PALUWAGAN NG BAYAN SAVINGS BANK, petitioner, The application of the foregoing rules is the issue in this petition for

of the foregoing rules is the issue in this petition for review by certiorari of a decision of
the Court of Appeals in G.R. CV No. 03386 entitled "Paluwagan ng Bayan Savings Bank vs. Mercantile
vs. Financing Corporation, et al." dated January 27, 1987, and its resolution dated April 22, 1987. 4
ANGELO KING, KEN SUY WAT JOSE FERRER, JR., QUINTIN
CALDERON, FE SARINO and DOMINGO K. LI, respondents. 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
Cruz, Durian, Agabin, Atienza, Alday and Tuason for petitioner. Corporation Code 5which provides as follows:

Simeon C. Sato for respondent Domingo K Li. Section 31. Liability of Directors, Trustees, Officers.-
Directors or trustees who willfully and knowingly vote for
Syquia Law Offices for respondents King, Ken Suy Wat, Calderon and or assent to patently unlawful acts of the corporation or
Ferrer, Jr. 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.
GANCAYCO, J.:
Summons and copies of the complaints were served upon MFC and
The rule on service of summons in this jurisdiction is too well-known. In
private respondents at the 4th Floor, LTA Building, No. 118 Perea Street,
civil cases, the service of summons on a defendant is made by handing a
Makati, Metro Manila, which is the stated office address of MFC in the
copy thereof to the defendant in person, or if he refuses to receive it, by
complaint, through its Assistant Manager Mr. Nasario S. Najomot Jr. who
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 acknowledged receipt thereof for and in behalf of MFC and the private
handing or tendering of a copy of the summons to the defendant himself. respondents. This is so recited in the certification of deputy sheriff
Bernardo San Juan dated May 11, 1983.
However, when the defendant cannot be served personally within a
reasonable time, substituted service may be effected (a) by leaving On May 24, 1983, the law firm of Guillermo E. Aragones and Associates
copies of the summons at the defendant's dwelling house or residence filed a motion for extension of time to file a responsible pleading and/or
with some person of suitable age and discretion then residing therein, or motion to dismiss. The said motion was signed by Atty. Guillermo E.
(b) by leaving the copies at defendant's office or regular place of business Aragones as counsel for the defendants. The motion was granted in an
with some competent person in charge thereof. 2 order dated May 26, 1983 giving the defendants an extension of twenty
(20) days from the expiration of the reglementary period within which to
It is only when the defendant cannot be served personally within a file the responsive pleading and/or motion to dismiss. On June 13, 1983,
reasonable time that substituted service maybe resorted to. The said counsel for defendants filed a motion asking for a suspension of the
impossibility of prompt service should be shown by stating the efforts action for a period of sixty (60) days on the ground that there was an on-
made to find the defendant personally and the fact that such efforts failed. going negotiation for an amicable settlement of the case between the
This statement should be made in the proof of service. This is necessary parties. The motion was denied. On June 27, 1983, counsel for plaintiff
because substituted service is in derogation of the usual method of filed a motion to declare defendants in default for failure to file an answer.
service. It has been held that this method of service is "in derogation of This motion was granted in an order dated June 29, 1983. On July 14,
the common law; it is a method extraordinary in character, and hence 1983, the parties, assisted by their counsel, submitted a compromise
may be used only as prescribed and in the circumstances authorized by Agreement for the approval of the court. It reads as follows:
statute." Thus, under the controlling decisions, the statutory requirements
of substituted service must be followed strictly, faithfully and fully, and 1. The defendants propose to pay, jointly and severally,
any substituted service other than that authorized by the statute is then account with the plaintiff as of June 15, 1983, in the
considered ineffective. 3
 sum of P707,500.01 with 20% interest per annum as On January 24, 1984, the Syquia Law Offices, in behalf of private
follows: respondents Angelo King, Keng Suy Wat, Quintin Calderon and Jose J.
Ferrer, Jr., filed a motion to set aside the decision dated July 18,1983, the
P100,000.00-on or before July 18, 1983 Compromise Agreement and the writ of execution dated December 21,
1983 on the ground that there was no service of summons upon each of
100,000.00-on or before August 30, 1983 them as the corporate address of the corporation was not their address
as they were no longer connected therewith; that Atty. Aragones had no
authority to represent them in the action and compromise agreement; that
100,000.00-on or before September 30, 1983
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
100,000.00-on or before October 30, 1983 participate as directors or officers of MFC in the subject transaction.

100,000.00-on or before November 30, 1983 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
100,000.00--on or before December 30, 1983 injunction alleging therein that there was no service of summons upon
him and that Atty. Aragones was not authorized to represent him or to
100,000.00-on or before January 30, 1984. 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
2. Except those mentioned above, the plaintiff has no dated April 6, 1984. Separate motions for reconsideration filed by the
more claim against the defendants. private respondents were also denied on May 4,1984.

3. The plaintiff agrees to the proposal of settlement Thus, private respondents appealed to the respondent Court of Appeals,
offered by the defendants provided that in case the latter reiterating that there was no service of summons upon each of them as
fail to pay, jointly and severally, two or more successive service of summons was made at the address of the firm with which they
monthly installments, the plaintiff is entitled to secure from had severed connections; that the counsel of record of MFC has no
the Court a writ of execution for the collection of the authority to represent them in the case and in the Compromise
unpaid account of the defendants. 6 Agreement; that they have not ratified the same by a partial payment of
the compromise judgment; and that they were no longer connected with
On July 18, 1983, a decision was rendered by the trial court approving the said Compromise MFC at the time they were sued. In due time, a decision was rendered by
Agreement and enjoining the parties to comply with the terms and conditions embodied therein. Partial the appellate court on January 27, 1987, the dispositive part of which
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 reads as follows:
court granted the motion on December 16, 1983.

In view of the foregoing, the other errors assigned by the

On January 16,1984, counsel for defendants filed a pleading entitled appellants need not be resolved: Wherefore:
"Clarification" thereby seeking a correction of the compromise judgment
on the ground that he erroneously filed the Compromise Agreement in (1) the decision dated July 18, 1983 approving the
behalf of all the defendants when in fact he was the counsel for MFC compromise agreement rendered by the lower court as
only. On January 17, 1984, said counsel filed a "Motion To Correct well as the writ of execution issued pursuant thereto as
Compromise Agreement" attaching thereto a copy of the resolution of the against appellants Angelo King, Keng Suy Wat, Quintin
Board of Directors of MFC of July 6,1983 showing that he was the Calderon, Jose Ferrer, Jr., and Domingo Li are hereby
attorney-in-fact of MFC only, and praying for the correction of the SET ASIDE; and
judgment, accordingly. The motion for clarification was denied on January
20,1984.
 (2) the case is remanded to the court of origin which is Although private respondents were sued in their capacity as directors and
hereby ordered to direct proper service of summons on officers of MFC, they are, nevertheless, being held personally liable for
the aforesaid individual appellants at their respective the obligation subject of the litigation under the complaint filed by
correct addresses and thereafter to proceed in petitioner. Hence, the rule on personal service of summons must be
accordance with law. observed in that summons must be served personally on private
respondents or, if they refuse to receive the same, by tendering it to
SO ORDERED. 7 them.

A motion for reconsideration of the said decision filed by petitioner was denied by the appellate court The proof of service prepared by the sheriff does not show that such
on April 22, 1987. Hence, the instant petition predicated on the following grounds:
personal service of summons was effected. The office address of the
corporation as indicated in the complaint does not appear to be the office
(A) THAT THE CASE AT BAR (a) PERTAINS TO (AN) address of private respondents as they were no longer connected with
APPEAL FROM ORDER OF TRIAL COURT DATED the corporation then. Personal service of summons should have been
APRIL 6,1984, DENYING (i) PRIVATE RESPONDENT made on them at their residences as shown in the records of the
DOMINGO K LI'S 'PETITION FOR RELIEF FROM Securities and Exchange Commission and the Central Bank. Instead, the
JUDGMENT' FILED JANUARY 25, 1984, AND (ii) sheriff effected substituted service by leaving copies of the summons with
MOTION TO SET ASIDE DECISION, COMPROMISE the Assistant Manager of MFC at the place of business of said
AGREEMENT AND QUASH EXECUTION FILED corporation with which as above stated private respondents were no
JANUARY 14,1984 BY PRIVATE RESPONDENTS longer connected. Such substituted service is not valid. There was no
ANGELO KING, KING SUY WAT, QUINTIN CALDERON compliance with the requirements of the rule that there must be a
and JOSE FERRER, JR. and (b) DOES NOT INVOLVE previous personal service and a failure to effect the same before
ANY APPEAL FROM TRIAL COURT'S DECISION substituted service could be resorted to. As the private respondents have
DATED JULY 19,1983 APPROVING THE COMPROMISE not been duly served with summons, the trial court never acquired
AGREEMENT WHICH HAS LONG BECOME FINAL AND jurisdiction over their persons.
EXECUTORY.
It is true that Atty. Aragones, who entered his appearance in behalf of
(B) THAT RESPONDENT COURT OF APPEALS MFC and private respondents, sought an extension of time to file an
COMPLETELY IGNORED THE BASIC QUESTION OF answer or a responsive pleading, and a suspension of the proceedings
WHETHER (a) PRIVATE RESPONDENT DOMINGO K. pending a possible settlement of the case; that thereafter, he signed a
LI'S 'PETITION FOR RELIEF FROM JUDGMENT FILED Compromise Agreement in behalf of MFC and private respondents which
JANUARY 25,1984, and (b)'THE MOTION TO SET was submitted to the court on the basis of which a compromise judgment
ASIDE DECISION, COMPROMISE AGREEMENT AND was rendered; that said judgment was partially complied with but upon
QUASH EXECUTION' FILED JANUARY 14,1984 BY default in the payment of the balance, a writ of execution was sought
PRIVATE RESPONDENTS ANGELO KING, KENG SUY from and granted by the trial court; and that it was only then that Atty.
WAT, QUINTIN CALDERON AND JOSE FERRER, JR., Aragones informed the court that he committed an oversight in having
WERE FILED OUT OF TIME. filed the Compromise Agreement in behalf of private respondents when it
was only MFC which hired his services. If Atty. Aragones was duly
(C) THAT PRIVATE RESPONDENTS WHO WERE authorized to appear in behalf of the defendants, his voluntary
SUED AS DIRECTORS AND OFFICERS OF MFC WERE appearance in their behalf by the filing of the aforementioned pleadings
PROPERLY SERVED WITH SUMMONS. and the Compromise Agreement would constitute a waiver of the defect
in the service of summons. However, the lack of authority of Atty.
The petition is devoid of merit. 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 perked up by saying that he committed an oversight and that he
was not authorized by the private respondents to represent them as counsel, 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.