This case clarifies the strict requirements for serving summons on domestic corporations to establish court jurisdiction. The Supreme Court reiterated that serving summons only on a branch manager, rather than on specific corporate officers designated by the Rules of Civil Procedure, is insufficient to confer jurisdiction over the corporation. This means any legal actions initiated against a corporation based on improper service can be dismissed, underscoring the importance of adhering to procedural rules to ensure due process.

Branch Managers vs. Corporate Officers: When Does Service of Summons Establish Jurisdiction?

In this case, Spouses Julian Santiago, Sr. and Leonila Santiago, and Spouses Lim Jose Ong and Mimi Ong Lim sought to prevent the extrajudicial foreclosure of their mortgaged properties by the Bank of the Philippine Islands (BPI), as the successor to Far East Bank & Trust Co. (FEBTC). The original owners, Spouses Santiago, initially mortgaged their land to Spouses Deloria. Later, with FEBTC’s involvement, the properties were sold to Spouses Lim, who then mortgaged them to FEBTC for a loan. When Spouses Lim defaulted, BPI initiated foreclosure proceedings. The petitioners filed a complaint for injunction, arguing that they were the real borrowers and had been making payments. However, the trial court dismissed the case due to improper service of summons, prompting the petitioners to appeal.

The central issue revolved around whether serving the summons to the branch managers of BPI’s Dumaguete City branches constituted valid service, thereby establishing the court’s jurisdiction over the bank. The petitioners argued that service on the branch managers amounted to substantial compliance, as these managers held significant responsibility and could be expected to notify the proper corporate officers. This argument drew on the principle that service should be made on a representative integrated enough with the corporation to understand the importance of the legal papers. However, the Supreme Court emphasized the need for strict compliance with Section 11, Rule 14 of the 1997 Rules of Civil Procedure.

Section 11, Rule 14 of the 1997 Rules of Civil Procedure explicitly defines who can receive summons on behalf of a domestic private juridical entity. It states that service may be made on the:

SECTION 11. Service upon domestic private juridical entity – 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 court clarified that the enumeration of officers authorized to receive summons is exclusive, following the principle of expressio unios est exclusio alterius, meaning the express mention of one thing excludes others. The Supreme Court relied on its prior ruling in E.B. Villarosa & Partner Co. Ltd. v. Benito, which underscored that the designation of persons authorized to accept summons for a domestic corporation is now limited and more clearly specified. Therefore, serving summons on branch managers does not constitute valid service unless they also hold one of the specified positions within the corporation.

Furthermore, the Court addressed the petitioners’ contention that the motion to dismiss violated the three-day notice rule. The petitioners claimed they were not given adequate notice before the hearing on the motion. The Supreme Court acknowledged that while the three-day notice rule aims to prevent surprises, its non-observance did not invalidate the dismissal in this case. The Court reasoned that the issue of jurisdiction had already been raised during the initial hearing for the issuance of a temporary restraining order (TRO), and the petitioners had the opportunity to argue against it. Thus, the element of surprise was absent, and the RTC correctly ruled on the issue of jurisdiction based on the arguments presented.

In conclusion, the Supreme Court affirmed the Court of Appeals’ decision, emphasizing the importance of strictly adhering to the rules regarding service of summons. The ruling clarifies that service on branch managers, who are not among the officers explicitly listed in Section 11, Rule 14, is insufficient to confer jurisdiction over a domestic corporation. The Court also highlighted that procedural rules, like the three-day notice rule, should be liberally construed to promote just, speedy, and inexpensive determination of cases, provided that the adverse party is not prejudiced.

FAQs

What was the key issue in this case?	The key issue was whether serving summons on branch managers of a corporation constitutes valid service to establish court jurisdiction over the corporation.
What does the court say about service of summons to branch managers?	The court ruled that serving summons on branch managers, who are not among the officers explicitly listed in Section 11, Rule 14 of the Rules of Civil Procedure, does not constitute valid service to confer jurisdiction over a domestic corporation.
What does Section 11, Rule 14 of the 1997 Rules of Civil Procedure state?	Section 11, Rule 14 specifies that service upon a domestic private juridical entity must be made on the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel.
What is the principle of “expressio unios est exclusio alterius“?	This legal principle means that the express mention of one thing excludes others. In this context, it means that the enumeration of specific officers in Section 11, Rule 14 is exclusive, and service on officers not listed is invalid.
Why did the court rule that the three-day notice rule was not violated?	The court ruled that although the motion to dismiss was filed and heard on the same day, the petitioners were not prejudiced because the issue of jurisdiction had already been raised during the initial hearing, and they had the opportunity to argue against it.
What is the significance of the Villarosa case in this ruling?	The Villarosa case reinforces the principle that the enumeration of officers authorized to receive summons is limited and strictly construed. It served as a precedent for the court’s decision in this case.
What happens if summons are not properly served?	If summons are not properly served, the court does not acquire jurisdiction over the person of the defendant, and any judgment rendered against the defendant may be void.
Can substantial compliance be invoked for service of summons?	No, the court has ruled that strict compliance with the mode of service is necessary to confer jurisdiction over a corporation. Substantial compliance is not sufficient when it comes to service of summons.

This case emphasizes the need for plaintiffs to be meticulous in serving summons to corporations to ensure that the court acquires jurisdiction. Failure to comply with the prescribed rules can lead to the dismissal of the case and unnecessary delays. The ruling serves as a reminder of the importance of due process and the strict application of procedural rules.

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: Spouses Julian Santiago, Sr. and Leonila Santiago vs. Bank of the Philippine Islands, G.R. No. 163749, September 26, 2008