G.R. No.

L-31339 January 31, 1978

VILLA REY TRANSIT, INC., and HON. JESUS P. MORFE, in his capacity as Judge
of the Court of First Instance of Manila, petitioners,
vs.
FAR EAST MOTOR CORPORATION and THE HONORABLE COURTS OF
APPEALS, respondents.
Marcial C. Reyes for petitioners.
Jaime S. Linsangan & Associates for private respondent.

GUERRERO, 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. No. 43144-R, entitled "Far East Motor
Corporation, Petitioner, vs. Hon. Jesus P. Morfe Judge of the Court of First Instance of Manila, et al.,
Respondents."
On April 25, 1968, respondent Far East Motor Corporation sued petitioner Villa Rey Transit, Inc. for
various sums of money before the Court of First Instance of Manila, Branch XIII.
Summons was issued to petitioner and per return of the Sheriff, the summons was served on petitioner on
June 16, 1968, the sheriff certifying. "Served thru Atty. Virgilio A. Reyes, Assistant General Mgr., but
refused to sign."
Claiming failure of the petitioner to file answer within the reglementary period, respondent corporation
filed on August 13, 1968 an ex-parte motion to declare the petitioner in default, which was granted on
August 21, 1968.
On the other hand, late receipt of the summons by its main office, petitioner filed an Urgent Motion to
Extend Time to Answer, which was denied on October 2, 1968, the order of denial being served on
petitioner's counsel on October 7, 1968.
Pursuant to the order of default, respondent Far East Motor Corporation then presented its evidence exparte, and based on the said evidence, the lower court adjudicated various sums of money to the
respondent Far East Motor Corporation. Copy of the decision was received by the petitioner on October
25, 1968.
On November 6, 1968, petitioner then filed a Motion to Quash Service of Summons, to Lift the Order of
Default, and to Set Aside Judgment, on the following grounds:
a. The service of summons upon defendant was not in accordance with law and therefor
this Honorable Court had not acquired a valid jurisdiction over said defendant;

b. Assuring for the sake of argument only that a valid substituted service of summons
was made, failure of defendant to answer with the reglementary peirod was due to failure
of Sheriff ot propertly serve summons and/or due to excusable negligence on the part of
defendant's employee; and
c. Considering the huge claims of plaintiff which are incorrect and against which
defendant has valid and genuine defense, it is in the interest of justice and truth to lift the
order of deafult which defandant has not received, and to set aside judgment already
rendered.
Petitioner's motion was denied on November 19, 1968 and copy of the denial was received by the
corporation on November 21, 1968.
Hence, on December 3, 1968, respondent Far East Motor Corporation filed a Motion for Execution of the
decision. Upon receipt of its copy of the said motion, petitioner Villa Rey Transit filed a motion dated
December 5, 1968 asking for reconsideration of the court's order denying its Motion to Set Aside on the
following grounds: (a) the sheriff's return is null and void and hence, the court has not acquired jurisdiction
over it, and (b) defendant has valid defenses which will alter the decision rendered ex-parte if the
defendant is given the opportunity to file its answer and present evidence in support thereof. The motion
was set for hearing on December 14, 1968.
Acting on these last two motions, the lower court on December 27, 1968 denied plaintiff's motion for
execution; granted defendant's motionfor reconsideration; set aside its order of November 19, 1967;
quashed the service of summons; and set aside the judgment already rendered.
On the claim that the judgment had already become final and unappealable on December 9, 1968,
respondent moved to reconsider the above order of December 9, 1968 but was denied.
Respondent then filed a petition for certiorari, mandamus and prohibition before the Supreme Court.
However, on the ground that the remedy sought in the petition was in aid of the appellate jurisdictionof the
Court of Appeals, the case was certified to the appellate court whose decision, sustaining the petition and
ordering the lower court to issue the writ of execution upon the judgement, i now subject of this appeal.
Emphasis is on the jurisdictional issue of service of summons.
To recount the facts surrounding the service of summons: Sometime in June, 1968, Deputy Sheriff Salita
went to petitioner's sub-station at 853 M. Earnshaw St., Sampaloc, Manila; he handed some papers to
Atty. Virgilio A. Reyes, Assistant General Manager for Operations: after reading the contents of the same,
and noting that they were copies of a complaint filed by Far East Motor corporation against petitioner
involving some transactions made by him with the complainant as the then president of petitioner
corporation, he suggested that service of the complaint made by him with the complainant as the then
president of petitioner corporation, he suggested that service of the complaint and the corresponding
summons be made directly on De. Jose M. Villarama, the present President and General Manager, at
their main office at Ricarfor Street, corner Sta. Elena Street, Tondo, Manila; instead, the sheriff left the
papers with one of their night tellers, Juanito Vince Cruz; due to volume and pressure of his work, Cruz
forgot all about the papers; hence, the papers were delivered to their main office only on September 27,
1968.

Based 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 acquire jurisdiction
over tis person.
We find the claim untenable. Service of process on a corporation is controll ed by Section 13, Rule 14 of
the Revised Rules of Court, thus
Sec. 13. Service upon private domestic corporation for partnership. If the defendant is
a corporation organized under the laws of the Philippines or a partnership duly registered,
service may be made on the president, manager, secretary, cashier, agent, or any of its
directors.
Petitioner claims that the foregoing enumeration is exclusive and service of summons is without force and
effect unless made upon any one of them. The focus of inquiry then is whether an Assistant General
Manager for Operations may properly be within the terms manager or agent.
Petitioner relies on the Litton Mills case 2 where this Court held that a branch manager (sales manager)
does not come within the enumeration in Sec. 13, Rule 14 of the Revised Rules of Court, all of whom are
top officers whose duties extend generally to overall transactions of the corporation, not merely to a
particular branch or department thereof.
The above cases without application here.
Atty. Virgilio A. Reyes is the Assistant General Manager, and admittedly, the former President and General
Manager of the petitioner corporation. As his present title implies, Atty. Virgilio A. Reyes is not one of the
lesser officers of the petitioner corporation upon whom service of Summons is not authorized by law. That
he is in charge of Operations, which "includes the incoming and outgoing buses, the arrangement of
schedule, the appointment of drivers and conductors, the following of highway troubles, and generally
affecting the running of buses, 3 does not make him a mere branch manager so insistently pointed out by
petitioner. We take the opposite view, for precisely, as the Assistant General Manager for Operations, he
is in charge of the main bulk of the corporate business of the petitioner transit corporation. "Operations" is
the main concern, if not all, of a transit corporation.
More, We find petitioner's claim that Attorney. Virgilio A. Reyes, holding office at their M. Earnshaw substation, is not the proper person upon whom summons may be seized inconsistent with their own
admission that Atty. Reyes customarily receives summons at the same sub-station in behalf of the
petitioner. To quote part of petitioner's motion for reconsideration of the CFI's denial of its motion to set
aside judgment: "Records will show that Atty. Reyes has been receiving summon issued in cases wherein
the Villa Rey Transit, Inc. is a defendant, before and after June 18, 1968, the alleged date when the
deputy sheriff allegedly served the summons and complaint in the above case. In all these occasions,
Atty. Reyes signed having received said summons and in no occasion had he refused to sign. However,
in connection with the service of summons in the above case, it is not true that Atty. Reyes refused to
sign. What he did was to instruct the deputy sheriff to serve the same directly to Dr. Jose M. Villarama
who is the President and General Manager of the Villa Rey Transit Inc. and having offices at the Villa Rey
Transit main compound located at Ricafort (corner Sta. Elena Street), Tondo, Manila. There was reason
for Atty. Reyes to make such request upon the deputy sheriff because the promissory notes (Annexes B,
C. D, E, F and G to complaint) were signed by him in his former capacity as President of the Villa Rey
Transit, Inc. while in other cases, the attention of Dr. Villarama may not be imperative." 4 That the

transactions alleged in the complaint involved him personally is no reason for his refusal to receive this
particular summons. Indeed, with more reason that he should have received the summons because as
the signatory to the promissory notes, he had an interest therein.
According to jurisprudence, the rationale of all rules for service of process on corporation is that service
must be made on a representative so integrated with the corporation sued as to make it a priori
supposable that he will realize his responsibilities and know what he should do with any legal papers
served on him. 5 Based on the particular facts of this case, service of summons upon Atty. Virgilio A.
Reyes has served the purpose of the law. And as he refused to receive the summons, tender unto him
was sufficient to confer jurisdiction over the petitioner.
Since petitioner failed to answer within the reglementary period, even after denial of its motion to extend
time to answer, the order of default was proper. So also with the hearing on the merits ex-parte resulting
in the judgment by default. The decision was appealable, and as receipt of the same by petitioner was on
October 25, 1968, the 30-day appeal period commenced from that date on. On November 6, 1968,
petitioner filed a Motion to Quash Service of Summons, To Lift Order of Defeat and To Set Aside
Judgment, and from that day on, the appeal period was deemed suspended, the remaining 18 days
beginning to run again upon receipt of the denial of the motion. Receipt of such denial was on November
21, 1968; hence, by mathematical computation, the 30-day appeal period expired on December 9, 1968.
There being no appeal increased by the petitioner from the judgment of default on or before December 9,
1968, the lower court lost its jurisdiction to hear on December 14, 1968 petitioner's Motion for
Reconsideration dated December 5, 1968, the judgment by default having become final and executory.
Of course, petitioner insists that on December 5, 1968 it filed a Motion for Reconsideration of the order
denying its Motion to Quash, Lift Order of Default and to Set Aside Judgment taking the position that it
should have suspended the period to appeal We do not agree. The records clearly show that there were
no new arguments presented against the judgment on the merits, perforce the motion is pro forma and
did not suspend the running of the period to appeal.
Petitioner then insists that the above motion should be considered a petition for relief. This again is
untenable. As correctly pointed out by the apellate court, a petition for relief presupposes a final and
unappealable judgment. In this case, judgment has not yet become final and unappealable at the time of
the filing of the motion on December 5, 1968.
WHEREFORE, the decision appealed from is affirmed. Let execution issue on the lower court's judgment
by default, Costs against petitioner. SO ORDERED.
Teehankee (Chairman), Makasiar, Muoz Palma and Fernandez, JJ., concur.

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 a
subscription to their stock of not less than $50,000. Certain persons did subscribe more than this
(to-wit, $148,750), with a proviso, however, that if a certain city in its corporate capacity
subscribed $50,000 or upwards, the city should accept what each of them had subscribed above a
small sum ($300) named. The city did subscribe the $50,000, and much more ($400,000), when,
A.D. 1853, the directors of the company -- these directors being themselves persons who had
subscribed part of the $148,750 -- passed a resolution authorizing the original subscribers to
transfer to the city all stock subscribed by them over $300 each, and that the stock thus
transferred be merged in the subscription made by the city.
As appeared by "an agreement of record" in which, without signature of anybody attached, it was
certified by the clerk that it was admitted by the complainants on the final hearing that all the
subscribers transferred, before July, 1854, their stock (above $300) to the city; that none of the
original subscribers were ever charged on the books of the company with any greater amount
than $300; that this sum had been paid by each, and accepted by the company in full satisfaction.
The company being insolvent in 1858, and the executions of creditors being then returned
unsatisfied, the creditors of the company in 1868 filed a bill against the original subscribers to
make them pay up the excess over $300 which they had subscribed.
Held:
1. That these subscribers could not be made liable for such excess.
2. That the proceeding being one in equity and not at law, the "agreement of record," though not
made part of the record by the pleadings, would be regarded as evidence.
3. That it proved the transfer and acceptance of the stock by the city.
4. That the fact that the directors were original subscribers did not affect the case, the transfer
having been in accordance with the conditions on which the original subscription was made, and
in itself fair.
Page 83 U. S. 391
5. That, independent of all this, the bill probably could not be maintained because of laches.
Burke, Putnam, and others were the equitable owners of a judgment recovered in 1857 against
the New Albany & Sandusky Railroad Company. Upon this judgment an execution was issued in
1858, which, on the 1st of December of that year, was returned "nulla bona." On the 29th of
January, 1868 -- that is to say, about ten years after the execution had been thus returned
unsatisfied -- they brought the present suit. It was a bill in chancery against one Smith and some
twenty-seven other defendants, and, alleging the insolvency of the company, it sought to subject
to the payment of the judgment, rights which, it alleged, the company had against the said
defendants. It averred that the defendants, on the 22d of August, 1853, under the general railroad
laws of Indiana, organized the above-named railroad company and subscribed to its capital stock,

severally, amounts which they had never paid, and the object of the bill was to compel the
payment of the debts thus incurred, and the application of the payments to the satisfaction of the
complainants' judgment. The facts were these:
On the 22d of August, 1853, under the general railroad laws of the state, the defendants, with
others, united in forming articles of association for the incorporation of the New Albany &
Sandusky Railroad Company, and severally subscribed to its capital stock in sums varying from
$1,000 to $5,000. [The railroad laws referred to allow, it may be added, no organization of a road
until at least $50,000, or $1,000 for every mile of the proposed road, shall have been
established.] The articles of association contained the following stipulation:
"Provided, however, and it is hereby understood, that if the City of New Albany, in its corporate
capacity, shall hereafter take stock in this corporation to the amount of $50,000 or upwards,
inasmuch as the present subscribers, being residents of
Page 83 U. S. 392
and owning property in said city, will then be under the necessity of contributing still further to
the corporation by way of taxation, unless a portion of the present subscription is taken off their
hands, the said city shall accept, in part of the amount to be subscribed in its corporate capacity,
at its par value, a transfer of any amount of stock now subscribed for by each individual over and
above the amount of six shares, or $300, which each such individual may desire or request shall
be so transferred."
There were fifty-five original subscribers, and the aggregate amount of the subscriptions was
$148,750. With such a subscription and under such articles of association, the subscribers
became a corporate body. After their incorporation, the City of New Albany subscribed $400,000
to the capital stock of the company. [Footnote 1] This subscription was made on the 19th of
November, 1853, and on the 31st of December next following, the directors of the company
adopted an order
"That the original subscribers to the articles of association be permitted, in accordance with the
stipulations contained in the articles, to transfer any amount of the stock so originally subscribed
by them over and above the amount of six shares, or $300, to the City of New Albany, said city
having made a subscription to the stock of said company to the amount of $50,000 and upwards,
and that the stock thus transferred be merged in the subscription already made by said city, so
that the stock of said city, under her present subscription, with the stock so transferred, shall not
exceed $400,000 as subscribed by her."
The directors of the company, who made this order, were themselves subscribers, like the
defendants, for more than six shares, or sums above $300.
So far, there was no controversy respecting the facts. And there was also an "agreement of
record" -- a document certified by the clerk of the court below, with the bill, answers, depositions
&c., as part of the full, true, and

Page 83 U. S. 393
complete copy and transcript of the record and proceedings in the case -- that the defendants
transferred to the City of New Albany all the stock subscribed by them in excess of $300 for
each, in compliance with the stipulation contained in the original articles of association; that the
transfers were made before the 1st day of July, 1854; that none of these original subscribers were
ever charged on the books of the railroad company with any greater amount of stock than $300;
that the amount of stock charged against each (viz., $300) had been fully paid long before the
filing of this bill, and when called by the company, and that such payments had been accepted by
the company as full satisfaction of the respective subscriptions.
The question was whether the defendants were debtors to the railroad company for any excess of
their subscriptions above $300.
The court below was of opinion that they were not, and dismissed the bill against them.
The complainants appealed.