TALSAN ENTERPRISES, INC., FRANCISCO P. SAN DIEGO, VICTOR RAMOGA AND BONIFACIO TALPLACIDO, PETITIONERS. VS. BALIWAG TRANSIT, INC. AND ANGELES RAMOS, RESPONDENTS.

Talsan Enterprises versus Baliwag Transit

The Case

Talsan Enterprises, Incorporated, Francisco San Diego, Victor Romago, and Bonifacio Talplacido sued Baliwag Transit, Incorporated and its bus driver, Angeles Ramos, for damages after a Baliwag passenger bus struck a Kia Ceres van on the Maharlika Highway in Santa Rosa, Nueva Ecija. The case matters because it is a compact lesson on two procedural pillars: how summons must be served on a corporation and on an individual defendant, and what remedies remain to a party declared in default. It also reminds us that an employer's vicarious liability under Article 2180 of the Civil Code cannot be established until the negligent employee himself has been brought under the court's jurisdiction.

Procedural History

The complaint for damages was filed before the Regional Trial Court of Makati City, Branch 56. Summons and a copy of the complaint were served on a certain Baby Cansino at the Baliwag bus station in Caloocan City, who received the papers but refused to sign the original summons. On motion of the plaintiffs, the trial court declared the defendants in default and, after receiving the plaintiffs' evidence ex parte, rendered judgment ordering the defendants to pay jointly and severally various sums for repair costs, medical and hospitalization expenses, unearned income, moral and exemplary damages, attorney's fees, and costs.

The defendants moved for reconsideration of the default order, arguing that the trial court never acquired jurisdiction over them because of improper service of summons. Without resolving that motion, the trial court rendered its decision. The defendants then appealed to the Court of Appeals, which annulled and set aside both the order of default and the judgment by default, holding that the trial court did not acquire jurisdiction over the person of the corporation, and remanded the case to the trial court. The plaintiffs' motion for reconsideration was denied, so they came to the Supreme Court by petition for review on certiorari.

Facts

On the night of March 4, 1992, at around half past eleven, a passenger bus owned by Baliwag Transit and driven by Angeles Ramos hit and bumped a Kia Ceres van owned by Francisco San Diego and driven by Alfredo Santiago. The van was damaged, and two of the plaintiffs, Victor Romago and Bonifacio Talplacido, were injured and required medical and hospital care.

On June 10, 1992, the plaintiffs filed a civil complaint for damages in Makati. Summons and a copy of the complaint were served on June 29, 1992, upon Baby Cansino at the Baliwag bus station on Rizal Avenue Extension in Caloocan City. She received the court processes but refused to sign the original summons. On September 11, 1992, upon the plaintiffs' motion, the trial court declared the defendants in default, and the plaintiffs presented their evidence ex parte.

The defendants received the default order on September 23, 1992, and on October 8, 1992, moved for reconsideration, insisting that the trial court had not acquired jurisdiction over them because the person who received the summons was only a cash receiving clerk who did not appreciate the legal significance of the document and failed to turn it over to her superiors. Before that motion could be resolved, the trial court rendered its decision on October 13, 1992. The defendants appealed to the Court of Appeals, which set aside the default order and the judgment and remanded the case. Hence the petition before the Supreme Court.

Issues

• Whether or not there was a valid service of summons upon the respondents.
• Whether or not the appeal taken by the private respondents, instead of a motion for new trial, is the proper remedy.

Applicable Provisions

Section 13 of Rule 14 of the Revised Rules of Court, on service of summons upon a corporation, provides:

If the defendant is a corporation organized under the laws of the Philippines, such as private respondent Baliwag, service of summons may be made on the president, manager, secretary, cashier, agent, or any of its directors.

This is the provision that decides whether the service on Baby Cansino bound the corporation.

Article 2180 of the New Civil Code, on the liability of employers for the acts of their employees, provides:

Employers shall be liable for the damage caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.

This is the basis of the employer's vicarious liability, which the Court holds cannot be established until the negligent driver has himself been validly brought under the court's jurisdiction.

Ruling

On the first issue, the Court ruled partly in favor of the petitioners. As to the bus driver, Angeles Ramos, the service of summons was improper. In actions in personam, summons must first be served personally on the defendant, and substituted service may be availed of only when the defendant cannot be promptly served in person. Here the sheriff resorted to substituted service without first attempting personal service, so the trial court never acquired jurisdiction over Ramos, and the judgment against him is nugatory and without effect.

As to Baliwag Transit, however, the service was proper. Under Section 13 of Rule 14, service on a corporation may be made on its president, manager, secretary, cashier, agent, or any of its directors. The sheriff's return stated that the papers were served through Baby Cansino, the cashier, and that return is prima facie evidence of that fact. Her self-serving affidavit claiming she was only a cash receiving clerk cannot overcome the presumption that official duty was regularly performed, which may be overcome only by clear and convincing evidence. Even assuming she was not the cashier, she is an agent within the contemplation of the rule, because she is an officer entrusted with vital and sensitive functions and may be relied upon to appreciate the importance of the papers served on her. The Court also held that service at the bus terminal rather than at the main office did not invalidate the service, since the rule does not require service at the principal office.

Yet the Court added that Baliwag's liability cannot be determined as of the moment. Since the driver had not been properly summoned, there was no proof of his negligence upon which the employer's vicarious liability could rest, and no presumption of negligence in the selection and supervision of employees could operate against the employer.

On the second issue, the Court held that the appeal was the proper remedy. A defendant declared in default may move to set aside the order of default before judgment, may move for new trial if judgment has been rendered but has not become final, may petition for relief after judgment has become final, and may also appeal from the judgment as contrary to the evidence or to the law. A default judgment is an adjudication on the merits and is appealable. Since the defendants seasonably moved for reconsideration and the court rendered judgment while that motion was pending, they could appeal under Section 2(3) of Rule 41.

Doctrine

First, service of summons on a corporation is valid when made on its president, manager, secretary, cashier, agent, or any of its directors, and the term agent has been liberalized to include a representative so integrated with the corporation that he or she will realize the responsibility and know what to do with legal papers served. Second, substituted service on an individual defendant is allowed only after personal service has first been attempted and found impossible; absent that, the court acquires no jurisdiction over the person and any judgment against him is void. Third, an employer's vicarious liability under Article 2180 cannot be established until the negligent employee has been validly brought under the court's jurisdiction, because the factual basis for the presumption of negligence does not yet exist. Fourth, a party declared in default may appeal the judgment, since a default judgment is an adjudication on the merits and is appealable.

Disposition

The petition was partly granted: the case was remanded to the Regional Trial Court for further proceedings consistent with the ruling, with the service on the corporation upheld and the service on the driver held invalid.

Remember This

Memorize this line: service on a corporate cashier or agent is valid, but substituted service on an individual is void without a prior attempt at personal service. Examiners use this case to test the rules on service of summons upon corporations and individuals, the remedies of a party in default, and the dependency of an employer's vicarious liability on a validly summoned employee.