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Documento Mx-Corp PDF
Documento Mx-Corp PDF
EXCELLENT QUALITY APPAREL, INC., RTC denied the motion but was reversed by CA.-
vs.
WIN MULTI RICH BUILDERS, INC. Facts: Hence, this petition.
- Issues:
1. does Win have a legal personality to institute the present
Petitioner Excellent Quality Apparel, Inc. then represented by case;2. does the RTC have jurisdiction over the case
Max L.F. Ying,Vice-President for Productions, and Alfiero R. notwithstanding the presence of the arbitration clause;
Orden, Treasurer, entered into a contract with Multi-Rich Held:
Builders (Multi-Rich) represented by Wilson G. Chua(Chua), A suit seeking to enforce the contractual rights of a single
its President and General Manager, for the construction of a proprietorship, that is, collection of receivables arising from a
garment factory within the Cavite Philippine Economic construction agreement must be brought in the name of the
Zone Authority (CPEZ). proprietor himself. Such suit cannot be brought either in the
name of a corporation organized by the proprietor in view of
the separate personality of a corporation there being no
The duration of the project was for a maximum period of five showing that the proprietor assigned the receivables to the
(5) months or 150consecutive calendar days. Included in the corporation, or even in the registered name of the single
contract is an arbitration clause.- proprietorship as a sole proprietorship is not vested with any
juridical personality to file or defend an action.
Respondent Win Multi-Rich Builders, Inc. (Win) was
incorporated with the Securities and Exchange Commission
(SEC) on 20 February 1997 with Chua asits President and
General Manager.- G.R. No. 195580 April 21, 2014
NARRA NICKEL MINING AND DEVELOPMENT "effectively controlled" by MBMI, a 100% Canadian company
CORP., TESORO MCARTHUR MINING, INC., and declared their MPSAs null and void.
Petitioners,
vs.
REDMONT CONSOLIDATED MINES
CORP., Respondent. Pending the resolution of the appeal filed by petitioners with
the MAB, Redmont filed a Complaint with the Securities and
Exchange Commission (SEC), seeking the revocation of the
certificates for registration of petitioners on the ground that
FACTS: they are foreign-owned or controlled corporations engaged in
mining in violation of Philippine laws.
Sometime in December 2006, respondent Redmont
Consolidated Mines Corp. (Redmont), a domestic corporation CA found that there was doubt as to the nationality of
organized and existing under Philippine laws, took interest in petitioners when it realized that petitioners had a common
mining and exploring certain areas of the province of Palawan. major investor, MBMI, a corporation composed of 100%
After inquiring with the Department of Environment and Canadians. Pursuant to the first sentence of paragraph 7 of
Natural Resources (DENR), it learned that the areas where it Department of Justice (DOJ) Opinion No. 020, Series of 2005,
wanted to undertake exploration and mining activities where adopting the 1967 SEC Rules which implemented the
already covered by Mineral Production Sharing Agreement requirement of the Constitution and other laws pertaining to
(MPSA) applications of petitioners Narra, Tesoro and the exploitation of natural resources, the CA used the
McArthur. "grandfather rule" to determine the nationality of petitioners.
SO ORDERED. RULING:
1st Issue: The defendant Benguet Company has committed no
civil wrong against the plaintiffs, and if a public wrong has
been committed, the directors of the Balatoc Company, and
CORPORATION LAW the plaintiff Harden himself, were the active inducers of the
commission of that wrong. The contract, supposing it to have
CASE DIGESTS been unlawful in fact, has been performed on both sides.
2nd Issue: Having shown that the plaintiffs in this case have no
right of action against the Benguet Company for the infraction
of law supposed to have been committed, we forego any
discussion of the further question whether a sociedad anonima
created under Spanish law, such as the Benguet Company, is a and concreting of Panay Avenue.5 Pursuant to the contract, the
corporation within the meaning of the prohibitory provision business enterprise commenced its clearing operations by
already so many times mentioned. removing the structures and uprooting the trees along the
A sociedad anonima is something very much like the English thoroughfare. Its foreman, Renato Agarao, supervised the
joint stock company, with features resembling those of both clearing operations.6
the partnership is shown in the fact that sociedad, the generic
component of its name in Spanish, is the same word that is Claiming that the clearing operations lacked the necessary
used in that language to designate other forms of partnership, permit and prior consultation, petitioners Bienvenido Ejercito
and in its organization it is constructed along the same general and Jose Martinez, as well as a certain Oscar Baria, brought
lines as the ordinary partnership. the matter to the attention of the barangay authorities, Mayor
In section 75 of the Corporation Law, a provision is found Belmonte, Senator Ma. Ana Consuelo A.S. Madrigal, the
making the sociedad anonima subject to the provisions of the Department of Environment and Natural Resources and the
Corporation Law "so far as such provisions may be Philippine Coconut Authority.7
applicable", and giving to the sociedades anonimas previously
created in the Islands the option to continue business as such The efforts of petitioners proved unsuccessful. Hence, on 10
or to reform and organize under the provisions of the
September 2004, they filed a petition for injunction before the
Corporation Law.
Quezon City RTC. The petition named "M.R. Vargas
The provision in Section 75 of the Act Congress of July 1,
Construction Co., represented by herein Marcial R. Vargas
1902 (Philippine Bill), generally prohibiting corporations
and Renato Agarao," as respondent.8
engaged in mining and members of such from being interested
in any other corporation engaged in mining, was amended by
section 7 of Act No. 3518 of the Philippine Legislature, The Petition,9 docketed as Civil Case No. Q-04-53687,
approved by Congress March 1, 1929. The change in the law indicated that "Respondent M.R. Vargas Construction, is an
effected by this amendment was in the direction of entity, with office address at the 4th Floor, President Tower,
liberalization. Thus, the inhibition contained in the original Timog Avenue corner Scout Ybardaloza [sic] St., Quezon
provision against members of a corporation engaged in City, represented herein by its President Marcial Vargas and
agriculture or mining from being interested in other its construction foreman Renato Agarao, where they may be
corporations engaged in agriculture or in mining was so served with summons and other court processes." 10
modified as merely to prohibit any such member from holding
more than fifteen per centum of the outstanding capital stock The petition was accompanied with an application for a
of another such corporation. Moreover, the explicit prohibition temporary restraining order (TRO) and a writ of preliminary
against the holding by any corporation (except for irrigation) injunction.11 Thus, the Office of the Clerk of Court forthwith
of an interest in any other corporation engaged in agriculture issued summons and notice of raffle on 10 September
or in mining was so modified as to limit the restriction to 2004.12 Upon service of the processes on the aforementioned
corporations organized for the purpose of engaging in address, they were returned unserved on the ground that
agriculture or in mining. respondent enterprise was unknown thereat.13
On 7 October 2004, counsel for respondent enterprise filed a The instant petition which similarly impleads the enterprise,
manifestation with urgent omnibus motion to nullify the M.R. Vargas Construction, Marcial R. Vargas and Renato
proceedings and to cite petitioners and the process server in Agarao as respondents' raises two issues, namely: (1) whether
contempt of court.22 He argued that respondent enterprise the trial court acquired jurisdiction over respondent enterprise
failed to receive the summons, alleging that it was herein and (2) whether the defense of lack of jurisdiction had been
petitioner Jose Martinez who signed as recipient thereof as waived.
well as of the notice of raffle that was served on 10 September
2004.23
Jurisdiction over the defendant is acquired either upon a valid
service of summons or the defendant's voluntary appearance in
On 18 October 2004, the writ of preliminary injunction was court. When the defendant does not voluntarily submit to the
issued. Subsequently, petitioners filed a motion for ocular court's jurisdiction or when there is no valid service of
inspection and another motion praying that respondent summons, any judgment of the court, which has no
enterprise be ordered to jurisdiction over the person of the defendant is null and void.
In an action strictly in personam, personal service on the
restore the structures damaged by its clearing operations. 24 defendant is the preferred mode of service, that is, by handing
a copy of the summons to the defendant in person.32
On 8 November 2004, the RTC issued the assailed
Order,25 nullifying the proceedings thus far conducted in the Citing the jurisdictional implications of the failure of service
case.26 Petitioners sought reconsideration, but the motion was of summons, the Court of Appeals concluded that no grave
denied in an Order dated 20 December 2004.27 abuse of discretion was committed by Judge Jacob in
nullifying the proceedings thus far conducted in the case based
Thus, petitioners filed a petition for certiorari before the Court on the finding that the summons had not been served on
of Appeals assailing the 8 November 2004 Order issued by respondent enterprise and that Agarao, despite being present at
Judge Jacob.28 This time, aside from Judge Jacob and the the 15 September 2004 hearing, was not authorized to
enterprise "M.R. Vargas Construction" itself, the petition also represent respondent enterprise in said hearing.
named Marcial R. Vargas and Renato Agarao, the enterprise's
owner and foreman, respectively, as individual respondents. Petitioners take exception. They argue that the trial court
The separate addresses of said respondents were also indicated acquired jurisdiction over respondent enterprise, an entity
in the initial part of the petition. without juridical personality, through the appearance of its
foreman, Agarao, at the 15 September 2004 hearing on the
It was argued in the petition that Judge Jacob committed grave TRO application. Petitioners theorize that the voluntary
abuse of direction in nullifying the proceedings on the ground appearance of Agarao in said hearing was equivalent to
of lack of jurisdiction in view of Agarao's presence at the service of summons binding upon respondent enterprise,
hearing on petitioners' application for TRO, in failing to act on following by analogy, Section 8, Rule 1433 which allows the
petitioners' pending motions and in directing instead the service of summons on any of the defendants associated to an
issuance of new summons on respondent enterprise.29 entity without juridical personality. Furthermore, they contend
that the receipt by a certain Rona Adol of the court processes
was binding upon respondent enterprise because the latter did
On 10 October 2005, the Court of Appeals rendered the
not deny the authority of Adol to receive communications on
assailed Decision dismissing the petition for certiorari for lack
of merit.30 In its Order dated 28 April 2006, the Court of its behalf.
Appeals denied petitioners' motion for reconsideration.
Petitioners' argument is untenable.
Hence, the instant petition attributes the following errors to the
Court of Appeals: At the outset, it is worthy to note that both the Court of
Appeals and the trial court found that summons was not
served on respondent enterprise. The Officer's Return stated
I.
essentially that the server failed to serve the summons on any mode of service other than that prescribed by the statute is
respondent enterprise because it could not be found at the considered ineffective.39
address alleged in the petition. This factual finding, especially
when affirmed by the appellate court, is conclusive upon this Agarao was not a party respondent in the injunction case
Court and should not be disturbed because this Court is not a before the trial court. Certainly, he is not a real party-in-
trier of facts. interest against whom the injunction suit may be brought,
absent any showing that he is also an owner or he acts as an
A sole proprietorship does not possess a juridical personality agent of respondent enterprise. Agarao is only a foreman,
separate and distinct from the personality of the owner of the bereft of any authority to defend the suit on behalf of
enterprise. The law does not vest a separate legal personality respondent enterprise. As earlier mentioned, the suit against an
on the sole proprietorship or empower it to file or defend an entity without juridical personality like respondent enterprise
action in court.34Only natural or juridical persons or entities may be instituted only by or against its owner. Impleading
authorized by law may be parties to a civil action and every Agarao as a party-respondent in the suit for injunction would
action must be prosecuted and defended in the name of the have no legal consequence. In any event, the petition for
real parties-in-interest.35 injunction described Agarao only as a representative of M.R.
Vargas Construction Co., which is a mere inconsequentiality
The records show that respondent enterprise, M.R. Vargas considering that only Vargas, as its sole owner, is authorized
Construction Co., is a sole proprietorship and, therefore, an by the Rules of Court to defend the suit on behalf of the
entity without juridical personality. Clearly, the real party-in- enterprise.
interest is Marcial R. Vargas who is the owner of the
enterprise. Thus, the petition for injunction should have Despite Agarao's not being a party-respondent, petitioners
impleaded him as the party respondent either simply by nevertheless confuse his presence or attendance at the hearing
mention of his name or by denominating him as doing on the application for TRO with the notion of voluntary
business under the name and style of "M.R. Vargas appearance, which interpretation has a legal nuance as far as
Construction Co." It was erroneous to refer to him, as the jurisdiction is concerned. While it is true that an appearance in
petition did in both its caption and body, as representing the whatever form, without explicitly objecting to the jurisdiction
enterprise. Petitioners apparently realized this procedural lapse of the court over the person, is a submission to the jurisdiction
when in the petition for certiorari filed before the Court of of the court over the person, the appearance must constitute a
Appeals and in the instant petition, M.R. Vargas Construction, positive act on the part of the litigant manifesting an intention
Marcial R. Vargas and Renato Agaro were separately named to submit to the court's jurisdiction.40 Thus, in the instances
as individual respondents. where the Court upheld the jurisdiction of the trial court over
the person of the defendant, the parties showed the intention to
Since respondent enterprise is only a sole proprietorship, an participate or be bound by the proceedings through the filing
entity without juridical personality, the suit for injunction may of a motion, a plea or an answer.41
be instituted only against its owner, Marcial Vargas.
Accordingly summons should have been served on Vargas Neither is the service of the notice of hearing on the
himself, following Rule 14, Sections 636 and 737 of the Rules application for a TRO on a certain Rona Adol binding on
of Court on personal service and substituted service. In the respondent enterprise. The records show that Rona Adol
instant case, no service of summons, whether personal or received the notice of hearing on behalf of an entity named
substituted, was effected on Vargas. It is well-established that JCB. More importantly, for purposes of acquiring jurisdiction
summons upon a respondent or a defendant must be served by over the person of the defendant, the Rules require the service
handing a copy thereof to him in person or, if he refuses to of summons and not of any other court processes.
receive it, by tendering it to him. Personal service of summons
most effectively ensures that the notice desired under the Petitioners also contend that respondent enterprise waived the
constitutional requirement of due process is accomplished. If defense of lack of jurisdiction when its counsel actively
however efforts to find him personally would make prompt demanded positive action on the omnibus motion. The
service impossible, service may be completed by substituted argument is implausible.
service, i.e., by leaving copies of the summons at his dwelling
house or residence with some person of suitable age and
It should be noted that when the defendant's appearance is
discretion then residing therein or by leaving the copies at his
made precisely to object to the jurisdiction of the court over
office or regular place of business with some competent his person, it cannot be considered as appearance in
person in charge thereof.38 court.42 Such was the purpose of the omnibus motion, as
counsel for respondent enterprise precisely manifested therein
The modes of service of summons should be strictly followed that he erroneously believed that Vargas himself had received
in order that the court may acquire jurisdiction over the the summons when in fact it was petitioner Martinez who
respondents, and failure to strictly comply with the signed as recipient of the summons. Noteworthy is the fact
requirements of the rules regarding the order of its publication that when the counsel first appeared in court his appearance
is a fatal defect in the service of summons. It cannot be was "special" in character and was only for the purpose of
overemphasized that the statutory requirements on service of questioning the court's jurisdiction over Vargas, considering
summons, whether personally, by substituted service or by that the latter never received the summons. However, the
publication, must be followed strictly, faithfully and fully, and counsel was shown a copy of the summons where a signature
appears at the bottom which led him to believe that the
summons was actually received by Vargas when in fact it was
petitioner Martinez himself who affixed his signature as
recipient thereof. When the counsel discovered his mistake, he
lost no time pleading that the proceedings be nullified and that
petitioners and the process server be cited for contempt of
court. Both the trial and appellate courts concluded that the
improvident withdrawal of the defense of lack of jurisdiction
was an innocuous error, proceeding on the undeniable fact that
the summons was not properly served on Vargas. Thus, the
Court of Appeals did not commit a reversible error when it
affirmed the trial court's nullification of the proceedings for
lack of jurisdiction.
SO ORDERED.