2.

Golden Country v. Sanvar

THIRD DIVISION [G.R. No. 58027. September 28, 1992.] THE GOLDEN COUNTRY FARMS, INC., petitioner, vs. SANVAR DEVELOPMENT CORP., respondent. B.C. De los Santos & Associates Law Offices for petitioner. Yolando F. Busmente for respondent. SYLLABUS 1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; SERVICE UPON PRIVATE CORPORATION; RULE WHEN EFFECTED THROUGH A CLERKTYPIST. In G & G Trading Corp. vs. Court of Appeals, (158 SCRA 466, 469), we had occasion to rule: "Although it may be true that the service of summons was made on a person not authorized to receive the same in behalf of the petitioner, nevertheless since it appears that the summons and complaint were in fact received by the corporation through its said clerk, the Court finds that there was substantial compliance with the rule on service of summons. Indeed the purpose of said rule as above stated to assure service of summons on the corporation had thereby been attained. The need for speedy justice must prevail over a technicality." There was, substantial compliance with the rules on service of summons since it appears that the summons and complaint were actually received by the petitioner corporation through its clerk, thereby satisfying the purpose of notice (Rebollido vs. Court of Appeals, 170 SCRA 800, 811). 2. ID.; ID.; DEFAULTS; MAY BE ORDERED FOR FAILURE TO FILE AN ANSWER WITHIN THE REGLEMENTARY PERIOD. We do not agree with petitioner's claim that it cannot be declared in default for not filing an answer while resolution of its joint motion for reconsideration of the order denying its motion to dismiss was held in abeyance by the lower court. Petitioner received the denial order of its motion to dismiss on May 15, 1980; hence, by mathematical computation, the 15-day period to file an answer provided in Section 1, Rule 77 of the Revised Rules of Court expired on May 30, 1980. However, on May 30, 1980, which was the last day to file its answer, petitioner filed a joint motion for reconsideration, instead of filing an answer. In this regard, we share the opinion of the lower court that petitioner's joint motion for reconsideration which merely reiterated the grounds in its motion to dismiss was pro forma and did not toll the running of the period to file an answer. In the case of PCIB vs. Escolin (67 SCRA 202) this Court rule that a motion for reconsideration which does not make out a new matter sufficiently persuasive to induce modification of judgment will be denied and that a repetition of arguments or grounds already discussed in prior incidents may properly be categorized as merely for purposes of delay. 3. ID.; ID.; ID.; RELIEF FROM ORDER OF DEFAULT; RULE. As we have ruled in the case of Philippine Bank of Commerce vs. Jose M. Aruego (102 SCRA 530, 537): "It has been held that to entitle a party to relief from a judgment taken against him through his mistake, inadvertence, surprise or excusable neglect, he must show to the court that he has a meritorious defense. In other words, in order to set aside the order of default, the defendant must not only show that his failure to answer was due to fraud, accident, mistake or excusable negligence but also that he has a meritorious defense." In the case of Development Insurance Corp. vs. Intermediate Appellate Court (143 SCRA 62), this Court also ruled that a default judgment will not be lifted if defendant has no valid defense. DECISION

MELO, J p: Before us is an appeal by certiorari from the decision of the then Court of First Instance of Rizal, Branch XX, Pasig, Metro Manila, at that time Presided over by the Honorable Celso L. Magsino, and the order dated February 16, 1981 denying petitioner's and its co-defendant's joint motion for reconsideration wherein petitioner Golden Country Farm, Inc. (GCFI, for short) was declared in default. The factual background of this case may be stated as follows: On February 28, 1980, respondent Sanvar Development Corporation (Sanvar, for short) sued petitioner GCFI and its President, Armando T. Romualdez, for a sum of money representing the unpaid balance of construction materials purchased by petitioner from respondent. Per return of the sheriff, summons and copy of the complaint were served on March 5, 1980 upon petitioner at its principal office through a certain Miss I.E. Lagrimas, clerk-typist of petitioner. On March 20, 1980, petitioner filed a motion to dismiss on the ground that summons was not properly served in accordance with Section 13, Rule 14 of the Revised Rules of Court. Petitioner's motion to dismiss was denied by the lower court on May 2, 1980 and copy of the denial order was received by petitioner on May 15, 1980. On May 30, 1980, petitioner, together with its president, filed a joint motion for reconsideration, the resolution of which was held in abeyance by the lower court. Subsequently, respondent filed an omnibus motion praying that the joint motion for reconsideration be denied and that petitioner be declared in default. On February 16, 1981, the lower court issued an omnibus order denying the joint motion for reconsideration and declaring petitioner in default for failure to file an answer within the reglementary period. Pursuant to the order of default, respondent Sanvar presented its evidence ex-parte and based on said evidence, the lower court adjudged petitioner GCFI liable to respondent Sanvar in the principal sum of P105,362.50. The complaint against petitioner's president was, however, dismissed because he was sued in his capacity as president of petitioner. A copy of the decision was received by petitioner on August 14, 1981. Hence, the instant appeal wherein petitioner raises the following issues: 1) Whether or not summons directed to petitioner corporation which was served through Miss Lagrimas, clerk-typist of the petitioner, is sufficient service for the trial court to acquire jurisdiction over said corporation. 2) Whether or not petitioner can be declared in default for not filing an answer to the complaint while its joint motion for reconsideration of the order denying its motion to dismiss remained pending for the court's consideration. Service of process on a corporation is controlled by Sec. 13, Rule 14 of the Revised Rules of Court, thus "SECTION 13. Service upon private domestic corporation or partnership. If the defendant is a corporation organized under the laws of the Philippines or a partnership duly registered, service may be made on the president, manager, secretary, cashier, agent, or any of its directors." Petitioner claims that the foregoing enumeration is exclusive and service of summons is without force and effect unless made upon any one of those enumerated. So in the case at bar, it is argued, the lower court did not acquire jurisdiction over petitionercorporation since service of summons was effected through a mere clerk, a person who is not one of those authorized officers mentioned in the aforequoted Section 13 upon whom valid service of summons can be made. LibLex We cannot accept the strict and literal interpretation of petitioner. Thus, in G & G Trading Corp. vs. Court of Appeals (158 SCRA 466, 469), we had occasion to rule:

"Although it may be true that the service of summons was made on a person not authorized to receive the same in behalf of the petitioner, nevertheless since it appears that the summons and complaint were in fact received by the corporation through its said clerk, the Court finds that there was substantial compliance with the rule on service of summons. Indeed the purpose of said rule as above stated to assure service of summons on the corporation had thereby been attained. The need for speedy justice must prevail over a technicality." In the case at bar, the fact that summons was received by petitioner through Miss Lagrimas, is not disputed; rather, petitioner admits that on March 18, 1980, the corporation and its legal counsel were informed by Miss Lagrimas of the summons she received (pp. 8 and 9, Rollo). And indeed, by virtue of the receipt of the summons, petitioner even filed a motion to dismiss. We, therefore, agree with the lower court's findings that: ". . . The actual receipt by the clerk-typist of the correct address of the corporation must be construed as receipt on behalf of the officer of the corporation holding office at that address. Mr. Romualdez, the general manager was holding office at that address, he received the summons, and that summons must be binding on him personally and on the corporation of which he is the general manager. It is to be observed that the law firm of Avila, de los Santos and Associates is the same counsel for both defendants, and it is simply absurd to split the personality of defendant Romualdez between himself as general manager of defendant corporation and the defendant corporation of which he is the general manager for purposes of service of summons." (Annex H, pp. 38-39, Rollo) The court a quo thereupon concluded: ". . . inasmuch as the spirit and purpose of the rule is 'to bring home to the corporation notice of the filing of the action' . . . and it appearing that said defendant had actually received the summons and a copy of the complaint albeit thru its clerk-typist Miss Iluminada E. Lagrimas, and in fact has filed this instant motion, the Court hereby considers the same as substantial compliance with the rules and therefore denies the aforesaid motion." (Annex B, p. 22, Rollo). There was, therefore, substantial compliance with the rules on service of summons since it appears that the summons and complaint were actually received by the petitioner corporation through its clerk, thereby satisfying the purpose of notice (Rebollido vs. Court of Appeals, 170 SCRA 800, 811). We do not agree with petitioner's claim that it cannot be declared in default for not filing an answer while resolution of its joint motion for reconsideration of the order denying its motion to dismiss was held in abeyance by the lower court. cdrep Petitioner received the denial order of its motion to dismiss on May 15, 1980; hence, by mathematical computation, the 15-day period to file an answer provided in Section 1, Rule 77 of the Revised Rules of Court expired on May 30, 1980. However, on May 30, 1980, which was the last day to file its answer, petitioner filed a joint motion for reconsideration, instead of filing an answer. In this regard, we share the opinion of the lower court that petitioner's joint motion for reconsideration which merely reiterated the grounds in its motion to dismiss was pro forma and did not toll the running of the period to file an answer. In the case of PCIB vs. Escolin (67 SCRA 2023 this Court ruled that a motion for reconsideration which does not make out a new matter sufficiently persuasive to induce modification of judgment will be denied and that a repetition of arguments or grounds already discussed in prior incidents may properly be categorized as merely for purposes of delay. An answer, not a motion for reconsideration of the order denying its motion to dismiss, should have been filed within the reglementary period. The record does not

disclose that the proper answer was in fact filed. Withal, there can be no serious challenge to the reception of evidence for the plaintiff thereafter. Moreover, notwithstanding its receipt of the order of default on March 6, 1981, petitioner did not even bother to take any steps to lift said order of default, but it simply folded its arms for five months until the decision was handed down on July 15, 1981. Further weakening the position of the petitioner is the absence of a viable defense against the documented claims of respondent for unpaid construction materials purchased by petitioner. As we have ruled in the case of Philippine Bank of Commerce vs. Jose M. Aruego (102 SCRA 530, 537): prLL "It has been held that to entitle a party to relief from a judgment taken against him through his mistake, inadvertence, surprise or excusable neglect, he must show to the court that he has a meritorious defense. In other words, in order to set aside the order of default, the defendant must not only show that his failure to answer was due to fraud, accident, mistake or excusable negligence but also that he has a meritorious defense." In the case of Development Insurance Corp. vs. Intermediate Appellate Court (143 SCRA 62), this Court also ruled that a default judgment will not be lifted if defendant has no valid defense. It is to be noted in this regard that not even once, not in its motion to dismiss and not now in its appeal has there been the least intimation on petitioner's part that the claim of respondent has been paid. All that petitioner can harp at is the alleged defective service of summons. WHEREFORE, the decision and order appealed from are hereby affirmed, with costs against petitioner. SO ORDERED.

3.

E.B. Villarosa v. Benito

THIRD DIVISION [G.R. No. 136426. August 6, 1999.] E.B. VILLAROSA & PARTNER CO., LTD., petitioner, vs. HON. HERMINIO I. BENITO, in his capacity as Presiding Judge, RTC, Branch 132, Makati City and IMPERIAL DEVELOPMENT CORPORATION, respondent. SYNOPSIS In this instant petition, E.B. Villarosa and Partner Co., Ltd. contended that the trial court did not acquire jurisdiction over its person because the summons intended for it was improperly served on its Branch Manager. cDTSHE The Court agreed with petitioner. Designation of persons or officers who are authorized to accept summons for a domestic corporation or partnership is now limited and more clearly specified in the 1997 Rules of Civil Procedure. The rule must be strictly observed, service must be made to one named in the statute. Petitioner's filing of a motion to dismiss, precisely objecting to the jurisdiction of the court over the person of the defendant, can by no means be deemed a submission to the jurisdiction of the court. SYLLABUS 1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; "AGENTS" NO LONGER AUTHORIZED TO RECEIVE SUMMONS FOR CORPORATION. Earlier cases have uphold service of summons upon a construction project manager; a corporation's assistant manager; ordinary clerk of a corporation; private secretary of corporate executives; retained counsel; officials who had charge or control of the operations of the corporation, like the assistant general manager; or the corporations Chief Finance and Administrative Officer. In these cases, these persons were considered as "agent" within the contemplation of the old rule. Notably, under the new Rules, service of summons upon an agent of the corporation is no longer authorized. 2. ID.; ID.; ID.; DESIGNATION OF PERSONS OR OFFICERS AUTHORIZED TO RECEIVE SUMMONS FOR DOMESTIC CORPORATIONS, LIMITED. The designation of persons or officers who are authorized to accept summons for a domestic corporation or partnership is now limited and more clearly specified in Section 11, Rule 14 of the 1997 Rules of Civil Procedure. The rule now states "general manager" instead of only "manager"; "corporate secretary" instead of "secretary"; and "treasurer" instead of "cashier." The phrase "agent, or any of its directors" is conspicuously deleted in the new rule, . . . It should be noted that even prior to the effectivity of the 1997 Rules of Civil Procedure, strict compliance with the rules has been enjoined. (Delta Motor Sales Corporation vs. Mangosing, 70 SCRA 598 [1976])

3. ID.. ID.; ID.; JURISDICTION NOT ACQUIRED WHERE SERVICE OF SUMMONS WAS MADE ON BRANCH MANAGER. Accordingly, we rule that the service of summons upon the branch manager of petitioner at its branch office at Cagayan de Oro, instead of upon the general manager at its principal office at Davao City is improper. Consequently, the trial court did not acquire jurisdiction over the person of the petitioner. 4. ID.; ID.; ID.; INEFFECTIVE SERVICE OF SUMMONS; FILING OF MOTION TO DISMISS DOES NOT CONSTITUTE VOLUNTARY APPEARANCE. The fact that defendant filed a belated motion to dismiss did not operate to confer jurisdiction upon its person. There is no question that the defendant's voluntary appearance in the action is equivalent to service of summons. Before, the rule was that a party may challenge the jurisdiction of the court over his person by making a special appearance through a motion to dismiss and if in the same motion, the movant raised other grounds or invoked affirmative relief which necessarily involves the exercise of the jurisdiction of the court, the party is deemed to have submitted himself to the jurisdiction of the court. This doctrine has been abandoned in the case of La Naval Drug Corporation vs. Court of Appeals, et al.; which became the basis of the adoption of a new provision in the former Section 23, which is now Section 20 of Rule 14 of the 1997 Rules, Section 20 now provides that "the inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance." The emplacement of this rule clearly underscores the purpose to enforce strict enforcement of the rules on summons. Accordingly, the filing of a motion to dismiss, whether or not belatedly filed by the defendant, his authorized agent or attorney, precisely objecting to the jurisdiction of the court over the person of the defendant can by no means be deemed a submission to the jurisdiction of the court. There being no proper service of summons, the trial court cannot take cognizance of a case for lack of jurisdiction over the person of the defendant. Any proceeding undertaken by the trial court will consequently be null and void. cDCaHA DECISION GONZAGA-REYES, J p: Before this Court is a petition for certiorari and prohibition with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction seeking to annul and set aside the Orders dated August 5, 1998 and November 20, 1998 of the public respondent Judge Herminio I. Benito of the Regional Trial Court of Makati City, Branch 132 and praying that the public respondent court be ordered to desist from further proceeding with Civil Case No. 98-824. LLjur Petitioner E.B. Villarosa & Partner Co., Ltd. is a limited partnership with principal office address at 102 Juan Luna St., Davao City and with branch offices at 2492 Bay View Drive, Tambo, Paraaque, Metro Manila and Kolambog, Lapasan, Cagayan de Oro City. Petitioner and private respondent executed a Deed of Sale with Development Agreement wherein the former agreed to develop certain parcels of land located at Barrio Carmen, Cagayan de Oro belonging to the latter into a housing subdivision for the construction of low cost housing units. They further agreed that in

case of litigation regarding any dispute arising therefrom, the venue shall be in the proper courts of Makati. On April 3, 1998, private respondent, as plaintiff, filed a Complaint for Breach of Contract and Damages against petitioner, as defendant, before the Regional Trial Court of Makati allegedly for failure of the latter to comply with its contractual obligation in that, other than a few unfinished low cost houses, there were no substantial developments therein. 1 Summons, together with the complaint, were served upon the defendant, through its Branch Manager Engr. Wendell Sabulbero at the stated address at Kolambog, Lapasan, Cagayan de Oro City 2 but the Sheriff's Return of Service 3 stated that the summons was duly served "upon defendant E.B. Villarosa & Partner Co., Ltd. thru its Branch Manager Engr. WENDELL SABULBERO on May 5, 1998 at their new office Villa Gonzalo, Nazareth, Cagayan de Oro City, and evidenced by the signature on the face of the original copy of the summons." On June 9, 1998, defendant filed a Special Appearance with Motion to Dismiss 4 alleging that on May 6, 1998, "summons intended for defendant" was served upon Engr. Wendell Sabulbero, an employee of defendant at its branch office at Cagayan de Oro City. Defendant prayed for the dismissal of the complaint on the ground of improper service of summons and for lack of jurisdiction over the person of the defendant. Defendant contends that the trial court did not acquire jurisdiction over its person since the summons was improperly served upon its employee in its branch office at Cagayan de Oro City who is not one of those persons named in Section 11, Rule 14 of the 1997 Rules of Civil Procedure upon whom service of summons may be made. Meanwhile, on June 10, 1998, plaintiff filed a Motion to Declare Defendant in Default 5 alleging that defendant has failed to file an Answer despite its receipt allegedly on May 5, 1998 of the summons and the complaint, as shown in the Sheriff's Return. On June 22, 1998, plaintiff filed an Opposition to Defendant's Motion to Dismiss 6 alleging that the records show that defendant, through its branch manager, Engr. Wendell Sabulbero actually received the summons and the complaint on May 8, 1998 as evidenced by the signature appearing on the copy of the summons and not on May 5, 1998 as stated in the Sheriff's Return nor on May 6, 1998 as stated in the motion to dismiss; that defendant has transferred its office from Kolambog, Lapasan, Cagayan de Oro to its new office address at Villa Gonzalo, Nazareth, Cagayan de Oro; and that the purpose of the rule is to bring home to the corporation notice of the filing of the action. On August 5, 1998, the trial court issued an Order 7 denying defendant's Motion to Dismiss as well as plaintiff's Motion to Declare Defendant in Default. Defendant was given ten (10) days within which to file a responsive pleading. The trial court stated that since the summons and copy of the complaint were in fact received by the corporation through its branch manager Wendell Sabulbero, there was substantial compliance with the rule on service of summons and consequently, it validly acquired jurisdiction over the person of the defendant. cdasia

On August 19, 1998, defendant, by Special Appearance, filed a Motion for Reconsideration 8 alleging that Section 11, Rule 14 of the new Rules did not liberalize but, on the contrary, restricted the service of summons on persons enumerated therein; and that the new provision is very specific and clear in that the word "manager" was changed to "general manager", "secretary" to "corporate secretary", and excluding therefrom agent and director. On August 27, 1998, plaintiff filed an Opposition to defendant's Motion for Reconsideration 9 alleging that defendant's branch manager "did bring home" to the defendant-corporation the notice of the filing of the action and by virtue of which a motion to dismiss was filed; and that it was one (1) month after receipt of the summons and the complaint that defendant chose to file a motion to dismiss. On September 4, 1998, defendant, by Special Appearance, filed a Reply 10 contending that the changes in the new rules are substantial and not just general semantics. Defendant's Motion for Reconsideration was denied in the Order dated November 20, 1998. 11 Hence, the present petition alleging that respondent court gravely abused its discretion tantamount to lack or in excess of jurisdiction in denying petitioner's motions to dismiss and for reconsideration, despite the fact that the trial court did not acquire jurisdiction over the person of petitioner because the summons intended for it was improperly served. Petitioner invokes Section 11 of Rule 14 of the 1997 Rules of Civil Procedure. Private respondent filed its Comment to the petition citing the cases of Kanlaon Construction Enterprises Co., Inc. vs. NLRC 12 wherein it was held that service upon a construction project manager is valid and in Gesulgon vs. NLRC 13 which held that a corporation is bound by the service of summons upon its assistant manager. The only issue for resolution is whether or not the trial court acquired jurisdiction over the person of petitioner upon service of summons on its Branch Manager. When the complaint was filed by Petitioner on April 3, 1998, the 1997 Rules of Civil Procedure was already in force. 14 Section 11, Rule 14 of the 1997 Rules of Civil Procedure provides that: "When the defendant is a corporation, partnership or association organized under the laws of the Philippines with a juridical personality, service may be made on the president, managing partner, general manager, corporate secretary, treasurer, or inhouse counsel." (underscoring supplied). This provision revised the former Section 13, Rule 14 of the Rules of Court which provided that:

"SECTION 13. Service upon private domestic corporation or partnership. If the defendant is a corporation organized under the laws of the Philippines or a partnership duly registered, service may be made on the president, manager, secretary, cashier, agent, or any of its directors." (underscoring supplied). Petitioner contends that the enumeration of persons to whom summons may be served is "restricted, limited and exclusive" following the rule on statutory construction expressio unios est exclusio alterius and argues that if the Rules of Court Revision Committee intended to liberalize the rule on service of summons, it could have easily done so by clear and concise language. We agree with petitioner. Earlier cases have uphold service of summons upon a construction project manager 15 ; a corporation's assistant manager 16; ordinary clerk of a corporation 17; private secretary of corporate executives 18; retained counsel 19; officials who had charge or control of the operations of the corporation, like the assistant general manager 20; or the corporation's Chief Finance and Administrative Officer 21. In these cases, these persons were considered as "agent" within the contemplation of the old rule. 22 Notably, under the new Rules, service of summons upon an agent of the corporation is no longer authorized. cdrep The cases cited by private respondent are therefore not in point. In the Kanlaon case, this Court ruled that under the NLRC Rules of Procedure, summons on the respondent shall be served personally or by registered mail on the party himself; if the party is represented by counsel or any other authorized representative or agent, summons shall be served on such person. In said case, summons was served on one Engr. Estacio who managed and supervised the construction project in Iligan City (although the principal address of the corporation is in Quezon City) and supervised the work of the employees. It was held that as manager, he had sufficient responsibility and discretion to realize the importance of the legal papers served on him and to relay the same to the president or other responsible officer of petitioner such that summons for petitioner was validly served on him as agent and authorized representative of petitioner. Also in the Gesulgon case cited by private respondent, the summons was received by the clerk in the office of the Assistant Manager (at principal office address) and under Section 13 of Rule 14 (old rule), summons may be made upon the clerk who is regarded as agent within the contemplation of the rule. The designation of persons or officers who are authorized to accept summons for a domestic corporation or partnership is now limited and more clearly specified in Section 11, Rule 14 of the 1997 Rules of Civil Procedure. The rule now states "general manager" instead of only "manager"; "corporate secretary" instead of "secretary"; and "treasurer" instead of "cashier." The phrase "agent, or any of its directors" is conspicuously deleted in the new rule. The particular revision under Section 11 of Rule 14 was explained by retired Supreme Court Justice Florenz Regalado, thus: 23

". . . the then Sec. 13 of this Rule allowed service upon a defendant corporation to 'be made on the president, manager, secretary, cashier, agent or any of its directors.' The aforesaid terms were obviously ambiguous and susceptible of broad and sometimes illogical interpretations, especially the word 'agent' of the corporation. The Filoil case, involving the litigation lawyer of the corporation who precisely appeared to challenge the validity of service of summons but whose very appearance for that purpose was seized upon to validate the defective service is an illustration of the need for this revised section with limited scope and specific terminology. Thus the absurd result in the Filoil case necessitated the amendment permitting service only on the in-house counsel of the corporation who is in effect an employee of the corporation, as distinguished from an independent practitioner." (underscoring supplied) Retired Justice Oscar Herrera, who is also a consultant of the Rules of Court Revision Committee, stated that "(T)he rule must be strictly observed. Service must be made to one named in (the) statute . . .". 24 It should be noted that even prior to the effectivity of the 1997 Rules of Civil Procedure, strict compliance with the rules has been enjoined. In the case of Delta Motor Sales Corporation vs. Mangosing, 25 the Court held: "A strict compliance with the mode of service is necessary to confer jurisdiction of the court over a corporation. The officer upon whom service is made must be one who is named in the statute; otherwise the service is insufficient. . . . . The purpose is to render it reasonably certain that the corporation will receive prompt and proper notice in an action against it or to insure that the summons be served on a representative so integrated with the corporation that such person will know what to do with the legal papers served on him. In other words, 'to bring home to the corporation notice of the filing of the action.' . . . . The liberal construction rule cannot be invoked and utilized as a substitute for the plain legal requirements as to the manner in which summons should be served on a domestic corporation. . . . ." (underscoring supplied). Service of summons upon persons other than those mentioned in Section 13 of Rule 14 (old rule) has been held as improper. 26 Even under the old rule, service upon a general manager of a firm's branch office has been held as improper as summons should have been served at the firm's principal office. In First Integrated Bonding & Ins. Co., Inc. vs. Dizon, 27 it was held that the service of summons on the general manager of the insurance firm's Cebu branch was improper; default order could have been obviated had the summons been served at the firm's principal office. And in the case of Solar Team Entertainment, Inc. vs. Hon. Helen Bautista Ricafort, et al. 28 the Court succinctly clarified that, for the guidance of the Bench and Bar, "strictest" compliance with Section 11 of Rule 13 of the 1997 Rules of Civil Procedure (on Priorities in modes of service and filing) is mandated and the Court cannot rule otherwise, lest we allow circumvention of the innovation by the 1997 Rules in order to obviate delay in the administration of justice. cdtai

Accordingly, we rule that the service of summons upon the branch manager of petitioner at its branch office at Cagayan de Oro, instead of upon the general manager at its principal office at Davao City is improper. Consequently, the trial court did not acquire jurisdiction over the person of the petitioner. The fact that defendant filed a belated motion to dismiss did not operate to confer jurisdiction upon its person. There is no question that the defendant's voluntary appearance in the action is equivalent to service of summons. 29 Before, the rule was that a party may challenge the jurisdiction of the court over his person by making a special appearance through a motion to dismiss and if in the same motion, the movant raised other grounds or invoked affirmative relief which necessarily involves the exercise of the jurisdiction of the court, the party is deemed to have submitted himself to the jurisdiction of the court. 30 This doctrine has been abandoned in the case of La Naval Drug Corporation vs. Court of Appeals, et al., 31 which became the basis of the adoption of a new provision in the former Section 23, which is now Section 20 of Rule 14 of the 1997 Rules. Section 20 now provides that "the inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance." The emplacement of this rule clearly underscores the purpose to enforce strict enforcement of the rules on summons. Accordingly, the filing of a motion to dismiss, whether or not belatedly filed by the defendant, his authorized agent or attorney, precisely objecting to the jurisdiction of the court over the person of the defendant can by no means be deemed a submission to the jurisdiction of the court. There being no proper service of summons, the trial court cannot take cognizance of a case for lack of jurisdiction over the person of the defendant. Any proceeding undertaken by the trial court will consequently be null and void. 32 WHEREFORE, the petition is hereby GRANTED. The assailed Orders of the public respondent trial court are ANNULLED and SET ASIDE. The public respondent Regional Trial Court of Makati, Branch 132 is declared without jurisdiction to take cognizance of Civil Case No. 98-824, and all its orders and issuances in connection therewith are hereby ANNULLED and SET ASIDE. SO ORDERED.

4.

Citizens Surety v. Melencio-Herrera

EN BANC [G.R. No. L-32170. March 31, 1971.] CITIZENS' SURETY & INSURANCE COMPANY, INC., petitioner, vs. HON. JUDGE A. MELENCIO-HERRERA, SANTIAGO DACANAY, and JOSEFINA DACANAY, respondents. Dayos, Tesoro & Gloria, Jr. for petitioner. Respondent Judge for and in his own behalf. SYLLABUS 1. REMEDIAL LAW; JURISDICTION; ACTION IN PERSONAM; PERSONAL SERVICE OF SUMMONS REQUIRED. We agree with respondent Judge that the action of plaintiff petitioner, being in personam, the Court could not validly acquire jurisdiction on a non-appearing defendant, absent a personal service of summons within the forum. We have explicitly so ruled in Pantaleon vs. Asuncion, 105 Phil. 765, pointing out without such personal service, any judgment on a non-appearing defendant would be violative of due process. In the aforecited case this Court, through Justice Roberto Concepcion, now Chief Justice, ruled as follows: . . . "It is a well-settled principle of Constitutional Law that, in an action strictly in personam, like the one at bar, personal service of summons, within the forum, is essential to the acquisition of jurisdiction over the person of the defendant, who does not voluntary submit himself to the authority of the court. In other words, summons by publication cannot consistently with the due process clause in the Bill of Rights confer upon the court jurisdiction over said defendants. 'Due process of law requires personal service to support a 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 voluntary appearance in the case is essential to the acquisition of jurisdiction so as to constitute compliance with the constitutional requirement of due process. . . . 'Although a state legislature has more control over the form of service on its own residents than nonresidents, it has been held that in actions in personam . . . service by publication on resident defendants who are personally within the state and can be found therein is not "due process of law," and statute allowing it is unconstitutional.' (16A C.J.S., pp. 786, 789; Emphasis our)" 2. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CREDITORS; REMEDY AGAINST ABSCONDING DEBTORS. The proper recourse for a creditor in the same situation as petitioner is to locate properties, real or personal, of the resident defendant debtor with unknown address and cause them to be attached under Rule 57, Sec. l(f), in which case, the enactment converts the action into a proceeding in rem or quasi in rem and the summons by publication may then accordingly be deemed valid and effective But because debtors who abscond and conceal themselves are also quite adept at concealing their properties, the dismissal of the case below by respondent Judge should be set aside and the case held pending in the court's archives, until petitioner as plaintiff succeed in determining the whereabouts of the defendants' person or properties and causes valid summons to be served personally or by publication as the case may be. In this manner, the tolling of the period of prescription for as long as the debtor remains in hiding would properly be a matter of court record, and he can not emerge after a sufficient lapse of time from the dismissal of the case to profit from his own misdeed and claim prescription of his just debt. DECISION REYES, J.B.L., J p:

Petitioner Citizens' Surety & Insurance Company, Inc. seeks review of an order of respondent Judge in Civil Case No. 77134 of the Court of First Instance of Manila, Branch XVII, entitled "Citizens' Surety & Insurance Co., Inc. vs. Santiago Dacanay and Josefina Dacanay," dismissing the complaint for lack of proper service of summons upon defendants. The record is to the effect that petitioner had filed its complaint in the Court below, alleging that at request of defendant Santiago Dacanay, the plaintiff Surety Company had issued its Surety Bonds Nos. 4942 and 4944, the first, in favor of Gregorio Fajardo to guarantee payment of a P5,000-promissory note executed by said Dacanay, and the second, in favor of Manufacturers Bank & Trust Co., to guarantee payment of another promissory note in like amount; that in consideration of said bonds, Santiago and Josefina Dacanay executed Indemnity Agreements, binding themselves jointly and severally to indemnify plaintiff for any losses, costs and expenses which it might sustain in connection with the issuance of the bonds aforesaid, with interest at 12% per annum; that as additional security, the Dacanays mortgaged to plaintiff a parcel of land in Baguio City, covered by Certificate of Title No. T-8116, the mortgage having been duly recorded; that the promissory notes were not paid .and as a result, plaintiff Surety was compelled to pay P5,000.00 to Gregorio Fajardo and P4,081.69 to the Manufacturers' Bank; that the Dacanays failed to reimburse the Surety for such payments, whereupon the Surety caused the extrajudicial foreclosure of the mortgage to pay its claim of P12,941.69 representing its payments, interest and stipulated liquidated damages: that at the foreclosure sale, the land mortgaged was sold to plaintiff, as highest bidder, for the sum of P2,000.00 leaving an unsatisfied balance of P10,491.69, that plaintiff sought to recover from defendants Dacanay, plus 10% thereof as attorneys' fees, and the costs. At petitioner's request, respondent Judge caused summons to be made by publication in the newspaper Philippines Herald. But despite the publication and deposit of a prepaid copy of the complaint at the Manila post office, defendants did not appear within the period of 60 days from last publication, as required by the summons. Plaintiff then asked that defendants be declared in default; but :instead, the Judge, by order of May 16, 1970, asked it to show cause why the action should not be dismissed, the suit being in personam and defendants not having appeared. Then, on May 29, 1970, respondent Judge dismissed the case, despite plaintiff Surety's argument that the summons by publication was sufficient and valid under section 16 of Rule 14 of the Revised Rules of Court. We agree with respondent Judge that the action of plaintiff petitioner, being in personam, the Court could not validly acquire jurisdiction on a non-appearing defendant, absent a personal service of summons within the forum. We have explicitly so ruled in Pantaleon vs. Asuncin, 105 Phil. 765, pointing out without such personal service, any judgment on a non-appearing defendant would be violative of due process. In the aforecited case this Court, through Justice Roberto Concepcin, now Chief Justice, ruled as follows: "Apart from the foregoing, it is well-settled principle of Constitutional Law that, in an action strictly in personam, like the one at bar, personal service of summons, within the forum. is essential to the acquisition of jurisdiction over the person of the defendant, who does not voluntarily submit himself to the authority of the court. In other words, summons by publication cannot consistently with the due process clause in the Bill of Rights confer upon the court jurisdiction over said defendants. 'Due process of law requires personal service to support a 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 voluntary

appearance in the case is essential to the acquisition of jurisdiction so as to constitute compliance with the constitutional requirement of due process. . . . 'Although a state legislature has more control over the form of service on its own residents than nonresidents, it has been held that in actions in personam . . . service by publication on resident defendants, who are personally within the state and can be found therein is not "due process of law," and a statute allowing it is unconstitutional.' (16A C.J.S., pp. 786, 789; Emphasis ours.)" The proper recourse for a creditor in the same situation as petitioner is to locate properties, real or personal, of the resident defendant debtor with unknown address and cause them to be attached under Rule 57, section 1(f), in which case, the attachment converts the action into a proceeding in rem or quasi in rem and the summons by publication may then accordingly be deemed valid and effective. But because debtors who abscond and conceal themselves are also quite adept at concealing their properties, the dismissal of the case below by respondent Judge should be set aside and the case held pending in the court's archives, until petitioner as plaintiff succeeds in determining the whereabouts of the defendants' person or properties and causes valid summons to be served personally or by publication as the case may be. In this manner, the tolling of the period of prescription for as long as the debtor remains in hiding would properly be a matter of court records and he can not emerge after a sufficient lapse of time from the dismissal of the case to profit from his own misdeed and claim prescription of his just debt. WHEREFORE, the order of dismissal of the case issued by the Court below is hereby set aside, and in the interest of justice, the proceedings are ordered suspended, to be held pending until the plaintiff petitioner succeeds in ascertaining the whereabouts of the defendants and/or locating properties of the same, to enable proper summons to be issued conformably to this Opinion. No costs.

5.

Magdalena v. Nieto

FIRST DIVISION [G.R. No. L-54242. November 25, 1983.] MAGDALENA ESTATE, INC., plaintiff-appellee, vs. RENE NIETO and HELEN GARCIA, defendants-appellants. Abraham F. Sarmiento for plaintiff-appellee. Guevara Law Office for defendants-appellants. SYLLABUS 1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; SERVICE BY PUBLICATION; FORMER RULE. It is true that in Fontanilla vs. Dominguez, 73 Phil. 579, it was held that service of summons by publication is proper in all actions without distinction, provided the defendant is residing in the Philippines but his identity is unknown or his address cannot he ascertained. 2. ID.; ID.; ID.; ID.; THE PRESENT RULE. However, in a later case, Pantaleon vs. Asuncion, 105 Phil. 765, the Court ruled that it is a well-settled principle of Constitutional Law that, in an action strictly in personam, like the one at bar, personal service of summons, within the forum, is essential to the acquisition of jurisdiction over the person of the defendant, who does not voluntarily submit himself to the authority of the court. And, the latest expression of such a doctrine comes from Justice J.B.L. Reyes in the case of Citizens' Surety and Insurance Company, Inc. vs. Melencio-Herrera, 38 SCRA 369. 3. ID.; ID.; ACTION IN PERSONAM; SUMMONS; PERSONAL SERVICE WITHIN THE FORUM OR VOLUNTARY APPEARANCE; ESSENTIAL TO SATISFY THE DUE PROCESS CLAUSE. Summons by publication cannot consistently with the due process clause in the Bill of Rights confer upon the court jurisdiction over said defendant. Due process of law requires personal service to support a 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 voluntary appearance in the case is essential to the acquisition of jurisdiction so as to constitute compliance with the constitutional requirement of due process. . . . Although a state legislature has more control over the form of service on its own residents than non-residents, it has been held that in actions in personam . . . service by publication on resident defendants, who are personally within the state and can be found therein is not 'due process of law,' and a statute allowing it is unconstitutional. (16A C.J.S., pp. 786, 789) 4. ID.; ID.; ID.; ATTACHMENT OF PROPERTIES, REAL OR PERSONAL, BELONGING TO A RESIDENT DEFENDANT DEBTOR WITH UNKNOWN ADDRESS; PROPER RECOURSE OF CREDITOR IN THE CASE AT BAR. The proper recourse for a creditor in the same situation as petitioner is to locate properties, real or personal, of the resident defendant debtor with unknown address and cause them to be attached under Rule 57, Section 1( f ), in which case, the attachment converts the action into a proceeding in rem or quasi in rem and the summons by publication may then accordingly be deemed valid and effective. DECISION RELOVA, J p: Appeal from the judgment of the then Court of First Instance of Rizal in Quezon City, ordering defendants-appellants Rene Nieto and Helen Garcia to pay plaintiff-appellee: "1) the sum of P11,999.00, with interest thereon at the rate of 7% per annum, beginning April 21, 1970, the date of the letter of demand, until the same shall have been fully paid; "2) the sum of P2,000.00 as and for attorney's fees; and

"3) the cost of the suit." (p. 41, Record on Appeal). The facts which led to the above judgment are summarized by the trial court as follows: "The evidence shows that the defendants herein bought from the plaintiff a parcel of land located at New Manila Subdivision, Quezon City. Even if defendants had not fully paid the consideration for the said lot, by special arrangement with the plaintiff, the former were able to have the title to said lot transferred in their names. They had made partial payments only and the balance of their account in the amount of P12,000.00 was secured by a promissory note which they executed on November 3, 1960, under the following terms and conditions to wit: (a) the defendants shall pay plaintiff the sum of P12,000.00, with interest thereon at the rate of 7% per annum, said amount to be payable without demand in consecutive monthly Installments of not less than P500.00 per month, beginning December 3, 1960, and on the third day of each month thereafter, until fully paid; (b) in case of failure to pay any monthly installment due, the total obligation, or the balance thereof, shall automatically become due and immediately payable; (c) that the plaintiff shall have the right to enforce payment of the obligation, together with the corresponding interest, including attorney's fees and the costs of suit in case of litigation to enforce collection of the said obligation (Exhibit `C'). Out of the aforesaid amount of P12,000.00, defendants paid only P100.00 in two installments of P50.00 each. The first payment was made on January 29, 1963 and the second payment was made on March 14, 1968, leaving a balance of P11,999.90, exclusive of interests. Plaintiff wrote defendants a letter of demand calling the attention of the latter about the installments in arrears under the terms and conditions of the promissory notes; but in spite of the said letter, defendants did not comply with their obligation. Plaintiff referred the matter to its legal counsel, who, in turn, sent defendants a letter of demand dated April 21, 1970 which letter was received by the defendants (Exhibits `D', `D-1' & `D-2'). Despite receipt of said letter, defendants did not comply and even failed to make a reply. Plaintiff presented further a statement of account stating therein that the amount still owing to it, inclusive of interest up to September 19, 1972 is P21,876.44; P11,999.00, the amount of the principal and P9,976.44 the amount of interest from November 3, 1960 up to September 19, 1972 (Exhibit `E')," (pp. 33-34, Rollo) There was an ex-parte reception of evidence because the defendants-appellants had been declared in default, plaintiff having complied with the court's order allowing service of summons and copy of the complaint upon the defendants-appellants through publication of the same in a newspaper of general circulation (Daily Mirror), pursuant to Section 16, Rule 14 of the Rules of Court. Plaintiff claims that summons could not be served personally upon the defendants because they concealed themselves to avoid service upon them; and, that when the sheriff went to the Jai-Alai Corporation of the Philippines at Cebu City where defendant-appellant Rene Nieto holds office, as manager, he could not be found thereat but, when the decision was served at the same address, the defendantsappellants were able to receive it. LibLex In this appeal, defendants-appellants contend that the lower court erred: (1) in allowing service of summons by publication, and consequently, the trial court did not acquire jurisdiction over the defendants-appellants, and the decision is therefore void; (2) in granting relief to plaintiff-appellee when its cause of action is barred by laches; (3) in lifting its orders dismissing the complaint for failure to prosecute; and (4) in granting interests from November 3, 1960. There is merit in this appeal. It is true that in Fontanilla vs. Dominguez, 73 Phil. 579, it was held that service of summons by publication is proper in all actions without distinction, provided the defendant is residing in the Philippines but his identity is

unknown or his address cannot be ascertained. However, in a later case, Pantaleon vs. Asuncion, 105 Phil, 765, the Court, speaking through then Justice Roberto Concepcion, ruled that "it is a well-settled principle of Constitutional Law that, in an action strictly in personam, like the one at bar, personal service of summons, within the forum, is essential to the acquisition of jurisdiction over the person of the defendant, who does not voluntarily submit himself to the authority of the court. In other words, summons by publication cannot consistently with the due process clause in the Bill of Rights confer upon the court jurisdiction over said defendant." And, quoting 16A C.J.S., pp. 786, 789, as follows: "Due process of law requires personal service to support a 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 voluntary appearance in the case is essential to the acquisition of jurisdiction so as to constitute compliance with the constitutional requirement of due process . . . Although a state legislature has more control over the form of service on its own residents than nonresidents, it has been held that in actions in personam . . . service by publication on resident defendants, who are personally within the state and can be found therein is not `due process of law', and a statute allowing it is unconstitutional." The action of herein plaintiff-appellee, being in personam, the doctrine laid down in Pantaleon vs. Asuncion (supra) finds application. And, the latest expression of such a doctrine comes from Justice J. B. L. Reyes in the case of Citizens' Surety and Insurance Company. Inc. vs. Melencio-Herrera, 38 SCRA 369, in these words: ". . . the Court could not validly acquire jurisdiction on a non-appearing defendant, absent a personal service of summons within the forum . . . The proper recourse for a creditor in the same situation as petitioner is to locate properties, real or personal, of the resident defendant debtor with unknown address and cause them to be attached under Rule 57, Section 1 (f), in which case, the attachment converts the action into a proceeding in rem or quasi in rem and the summons by publication may then accordingly be deemed valid and effective." Inasmuch as in the case at bar the lower court did not acquire jurisdiction over the person of the defendants-appellants, We find it unnecessary to discuss the other assigned errors raised by them. WHEREFORE, the decision, dated October 5, 1972 of the court a quo, is hereby SET ASIDE and the case is remanded to the trial court for proper service of summons and trial. SO ORDERED.

6.

Dial Corp. v. Soriano

FIRST DIVISION [G.R. No. 82330. May 31, 1988.] THE DIAL CORPORATION, C & T REFINERY INC., NALIN Sdn. Bhb. BERISFORD COMMODITIES, LTD., and PACIFIC MOLASSES COMPANY, petitioners, vs. THE HON. CLEMENTE M. SORIANO, Presiding Judge, Regional Trial Court, Branch 3, MANILA PUBLIC RESPONDENT and IMPERIAL VEGETABLE OIL COMPANY, INC., respondents. SYLLABUS 1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; EXTRA-TERRITORIAL SERVICE THEREOF; INSTANCES. Only in four (4) instances is extraterritorial service of summons proper, namely: "(1) when the action affects the personal status of the plaintiffs; (2) when the action 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; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant non-resident's property has been attached within the Philippines" (De Midgely vs. Ferandos, 64 SCRA 23). 2. ID.; ID.; ID.; IN PERSONAL ACTIONS, EXTRA-TERRITORIAL SERVICE DOES NOT CONFER JURISDICTION. The action is purely an action for injunction to restrain the defendants from enforcing against Imperial Vegetable Oil company, Inc. ("abusing and harassing") its contracts for the delivery of coconut oil to the defendants, and to recover from the defendants P21 million in damages for such "harassment." It is clearly a personal action as well as an action in personam, not an action in rem or quasi in rem. As Civil Case No. 87-40166 is a personal action, personal or substituted service of summons on the defendants, not extraterritorial service, is necessary to confer jurisdiction on the court. 3. ID.; ID.; ACTION IN PERSONAM AND PERSONAL ACTION, BOTH DEFINED. 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. (Hernandez vs. Rural Bank of Lucena, Inc. 76 SCRA 85). A personal action is one brought for the recovery of personal property, for the enforcement of some contract or recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the person or property (Hernandez vs. Development Bank of the Philippines, 71 SCRA 292). 4. ID.; PROVISIONAL REMEDIES; INJUNCTION. In an action for injunction, extraterritorial service of summons and complaint upon the non-resident defendants cannot subject them to the processes of the regional trial courts which are powerless to reach them outside the region over which they exercise their authority (Sec. 3-a, Interim Rules of Court; Sec. 21, subpar. 1, B.P. Blg. 129). Extraterritorial service of summons will not confer on the court jurisdiction or power to compel them to obey its orders. DECISION GRIO-AQUINO, J p: The petitioners are foreign corporations organized and existing under the laws of the United States, the United Kingdom, and Malaysia, are not domiciled in the

Philippines, nor do they have officers or agents, place of business, or property in the Philippines; they are not licensed to engage, and are not engaged, in business here. The respondent Imperial Vegetable Oil Company, Inc. (or "IVO" for brevity) is a Philippine corporation which through its president, Dominador Monteverde, had entered into several contracts for the delivery of coconut oil to the petitioners. Those contracts stipulate that any dispute between the parties will be settled through arbitration under the rules of either the Federation of Oils Seeds and Fats Association (FOSFA) or the National Institute of Oil Seed Products (NIOP). Because IVO defaulted under the contracts, the petitioners and 15 others, initiated arbitration proceedings abroad, and some have already obtained arbitration awards against IVO. On April 8, 1987, IVO filed a complaint for injunction and damages against nineteen (19) foreign coconut oil buyers including the petitioners, with whom its president, Dominador Monteverde, had entered into contracts for the delivery of coconut oil (Civil Case No. 87-40166, RTC Manila entitled "Imperial Vegetable Oil Co., Inc. vs. Dial Corporation et al."). IVO repudiated Monteverde's contracts on the grounds that they were mere "paper trading in futures" as no actual delivery of the coconut oil was allegedly intended by the parties; that the Board of Directors of IVO convened in a special meeting on March 21, 1987 and removed Dominador Monteverde from his position as president of the corporation, named in his place, Rodrigo Monteverde, and disowned Dominador Monteverde's allegedly illegal and unauthorized acts; that the defendants have allegedly "harassed" IVO to comply with Dominador's contracts and to come to a settlement with them. IVO prayed for the issuance of a temporary restraining order or writ of preliminary injunction to stop the defendants from harassing IVO with their insistent demands to recognize the contracts entered into by Dominador Monteverde and from portraying the IVO as one that defaults on its contracts and obligations and has fallen into bad times and from interfering with IVO's normal conduct of business. IVO also prayed that the defendants pay it moral damages of P5 million, actual damages of P10 million, exemplary damages of P5 million, attorney's fees of P1 million, P3,000 per appearance of counsel, and litigation expenses. cdphil On motion of IVO, respondent Judge authorized it to effect extraterritorial service of summons to all the defendants through DHL Philippines corporation (Annex B). Pursuant to that order, the petitioners were served with summons and copy of the complaint by DHL courier service. On April 25, 1987, without submitting to the court's jurisdiction and only for the purpose of objecting to said jurisdiction over their persons, the petitioners filed motions to dismiss the complaint against them on the ground that the extraterritorial service of summons to them was improper and that hence the court did not acquire jurisdiction over them. On December 15, 1987, the court denied their motions to dismiss and upheld the validity of the extraterritorial service of summons to them on the ground that "the present action relates to property rights which lie in contracts within the Philippines, or which defendants claim liens or interests, actual or inchoate, legal or equitable (par. 2, complaint). And one of the reliefs demanded consists, wholly or in part, in excluding the defendants from any interest in such property for the reason that their transactions with plaintiff's former president are ultra vires." Furthermore, "as foreign corporations doing business in the Philippines without a license, they opened themselves to suit before Philippine courts, pursuant to Sec. 133 of the Corporation Code of the Philippines." (Annex H) The petitioners' motions for reconsideration of that order were also denied by the court (Annex M), hence this

petition for certiorari with a prayer for the issuance of a temporary retraining order which We granted. The petition is meritorious. Section 17, Rule 14 of the Rules of Court provides: Section 17. Extraterritorial service. When the defendant does not reside and is not found in the Philippines and the action affects 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 the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of 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 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 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 notice, within which the defendant must answer." Only in four (4) instances is extraterritorial service of summons proper, namely: "(1) when the action affects the personal status of the plaintiffs; (2) when the action 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; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant nonresident's property has been attached within the Philippines" (De Midgely vs. Ferandos, 64 SCRA 23). The complaint in this case does not involve the personal status of the plaintiff, nor any property in the Philippines in which the defendants have or claim an interest, or which the plaintiff has attached. The action is purely an action for injunction to restrain the defendants from enforcing against IVO ("abusing and harassing") its contracts for the delivery of coconut oil to the defendants, and to recover from the defendants P21 million in damages for such "harassment." It is clearly a personal action as well as an action in personam, not an action in rem or quasi in rem. "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." (Hernandez vs. Rural Bank of Lucena, Inc., 76 SCRA 85). A personal action is one brought for the recovery of personal property, for the enforcement of some contract or recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the person or property (Hernandez vs. Development Bank of the Philippines, 71 SCRA 292). As Civil Case No. 87-40166 is a personal action, personal or substituted service of summons on the defendants, not extraterritorial service, is necessary to confer jurisdiction on the court. The rule is explained in Moran's Comments on the Rules of Court thus: "As a general rule, when the defendant is not residing and is not found in the Philippines, the Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court. But, when the action affects the personal status of the plaintiff residing in the Philippines, or is intended to seize or dispose of any property, real or personal, of the

defendant located in the Philippines, it may be validly tried by the Philippines courts, for then, they have jurisdiction over the res, i.e., the personal status of the plaintiff or the property of the defendant and their jurisdiction over the person of the non-resident defendant is not essential. Venue in such cases may be laid in the province where the property of the defendant or a part thereof involved in the litigation is located." (5 Moran's Comments on the Rules of Court, 2nd Ed., p. 105.) In an action for injunction, extraterritorial service of summons and complaint upon the non-resident defendants cannot subject them to the processes of the regional trial courts which are powerless to reach them outside the region over which they exercise their authority (Sec. 3-a, Interim Rules of Court; Sec. 21, subpar. 1, B.P. Blg. 129). Extraterritorial service of summons will not confer on the court jurisdiction or power to compel them to obey its orders: LLphil Neither may the court by extraterritorial service of summons acquire jurisdiction to render and enforce a money judgment against a non-resident defendant who has no property in the Philippines for "the fundamental rule is that jurisdiction in personam over non-residents, so as to sustain a money judgment, must be based upon personal service within the state which renders the judgment" (Boudard vs. Tait, 67 Phil. 170, 174). Respondents' contention that "the action below is related to property within the Philippines, specifically contractual rights that petitioners are enforcing against IVO" is specious for the "contractual rights" of the petitioners are not property found in the Philippines for the petitioners have not filed an action in the local courts to enforce said rights. They have not submitted to the jurisdiction of our courts. The lower court invoked Section 33 of the Corporation Code which provides that a "foreign corporation transacting business in the Philippines without a license may be sued or proceeded against before Philippine courts or administrative tribunal on any valid cause of action recognized under Philippine laws." It assumed that the defendants (herein petitioners) are doing business in the Philippines, which allegation the latter denied. Even if they can be considered as such, the Corporation Code did not repeal the rules requiring proper service of summons to such corporations as provided in Rule 14 of the Rules of Court and Section 128 of the Corporation Code. The respondent court's finding that, by filing motions to dismiss, the petitioners hypothetically admitted the allegations of the complaint that they are doing business in the Philippines without any license, and that they may be served with summons and other court processes through their agents or representatives enumerated in paragraph 2 of the complaint, is contradicted by its order authorizing IVO to summon them by extraterritorial service, a mode of service which is resorted to when the defendant is not found in the Philippines, does not transact business here, and has no resident agent on whom the summons may be served. Cdpr WHEREFORE, We hold that the extraterritorial service of summons on the petitioners was improper, hence null and void. The petition for certiorari is granted. The orders dated April 24, 1987 (Annex B) and December 15, 1987 (Annex II) of the respondent Judge are hereby set aside. The complaint in Civil Case No. 87-40166 is hereby dismissed as against the petitioners for failure of the court to acquire jurisdiction over them. SO ORDERED.

7.

Banco de Brasil v. CA

SECOND DIVISION [G.R. Nos. 121576-78. June 16, 2000.] BANCO DO BRASIL, petitioner, vs. THE COURT OF APPEALS, HON. ARSENIO M. GONONG, and CESAR S. URBINO, SR., respondents. SYNOPSIS On April 10, 1991, petitioner Banco Do Brasil filed, by special appearance, an urgent motion to vacate judgment and to dismiss case on the ground that the February 18, 1991 decision of the trial court ordering herein petitioner to pay private respondent the amount of $300,000.00 in damages was void with respect to it for having been rendered without validly acquiring jurisdiction over the person of petitioner. Petitioner subsequently amended its petition to specifically aver that its special appearance was solely for the purpose of questioning the court's exercise of personal jurisdiction. On May 20, 1991, the trial court issued an order acting favorably on petitioner's motion and set aside as against petitioner the decision for having been rendered without jurisdiction over Banco do Brasil's person. Private respondent sought reconsideration of the order, but the trial court denied said motion. Meanwhile, a certiorari petition was filed by private respondent before the Court of Appeals seeking to nullify the cease and desist order dated April 5, 1991 issued by Judge Arsenio M. Gonong. Two more separate petitions for certiorari were subsequently filed by private respondent. The second petition sought to nullify the order setting aside the deputy sheriff's return as well as the certificate of sale issued by deputy sheriff Camangon. The third petition sought to nullify the order of the Court of Tax Appeals directing the Commissioner of Customs to place the Bureau of Customs and PNP officers and guards to secure the M/V Star Ace and its cargoes, make inventory of the goods stored in the premises as indicated to belong to the private respondent. These three petitions were consolidated, and on July 19, 1993, the appellate court rendered its decision granting private respondent's petitions, thereby nullifying the disputed orders and effectively giving away to the entire decision of the RTC of Manila. Petitioner sought reconsideration, insofar as its liability for damages was concerned. The appellate court denied the motion for reconsideration. Hence, this petition. ATcaID The Court found the petition meritorious. Private respondent's suit against petitioner was premised on petitioner's being one of the claimants of the subject vessel, M/V Star Ace. Thus, it can be said that private respondent initially sought only to exclude petitioner from claiming interest over the subject vessel. While the action is in rem, by claiming damages, the relief demanded went beyond the res and sought a relief totally alien to the action. Any relief granted in rem or quasi in rem actions must be confined to the res and the court cannot lawfully render a personal judgment against the defendant. Clearly, the publication of summons effected by private respondent was invalid and ineffective for the trial court to acquire jurisdiction over the person of petitioner, since by seeking to recover damages from petitioner for their alleged commission of an injury to his person or property cause by petitioner's being a nuisance defendant, private respondent's action became in personam. Bearing in mind that in personam nature of the action, personal, or if not possible, substituted

service of summons on petitioner and not extraterritorial service, is necessary to confer jurisdiction over the person of petitioner and validly hold it liable to private respondent for damages. Thus, the trial court had no jurisdiction to award damages amounting to $300,000.00 in favor of private respondent and as against herein petitioner. Accordingly, the petition was granted and the decision and resolution of the Court of Appeals were reversed and set aside insofar as they affect petitioner Banco do Brasil. SYLLABUS 1. REMEDIAL LAW; CIVIL PROCEDURE; SERVICE OF SUMMONS; INSTANCES WHEN EXTRATERRITORIAL SERVICE OF SUMMONS IS PROPER. When the defendant is a non-resident and he is not found in the country, summons may be served extraterritorially in accordance with Rule 14, Section 17 of the Rules of Court. Under this provision, there are only four (4) instances when extraterritorial service of summons is proper, namely: "(1) when the action affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of which is property, within the Philippines, in which the defendant claims a lien or interest, actual or contingent; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant non-resident's property has been attached within the Philippines. In these instances, service of summons may be affected by (a) personal service out of the country, with leave of court; (b) publication, also with leave of court; or (c) any other manner the court may deem sufficient. 2. ID.; ID.; ID.; EXTRAJUDICIAL SERVICE OF SUMMONS APPLY ONLY WHERE THE ACTION IS IN REM. Clear from the foregoing, extrajudicial service of summons apply only where the action is in rem, an action against the thing itself instead of against the person, or in an action quasi in rem, where an individual is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or loan burdening the property. This is so inasmuch as, in in rem and quasi in rem actions, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the res. 3. ID.; ID.; ID.; ACTION IN PERSONAM; WHEN THE DEFENDANT IS A NONRESIDENT, PERSONAL SERVICE OF SUMMONS WITHIN THE STATE IS ESSENTIAL TO THE ACQUISITION OF JURISDICTION OVER THE PERSON. Where the action is in personam, one brought against a person on the basis of his personal liability, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. When the defendant is a non-resident, personal service of summons within the state is essential to the acquisition of jurisdiction over the person. This cannot be done, however, if the defendant is not physically present in the country, and thus, the court cannot acquire jurisdiction over his person and therefore cannot validly try and decide the case against him. In the instant case, private respondent's suit against petitioner is premised on petitioner's being one of the claimants of the subject vessel M/V Star Ace. Thus, it can be said that private respondent initially sought only to exclude petitioner from claiming interest over the subject vessel M/V Star Ace. However, private respondent testified during the presentation of evidence that, for being a nuisance defendant, petitioner caused

irreparable damage to private respondent in the amount of $300,000.00. Therefore, while the action is in rem, by claiming damages, the relief demanded went beyond the res and sought a relief totally alien to the action. CaDATc 4. ID.; ID.; ID.; ANY RELIEF GRANTED IN REM OR QUASI IN REM ACTIONS MUST BE CONFINED TO THE RES AND THE COURT CANNOT LAWFULLY RENDER A PERSONAL JUDGMENT AGAINST THE DEFENDANT. It must be stressed that any relief granted in rem or quasi in rem actions must be confined to the res, and the court cannot lawfully render a personal judgment against the defendant. Clearly, the publication of summons effected by private respondent is invalid and ineffective for the trial court to acquire jurisdiction over the person of petitioner, since by seeking to recover damages from petitioner for the alleged commission of an injury to his person or property caused by petitioner's being a nuisance defendant, private respondent's action became in personam. Bearing in mind the in personam nature of the action, personal or, if not possible, substituted service of summons on petitioner, and not extraterritorial service, is necessary to confer jurisdiction over the person of petitioner and validly hold it liable to private respondent for damages. Thus, the trial court had no jurisdiction to award damages amounting to $300,000.00 in favor of private respondent and as against herein petitioner. 5. ID.; ID.; JUDGMENT; ONLY UPON THE LAPSE OF THE REGLEMENTARY PERIOD TO APPEAL, WITH NO APPEAL PERFECTED WITHIN SUCH PERIOD, DOES THE DECISION BECOME FINAL AND EXECUTORY. We settled the issue of finality of the trial court's decision dated February 18, 1991 in the Vlason case, wherein we stated that, considering the admiralty case involved multiple defendants, "each defendant had a different period within which to appeal, depending on the date of receipt of decision." Only upon the lapse of the reglementary period to appeal, with no appeal perfected within such period, does the decision become final and executory. In the case of petitioner, its Motion to Vacate Judgment and to Dismiss Case was filed on April 10, 1991, only six (6) days after it learned of the existence of the case upon being informed by the Embassy of the Federative Republic of Brazil in the Philippines, on April 4, 1991, of the February 18, 1991 decision. Thus, in the absence of any evidence on the date of receipt of decision, other than the alleged April 4, 1991 date when petitioner learned of the decision, the February 18, 1991 decision of the trial court cannot be said to have attained finality as regards the petitioner. DECISION DE LEON, JR., J p: Before us is a petition for review on certiorari of the Decision 1 and the Resolution 2 of the Court of Appeals 3 dated July 19, 1993 and August 15, 1995, respectively, which reinstated the entire Decision 4 dated February 18, 1991 of the Regional Trial Court of Manila, Branch 8, holding, among others, petitioner Banco do Brasil liable to private respondent Cesar Urbino, Sr. for damages amounting to $300,000.00. 5 At the outset, let us state that this case should have been consolidated with the recently decided case of Vlason Enterprises Corporation v. Court of Appeals and

Duraproof Services, represented by its General Manager, Cesar Urbino Sr.6 , for these two (2) cases involved the same material antecedents, though the main issue proffered in the present petition vary with the Vlason case. The material antecedents, as quoted from the Vlason 7 case, are: Poro Point Shipping Services, then acting as the local agent of Omega Sea Transport Company of Honduras & Panama, a Panamanian Company (hereafter referred to as Omega), requested permission for its vessel M/V Star Ace, which had engine trouble, to unload its cargo and to store it at the Philippine Ports Authority (PPA) compound in San Fernando, La Union while awaiting transshipment to Hongkong. The request was approved by the Bureau of Customs. 8 Despite the approval, the customs personnel boarded the vessel when it docked on January 7, 1989, on suspicion that it was the hijacked M/V Silver Med owned by Med Line Philippines Co., and that its cargo would be smuggled into the country. 9 The district customs collector seized said vessel and its cargo pursuant to Section 2301, Tariff and Customs Code. A notice of hearing of SFLU Seizure Identification No. 3-89 was served on its consignee, Singkong Trading Co. of Hongkong, and its shipper, Dusit International Co., Ltd. of Thailand. While seizure proceedings were ongoing, La Union was hit by three typhoons, and the vessel ran aground and was abandoned. On June 8, 1989, its authorized representative, Frank Cadacio, entered into salvage agreement with private respondent to secure and repair the vessel at the agreed consideration of $1 million and "fifty percent (50%) [of] the cargo after all expenses, cost and taxes." 10 Finding that no fraud was committed, the District Collector of Customs, Aurelio M. Quiray, lifted the warrant of seizure on July 1989. 11 However, in a Second Indorsement dated November 11, 1989, then Customs Commissioner Salvador M. Mison declined to issue a clearance for Quirays Decision; instead, he forfeited the vessel and its cargo in accordance with Section 2530 of the Tariff and Customs Code. 12 Accordingly, acting District Collector of Customs John S. Sy issued a Decision decreeing the forfeiture and the sale of the cargo in favor of the government. 13 To enforce its preferred salvors lien, herein Private Respondent Duraproof Services filed with the Regional Trial Court of Manila a Petition for Certiorari, Prohibition and Mandamus 14 assailing the actions of Commissioner Mison and District Collector Sy. Also impleaded as respondents were PPA Representative Silverio Mangaoang and Med Line Philippines, Inc. On January 10, 1989, private respondent amended its Petition 15 to include former District Collector Quiray; PPA Port Manager Adolfo Ll. Amor, Jr.; . . . Vlason Enterprises as represented by its president, Vicente Angliongto; Singkong Trading Company as represented by Atty. Eddie Tamondong; Banco Do Brasil; Dusit International Co.; Thai-Nan Enterprises Ltd., and Thai-United Trading Co., Ltd. 16 . . . Summonses for the amended Petition were served on Atty. Joseph Capuyan for Med Line Philippines: Anglionto (through his secretary, Betty Bebero), Atty. Tamondong and Commissioner Mison. 17 Upon motion of the private respondent, the trial court

allowed summons by publication to be served upon defendants who were not residents and had no direct representative in the country. 18 On January 29, 1990, private respondent moved to declare respondents in default, but the trial court denied the motion in its February 23, 1990 Order 19 , because Mangaoang and Amor had jointly filed a Motion to Dismiss, while Mison and Med Line had moved separately for an extension to file a similar motion. 20 Later it rendered an Order dated July 2, 1990, giving due course to the motions to dismiss filed by Mangaoang and Amor on the ground of litis pendentia, and by the commissioner and district collector of customs on the ground of lack of jurisdiction. 21 In another Order, the trial court dismissed the action against Med Line Philippines on the ground of litis pendentia. 22 On two other occasions, private respondent again moved to declare the following in default: [Vlason], Quiray, Sy and Mison on March 26, 1990; 23 and Banco [do] Bra[s]il, Dusit International Co., Inc., Thai-Nan Enterprises Ltd. and Thai-United Trading Co., Ltd. on August 24, 1990. 24 There is no record, however, that the trial court acted upon the motions. On September 18, 1990, [private respondent] filed another Motion for leave to amend the petition, 25 alleging that its counsel failed to include "necessary and/or indispensable parties": Omega represented by Cadacio; and M/V Star Ace represented by Capt. Nahon Rada, relief captain. Aside from impleading these additional respondents, private respondent also alleged in the Second (actually, third) Amended Petition 26 that the owners of the vessel intended to transfer and alienate their rights and interest over the vessel and its cargo, to the detriment of the private respondent. The trial court granted leave to private respondent to amend its Petition, but only to exclude the customs commissioner and the district collector. 27 Instead, private respondent filed the "Second Amended Petition with Supplemental Petition" against Singkong Trading Company; and Omega and M/V Star Ace, 28 to which Cadacio and Rada filed a Joint Answer. 29 Declared in default in an Order issued by the trial court on January 23, 1991, were the following: Singkong Trading Co., Commissioner Mison, M/V Star Ace and Omega. 30 Private respondent filed, and the trial court granted, an ex parte Motion to present evidence against the defaulting respondents. 31 Only private respondent, Atty. Tamondong, Commissioner Mison, Omega and M/V Star Ace appeared in the next pretrial hearing; thus, the trial court declared the other respondents in default and allowed private respondent to present evidence against them. 32 Cesar Urbino, general manager of private respondent, testified and adduced evidence against the other respondents, . . . .33 On December 29, 1990, private respondent and Rada, representing Omega, entered into a Memorandum of Agreement stipulating that Rada would write and notify Omega regarding the demand for salvage fees of private respondent; and that if Rada did not receive any instruction from his principal, he would assign the vessel in favor of the salvor. 34 On February 18, 1991, the trial court disposed as follows:

"WHEREFORE, IN VIEW OF THE FOREGOING, based on the alle gations, prayer and evidence adduced, both testimonial and documentary, the Court is convinced, that, indeed, defendants/respondents are liable to [private respondent] in the amount as prayed for in the petition for which it renders judgment as follows: 1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, [r]elief [c]aptain of the vessel and Omega Sea Transport Company, Inc., represented by Frank Cadacio[,] is ordered to refrain from alienating or [transferring] the vessel M/V Star Ace to any third parties; 2. a. Singkong Trading Company to pay the following: Taxes due the government;

b. Salvage fees on the vessel in the amount of $1,000,000.00 based on . . . Lloyds Standard Form of Salvage Agreement; c. Preservation, securing and guarding fees on the vessel in the amount of $225,000.00; d. Maintenance fees in the amount of P2,685,000.00;

e. Salaries of the crew from August 16, 1989 to December 1989 in the amount of $43,000.00 and unpaid salaries from January 1990 up to the present; f. Attorneys fees in the amount of P656,000.00;

3. [Vlason] Enterprises to pay [private respondent] in the amount of P3,000,000.00 for damages; 4. Banco [Du] Brasil to pay [private respondent] in the amount of $300,000.00 in damages; 35 and finally, 5. Costs of [s]uit."

Subsequently, upon the motion of Omega, Singkong Trading Co., and private respondent, the trial court approved a Compromise Agreement 36 among the movants, reducing by 20 percent the amounts adjudged. For their part, respondentsmovants agreed not to appeal the Decision. 37 On March 8, 1991, private respondent moved for the execution of judgment, claiming that the trial court Decision had already become final and executory. The Motion was granted and a Writ of Execution was issued. To satisfy the Decision, Sheriffs Jorge Victorino, Amado Sevilla and Dionisio Camagon were deputized on March 13, 1991 to levy and to sell on execution the defendants vessel and personal property.

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Banco do Brasil. 49 Nonetheless, the appellate court denied the motions for reconsideration in its Resolution 50 dated August 15, 1995. Hence, the instant petition. Petitioner Banco do Brasil takes exception to the appellate courts declaration that the suit below is in rem, not in personam, 51 thus, service of summons by publication was sufficient for the court to acquire jurisdiction over the person of petitioner Banco do Brasil, and thereby liable to private respondent Cesar Urbino for damages claimed, amounting to $300,000.00. Petitioner further challenges the finding that the February 18, 1991 decision of the trial court was already final and thus, cannot be modified or assailed. 52 Petitioner avers that the action filed against it is an action for damages, as such it is an action in personam which requires personal service of summons be made upon it for the court to acquire jurisdiction over it. However, inasmuch as petitioner Banco do Brasil is a non-resident foreign corporation, not engaged in business in the Philippines, unless it has property located in the Philippines which may be attached to convert the action into an action in rem, the court cannot acquire jurisdiction over it in respect of an action in personam. The petition bears merit, thus the same should be as it is hereby granted. First. When the defendant is a nonresident and he is not found in the country, summons may be served extraterritorially in accordance with Rule 14, Section 17 53 of the Rules of Court. Under this provision, there are only four (4) instances when extraterritorial service of summons is proper, namely: "(1) when the action affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of which is property, within the Philippines, in which the defendant claims a lien or interest, actual or contingent; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant non-residents property has been attached within the Philippines." 54 In these instances, service of summons may be effected by (a) personal service out of the country, with leave of court; (b) publication, also with leave of court; or (c) any other manner the court may deem sufficient. 55 Clear from the foregoing, extrajudicial service of summons apply only where the action is in rem, an action against the thing itself instead of against the person, or in an action quasi in rem, where an individual is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or loan burdening the property. This is so inasmuch as, in in rem and quasi in rem actions, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the res. 56 However, where the action is in personam, one brought against a person on the basis of his personal liability, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. When the defendant is a non-resident, personal service of summons within the state is essential to the acquisition of jurisdiction over the person. 57 This cannot be done, however, if the defendant is not

On March 18, 1991, the Bureau of Customs also filed an ex parte Motion to recall the execution, and to quash the notice of levy and the sale on execution. Despite this Motion, the auction sale was conducted on March 21, 1991 by Sheriff Camagon, with private respondent submitting the winning bid. The trial court ordered the deputy sheriffs to cease and desist from implementing the Writ of Execution and from levying on the personal property of the defendants. Nevertheless, Sheriff Camagon issued the corresponding Certificate of Sale on March 27, 1991. On April 10, 1991, petitioner Banco do Brasil filed, by special appearance, an Urgent Motion to Vacate Judgment and to Dismiss Case 38 on the ground that the February 18, 1991 Decision of the trial court is void with respect to it for having been rendered without validly acquiring jurisdiction over the person of Banco do Brasil. Petitioner subsequently amended its petition 39 to specifically aver that its special appearance is solely for the purpose of questioning the Courts exercise of personal jurisdiction. On May 20, 1991, the trial court issued a n Order 40 acting favorably on petitioners motion and set aside as against petitioner the decision dated February 18, 1991 for having been rendered without jurisdiction over Banco do Brasils person. Private respondent sought reconsideration 41 of the Order dated May 20, 1991. However, the trial court in an Order 42 dated June 21, 1991 denied said motion. Meanwhile, a certiorari petition 43 was filed by private respondent before public respondent Court of Appeals seeking to nullify the cease and desist Order dated April 5, 1991 issued by Judge Arsenio M. Gonong. Two (2) more separate petitions for certiorari were subsequently filed by private respondent. The second petition 44 sought to nullify the Order 45 dated June 26, 1992 setting aside the Deputy Sheri ffs return dated April 1, 1991 as well as the certificate of sale issued by Deputy Sheriff Camagon. The third petition 46 sought to nullify the Order dated October 5, 1992 of the Court of Tax Appeals directing the Commissioner of Customs to place Bureau of Customs and PNP officers and guards to secure the M/V Star Ace and its cargoes, make inventory of the goods stored in the premises as indicated to belong to the private respondent. Likewise challenged was the Order dated August 17, 1992 authorizing the sale of M/V Star Ace and its cargoes. These three (3) petitions were consolidated and on July 19, 1993, the appellate court rendered its Decision 47 granting private respondents petitions, thereby nullifying and setting aside the disputed orders and effectively "giving way to the entire decision dated February 18, 1991 of the . . . Regional Trial Court of Manila, Branch 8, in Civil Case No. 89-51451 which remains valid, final and executory, if not yet wholly executed." 48 Private respondent Urbino, Vlason Enterprises and petitioner Banco do Brasil filed separate motions for reconsideration. For its part, petitioner Banco do Brasil sought reconsideration, insofar as its liability for damages, on the ground that there was no valid service of summons as service was on the wrong party the ambassador of Brazil. Hence, it argued, the trial court did not acquire jurisdiction over petitioner

physically present in the country, and thus, the court cannot acquire jurisdiction over his person and therefore cannot validly try and decide the case against him. 58 In the instant case, private respondents suit against petitioner is premised on petitioners being one of the claimants of the subject vessel M/V Star Ace. 59 Thus, it can be said that private respondent initially sought only to exclude petitioner from claiming interest over the subject vessel M/V Star Ace. However, private respondent testified during the presentation of evidence that, for being a nuisance defendant, petitioner caused irreparable damage to private respondent in the amount of $300,000.00. 60 Therefore, while the action is in rem, by claiming damages, the relief demanded went beyond the res and sought a relief totally alien to the action. It must be stressed that any relief granted in rem or quasi in rem actions must be confined to the res, and the court cannot lawfully render a personal judgment against the defendant. 61 Clearly, the publication of summons effected by private respondent is invalid and ineffective for the trial court to acquire jurisdiction over the person of petitioner, since by seeking to recover damages from petitioner for the alleged commission of an injury to his person or property 62 caused by petitioners being a nuisance defendant, private respondents action became in personam. Bearing in mind the in personam nature of the action, personal or, if not possible, substituted service of summons on petitioner, and not extraterritorial service, is necessary to confer jurisdiction over the person of petitioner and validly hold it liable to private respondent for damages. Thus, the trial court had no jurisdiction to award damages amounting to $300,000.00 in favor of private respondent and as against herein petitioner. Second. We settled the issue of finality of the trial courts decision dated February 18, 1991 in the Vlason case, wherein we stated that, considering the admiralty case involved multiple defendants, "each defendant had a different period within which to appeal, depending on the date of receipt of decision." 63 Only upon the lapse of the reglementary period to appeal, with no appeal perfected within such period, does the decision become final and executory. 64 In the case of petitioner, its Motion to Vacate Judgment and to Dismiss Case was filed on April 10, 1991, only six (6) days after it learned of the existence of the case upon being informed by the Embassy of the Federative Republic of Brazil in the Philippines, on April 4, 1991, of the February 18, 1991 decision. 65 Thus, in the absence of any evidence on the date of receipt of decision, other than the alleged April 4, 1991 date when petitioner learned of the decision, the February 18, 1991 decision of the trial court cannot be said to have attained finality as regards the petitioner. WHEREFORE, the subject petition is hereby GRANTED. The Decision and the Resolution of the Court of Appeals dated July 19, 1993 and August 15, 1995, respectively, in CA-G.R. SP Nos. 24669, 28387 and 29317 are hereby REVERSED and SET ASIDE insofar as they affect petitioner Banco do Brasil. The Order dated May 20, 1991 of the Regional Trial Court of Manila, Branch 8 in Civil Case No. 8951451 is REINSTATED.

SO ORDERED.

8.

Cariaga v. Malaya

SECOND DIVISION [G.R. No. L-48375. August 13, 1986.] JOSE C. CARIAGA, JR. AND MARIETA CARIAGA, petitioners, vs. THE HON. ANTONIO Q. MALAYA, CAROLINA ALMONTE CARIAGA-SOON AND ANA ALMONTE CARIAGA, respondents. SYLLABUS 1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; EXTRA-TERRITORIAL SERVICE OF SUMMONS; WHEN AVAILABLE. Under Section 17, Rule 14, of the Rules of Court extraterritorial service of summons is proper: (1) when the action affects the personal status of the plaintiff; (2) when the action 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; (3) when the relief demanded in such an action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when defendant nonresident's property has been attached within the Philippines. 2. ID.; ID.; ID.; ID.; MANNERS IN EFFECTING THEREOF. In any of such four cases provided in Sec. 17, Rule 14 of the Rules of Court the service of summons may, with leave of court, be effected out of the Philippines in three ways: (1) by personal 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 sent by registered mail to the last known address of the defendant; and (3) in any other manner which the court may deem sufficient. The third mode of extraterritorial service of summons was substantially complied with in this case. (De Midgely v. Ferandos, 64 SCRA 23, 33, 34). 3. CONSTITUTIONAL LAW; BILL OF RIGHTS; JUDICIAL DUE PROCESS; OBSERVED IN CASE AT BAR. There is no question that the requirement of due process has been met as shown by the fact that defendants actually received the summonses and copies of the complaint and as evidenced by the Registry Return Cards marked as Annex A-1 and Annex B-1. Whatever defect there may have been in the service of summons was aptly corrected by the court a quo in its assailed order dated January 16, 1978, which gave said defendants ninety (90) days from receipt of order within which to file their responsive pleadings. Defendants have no reason to complain that they were unaware of the action filed against them or claim that they were denied due process. DECISION PARAS, J p: This is a petition for certiorari to review and to set aside two orders of the respondent Judge dated January 16, 1978 and April 11, 1978 giving validity to the service of summons by registered mail upon the defendants Jose C. Cariaga, Jr. and Marieta Cariaga-Celis (petitioners herein), who are residing abroad. Petitioners aver that the issuance of said orders by the respondent Judge is tantamount to grave abuse of discretion. The antecedent facts of the case at bar are briefly summarized as follows:

On October 6, 1976, plaintiffs (private respondents herein) Ana Almonte Cariaga Soon filed in her behalf and in behalf of her minor daughter Carolina, an action for (1) Annulment of a Deed of Extra-Judicial Partition of Real Property, (2) Cancellation of Transfer Certificate of Title (TCT), (3) Recovery of Real Property with damages, in the Court of First Instance (CFI) of Laguna, Branch IV, now known as the Regional Trial Court (RTC), docketed as Civil Case No. SC-1474. All defendants in said action filed their answer with counterclaim with the exception of defendants (petitioners herein) Jose C. Cariaga Jr. and Marieta Cariaga-Celis who were both residing abroad and were not served with summons. The lower court upon motion of plaintiffs granted them leave to effect extra-territorial service of summons upon said defendants pursuant to Secs. 7, 17 and 18 of Rule 14 of the New Rules of Court. (Annex "A", p. 9, Record). Accordingly, summonses with copies of the complaint were served to the defendants by registered mail abroad (Guam and U.S.A.) by the Clerk of Court at the instance of plaintiffs (Annex "B" and "C"). On August 30, 1977, defendants, who are residents of the Philippines filed a motion to set aside the said summons and to declare the service of summons abroad by registered mail as null and void, it being allegedly irregular and unauthorized under the provisions of Rule 14 of the Rules of Court (Annex "D") to which motion plaintiffs filed their opposition. Acting on the issue the lower court ruled in this wise: "ORDER "It appearing that but for the short period of fifteen (15) days from date of receipt of summons within which to answer given defendants Jose C. Cariaga, Jr. and Marietta C. Cariaga, who reside abroad, there was substantial compliance with Section 17 as related to Section 7 both of Rule 14 of the New Rules of Court in the service of said summons on said defendants, for LACK OF MERIT, the defendants' MOTION TO SET ASIDE SUMMONSES is, as it is, hereby DENIED. "Defendants Jose C. Cariaga, Jr., and Marietta C. Cariaga, having already received copies of plaintiffs' Complaint with the service of summons on them, said defendants are given NINETY (90) days from receipt of this Order within which to file responsive pleadings. "Let copies of this Order be served on the said defendants by registered mail with return cards at the instance of the plaintiffs. "IT IS SO ORDERED. Santa Cruz, Laguna, January 16, 1978. Sgd. ANTONIO Q. ANTONIO Q. J u d g e" (Annex F, p. 21, Record). On March 31, 1978, defendants (petitioner herein), residing abroad, by special appearance and thru counsel filed their motion to consider the service of summons upon them by registered mail as null and void. On April 11, 1978, the lower court issued another order reading as follows: "ORDER MALAYA

MALAYA

"Finding on merit to defendants' motion filed on March 31, 1978, through counsel, to consider the service of summons to them by registered mail, to be null and void because they are residing abroad, considering the findings of this Court as expounded in its January 16, 1978 Order, said motion is, as it is, hereby DENIED. "IT IS SO ORDERED. Santa Cruz, Laguna, April 11, 1978. (SGD.) IRINEO V. MENDOZA T/IRINEO V. MENDOZA J u d g e" (Annex "H", p. 25 Record). The main issue on appeal is whether the service of summons by registered mail upon defendants in the case at bar is one which is contemplated within the principles laid down in the provisions of Secs. 17, 7 and 22, Rule 14 of the New Rules of Court to Wit: "Section 17. Extraterritorial service. When the defendant does not reside and is not found in the Philippines and the action affects 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 the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of 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 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 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 notice, within which the defendant must answer." Sec. 7. Personal service of summons. The summons shall be served by handing a copy thereof to the defendant in person, or if he refuses to receive it, by tendering it to him." Sec. 22. Proof of service by registered mail. Service by registered mail under this rule may be proved by a certificate of the sheriff or affidavit of the person especially authorized by the court, showing that a copy of the summons and papers attached thereto, inclosed in an envelope and addressed to the defendant, with postage prepaid, has been mailed, to which certificate or affidavit the registry receipt and return card shall be attached." Questioning the validity of the aforequoted orders dated January 16, 1978 and April 11, 1978, petitioners aver that the lower court committed an error in allowing service of summons by registered mail, arguing that such mode must be coupled with publication in a newspaper of general circulation which was lacking in the case at bar. Petitioners' contention holds no water. Under Section 17, extraterritorial service of summons is proper: (1) when the action affects the personal status of the plaintiff; (2) when the action 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; (3) when the relief demanded in such an action

consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when defendant nonresident's property has been attached within the Philippines (Sec. 17, Rule 14, Rules of Court). In any of such four cases, the service of summons may, with leave of court, be effected out of the Philippines in three ways: (1) by personal 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 sent by registered mail to the last known address of the defendant; and (3) in any other manner which the court may deem sufficient. The third mode of extraterritorial service of summons was substantially complied with in this case. (De Midgely v. Ferandos, 64 SCRA 23, 33, 34). There is no question that the requirement of due process has been met as shown by the fact that defendants actually received the summonses and copies of the complaint and as evidenced by the Registry Return Cards marked as Annex A-1 (page 56Record) and Annex B-1. Whatever defect there may have been in the service of summons was aptly corrected by the court a quo in its assailed order dated January 16, 1978, which gave said defendants ninety (90) days from receipt of order within which to file their responsive pleadings. Defendants have no reason to complain that they were unaware of the action filed against them or claim that they were denied due process. The case of Habana v. Vamenta et al., L-27091, June 30, 1970, or 33 SCRA 569, cited by the petitioners in support of their claim has no bearing in the case at bar since in said case service of summons was never made, even if defendant knew of the case against him, while in the case under consideration, service of summons was made upon them (although claimed erroneously by them as defective). WHEREFORE, premises considered, the petition for certiorari is hereby DISMISSED with costs against the petitioners. SO ORDERED.

9.

Valmonte v. CA

SECOND DIVISION [G.R. No. 108538. January 22, 1996.] LOURDES A. VALMONTE and ALFREDO D. VALMONTE, petitioners, vs. THE HONORABLE COURT OF APPEALS, THIRD DIVISION and ROSITA DIMALANTA, respondents. cdasia Alfredo D. Valmonte and Cirilo E. Doronia, for petitioners. Balgos & Perez, for private respondent. SYLLABUS 1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; SERVICE REQUIRED IN ACTION IN PERSONAM. In an action in personam, personal service of summons or, if this is not possible and he cannot be personally served, substituted service, as provided in Rule 14, 7-8 is essential for the acquisition by the court of jurisdiction over the person of a defendant who does not voluntarily submit himself to the authority of the court. If defendant cannot be served with summons because he is temporarily abroad, but otherwise he is a Philippine resident, service of summons may, by leave of court, be made by publication. Otherwise stated, a resident defendant in an action in personam, who cannot be personally served with summons, may be summoned either by means of substituted service in accordance with Rule 14, 8 or by publication as provided in 17 and 18 of the same Rule. 2. ID.; ID.; ID.; ID.; DEFENDANT MUST BE RESIDENT OF PHILIPPINES. 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 essential to make a binding decision. 3. ID.; ID.; ACTION IN REM; NON-RESIDENT DEFENDANT MAY BE SERVED WITH SUMMONS EXTERRITORIALLY. On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the defendant is not essential for giving the court jurisdiction so long as the court acquires jurisdiction over the res. If the defendant is a nonresident and he is not found in the country, summons may be served exterritorially in accordance with Rule 14, 17. In such cases, what gives the court jurisdiction in an action in rem or quasi in rem is that it has jurisdiction over the res, i.e. the personal status of the plaintiff who is domiciled in the Philippines or the property litigated or attached. 4. ID.; ID.; ID.; ID.; PURPOSE. Service of summons in the manner provided in 17 is not for the purpose of vesting it with jurisdiction but for complying with the requirements of fair play or due process, so that he will be informed of the pendency of the action against him and the possibility that property in the Philippines belonging to him or in which he has an interest may be subjected to a judgment in favor of the plaintiff and he can thereby take steps to protect his interest if he is so minded. 5. ID.; ID.; ID.; ID.; MODES. As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines, service of summons on her must be in accordance with Rule 14, 17. Such service, to be effective outside the Philippines, must be made either (1) by personal 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 sent by

registered mail to the last known address of the defendant; or (3) in any other manner which the court may deem sufficient. 6. ID.; ID.; ID.; ID.; ID.; SERVICE OF SUMMONS ON DEFENDANT'S HUSBAND AND COUNSEL IN PHILIPPINES, NOT VALID. Since in the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was not done by means of any of the first two modes, the question is whether the service on her attorney, petitioner Alfredo D. Valmonte, can be justified under the third mode, namely, "in any . . . manner the court may deem sufficient." We hold it cannot. This mode of service, like the first two, must be made outside the Philippines, such as through the Philippine Embassy in the foreign country where the defendant resides. Moreover, there are several reasons why the service of summons on Atty. Alfredo A. Valmonte cannot be considered a valid service of summons on petitioner Lourdes A. Valmonte. In the first place, service of summons on petitioner Alfredo D. Valmonte was not made upon the order of the court as required by Rule 14, 17 and certainly was not a mode deemed sufficient by the court which in fact refused to consider the service to be valid and on that basis declare petitioner Lourdes A. Valmonte in default for her failure to file an answer. In the second place, service in the attempted manner on petitioner was not made upon prior leave of the trial court as required also in Rule 14, 17. As provided in 19, such leave must be applied for by motion in writing, supported by affidavit of the plaintiff or some person on his behalf and setting forth the grounds for the application. DECISION MENDOZA, J p: Petitioner Lourdes A. Valmonte is a foreign resident. The question is whether in an action for partition filed against her and her husband, who is also her attorney, summons intended for her may be served on her husband, who has a law office in the Philippines. The Regional Trial Court of Manila, Branch 48, said no and refused to declare Lourdes A. Valmonte in default, but the Court of Appeals said yes. Hence this petition for review on certiorari. The facts of the case are as follows: Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and wife. They are both residents of 90222 Carkeek Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D. 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 Manila, where he holds office at S-304 Gedisco Centre, 1564 A. Mabini, Ermita, Manila. cdasia On March 9, 1992, private respondent Rosita Dimalanta, who is 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 the Regional Trial Court of Manila, Branch 48. The subject of the action is a three-door apartment located in Paco, Manila. In her Complaint, private respondent alleged: The plaintiff is of legal age, a widow and is at present a resident of 14823 Conway Road, Chesterfield, Missouri, U.S.A., while the defendants are spouses, of legal age 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 Center,

Unit 304, 1564 A. Mabini St., Ermita, Manila where defendant Alfredo D. Valmonte as defendant Lourdes Arreola Valmonte's spouse holds office and where he can be found. cdtai Apparently, the foregoing averments were made on the basis of a letter previously sent by petitioner Lourdes A. Valmonte to private respondent's counsel in which, in regard to the partition of the property in question, she referred private respondent's counsel to her husband as the party to whom all communications intended for her should be sent. The letter reads: July 4, 1991 Dear Atty. Balgos: 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. Valmonte, whose address, telephone and fax numbers appear below. cdasia c/o Prime Marine Gedisco Center, Unit 304 1564 A. Mabini, Ermita Metro Manila Telephone: 521-1736 Fax: 521-2095 Service of summons was then made upon petitioner Alfredo D. Valmonte, who at the time, was at his office in Manila. Petitioner Alfredo D. Valmonte accepted the summons, insofar as he was concerned, but refused to accept the summons for his wife, Lourdes A. Valmonte, on the ground that he was not authorized to accept the process on her behalf. Accordingly the process server left without leaving a copy of the summons and complaint for petitioner Lourdes A. Valmonte. 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 declare her in default. Petitioner Alfredo D. Valmonte entered a special appearance in behalf of his wife and opposed the private respondent's motion. cdtai In its Order dated July 3, 1992, the trial court, denied private respondent's motion to declare petitioner Lourdes A. Valmonte in 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 Appeals. On December 29, 1992, the Court of Appeals rendered a decision granting the petition and declaring Lourdes A. Valmonte in 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, this petition. The issue at bar is whether in light of the facts set forth above, petitioner Lourdes A. Valmonte was validly served with summons. In holding that she had been, the Court of Appeals stated: 1 cdt

[I]n her above-quoted reply, Mrs. Valmonte clearly and unequivocally directed the aforementioned counsel of Dimalanta to address all communications (evidently referring to her controversy with her sister Mrs. Dimalanta over the Paco 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 husband Atty. Valmonte as her lawyer likewise made without any qualification or reservation. Any disclaimer therefore on the part of Atty. Valmonte as to his being his wife's attorney (at least with regard to the dispute vis-avis (sic) the Paco property) would appear to be feeble or trifling, if not incredible. This view is bolstered by Atty. Valmonte's subsequent alleged special appearance made on behalf of his wife. Whereas Mrs. Valmonte had manifestly authorized her husband to serve as her lawyer relative to her dispute with her sister over the Paco property and to receive all communications regarding the same and subsequently to appear on her behalf by way of a so-called special appearance, she would nonetheless now insist that the same husband would nonetheless had absolutely no authority to receive summons on her behalf. In effect, she is asserting that representation by her lawyer (who is also her husband) as far as the Paco property controversy is concerned, should only be made by him when such representation would be favorable to her but not otherwise. It would obviously be inequitable for this Court to allow private respondent Lourdes A. Valmonte to hold that her husband has the authority to represent her when an advantage is to be obtained by her and to deny such authority when it would turn out to be her disadvantage. If this be allowed, Our Rules of Court, instead of being an instrument to promote justice would be made use of to thwart or frustrate the same. xxx xxx xxx

Turning to another point, it would not do for Us to 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 husband. But that is not all, the same lawyer/husband happens to be also her co-defendant in the instant case which involves real property which, according to her lawyer/husband/co-defendant, belongs to the conjugal partnership of the defendants (the spouses Valmonte). It is highly inconceivable and certainly it would be contrary to human nature for the lawyer/husband/co-defendant to keep to himself the fact that they (the spouses Valmonte) had been sued with regard to a property which he claims to be conjugal. Parenthetically, there is nothing in the records of the case before Us regarding any manifestation by private respondent Lourdes A. Valmonte about her lack of knowledge about the case instituted against her and her lawyer/husband/codefendant by her sister Rosita. . . . aisadc PREMISES CONSIDERED, the instant petition for certiorari, prohibition and mandamus is given due course. This Court hereby Resolves to nullify the orders of the court a quo dated July 3, 1992 and September 23, 1992 and further declares private respondent Lourdes Arreola Valmonte as having been properly served with summons. 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, 8 when the fact is that petitioner Lourdes A. Valmonte is a nonresident defendant; and (2) because even if Rule 14, 8 is the applicable provision, there was no valid substituted service as there was no strict compliance with the requirement by leaving a copy of the summons and complaint

with petitioner Alfredo D. Valmonte. Private respondent, upon the other hand, asserts that petitioners are invoking a technicality and that strict adherence to the rules would only result in a useless ceremony. We hold that there was no valid service of process on Lourdes A. Valmonte. To provide perspective, it will be helpful to determine first the nature of the action filed against petitioners Lourdes A. Valmonte and Alfredo D. Valmonte by private respondent, whether it is an action in personam, in rem or quasi in rem. This is because the rules on service of summons embodied in Rule 14 apply according to whether an action is one or the other of these actions. cdta In an action in personam, personal service of summons or, if this is not possible and he cannot be personally served, substituted service, as provided in Rule 14, 7-8 2 is essential for the acquisition by the court of jurisdiction over the person of a defendant who does not voluntarily submit himself to the authority of the court. 3 If defendant cannot be served with summons because he is temporarily abroad, but otherwise he is a Philippine resident, service of summons may, by leave of court, be made by publication. 4 Otherwise stated, a resident defendant in an action in personam, who cannot be personally served with summons, may be summoned either by means of substituted service in accordance with Rule 14, 8 or by publication as provided in 17 and 18 of the same Rule. 5 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 essential to make a binding decision. On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the defendant is not essential for giving the court jurisdiction so long as the court acquires 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 Rule 14, 17, which provides: cdasia 17. Extraterritorial service. When the defendant does not reside and is not found in the Philippines and the action affects 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 the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of 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 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 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 notice, within which the defendant must answer. In such cases, what gives the court jurisdiction in an action in rem or quasi in rem is that it has jurisdiction over the res, i.e. the personal status of the plaintiff who is domiciled in the Philippines or the property litigated or attached. Service of summons in the manner provided in 17 is not for the purpose of vesting it with jurisdiction but for complying with the requirements of fair play or due process, so that he will be informed of the pendency of the action against him and the possibility that property in the Philippines belonging to him or in which he has an interest may be

subjected to a judgment in favor of the plaintiff and he can thereby take steps to protect his interest if he is so minded. 6 cdtai Applying the foregoing rules to the case at bar, private respondent's action, which is for partition and accounting under Rule 69, is in the nature of an action quasi in rem. Such an action is essentially for the purpose of affecting the defendant's interest in a specific property and not to render a judgment against him. As explained in the leading case of Banco Espaol Filipino v. Palanca: 7 [An action quasi in rem is] an action which while not strictly 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 individual is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property. All proceedings having for their sole object the sale or other disposition of the property of the defendant, whether by attachment, foreclosure, or other form of remedy, are in a general way thus designated. The judgment entered in these proceedings is conclusive only between the parties. As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines, service of summons on her must be in accordance with Rule 14, 17. Such service, to be effective outside the Philippines, must be made either (1) by personal 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 sent by registered mail to the last known address of the defendant; or (3) in any other manner which the court may deem sufficient. cdtai Since in the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was not done by means of any of the first two modes, the question is whether the service on her attorney, petitioner Alfredo D. Valmonte, can be justified under the third mode, namely, "in any . . . manner the court may deem sufficient." We hold it cannot. This mode of service, like the first two, must be made outside the Philippines, such as through the Philippine Embassy in the foreign country where the defendant resides. 8 Moreover, there are several reasons why the service of summons on Atty. Alfredo D. Valmonte cannot be considered a valid service of summons on petitioner Lourdes A. Valmonte. In the first place, service of summons on petitioner Alfredo D. Valmonte was not made upon the order of the court as required by Rule 14, 17 and certainly was not a mode deemed sufficient by the court which in fact refused to consider the service to be valid and on that basis declare petitioner Lourdes A. Valmonte in default for her failure to file an answer. In the second place, service in the attempted manner on petitioner was not made upon prior leave of the trial court as required also in Rule 14, 17. As provided in 19, such leave must be applied for by motion in writing, supported by affidavit of the plaintiff or some person on his behalf and setting forth the grounds for the application. cdt Finally, and most importantly, because there was no order granting such leave, petitioner Lourdes A. Valmonte was not given ample time to file her Answer which, according to the rules, shall be not less than sixty (60) days after notice. It must be noted 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 former, the period is fifteen (15) days from service of summons, while in the latter, it is at least sixty (60) days from notice. Strict compliance with these requirements alone can assure observance of due process. That is why in one case, 9 although the Court considered publication in the Philippines of the summons (against the contention that it should be made in the 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 in the Philippines. Private respondent cites the ruling in De Leon v. Hontanosas, 67 SCRA 458, 462-463 (1975), in which it was held that service of summons upon the defendant's husband was binding on her. But the ruling in that case is justified because summons were served upon defendant's husband in their conjugal home in Cebu City and the wife was only temporarily absent, having gone to Dumaguete City for a vacation. The action was for collection of a sum of money. In accordance with Rule 14, 8, substituted 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 on her behalf. In any event, it appears that defendant in that case submitted to the jurisdiction of the court by instructing her husband to move for the dissolution of the writ of attachment issued in that case. aisadc On the other hand, in the case of Gemperle v. Schenker, 10 it was held that service on the wife of a nonresident defendant was found sufficient because the defendant had appointed his wife as 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 Philippines was sufficient because she was her husband's representative and attorney-in-fact in a civil case, which he had earlier filed against William Gemperle. In fact Gemperle's action was for damages arising from allegedly derogatory statements contained in the complaint filed in the first case. As this Court said, "[i]n other words, Mrs. Schenker had authority to sue, and had actually sued, on behalf of her husband, so that she was, also, empowered to represent him in suits filed against him, particularly in a case, like the one at bar, which is a consequence of the action brought by her on his behalf." 11 Indeed, if instead of filing an independent action Gemperle filed a counterclaim in the action brought by Mr. Schenker against him, there would have been no doubt that the trial court could have acquired jurisdiction over Mr. Schenker through his agent and attorney-in-fact, Mrs. Schenker. In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not appoint her husband as her attorney-in-fact. Although she wrote private respondent's attorney that "all communications" intended for her should be addressed to her husband who is also her lawyer at the latter's address in Manila, no power of attorney to receive summons for her can be inferred therefrom. In fact the letter was written seven months before the filing of this case below, and it appears that it was written in connection with the 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 correspondence was carried on by counsel for the parties. But the authority given to petitioner's husband in these negotiations certainly cannot be construed as also including an authority to represent her in any litigation.

For the foregoing reasons, we hold that there was no valid service on petitioner Lourdes A. Valmonte in this case. cdta WHEREFORE, the decision appealed from is REVERSED and the orders dated July 3, 1992 and September 23, 1992 of the Regional Trial Court of Manila, Branch 48 are REINSTATED. SO ORDERED.

10. [G.R. No. 150656. April 29, 2003] MARGARITA ROMUALDEZ-LICAROS, petitioner, vs. ABELARDO B. LICAROS, respondent. DECISION CARPIO, J.: The Case This is a petition for review on certiorari to annul the Decision dated 9 August 2001 of the Court of Appeals in CA-G.R. SP No. 58487, as well as the Resolution dated 23 October 2001 denying the motion for reconsideration. The Court of Appeals [3] dismissed the petition to annul the following decisions rendered by Branch 143 of the Regional Trial Court of Makati: (1) The Decision dated 27 December 1990 granting the dissolution of the conjugal partnership of gains of the spouses Abelardo B. Licaros and Margarita RomualdezLicaros; (2) The Decision dated 8 November 1991 spouses null and void. The Facts The antecedent facts as found by the Court of Appeals are as follows: x x x Abelardo Licaros (Abelardo, for short) and Margarita Romualdez-Licaros (Margarita, hereafter) were lawfully married on December 15, 1968. Out of this marital union were born Maria Concepcion and Abelardo, Jr. Ironically, marital differences, squabbles and irreconcilable conflicts transpired between the spouses, such that sometime in 1979, they agreed to separate from bed and board. In 1982, Margarita left for the United States and there, to settle down with her two (2) children. In the United States, on April 26, 1989, Margarita applied for divorce before the Superior Court of California, County of San Mateo (Annex 1, Rejoinder, pp. 164-165) where she manifested that she does not desire counseling at that time (Quotation, p. 166, Rollo). On August 6, 1990, Margarita was granted the decree of divorce (Annex 2, Answer, p. 108, Rollo)together with a distribution of properties between her and Abelardo (pp. 167-168, Rollo). Not long after, on August 17, 1990, Abelardo and Margarita executed an Agreement of Separation of Properties (pp. 60-64, Rollo). This was followed-up by a petition filed on August 21, 1990 before the Regional Trial Court of Makati for the dissolution of the conjugal partnership of gains of the spouses and for the approval of the agreement of separation of their properties. This was docketed as Special Proceeding No. 2551. On December 27, 1990, a decision was issued granting the petition and approving the separation of property agreement.
[5] [4] [1] [2]

For his part, on June 24, 1991, Abelardo commenced Civil Case No. 91-1757, for the declaration of nullity of his marriage with Margarita, based on psychological incapacity under the New Family Code. As Margarita was then residing at 96 Mulberry Lane, Atherton, California, U.S.A., Abelardo initially moved that summons be served through the International Express Courier Service. The court a quo denied the motion. Instead, it ordered that summons be served by publication in a newspaper of general circulation once a week for three (3) consecutive weeks, at the same time furnishing respondent a copy of the order, as well as the corresponding summons and a copy of the petition at the given address in the United States through the Department of Foreign Affairs, all at the expense of Abelardo. Respondent was given sixty (60) days after publication to file a responsive pleading. On July 15, 1991, Process Server, Maximo B. Dela Rosa, submitted his Officers Return quoted hereunder: OFFICERS RETURN THIS IS TO CERTIFY that on July 3, 1991, I have served a copy of summons and complaint with annexes together with order dated June 28, 1991 issued by the Court in the above-entitled case upon defendant Margarita Romualdez-Licaros c/o DFA. (sent by Mail) thru Pat G. Martines receiving Clerk of Department of Foreign Affairs a person authorized to receive this kind of process who acknowledged the receipt thereof at ADB Bldg., Roxas Blvd., Pasay City, Metro Manila. (p. 40, Rollo) As required by law, the case was referred to Trial Prosecutor Bruselas, Jr. to find out any possible collusion between the parties in the case. Thereafter, with the negative report of collusion, Abelardo was allowed to present his evidence ex-parte. On November 8, 1991, the Decision (Annex A, Petition) was handed down in Civil Case No. 91-1757 declaring the marriage between Abelardo and Margarita null and void. Almost nine (9) years later, on April 28, 2000, the petition at bench was commenced when Margarita received a letter dated November 18, 1991 from a certain Atty. Angelo Q. Valencia informing her that she no longer has the right to use the family name Licaros inasmuch as her marriage to Abelardo had already been judicially dissolved by the Regional Trial Court of Makati on November 8, 1991. Asseverating to have immediately made some verifications and finding the information given to be true, petitioner commenced the instant petition on the following grounds: (A) THERE WAS EXTRINSIC FRAUD IN THE PREPARATION AND FILING BY ABELARDO OF THE PETITION FOR DISSOLUTION OF THE CONJUGAL PARTNERSHIP OF GAINS AND ITS ANNEX, THE AGREEMENT OF SEPARATION OF PROPERTIES. (B) THE TRIAL COURT LACKED JURISDICTION TO HEAR AND DECIDE THE PETITION FOR DECLARATION OF NULLITY OF [6] MARRIAGE.

declaring the marriage between the same

The Ruling of the Court of Appeals

The Court of Appeals debunked the claim of Margarita that there was extrinsic fraud in the preparation and filing by Abelardo of thePetition for Dissolution of Conjugal Partnership of Gains and its annex, the Agreement of Separation of Properties. The Court of Appeals stated: x x x, the extrinsic fraud alluded to consists of Abelardo coercing Margarita into signing the petition to dissolve their conjugal partnership of gains together with the agreement of separation of properties, by threatening to cut-off all financial and material support of their children then still studying in the United States; that petitioner had no hand directly or indirectly in the preparation of the petition and agreement of separation of properties; that petitioner never met the counsel for the petitioner, nor the notary public who notarized the deed; and, petitioner never received any notice of the pendency of the petition nor a copy of the decision. Antithetically, a meticulous perusal of the controversial petition ( Annex B-1) and the agreement of separation of properties (pp. 60-64, Rollo) readily shows that the same were signed by the petitioner on the proper space after the prayer and on the portion for the verification of the petition. The same is true with the agreement of separation of properties. What is striking to note is that on August 6, 1990, Margarita appeared before Amado P. Cortez, Consul of the Republic of the Philippines at the San Francisco, California, United States Consulate Office, to affirm and acknowledge before said official that she executed the agreement of separation of properties of her own free will and deed, after being informed of the contents thereof. And yet, there is no showing that Abelardo was with her at the Philippine Consulate Office in confirming the separation of property agreement. Moreover, on page 2 of the same agreement, it is specifically stated that such property separation document shall be subject to approval later on by the proper court of competent jurisdiction. The clear import of this is that the agreement must have to be submitted before the proper court for approval, which explains and confirms petitioners signature on the petition filed in court. In main, We see no indication nor showing of coercion or fraud from these facts, which could very well be considered as extrinsic or collateral fraud to justify a petition under Rule 47. From all indications, the pretended coerced documents were rather freely and voluntarily executed by the parties therein knowing fully well the imports thereof. This conclusion finds more weight if We consider the fact that the separation of property was fully implemented and enforced, when apparently both parties correspondingly received the properties respectively assigned to each of them under [7] the said document. The Court of Appeals also rejected Margaritas claim that the trial court lacked jurisdiction to hear and decide the Petition for Declaration of Nullity of Marriage for improper service of summons on her. The case involves the marital status of the parties, which is an action in rem orquasi in rem. The Court of Appeals ruled that in such an action the purpose of service of summons is not to vest the trial court with jurisdiction over the person of the defendant, but only to comply with due process. The Court of Appeals concluded that any irregularity in the service of

summons involves due process which does not destroy the trial courts jurisdiction over the res which is the parties marital status. Neither does such irregularity invalidate the judgment rendered in the case. Thus, the Court of Appeals dismissed the petition for annulment of judgment, stating that: At bar, the case involves the personal (marital) status of the plaintiff and the defendant. This status is the res over which the Philippine court has acquired jurisdiction. This is also the kind of action which the Supreme Court had ruled that service of summons may be served extraterritorially under Section 15 ( formerly Section 17) of Rule 14 and where such service of summons is not for the purpose of vesting the trial court with jurisdiction over the person of the defendant but only for the purpose of complying with the requirements of fair play and due process . A fortiori, the court a quo had properly acquired jurisdiction over the person of herein petitionerdefendant when summons was served by publication and a copy of the summons, the complaint with annexes, together with the Order of June 28, 1991, was served to the defendant through the Department of Foreign Affairs by registered mail and duly received by said office to top it all. Such mode was upon instruction and lawful order of the court and could even be treated as any other manner the court may deem [8] sufficient. Hence, the instant petition.

The Issues

The issues raised by Margarita are restated as follows: I. Whether Margarita was validly served with summons in the case for declaration of nullity of her marriage with Abelardo; II. Whether there was extrinsic fraud in the preparation and filing by Abelardo of the Petition for Dissolution of the Conjugal Partnership of Gains and its annex, the Agreement of Separation of Properties.

The Courts Ruling

The petition is bereft of merit. First Issue: Validity of the Service of Summons on Margarita Margarita insists that the trial court never acquired jurisdiction over her person in the petition for declaration of nullity of marriage since she was never validly served with summons. Neither did she appear in court to submit voluntarily to its jurisdiction. On the other hand, Abelardo argues that jurisdiction over the person of a nonresident defendant in an action in rem or quasi in rem is not necessary. The trial and

appellate courts made a clear factual finding that there was proper summons by publication effected through the Department of Foreign Affairs as directed by the trial court. Thus, the trial court acquired jurisdiction to render the decision declaring the marriage a nullity. Summons is a writ by which the defendant is notified of the action brought against him. Service of such writ is the means by which the court acquires jurisdiction [9] over his person. As a rule, when the defendant does not reside and is not found in the Philippines, Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court. But when the case is one of actionsin rem or quasi in rem enumerated in [10] Section 15, Rule 14 of the Rules of Court, Philippine courts have jurisdiction to hear and decide the case. In such instances, Philippine courts have jurisdiction over the res, and jurisdiction over the person of the non-resident [11] defendant is not essential. Actions in personam and actions in rem or quasi in rem differ in that actions in personam are directed against specific persons and seek personal judgments. On the other hand, actions in rem or quasi in rem are directed against the thing or property or status of a person and seek judgments with respect thereto as against the [13] whole world. At the time Abelardo filed the petition for nullity of the marriage in 1991, Margarita was residing in the United States. She left the Philippines in 1982 together with her two children. The trial court considered Margarita a non-resident defendant who is not found in the Philippines. Since the petition affects the personal status of the plaintiff, the trial court authorized extraterritorial service of summons under Section 15, Rule 14 of the Rules of Court. The term personal status includes family [14] relations, particularly the relations between husband and wife. Under Section 15 of Rule 14, a defendant who is a non-resident and is not found in the country may be served with summons by extraterritorial service in four instances: (1) when the action affects the personal status of the plaintiff; (2) when the action 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; (3) when the relief demanded consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; or (4) when the property of the defendant has been attached within the Philippines. In these instances, extraterritorial service of summons may be effected under any of three modes: (1) by personal service out of the country, with leave of court; (2) by publication and sending a copy of the summons and order of the court by registered mail to the defendants last known address, also with leave of court; or (3) by any other means the judge may consider sufficient. Applying the foregoing rule, the trial court required extraterritorial service of summons to be effected on Margarita in the following manner: x x x, service of Summons by way of publication in a newspaper of general circulation once a week for three (3) consecutive weeks, at the same time, furnishing respondent copy of this Order as well as the corresponding Summons and copy of
[12]

the petition at her given address at No. 96 Mulberry Lane, Atherton, California, U.S.A., thru the Department of Foreign Affairs, all at the expense of [15] petitioner. (Emphasis ours) The trial courts prescribed mode of extraterritorial service does not fall under the first or second mode specified in Section 15 of Rule 14, but under the third mode. This refers to any other means that the judge may consider sufficient. The Process Servers Return of 15 July 1991 shows that the summons addressed to Margarita together with the complaint and its annexes were sent by mail to the Department of Foreign Affairs with acknowledgment of receipt. The Process Servers certificate of service of summons is prima facie evidence of the facts as set [16] out in the certificate. Before proceeding to declare the marriage between Margarita and Abelardo null and void, the trial court stated in its Decision dated 8 November 1991 that compliance with the jurisdictional requirements hav(e) (sic) been duly established. We hold that delivery to the Department of Foreign Affairs was sufficient compliance with the rule. After all, this is exactly what the trial court required and considered as sufficient to effect service of summons under the third mode of extraterritorial service pursuant to Section 15 of Rule 14. Second Issue: Validity of the Judgment Dissolving the Conjugal Partnership of Gains Margarita claims that Abelardo coerced her into signing the Petition for Dissolution of the Conjugal Partnership of Gains (Petition) and its annex, the Agreement of Separation of Properties (Agreement). Abelardo allegedly threatened to cut off all financial and material support to their children if Margarita did not sign the documents. The trial court did not find anything amiss in the Petition and Agreement that Abelardo filed, and thus the trial court approved the same. The Court of Appeals noted that a meticulous perusal of the Petition and Agreement readily shows that Margarita signed the same on the proper space after the prayer and on the portion for the verification of the petition. The Court of Appeals observed further that on 6 August 1990, Margarita appeared before Consul Amado Cortez in the Philippine Consulate Office in San Francisco, California, to affirm that she executed the Agreement of her own free will. There was no showing that Abelardo was at that time with her at the Philippine Consulate Office. Abelardo secured judicial approval of the Agreement as specifically required in the Agreement. The Court is bound by the factual findings of the trial and appellate courts that the parties freely and voluntarily executed the documents and that there is no showing of coercion or fraud. As a rule, in an appeal by certiorari under Rule 45, the Court does not pass upon questions of fact as the factual findings of the trial and appellate courts are binding on the Court. The Court is not a trier of facts. The Court will not examine the evidence introduced by the parties below to determine if the trial [17] and appellate courts correctly assessed and evaluated the evidence on record . The due and regular execution of an instrument acknowledged before an officer authorized to administer oaths cannot be overthrown by bare allegations of coercion [18] but only by clear and convincing proof. A person acknowledging an instrument before an officer authorized to administer oaths acknowledges that he freely and

voluntarily executed the instrument, giving rise to a prima facie presumption of such fact. In the instant case, Margarita acknowledged the Agreement before Consul Cortez. The certificate of acknowledgment signed by Consul Cortez states that Margarita personally appeared before him and acknowledged before me that SHE [19] executed the same of her own free will and deed. Thus, there is a prima facie presumption that Margarita freely and voluntarily executed the Agreement. Margarita has failed to rebut this prima facie presumption with clear and convincing proof of coercion on the part of Abelardo. A document acknowledged before a notary public is prima facie evidence of the [20] due and regular execution of the document. A notarized document has in its favor the presumption of regularity in its execution, and to contradict the same, there must [21] be evidence that is clear, convincing and more than merely preponderant. WHEREFORE, the Decision of the Court of Appeals in CA-G.R. SP No. 58487 dismissing the petition to annul judgment is AFFIRMED. SO ORDERED.

11. Montalban v. Maximo EN BANC [G.R. No. L-22997. March 15, 1968.] PABLO C. MONTALBAN, ET AL., plaintiffs-appellees, vs. GERARDO MAXIMO, defendant-appellant. SYLLABUS 1. COURTS; JURISDICTION; SUITS IN PERSONAM; JURISDICTION OVER TEMPORARILY ABSENT RESIDENTS. In suits in personam, courts have jurisdiction over residents temporarily out of the country. 2. ID.; ID.; ID.; SUMMONS; SUBSTITUTED SERVICE UNDER SECTION 8, RULE 14, APPLIES TO TEMPORARILY ABSENT RESIDENTS. In a suit in personam against a resident of the Philippines temporarily absent therefrom, substituted service may be validly effected under Section 8, Rule 14, Rules of Court, "(a) by leaving copies of the summons at the defendant's dwelling house or residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendant's office or regular place of business with some competent person in charge thereof." Said Section 8 is to be applied to all resident defendants - without distinction as to whether the resident is physically present in this country or not. 3. ID.; ID.; ID.; ID.; JUDGMENT ON SUBSTITUTED SERVICE UNDER SECTION 8, RULE 14, VALID; REASON. A resident defendant may be charged by a judgment in personam as a result of legal proceedings upon a method of service which is not personal, which in fact may not become actual notice to him and which may be accomplished in his lawful absence from the country. The rules do not require that papers be served on defendant personally or a showing that the papers were delivered to defendant by the person with whom they were left. A resident, temporarily absent, usually leaves his affairs in the hands of a person who may communicate with him. If the absent resident does not do so, he cannot protest. 4. SUMMONS; SERVICE; EFFECTIVE WHEN MADE UPON ANOTHER PRIEST OF SAME CONVENT. Where summons upon a parish priest, who is a temporarily absent defendant, was served upon mother priest, presumably a responsible person who lives in the same convent where defendant resides, the service is effective. 5. ID.; ID.; SECTIONS 8 AND 18, RULE 14, COMPARED; MODES OF SERVICE; SECTION 18 IS NOT SOLE MODE OF SERVICE ON TEMPORARILY ABSENT RESIDENT. The statement in Section 18, Rule 14, Rules of Court that "service may, by leave of court, be effected out of the Philippines" as under Section 17 referring to extraterritorial service, does not mean that Section 18 is the sole provision that governs summons upon a defendant temporarily absent in an action in personam. Said statement in fact recognizes that Section 17 is but one of the modes

of service. The normal method of summoning one temporarily absent is by substituted service under Section 8, for personal service outside the country and service by publication are not ordinary means of summoning defendants. 6. ID.; ID.; SUITS IN PERSONAM; SECTIONS 17 AND 18, RULE 14, WHEN RESORTED TO. Service of summons in suits in personam under Sections 17 and 18, Rule 14, is more circuitous and is resorted to if defendant's dwelling house or residence or place of business in this country is not known, or, if known, service cannot be had under Section 8. 7. JUDGMENTS; PRESUMPTION OF REGULARITY; NON QUIETA MOVERE. A judgment, long final, enjoys the presumption of regularity, and unless stricken down is entitled to respect. Non quieta movere. Public policy and sound practice demand that, at the risk of occasional errors, judgments of courts should become final at some definite date fixed by law. (Dy Cay vs. Crossfield & O'Brien, 38 Phil. 521, 526.) 8. ID.; JUDGMENT BY DEFAULT; ANNULMENT OF; LACHES BARS ANNULMENT. When defendant, after his return to this country, did not move to set aside the default order, the default judgment for a big amount, and execution thereof until after, by his own admission, two years and two months from his knowledge of the judgment when levy and execution were made on his house, laches has set in to prevent him from annulling the proceedings. 9. ID.; ID.; ID.; PREJUDICE TO PLAINTIFFS. Where defendant delayed in annulling the court decision against him, plaintiffs may not be compelled to file a fresh suit because prejudice, which could have been avoided by defendant, will be caused the plaintiffs. The latter may have to search for their witnesses who, if found, may no longer be able to present a narrative as accurate as before; other evidence may have dissipated. The march of time is truth in flight. These give life to the salutary policy on which laches is founded. DECISION SANCHEZ, J p: Chronologically, following are the events that spawned the present case: August 15, 1958. Plaintiffs commenced suit 1 against Fr. Gerardo Maximo who, according to the complaint, was residing at the parish church at Concepcion, Malabon, Rizal. Plaintiffs' cause of action for damages sprang from a motor vehicle accident which occurred at Padre Faura St., Manila, on December 16, 1957. Paul Hershell Montalban, son of plaintiffs, suffered injuries. August 15, 1958. On this same day that the complaint was filed, summons was served on defendant Fr. Gerardo Maximo at the parish church of Concepcion, Malabon, Rizal, through Fr. Arsenio Bautista a priest in the same parish church.

August 23, 1958. Fr. Arsenio Bautista sent a letter (dated August 21) to Macario M. Ofilada, Clerk of Court of the Court of First Instance of Manila, informing him that defendant Fr. Gerardo Maximo left for Europe on August 7, and "will be back on the first week of November." Actually, Fr. Maximo returned from abroad "about the second week of October, 1958." 2 September 20, 1958. The lower court declared defendant in default, on plaintiffs' motion of September 13, 1958. June 8, 1959. Upon plaintiffs' evidence, the court rendered judgment sentencing defendant to: "1. Pay plaintiff Paul Hershell Montalban the amount of P10,000.00 as actual damages for loss of his spleen; 2. Pay plaintiff Paul Hershell Montalban the amount of P10,000.00 for loss or impairment of earning capacity, talents and physical strength; 3. Pay plaintiff Paul Hershell Montalban the amount of P5,000.00 as moral damages; 4. Pay plaintiffs Pablo C. Montalban and Regina Barretto the amount of P5,000.00 as moral damages; 5. Pay plaintiffs the amount of P1,000.00 as exemplary damages; and

such demand, defendant alleged that he was then "financially hard up," 4 and that the Sheriff found no property that could be subject to execution. January 30, 1962. An alias writ of execution was issued. Copy thereof was received by defendant on February 9, 1962. February 1, 1962. The Deputy Sheriff attached and levied on a residential house located in Caloocan City and purportedly belonging to defendant. February 20, 1962. Two years and two months after defendant admittedly learned of the lower court's decision from counsel for plaintiffs herein, said defendant, by counsel, filed a verified motion in the same case praying for the annulment of the entire proceedings. His ground is this: Summons was not duly served upon him "as provided under Sec. 7, Rule 7 of the Rules of Court"; 5 accordingly, the lower court "did not acquire jurisdiction over his person", and "the trial and decision by default" are "null and void," 6 March 3, 1962. The court denied this motion. March 24, 1962. Defendant's move to reconsider was rejected by the court. Hence, this appeal from the orders of March 3 and March 24, 1962, duly certified to this Court by the Court of Appeals. September 2, 1965. After the case was submitted for decision, defendant's lawyer informed this Court of the death of defendant on August 1, 1965. October 18, 1967. Following extensive efforts to have the deceased defendant substituted by any of his heirs or the executor or administrator of his estate, which were to no avail, this Court appointed the Clerk of Court of the Court of First Instance of Manila, representative of the deceased defendant. 1. A question of transcendental importance which necessarily involves an inquiry into procedural due process is whether summons in a suit in personam against a resident of the Philippines temporarily absent therefrom may be validly effected by substituted service under Section 8, Rule 14 (formerly Section 8, Rule 7) of the Rules of Court. A head on collision of views becomes inevitable considering the diametrically opposing positions taken by plaintiffs, on the one hand, and defendant, on the other. For, plaintiffs make the point that even with defendant temporarily abroad, substituted service is valid under Section 8 by leaving a copy of the summons "at the defendant's dwelling house or residence with some person of suitable age and discretion then residing therein." Plaintiffs argue that if the ordinary method prescribed by the rules, that is, personal service under Section 7, Rule 14, is not feasible, then the substituted service in Section 8 aforesaid comes into play. Section 8 says:

6. Pay plaintiffs attorney's fees [in] the amount of P3,000.00 and the cost of litigation." December 16, 1959. Plaintiffs themselves wrote defendant Fr. Gerardo Maximo, at the Malabon Catholic Church, informing the latter of the lower court's decision, giving the data: "Re Civil Case No. 37202 (in which the foregoing judgment was rendered) Montalban vs. Maximo," quoting therein the dispositive part of the decision just transcribed, requesting prompt compliance therewith and suggesting that he communicate with or personally see their lawyer, Jose W. Diokno, at the latter's address, 332 Regina Building, Escolta, Manila. December 20, 1959. Defendant, through his legal counsel, Dr. Nicanor T. Santos, answered the foregoing letter expressing regret that he could not comply with plaintiffs' request, because he (defendant) was not aware of the said civil case, and that, in the criminal action arising out of the same incident, said defendant was acquitted by the Municipal Court of Manila. 3 January 14, 1960. Deputy Sheriff Liberato C. Manalo of Rizal notified defendant of the issuance of the writ of execution dated January 7, 1960, and demanded payment of the amount set forth therein. The Sheriff's return to the writ shows that in response to

"SEC. 8. Substituted service. If the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant's dwelling house or residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendant's office or regular place of business with some competent person in charge thereof." Upon the other hand, defendant advances the theory that in a situation like the present, where defendant was temporarily abroad, the sole and exclusive method of service of summons in a case in personam is that set forth in Section 18, Rule 14 of the Rules (formerly Section 18, Rule 7), which reads: "SEC. 18. Residents temporarily out of the Philippines. When an action is commenced against a defendant who ordinarily resides within the Philippines, but who is temporarily out of it, service may, by leave of court, be effected out of the Philippines, as under the preceding section." 7 Section 17 referred to in Section 18 (Section 17, Rule 7 in the old Rules) in turn states: "SEC. 17. Extraterritorial service. When the defendant does not reside and is not found in the Philippines and the action affects 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 the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of 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 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 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 notice, within which the defendant must answer." Historically, in its common-law origin, the jurisdiction of courts to render judgments in personam was grounded on their de facto power over defendant's person. Jurisdiction was based on the power to seize and imprison defendant. 8 If a defendant was absent from the territory, the fact that he was a citizen would not enable the court's officers to seize him and service could not represent this power. 9 Hence, his presence within the territorial jurisdiction was a pre- requisite to the rendition of a judgment personally binding against him. Anglo-American law then emphasized the power concept of jurisdiction. 10 Continental law, however, was somewhat different. It had two fundamental principles of Roman origin: (1) in suits in personam and those relating to movables, courts of the domicile of the defendant have general jurisdiction actor rei forum sequitur; and (2) in actions concerning immovables, the courts of the situs have exclusive jurisdiction. 11

In the development of the law, the variance between Anglo- American law and continental law became "less and less clear-cut" because "American law has had to yield to the increasing necessity of enlarging more and more the catalogue of forums available to the plaintiff." 12 Thus it is, that American cases forged the doctrine, now long recognized, that domiciliaries of a state, though temporarily out of its territorial jurisdiction, are always amenable to suits in personam therein. 13 And this precept is the foundation for the American rule that declares substituted service binding on absent residents. The leading case of Milliken vs. Meyer, 14 furnishes the rationale: " . . . the authority of a state over one of its citizens is not terminated by the mere fact of his absence from the state. The state which accords him privileges and affords protection to him and his property by virtue of his domicile may also exact reciprocal duties. 'Enjoyment of the privileges of residence within the state and the attendant right to invoke the protection of its laws, are inseparable' from the various incidences of state citizenship . . . The responsibilities of that citizenship arise out of the relationship to the state which domicile creates. That relationship is not dissolved by mere absence from the state. The attendant duties, like the rights and privileges incident to domicile, are not dependent on continuous presence in the state. One such incident of domicile is amenability to suit within the state even during sojourns without the state, where the state has provided and employed e reasonable method for apprising such an absent party of the proceedings against him." There should be no doubt, therefore, that in suits in personam, courts have jurisdiction over residents temporarily out of the country. This brings us to the question of procedural due process. Substituted service such as one contemplated in Section 8 upon a temporarily absent resident, it has been held, is wholly adequate to meet the requirements of due process. 15 The constitutional requirement of due process exacts that the service be such as may be reasonably expected to give the notice desired. Once the service provided by the rules reasonably accomplishes that end, the requirement of justice is answered, the traditional notions of fair play are satisfied; due process is served. In American jurisprudence, whether a defendant be in another state under the federal system or is abroad in Europe, 16 substituted service is still considered to be valid. 17 The language in Milliken vs. Meyer, supra, is expressive: "Its adequacy so far as due process is concerned is dependent on whether or not the form of substituted service provided for such cases and employed is reasonably calculated to give him actual notice of the proceedings and an opportunity to be heard. If it is, then traditional notions of fair play and substantial justice (McDonald vs. Mabee, supra) implicit in due process are satisfied." 18 When the framers of our Rules adapted Section 8, it is to be implied that they intended to give the provision the same meaning shaped out by the jurisprudence of the jurisdiction from whence it was patterned. Section 8 is to be viewed in the same context it is understood in the American legal system. The word "defendant" in that provision is to be construed as including any resident of this country. By comparative

construction, Section 8 is to be applied to all resident defendants without distinction as to whether he is physically present in this country or not. Chief Justice Moran shares this view. Commenting on Section 18, Rule 14, he states: "Since the defendant is residing in the Philippines, jurisdiction over his person may be acquired by Philippine courts by substituted service of summons under section 8. But extraterritorial service is allowed also by leave of court according to the above provision [Section 18]." 19 Justice Martin regards the word "residence" in Section 8 as "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 state at the time." 20 This construction is but fair. It is in accord with substantial justice. The burden on a plaintiff is not to be enlarged with a restrictive construction as desired by defendant here. Under the rules, a plaintiff, in the initial stage of suit, is merely required to know the defendant's "dwelling house or residence" or his "office or regular place of business" and no more. He is not asked to investigate where a resident defendant actually is, at the precise moment of filing suit. Once defendant's dwelling house or residence or office or regular place of business is known, he can expect valid service of summons to be made on "some person of suitable age and discretion then residing" in defendant's dwelling house or residence, or on "some competent person in charge" of his office or regular place of business. By the terms of the law, plaintiff is not even duty-bound to see to it that the person upon whom service was actually made delivers the summons to defendant or informs him about it. The law presumes that for him. It is immaterial then that defendant does not in fact receive actual notice. This will not affect the validity of the service. 21 Accordingly, the defendant may be charged by a judgment in personam as a result of legal proceedings upon a method of service which is not personal, "which in fact may not become actual notice to him," and which may be accomplished in his lawful absence from the country. 22 For, the rules do not require that papers be served on defendant personally or a showing that the papers were delivered to defendant by the person with whom they were left. 23 Reasons for the views just expressed are not wanting. A man temporarily absent from this country leaves a definite place of residence, a dwelling where he lives, a local base, so to speak, to which any inquiry about him may be directed and where he is bound to return. Where one temporarily absents himself, he leaves his affairs in the hands of one who may be reasonably expected to act in his place and stead; to do all that is necessary to protect his interests; and to communicate with him from time to time any incident of importance that may affect him or his business or his affairs. It is usual for such a man to leave at his home or with his business associates information as to where he may be contacted in the event a question that affects him crops up. If he does not do what is expected of him, and a case comes up in court against him, he cannot in justice raise his voice and say that he is not subject to the processes of our courts. He cannot stop a suit from being filed against him upon a claim that he cannot be summoned at his dwelling house or residence or his office or regular place of business. Not that he cannot be reached within a reasonable time to enable him to contest a suit against him. There are now advanced facilities of communication. Long distance

telephone calls and cablegrams make it easy for one he left behind to communicate with him. In the light of the foregoing, we find ourselves unwilling to concede that substituted service provided in Section 8 may be down- graded as an ineffective means to bring temporarily absent residents within the reach of our courts. As we go back to the case at hand, there is the temporarily absent defendant who was a parish priest. Summons upon him was served upon Fr. Bautista who lived in the same convent where defendant resided. Fr. Bautista, we must assume, is a responsible person. Service upon him is effective. 2. The view we take of this case sweeps away defendant's argument that Section 18 is the sole provision that governs summons upon a defendant temporarily absent in an action in personam, as here. Indeed, defendant's posture strikes at the very language employed by this reglementary provision cited by him. The word "may" in the statement in Section 18 that "service may, by leave of court, be effected out of the Philippines," as under Section 17 will not support the deduction, without more, that Section 18 is the only provision controlling in this case. On the contrary, the phraseology of the rule is a recognition of the fact that substituted service out of the Philippines under Section 17 is but one of the modes of effective service to bring a defendant in court. And upon the basic concepts under which our rules governing processes operate, the normal method of service of summons on one temporarily absent is by substituted service set forth in Section 8. And this, because personal service outside the country and service by publication are not ordinary means of summoning defendants. In practical terms, we perceive that in suits in personam the more circuitous procedure delineated in Sections 17 and 18 is resorted to by a plaintiff if defendant's dwelling house or residence or place of business in this country is not known; or, if known, service upon him cannot be had thereat upon the terms of Section 8. Here, since personal service is impossible, resort to substituted service becomes a necessity. A comparison between the service in Section 8 and that in Sections 17 and 18 is beside the point. They both provide for substituted service. Anyway, as Goodrich observed: "[I]f a substitute is to be made where an actual personal service is impossible, 'the best is none too good.'" 24 3. The judgment has long since become final. It enjoys the presumption of regularity. It is, unless stricken down, entitled to respect. Non quieta movere. Because "[p]ublic policy and sound practice demand that, at the risk of occasional errors, judgments of courts should become final at some definite date fixed by law." 25 The norm of conduct observed by defendant would not, we believe, tilt the scales of justice in his favor. We go to the background facts. Logic and common sense tell us that Fr. Bautista who received the summons and who took interest in the case must have informed defendant one way or another of the suit, at the latest upon his return in October, 1958. By then there was still time for him to move to set aside the default order of September 20, 1958. Defendant did not move. It is well to remember also that judgment by default was not rendered against defendant until June 8, 1959, or

almost nine (9) months after the default order was issued. Again, defendant did nothing. According to defendant, he learned of that judgment on December 20, 1959. The full impact of the judgment totalling P34,000 must have by then left an indelible mark in his mind. A judgment of a court of justice is no piddling matter. It should not be trifled with. Especially so when the amount is big, as it is here. That same day December 20 his attorney took a hand on the matter, wrote back plaintiffs refusing payment of the claim. The first writ of execution was served on defendant on January 14, 1960. That time he did not pay, because according to the Sheriff's return, defendant then stated that he was "financially hard up." Defendant did not bestir himself until February 20, 1962, i.e., not less than two years and two months after he learned-by his own admission-of the judgment. And, that was shortly after levy was made on his house in Caloocan. It is in this factual environment that then CFI Judge Magno Gatmaitan, in his order of March 24, 1962, correctly observed that 'the Court once again believes that this solution (denial of the motion to reconsider the appealed order) is just because of the apparent intentional inaction of defendant since 20 December, 1959." Indeed, it was not right that defendant should have supinely sat on the decision, and deliberately disregarded the import thereof. Neither was it correct for him to have waited so long, slept on his rights, and only put plaintiffs to task when his own property was threatened because of the levy and execution thereon. The decision below may not thus be annulled. Plaintiffs may not be compelled to file a fresh suit. Because, prejudice to plaintiffs, which could have been avoided by defendant, will become a reality. The additional expense, trouble and anxiety need not be essayed. The accident took place on December 16, 1957. The lower court's decision made mention of two eyewitnesses and two doctors of medicine who testified as to injuries. To bring back those witnesses to court becomes a serious problem. Plaintiffs will have to search for them and if found, they may not be able to present to the court a narrative as accurately as they had done before. Time has an unfortunate tendency of obliterating occurrences from a witness' memory. Recollections are apt to be blurred. Human memory can even be treacherous. Lapse of time may also carry with it dissipation of other evidence. Surely, there is great validity to the statement that the march of time is truth in flight. 26 These, in broad outlines, give life to the salutary policy on which laches is founded. WHEREFORE, the orders appealed from dated March 3, 1962 and March 24, 1962 are hereby affirmed. Costs against defendant-appellant. So Ordered.

12. [G.R. No. 159590. October 18, 2004] HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, petitioner, vs. CECILIA DIEZ CATALAN,respondent. [G.R. No. 159591. October 18, 2004] HSBC INTERNATIONAL TRUSTEE LIMITED, petitioner, vs. CECILIA DIEZ CATALAN, respondent. DECISION AUSTRIA-MARTINEZ, J.: Before us are two petitions for review on certiorari under Rule 45 of the Rules of Court separately filed by the Hongkong and Shanghai Banking Corporation Limited (HSBANK) and HSBC International Trustee Limited (HSBC TRUSTEE). They seek [1] the reversal of the consolidated Decision, dated August 14, 2003, of the Court of Appeals (CA) in CA-G.R. SP Nos. 75756 and 75757, which dismissed the petitions for certiorari of herein petitioners assailing the Order, dated May 15, 2002, of the Regional Trial Court, Branch 44, Bacolod City (RTC) in Civil Case No. 01-11372 that denied their respective motions to dismiss the amended complaint of respondent Cecilia Diez Catalan. The factual antecedents are as follows: On January 29, 2001, respondent filed before the RTC, a complaint for a sum of money with damages against petitioner HSBANK, docketed as Civil Case No. 0111372, due to HSBANKs alleged wanton refusal to pay her the valu e of five HSBANK checks issued by Frederick Arthur Thomson (Thomson) amounting to [2] HK$3,200,000.00. On February 7, 2001, summons was served on HSBANK at the Enterprise Center, Tower I, Ayala Avenue corner Paseo de Roxas [3] St.,Makati City. HSBANK filed a Motion for Extension of Time to File Answer or [4] Motion to Dismiss dated February 21, 2001. Then, it filed a Motion to Dismiss, dated March 8, 2001, on the grounds that (a) the RTC has no jurisdiction over the subject matter of the complaint; (b) the RTC has not acquired jurisdiction for failure of the plaintiff to pay the correct filing or docket fees; (c) the RTC has no jurisdiction over the person of HSBANK; (d) the complaint does not state a cause of action against [5] HSBANK; and (e) plaintiff engages in forum-shopping. On September 10, 2001, Catalan filed an Amended Complaint impleading petitioner HSBC TRUSTEE as co-defendant and invoking Article 19 of the Civil Code [6] as basis for her cause of action. The Amended Complaint alleges: Defendants HSBANK and HSBC TRUSTEE, doing business in the Philippines, are corporations duly organized under the laws of the British Virgin Islands with head office at 1 Grenville Street, St. Helier Jersey, Channel Islands and with branch offices at Level 12, 1 Queens Road Central, Hongkong and may be served with summons and other court processes through their main office in Manila with address at HSBC, the Enterprise Center, Tower 1, Ayala Avenue corner Paseo de Roxas Street, Makati City.

Sometime in March 1997, Thomson issued five HSBANK checks payable to Catalan, to wit: CHECK NO. 807852 807853 807854 807855 807856 DATE AMOUNT Mar. 15, 1997 Mar. 17, 1997 Mar. 17, 1997 Mar. 22, 1997 Mar. 23, 1997 TOTAL $600,000.00 800,000.00 600,000.00 600,000.00 600,000.00 $3,200,000.00

The checks when deposited were returned by HSBANK purportedly for reason of payment stopped pending confirmation, despite the fact that the checks were duly [7] funded. On March 18, 1997, Thomson wrote a letter to a certain Ricky Sousa of HSBANK confirming the checks he issued to Catalan and requesting that all his checks be cleared. On March 20, 1997, Thomson wrote another letter to Sousa of HSBANK requesting an advice in writing to be sent to the Philippine National Bank, through the fastest means, that the checks he previously issued to Catalan were already cleared. Thereafter, Catalan demanded that HSBANK make good the checks issued by Thomson. On May 16, 1997, Marilou A. Lozada, personal secretary and attorney-in-fact of Thomson, wrote a letter to Sousa of HSBANK informing him that HSBANKs failure to clear all the checks had saddened Thomson and requesting that the clearing of the checks be facilitated. Subsequently, Thomson died and Catalan forwarded her demand to HSBC TRUSTEE. Catalan sent photocopies of the returned checks to HSBC TRUSTEE. Not satisfied, HSBC TRUSTEE through deceit and trickery, required Catalan, as a condition for the acceptance of the checks, to submit the original copies of the returned checks, purportedly, to hasten payment of her claim. HSBC TRUSTEE succeeded in its calculated deception because on April 21, 1999, Catalan and her former counsel went to Hongkong at their own expense to personally deliver the originals of the returned checks to the officers of HSBC TRUSTEE, anxious of receiving the money value of the checks but HSBC TRUSTEE despite receipt of the original checks, refused to pay Catalans claim. Having seen and received the original of the checks, upon its request, HSBC TRUSTEE is deemed to have impliedly accepted the checks. Moreover, the refusal of HSBANK and HSBC TRUSTEE to pay the checks is equivalent to illegal freezing of ones deposit. On the assurance of HSBC TRUSTEE that her claim will soon be paid, as she was made to believe that payments of the checks shall be made by HSBC TRUSTEE upon sight, the unsuspecting Catalan left the originals of the checks with HSBC TRUSTEE and was given only an acknowledgment receipt. Catalan made several demands and after several more follow ups, on August 16, 1999, Phoenix Lam, Senior Vice President of HSBC TRUSTEE, in obvious disregard of her valid claim, informed Catalan that her claim is disapproved. No reason or explanation whatsoever was made why her claim was disapproved, neither were the checks returned to her. Catalan appealed for fairness and understanding, in the hope that HSBC TRUSTEE would act fairly and justly on her claim but these demands were met by a stonewall of silence. On June 9, 2000, Catalan through counsel sent a last and final demand to HSBC TRUSTEE to remit the amount covered by the checks but despite receipt of said letter, no payment was made. Clearly, the act of the HSBANK and HSBC TRUSTEE in refusing to honor and pay the checks validly issued by Thomson violates the abuse of rights principle under Article 19 of the Civil Code which requires

that everyone must act with justice, give everyone his due and observe honesty and good faith. The refusal of HSBANK and HSBC TRUSTEE to pay the checks without any valid reason is intended solely to prejudice and injure Catalan. When they declined payment of the checks despite instructions of the drawer, Thomson, to honor them, coupled with the fact that the checks were duly funded, they acted in bad faith, thus causing damage to Catalan. A person may not exercise his right unjustly or in a manner that is not in keeping with honesty or good faith, otherwise he opens himself [8] to liability for abuse of right. Catalan prays that HSBANK and HSBC TRUSTEE be ordered to pay P20,864,000.00 representing the value of the five checks at the rate of P6.52 per HK$1 as of January 29, 2001 for the acts of HSBANK and HSBC TRUSTEE in refusing to pay the amount justly due her, in addition to moral and exemplary [9] damages, attorneys fees and litigation expenses. On October 2, 2001, HSBANK filed a Motion to Dismiss Amended Complaint on the grounds that: (a) the RTC has no jurisdiction over the subject matter of the complaint since the action is a money claim for a debt contracted by Thomson before his death which should have been filed in the estate or intestate proceedings of Thomson; (b) Catalan engages in forum shopping by filing the suit and at the same time filing a claim in the probate proceeding filed with another branch of the RTC; (c) the amended complaint states no cause of action against HSBANK since it has no obligation to pay the checks as it has not accepted the checks and Catalan did not redeposit the checks or make a formal protest; (d) the RTC has not acquired jurisdiction over the person of HSBANK for improper service of summons; and, (e) it did not submit to the jurisdiction of the RTC by filing a motion for extension [10] of time to file a motion to dismiss. Meanwhile, on October 17, 2001, summons for HSBC TRUSTEE was tendered to the In House Counsel of HSBANK (Makati Branch) at the Enterprise Center, Tower 1, Ayala Avenue corner Paseo de Roxas, Makati. Without submitting itself to the jurisdiction of the RTC, HSBC TRUSTEE filed a Special Appearance for Motion to Dismiss Amended Complaint, dated October 29, 2001, questioning the jurisdiction of [11] the RTC over it. HSBC TRUSTEE alleges that tender of summons through HSBANK Makati did not confer upon the RTC jurisdiction over it because: (a) it is a corporation separate and distinct from HSBANK; (b) it does not hold office at the HSBANK Makati or in any other place in the Philippines; (c) it has not authorized HSBANK Makati to receive summons for it; and, (d) it has no resident agent upon whom summons may be served because it does not transact business in the Philippines. Subsequently, HSBC TRUSTEE filed a Submission, dated November 15, 2001, attaching the Affidavit executed in Hongkong by Phoenix Lam, Senior Vice-President of HSBC TRUSTEE, attesting to the fact that: 1) HSBC TRUSTEE has not done nor is it doing business in the Philippines; 2) it does not maintain any office in Makati or anywhere in the Philippines; 3) it has not appointed any agent in Philippines; and 4) HSBANK Makati has no authority to receive any summons or court processes for [12] HSBC TRUSTEE. On May 15, 2002, the RTC issued an Order denying the two motions to [13] dismiss. The RTC held that it has jurisdiction over the subject matter of the action because it is an action for damages under Article 19 of the Civil Code for the acts of unjustly refusing to honor the checks issued by Thomson and not a money claim

against the estate of Thomson; that Catalan did not engage in forum-shopping because the elements thereof are not attendant in the case; that the question of cause of action should be threshed out or ventilated during the proceedings in the main action and after the plaintiff and defendants have adduced evidence in their favor; that it acquired jurisdiction over the person of defendants because the question of whether a foreign corporation is doing business or not in the Philippines cannot be a subject of a Motion to Dismiss but should be ventilated in the trial on the merits; and defendants voluntarily submitted to the jurisdiction of the RTC setting up in their Motions to Dismiss other grounds aside from lack of jurisdiction. HSBANK and HSBC TRUSTEE filed separate motions for reconsideration but both proved futile as they were denied by the RTC in an Order dated December 20, [15] 2002. On February 21, 2003, Catalan moved to declare HSBANK and HSBC TRUSTEE in default for failure to file their answer to the amended complaint. On March 5, 2003, HSBANK and HSBC TRUSTEE filed separate petitions for [16] certiorari and/or prohibition with the CA, docketed as CA-G.R. SP Nos. 75756 and [17] 75757, respectively. Subsequently, HSBANK and HSBC TRUSTEE filed before the RTC separate Answers ad cautelam, both dated March 18, 2003, as a precaution against being declared in default and without prejudice to the separate petitions for certiorari and/or [18] prohibition then pending with the CA. Meanwhile, the two petitions for certiorari before the CA were consolidated and after responsive pleadings were filed, the cases were deemed submitted for decision. In a consolidated Decision dated August 14, 2003, the CA dismissed the two [19] petitions for certiorari. The CA held that the filing of petitioners answers before the RTC rendered moot and academic the issue of the RTCs lack of jurisdiction over the person of the petitioners; that the RTC has jurisdiction over the subject matter since it is one for damages under Article 19 of the Civil Code for the alleged unjust acts of petitioners and not a money claim against the estate of Thomson; and, that the amended complaint states a cause of action under Article 19 of the Civil Code which could merit a favorable judgment if found to be true. The CA noted that Catalan may have prayed for payment of the value of the checks but ratiocinated that she merely used the value as basis for the computation of the damages. Hence, the present petitions. In G.R. No. 159590, HSBANK submits the following assigned errors: I. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT THE COURT A QUO, ACTING AS AN (SIC) REGULAR COURT, HAS JURISDICTION OVER THE AMENDED COMPLAINT SEEKING TO ORDER HSBC TRUSTEE, THE EXECUTOR OF THE DECEASED FREDERICK ARTHUR THOMSON, TO PAY SUBJECT CHECKS ISSUED BY THE LATE FREDERICK ARTHUR THOMSON, ADMITTEDLY IN PAYMENT OF HIS INDEBTEDNESS TO CATALAN.
[14]

II. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT THE AMENDED COMPLAINT DOES NOT SEEK TO ORDER HSBANK AND HSBC INTERNATIONAL TRUSTEE LIMITED TO PAY THE OBLIGATION OF THE (SIC) FREDERICK ARTHUR THOMSON AS EVIDENCED BY THE CHECKS, BUT PRAYS FOR DAMAGES EQUIVALENT OR COMPUTED ON THE BASIS OF THE VALUE OF THE CHECKS BECAUSE THE DEFENDANTS FAILED TO COMPLY WITH THE MANDATES OF ARTICLE 19 OF THE NEW CIVIL CODE. III. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT ALLEGATIONS IN THE AMENDED COMPLAINT MAKE OUT A CAUSE OF ACTION WHICH COULD MERIT A FAVORABLE JUDGMENT IF FOUND TO BE TRUE, OR IN NOT HOLDING THAT THE AMENDED COMPLAINT STATES NO CAUSE OF ACTION AGAINST HSBANK, AS DRAWEE BANK. IV. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN DISREGARDING THE FACT THAT CATALAN ENGAGED IN FORUM SHOPPING BY FILING THE AMENDED COMPLAINT WHILE HER PETITION FOR THE PROBATE OF THE SUPPOSED WILL OF THE DECEASED FREDERICK ARTHUR THOMSON IS PENDING WITH ANOTHER BRANCH OF THE COURT A QUO. V. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT HSBANK HAD SUBMITTED TO THE JURISDICTION OF THE COURT A QUO BY [20] SUBMITTING AN ANSWER TO THE AMENDED COMPLAINT. In G.R. No. 159591, HSBC TRUSTEE also assigns the foregoing first, second [21] and fifth errors as its own. In addition, it claims that: THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT ORDERING THE DISMISSAL OF THE AMENDED COMPLAINT AGAINST HSBC TRUSTEE [22] DESPITE THE FACT IT HAS NOT BEEN DULY SERVED WITH SUMMONS. HSBANK and HSBC TRUSTEE contend in common that Catalan has no cause of action for abuse of rights under Article 19 of the Civil Code; that her complaint, under the guise of a claim for damages, is actually a money claim against the estate of Thomson arising from checks issued by the latter in her favor in payment of indebtedness. HSBANK claims that the money claim should be dismissed on the ground of forum-shopping since Catalan also filed a petition for probate of the alleged last will of Thomson before RTC, Branch 48, Bacolod City, docketed as Spec. Proc No. 00-

892. In addition, HSBANK imputes error upon the CA in holding that by filing an answer to the amended complaint, petitioners are estopped from questioning the jurisdiction of the RTC. HSBC TRUSTEE maintains that the RTC did not acquire jurisdiction over it for improper service of summons. In her Comment, Catalan insists that her complaint is one for damages under Article 19 of the Civil Code for the wanton refusal to honor and pay the value of five checks issued by the Thomson amounting to HK$3,200,000.00. She argues that the issue of jurisdiction has been rendered moot by petitioners participation in the proceedings before the RTC. Succinctly, the issues boil down to the following: 1) Does the complaint state a cause of action?

2) Did Catalan engage in forum-shopping by filing the complaint for damages when she also filed a petition for probate of the alleged last will of Thomson with another branch of the RTC? and, 3) Did the RTC acquire jurisdiction over HSBANK and HSBC TRUSTEE? Corollary thereto, did the filing of the answer before the RTC render the issue of lack of jurisdiction moot and academic? We shall resolve the issue in seriatim. Does the complaint state a cause of action against HSBANK and HSBC TRUSTEE? The elementary test for failure to state a cause of action is whether the complaint alleges facts which if true would justify the relief demanded. Stated otherwise, may the court render a valid judgment upon the facts alleged [23] therein? The inquiry is into the sufficiency, not the veracity of the material [24] allegations. If the allegations in the complaint furnish sufficient basis on which it can be maintained, it should not be dismissed regardless of the defense that may be [25] presented by the defendants. Catalan anchors her complaint for damages on Article 19 of the Civil Code. It speaks of the fundamental principle of law and human conduct that a person " must, in the exercise of his rights and in the performance of his duties, act with justice, give every one his due, and observe honesty and good faith ." It sets the standards which may be observed not only in the exercise of ones rights but also in the performance of ones duties. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is [26] thereby committed for which the wrongdoer must be held responsible. But a right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. A person should be protected only when he acts in the legitimate exercise of his right, that is, when he acts with [27] prudence and in good faith; but not when he acts with negligence or abuse. There is an abuse of right when it is exercised for the only purpose of prejudicing or injuring another. The exercise of a right must be in accordance with the purpose for which it was established, and must not be excessive or unduly harsh; there must be no [28] intention to injure another.

Thus, in order to be liable under the abuse of rights principle, three elements must concur, to wit: (a) that there is a legal right or duty; (b) which is exercised in bad [29] faith; and (c) for the sole intent of prejudicing or injuring another. In this instance, after carefully examining the amended complaint, we are convinced that the allegations therein are in the nature of anaction based on tort under Article 19 of the Civil Code. It is evident that Catalan is suing HSBANK and HSBC TRUSTEE for unjustified and willful refusal to pay the value of the checks. HSBANK is being sued for unwarranted failure to pay the checks notwithstanding the repeated assurance of the drawer Thomson as to the authenticity of the checks and frequent directives to pay the value thereof to Catalan. Her allegations in the complaint that the gross inaction of HSBANK on Thomsons instructions, as well as its evident failure to inform Catalan of the reason for its continued inaction and non-payment of the checks, smack of insouciance on its part, are sufficient statements of clear abuse of right for which it may be held liable to Catalan for any damages she incurred resulting therefrom. HSBANKs actions, or lack thereof, prevented Catalan from seeking further redress with Thomson for the recovery of her claim while the latter was alive. HSBANK claims that Catalan has no cause of action because under Section 189 of the Negotiable Instruments Law, a check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder unless and until it accepts or ce rtifies it. However, HSBANK is not being sued on the value of the check itself but for how it acted in relation to Catalans claim for payment despite the repeated directives of the drawer Thomson to recognize the check the latter issued. Catalan may have prayed that she be paid the value of the checks but it is axiomatic that what determines the nature of an action, as well as which court has jurisdiction over it, are the allegations of the complaint, irrespective of whether or not the plaintiff is entitled to recover upon all or [30] some of the claims asserted therein. Anent HSBC TRUSTEE, it is being sued for the baseless rejection of Catalans claim. When Catalan parted with the checks as a requirement for the processing of her claim, even going to the extent of traveling to Hongkong to deliver personally the checks, HSBC TRUSTEE summarily disapproved her claim with nary a reason. HSBC TRUSTEE gave no heed to Catalans incessant appeals for an explanation. Her pleas fell on deaf and uncaring corporate ears. Clearly, HSBC TRUSTEEs acts are anathema to the prescription for human conduct enshrined in Article 19 of the Civil Code. Did Catalan engage in forum-shopping? It has been held that forum-shopping exists where a litigant sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending, the defense of litis pendentia in one case is a bar to the others; and, a final judgment in one would constitute res [31] judicata and thus would cause the dismissal of the rest. Thus, there is forum-shopping when there exist: a) identity of parties, or at least such parties as represent the same interests in both actions, b) identity of rights asserted and relief prayed for, the relief being founded on the same facts, and c) the identity of the two preceding particulars is such that any judgment rendered in the

pending case, regardless of which party is successful would amount to res judicata in [32] the other. Applying the foregoing requisites to the case before us in relation to Spec. Proc No. 00-892, the probate proceeding brought by Catalan before RTC, Branch 48, Bacolod City, it is obvious that forum-shopping does not exist. There is no identity of parties. HSBANK is not a party in the probate proceeding. HSBC TRUSTEE is only a party in the probate proceeding because it is the executor and trustee named in the Hongkong will of Thomson. HSBC TRUSTEE is representing the interest of the estate of Thomson and not its own corporate interest. With respect to the second and third requisites, a scrutiny of the entirety of the allegations of the amended complaint in this case reveals that the rights asserted and reliefs prayed for therein are different from those pleaded in the probate proceeding, such that a judgment in one case would not bar the prosecution of the other case. Verily, there can be no forum-shopping where in one proceeding a party raises a claim for damages based on tort and, in another proceeding a party seeks the allowance of an alleged last will based on ones claim as an heir. After all, the merits of the action for damages is not to be determined in the probate proceeding and vice versa. Undeniably, the facts or evidence as would support and establish the two [33] causes of action are not the same. Consequently, HSBANKs reliance on the principle of forum-shopping is clearly misplaced. Did the RTC acquire jurisdiction over HSBANK and HSBC TRUSTEE? The Rules of Court provides that a court generally acquires jurisdiction over a person through either a valid service of summons in the manner required by law or [34] the persons voluntary appearance in court. In holding that it acquired jurisdiction over HSBANK and HSBC TRUSTEE, the RTC held that both voluntarily submitted to the jurisdiction of the court by setting up in their Motions to Dismiss other grounds aside from lack of jurisdiction. On the other hand, the CA ruled that HSBANK and HSBC TRUSTEE are estopped from challenging the jurisdiction of the RTC because they filed their respective answers before the RTC. We find that both lower courts overlooked Section 20 of Rule 14 of the 1997 Rules of Civil Procedure which provides that the inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance. Nonetheless, such omission does not aid HSBANKs case. It must be noted that HSBANK initially filed a Motion for Extension of Time to [35] File Answer or Motion to Dismiss. HSBANK already invoked the RTCs jurisdiction over it by praying that its motion for extension of time to file answer or a motion to dismiss be granted. The Court has held that the filing of motions seeking affirmative relief, such as, to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration, are [36] considered voluntary submission to the jurisdiction of the court . Consequently, HSBANKs expressed reservation in its Answer ad cautelam that it filed the same as a mere precaution against being declared in default, and without prejudice to the Petition for Certiorari and/or Prohibition xxx now pending before the Court of

Appeals to assail the jurisdiction of the RTC over it is of no moment. Having earlier invoked the jurisdiction of the RTC to secure affirmative relief in its motion for additional time to file answer or motion to dismiss, HSBANK, effectively submitted voluntarily to the jurisdiction of the RTC and is thereby estopped from asserting otherwise, even before this Court. In contrast, the filing by HSBC TRUSTEE of a motion to dismiss cannot be considered a voluntary submission to the jurisdiction of the RTC. It was a conditional appearance, entered precisely to question the regularity of the service of summons. It is settled that a party who makes a special appearance in court challenging the jurisdiction of said court, e.g., invalidity of the service of summons, cannot be considered to have submitted himself to the jurisdiction of the [38] court. HSBC TRUSTEE has been consistent in all its pleadings in assailing the service of summons and the jurisdiction of the RTC over it. Thus, HSBC TRUSTEE cannot be declared in estoppel when it filed an Answer ad cautelambefore the RTC while its petition for certiorari was pending before the CA. Such answer did not render the petition for certiorari before the CA moot and academic. The Answer of HSBC TRUSTEE was only filed to prevent any declaration that it had by its inaction waived the right to file responsive pleadings. Admittedly, HSBC TRUSTEE is a foreign corporation, organized and existing under the laws of the British Virgin Islands. For proper service of summons on foreign corporations, Section 12 of Rule 14 of the Revised Rules of Court provides: SEC. 12. Service upon foreign private juridical entity. When the defendant is a foreign private juridical entity which has transacted business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines. In French Oil Mill Machinery Co., Inc. vs. Court of Appeals, we had occasion to rule that it is not enough to merely allege in the complaint that a defendant foreign corporation is doing business. For purposes of the rule on summons, the fact of doing business must first be "established by appropriate allegations in the complaint" [40] and the court in determining such fact need not go beyond the allegations therein. The allegations in the amended complaint subject of the present cases did not sufficiently show the fact of HSBC TRUSTEEs doing business in the Philippines. It does not appear at all that HSBC TRUSTEE had performed any act which would give the general public the impression that it had been engaging, or intends to engage in its ordinary and usual business undertakings in the country. Absent from the amended complaint is an allegation that HSBC TRUSTEE had performed any act in the country that would place it within the sphere of the courts jurisdiction. We have held that a general allegation, standing alone, that a party is doing business in the Philippines does not make it so; a conclusion of fact or law cannot be derived from the unsubstantiated assertions of parties notwithstanding the demands of convenience or dispatch in legal actions, otherwise, the Court would be guilty of [41] sorcery; extracting substance out of nothingness. Besides, there is no allegation in the amended complaint that HSBANK is the domestic agent of HSBC TRUSTEE to warrant service of summons upon it. Thus, the
[39]

[37]

summons tendered to the In House Counsel of HSBANK (Makati Branch) for HSBC TRUSTEE was clearly improper. There being no proper service of summons, the RTC cannot take cognizance of the case against HSBC TRUSTEE for lack of jurisdiction over it. Any proceeding [42] undertaken by the RTC is therefore null and void. Accordingly, the complaint against HSBC TRUSTEE should have been dismissed for lack of jurisdiction over it. WHEREFORE, the petition in G.R. No. 159590 is DENIED. The Decision of the Court of Appeals, dated August 14, 2003, in CA-G.R. SP No. 75757 dismissing the petition for certiorari of the Hongkong and Shanghai Banking Corporation Limited is AFFIRMED. The petition in G.R. No. 159591 is GRANTED. The Decision of the Court of Appeals, dated August 14, 2003, in CA-G.R. SP No. 75756 dismissing the petition for certiorari of the HSBC International Trustee Limited is REVERSED and SET ASIDE. The Regional Trial Court, Branch 44, Bacolod City is declared without jurisdiction to take cognizance of Civil Case No. 01-11372 against the HSBC International Trustee Limited, and all its orders and issuances with respect to the latter are hereby ANNULLED and SET ASIDE. The said Regional Trial Court is hereby ORDERED to DESIST from maintaining further proceedings against the HSBC International Trustee Limited in the case aforestated. SO ORDERED.

13. Minucher v. CA THIRD DIVISION [G.R. No. 97765. September 24, 1992.] KHOSROW MINUCHER, petitioner, vs. THE HONORABLE COURT OF APPEALS and ARTHUR W. SCALZO, JR., respondents. SYLLABUS 1. REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; DISMISSAL OF ACTION BASED ON ERRONEOUS ASSUMPTION, A GRAVE ABUSE OF DISCRETION. While the trial court correctly denied the motion to dismiss, the public respondent gravely abused its discretion in dismissing Civil Case No. 88-45691 on the basis of an erroneous assumption that simply because of the Diplomatic Note, the private respondent is clothed with diplomatic immunity, thereby divesting the trial court of jurisdiction over his person. Private respondent himself, in his Pre-trial Brief filed on 13 June 1990, unequivocally states that he would present documentary evidence consisting of DEA records on his investigation and surveillance of plaintiff and on his position and duties as DEA special agent in Manila. Having thus reserved his right to present evidence in support of his position, which is the basis for the alleged diplomatic immunity, the barren self-serving claim in the belated motion to dismiss cannot be relied upon for a reasonable, intelligent and fair resolution of the issue of diplomatic immunity. The public respondent then should have sustained the trial court's denial of the motion to dismiss. Verily, such should have been the most proper and appropriate recourse. It should not have been overwhelmed by the selfserving Diplomatic Note whose belated issuance is even suspect and whose authenticity has not yet been proved. The undue haste with which respondent Court yielded to the private respondent's claim is arbitrary. 2. ID.; ACTIONS; MOTION TO DISMISS; GROUNDS; LACK OF CAUSE OF ACTION WHERE DEFENDANT IS A DIPLOMAT. It may at once be stated that even if the private respondent enjoys diplomatic immunity, a dismissal of the case cannot be ordered on the ground of lack of jurisdiction over his person, but rather for lack of a cause of action because even if he committed the imputed act and could have been otherwise made liable therefor, his immunity would bar any suit against him in connection therewith and would prevent recovery of damages arising therefrom. 3. ID.; ID.; JURISDICTION OVER THE PERSON, HOW ACQUIRED; CASE AT BAR. Jurisdiction over the person of the defendant is acquired either by his voluntary appearance or by the service of summons upon him. While in the instant case, private respondent's counsel filed, on 26 October 1988, a motion to quash summons because being outside the Philippines and being a non-resident alien, he is beyond the processes of the court, which was properly denied by the trial court, he had in effect already waived any defect in the service of the summons by earlier asking, on two (2) occasions, for an extension of time to file an answer, and by ultimately filing an Answer with Counterclaim. There is no question that the trial court acquired jurisdiction over the person of the private respondent.

4. ID.; ID.; MOTION TO DISMISS; CASE SHOULD NOT BE DISMISSED WHERE THERE IS SUFFICIENT ALLEGATION OF PERSONAL LIABILITY OF DEFENDANT; CASE AT BAR. And now to the core issue the alleged diplomatic immunity of the private respondent. Setting aside for the moment the issue of authenticity raised by the petitioner and the doubts that surround such a claim, in view of the fact that it took private respondent one (1) year, eight (8) months and seventeen (17) days from the time his counsel filed on 12 September 1988 a Special Appearance and Motion asking for a first extension of time to file the Answer because the Departments of State and Justice of the United States of America were studying the case for the purpose of determining his defenses, before he could secure the Diplomatic Note from the U.S. Embassy in Manila, and even granting for the sake of argument that such note is authentic, the complaint for damages filed by the petitioner still cannot be peremptorily dismissed. Said complaint contains sufficient allegations which indicate that the private respondent committed the imputed acts in his personal capacity and outside the scope of his official duties and functions. As described in the complaint, he committed criminal acts for which he is also civilly liable. In the Special Appearance to Quash Summons earlier alluded to, on the other hand, private respondent maintains that the claim for damages arose "from an alleged tort." Whether such claim arises from criminal acts or from tort, there can be no question that private respondent was sued in his personal capacity for acts committed outside his official functions and duties. In the decision acquitting the petitioner in the criminal case involving the violation of the Dangerous Drugs Act, copy of which is attached to his complaint for damages and which must be deemed as an integral part thereof, the trial court gave full credit to petitioner's theory that he was a victim of a frame-up instigated by the private respondent. Thus, there is a prima facie showing in the complaint that indeed private respondent could be held personally liable for the acts committed beyond his official functions or duties. DECISION DAVIDE, JR., J p: May a complaint for damages be dismissed on the sole basis of a statement contained in a Diplomatic Note, belatedly issued after an answer to the said complaint had already been filed, that the defendant was a member of the diplomatic staff of the United States Diplomatic Mission in the Philippines at the time the cause of action accrued? This is the issue in the instant petition. On 3 August 1988, petitioner filed with the Regional Trial Court (RTC) of Manila a complaint for damages against private respondent Arthur Scalzo, Jr. The case was docketed as Civil Case No. 88-45691 and was raffled off to Branch 19 of said court. 1 Petitioner alleges therein that he was the Labor Attache of the Embassy of Iran in the Philippines "prior to the Ayatollah Khomeini regime." On 13 May 1986, private respondent, then connected with the American Embassy in Manila, was introduced to him by a certain Jose Iigo, an informer belonging to the military intelligence community, with whom petitioner had several business transactions involving Iranian products like carpets, caviar and others. Iigo had previously sought petitioner's assistance in connection with charges of illegal recruitment. According to Iigo,

private respondent was purportedly interested in buying Iranian products, namely caviar and carpets. On this same occasion, petitioner complained to the private respondent about the problems the former was then encountering with the American Embassy regarding the expired visas of his wife and fellow Iranian, Abbas Torabian. Offering his help, private respondent gave the petitioner a calling card showing that the former is an agent of the Drug Enforcement Administration (DEA), Department of Justice, of the United States of America assigned to the American Embassy in Manila with official contacts with a certain Col. Dumlao; head of the Anti-Narcotics Command, Philippine Constabulary. Private respondent also expressed his intent to purchase two (2) kilos of caviar worth P10,000.00 and informed the petitioner that he might have prospective buyers for these goods; he further promised to arrange for the renewal of the aforesaid visas for a $2,000.00 fee. On 19 May 1986, private respondent invited petitioner to dinner at Mario's Restaurant in Makati, Metro Manila; the petitioner accepted. During the said dinner held the very next day, both discussed politics and business. Specifically, private respondent told petitioner that he wanted to purchase an additional two hundred (200) grams of caviar and inquired about his commission for selling petitioner's carpets; petitioner promised a 10% commission based on profits. prLL In the evening of 26 May 1986, private respondent came to petitioner's residence and asked to be entrusted with a pair of Persian silk carpets with a floor price of $24,000.00 each, for which he had a buyer. The following day, private respondent returned to petitioner's residence, took the carpets and gave the latter $24,000.00; after about an hour, private respondent returned, claimed that he had already made arrangements with his contacts at the American Embassy concerning the visas and asked for $2,000.00. He was given this amount. It turned out, however, that private respondent had prepared an elaborate plan to frame-up the petitioner and Abbas Torabian for alleged heroin trafficking; both were falsely arrested by private respondent and some American and Filipino police officers, and were taken to Camp Crame in their underwear. Private respondent and his companions took petitioner's three (3) suitcases containing various documents, his wallet containing money and the keys to his house and car, as well as the $24,000.00 which private respondent had earlier delivered to him. Petitioner and Torabian were handcuffed together for three (3) days and were not given food and water; they were asked to confess to the possession of heroin or else they would be jailed or even executed by Iranian terrorists. Consequently, the two were charged for the violation of Section 4 of R.A. No. 6425 (Dangerous Drugs Act of 1972) before the Regional Trial Court of Pasig. They were, however, acquitted by the said court on 8 January 1988. Private respondent testified for the prosecution in the said case. Petitioner further alleges in his complaint that private respondent falsely testified against him in the criminal case. The former also avers that charges of unlawful arrest, robbery and estafa or swindling have already been filed against the private respondent. He therefore prays for actual and compensatory damages of not less than P480,000,00 ($24,000.00) representing the fair market value of the Persian silk carpet and $2,000.00 representing the refund of the amount he had given for the visas; moral damages in the amount of P5 million; exemplary damages in the sum of P100,000.00 and attorney's fees of at least P200,000.00 to answer for litigation

expenses incurred for his defense in the criminal case and for the prosecution of the civil case. LLphil On 14 September 1988, private respondent's counsel, the law firm LUNA, SISON AND MANAS, filed a Special Appearance and Motion alleging therein that since the private respondent is an agent of the Drug Enforcement Administration of the United States of America, and the acts and omissions complained of were performed by him in the performance of official functions, the case is now under study by the Departments of State and Justice in Washington, D.C. for the purpose of determining what defenses would be appropriate; said counsel also prayed that the period to answer be extended to 13 October 1988. 2 This prayer was granted in the 16 September 1988 order of the court. On 12 October 1988, private respondent's aforesaid counsel filed another Special Appearance and Motion seeking a further extension of the period to answer to 28 October 1988 because the law firm had not yet received the decision of the Departments of State and Justice. 3 On 27 October 1988, private respondent's counsel filed a Special Appearance to Quash Summons 4 alleging therein that: "The action being a personal action for damages arising from an alleged tort, the defendant being outside the Philippines and not being a resident of the Philippines, Defendant is beyond the processes of this court," and praying that the summons issued be quashed. The trial court denied the motion in its Order of 13 December 1988. 5 Unsatisfied with the said order, private respondent filed a petition for certiorari with the Court of Appeals which was docketed as C.A.-G R. SP No 17023. In its Decision promulgated on 6 October 1989, the Court of Appeals dismissed the petition for lack of merit. 6 Respondent thus sought a review of the said decision by filing a petition with this Court which was docketed as G.R. No. 91173. Said petition was however, dismissed by this Court in the Resolution of 20 December 1989 for non-compliance with paragraph 2 of Circular No. 1-88; moreover, respondent failed to show that the Court of Appeals had committed any reversible error in the questioned judgment. 7 On 9 March 1990, private respondent filed with the trial court his Answer in Civil Case No. 88-46591 8 wherein he denies the material allegations in the complaint, sets forth the following Affirmative Defenses: "The Complaint fails to state a cause of action: in having plaintiff and Abbas Torabian arrested on May 27, 1986 and detained at Camp Crame; a quantity of heroin, seized from plaintiff by Philippine police authorities and in seizing the money used in the drug transaction, defendant acted in the discharge of his official duties or otherwise in the performance of his official functions as agent of the Drug Enforcement Administration, U.S. Department of Justice." 9 and interposes a counterclaim for P100,000.00 to answer for attorney's fees and the expenses of litigation. LLpr On 13 June 1990, private respondent filed with the trial court the Defendant's PreTrial Brief, 10 the pertinent portions of which read:s

xxx "DEFENSES 1.

xxx

xxx

On 25 June 1990, the trial court issued an order denying the motion for being "devoid of merit." 15 Private respondent then filed with the public respondent Court of Appeals a petition for certiorari, docketed therein as C.A.-G.R. SP No. 22505, to nullify the aforesaid Order of 25 June 1990. On 31 October 1990, public respondent promulgated a Decision 16 ordering the dismissal of Civil Case No. 88-45691 due to the trial court's lack of jurisdiction over the person of the defendant because the latter possessed diplomatic immunity. Petitioner's motion to reconsider the decision was denied in the public respondent's Resolution of 8 March 1991 because: "When therefore Mr. Scalzo testified in the Criminal Case against Khosrow Minucher it was in connection with his official functions as an agent of the Drug Enforcement Administration of the United States and member (sic) of the American Mission charged with cooperating with the Philippine law enforcement agency. He therefore, enjoys immunity from criminal and civil jurisdiction of the receiving State under Article 31 of the Vienna Convention on Diplomatic Relations." 17 Hence, this petition for review under Rule 45 of the Rules of Court. Petitioner declares that the public respondent erred: "I. . . . IN NOT DISMISSING THE PETITION FOR CERTIORARI FILED BY SCALZO. II. . . . IN RULING THAT PRIVATE RESPONDENT SCALZO IS A DIPLOMAT IMMUNE FROM CIVIL SUIT CONFORMABLY WITH THE VIENNA CONVENTION ON DIPLOMATIC RELATIONS. III. . . . IN NOT FINDING THAT SCALZO'S PARTICIPATION IN THE BUYBUST OPERATION IS OUTSIDE OF HIS OFFICIAL FUNCTIONS, HENCE, THAT HE IS NOT IMMUNE FROM SUIT UNDER THE VIENNA CONVENTION ON DIPLOMATIC RELATIONS." 18 After private respondent filed his Comment to the petition and the petitioner submitted his Reply thereto, this Court gave due course to the same and required the parties to submit their respective Memoranda, which they subsequently did. We find merit in the petition. While the trial court correctly denied the motion to dismiss, the public respondent gravely abused its discretion in dismissing Civil Case No 88-45691 on the basis of an erroneous assumption that simply because of the Diplomatic Note, the private respondent is clothed with diplomatic immunity, thereby divesting the trial court of jurisdiction over his person. It may at once be stated that even if the private

Plaintiff's complaint is false and malicious;

2. In having a quantity of heroin and the money used in the drug transaction between him and plaintiff seized from plaintiff by P.C. NARCOM, plaintiff (sic) was acting in the discharge of his official functions as special agent of the Drug Enforcement Administration, U.S. Department of Justice and was then a member of the U.S. diplomatic mission in the Philippines. DEFENDANT'S EVIDENCE Defendant will present: 1. His testimony by deposition upon written interrogatories because defendant lives and works outside the Philippines and is not a resident of the Philippines. 2. Documentary evidence, consisting of DEA records on his investigation and surveillance of plaintiff and on his position and duties as DEA special agent in May 1980 in Manila; these will be identified by defendant and possibly by another DEA official." 11 On 14 June 1990, private respondent filed a Motion to Dismiss 12 the case on the ground that as per the copy of Diplomatic Note No. 414 issued by the Embassy of the United States of America, 13 dated 29 May 1990 and certified to be a true and faithful copy of the original by one Donald K. Woodward, Vice-Consul of the United States of America on 11 June 1990,14 the Embassy advised the Department of Foreign Affairs of the Republic of the Philippines that: ". . . Arthur W. Scalzo, was a member of the diplomatic staff of the United States diplomatic mission from his arrival in the Philippines on October 14, 1985 until his departure on August 10, 1988. . . . . . . in May 1986, with the cooperation of Philippine law enforcement officials and in the exercise of his functions as a member of the mission, Mr. Scalzo investigated Mr. Khosrow Minucher, the plaintiff in the aforementioned case for allegedly trafficking in a prohibited drug. It is this investigation which has given rise to the plaintiff's complaint. The Embassy takes note of the provisions of Article 39(2) of the Vienna Convention on Diplomatic Relations, which provides that Mr. Scalzo retains immunity from civil suit for acts performed in the exercise of his functions, as is the case here, even though he has departed (sic) the country." cdrep Petitioner opposed the motion.

respondent enjoys diplomatic immunity, a dismissal of the case cannot be ordered on the ground of lack of jurisdiction over his person, but rather for lack of a cause of action because even if he committed the imputed act and could have been otherwise made liable therefor, his immunity would bar any suit against him in connection therewith and would prevent recovery of damages arising therefrom. Jurisdiction over the person of the defendant is acquired either by his voluntary appearance or by the service of summons upon him. While in the instant case, private respondent's counsel filed, on 26 October 1988, a motion to quash summons because being outside the Philippines and being a non-resident alien, he is beyond the processes of the court, which was properly denied by the trial court, he had in effect already waived any defect in the service of the summons by earlier asking, on two (2) occasions, for an extension of time to file an answer, and by ultimately filing an Answer with Counterclaim. There is no question that the trial court acquired jurisdiction over the person of the private respondent. LexLib

well-settled principle of law that a public official may be liable in his personal private capacity for whatever damage he may have caused by his act done with malice and in bad faith, or beyond the scope of his authority or jurisdiction (Dumlao vs. Court of Appeals, et al., 114 SCRA 247 [1982])." Even Article 31 of the Vienna Convention on Diplomatic Relations admits of exceptions. It reads: "1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving State. He shall also enjoy immunity from its civil and administrative jurisdiction except in the case of: xxx xxx xxx

And now to the core issue the alleged diplomatic immunity of the private respondent. Setting aside for the moment the issue of authenticity raised by the petitioner and the doubts that surround such a claim, in view of the fact that it took private respondent one (1) year, eight (8) months and seventeen (17) days from the time his counsel filed on 12 September 1988 a Special Appearance and Motion asking for a first extension of time to file the Answer because the Departments of State and Justice of the United States of America were studying the case for the purpose of determining his defenses, before he could secure the Diplomatic Note from the U.S. Embassy in Manila, and even granting for the sake of argument that such note is authentic, the complaint for damages filed by the petitioner still cannot be peremptorily dismissed. Said complaint contains sufficient allegations which indicate that the private respondent committed the imputed acts in his personal capacity and outside the scope of his official duties and functions. As described in the complaint, he committed criminal acts for which he is also civilly liable. In the Special Appearance to Quash Summons earlier alluded to, on the other hand, private respondent maintains that the claim for damages arose "from an alleged tort." Whether such claim arises from criminal acts or from tort, there can be no question that private respondent was sued in his personal capacity for acts committed outside his official functions and duties. In the decision acquitting the petitioner in the criminal case involving the violation of the Dangerous Drugs Act, copy of which is attached to his complaint for damages and which must be deemed as an integral part thereof, the trial court gave full credit to petitioner's theory that he was a victim of a frame-up instigated by the private respondent. Thus, there is a prima facie showing in the complaint that indeed private respondent could be held personally liable for the acts committed beyond his official functions or duties. In Shauf vs. Court of Appeals, 19 after citing pertinent authorities, 20 this Court ruled: llcd "The aforecited authorities are clear on the matter. They state that the doctrine of immunity from suit will not apply and may not be involved where the public official is being sued in his private and personal capacity as an ordinary citizen. The cloak of protection afforded the officers and agents of the government is removed the moment they are sued in their individual capacity. This situation usually arises where the public official acts without authority or in excess of the powers vested in him. It is a

(c) an action relating to any professional or commercial activity exercised by the diplomatic agent in the receiving State outside his official functions. (Emphasis supplied). There is of course the claim of private respondent that the acts imputed to him were done in his official capacity. Nothing supports this self-serving claim other than the socalled Diplomatic Note. In short, insofar as the records are concerned, private respondent did not come forward with evidence to prove that indeed, he had acted in his official capacity. It does not appear that an actual hearing on the motion to dismiss was conducted and that private respondent offered evidence in support thereof. Thus, it is apropos to quote what this Court stated in United States of America vs. Guinto: 21 "But even as we are certain that the individual petitioners in G.R. No. 80018 were acting in the discharge of their official functions, we hesitate to make the same conclusion in G.R. No. 80258. The contradictory factual allegations in this case deserve in our view a closer study of what actually happened to the plaintiffs. The record is too meager to indicate if the defendants were really discharging their official duties or had actually exceeded their authority when the incident in question occurred. Lacking this information, this Court cannot directly decide this case. The needed inquiry must first be made by the lower court so it may assess and resolve the conflicting claims of the parties on the basis of the evidence that has yet to be presented at the trial. Only after it shall have determined in what capacity the petitioners were acting at the time of the incident in question will this Court determine, if still necessary, if the doctrine of state immunity is applicable." It may be mentioned in this regard that private respondent himself, in his Pre-trial Brief filed on 13 June 1990, unequivocally states that he would present documentary evidence consisting of DEA records on his investigation and surveillance of plaintiff and on his position and duties as DEA special agent in Manila. Having thus reserved his right to present evidence in support of his position, which is the basis for the alleged diplomatic immunity, the barren self-serving claim in the belated motion to dismiss cannot be relied upon for a reasonable, intelligent and fair resolution of the issue of diplomatic immunity.

The public respondent then should have sustained the trial court's denial of the motion to dismiss. Verily, such should have been the most proper and appropriate recourse. It should not have been overwhelmed by the self-serving Diplomatic Note whose belated issuance is even suspect and whose authenticity has not yet been proved. The undue haste with which respondent Court yielded to the private respondent's claim is arbitrary. WHEREFORE, the challenged decision of public respondent of 31 October 1990 in C.A.-G.R. SP No. 22505 is SET ASIDE and the Order of 25 June 1990 of Branch 19 of the Regional Trial Court of Manila in Civil Case No. 88-45691 denying private respondent's Motion to Dismiss is hereby REINSTATED. Costs against private respondent. SO ORDERED.