Personal Jurisdiction Over Corporations Hinges on Proper Summons: Branch Manager Service Insufficient

TLDR: Philippine courts strictly interpret the rules on serving summons to corporations. This case emphasizes that serving a branch manager, rather than specific officers like the General Manager at the principal office, is invalid and prevents the court from acquiring jurisdiction over the corporation. This can lead to the dismissal of cases, regardless of actual notice.

G.R. No. 136426, August 06, 1999: E. B. VILLAROSA & PARTNER CO., LTD. VS. HON. HERMINIO I. BENITO AND IMPERIAL DEVELOPMENT CORPORATION

Introduction

Imagine your business being sued. You might expect to be properly notified at your main office, right? But what if the court papers are delivered to a branch, and not to the right person? In the Philippines, this seemingly minor detail can have major legal consequences. The Supreme Court case of E.B. Villarosa & Partner Co., Ltd. vs. Hon. Herminio I. Benito and Imperial Development Corporation highlights the critical importance of correctly serving summons to corporations. A seemingly simple procedural misstep can lead to a case being dismissed, even if the corporation is aware of the lawsuit. This case serves as a stark reminder that in legal proceedings, especially those involving corporations, strict adherence to procedural rules is paramount. Let’s delve into why serving a branch manager just doesn’t cut it when you’re suing a company in the Philippines.

The Letter of the Law: Understanding Summons and Corporate Service in the Philippines

In the Philippine legal system, a summons is the official way a court notifies a defendant that they are being sued. It’s not just a formality; proper service of summons is absolutely crucial for a court to gain jurisdiction, or legal authority, over the defendant. Without proper jurisdiction, the court cannot legally make binding orders or judgments against that defendant. For corporations, which are considered distinct legal entities, the Rules of Civil Procedure specify exactly who must receive the summons on behalf of the company.

The case revolves around Rule 14, Section 11 of the 1997 Rules of Civil Procedure, which dictates how summons should be served on domestic corporations. This rule 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.”

Notice the specific titles listed. Crucially, this rule is a revision of the older Section 13, Rule 14 of the Rules of Court, which had a broader list:

“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.”

The key difference? The new rule replaced “manager” with “general manager,” “secretary” with “corporate secretary,” and notably removed “agent, or any of its directors.” This change was not accidental. The Supreme Court in Villarosa emphasized that this revision was intended to narrow down and clarify who can validly receive summons for a corporation. This reflects the legal principle of expressio unius est exclusio alterius – what is expressly mentioned excludes by implication what is not mentioned. In simpler terms, by specifically listing certain officers, the rule implicitly excludes others, like branch managers, from being valid recipients of summons.

Case Summary: Faulty Service Leads to Dismissal

E.B. Villarosa & Partner Co., Ltd. (Villarosa) was a limited partnership based in Davao City, with branch offices elsewhere, including Cagayan de Oro City. Imperial Development Corporation (Imperial) sued Villarosa for breach of contract in Makati City, alleging failure to develop land in Cagayan de Oro as agreed. Imperial attempted to serve the summons on Villarosa through its branch manager in Cagayan de Oro, Engr. Wendell Sabulbero.

Here’s a breakdown of the case’s procedural journey:

1. Complaint Filed in Makati RTC: Imperial filed the lawsuit in Makati, based on a venue stipulation in their contract.
2. Summons Served on Branch Manager: The summons was served on Engr. Sabulbero, Villarosa’s Branch Manager in Cagayan de Oro.
3. Motion to Dismiss by Villarosa: Villarosa filed a special appearance and motion to dismiss, arguing improper service of summons and lack of jurisdiction because service was on a branch manager, not someone listed in Rule 14, Section 11.
4. Motion to Declare Default by Imperial: Imperial countered, arguing that Villarosa was effectively notified and had failed to answer the complaint.
5. RTC Denies Motion to Dismiss: The Regional Trial Court (RTC) in Makati sided with Imperial, claiming substantial compliance because the branch manager received the summons. The court believed Villarosa had been notified.
6. Motion for Reconsideration by Villarosa: Villarosa reiterated that strict compliance with the revised rule was necessary and branch managers were not authorized recipients.
7. RTC Denies Reconsideration: The RTC upheld its original decision.
8. Petition for Certiorari to Supreme Court: Villarosa elevated the case to the Supreme Court, questioning the RTC’s jurisdiction.

The Supreme Court sided with Villarosa. It emphasized the strict interpretation of Rule 14, Section 11. The Court stated:

“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 Court explicitly overruled previous cases that had allowed service on agents or other officers not specifically listed in the revised rule. It highlighted the intent of the rule revision to prevent ambiguity and ensure proper notification to corporations through their key officers at the principal place of business. Because service was improperly made on the branch manager in Cagayan de Oro, and not on any of the officers listed in Rule 14, Section 11 at Villarosa’s principal office in Davao City, the Supreme Court declared that the Makati RTC never acquired jurisdiction over Villarosa. Consequently, all orders of the RTC were nullified, and the case was effectively dismissed.

Practical Implications: Serve Summons Correctly or Risk Dismissal

The Villarosa case has significant practical implications for anyone involved in suing corporations in the Philippines. It serves as a clear warning: strict compliance with Rule 14, Section 11 is not optional, it is mandatory. Failing to serve summons on one of the specifically enumerated officers at the corporation’s principal office can be fatal to your case, even if the corporation becomes aware of the lawsuit through other means.

For businesses, this ruling underscores the importance of clearly identifying their principal place of business and ensuring that key officers like the General Manager, Corporate Secretary, and Treasurer are aware of their role in receiving legal summons. Corporations should also ensure their official addresses are updated with the Securities and Exchange Commission (SEC) to avoid any confusion regarding where summons should be served.

For lawyers and litigants, this case is a crucial reminder to double-check and strictly adhere to the rules of service of summons. Do not assume that serving a branch manager or any other employee will suffice. Always aim to serve summons on one of the officers explicitly listed in Rule 14, Section 11 at the corporation’s principal office. Verification of the corporation’s principal address with the SEC is a prudent step before initiating legal action.

Key Lessons from Villarosa v. Benito:

• Strict Compliance is Key: Philippine courts strictly interpret Rule 14, Section 11 regarding service of summons on corporations. Substantial compliance is not enough.
• Serve the Right Officer: Summons must be served on the President, Managing Partner, General Manager, Corporate Secretary, Treasurer, or In-house Counsel. No other officers or employees are valid recipients.
• Principal Office Matters: Service should ideally be made at the corporation’s principal place of business, as officially registered.
• Branch Manager is Insufficient: Serving summons on a branch manager, even if they are a high-ranking employee, is not valid service for domestic corporations.
• Jurisdiction is Paramount: Improper service means the court does not acquire jurisdiction, and any judgments or orders will be void.
• Motion to Dismiss is Powerful: A motion to dismiss based on improper service of summons is a potent tool if service is indeed defective.

Frequently Asked Questions (FAQs) about Summons and Corporate Service in the Philippines

Q1: What happens if I serve the summons on the wrong person in a corporation?

A: If you serve summons on someone not listed in Rule 14, Section 11 (like a branch manager, agent, or regular employee), the service is considered invalid. The court will not acquire jurisdiction over the corporation, and the case could be dismissed.

Q2: Our corporation has multiple offices. Where should the summons be served?

A: Ideally, summons should be served at the corporation’s principal place of business, as registered with the SEC. While service at a branch office might sometimes be argued as valid under certain circumstances (though less likely after Villarosa), it is always safest to serve at the principal office and to one of the officers listed in Rule 14, Section 11.

Q3: What if the corporation actually received the summons even if served on the wrong person? Does that count as valid service?

A: No. As Villarosa illustrates, actual notice is not the same as valid service. Even if the corporation becomes aware of the lawsuit, if the summons was not served according to Rule 14, Section 11, the service is invalid, and the court lacks jurisdiction.

Q4: What if the General Manager is always out of the office? Who else can I serve?

A: You can serve summons on any of the officers listed in Rule 14, Section 11: the President, Managing Partner, Corporate Secretary, Treasurer, or In-house Counsel. If none are available at the principal office after diligent attempts, you may need to explore substituted service as provided by the Rules, but always prioritize personal service to the enumerated officers first.

Q5: What should I do if I believe I was improperly served with summons?

A: Immediately consult with legal counsel. You should file a Motion to Dismiss based on lack of jurisdiction due to improper service of summons. This motion should be filed as a special appearance, specifically challenging the court’s jurisdiction without submitting to it for other purposes.

Q6: Does this rule apply to foreign corporations?

A: No, Rule 14, Section 11 applies to domestic corporations. Service on foreign corporations is governed by a different section of the Rules of Civil Procedure, typically Section 12 or 14 of Rule 14, depending on whether the foreign corporation is doing business in the Philippines and has a resident agent.

Q7: Has the rule on summons service ever been relaxed?

A: Prior to the 1997 amendments, courts sometimes allowed service on agents or managers not explicitly listed in the rules, applying a more liberal interpretation focused on actual notice. However, Villarosa and subsequent cases firmly established a strict compliance standard under the revised Rule 14, Section 11.

ASG Law specializes in civil litigation and corporate law in the Philippines. Contact us or email hello@asglawpartners.com to schedule a consultation.