Beruflich Dokumente
Kultur Dokumente
113074 January 22, 1997 the ASSIGNOR is hereby named and constituted as
ASSIGNEE's Attorney-In-Fact, but any such suit without
ASSIGNEE's consent will exclusively be the
ALFRED HAHN, petitioner,
responsibility and for the account of the ASSIGNOR,
vs.
COURT OF APPEALS and BAYERSCHE MOTOREN WERKE
AKTIENGSELLSCHAFT (BMW), respondents. 2. That the ASSIGNOR and the ASSIGNEE shall
continue business relations as has been usual in the
past without a formal contract, and for that purpose, the
dealership of ASSIGNOR shall cover the ASSIGNEE's
complete production program with the only limitation
MENDOZA, J.: that, for the present, in view of ASSIGNEE's limited
production, the latter shall not be able to supply
automobiles to ASSIGNOR.
This is a petition for review of the decision1 of the Court of
Appeals dismissing a complaint for specific performance which
petitioner had filed against private respondent on the ground that Per the agreement, the parties "continue[d] business relations as
the Regional Trial Court of Quezon City did not acquire has been usual in the past without a formal contract." But on
jurisdiction over private respondent, a nonresident foreign February 16, 1993, in a meeting with a BMW representative and
corporation, and of the appellate court's order denying petitioner's the president of Columbia Motors Corporation (CMC), Jose
motion for reconsideration. Alvarez, petitioner was informed that BMW was arranging to grant
the exclusive dealership of BMW cars and products to CMC,
which had expressed interest in acquiring the same. On February
The following are the facts: 24, 1993, petitioner received confirmation of the information from
BMW which, in a letter, expressed dissatisfaction with various
Petitioner Alfred Hahn is a Filipino citizen doing business under aspects of petitioner's business, mentioning among other things,
the name and style "Hahn-Manila." On the other hand, private decline in sales, deteriorating services, and inadequate showroom
respondent Bayerische Motoren Werke Aktiengesellschaft (BMW) and warehouse facilities, and petitioner's alleged failure to comply
is a nonresident foreign corporation existing under the laws of the with the standards for an exclusive BMW dealer.2 Nonetheless,
former Federal Republic of Germany, with principal office at BMW expressed willingness to continue business relations with
Munich, Germany. the petitioner on the basis of a "standard BMW importer" contract,
otherwise, it said, if this was not acceptable to petitioner, BMW
would have no alternative but to terminate petitioner's exclusive
On March 7, 1967, petitioner executed in favor of private dealership effective June 30, 1993.
respondent a "Deed of Assignment with Special Power of
Attorney," which reads in full as follows:
Petitioner protested, claiming that the termination of his exclusive
dealership would be a breach of the Deed of Assignment. 3 Hahn
WHEREAS, the ASSIGNOR is the present owner and insisted that as long as the assignment of its trademark and
holder of the BMW trademark and device in the device subsisted, he remained BMW's exclusive dealer in the
Philippines which ASSIGNOR uses and has been using Philippines because the assignment was made in consideration of
on the products manufactured by ASSIGNEE, and for the exclusive dealership. In the same letter petitioner explained
which ASSIGNOR is the authorized exclusive Dealer of that the decline in sales was due to lower prices offered for BMW
the ASSIGNEE in the Philippines, the same being cars in the United States and the fact that few customers returned
evidenced by certificate of registration issued by the for repairs and servicing because of the durability of BMW parts
Director of Patents on 12 December 1963 and is and the efficiency of petitioner's service.
referred to as Trademark No. 10625;
xxx xxx xxx On July 1, 1993, BMW moved to dismiss the case, contending
that the trial court did not acquire jurisdiction over it through the
service of summons on the Department of Trade and Industry,
5. On March 7, 1967, Plaintiff executed in favor of
because it (BMW) was a foreign corporation and it was not doing
defendant BMW a Deed of Assignment with Special
business in the Philippines. It contended that the execution of the
Power of Attorney covering the trademark and in
Deed of Assignment was an isolated transaction; that Hahn was
consideration thereof, under its first whereas clause,
not its agent because the latter undertook to assemble and sell
Plaintiff was duly acknowledged as the "exclusive
BMW cars and products without the participation of BMW and
Dealer of the Assignee in the Philippines. . . .
sold other products; and that Hahn was an indentor or middleman
transacting business in his own name and for his own account.
xxx xxx xxx
Petitioner Alfred Hahn opposed the motion. He argued that BMW
8. From the time the trademark "BMW & DEVICE" was was doing business in the Philippines through him as its agent, as
first used by the Plaintiff in the Philippines up to the shown by the fact that BMW invoices and order forms were used
present, Plaintiff, through its firm name "HAHN to document his transactions; that he gave warranties as
MANILA" and without any monetary contribution from exclusive BMW dealer; that BMW officials periodically inspected
defendant BMW, established BMW's goodwill and standards of service rendered by him; and that he was described
market presence in the Philippines. Pursuant thereto, in service booklets and international publications of BMW as a
Plaintiff has invested a lot of money and resources in "BMW Importer" or "BMW Trading Company" in the Philippines.
order to single-handedly compete against other
motorcycle and car companies. . . . Moreover, Plaintiff
The trial court6 deferred resolution of the motion to dismiss until
has built buildings and other infrastructures such as
after trial on the merits for the reason that the grounds advanced
service centers and showrooms to maintain and
by BMW in its motion did not seem to be indubitable.
promote the car and products of defendant BMW.
d) the phrase "doing business" shall include soliciting 8. From the time the trademark "BMW & DEVICE" was
orders, service contracts, opening offices, whether first used by the Plaintiff in the Philippines up to the
called "liaison" offices or branches; appointing present, Plaintiff, through its firm name "HAHN
representatives or distributors domiciled in the MANILA" and without any monetary contributions from
Philippines or who in any calendar year stay in the defendant BMW, established BMW's goodwill and
country for a period or periods totalling one hundred market presence in the Philippines. Pursuant thereto,
eighty (180) days or more; participating in the Plaintiff invested a lot of money and resources in order
management, supervision or control of any domestic to single-handedly compete against other motorcycle
business, firm, entity or corporation in the and car companies. . . . Moreover, Plaintiff has built
Philippines; and any other act or acts that imply a buildings and other infrastructures such as service
continuity of commercial dealings or arrangements, and centers and showrooms to maintain and promote the
contemplate to that extent the performance of acts or car and products of defendant BMW.
works, or the exercise of some of the functions normally
incident to, and in progressive prosecution of,
As the above quoted allegations of the amended complaint show, specifications.10 For example, in its letter to Hahn dated February
however, there is nothing to support the appellate court's finding 23, 1996, BMW stated:
that Hahn solicited orders alone and for his own account and
without "interference from, let alone direction of, BMW." (p. 13) To
In the last years we have pointed out to you in several
the contrary, Hahn claimed he took orders for BMW cars and
discussions and letters that we have to tackle the
transmitted them to BMW. Upon receipt of the orders, BMW fixed
Philippine market more professionally and that we are
the downpayment and pricing charges, notified Hahn of the
through your present activities not adequately prepared
scheduled production month for the orders, and reconfirmed the
to cope with the forthcoming challenges.11
orders by signing and returning to Hahn the acceptance sheets.
Payment was made by the buyer directly to BMW. Title to cars
purchased passed directly to the buyer and Hahn never paid for In effect, BMW was holding Hahn accountable to it under the
the purchase price of BMW cars sold in the Philippines. Hahn was 1967 Agreement.
credited with a commission equal to 14% of the purchase price
upon the invoicing of a vehicle order by BMW. Upon confirmation
in writing that the vehicles had been registered in the Philippines This case fits into the mould of Communications Materials,
and serviced by him, Hahn received an additional 3% of the full Inc. v. Court of Appeals,12 in which the foreign corporation entered
into a "Representative Agreement" and a "Licensing Agreement"
purchase price. Hahn performed after-sale services, including
warranty services, for which he received reimbursement from with a domestic corporation, by virtue of which the latter was
BMW. All orders were on invoices and forms of BMW.8 appointed "exclusive representative" in the Philippines for a
stipulated commission. Pursuant to these contracts, the domestic
corporation sold products exported by the foreign corporation and
These allegations were substantially admitted by BMW which, in put up a service center for the products sold locally. This Court
its petition for certiorari before the Court of Appeals, stated:9 held that these acts constituted doing business in the Philippines.
The arrangement showed that the foreign corporation's purpose
was to penetrate the Philippine market and establish its presence
9.4. As soon as the vehicles are fully manufactured and
in the Philippines.
full payment of the purchase prices are made, the
vehicles are shipped to the Philippines. (The payments
may be made by the purchasers or third-persons or In addition, BMW held out private respondent Hahn as its
even by Hahn.) The bills of lading are made up in the exclusive distributor in the Philippines, even as it announced in
name of the purchasers, but Hahn-Manila is therein the Asian region that Hahn was the "official BMW agent" in the
indicated as the person to be notified. Philippines.13
9.5. It is Hahn who picks up the vehicles from the The Court of Appeals also found that petitioner Alfred Hahn dealt
Philippine ports, for purposes of conducting pre-delivery in other products, and not exclusively in BMW products, and, on
inspections. Thereafter, he delivers the vehicles to the this basis, ruled that Hahn was not an agent of BMW. (p. 14) This
purchasers. finding is based entirely on allegations of BMW in its motion to
dismiss filed in the trial court and in its petition for certiorari before
the Court of Appeals.14 But this allegation was denied by
9.6. As soon as BMW invoices the vehicle ordered,
Hahn15 and therefore the Court of Appeals should not have cited it
Hahn is credited with a commission of fourteen percent
as if it were the fact.
(14%) of the full purchase price thereof, and as soon as
he confirms in writing that the vehicles have been
registered in the Philippines and have been serviced by Indeed this is not the only factual issue raised, which should have
him, he will receive an additional three percent (3%) of indicated to the Court of Appeals the necessity of affirming the
the full purchase prices as commission. trial court's order deferring resolution of BMW's motion to dismiss.
Petitioner alleged that whether or not he is considered an agent of
BMW, the fact is that BMW did business in the Philippines
Contrary to the appellate court's conclusion, this arrangement
because it sold cars directly to Philippine buyers. 16 This was
shows an agency. An agent receives a commission upon the
denied by BMW, which claimed that Hahn was not its agent and
successful conclusion of a sale. On the other hand, a broker
that, while it was true that it had sold cars to Philippine buyers,
earns his pay merely by bringing the buyer and the seller
this was done without solicitation on its part.17
together, even if no sale is eventually made.
SO ORDERED.
G.R. No. 122191 October 8, 1998 detention. Eventually, they were again put in
service by defendant SAUDI (sic). In
September 1990, defendant SAUDIA
SAUDI ARABIAN AIRLINES, petitioner,
transferred plaintiff to Manila.
vs.
COURT OF APPEALS, MILAGROS P. MORADA and HON.
RODOLFO A. ORTIZ, in his capacity as Presiding Judge of On January 14, 1992, just when plaintiff
Branch 89, Regional Trial Court of Quezon City, respondents. thought that the Jakarta incident was already
behind her, her superiors requested her to
see Mr. Ali Meniewy, Chief Legal Officer of
SAUDIA, in Jeddah, Saudi Arabia. When she
saw him, he brought her to the police station
QUISUMBING, J.: where the police took her passport and
questioned her about the Jakarta incident.
Miniewy simply stood by as the police put
This petition for certiorari pursuant to Rule 45 of the Rules of pressure on her to make a statement
Court seeks to annul and set aside the Resolution1dated dropping the case against Thamer and Allah.
September 27, 1995 and the Decision2 dated April 10, 1996 of the
Not until she agreed to do so did the police
Court of Appeals3 in CA-G.R. SP No. 36533,4 and the return her passport and allowed her to catch
Orders5 dated August 29, 1994 6 and February 2, 19957 that were the afternoon flight out of Jeddah.
issued by the trial court in Civil Case No. Q-93-18394.8
Leave of court before filing a supplemental As stated by private respondent in her Amended
pleading is not a jurisdictional requirement. Complaint 38 dated June 23, 1994:
Besides, the matter as to absence of leave of
court is now moot and academic when this
2. Defendant SAUDI ARABIAN AIRLINES or
Honorable Court required the respondents to
SAUDIA is a foreign airlines corporation
comment on petitioner's April 30, 1996
doing business in the Philippines. It may be
Supplemental Petition For Review With
served with summons and other court
Prayer For A Temporary Restraining Order
processes at Travel Wide Associated Sales
Within Ten (10) Days From Notice Thereof.
(Phils.). Inc., 3rd Floor, Cougar Building, 114
Further, the Revised Rules of Court should
Valero St., Salcedo Village, Makati, Metro
be construed with liberality pursuant to
Manila.
Section 2, Rule 1 thereof.
12. Because SAUDIA refused to lend her a The aforecited provisions on human relations
hand in the case, plaintiff sought the help of were intended to expand the concept of torts
the Philippines Embassy in Jeddah. The in this jurisdiction by granting adequate legal
latter helped her pursue an appeal from the remedy for the untold number of moral
decision of the court. To pay for her upkeep, wrongs which is impossible for human
she worked on the domestic flights of foresight to specifically provide in the
defendant SAUDIA while, ironically, Thamer statutes.
and Allah freely served the international
flights. 39
Although Article 19 merely declares a principle of law, Article 21
gives flesh to its provisions. Thus, we agree with private
Where the factual antecedents satisfactorily establish the respondent's assertion that violations of Articles 19 and 21 are
existence of a foreign element, we agree with petitioner that the actionable, with judicially enforceable remedies in the municipal
problem herein could present a "conflicts" case. forum.
A factual situation that cuts across territorial lines and is affected Based on the allegations 46 in the Amended Complaint, read in the
by the diverse laws of two or more states is said to contain a light of the Rules of Court on jurisdiction 47 we find that the
Regional Trial Court (RTC) of Quezon City possesses jurisdiction Weighing the relative claims of the parties, the court a quo found
over the subject matter of the suit. 48 Its authority to try and hear it best to hear the case in the Philippines. Had it refused to take
the case is provided for under Section 1 of Republic Act No. 7691, cognizance of the case, it would be forcing plaintiff (private
to wit: respondent now) to seek remedial action elsewhere, i.e. in the
Kingdom of Saudi Arabia where she no longer maintains
substantial connections. That would have caused a fundamental
Sec. 1. Section 19 of Batas Pambansa Blg.
unfairness to her.
129, otherwise known as the "Judiciary
Reorganization Act of 1980", is hereby
amended to read as follows: Moreover, by hearing the case in the Philippines no unnecessary
difficulties and inconvenience have been shown by either of the
parties. The choice of forum of the plaintiff (now private
Sec. 19. Jurisdiction in Civil Cases. —
respondent) should be upheld.
Regional Trial Courts shall exercise exclusive
jurisdiction:
Similarly, the trial court also possesses jurisdiction over the
persons of the parties herein. By filing her Complaint and
xxx xxx xx
Amended Complaint with the trial court, private respondent has
x
voluntary submitted herself to the jurisdiction of the court.
(b) Personal actions. — All other actions may Similarly, the case of De Midgely vs. Ferandos, held that;
be commenced and tried where the
defendant or any of the defendants resides or
may be found, or where the plaintiff or any of When the appearance is by motion for the
the plaintiff resides, at the election of the purpose of objecting to the jurisdiction of the
plaintiff. court over the person, it must be for the sole
and separate purpose of objecting to the
jurisdiction of the court. If his motion is for any
Pragmatic considerations, including the convenience of the other purpose than to object to the jurisdiction
parties, also weigh heavily in favor of the RTC Quezon City
of the court over his person, he thereby
assuming jurisdiction. Paramount is the private interest of the submits himself to the jurisdiction of the court.
litigant. Enforceability of a judgment if one is obtained is quite A special appearance by motion made for the
obvious. Relative advantages and obstacles to a fair trial are
purpose of objecting to the jurisdiction of the
equally important. Plaintiff may not, by choice of an inconvenient court over the person will be held to be a
forum, "vex", "harass", or "oppress" the defendant, e.g. by general appearance, if the party in said
inflicting upon him needless expense or disturbance. But unless
motion should, for example, ask for a
the balance is strongly in favor of the defendant, the plaintiffs dismissal of the action upon the further
choice of forum should rarely be disturbed. 49
ground that the court had no jurisdiction over place where a power of attorney is to be
the subject matter. 52 exercised;
Clearly, petitioner had submitted to the jurisdiction of the Regional (6) the intention of the contracting parties as
Trial Court of Quezon City. Thus, we find that the trial court has to the law that should govern their
jurisdiction over the case and that its exercise thereof, justified. agreement, thelex loci intentionis;
As to the choice of applicable law, we note that choice-of-law (7) the place where judicial or administrative
problems seek to answer two important questions: (1) What legal proceedings are instituted or done. The lex
system should control a given situation where some of the fori — the law of the forum — is particularly
significant facts occurred in two or more states; and (2) to what important because, as we have seen earlier,
extent should the chosen legal system regulate the situation. 53 matters of "procedure" not going to the
substance of the claim involved are governed
by it; and because the lex fori applies
Several theories have been propounded in order to identify the
whenever the content of the otherwise
legal system that should ultimately control. Although ideally, all
applicable foreign law is excluded from
choice-of-law theories should intrinsically advance both notions of
application in a given case for the reason that
justice and predictability, they do not always do so. The forum is
it falls under one of the exceptions to the
then faced with the problem of deciding which of these two
applications of foreign law; and
important values should be stressed. 54
SO ORDERED.1âwphi1.nêt
G.R. No. 149177 November 23, 2007 In the meantime, on June 20, 2000, the DPWH approved
Nippon's request for the replacement of Kitamura by a certain Y.
Kotake as project manager of the BBRI Project.13
KAZUHIRO HASEGAWA and NIPPON ENGINEERING
CONSULTANTS CO., LTD., Petitioners,
vs. On June 29, 2000, the RTC, invoking our ruling in Insular
MINORU KITAMURA, Respondent. Government v. Frank14 that matters connected with the
performance of contracts are regulated by the law prevailing at
the place of performance,15 denied the motion to dismiss.16 The
DECISION
trial court subsequently denied petitioners' motion for
reconsideration,17 prompting them to file with the appellate court,
NACHURA, J.: on August 14, 2000, their first Petition for Certiorari under Rule
65 [docketed as CA-G.R. SP No. 60205].18 On August 23, 2000,
the CA resolved to dismiss the petition on procedural grounds—
Before the Court is a petition for review on certiorari under Rule
for lack of statement of material dates and for insufficient
45 of the Rules of Court assailing the April 18, 2001 Decision1 of verification and certification against forum shopping. 19 An Entry of
the Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July Judgment was later issued by the appellate court on September
25, 2001 Resolution2 denying the motion for reconsideration
20, 2000.20
thereof.
On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's Remaining steadfast in their stance despite the series of denials,
general manager for its International Division, informed petitioners instituted the instant Petition for Review
respondent that the company had no more intention of on Certiorari25 imputing the following errors to the appellate court:
automatically renewing his ICA. His services would be engaged
by the company only up to the substantial completion of the STAR
A. THE HONORABLE COURT OF APPEALS
Project on March 31, 2000, just in time for the ICA's expiry. 9
GRAVELY ERRED IN FINDING THAT THE TRIAL
COURT VALIDLY EXERCISED JURISDICTION OVER
Threatened with impending unemployment, respondent, through THE INSTANT CONTROVERSY, DESPITE THE FACT
his lawyer, requested a negotiation conference and demanded THAT THE CONTRACT SUBJECT MATTER OF THE
that he be assigned to the BBRI project. Nippon insisted that PROCEEDINGS A QUO WAS ENTERED INTO BY
respondent’s contract was for a fixed term that had already AND BETWEEN TWO JAPANESE NATIONALS,
expired, and refused to negotiate for the renewal of the ICA.10 WRITTEN WHOLLY IN THE JAPANESE LANGUAGE
AND EXECUTED IN TOKYO, JAPAN.
As he was not able to generate a positive response from the
petitioners, respondent consequently initiated on June 1, 2000 B. THE HONORABLE COURT OF APPEALS
Civil Case No. 00-0264 for specific performance and damages GRAVELY ERRED IN OVERLOOKING THE NEED TO
with the Regional Trial Court of Lipa City.11 REVIEW OUR ADHERENCE TO THE PRINCIPLE
OF LEX LOCI SOLUTIONIS IN THE LIGHT OF
RECENT DEVELOPMENT[S] IN PRIVATE
For their part, petitioners, contending that the ICA had been
INTERNATIONAL LAWS.26
perfected in Japan and executed by and between Japanese
nationals, moved to dismiss the complaint for lack of jurisdiction.
They asserted that the claim for improper pre-termination of The pivotal question that this Court is called upon to resolve is
respondent's ICA could only be heard and ventilated in the proper whether the subject matter jurisdiction of Philippine courts in civil
courts of Japan following the principles of lex loci cases for specific performance and damages involving contracts
celebrationis and lex contractus.12 executed outside the country by foreign nationals may be assailed
on the principles of lex loci celebrationis, lex contractus, the "state
of the most significant relationship rule," or forum non conveniens.
However, before ruling on this issue, we must first dispose of the president and chief executive officer, not by the company's board
procedural matters raised by the respondent. of directors. In not a few cases, we have ruled that corporate
powers are exercised by the board of directors; thus, no person,
not even its officers, can bind the corporation, in the absence of
Kitamura contends that the finality of the appellate court's
authority from the board.40 Considering that Hasegawa verified
decision in CA-G.R. SP No. 60205 has already barred the filing of
and certified the petition only on his behalf and not on behalf of
the second petition docketed as CA-G.R. SP No. 60827
the other petitioner, the petition has to be denied pursuant
(fundamentally raising the same issues as those in the first one)
to Loquias v. Office of the Ombudsman.41 Substantial compliance
and the instant petition for review thereof.
will not suffice in a matter that demands strict observance of the
Rules.42 While technical rules of procedure are designed not to
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 frustrate the ends of justice, nonetheless, they are intended to
on account of the petition's defective certification of non-forum effect the proper and orderly disposition of cases and effectively
shopping, it was a dismissal without prejudice. 27 The same holds prevent the clogging of court dockets.43
true in the CA's dismissal of the said case due to defects in the
formal requirement of verification28 and in the other requirement in
Further, the Court has observed that petitioners incorrectly filed a
Rule 46 of the Rules of Court on the statement of the material
Rule 65 petition to question the trial court's denial of their motion
dates.29 The dismissal being without prejudice, petitioners can re-
to dismiss. It is a well-established rule that an order denying a
file the petition, or file a second petition attaching thereto the
motion to dismiss is interlocutory, and cannot be the subject of the
appropriate verification and certification—as they, in fact did—and
extraordinary petition for certiorari or mandamus. The appropriate
stating therein the material dates, within the prescribed period30 in
recourse is to file an answer and to interpose as defenses the
Section 4, Rule 65 of the said Rules.31
objections raised in the motion, to proceed to trial, and, in case of
an adverse decision, to elevate the entire case by appeal in due
The dismissal of a case without prejudice signifies the absence of course.44 While there are recognized exceptions to this
a decision on the merits and leaves the parties free to litigate the rule,45 petitioners' case does not fall among them.
matter in a subsequent action as though the dismissed action had
not been commenced. In other words, the termination of a case
This brings us to the discussion of the substantive issue of the
not on the merits does not bar another action involving the same
case.
parties, on the same subject matter and theory.32
On the other hand the petition of Basso docketed as CA-G.R. SP CMI maintains that there is a conflict-of-laws issue that must be
No. 83938 is GIVEN DUE COURSE and GRANTED, and settled to determine proper jurisdiction over the parties and the
accordingly, the assailed Decision dated November 28, 2003 and subject matter of the case. It also alleges that the existence of
Resolution dated February 27, 2004 of the NLRC are SET ASIDE foreign elements calls or the application of US laws and the
and VACATED. Instead judgment is rendered hereby declaring doctrines of lex loci celebrationis (the law of the place of the
the dismissal of Basso illegal and ordering Continental to pay him ceremony), lex loci contractus (law of the place where a contract
separation pay equivalent to one (1) month pay for every year of is executed), and lex loci intentionis (the intention of the parties as
service as an alternative to reinstatement. Further, ordering to the law that should govern their agreement). CMI also invokes
Continental to pay Basso his full backwages from the date of his the application of the rule of forum non conveniens to determine
said illegal dismissal until date of this decision. The claim for the propriety of the assumption of jurisdiction by the labor
moral and exemplary damages as well as attorney's fees are tribunals.
dismissed.35
We agree with CMI that there is a conflict-of-laws issue that
The Court of Appeals ruled that the Labor Arbiter and the NLRC needs to be resolved first. Where the facts establish the existence
had jurisdiction over the subject matter of the case and over the of foreign elements, he case presents a conflict-of-laws issue.39
parties. The Court of Appeals explained that jurisdiction over the The foreign element in a case nay appear in different forms, such
subject matter of the action is determined by the allegations of the as in this case, where one of the parties s an alien and the other
complaint and the law. Since the case filed by Basso is a is domiciled in another state.
termination dispute that is "undoubtedly cognizable by the labor
tribunals", the Labor Arbiter and the NLRC had jurisdiction to rule In Hasegawa v. Kitamura,40 we stated that in the judicial
on the merits of the case. On the issue of jurisdiction over he resolution of conflict-of-laws problems, three consecutive phases
person of the parties, who are foreigners, the Court of Appeals are involved: jurisdiction, choice of law, and recognition and
ruled that jurisdiction over the person of Basso was acquired enforcement of judgments. In resolving the conflicts problem,
when he filed the complaint for illegal dismissal, while jurisdiction courts should ask the following questions:
over the person of CMI was acquired through coercive process of 1. "Under the law, do I have jurisdiction over the subject matter
service of summons to its agent in the Philippines. The Court of and the parties to this case?
Appeals also agreed that the active participation of CMI in the
case rendered moot the issue on jurisdiction. 2. "If the answer is yes, is this a convenient forum to the parties,
in light of the facts?
On the merits of the case, the Court of Appeals declared that CMI
illegally dismissed Basso. The Court of Appeals found that CMI's 3. "If the answer is yes, what is the conflicts rule for this particular
allegations of loss of trust and confidence were not established. problem?
4. "If the conflicts rule points to a foreign law, has said law been The labor tribunals can make an intelligent decision as to the law
properly pleaded and proved by the one invoking it? and facts. The incident subject of this case (i.e. dismissal of
Basso) happened in the Philippines, the surrounding
5. "If so, is the application or enforcement of the foreign law in the circumstances of which can be ascertained without having to
forum one of the basic exceptions to the application of foreign leave the Philippines. The acts that allegedly led to loss of trust
law? In short, is there any strong policy or vital interest of the and confidence and Basso's eventual dismissal were committed
forum that is at stake in this case and which should preclude the in the Philippines. As to the law, we hold that Philippine law is the
application of foreign law?41 proper law of he forum, as we shall discuss shortly. Also, the
Jurisdiction is defined as the power and authority of the courts to labor tribunals have the power to enforce their judgments
hear, try and decide cases. Jurisdiction over the subject matter is because they acquired jurisdiction over the persons of both
conferred by the Constitution or by law and by the material parties.
allegations in the complaint, regardless of whether or not the
plaintiff is entitled to recover all or some of the claims or reliefs Our labor tribunals being the convenient fora, the next question is
sought therein.42 It cannot be acquired through a waiver or what law should apply in resolving this case.
enlarged by the omission of the parties or conferred by the
acquiescence of the court.43 That the employment contract of The choice-of-law issue in a conflict-of-laws case seeks to answer
Basso was replete with references to US laws, and that it the following important questions: (1) What legal system should
originated from and was returned to the US, do not automatically control a given situation where some of the significant facts
preclude our labor tribunals from exercising jurisdiction to hear occurred in two or more states; and (2) to what extent should the
and try this case. chosen legal system regulate the situation.47 These questions
are entirely different from the question of jurisdiction that only
This case stemmed from an illegal dismissal complaint. The Labor seeks to answer whether the courts of a state where the case is
Code, under Article 217, clearly vests original and exclusive initiated have jurisdiction to enter a judgment.48 As such, the
jurisdiction to hear and decide cases involving termination power to exercise jurisdiction does not automatically give a state
disputes to the Labor Arbiter. Hence, the Labor Arbiter and the constitutional authority to apply forum law.49
NLRC have jurisdiction over the subject matter of the case.
CMI insists that US law is the applicable choice-of-law under the
As regards jurisdiction over the parties, we agree with the Court of principles of lex loci celebrationis and lex loci contractus. It argues
Appeals that the Labor Arbiter acquired jurisdiction over the that the contract of employment originated from and was returned
person of Basso, notwithstanding his citizenship, when he filed his to the US after Basso signed it, and hence, was perfected there.
complaint against CMI. On the other hand, jurisdiction over the CMI further claims that the references to US law in the
person of CMI was acquired through the coercive process of employment contract show the parties' intention to apply US law
service of summons. We note that CMI never denied that it was and not ours. These references are:
served with summons. CMI has, in fact, voluntarily appeared and Foreign station allowance of forty percent (40%) using the "U.S.
participated in the proceedings before the courts. Though a State Department Index, the base being Washington, D.C."
foreign corporation, CMI is licensed to do business in the
Philippines and has a local business address here. The purpose Tax equalization that made Basso responsible for "federal and
of the law in requiring that foreign corporations doing business in any home state income taxes."
the country be licensed to do so, is to subject the foreign
corporations to the jurisdiction of our courts.44 Hardship allowance of fifteen percent (15%) of base pay based
upon the "U.S. Department of State Indexes of living costs
Considering that the Labor Arbiter and the NLRC have jurisdiction abroad."
over the parties and the subject matter of this case, these
tribunals may proceed to try the case even if the rules of conflict- The employment arrangement is "one at will, terminable by either
of-laws or the convenience of the parties point to a foreign forum, party without any further liability on thirty days prior written
this being an exercise of sovereign prerogative of the country notice."50
where the case is filed.45 CMI asserts that the US law on labor relations particularly, the US
Railway Labor Act sanctions termination-at-will provisions in an
The next question is whether the local forum is the convenient employment contract. Thus, CMI concludes that if such laws were
forum in light of the facts of the case. CMI contends that a applied, there would have been no illegal dismissal to speak of
Philippine court is an inconvenient forum. because the termination-at-will provision in Basso's employment
contract would have been perfectly valid.
We disagree.
We disagree.
Under the doctrine of forum non conveniens, a Philippine court in
a conflict-of-laws case may assume jurisdiction if it chooses to do In Saudi Arabian Airlines v. Court of Appeals,51 we emphasized
so, provided, that the following requisites are met: (1) that the that an essential element of conflict rules is the indication of a
Philippine Court is one to which the parties may conveniently "test" or "connecting factor" or "point of contact". Choice-of-law
resort to; (2) that the Philippine Court is in a position to make an rules invariably consist of a factual relationship (such as property
intelligent decision as to the law and the facts; and (3) that the right, contract claim) and a connecting fact or point of contact,
Philippine Court has or is likely to have power to enforce its such as the situs of the res, the place of celebration, the place of
decision.46 All these requisites are present here. performance, or the place of wrongdoing. Pursuant to Saudi
Arabian Airlines, we hold that the "test factors," "points of contact"
Basso may conveniently resort to our labor tribunals as he and or "connecting factors" in this case are the following:
CMI lad physical presence in the Philippines during the duration
of the trial. CMI has a Philippine branch, while Basso, before his (1) The nationality, domicile or residence of Basso;
death, was residing here. Thus, it could be reasonably expected
that no extraordinary measures were needed for the parties to (2) The seat of CMI;
make arrangements in advocating their respective cases.
(3) The place where the employment contract has been made, the
locus actus; CMI submits that the Court of Appeals overstepped the
boundaries of the limited scope of its certiorari jurisdiction when
(4) The place where the act is intended to come into effect, e.g., instead of ruling on the existence of grave abuse of discretion, it
the place of performance of contractual duties; proceeded to pass upon the legality and propriety of Basso's
dismissal. Moreover, CMI asserts that it was error on the part of
(5) The intention of the contracting parties as to the law that the Court of Appeals to re-evaluate the evidence and
should govern their agreement, the lex loci intentionis; and circumstances surrounding the dismissal of Basso.
We find that CMI failed to discharge its burden to prove the above Finally, CMI violated procedural due process in terminating
acts. CMI merely submitted affidavits of its officers, without any Basso. In King of Kings Transport, Inc. v. Mamac89 we detailed
other corroborating evidence. Basso, on the other hand, had the procedural due process steps in termination of employment:
adequately explained his side. On the advertising agency and To clarify, the following should be considered in terminating the
budget issues raised by CMI, he explained that these were blatant services of employees:
lies as the advertising needs of CMI were centralized in its Guam
office and the Philippine office was not authorized to deal with (1) The first written notice to be served on the employees should
CMI's advertising agency, except on minor issues.76 Basso contain the specific causes or grounds for termination against
further stated that under CMI's existing policy, ninety percent them, and a directive that the employees are given the
(90%) of the advertising decisions were delegated to the opportunity to submit their written explanation within a reasonable
advertising firm of McCann-Ericsson in Japan and only ten period. "Reasonable opportunity" under the Omnibus Rules
percent (10%) were left to the Philippine office.77 Basso also means every kind of assistance that management must accord to
denied the allegations of owning nightclubs and promoting his the employees to enable them to prepare adequately for their
personal businesses and explained that it was illegal for defense. This should be construed as a period of at least five (5)
foreigners in the Philippines to engage in retail trade in the first calendar days from receipt of the notice to give the employees an
place. opportunity to study the accusation against them, consult a union
official or lawyer, gather data and evidence, and decide on the
Apart from these accusations, CMI likewise presented the findings defenses they will raise against the complaint. Moreover, in order
of the audit team headed by Mr. Stephen D. Goepfert, showing to enable the employees to intelligently prepare their explanation
that "for the period of 1995 and 1996, personal passes for and defenses, the notice should contain a detailed narration of the
Continental and other airline employees were noted (sic) to be facts and circumstances that will serve as basis for the charge
issued for which no service charge was collected."78 The audit against the employees. A general description of the charge will
cited the trip pass log of a total of 10 months. The trip log does not suffice. Lastly, the notice should specifically mention which
not show, however, that Basso caused all the ticket issuances. company rules, if any, are violated and/or which among the
More, half of the trips in the log occurred from March to July of grounds under Art. 282 is being charged against the employees.
1996,79 a period beyond the tenure of Basso. Basso was
terminated effectively on January 31, 1996 as indicated in the (2) After serving the first notice, the employers should schedule
letter of Ms. Woodward.80 and conduct a hearing or conference wherein the employees will
be given the opportunity to: (1) explain and clarify their defenses
CMI also accused Basso of making "questionable overseas to the charge against them; (2) present evidence in support of
phone calls". Basso, however, adequately explained in his their defenses; and (3) rebut the evidence presented against them
Reply81 that the phone calls to Italy and Portland, USA were by the management. During the hearing or conference, the
employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of
their choice. Moreover, this conference or hearing could be used
by the parties as an opportunity to come to an amicable
settlement.
SO ORDERED.
G.R. No. 112573 February 9, 1995 On August 28, 1980, defendant received from Deputy Sheriff
Rolando Balingit the writ of summons (p. 276, Records). Despite
receipt of the same, defendant failed to appear at the scheduled
NORTHWEST ORIENT AIRLINES, INC. petitioner,
hearing. Thus, the Tokyo Court proceeded to hear the plaintiff's
vs.
complaint and on [January 29, 1981], rendered judgment ordering
COURT OF APPEALS and C.F. SHARP & COMPANY
the defendant to pay the plaintiff the sum of 83,158,195 Yen and
INC., respondents.
damages for delay at the rate of 6% per annum from August 28,
1980 up to and until payment is completed (pp. 12-14, Records).
SO ORDERED.
G.R. No. 108538 January 22, 1996 This is in response to your letter, dated 20 June 1991,
which I received on 3 July 1991. Please address all
communications to my lawyer, Atty. Alfredo D.
LOURDES A. VALMONTE and ALFREDO D.
Valmonte, whose address, telephone and fax numbers
VALMONTE, petitioners,
appear below.
vs.
THE HONORABLE COURT OF APPEALS, THIRD DIVISION
and ROSITA DIMALANTA, respondents. c/o Prime Marine
Gedisco Center, Unit 304
1564 A. Mabini, Ermita
DECISION
Metro Manila
Telephone: 521-1736
MENDOZA, J.: Fax: 521-2095
Petitioner Lourdes A. Valmonte is a foreign resident. The question Service of summons was then made upon petitioner Alfredo D.
is whether in an action for partition filed against her and her Valmonte, who at the time, was at his office in Manila. Petitioner
husband, who is also her attorney, summons intended for her Alfredo D. Valmonte accepted the summons, insofar as he was
may be served on her husband, who has a law office in the concerned, but refused to accept the summons for his wife,
Philippines. The Regional Trial Court of Manila, Branch 48, said Lourdes A. Valmonte, on the ground that he was not authorized to
no and refused to declare Lourdes A. Valmonte in default, but the accept the process on her behalf. Accordingly the process server
Court of Appeals said yes. Hence this petition for review left without leaving a copy of the summons and complaint for
on certiorari. petitioner Lourdes A. Valmonte.
The facts of the case are as follows: Petitioner Alfredo D. Valmonte thereafter filed his Answer with
Counterclaim. Petitioner Lourdes A. Valmonte, however, did not
file her Answer. For this reason private respondent moved to
Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are
declare her in default. Petitioner Alfredo D. Valmonte entered a
husband and wife. They are both residents of 90222 Carkeek special appearance in behalf of his wife and opposed the private
Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D. respondent's motion.
Valmonte, who is a member of the Philippine bar, however,
practices his profession in the Philippines, commuting for this
purpose between his residence in the state of Washington and In its Order dated July 3, 1992, the trial court, denied private
Manila, where he holds office at S-304 Gedisco Centre, 1564 A. respondent's motion to declare petitioner Lourdes A. Valmonte in
Mabini Ermita, Manila. default. A motion for reconsideration was similarly denied on
September 23, 1992. Whereupon, private respondent filed a
petition for certiorari, prohibition and mandamus with the Court of
On March 9, 1992, private respondent Rosita Dimalanta, who is Appeals.
the sister of petitioner Lourdes A. Valmonte, filed a complaint for
partition of real property and accounting of rentals against
petitioners Lourdes A. Valmonte and Alfredo D. Valmonte before On December 29, 1992, the Court of Appeals rendered a decision
the Regional Trial Court of Manila, Branch 48. The subject of the granting the petition and declaring Lourdes A. Valmonte in
action is a three-door apartment located in Paco, Manila. default. A copy of the appellate court's decision was received by
petitioner Alfredo D. Valmonte on January 15, 1993 at his Manila
office and on January 21, 1993 in Seattle, Washington. Hence,
In her Complaint, private respondent alleged: this petition.
The plaintiff is of legal age, a widow and is at present a The issue at bar is whether in light of the facts set forth above,
resident of 14823 Conway Road, Chesterfield, Missouri, petitioner Lourdes A. Valmonte was validly served with summons.
U.S.A., while the defendants are spouses, of legal age
In holding that she had been, the Court of Appeals stated:1
and at present residents of 90222 Carkeek Drive, South
Seattle, Washington, U.S.A., but, for purposes of this
complaint may be served with summons at Gedisco [I]n her above-quoted reply, Mrs. Valmonte clearly and
Center, Unit 304, 1564 A. Mabini St., Ermita, Manila unequivocally directed the aforementioned counsel of Dimalanta
where defendant Alfredo D. Valmonte as defendant to address all communications (evidently referring to her
Lourdes Arreola Valmonte's spouse holds office and controversy with her sister Mrs. Dimalanta over the Paco
where he can be found. property, now the subject of the instant case) to her lawyer who
happens also to be her husband. Such directive was made
without any qualification just as was her choice/designation of her
Apparently, the foregoing averments were made on the basis of a
husband Atty. Valmonte as her lawyer likewise made without any
letter previously sent by petitioner Lourdes A. Valmonte to private qualification or reservation. Any disclaimer therefore on the part of
respondent's counsel in which, in regard to the partition of the Atty. Valmonte as to his being his wife's attorney (at least with
property in question, she referred private respondent's counsel to
regard to the dispute vis-a-vis (sic) the Paco property) would
her husband as the party to whom all communications intended appear to be feeble or trifling, if not incredible.
for her should be sent. The letter reads:
xxx xxx xxx In all of these cases, it should be noted, defendant must be a
resident of the Philippines, otherwise an action in personam
cannot be brought because jurisdiction over his person is
Turning to another point, it would not do for Us to
essential to make a binding decision.
overlook the fact that the disputed summons was
served not upon just an ordinary lawyer of private
respondent Lourdes A. Valmonte, but upon her lawyer On the other hand, if the action is in rem or quasi in rem,
husband. But that is not all, the same lawyer/husband jurisdiction over the person of the defendant is not essential for
happens to be also her co-defendant in the instant case giving the court jurisdiction so long as the court acquires
which involves real property which, according to her jurisdiction over the res. If the defendant is a nonresident and he
lawyer/husband/co-defendant, belongs to the conjugal is not found in the country, summons may be served exterritorially
partnership of the defendants (the spouses Valmonte). in accordance with Rule 14, §17, which provides:
It is highly inconceivable and certainly it would be
contrary to human nature for the lawyer/husband/co-
§17. Extraterritorial service. - When the defendant does
defendant to keep to himself the fact that they (the
not reside and is not found in the Philippines and the
spouses Valmonte) had been sued with regard to a
action affects the personal status of the plaintiff or
property which, he claims to be conjugal.
relates to, or the subject of which is, property within the
Parenthetically, there is nothing in the records of the
Philippines, in which the defendant has or claims a lien
case before Us regarding any manifestation by private
or interest, actual or contingent, or in which the relief
respondent Lourdes A. Valmonte about her lack of
demanded consists, wholly or in part, in excluding the
knowledge about the case instituted against her and
defendant from any interest therein, or the property of
her lawyer/husband/co-defendant by her sister Rosita. .
the defendant has been attached within the Philippines,
..
service may, by leave of court, be effected out of the
Philippines by personal service as under section 7; or
PREMISES CONSIDERED, the instant petition by publication in a newspaper of general circulation in
for certiorari, prohibition and mandamus is given due such places and for such time as the court may order,
course. This Court hereby Resolves to nullify the orders in which case a copy of the summons and order of the
of the court a quo dated July 3, 1992 and September court shall be sent by registered mail to the last known
23, 1992 and further declares private respondent address of the defendant, or in any other manner the
Lourdes Arreola Valmonte as having been properly court may deem sufficient. Any order granting such
served with summons. leave shall specify a reasonable time, which shall not
be less than sixty (60) days after notice, within which
the defendant must answer..
Petitioners assail the aforequoted decision, alleging that the Court
of Appeals erred (1) in refusing to apply the provisions of Rule 14,
§17 of the Revised Rules of Court and applying instead Rule 14, In such cases, what gives the court jurisdiction in an action in
§8 when the fact is that petitioner Lourdes A. Valmonte is a rem or quasi in rem is that it has jurisdiction over the res, i.e. the
nonresident defendant; and (2) because even if Rule 14, §8 is the personal status of the plaintiff who is domiciled in the Philippines
applicable provision, there was no valid substituted service as or the property litigated or attached.
there was no strict compliance with the requirement by leaving a
copy of the summons and complaint with petitioner Alfredo D.
Service of summons in the manner provided in §17 is not for the
Valmonte. Private respondent, upon the other hand, asserts that
purpose of vesting it with jurisdiction but for complying with the
petitioners are invoking a technicality and that strict adherence to
requirements of fair play or due process, so that he will be
the rules would only result in a useless ceremony.
informed of the pendency of the action against him and the
possibility that property in the Philippines belonging to him or in
We hold that there was no valid service of process on Lourdes A. which he has an interest may be subjected to a judgment in favor
Valmonte. of the plaintiff and he can thereby take steps to protect his interest
if he is so minded.6
To provide perspective, it will be helpful to determine first the
nature of the action filed against petitioners Lourdes A. Valmonte Applying the foregoing rules to the case at bar, private
and Alfredo D. Valmonte by private respondent, whether it is an respondent's action, which is for partition and accounting under
action in personam, in rem or quasi in rem. This is because the Rule 69, is in the nature of an action quasi in rem. Such an action
rules on service of summons embodied in Rule 14 apply is essentially for the purpose of affecting the defendant's interest
according to whether an action is one or the other of these in a specific property and not to render a judgment against him.
actions.
As explained in the leading case of Banco Español Filipino v. summons (against the contention that it should be made in the
Palanca :7 foreign state where defendant was residing) sufficient,
nonetheless the service was considered insufficient because no
copy of the summons was sent to the last known correct address
[An action quasi in rem is] an action which while not strictly
in the Philippines..
speaking an action in rem partakes of that nature and is
substantially such. . . . The action quasi in rem differs from the
true action in rem in the circumstance that in the former an Private respondent cites the ruling in De Leon v. Hontanosas, 67
individual is named as defendant and the purpose of the SCRA 458,462-463 (1975), in which it was held that service of
proceeding is to subject his interest therein to the obligation or summons upon the defendant's husband was binding on her. But
lien burdening the property. All proceedings having for their sole the ruling in that case is justified because summons were served
object the sale or other disposition of the property of the upon defendant's husband in their conjugal home in Cebu City
defendant, whether by attachment, foreclosure, or other form of and the wife was only temporarily absent, having gone to
remedy, are in a general way thus designated. The judgment Dumaguete City for a vacation. The action was for collection of a
entered in these proceedings is conclusive only between the sum of money. In accordance with Rule 14, §8, substituted
parties. service could be made on any person of sufficient discretion in the
dwelling place of the defendant, and certainly defendant's
husband, who was there, was competent to receive the summons
As petitioner Lourdes A. Valmonte is a nonresident who is not
on her behalf. In any event, it appears that defendant in that case
found in the Philippines, service of summons on her must be in
submitted to the jurisdiction of the court by instructing her
accordance with Rule 14, §17. Such service, to be effective
husband to move for the dissolution of the writ of attachment
outside the Philippines, must be made either (1) by personal
issued in that case.
service; (2) by publication in a newspaper of general circulation in
such places and for such time as the court may order, in which
case a copy of the summons and order of the court should be On the other hand, in the case of Gemperle v. Schenker, 10 it was
sent by registered mail to the last known address of the held that service on the wife of a nonresident defendant was
defendant; or (3) in any other manner which the court may deem found sufficient because the defendant had appointed his wife as
sufficient. his attorney-in-fact. It was held that although defendant Paul
Schenker was a Swiss citizen and resident of Switzerland, service
of summons upon his wife Helen Schenker who was in the
Since in the case at bar, the service of summons upon petitioner
Philippines was sufficient because she was her husband's
Lourdes A. Valmonte was not done by means of any of the first
representative and attorney-in-fact in a civil case, which he had
two modes, the question is whether the service on her attorney,
earlier filed against William Gemperle. In fact Gemperle's action
petitioner Alfredo D. Valmonte, can be justified under the third
was for damages arising from allegedly derogatory statements
mode, namely, "in any . . . manner the court may deem sufficient."
contained in the complaint filed in the first case. As this Court
said, "[i]n other words, Mrs. Schenker had authority to sue, and
We hold it cannot. This mode of service, like the first two, must be had actually sued, on behalf of her husband, so that she was,
made outside the Philippines, such as through the Philippine also, empowered to represent him in suits filed against him,
Embassy in the foreign country where the defendant particularly in a case, like the one at bar, which is a consequence
resides.8 Moreover, there are several reasons why the service of of the action brought by her on his behalf" 11 Indeed, if instead of
summons on Atty. Alfredo D. Valmonte cannot be considered a filing an independent action Gemperle filed a counterclaim in the
valid service of summons on petitioner Lourdes A. Valmonte. In action brought by Mr. Schenker against him, there would have
the first place, service of summons on petitioner Alfredo D. been no doubt that the trial court could have acquired jurisdiction
Valmonte was not made upon the order of the court as required over Mr. Schenker through his agent and attorney-in-fact, Mrs.
by Rule 14, §17 and certainly was not a mode deemed sufficient Schenker.
by the court which in fact refused to consider the service to be
valid and on that basis declare petitioner Lourdes A. Valmonte in
In contrast, in the case at bar, petitioner Lourdes A. Valmonte did
default for her failure to file an answer.
not appoint her husband as her attorney-in-fact. Although she
wrote private res- pondent's attorney that "all communications"
In the second place, service in the attempted manner on intended for her should be addressed to her husband who is also
petitioner was not made upon prior leave of the trial court as her lawyer at the latter's address in Manila, no power of attorney
required also in Rule 14, §17. As provided in §19, such leave to receive summons for her can be inferred therefrom. In fact the
must be applied for by motion in writing, supported by affidavit of letter was written seven months before the filing of this case
the plaintiff or some person on his behalf and setting forth the below, and it appears that it was written in connection with the
grounds for the application. negotiations between her and her sister, respondent Rosita
Dimalanta, concerning the partition of the property in question. As
is usual in negotiations of this kind, the exchange of
Finally, and most importantly, because there was no order correspondence was carried on by counsel for the parties. But the
granting such leave, petitioner Lourdes A. Valmonte was not authority given to petitioner's husband in these negotiations
given ample time to file her Answer which, according to the rules,
certainly cannot be construed as also including an authority to
shall be not less than sixty (60) days after notice. It must be noted represent her in any litigation.
that the period to file an Answer in an action against a resident
defendant differs from the period given in an action filed against a
nonresident defendant who is not found in the Philippines. In the For the foregoing reasons, we hold that there was no valid service
former, the period is fifteen (15) days from service of summons, on petitioner Lourdes A. Valmonte in this case.
while in the latter, it is at least sixty (60) days from notice.
WHEREFORE, the decision appealed from is REVERSED and
Strict compliance with these requirements alone can assure the orders dated July 3, 1992 and September 23, 1992 of the
observance of due process. That is why in one case, 9 although Regional Trial Court of Manila, Branch 48 are REINSTATED
the Court considered publication in the Philippines of the
G.R. No. 127692 March 10, 2004 After trial on the merits, the RTC rendered its decision on March
1993, with the following disposition:
FORTUNATO GOMEZ and AURORA GOMEZ, petitioners,
vs. WHEREFORE, premises considered, judgment is hereby
COURT OF APPEALS, ADOLFO TROCINO and MARIANO rendered in favor of the plaintiffs and against the defendants.
TROCINO, respondents.
The latter are hereby ordered to jointly and severally execute a
DECISION Deed of Sale in favor of the plaintiffs and to deliver the owner’s
duplicate copies of TCT Nos. 10616 and 31856, covering the
properties sold, to the plaintiffs within ten (10) days from the
AUSTRIA-MARTINEZ, J.:
finality of the judgment, after which plaintiffs shall pay in turn to
the defendants the balance of ₱2,000,000.00. Otherwise, the sale
Before the Court is a petition for review on certiorari under Rule is rescinded and revoked and the defendants are directed to
45 of the Rules of Court assailing the decision1 of the Court of return to the plaintiffs the amount of ₱500,000.00, with interest of
Appeals dated September 30, 1996, in CA-G.R. SP No. 40067, 12% per annum computed from December 6, 1989, until the full
nullifying the decision and orders of the Regional Trial Court of amount is paid.
Cebu City (Branch 10) in Civil Case No. CEB-11103, for want of
jurisdiction.
In addition thereto, defendants are to pay jointly and severally to
the plaintiffs, the amount of ₱50,000.00 as moral damages;
Civil Case No. CEB-11103 is an action for specific performance ₱20,000.00 as exemplary damages; ₱40,000.00 by way of
and/or rescission filed by herein petitioners, spouses Fortunato attorney’s fees; and ₱10,000.00 as litigation expenses.
and Aurora Gomez, against the heirs of Jesus J. Trocino, Sr.,
which include herein respondents and their mother Caridad
SO ORDERED.5
Trocino.2
SEC. 7. Personal service of summons.-- The summons shall be In a personal action, the plaintiff seeks the recovery of personal
served by handing a copy thereof to the defendant in person or, if property, the enforcement of a contract or the recovery of
he refuses to receive it, by tendering it to him. damages. In a real action, the plaintiff seeks the recovery of real
property, or, as indicated in section 2(a) of Rule 4, a real action is
an action affecting title to real property or for the recovery of
If efforts to find defendant personally makes prompt service possession, or for partition or condemnation of, or foreclosure of a
impossible, substituted service may be effected by leaving copies mortgage on, real property.
of the summons at the defendant's dwelling house or residence
with some person of suitable age and discretion then residing
therein, or by leaving the copies at the defendant's office or An action in personam is an action against a person on the basis
regular place of business with some competent person in charge of his personal liability, while an action in rem is an action against
thereof.15 In substituted service, it is mandated that the fact of the thing itself, instead of against the person. Hence, a real action
impossibility of personal service should be explained in the proof may at the same time be an action in personam and not
of service.16 necessarily an action in rem.22
When the defendant in an action in personam is a non-resident The objective sought in petitioners’ complaint was to establish a
who does not voluntarily submit himself to the authority of the claim against respondents for their alleged refusal to convey to
court, personal service of summons within the State is essential to them the title to the two parcels of land that they inherited from
the acquisition of jurisdiction over his person. This cannot be done their father, Jesus Trocino, who was one of the sellers of the
properties to petitioners. Hence, to repeat, Civil Case No. CEB- that it is binding on a co-defendant. Furthermore, Caridad Trocino
11103 is an action in personam because it is an action against represented herself as the principal defendant in her Motion to
persons, namely, herein respondents, on the basis of their Withdraw Appeal. (Rollo, p. 80)
personal liability. As such, personal service of summons upon
the defendants is essential in order for the court to acquire of
Since the defendant heirs are co-defendants, the trial court should
jurisdiction over their persons.23
have verified the extent of Atty. Bugarin’s authority when
petitioners failed to appear as early as the pre-trial stage, where
A distinction, however, must be made with regard to service of the parties are required to appear. The absence of the defendant
summons on respondents Adolfo Trocino and Mariano Trocino. heirs should have prompted the trial court to inquire from the
Adolfo Trocino, as records show, is already a resident of Ohio, lawyer whether he was also representing the other petitioners. As
U.S.A. for 25 years. Being a non-resident, the court cannot co-defendant and co-heirs over the disputed properties, the
acquire jurisdiction over his person and validly try and decide the defendant heirs had every right to be present during the trial. Only
case against him. Caridad Trocino appeared and testified on her own behalf. All the
defenses raised were her own, not the defendant heirs. 29
On the other hand, Mariano Trocino has been in Talibon, Bohol
since 1986. To validly acquire jurisdiction over his person, Consequently, the judgment sought to be executed against
summons must be served on him personally, or through respondents were rendered without jurisdiction as there was
substituted service, upon showing of impossibility of personal neither a proper service of summons nor was there any waiver or
service. Such impossibility, and why efforts exerted towards voluntary submission to the trial court’s jurisdiction. Hence, the
personal service failed, should be explained in the proof of same is void, with regard to private respondents except Caridad
service. The pertinent facts and circumstances attendant to the Trocino.
service of summons must be stated in the proof of service or
Officer’s Return. Failure to do so would invalidate all subsequent
It must be pointed out that while it was the spouses Jesus and
proceedings on jurisdictional grounds.24
Caridad Trocino who sold the properties to petitioners, their right
to proceed against Jesus Trocino when he died was passed on to
In the present case, the process server served the summons and his heirs, which includes respondents and Caridad Trocino. Such
copies of the complaint on respondents Jacob, Jesus, Jr., Adolfo, transmission of right occurred by operation of law, more
Mariano, Consolacion, Alice and Racheal,25 through their mother, particularly by succession, which is a mode of acquisition by
Caridad Trocino.26 The return did not contain any particulars as to virtue of which the property, rights and obligations to the extent of
the impossibility of personal service on Mariano Trocino within a the value of the inheritance of a person are transmitted. 30 When
reasonable time. Such improper service renders the same the process server personally served the summons on Caridad
ineffective. Trocino, the trial court validly acquired jurisdiction over her person
alone. Hence, the trial court’s decision is valid and binding with
regard to her, but only in proportion to Caridad Trocino’s share.
Due process of law requires personal service to support a
As aptly stated by the Court of Appeals:
personal judgment, and, when the proceeding is strictly in
personam brought to determine the personal rights and
obligations of the parties, personal service within the state or a This Court’s decision is therefore applicable to all the defendant
voluntary appearance in the case is essential to the acquisition of heirs with the exception of defendant Caridad Trocino considering
jurisdiction so as to constitute compliance with the constitutional that it was the latter who entered into the alleged sale without the
requirement of due process.27 consent of her husband. She is therefore estopped from
questioning her own authority to enter into the questioned sale.
Moreover, Caridad Trocino was validly served with summons and
Moreover, inasmuch as the sheriff’s return failed to state the facts
was accorded due process.31
and circumstances showing the impossibility of personal service
of summons upon respondents within a reasonable time,
petitioners should have sought the issuance of an alias summons. WHEREFORE, the petition for review is DENIED. The decision of
Under Section 5, Rule 14 of the Rules of Court, alias summons the Court of Appeals in CA-G.R. SP No. 40067 is AFFIRMED.
may be issued when the original summons is returned without
being served on any or all of the defendants. 28 Petitioners,
Costs against petitioners.
however, did not do so, and they should now bear the
consequences of their lack of diligence.
SO ORDERED.
The fact that Atty. Expedito Bugarin represented all the
respondents without any exception does not transform the
ineffective service of summons into a valid one. It does not
constitute a valid waiver or even a voluntary submission to the
trial court’s jurisdiction. There was not even the slightest proof
showing that respondents authorized Atty. Bugarin’s appearance
for and in their behalf. As found by the Court of Appeals:
DECISION The case was docketed as Civil Case No. 879. The summons and
the complaint were not served on the respondent because the
latter was apparently out of the country. This was relayed to the
CALLEJO, SR., J.:
Sheriff by her (the respondent’s) brother, Oscar Layno, who was
then in the respondent’s house at No. 572 Barangay Buenlag,
This is a petition for review on certiorari, under Rule 45 of the Calasiao, Pangasinan. The Sheriff left the summons and
Rules of Court, of the Decision1 of the Court of Appeals (CA) in complaint with Oscar Layno, who received the same.5
CA-G.R. CV No. 73995, which affirmed the Decision2 of the
Regional Trial Court (RTC) of Dagupan City, Branch 44, in Civil
Nonetheless, on May 17, 1999, the court rendered judgment
Case No. 2000-0244-D, which declared null and void the decision
ordering the respondent and all persons occupying the property
of the Municipal Trial Court (MTC) of Calasiao, Pangasinan in
for and in the latter’s behalf to vacate the disputed area and to
Civil Case No. 879.3
pay monthly rentals therefor, including actual damages, attorney’s
fees, and exemplary damages. The fallo of the decision reads:
The antecedent facts follow.
1) Ordering the defendant, her representatives, agents
On February 19, 1999, petitioner Filomena Domagas filed a and persons acting under her, to vacate the 68-square
complaint for forcible entry against respondent Vivian Jensen meters which she encroached upon;
before the MTC of Calasiao, Pangasinan. The petitioner alleged
in her complaint that she was the registered owner of a parcel of
2) Ordering the defendant to pay a monthly rental of
land covered by Original Certificate of Title (OCT) No. P-30980,
₱1,000.00 to the plaintiff;
situated in Barangay Buenlag, Calasiao, Pangasinan, and with an
area of 827 square meters. On January 9, 1999 the respondent,
by means of force, strategy and stealth, gained entry into the 3) To pay plaintiff actual damages of ₱20,000.00;
petitioner’s property by excavating a portion thereof and thereafter attorney’s fees of ₱15,000.00 and exemplary damages
constructing a fence thereon. As such, the petitioner was deprived in the amount of ₱20,000.00 plus the costs.
of a 68-square meter portion of her property along the boundary
line. The petitioner prayed that, after due proceedings, judgment
SO ORDERED.6
be rendered in her favor, thus:
In Keister v. Narcereo,38 the Court held that the term "dwelling SO ORDERED.
house" or "residence" are generally held to refer to the time of
service; hence, it is not sufficient to leave the summons at the
former’s dwelling house, residence or place of abode, as the case
may be. Dwelling house or residence refers to the place where
the person named in the summons is living at the time when the
service is made, even though he may be temporarily out of the
country at the time. It is, thus, the service of the summons
intended for the defendant that must be left with the person of
G.R. No. 130974 August 16, 2006 place; (3) the procedure prescribed by the Rules on personal and
substituted service of summons was ignored; (4) defendant was a
resident of Singapore; and (5) whatever judgment rendered in this
MA. IMELDA M. MANOTOC, Petitioner,
case would be ineffective and futile.
vs.
HONORABLE COURT OF APPEALS and AGAPITA TRAJANO
on behalf of the Estate of ARCHIMEDES During the hearing on the Motion to Dismiss, petitioner Manotoc
TRAJANO, Respondents. presented Carlos Gonzales, who testified that he saw defendant
Manotoc as a visitor in Alexandra Homes only two times. He also
identified the Certification of Renato A. de Leon, which stated that
DECISION
Unit E-2104 was owned by Queens Park Realty, Inc.; and at the
time the Certification was issued, the unit was not being leased by
VELASCO, JR., J.: The court’s jurisdiction over a defendant is anyone. Petitioner also presented her Philippine passport and the
founded on a valid service of summons. Without a valid service, Disembarkation/Embarkation Card 7 issued by the Immigration
the court cannot acquire jurisdiction over the defendant, unless Service of Singapore to show that she was a resident of
the defendant voluntarily submits to it. The defendant must be Singapore. She claimed that the person referred to in plaintiff’s
properly apprised of a pending action against him and assured of Exhibits "A" to "EEEE" as "Mrs. Manotoc" may not even be her,
the opportunity to present his defenses to the suit. Proper service but the mother of Tommy Manotoc, and granting that she was the
of summons is used to protect one’s right to due process. one referred to in said exhibits, only 27 out of 109 entries referred
to Mrs. Manotoc. Hence, the infrequent number of times she
allegedly entered Alexandra Homes did not at all establish
The Case
plaintiff’s position that she was a resident of said place.
Petitioner raises the following assignment of errors for the Court’s Section 8 of Rule 14 of the old Revised Rules of Court which
consideration: applies to this case provides:
I. RESPONDENT COURT OF APPEALS COMMITTED [A] SEC. 8. 21 Substituted service. – If the defendant cannot be
SERIOUS ERROR IN RENDERING THE DECISION AND served within a reasonable time as provided in the preceding
RESOLUTION IN QUESTION (ANNEXES A AND B) IN section [personal service on defendant], service may be effected
DEFIANCE OF LAW AND JURISPRUDENCE IN RULING THAT (a) by leaving copies of the summons at the defendant’s
THE TRIAL COURT ACQUIRED JURISDICTION OVER THE residence with some person of suitable age and discretion then
PERSON OF THE PETITIONER THROUGH A SUBSTITUTED residing therein, or (b) by leaving the copies at defendant’s office
SERVICE OF SUMMONS IN ACCORDANCE WITH SECTION 8, or regular place of business with some competent person in
RULE 14 OF THE REVISED RULES OF COURT. charge thereof.
II. RESPONDENT COURT OF APPEALS COMMITTED [A] We can break down this section into the following requirements to
SERIOUS ERROR WHEN IT RULED THAT THERE WAS A effect a valid substituted service:
VALID SERVICE OF SUMMONS ON AN ALLEGED
CARETAKER OF PETITIONER’S RESIDENCE IN COMPLETE
(1) Impossibility of Prompt Personal Service
DEFIANCE OF THE RULING IN CASTILLO VS. CFI OF
BULACAN, BR. IV, G.R. NO. L-55869, FEBRUARY 20, 1984, 127
SCRA 632 WHICH DEFINES THE PROPRIETY OF SUCH The party relying on substituted service or the sheriff must show
SERVICE UPON MERE OVERSEERS OF PREMISES WHERE A that defendant cannot be served promptly or there is impossibility
PARTY SUPPOSEDLY RESIDES. of prompt service. 22 Section 8, Rule 14 provides that the plaintiff
or the sheriff is given a "reasonable time" to serve the summons
to the defendant in person, but no specific time frame is
III. RESPONDENT COURT OF APPEALS COMMITTED [A]
mentioned. "Reasonable time" is defined as "so much time as is
SERIOUS ERROR IN CONCLUDING THAT THE RESIDENCE
necessary under the circumstances for a reasonably prudent and
OF THE HUSBAND IS ALSO THE RESIDENCE OF HIS WIFE
diligent man to do, conveniently, what the contract or duty
CONTRARY TO THE RULING IN THE BANK OF THE
requires that should be done, having a regard for the rights and
PHILIPPINE ISLANDS VS. DE COSTER, G.R. NO. 23181,
possibility of loss, if any[,] to the other party." 23 Under the Rules,
MARCH 16, 1925, 47 PHIL. 594.
the service of summons has no set period. However, when the
court, clerk of court, or the plaintiff asks the sheriff to make the
IV. RESPONDENT COURT OF APPEALS COMMITTED [A] return of the summons and the latter submits the return of
SERIOUS ERROR IN FAILING TO APPLY THE RULE ON summons, then the validity of the summons lapses. The plaintiff
EXTRA-TERRITORIAL SERVICE OF SUMMONS UNDER may then ask for an alias summons if the service of summons has
SECTIONS 17 AND 18, RULE 14 OF THE REVISED RULES OF failed. 24 What then is a reasonable time for the sheriff to effect a
COURT. 17 personal service in order to demonstrate impossibility of prompt
service? To the plaintiff, "reasonable time" means no more than
seven (7) days since an expeditious processing of a complaint is
The assigned errors bring to the fore the crux of the what a plaintiff wants. To the sheriff, "reasonable time" means 15
disagreement—the validity of the substituted service of summons
to 30 days because at the end of the month, it is a practice for the
for the trial court to acquire jurisdiction over petitioner. branch clerk of court to require the sheriff to submit a return of the
summons assigned to the sheriff for service. The Sheriff’s Return
The Court’s Ruling provides data to the Clerk of Court, which the clerk uses in the
Monthly Report of Cases to be submitted to the Office of the
Court Administrator within the first ten (10) days of the succeeding
We GRANT the petition. month. Thus, one month from the issuance of summons can be
considered "reasonable time" with regard to personal service on
Acquisition of Jurisdiction the defendant.
Sheriffs are asked to discharge their duties on the service of competent person in charge of the place. Thus, the person on
summons with due care, utmost diligence, and reasonable whom the substituted service will be made must be the one
promptness and speed so as not to prejudice the expeditious managing the office or business of defendant, such as the
dispensation of justice. Thus, they are enjoined to try their best president or manager; and such individual must have sufficient
efforts to accomplish personal service on defendant. On the other knowledge to understand the obligation of the defendant in the
hand, since the defendant is expected to try to avoid and evade summons, its importance, and the prejudicial effects arising from
service of summons, the sheriff must be resourceful, persevering, inaction on the summons. Again, these details must be contained
canny, and diligent in serving the process on the defendant. For in the Return.
substituted service of summons to be available, there must be
several attempts by the sheriff to personally serve the summons
Invalid Substituted Service in the Case at Bar
within a reasonable period [of one month] which eventually
resulted in failure to prove impossibility of prompt service.
"Several attempts" means at least three (3) tries, preferably on at Let us examine the full text of the Sheriff’s Return, which reads:
least two different dates. In addition, the sheriff must cite why
such efforts were unsuccessful. It is only then that impossibility of
service can be confirmed or accepted. THIS IS TO CERTIFY that on many occasions several
attempts were made to serve the summons with complaint and
annexes issued by this Honorable Court in the above entitled
(2) Specific Details in the Return case, personally upon the defendant IMELDA ‘IMEE’ MARCOS-
MANOTOC located at Alexandra Condominium Corpration [sic] or
Alexandra Homes E-2 Room 104 No. 29 Merlaco [sic] Ave.,
The sheriff must describe in the Return of Summons the facts and
Pasig, Metro-Manila at reasonable hours of the day but to no avail
circumstances surrounding the attempted personal service. 25 The
for the reason that said defendant is usually out of her place
efforts made to find the defendant and the reasons behind the
and/or residence or premises. That on the 15th day of July, 1993,
failure must be clearly narrated in detail in the Return. The date
substituted service of summons was resorted to in accordance
and time of the attempts on personal service, the inquiries made
with the Rules of Court in the Philippines leaving copy of said
to locate the defendant, the name/s of the occupants of the
summons with complaint and annexes thru [sic] (Mr) Macky de la
alleged residence or house of defendant and all other acts done,
Cruz, caretaker of the said defendant, according to (Ms) Lyn
though futile, to serve the summons on defendant must be
Jacinto, Receptionist and Telephone Operator of the said
specified in the Return to justify substituted service. The form on
building, a person of suitable age and discretion, living with the
Sheriff’s Return of Summons on Substituted Service prescribed in
said defendant at the given address who acknowledged the
the Handbook for Sheriffs published by the Philippine Judicial
receipt thereof of said processes but he refused to sign
Academy requires a narration of the efforts made to find the
(emphases supplied).
defendant personally and the fact of failure. 26 Supreme Court
Administrative Circular No. 5 dated November 9, 1989 requires
that "impossibility of prompt service should be shown by stating WHEREFORE, said summons is hereby returned to this
the efforts made to find the defendant personally and the failure of Honorable Court of origin, duly served for its record and
such efforts," which should be made in the proof of service. information.
If the substituted service will be effected at defendant’s house or A meticulous scrutiny of the aforementioned Return readily
residence, it should be left with a person of "suitable age and reveals the absence of material data on the serious efforts to
discretion then residing therein." 27 A person of suitable age and serve the Summons on petitioner Manotoc in person. There is no
discretion is one who has attained the age of full legal capacity clear valid reason cited in the Return why those efforts proved
(18 years old) and is considered to have enough discernment to inadequate, to reach the conclusion that personal service has
understand the importance of a summons. "Discretion" is defined become impossible or unattainable outside the generally couched
as "the ability to make decisions which represent a responsible phrases of "on many occasions several attempts were made to
choice and for which an understanding of what is lawful, right or serve the summons x x x personally," "at reasonable hours during
wise may be presupposed". 28 Thus, to be of sufficient discretion, the day," and "to no avail for the reason that the said defendant is
such person must know how to read and understand English to usually out of her place and/or residence or premises." Wanting in
comprehend the import of the summons, and fully realize the detailed information, the Return deviates from the ruling—in
need to deliver the summons and complaint to the defendant at Domagas v. Jensen 30 and other related cases 31—that the
the earliest possible time for the person to take appropriate pertinent facts and circumstances on the efforts exerted to serve
action. Thus, the person must have the "relation of confidence" to the summons personally must be narrated in the Return. It cannot
the defendant, ensuring that the latter would receive or at least be be determined how many times, on what specific dates, and at
notified of the receipt of the summons. The sheriff must therefore what hours of the day the attempts were made. Given the fact that
determine if the person found in the alleged dwelling or residence the substituted service of summons may be assailed, as in the
of defendant is of legal age, what the recipient’s relationship with present case, by a Motion to Dismiss, it is imperative that the
the defendant is, and whether said person comprehends the pertinent facts and circumstances surrounding the service of
significance of the receipt of the summons and his duty to summons be described with more particularity in the Return or
immediately deliver it to the defendant or at least notify the Certificate of Service.
defendant of said receipt of summons. These matters must be
clearly and specifically described in the Return of Summons.
Besides, apart from the allegation of petitioner’s address in the
Complaint, it has not been shown that respondent Trajano or
(4) A Competent Person in Charge Sheriff Cañelas, who served such summons, exerted
extraordinary efforts to locate petitioner. Certainly, the second
paragraph of the Complaint only states that respondents were
If the substituted service will be done at defendant’s office or
"informed, and so [they] allege" about the address and
regular place of business, then it should be served on a
whereabouts of petitioner. Before resorting to substituted service, Even American case law likewise stresses the principle of strict
a plaintiff must demonstrate an effort in good faith to locate the compliance with statute or rule on substituted service, thus:
defendant through more direct means. 32 More so, in the case in
hand, when the alleged petitioner’s residence or house is doubtful
The procedure prescribed by a statute or rule for substituted or
or has not been clearly ascertained, it would have been better for
constructive service must be strictly pursued. 35There must be
personal service to have been pursued persistently.
strict compliance with the requirements of statutes authorizing
substituted or constructive service. 36
In the case Umandap v. Sabio, Jr., 33 it may be true that the Court
held that a Sheriff’s Return, which states that "despite efforts
Where, by the local law, substituted or constructive service is in
exerted to serve said process personally upon the defendant on
certain situations authorized in the place of personal service when
several occasions the same proved futile," conforms to the
the latter is inconvenient or impossible, a strict and literal
requirements of valid substituted service. However, in view of the
compliance with the provisions of the law must be shown in order
numerous claims of irregularities in substituted service which
to support the judgment based on such substituted or constructive
have spawned the filing of a great number of unnecessary special
service. 37 Jurisdiction is not to be assumed and exercised on the
civil actions of certiorari and appeals to higher courts, resulting in
general ground that the subject matter of the suit is within the
prolonged litigation and wasteful legal expenses, the Court rules
power of the court. The inquiry must be as to whether the
in the case at bar that the narration of the efforts made to find the
requisites of the statute have been complied with, and such
defendant and the fact of failure written in broad and imprecise
compliance must appear on the record. 38 The fact that the
words will not suffice. The facts and circumstances should be
defendant had actual knowledge of attempted service does not
stated with more particularity and detail on the number of
render the service effectual if in fact the process was not served
attempts made at personal service, dates and times of the
in accordance with the requirements of the statute.39
attempts, inquiries to locate defendant, names of occupants of the
alleged residence, and the reasons for failure should be included
in the Return to satisfactorily show the efforts undertaken. That Based on the above principles, respondent Trajano failed to
such efforts were made to personally serve summons on demonstrate that there was strict compliance with the
defendant, and those resulted in failure, would prove impossibility requirements of the then Section 8, Rule 14 (now Section 7, Rule
of prompt personal service. 14 of the 1997 Rules of Civil Procedure).
Moreover, to allow sheriffs to describe the facts and Due to non-compliance with the prerequisites for valid substituted
circumstances in inexact terms would encourage routine service, the proceedings held before the trial court perforce must
performance of their precise duties relating to substituted be annulled.
service—for it would be quite easy to shroud or conceal
carelessness or laxity in such broad terms. Lastly, considering
The court a quo heavily relied on the presumption of regularity in
that monies and properties worth millions may be lost by a
defendant because of an irregular or void substituted service, it is the performance of official duty. It reasons out that "[t]he
but only fair that the Sheriff’s Return should clearly and certificate of service by the proper officer is prima facie evidence
of the facts set out herein, and to overcome the presumption
convincingly show the impracticability or hopelessness of
personal service. arising from said certificate, the evidence must be clear and
convincing." 40
The Process Server submitted the Officer's Return, to wit: In its Order dated May 29, 1995, the RTC denied petitioner's
Motion ruling that the presumption of regularity in the discharge of
the function of the Process Server was not sufficiently overcome
by petitioner's allegation to the contrary; that there was no evident THE COURT OF APPEALS PATENTLY ERRED IN
reason for the Process Server to make a false narration regarding NOT RULING THAT PETITIONER WAS NOT VALIDLY
the service of summons to defaulting defendant in the Officer's SERVED WITH SUMMONS.
Return.12
II
On September 4, 1995, respondents filed a Motion for
Execution.13 On September 22, 1995, petitioner filed an
THE COURT OF APPEALS PATENTLY ERRED IN
Opposition to Motion for Execution contending that she has not
NOT RULING THAT PETITIONER WAS PREVENTED
yet received the Decision and it is not yet final and executory as
FROM FILING RESPONSIVE PLEADING AND
against her.14
DEFENDING AGAINST RESPONDENTS' COMPLAINT
BECAUSE OF FRAUD, ACCIDENT AND MISTAKE.21
In its Order dated January 3, 1996, the RTC, finding that the
Decision dated June 15, 1994 and the Order dated May 29, 1995
Parties filed their respective Memoranda on September 8 and 9,
were indeed not furnished or served upon petitioner, denied
2005.
respondents' motion for execution against petitioner and ordered
that petitioner be furnished the said Decision and Order. 15
Petitioner argues that summons should have been served through
extraterritorial service since she is a non-resident; that the RTC
On March 28, 1996, the RTC issued an Order directing the
should have lifted the order of default since a default judgment is
issuance of the writ of execution against petitioner's co-
frowned upon and parties should be given their day in court; that
defendant.16
she was prevented from filing a responsive pleading and
defending against respondents' complaint
On May 23, 1996, petitioner, through her counsel, finally received
the Decision dated June 15, 1994 and the Order dated May 29,
through fraud, accident or mistake considering that the statement
1995.17
in the Officer's Return that she was personally served summons is
inaccurate; that
Petitioner filed an appeal with the CA questioning the propriety
and validity of the service of summons made upon her.
she does not remember having been served with summons
Respondents opposed the appeal, arguing that the petition should
during the said date but remembers that a man hurled some
be dismissed since it raised pure questions of law, which is not
papers at her while she was entering the elevator and, not
within the CA's jurisdiction to resolve under Section 2 (c) of Rule
knowing what the papers were all about, she threw back the
41 of the Revised Rules of Court; that, in any case, petitioner's
papers to the man before the elevator closed; that she has a valid
reliance on the rule of extraterritorial service is misplaced; that the
and meritorious defense to refute the material allegations of
judgment by default has long been final and executory since as
respondents' complaint.
early as August 1994 petitioner became aware of the judgment by
default when she verified the status of the case; that petitioner
should have filed a motion for new trial or a petition for relief from On the other hand, respondents contend that petitioner was
judgment and not a motion to set aside the order of default since validly served with summons since the rules do not require that
there was already a judgment by default. service be made upon her at her place of residence as alleged in
the complaint or stated in the summons; that extraterritorial
service applies only when the defendant does not reside and is
On May 14, 2002, the CA rendered its Decision affirming the
not found in the Philippines; that petitioner erred in filing a motion
Decision and Order of the RTC18 ruling that it (CA) has jurisdiction
to set aside the order of default at the time when a default
since the petition raised a question of fact, that is, whether
judgment was already rendered by the RTC since the proper
petitioner was properly served with summons; that the judgment
remedy is a motion for new trial or a petition for relief from
by default was not yet final and executory against petitioner since
judgment under Rule 38; that the issue on summons is a pure
the records reveal and the RTC Order dated January 3, 1996
question of law which the CA does not have jurisdiction to resolve
confirmed that she was not furnished or served a copy of the
under Section 2 (c) of Rule 41 of the 1997 Rules of Civil
decision; that petitioner was validly served with summons since
Procedure.22
the complaint for damages is an action in personam and only
personal, not extraterritorial service, of summons, within the
forum, is essential for the acquisition of jurisdiction over her The Court finds it proper to resolve first whether the issue
person; that petitioner's allegations that involved in the appeal filed with the CA is a question of law and
therefore not within the jurisdiction of the CA to resolve.
she did not know what was being served upon her and that
somebody just hurled papers at her were not substantiated by In Murillo v. Consul,23 which was later adopted by the 1997 Rules
competent evidence and cannot overcome the presumption of of Civil Procedure, the Court clarified the three modes of appeal
regularity of performance of official functions in favor of the from decisions of the RTC, namely: (a) ordinary appeal or appeal
Officer's Return. by writ of error, where judgment was rendered in a civil or criminal
action by the RTC in the exercise of original jurisdiction; (b)
petition for review, where judgment was
Petitioner filed a Motion for Reconsideration19 but the CA denied it
in its Resolution dated October 1, 2002.20
rendered by the RTC in the exercise of appellate jurisdiction; and
(c) petition for review to the Supreme Court.
Hence, the present petition anchored on the following grounds:
The Court need not make a long discussion on the propriety of SO ORDERED.
the remedy adopted by petitioner in the RTC of filing a motion to
set aside the order of default at a time when there was already a
judgment by default. As aptly held by the CA, since petitioner was
not furnished or served a copy of the judgment of default, there
was no notice yet of such judgment as against her. Thus, the
remedy of filing a motion to set aside the order of default in the
RTC was proper.
Petitioner's argument that the RTC should have set aside the
order of default and applied the liberal interpretation of rules with
a view of affording parties their day in court is not tenable. While
indeed default orders are not viewed with favor, the party seeking
to have the order of default lifted must
first show that her failure to file an answer or any other responsive
pleading was due to fraud, accident, mistake, or excusable
neglect and then she must show that she has a valid and
meritorious defense.37
A.
b) A correlative obligation of the defendant;
The action instituted by [respondent] affects the parties alone, not Moreover, the allegations made by the respondent that the
the whole world. Hence, it is an action in personam, i.e., any petitioner has property within the Philippines were in support of its
judgment therein is binding only upon the parties properly application for the issuance of a writ of attachment, which was
impleaded. denied by the RTC. Hence, it is clear from the foregoing that the
Complaint filed by the respondent against the petitioner does not
really relate to, or the subject of which is, property within the
xxxx Philippines of the petitioner.
In the same way, the appellate court did not err in denying
In the cases of Metal Engineering Resources Corp. v. Court of
petitioner’s Motion to Dismiss Civil Case No. MC99-605 on the
Appeals,50 International Container Terminal Services, Inc. v. Court
ground of improper venue. In arriving at such conclusion, this
of Appeals,51 and BA Finance Corporation v. Co.,52 the Court
Court quotes with approval the following ratiocination of the RTC:
ruled that if the court does not have jurisdiction to entertain the
main action of the case and dismisses the same, then the
As for the contention that venue was improperly laid, x x x, the compulsory counterclaim, being ancillary to the principal
[trial court] in its ultimate desire that the ends of justice could be controversy, must likewise be dismissed since no jurisdiction
served in its fullest, cannot rule that venue was improperly laid. remained for any grant of relief under the counterclaim.53 If we
follow the aforesaid pronouncement of the Court in the cases
mentioned above, the counterclaim of the herein petitioner being
xxxx compulsory in nature must also be dismissed together with the
Complaint. However, in the case of Pinga vs. Heirs of German
The stipulation as to the venue of a prospective action does not Santiago,54 the Court explicitly expressed that:
preclude the filing of the suit in the residence of the [respondent]
under Section 2, Rule 4, Rules of Court, especially where the Similarly, Justice Feria notes that "the present rule reaffirms the
venue stipulation was imposed by the [petitioner] for its own
right of the defendant to move for the dismissal of the complaint
benefits.48 (Emphasis supplied.) and to prosecute his counterclaim, as stated in the separate
opinion [of Justice Regalado in BA Finance]. Retired Court of
Despite the venue stipulation found in the Distribution Agreement Appeals Justice Hererra pronounces that the amendment to
stipulating that the exclusive jurisdiction over disputes arising from Section 3, Rule 17 [of the 1997 Revised Rules of Civil Procedure]
the same shall lie in the courts of Singapore or of the Territory settles that "nagging question "whether the dismissal of the
(referring to the Philippines), whichever is elected by PEIA (or complaint carries with it the dismissal of the counterclaim, and
petitioner, as PEIA’s alleged successor), the RTC of the opines that by reason of the amendments, the rulings in Metals
Philippines cannot be considered as an improper venue. Truly, Engineering, International Container, and BA Finance "may be
the venue stipulation used the word "exclusive," however, a closer deemed abandoned." x x x.
look on the Distribution Agreement would reveal that the venue
stipulation was really in the alternative i.e., courts of Singapore or x x x, when the Court promulgated the 1997 Rules of Civil
of the Territory, meaning, the Philippines; thus, the court a quo is
Procedure, including the amended Rule 17, those previous jural
not an improper venue for the present case. doctrines that were inconsistent with the new rules incorporated in
the 1997 Rules of Civil Procedure were implicitly abandoned
Nonetheless, it bears to emphasize that despite our findings that insofar as incidents arising after the effectivity of the new
based on the allegations in respondent’s Complaint in Civil Case procedural rules on 1 July 1997. BA Finance, or even the doctrine
No. MC99-605, respondent appears to have a cause of action that a counterclaim may be necessarily dismissed along with the
against the petitioner and that the RTC is the proper venue for the complaint, clearly conflicts with the 1997 Rules of Civil Procedure.
said case, Civil Case No. MC99-605 is still dismissible, for the The abandonment of BA Finance as doctrine extends as far back
RTC never acquired jurisdiction over the person of the petitioner. as 1997, when the Court adopted the new Rules of Civil
The extraterritorial service of summons upon the petitioner Procedure. If, since then, abandonment has not been affirmed in
produces no effect because it can only be done if the action is in jurisprudence, it is only because no proper case has arisen that
rem or quasi in rem. The case for collection of sum of money and would warrant express confirmation of the new rule. That
damages filed by the respondent against the petitioner being an opportunity is here and now, and we thus rule that the dismissal
action in personam, then personal service of summons upon the of a complaint due to fault of the plaintiff is without prejudice to the
right of the defendant to prosecute any pending counterclaims of It may also do well to remember that it is this Court which
whatever naturein the same or separate action. We confirm that mandated that claims for damages and attorney’s fees based on
BA Finance and all previous rulings of the Court that are unfounded suit constitute compulsory counterclaim which must be
inconsistent with this present holding are now pleaded in the same action or, otherwise, it shall be barred. It will
abandoned.55 [Emphasis supplied]. then be iniquitous and the height of injustice to require the
petitioner to make the counterclaim in the present action, under
threat of losing his right to claim the same ever again in any other
It is true that the aforesaid declaration of the Court refers to
court, yet make his right totally dependent on the fate of the
instances covered by Section 3, Rule 17 of the 1997 Revised
respondent’s complaint.
Rules of Civil Procedure56 on dismissal of the complaint due to the
fault of the plaintiff. Nonetheless, it does not also preclude the
application of the same to the instant case just because the If indeed the Court dismisses petitioner’s counterclaim solely on
dismissal of respondent’s Complaint was upon the instance of the the basis of the dismissal of respondent’s Complaint, then what
petitioner who correctly argued lack of jurisdiction over its person. remedy is left for the petitioner? It can be said that he can still file
a separate action to recover the damages and attorney’s fees
based on the unfounded suit for he cannot be barred from doing
Also in the case of Pinga v. Heirs of German Santiago, the Court
so since he did file the compulsory counterclaim in the present
discussed the situation wherein the very filing of the complaint by
action, only that it was dismissed when respondent’s Complaint
the plaintiff against the defendant caused the violation of the
was dismissed. However, this reasoning is highly flawed and
latter’s rights. As to whether the dismissal of such a complaint
irrational considering that petitioner, already burdened by the
should also include the dismissal of the counterclaim, the Court
damages and attorney’s fees it may have incurred in the present
acknowledged that said matter is still debatable, viz:
case, must again incur more damages and attorney’s fees in
pursuing a separate action, when, in the first place, it should not
Whatever the nature of the counterclaim, it bears the same have been involved in any case at all.
integral characteristics as a complaint; namely a cause (or
causes) of action constituting an act or omission by which a party
Since petitioner’s counterclaim is compulsory in nature and its
violates the right of another. The main difference lies in that the
cause of action survives that of the dismissal of respondent’s
cause of action in the counterclaim is maintained by the
complaint, then it should be resolved based on its own merits and
defendant against the plaintiff, while the converse holds true with
evidentiary support.WHEREFORE, premises considered, the
the complaint. Yet, as with a complaint, a counterclaim without a
instant Petition is hereby GRANTED. The Decision of the Court of
cause of action cannot survive.
Appeals, dated 4 April 2006, in CA-G.R. SP No. 78981, affirming
the Orders, dated 4 November 2002 and 20 June 2003, of the
x x x if the dismissal of the complaint somehow eliminates the Regional Trial Court of Mandaluyong City, Branch 212, in Civil
cause(s) of the counterclaim, then the counterclaim cannot Case No. MC99-605, is hereby REVERSED AND SET ASIDE.
survive. Yet that hardly is the case, especially as a general rule. Respondent’s Amended Complaint in Civil Case No. MC99-605
More often than not, the allegations that form the counterclaim are as against the petitioner is hereby ordered DISMISSED, and all
rooted in an act or omission of the plaintiff other than the plaintiff’s the proceedings against petitioner in the court a quo by virtue
very act of filing the complaint. Moreover, such acts or omissions thereof are hereby DECLARED NULL AND VOID. The Regional
imputed to the plaintiff are often claimed to have occurred prior to Trial Court of Mandaluyong City, Branch 212, is DIRECTED to
the filing of the complaint itself. The only apparent exception to proceed without further delay with the resolution of respondent’s
this circumstance is if it is alleged in the counterclaim that the very Complaint in Civil Case No. MC99-605 as to defendant PEIP, as
act of the plaintiff in filing the complaint precisely causes the well as petitioner’s counterclaim. No costs.SO ORDERED.
violation of the defendant’s rights. Yet even in such an instance, it
remains debatable whether the dismissal or withdrawal of the
complaint is sufficient to obviate the pending cause of action
maintained by the defendant against the plaintiff.571awphi1
SO ORDERED.
G.R. No. 168747 October 19, 2007 executed earlier by lifting his hand to affix his thumbmark on the
said affidavit.
VICTORIA REGNER, Petitioner,
vs. Sheriff Melchor A. Solon served the summonses on Cynthia and
CYNTHIA R. LOGARTA, TERESA R. TORMIS and CEBU Teresa at the Borja Family Clinic in Tagbilaran City wherein
COUNTRY CLUB, Inc., Respondents. Melinda worked as a doctor, but Melinda refused to receive the
summonses for her sisters and informed the sheriff that their
lawyer, Atty. Francis Zosa, would be the one to receive the same.
DECISION
Rule 3, Section 7 of the Rules of Court, defines indispensable An indispensable party has been defined as follows:
parties as parties-in-interest without whom there can be no final
determination of an action. As such, they must be joined either as
An indispensable party is a party who has such an interest in the
plaintiffs or as defendants. The general rule with reference to the
controversy or subject matter that a final adjudication cannot be
making of parties in a civil action requires, of course, the joinder
made, in his absence, without injuring or affecting that interest, a
of all necessary parties where possible, and the joinder of all
party who has not only an interest in the subject matter of the
indispensable parties under any and all conditions, their presence
controversy, but also has an interest of such nature that a final
being a sine qua non for the exercise of judicial power. 12 It is
decree cannot be made without affecting his interest or leaving
precisely "when an indispensable party is not before the court
the controversy in such a condition that its final determination may
[that] the action should be dismissed."13 The absence of an
be wholly inconsistent with equity and good conscience. It has
indispensable party renders all subsequent actions of the court
also been considered that an indispensable party is a person in
whose absence there cannot be a determination between the Based on the foregoing disquisitions, the issue of whether the
parties already before the court which is effective, complete, or answer filed by Teresa should benefit Cynthia who was not
equitable. Further, an indispensable party is one who must be served summons need not be discussed.
included in an action before it may properly go forward.
As to determine whether Cynthia was properly served a
A person is not an indispensable party, however, if his interest in summons, it will be helpful to determine first the nature of the
the controversy or subject matter is separable from the interest of action filed against Cynthia and Teresa by petitioner Victoria,
the other parties, so that it will not necessarily be directly or whether it is an action in personam, in rem or quasi in rem. This is
injuriously affected by a decree which does complete justice because the rules on service of summons embodied in Rule 14
between them. Also, a person is not an indispensable party if his apply according to whether an action is one or the other of these
presence would merely permit complete relief between him and actions.
those already parties to the action, or if he has no interest in the
subject matter of the action. It is not a sufficient reason to declare
In a personal action, the plaintiff seeks the recovery of personal
a person to be an indispensable party that his presence will avoid
property, the enforcement of a contract or the recovery of
multiple litigation.16
damages.20 In contrast, in a real action, the plaintiff seeks the
recovery of real property; or, as indicated in Section 2(a), Rule 4
In Servicewide Specialists, Incorporated v. Court of of the then Rules of Court, a real action is an action affecting title
Appeals,17 this Court held that no final determination of a case to real property or for the recovery of possession, or for partition
could be made if an indispensable party is not legally present or condemnation of, or foreclosure of mortgage on, real property.
therein: An action in personam is an action against a person on the basis
of his personal liability, while an action in rem is an action against
the thing itself, instead of against the person.21
An indispensable party is one whose interest will be affected by
the court’s action in the litigation, and without whom no final
determination of the case can be had. The party’s interest in the In an action in personam, personal service of summons or, if this
subject matter of the suit and in the relief sought are so is not possible and he cannot be personally served, substituted
inextricably intertwined with the other parties that his legal service, as provided in Section 7, Rule 14 of the Rules of
presence as a party to the proceeding is an absolute necessity. In Court,22 is essential for the acquisition by the court of jurisdiction
his absence there cannot be a resolution of the dispute of the over the person of a defendant who does not voluntarily submit
parties before the court which is effective, complete, or equitable. himself to the authority of the court.23 If defendant cannot be
served a summons because he is temporarily abroad, but is
otherwise a Philippine resident, service of summons may, by
The rationale for treating all the co-owners of a property as
leave of court, be made by publication.24 Otherwise stated, a
indispensable parties in a suit involving the co-owned property is
resident defendant in an action in personam, who cannot be
explained in Arcelona v. Court of Appeals18 :
personally served a summons, may be summoned either by
means of substituted service in accordance with Section 7, Rule
As held by the Supreme Court, were the courts to permit an 14 of the Rules of Court, or by publication as provided in Sections
action in ejectment to be maintained by a person having merely 15 and 16 of the same Rule.
an undivided interest in any given tract of land, a judgment in
favor of the defendants would not be conclusive as against the
In all of these cases, it should be noted, defendant must be a
other co-owners not parties to the suit, and thus the defendant in
resident of the Philippines; otherwise an action in personam
possession of the property might be harassed by as many
cannot be brought because jurisdiction over his person is
succeeding actions of ejectment, as there might be co-owners of
essential to make a binding decision.
the title asserted against him. The purpose of this provision was
to prevent multiplicity of suits by requiring the person asserting a
right against the defendant to include with him, either as co- On the other hand, if the action is in rem or quasi in rem,
plaintiffs or as co-defendants, all persons standing in the same jurisdiction over the person of the defendant is not essential for
position, so that the whole matter in dispute may be determined giving the court jurisdiction so long as the court acquires
once and for all in one litigation. jurisdiction over the res. If the defendant is a nonresident and he
is not found in the country, summons may be served
extraterritorially in accordance with Section 15, Rule 14 of the
Applying the foregoing definitions and principles to the present
Rules of Court, which provides:
case, this Court finds that any decision in Civil Case No. CEB
23927 cannot bind Cynthia, and the Court cannot nullify the
donation of the property she now co-owns with Teresa, even if Section 15. Extraterritorial service. - When the defendant does not
limited only to the portion belonging to Teresa, to whom summons reside and is not found in the Philippines, and the action affects
was properly served, since ownership of the property is still pro the personal status of the plaintiff or relates to, or the subject of
indiviso. Obviously, Cynthia is an indispensable party in Civil which is, property within the Philippines, in which the defendant
Case No. CEB 23927 without whom the lower court is barred from has or claims a lien or interest, actual or contingent, or in which
making a final adjudication as to the validity of the entire donation. the relief demanded consists, wholly or in part, in excluding the
Without the presence of indispensable parties to a suit or defendant from any interest therein, or the property of the
proceeding, a judgment therein cannot attain finality.19 defendant has been attached within the Philippines, service may,
by leave of court, be effected out of the Philippines by personal
service as under Section 6; or by publication in a newspaper of
Being an indispensable party in Civil Case No. CEB 23927, the
general circulation in such places and for such time as the court
trial court must also acquire jurisdiction over Cynthia’s person
may order, in which case a copy of the summons and order of the
through the proper service of summons.
court shall be sent by registered mail to the last known address of
the defendant, or in any other manner the court may deem
sufficient. Any order granting such leave shall specify a
reasonable time, which shall not be less than sixty (60) days after Being an action in personam, the general rule requires the
notice, within which the defendant must answer. personal service of summons on Cynthia within the Philippines,
but this is not possible in the present case because Cynthia is a
non-resident and is not found within the Philippines.
As stated above, there are only four instances wherein a
defendant who is a non-resident and is not found in the country
may be served a summons by extraterritorial service, to wit: (1) As Cynthia is a nonresident who is not found in the Philippines,
when the action affects the personal status of the plaintiff; (2) service of summons on her must be in accordance with Section
when the action relates to, or the subject of which is property 15, Rule 14 of the Rules of Court. Such service, to be effective
within the Philippines, on which the defendant claims a lien or an outside the Philippines, must be made either (1) by personal
interest, actual or contingent; (3) when the relief demanded in service; (2) by publication in a newspaper of general circulation in
such action consists, wholly or in part, in excluding the defendant such places and for such time as the court may order, in which
from any interest in property located in the Philippines; and (4) case a copy of the summons and order of the court should be
when the defendant non-resident’s property has been attached sent by registered mail to the last known address of the
within the Philippines. In these instances, service of summons defendant; or (3) in any other manner which the court may deem
may be effected by (a) personal service out of the country, with sufficient. The third mode, like the first two, must be made outside
leave of court; (b) publication, also with leave of court; or (c) any the Philippines, such as through the Philippine Embassy in the
other manner the court may deem sufficient.25 foreign country where Cynthia resides.
In such cases, what gives the court jurisdiction in an action in rem Since in the case at bar, the service of summons upon Cynthia
or quasi in rem is that it has jurisdiction over the res, i.e., the was not done by any of the authorized modes, the trial court was
personal status of the plaintiff who is domiciled in the Philippines correct in dismissing petitioner’s complaint.
or the property litigated or attached. Service of summons in the
manner provided in Section 15, Rule 14 of the Rules of Court is
Section 3, Rule 17 of the 1997 Rules of Civil Procedure, states –
not for the purpose of vesting the court with jurisdiction, but for
complying with the requirements of fair play or due process, so
that the defendant will be informed of the pendency of the action SEC. 3. Dismissal due to fault of plaintiff. – If, for no justifiable
against him; and the possibility that property in the Philippines cause, the plaintiff fails to appear on the date of the presentation
belonging to him, or in which he has an interest, might be of his evidence in chief on the complaint, or to prosecute his
subjected to a judgment in favor of the plaintiff and he can thereby action for an unreasonable length of time, or to comply with these
take steps to protect his interest if he is so minded.26 Rules or any order of the court, the complaint may be dismissed
upon motion of the defendant or upon the court's own motion,
without prejudice to the right of the defendant to prosecute his
In petitioner’s Complaint in Civil Case No. CEB No. 23427, she
counterclaim in the same or in a separate action. This dismissal
alleged that Cynthia is residing at 462 West Vine No. 201,
shall have the effect of an adjudication upon the merits, unless
Glendale, California, 912041, U.S.A.; while Teresa is residing at
otherwise declared by the court.
2408 South Hacienda Boulevard, Hacienda Heights, California,
but they usually visit here in the Philippines and can be served
summonses and other processes at the Borja Family Clinic, As can be gleaned from the rule, there are three instances when
Bohol. Pertinent portions of the Complaint read: the complaint may be dismissed due to the plaintiff's fault: (1) if he
fails to appear during a scheduled trial, especially on the date for
the presentation of his evidence in chief; (2) if he fails to
2. Defendant Cynthia R. Logarta is a Filipino, of legal
prosecute his action for an unreasonable length of time; and (3) if
age, married to Ramon Logarta, resident (sic) 463 West
he fails to comply with the rules or any order of the court.28
Vine No.201, Glendale, California, 912041, USA. She
however usually visits in the Philippines and can be
served with summons and other processes of this Considering the circumstances of the case, it can be concluded
Honorable Court at Borja Family Clinic, Tagbilaran, that the petitioner failed to prosecute the case for an
Bohol; unreasonable length of time. There is failure to prosecute when
the plaintiff, being present, is not ready or is unwilling to proceed
with the scheduled trial or when postponements in the past were
3. Defendant Teresa R. Tormis is likewise a Filipino, of
due to the plaintiff's own making, intended to be dilatory or caused
legal age, married to Antonio Tormis, and a resident of
substantial prejudice on the part of the defendant.29
2408 South Hacienda Heights, California, 19745,
U.S.A. She however usually visits in the Philippines and
can be served with summons and other processes of While a court can dismiss a case on the ground of failure to
this Honorable Court at Borja Family Clinic, Tagbilaran, prosecute, the true test for the exercise of such power is whether,
Bohol.27 under the prevailing circumstances, the plaintiff is culpable for
want of due diligence in failing to proceed with reasonable
promptitude.30 As to what constitutes an "unreasonable length of
Petitioner prayed for a declaration of nullity of the deed of
time," within the purview of the above-quoted provision, the Court
donation, to restrain Cebu Country Club, Inc. from transferring title
has ruled that it "depends upon the circumstances of each
and ownership of Proprietary Ownership Certificate No. 0272 to
particular case," and that "the sound discretion of the court" in the
Cynthia and Teresa, and for moral and exemplary damages. Civil
determination of said question "will not be disturbed, in the
Case No. CEB 23927 is evidently an action against Cynthia and
absence of patent abuse"; and that "the burden of showing abuse
Teresa on the basis of their personal liability for the alleged
of judicial discretion is upon the appellant since every
fraudulent transfer of the subject Country Club membership from
presumption is in favor of the correctness of the court's
Luis to their name. In this sense, petitioner questions the
action."31 Likewise, the concept of promptness is a relative term
participation and shares of Cynthia and Teresa in the transferred
and must not unnecessarily be an inflexible one. It connotes an
Country Club membership. Moreover, the membership certificate
action without hesitation and loss of time. As to what constitutes
from the Cebu Country Club, Inc. is a personal property. Thus, the
the term is addressed to the consideration of the trial court,
action instituted by petitioner before the RTC is in personam.
bearing in mind that while actions must be disposed of with in the Philippines for a visit. However, the summons for Cynthia
dispatch, the essential ingredient is the administration of justice was never served upon her.1âwphi1
and not mere speed.32
Although Section 1, Rule 14 of the Rules, imposes upon the clerk
It is well to quote the doctrine laid in Padua v. Ericta, 33 as of court the duty to serve summons, this does not relieve the
accentuated in the subsequent case Marahay v. Melicor34: petitioner of her own duty as the plaintiff in a civil case to
prosecute the case diligently. If the clerk had been negligent, it
was petitioner’s duty to call the court’s attention to that fact. It
Courts should not brook undue delays in the ventilation and
must be noted that it was not even petitioner who called the
determination of causes. It should be their constant effort to
court’s attention that summons had not been served on Cynthia,
assure that litigations are prosecuted and resolved with dispatch.
but Teresa. This despite the fact that petitioner was aware, as
Postponements of trials and hearings should not be allowed
early as 15 June 1999, when she filed her complaint, that the
except on meritorious grounds; and the grant or refusal thereof
summonses could not be served on Teresa and Cynthia, as she
rests entirely in the sound discretion of the Judge. It goes without
admitted therein that Teresa and Cynthia were residing abroad.
saying, however, that discretion must be reasonably and wisely
Petitioner as plaintiff should have asked that Cynthia and Teresa
exercised, in the light of the attendant circumstances. Some
be summoned by publication at the earliest possible time. She
reasonable deferment of the proceedings may be allowed or
cannot idly sit by and wait till this is done. She cannot afterwards
tolerated to the end that cases may be adjudged only after full
wash her hands and say that the delay was not her fault. She
and free presentation of evidence by all the parties, especially
cannot simply "fold [her] hands" and say that it is the duty of the
where the deferment would cause no substantial prejudice to any
clerk of court to have the summonses served on Cynthia and
part. The desideratum of a speedy disposition of cases should
Teresa for the prompt disposition of her case. If there were no
not, if at all possible, result in the precipitate loss of a party’s right
means of summoning any of the defendants, petitioner should
to present evidence and either in plaintiff's being non-suited or the
have so informed the court within a reasonable period of time, so
defendant's being pronounced liable under an ex parte judgment.
that the case could be disposed of one way or another and the
administration of justice would not suffer delay. The non-
"[T]rial courts have x x x the duty to dispose of controversies after performance of that duty by petitioner as plaintiff is an express
trial on the merits whenever possible. It is deemed an abuse of ground for dismissing an action. For, indeed, this duty imposed
discretion for them, on their own motion, ‘to enter a dismissal upon her was precisely to spur on the slothful.
which is not warranted by the circumstances of the case’
(Municipality of Dingras v. Bonoan, 85 Phil. 458-59 [1950]). While
For failure to diligently pursue the complaint, petitioner trifled with
it is true that the dismissal of an action on grounds specified
the right of the respondents to speedy trial. It also sorely tried the
under Section 3, Rule 17 of the Revised Rules of Court is
patience of the court and wasted its precious time and attention.
addressed to their discretion (Flores v. Phil. Alien Property
To allow petitioner to wait until such time that summonses were
Administrator, 107 Phil. 778 [1960]; Montelibano v. Benares, 103
served on respondents would frustrate the protection against
Phil. 110 [1958]; Adorable v. Bonifacio, 105 Phil. 1269 [1959];
unreasonable delay in the prosecution of cases and violate the
Inter-Island Gas Service, Inc. v. De la Gerna, L-17631, October
constitutional mandate of speedy dispensation of justice which
19, 1966, 18 SCRA 390), such discretion must be exercised
would in time erode the people’s confidence in the judiciary. We
soundly with a view to the circumstances surrounding each
take a dim view of petitioner’s complacent attitude. Ex nihilo nihil
particular case (Vernus-Sanciangco v. Sanciangco, L-12619, April
fit.35
28, 1962, 4 SCRA 1209). If facts obtain that serve as mitigating
circumstances for the delay, the same should be considered and
dismissal denied or set aside (Rudd v. Rogerson, 15 ALR 2d 672; Likewise, petitioner’s counsel inexplicably failed to diligently
Cervi v. Greenwood, 147 Colo. 190, 362 P.2d 1050 [1961]), pursue the service of summonses on respondents. These were
especially where the suit appears to be meritorious and the acts of negligence, laxity and truancy which the court could have
plaintiff was not culpably negligent and no injury results to very easily avoided or timely remedied. Petitioner and her counsel
defendant (27 C.J.S. 235-36; 15 ALR 3rd 680)." (Abinales vs. could not avail themselves of this Court’s sympathy, considering
Court of First Instance of Zamboanga City, Br. I, 70 SCRA 590, their apparent complacency, if not delinquency, in the conduct of
595). their litigation.
"It is true that the allowance or denial of petitions for Considering the foregoing, we sustain the dismissal by the trial
postponement and the setting aside of orders previously issued, court of the petitioner’s complaint for failure to prosecute for a
rest principally upon the sound discretion of the judge to whom period of more than one year (from the time of filing thereof on 15
they are addressed, but always predicated on the consideration June 1997 until Teresa’s filing of a motion to dismiss).
that more than the mere convenience of the courts or of the
parties of the case, the ends of justice and fairness would be
WHEREFORE, premises considered, the instant petition is
served thereby (Camara Vda. de Zubiri v. Zubiri, et al., L-16745,
DENIED for lack of merit and the assailed Decision dated 6 May
December 17, 1966). When no substantial rights are affected and
2005 of the Court of Appeals in CA-G.R. CV No. 71028 is hereby
the intention to delay is not manifest, the corresponding motion to
AFFIRMED. Costs against petitioner.
transfer the hearing having been filed accordingly, it is sound
judicial discretion to allow them (Rexwell Corp. v. Canlas, L-
16746, December 30, 1961)." x x x. SO ORDERED.
This Court recalls that the complaint herein was filed on 15 June
1999. The summonses for Cynthia and Teresa were served on
their sister Melinda at the Borja Family Clinic in Tagbilaran City,
but the latter refused to receive the same. It was only on 1 June
2000 that summons was served on Teresa at Room 304,
Regency Crest Condominium, Banilad, Cebu City, when she was
G.R. No. 165273 March 10, 2010 On May 7, 2004, the RTC issued its assailed Order granting
private respondent's motion to dismiss. It found that while the
summons was served at private respondent's house and received
LEAH PALMA, Petitioner,
by respondent's husband, such service did not qualify as a valid
vs.
service of summons on her as she was out of the country at the
HON. DANILO P. GALVEZ, in his capacity as PRESIDING
time the summons was served, thus, she was not personally
JUDGE of the REGIONAL TRIAL COURT OF ILOILO CITY,
served a summons; and even granting that she knew that a
BRANCH 24; and PSYCHE ELENA AGUDO, Respondents.
complaint was filed against her, nevertheless, the court did not
acquire jurisdiction over her person as she was not validly served
DECISION with summons; that substituted service could not be resorted to
since it was established that private respondent was out of the
country, thus, Section 16, Rule 14 provides for the service of
PERALTA, J.:
summons on her by publication.
Assailed in this petition for certiorari under Rule 65 of the Rules of Petitioner filed a motion for reconsideration, which the RTC
Court are the Orders dated May 7, 20041 and July 21, 20042 of denied in its Order dated July 21, 2004.
the Regional Trial Court (RTC) of Iloilo City, Branch 24, granting
the motion to dismiss filed by private respondent Psyche Elena
Agudo and denying reconsideration thereof, respectively. Petitioner is now before us alleging that the public respondent
committed a grave abuse of discretion amounting to lack or
excess of jurisdiction when he ruled that:
On July 28, 2003, petitioner Leah Palma filed with the RTC an
action for damages against the Philippine Heart Center (PHC), Dr.
Danilo Giron and Dr. Bernadette O. Cruz, alleging that the I. Substituted service of summons upon private
defendants committed professional fault, negligence and omission respondent, a defendant residing in the Philippines but
for having removed her right ovary against her will, and losing the temporarily outside the country is invalid;
same and the tissues extracted from her during the surgery; and
that although the specimens were subsequently found, petitioner
II. Section 16, Rule 14, of the 1997 Rules of Civil
was doubtful and uncertain that the same was hers as the label
Procedure limits the mode of service of summons upon
therein pertained that of somebody else. Defendants filed their
a defendant residing in the Philippines, but temporarily
respective Answers. Petitioner subsequently filed a Motion for
outside the country, exclusively to extraterritorial
Leave to Admit Amended Complaint, praying for the inclusion of
service of summons under section 15 of the same rule;
additional defendants who were all nurses at the PHC, namely,
Karla Reyes, Myra Mangaser and herein private respondent
Agudo. Thus, summons were subsequently issued to them. III. In not ruling that by filing two (2) motions for
extension of time to file Answer, private respondent had
voluntarily submitted herself to the jurisdiction of
On February 17, 2004, the RTC's process server submitted his
respondent court, pursuant to Section 20, Rule 14 of
return of summons stating that the alias summons, together with a
the 1997 Rules of Civil Procedure, hence, equivalent to
copy of the amended complaint and its annexes, were served
having been served with summons;
upon private respondent thru her husband Alfredo Agudo, who
received and signed the same as private respondent was out of
the country.3 IV. The cases cited in his challenged Order of May 7,
2004 constitute stare decisis despite his own admission
that the factual landscape in those decided cases are
On March 1, 2004, counsel of private respondent filed a Notice of
entirely different from those in this case.10
Appearance and a Motion for Extension of Time to File
Answer4 stating that he was just engaged by private respondent's
husband as she was out of the country and the Answer was Petitioner claims that the RTC committed a grave abuse of
already due. discretion in ruling that Section 16, Rule 14, limits the service of
summons upon the defendant-resident who is temporarily out of
the country exclusively by means of extraterritorial service, i.e., by
On March 15, 2004, private respondent's counsel filed a Motion
personal service or by publication, pursuant to Section 15 of the
for Another Extension of Time to File Answer,5 and stating that
same Rule. Petitioner further argues that in filing two motions for
while the draft answer was already finished, the same would be
extension of time to file answer, private respondent voluntarily
sent to private respondent for her clarification/verification before
submitted to the jurisdiction of the court.
the Philippine Consulate in Ireland; thus, the counsel prayed for
another 20 days to file the Answer.
In her Comment, private respondent claims that
petitioner's certiorari under Rule 65 is not the proper remedy but a
On March 30, 2004, private respondent filed a Motion to
petition for review under Rule 45, since the RTC ruling cannot be
Dismiss6 on the ground that the RTC had not acquired jurisdiction
considered as having been issued with grave abuse of discretion;
over her as she was not properly served with summons, since she
that the petition was not properly verified because while the
was temporarily out of the country; that service of summons on
verification was dated September 15, 2004, the petition was dated
her should conform to Section 16, Rule 14 of the Rules of Court.
September 30, 2004. She insists that since she was out of the
Petitioner filed her Opposition7 to the motion to dismiss, arguing
country at the time the service of summons was made, such
that a substituted service of summons on private respondent's
service should be governed by Section 16, in relation to Section
husband was valid and binding on her; that service of summons
15, Rule 14 of the Rules of Court; that there was no voluntary
under Section 16, Rule 14 was not exclusive and may be effected
appearance on her part when her counsel filed two motions for
by other modes of service, i.e., by personal or substituted service.
extension of time to file answer, since she filed her motion to
Private respondent filed a Comment8 on petitioner's Opposition,
dismiss on the ground of lack of jurisdiction within the period
and petitioner filed a Reply9 thereto.
provided under Section 1, Rule 16 of the Rules of Court.
In her Reply, petitioner claims that the draft of the petition and the explanation. While Section 1, Rule 65 requires that the petition
verification and certification against forum shopping were sent to for certiorari be verified, this is not an absolute necessity where
her for her signature earlier than the date of the finalized petition, the material facts alleged are a matter of record and the questions
since the petition could not be filed without her signed verification. raised are mainly of law.15 In this case, the issue raised is purely
Petitioner avers that when private respondent filed her two of law.
motions for extension of time to file answer, no special
appearance was made to challenge the validity of the service of
Now on the merits, the issue for resolution is whether there was a
summons on her.
valid service of summons on private respondent.
LEONARDO-DE CASTRO, J.: Meanwhile, on December 28, 2006, the trial court issued an Order
directing respondent to answer some of the questions in
petitioner’s Interrogatories to Plaintiff dated September 7, 2006.
This is a Petition for Review on Certiorari assailing the
Decision1 of the Court of Appeals dated September 8, 2006 in
CA-G.R. SP No. 94382 and its Resolution2 dated December 12, Notwithstanding the foregoing, petitioner filed the present petition
2006, denying the Motion for Reconsideration. assailing the September 8, 2006 Decision and the December 12,
2006 Resolution of the Court of Appeals. Arguing against the
ruling of the appellate court, petitioner insists that (a) an order
On August 30, 2005, respondent Lepanto Consolidated Mining denying a motion to dismiss may be the proper subject of a
Company filed with the Regional Trial Court (RTC) of Makati City petition for certiorari; and (b) the trial court committed grave
a Complaint3 against petitioner NM Rothschild & Sons (Australia)
abuse of discretion in not finding that it had not validly acquired
Limited praying for a judgment declaring the loan and hedging jurisdiction over petitioner and that the plaintiff had no cause of
contracts between the parties void for being contrary to Article action.
20184 of the Civil Code of the Philippines and for damages. The
Complaint was docketed as Civil Case No. 05-782, and was
raffled to Branch 150. Upon respondent’s (plaintiff’s) motion, the Respondent, on the other hand, posits that: (a) the present
trial court authorized respondent’s counsel to personally bring the Petition should be dismissed for not being filed by a real party in
summons and Complaint to the Philippine Consulate General in interest and for lack of a proper verification and certificate of non-
Sydney, Australia for the latter office to effect service of summons forum shopping; (b) the Court of Appeals correctly ruled that
on petitioner (defendant). certiorari was not the proper remedy; and (c) the trial court
correctly denied petitioner’s motion to dismiss.
On October 20, 2005, petitioner filed a Special Appearance With
Motion to Dismiss5 praying for the dismissal of the Complaint on Our discussion of the issues raised by the parties follows:
the following grounds: (a) the court has not acquired jurisdiction
over the person of petitioner due to the defective and improper
Whether petitioner is a real party in interest
service of summons; (b) the Complaint failed to state a cause of
action and respondent does not have any against petitioner; (c)
the action is barred by estoppel; and (d) respondent did not come Respondent argues that the present Petition should be dismissed
to court with clean hands. on the ground that petitioner no longer existed as a corporation at
the time said Petition was filed on February 1, 2007. Respondent
points out that as of the date of the filing of the Petition, there is
On November 29, 2005, petitioner filed two Motions: (1) a Motion
no such corporation that goes by the name NM Rothschild and
for Leave to take the deposition of Mr. Paul Murray (Director, Risk
Sons (Australia) Limited. Thus, according to respondent, the
Management of petitioner) before the Philippine Consul General;
present Petition was not filed by a real party in interest, citing our
and (2) a Motion for Leave to Serve Interrogatories on
ruling in Philips Export B.V. v. Court of Appeals,10 wherein we
respondent.
held:
On April 3, 2006, petitioner sought redress via a Petition for In its Memorandum12 before this Court, petitioner started to refer
Certiorari9 with the Court of Appeals, alleging that the trial court to itself as Investec Australia Limited (formerly "NM Rothschild &
committed grave abuse of discretion in denying its Motion to Sons [Australia] Limited") and captioned said Memorandum
Dismiss. The Petition was docketed as CA-G.R. SP No. 94382. accordingly. Petitioner claims that NM Rothschild and Sons
(Australia) Limited still exists as a corporation under the laws of estoppel; and (d) respondent did not come to court with clean
Australia under said new name. It presented before us documents hands.
evidencing the process in the Australian Securities & Investment
Commission on the change of petitioner’s company name from
As correctly ruled by both the trial court and the Court of Appeals,
NM Rothschild and Sons (Australia) Limited to Investec Australia
the alleged absence of a cause of action (as opposed to the
Limited.13
failure to state a cause of action), the alleged estoppel on the part
of petitioner, and the argument that respondent is in pari delicto in
We find the submissions of petitioner on the change of its the execution of the challenged contracts, are not grounds in a
corporate name satisfactory and resolve not to dismiss the Motion to Dismiss as enumerated in Section 1, Rule 1617 of the
present Petition for Review on the ground of not being prosecuted Rules of Court. Rather, such defenses raise evidentiary issues
under the name of the real party in interest. While we stand by our closely related to the validity and/or existence of respondent’s
pronouncement in Philips Export on the importance of the alleged cause of action and should therefore be threshed out
corporate name to the very existence of corporations and the during the trial.
significance thereof in the corporation’s right to sue, we shall not
go so far as to dismiss a case filed by the proper party using its
As regards the allegation of failure to state a cause of action,
former name when adequate identification is presented. A real
while the same is usually available as a ground in a Motion to
party in interest is the party who stands to be benefited or injured
Dismiss, said ground cannot be ruled upon in the present Petition
by the judgment in the suit, or the party entitled to the avails of the
without going into the very merits of the main case.
suit.14 There is no doubt in our minds that the party who filed the
present Petition, having presented sufficient evidence of its
identity and being represented by the same counsel as that of the It is basic that "[a] cause of action is the act or omission by which
defendant in the case sought to be dismissed, is the entity that a party violates a right of another."18 Its elements are the
will be benefited if this Court grants the dismissal prayed for. following: (1) a right existing in favor of the plaintiff, (2) a duty on
the part of the defendant to respect the plaintiff's right, and (3) an
act or omission of the defendant in violation of such right.19 We
Since the main objection of respondent to the verification and
have held that to sustain a Motion to Dismiss for lack of cause of
certification against forum shopping likewise depends on the
action, the complaint must show that the claim for relief does not
supposed inexistence of the corporation named therein, we give
exist and not only that the claim was defectively stated or is
no credit to said objection in light of the foregoing discussion.
ambiguous, indefinite or uncertain.20
In the case at bar, respondent asserts in the Complaint that the Sec. 12. Service upon foreign private juridical entity. – When the
Hedging Contracts are void for being contrary to Article 201825 of defendant is a foreign private juridical entity which has
the Civil Code. Respondent claims that under the Hedging transacted business in the Philippines, service may be made
Contracts, despite the express stipulation for deliveries of gold, on its resident agent designated in accordance with law for that
the intention of the parties was allegedly merely to compel each purpose, or, if there be no such agent, on the government official
other to pay the difference between the value of the gold at the designated by law to that effect, or on any of its officers or agents
forward price stated in the contract and its market price at the within the Philippines. (Emphasis supplied.)
supposed time of delivery.
This is a significant amendment of the former Section 14 of said
Whether such an agreement is void is a mere allegation of a rule which previously provided:
conclusion of law, which therefore cannot be hypothetically
admitted. Quite properly, the relevant portions of the contracts
Sec. 14. Service upon private foreign corporations. — If the
sought to be nullified, as well as a copy of the contract itself, are
defendant is a foreign corporation, or a nonresident joint stock
incorporated in the Complaint. The determination of whether or
company or association, doing business in the Philippines,
not the Complaint stated a cause of action would therefore involve
service may be made on its resident agent designated in
an inquiry into whether or not the assailed contracts are void
accordance with law for that purpose, or if there be no such
under Philippine laws. This is, precisely, the very issue to be
agent, on the government official designated by law to that effect,
determined in Civil Case No. 05-782. Indeed, petitioner’s defense
or on any of its officers or agents within the Philippines.
against the charge of nullity of the Hedging Contracts is the
(Emphasis supplied.)
purported intent of the parties that actual deliveries of gold be
made pursuant thereto. Such a defense requires the presentation
of evidence on the merits of the case. An issue that "requires the The coverage of the present rule is thus broader. 30 Secondly, the
contravention of the allegations of the complaint, as well as the service of summons to petitioner through the DFA by the
full ventilation, in effect, of the main merits of the case, should not conveyance of the summons to the Philippine Consulate General
be within the province of a mere Motion to Dismiss."26 The trial in Sydney, Australia was clearly made not through the above-
court, therefore, correctly denied the Motion to Dismiss on this quoted Section 12, but pursuant to Section 15 of the same rule
ground. which provides:
It is also settled in jurisprudence that allegations of estoppel and Sec. 15. Extraterritorial service. – When the defendant does not
bad faith require proof. Thus, in Parañaque Kings Enterprises, reside and is not found in the Philippines, and the action affects
Inc. v. Court of Appeals,27 we ruled: the personal status of the plaintiff or relates to, or the subject of
which is property within the Philippines, in which the defendant
has or claims a lien or interest, actual or contingent, or in which
Having come to the conclusion that the complaint states a valid
the relief demanded consists, wholly or in part, in excluding the
cause of action for breach of the right of first refusal and that the
defendant from any interest therein, or the property of the
trial court should thus not have dismissed the complaint, we find
defendant has been attached within the Philippines, service may,
no more need to pass upon the question of whether the complaint
by leave of court, be effected out of the Philippines by personal
states a cause of action for damages or whether the complaint
service as under section 6; or by publication in a newspaper of
is barred by estoppel or laches. As these matters require
general circulation in such places and for such time as the court
presentation and/or determination of facts, they can be best
may order, in which case a copy of the summons and order of the
resolved after trial on the merits.28 (Emphases supplied.)
court shall be sent by registered mail to the last known address of
the defendant, or in any other manner the court may deem
On the proposition in the Motion to Dismiss that respondent has sufficient. Any order granting such leave shall specify a
come to court with unclean hands, suffice it to state that the reasonable time, which shall not be less than sixty (60) days after
determination of whether one acted in bad faith and whether notice, within which the defendant must answer.
damages may be awarded is evidentiary in nature. Thus, we have
previously held that "[a]s a matter of defense, it can be best
Respondent argues31 that extraterritorial service of summons
passed upon after a full-blown trial on the merits."29
upon foreign private juridical entities is not proscribed under the
Rules of Court, and is in fact within the authority of the trial court
Jurisdiction over the person of petitioner to adopt, in accordance with Section 6, Rule 135:
Petitioner alleges that the RTC has not acquired jurisdiction over Sec. 6. Means to carry jurisdiction into effect. – When by law
its person on account of the improper service of summons. jurisdiction is conferred on a court or judicial officer, all auxiliary
Summons was served on petitioner through the DFA, with writs, processes and other means necessary to carry it into effect
respondent’s counsel personally bringing the summons and may be employed by such court or officer; and if the procedure to
Complaint to the Philippine Consulate General in Sydney, be followed in the exercise of such jurisdiction is not specifically
Australia. pointed out by law or by these rules, any suitable process or
mode of proceeding may be adopted which appears comformable
to the spirit of said law or rules.
In the pleadings filed by the parties before this Court, the parties
entered into a lengthy debate as to whether or not petitioner is
doing business in the Philippines. However, such discussion is
Section 15, Rule 14, however, is the specific provision dealing It is likewise settled that "[a]n action in personam is lodged
precisely with the service of summons on a defendant which does against a person based on personal liability; an action in rem is
not reside and is not found in the Philippines, while Rule 135 directed against the thing itself instead of the person; while an
(which is in Part V of the Rules of Court entitled Legal Ethics) action quasi in rem names a person as defendant, but its object is
concerns the general powers and duties of courts and judicial to subject that person’s interest in a property to a corresponding
officers. lien or obligation."37
Breaking down Section 15, Rule 14, it is apparent that there are The Complaint in the case at bar is an action to declare the loan
only four instances wherein a defendant who is a non-resident and Hedging Contracts between the parties void with a
and is not found in the country may be served with summons by prayer for damages. It is a suit in which the plaintiff seeks to be
extraterritorial service, to wit: (1) when the action affects the freed from its obligations to the defendant under a contract and to
personal status of the plaintiffs; (2) when the action relates to, or hold said defendant pecuniarily liable to the plaintiff for entering
the subject of which is property, within the Philippines, in which into such contract. It is therefore an action in personam, unless
the defendant claims a lien or an interest, actual or contingent; (3) and until the plaintiff attaches a property within the Philippines
when the relief demanded in such action consists, wholly or in belonging to the defendant, in which case the action will be
part, in excluding the defendant from any interest in property converted to one quasi in rem.
located in the Philippines; and (4) when the defendant non-
resident's property has been attached within the Philippines. In
Since the action involved in the case at bar is in personam and
these instances, service of summons may be effected by (a)
since the defendant, petitioner Rothschild/Investec, does not
personal service out of the country, with leave of court; (b)
reside and is not found in the Philippines, the Philippine courts
publication, also with leave of court; or (c) any other manner the
cannot try any case against it because of the impossibility of
court may deem sufficient.32
acquiring jurisdiction over its person unless it voluntarily appears
in court.38
Proceeding from this enumeration, we held in Perkin Elmer
Singapore Pte Ltd. v. Dakila Trading Corporation33 that:
In this regard, respondent vigorously argues that petitioner should
be held to have voluntarily appeared before the trial court when it
Undoubtedly, extraterritorial service of summons applies prayed for, and was actually afforded, specific reliefs from the trial
only where the action is in rem or quasi in rem, but not if an court.39 Respondent points out that while petitioner’s Motion to
action is in personam. Dismiss was still pending, petitioner prayed for and was able to
avail of modes of discovery against respondent, such as written
interrogatories, requests for admission, deposition, and motions
When the case instituted is an action in rem or quasi in rem,
for production of documents.40
Philippine courts already have jurisdiction to hear and decide the
case because, in actions in rem and quasi in rem, jurisdiction over
the person of the defendant is not a prerequisite to confer Petitioner counters that under this Court’s ruling in the leading
jurisdiction on the court, provided that the court acquires case of La Naval Drug Corporation v. Court of Appeals, 41 a party
jurisdiction over the res. Thus, in such instance, extraterritorial may file a Motion to Dismiss on the ground of lack of jurisdiction
service of summons can be made upon the defendant. The said over its person, and at the same time raise affirmative defenses
extraterritorial service of summons is not for the purpose of and pray for affirmative relief, without waiving its objection to the
vesting the court with jurisdiction, but for complying with the acquisition of jurisdiction over its person.42
requirements of fair play or due process, so that the defendant will
be informed of the pendency of the action against him and the
It appears, however, that petitioner misunderstood our ruling in La
possibility that property in the Philippines belonging to him or in
Naval. A close reading of La Naval reveals that the Court
which he has an interest may be subjected to a judgment in favor
intended a distinction between the raising of affirmative defenses
of the plaintiff, and he can thereby take steps to protect his
in an Answer (which would not amount to acceptance of the
interest if he is so minded. On the other hand, when the
jurisdiction of the court) and the prayer for affirmative reliefs
defendant or respondent does not reside and is not found in
(which would be considered acquiescence to the jurisdiction of
the Philippines, and the action involved is in personam,
the court):
Philippine courts cannot try any case against him because of
the impossibility of acquiring jurisdiction over his person
unless he voluntarily appears in court.34 (Emphases supplied.) In the same manner that a plaintiff may assert two or more
causes of action in a court suit, a defendant is likewise
expressly allowed, under Section 2, Rule 8, of the Rules of
In Domagas v. Jensen,35 we held that:
Court, to put up his own defenses alternatively or even
hypothetically. Indeed, under Section 2, Rule 9, of the Rules of
[T]he aim and object of an action determine its character. Court, defenses and objections not pleaded either in a motion to
Whether a proceeding is in rem, or in personam, or quasi in rem dismiss or in an answer, except for the failure to state a cause of
for that matter, is determined by its nature and purpose, and by action, are deemed waived. We take this to mean that a
these only. A proceeding in personam is a proceeding to enforce defendant may, in fact, feel enjoined to set up, along with his
personal rights and obligations brought against the person and is objection to the court's jurisdiction over his person, all other
based on the jurisdiction of the person, although it may involve his possible defenses. It thus appears that it is not the invocation of
right to, or the exercise of ownership of, specific property, or seek any of such defenses, but the failure to so raise them, that can
to compel him to control or dispose of it in accordance with the result in waiver or estoppel. By defenses, of course, we refer to
mandate of the court. The purpose of a proceeding in personam the grounds provided for in Rule 16 of the Rules of Court that
is to impose, through the judgment of a court, some responsibility must be asserted in a motion to dismiss or by way of
or liability directly upon the person of the defendant. Of this affirmative defenses in an answer.
character are suits to compel a defendant to specifically perform
some act or actions to fasten a pecuniary liability on him. 36
Mindful of the foregoing, in Signetics Corporation vs. Court In view of the above, we therefore rule that petitioner, by seeking
of Appeals and Freuhauf Electronics Phils., Inc. (225 SCRA affirmative reliefs from the trial court, is deemed to have
737, 738), we lately ruled: voluntarily submitted to the jurisdiction of said court. A party
cannot invoke the jurisdiction of a court to secure affirmative relief
against his opponent and after obtaining or failing to obtain such
"This is not to say, however, that the petitioner's right to
relief, repudiate or question that same
question the jurisdiction of the court over its person is now
jurisdiction.48 Consequently, the trial court cannot be considered
to be deemed a foreclosed matter. If it is true, as Signetics
to have committed grave abuse of discretion amounting to lack or
claims, that its only involvement in the Philippines was through a
excess of jurisdiction in the denial of the Motion to Dismiss on
passive investment in Sigfil, which it even later disposed of, and
account of failure to acquire jurisdiction over the person of the
that TEAM Pacific is not its agent, then it cannot really be said to
defendant.
be doing business in the Philippines. It is a defense, however, that
requires the contravention of the allegations of the complaint, as
well as a full ventilation, in effect, of the main merits of the case, WHEREFORE, the Petition for Review on Certiorari is DENIED.
which should not thus be within the province of a mere motion to The Decision of the Court of Appeals dated September 8, 2006
dismiss. So, also, the issue posed by the petitioner as to whether and its Resolution dated December 12, 2006 in CA-G.R. SP No.
a foreign corporation which has done business in the country, but 94382 are hereby AFFIRMED.
which has ceased to do business at the time of the filing of a
complaint, can still be made to answer for a cause of action which
No pronouncement as to costs.
accrued while it was doing business, is another matter that would
yet have to await the reception and admission of evidence. Since
these points have seasonably been raised by the petitioner, SO ORDERED.
there should be no real cause for what may understandably
be its apprehension, i.e., that by its participation during the
trial on the merits, it may, absent an invocation of separate or
independent reliefs of its own, be considered to have
voluntarily submitted itself to the court's
jurisdiction."43 (Emphases supplied.)
Thus, while mindful of our ruling in La Naval and the new Section
20, Rule 20, this Court, in several cases, ruled that seeking
affirmative relief in a court is tantamount to voluntary appearance
therein.45 Thus, in Philippine Commercial International Bank v. Dy
Hong Pi,46 wherein defendants filed a "Motion for Inhibition
without submitting themselves to the jurisdiction of this Honorable
Court" subsequent to their filing of a "Motion to Dismiss (for Lack
of Jurisdiction)," we held:
This is a petition for review on certiorari1 challenging the In its now assailed Decision,16 the CA set aside the RTC Decision
Decision2 dated January 5, 2012 and Resolution3 dated June 27, and revoked the order to cancel or restrict Ocampo's Philippine
2012 of the Court of Appeals (CA) in CA-G.R. SP No. 113475. passport (CA Decision). The CA first settled the issue of
The CA granted the petition for certiorarifiled by respondent Helen procedural due process, particularly whether Ocampo was
M. Ocampo (Ocampo) and set aside the Decision4 dated properly served with summons. It held that since Ocampo's
September 14, 2009 of the Regional Trial Court (RTC) in Civil whereabouts were unknown, summons should have been served
Case No. MC08-3775 which granted BDO Remittance (Italia) in accordance with Section 14, Rule 14 of the Rules of Civil
S.P.A. 's (BDO Remittance) petition for recognition of foreign Procedure. The sheriff however, erroneously effected the
judgment. substituted service of summons under Section 7 of Rule 14. Thus,
the CA concluded that the RTC did not acquire jurisdiction over
Ocampo, and the RTC Decision against her is null and void. It
The core issue being raised is whether service of summons was also found that the RTC acted in grave abuse of discretion when it
validly effected upon respondent, who lives in Italy, through recognized a foreign judgment of a criminal case and ordered the
substituted service.
DFA to restrict or cancel Ocampo's passport.17
BDO Remittance, a corporation with principal office in Italy, hired After the CA denied its motion for reconsideration, BDO
respondent Ocampo as a remittance processor in September
Remittance filed the present petition for review under Rule 45
2002. She was dismissed in February 2004 for misappropriating arguing that: (1) Ocampo availed of the wrong remedy; and (2)
the sum of €24,035.60 by falsifying invoices of money payments the RTC did not gravely abuse its discretion in granting the
relating to customers' money transfer orders from February to petition for recognition of foreign judgment and ordering the DFA
December 2003.5 to restrict or cancel Ocampo's passport.18
Accordingly, BDO Remittance filed a criminal complaint against In her comment,19 Ocampo explained that BDO Remittance's
Ocampo for the same acts before the Court of Turin, Italy. insistence on the enforcement of Court of Turin Decision is
Ocampo pleaded guilty to the offense charged. On April 13, 2005,
misleading because, by availing of the benefit of suspension of
the Honorable Court of Turin convicted and sentenced her to the enforcement, the penalty of confinement will not be enforced
suffer imprisonment of six months and a penalty of €300.00, but upon her. She also presented a decree20 from the High Court of
granted her the benefit of suspension of the enforcement of
Turin dated June 29, 2010 which stated that her criminal liability
sentence on account of her guilty plea (the Court of Turin has been extinguished.
Decision).6
On November 21, 2008, the sheriff attempted to personally serve Sec. 6. Service in person on defendant. - Whenever practicable,
the summons on Ocampo in her local address alleged in the the summons shall be served by handing a copy thereof to the
petition located in San Bernardo Village, Darasa, Tanauan, defendant in person, or, if he refuses to receive and sign for it, by
Batangas. However, since the address was incomplete, the sheriff tendering it to him.
sought the help of barangay officials, who pointed him to the
house belonging to Ocampo's father, Nicasio Ocampo, Victor P.
For justifiable reasons, however, other modes of serving
Macahia (Macahia), uncle of Ocampo and present occupant,
summons may be resorted to. When the defendant cannot be
informed the sheriff that Ocampo and her family were already in
served personally within a reasonable time after efforts to locate
Italy, and that he was only a caretaker of the house. The sheriff
him have failed, the rules allow summons to be served by
then proceeded to serve the summons upon Macahia.9 After
substituted service. Substituted service is effected by leaving
Ocampo failed to file an answer, BDO Remittance filed a motion
copies of the summons at the defendant's residence with some
to declare Ocampo in default. The RTC granted the motion and
person of suitable age and discretion then residing therein, or by
allowed BDO Remittance to present evidence ex parte.10
leaving the copies at defendant's office or regular place of
business with some competent person in charge thereof. 21
On September 14, 2009, the RTC rendered a Decision11 in favor
of BDO Remittance (RTC Decision). It recognized as valid and
When the defendant's whereabouts are unknown, the rules allow
binding in the Philippines the Court of Turin Decision and ordered
service of summons by publication.22 As an exception to the
preferred mode of service, service of summons by publication however, Ocampo's sojourn in Italy cannot be classified as
may only be resorted to when the whereabouts of the defendant temporary considering that she already resides there, albeit her
are not only unknown, but cannot be ascertained by diligent precise address was not known. Modes of service of summons
inquiry. The diligence requirement means that there must be prior must be strictly followed in order that the court may acquire
resort to personal service under Section 7 and substituted service jurisdiction over the person of the defendant. The purpose of this
under Section 8, and proof that these modes were ineffective is to afford the defendant an opportunity to be heard on the claim
before summons by publication may be allowed.23 This mode also against him.32 BDO Remittance is not totally without recourse, as
requires the plaintiff to file a written motion for leave of court to the rules allow summons by publication and extraterritorial
effect service of summons by publication, supported by affidavit of service.33 Unlike substituted service, however, these are
the plaintiff or some person on his behalf, setting forth the extraordinary modes which require leave of court.
grounds for the application.24
The service of summons is a vital and indispensable ingredient of
In the present case, the sheriff resorted to substituted service a defendant's constitutional right to due process. As a rule, if a
upon Ocampo through her uncle, who was the caretaker of defendant has not been validly summoned, the court acquires no
Ocampo's old family residence in Tanauan, Batangas. The CA jurisdiction over his person, and a judgment rendered against him
held that substituted service was improperly resorted to. It found is void.34 Since the RTC never acquired jurisdiction over the
that since Ocampo' s "whereabouts are unknown and cannot be person of Ocampo, the judgment rendered by the court could not
ascertained by diligent inquiry x x x service may be effected only be considered binding upon her.
by publication in a newspaper of general circulation."25
Consequently, it is no longer necessary to delve into the other
We agree with the CA that substituted service is improper under issues raised in the petition. These issues can be resolved by the
the facts of this case. Substituted service presupposes that the trial court upon acquiring jurisdiction over Ocampo and giving her
place where the summons is being served is the an opportunity to be heard. It is in a better position to receive and
defendant's current residence or office/regular place of assess the evidence that may be presented by Ocampo, including
business. Thus, where the defendant neither resides nor holds the decree dated June 29, 2010 issued by the High Court of
office in the address stated in the summons, substituted service Turin, to the effect that her liability has been extinguished. While
cannot be resorted to. As we explained in Keister v. Navarro: 26 such claim would tend to render the case moot, we refuse to
consider the argument at the first instance on two grounds: first,
we are not a trier of facts; and second, the document submitted
Under the Rules, substituted service may be effect[ed] (a) by
has not been authenticated in accordance with the rules on
leaving copies of the summons at the defendant's dwelling house
evidence.
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 WHEREFORE, the petition is DENIED. The Decision dated
some competent person in charge thereof. The terms "dwelling January 5, 2012 and Resolution dated June 27, 2012 of the Court
house" or "residence" are generally held to refer to the time of of Appeals in CA-G.R. SP No. 113475 are AFFIRMED insofar as
service, hence it is not sufficient "to leave the copy at defendant's there was no valid service of summons. The Decision dated
former dwelling house, residence, or place of abode, as the case September 14, 2009 of the Regional Trial Court, Branch 212,
may be, after his removal therefrom." They refer to the place Mandaluyong City in Civil Case No. MCOS-3775 is declared
where the person named in the summons is living at the time VOID.
when the service is made, even though he may be temporarily out
of the country at the time. Similarly, the terms "office" or "regular
SO ORDERED.
place of business" refer to the office or place of business of
defendant at the time of service. Note that the rule designates the
persons to whom copies of the process may be left. The rule
presupposes that such a relation of confidence exists between the
person with whom the copy is left and the defendant and,
therefore, assumes that such person will deliver the process to
defendant or in some way give him notice thereof. 27 (Italics in the
original, citations omitted.)