BPI v. Santiago Digest

G.R. No. 169116 March 28, 2007

Ponente: Chico-Nazario, J.:

Service of Summons

Facts:

1. Centrogen, a domestic corporation engaged in pharmaceutical business obtained several loans from Far East Bank and Trust Company (FEBTC), which was secured by a real estate mortage over a parcel of land by Irene Santiago. Subsequently, FEBTC merged with BPI. Due to failure of Centrogen to pay its loans, 

BPI filed a case for Extra-Judicial Foreclosure of Real Estate Mortgage over the subject 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 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.

2. The complaint alleged that the initial loan obligation in the amount of P490,000.00, including interest thereon 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.

3. On 27 February 2003, BPI was summoned to file and serve its Answer and on the same day, summons was served on the Branch Manager of BPI . 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 Revised Rules of Court to receive summons on behalf of the corporation. The summons served upon its Branch Manager, therefore, did not bind the corporation.  Also alleged lack of authorityof the person who signed. RTC denied the MD and issued new summons. 

4. The RTC granted the TRO to prevent foreclosure sale. 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 acquired jurisdiction over BPI. The defect of the service of the original summons was cured by the issuance of the new summons which was not questioned by BPI.

1. There was substantial compliance. 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. 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. 

2. 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.

3. 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.