EUCDI United Construction and Development, Inc. v. De Guzman

FIRST DIVISION

[G.R. No. 196836. September 16, 2020.]

EUCDI UNITED CONSTRUCTION AND DEVELOPMENT, INC. (EUCDI), EUNICON UNITED CONSTRUCTION AND DEVELOPMENT, INC. (EUNICON), EMMANUEL ESPESO, ABRAHAM ESPESO, ADAMSON IBAÑEZ, AND JEGUNDINA ESPESO, petitioners,vs. SARA FRANCESCA SOLIVEN DE GUZMAN, respondent.

NOTICE

Sirs/Mesdames:

Please take notice that the Court, First Division, issued a Resolution datedSeptember 16, 2020which reads as follows:

"G.R. No. 196836 (EUCDI United Construction and Development, Inc. (EUCDI), Eunicon United Construction and Development, Inc. (EUNICON), Emmanuel Espeso, Abraham Espeso, Adamson Ibañez, and Jegundina Espeso v. Sara Francesca Soliven De Guzman)

On March 31, 2006, 1 respondent Sara Francesca Soliven de Guzman filed before the Regional Trial Court (RTC), Quezon City a complaint for sum of money and damages with prayer for ex-parte issuance of a writ of preliminary attachment against petitioners EUCDI United Construction and Development, Inc. (EUCDI), 2 EUNICON United Construction and Development, Inc. (EUNICON), and their corporate officers. She essentially alleged:

On May 4, 2005, EUCDI agreed to construct a three (3)-storey residential house for her at No. 6 Moscow Street, Loyola Grand Villas, Quezon City for P18,500,000.00. Per contract, construction will begin on June 1, 2005 and end on June 1, 2006. Although they did not stipulate on any downpayment, petitioners prodded her to pay fifty percent (50%) of the contract price or P9,250,000.00 even before the construction started. She promptly paid the amount on May 10, 2005.

Despite the advance payment, however, EUCDI failed to fulfill its obligation as no visible progress was made on the construction site until November 2005. Thus, she demanded that EUCDI return the downpayment. EUNICON and its corporate officers Emmanuel Espeso, Abraham Espeso, Adamson Ibañez and Jegundina Espeso should also be liable with EUCDI because they all conspired to make it appear that EUCDI and EUNICON were one and the same. They did this by presenting to her the profile of EUNICON, albeit the final contract only bore the name of EUCDI as party obligor.

The case was raffled to Branch 96.

By Order 3 dated May 11, 2006, the trial court granted private respondent's prayer for preliminary attachment, and on June 20, 2006, issued the corresponding writ. 4

In his Sheriff's Return dated August 16, 2006, Deputy Sheriff Ramon P. Villanueva reported that he had served copies of the summons on petitioners EUCDI, EUNICON, Abraham, Adamson and Emmanuel through EUCDI's secretary and receiving officer Mhel C. Marquez, thus:

THIS IS TO CERTIFY that on August 3, 2006, copies of the Summons together with the copy of the complaints and its annexes including copies of the Order dated May 11, 2006 and the Writ of Preliminary Attachment dated June 20, 2006, were DULY SERVED to the defendants eUCDI, eUNICON, Arch. Abraham Espeso, Adamson Ibañez and Emmanuel D. Espeso thru Ms. Mhel C. Marquez, Secretary and authorized receiving officer who acknowledged receipt hereof for the above named parties. 5

On the same day, he also submitted a Partial Officer's Return, 6 reporting that his efforts to effect personal service of summons on petitioners proved to be futile and that the garnishment of petitioners' bank account did not go smoothly, thus:

THIS IS TO CERTIFY that on August 3, 2006, the undersigned caused the garnishment of the bank accounts of the defendants, after summons were (sic) served to defendants eUCDI, eUNICON, Emmanuel D. Espeso, Arch. Abraham Espeso and Adamson Ibañez, through Mhel C. Marquez, secretary and authorized receiving officer. In compliance with the notice of garnishment, Banco De Oro had frozen the accounts of the said defendants. However, said bank failed and refuses to disclose the amounts garnished, which is material and essential to determine whether or not the undersigned still had to proceed with the preliminary attachment.

This is to certify further that summons could not possibly be served to the defendant's officer personally since the said defendants seldom report to their principal office at Unit 3C, 3rd level, MAPFRE Bldg., Acacia Avenue, Muntinlupa City and has (sic) even transferred their residence. Efforts to serve summons to the officers and other defendants personally turned futile. 7

On August 18, 2006, petitioners moved to quash the summons and the writ of attachment/garnishment on ground that the court allegedly failed to acquire jurisdiction over their persons. According to them, jurisdiction over the person of the defendant is acquired either by valid service of summons or by voluntary appearance in court. Under Section 11, Rule 14 of the Revised Rules of Court, the enumeration of persons upon whom summons may be validly served in cases where the defendant is a corporation, partnership or association organized under the laws of the Philippines with juridical personality is exclusive. And since Ms. Mhel C. Marquez upon whom the summons was served was neither the president, managing partner, general manager, corporate secretary, treasurer nor in-house counsel of EUCDI and EUNICON, the court failed to acquire jurisdiction over them. 8

Petitioners further argued that substituted service was not validly effected on them either. For the Sheriff's Return did not state that it was impossible to effect personal service despite the sheriff's efforts to do so within a reasonable time; for some justifiable reasons, personal service cannot be effected; and service was done at the defendant's residence or defendant's office or regular place of business. In view of the flawed service of summons therefore in this case, the court did not acquire jurisdiction over their persons, 9 hence, the writ of preliminary attachment/garnishment was invalid.

On August 23, 2006, Sheriff Villanueva issued a Notice of Levy on Preliminary Attachment of petitioners' personal properties. 10

Through his Second Partial Officer's Return dated September 8, 2006, Sheriff Villanueva reported that he succeeded in serving summons on Spouses Emmanuel and Jegundina Espeso and the attachment of some of their properties, thus:

THIS IS TO CERTIFY that on August 23, 2006, the undersigned was able to attached (sic) one (1) unit Toyota Prado with Plate No. RLP222 (2005) under the name Eunicon United Construction and Development, Inc., thru one Arch. Royal Christopher Pineda, at Jupiter St., Makati City. And had also caused the levy of the other vehicles under the name of the defendants (copy of levy hereto attached as Annex "A").

THIS IS TO CERTIFY FURTHER, that on August 25, 2006, the undersigned caused the service of the copies of the summons, copies of the Order dated May 11, 2006 and the Writ of Preliminary Attachment to defendants Sps. Emmanuel and Jegundina Espeso at No. 102 Alsace St., Sta. Rosa Village II, Sta. Rosa, thru Jegundina Espeso who at first denied being one of the defendants but was identified by the plaintiff's representative. However, she refused to acknowledge receipt thereof for and in behalf of her husband. The denial herein is the same denial when the undersigned tried to serve the summons on August 3, 2006 at Apitong St. cor. Acacia St., Cerris 1, Canlubang, Laguna, where the occupants supposedly the [Adamson] Ibañez denied being the defendant therein. Unfortunately, no one could identify them at that time.

THIS IS TO CERTIFY FURTHERMORE, that the undersigned attached some of the properties of the said spouses defendants after Jen Del Rosario and neighbors (Perez Family) positively identified that said spouses defendants actually resides (sic) in the said address.

Finally, this is to certify that the other defendants no longer reside at No. 17 Amarillo St. Cerris 1, Canlubang, Laguna, and B 15 L21 Cerris 1, Canlubang, Laguna. That despite barangay assistance from Cresencio Alemurin, Barangay Investigator from Cerris 1, the undersigned ended up only with Lawrence Espeso and his mother who likewise refused to give the whereabouts of her children. And as of this writing, defendant corporation had moved out of their office without any forwarding address. 11

On September 8, 2006, Jegundina moved to dismiss 12 the complaint for its failure to state a cause of action against her.

The Trial Court's Ruling

By Omnibus Order 13 dated October 31, 2006, the trial court denied petitioners' motion to quash summons and writ of attachment/garnishment, as well as Jegundina's motion to dismiss.

It held that substituted service of summons was warranted here since private respondent sought the provisional remedy of preliminary attachment. To rule otherwise would give petitioners ample time to conceal their properties and avoid the court's legal processes.

Sheriff Villanueva's failure to personally serve summons on petitioners was not due to his own fault but to the unavailability of the corporate officers at their principal place of business and their alleged residences. When Sheriff Villanueva returned to their office to implement the writ of preliminary attachment, petitioner corporate officers were still nowhere to be found.

The Partial Officer's Return dated August 16, 2006, being an official act of a court officer is presumed to have been regularly issued. It was a complementary issuance with the Sheriff's Return of even date. At any rate, any perceived irregularities on their face may always be clarified before the court through the testimony of the officer who executed it. It has been settled that the impossibility of effecting personal service may be established by Sheriff's Report or by any other competent evidence. 14 There is no rule or law prohibiting a sheriff from rendering two (2) Sheriff's Returns, more so when the second return is absolutely necessary to supplement what is wanting in the first return. 15

As for Jegundina's motion to dismiss, the trial court ruled that the factual allegations in the complaint sufficiently state a cause of action against her.

Petitioners moved for reconsideration 16 which the trial court denied in its Order 17 dated October 3, 2007.

On April 25, 2008, petitioners elevated the case to the Court of Appeals via a petition for certiorari docketed as CA-G.R. SP No. 103564. 18

The Court of Appeals' Ruling

Through its assailed Decision 19 dated February 16, 2011, the Court of Appeals affirmed. It concurred in the trial court's finding that Sheriff Villanueva's returns categorically bore the circumstances showing that it was futile to effect personal service of summons on petitioners, hence, substituted service through Marquez became necessary. 20 At any rate, Sheriff Villanueva enjoyed the presumption of regularity in the performance of his official functions.

More, the complaint alleged that Jegundina was one of the "directors/officers of EUCDI" and petitioners "tricked [de Guzman] by making it appear that EUCDI and EUNICON are one and the same and/or by presenting the profile of EUNICON but making a contract between her and EUCDI only." These factual allegations sufficiently state a cause of action against Jegundina for fraud. 21

By its assailed Resolution 22 dated May 12, 2011, the Court of Appeals denied petitioners' motion for reconsideration.

The Present Petition

Petitioners now seek affirmative relief from the Court against the assailed dispositions of the Court of Appeals.

Petitioners essentially argue that Marquez was not one of those authorized to receive summons on their behalf pursuant to Section 11, Rule 14 23 of the Revised Rules of Court. She was not the president, general manager, corporate secretary, treasurer, or in-house counsel of either EUCDI or EUNICON. She was but an ordinary secretary and receiving officer. Consequently, the service of summons on petitioners through Marquez was invalid, hence, the trial court did not acquire jurisdiction over their persons. Corollarily, the entire proceedings before the trial court were void. 24

The August 16, 2006 Sheriff's Return is bereft of any particulars on the supposed impossibility of personal service on petitioners. Jurisprudence requires that before substituted service may be resorted to, the sheriff or process server must have done at least three (3) attempts to effect personal service on at least two (2) different days and must show that he or she has exerted efforts to personally locate the defendant and that such efforts have failed. As it was though, Sheriff Villanueva immediately resorted to substituted service following only his first failed attempt at effecting personal service. Neither was it shown that Sheriff Villanueva exerted efforts to personally locate petitioners and that his efforts to do so proved to be futile.

In view of the defects in his Sheriff's Return, Sheriff Villanueva may not be presumed to have regularly performed his official duties. 25 His subsequent issuance of a Partial Officer's Return did not cure these defects. 26 Too, the service of summons on Emmanuel and Jegundina, though valid, could not have bound their co-defendants. 27

As for the writ of the preliminary attachment, Sheriff Villanueva violated Section 5, Rule 57 of the Revised Rules of Court when he implemented the writ of attachment prior to serving summons on petitioners. Citing Oñate v. Hon. Zeus Abrogar, et al., 28 such preemptive act may not be justified by plaintiff's purported fear that defendants might immediately dispose of their properties.

On the denial of Jegundina's motion to dismiss, she asserts that she cannot be held liable for EUCDI's obligation to respondent because her name does not appear in the contract between respondent and EUCDI nor did she ever transact with respondent. Too, there was nothing in the complaint which states that she benefited from the proceeds of the contract. 29

In her Comment 30 dated January 16, 2012, respondent counters that there is nothing new in the present petition which merits the reversal of the dispositions of the courts below.

Issues

1. Did the trial court acquire jurisdiction over the persons of petitioners?

2. Did the trial court err in denying Jegundina's motion to dismiss?

Ruling

The trial court acquired

It is settled that jurisdiction over a defendant in a civil case is acquired either through service of summons or through voluntary appearance in court and submission to its authority. In the absence of service or when the service of summons upon the person of the defendant is defective, the court acquires no jurisdiction over his person, and a judgment rendered against him or her is void. 31

Regardless of the type of action — whether it is in personam, in rem or quasi in rem — the preferred mode of service of summons is personal service. 32 It is effected by handling a copy of the summons to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him. If the defendant is a domestic private juridical entity, service may be made on its president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel. 33 This enumeration is exclusive. Hence, service of summons made upon persons other than those enumerated is invalid. 34

Petitioners' invocation of Manotoc v. Court of Appeals35 is misplaced. This is because in Manotoc, the sheriff who served the summons immediately resorted to substituted service without even showing his honest-to-goodness efforts to personally locate the defendant. In the present case, however, Sheriff Villanueva was persistent in personally serving the summons on petitioners. As shown, when he initially failed to find petitioners at their principal office, he went on and searched for them at their last known addresses. Also, unlike in Manotoc where the Sheriff's Return patently lacked details on the efforts exerted by the sheriff to serve the summons personally on the defendant, here, Sheriff Villanueva narrated with particularity the steps he meticulously took to effect personal service on petitioners.

To recall, the Partial Officer's Return dated August 16, 2006 states:

This is to certify further that summons could not possibly be served to the defendant's officer personally since the said defendants seldom report to their principal office at Unit 3C, 3rd level, MAPFRE Bldg., Acacia Avenue, Muntinlupa City and has even transferred their residence. Efforts to serve summons to the officers and other defendants personally turned futile. 36

By his Second Partial Officer's Return dated September 8, 2006, Sheriff Villanueva also reported that he had served summons on Spouses Emmanuel and Jegundina Espeso and had implemented the writ of attachment on some of their properties, thus:

THIS IS TO CERTIFY that on August 23, 2006, the undersigned was able to attached (sic) one (1) unit Toyota Prado with Plate No. RLP222 (2005) under the name Eunicon United Construction and Development, Inc., thru one Arch. Royal Christopher Pineda, at Jupiter St., Makati City. And had also caused the levy of the other vehicles under the name of the defendants (copy of levy hereto attached as Annex "A").

THIS IS TO CERTIFY FURTHER, that on August 25, 2006, the undersigned caused the service of the copies of the summons, copies of the Order dated May 11, 2006 and the Writ of Preliminary Attachment to defendants Sps. Emmanuel and Jegundina Espeso at No. 102 Alsace St., Sta. Rosa Village II, Sta. Rosa, thru Jegundina Espeso who at first denied being one of the defendants but was identified by the plaintiff's representative. However, she refused to acknowledge receipt thereof for and in behalf of her husband. The denial herein is the same denial when the undersigned tried to serve the summons on August 3, 2006 at Apitong St. cor. Acacia St., Cerris 1, Canlubang, Laguna, where the occupants supposedly the [Adamson] Ibañez denied being the defendant therein. Unfortunately, no one could identify them at that time.

THIS IS TO CERTIFY FURTHERMORE, that the undersigned attached some of the properties of the said spouses defendants after Jen Del Rosario and neighbors (Perez Family) positively identified that said spouses defendants actually resides (sic) in the said address.

Finally, this is to certify that the other defendants no longer reside at No. 17 Amarillo St., Cerris 1, Canlubang, Laguna, and B 15 L21 Cerris 1, Canlubang, Laguna. That despite barangay assistance from Cresencio Alemurin, Barangay Investigator from Cerris 1, the undersigned ended up only with Lawrence Espeso and his mother who likewise refused to give the whereabouts of her children. And as of this writing, defendant corporation had moved out of their office without any forwarding address. 37

The records speak for themselves. They bore in vivid detail the circumstances surrounding the Sheriff's assiduous efforts every step of the way to effect personal service of summons on the defendants (herein petitioners), albeit he failed each time, except only with respect to Jegundina Espeso.

The records also speak of petitioners' repeated attempts at eluding the court's processes and jurisdiction. They in fact employed various ways, means, and trickery toward this end. And yet, they keep asking for relief from the same court whose jurisdiction they also keep evading and questioning. Surely, they are as guilty of trifling with the court's processes as they are of coming to court with unclean hands. This, we cannot countenance. The axe must now fall.

In Sagana v. Francisco, 38 substituted service of summons on the defendant was questioned for non-compliance with the Rules, since the summons was not allegedly served at defendant's residence or left with any person who was authorized to receive it on behalf of the defendant. The Court upheld the validity of the substituted service of summons due to defendant's evident avoidance to receive the summons personally despite the process server's diligent efforts to effect personal service upon him, thus:

We do not intend this ruling to overturn jurisprudence to the effect that statutory requirements of substituted service must be followed strictly, faithfully, and fully, and that any substituted service other than that authorized by the Rules is considered ineffective. However, an overly strict application of the Rules is not warranted in this case, as it would clearly frustrate the spirit of the law as well as do injustice to the parties, who have been waiting for almost 15 years for a resolution of this case. We are not heedless of the widespread and flagrant practice whereby defendants actively attempt to frustrate the proper service of summons by refusing to give their names, rebuffing requests to sign for or receive documents, or eluding officers of the court. Of course it is to be expected that defendants try to avoid service of summons, prompting this Court to declare that, "the sheriff must be resourceful, persevering, canny, and diligent in serving the process on the defendant." However, sheriffs are not expected to be sleuths, and cannot be faulted where the defendants themselves engage in deception to thwart the orderly administration of justice.

Also, in the recent case of Carson Realty & Management Corp. v. Red Robin Security Agency, 39 the Court similarly relaxed the rules on service of summons by reason of defendants' devious scheme of evading personal service.

Here, the Returns having sufficiently established petitioners' wrongful act of evading personal service, the Court deems the substituted service effected on petitioners' secretary Mhel Marquez to be substantially compliant with the requirements of the law. To rule otherwise would inflict further injustice on private respondent whose quest for justice has already been delayed for over fourteen (14) years now with nary a clear resolution at sight.

The trial court did not err in

As for the denial of Jegundina's motion to dismiss, the Court quotes with concurrence the trial court's disquisition, viz.:

Relative to the issue raised in the Motion to Dismiss filed by defendant Jegundina A. Espeso, the Court holds that there may be a valid cause as proper subject of trial and adjudication later, to pierce the veil of corporate fiction of the defendant corporations which consequently may result in a joint and solidary liability on the part of directors, officers, stockholders and/or persons directing the affairs of the defendant corporations. The factual allegations in the complaint and the thrust of the evidence so far adduced by the plaintiff, as well as the sheriff's return, provide for sufficient basis for the court to have the case tried on the merits. This legal view is within the ambit of the Corporation Code as well as decisional rules relative to the established exceptions to the doctrine of separate corporate personality of a corporation.

All told, the Court of Appeals did not err in affirming the trial court's Omnibus Order dated October 31, 2006 and Order dated October 3, 2007.

WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated February 16, 2011 and Resolution dated May 12, 2011 in CA G.R. SP No. 103594 are AFFIRMED.

The letter dated February 20, 2017 of Ms. Aurora A. Mua, Records Officer III, Office-in-Charge, Archives Section, Judicial Records Division, Court of Appeals, Manila, transmitting the rollo of CA G.R. SP No. 103594 with 555 pages, is NOTED.

SO ORDERED." Peralta, C.J., took no part; Inting, J., designated Additional Member per Raffle dated June 29, 2020.

By authority of the Court:

(SGD.) LIBRADA C. BUENADivision Clerk of Court

by:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

 

Footnotes

1.Rollo, pp. 40-41.

2. Sometimes appears in the record as "eUCDI."

3. Penned by Judge Afable E. Cajigal; rollo, pp. 102-105.

4.Rollo, pp. 106-107.

5.Id. at 108.

6.Id. at 109.

7.Id.

8.Id. at 110-118.

9.Id. at 113-117.

10.Id. at 119.

11.Id. at 120-121.

12.Id. at 122-124.

13.Id. at 81-87.

14.Id. at 51-52.

15.Id. at 52.

16.Id. at 87-101.

17.Id. at 86.

18.Id. at 14.

19. Penned by Associate Justice Fernanda Lampas Peralta and Associate Justices Priscilla J. Baltazar-Padilla and Manuel M. Barrios; rollo, pp. 39-54.

20.Rollo, pp. 48-50.

21.Id. at 52.

22.Id. at 48.

23.Section 11. Service upon domestic private juridical entity. — 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.

24.Rollo, pp. 16-23.

25.Id. at 27.

26.Id. at 24-27.

27.Id. at 26.

28.Id. at 48.

29.Id. at 31-32.

30.Id. at 148-178.

31.Interlink Movie Houses, Inc. v. Court of Appeals, 823 Phil. 1032, 1038-1039 (2018).

32.De Pedro v. Romasan Development Corporation, 748 Phil. 706, 712 (2014).

33. Section 11, Rule 14 of the Revised Rules of Court.

34. See Interlink Movie Houses, Inc. v. Court of Appeals, supra note 31.

35. 530 Phil. 454 (2006).

36.Rollo, p. 109.

37.Id. at 120-121.

38. 617 Phil. 387, 397-398 (2009).

39. 805 Phil. 562 (2017).