Cathay Metal Corporation vs. Laguna West Multi-Purpose Cooperative, Inc.

Service of summons upon a domestic private juridical entity must be made only upon the officers exclusively enumerated in Rule 14, Section 11 of the Rules of Court—the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel; the Cooperative Code's official-address provision does not replace that rule. A claim based on a future right or rights still under negotiation does not ripen into an adverse claim under Section 70 of Presidential Decree No. 1529, and a promise to sell CLOA-awarded land during the ten-year prohibition to circumvent Republic Act No. 6657 is illegal and void.

Cathay Metal Corporation is a corporation that acquired the lands in dispute; Laguna West Multi-Purpose Cooperative, Inc. is a cooperative recognized under Republic Act No. 6657, the Comprehensive Agrarian Reform Law. The dispute concerns agricultural lands in Silang, Cavite originally awarded to farmer-beneficiaries through Certificates of Land Ownership Award. The statutory backdrop includes Republic Act No. 6657's ten-year prohibition on sale or transfer of awarded lands, Section 65 on conversion, Section 70 of Presidential Decree No. 1529 on adverse claims, and the Cooperative Code's requirement of an official postal address.

Laguna West Multi-Purpose Cooperative, Inc., a cooperative recognized under Republic Act No. 6657, allegedly entered into a joint venture agreement with farmer-beneficiaries holding Certificates of Land Ownership Award over properties in Silang, Cavite. While Laguna West was negotiating with the farmer-beneficiaries, Cathay Metal Corporation entered into Irrevocable Exclusive Right to Buy contracts with the same farmer-beneficiaries. Under the IERB, the farmer-beneficiaries committed themselves to sell to Cathay their agricultural properties upon conversion to industrial or commercial properties or upon expiration of the period of prohibition from transferring title.

In 1996, Laguna West caused the annotation of its adverse claim on the farmer-beneficiaries' certificates of title. On November 9, 1998, the Department of Agrarian Reform issued an order converting the properties from agricultural to mixed use. In 1999, Cathay and the farmer-beneficiaries executed contracts of sale of the properties, and transfer certificates of title were issued in Cathay's name; the annotations in the original titles were copied to Cathay's titles. Laguna West's Vice-President, Orlando dela Peña, sent two letters dated March 20, 2000 and April 12, 2000 to Cathay, informing it of Laguna West's claim to the properties. Cathay did not respond.

On September 15, 2000, Cathay filed a consolidated petition for cancellation of adverse claims on its transfer certificates of title with the Regional Trial Court of Tagaytay City. It served a copy of the petition by registered mail to Laguna West's alleged official address at Barangay Mayapa, Calamba, Laguna. The petition was returned to sender because Laguna West could not be found at that address; the postman issued a certification stating that the cooperative was not existing. Cathay allegedly attempted to serve the petition personally, but this also failed. Upon Cathay's motion, the RTC issued an order on December 15, 2000 declaring substituted service to have been effected and giving Laguna West fifteen days to file an opposition. Cathay was later allowed to present its evidence ex parte.

Upon learning that a case involving its adverse claim was pending, Laguna West, through Orlando dela Peña, filed a manifestation and motion alleging that it never received a copy of the summons and the petition. It moved for service of summons and a copy of the petition at No. 160, Narra Avenue, Looc, Calamba, Laguna. The RTC granted the motion on March 16, 2001 and ordered that Laguna West be furnished a copy of the petition at its new address. Instead of complying, Cathay filed on April 16, 2001 a motion for reconsideration, arguing that the case was already submitted for decision after all its evidence had been admitted and a memorandum had been filed, and that Laguna West was in default. Cathay sent a copy of the motion by registered mail and set the hearing on April 20, 2001. Laguna West failed to appear at the hearing, and the RTC submitted the motion for resolution. Laguna West received a copy after the hearing and, on August 13, 2001, filed a motion for leave to admit attached opposition and an opposition, arguing that the ex parte presentation of evidence was secured through extrinsic fraud and that a new trial should be held. Cathay opposed this on September 6, 2001.

On January 16, 2003, the RTC granted Cathay's motion for reconsideration. It found that Laguna West's alleged representatives failed to prove their authority to represent it and ruled that service should be made to the address indicated in its Cooperative Development Authority Certificate of Registration; the case was declared submitted for decision. Laguna West filed a motion for reconsideration. On March 21, 2003, the RTC issued a decision granting Cathay's petition for cancellation of annotations and ordered the Register of Deeds of Cavite to cancel the annotations. On April 3, 2003, the RTC rescinded its March 21, 2003 decision for having been prematurely rendered. On May 26, 2003, the RTC denied Laguna West's motion for reconsideration of the January 16, 2003 order. On June 23, 2003, the RTC decided to grant Cathay's petition for cancellation, finding that the annotations were copied to Cathay's titles, that Laguna West did not file any claim against the farmer-beneficiaries or Cathay, that the affidavits and supporting documents for the adverse claims were inexistent in the registry, that the CDA certified Laguna West had been inoperative since 1992, that the Bureau of Posts certified its office was closed, and that the 30-day period under Section 70 had lapsed. The RTC found Laguna West inoperative and without a valid claim; the Court of Appeals later found that Laguna West had not been validly served with summons.

• Service of Summons and Cooperative Code: Petitioner maintained that summons was served upon respondent at its official registered address at Barangay Mayapa, Calamba, Laguna; when no one received it, the trial court issued an order for substituted service. Petitioner argued that under Article 52 of Republic Act No. 6938, a cooperative must have an official postal address to which all notices and communications shall be sent, and that this substantive law takes precedence over procedural rules; no law requires service to every unsubstantiated address alleged by a party.
• Representation of Respondent: Petitioner argued that Orlando dela Peña and Geriberto Dragon claimed to represent respondent but never submitted proof of authority and were never members or officers of respondent. Petitioner cannot be blamed for being skeptical about their claims of authority, especially since respondent was inoperative since 1992 and was dissolved by the Cooperative Development Authority in 2002.
• Default and Submission for Decision: Petitioner argued that the case was already submitted for decision after all its evidence had been admitted and a memorandum had been filed; it was too late for respondent to ask to be furnished a copy of the petition. Because respondent was already in default, a manifestation and motion without allegations of grounds for a motion to lift order of default would not give it personality to participate in the proceedings.
• Remand and Merits: Petitioner argued that the Court of Appeals erred in remanding the case for trial because respondent already admitted that its adverse claims were based not on a right over the property but on the alarming possibility of losing the deal with the owners. No agreement yet vested in respondent any right over the properties, and the annotations were made in 1996 when respondent was already inoperative.

• Due Process and Service at Known Address: Respondent emphasized that it entered into a joint venture agreement with the farmer-beneficiaries. While it was in the process of negotiations, petitioner entered the picture by offering the farmer-beneficiaries Irrevocable Exclusive Right to Buy contracts. Respondent, through its Vice-President Orlando dela Peña, wrote two letters between March and April 2000 relative to its adverse claims, on letterheads indicating the address No. 167, Barangay Looc, Calamba, Laguna. Petitioner deliberately served summons upon respondent at its old address despite knowledge of its actual address.
• Defective Notice of Hearing: Respondent argued that it was unable to appear at the hearing on the motion for reconsideration because petitioner set the hearing on April 20, 2001 and mailed a copy of the motion on April 16, 2001, only four days before the hearing. Respondent filed a motion for leave to admit attached opposition, but the trial court issued its January 16, 2003 order while the motion was pending.
• Premature Decision: Respondent argued that while the incidents were pending, the trial court rendered its March 21, 2003 decision granting petitioner's petition to cancel the annotations, which was premature. The trial court itself rescinded the March 21, 2003 decision.
• Right to Present Evidence: Respondent argued that its rights over the property should be best determined after trial. Had there been a trial, it would have presented documentary evidence that its negotiation with the former landowners had earned for it part-ownership or exclusive authority to deal with potential buyers; offered the joint venture agreements and proof of partial payment of the landowners' 40% share; proved that the annotation was a registration of an interest over the properties; presented its authorized representatives Orlando dela Peña, Geriberto Dragon, and Ediza Saliva, and one or two original landowners; and called on CDA officers regarding a cooperative's address of record vis-à-vis its actual address as known to petitioner.

• Service of Summons: Whether respondent was validly served with summons or notices of the hearing on the petition for cancellation of annotations of adverse claims.
• Non-Operation and Authority of Representatives: Whether respondent's alleged non-operation or dissolution barred it from authorizing a person to act on its behalf in court proceedings.
• Trial Court's Resolution of Representation: Whether the trial court could have resolved the issue of authority of respondent's alleged representatives instead of deciding on technicalities.
• Validity of Adverse Claims: Whether respondent's annotations of adverse claims should be cancelled because they were based on rights still under negotiation or a future claim.
• Circumvention of Agrarian Reform Law: Whether the joint venture agreement and petitioner's Irrevocable Exclusive Right to Buy contracts involving CLOA-awarded lands during the ten-year prohibition were valid under Republic Act No. 6657.

• Service of Summons: No. Respondent was not validly served. Rule 14, Section 11 of the Rules of Court provides an exclusive enumeration of officers authorized to receive summons for a juridical entity, and the Cooperative Code's official-address provision does not replace that rule.
• Non-Operation and Authority of Representatives: No. Even assuming non-operation, a cooperative may exercise its powers under Section 9 of Republic Act No. 6938 until dissolved, including authorizing persons to act on its behalf; the relevant acts occurred before the alleged dissolution.
• Trial Court's Resolution of Representation: Yes. The trial court had opportunities to resolve the authority of the alleged representatives and should have done so; premature decisions elicit suspicion and diminish the judiciary's role.
• Validity of Adverse Claims: Yes. The annotations should be cancelled. A claim based on a future right or rights still under negotiation does not ripen into an adverse claim under Section 70 of Presidential Decree No. 1529.
• Circumvention of Agrarian Reform Law: Yes. The joint venture agreement and petitioner's IERB contracts, executed during the ten-year prohibition and before conversion, circumvent Republic Act No. 6657 and are illegal and void; the decision is without prejudice to cancellation of petitioner's certificates of title.

• Service of Summons: The Rules of Court govern court procedures, including service of notices and summons. The power to promulgate procedural rules is vested in the Supreme Court under Article VIII, Section 5(5) of the Constitution. Service of notices and summons on interested parties in civil, criminal, or special proceedings is court procedure, so the Rules of Court govern. The Cooperative Code provisions may govern cooperatives' activities as administered by the Cooperative Development Authority, but they are not procedural rules for court processes. Article 52 of Republic Act No. 6938, retained in Article 51 of Republic Act No. 9520, requires an official postal address, but it cannot take the place of the rules on summons. Rule 14, Section 11 provides that service upon a domestic private juridical entity may be made only on the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel. The enumeration is exclusive; service on other persons is invalid; even substantial compliance is insufficient. Petitioner served by registered mail and allegedly personally at the office address in the certificate of registration, not on any enumerated officer, and did not publish under Rule 14, Section 14. Although this is an action in rem and jurisdiction over the person is not required, fair play and due process require valid service. Thus, respondent was not validly served.
• Non-Operation and Authority of Representatives: Petitioner's conclusion that respondent was no longer operating was based only on the postmaster's certification and the CDA certification that respondent had not submitted financial reports since 1992. The postmaster was not in a position to make a reliable statement on the existence or closure of an entity, and the CDA certification was indicative, not conclusive, of non-operation. Even assuming non-operation, Section 9 of Republic Act No. 6938 grants a registered cooperative powers and capacities, including to sue and be sued, amend its articles, deal with property, and exercise other powers until dissolution. Prior to dissolution, it may engage in deals and authorize persons to act on its behalf. Even if petitioner alleged dissolution by a November 7, 2002 CDA resolution, the relevant acts occurred before that resolution. The issue of representation could have facilitated resolution on the merits.
• Trial Court's Resolution of Representation: The trial court had full control and every opportunity to resolve the validity of Mr. dela Peña's and Mr. Dragon's authority. It had allowed respondent to file an answer and oppose the petition; it could have ordered them to produce evidence of authority. There were at least two motions for reconsideration: petitioner's motion after the March 16, 2001 order, and respondent's motion after the January 16, 2003 order. The trial court could have heard the representation issue. It also failed to note petitioner's non-compliance with Rule 15, Section 4: petitioner set the hearing on April 20, 2001 and served a copy by registered mail only on April 16, 2001, four days before. To comply with the three-day rule, receipt should be ensured by April 17, 2001; service by registered mail does not take place in one day. The trial court ignored opportunities and ruled on technicalities to respondent's prejudice. Citing Alonso vs. Villamor, litigation is not a game of technicalities; technicality that hinders justice deserves scant consideration. Rules cannot be interpreted to violate due process; courts should give parties the opportunity to present evidence. The trial court also issued a decision pending unresolved incidents; premature decisions elicit suspicion.
• Validity of Adverse Claims: Ordinarily the case would be remanded, but it had been pending in the Supreme Court for about eight years; judicial economy and efficiency, and sufficient records, allowed ruling on validity. Respondent's claim was anchored on disrupted negotiations with the farmer-beneficiaries. Its memorandum stated that it was still finalizing negotiations when petitioner entered with IERB contracts, and it was alarmed at losing the deal. The annotations were adverse claims. Section 70 of Presidential Decree No. 1529 defines an adverse claim as a statement in writing setting forth a subsequent right or interest adverse to the registered owner. A claim based on a future right does not ripen into an adverse claim. A right still subject to negotiations cannot be enforced against a title holder or one with legitimate title based on possession, ownership, lien, or a valid deed of transfer. Respondent's claim was based on a deal that did not materialize. It alleged it could show part-ownership or exclusive authority, but for a contract there must be a meeting of minds; during negotiations, meeting of minds was absent and terms were not final, so no right or obligation attached. It also alleged partial payment of the landowners' 40% share, but Republic Act No. 6657 prohibits circumvention. Section 27 prohibits sale, transfer, or conveyance of awarded lands for ten years except through hereditary succession, to the government, the LBP, or other qualified beneficiaries. Section 65 allows conversion after five years if the land is not economically feasible or the locality has become urbanized. Section 73 prohibits acts circumventing the law, including sale, transfer, or conveyance and sale of usufructuary rights. The prohibition encompasses all rights relating to disposition, including a promise of sale upon conditions removing restrictions. CLOAs were awarded between 1990 and 1992; the annotation was made in 1996; conversion occurred only in 1998. The ten-year period had not lapsed and the properties were not converted when the joint venture agreement was made. Thus, no valid adverse claim existed. Whether the joint venture agreement had a transfer or promise provision or not, there was no basis: absence means no valid claim; inclusion is illegal and void.
• Circumvention of Agrarian Reform Law: The ruling also applies to petitioner, which entered IERB contracts with the farmer-beneficiaries during the prohibition and before conversion. The farmer-beneficiaries committed to sell upon expiration of the prohibition or conversion, whichever came first. Upon conversion, the properties were immediately sold to petitioner. Intent to circumvent Republic Act No. 6657 is apparent. Petitioner's contracts are illegal and void. The decision is without prejudice to the right of interested parties to seek cancellation of petitioner's certificates of title obtained in violation of law.

• Exclusive Enumeration of Officers for Service of Summons on Juridical Entities — Under Rule 14, Section 11 of the Rules of Court, service of summons upon a domestic private juridical entity may be made only on its president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel. The enumeration is exclusive; service on any other person is invalid, and even substantial compliance is not sufficient. In this case, service at the cooperative's registered address and on alleged representatives did not comply, so no valid service was effected.
• Rules of Court Govern Court Procedure; Cooperative Code Does Not Replace Summons Rules — The Supreme Court has exclusive power under Article VIII, Section 5(5) of the Constitution to promulgate rules on pleading, practice, and procedure. Service of notices and summons in court proceedings is court procedure. Although the Cooperative Code requires cooperatives to maintain an official postal address, that provision governs cooperative activities before the Cooperative Development Authority and cannot replace Rule 14 on summons. Applied: petitioner could not rely on the Cooperative Code to justify service at the registered address.
• Due Process in In Rem Actions; Service by Publication — In an action in rem, jurisdiction over the person of the defendant is not required as long as there is jurisdiction over the res, but fair play and due process still require that interested parties be given notice. If a defendant's whereabouts are unknown and cannot be ascertained by diligent inquiry, service may be made by publication under Rule 14, Section 14. Applied: petitioner neither served the enumerated officers nor published, depriving respondent of the opportunity to present evidence.
• Adverse Claim Under Section 70, Presidential Decree No. 1529 — An adverse claim is a statement in writing setting forth a subsequent right or interest in registered land adverse to the registered owner, effective for thirty days from registration and cancellable thereafter upon verified petition. A claim based on a future right or rights still under negotiation does not ripen into an adverse claim. Applied: respondent's claim rested on a joint venture that had not materialized and on negotiations without a meeting of minds, so the annotations were properly cancelled.
• Cooperative Powers Before Dissolution — Under Section 9 of Republic Act No. 6938, a registered cooperative may sue and be sued, amend its articles, deal with property, and exercise other powers until dissolved. Non-operation, shown only by postmaster and CDA certifications, is not conclusive proof that it cannot authorize representatives. Applied: respondent could authorize persons to act on its behalf, and the relevant acts occurred before the alleged dissolution.
• Prohibition Against Circumvention of Republic Act No. 6657 — Republic Act No. 6657 prohibits the sale, transfer, or conveyance of awarded lands for ten years except through hereditary succession, to the government, the LBP, or other qualified beneficiaries; after five years, conversion may be authorized if the land is no longer economically feasible or the locality has become urbanized. Section 73 prohibits acts that circumvent the law. The prohibition encompasses all rights relating to disposition, including a promise to sell upon conditions that remove conveyance restrictions. Applied: the joint venture agreement and petitioner's IERB contracts were executed during the prohibition and before conversion, so they were illegal and void.
• Judicial Economy and Premature Decisions — Although a case may ordinarily be remanded for presentation of evidence, a court may rule on the merits when the records are sufficient and the case has been pending for a long time, in the interest of judicial economy and efficiency. Courts must also resolve pending incidents before rendering decision; premature decisions elicit suspicion. Applied: the Supreme Court ruled on the adverse claim despite the Court of Appeals' remand, and the trial court's premature decision was criticized.

• "The Rules of Court governs court procedures, including the rules on service of notices and summons. The Cooperative Code p~ovisions on notices cannot replace the rules on summons under the Rules of Court. Rule 14, Section 11 of the Rules of Court provides an-exclusive enumeration of the persons authorized to receive summons for juridical entities. These persons are the juridical entity's president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel." — This states the ratio on service of summons: the Rules of Court, not the Cooperative Code, govern service upon juridical entities, and the enumeration of authorized officers is exclusive.
• "A claim based on a future right does notripen into an adverse claim as defined in Section 70 of Presidential Decree No. 1529. A right still subject to negotiations cannot be enforced against a title holder or against one that has a legitimate title to the property based on possession, ownership, lien, or any valid deed of transfer." — This is the controlling formulation on adverse claims, explaining why respondent's annotations based on unfinished negotiations were invalid.
• "The prohibition from disposition of the properties encompasses all rights relating to disposition, including the right to convey ownership or to promise the sale and transfer of property from the farmer-beneficiaries to anyone upon the happening of certain conditions that will remove the conveyance restrictions." — This defines the scope of the anti-circumvention rule under Republic Act No. 6657 and supports the invalidation of both respondent's joint venture agreement and petitioner's IERB contracts.
• "In this case, petitioner served summons upon respondent by registered mail and, allegedly, by personal service at the office address indicated in respondent’s Certificate of Registration. Summons was not served upon respondent’s officers. It was also not published in accordance with the Rules of Court. As a result, respondent was not given an opportunity to present evidence, and petitioner was able to obtain from the Regional Trial Court an order cancelling respondent’s annotations of adverse claims." — This applies the service-of-summons rule to the facts and explains the due process violation despite the action being in rem.

• Paramount Insurance Corp. vs. A.C. Ordoñez Corporation and Franklin Suspine, 583 Phil. 321, 327 (2008) — Cited to support the rule that the enumeration in Section 11, Rule 14 of the Rules of Court is exclusive and that service of summons upon persons other than the enumerated officers is invalid; even substantial compliance is not sufficient.
• Alonso vs. Villamor, 16 Phil. 315, 321–322 (1910) — Cited for the principle that litigation is not a game of technicalities and that technicality, when it hinders rather than aids justice, deserves scant consideration; applied to criticize the trial court's reliance on technicalities to respondent's prejudice.
• Astraquilio vs. Javier, 13 CRA 125 — Cited in the RTC's April 3, 2003 order, quoted by the Supreme Court, for the inherent power of a court to amend and control its process and orders and to reverse itself to prevent injustice.

• Article VIII, Section 5(5), 1987 Constitution — Vests in the Supreme Court the power to promulgate rules concerning pleading, practice, and procedure, which shall not diminish, increase, or modify substantive rights. Applied to hold that the Rules of Court govern service of summons and notices in court proceedings, not the Cooperative Code.
• Rule 14, Section 11, Rules of Court — Provides that service upon a domestic private juridical entity may be made only on the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel. Applied: service on the registered address and alleged representatives was invalid; no enumerated officer was served.
• Rule 14, Section 14, Rules of Court — Allows service by publication when the defendant's identity or whereabouts are unknown and cannot be ascertained by diligent inquiry. Applied: petitioner should have used publication if respondent's whereabouts were unknown; it did not.
• Rule 15, Section 4, Rules of Court — Requires that notice of hearing be served in such a manner as to ensure receipt by the other party at least three days before the hearing. Applied: service by registered mail four days before the hearing did not ensure receipt at least three days before, and the trial court missed an opportunity to resolve the representation issue.
• Article 52, Republic Act No. 6938 (Cooperative Code of 1990) — Requires every cooperative to have an official postal address to which all notices and communications shall be sent, with every change registered with the Cooperative Development Authority; retained in Article 51 of Republic Act No. 9520. Applied: this provision governs cooperative activities before the CDA and does not replace the Rules of Court on summons.
• Section 9, Republic Act No. 6938 — Enumerates the powers and capacities of a registered cooperative, including to sue and be sued, amend its articles, deal with property, and exercise other powers. Applied: even assuming non-operation, respondent could exercise these powers until dissolution and authorize persons to act on its behalf.
• Section 70, Presidential Decree No. 1529 (Property Registration Decree) — Defines an adverse claim as a statement in writing setting forth a subsequent right or interest adverse to the registered owner; the claim is effective for thirty days and may be cancelled thereafter upon verified petition. Applied: respondent's claim, based on a future right and unfinished negotiations, did not qualify as a valid adverse claim.
• Section 27, Republic Act No. 6657 — Prohibits the sale, transfer, or conveyance of lands acquired by beneficiaries under the Act except through hereditary succession, to the government, the LBP, or other qualified beneficiaries for a period of ten years. Applied: the CLOAs were awarded between 1990 and 1992, and the annotation was made in 1996, before the ten-year prohibition lapsed.
• Section 65, Republic Act No. 6657 — Allows conversion of awarded lands after five years when the land ceases to be economically feasible for agricultural purposes or the locality has become urbanized and the land will have greater economic value for residential, commercial, or industrial purposes. Applied: the properties were converted only in 1998, after the joint venture agreement and annotation, so no right to transfer had yet arisen.
• Section 73, Republic Act No. 6657 — Prohibits acts and omissions that circumvent the Comprehensive Agrarian Reform Program, including the sale, transfer, or conveyance of lands outside urban centers and city limits and the sale of usufructuary rights to circumvent the Act. Applied: the promise to sell upon conditions removing conveyance restrictions carried an intent to circumvent the law and was void.

Presbitero J. Velasco, Jr. (Chairperson), Diosdado M. Peralta, Martin S. Villarama, Jr., and Jose C. Mendoza concurred. The text does not contain separate concurring opinions.