made on a person not authorized to receive the same, nevertheless since it appears that the
summons and complaint were in fact received by the corporation through its said clerk, the
Court finds that there was substantial compliance, with the rule on service of summons.
As ruled by CA, by virtue of the assumption of the debts, liabilities and obligations of Pepsi Cola,
"any judgment rendered against Pepsi Cola after its dissolution is a ‘liability’ of PEPSICO, Inc.,
within the contemplation of the undertaking." Hence it was incumbent upon respondent to have
defended the civil suit against the corporation whose liabilities it had assumed. Failure to do so
after it received the notice by way of summons amounts to gross negligence and bad faith.
Respondent cannot now invoke a technical defect involving improper service upon Pepsi Cola
and alleged absence of service of summons upon it. There is the substantive right of the
petitioners to be considered over the attempt to avoid the jurisdiction of the lower court.
Petitioners cannot be faulted in naming the defendants because at the time of the
commencement of the suit, the petitioners had no knowledge of the dissolution and the
undertaking assumed by PEPSICO.

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G.R. No.

81123 February 28, 1989

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