Philippine Supreme Court Jurisprudence > Year 2011 > September 2011 Decisions > [G.R. No. 175299 : September 14, 2011] REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, THROUGH THE HON. SECRETARY, HERMOGENES EBDANE, PETITIONER, VS. ALBERTO A. DOMINGO, RESPONDENT. :

In this Petition for Review on Certiorari^[1] under Rule 45 of the Rules of Court, the Court is called upon to reverse and set aside the Decision^[2] dated May 19, 2006 and the Resolution^[3] dated October 25, 2006 of the Court of Appeals in CA-G.R. SP No. 78813, as well as to declare null and void the Decision^[4] dated February 18, 2003 of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 18, in Civil Case No. 333-M-2002.

As culled from the records, the factual antecedents of the case are as follows:

On April 26, 2002, herein respondent Alberto A. Domingo filed a Complaint for Specific Performance with Damages^[5] against the Department of Public Works and Highways (DPWH), Region III, which was docketed as Civil Case No. 333-M-2002 in the RTC of Malolos, Bulacan, Branch 18.  Domingo averred that from April to September 1992, he entered into seven contracts with the DPWH Region III for the lease of his construction equipment to said government agency.^[6]  The lease contracts were allegedly executed in order to implement the emergency projects of the DPWH Region III, which aimed to control the flow of lahar from Mt. Pinatubo in the adjacent towns in the provinces of Tarlac and Pampanga.  After the completion of the projects, Domingo claimed that the unpaid rentals of the DPWH Region III amounted to P6,320,163.05. Despite repeated demands, Domingo asserted that the DPWH Region III failed to pay its obligations.  Domingo was, thus, compelled to file the above case for the payment of the P6,320,163.05 balance, plus P200,000.00 as moral and compensatory damages, P100,000.00 as exemplary damages, and P200,000.00 as attorney's fees.^[7]

Thereafter, summons was issued by the RTC. The Proof of Service^[8] of the Sheriff dated May 9, 2002 stated, thus:

PROOF OF SERVICE

The undersigned personally served the copy of the Summons together with the complaint issued in the above-entitled case upon defendant The Department of Public Works and Highways, Region III, San Fernando Pampanga on May 6, 2002 through Nora Cortez, Clerk III of said office as shown by her signature and stamped mark received by said office appearing on the original Summons.

WHEREFORE, the original Summons respectfully returned to the Court "DULY SERVED", for its record and information.

Malolos, Bulacan, May 9, 2002.

Subsequently, on July 30, 2002, Domingo filed a Motion to Declare Defendant in Default^[9] in view of the failure of the DPWH Region III to file a responsive pleading within the reglementary period as required under the Rules of Court.  During the hearing of the motion on August 8, 2002, the RTC directed the counsel of Domingo to submit proof of service of said motion on the DPWH Region III. Thereafter, the motion was deemed submitted for resolution.^[10]  Counsel for Domingo timely filed a Manifestation,^[11] showing compliance with the order of the trial court.

In an Order^[12] dated September 2, 2002, the RTC declared the DPWH Region III in default and thereafter set the date for the reception of Domingo's evidence ex parte.

After the ex parte presentation of Domingo's evidence, the RTC rendered judgment on February 18, 2003, finding that:

From the evidence presented by [Domingo], testimonial and documentary, it was convincingly proven that [Domingo] is entitled to the relief prayed for.

In his seven causes of actions, [Domingo] has religiously undertaken what is incumbent upon him in the contracts of lease signed by both [Domingo] and [the DPWH Region III].  As a matter of course, the [DPWH Region III] has the duty to pay [Domingo] the amount equivalent to the services performed by [Domingo] which [in] this case now amount to P6,320,163.05 excluding interest.

Considering that there was a long delay in the payment of the obligation on the part of the [DPWH Region III], Article 2209 of the New Civil Code finds application as to imputation of legal interest at six (6%) percent per annum, in the absence of stipulation of interest on the amount due.

With respect to the claim for attorney's fees, although as a general rule, attorney's fees cannot be rewarded because of the policy that no premium should be placed on the right to litigate, this rule does not apply in the case at bar in the face of the stubborn refusal of [the DPWH Region III] to respect the valid claim of [Domingo] x x x.  Award of attorney's fees in the amount of P30,000.00 appears proper.  Moreover, as to [the] demand for moral and exemplary damages, the same are hereby denied for lack of persuasive and sufficient evidence.^[13]

Thus, the RTC disposed:

Wherefore, premises considered, judgment is hereby rendered in favor of plaintiff Alberto Domingo and against defendant DPWH Region III, ordering defendant to pay plaintiff:

1. the sum of Six Million Three Hundred Twenty Thousand One Hundred Sixty[-]Three and 05/100 Pesos (P6,320,163.05) representing the principal obligation of the defendant plus interest at six percent (6%) per annum from 1993 until the obligation is fully paid;
2. to pay attorney's fees in the total amount of Thirty Thousand Pesos (P30,000.00) and
3. to pay the costs of suit.^[14]

On March 12, 2003, Domingo filed a Motion for Issuance of Writ of Execution,^[15] asserting that the DPWH Region III failed to file an appeal or a motion for new trial and/or reconsideration despite its receipt of a copy of the RTC decision on February 19, 2003.  On March 20, 2003, the RTC granted the aforesaid motion of Domingo.^[16]  A Writ of Execution^[17] was then issued on March 24, 2003, commanding the sheriff to enforce the RTC Decision dated February 18, 2003.

On August 27, 2003, the Republic of the Philippines, represented by the Office of the Solicitor General (OSG), filed with the Court of Appeals a Petition for Annulment of Judgment with Prayer for the Issuance of a Temporary Restraining Order and/or a Writ of Preliminary Injunction.^[18]  The petition was docketed as CA-G.R. SP No. 78813.  The Republic argued that it was not impleaded as an indispensable party in Civil Case No. 333-M-2002.  The seven contracts sued upon in the trial court stated that they were entered into by the Regional Director, Assistant Regional Director and/or Project Manager of the DPWH Region III for and in behalf of the Republic of the Philippines, which purportedly was the real party to the contract.  Moreover, the Republic averred that, under the law, the statutory representatives of the government for purposes of litigation are either the Solicitor General or the Legal Service Branch of the Executive Department concerned.  Since no summons was issued to either of said representatives, the trial court never acquired jurisdiction over the Republic. The absence of indispensable parties allegedly rendered null and void the subsequent acts of the trial court because of its lack of authority to act, not only as to the absent parties, but even as to those present.  The Republic prayed for the annulment of the RTC Decision dated February 18, 2003 and the dismissal of the said case, without prejudice to the original action being refiled in the proper court.

On May 19, 2006, the Court of Appeals promulgated its decision, dismissing the Petition for Annulment of Judgment filed by the Republic.  The appellate court elaborated that:

The hair-splitting distinction being made by [the Republic] between the DPWH as a department under the Republic, and the Regional Office of the DPWH fails to persuade Us.  Instead, We uphold [Domingo's] position that the regional office is an extension of the department itself and service of summons upon the former is service upon the latter. x x x.

x x x x

x x x [A] regional office of the DPWH is part of the composition of the department itself and is therefore, not an entity that is altogether separate from the department. This conclusion lends credence to [Domingo's] position that service of summons upon the regional office is service upon the department itself because the former is essentially part of the latter. Indeed, what militates heavily against [the Republic's] theory is the simple fact that the regional office is not a different entity at all, but, as can be gleaned from the manner of its creation, a part of the department itself, so much so that it does not even have a juridical personality of its own. x x x.

Anent the claim that the procedure for service of summons upon the Republic was not followed because service should have been made on the OSG or the Legal Service Department of the DPWH, We are likewise not persuaded.  A perusal of the Revised Administrative Code of the Philippines suggests nothing of this import. x x x.

x x x x

Clearly, nothing [in the functions of the OSG] remotely suggests that service of summons upon the Republic should be made exclusively on the OSG.  What the [provisions] merely state is that the OSG will represent the government in all proceedings involving it.  It cannot be deduced nor implied from this, however, that summons should be served upon it alone.

The same conclusion applies to the legal service branch of the DPWH, as there is also nothing in the law that suggests that service of summons on the DPWH should be made upon it alone. x x x.

x x x x

Obviously, petitioner's conclusion that the proper procedure for service of summons was not observed is a mere conjecture because We find nothing in the provisions invoked by it that such indeed is the procedure sanctioned by law.  We are thus inclined to give more credence to [the Republic's] argument that it was the regional office's fault if it failed to bring the subject case to the attention of the OSG for proper representation.  To allow it to benefit from its own omission in order to evade its just and valid obligation would be the height of injustice.

Finally, anent the argument that the Republic is estopped from questioning the jurisdiction of the trial court, We rule in the negative.  The existence of another case against the regional office of the DPWH where the OSG appeared is of no moment as it concerns a totally different transaction. Thus, it would be erroneous for Us to rule on that basis alone, that the OSG is already acknowledging the service of summons upon the regional office, especially considering the categorical stand taken by the OSG on the matter in the case now before Us.  Be that as it may, however, We still rule, as We have discussed above, that [Domingo's] position is more impressed with merit.

WHEREFORE, in view of the foregoing, the instant Petition for Annulment of Judgment is hereby DISMISSED.^[19]

The Republic filed a Motion for Reconsideration^[20] of the above decision, but the Court of Appeals denied the same in the assailed Resolution dated October 25, 2006.

Consequently, the Republic filed the instant petition before this Court.  In a Resolution^[21] dated February 19, 2007, we denied the Republic's petition for failure to properly verify the petition and that the jurat in the verification and certification against forum shopping did not contain any competent evidence of the affiant's identity.  In addition, the Integrated Bar of the Philippines (IBP) dues payment (under IBP O.R. No. 663485) of one of the counsels who signed the petition was not updated. The Republic filed a Motion for Reconsideration^[22] of the above resolution.^[23]  On July 2, 2007, the Court resolved^[24] to grant the Republic's motion, thereby reinstating its petition.

In assailing the judgment of the Court of Appeals, the Republic brings to fore the following arguments:

I.

If in the act by which the Republic consents to be sued, no designation is made as to the officer to be served with summons, then the process can only be served upon the Solicitor General.

[II.]

The State is not bound by the errors or mistakes of its agents.

III.

Respondent can recover on the government contracts sued upon in Civil Case No. ^[3]33-M-2002 only on a quantum meruit basis.^[25]

In essence, the primary issue that must be resolved in the instant petition is whether the Court of Appeals correctly dismissed the Petition for Annulment of Judgment filed by the Republic.

Section 1, Rule 47^[26] of the Rules of Court provides for the remedy of annulment by the Court of Appeals of judgments or final orders and resolutions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner.

Under the first paragraph of Section 2, Rule 47^[27] of the Rules of Court, the annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction. As a ground for annulment of judgment, lack of jurisdiction refers to either lack of jurisdiction over the person of the defending party or over the subject matter of the claim.^[28]

In the petition at bar, the Republic argues that the RTC failed to acquire jurisdiction over the former.  The Republic reiterates that the service of summons upon the DPWH Region III alone was insufficient. According to the Republic, the applicable rule of procedure in this case is Section 13, Rule 14 of the Rules of Court, which mandates that when the defendant is the Republic of the Philippines, the service of summons may be effected on the Office of the Solicitor General (OSG).  The DPWH and its regional office are simply agents of the Republic, which is the real party in interest in Civil Case No. 333-M-2002. The Republic posits that, since it was not impleaded in the case below and the RTC did not acquire jurisdiction over it, the proceedings in Civil Case No. 333-M-2002 are null and void.

On the other hand, Domingo argues that the DPWH Region III is part of the DPWH itself; hence, a suit against the regional office is a suit against the said department and the Republic as well.  Domingo stresses that the case he filed was against the Republic, that is, against the DPWH Region III, and it was clear that the summons and a copy of the complaint was duly served on the said regional office.  Likewise, Domingo submits that the Republic is estopped from raising the issue of jurisdiction in the instant case given that he has filed two other civil actions for specific performance and damages against the DPWH Region III and, in the said cases, the OSG formally entered its appearance for and in behalf of the Republic.  Domingo alleges that the foregoing action of the OSG proved that it recognized the validity of the service of summons upon the DPWH Region III and the jurisdiction of the trial court over the said regional office.

The Court finds merit in the Republic's petition.

Summons is a writ by which the defendant is notified of the action brought against him. Service of such writ is the means by which the court acquires jurisdiction over his person.  Jurisdiction over the person of the defendant is acquired through coercive process, generally by the service of summons issued by the court, or through the defendant's voluntary appearance or submission to the court.^[29]

Section 13, Rule 14 of the Rules of Court states that:

SEC. 13. Service upon public corporations. - When the defendant is the Republic of the Philippines, service may be effected on the Solicitor General; in case of a province, city or municipality, or like public corporations, service may be effected on its executive head, or on such other officer or officers as the law or the court may direct.  (Emphasis ours.)

Jurisprudence further instructs that when a suit is directed against an unincorporated government agency, which, because it is unincorporated, possesses no juridical personality of its own, the suit is against the agency's principal, i.e., the State.^[30]  In the similar case of Heirs of Mamerto Manguiat v. Court of Appeals,^[31] where summons was served on the Bureau of Telecommunications which was an agency attached to the Department of Transportation and Communications, we held that:

Rule 14, Section 13 of the 1997 Rules of Procedure provides:

SEC. 13.  Service upon public corporations. -- When the defendant is the Republic of the Philippines, service may be effected on the Solicitor General; in case of a province, city or municipality, or like public corporations, service may be effected on its executive head, or on such other officer or officers as the law or the court may direct.

It is clear under the Rules that where the defendant is the Republic of the Philippines, service of summons must be made on the Solicitor General. The BUTEL is an agency attached to the Department of Transportation and Communications created under E.O. No. 546 on July 23, 1979, and is in charge of providing telecommunication facilities, including telephone systems to government offices. It also provides its services to augment limited or inadequate existing similar private communication facilities. It extends its services to areas where no communication facilities exist yet; and assists the private sector engaged in telecommunication services by providing and maintaining backbone telecommunication network. It is indisputably part of the Republic, and summons should have been served on the Solicitor General.

We now turn to the question of whether summons was properly served according to the Rules of Court. Petitioners rely solely on the sheriff's return to prove that summons was properly served. We quote its contents, viz:

"THIS IS TO CERTIFY that on the 19th day of May 1999, the undersigned caused the service of Summons and Complaint upon defendant J.A. Development Corporation at the address indicated in the summons, the same having been received by a certain Jacqueline delos Santos, a person employed thereat, of sufficient age and discretion to receive such process, who signed on the lower portion of the Summons to acknowledge receipt thereof.

Likewise, copy of the Summons and Complaint was served upon defendant Bureau of Telecommunications at the address indicated in the Summons, a copy of the same was received by a certain Cholito Anitola, a person employed thereat, who signed on the lower portion of the Summons to acknowledge receipt thereof."

It is incumbent upon the party alleging that summons was validly served to prove that all requirements were met in the service thereof. We find that this burden was not discharged by the petitioners. The records show that the sheriff served summons on an ordinary employee and not on the Solicitor General. Consequently, the trial court acquired no jurisdiction over BUTEL, and all proceedings therein are null and void.^[32]  (Emphases supplied.)

In the instant case, the Complaint for Specific Performance with Damages filed by Domingo specifically named as defendant the DPWH Region III.  As correctly argued by the Republic, the DPWH and its regional office are merely the agents of the former (the Republic), which is the real party in interest in Civil Case No. 333-M-2002.  Thus, as mandated by Section 13, Rule 14 of the Rules of Court, the summons in this case should have been served on the OSG.

Quite inexplicably, the Court of Appeals failed to apply, nay, to even consider, the provisions of Section 13, Rule 14 of the Rules of Court in rendering its assailed Decision.  A perusal of the Decision dated May 19, 2006 shows that the appellate court mainly dissertated regarding the functions and organizational structures of the DPWH and the OSG, as provided for in the Revised Administrative Code of 1987, in an attempt to demonstrate the relationship between the DPWH and its regional offices, as well as to refute the claim that the service of summons upon the Republic should be made exclusively upon the OSG.  Such an oversight on the part of the Court of Appeals is most unfortunate given the relevance and materiality of Section 13, Rule 14 of the Rules of Court to the instant case, in addition to the fact that the Republic itself quoted the aforesaid provision in its petition before the appellate court.^[33]

The Court, nonetheless, subscribes to the ruling of the Court of Appeals that the Republic is not estopped from raising the issue of jurisdiction in the case at bar in view of the alleged entry of appearance of the OSG, in behalf of the Republic, in the other civil cases supposedly filed by Domingo against the DPWH Region III. As held by the appellate court, the other civil cases presumably pertained to transactions involving Domingo and the DPWH Region III, which were totally different from the contracts involved in the instant case.  The fact that the OSG entered its appearance in the other civil cases, notwithstanding that the summons therein were only served upon the DPWH Region III, has no bearing in the case now before us.  All this indicates is that, despite the improper service of summons in these other civil cases, there appeared to be notice to the OSG and voluntary appearance on the latter's part.

Here, there was no indication, and Domingo did not insist otherwise, that the OSG had any notice of the filing of Civil Case No. 333-M-2002.  Domingo speculates that, in the subsequent civil actions against the DPWH Region III, the latter most likely brought the said cases to the attention of the OSG.  On the other hand, Domingo opines that the DPWH Region III apparently neglected to inform the OSG of the pendency of Civil Case No. 333-M-2002.  Accordingly, Domingo asserted that he should not be faulted therefor.  The Court disagrees.  Domingo ought to bear in mind that it is the duty of the plaintiff to implead all the necessary or indispensable parties for the complete determination of the action.^[34]  It was, thus, incumbent upon him to name and implead the proper defendant in this case, i.e., the Republic, and cause the service of summons to be made upon the officer mandated by law, that is, the OSG.  As Domingo failed to discharge this burden, he cannot now be allowed to shift the blame on the DPWH Region III or hold in estoppel the OSG.

In sum, the Court holds that the Republic was not validly served with summons in Civil Case No. 333-M-2002.  Hence, the RTC failed to acquire jurisdiction over the person of the Republic. Consequently, the proceedings had before the trial court and its Decision dated February 18, 2003 are hereby declared void.

In accordance with Section 7, Rule 47^[35] of the Rules of Court, a judgment of annulment shall set aside the questioned judgment or final order or resolution and render the same null and void, without prejudice to the original action being refiled in the proper court.

In view of the above ruling of the Court declaring the nullity of the proceedings in the RTC, the Court shall no longer pass upon the other issues raised by the parties in the instant petition.

WHEREFORE, the petition is GRANTED.  The Decision dated May 19, 2006 and the Resolution dated October 25, 2006 of the Court of Appeals in CA-G.R. SP No. 78813 are REVERSED.  The Decision dated February 18, 2003 of the Regional Trial Court of Malolos, Bulacan, Branch 18, in Civil Case No. 333-M-2002 is hereby ANNULLED and SET ASIDE, without prejudice to the filing of the original action in the proper Regional Trial Court.

SO ORDERED.

Corona, C.J., (Chairperson), Leonardo-De Castro, Bersamin, Del Castillo, and Villarama, Jr., JJ.

Endnotes:

---

^[1] Rollo, pp. 9-31.

^[2] Id. at 32-45; penned by Associate Justice Mariflor P. Punzalan Castillo with Associate Justices Elvi John S. Asuncion and Noel G. Tijam, concurring.

^[3] Id. at 46-48.

^[4] Id. at 73-80; penned by Presiding Judge Victoria C. Fernandez-Bernardo.

^[5] Records, Vol. I, pp. 3-24.

^[6] Id., Vol. III, pp. 2-3, 40-41, 75-76, 112-114, 171-173, 230-231, and 261-262.

^[7] Id., Vol. I, pp. 22-23.

^[8] Id. at 41.

^[9] Id. at 42-43.

^[10] Id. at 46.

^[11] Id. at 47-49.

^[12] Id. at 50.

^[13] Rollo, p. 79.

^[14] Id. at 80.

^[15] Records, Vol. I, pp. 76-78.

^[16] Id. at 79.

^[17] Id. at 80-81.

^[18] CA rollo, pp. 1-30.

^[19] Rollo, pp. 37-45.

^[20] CA rollo, pp. 158-165.

^[21] Rollo, p. 129.

^[22] Id. at 130-149.

^[23] In brief, the Republic proffered the following reasons: (a) the OSG's authority to administer oaths in matters of official business is derived from Presidential Decree No. 1347, hence, the Notarial Law or the 2004 Rules on Notarial Practice, including the approved forms of the 2004 Rules on Notarial Practice, is not particularly applicable to the said office; (b) the petition was properly verified and the identity and signature of affiant Hermogenes Ebdane was confirmed by the Solicitor/Officer of the OSG administering the oath; (c) IBP O.R. No. 663485 of Solicitor Edgar R. Tupas was paid for the Calendar Year 2006; and (d) substantial compliance with the Rules merits a liberal construction of the Rules with the instant case being determined on its merits rather than on technicality or procedural imperfections. (Rollo, pp. 130-131.)

^[24] Rollo, pp. 158-159.

^[25] Id. at 263.

^[26] Section 1 of Rule 47 reads:

SEC. 1. Coverage.  - This Rule shall govern the annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner.

^[27] Section 2 of Rule 47 provides:

SEC. 2. Grounds for annulment.  - The annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction.

Extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion for new trial or petition for relief.

^[28] Republic of the Philippines v. "G" Holdings, Inc., G.R. No. 141241, November 22, 2005, 475 SCRA 608, 617-618.

^[29] Guiguinto Credit Cooperative, Inc. v. Torres, G.R. No. 170926, September 15, 2006, 502 SCRA 182, 189-190.

^[30] Philippine Rock Industries, Inc. v. Board of Liquidators, 259 Phil. 650, 655-656 (1989). See also Farolan, Jr. v. Court of Tax Appeals, G.R. No. 42204, January 21, 1993, 217 SCRA 298, 306.

^[31] G.R. Nos. 150768 and 160176, August 20, 2008, 562 SCRA 422.

^[32] Id. at 431-432.

^[33] CA rollo, p. 12.

^[34] Nery v. Leyson, 393 Phil. 644, 655 (2000).

^[35] Section 7, Rule 47 provides:

SEC. 7. Effect of judgment. - A judgment of annulment shall set aside the questioned judgment or final order or resolution and render the same null and void, without prejudice to the original action being refiled in the proper court.  However, where the judgment or final order or resolution is set aside on the ground of extrinsic fraud, the court may on motion order the trial court to try the case as if a timely motion for new trial had been granted therein.