Spouses Mason vs. Court of Appeals

Service of summons upon a domestic private juridical entity under Section 11, Rule 14 of the 1997 Rules of Civil Procedure must be made strictly on the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel; service on a mere filing clerk is invalid and does not vest the trial court with jurisdiction over the corporation.

Petitioners Efren and Digna Mason owned two parcels of land along Epifanio delos Santos Avenue in Pasay City. They entered into a lease contract with Columbus Philippines Bus Corporation on March 30, 1993. The procedural dispute centers on Section 11, Rule 14 of the 1997 Rules of Civil Procedure, which governs service of summons upon a domestic private juridical entity and replaced Section 13, Rule 14 of the 1964 Rules of Court.

Petitioners spouses Efren and Digna Mason owned two parcels of land along Epifanio delos Santos Avenue in Pasay City. On March 30, 1993, they entered into a lease contract with private respondent Columbus Philippines Bus Corporation, under which Columbus undertook to construct a building worth ₱10,000,000 at the end of the third year of the lease.

Columbus failed to comply with that undertaking. On November 13, 1998, petitioners filed a complaint for rescission of contract with damages against Columbus before the Regional Trial Court of Pasay City, docketed as Civil Case No. 98-1567. Summons was served upon Columbus through a certain Ayreen Rejalde. The receiving copy of the summons described Rejalde as a secretary of Columbus, while the sheriff’s return described her as a secretary to the corporate president, duly authorized to receive legal processes.

Columbus did not file an answer or other responsive pleading. Petitioners moved to declare it in default; the motion was granted, and petitioners were allowed to present evidence ex-parte. The case was then submitted for decision. On April 22, 1999, the trial court rendered judgment rescinding, terminating, and cancelling the lease contract and ordering Columbus to pay ₱10,000,000 as actual damages for the building it failed to construct, ₱63,862.57 beginning November 1998 until it and the sub-lessee vacated the property as reasonable compensation, ₱300,000 moral damages, ₱100,000 exemplary damages, ₱100,000 attorney’s fees, and costs, and to surrender possession to petitioners.

The decision became final on May 12, 1999. The following day, Columbus filed a motion to lift the order of default, which petitioners opposed. The trial court ordered the parties to submit memoranda, but on May 26, 1999, it denied the motion to lift default and granted execution, revoking its May 21, 1999 order allowing memoranda. Columbus’s motion for reconsideration was denied, and its manifestation and motion to lift the writ of execution was likewise denied as dilatory; the branch sheriff was directed to enforce the decision.

On appeal, the Court of Appeals found that Ayreen Rejalde was a mere filing clerk in Columbus’s office, as evidenced by her employment record, and not one of the persons authorized to receive summons under Section 11, Rule 14 of the 1997 Rules of Civil Procedure. The Court of Appeals also noted that Columbus’s motion to lift the order of default explained that its failure to answer was due to its impression that the case would not be pursued because it had already made payments to petitioners.

• Substantial Compliance Under Section 11, Rule 14: Petitioners contended that while Section 11, Rule 14 specifies the persons authorized to receive summons on behalf of a private juridical entity, it did not abandon or render inapplicable the substantial compliance rule; citing Millenium Industrial Commercial Corporation vs. Tan and E.B. Villarosa & Partner Co., Ltd. vs. Judge Benito, they maintained that the provision states the general rule and substantial compliance is the exception.
• Actual Receipt by Corporation: Petitioners stressed that although summons was received by a mere filing clerk, there was substantial compliance because the summons actually reached Columbus; Columbus’s motion to lift order of default did not question the validity of service but explained that it failed to answer because it thought the case would not be pursued since it had already made payments, which petitioners claimed was an admission of receipt.
• Negligence and Speedy Justice: Petitioners argued that Columbus’s failure to answer despite receipt was negligence that courts cannot tolerate; technicality must not defeat speedy justice; thus the RTC acquired jurisdiction.
• Misplaced Reliance on Villarosa: Petitioners claimed the Court of Appeals’ reliance on Villarosa was misplaced because in Villarosa there was no showing of actual receipt by the defendant corporation, whereas here Columbus actually received the summons.
• Motion to Lift Order of Default: Petitioners claimed Columbus’s motion to lift order of default was not in order because it was filed late, contrary to Section 3(b), Rule 9 of the 1997 Rules of Civil Procedure, which requires filing after notice but before judgment; it was not under oath; it did not show fraud, accident, mistake, or excusable neglect; and it did not show a meritorious defense.

• Millenium Not Authority: Respondent countered that Millenium did not state or imply that the substantial compliance doctrine had not been abandoned; petitioners misquoted it; Millenium discussed service under the old Rules of Court prior to the 1997 Rules, and the exception for actual receipt referred to the old rule.
• Villarosa Controls: Respondent argued that since the 1997 Rules were in effect when the complaint was filed, Villarosa squarely governs; service through Ayreen Rejalde, a mere filing clerk not among those enumerated, is invalid.
• No Jurisdiction and Mootness: Respondent argued that because service was invalid, the trial court did not acquire jurisdiction over it; all subsequent proceedings, including the order of default, are null and void, rendering the second issue moot and academic.

• Validity of Service of Summons and Jurisdiction: Whether there was valid service of summons on private respondent for the trial court to acquire jurisdiction, including whether the substantial compliance rule applies under Section 11, Rule 14 of the 1997 Rules of Civil Procedure.
• Motion to Lift Order of Default: Whether private respondent’s motion to lift order of default was in order.

• Validity of Service of Summons and Jurisdiction: No. Service on Ayreen Rejalde, a mere filing clerk not among those enumerated in Section 11, Rule 14 of the 1997 Rules of Civil Procedure, was invalid; strict compliance is required, and the trial court did not acquire jurisdiction over Columbus.
• Motion to Lift Order of Default: Moot and academic. Because the trial court did not acquire jurisdiction, all subsequent proceedings, including the order of default, are null and void.

• Validity of Service of Summons and Jurisdiction: The Court found respondent’s submission meritorious. The question whether substantial compliance remains applicable under Section 11, Rule 14 was settled in Villarosa, which applies squarely. In Villarosa, service was made on a branch manager not included in Section 11, Rule 14; the trial court denied a motion to dismiss on substantial compliance, but the Supreme Court declared the trial court without jurisdiction. The new rule revised Section 13, Rule 14 of the 1964 Rules of Court; the enumeration is restricted, limited, and exclusive under expressio unius est exclusio alterius. Had the Rules of Court Revision Committee intended to liberalize service, it could have done so by clear and concise language; absent such intent, strict compliance is required. Millenium cannot support petitioners because it was decided under the 1964 Rules; the cases cited by petitioners upholding substantial compliance are deemed overturned by Villarosa. Service of summons is a vital and indispensable ingredient of due process; disregarding the rules would deprive Columbus of its right to present its defense in a multi-million peso suit. Since service on Ayreen Rejalde, a mere filing clerk, was invalid, the RTC did not acquire jurisdiction over Columbus.
• Motion to Lift Order of Default: Because the trial court did not acquire jurisdiction, all subsequent proceedings before it, including the order of default, are null and void. The second issue—whether Columbus’s motion to lift the order of default was in order—became moot and academic. The Court thus did not resolve the timeliness or merits of that motion.

• Strict Compliance with Service of Summons on Domestic Private Juridical Entity — Under Section 11, Rule 14 of the 1997 Rules of Civil Procedure, service of summons 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 restricted, limited, and exclusive; service on a mere filing clerk is invalid. The Court applied this rule to invalidate service on Ayreen Rejalde and to hold that the RTC never acquired jurisdiction over Columbus.
• Expressio Unius Est Exclusio Alterius — The express mention of the persons authorized to receive summons in Section 11, Rule 14 implies the exclusion of all others. The Court used this rule in statutory construction to hold that the enumeration in the 1997 Rules is exclusive and that the substantial compliance rule under the old Rules no longer applies.
• Service of Summons as a Due Process Requirement — Notice to enable the other party to be heard and to present evidence is not a mere technicality or trivial matter in administrative or judicial proceedings; service of summons is a vital and indispensable ingredient of due process. The Court applied this principle to prevent Columbus from being deprived of its right to present its defense in a multi-million peso suit.
• Effect of Invalid Service of Summons — If service of summons is invalid, the trial court does not acquire jurisdiction over the defendant; all subsequent proceedings, including the order of default, are null and void. The Court applied this consequence to set aside the default and execution and to render the second issue moot.

• "The designation of persons or officers who are authorized to accept summons for a domestic corporation or partnership is now limited and more clearly specified in Section 11, Rule 14 of the 1997 Rules of Civil Procedure. The rule now states "general manager" instead of only "manager"; "corporate secretary" instead of "secretary"; and "treasurer" instead of "cashier." The phrase "agent, or any of its directors" is conspicuously deleted in the new rule." — This passage, quoted from Villarosa, states the Court’s controlling interpretation that the 1997 Rules deliberately limited and restricted the persons who may receive summons for a domestic private juridical entity.
• "Had the Rules of Court Revision Committee intended to liberalize the rule on service of summons, we said, it could have easily done so by clear and concise language. Absent a manifest intent to liberalize the rule, we stressed strict compliance with Section 11, Rule 14 of the 1997 Rules of Civil Procedure." — This is the ratio decidendi for rejecting the substantial compliance rule under the 1997 Rules and requiring strict compliance with the enumeration.
• "At this juncture, it is worth emphasizing that notice to enable the other party to be heard and to present evidence is not a mere technicality or a trivial matter in any administrative or judicial proceedings. The service of summons is a vital and indispensable ingredient of due process." — This passage defines the due process dimension of service of summons and explains why invalid service cannot be excused as a mere technicality.
• "Since we have ruled that service of summons upon private respondent through its filing clerk cannot be considered valid, it necessarily follows therefore that the Regional Trial Court of Pasay City did not acquire jurisdiction over private respondent. Consequently, all the subsequent proceedings held before it, including the order of default, are null and void." — This passage states the jurisdictional consequence of invalid service and the nullity of the default and subsequent proceedings.

• E.B. Villarosa & Partner Co., Ltd. vs. Judge Benito, 370 Phil. 921, 927-928 (1999) — Controlling precedent. The Court applied it squarely and held that service on a person not enumerated in Section 11, Rule 14 of the 1997 Rules of Civil Procedure is invalid, discarding substantial compliance and requiring strict compliance.
• Millenium Industrial Commercial Corporation vs. Tan, 383 Phil. 468, 476-477 (2000) — Distinguished. It was decided under the 1964 Rules of Court and cannot support applying the substantial compliance rule under the 1997 Rules; cases upholding substantial compliance were deemed overturned by Villarosa.
• National Power Corporation vs. NLRC, 339 Phil. 89, 107 (1997) — Cited for the principle that service of summons is a vital and indispensable ingredient of due process.
• Cano-Gutierrez vs. Gutierrez, G.R. No. 138584, 2 October 2000, 341 SCRA 670, 675 — Cited for the consequence that invalid service means the trial court did not acquire jurisdiction over the defendant.
• Arcenas vs. Court of Appeals, 360 Phil. 122, 131 (1998) — Cited for the rule that all subsequent proceedings, including the order of default, are null and void where jurisdiction was not acquired.

• Section 11, Rule 14, 1997 Rules of Civil Procedure — Service upon domestic private juridical entity. It enumerates the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel as the only persons authorized to receive summons. Applied: service on Ayreen Rejalde, a filing clerk, was invalid; strict compliance required.
• Section 13, Rule 14, 1964 Rules of Court — The prior rule, which allowed service on the president, manager, secretary, cashier, agent, or any of the directors. It was revised by Section 11, Rule 14 of the 1997 Rules; Millenium was decided under this old rule.
• Section 3(b), Rule 9, 1997 Rules of Civil Procedure — Relief from order of default. It requires a motion under oath, filed after notice and before judgment, showing fraud, accident, mistake, or excusable negligence and a meritorious defense. Petitioners invoked it to challenge Columbus’s motion; the Court found the issue moot because the trial court never acquired jurisdiction.

Bellosillo, J. (Chairman); Austria-Martinez, J.; Callejo, Sr., J.; Tinga, J.