G.R. No. 172595 - Ejercito vs. M.R. Vargas Construction

On March 5, 2004, the City Government of Quezon City, represented by Mayor Feliciano Belmonte, Jr., entered into a construction contract with M.R. Vargas Construction, represented by Marcial Vargas in his capacity as general manager, for the improvement and concreting of Panay Avenue.
In accordance with the contract, M.R. Vargas Construction commenced clearing operations along Panay Avenue by removing structures and uprooting trees. Renato Agarao, the project foreman, supervised these operations.

Petitioners Bienvenido Ejercito and Jose Martinez, together with a certain Oscar Baria, alleged that the clearing operations were conducted without the necessary permits and without prior consultation with concerned authorities.
Their complaints were brought to the attention of various government figures and agencies, including barangay authorities, the mayor, a senator (Ma. Ana Consuelo A.S. Madrigal), the Department of Environment and Natural Resources, and the Philippine Coconut Authority, but these efforts proved unsuccessful.

On September 10, 2004, petitioners filed a petition for injunction before the Quezon City Regional Trial Court (RTC), naming "M.R. Vargas Construction, represented by Marcial R. Vargas and Renato Agarao" as the respondent.
The petition was docketed as Civil Case No. Q-04-53687 and accompanied by an application for a temporary restraining order (TRO) and a writ of preliminary injunction.
On the same day, the Office of the Clerk of Court issued summons and a notice of raffle; however, the summons were later returned as unserved because the address provided was not found.

The petition was raffled to Judge Marie Christine Jacob’s sala, and on September 15, 2004, when Agarao was present in court, Judge Jacob issued a TRO directing respondent enterprise to desist from cutting, damaging, or transferring trees along Panay Avenue.
Subsequently, on September 23, 2004, Mangoba Tan Agus Law Offices, representing the respondent enterprise, filed a special appearance. They moved to dismiss the petition and quash the TRO on several grounds: lack of jurisdiction over the respondent enterprise, irregular conduct in the raffle process, issuance of the TRO without posting a bond, failure to include the City Government (the real party-in-interest), and alleged defects in petitioners’ application for the injunctive writ.
During the hearing on September 24, 2004, it was shown that a copy of the summons and the notice of raffle bore a signature allegedly indicating receipt; believing the summons had been served, the respondent’s counsel later withdrew two of the grounds (lack of jurisdiction and irregularity in the raffle).

On October 1, 2004, during the hearing for the writ of preliminary injunction, respondent counsel adopted arguments from the motion to quash the TRO.
On October 6, 2004, the RTC issued an Order granting petitioners’ writ of preliminary injunction, followed by respondent counsel filing an urgent omnibus motion on October 7, 2004 to nullify the proceedings and to cite petitioners and the process server for contempt, arguing that the summons had not been properly served on the enterprise.
On October 18, 2004, the writ of preliminary injunction was formally issued, but later petitioners filed additional motions for ocular inspection and for the restoration of the damaged structures.
On November 8, 2004, Judge Jacob issued an Order nullifying the proceedings conducted thus far in the case. Petitioners’ motion for reconsideration was denied on December 20, 2004.

Petitioners filed a petition for certiorari before the Court of Appeals, challenging the November 8, 2004, Order.
In the petition for certiorari, alongside Judge Jacob and the enterprise, petitioners separately named Marcial R. Vargas and Renato Agarao as individual respondents, providing their respective addresses.
Petitioners argued that Judge Jacob abused discretion by nullifying the proceedings, asserting that Agarao’s appearance at the TRO hearing should have been sufficient to confer jurisdiction on the respondent enterprise.
On October 10, 2005, the Court of Appeals dismissed the petition for certiorari for lack of merit and later denied petitioners’ motion for reconsideration on April 28, 2006.

The petition attributed two major errors to the Court of Appeals: (a) the erroneous ruling that the RTC did not acquire jurisdiction over the respondents despite the appearance and supposed receipt of process, and (b) the failure to hold that the withdrawal of the jurisdictional defense by the private respondents constituted a waiver of such defense.
Central to the dispute was the adequate service of summons on a sole proprietorship (M.R. Vargas Construction), which, as an entity without juridical personality, should have been served upon its owner, Marcial R. Vargas.
Petitioners contended that the voluntary appearance of the foreman (Agarao) was equivalent to service of summons and argued that receipt of the processes by another party (Rona Adol) bindingly constituted service on the enterprise.

Whether the RTC acquired jurisdiction over the respondent enterprise by virtue of the foreman’s appearance at the TRO hearing, even though the summons was not properly served on the actual owner of the enterprise.
Whether the appearance of a representative (foreman Agarao) with limited authority can be equated to valid service of summons upon an entity without juridical personality.

Whether the respondent enterprise’s counsel waived the defense of lack of jurisdiction by initially appearing in court and subsequently withdrawing the defense, especially in light of the mistaken belief that proper service had been effected.
How the procedural missteps concerning service of summons and the withdrawal of the defense affected the court’s acquisition of jurisdiction over the respondent.