G.R. No. L-47821; April 25, 1941
FRANCIS, ROSE y GLORIA, todos apellidados DENISON, representados por su curadora ad litem, SOFIA CABUCO, demandantes y apelados, vs. JOHN C. BEYERSDORFFER, demandado y apelante.

FACTS

On October 22, 1932, defendant-appellant John C. Beyersdorffer filed Civil Case No. 2028 against the Sibuco Bay Coconut Plantation to collect P41,949.32 allegedly owed to him for salaries and money advanced. The sheriff attempted to serve the summons on Pedro Macrohon, believed to be the corporation’s secretary, but Macrohon refused, stating he no longer had any connection with the corporation. On November 29, 1932, Beyersdorffer, through counsel, moved for service of summons upon the corporation by publication, which the Court of First Instance of Zamboanga ordered. Since no one appeared for the corporation, a judgment by default was rendered in favor of Beyersdorffer.
On October 12, 1937, Sofia Cabuco, as guardian ad litem of the minors Francis, Ross, and Gloria Denison (shareholders of the Sibuco Bay Coconut Plantation), filed a complaint against John C. Beyersdorffer seeking to declare null and void the default judgment obtained by him against the corporation in Civil Case No. 2028, as well as a transfer made by the administrator of the estate of the deceased R.M. Denison (the minors’ father and a shareholder) in favor of Beyersdorffer. The action was based on the grounds that the judgment was obtained by fraud, as Beyersdorffer made it appear the corporation owed him money when no such debt existed, and that the Court of First Instance of Zamboanga lacked jurisdiction over Civil Case No. 2028 because the corporation was not properly summoned according to law. The lower court credited the evidence presented by the plaintiffs and ruled in their favor, declaring Beyersdorffer’s judgment null.
On appeal, Beyersdorffer assigned errors, alleging the lower court erred: (1) in declaring the plaintiffs had standing to bring the action; (2) in holding the corporation was not properly summoned despite publication of the order in local newspapers; (3) in declaring the judgment in Civil Case No. 2028 null; and (4) in denying a motion for new trial.

ISSUE

1. Whether the minor shareholders (the Denisons) have standing to bring an action to annul a judgment allegedly obtained by fraud against the corporation.
2. Whether the Sibuco Bay Coconut Plantation was properly summoned in the prior civil case (No. 2028) to confer jurisdiction on the court.

RULING

The Supreme Court affirmed the lower court’s decision in all respects.
1. On the first assigned error (standing): The Court agreed with the lower court that shareholders of a corporation, such as the plaintiff-appellees (heirs of shareholder R.M. Denison), may bring an action to annul a judgment allegedly obtained through fraud against the corporation.
2. On the second assigned error (service of summons): The law is clear regarding summons. For a domestic corporation like the Sibuco Bay Coconut Plantation, service must be made upon the chief or president, secretary, cashier, or manager of the corporation (Article 396, case 1, Code of Civil Procedure). In Civil Case No. 2028, summons was attempted to be served on Pedro Macrohon, who was proven to no longer be the secretary of the corporation and had no connection with it at that time. Given this, there was no basis to resort to substituted service (by publication), which is only proper after attempting to comply with all legal requirements. This was not done, as Beyersdorffer should have called a meeting to appoint Macrohon’s successor as corporate secretary to properly summon the corporation according to law.
3. On the remaining errors: The Court found them without merit, as they were mere consequences of the preceding errors.
The appealed judgment was found to be in accordance with law and was confirmed in all parts, with costs against the appellant.