Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 169919               September 11, 2009

B. D. LONG SPAN BUILDERS, INC., Petitioner,
vs.
R. S. AMPELOQUIO REALTY DEVELOPMENT, INC., Respondent.

D E C I S I O N

CARPIO, J.:

The Case

This is a petition for review1 of the Court of Appeals’ Decision2 dated 14 July 2005 and Resolution dated 30 September 2005 in CA-G.R. CV No. 78259. The Court of Appeals reversed the Decision3 dated 14 January 2003 of the Regional Trial Court of Muntinlupa City, Branch 206 (RTC).

The Antecedent Facts

Petitioner B. D. Long Span Builders, Inc. and respondent R. S. Ampeloquio Realty Development, Inc. are corporations duly organized and existing under the laws of the Republic of the Philippines.

On 31 July 1999, petitioner and respondent entered into an Agreement wherein petitioner agreed to render "rip rapping" construction services at respondent’s Ampeloquio International Resort in Ternate, Cavite, for the contract price of ₱50 million. On the same day, the parties entered into a second Agreement for the same construction project, stipulating a contract price of ₱30 million, hence bringing the total contract price of the project to ₱80 million. Both Agreements required petitioner to deposit with respondent a cash bond of one percent (1%) of the contract price, to be returned to petitioner upon completion of the project. In compliance, petitioner deposited with respondent a cash bond amounting to ₱800,000.

Respondent failed to fulfill its obligations under the Agreements, resulting in the cancellation of the project. Petitioner demanded the return of the ₱800,000 cash bond, but respondent refused to do so. Petitioner’s legal counsel sent two (2) demand letters dated 19 April 2002 and 10 May 2002 to respondent, but the latter still refused to return the ₱800,000 cash bond.

On 24 September 2002, petitioner (plaintiff) filed with the RTC a complaint for rescission of contract and damages against respondent (defendant). On 17 October 2002, summons and a copy of the complaint were served on respondent, through its staff member, Romel Dolahoy.4

Respondent failed to file an Answer or any responsive pleading to the complaint. Upon motion of petitioner, the RTC issued an Order dated 29 November 2002, declaring respondent in default, and allowing petitioner to present evidence ex parte.

The Trial Court’s Ruling

On 14 January 2003, the RTC rendered a Decision, the dispositive portion of which reads:

WHEREFORE, finding preponderance of evidence in support of the instant complaint, the same is granted.

Judgment is rendered declaring the aforesaid contracts entered into by plaintiff with defendant, both dated July 31, 1999 for the rip rapping construction project at the Ampeloquio International Resort in Ternate, Cavite, as RESCINDED.

Moreover, defendant corporation is ordered to:

1) Return the amount of ₱800,000.00 posted by the plaintiff as cash bond with legal interest accruing thereto from the time of its demand until fully paid;

2) Pay the plaintiff the amount of ₱50,000.00 as nominal damages;

3) Pay the plaintiff the amount of ₱100,000.00 as exemplary damages;

4) Pay the plaintiff the amount of ₱50,000.00 as and by way of attorney's fees; and

5) Pay the cost of suit in the amount of ₱10,539.00.

SO ORDERED.5

The Court of Appeals’ Ruling

Upon receipt of the RTC decision, respondent filed a Notice of Appeal dated 12 February 2003 with the Court of Appeals. After considering the pleadings filed by petitioner and respondent, the Court of Appeals rendered judgment6 which reversed and set aside the decision of the RTC. The dispositive portion of the Court of Appeals’ Decision reads:

WHEREFORE, in view of the foregoing, the decision dated January 14, 2003 of the Regional Trial Court, Branch 206, Muntinlupa City in Civil Case No. 02-217 is hereby REVERSED and SET ASIDE.

SO ORDERED.7

Petitioner filed a Motion for Reconsideration, but this was denied by the Court of Appeals in its Resolution of 30 September 2005.8

Hence, this appeal.

The Issue

The sole issue for resolution in this case is whether the Court of Appeals erred in ruling that there was invalid service of summons upon respondent, and hence the trial court did not acquire jurisdiction over said respondent.

The Court’s Ruling

We find the appeal without merit.

Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint. On the other hand, jurisdiction over the defendants in a civil case is acquired either through the service of summons upon them or through their voluntary appearance in court and their submission to its authority.9 The service of summons is a vital and indispensable ingredient of due process.10 As a rule, if defendants have not been validly summoned, the court acquires no jurisdiction over their person, and a judgment rendered against them is null and void.11

Section 11 of Rule 14 of the 1997 Rules of Civil Procedure states:

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.

As a rule, summons should be personally served on the defendant. In case of a domestic private juridical entity, the service of summons must be made upon an officer who is named in the statute (i.e., the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel), otherwise, the service is insufficient.12 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.13 However, if the summons cannot be served on the defendant personally within a reasonable period of time, then substituted service may be resorted to. Section 7 of Rule 14 provides:

SEC. 7. Substituted service.— If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant's residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendant's office or regular place of business with some competent person in charge thereof.

Nonetheless, the impossibility of prompt personal service must be shown by stating that efforts have been made to find the defendant personally and that such efforts have failed.14 This is necessary because substituted service is in derogation of the usual method of service. It is a method extraordinary in character and hence may be used only as prescribed and in the circumstances authorized by statute.15 The statutory requirements of substituted service must be followed strictly, faithfully and fully, and any substituted service other than that authorized by statute is considered ineffective.16

In Orion Security Corporation v. Kalfam Enterprises, Inc.,17 this Court held that in case of substituted service, there should be a report indicating that the person who received the summons in the defendant’s behalf was one with whom the defendant had a relation of confidence ensuring that the latter would actually receive the summons.

In this case, the Return by Process Server provides:

This is to certify that:

On October 17, 2002 at about 11:00 o'clock in the morning, undersigned tried to cause the service of the Summons together with the attached complaint & its annexes in the above-entitled case to the defendant at his given address on record. Mr Romel Dalahoy, a staff of said Realty received the said Summons with the attached complaint & its annexes as evidenced by the former's signature as appearing on the original copy of the aforesaid Summons.

Henceforth, the said Summons with the attached complaint & its annexes to Atty. Evangeline V. Tiongson, Clerk of Court V, this Court, is respectfully returned, DULY SERVED, by substituted service.

October 17, 2002, Muntinlupa City

Angelito C. Reyes

Process Server18

Clearly, the summons was not served personally on the defendant (respondent) through any of the officers enumerated in Section 11 of Rule 14; rather, summons was served by substituted service on the defendant’s staff member, Romel Dolahoy. Substituted service was resorted to on the server’s first attempt at service of summons, and there was no indication that prior efforts were made to render prompt personal service on the defendant.

Moreover, nothing on record shows that Romel Dolahoy, the staff member who received the summons in respondent’s behalf, shared such relation of confidence ensuring that respondent would surely receive the summons. Thus, following our ruling in Orion, we are unable to accept petitioner’s contention that service on Romel Dolahoy constituted substantial compliance with the requirements of substituted service.1avvphi1

Petitioner’s contention that respondent’s filing of Notice of Appeal effectively cured any defect in the service of summons is devoid of merit. It is well-settled that a defendant who has been declared in default has the following remedies, to wit: (1) he may, at any time after discovery of the default but before judgment, file a motion, under oath, to set aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake or excusable neglect, and that he has a meritorious defense; (2) if judgment has already been rendered when he discovered the default, but before the same has become final and executory, he may file a motion for new trial under Section 1(a) of Rule 37; (3) if he discovered the default after the judgment has become final and executory, he may file a petition for relief under Section 2 of Rule 38; and (4) he may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition to set aside the order of default has been presented by him.19 Thus, respondent, which had been declared in default, may file a notice of appeal and question the validity of the trial court’s judgment without being considered to have submitted to the trial court’s authority.

WHEREFORE, we DENY the petition. We AFFIRM the Court of Appeals’ Decision dated 14 July 2005 and Resolution dated 30 September 2005 in CA-G.R. CV No. 78259. Let the case be REMANDED to the trial court for further proceedings upon valid service of summons to respondent.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice
Chairperson

RENATO C. CORONA
Associate Justice		 TERESITA J. LEONARDO-DE CASTRO
Associate Justice

LUCAS P. BERSAMIN
Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice


Footnotes

1 Under Rule 45 of the 1997 Rules of Civil Procedure.

2 Penned by Associate Justice Remedios A. Salazar-Fernando with Associate Justices Rosmari D. Carandang and Monina Arevalo-Zenarosa, concurring.

3 Penned by Judge Patria A. Manalastas-De Leon.

4 Records, pp. 19-20.

5 CA rollo, pp. 50-51.

6 Promulgated on 14 July 2005.

7 Rollo, p. 60.

8 Id. at 61.

9 Orion Security Corporation v. Kalfam Enterprises, Inc., G.R. No. 163287, 27 April 2007, 522 SCRA 617, citingCasimina v. Legaspi, G.R. No. 147530, 29 June 2005, 462 SCRA 171, 177.

10 Spouses Mason v. Court of Appeals, 459 Phil. 689, 699 (2003), citing National Power Corporation v. NLRC, 339 Phil. 89, 107 (1997).

11 Bank of the Philippine Islands v. Spouses Evangelista, 441 Phil. 445, 453 (2002).

12Bank of the Philippine Islands v. Sps. Santiago, G.R. No. 169116, 28 March 2007, 519 SCRA 389, 400, citing Delta Motor Sales Corp. v. Mangosing, 162 Phil. 804 (1976).

13 Santiago, Jr. v. Bank of the Philippine Islands , G.R. No. 163749, 26 September 2008, 566 SCRA 435.

14 Ang Ping v. Court of Appeals, 369 Phil. 607, 614 (1999).

15 Id.

16 Id.

17 Supra note 9 at 623.

18 Records, p. 21.

19 Talsan Enterprises, Inc. v. Baliwag Transit, Inc., 369 Phil. 409, 421 (1999).
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