Delta Motor Sales Corporation vs. Mangosing

Service of summons on a domestic corporation must be made strictly upon one of the officers or agents enumerated in Section 13, Rule 14 of the Revised Rules of Court; service on any other employee, regardless of position, does not confer jurisdiction over the corporation and renders any resulting judgment void.

Delta Motor Sales Corporation was a domestic corporation engaged in the sale of Toyota vehicles. Jose Luis Pamintuan purchased a Toyota car from Delta Motor for ₱33,950 and, experiencing defects in the vehicle, sued Delta Motor in the Court of First Instance of Manila for damages arising from breach of warranty. The dispute centered on whether the trial court acquired jurisdiction over Delta Motor through the service of summons on one of its employees.

On April 16, 1975, Jose Luis Pamintuan filed a complaint against Delta Motor Sales Corporation in the Court of First Instance of Manila, Branch XXIV, docketed as Civil Case No. 97373, seeking recovery of ₱58,000 as damages and attorney's fees. The action arose from Delta Motor's alleged failure to fulfill its warranty obligation over a Toyota car purchased by Pamintuan on June 20, 1974 for ₱33,950, the vehicle having developed persistent leaks from its windshield, doors, and windows that Delta Motor failed to properly repair.

The summons was served on April 19, 1975 on Dionisia G. Miranda, an employee of Delta Motor, who acknowledged receipt by signing on the lower portion of the original summons. Delta Motor did not answer the complaint within the reglementary period, which expired on May 4. On May 27, Pamintuan filed a motion to declare Delta Motor in default, a copy of which was furnished Delta Motor. The Manila court granted the motion on June 3 and, on June 16, rendered judgment by default awarding Pamintuan ₱45,000 as damages.

On July 21, Delta Motor filed a petition to lift the order of default, set aside the judgment, and for new trial. It alleged that Miranda was not the corporate secretary but the secretary of Alberto Ramos of the personnel department, who was on sick leave, and that service upon her was a mistake. It further asserted that Pamintuan still owed Delta Motor ₱25,000 as the unpaid balance of the purchase price, that the entity liable for breach of warranty was Toyota Motor Sales Company, and that Delta Motor had good defenses to the action. The motion was supported by Miranda's affidavit, in which she stated that, having received no instruction from the sheriff to deliver the summons and complaint to the officers of Delta Motor, she merely kept them "for reference" to her immediate superior, Ramos, who seldom went to the office. The administrative officer of Delta Motor, Geldino S. Santos, confirmed in his affidavit that Miranda was Ramos' secretary.

The lower court denied the motion on July 29, ruling that Miranda was a person of suitable age and discretion who could receive summons for another person under Section 8, Rule 14, and that although Delta Motor's legal department had been served with a copy of the motion to declare it in default on May 27, it did not oppose the motion. Delta Motor filed a motion for reconsideration at ten minutes before five o'clock in the afternoon of August 8, the thirtieth day from receipt of the denial. The lower court denied the motion on August 25. On September 5, Delta Motor filed a notice of appeal, record on appeal, and an appeal bond of ₱120. Pamintuan countered with a motion for execution, arguing that the judgment had become final because the motion for reconsideration was filed after four-thirty in the afternoon. On October 13, the Manila court refused to give due course to the appeal and granted the motion for execution. The sheriff levied upon a Toyota mini-bus and a car to satisfy the judgment.

Meanwhile, on May 27, 1975 — the same day it was furnished a copy of the motion to declare it in default — Delta Motor filed a separate action against Pamintuan in the Court of First Instance of Rizal, Pasig Branch XIII, docketed as Civil Case No. 21303, for rescission of the sale and recovery of the car. A writ of replevin was issued, and a deputy sheriff seized the Toyota car from Pamintuan on June 6. Pamintuan moved to dismiss that complaint on the ground of the pendency of the Manila case, but the motion was denied. Pamintuan's petition for certiorari in the Court of Appeals (CA-G.R. No. SP-04743) was likewise denied on February 16, 1976, the appellate court holding that the Rizal court did not commit grave abuse of discretion in refusing to dismiss Delta Motor's action.

• Invalid Service of Summons: Petitioner argued that the service of summons on Dionisia G. Miranda was invalid because she was not the corporate secretary but merely the secretary of Alberto Ramos of the personnel department, and that service upon her was a mistake that did not bind the corporation.
• Meritorious Defenses: Petitioner maintained that it had good defenses to the action, namely that Pamintuan still owed ₱25,000 as the unpaid balance of the purchase price, that the entity liable for breach of warranty was Toyota Motor Sales Company, and that it was not the proper party against whom the warranty claim should be pursued.
• Timeliness of Motion for Reconsideration: Petitioner implicitly contested the contention that its motion for reconsideration was filed out of time, having filed it at ten minutes before five o'clock in the afternoon of the thirtieth day.

• Valid Substituted Service: Respondent Pamintuan argued that Dionisia G. Miranda was a person of suitable age and discretion who could receive summons for another person, as contemplated under Section 8, Rule 14 of the Revised Rules of Court.
• Failure to Oppose Default Motion: Respondent contended that Delta Motor's legal department had been served with a copy of the motion to declare it in default on May 27 but did not oppose the motion, warranting the declaration of default.
• Finality of Judgment: Respondent argued that the judgment had already become final because Delta Motor's motion for reconsideration was filed after four-thirty in the afternoon of the thirtieth day, or after the close of office hours.

• Validity of Service of Summons: Whether the service of summons on Dionisia G. Miranda, the secretary of a personnel department employee, was sufficient to confer jurisdiction over Delta Motor Sales Corporation under Section 13, Rule 14 of the Revised Rules of Court.
• Effect of Invalid Service: Whether the order of default, judgment by default, and subsequent execution in Civil Case No. 97373 were void for lack of jurisdiction over the defendant corporation.
• Consolidation of Related Cases: Whether the Manila case and the related replevin case filed by Delta Motor in Pasig should be consolidated to avoid conflicting decisions.

• Validity of Service of Summons: No. The service of summons on Dionisia G. Miranda was insufficient because she was not among the persons enumerated in Section 13, Rule 14 of the Revised Rules of Court as authorized to receive summons on behalf of a domestic corporation.
• Effect of Invalid Service: Yes. The order of default, judgment by default, and execution were void for lack of jurisdiction over Delta Motor, the court not having acquired jurisdiction over the corporation through valid service of summons.
• Consolidation of Related Cases: Yes. The two cases involving the same Toyota car should be consolidated and tried in the Court of First Instance of Manila to avoid conflicting decisions.

• Validity of Service of Summons: Section 13, Rule 14 of the Revised Rules of Court provides that service on a domestic corporation may be made on the president, manager, secretary, cashier, agent, or any of its directors. A corporation is identified with the officer or agent designated by the rule to accept service of process, and the corporate power to receive and act on such service is vested in that officer or agent. Where the statute designates a particular officer upon whom service may be made, that designation excludes all others; strict compliance with the mode of service is necessary to confer jurisdiction over a corporation. The liberal construction rule cannot substitute for the plain legal requirements as to the manner of service. In this case, Dionisia G. Miranda was not the corporate secretary, nor was she the secretary, manager, cashier, agent, or director of Delta Motor; she was the secretary of Alberto Ramos of the personnel department. Service upon her was therefore insufficient and did not bind the corporation.

• Effect of Invalid Service: Courts acquire jurisdiction over the person of a defendant and over the subject matter of the action by virtue of the service of summons in the manner required by law. Where there is no valid service of summons or voluntary general appearance by the defendant, the court acquires no jurisdiction to pronounce judgment. Because the summons was not served on any of the persons enumerated in Section 13, Rule 14, the Manila court did not acquire jurisdiction over Delta Motor. Consequently, the order of default, the judgment by default, and the execution in Civil Case No. 97373 were void and were set aside.

• Consolidation of Related Cases: Civil Case No. 21303 filed by Delta Motor against Pamintuan in the Pasig court was, in effect, a counterclaim to the Manila case and dealt with the sale of the same Toyota car involved in Civil Case No. 97373. In the interest of justice and to avoid conflicting decisions, the trial of the two cases should be consolidated, with the Pasig case transferred to Branch XXIV of the Court of First Instance of Manila where Civil Case No. 97373 was assigned.

• Strict Compliance with Statutory Mode of Service on Corporations — Where the statute or rule designates particular officers upon whom summons may be served on behalf of a domestic corporation, service must be made on one of those designated persons; no other officer or person may be substituted. The designation of one particular officer excludes all others. Strict compliance is necessary to confer jurisdiction over the corporation; liberal construction cannot substitute for the plain legal requirements. In this case, service on a personnel department secretary who was not among the enumerated corporate officers was held insufficient, rendering the default judgment void.

• Jurisdiction over Corporate Defendant Requires Valid Service — Courts acquire jurisdiction over the person of a defendant corporation only through valid service of summons in the manner required by law or through voluntary general appearance. Absent either, the court acquires no jurisdiction to render judgment, and any judgment rendered is void. The purpose of the rule is to render it reasonably certain that the corporation will receive prompt and proper notice and 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.

• "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 be one who is named in the statute; otherwise the service is insufficient." — This passage articulates the ratio decidendi: that jurisdiction over a corporate defendant requires service strictly upon a statutorily designated officer, and service on any other person is void.

• "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." — This defines the underlying rationale of the rule on service of summons on corporations, frequently cited in subsequent jurisprudence on corporate service.

• "Courts acquire jurisdiction over the person of a party defendant and of the subject-matter of the action by virtue of the service of summons in the manner required by law. Where there is no service of summons or a voluntary general appearance by the defendant, the court acquires no jurisdiction to pronounce a judgment in the cause." — This states the fundamental principle linking valid service of summons to the court's jurisdiction to render judgment.

• Lafayette Insurance Co. vs. French, 15 L. Ed. 451 — Cited for the proposition that a corporation is identified with its officer or agent designated to accept service of process, and that the corporate power to receive and act on such service is vested in that officer or agent.
• Amy vs. City of Watertown, 32 L. Ed. 946 — Cited for the rule that where a statute prescribes a particular method of service, that method must be followed, especially with reference to corporations; the designation of one particular officer excludes all others.
• Reader vs. District Court, 94 Pacific 2nd 858 — Cited as illustrative authority: where the statute required service on specified corporate officers, service on the secretary's wife did not confer jurisdiction, rendering the foreclosure decree and deficiency judgment void.
• Syllabi Salmon and Pacific Commercial Co. vs. Tan Cueco, 36 Phil. 556 — Cited for the principle that courts acquire jurisdiction over the person of a defendant and the subject matter of the action by virtue of service of summons in the manner required by law, and that absent such service or voluntary appearance, the court acquires no jurisdiction to render judgment.
• U.S. vs. Molenhauer Laboratories, Inc., 267 Fed. Rep. 2nd 260 — Cited for the proposition that the liberal construction rule cannot be invoked as a substitute for the plain legal requirements as to the manner of serving summons on a domestic corporation.

• Section 13, Rule 14, Revised Rules of Court — Governs service of summons on private domestic corporations or partnerships, providing that service may be made on the president, manager, secretary, cashier, agent, or any of its directors. The Court held that service on a person not among those enumerated — here, a personnel department secretary — is insufficient to confer jurisdiction over the corporation.
• Section 8, Rule 14, Revised Rules of Court — Governs substituted service of summons on individual defendants, allowing service by leaving copies at the defendant's dwelling house or residence with a person of suitable age and discretion, or at the defendant's office with a competent person in charge. The lower court erroneously applied this provision to corporate service; the Supreme Court confined its applicability to individual defendants.

• Concepcion, Jr., J. — Concurred in the result.
• Fernando, C.J. — Concurred in the result.
• Barredo, J. (concurring opinion) — Concurred in setting aside the order of default and all subsequent proceedings, but disagreed that service on a domestic corporation must necessarily be made in person on the officers named in Section 13, Rule 14. He opined that substituted service under Section 8 could validly be made on corporate officers, the officer being virtually the embodiment of the corporation. He found no proper substituted service here, however, because there was no evidence that Miranda was the "competent person in charge" of the office of any officer upon whom service could be made. As to the Pasig case, he believed it should have been dismissed as barred by the Manila case, but since the Court of Appeals had already ruled on that issue and its decision was final, respondent was bound by it as the law of the case.