The Supreme Court ruled that a court’s jurisdiction over a corporation requires valid service of summons to specific individuals authorized to receive it, such as the president, manager, secretary, cashier, agent, or director. If service is made to an unauthorized person, the court does not acquire jurisdiction, rendering the proceedings and any resulting decisions null and void. This ensures corporations receive proper notice of legal actions against them, safeguarding their right to due process and the opportunity to defend themselves. This decision highlights the importance of adhering strictly to the rules governing service of summons to protect the procedural rights of corporations.

The Case of the Missing Summons: Can a Corporation Be Bound Without Proper Notification?

In Ellice Agro-Industrial Corporation v. Young, the central legal issue revolved around whether the Regional Trial Court (RTC) validly acquired jurisdiction over Ellice Agro-Industrial Corporation (EAIC). This hinged on the validity of the service of summons. The case began with a Contract to Sell between Rodel T. Young, Delfin Chan, and Jim Wee (respondents) and EAIC, represented by Guia G. Domingo. After the respondents made partial payments, EAIC allegedly failed to deliver the owner’s duplicate certificate of title and the corresponding deed of sale. Consequently, the respondents filed a complaint for specific performance against EAIC and Domingo.

The problem arose when the summons was served on Domingo, who was purportedly EAIC’s corporate secretary and attorney-in-fact. EAIC later claimed that Domingo was not authorized to receive summons on its behalf. The RTC, however, proceeded with the case, and when EAIC failed to appear at the pre-trial conference, the court allowed the respondents to present their evidence ex parte, ultimately ruling in their favor. EAIC subsequently filed a Petition for Relief from Judgment and then a Petition for Annulment of Judgment, both of which were denied. The Court of Appeals (CA) affirmed the RTC’s decision, leading EAIC to elevate the case to the Supreme Court.

The Supreme Court addressed the crucial question of whether the RTC had properly obtained jurisdiction over EAIC. The court referenced Section 13, Rule 14 of the 1964 Rules of Civil Procedure, which was the applicable rule at the time. This section specifies that service upon a domestic corporation must be made on the president, manager, secretary, cashier, agent, or any of its directors. The purpose of this rule is to ensure that the corporation receives prompt and proper notice of the action against it.

The Supreme Court emphasized the importance of strict compliance with the rules on summons, stating:

The requirements of the rule on summons must be strictly followed, otherwise, the trial court will not acquire jurisdiction over the defendant.

The Court scrutinized EAIC’s 1996 General Information Sheet (GIS) filed with the Securities and Exchange Commission (SEC), which revealed that Domingo was not listed as president, manager, secretary, cashier, agent, or director of EAIC. Based on this, the Court determined that Domingo lacked the authority to represent EAIC, and therefore, the service of summons was invalid. The Court rejected the argument that EAIC’s actual knowledge of the case could substitute for valid service of summons, citing Cesar v. Ricafort-Bautista:

…jurisdiction of the court over the person of the defendant or respondent cannot be acquired notwithstanding his knowledge of the pendency of a case against him unless he was validly served with summons. Such is the important role a valid service of summons plays in court actions.

The Supreme Court also dismissed the argument that EAIC’s filing of an answer with counterclaim through Domingo constituted voluntary submission to the RTC’s jurisdiction. The Court cited Salenga v. Court of Appeals, emphasizing that a corporation can only act through its board of directors or authorized officers and agents. Since Domingo was not an authorized officer or agent, her actions could not bind EAIC. Furthermore, Domingo’s claim that she was representing Alicia E. Gala, the purported beneficial owner of the property, further undermined her authority to act on behalf of EAIC.

In light of these findings, the Supreme Court concluded that the RTC had not validly acquired jurisdiction over EAIC. Consequently, the proceedings and the RTC’s decision were deemed null and void. The Court therefore granted the petition, reversed the CA’s decision, and ordered the case remanded to the RTC for proper service of summons and further proceedings. This decision reaffirms the principle that valid service of summons is a prerequisite for a court to exercise jurisdiction over a corporation.

The implications of this ruling are significant for corporations involved in legal disputes. It underscores the necessity of ensuring that summons are served only on authorized individuals, as defined by the Rules of Civil Procedure and the corporation’s own records. The ruling protects corporations from being bound by legal proceedings where they have not received proper notice and opportunity to defend themselves. Moreover, it serves as a reminder to plaintiffs to verify the proper channels for serving summons to corporations to avoid potential jurisdictional challenges.

This case also highlights the importance of maintaining accurate and up-to-date corporate records, particularly the General Information Sheet (GIS) filed with the SEC. The GIS serves as a key document for determining who is authorized to represent the corporation in legal matters. Inaccurate or outdated information could lead to confusion and potential challenges to the validity of service of summons. Therefore, corporations should regularly review and update their GIS to reflect the current composition of their officers and directors.

Furthermore, the decision clarifies that mere knowledge of a pending case does not substitute for valid service of summons. Even if a corporation is aware of a lawsuit against it, the court must still adhere to the procedural requirements for service of summons to establish jurisdiction. This principle safeguards the corporation’s right to due process and ensures that it has a fair opportunity to respond to the allegations against it.

FAQs

What was the key issue in this case?	The key issue was whether the Regional Trial Court (RTC) validly acquired jurisdiction over Ellice Agro-Industrial Corporation (EAIC) through the service of summons on Guia G. Domingo. The Supreme Court found that Domingo was not authorized to receive summons on behalf of the corporation, thus invalidating the service.
Who is authorized to receive summons for a corporation?	According to the 1964 Rules of Civil Procedure, service of summons upon a domestic corporation must be made on the president, manager, secretary, cashier, agent, or any of its directors. The purpose is to ensure the corporation receives proper notice of the legal action.
What happens if the summons is served on an unauthorized person?	If the summons is served on someone not authorized to receive it on behalf of the corporation, the court does not acquire jurisdiction over the corporation. Any judgment rendered by the court in such a case is null and void.
Does knowledge of a lawsuit substitute for valid service of summons?	No, mere knowledge of a pending case does not substitute for valid service of summons. The court must still adhere to the procedural requirements for service to establish jurisdiction over the corporation, ensuring due process.
What is a General Information Sheet (GIS) and why is it important?	A General Information Sheet (GIS) is a document filed with the Securities and Exchange Commission (SEC) that contains information about a corporation’s officers and directors. It is important because it helps determine who is authorized to represent the corporation in legal matters.
Can a corporation voluntarily submit to the court’s jurisdiction?	Yes, a corporation can voluntarily submit to the court’s jurisdiction, but only through its authorized representatives. An unauthorized person’s actions, such as filing an answer, cannot bind the corporation or be considered a voluntary appearance.
What is the effect of a judgment of annulment?	A judgment of annulment sets aside the questioned judgment, final order, or resolution and renders it null and void. This means the original decision is vacated, and the case may be refiled in the proper court with proper service of summons.
What was the outcome of this case?	The Supreme Court reversed the Court of Appeals’ decision and declared the Regional Trial Court’s decision vacated and set aside. The case was remanded to the RTC for proper service of summons and further proceedings.

In conclusion, Ellice Agro-Industrial Corporation v. Young underscores the critical importance of adhering to the rules governing service of summons, particularly concerning corporations. The decision serves as a reminder to both plaintiffs and corporations to ensure that proper procedures are followed to safeguard the rights and interests of all parties involved in legal proceedings. By strictly enforcing these rules, the courts can ensure that justice is administered fairly and impartially.

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: Ellice Agro-Industrial Corporation v. Young, G.R. No. 174077, November 21, 2012