THIRD DIVISION
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BANK OF THE
PHILIPPINE Petitioner, - versus - SPS. IRENEO M. SANTIAGO and LIWANAG P. SANTIAGO, CENTROGEN, INC.,
REPRSENTED BY EDWIN Respondent. |
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G.R. No. 169116 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ,
CALLEJO, SR., CHICO-NAZARIO, and NACHURA, JJ. Promulgated: |
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CHICO-NAZARIO,
J.:
Before this Court is a Petition for
Review on Certiorari filed by petitioner Bank of the Philippine Islands (BPI)
seeking to reverse and set aside the Decision[1]
of the Court of Appeals dated 3 March 2005 and its Resolution[2]
dated 28 July 2005 affirming the Order[3]
of the Regional Trial Court (RTC) of Santa Cruz, Laguna, Branch 91, dated 20
March 2003 enjoining the extrajudicial foreclosure sale of a parcel of land
covered by Transfer Certificate of Title (TCT) No. T-131382 registered under
the name of Spouses Ireneo and Liwanag
Santiago. The dispositive portion of the
Court of Appeals Decision reads:
WHEREFORE,
premises considered, the petition is DISMISSED. The assailed orders dated
Petitioner BPI is a banking institution duly organized and existing as
such under the Philippine laws.
Private respondent Centrogen, Inc. (Centrogen) is a
domestic corporation engaged in pharmaceutical business, duly organized and
existing as such under the Philippine laws and represented in this act by its
President, Edwin Santiago, son of private respondents Spouses Ireneo M. Santiago and Liwanag P.
Santiago.
On several occasions,
private respondent Centrogen obtained loans from Far
East Bank and Trust Company (FEBTC) in different amounts, the total of which
reached the sum P4,650,000.00, as evidenced by promissory notes executed
by Edwin Santiago.
As a security for a
fraction of the loan obligation, Ireneo M. Santiago
executed a Real Estate Mortgage over a parcel of land covered by TCT No.
T-131382 registered under his name and located at Sta
Cruz, Laguna, with an area of 2,166 square meters (subject property).[4] The mortgage secured the principal loan in
the amount of P490,000.00. Later
on, the same property secured another loan obligation in the amount of P1,504,280.00.[5]
Subsequently, however, Centrogen incurred default and therefore the loan obligation
became due and demandable.
Meanwhile, FEBTC merged
with the BPI with the latter as the surviving corporation. As a result, BPI assumed all the rights,
privileges and obligations of FEBTC.
On
Upon receipt of the Notice of Sale, the Spouses Santiago and Centrogen filed a Complaint seeking the issuance of a Temporary
Restraining Order 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 thereon was fully paid as evidenced by
Union Bank Check No. 0363020895 dated P648,521.51
with BPI as payee. 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.
In addition, the Spouses Santiago and Centrogen
asseverated that the original loan agreement was for the amount of Five Million
Pesos. Such amount will be supposedly
utilized to finance the squalene project of the
company. However, after the amount of
Two Million Pesos was released and was accordingly used in funding the erection
of the structural details of the project, FEBTC, in gross violation of the
agreement, did not release the balance of Three Million Pesos that will
supposedly finance the purchase of machineries and equipment necessary for the
operation. As a result, the squalene project failed and the company groped for funds to
pay its loan obligations.
On
Respectfully returned the original summons and order dated February 2003 with the information that on February 27, 2003 the undersigned served the copy of summons together with the corresponding copy of complaint and its Annexes and order dated February 27, 2003, to defendants (sic) Bank of the Philippine Islands (BPI) thru the manager Ms. Glona Ramos at Sta. Cruz Laguna Branch, at Sta. Cruz, Laguna, to defendant Sheriff Marcial Opinion at the Office of the Provincial Sheriff of Laguna, R.T.C. (sic) Sta. Cruz, Laguna as shown by their signatures on the original summons and order.
Instead of filing an
Answer, BPI filed a Motion to Dismiss[8] the
complaint on the ground of lack of jurisdiction over the person of the
defendant and other procedural infirmities attendant to the filing of the
complaint. In its Motion to Dismiss,
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 Revised Rules of Court[9] to
receive summons on behalf of the corporation.
The summons served upon its Branch Manager, therefore, did not bind the
corporation. In addition, it was alleged
that the complaint filed by the Spouses Santiago and Centrogen
lacked a Certificate of Non-Forum Shopping[10] and
was therefore dismissible. Finally, BPI
underscored that the person who verified the complaint was not duly authorized
by Centrogen’s Board of Directors to institute the
present action as required by Section 23 of the Corporation Code.[11]
In an Order[12] dated
WHEREFORE, premises
considered, the motion to dismiss is hereby denied because of the presence of
extreme urgency wherein the Court has jurisdiction to act on the TRO despite
lack of proper service of summons. Let the instant case be called for summary
hearing on plaintiff’s application for temporary restraining order.
After summary hearing on the Spouses Santiago and Centrogen’s
application for Temporary Restraining Order, the RTC, on
Wherefore, premises
considered, the Court orders that pending the resolution of the plaintiff’s
prayer for preliminary injunction:
1.
The Defendant Provincial Sheriff, his
deputies, employees, and agents are enjoined from proceeding with the
threatened extra-judicial foreclosure sale (to be conducted today) of the
parcel of land owned by plaintiffs Spouses Ireneo M.
Santiago and Liwanag P. Santiago located in (sic) Brgy. Sto. Angel Norte, Sta.
Cruz, Laguna.
2.
The application for a preliminary injunction
is hereby set for hearing on March 10, 2003 at P100,000.00)
to answer for damages that Defendant Bank may sustain if the court should
finally decide that the plaintiffs are not entitled thereto.
On
To avoid further argument as regards the proper service of summons to Defendant Bank, the Branch Clerk of Court is hereby directed to issue another summons and serve copy of the same together with the complaint and its annexes to any of the officers of the Defendant Bank as provided by the rules of civil procedure.[15]
In compliance with the aforesaid
Order, the Branch Clerk of Court caused the issuance of a new summons on
This is to Certify that on March 11, 2003 the undersigned caused the
service of summons together with the copy of complaint and its annexes to
defendant Bank of the Philippine Islands (BPI) and receive (sic) by the Office
of the Corporate Secretary dated March 11, 2003 at the BPI Building Ayala
Avenue, Makati City.
On P490,000.00 secured by
the property subject of the extra-judicial sale had long been paid by Centrogen through a Union
Bank Check No. 0363020895 presented as evidence. The dispositive part of the Order reads:
Wherefore, premises considered, the Court orders that pending the resolution of the main action for the annulment of the real estate mortgage, etc., and /or order from this Court:
1. The Defendant Provincial Sheriff, his deputies,
employees, and agents are enjoined from proceeding with the threatened
extra-judicial foreclosure sale of the parcel of land covered by TCT No.
T-131382 owned by Plaintiffs Spouses Ireneo M.
Santiago and Liwanag P.
2. The bond in the amount of One Hundred
Thousand (P100,000.00) Pesos ordered by the Court to be posted by the
plaintiffs to answer for damages that defendant bank may sustain if the court
should finally decide that the plaintiffs are entitled thereto still stands.
The Motion for Reconsideration filed
by BPI was denied by the RTC in its Order[17]
dated
Aggrieved, BPI filed a Petition for Certiorari before the Court of Appeals
seeking the reversal of the adverse Orders of the RTC.
On
Undaunted, BPI filed this instant
Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court. For our resolution are the
following issues:
I.
WHETHER OR NOT THE RTC ACQUIRED JURISDICTION OVER THE
PERSON OF BPI WHEN THE ORIGINAL SUMMONS WAS SERVED UPON THE BRANCH MANAGER OF
ITS STA. CRUZ, LAGUNA BRANCH.
II.
WHETHER OR NOT THE RTC COMMITTED A GRAVE ABUSE OF
DISCRETION IN ISSUING THE WRIT OF PRELIMINARY INJUNCTION.
BPI
vehemently insists 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.
We are not
persuaded.
The
pertinent provision of the Revised Rules of Court provides:
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.
Basic is
the rule that a strict compliance with the mode of service is necessary to
confer jurisdiction of the court over a corporation. The officer upon whom service is made must be
one who is named in the statute; otherwise, the service is insufficient.[19] The purpose is to render it reasonably
certain that the corporation will receive prompt and proper notice in an action
against it or to insure that the summons be served on a representative so
integrated with the corporation that such person will know what to do with the
legal papers served on him.
Applying
the aforestated principle in the case at bar, we rule
that the service of summons on BPI’s Branch Manager
did not bind the corporation for the branch manager is not included in the
enumeration of the statute of the persons upon whom service of summons can be
validly made in behalf of the corporation.
Such service is therefore void and ineffectual.
However, upon
the issuance and the proper service of new summons on
It bears
stressing, that on
The
subsequent 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.[20]
The Process Server’s Certificate of
Service of Summons is a prima facie evidence of facts set out in that
certificate.[21]
Inarguably,
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 the case
of The Philippine American Life and General Insurance Company v. Brevea,[22]
we ruled:
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.
x x x x
x x
x 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. x x x Moreover, the second summons was technically not an alias
summons but more of a new summons on the amended complaint. It was not a continuation of the first summons
considering that it particularly referred to the amended complaint and not to
the original complaint. (Emphases
supplied.)
BPI’s lamentation, at every turn, on the invalidity of the
service of summons made on the Branch Manager and its deliberate neglect to
acknowledge the fact that a new summons was accordingly served on its Corporate
Secretary, is an attempt in futility to mislead this Court into believing that
the court a quo never acquired
jurisdiction over the case and thus the issuance of the Writ of Preliminary
Injunction was invalid.
We are not
drawn into petitioner’s sophistry.
In the case
of G&G Trading Corporation v. Court of Appeals,[23]
this Court made the following pronouncements:
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.
In explaining the test on the validity of service of summons,
Justice Florenz Regalado[24]
stressed that substantial justice must take precedence over technicality and
thus stated:
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.
Prescinding from the above, we deem it best to
underscore 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.
Having
settled this issue necessitates us to look into the propriety of the issuance
of the Writ of Preliminary Injunction.
BPI asserts
that the RTC gravely abused its discretion in granting the Spouses Santiago and
Centrogen’s application for the Writ of Preliminary
Injunction in the absence of showing that the latter have a clear legal right
sought to be protected.
Again, we
do not agree.
An
injunction is a preservative remedy for the protection of one’s substantive
right or interest; it is not a cause of action by itself but merely a
provisional remedy, an adjunct to the main suit.[25] The purpose of injunction is to prevent
threatened or continuous irremediable injury to some of the parties before
their claims can be thoroughly studied and educated. Its sole aim is to preserve the status quo
until the merits of the case is heard fully.[26]
The
issuance of the writ of preliminary injunction as an ancillary or preventive
remedy to secure the rights of a party in a pending case is entirely within the
discretion of the court taking cognizance of the case, the only limitation
being that the discretion should be exercised based upon the grounds and in a
manner provided by law. Before a writ of
preliminary injunction may be issued, the following requisites must be complied
with: (1) a right in esse or a clear or
unmistakable right to be protected; (2) violation of that right; and (3) that
there is an urgent and permanent act and urgent necessity for the writ to
prevent serious damage.[27]
Verily,
the aforestated requisites for the issuance of the
Writ of Preliminary Injunction have been fully complied with. The right of Spouses Santiago over the
property clearly exists since they are the registered owners thereof, and the
existence of a Real Estate Mortgage does not undermine the right of the
absolute owner over the property. The
violation of such right is manifest in the threatened foreclosure proceedings
commenced by BPI amidst the claim that the principal obligation has been fully
paid. Finally, to allow the foreclosure
of the subject property without first calibrating the evidence of opposing
parties pertaining to the action for the annulment of mortgage would cause
irreparable damage to the registered owner.
The right
of BPI to foreclose the subject property is under dispute upon the claim
interposed by the Spouses Santiago and Centrogen that
payments for the loan secured by the property subject to the threatened
foreclosure proceedings were already made.
To support their assertions, Spouses Santiago and Centrogen
presented as evidence Union Bank Check
No. 0363020895 dated P648,521.51, with BPI as payee. From this, we can deduce that the right of
BPI to foreclose the subject property is questionable. We cannot therefore allow the foreclosure of
the Real Estate Mortgage to proceed without first setting the main case for
hearing so that based on the evidence presented by the parties, the trial court
can determine who between them has the better right over the subject
property. To rule otherwise would cause
a grave irreparable damage to the Spouses Santiago and Centrogen.
Parenthetically,
this petition affords us the opportunity to once again reiterate the rule that
the issuance of the writ of preliminary injunction rests entirely within the
discretion of the court and generally not interfered with except in case of
manifest abuse. The assessment and
evaluation of evidence in the issuance of the writ of preliminary injunction
involve finding of facts ordinarily left to the trial court for its conclusive
determination.[28]
In
[T]he matter of the issuance
of writ of a preliminary injunction is addressed to the sound discretion of the
trial court, unless the court commits a grave abuse of discretion. Grave abuse of discretion in the issuance of writs
of preliminary injunction implies a capricious and whimsical exercise of
judgment that is equivalent to lack of jurisdiction or whether the power is
exercised in an arbitrary or despotic manner by reason of passion, prejudice or
personal aversion amounting to an evasion of positive duty or to a virtual
refusal to perform the duty enjoined, or to act at all in contemplation of law.
x x x.
In the case
at bar, after summary hearing and evaluation of evidence presented by both
contending parties, the RTC ruled that justice would be better served if status
quo is preserved until the final determination of the merits of the case, to wit:
For purposes
of preliminary injunction, between the evidence presented by [the spouses
Furthermore,
this case involves complicated issues that must be resolved first before
altering the status quo. The issue of payment and non-payment of the loan and
the issue of breach of the second loan directly affect the rights of the
plaintiffs over the subject lot. Hence, the last actual, peaceable, uncontested
status of the parties before the controversy must be preserved.
The unyielding
posture of BPI that its right to foreclose the subject property was violated
since it is permanently barred from proceeding with the auction sale is
patently erroneous. The RTC, in the exercise of its discretion merely intended
to preserve the status quo while the principal action for the annulment
of mortgage is heard with the end view that no irreversible damage may be
caused to the opposing parties. We find
nothing whimsical, arbitrary or capricious in the exercise of the RTC of its
discretion.
WHEREFORE, IN
VIEW OF THE FOREGOING, the instant petition is DENIED. The Decision
dated
SO ORDERED.
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MINITA V. CHICO-NAZARIOAssociate Justice |
WE
CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
Associate Justice
Associate Justice
ANTONIO EDUARDO B. NACHURA
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONSUELO
YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S.
PUNO
Chief Justice
[1] Penned by Associate Justice Amelita G. Tolentino with Associate Justices Roberto A. Barrios and Vicente E. Veloso, concurring.
[2] Rollo, pp. 42-43.
[3]
[4] CA rollo, pp. 55-60.
[5] Records, pp. 26-27.
[6]
[7]
[8]
[9] SEC. 11. 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.
[10] SEC. 5. Certification
against forum shopping. – The plaintiff or principal party shall certify
under oath in the complaint or other initiatory pleading asserting a claim for
relief, or in a sworn certification annexed thereto and simultaneously filed
therewith: (a) that he has not
theretofore commenced any action or filed any claim involving the same issues
in any court, tribunal or quasi-judicial agency and to the best of his
knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or
claim, a complete statement of the present status thereof; and (c) if he should
thereafter learn that the same or similar actions or claim has been filed or is
pending, he shall report that fact within five (5) days therefrom
to the court wherein his aforesaid complaint or initiatory pleading has been
filed. (Rule 7, Rules of Court.)
[11] SEC. 23. The Board of Directors or Trustees. – Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all businesses conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stocks, or where there is no stock, from among the members of the corporation, who shall hold office for one (1) year and until their successors are elected and qualified.
Every
director must own at least one (1) share of the capital stock of the corporation
of which he is a director, which share shall stand in his name on the books of
the corporation. Any director who ceases
to be the owner of at least one (1) share of the capital stock of the
corporation of which he is a director shall thereby cease to be director. Trustees of non-stock corporations must be
members thereof. A majority of the
directors or trustees of all corporations organized under this Code must be
residents of the
[12] Records, pp. 57-58.
[13] SEC. 5. Preliminary injunction not granted without notice; exception. – No preliminary injunction shall be granted without hearing and prior notice to the party or person sought to be enjoined. If it shall appear from facts shown by affidavits or by the verified application that great or irreparable injury would result to the applicant before the matter can be heard on notice, the court to which the application for preliminary injunction was made, may issue ex parte a temporary restraining order to be effective only for a period of twenty (20) days from service on the party or person sought to be enjoined, except as herein provided. Within the said twenty-day period, the court must order said party or person to show cause, at a specified time and place, why the injunction should not be granted, determine within the same period whether or not the preliminary injunction shall be granted, and accordingly issue the corresponding order.
However, and subject to the provisions of the preceding sections, if the matter is of extreme urgency and the applicant will suffer grave injustice and irreparable injury, the executive judge of a multiple-sala court or the presiding judge of a single-sala court may issue ex parte a temporary restraining order effective for only seventy-two (72) hours from issuance but he shall immediately comply with the provisions of the next preceding section as to service of summons and the documents to be served therewith. Thereafter, within the aforesaid seventy-two (72) hours, the judge before whom the case is pending shall conduct a summary hearing to determine whether the temporary restraining order shall be extended until the application for preliminary injunction can be heard. In no case shall the total period of effectivity of the temporary restraining order exceed twenty (20) days, including the original seventy-two hours provided herein.
[14] Records, pp. 59-60.
[15]
[16]
[17]
[18] Rollo, pp. 30-41.
[19] Delta Motors Corp. v. Pamintuan, G.R. No. L-41667,
[20] Section 3, Rule 131 of the Revised Rules of Court.
[21] Romuladez-Licaros v. Licaros,
G.R. No. 150656,
[22] The Philippine American Life and General Insurance Company v. Breva, G.R. No. 147937, 11 November 2004, 442 SCRA 217, 223-225.
[23] G.R. No. 78299,
[24] Remedial Law CompeNdium (Seventh Revised Ed.), pp. 224-225.
[25] Trasnfield
[26]
[27]
[28] Dungog v. Court of Appeals, G.R. No. 139767,
[29] 458 Phil. 661, 681 (2003).
[30] G.R. No. 117964,