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Millenium Industrial Commercial Corporation vs. Tan

*
G.R. No. 131724. February 28, 2000.

MILLENIUM INDUSTRIAL COMMERCIAL

CORPORATION, petitioner, vs. JACKSON TAN,
respondent.

Actions; Pleadings and Practice; Summons; Parties; Service of

summons upon a defendant corporation must be made on a
representative so integrated with the corporation sued as to make
it a priori presumable that he will realize his responsibilities and
know what he should do with any legal papers received by him.—–
Summons is the means by which the defendant in a case is
notified of the existence of an action against him and, thereby, the
court is conferred jurisdiction over the person of the defendant. If
the defendant is a corporation, Rule 14, §13 requires that service
of summons be made upon the corporation’s president, manager,
secretary, cashier, agent, or any of its directors. The rationale of
the rule is that service must be made on a representative so
integrated with the corporation sued as to make it a priori
presumable that he will realize his responsibilities and know
what he should do with any legal papers received by him.
Same; Same; Same; Words and Phrases; Doctrine of
Substantial Compliance; Requisites.—–In Porac Trucking, Inc. v.
Court of Appeals, this Court enumerated the requisites for the
application of

________________

* SECOND DIVISION.

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the doctrine of substantial compliance, to wit: (a) there must be

actual receipt of the summons by the person served, i.e.,
transferring possession of the copy of the summons from the
Sheriff to the person served; (b) the person served must sign a
receipt or the sheriffs return; and (c) there must be actual receipt
of the summons by the corporation through the person on whom
the summons was actually served. The third requisite is the most
important for it is through such receipt that the purpose of the
rule on service of summons is attained.
Same; Same; Same; It is not allowable to merely infer actual
receipt of summons by the corporation through the person on
whom the summons was served—for there to be substantial
compliance, actual receipt of summons by the corporation through
the person served must be shown.—In this case, there is no
dispute that the first and second requisites were fulfilled. With
respect to the third, the appellate court held that petitioner’s
filing of a motion to dismiss the foreclosure suit is proof that it
received the copy of the summons and the complaint. There is,
however, no direct proof of this or that Lynverd Cinches actually
turned over the summons to any of the officers of the corporation.
In contrast, in our cases applying the substantial compliance rule,
there was direct evidence, such as the admission of the
corporation’s officers, of receipt of summons by the corporation
through the person upon whom it was actually served. The
question is whether it is allowable to merely infer actual receipt of
summons by the corporation through the person on whom
summons was served. We hold that it cannot be allowed. For
there to be substantial compliance, actual receipt of summons by
the corporation through the person served must be shown. Where
a corporation only learns of the service of summons and the filing
of the complaint against it through some person or means other
than the person actually served, the service of summons becomes
meaningless. This is particularly true in the present case where
there is serious doubt if Lynverd Cinches, the person on whom
service of summons was effected, is in fact an employee of the
corporation. Except for the sheriff’s return, there is nothing to
show that Lynverd Cinches was really a draftsman employed by
the corporation.
Same; Same; Same; Receipt by a defendant corporation of the
summons and complaint cannot be inferred from the fact that it
filed a Motion to Dismiss the case.—Respondent casts doubt on
petitioner’s claim that it came to know about the summons and
the

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Millenium Industrial Commercial Corporation vs. Tan

complaint against it only after it learned that there was a pending

foreclosure of its mortgage. There is nothing improbable about
this claim. Petitioner was in default in the payment of its loan. It
had received demand letters from respondent. Thus, it had reason
to believe that a foreclosure suit would be filed against it. The
appellate court was, therefore, in error in giving weight to
respondent’s claims. Receipt by petitioner of the summons and
complaint cannot be inferred from the fact that it filed a Motion to
Dismiss the case.
Same; Same; Same; Jurisdiction; Estoppel; Voluntary
appearance is a waiver of the defense of lack of jurisdiction over
the person of the defendant, but the assertion of affirmative
defenses shall not be construed as an estoppel or as a waiver of
such defense.—–Our decision in La Naval Drug Corporation v.
Court of Appeals settled this question. The rule prior to La Naval
was that if a defendant, in a motion to dismiss, alleges grounds
for dismissing the action other than lack of jurisdiction, he would
be deemed to have submitted himself to the jurisdiction of the
court. This rule no longer holds true. Noting that the doctrine of
estoppel by jurisdiction must be unequivocal and intentional, we
ruled in La Naval: Jurisdiction over the person must be
seasonably raised, i.e., that it is pleaded in a motion to dismiss or
by way of an affirmative defense. Voluntary appearance shall be
deemed a waiver of this defense. The assertion, however, of
affirmative defenses shall not be construed as an estoppel or as a
waiver of such defense.
Same; Same; Same; Same; Same; The rule that, in a motion to
dismiss, the allegation of grounds other than lack of jurisdiction
over the person of the defendant, including a prayer “for such other
reliefs as” may be deemed “appropriate and proper” amounted to
voluntary appearance must be deemed superseded by the ruling in
La Naval Drug Corporation vs. Court of Appeals (236 SCRA 78
[1994]) that estoppel by jurisdiction must be unequivocal and
intentional.—–We turn to the effect of petitioner’s prayer for
“other reliefs” in its Motion to Dismiss. In De Midgely v.
Fernandos, it was held that, in a motion to dismiss, the allegation
of grounds other than lack of jurisdiction over the person of the
defendant, including a prayer “for such other reliefs as” may be
deemed “appropriate and proper” amounted to voluntary
appearance. This, however, must be deemed superseded by the
ruling in La Naval that estoppel by jurisdiction must be
unequivocal and intentional. It would be absurd to hold that
petitioner unequivocally and intentionally submitted itself to the
juris-
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diction of the court by seeking other reliefs to which it might be

entitled when the only relief that it can properly ask from the
trial court is the dismissal of the complaint against it.

PETITION for review on certiorari of a decision of the

Court of Appeals.

The facts are stated in the opinion of the Court.

     A.S. Dy & Associates for petitioner.
          Fernan, Mercado, Cordero, De la Torre & Bael for
private respondent.

MENDOZA, J.:

In December 1994, Millenium Industrial Commercial

Corporation, petitioner
1
herein, executed a Deed of Real
Estate Mortgage over its real property covered by TCT No.
24069 in favor of respondent Jackson Tan. The mortgage
was executed to secure payment of petitioner’s
indebtedness to respondent in the amount of P2 million,
without monthly interest, but which, at maturity date on
June 10, 1995, was payable in the amount of P4 million.
On November 9, 1995, respondent filed against
petitioner a complaint for foreclosure of mortgage in the
Regional Trial Court, Branch 6, Cebu City. On November
21, 1995, summons and a copy of the complaint were served
upon petitioner through a certain Lynverd Cinches,
described in the sheriff’s return, dated November 23, 1995,
as “a Draftsman, a person of sufficient age and (discretion)
working therein, he is the highest ranking officer or
Officer-in-Charge of defendant’s
2
Corporation, to receive
processes of the Court.”
Petitioner moved for the dismissal of the complaint on
the ground that there was no valid service of summons
upon it, as a result of which the trial court did not acquire
jurisdiction

_______________

1 Annex D; Rollo, p. 55.

2 Annex F; Id., p. 60.

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over it. Petitioner invoked Rule 14, §13 of the 1964 Rules of
Court and contended that service on Lynverd Cinches, as
alleged in the sheriff’s return, was invalid as he is not one
of the authorized persons on whom summons may 3
be
served and that, in fact, he was not even its employee.
Petitioner also sought the dismissal of the complaint
against it on the ground that it had satisfied its obligation
to respondent when the latter opted to be paid in shares of
stock under the following stipulation in the mortgage
contract:

That in the remote possibility of failure on the part of the

mortgagor to pay the mortgage obligation and interest in cash,
the MORTGAGEE at his option may demand that payment be
made in the form of shares of stock of Millenium Industrial
4
Commercial Corporation totaling at least 4,000,000 shares.

Petitioner further prayed for 5

“other reliefs just and
equitable under the premises.”
On December 15, 1995, the trial court denied petitioner’s
Motion to Dismiss. Its order stated:

This refers to the Motion to Dismiss, dated December 4, 1995, by

defendant anchored on the following grounds:

1. That the Court had not acquired jurisdiction over the

person of the defendant corporation because summons was
served upon a person who is not known to or an employee
of the defendant corporation.
2. That the obligation sought to be collected was already paid
and extinguished.

_______________

3 Annex J; Id., p. 130.

4 Whether respondent availed of the above option by accepting payment
in the form of Millenium shares is a matter of dispute. Petitioner contends
that when Tan instituted the foreclosure suit, he had already opted to
collect payment through the issuance of P4 million worth of stocks.
Respondent, however, denies that he opted to be paid in shares of the
corporation.
5 Rollo, p. 133.

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By interposing the second ground, the defendant has availed of an

affirmative defense on the basis of which the Court has to hear and
receive evidence. For the Court to validly decide the said plea of the
defendant it necessarily had to acquire jurisdiction over the person
of the defendant. Thus, defendant is considered to have then
abandoned its first ground and is deemed to have voluntarily
submitted itself to the jurisdiction of the Court. It is a legal truism
that voluntary appearance cures the defect of the summons, if
any. The defendant’s filing of the motion to dismiss by pleading
therein the second ground amounts to voluntary appearance and
it indeed cured the defect.
Wherefore,
6
Motion to Dismiss is hereby denied for lack of
merit.

Petitioner moved for reconsideration, but its motion was

denied by the trial court in its order, dated January 16,
1996, for failure of petitioner to raise any new ground.
Petitioner then filed a petition for certiorari in the Court of
Appeals, assailing the aforesaid orders of the trial court.
On September
7
18, 1997, the Court of Appeals dismissed
the petition. The appellate court ruled that although
petitioner denied Lynverd Cinches’ authority to receive
summons for it, its actual receipt of the summons could be
inferred from its filing of a motion to dismiss, hence, the
purpose for issuing summons had been substantially
achieved. Moreover, it was held, by including the
affirmative defense that it had already paid its obligation
and praying for other reliefs in its Motion to Dismiss,
petitioner
8
voluntarily submitted to the jurisdiction of the
court.
Hence, this petition for review. Petitioner raises the
following issues:

_______________

6 CA Decision, pp. 1-2; Id., pp. 47-48. (Emphasis added)

7 I n CA-G.R. SP No. 39957, dated Sept. 18, 1997. Per Justice Artemon
D. Luna, concurred in by Justices Hector L. Hofileña and Demetrio G.
Demetria.
8 CA Decision, pp. 4-5; Id., pp. 50-51.

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Millenium Industrial Commercial Corporation vs. Tan

I. WHETHER OR NOT SERVICE OF SUMMONS

UPON A MERE DRAFTSMAN WHO IS NOT ONE
OF THOSE UPON WHOM SUMMONS MAY BE
SERVED IN CASE OF A DEFENDANT
CORPORATION AS MENTIONED IN THE
RULES IS VALID.
II. WHETHER OR NOT THE INCLUSION OF
ANOTHER AFFIRMATIVE RELIEF IN A
MOTION TO DISMISS ABANDONS AND
WAIVES THE GROUND OF LACK OF
JURISDICTION OVER THE PERSON OF THE
DEFENDANT THEREIN ALSO PLEADED
UNDER PREVAILING LAW AND
JURISPRUDENCE.
III. WHETHER OR NOT THERE IS A LEGAL
GROUND TO GRANT PETITIONERS MOTION
TO DISMISS THE COMPLAINT BELOW.

First. Petitioner objects to the application of the doctrine of

substantial compliance in the service of summons for two
reasons: (1) the enumeration of persons on whom service of
summons on a corporation may be effected in Rule 14, §13,
is exclusive and mandatory; and (2) even assuming that
substantial compliance is allowed, its alleged actual receipt
of the summons is based on an unfounded speculation
because there is nothing in the records to show that
Lynverd Cinches actually turned 9over the summons to any
of the officers of the corporation. Petitioner contends that
it was able to file a motion to dismiss only because of its
timely discovery of the foreclosure suit against it when it
checked the records of the case in the trial court.
The contention is meritorious.
Summons is the means by which the defendant in a case
is notified of the existence of an action against him and,
thereby, the court10 is conferred jurisdiction over the person
of the defendant. If the defendant is a corporation, Rule
14, §13 requires that service of summons be made upon the
corporation’s president, manager, secretary, cashier, agent,
or any of

_______________

9 Petition, p. 6; Id., pp. 22-25.

10 Matanguihan v. Tengco, 95 SCRA 478 (1980); Arcenas v. Court of
Appeals, 299 SCRA 733 (1998).

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11
its directors. The rationale of the rule is that service must
be made on a representative so integrated with the
corporation sued as to make it a priori presumable that he
will realize his responsibilities and know
12
what he should do
with any legal papers received by him.
Petitioner contends that the enumeration in Rule 14,
§13 is exclusive and that service of summons upon one who
is not
13
enumerated therein is invalid. This is the general
rule. However, it is settled that substantial compliance by
serving summons on persons other than those mentioned in
the above rule may be justified. 14
In G & G Trading
Corporation v. Court of Appeals, we ruled that although
the service of summons was made on a person not
enumerated in Rule 14, §13, if it appears that the summons
and complaint were in fact received by the corporation,
there is substantial compliance with the rule as its purpose
has been attained. 15
In Porac Trucking, Inc. v. Court of Appeals, this Court
enumerated the requisites for the application of the
doctrine of substantial compliance, to wit: (a) there must be
actual receipt of the summons by the person served, i.e.,
transferring possession of the copy of the summons from
the Sheriff to the person served; (b) the person served must
sign a receipt or the sheriffs return; and (c) there must be
actual receipt of the summons by the corporation through
the person on whom the

_______________

11 As amended, Rule 14, §11 of the 1997 Rules of Civil Procedure now
provides:

When the defendant is a corporation, partnership or association organized under

the laws of the Philippines with a juridical personality, service may be made on
the president, managing partner, general manager, corporate secretary, treasurer,
or in-house counsel.

12 Villa Rey Transit, Inc. v. Far East Motor Corporation, 81 SCRA 298
(1978). See also Delta Motor Sales Corp. v. Mancosing, 70 SCRA 598
(1976).
13 See E.B. Villarosa & Partner Co., Ltd. v. Imperial Development
Corp., G.R. No. 136426, Aug. 6, 1999, 312 SCRA 65.
14 158 SCRA 466 (1988).

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15 183 SCRA 45 (1990).

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Millenium Industrial Commercial Corporation vs. Tan

16
summons was actually served. The third requisite is the
most important for it is through such receipt that the
purpose of the rule on service of summons is attained.
In this case, there is no dispute that the first and second
requisites were fulfilled. With respect to the third, the
appellate court held that petitioner’s filing of a motion to
dismiss the foreclosure suit is proof that it received the
copy of the summons and the complaint. There is, however,
no direct proof of this or that Lynverd Cinches actually
turned over the summons to any of the officers of the
corporation. In contrast, in 17
our cases applying the
substantial compliance rule, there was direct evidence,
such as the admission of the corporation’s officers, of
receipt of summons by the corporation through the person
upon whom it was actually served. The question is whether
it is allowable to merely infer actual receipt of summons by
the corporation through the person on whom summons was
served. We hold that it cannot be allowed. For there to be
substantial compliance, actual receipt of summons by the
corporation through the person served must be shown.
Where a corporation only learns of the service of summons
and the filing of the complaint against it through some
person or means other than the person actually served, the
service of summons becomes meaningless. This is
particularly true in the present case where there is serious
doubt if Lynverd Cinches, the person on whom service of
summons was effected, is in fact an employee of the
corporation. Except for the sheriff’s return, there is nothing
to show that Lynverd Cinches was really a draftsman
employed by the corporation.
Respondent casts doubt on petitioner’s claim that it
came to know about the summons and the complaint
against it only after it learned that there was a pending
foreclosure of its

_______________

16 Id., pp. 48-49.

17 Talsan Enterprises, Inc. v. Baliwag Transit, Inc., G.R. No. 126258,
July 8, 1999, 310 SCRA 156; Pabon v. NLRC, 296 SCRA 7 (1998); Golden
Country Farms, Inc. v. Sanvar Development Corp., 214 SCRA 295 (1992);

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Rebollido v. Court of Appeal, 170 SCRA 800 (1989); G&G Trading Corp. v.
Court of Appeal, supra.

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Millenium Industrial Commercial Corporation vs. Tan

mortgage. There is nothing improbable about this claim.

Petitioner was in default in the payment of its loan. It had
received demand letters from respondent. Thus, it had
reason to believe that a foreclosure suit would be filed
against it. The appellate court was, therefore, in error in
giving weight to respondent’s claims. Receipt by petitioner
of the summons and complaint cannot be inferred from the
fact that it filed a Motion to Dismiss the case.
Second. We now turn to the issue of jurisdiction by
estoppel. Both the trial court and the Court of Appeals held
that by raising the affirmative defense of payment and by
praying for other reliefs in its Motion to Dismiss, petitioner
in effect waived its objection to the trial court’s jurisdiction
over it. We think this is error.
Our decision
18
in La Naval Drug Corporation v. Court of
Appeals settled this question. The rule prior to La Naval
was that if a defendant, in a motion to dismiss, alleges
grounds for dismissing the action other than lack of
jurisdiction, he would be deemed 19
to have submitted himself
to the jurisdiction of the court. This rule no longer holds
true. Noting that the doctrine of estoppel by jurisdiction
must be unequivocal and intentional, we ruled in La Naval:
Jurisdiction over the person must be seasonably raised,
i.e., that it is pleaded in a motion to dismiss or by way of an
affirmative defense. Voluntary appearance shall be deemed
a waiver of this defense. The assertion, however, of
affirmative defenses shall not20be construed as an estoppel
or as a waiver of such defense.
Third. Finally, we turn to the effect of petitioner’s
prayer for “other reliefs” in its Motion to Dismiss. In De
Midgely v.

________________

18 236 SCRA 78 (1994).

19 Wang Laboratories, Inc. v. Mendoza, 156 SCRA 44 (1987); De
Midgely v. Judge Ferandos, 64 SCRA 23 (1975); Republic v. Ker &
Company, Ltd., 18 SCRA 207 (1966).
20 236 SCRA at 91.

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21
Fernandos, it was held that, in a motion to dismiss, the
allegation of grounds other than lack of jurisdiction over
the person of the defendant, including a prayer “for such
other reliefs as” may be deemed “appropriate and proper”
amounted to voluntary appearance. This, however, must be
deemed superseded by the ruling in La Naval that estoppel
by jurisdiction must be unequivocal and intentional. It
would be absurd to hold that petitioner unequivocally and
intentionally submitted itself to the jurisdiction of the court
by seeking other reliefs to which it might be entitled when
the only relief that it can properly ask from the trial court
is the dismissal of the complaint against it.
WHEREFORE, the decision of the Court of Appeals is
REVERSED and the complaint against petitioner is
DISMISSED.
SO ORDERED.

     Bellosillo (Chairman), Quisumbing, Buena and De

Leon, Jr., JJ., concur.

Judgment reversed, complaint dismissed.

Notes.—–No voluntary appearance by a foreign

corporation can be inferred from the acts of a lawyer who
filed an answer for such corporation where the latter does
not claim to have directly conferred with the former, there
is no evidence to show that he notified it of his appearance
in its behalf, or that he furnished it with copies of
pleadings or the answer he filed.
(Litton Mills, Inc. vs. Court of Appeals, 256 SCRA 696
[1996])
The filing of an answer per se should not be
automatically treated as voluntary appearance by the
defendant for purposes of summons. (French Oil Mill
Machinery Co., Inc. vs. Court of Appeals, 295 SCRA 462
[1998])
Where there is substituted service, there should be a
report indicating that the person who received the
summons in the

_______________

21 64 SCRA 23 (1975).

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Republic vs. De Guzman

defendant’s behalf was one with whom petitioner had a

relation of confidence that would ensure that the latter will
receive or be notified of the summons issued in his name.
(Ang Ping vs. Court of Appeals, 310 SCRA 343 [1999])

—–—–o0o—–—–

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