In Millex Construction and Development Corporation v. Citystate Insurance Corporation, the Supreme Court affirmed that serving a summons to the ‘secretary of the company’ is equivalent to serving it to the ‘corporate secretary,’ thus establishing valid service. This ruling reinforces the importance of proper notification in legal proceedings and clarifies who within a corporation can receive a summons, ensuring that companies cannot evade legal responsibility through technicalities in service. This decision impacts how corporations are notified of lawsuits, emphasizing the need for clear internal processes to handle legal documents and respond appropriately to court summonses.

Knock, Knock, Who’s There? Valid Summons Service on Corporations

The case arose from a vehicular accident where a truck owned by Millex Construction & Development Corporation damaged a vehicle insured by Citystate Insurance Corporation. After paying the insurance proceeds to its client, Citystate Insurance sought to recover the amount from Millex Construction. The critical issue revolved around whether the summons was validly served on Millex Construction, specifically if serving it to Ailyn Marasigan, identified as the company’s secretary, was sufficient to establish jurisdiction over the corporation.

The trial court ruled in favor of Citystate Insurance, a decision affirmed by the Court of Appeals. Millex Construction appealed, arguing that Ailyn Marasigan was not the ‘corporate secretary’ required by law for valid service of summons. The Supreme Court, however, upheld the lower courts’ decisions, emphasizing that the process server’s return indicated service to the ‘secretary of the company,’ which was deemed equivalent to the ‘corporate secretary’ in the absence of any refutation by Millex Construction.

The legal framework governing service of summons on corporations is found in Rule 14, Section 11 of the Rules of Court, which specifies the individuals authorized to receive summons on behalf of a corporation. It states:

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 Supreme Court’s interpretation of this rule in Millex Construction clarified that the designation ‘secretary of the company’ could be considered equivalent to ‘corporate secretary,’ especially when the corporation fails to provide evidence to the contrary. This highlights the burden of proof on the corporation to demonstrate that the person served was not authorized to receive the summons.

The Court emphasized the importance of timely presenting evidence and not raising new arguments on appeal. Millex Construction’s attempt to introduce an affidavit from its personnel manager, attesting that Ailyn Marasigan was merely a secretary in the administrative department and not the corporate secretary, was rejected by the Supreme Court. The Court stated that it is not its duty to accept additional evidence intended to disprove an established fact. The Court reiterated that the opportunity to present such evidence was available during the trial and appellate stages. This underscores the principle that parties must diligently present their case at the appropriate time and cannot introduce new evidence on appeal.

This ruling has significant implications for corporations in the Philippines. It necessitates that corporations maintain clear internal procedures for handling legal documents and ensure that designated individuals are authorized to receive summonses. The failure to do so may result in a default judgment against the corporation, as happened in this case. Furthermore, this case highlights the importance of carefully reviewing the process server’s return to determine the validity of service and promptly challenging any irregularities. If a corporation believes that the summons was served on an unauthorized individual, it must present evidence to that effect during the trial court proceedings.

The Supreme Court’s decision also reinforces the principle of subrogation in insurance law. When Citystate Insurance paid the insurance proceeds to its client, Restie Perez, it was subrogated to Perez’s rights against Millex Construction. Subrogation is a legal doctrine that allows an insurer to step into the shoes of the insured and pursue claims against the party responsible for the loss. In this case, Citystate Insurance had the right to sue Millex Construction to recover the amount it paid to Perez. The document executed by Perez, releasing Citystate Insurance from liability and subrogating it in his place, was crucial in establishing Citystate Insurance’s right to sue Millex Construction.

Moreover, the Court reiterated the principle that factual findings of the trial court, when affirmed by the Court of Appeals, are generally not disturbed on appeal to the Supreme Court. This is because the Supreme Court is not a trier of facts and its function is limited to reviewing questions of law. In this case, both the trial court and the Court of Appeals found that there was a valid service of summons on Millex Construction. The Supreme Court, therefore, deferred to these factual findings and upheld the lower courts’ decisions.

The Court also addressed the issue of docket fees, noting that Millex Construction paid the docket fees late. While the Court did not explicitly rule on whether this was a ground for dismissal, it emphasized the importance of paying docket fees on time to perfect an appeal. This serves as a reminder to litigants to comply with the procedural requirements for filing an appeal to avoid dismissal.

Building on this principle, it is crucial for companies to understand their obligations regarding the receipt of legal summonses. A designated corporate secretary or an authorized officer must be in place to receive such documents. Additionally, companies should train their administrative staff to recognize legal documents and promptly forward them to the appropriate personnel. This proactive approach can prevent default judgments and ensure that the company can properly defend itself in legal proceedings.

This decision contrasts with situations where the summons is clearly served on an unauthorized individual. In such cases, the court may rule that there was no valid service, and the case may be dismissed for lack of jurisdiction over the defendant. However, the burden of proof rests on the defendant to demonstrate that the person served was not authorized to receive the summons. The case of Millex Construction serves as a cautionary tale for corporations that attempt to evade legal responsibility by claiming improper service of summons.

FAQs

What was the key issue in this case?	The key issue was whether the service of summons on Ailyn Marasigan, as secretary of Millex Construction, was valid to establish jurisdiction over the corporation.
What did the Supreme Court rule regarding the service of summons?	The Supreme Court ruled that serving a summons to the ‘secretary of the company’ is equivalent to serving it to the ‘corporate secretary,’ thus establishing valid service, especially if the company does not refute this designation.
What is the significance of Rule 14, Section 11 of the Rules of Court?	Rule 14, Section 11 specifies the individuals authorized to receive summons on behalf of a corporation, including the president, general manager, corporate secretary, treasurer, or in-house counsel.
Why did the Supreme Court reject Millex Construction’s affidavit?	The Supreme Court rejected the affidavit because it was presented late, during the appeal stage, and the company had the opportunity to present this evidence in the trial court.
What is subrogation in insurance law?	Subrogation allows an insurer to step into the shoes of the insured and pursue claims against the party responsible for the loss, as Citystate Insurance did after paying its client, Restie Perez.
What is the practical implication of this ruling for corporations?	Corporations must maintain clear internal procedures for handling legal documents and ensure that designated individuals are authorized to receive summonses to avoid default judgments.
What should a corporation do if it believes a summons was improperly served?	A corporation should promptly challenge the service in the trial court, presenting evidence that the person served was not authorized to receive the summons.
What was the effect of Millex Construction’s late payment of docket fees?	While the Court did not explicitly rule on this, it emphasized the importance of paying docket fees on time to perfect an appeal, serving as a reminder to litigants to comply with procedural requirements.

In conclusion, the Supreme Court’s decision in Millex Construction v. Citystate Insurance underscores the importance of proper service of summons in legal proceedings and clarifies who within a corporation can receive a summons. This ruling serves as a reminder to corporations to establish clear internal processes for handling legal documents and responding appropriately to court summonses to avoid default judgments and ensure their right to defend themselves in court.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Millex Construction and Development Corporation v. Citystate Insurance Corporation, G.R. No. 149670, June 27, 2006