Case Summary (G.R. No. 200465)
Background of Financial Transactions
On March 28, 2003, Banco de Oro-EPCI, Inc. granted credit facilities to JAPRL Development Corporation amounting to P230,000,000, based on the evaluation of its financial statements from 1998 to 2000. Despite their apparent financial strength, JAPRL soon defaulted on several trust receipts. Subsequent investigations revealed that JAPRL had allegedly inflated its sales revenues to misrepresent its financial viability.
Rehabilitation Proceedings
On August 30, 2003, JAPRL and its subsidiary filed a petition for rehabilitation in the Regional Trial Court (RTC) of Quezon City, claiming a decline in sales and significant losses prior to the petition. A stay order was issued, protecting JAPRL from creditors while the rehabilitation process was ongoing. However, the proposed rehabilitation plan was ultimately rejected by the RTC in a ruling issued on May 9, 2005.
Legal Actions and Jurisdiction Issues
In response to JAPRL's default, Banco de Oro filed a civil complaint seeking payment and a writ of preliminary attachment against the respondents on August 21, 2003. The Makati RTC denied the attachment due to lack of merit, although it permitted service of summons upon respondents. Respondents contested the service, arguing that it had not been properly delivered according to procedural norms.
Court’s Finding on Service of Summons
The Makati RTC determined that service on an administrative assistant was acceptable within the ordinary business practice, thereby allowing jurisdiction over the corporate entities involved. However, respondents later contested this jurisdiction, claiming improper service and subsequently moved to suspend proceedings based on rehabilitation orders from the Calamba RTC.
Appeal and Higher Court Decisions
Respondents filed a petition for certiorari in the Court of Appeals asserting the Makati RTC lacked jurisdiction due to defective service of summons. The appellate court sided with the respondents, concluding that the summoning procedure was not followed correctly, which ultimately led to a lack of jurisdiction by the RTC. Banco de Oro's motion for reconsideration was denied.
Supreme Court's Ruling
Upon review, the Supreme Court concluded that respondents had effectively evaded valid service of summons to obstruct proceedings. The Court reasoned that their withdrawal of the motion for reconsideration rendered the RTC order final, and their subsequent actions indicated a submission to the court's jurisdiction regardless of the alleged defect in the service of summons.
Implications for Civil Case No. 03-991
The Supreme Court ordered the Makati RTC to expedite proceedings in Civil Case No. 03-991. The Court ruled that allegations of fraud raised serious questions concerning the financial representations made by JAPRL, which could impact the ongoing rehabilitation process and lead to an immediate demand for payment from the responden
...continue readingCase Syllabus (G.R. No. 200465)
Case Overview
- This case is a petition for review on certiorari filed by Banco de Oro-EPCI, Inc. (Petitioner) against JAPRL Development Corporation, Rapid Forming Corporation, and Jose U. Arollado (Respondents).
- The petition seeks to overturn the decision of the Court of Appeals (CA) in CA-G.R. SP No. 95659 and its resolution denying reconsolidation.
Background of the Case
- Petitioner extended credit facilities totaling P230,000,000 to JAPRL on March 28, 2003, based on JAPRL's financial statements from 1998 to 2000.
- Rapid Forming Corporation and Jose U. Arollado acted as sureties for JAPRL.
- JAPRL defaulted on payment shortly after the loan was approved, failing to settle four trust receipts.
- Petitioner discovered that JAPRL had altered and falsified its financial statements to appear more financially viable than it was.
Legal Proceedings Initiated by JAPRL
- On August 30, 2003, JAPRL filed a petition for rehabilitation in the Quezon City RTC, citing a decline in sales and significant losses.
- A stay order was issued on September 28, 2003, halting enforcement of claims against JAPRL.
Petitioner’s Response
- On August 21, 2003, because JAPRL did not comply with the payment demand, Petitioner filed a complaint for a sum of money and requested a writ of preliminary attachment in the Makati RTC.
- The Makati RTC denied the application for lack of merit, claiming Petitioner failed to substantiate allegations of fraud.
Service of Summons and Jurisdiction Issues
- Respondents contended that the