FACTS:

The Bank of the Philippine Islands (BPI), a banking institution, filed a petition seeking to reverse the decision of the Court of Appeals which affirmed the order of the Regional Trial Court (RTC) enjoining the extrajudicial foreclosure of a parcel of land owned by Spouses Ireneo and Liwanag Santiago. The property was mortgaged to Far East Bank and Trust Company (FEBTC) as security for several loans obtained by Centrogen, Inc., a pharmaceutical company represented by Edwin Santiago, son of Spouses Santiago. BPI assumed the rights of FEBTC after their merger. BPI filed for extrajudicial foreclosure but the Spouses Santiago and Centrogen filed a complaint seeking a temporary restraining order, injunction, and annulment of the real estate mortgage. The complaint alleged that the initial loan was fully paid and that FEBTC did not release the full amount agreed upon, resulting in the failure of Centrogen's project and difficulties in paying the loan obligations. BPI filed a Motion to Dismiss, claiming lack of jurisdiction over the person of the defendant and procedural infirmities. The RTC denied the motion, stating that the case falls outside the jurisdiction of Rule 14 and that the complaint is not dismissible.

The Spouses Santiago and Centrogen filed a case for annulment of real estate mortgage against the Bank of the Philippine Islands (BPI) and the Provincial Sheriff. On February 25, 2003, the Regional Trial Court (RTC) issued an Order granting the Spouses' application for a Temporary Restraining Order (TRO), despite non-compliance with the proper service of summons. On February 28, 2003, the RTC issued another Order enjoining the Provincial Sheriff from proceeding with the extra-judicial foreclosure sale of the subject property until the propriety of granting a preliminary injunction is determined. On March 6, 2003, the RTC ordered the service of new summons to BPI in accordance with the Revised Rules of Court. Compliance with the Order was made and a new summons was served on March 11, 2003. On March 20, 2003, the RTC issued another Order granting the application for a Writ of Preliminary Injunction, enjoining the extra-judicial foreclosure sale of the subject property. BPI filed a Motion for Reconsideration, but it was denied by the RTC. BPI then filed a petition for certiorari before the Court of Appeals seeking to reverse the orders of the RTC. The Court of Appeals, in its decision, affirmed the orders of the RTC.

ISSUES:

1. Whether or not the RTC acquired jurisdiction over the person of BPI when the original summons was served upon the branch manager of its Sta. Cruz, Laguna branch.

2. Whether or not the RTC committed a grave abuse of discretion in issuing the writ of preliminary injunction.

3. Whether there was valid service of summons in this case.

4. Whether the issuance of the writ of preliminary injunction was proper.

5. Whether the trial court committed a grave abuse of discretion in issuing the writ of preliminary injunction.

RULING:

1. The service of summons on BPI's branch manager did not bind the corporation because the branch manager is not included in the enumeration of persons upon whom service of summons can be validly made on behalf of the corporation. However, the subsequent service of summons on the corporate secretary before the issuance of the writ of preliminary injunction cured the defect in the original service of summons. The RTC acquired jurisdiction over BPI by virtue of the new summons validly served on the corporate secretary.

2. The RTC did not commit a grave abuse of discretion in issuing the writ of preliminary injunction. The new summons served on the corporate secretary was sufficient to confer jurisdiction over BPI, and therefore, the court had the authority to issue the injunction.

3. The Court held that there was valid service of summons in this case. While it may be true that the service of summons was made on a person not authorized to receive the same on behalf of the petitioner, it was found that the summons and complaint were received by the corporation through its clerk. Thus, there was substantial compliance with the rule on service of summons. The Court emphasized that the need for speedy justice should prevail over technicalities.

4. The Court held that the issuance of the writ of preliminary injunction was proper. Injunction is a preservative remedy for the protection of one's substantive right or interest. It is not a cause of action by itself but a provisional remedy to preserve the status quo until the merits of the case are fully heard. Before a writ of preliminary injunction may be issued, the requisites of a clear or unmistakable right to be protected, violation of that right, and urgent necessity for the writ to prevent serious damage must be complied with. In this case, the Spouses Santiago, as registered owners of the property, have a clear right to be protected from the foreclosure proceedings commenced by BPI. The violation of their right is evident in BPI's claim that the principal obligation has been fully paid. Moreover, to allow the foreclosure without first hearing the evidence would cause irreparable damage to the registered owner. Thus, the requisites for the issuance of the writ of preliminary injunction have been fully satisfied.

5. The Supreme Court held that the trial court did not commit a grave abuse of discretion in issuing the writ of preliminary injunction. The issuance of a writ of preliminary injunction is within the sound discretion of the trial court, unless there is grave abuse of discretion. Grave abuse of discretion refers to a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction, arbitrary or despotic exercise of power, or a refusal to perform a duty enjoined by law. In this case, the trial court, after evaluating the evidence presented by both parties, ruled that preserving the status quo until the final determination of the merits of the case would better serve the interest of justice. Because the case involved complicated issues that must be resolved first before altering the status quo, and to prevent irreversible damage to the parties, the trial court's exercise of discretion in issuing the writ of preliminary injunction was not whimsical, arbitrary, or capricious.

PRINCIPLES:

• Strict compliance with the mode of service is necessary to confer jurisdiction of the court over a corporation.

• A new summons can be served on a defendant to cure a defect in the original service of summons.

• The designation of a summons as "original" or "alias" is not important as long as it complies with the requirements under the Rules of Court and has been duly served on the defendant.

• There is no hard and fast rule pertaining to the manner of service of summons. Substantial justice demands that each case should be viewed in light of the peculiar circumstances attendant to it.

• The need for speedy justice should prevail over technicalities in the service of summons.

• Injunction is a preservative remedy for the protection of one's substantive right or interest.

• Before a writ of preliminary injunction may be issued, the requisites of a clear or unmistakable right to be protected, violation of that right, and urgent necessity for the writ to prevent serious damage must be complied with.

• The issuance of the writ of preliminary injunction rests entirely within the discretion of the court and is generally not interfered with except in cases of manifest abuse.

• The issuance of a writ of preliminary injunction is addressed to the sound discretion of the trial court, unless there is grave abuse of discretion.

• Grave abuse of discretion in the issuance of writs of preliminary injunction implies a capricious and whimsical exercise of judgment that is equivalent to lack of jurisdiction, or an arbitrary or despotic exercise of power.

• The preservation of the status quo is justified when the case involves complicated issues that must be resolved first before altering the status quo and to prevent irreversible damage to the parties.