Ellice Agro-Industrial Corporation vs. Rodel T. Young

For service of summons upon a domestic corporation to be valid and binding, it must be made strictly upon the president, manager, secretary, cashier, agent, or director as enumerated in Section 13, Rule 14 of the Rules of Civil Procedure and as conclusively shown in the General Information Sheets (GIS) filed with the SEC. Service upon any other person, even one claiming to be corporate secretary, is invalid and fails to confer jurisdiction over the corporation. Actual knowledge of the pending action or the filing of an answer by an unauthorized representative does not constitute voluntary appearance or cure the jurisdictional defect.

The case arose from a Contract to Sell involving a parcel of land in Sariaya, Quezon, where respondents paid partial consideration to the petitioner corporation through an individual claiming to be its corporate secretary. When the corporation failed to deliver the title, respondents filed suit. The dispute centered on whether the corporation was properly served with summons through this individual, who was later shown not to be listed as an officer or director in the corporate records filed with the SEC.

• On July 24, 1995, respondents Rodel T. Young, Delfin Chan, and Jim Wee entered into a Contract to Sell with petitioner Ellice Agro-Industrial Corporation (EAIC), represented by Guia G. Domingo, for a 30,000 square-meter portion of land located in Lutucan, Sariaya, Quezon, covered by Transfer Certificate of Title No. T-157038.
• Respondents paid an aggregate amount of P545,000.00 as partial payment through Domingo.
• EAIC failed to deliver the owner's duplicate certificate of title and execute the corresponding deed of sale as required under the Contract to Sell.
• On November 8, 1996, respondents caused the annotation of an Affidavit of Adverse Claim on TCT No. T-157038.
• On November 14, 1996, respondents filed a Complaint for specific performance (Civil Case No. 96-177) against EAIC and Domingo before the RTC of Lucena City, Branch 60.
• On November 18, 1996, respondents annotated a Notice of Lis Pendens on TCT No. T-157038.
• Initial service of summons on EAIC through Domingo at Rizal Street, Sariaya, Quezon was unsuccessful.
• Alias summons was subsequently served on Domingo at her residence at 996 Maligaya Street, Singalong, Manila.
• The 1996 General Information Sheet (GIS) filed with the Securities and Exchange Commission, which reports the election of directors and officers, showed that Domingo was not listed as president, manager, secretary, cashier, agent, or director of EAIC.
• On March 21, 1997, Domingo filed an Answer with Counterclaim for EAIC, alleging therein that she was authorized by Alicia E. Gala (purported beneficial owner) to represent the latter, not EAIC.
• On July 9, 1997, respondent Jim Wee sent a letter to Raul E. Gala (EAIC's Chairman and President) seeking a conference regarding the execution of the deed of sale.
• On July 18, 1997, EAIC's counsel replied informing Wee of Domingo's lack of authority to represent EAIC.
• On January 27, 1998, the pre-trial conference proceeded ex parte due to Domingo's non-appearance, and respondents were allowed to present their evidence.
• On November 11, 1999, the RTC rendered a Decision ordering EAIC to deliver the owner's duplicate copy of TCT No. T-157038 and to execute a final deed of sale in favor of respondents.
• On July 10, 2000, EAIC, represented by Raul E. Gala, filed a Petition for Relief from Judgment under Rule 38, premised on extrinsic fraud committed by Domingo in concealing the contract and the case from EAIC.
• On April 24, 2001, EAIC filed a Petition for Annulment of Judgment under Rule 47 before the Court of Appeals, grounded on lack of jurisdiction and extrinsic fraud.

• Domingo was not the president, manager, secretary, cashier, agent, or director of EAIC at the time of service, as conclusively shown by the General Information Sheets filed with the SEC, rendering the service of summons invalid under Section 13, Rule 14 of the 1964 Rules of Civil Procedure.
• The RTC did not acquire jurisdiction over EAIC because there was no valid service of summons and EAIC did not voluntarily appear in the action.
• The filing of an Answer with Counterclaim by Domingo, an unauthorized person, cannot bind the corporation or constitute voluntary submission to the court's jurisdiction.
• Annotations of adverse claim and lis pendens on the certificate of title do not confer jurisdiction over the person of the defendant; they merely serve as notice to third persons and do not replace the requirement for valid service.
• The exchange of letters in July 1997 did not inform EAIC of the pending litigation, and actual knowledge of the suit, if any, does not cure the defect in the service of summons.
• Extrinsic fraud was committed by Domingo in fraudulently representing herself as corporate secretary and concealing the existence of the contract and the lawsuit from EAIC.

• Domingo was acting for and in behalf of EAIC, and the annotations of adverse claim and lis pendens on the TCT constituted constructive notice to EAIC of the pending litigation, binding it to the case.
• EAIC's filing of an Answer with Counterclaim and a subsequent Petition for Relief from Judgment constituted voluntary appearance, thereby submitting itself to the jurisdiction of the RTC.
• The ground of extrinsic fraud was barred by prior adjudication because EAIC already invoked it in the Petition for Relief from Judgment under Rule 38, which was rejected with finality.
• The November 3, 1998 decision in SEC Cases Nos. 3747 and 4027 held that the board of directors headed by Raul E. Gala was illegitimate, suggesting that Domingo may have been the proper representative of EAIC at the time of service.
• Respondents had a duty to ensure proper service, but the corporation's own reticence and failure to act on the constructive notices should estop it from denying jurisdiction.

• Procedural Issues: Whether the petition for annulment of judgment is barred by the prior filing of a petition for relief from judgment based on the same ground of extrinsic fraud.
• Substantive Issues: Whether there was valid service of summons upon EAIC through Guia G. Domingo; Whether Domingo was a director or authorized agent of EAIC at the time of service as evidenced by the Report of Election of Directors (GIS); Whether the RTC acquired jurisdiction over the person of EAIC; Whether the filing of an Answer with Counterclaim by an unauthorized person constitutes voluntary appearance.

• Procedural: The Court found it unnecessary to fully resolve the procedural bar issue because the substantive issue of lack of jurisdiction was determinative. The Court noted that since the petition for relief was dismissed solely for being filed out of time without touching on the merits of the fraud allegation, the ground of extrinsic fraud was not actually adjudicated. However, the resolution of the jurisdictional defect rendered the procedural issue moot.
• Substantive: The Court GRANTED the petition and annulled the RTC decision. It held that:
• Service of summons on Domingo was invalid because she was not an officer or director of EAIC as shown by the 1996 GIS filed with the SEC. Under Section 13, Rule 14 of the 1964 Rules of Civil Procedure, service must be made strictly on the president, manager, secretary, cashier, agent, or director.
• The purpose of the rule is to ensure the corporation receives prompt and proper notice through a representative so integrated with the corporation that such person will know what to do with the legal papers.
• Actual knowledge of the pending case does not cure the lack of valid service of summons; jurisdiction over the person cannot be acquired by actual knowledge alone without valid service.
• The filing of an Answer with Counterclaim by Domingo did not constitute voluntary appearance because she lacked authority to represent EAIC. A corporation can only act through its board of directors or authorized officers/agents pursuant to board resolution or bylaws. Domingo acted as an unauthorized stranger and even admitted she represented Alicia E. Gala, not EAIC.
• The annotations of adverse claim and lis pendens on the TCT do not confer jurisdiction over the defendant; they serve only as notice to third persons.
• Consequently, the RTC did not acquire jurisdiction over EAIC, rendering the November 11, 1999 Decision null and void. The case was remanded to the RTC for proper service of summons.

• Strict Compliance with Service of Summons on Corporations — Service upon a domestic corporation must strictly comply with Section 13, Rule 14 of the Rules of Civil Procedure, meaning it must be made on the president, manager, secretary, cashier, agent, or director. The General Information Sheet (GIS) filed with the SEC, which reports the election of directors and officers, is conclusive evidence of who holds these positions. Service on persons not listed in the GIS is invalid and does not confer jurisdiction.
• Jurisdiction over the Person — Jurisdiction over the defendant is acquired only through valid service of summons or voluntary appearance. Actual knowledge of the suit, without valid service, does not confer jurisdiction over the person of the defendant.
• Voluntary Appearance by Corporations — For a corporation, voluntary appearance must be made by the board of directors or officers/agents authorized by board resolution or bylaws. The act of an unauthorized person in filing an answer does not bind the corporation or constitute voluntary submission to jurisdiction.
• Constructive Notice via Title Annotations — Annotations of lis pendens and adverse claims on a certificate of title serve as notice to third persons regarding the status of the property, but they do not confer jurisdiction over the defendant corporation or substitute for valid service of summons.

• "It is a settled rule that jurisdiction over the defendant is acquired either upon a valid service of summons or the defendant’s voluntary appearance in court. When the defendant does not voluntarily submit to the court’s jurisdiction or when there is no valid service of summons, any judgment of the court which has no jurisdiction over the person of the defendant is null and void."
• "The purpose of summons is not only to acquire jurisdiction over the person of the defendant, but also to give notice to the defendant that an action has been commenced against it and to afford it an opportunity to be heard on the claim made against it. The requirements of the rule on summons must be strictly followed, otherwise, the trial court will not acquire jurisdiction over the defendant."
• "Based on the above-quoted provision, for service of summons upon a private domestic corporation, to be effective and valid, should be made on the persons enumerated in the rule. Conversely, service of summons on anyone other than the president, manager, secretary, cashier, agent, or director, is not valid."
• "A corporation can only exercise its powers and transact its business through its board of directors and through its officers and agents when authorized by a board resolution or its bylaws."
• "EAIC cannot be bound or deemed to have voluntarily appeared before the RTC by the act of an unauthorized stranger."

• Manotoc v. Court of Appeals (530 Phil. 454) — Cited for the fundamental rule that jurisdiction over the defendant is acquired only by valid service of summons or voluntary appearance.
• Cesar v. Ricafort-Bautista (536 Phil. 1037) — Cited for the principle that actual knowledge of a pending case does not confer jurisdiction over the person of the defendant in the absence of valid service of summons.
• Salenga v. Court of Appeals (G.R. No. 174941, February 1, 2012) — Cited for the rule that corporations act only through their board of directors or authorized officers/agents, and unauthorized individuals cannot bind the corporation.
• Pioneer International, Ltd. v. Guadiz, Jr. (G.R. No. 156848) — Cited for the requirement that rules on summons must be strictly followed for a court to acquire jurisdiction.
• B.D. Long Span Builders v. R.S. Ampeloquio Realty Development Inc. (G.R. No. 169919) — Cited for the purpose of service on specific corporate officers: to ensure the corporation receives prompt notice through an integrated representative.

• Section 13, Rule 14 of the 1964 Rules of Civil Procedure — Governs service of summons upon private domestic corporations; limits valid service to the president, manager, secretary, cashier, agent, or director.
• Section 3, Rule 38 of the Rules of Court — Prescribes the time limit (60 days from knowledge, not more than 6 months from judgment) for filing a petition for relief from judgment.
• Section 2, Rule 47 of the Rules of Court — Limits grounds for annulment of judgment to extrinsic fraud and lack of jurisdiction; bars extrinsic fraud as a ground if it was or could have been availed of in a motion for new trial or petition for relief.
• Section 7, Rule 47 of the Rules of Court — Provides that a judgment of annulment sets aside the questioned judgment and renders it null and void, and allows remand for proper proceedings.
• Section 5, Rule 18 of the Rules of Court — Allows ex parte presentation of evidence when the defendant fails to appear at the pre-trial conference.