G.R. No. 163749; September 26, 2008
SPOUSES JULIAN SANTIAGO, SR. and LEONILA SANTIAGO and SPOUSES LIM JOSE ONG and MIMI ONG LIM, Petitioners, vs. BANK OF THE PHILIPPINE ISLANDS as successor in interest of Far East Bank & Trust Co., substituted by Investments 2234 Philippines Fund I (SPV-AMC), Inc., Respondent.

FACTS

Petitioners Spouses Santiago were the original owners of three parcels of land mortgaged to spouses Deloria. Far East Bank and Trust Company (FEBTC) approved a term loan for petitioner Lim Jose Ong, conditioned on using the proceeds to purchase these lands and release the Deloria mortgage. The Spouses Santiago sold the lands to Spouses Lim, who then executed a real estate mortgage in favor of FEBTC to secure a P2,500,000.00 loan. FEBTC later merged with respondent Bank of the Philippine Islands (BPI). Due to the Spouses Lim’s failure to pay their indebtedness, which ballooned to P18,630,011.96, BPI applied for extra-judicial foreclosure. Petitioners filed a complaint for injunction, damages, and accounting with the RTC of Dumaguete City, alleging that the Spouses Santiago were the real borrowers accommodated by the Spouses Lim with FEBTC’s knowledge, and that the obligation was unliquidated. The RTC issued a 72-hour TRO. Summons was served on BPI through the managers of its two Dumaguete City branches. During hearings, BPI challenged the RTC’s jurisdiction due to improper service of summons. The RTC dismissed the complaint, ruling it did not acquire jurisdiction over BPI because summons was not served on any of the persons enumerated in Section 11, Rule 14 of the 1997 Rules of Civil Procedure. The Court of Appeals affirmed the RTC’s decision.

ISSUE

Whether the service of summons on the branch managers of BPI’s two separate branches in Dumaguete City constitutes substantial compliance with Section 11, Rule 14 of the 1997 Rules of Civil Procedure, thereby vesting the RTC with jurisdiction over the person of the respondent.

RULING

No. The Supreme Court ruled that service of summons on the branch managers was not valid and did not constitute substantial compliance with the rules. Section 11, Rule 14 explicitly limits service for a domestic private juridical entity to the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel. Branch managers are not included in this enumeration. The rule is restrictive and must be strictly construed. Jurisdiction over the person of a corporation is acquired only upon strict compliance with the prescribed mode of service. Since there was no proper service of summons, the RTC did not acquire jurisdiction over BPI. The Court also found that BPI’s motion to dismiss did not violate the three-day notice rule, as it was a follow-up to an oral objection already made during the hearing, and the RTC had already indicated it would rule on the jurisdictional issue. Furthermore, the petitioners had a speedy and adequate remedy in the ordinary course of law by appealing the RTC’s order of dismissal, making their petition for certiorari before the CA improper. The Supreme Court denied the petition and affirmed the assailed CA Decision.