12 BPI v.

Santiago
GR. No. 169116 (2007)
J. Chico-Nazario / Tita K

Subject Matter: Rule 14, Sec. 11; Summons – Service upon domestic private juridical entity

Case Summary: Centrogen obtained several loans from FEBTC (FEBTC later merged with BPI). A fraction of this loan was secured by
REM executed by Sps. Santiago. Centrogen defaulted. BPI (surviving entity in the merger with FEBTC) filed for an extrajudicial
foreclosure of the REM. Sps. Santiago filed a complaint seeking the issuance of TRO and writ of preliminary injunction. In this case, 2
summons were served. 1st summons was issued and served upon BPI Laguna Branch manager. BPI then filed a Motion to dismiss the
complaint on the ground that RTC did not acquire jurisdiction over BPI because the summons was served upon the branch manager,
a person not authorized to receive summons by Sec. 11, Rule 14 of the ROC. RTC denied the motion to dismiss and ordered the
issuance of another summons. 2nd summons was issued and served, this time, upon BPI’s corporate secretary. Subsequently, RTC
granted the application for writ of preliminary injunction. BPI appealed to the CA. However, CA affirmed RTC orders. WON RTC
acquired jurisdiction over the person of BPI, the SC ruled that YES, the RTC acquired jurisdiction over BPI when the second summons
was served upon the corporate secretary, NOT when the original summons was served upon the branch manager. SC ruled that a
strict compliance with Sec. 11, Rule 14 is necessary to confer jurisdiction. The officer upon whom service is made must be one who is
named in the statute. Service upon the corporate secretary, being one of the officers named in the said statute, conferred
jurisdiction over the person of BPI. (See doctrines)

Doctrine/s:

Service of summons on a bank’s Branch Manager did not bind the corporation for the branch manager is not included in the
enumeration of the statute of the persons upon whom service of summons can be validly made in behalf of the corporation, but
whatever defect that attended the service of the original summons was cured by the issuance and the proper service of new
summons.

The ultimate test on the validity and sufficiency on service of summons is whether the same and the attachments thereto were
ultimately received by the corporation under such circumstances that no undue prejudice is sustained by it from the procedural
lapse and it was afforded full opportunity to present its responsive pleadings.

There is no hard and fast rule pertaining to the manner of service of summons—substantial justice demands that every case should
be viewed in light of the peculiar circumstances attendant to each.

Action Before SC: “This is a petition for review on certiorari under Rule 45 of the Rules of Court”
Parties:
Petitioner BANK OF THE PHILIPPINE ISLANDS (BPI)

SPS. IRENEO M. SANTIAGO and LIWANAG P. SANTIAGO,

Respondent
CENTROGEN, INC. (Centrogen), REPRESENTED BY EDWIN SANTIAGO

Antecedent Facts:
1. Centrogen is a domestic corporation engaged in pharmaceutical business.
2. Centrogen obtained several loans from Far East Bank and Trust Company (FEBTC), the total of which reached P4,650,000,
as evidenced by promissory notes executed by Edwin Santiago, the president of Centrogen.
3. As security for the principal loan of P490K (a fraction of the total loan obligation), Ireneo Santiago (dad of Pres. Edwin
Santiago) executed a Real Estate Mortgage over a parcel of land duly registered in his name.
4. Later, the same parcel of land secured another loan obligation of P1,504,280.

5. Centrogen defaulted and the loan obligation became due and demandable.

6. Meanwhile, FEBTC merged with the BPI with the latter as the surviving corporation. As a result, BPI assumed all the rights,
privileges and obligations of FEBTC.
7. BPI filed an Extrajudicial Foreclosure of Real Estate Mortgage over the subject property before the RTC.
8. Sps. Santiago were served with a copy of a Notice of Sale.
RTC
1. Sps. Santiago filed a Complaint seeking the issuance of a Temporary Restraining Order and Preliminary and Final
Injunction and in the alternative, for the annulment of the Real Estate Mortgage with BPI.
The complaint alleged that:
 the initial loan obligation in the amount of P490K, including interest thereon was fully paid
 the company groped for funds to pay its loan obligation as a result of FEBTC’s failure to release the balance of
P3Million out of the original loan amount of P5million. The said failure to release caused the Centrogen’s squalene
project to fail.
Summon #1 - BPI was summoned to file and serve its Answer to the complaint. Based on the Sheriff’s return, the
summon was served through BPI Laguna branch manager.
2. Instead of filing an Answer, BPI filed a Motion to Dismiss on the ground of lack of jurisdiction over the person of the
defendant as the branch manager was not authorized by Sec. 11, Rule 14 of the ROC to receive summons on behalf of the
corporation. The summons served upon branch manager did not bind the corporation.
3. RTC denied the Motion to Dismiss and emphasized that the nature of the case (urgency because of impending sale)
merited its removal from the purview of Section 11, Rule 14 of the ROC. RTC declared that the order is still valid and binding
despite non-compliance with the provisions of Section 11, Rule 14.
4. After summary hearing on the Sps. Santiago and Centrogen’s application for TRO, the RTC, issued an Order enjoining the
Provincial Sheriff from proceeding with the extrajudicial foreclosure sale of the subject property until the propriety of
granting a preliminary injunction is ascertained.
Summons #2 - RTC ordered the service of new summons to BPI in accordance with the provisions of the Revised Rules of
Court. Branch Clerk of Court caused the issuance of a new summons, a copy of which was served upon the Office of the
Corporate Secretary of the BPI, as evidenced by the Sheriff’s Return.
5. Subsequently, RTC issued an Order granting the application for the issuance of a Writ of Preliminary Injunction filed by
the Spouses Santiago and Centrogen. It enjoined the extrajudicial foreclosure sale of the subject property pending
resolution of the main action for Annulment of Real Estate Mortgage or until further orders of the trial court.
6. MR filed by BPI was denied.
CA
1. BPI filed a petition for certiorari.
2. CA affirmed the RTC order, dismissed the petition. CA ruled that before the writ of preliminary injunction was granted, RTC
properly acquired jurisdiction over the person of BPI upon service of the new summons thru BPI’s corporate secretary.
Issues:
1. WON THE RTC ACQUIRED JURISDICTION OVER THE PERSON OF BPI WHEN THE ORIGINAL SUMMONS WAS SERVED UPON
THE BRANCH MANAGER OF ITS STA. CRUZ, LAGUNA BRANCH. – YES, RTC acquired jurisdiction over the person of BPI but
only when the summons was served upon the Corporate Secretary.
Ratio:

Yes – RTC acquired jurisdiction over BPI when summons was served upon BPI’s Corporate Secretary.

 Sec. 11, Rule 14. 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.

 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.

o The service of summons on BPI’s Branch Manager did not bind the corporation for the branch manager is not
included in the enumeration of the statute of the persons upon whom service of summons can be validly made
in behalf of the corporation. Such service is therefore void and ineffectual.
 o However, whatever defect attended the service of the original summons, was promptly cured upon the issuance
and the proper service of new summons upon BPI’s Corporate Secretary, before the Writ of Preliminary
Injunction was issued.
o
o The second service of summons was neither disputed nor mentioned by BPI, and therefore enjoys the
presumption that official duty has been regularly performed. The Process Server’s Certificate of Service of
Summons is a prima facie evidence of facts set out in that certificate.
o
o Therefore, before the Order granting the application for Writ of Preliminary Injunction was issued, the RTC already
acquired jurisdiction over the person of BPI by virtue of the new summons validly served on the Corporate
Secretary.

 The Philippine American Life and General Insurance Company v. Brevea: A case should not be dismissed simply because an
original summons was wrongfully served. It should be difficult to conceive, for example, that when a defendant personally
appears before a Court complaining that he had not been validly summoned, that the case against him should be
dismissed. An alias summons can be actually served on said defendant. It is not pertinent whether the summons is
designated as an "original" or an "alias" summons as long as it has adequately served its purpose. What is essential is
that the summons complies with the requirements under the Rules of Court and it has been duly served on the
defendant together with the prevailing complaint.
 G&G Trading Corporation v. Court of Appeals: Although it may be true that the service of summons was made on a person
not authorized to receive the same in behalf of the petitioner, 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.

 In explaining the test on the validity of service of summons, Justice Florenz Regalado stressed that substantial justice must
take precedence over technicality and thus stated:
“The ultimate test on the validity and sufficiency on service of summons is whether the same and the attachments
thereto were ultimately received by the corporation under such circumstances that no undue prejudice is
sustained by it from the procedural lapse and it was afforded full opportunity to present its responsive pleadings.
This is but in accord with the entrenched rule that the ends of substantial justice should not be subordinated to
technicalities and, for which purpose, each case should be examined within the factual milieu peculiar to it.”

 Thus, SC emphasized that there is no hard and fast rule pertaining to the manner of service of summons.
 Rather, substantial justice demands that every case should be viewed in light of the peculiar circumstances attendant to
each.

Dispositive: Wherefore, IN VIEW OF THE FOREGOING, the instant petition is DENIED. The Decision dated 3 March 2005, and the
Resolution dated 28 July 2005, rendered by the Court of Appeals in CA-G.R. SP No. 80643, are hereby AFFIRMED.

Others/Notes:

ISSUE #2: WHETHER OR NOT THE RTC COMMITTED A GRAVE ABUSE OF DISCRETION IN ISSUING THE WRIT OF PRELIMINARY
INJUNCTION. – NO

Ruling:
Before a writ of preliminary injunction may be issued, the following requisites must be complied with: (1) a right in esse or a clear or
unmistakable right to be protected; (2) violation of that right; and (3) that there is an urgent and permanent act and urgent necessity
for the writ to prevent serious damage.

The requisites for the issuance of the Writ of Preliminary Injunction have been fully complied with. The right of Spouses
Santiago over the property clearly exists since they are the registered owners thereof, and the existence of a Real Estate
Mortgage does not undermine the right of the absolute owner over the property. The violation of such right is manifest in
the threatened foreclosure proceedings commenced by BPI amidst the claim that the principal obligation has been fully
paid. Finally, to allow the foreclosure of the subject property without first calibrating the evidence of opposing parties
pertaining to the action for the annulment of mortgage would cause irreparable damage to the registered owner.