Burke vs Smith

7/23/2019 Burke vs Smith

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G.R. No. L-31339 January 31, 1978

VILLA REY TRANSIT, INC., and HON. JESS !. "OR#E, $n %$& 'a(a'$)y a& Jud*+

o )%+ Cour) o #$r&) In&)an'+ o "an$a, petitioners,

vs.

#AR EAST "OTOR COR!ORATION and THE HONORALE CORTS O#

A!!EALS, respondents.

Marcial C. Reyes for petitioners.

Jaime S. Linsangan & Associates for private respondent.

GERRERO, J.:

Appeal by certiorari from the Derision of the Court of Appeals 1 and its Resolution denying

petitioner's Motion for Reconsideration of said Decision in CA-G.R. o. !"#!!-R, entitled "Far East Motor

Corporation, etitioner, vs. !on. Jess . Morfe Jdge of t#e Cort of First $nstance of Manila, et al.,

Respondents."

$n April %&, #(), respondent *ar +ast Motor Corporation sued petitioner illa Rey ransit, nc. for

various sums of money before the Court of *irst nstance of Manila, /ranch 0.

1ummons 2as issued to petitioner and per return of the 1heriff, the summons 2as served on petitioner on

3une #(, #(), the sheriff certifying. 41erved thru Atty. irgilio A. Reyes, Assistant General Mgr., but

refused to sign.4

Claiming failure of the petitioner to file ans2er 2ithin the reglementary period, respondent corporation

filed on August #", #() an e%parte motion to declare the petitioner in default, 2hich 2as granted on

August %#, #().

$n the other hand, late receipt of the summons by its main office, petitioner filed an 5rgent Motion to

+6tend ime to Ans2er, 2hich 2as denied on $ctober %, #(), the order of denial being served on

petitioner's counsel on $ctober 7, #().

8ursuant to the order of default, respondent *ar +ast Motor Corporation then presented its evidence e6-

parte, and based on the said evidence, the lo2er court ad9udicated various sums of money to the

respondent *ar +ast Motor Corporation. Copy of the decision 2as received by the petitioner on $ctober

%&, #().

$n ovember (, #(), petitioner then filed a Motion to :uash 1ervice of 1ummons, to ;ift the $rder of

Default, and to 1et Aside 3udgment, on the follo2ing grounds<

a. he service of summons upon defendant 2as not in accordance 2ith la2 and therefor

this =onorable Court had not ac>uired a valid 9urisdiction over said defendant?



b. Assuring for the sa@e of argument only that a valid substituted service of summons

2as made, failure of defendant to ans2er 2ith the reglementary peirod 2as due to failure

of 1heriff ot propertly serve summons andor due to e6cusable negligence on the part of

defendant's employee? and

c. Considering the huge claims of plaintiff 2hich are incorrect and against 2hich

defendant has valid and genuine defense, it is in the interest of 9ustice and truth to lift the

order of deafult 2hich defandant has not received, and to set aside 9udgment already

rendered.

8etitioner's motion 2as denied on ovember #, #() and copy of the denial 2as received by the

corporation on ovember %#, #().

=ence, on December ", #(), respondent *ar +ast Motor Corporation filed a Motion for +6ecution of the

decision. 5pon receipt of its copy of the said motion, petitioner illa Rey ransit filed a motion dated

December &, #() as@ing for reconsideration of the court's order denying its Motion to 1et Aside on the

follo2ing grounds< Ba the sheriff's return is null and void and hence, the court has not ac>uired 9urisdiction

over it, and Bb defendant has valid defenses 2hich 2ill alter the decision rendered e6-parte if thedefendant is given the opportunity to file its ans2er and present evidence in support thereof. he motion

2as set for hearing on December #!, #().

Acting on these last t2o motions, the lo2er court on December %7, #() denied plaintiff's motion for

e6ecution? granted defendant's motionfor reconsideration? set aside its order of ovember #, #(7?

>uashed the service of summons? and set aside the 9udgment already rendered.

$n the claim that the 9udgment had already become final and unappealable on December , #(),

respondent moved to reconsider the above order of December , #() but 2as denied.

Respondent then filed a petition for certiorari, mandamus and prohibition before the 1upreme Court.

=o2ever, on the ground that the remedy sought in the petition 2as in aid of the appellate 9urisdictionof the

Court of Appeals, the case 2as certified to the appellate court 2hose decision, sustaining the petition and

ordering the lo2er court to issue the 2rit of e6ecution upon the 9udgement, i no2 sub9ect of this appeal.

+mphasis is on the 9urisdictional issue of service of summons.

o recount the facts surrounding the service of summons< 1ometime in 3une, #(), Deputy 1heriff 1alita

2ent to petitioner's sub-station at )&" M. +arnsha2 1t., 1ampaloc, Manila? he handed some papers to

Atty. irgilio A. Reyes, Assistant General Manager for $perations< after reading the contents of the same,

and noting that they 2ere copies of a complaint filed by *ar +ast Motor corporation against petitioner

involving some transactions made by him 2ith the complainant as the then president of petitioner

corporation, he suggested that service of the complaint made by him 2ith the complainant as the thenpresident of petitioner corporation, he suggested that service of the complaint and the corresponding

summons be made directly on De. 3ose M. illarama, the present 8resident and General Manager, at

their main office at Ricarfor 1treet, corner 1ta. +lena 1treet, ondo, Manila? instead, the sheriff left the

papers 2ith one of their night tellers, 3uanito ince Cru? due to volume and pressure of his 2or@, Cru

forgot all about the papers? hence, the papers 2ere delivered to their main office only on 1eptember %7,

#().



/ased on the above facts, petitioner claims that service of summons on its mere Assistant General

Manager holding office at ists sub-station is not a valid service? thus, the court did not ac>uire 9urisdiction

over tis person.

Ee find the claim untenable. 1ervice of process on a corporation is controll ed by 1ection #", Rule #! of

the Revised Rules of Court, thus F

1ec. #". 1ervice upon private domestic corporation for partnership. F f the defendant is

a corporation organied under the la2s of the 8hilippines or a partnership duly registered,

service may be made on the president, manager, secretary, cashier, agent, or any of its

directors.

8etitioner claims that the foregoing enumeration is e6clusive and service of summons is 2ithout force and

effect unless made upon any one of them. he focus of in>uiry then is 2hether an Assistant General

Manager for $perations may properly be 2ithin the terms manager or agent.

8etitioner relies on the ;itton Mills case / 2here this Court held that a branch manager Bsales manager

does not come 2ithin the enumeration in 1ec. #", Rule #! of the Revised Rules of Court, all of 2hom aretop officers 2hose duties e6tend generally to overall transactions of the corporation, not merely to a

particular branch or department thereof.

he above cases 2ithout application here.

Atty. irgilio A. Reyes is the Assistant 'eneral Manager, and admittedly, the former 8resident and General

Manager of the petitioner corporation. As his present title implies, Atty. irgilio A. Reyes is not one of the

lesser officers of the petitioner corporation upon 2hom service of 1ummons is not authoried by la2. hat

he is in charge of $perations, 2hich 4includes the incoming and outgoing buses, the arrangement of

schedule, the appointment of drivers and conductors, the follo2ing of high2ay troubles, and generally

affecting the running of buses, 3 does not ma@e him a mere branch manager so insistently pointed out by

petitioner. Ee ta@e the opposite vie2, for precisely, as the Assistant General Manager for $perations, he

is in charge of the main bul@ of the corporate business of the petitioner transit corporation. 4$perations4 is

the main concern, if not all, of a transit corporation.

More, Ee find petitioner's claim that Attorney. irgilio A. Reyes, holding office at their M. +arnsha2 sub-

station, is not the proper person upon 2hom summons may be seied inconsistent 2ith their o2n

admission that Atty. Reyes customarily receives summons at the same sub-station in behalf of the

petitioner. o >uote part of petitioner's motion for reconsideration of the C*'s denial of its motion to set

aside 9udgment< 4Records 2ill sho2 that Atty. Reyes has been receiving summon issued in cases 2herein

the illa Rey ransit, nc. is a defendant, before and after 3une #), #(), the alleged date 2hen the

deputy sheriff allegedly served the summons and complaint in the above case. n all these occasions,

Atty. Reyes signed having received said summons and in no occasion had he refused to sign. =o2ever,in connection 2ith the service of summons in the above case, it is not true that Atty. Reyes refused to

sign. Ehat he did 2as to instruct the deputy sheriff to serve the same directly to Dr. 3ose M. illarama

2ho is the 8resident and General Manager of the illa Rey ransit nc. and having offices at the illa Rey

ransit main compound located at Ricafort Bcorner 1ta. +lena 1treet, ondo, Manila. here 2as reason

for Atty. Reyes to ma@e such re>uest upon the deputy sheriff because the promissory notes BAnne6es /,

C. D, +, * and G to complaint 2ere signed by him in his former capacity as 8resident of the illa Rey

ransit, nc. 2hile in other cases, the attention of Dr. illarama may not be imperative.4 0 hat the



transactions alleged in the complaint involved him personally is no reason for his refusal to receive this

particular summons. ndeed, 2ith more reason that he should have received the summons because as

the signatory to the promissory notes, he had an interest therein.

According to 9urisprudence, the rationale of all rules for service of process on corporation is that service

must be made on a representative so integrated 2ith the corporation sued as to ma@e it a priori

supposable that he 2ill realie his responsibilities and @no2 2hat he should do 2ith any legal papers

served on him. /ased on the particular facts of this case, service of summons upon Atty. irgilio A.

Reyes has served the purpose of the la2. And as he refused to receive the summons, tender unto him

2as sufficient to confer 9urisdiction over the petitioner.

1ince petitioner failed to ans2er 2ithin the reglementary period, even after denial of its motion to e6tend

time to ans2er, the order of default 2as proper. 1o also 2ith the hearing on the merits e%parte resulting

in the 9udgment by default. he decision 2as appealable, and as receipt of the same by petitioner 2as on

$ctober %&, #(), the "-day appeal period commenced from that date on. $n ovember (, #(),

petitioner filed a Motion to :uash 1ervice of 1ummons, o ;ift $rder of Defeat and o 1et Aside

3udgment, and from that day on, the appeal period 2as deemed suspended, the remaining #) days

beginning to run again upon receipt of the denial of the motion. Receipt of such denial 2as on ovember%#, #()? hence, by mathematical computation, the "-day appeal period e6pired on December , #().

here being no appeal increased by the petitioner from the 9udgment of default on or before December ,

#(), the lo2er court lost its 9urisdiction to hear on December #!, #() petitioner's Motion for

Reconsideration dated December &, #(), the 9udgment by default having become final and e6ecutory.

$f course, petitioner insists that on December &, #() it filed a Motion for Reconsideration of the order

denying its Motion to :uash, ;ift $rder of Default and to 1et Aside 3udgment ta@ing the position that it

should have suspended the period to appeal Ee do not agree. he records clearly sho2 that there 2ere

no ne2 arguments presented against the 9udgment on the merits, perforce the motion is pro forma and

did not suspend the running of the period to appeal.

8etitioner then insists that the above motion should be considered a petition for relief. his again is

untenable. As correctly pointed out by the apellate court, a petition for relief presupposes a final and

unappealable 9udgment. n this case, 9udgment has not yet become final and unappealable at the time of

the filing of the motion on December &, #().

E=+R+*$R+, the decision appealed from is affirmed. ;et e6ecution issue on the lo2er court's 9udgment

by default, Costs against petitioner. 1$ $RD+R+D.

(ee#an)ee *C#airman+, Ma)asiar, Mo- alma and Fernande-, JJ., concr.

Burke v. Smith, 83 U.S. 16 Wall. 390 390 (1872)

Burke v. Smith

83 U.S. (16 Wall.) 390

Syllabus



The laws of a state required that before being organized, all railroad companies should have asubscription to their stock of not less than $50,000. Certain persons did subscribe more than thisto!wit, $"#,%50&, with a proviso, however, that if a certain cit' in its corporate capacit'subscribed $50,000 or upwards, the cit' should accept what each of them had subscribed above asmall sum $(00& named. The cit' did subscribe the $50,000, and much more $#00,000&, when,

).*. "5(, the directors of the compan' !! these directors being themselves persons who hadsubscribed part of the $"#,%50 !! passed a resolution authorizing the original subscribers totransfer to the cit' all stock subscribed b' them over $(00 each, and that the stock thustransferred be merged in the subscription made b' the cit'.

)s appeared b' +an agreement of record+ in which, without signature of an'bod' attached, it wascertified b' the clerk that it was admitted b' the complainants on the final hearing that all thesubscribers transferred, before ul', "5#, their stock above $(00& to the cit'- that none of theoriginal subscribers were ever charged on the books of the compan' with an' greater amountthan $(00- that this sum had been paid b' each, and accepted b' the compan' in full satisfaction.

The compan' being insolvent in "5, and the eecutions of creditors being then returnedunsatisfied, the creditors of the compan' in "/ filed a bill against the original subscribers tomake them pa' up the ecess over $(00 which the' had subscribed.

Held:

". That these subscribers could not be made liable for such ecess.

. That the proceeding being one in equit' and not at law, the +agreement of record,+ though notmade part of the record b' the pleadings, would be regarded as evidence.

(. That it proved the transfer and acceptance of the stock b' the cit'.

#. That the fact that the directors were original subscribers did not affect the case, the transferhaving been in accordance with the conditions on which the original subscription was made, andin itself fair.

1age ( 2. 3. (4"

5. That, independent of all this, the bill probabl' could not be maintained because of laches.

urke, 1utnam, and others were the equitable owners of a 6udgment recovered in "5% against

the 7ew )lban' 8 3andusk' 9ailroad Compan'. 2pon this 6udgment an eecution was issued in"5, which, on the "st of *ecember of that 'ear, was returned +nulla bona.+ :n the 4th ofanuar', "/ !! that is to sa', about ten 'ears after the eecution had been thus returnedunsatisfied !! the' brought the present suit. ;t was a bill in chancer' against one 3mith and sometwent'!seven other defendants, and, alleging the insolvenc' of the compan', it sought to sub6ectto the pa'ment of the 6udgment, rights which, it alleged, the compan' had against the saiddefendants. ;t averred that the defendants, on the d of )ugust, "5(, under the general railroadlaws of ;ndiana, organized the above!named railroad compan' and subscribed to its capital stock,



severall', amounts which the' had never paid, and the ob6ect of the bill was to compel the pa'ment of the debts thus incurred, and the application of the pa'ments to the satisfaction of thecomplainants< 6udgment. The facts were these=

:n the d of )ugust, "5(, under the general railroad laws of the state, the defendants, with

others, united in forming articles of association for the incorporation of the 7ew )lban' 83andusk' 9ailroad Compan', and severall' subscribed to its capital stock in sums var'ing from$",000 to $5,000. >The railroad laws referred to allow, it ma' be added, no organization of a roaduntil at least $50,000, or $",000 for ever' mile of the proposed road, shall have beenestablished.? The articles of association contained the following stipulation=

+ Provided, however, and it is hereb' understood, that if the Cit' of 7ew )lban', in its corporatecapacit', shall hereafter take stock in this corporation to the amount of $50,000 or upwards,inasmuch as the present subscribers, being residents of

1age ( 2. 3. (4

and owning propert' in said cit', will then be under the necessit' of contributing still further tothe corporation b' wa' of taation, unless a portion of the present subscription is taken off theirhands, the said cit' shall accept, in part of the amount to be subscribed in its corporate capacit',at its par value, a transfer of an' amount of stock now subscribed for b' each individual over andabove the amount of si shares, or $(00, which each such individual ma' desire or request shall be so transferred.+

There were fift'!five original subscribers, and the aggregate amount of the subscriptions was$"#,%50. @ith such a subscription and under such articles of association, the subscribers became a corporate bod'. )fter their incorporation, the Cit' of 7ew )lban' subscribed $#00,000

to the capital stock of the compan'. >Aootnote "? This subscription was made on the "4th of 7ovember, "5(, and on the ("st of *ecember net following, the directors of the compan'adopted an order

+That the original subscribers to the articles of association be permitted, in accordance with thestipulations contained in the articles, to transfer an' amount of the stock so originall' subscribed b' them over and above the amount of si shares, or $(00, to the Cit' of 7ew )lban', said cit'having made a subscription to the stock of said compan' to the amount of $50,000 and upwards,and that the stock thus transferred be merged in the subscription alread' made b' said cit', sothat the stock of said cit', under her present subscription, with the stock so transferred, shall noteceed $#00,000 as subscribed b' her.+

The directors of the compan', who made this order, were themselves subscribers, like thedefendants, for more than si shares, or sums above $(00.

3o far, there was no controvers' respecting the facts. )nd there was also an +agreement ofrecord+ !! a document certified b' the clerk of the court below, with the bill, answers, depositions8c., as part of the full, true, and

https://supreme.justia.com/cases/federal/us/83/390/#F1

https://supreme.justia.com/cases/federal/us/83/390/#F1



1age ( 2. 3. (4(

complete cop' and transcript of the record and proceedings in the case !! that the defendantstransferred to the Cit' of 7ew )lban' all the stock subscribed b' them in ecess of $(00 foreach, in compliance with the stipulation contained in the original articles of association- that the

transfers were made before the "st da' of ul', "5#- that none of these original subscribers wereever charged on the books of the railroad compan' with an' greater amount of stock than $(00-that the amount of stock charged against each viz., $(00& had been full' paid long before thefiling of this bill, and when called b' the compan', and that such pa'ments had been accepted b'the compan' as full satisfaction of the respective subscriptions.

The question was whether the defendants were debtors to the railroad compan' for an' ecess oftheir subscriptions above $(00.

The court below was of opinion that the' were not, and dismissed the bill against them.

The complainants appealed.

Documents

Burke vs Smith