G.R. No. 174077 - Ellice Agro-Industrial Corp. vs. Young

On July 24, 1995, a Contract to Sell was executed between the respondents (Rodel T. Young, Delfin Chan, and Jim Wee) and Ellice Agro-Industrial Corporation (EAIC), represented by its alleged corporate secretary and attorney‐in‐fact, Guia G. Domingo.
The contract involved the sale of a 30,000 square-meter portion of a parcel of land in Lutucan, Sariaya, Quezon, which was registered in EAIC’s name under Transfer Certificate of Title (TCT) No. T-157038.
The agreed purchase price was One Million and Fifty Thousand Pesos (P1,050,000.00).

Respondents made a partial payment of Five Hundred Forty-Five Thousand Pesos (P545,000.00) to EAIC, executed through Domingo, as part of the contractual consideration.
Despite this partial payment, EAIC failed to deliver the owner’s duplicate certificate of title and the corresponding deed of sale as required under the contract.

On November 8, 1996, in response to EAIC’s noncompliance, the respondents had their Affidavit of Adverse Claim duly annotated in TCT No. T-157038.
On November 14, 1996, the respondents filed a Complaint for Specific Performance (Civil Case No. 96-177) against EAIC and Domingo before the Regional Trial Court (RTC) of Lucena City, Branch 60.
On November 18, 1996, a Notice of Lis Pendens was annotated on TCT No. T-157038 after the complaint was filed.

The initial attempt to serve summons and copies of the complaint on EAIC, through Domingo at Rizal Street, Sariaya, was unsuccessful due to EAIC not being located there.
A subsequent attempt at 996 Maligaya Street, Singalong, Manila—the residence of Domingo—resulted in successful service of the alias summons.
On March 21, 1997, EAIC, represented by Domingo, filed its Answer with Counterclaim in response to the complaint.
During the scheduled pre-trial conference on January 27, 1998, neither Domingo nor her counsel appeared, prompting the court to allow the respondents to present their evidence ex parte pursuant to Section 5, Rule 18 of the Rules of Court.

On November 11, 1999, following the ex parte evidence presentation, the RTC rendered a decision ordering EAIC to deliver the owner’s duplicate TCT and execute a final deed of sale in favor of the respondents.
EAIC took several post-judgment actions:

On July 10, 2000, EAIC, represented by its Chairman and President Raul E. Gala, filed a Petition for Relief from Judgment under Rule 38 based on alleged fraud by Domingo.
On July 12, 2000, the RTC denied the petition for being filed out of time.
On April 24, 2001, EAIC initiated a Petition for Annulment of Judgment under Rule 47 before the Court of Appeals, contending the RTC’s lack of jurisdiction and alleging extrinsic fraud committed by Domingo.

The respondents countered by asserting that EAIC was already constructively notified of the pending litigation through the annotated adverse claim, Notice of Lis Pendens, and direct correspondence, thereby binding EAIC to the proceedings.

On July 1, 2003, the Court of Appeals (CA) dismissed EAIC’s petition for annulment of judgment.
The CA’s decision was based on the view that EAIC had been constructively notified—by the annotations on the title and through direct communications—thus accepting its role in Civil Case No. 96-177.
EAIC filed a motion for reconsideration, which was denied by the CA in its August 8, 2006 Resolution.
EAIC subsequently assailed these decisions before the Supreme Court via a Petition for Review on Certiorari.

Whether the RTC validly acquired jurisdiction over EAIC given that the service of summons was allegedly invalid.
Whether the filing of an Answer with Counterclaim by Domingo, who may not have been an authorized corporate representative, constitutes a valid appearance by the corporation.

Whether service of summons upon EAIC via Domingo was valid when the GIS indicated she did not hold an authorized position (i.e., president, manager, secretary, cashier, agent, or director) at the time of service.
Whether the annotations (Adverse Claim and Notice of Lis Pendens) on TCT No. T-157038 served as adequate constructive notice to EAIC regarding the pending litigation.

Whether EAIC, by its prior actions—including its Answer with Counterclaim and its filing for relief from judgment—voluntarily submitted to the jurisdiction of the RTC, thereby waiving any jurisdictional defects.
Whether EAIC’s subsequent petition for annulment of judgment is barred on the ground that it had already invoked the issue of extrinsic fraud in an earlier motion.

Whether Domingo’s actions, based on her honest but mistaken belief of authority, can bind EAIC in the litigation despite her lack of proper authorization.
Whether such unauthorized acts can affect the validity of service and the subsequent jurisdiction of the RTC.