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Bank of the Philippine Islands vs. Sps. Ireneo M. Santiago and Liwanag P. Santiago, Centrogen, Inc.

,
Represented by Edwin Santiago
March 28, 2007

Doctrine:
1. The service of summons to an officer not included in the enumeration in the Rules will not bind the
private juridical entity. Such service is therefore void and ineffectual.
2. The defect of the service of the original summons can be cured by the issuance and the proper service of
new summons.

Summary:
Centrogen obtained several loans from FEBTC-BPI, which was secured by an REM executed by Spouses
Santiago. The loan became due and demandable and Centrogen defaulted. BPI foreclosed the property. Upon
the receipt of the Notice of Sale, Centrogen with Spouses Santiago filed a complaint seeking the issuance of
a TRO and the annulment of the REM. The summons to BPI was served to BPI Branch in Sta. Cruz, Laguna.
BPI filed a Motion to Dismiss because of improper service of summons-lack of jurisdiction over the person.
BPI was again sent summons now to the Corporate Secretary in Ayala, Makati. BPI still claims that there was
no proper service of summons. The SC held that the defect in the original summons were cured by the
subsequent summons sent to the Corporate Secretary. Moreover, the new summons were sent before the
granting of the Writ of Preliminary Injunction.

Edwin Santiago is the son of Spouses Ireneo and Liwanag Santiago.

Centrogen, a domestic corporation engaged in pharmaceutical business obtained several loans from Far East
Bank and Trust Company (FEBTC) amounting to P4,650,000 as evidenced by promissory notes executed by
its President, Edwin Santiago. This was secured by a real estate mortage over a parcel of land by Ireneo
Santiago. The mortgage secured the principal loan of P490,000. Later on, the same property secured another
loan obligation in the amount of P1,504,280. Subsequently, Centrogen incurred default and the loan became
due and demandable.

Subsequently, FEBTC merged with BPI. BPI assumed all the rights, privileges and obligations of FEBTC.

BPI filed a case for Extra-Judicial Foreclosure of Real Estate Mortgage over the property before the RTC of
Sta. Cruz, Laguna. Thereafter, a Notice of Sale was issued by the Provincial Sheriff on 21 January 2003.

On the same day, the Spouses Santiago were served with the copy of the Notice of Sale. Upon receipt the
Spouses Santiago and Centrogen filed a Complaint seeking the issuance of a TRO 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 P490,000.00, including interest has
been fully paid. Such payment notwithstanding, the amount was still included in the amount of computation
of the arrears as shown by the document of Extra-Judicial Foreclosure of Real Estate Mortgage filed by the
latter. Moreover, the Spouses Santiago and Centrogen contended that the original loan agreement was for the
amount of 5 Million but only 2 Million was released by petitioner and as a result, the squalene project failed
and the company groped for funds to pay its loan obligations.

On 27 February 2003, BPI was summoned to file and serve its Answer. On the same day, summons was
served on the Branch Manager of BPI in Sta. Cruz, Laguna, as evidenced by the Sheriffs Return.

Instead of filing an Answer, BPI filed a Motion to Dismiss on the ground of lack of jurisdiction over the
person of the defendant and other procedural infirmities attendant to the filing of the complaint. BPI claimed
that the Branch Manager of its Sta. Cruz, Laguna Branch, was not one of those authorized by Section 11,
Rule 14 of the Rules of Court to receive summons on behalf of the corporation. Therefore, the summons
served upon its Branch Manager did not bind the corporation. Also, BPI alleged that the complaint filed by
the Spouses Santiago and Centrogen lacked a Certificate of Non-Forum Shopping and was dismissible.
Lastly, BPI also attacked that the person who verified the complaint was not authorised by Centrogens BOD.

In an Order dated Feb.28, 2003, RTC denied the Motion to Dismiss and emphasised that the nature of the
case merited its removal from the purview of Sec. 11, Rule 14 of the Rules of Court. The RTC declared that
the instant Order is still valid and binding despite non-compliance with the Sec. 11, Rule 14 because of the
extreme urgency wherein the Court has jurisdiction to act on the TRO despite the lack of proper service of
summons. The RTC also called for a summary hearing for the application of the TRO.

After the summary hearing, the RTC granted the TRO to prevent foreclosure sale.

On Mar. 6, 2003, RTC ordered the service of new summons to BPI. The new summons was served
upon the Office of the Corporate Secretary of BPI on Mar. 11, 2003.

On Mar. 20, 2003, RTC issued an Order granting the issuance of a Writ of Preliminary Injunction enjoining
the extrajudicial foreclosure sale of the property pending the resolution of the Annulment of Real Estate
Mortgage.

BPI file MR but was denied hence this petition with BPI alleging that the court a quo did not acquire
jurisdiction over its person and consequently, the Order issued by the RTC, permanently enjoining the
foreclosure sale, was therefore void and does not bind BPI.

Issue: Whether or not the court acquired jurisdiction over BPI?- YES

The Court held that the service of summons on BPIs Branch Manager did not bind the BPI for the branch
manager is not included in the enumeration of the statute of the person upon whom service of summons can
be validly made in behalf of the corporation. Such service is void and ineffectual.

However, upon the issuance and the proper service of new summons to the Corporate Secretary of
BPI, whatever defect attended the service of the original summons, was promptly and accordingly
cured.

The subsequence service of summons was neither disputed nor was it mentioned by BPI except in a fleeting
narration of facts and therefore enjoys the presumption that official duty has been regularly performed. The
Process Servers Certificate of Service of Summons is a prima facie evidence of facts set out in that
certificate.

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 fact that the original summons was invalidly served is of no moment since jurisdiction over
BPI was subsequently acquired by the service of a new summons.

In explaining the test on the validity of service of summons, Justice Florenz Regaled stressed that substantial
justice must take precedence over technical and stated that:
The ultimate test on the validity and sufficiency on service of summons is whether the same and the
attachments thereto where 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.

The Court also 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.
In any event, as it is glaringly evident from the records of the case that jurisdiction over the person of the
defendant was validly acquired by the court by the valid service of a new summons before the writ of
preliminary injunction was issued and guided by jurisprudential pronouncements heretofore adverted to, we
hold that the proceedings attendant to the issuance of the writ of preliminary injunction were regular.

Additional Notes:
The Philippine American Life and General Insurance Company vs. 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 vs. 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. x x x The need for speedy justice must prevail over a technicality.