In a pivotal ruling, the Supreme Court of the Philippines affirmed that serving a summons on a branch manager is insufficient for establishing jurisdiction over a corporation. However, the Court clarified that a subsequent proper service of a new summons on the corporate secretary cures any prior defects, ensuring due process and the validity of court proceedings. This case highlights the importance of adhering to the Revised Rules of Court when serving summons to juridical entities.

The Summons Saga: BPI’s Challenge to Court Jurisdiction Over Foreclosure

The Bank of the Philippine Islands (BPI) sought to reverse the Court of Appeals’ decision, which upheld the Regional Trial Court’s (RTC) order to enjoin the extrajudicial foreclosure sale of land owned by Spouses Ireneo and Liwanag Santiago and Centrogen, Inc. The core issue was whether the RTC properly acquired jurisdiction over BPI. Initially, the summons was served on BPI’s branch manager in Sta. Cruz, Laguna, which BPI argued was invalid under Section 11, Rule 14 of the Revised Rules of Court. This rule specifies that service on a corporation must be made on the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel. BPI contended that because the branch manager was not among those authorized, the court lacked jurisdiction.

However, the RTC later ordered a new summons to be served, which was then properly served on the Corporate Secretary of BPI. The Supreme Court emphasized that this subsequent valid service cured the initial defect. The court referenced Section 11, Rule 14 of the Revised Rules of Court, which dictates the proper method for serving summons on domestic private juridical entities:

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.

The Court clarified that while the initial service was indeed insufficient, the later, proper service on the Corporate Secretary rectified the situation. The Court emphasized that the essence of the rule is to ensure that the corporation receives proper notice and has the opportunity to respond. Therefore, the primary objective is to render reasonably certain that the corporation will promptly receive notice of the action filed against it.

Building on this principle, the Supreme Court cited The Philippine American Life and General Insurance Company v. Brevea, highlighting that a case should not be dismissed simply because the original summons was wrongfully served. Instead, the issuance and service of an alias summons can correct the defect. The Supreme Court further elucidated that the validity of service of summons rests on whether the corporation ultimately receives the summons and attachments under circumstances where it does not sustain undue prejudice and is afforded a full opportunity to file its responsive pleadings. 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.

Beyond the issue of jurisdiction, the Court also addressed the propriety of the preliminary injunction issued by the RTC. The Court noted that an injunction is a preservative remedy intended to protect a substantive right, maintaining the status quo until the merits of the case are fully heard. To grant a preliminary injunction, there must be (1) a right in esse or a clear legal right to be protected; (2) a violation of that right; and (3) an urgent need to prevent serious damage. The Spouses Santiago’s right as registered owners and their claim of fully paying the mortgage obligation justified the injunction, preventing irreparable damage pending resolution of the main case.

The Court also stated that even with subsequent service on the corporate secretary of BPI, its issuance of a Writ of Preliminary Injunction remained regular. In essence, the Supreme Court underscored that lower courts should not be overturned on discretionary judgments, unless there is manifest abuse. By affirming the appellate court’s decision, the Court reiterated that lower courts possess considerable discretion in issuing preliminary injunctions, provided their exercise of power is within legal bounds. It stated that any perceived abuse of this discretion should be grave enough to amount to a lack of jurisdiction, before the Supreme Court can step in and overturn decisions made by lower courts.

FAQs

What was the key issue in this case?	The central question was whether the RTC acquired jurisdiction over BPI, given that the initial summons was served on the branch manager rather than an authorized officer.
Why was the service on the branch manager initially considered invalid?	Under Section 11, Rule 14 of the Revised Rules of Court, service on a corporation must be made on specific officers, such as the president, corporate secretary, or general manager, not a branch manager.
How was the issue of improper service resolved?	The RTC ordered a new summons, which was then properly served on BPI’s Corporate Secretary. This subsequent service cured the defect in the initial service.
What is the effect of a subsequent valid service of summons?	A subsequent valid service of summons retroactively validates the court’s jurisdiction over the defendant corporation, curing any prior defects in service.
What is a preliminary injunction?	A preliminary injunction is a court order that temporarily restrains a party from performing certain actions, preserving the status quo until the merits of the case can be decided.
What are the requirements for issuing a preliminary injunction?	The requirements include a clear legal right being violated, an urgent need to prevent serious damage, and that the injunction serves to maintain the status quo.
What evidence supported the issuance of the preliminary injunction in this case?	The Spouses Santiago presented a Union Bank check indicating payment of a significant amount, which questioned BPI’s right to foreclose the property.
Can the Supreme Court overturn the issuance of a preliminary injunction?	The Supreme Court will only interfere with the issuance of a preliminary injunction if the lower court committed a grave abuse of discretion.
What was the ultimate outcome of this case?	The Supreme Court affirmed the Court of Appeals’ decision, upholding the RTC’s order enjoining the extrajudicial foreclosure sale, based on valid service of summons and the propriety of the preliminary injunction.

In conclusion, this case serves as a crucial reminder of the importance of strict adherence to procedural rules regarding the service of summons on corporations. It also clarifies that a subsequent valid service can rectify initial defects, ensuring that due process is observed and that the courts maintain proper jurisdiction. While lower courts maintain considerable discretion in granting preliminary injunctions, the Supreme Court reserves the right to overturn such decisions where lower courts are found to have seriously abused their positions.

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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: BANK OF THE PHILIPPINE ISLANDS VS. SPS. IRENEO M. SANTIAGO AND LIWANAG P. SANTIAGO, CENTROGEN, INC., G.R. NO. 169116, March 28, 2007