GR 228435; (June, 2017) (Digest)
G.R. No. 228435 , June 21, 2017
KT Construction Supply, Inc., represented by William Go, Petitioner, vs. Philippine Savings Bank, Respondent.
FACTS
Petitioner KT Construction Supply, Inc. obtained a loan from respondent Philippine Savings Bank (PSBank) evidenced by a Promissory Note signed by its officers, William Go and Nancy Go-Tan, in their corporate capacities and, as stated in the note, in their personal capacities. The note contained an acceleration clause making the entire obligation due upon default in any installment. After KT Construction defaulted, PSBank sent a demand letter and subsequently filed a complaint for sum of money against the corporation.
The Regional Trial Court (RTC) ruled in favor of PSBank, ordering KT Construction, Go, and Go-Tan to pay the outstanding loan solidarily. The Court of Appeals (CA) affirmed the RTC decision, upholding the validity of the acceleration clause and the solidary liability of the corporate officers as co-makers per the promissory note’s stipulation.
ISSUE
The core issues were: (1) whether the complaint was prematurely filed; (2) whether the promissory note was a void contract of adhesion; (3) whether attorney’s fees were properly awarded; and (4) whether William Go and Nancy Go-Tan could be held solidarily liable with the corporation.
RULING
The Supreme Court partially granted the petition. It upheld the lower courts’ rulings on the first three issues but reversed the finding of solidary liability for the individual officers. The acceleration clause was valid and enforceable, making the entire loan due upon default and rendering the complaint timely. The promissory note was not a contract of adhesion as the petitioner, a corporation engaged in business, was not forced to accept its terms and had the opportunity to clarify them. The award of attorney’s fees was valid as it was based on a stipulated penal clause in the contract.
However, the Court held that the RTC never acquired jurisdiction over William Go and Nancy Go-Tan in their personal capacities. They were not impleaded as party-defendants in the complaint nor served with summons; they participated only as representatives of the corporate defendant. Jurisdiction over a person is acquired either through service of summons or voluntary appearance. Since neither condition was met, the trial court could not validly render a judgment imposing solidary liability upon them. Only the corporation, KT Construction Supply, Inc., was properly bound by the judgment award.