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ROMEO J. ORDOEZ, petitioner, vs. THE HON. ALFREDO J. GUSTILO,
in his capacity as presiding judge of Regional Trial Court of Cavite, Branch
XVI, Cavite City, Municipality of Rosario, Cavite, former Mayor Calixto D.
Enriquez of Rosario, Cavite, and Valeriano Espiritu of Mabolo, Bacoor,
Cavite, respondents.
1990 December 20, 2nd Division, G.R. No. 81835
D E C I S I O N: PARAS, J.:
This is a petition for certiorari which seeks to annul, on the ground of grave abuse
of discretion, the (1) Decision dated May 24, 1985; (2) Order dated May 27, 1987
and (3) Order dated December 24, 1987, all issued in Civil Case No. N-4367 of
the Regional Trial Court of Cavite, Branch XVI, Cavite City entitled "Valeriano
Espiritu v. Municipality of Rosario, Province of Cavite and Hon. Calixto D.
Enriquez in his capacity as Municipal Mayor of Rosario, Cavite.
The pertinent background facts are:
Valeriano Espiritu, herein private respondent filed on April 22, 1983, a complaint
for Specific Performance and Damages, against respondents Municipality of
Rosario, Cavite and Calixto Enriquez, the latter in his capacity as Mayor of said
municipality, to enforce their agreement contained in a Reclamation Contract. In
his complaint, Espiritu prayed that the Municipality of Rosario, together with
Enriquez, be ordered to convey to him 323,996 square meters of the reclaimed
portion of the foreshore land of the town. Espiritu filed the action in his capacity
as the assignee of the Salinas Development Corporation (SADECO), the entity
which reclaimed the area in question by virtue of a Reclamation Contract entered
into between it and the Municipality of Rosario, represented by Enriquez as
Municipal Mayor. The case was docketed as Civil Case No. 4367 of the Regional
Trial Court of Cavite, Fourth Judicial Region, Branch XVI, Cavite City.
In its answer, defendant municipality resisted plaintiff's claim stating that it was
barred by the statute of limitation; the contract has been substantially amended,
modified and supplemented; and plaintiff has not performed his reciprocal
obligation.
The barangay captain of Tejeros Convention, Rosario, Cavite, herein petitioner
Romeo J. Ordoez, together with seven (7) other municipal and barangay officials
intervened, and in their Answer-in-Intervention, they alleged that no actual
reclamation was done by the plaintiff and the area being claimed by the plaintiff
came about by natural accretion; the reclamation contract between the contractor
and the municipality is either void, voidable or disadvantageous to the defendant
municipality.
The issues having been joined the trial court set the case for the mandatory pretrial conference on November 15, 1984.
At this scheduled pre-trial conference, all the litigants including the intervenors,
with their respective counsel, were present. In said conference, plaintiff Espiritu
and defendant municipality, manifested to the court that having arrived at a

satisfactory settlement, they would submit a compromise agreement at a latter

date.
On the other hand, the intervenors asked the court that they be allowed to present
their evidence to prove their defense asserted in their answer-in-intervention. For
the said purpose, hearing was held on December 13, 1984 wherein Ernesto
Andico, vice-mayor testified. Another hearing was also held on January 24, 1985
where Vice-Governor Jose M. Ricafrente, Jr. of the Province of Cavite, and
petitioner's counsel in the instant case, also testified.
On May 20, 1985, the principal litigants filed with respondent trial court their
promised compromise agreement. The parties agreed that 208,664 square meters
of the reclaimed area were to be alloted to the plaintiff and 211,311 square meters
thereof were to be given to defendant municipality.
On May 24, 1985, the trial court approved the compromise agreement and
rendered a decision in accordance therewith. The intervenors received their copy
of the decision on September 19, 1985 thru Vice-Mayor Ernesto Andico.
The decision being already final, it was duly executed to the satisfaction of the
principal litigants.
On October 17, 1985 and July 2, 1987 additional hearings were held where the
intervenors presented three (3) additional witnesses.
On June 24, 1987, the intervenors filed a motion to set aside the compromise
agreement dated May 15, 1985. This was denied by the trial court, thru respondent
Judge Alfredo Gustilo (the former presiding judge, Judge Alejandro Silapan
having already retired) in its Order dated November 27, 1987, the pertinent portion
of which reads as follows:
"It appears that on May 24, 1985, the former Presiding Judge of this Court
approved the said Compromise Agreement and rendered a judgment on the basis
thereof. It is settled that a judgment approving a compromise agreement is final
and immediately executory. (Samonte v. Samonte, 64 SCRA 524). The motion in
question therefore cannot be granted as it has the effect of annulling the judgment
of this Court which has already become final and, according to the plaintiff,
already executed.
"The Motion to Set Aside Compromise Agreement cannot even be considered as a
motion for reconsideration because the Court can no longer set aside, amend or
modify its judgment which has become final. Neither can the said motion be
deemed as a petition for relief under Rule 38 of the Rules of Court, since to set
aside a judgment based upon a compromise agreement under the said Rule, the
petition for relief must be filed not later than six (6) months from the date it was
rendered. (Bodiongan v. Ceniza, 102 Phil. 750). The decision of the Court based
on the Compromise Agreement was rendered on May 24, 1985. On the other hand,
the present Motion to Set Aside Compromise Agreement was filed only on June
24, 1987. Moreover, under Section 3 of Rule 38, the petition for relief from
judgment should be filed within 60 days after the petitioner learns of the judgment
sought to be set aside. The intervenor in this case received a copy of the decision
based on the Compromise Agreement on September 19, 1985. If the instant motion
be construed as an independent action to annul a judgment, this Court would not

have jurisdiction over it inasmuch as under Section 9 of Batas Pambansa Blg. 129,
the Judiciary Reorganization Act of 1980, an action for the annulment of a
judgment of the Regional Trial Court falls under the exclusive original jurisdiction
of the Court of Appeals.
Additionally, the intervenors have not convincingly shown that defendant Mayor
Enriquez was not authorized to sign the Compromise Agreement in behalf of the
Municipality of Rosario. On the contrary, the Mayor has in his favor the
presumption that official duty has been regularly performed. (Sec. 5 [m], Rule
131, Rules of Court.) Likewise, they failed to sufficiently explain why and how
the terms and conditions of the Compromise Agreement have contravened the law,
morals, good customs and public policy." (pp. 41-42, Rollo).
Meanwhile, on August 10, 1987, plaintiff Espiritu filed a manifestation and
Motion praying that the proceedings be terminated and that the case be considered
closed, which motion respondent judge granted in his Order dated December 24,
1987. The pertinent portion of the said Order reads
"In support of his motion to terminate the proceedings, the plaintiff argued that
further trial in this case will be an exercise in futility, considering that the issues
raised by the intervenors have become moot and academic in view of the decision
of the Court based on the Compromise Agreement submitted by the plaintiff and
the defendants.
"This contention appears to be well taken. The decision of the Court based on the
Compromise Agreement has in effect resolved the issues raised by the intervenors,
i.e., whether the reclamation contract entered into between the town of Rosario
and the Salinas Development Corporation, the predecessors-in-interest of the
plaintiff, is null and void; and whether or not there was actual reclamation done by
the said entity. This is so, for the decision of the Court based on the Compromise
Agreement has impliedly recognized the validity of the said reclamation contract
and the fact that the tract of land divided between the plaintiff and the defendant
municipality of Rosario pursuant to the Compromise Agreement was the product
of the reclamation efforts undertaken by the Salinas Development Corporation,
which subsequently assigned its rights to the plaintiff.
"The continuation of the trial in this case will be useless. Should the intervenors
fail to adduce evidence showing that the reclamation contract was null and void
and that no actual reclamation was undertaken by the Salinas Development
Corporation, the correctness and propriety of the decision of the Court based on
the Compromise Agreement would be strengthened. Even if they would succeed in
proving that the reclamation contract was null and void and that the area in
question came into being through the natural action of the sea and not through the
reclamation done by the Salinas Development Corporation, still the said decision
could no longer be set aside, inasmuch as it has already become final and,
according to the plaintiff, already executed. The continuation of the reception of
the evidence for the intervenors clearly appears to serve no purpose at all.
xxx

xxx

xxx

"WHEREFORE, the Manifestation and Motion dated August 6, 1987, filed by the
plaintiff, is granted, and the trial of this case is declared terminated and this case is
considered closed.

"This order modifies the pre-trial order dated November 15, 1984 of this Court,
insofar as the said order has allowed the intervenors to adduce evidence in support
of their contention that the land in question was not reclaimed by the plaintiff or
his predecessor-in-interest but the product of accretion, and that the reclamation
contract between the defendants and the Salinas Development Corporation was
null and void.
"SO ORDERED." (pp. 45-47, Rollo)
In assailing the aforementioned Decision and Orders of the trial court, petitioner
Romeo Ordoez (one of the intervenors, the other seven intervenors did not join
him in this petition) raises the following issues, to wit:
1. Whether or not the lower court erred in stopping/preventing the intervenors
from further presenting their evidence in support of their Answer-in-Intervention.
2. Whether or not the lower court erred in approving the compromise agreement
of May 20, 1985 and rendering a decision based thereon dated May 24, 1985,
inspite of the clear lack of authority on the part of respondent Calixto D. Enriquez
to bind the Municipality of Rosario because of the absence of an enabling
ordinance from the Sangguniang Bayan of Rosario, Cavite empowering him to
enter into said compromise agreement.
We answer both issues in the negative.
Intervention is defined as a "proceeding in a suit or action by which a third person
is permitted by the court to make himself a party, either joining plaintiff in
claiming what is sought by the complaint, or uniting with defendant in resisting
the claims of plaintiff, or demanding something adversely to both of them; the act
or proceeding by which a third person becomes a party in a suit pending between
others; the admission, by leave of court, of a person not an original party to
pending legal proceedings, by which such person becomes a party thereto for the
protection of some right or interest alleged by him to be affected by such
proceedings." (Metropolitan Bank & Trust Co. v. the Presiding Judge, RTC
Manila, Branch 39, et al., G.R. No. 89909, September 21, 1990)
An intervention has been regarded as "merely collateral or accessory or ancillary
to the principal action and not an independent proceeding; an interlocutory
proceeding dependent on or subsidiary to, the case between the original parties."
(Francisco, Rules of Court, Vol. 1) The main action having ceased to exist, there is
no pending proceeding whereon the intervention may be based. (Barangay
Matictic v. Elbinias, 148 SCRA 83, 89).
As we recently ruled in Camacho v. Hon. Court of Appeals, et al., G.R. No. 79564,
December 24, 1989
"There is no question that intervention is only collateral or ancillary to the main
action. Hence, it was previously ruled that the final dismissal of the principal
action results in the dismissal of said ancillary action."
A judgment approving a compromise agreement is final and immediately
executory. (Samonte v. Samonte, 64 SCRA 524) All pending issues will become

moot and academic once a compromise submitted by the parties is approved by

the trial court. (Berenguer v. Arcangel, 149 SCRA 164)
In the case at bar, the compromise agreement submitted by the plaintiff and the
defendants and the decision approving the same recognized the validity of the
Reclamation Contract and the fact that the tract of land involved was the result of
the reclamation done by SADECO. In their answer-in-intervention, petitioner
alleges that there was no reclamation undertaken by SADECO, that the land in
question was the result of accretion from the sea and that the Reclamation Contract
is null and void. Clearly then, the compromise agreement and the decision had in
effect resolved the aforementioned issues raised by the intervenors. As aptly
observed by the trial court, the continuation of the reception of the intervenors'
evidence would serve no purpose at all.
Should intervenors fail to prove that the Reclamation Contract is null and void and
that no actual reclamation was made, the correctness and propriety of the decision
based on the compromise agreement would be strengthened.
Upon the other hand, should they succeed in proving that the contract is null and
void, and that the area in question came into being through the natural action of
the sea, still the decision of the lower court could no longer be set aside, inasmuch
as it has already become final and executed.
There is, therefore, no merit to the claim of petitioner that the lower court
"unceremoniously terminated the proceedings" even "without the intervenors
completing their evidence." (Memorandum for Petitioner, p. 140, 143, Rollo)
Precisely, the court a quo gave credence and weight to the compromise agreement
and denied the claims of the intervenors which were controverting the theories of
the plaintiff and the defendants. In other words, due process had been accorded the
intervenors. It would have been different had the court not taken into consideration
the claims of the intervenors.
The petitioner cannot claim ignorance of the filing of the compromise agreement.
As can be gleaned from the pre-trial order, the intervenors were represented during
the pre-trial conferences, where the plaintiff and the defendants intimated that they
would submit a compromise agreement. The intervenors did not interpose any
opposition to the manifestation of the plaintiff and defendants that they would be
amicably settling their dispute. The compromise agreement was filed in court on
May 20, 1985. It was approved by the lower court on May 24, 1986. Before its
approval no opposition had been filed questioning its legality. The intervenors
received their copy of the decision on September 19, 1985. They did not file any
motion for reconsideration to suspend its finality. It was only on June 24, 1987, or
after the lapse of almost two (2) years when they filed a motion to set aside the
compromise agreement. It should be emphasized at this juncture that the decision
based on the compromise agreement had long been executed.
Anent the other issue raised whether or not respondent mayor needed another
authority from the Sangguniang Bayan to sign the compromise agreement, suffice
it to state that the mayor need not secure another authority from the
Sandiganbayan under Section 141 (c) and (i) of the Local Government Code,
which state that

"Section 141. (1) The Mayor shall be the Chief Executive of the municipal
government and shall exercise such powers, duties and functions as provided in
this code and other laws. (2) He shall:
xxx

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xxx

'(c) Represent the municipality in its business transactions and sign on its behalf
all contracts, obligations and official documents made in accordance with law or
ordinance.
'(i) Direct the formulation of municipal development plans and programs, and
once approved by the Sangunian Bayan, supervise and direct the execution and
implementation thereof.'" (p. 115, Rollo)
because the execution of the Compromise Agreement is but an act implementing
the reclamation contract duly approved by the Sangguniang Bayan.
Further, the terms and conditions of the compromise agreement are beneficial to
the municipality because the share of Espiritu has been reduced considerably from
the 80% agreed upon in the reclamation contract.
WHEREFORE, for lack of merit, the petition is DISMISSED. Costs against
petitioner.
SO ORDERED.
Melencio-Herrera (Chairman), Padilla, Sarmiento and Regalado, JJ., concur.
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(LUZVIMINDA VISAYAN, BENJAMIN BORJA, PABLO AJERO,
LORETO DEDOYCO, NESTOR GORGOLLO, DOMINGO METRAN,
LITO MONTERON, ROMEO OMAGBON, BOMBOM PAUSAMOS,
CIRILO RAMOS, MARCOS SISON, ERIC BONDOLO, REY ZAMORA,
TERESA ANAVISO, EVELYN BACULINAO, MARIBEL BASAG,
VIOLETA DAGUISA, ADELAIDA CANALDA, LAILA DIMLA,
MACHAELA LUCERO, DIVINA MARIANO, EPIFANIA OBLIGADO,
RAQUEL PONCIANO, ELLEN SACRAMENTO, GRACE SULLETA,
FELY TAPAY, SUSAN VILLAMOR, ANAINO AMPLAYO, MARIO
CHIONG, NESTOR ESTARES, ALELI ALEJO, ELVIE BAUTISTA,
JANINA ESTARES, NORMA MENDOZA, LIGAYA SYDUA, & JANETTE
VILLAREAL, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION (THIRD DIVISION) AND FUJIYAMA RESTAURANT AND
HOTEL, INC. and its MANAGER/OPERATOR, respondents.
Danilo S. Lorredo for petitioners.
King, Capuchino, Banico & Associates for private respondent., G.R. No.
69999, 1991 April 30, 2nd Division)
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Valdez---/

Section 23 of B.P. 68, otherwise known as the "Corporation Code of the

Philippines," expressly provides as follows:
"Unless otherwise provided in this Code, the corporate powers of all corporations
formed under this Code shall be exercised, all business conducted and all property
of such corporations controlled and held by the board of directors or trustees to be
elected from among the holders of stocks, or where there is no stock, from among
the members of the corporation, who shall hold office for one (1 ) year and until
their successors are elected and qualified.
xxx

xxx

xxx"

It is clear from the above-quoted provision that a corporation can act only through
its board of directors. "The law is settled that contracts between a corporation and
third persons must be made by or under the authority of its board of directors and
not by its stockholders. Hence, the action of the stockholders in such matters is
only advisory and not in any wise binding on the corporation." (De Leon, The
Corporation Code of the Philippines, 1989 edition, p. 168, citing the case of
Barreto vs. La Previsora Filipina, 57 Phil. 649).
A corporation, like a natural person who may authorize another to do certain acts
for and in his behalf, through its board of directors, may legally delegate some of
its functions and powers to its officers, committees or agents appointed by it.
(Campos & Campos, The Corporation Code Comments,
Notes, and Selected cases, 1981 ed., p. 253). In the absence of an authority from
the board of directors, no person, not even the officers of the corporation, can
validly bind the corporation. Thus, the Supreme Court has made the following
pronouncement in the case of Vicente vs. Geraldez, L-32473, 53 SCRA 210:
". . . Whatever authority the officers or agents of a corporation may have is derived
from the board of directors or other governing body, unless conferred by the
charter of the corporation. A corporate officer's power as an agent of the
corporation must therefore be sought from the statute, the charter, the by-laws, or
in a delegation of authority to such officer, from the acts of the board of directors,
formally expressed or implied from a habit or custom of doing business. In the
case at bar no provision of the charter and by-laws of the corporation or any
resolution or any other act of the board of directors has been cited from which we
could reasonably infer that the administrative manager had been granted expressly
or impliedly the power to bind the corporation or the authority to compromise the
case. The signature of Atty. Cardenas on the Agreement would therefore be legally
ineffectual". (Vicente vs Geraldez, L-32473, 52 SCRA 210, p. 227). (Respondent's
Memorandum, p 11).
(ANTONIO C. RAMOS, ROSALINDA M. PEREZ, NORMA C. CASTILLO
and BALIUAG MARKET VENDORS ASSOCIATION, INC., petitioners,
vs.
COURT OF APPEALS, HON. CAMILO O. MONTESA, JR., in his capacity
as Presiding Judge of the Regional Trial Court of Bulacan, Branch 19, and
MUNICIPALITY OF BALIUAG, respondents., G.R. No. 99425, 1997 March
03, Panganiban, J.)

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Valdez---/
The contention of Atty. Mendiola that private respondent cannot raise for the first
time on appeal his lack of authority to represent the municipality is untenable. The
legality of his representation can be questioned at any stage of the proceedings. In
the cases hereinbefore cited, the issue of lack of authority of private counsel to
represent a municipality was only raised for the first time in the proceedings for
the collection of attorney's fees for services rendered in the particular case, after
the first time in the proceedings for the collection of attorney's fees for services
rendered in the particular case, after the decision in that case had become final and
executory and/or had been duly executed.
Elementary fairness dictates that parties unaware of the unauthorized
representation should not be held in estoppel just because they did not question on
the spot the authority of the counsel for the municipality. The rule on appearances
of a lawyers is that until the contrary is clearly shown, an attorney is presumed to
be acting under authority of the litigant whom he purports to represent. (Azotes v.
Blanco, 78 Phil. 739) His authority to appear for and represent petitioner in
litigation, not having been questioned in the lower court, it will be presumed on
appeal that counsel was properly authorized to file the complaint and appear for
his client. (Republic v. Philippine Resources Development Corporation, 102 Phil.
960) 28
PALUWAGAN NG BAYAN SAVINGS BANK, petitioner, vs. ANGELO
KING, KEN SUY WAT, JOSE FERRER, JR., QUINTIN CALDERON, FE
SARIO and DOMINGO K. LI, respondents.
1989 April 12, 1st Division, G.R. No. 78252
D E C I S I O N: GANCAYCO, J.:
The rule on service of summons in this jurisdiction is too well-known. In civil
cases, the service of summons on a defendant is made by handing a copy thereof
to the defendant in person, or if he refuses to receive it, by tendering it to him. 1
Such service of summons may be made at the defendant's dwelling house or
residence or at his office or regular place of business. The essence of personal
service is the handing or tendering of a copy of the summons to the defendant
himself.
However, when the defendant cannot be served personally within a reasonable
time, substituted service may be effected (a) by leaving copies of the summons at
the defendant's dwelling house or residence with some person of suitable age and
discretion then residing therein, or (b) by leaving the copies at defendant's office
or regular place of business with some competent person in charge thereof. 2
It is only when the defendant cannot be served personally within a reasonable time
that substituted service may be resorted to. The impossibility of prompt service
should be shown by stating the efforts made to find the defendant personally and
the fact that such efforts failed. This statement should be made in the proof of
service. This is necessary because substituted service is in derogation of the usual

method of service. It has been held that this method of service is in derogation of
the common law; it is a method extraordinary in character, and hence may be used
only as prescribed and in the circumstances authorized by statute." Thus, under the
controlling decisions, the statutory requirements of substituted service must be
followed strictly, faithfully and fully, and any substituted service other than that
authorized by the statute is considered ineffective. 3
The application of the foregoing rules is the issue in this petition for review by
certiorari of a decision of the Court Appeals in G.R. CV No. 03386 entitled
"Paluwagan ng Bayan Savings Bank vs. Mercantile Financing Corporation, et al."
dated January 27, 1987, and its resolution dated April 22, 1987. 4
The facts are undisputed. Petitioner sued Mercantile Financing Corporation (MFC)
and private respondents, as directors and officers of MFC, for the recovery of
money market placements through certain promissory notes. They were charged
jointly and solidarily in accordance with Section 31 of the Corporation Code 5
which provides as follows:
"Section 31. Liability of Directors, Trustees, Officers. Directors or trustees who
willfully and knowingly vote for or assent to patently unlawful acts of the
corporation or who are guilty of gross negligence or bad faith in directing the
affairs of the corporation shall be liable jointly and severally for all damages
resulting therefrom suffered by the corporation, its stockholders or members and
other persons."
Summons and copies of the complaints were served upon MFC and private
respondents at the 4th Floor, LTA Building, No. 118 Perea Street, Makati, Metro
Manila, which is the stated office address of MFC in the complaint, through its
Assistant Manager Mr. Nasario S. Najomot, Jr. who acknowledged receipt thereof
for and in behalf of MFC and the private respondents. This is so recited in the
certification of deputy sheriff Bernardo San Juan dated May 11, 1983.
On May 24, 1983, the law firm of Guillermo E. Aragones and Associates filed a
motion for extension of time to file a responsible pleading and/or motion to
dismiss. The said motion was signed by Atty. Guillermo E. Aragones as counsel
for the defendants. The motion was granted in an order dated May 26, 1983 giving
the defendants an extension of twenty (20) days from the expiration of the
reglementary period within which to file the responsive pleading and/or motion to
dismiss. On June 13, 1983, said counsel for defendants filed a motion asking for a
suspension of the action for a period of sixty (60) days on the ground that there
was an on-going negotiation for an amicable settlement of the case between the
parties. The motion was denied. On June 27, 1983, counsel for plaintiff filed a
motion to declare defendants in default for failure to file an answer. This motion
was granted in an order dated June 29, 1983. On July 14, 1983, the parties,
assisted by their counsel, submitted a Compromise Agreement for the approval of
the court. It reads as follows:
"1. The defendants propose to pay, jointly and severally, their account with the
plaintiff as of June 15, 1983, in the sum of P707,500.01 with 20% interest per
annum as follows:
P 100,000.00 on or before July 18, 1983
100,000.00
on or before August 30, 1983

10

100 000.00
100,000.00
100,000.00
100,000.00
100,000.00

on or before September 30, 1983

on or before October 30, 1983
on or before November 30, 1983
on or before December 30, 1983
on or before January 30, 1984.

"2. Except those mentioned above, the plaintiff has no more claim against the
defendants.
"3. The plaintiff agrees to the proposal of settlement offered by the defendants
provided that in case the latter fail to pay, jointly and severally, two or more
successive monthly installments, the plaintiff is entitled to secure from the Court a
writ of execution for the collection of the unpaid account of the defendants." 6
On July 18, 1983, a decision was rendered by the trial court approving the said
Compromise Agreement and enjoining the parties to comply with the terms and
conditions embodied therein. Partial payments were made under the compromise
judgment. Upon failure of private respondent to make the other payments,
petitioner filed a motion for the issuance of a writ of execution of judgment. The
trial court granted the motion on December 16, 1983.
On January 16, 1984, counsel for defendants filed a pleading entitled
"Clarification" thereby seeking a correction of the compromise judgment on the
ground that he erroneously filed the Compromise Agreement in behalf of all the
defendants when in fact he was the counsel for MFC only. On January 17, 1984,
said counsel filed a "Motion To Correct Compromise Agreement" attaching thereto
a copy of the resolution of the Board of Directors of MFC of July 6, 1983 showing
that he was the attorney-in-fact of MFC only, and praying for the correction of the
judgment, accordingly. The motion for clarification was denied on January 20,
1984.
On January 24, 1984, the Syquia Law Offices, in behalf of private respondents
Angelo King, Keng Suy Wat, Quintin Calderon and Jose J. Ferrer, Jr., filed a
motion to set a decision dated July 18, 1983, the Compromise Agreement and the
writ of execution dated December 21, 1983 on the that there was no service of
summons upon each of them as the corporate address of the corporation was not
their address they were no longer connected therewith; that Atty. Aragones had no
authority to represent them in the action and compromise agreement; that they
were not served copies of the decision of the court; that they learned about the
same only when it was being executed; and that they did not participate as
directors or officers of MFC in the subject transaction.
On January 26, 1984, private respondent Domingo F. Li filed a petition for relief
from judgment with a prayer for the issuance of a writ of preliminary injunction
alleging therein that there was no service of summons upon him and that Atty.
Aragones was not authorized to represent him or to enter into the Compromise
Agreement. After an opposition to said motion was filed by the petitioner, the
lower court denied the same in its order dated April 6, 1984. Separate motions for
reconsideration filed by the private respondents were also denied on May 4, 1984.
Thus, private respondents appealed to the respondent Court of Appeals, reiterating
that there was no service of summon, upon each of them as service of summons
was made at the address of the firm with which they had severed connections; that

11

the counsel of record of MFC has no authority to represent them in the case and in
the Compromise Agreement; that they have not ratified the same by a partial
payment of the compromise judgment; and that they were no longer connected
with MFC at the time they were sued. In due time, a decision was rendered by the
appellate court on January 27, 1987, the dispositive part of which reads as follows:
"In view of the foregoing, the other errors assigned by the appellants need not be
resolved:
Wherefore:
(1) the decision dated July 18, 1983 approving the compromise agreement
rendered by the lower court as well writ of execution issued pursuant thereto as
against appellants Angelo King, Keng Suy Wat, Quintin Calderon, Jose Jr., and
Domingo Li are hereby SET ASIDE; and
(2) the case is remanded to the court of origin which is hereby ordered to direct
proper service of summons aforesaid individual appellants at their respective
correct addresses and thereafter to proceed in accordance with law.
SO ORDERED." 7
A motion for reconsideration of the said decision filed by petitioner was denied by
the appellate court on April 22, 1987. Hence, the instant petition predicated on the
following grounds:
(A) THAT THE CASE AT BAR (a) PERTAINS TO (AN) APPEAL FROM
ORDER OF TRIAL COURT DATED APRIL 6, 1984, DENYING (i) PRIVATE
RESPONDENT DOMINGO K. LI'S `PETITION FOR RELIEF FROM
JUDGMENT' FILED JANUARY 25, 1984, AND (ii) MOTION TO SET ASIDE
DECISION, COMPROMISE AGREEMENT AND QUASH EXECUTION
FILED JANUARY 14, 1984 BY PRIVATE RESPONDENTS ANGELO KING,
KENG SUY WAT, QUINTIN CALDERON and JOSE FERRER, JR. and (b)
DOES NOT INVOLVE ANY APPEAL FROM TRIAL COURT'S DECISION
DATED JULY 19, 1983 APPROVING THE COMPROMISE AGREEMENT
WHICH HAS LONG BECOME FINAL AND EXECUTORY.
(B) THAT RESPONDENT COURT OF APPEALS COMPLETELY IGNORED
THE BASIC QUESTION OF WHETHER (a) PRIVATE RESPONDENT
DOMINGO K. LI'S `PETITION FOR RELIEF FROM JUDGMENT' FILED
JANUARY 25, 1984, and (b) `THE MOTION SET ASIDE DECISION,
COMPROMISE AGREEMENT AND QUASH EXECUTION' FILED JANUARY
14, 1984 BY PRIVATE RESPONDENTS ANGELO KING, KENG SUY WAT,
QUINTIN CALDERON AND JOSE FERRER, JR., WERE FILED OUT OF
TIME.
(C) THAT PRIVATE RESPONDENTS WHO WERE SUED AS DIRECTORS
AND OFFICERS OF MFC WERE PROPERLY SERVED WITH SUMMONS.
The petition is devoid of merit.
Although private respondents were sued in their capacity as directors and officers
of MFC, they are, nevertheless, being held personally liable for the obligation

12

subject of the litigation under the complaint filed by petitioner. Hence, the rule on
personal service of summons must be observed in that summons must be served
personally on private respondents or, if they refuse to receive the same, by
tendering it to them.
The proof of service. prepared by the sheriff does not show that such personal
service of summons was effected. The office address of the corporation as
indicated in the complaint does not appear to be the office address of private
respondents as they were no longer connected with the corporation then. Personal
service of summons should have been made on them at their residences as shown
in the records of the Securities and Exchange Commission and the Central Bank.
Instead, the sheriff effected substituted service by leaving copies of the summons
with the Assistant Manager of MFC at the place of business of said corporation
with which as above stated private respondents were no longer connected. Such
substituted service is not valid. There was no compliance with the requirements of
the rule that there must be a previous personal service and a failure to effect the
same before substituted service could be resorted to. As the private respondents
have not been duly served with summons, the trial court never acquired
jurisdiction over their persons.
It is true that Atty. Aragones, who entered his appearance in behalf of MFC and
private respondents, sought an extension of time to file an answer or a responsive
pleading, and suspension of the proceedings pending a possible settlement of the
case; that thereafter, he signed a Compromise Agreement in behalf of MFC and
private respondents which was submitted to the court on the basis of which a
compromise judgment was rendered; that said judgment was partially complied
with but upon default in the payment of the balance, a writ of execution was
sought from and granted by the trial court; and that it was only then that Atty.
Aragones informed the court that he committed an oversight in having filed the
Compromise Agreement in behalf of private respondents when it was only MFC
which hired his services. If Atty. Aragones was duly authorized to appear in behalf
of the defendants, his voluntary appearance in their behalf by the filing of the
aforementioned pleadings and the Compromise Agreement would constitute a
waiver of the defect in the service of summons. However, the lack of authority of
Atty. Aragones was revealed when he produced the resolution of the Board of
Directors of MFC to the effect that the authority of said counsel was in behalf of
said corporation only and not in behalf of the private respondents.
Since the Compromise Agreement was signed by Atty. Aragones in behalf of the
private respondents without their authority, the same is null and void in so far as
they are concerned. By the same token, the compromise judgment is also null and
void as to private respondents. The ruling of the lower court that the motion to set
aside the judgment and the petition for relief from judgment were filed beyond the
reglementary period is untenable. An action to declare the nullity of a void
judgment does not prescribe. 8
One last word, Atty. Aragones appears to be remiss in his duties and reckless in the
performance of his responsibility as counsel of record in said case. He represented
himself to be the counsel for the defendants including the private respondents not
only in the motions he filed but also in the Compromise Agreement he submitted.
It was only after the writ of execution of the compromise judgment was being
enforced that he was perked up by saying that he committed an oversight and that
he was not authorized by the private respondents to represent them as counsel,

13

much less in the Compromise Agreement. Candor towards the courts is a cardinal
requirement of the practicing lawyer. To say one thing today and another
tomorrow is a transgression of this imperative. Counsel should be made to account
before his peers.
WHEREFORE, the petition is DENIED. Let a copy of this decision be furnished
the Integrated Bar of the Philippines for an appropriate administrative
investigation, report and recommendation on Atty. Guillermo E. Aragones who
holds office at the 9th Floor of the Finasia Building, 6774 Ayala Avenue, Makati,
Metro Manila. No costs. This decision is immediately executory.
SO ORDERED.
Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.
---------------Footnotes
1. Section 7, Rule 14, Rules of Court; Matanguihan vs. Tengco, 95 SCRA 478
(1980).
2. Section 8, Rule 14, Rules of Court.
3. Keister vs. Navarro, 77 SCRA 209, at 215 (1977) and Arevalo vs. Quilatan,
116 SCRA 700 (1982).
4. Decided by the 11th Division of the Court of Appeals with Madame Justice
Gloria C. Paras as ponente, and concurred in by Justices Lorna S. Lombos de la
Fuente and Jorge S. Imperial.
5. Batas Pambansa Blg. 68, as amended.
6. Pages 27 and 28, Rollo.
7. Pages 42 and 43, Rollo.
8. Ang Lam vs. Rosillosa and Santiago, 86 Phil. 447, 452 (1950).

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