CIVIL PROCEDURE CASES Summons (Rule 14)
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.
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.
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.
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.
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.
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
1

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
[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-a-vis (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
CIVIL PROCEDURE CASES Summons (Rule 14)
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/co-defendant by her sister Rosita. . . .
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.
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
2

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 exterritorially in accordance with Rule 14, 17,
which provides:
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
CIVIL PROCEDURE CASES Summons (Rule 14)
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.
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
3

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.
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.
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
CIVIL PROCEDURE CASES Summons (Rule 14)
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 res- pondent'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.
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.
4

G.R. No. 103200 August 31, 1994
LA NAVAL DRUG CORPORATION, petitioner, vs. THE HONORABLE COURT OF
APPEALS and WILSON C. YAO, respondents.
In an effort to declog the courts of an increasing volume of work load and, most
importantly, in order to accord contending parties with expenditious alternatives for
settling disputes, the law authorities, indeed encourages, out of court settlements or
adjudications. Compromises and arbitration are widely known and used as such
acceptable methods of resolving adversarial claims.
Arbitrations, in particular, is governed by a special law, Republic Act 876, suppletory to
which are laws and rules of general application. This case before us concerns the
jurisdiction of courts, in relation to the provisions of Section 6 of Republic Act No. 876,
and, in that respect, the applicability of the doctrine of estoppel. The law (R.A. 876),
specifically Section 6 thereof, provides:
Sec. 6. Hearing by court. A party aggrieved by the failure, neglect or refusal of
another to perform under an agreement in writing providing for arbitration may
petition the court for an order directing that such arbitration proceed in the
manner provided for in such agreement. Five days notice in writing of the hearing
of such application shall be served either personally or by registered mail upon
the party in default. The court shall hear the parties, and upon being satisfied that
the making of the agreement or such failure to comply therewith is not in issue,
shall make an order directing the parties to proceed to arbitration in accordance
with the terms of the agreement. If the making of the agreement or default be in
issue the court shall proceed to summarily hear such issue. If the finding be that
no agreement in writing providing for arbitration was made, or that there is no
default in the proceeding thereunder, the proceeding shall be dismissed. If the
finding be that a written provision for arbitration was made and there is a default
in proceeding thereunder, an order shall be made summarily directing the parties
to proceed with the arbitration in accordance with the terms thereof.
The court shall decide all motions, petitions or application filed under the
provisions of this Act, within ten days after such motions, petitions, or
applications have been heard by it.
In chronology, the events that have led to the case at bench are detailed in the appealed
decision of respondent appellate court, which we here reproduce in toto.
Original action for Certiorari and Prohibition for Annulment of the Orders, dated
April 26, 1990 and June 22, 1990, respectively, of Branch LXI, Regional Trial
CIVIL PROCEDURE CASES Summons (Rule 14)
Court, Angeles City, in Special Case No. 6024 for Enforcement of ARBITRATION
Agreement with Damages. Petitioner assails that portion of subject Order of April
26, 1990, stating as follows:
(1) Petitioner's claim for damages predicated on alleged tortuous acts of
respondents La Naval Drug corporation such as their alleged interference
and dilatory tactics, etc. in the implementation of the Arbitration
Agreement in the Contract of Lease, thereby compelling among others
the petitioner to go to Court for redress; and respondent La Naval Drug
Corporation's counterclaim for damages may be entertained by this Court
in a hearing not summary for the purpose, under the Rules of
Court.
(2) A preliminary hearing of the special and affirmative defense to show
that Petitioner has not cause of action against respondent's claim for
damages is denied; a resolution on this issue is deferred after the trial of
the case on the merits.
And challenges the Order of June 22, 1990 denying its motion for reconsideration
of the said earlier Order.
From the petition below of respondent Yao, it appears that he is the present
owner of a commercial building a portion of which is leased to petitioner under a
contract of lease executed on December 23, 1993 with the former owner thereof,
La Proveedora, Inc., which contract expired on April 30, 1989. However,
petitioner exercised its option to lease the same building for another five years.
But petitioner and respondent Yao disagreed on the rental rate, and to resolve
the controversy, the latter, thru written notices to the former, expressed his
intention to submit their disagreement to arbitration, in accordance with Republic
Act 876, otherwise known as the Arbitration Law, and paragraph 7 of their lease
contract, providing that:
7. . . . Should the parties fail to agree on the rate of rentals, the same
shall be submitted to a group of Arbitrators composed of three (3)
members, one to be appointed by LESSOR, another by LESSEE and the
third one to be agreed upon by the two arbitrators previously chosen and
the parties hereto shall submit to the decision of the arbitrators.
Thus, on May 6, 1989, respondent Yao appointed Domingo Alamarez, Jr. as his
arbitrator, while on June 5, 1989, petitioner chose Atty. Casiano Sabile as its
arbitrator. The confirmation of the appointment of Aurelio Tupang, as third
5

arbitrator, was held in abeyance because petitioner instructed Atty. Sabile to
defer the same until its Board of Directors could convene and approve Tupang's
appointment. Respondent Yao theorizes that this was petitioner's design to delay
the arbitration proceedings, in violation of the Arbitration Law, and the governing
stipulation of their contract of lease.
On the basis of the aforesaid allegations, respondent Yao prayed that after
summary hearing pursuant to Section 6 of the Arbitration Law, Atty. Casiano
Sabile and Domingo Alamarez be directed to proceed with the arbitration in
accordance with Section 7 of subject Contract of Lease and the applicable
provisions of the Arbitration law, by appointing and confirming the appointment of
the Third Arbitrator; and that the Board of Three Arbitrators be ordered to
immediately convene and resolve the controversy before it, pursuant to Section
12 and the succeeding sections of the Arbitration Law. (Annex "A," Petition.)
In its Answer with Counterclaim (Annex "C," Petition), petitioner here specifically
denied the averments of the petition below; theorizing that such petition is
premature since respondent Yao has not yet formally required arbitrators
Alamarez and Sabile to agree on the third arbitrator, within ten (10) days from
notice, and that the delay in the arbitration was due to respondent Yao's failure to
perform what is incumbent upon him, of notifying and thereafter, requiring both
arbitrators to appoint the third member of the Board of Arbitrators. According to
petitioner, it actually gave arbitrators Sabile and Alamarez a free hand in
choosing the third arbitrator; and, therefore, respondent Yao has no cause of
action against it (petitioner). By way of Counterclaim, petitioner alleged that it
suffered actual damages of P100,000.00; and incurred attorney's fees of
P50,000.00, plus P500.00 for every court appearance of its counsel.
On October 20, 1989, respondent Yao filed an amended petition for
"Enforcement of Arbitration Agreement with Damages;" praying that petitioner be
ordered to pay interest on the unpaid rents, at the prevailing rate of interest in
commercial banks, and exemplary damages of at least P250,000.00.
On October 24, 1989, despite petitioner's opposition to the motion to admit the
amended petition, the respondent court admitted the same.
On October 31, 1989, petitioner answered the amended petition; contending,
among others, that the amended petition should be dismissed on the ground of
non-payment of the requisite filing fees therefor; and it being in the nature of an
ordinary civil action, a full blown and regular trial, is necessary; so that
respondent Yao's proposition for a summary hearing of the arbitration issue and
separate trial for his claim for damages is procedurally untenable and
implausible.
CIVIL PROCEDURE CASES Summons (Rule 14)
Invoking Section 5, Rule 16 of the Rules of Court, petitioner presented a "Motion
to Set Case for Preliminary Hearing" of its special and affirmative defenses,
which are grounds fro a motion to dismiss.
In its Order of November 14, 1989, the respondent court announced that the two
arbitrators chose Mrs. Eloisa R. Narciso as the third arbitrator. And on November
21, 1989, it ordered the parties to submit their position papers on the issue as to
whether or not respondent Yao's claim for damages may be litigated upon in the
summary proceeding for enforcement of arbitration agreement. It likewise
informed the parties that petitioner's Motion to Set Case for Preliminary Hearing"
of Special and Affirmative Defenses would be resolved together with the question
of damages.
On April 26, 1990, the aforequoted assailed Order issued. In moving for
reconsideration of the said Order, petitioner argued that in Special Case No.
6024, the respondent court sits as a special court exercising limited jurisdiction
and is not competent to act on respondent Yao's claim for damages, which poses
an issue litigable in an ordinary civil action. But the respondent court was not
persuaded by petitioner's submission. On June 22, 1990, it denied the motion for
reconsideration. (Rollo, pp. 89-93).
While the appellate court has agreed with petitioner that, under Section 6 of Republic Act
No. 876, a court, acting within the limits of its special jurisdiction, may in this case solely
determine the issue of whether the litigants should proceed or not to arbitration, it,
however, considered petitioner in estoppel from questioning the competence of the court
to additionally hear and decide in the summary proceedings private respondent's claim
for damages, it (petitioner) having itself filed similarly its own counterclaim with the
court a quo.
It is hardly disputable that when a court is called upon to exercise limited and special
jurisdiction, that court cannot stray to matters outside the area of its declared authority or
beyond what has been expressly invested by law (Elumbaring vs. Elumbaring, 12 Phil.
384, 387), particularly, such as in this instance, where the proceedings are summary in
nature.
Prefatorily, recalling the distinctions, pertinent to the case, between the court's lack of
jurisdiction over the person of the defendant, on the one hand, and its lack of jurisdiction
over the subject matter or the nature of the action, upon the other hand, should be
useful.
The lack of jurisdiction over the person of the defendant may be waived either expressly
or impliedly. When a defendant voluntarily appears, he is deemed to have submitted
himself to the jurisdiction of the court. If he so wishes not to waive this defense, he must
6

do so seasonably by motion for the purpose of objecting to the jurisdiction of the court;
otherwise, he shall be deemed to have submitted himself to that jurisdiction. The
decisions promulgated heretofore by this Court would likewise seemingly apply estoppel
to bar the defendant from pursuing that defense by alleging in his answer any other issue
for dismissing the action.
A citation of a few of our decisions might be apropos.
In Wang Laboratories, Inc., vs. Mendoza (156 SCRA 44), this Court has ruled that if the
defendant, besides setting up in a motion to dismiss his objection to the jurisdiction of the
court, alleges at the same time any other ground for dismissing the action, he is deemed
to have submitted himself to the jurisdiction of the court. In the process, it has equated
the matter to a situation where, such as in Immaculata vs. Judge Navarro, et al. (146
SCRA 5), the defendant invokes an affirmative relief against his opponent.
In De Midgely vs. Judge Ferandos (64 SCRA 23, 31), the Court elaborated thusly:
We are of the opinion that the lower court has acquired jurisdiction over the
person of Mrs. Midgely by reason of her voluntary appearance. The reservation
in her motion to dismiss that she was making a special appearance to contest the
court's jurisdiction over her person may be disregarded.
It may be disregarded because it was nullified by the fact that in her motion to
dismiss she relied not only on the ground of lack of jurisdiction over her person
but also on the ground that there was no showing that earnest efforts were
exerted to compromise the case and because she prayed "for such other relief
as" may be deemed "appropriate and proper."
xxx xxx xxx
When the appearance is by motion for the purpose of objecting to the jurisdiction
of the court over the person, it must be for the sole and separate purpose of
objecting to the jurisdiction of the court. If his motion is for any other purpose
than to object to the jurisdiction of the court over his person, he thereby submits
himself to the jurisdiction of the court. A special appearance by motion made for
the purpose of objecting to the jurisdiction of the court over the person will be
held to be a general appearance, if the party in said motion should, for example,
ask for a dismissal of the action upon the further ground that the court had no
jurisdiction over the subject matter. (Syllabus, Flores vs. Zurbito, supra, at page
751. That rule was followed in Ocampo vs. Mina and Arejola, 41 Phil. 308).
CIVIL PROCEDURE CASES Summons (Rule 14)
The justification for the rule was expressed in Republic vs. Ker and Companry, Ltd. (18
SCRA 207, 213-214), in this wise:
We observed that the motion to dismiss filed on April 14, 1962, aside from
disputing the lower court's jurisdiction over defendant's person, prayed for
dismissal of the complaint on the ground that plaintiff's cause of action had
prescribed. By interposing such second ground in its motion to dismiss, Ker &
Co., Ltd. availed of an affirmative defense on the basis of which it prayed the
court to resolve controversy in its favor. For the court to validly decide the said
plea of defendant Ker & Co., Ltd., it necessarily had to acquire jurisdiction upon
the latter's person, who, being the proponent of the affirmative defense, should
be deemed to have abandoned its special appearance and voluntarily submitted
itself to the jurisdiction of the court.
Voluntary appearance cures defects of summons, if any, Such defect, if any, was
further cured when defendant filed its answer to the complaint. A defendant can
not be permitted to speculate upon the judgment of the court by objecting to the
court's jurisdiction over its person if the judgment is adverse to it, and acceding to
jurisdiction over its person if and when the judgment sustains its defenses.
The doctrine of estoppel is predicated on, and has its origin in, equity which, broadly
defined, is justice according to natural law and right. It is a principle intended to avoid a
clear case of injustice. The term is hardly distinguishable from a waiver of right. Estoppel,
like its said counterpart, must be unequivocal and intentional for, when misapplied, it can
easily become a most convenient and effective means of injustice. Estoppel is not
understood to be a principle that, as a rule, should prevalently apply but, such as it
concededly is, as a mere exception from the standard legal norms of general application
that can be invoked only in highly exceptional and justifiable cases.
Tested by the above criteria, the Court sees it propitious to re-examine specifically the
question of whether or not the submission of other issues in a motion to dismiss, or of an
affirmative defense (as distinguished from an affirmative relief) in an answer, would
necessarily foreclose, and have the effect of a waiver of, the right of a defendant to set
up the court's lack of jurisdiction over the person of the defendant.
Not inevitably.
Section 1, Rule 16, of the Rules of Court, provides that a motion to dismiss may be made
on the following grounds:
(a) That the court has no jurisdiction over the person of the defendant or over the
subject of the action or suit;
7

(b) That the court has no jurisdiction over the nature of the action or suit;
(c) The venue is improperly laid;
(d) That the plaintiff has no legal capacity to sue;
(e) That there is another action pending between the same parties for the same
cause;
(f) That the cause of action is barred by a prior judgment or by statute of
limitations;
(g) That the complaint states no cause of action;
(h) That the claim or demand set forth in the plaintiff's pleading has been paid,
waived, abandoned, or otherwise extinguished;
( i ) That the claim on which the action or suit is founded is unenforceable under
the provisions of the statute of frauds;
( j ) That the suit is between members of the same family and no earnest efforts
towards a compromise have been made.
Any ground for dismissal in a motion to dismiss, except improper venue, may, as further
set forth in Section 5 of the same rule, be pleaded as an affirmative defense and a
preliminary hearing may be had thereon as if a motion to dismiss had been filed. An
answer itself contains the negative, as well as affirmative, defenses upon which the
defendant may rely (Section 4, Rule 6, Rules of Court). A negative defense denies the
material facts averred in the complaint essential to establish the plaintiff's cause of
action, while an affirmative defense in an allegation of a new matter which, while
admitting the material allegations of the complaint, would, nevertheless, prevent or bar
recovery by the plaintiff. Inclusive of these defenses are those mentioned in Rule 16 of
the Rules of Court which would permit the filing of a motion to dismiss.
In the same manner that the plaintiff may assert two or more causes of action in a court
suit, a defendant is likewise expressly allowed, under Section 2, Rule 8, of the Rules of
Court, to put up his own defenses alternatively or even hypothetically. Indeed, under
Section 2, Rule 9, of the Rules of Court, defenses and objections not pleaded either in a
motion to dismiss or in an answer, except for the failure to state a cause of action, are
deemed waived. We take this to mean that a defendant may, in fact, feel enjoined to set
up, along with his objection to the court's jurisdiction over his person, all other possible
defenses. It thus appears that it is not the invocation of any of such defenses, but the
CIVIL PROCEDURE CASES Summons (Rule 14)
failure to so raise them, that can result in waiver or estoppel. By defenses, of course, we
refer to the grounds provided for in Rule 16 of the Rules of Court that must be asserted
in a motion to dismiss or by way of affirmative defenses in an answer.
Mindful of the foregoing, in Signetics Corporation vs. Court of Appeals and Freuhauf
Electronics Phils., Inc. (225 SCRA 737, 738), we lately ruled:
This is not to say, however, that the petitioner's right to question the jurisdiction of
the court over its person is now to be deemed a foreclosed matter. If it is true, as
Signetics claims, that its only involvement in the Philippines was through a
passive investment in Sigfil, which it even later disposed of, and that TEAM
Pacific is not its agent, then it cannot really be said to be doing business in the
Philippines. It is a defense, however, that requires the contravention of the
allegations of the complaint, as well as full ventilation, in effect, of the main merits
of the case, which should not thus be within the province of a mere motion to
dismiss. So, also, the issue posed by the petitioner as to whether a foreign
corporation which has done business in the country, but which has ceased to do
business at the time of the filing of a complaint, can still be made to answer for a
cause of action which accrued while it was doing business, is another matter that
would yet have to await the reception and admission of evidence. Since these
points have seasonably been raised by the petitioner, there should be no real
cause for what may understandably be its apprehension, i.e., that by its
participation during the trial on the merits, it may, absent an invocation of
separate or independent reliefs of its own, be considered to have voluntarily
submitted itself to the court's jurisdiction.
Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it
appears that the court has no jurisdiction over the subject matter, the action shall be
dismissed (Section 2, Rule 9, Rules of Court). This defense may be interposed at any
time, during appeal (Roxas vs. Rafferty, 37 Phil. 957) or even after final judgment
(Cruzcosa vs. Judge Concepcion, et al., 101 Phil. 146). Such is understandable, as this
kind of jurisdiction is conferred by law and not within the courts, let alone the parties, to
themselves determine or conveniently set aside. In People vs. Casiano (111 Phil. 73 93-
94), this Court, on the issue of estoppel, held:
The operation of the principle of estoppel on the question of jurisdiction
seemingly depends upon whether the lower court actually had jurisdiction or not.
If it had no jurisdiction, but the case was tried and decided upon the theory that it
had jurisdiction, the parties are not barred, on appeal, from assailing such
jurisdiction, for the same "must exist as a matter of law, and may not be
conferred by consent of the parties or by estoppel" (5 C.J.S., 861-863). However,
if the lower court had jurisdiction, and the case was heard and decided upon a
given theory, such, for instance, as that the court had no jurisdiction, the party
8
 CIVIL PROCEDURE CASES Summons (Rule 14)
who induced it to adopt such theory will not be permitted, on appeal, to assume All considered, the court a quo must then refrain from taking up the claims of the
an inconsistent position that the lower court had jurisdiction. Here, the contending parties for damages, which, upon the other hand, may be ventilated in
principle of estoppel applies. The rule that jurisdiction is conferred by law, and separate regular proceedings at an opportune time and venue. The circumstances
does not depend upon the will of the parties, has not bearing thereon. obtaining in this case are far, we hold, from justifying the application of estoppel against
either party.
The rule was reiterated in Calimlim vs. Ramirez (118 SCRA 399, 406), and quite recently,
in Southeast Asian Fisheries Development Center-Aquaculture Department vs. National WHEREFORE, the decision of the Court of Appeals and the orders of the trial court in
Labor Relations Commission (206 SCRA 283). question are SET ASIDE. The court a quo, in the instant proceedings, is ordered to
DESIST from further hearing private respondent's claim, as well as petitioner's
Jurisdiction over the nature of the action, in concept, differs from jurisdiction over the counterclaim, for damages. No costs. SO ORDERED.
subject matter. Illustrated, lack of jurisdiction over the nature of the action is the situation
that arises when a court, which ordinarily would have the authority and competence to
take a case, is rendered without it either because a special law has limited the exercise
of its normal jurisdiction on a particular matter or because the type of action has been
reposed by law in certain other courts or quasi-judicial agencies for determination.
Nevertheless, it can hardly be questioned that the rules relating to the effects of want of
jurisdiction over the subject matter should apply with equal vigor to cases where the
court is similarly bereft of jurisdiction over the nature of the action.

In summary, it is our considered view, as we now so hereby express,

that

(1) Jurisdiction over the person must be seasonably raised, i.e., that it is pleaded in a
motion to dismiss or by way of an affirmative defense in an answer. Voluntary
appearance shall be deemed a waiver of this defense. The assertion, however, of
affirmative defenses shall not be constructed as an estoppel or as a waiver of such
defense.

(2) Where the court itself clearly has no jurisdiction over the subject matter or the nature
of the action, the invocation of this defense may be done at any time. It is neither for the
courts nor the parties to violate or disregard that rule, let alone to confer that jurisdiction,
this matter being legislative in character. Barring highly meritorious and exceptional
circumstances, such as hereinbefore exemplified, neither estoppel nor waiver shall apply.

In the case at bench, the want of jurisdiction by the court is indisputable, given the nature
of the controversy. The arbitration law explicitly confines the court's authority only to pass
upon the issue of whether there is or there is no agreement in writing providing for
arbitration. In the affirmative, the statute ordains that the court shall issue an order
"summarily directing the parties to proceed with the arbitration in accordance with the
terms thereof." If the court, upon the other hand, finds that no such agreement exists,
"the proceeding shall be dismissed." The proceedings are summary in nature.

9

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.
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.
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 City2 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 SALBULBERO 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. 1wphi1.nt
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
CIVIL PROCEDURE CASES Summons (Rule 14)
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
Default5 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 Sheriffs 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 Sheriffs 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 Order7 denying defendant's Motion to
Dismiss as well as plaintiffs 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.
On August 19, 1998, defendant, by Special Appearance, filed a Motion for
Reconsideration8 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
Reconsideration9 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.
10

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 Kanlaon
Construction Enterprises Co., Inc. vs. NLRC12 wherein it was held that service upon a
construction project manager is valid and in Gesulgon vs. NLRC13 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
Sec. 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 in-house counsel. (emphasis supplied).
This provision revised the former Section 13, Rule 14 of the Rules of Court which
provided that:
Sec. 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. (emphasis 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.
CIVIL PROCEDURE CASES Summons (Rule 14)
Earlier cases have uphold service of summons upon a construction project manager 15; a
corporation's assistant manager16; ordinary clerk of a corporation 17; private secretary of
corporate executives18; retained counsel19; 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 Officer21. 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.
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
11

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. (emphasis 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. . . . . (emphasis 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 &
Inc. 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.
CIVIL PROCEDURE CASES Summons (Rule 14)
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.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.
1wphi1.nt
SO ORDERED.
12

G.R. No. 91486 September 10, 2003
ALBERTO G. PINLAC, ATTY. ERIBERTO H. DECENA, RODOLFO F. REYES, FELIPE
BRIONES, JUANITO METILLA, JR., FELIPE A. FLORES, HERMINIO ELEVADO,
NARCISO S. SIMEROS, petitioners, vs. COURT OF APPEALS, ATTY. CORAZON A.
MERRERA, ATTY. JEAN MAKASIAR-PUNO, SERGIO ACABAN, represented by Atty.
Ramon Gerona, ATTY. ROGELIO VELASCO, MARTINA S. NONA, OVIDEO MEJICA,
ALFREDO ITALIA, MARIANO GUEVARRA, JESUS YUJUICO, DOMINADOR RIVERA,
SATURNINA SALES, represented by Atty. Consolacion Sales-Demontano, FRED
CHUA, SONIA SY CHUA, LAWRENCE CHUA, CAROLINA C. RUBIO, represented by
Tessie Sebastian, GEORGE G. GUERRERO, BEATRIZ TANTOCO, represented by
Filomena Cervantes, ATTY. MARCELA CELESTINO-GARCIA, FEDERICO GARCIA,
ILDEFONSO MORALES, LEONCIA VELASCO, OCRAVIO F. LINA, ANA MARIA
JARAMILLO, ESTRELLA BASA, JOSE ESTEVA, JR., CIRILO GONZALES, VILLY
TOBIAS, MIGUEL DELA PAZ, RUBEN GUILLERMO, FAUSTO YADAO, represented
by Jeremias Panlilio, RICARDO YAP, ROSAURO/PATRICK MARQUEZ, represented
by Emmanuel Marquez, MODESTA FABRIG and MAXIMINO SALCEDA, MELIA
LATOMBO, TERESITA PANGILINAN-RIVERO, ARCH. DANILO C. DE CASTRO, JOSE
S. LEDESMA, JAIME P. ANG, VEICENTE P. ANG, MAURO U. GABRIEL, ATTY.
VIRGINIA GOMEZ, GIL S. BONILLA, LOURDES BLANCO, represented by Catalina
Blanco, JOSEFA SANCHEZ and ROSALINA VILLEGAS, represented by Heidi
Bobis, SHIRLEY BUCAG, QUIRINA O. TUVERA, represented by Wilfredo Orejuros,
GREGORIO AVENTINO, represented by Enrico Aventino, LEONARDO L. NICOLAS,
NICOMEDES PENARANDA, FRANCISCA MEDRANO, OFELIA IGNACIO, ROSENDO
ABUBO, represented by Santos Chavez, SOLEDAD BAUTISTA DE COLUMNA,
represented by Zenaida Valle, MARQUITA/ SEBASTIAN LOPEZ, represented by
Emmanuel Marquez, DELIA DORION, GERARDO L. SANTIAGO, FIDEL
PANGANIBAN, represented by Manuel dela Roca, MATEO and OFELIA INOVEJAS,
REMEDIOS C. DOVAS, represented by Josefa Capistrano, DOMINGO ALTAMIRANO
and SPOUSES ROLANDO ALTAMIRANO and MINERVA FETALVERO, BEATRIZ
RINGPIS, ROSARIO DE MATA, RUFINA CRUZ, represented by JOSEFA MANABAT,
SPOUSES ANITA SALONGA-CAPAGCUAN and MAYNARD CAPAGCUAN, DISCORA
YATCO, represented by VICTORINA Y. FIRME, and CONSUELO YATCO, GENEROSA
MEDINA VDA. DE NOGUERA, represented by ATTY. RAYMUNDO M. NOGUERA,
BEATRIZ SALANDANAN and LOURDES ALONTE-VASQUEZ, PEDRO COSIO and
VICTORINA CARINO, RUTH C. ZARATE, PRECIOSISIMA V. YAPCHULAY, BASILISA
B. YAPCHULAY, OFELIA B. YAPCHULAY, FELISA B. YAPCHULAY, FE B.
YAPCHULAY, WILMA B. YAPCHULAY, FELIX B. YAPCHULAY, MARIANO B.
YAPCHULAY, GEN. ALFREDO LIM, and other registered OWNERS OF VILAR-
MALOLES (VILMA) SUBDIVISION, respondents.
REPUBLIC OF THE PHILIPPINES, intervenor.
WORLD WAR II VETERANS LEGIONARIES OF THE PHILIPPINES, intervenor.
CIVIL PROCEDURE CASES Summons (Rule 14)
This resolves the Petition-In-Intervention1 filed by the Republic of the Philippines,
represented by the Land Registration Authority and the Motion for Clarification 2 filed by
respondents.
The facts may be briefly restated as follows: The controversy stemmed from a Petition
for Quieting of Title filed by petitioners over 3 vast parcels of land known as Lot Nos. 1, 2
& 3. Lot No. 1 is covered by TCT No. 5690, while Lot Nos. 2 and 3 were originally
covered by OCT No. 614 and OCT No. 333, respectively. On March 21, 1988, the trial
court rendered a Partial Decision3 in favor of petitioners and against the defendants who
were declared in default, including respondent owners of Vilmar-Maloles (Vilma)
Subdivision whose properties were within Lot No. 2. The dispositive portion of which
reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
petitioners and against the defaulted respondents:
1) Declaring petitioners through the principal petitioners hereof, to wit: Alberto G.
Pinlac, Atty. Eriberto H. Decena, Rodolfo T. Reyes, Felipe Briones and Juanito S.
Metilla as absolute owners in fee simple title of the aforesaid Lots 1, 2 & 3 hereof
by virtue of extra-ordinary prescription, with the exception of the lands covered by
the respective transfer certificate of title belonging to the non-defaulted
respondents;
2) Declaring Original Certificate of Title No. 614, TCT No. 5690 and TCT No.
3548 of the Register of Deeds of Quezon City, and the subsequent TCTs issued
therefrom, with the exception of those titles belonging to the non-defaulted
respondents, as null and void ab initio;
3) Ordering the Register of Deeds of Quezon City to cancel OCT No. 614, TCT
No. 5690 and TCT No. 3548 as well as the subsequent TCTs issued and
emanating therefrom, with the exception of those titles belonging to the non-
defaulted respondents, from its record;
4) Declaring the area of TCT No. 333 in excess of its true and actual area of
4,574 Sq. Meters, as well as the TCTs subsequently issued by the Register of
Deeds of Quezon City, covering the area in excess of said actual area, with the
exception of those belonging to non-defaulted respondents, as null and void ab
initio;
13

5) Ordering the Register of Deeds of Quezon City to cancel all TCTs
subsequently issued based on OCT No. 333 in excess of the actual area of 4,574
Sq. Meters, with the exception of those titles belonging to the non-defaulted
respondents;
6) Declaring the writ of preliminary injunction dated August 7, 1985, in so far as
those areas covered by the cancelled OCTs and TCTs hereof are concerned, as
permanent;
7) Ordering the Register of Deeds of Quezon City to issue herein petitioners the
corresponding individual transfer certificate of titles upon proper application made
thereof.
SO ORDERED.
On May 17, 1989, the defaulted title owners of Vilma filed with the Court of Appeals a
Petition to Annul the Partial Decision of the trial court, which was granted in a
decision4 dated November 15, 1989. The appellate court ruled that the court a quo did
not acquire jurisdiction over the person of respondents because of defective service of
summons by publication. Petitioners motion for reconsideration of the said decision was
denied; hence, they filed this petition for certiorari.
On January 19, 2001, we rendered a Decision denying the petition and affirming the
Judgment of the Court of Appeals. The dispositive portion thereof reads:
WHEREFORE, in view of all the foregoing, the decision of the Court of Appeals
in CA-G.R. SP No. 17596 is AFFIRMED and the instant petition is DENIED for
lack of merit.
SO ORDERED.5
Petitioners filed a Motion for Reconsideration 6 contending, inter alia, that the disposition
of the trial court with respect to Lot No. 3, should not have been annulled by the Court of
Appeals because the petition for annulment of judgment filed by the respondents
concerned only Lot No. 2. They prayed that the January 19, 2001 decision of the Court
which affirmed the decision of the Court of Appeals be reconsidered insofar as Lot No. 3
is concerned.
CIVIL PROCEDURE CASES Summons (Rule 14)
On November 20, 2001, the Court issued a Resolution partially granting petitioners
motion for reconsideration by reinstating paragraphs 4 and 5 of the dipositive portion of
the trial courts Partial Decision pertaining to Lot No. 3, thus
WHEREFORE, the Motion for Reconsideration is PARTIALLY GRANTED and our
Decision promulgated on January 19, 2001 is MODIFIED as follows:
(1) reinstating paragraph (4) and (5) of the Partial Decision of the court a
quo; and
(2) affirming the Decision of the Court of Appeals in CA-G.R. No. 17596
in all other respects.
SO ORDERED.7
On July 22, 2002, the Republic of the Philippines, represented by the Land Registration
Authority (LRA), thru the Office of the Solicitor General (OSG), filed a motion for
intervention and a Petition-In-Intervention praying that judgment be rendered declaring:
1) That OCT No. 333 is a valid and existing title in line with the decisions this
Honorable Court had already rendered;
2) That OCT No. 333 was never expanded from its original area of 52,949,737
square meters;
3) That the land occupied by petitioners is not forest land and is covered by OCT
No. 333;
4) That the proceedings conducted in Civil Case No. Q-35673 with respect to
OCT No. 333 are null and void; and
5) That the proceedings conducted in Civil Case No. Q-35672 is null and void, no
notice of the hearings/proceedings having been sent to the Republic and other
interested parties.
The Republic likewise prays for such other relief as may be just and equitable
under the circumstances.8
The rule on intervention, like all other rules of procedure is intended to make the powers
of the Court fully and completely available for justice. It is aimed to facilitate a
14

comprehensive adjudication of rival claims overriding technicalities on the timeliness of
the filing thereof.9 Indeed, in exceptional cases, the Court has allowed intervention
notwithstanding the rendition of judgment by the trial court. In one case, intervention was
allowed even when the petition for review of the assailed judgment was already
submitted for decision in the Supreme Court.10
In Mago v. Court of Appeals,11 intervention was granted even after the decision became
final and executory, thus
The permissive tenor of the provision on intervention shows the intention of the
Rules to give to the court the full measure of discretion in permitting or
disallowing the same. But needless to say, this discretion should be exercised
judiciously and only after consideration of all the circumstances obtaining in the
case.
But it is apparent that the courts a quo only considered the technicalities of the rules on
intervention and of the petition for relief from judgment. The denial of their motion to
intervene arising from the strict application of the rule was an injustice to petitioners
whose substantial interest in the subject property cannot be disputed. It must be stressed
that the trial court granted private respondent's petition for prohibition with injunction
without petitioners being impleaded, in total disregard of their right to be heard, when on
the face of the resolution of the Community Relations and Information Office (CRIO)
sought to be enjoined, petitioners were the ones directly to be affected. We need not
belabor the point that petitioners are indeed indispensable parties with such an interest in
the controversy or subject matter that a final adjudication cannot be made in their
absence without affecting, nay injuring, such interest.
In Director of Lands v. Court of Appeals where the motions for intervention were filed
when the case had already reached this Court, it was declared:
It is quite clear and patent that the motions for intervention filed by the movants at this
stage of the proceedings where trial had already been concluded x x x and on appeal x x
x the same was affirmed by the Court of Appeals and the instant petition for certiorari to
review said judgment is already submitted for decision by the Supreme Court, are
obviously and manifestly late, beyond the period prescribed under x x x Section 2, Rule
12 of the Rules of Court [now Rule 19, Section 2 of the 1997 Rules on Civil Procedure].
But Rule 12 of the Rules of Court, like all other Rules therein promulgated, is
simply a rule of procedure, the whole purpose and object of which is to make the
powers of the Court fully and completely available for justice. The purpose of
CIVIL PROCEDURE CASES Summons (Rule 14)
procedure is not to thwart justice. Its proper aim is to facilitate the application of
justice to the rival claims of contending parties. It was created not to hinder and
delay but to facilitate and promote the administration of justice. It does not
constitute the thing itself which courts are always striving to secure to litigants. It
is designed as the means best adopted to obtain that thing. In other words, it is a
means to an end.
In Tahanan Development Corp. v. Court of Appeals, this Court allowed
intervention almost at the end of the proceedings. Accordingly, there should be
no quibbling, much less hesitation or circumvention, on the part of subordinate
and inferior courts to abide and conform to the rule enunciated by the Supreme
Court.12
The Solicitor General summarized the interest of the Republic in Lot No. 3 (originally
covered by OCT No. 333), as follows:
On March 5, 1979, then President Marcos issued Proclamation No. 1826
"reserving for national government center site a parcel of land situated in the
Constitution Hill, Quezon City, Metro Manila, containing an area of four million for
hundred forty thousand FOUR HUNDRED SIXTY-SIX SQUARE METERS." In a
certification [Annex "F", Rollo, p. 1415] issued by the Land Registration Authority,
it attested to the fact that the National Government Center described in
Proclamation No. 1826 "is within the area covered by GLRO Record No. 1037
(OCT-333) and GLRO Record No. 5975 as plotted in our Municipal Index Sheet
(MIS) Nos. 2574-C, 5707-B, 5708-A, 5708-B and 3339-D."
In a letter [Annex "B-2", Rollo, p. 1330], the Housing and Urban Development
Coordinating Council certified that within the Project site/jurisdiction of the National
Government Center Housing Project (NGCHP) and the NGC-EASTSIDE
DEVELOPMENT PROJECT, the following government buildings, offices and complexes
are situated:
1) House of Representatives;
2) Civil Service Commission (CSC);
3) Department of Social Works and Development (DSWD);
4) Sandiganbayan;
15

5) Commission on Audit (COA);
6) Department of Public Works and Highways (DPWH) Depot;
7) Polytechnic University of the Philippines (PUP) Commonwealth Campus;
8) TESDA Skills Training Center;
9) Several Public Elementary and High Schools, Health Centers and Barangay
Halls.
It also certified that the NGCHP under its Peoples Housing Alternative for Social
Empowerment land Acquisition Development Program (PHASE-LADP), has
already awarded 3,975 TCTs to its beneficiaries. This program comprises the
biggest chunk of the NGCHP with about 117 hectares intended for disposition to
qualified beneficiaries. Further, in line with the National Governments thrust of
fast-tracking the implementation of the NGCHP, the remaining 20,696 TCTs are
about to be awarded to qualified beneficiaries."13
Clearly, the intervention of the Republic is necessary to protect public interest as well as
government properties located and projects undertaken on Lot No. 3. The Constitutional
mandate that no person shall be deprived of life, liberty, or property without due process
of law can certainly be invoked by the Republic which is an indispensable party to the
case at bar. As correctly pointed out by the Solicitor General, while the provision is
intended as a protection of individuals against arbitrary action of the State, it may also be
invoked by the Republic to protect its properties.14
After a thorough re-examination of the case, we find that our November 20, 2001
Resolution reinstating paragraphs 4 and 5 of the trial courts Partial Decision pertaining
to Lot No. 3, overlooked certain aspects which, if not corrected, will cause extreme and
irreparable confusion and prejudice. The reinstated portions of the decision states:
4) Declaring the area of [OCT] No. 333 in excess of its true and actual area of
4,574 Sq. Meters, as well as the TCTs subsequently issued by the Register of
Deeds of Quezon City, covering the area in excess of said actual area, with the
exception of those belonging to non-defaulted respondents, as null and void ab
initio;
5) Ordering the Register of Deeds of Quezon City to cancel all TCTs
subsequently issued based on OCT No. 333 in excess of the actual area of 4,574
CIVIL PROCEDURE CASES Summons (Rule 14)
Sq. Meters, with the exception of those titles belonging to the non-defaulted
respondents;15
We note that paragraph 4 does not at all specify which portions are in excess of the
4,574 square meter area of OCT No. 333 and which areas belong to the defaulted and
non-defaulted respondents. Neither did the body of the trial courts decision state the
metes and bounds that would serve as basis in implementing the dispositive portion
thereof. Verily, this flaw goes into the very identity of the disputed land. Paragraphs 4 and
5 are therefore null and void for having been rendered in violation of the constitutional
mandate that "no decision shall be rendered by any court without expressing therein
clearly and distinctly the facts and the law on which it is based." 16 Hence, the November
20, 2001 Resolution reinstating paragraphs 4 and 5 of the trial courts Partial Decision
should be modified.
The OSGs prayer that OCT No. 333 be held as a valid and existing title is likewise
meritorious. In Republic v. Tofemi Realty Corporation (Tofemi),17 an action for
"Cancellation of Titles & Reversion" of TCT No. 55747 and TCT No. 55748, the validity of
OCT No. 333 from which said transfer certificates of title originated, has already been
settled. In dismissing the petition of the Republic, it was held therein that OCT No. 333 is
a valid title duly issued by the Land Registration Court. The Republic did not appeal
therefrom and the decision became final and executory. Pertinent portion of which states
Regarding the issue of nullity of OCT No. 333,
We find that the then Land Registration Court had the power, authority and
jurisdiction to issue it. It was issued after trial, or presumptively in a fair and
square trial with all the requisites of the law (The Phil. British Co., Inc. vs. de los
Angeles, 63 SCRA 52).
The Act of Congress of July 1, 1902, known in local history as the "Philippine Bill of
1902", in its sections 13 to 18, mentions three (3) classes of land, to wit, "public land" or
public domain", "mineral lands", and "timber land". (Ramos vs. Director of Lands, 39 Phil.
175). Early decisions as regards classification of public lands, such as Mapa vs. Insular
Government, 10 Phil 175, Ramos vs. Director of Lands, supra, and Ankron vs.
Government of the Philippine Islands, 40 Phil. 10, which were decided under the
Philippine Bill of 1902 and the first Public Land Act No. 926 enacted by the Philippine
Commission on October 7, 1926, or prior to the passage of Act No. 2874, had impliedly
ruled that there was no legal provision vesting in the chief Executive or President of the
Philippines the power to classify lands of the public domain into mineral, timber and
16

agricultural; so that the courts then were free to make corresponding classifications in
justiciable cases, or were invested with implicit power in so doing, depending upon the
preponderance of the evidence. In Mapa vs. Insular Government, supra, Feb. 10, 1908,
the Court of Land Registration granted the application for registration after finding that it
was neither "timber" nor "mineral" and came within the definition of "Agricultural land"
under Act 926. The Attorney General appealed. The Supreme Court affirmed the
appealed judgment. In G.L.R.O. No. 1037, the application for registration was granted
and consequently the issuance of a title was decreed in favor of the applicant because
the Land Registration Court found that the land applied for is agricultural susceptible of
private appropriation (Ramos vs. Director of Lands, supra; Ankron vs. Government of the
Philippine Islands, supra). We repeat by way of emphasis, the record does not reveal
that the Government has always considered the lot in question as forest reserve prior to
the issuance of OCT 333. To declare the land now as forest land on the authority of LC
Map 639 of Rizal approved on March 11, 1937 only, would deprive defendants of their
registered property without due process of law. It was pronounced in Ramos vs. Director
of lands, supra:
"x x x Upon the other hand, the presumption should be, in lieu of contrary
evidence, that land is agricultural in nature. One very good reason is that it is
good for the Philippine Islands to have a large public domain come under private
ownership. Such is the natural attitude of the sagacious citizen."
OCT No. 333 being legal and valid; ergo, TCTs Nos. 55747 and 55748, being
derived from the said mother title, are also legal and valid. These TCTs were in
turn derived from TCTs Nos. 45832 and 45833, covering Lots Nos. 65, 76 and 81
which originally formed parts of Parcel C of Plan Psu-32606 approved by the
Court of First Instance of Rizal on October 21, 1924. (Emphasis supplied) 18
Stare decisis et non quieta movere. Stand by the decisions and disturb not what is
settled. It is a salutary and necessary judicial practice that when a court has laid down a
principle of law applicable to a certain state of facts, it must adhere to such principle and
apply it to all future cases in which the facts sued upon are substantially the same. 19 It is
beyond cavil, therefore, that since the court had already ruled on the validity OCT No.
333, said issue must be laid to rest and must no longer be relitigated in the present case.
With respect, however, to the area covered by OCT No. 333, the principle of stare
decisis is not applicable because the decision of the Court of Appeals did not indicate the
boundaries of the lot covered by OCT No. 333. While it was held therein that the area of
OCT No. 333 is 52,949,735 square meters, the metes and bounds of the land covered by
OCT No. 333 was not specified. We cannot adopt the findings as to the area of OCT No.
CIVIL PROCEDURE CASES Summons (Rule 14)
333 for it might cause deprivation of property of adjacent land owners without due
process of law.
So, also, the Court cannot nullify the entire Partial Decision of the court a quo. The
defaulted defendants whose properties are located in Lot No. 1 did not question the
decision of the trial court. Neither was it shown in the Petition-In-Intervention that the
OSG is an indispensable party to Lot No. 1.
In their Motion for Clarification and Manifestation, respondents seek the clarification of
paragraph 1 of the trial courts Partial Decision declaring petitioners as owners of, among
others, Lot No. 2 where respondents properties are located. Paragraph 1, provides:
1) Declaring petitioners through the principal petitioners hereof, to wit: Alberto G.
Pinlac, Atty. Eriberto H. Decena, Rodolfo F. Reyes, Felipe Briones and Juanito S.
Metilla as absolute owners in fee simple title of the aforesaid Lots 1, 2 & 3 hereof
by virtue of extraordinary prescription, with the exception of the lands covered by
the respective transfer certificate of title belonging to non-defaulted
respondents.20
In view of the annulment of the trial courts Partial Decision with respect to Lot No. 2
originally covered by OCT No. 614, all portions of the decision pertaining to Lot No. 2,
including that in paragraph 1 declaring petitioners as absolute owners in fee simple of Lot
No. 2, is declared void. Likewise, the declaration of nullity of paragraphs 4 and 5 of the
dispositive portion of the decision a quo concerning Lot No. 3, renders the disposition in
paragraph 1 insofar as it affects Lot No. 3, also void. Under the 1997 Rules on Civil
Procedure, specifically Rule 47, Section 7 thereof, a judgment of annulment shall set
aside the questioned judgment or final order or resolution and render the same null and
void, without prejudice to the original action being re-filed in the proper court.
In the meantime, the World War II Veterans Legionaries of the Philippines (WW II) filed a
Petition-in-Intervention with prior leave of court. It alleges that the Court of Appeals
decision dated November 15, 1989 in CA-G.R. SP No. 17596, which is the subject of the
instant petition for review, ran counter to the June 22, 1989 decision of the same court in
CA-G.R. SP No. 17221, which merely amended the first paragraph of the Partial
Decision of the trial court in Civil Case No. Q-35672. The latter decision of the appellate
court was affirmed by this Court in G.R. No. 90245 on April 8, 1990.
We find no conflict between the two decisions of the Court of Appeals. It is true that both
decisions affected the portion of the Partial Decision of the trial court which declared
petitioners, who are individual members of the WW II, as absolute owners of Lot Nos. 1,
17
 CIVIL PROCEDURE CASES Summons (Rule 14)
2 and 3. However, the decision in CA-G.R. SP No. 17221 merely granted WW IIs prayer
that it be substituted for its individual members, who were declared the owners of Lot
Nos. 1, 2 and 3 in the Partial Decision. Aside from this, the decision in CA-G.R. SP No.
17221 had nothing to do with the merits of the case. As such, it did not contradict the
Court of Appeals decision of November 15, 1989 in CA-G.R. SP No. 17596 which set
aside the Partial Decision of the trial court.

WHEREFORE, in view of all the foregoing, the Petition-In-Intervention of the Republic of

the Philippines is PARTIALLY GRANTED. The Resolution promulgated on November 20,
2001 is MODIFIED as follows: The Decision dated March 21, 1988 of the Regional Trial
Court of Quezon City, Branch 83, in Civil Case No. Q-35762, is annulled insofar as it
concerns Lot No. 2, originally covered by OCT No. 614 and Lot No. 3 originally covered
by OCT No. 333. The November 15, 1999 Decision of the Court of Appeals in CA-G.R.
No. 17596 is affirmed in all other respects.

As clarified above, paragraph 1 of the dispositive portion of the decision of the court a
quo is void insofar as it declares petitioners as absolute owners in fee simple of Lot Nos.
2 and 3.

The Petition-in-Intervention filed by the World War Veterans Legionaries of the

Philippines is DENIED for lack of merit.

SO ORDERED.

18

G.R. No. 152776 October 8, 2003
HENRY S. OAMINAL, petitioner, vs. PABLITO M. CASTILLO and GUIA S.
CASTILLO, respondents.
In the instant case, the receipt of the summons by the legal secretary of the defendants
-- respondents herein -- is deemed proper, because they admit the actual receipt thereof,
but merely question the manner of service. Moreover, when they asked for affirmative
reliefs in several motions and thereby submitted themselves to the jurisdiction of the trial
court, whatever defects the service of summons may have had were cured.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to nullify
the March 26, 2002 Decision2 of the Court of Appeals (CA) in CA-GR SP No. 66562. The
assailed Decision disposed thus:
"WHEREFORE, the [D]ecision dated 23 August 2001 is hereby NULLIFIED and SET
ASIDE and Civil Case No. OZC-00-13 ordered DISMISSED, without prejudice. Costs
against [petitioner]."3
The Antecedents
The antecedents of the case were narrated by the CA as follows:
"On 09 March 2000, [Petitioner Henry Oaminal] filed a complaint for collection
against [Respondents Pablito and Guia Castillo] with the Regional Trial Court
[RTC] of Ozamis City (Branch 35) x x x. The complaint prayed that [respondents]
be ordered to pay P1,500,000.00 by way of liquidated damages and P150,000.00
as attorney's fees.
"On 30 May 2000, the summons together with the complaint was served upon
Ester Fraginal, secretary of [Respondent] Mrs. Castillo.
"On 06 June 2000, [respondents] filed their 'Urgent Motion to Declare Service of
Summons Improper and Legally Defective' alleging that the Sheriff's Return has
failed to comply with Section (1), Rule 14 of the Rules of Court or substituted
service of summons.
CIVIL PROCEDURE CASES Summons (Rule 14)
"The scheduled hearing of the Motion on 14 July 2000 did not take place
because x x x [RTC] Judge [Felipe Zapatos] took a leave of absence from July
17 to 19, 2000[;] hence[,] it was re-scheduled to 16 August 2000.
"On 19 October 2000, [petitioner] filed an Omnibus Motion to Declare
[Respondents] in Default and to Render Judgment because no answer [was] filed
by [the latter].
"[Respondents] forthwith filed the following:
'a. Omnibus Motion Ad Cautelam to Admit Motion to Dismiss and
Answer with Compulsory Counter-claim dated 9 November 2000
which was set for hearing on 27 November 2000 at 8:30 a.m.;
'b. x x x Urgent Motion to Dismiss also dated 9 November 2000
which was also set for hearing on 27 November 2000 at 8:30 a.m.
The said motion was anchored on the premise that x x x
[petitioner's] complaint was barred by improper venue and litis
pendentia; and
'c. Answer with Compulsory Counter-Claim dated 9 November
2000.'
"On 16 November 2000, x x x [the] judge denied [respondents'] Motion to
Dismiss, admitted [their] Answer, and set the pre-trial [on] 17 January 2001.
"On 24 November 2000, [respondents] filed an 'Urgent Motion to Inhibit Ad
Cautelam' against Judge [Zapatos], 'in the higher interest of substantial justice
and the [r]ule of [l]aw x x x.'
"On 27 December 2000, Judge [Zapatos] denied the motion and transferred the
January 17th pre-trial to 19 February 2001.
"[Respondents] filed an 'Urgent Omnibus Motion for Reconsideration with the
Accompanying Plea to Reset' dated 22 January 2001. The motion requested that
it be set for consideration and approval by the trial court on 05 February 2001 at
8:30 a.m. Said motion in the main prayed 'that an order be issued by the
Honorable Court reconsidering its adverse order dated 16 November 2000, by
dismissing the case at bar on the ground of improper venue or in the alternative,
19
 CIVIL PROCEDURE CASES Summons (Rule 14)
that the Honorable Presiding Judge reconsider and set aside its order dated Hence, this Petition. 5

December 27, 2000 by inhibiting himself from the case at hand.'

Issues
"On 22 May 2001, Judge [Zapatos] ruled that [respondents'] 'Omnibus Motion Ad
Cautelam to Admit Motion to Dismiss and Answer with Counterclaim' was filed Petitioner submits the following issues for our consideration:
outside the period to file answer, hence he (1) denied the Motion to Admit Motion
to Dismiss and Answer; (2) declared [respondents] in default; and (3) ordered "I
[petitioner] to present evidence ex-parte within ten days from receipt of [the]
order, [failing] which, the case will be dismissed. Whether respondents' recourse to a Petition for Certiorari [was] appropriate when the
remedy of appeal was available?
"On 23 August 2001, Judge [Zapatos] rendered a decision on the merits, with the
following dispositi[on]: "II

'WHEREFORE, finding by preponderance of evidence, judgment is Whether the Decision of the trial court attained finality?
hereby rendered in favor of [petitioner], ordering [respondents] to pay x x
x: "III

1) P1,500,000.00 by way of [l]iquidated [d]amages;
2) P20,000.00 as attorney's fees and litigation expenses; and
3) x x x cost[s].'"4
On September 11, 2001, respondents filed with the CA a Petition for certiorari, prohibition
and injunction, with a prayer for a writ of preliminary injunction or temporary restraining
order (TRO). In the main, they raised the issue of whether the trial court had validly
acquired jurisdiction over them.
On September 20, 2001, the appellate court issued a TRO to enjoin the lower court from
issuing a writ of execution to enforce the latter's decision.
Ruling of the Court of Appeals
The CA ruled that the trial court did not validly acquire jurisdiction over respondents,
because the summons had been improperly served on them. It based its finding on the
Sheriff's Return, which did not contain any averment that effort had been exerted to
personally serve the summons on them before substituted service was resorted to. Thus,
the appellate court set aside the trial court's Decision and dismissed, without prejudice,
Civil Case No. OZC-00-13.
Whether the Honorable Third Division of the Court of Appeals [was] correct in
entertaining and in granting the Writ of Certiorari when the facts clearly establish[ed] that
not only was [an] appeal available, but x x x there were other plain, speedy and adequate
remedies in the ordinary course of law?
"IV
Whether the Honorable Third Division of the Court of Appeals had jurisdiction to nullify
and set aside the Decision of the trial court and dismiss the case?
"V
[Whether] receipt by a legal secretary of a summons [is deemed] receipt by a lawyer in
contemplation of law?"6
Simply stated, the issues boil down to the following: (1) whether the Petition
for certiorari before the CA was proper; and (2) whether the trial court acquired
jurisdiction over respondents.
Since the Petition for certiorari was granted by the CA based on the trial court's alleged
lack of jurisdiction over respondents, the second issue shall be discussed ahead of the
former.

20

The Court's Ruling
The present Petition is partly meritorious.
First Issue:
Jurisdiction over Defendants
Petitioner contends that the trial court validly acquired jurisdiction over the persons of
respondents, because the latter never denied that they had actually received the
summons through their secretary. Neither did they dispute her competence to receive it.
Moreover, he argues that respondents automatically submitted themselves to the
jurisdiction of the trial court when they filed, on November 9, 2000, an Omnibus Motion to
Dismiss or Admit Answer, a Motion to Dismiss on the grounds of improper venue and litis
pendentia, and an Answer with Counterclaim.
On the other hand, respondents insist that the substituted service of summons on them
was improper. Thus, they allege that the trial court did not have the authority to render its
August 23, 2001 Decision.
We clarify.
Service of Summons
In civil cases, the trial court acquires jurisdiction over the person of the defendant either
by the service of summons or by the latter's voluntary appearance and submission to the
authority of the former. Where the action is in personam and the defendant is in the
Philippines, the service of summons may be made through personal or substituted
service in the manner provided for by Sections 6 and 7 of Rule 14 of the Revised Rules
of Court, which read:
"Section 6. Service in person on defendant. - Whenever practicable, the
summons shall be served by handing a copy thereof to the defendant in person,
or, if he refuses to receive and sign for it, by tendering it to him.
"Section 7. Substituted service. - If, for justifiable causes, 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
residence with some person of suitable age and discretion then residing therein,
CIVIL PROCEDURE CASES Summons (Rule 14)
or (b) by leaving the copies at defendant's office or regular place of business with
some competent person in charge thereof."
Personal service of summons is preferred over substituted service. Resort to the latter is
permitted when the summons cannot be promptly served on the defendant in person and
after stringent formal and substantive requirements have been complied with. 7
For substituted service of summons to be valid, it is necessary to establish the following
circumstances: (a) personal service of summons within a reasonable time was
impossible; (b) efforts were exerted to locate the party; and (c) the summons was served
upon a person of sufficient age and discretion residing at the party's residence or upon a
competent person in charge of the party's office or regular place of business. 8 It is
likewise required that the pertinent facts proving these circumstances are stated in the
proof of service or officer's return.
In the present case, the Sheriff's Return 9 failed to state that efforts had been made to
personally serve the summons on respondents. Neither did the Return indicate that it
was impossible to do so within a reasonable time. It simply stated:
1a\^/phi1.net
"THIS IS TO CERTIFY that on the 30th day of May 2000, copies of the summons
together with the complaint and annexes attached thereto were served upon the
defendants Pablito M. Castillo and Guia B. Castillo at their place of business at
No. 7, 21st Avenue, Cubao, Quezon City thru MS. ESTER FREGINAL, secretary,
who is authorized to receive such kind of process. She signed in receipt of the
original as evidenced by her signature appearing on the original summons.
"That this return is submitted to inform the Honorable x x x Court that the same
was duly served."10
Nonetheless, nothing in the records shows that respondents denied actual receipt of the
summons through their secretary, Ester Fraginal. Their "Urgent Motion to Declare
Service of Summons Improper and Legally Defective" 11did not deny receipt thereof; it
merely assailed the manner of its service. In fact, they admitted in their Motion that the
"summons, together with the complaint, was served by the Sheriff on Ester Fraginal,
secretary of the defendants at No. 7, 21st Avenue, Cubao, Quezon City on 30 May
2000."12
That the defendants' actual receipt of the summons satisfied the requirements of
procedural due process had previously been upheld by the Court thus:
21

"x x x [T]here is no question that summons was timely issued and received by
private respondent. In fact, he never denied actual receipt of such summons but
confined himself to the argument that the Sheriff should prove that personal
service was first made before resorting to substituted service.
"This brings to the fore the question of procedural due process. In Montalban v.
Maximo (22 SCRA 1077 [1968]) the Court ruled that '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.'" 13
There is likewise no showing that respondents had heretofore pursued the issue of lack
of jurisdiction; neither did they reserve their right to invoke it in their subsequent
pleadings. If at all, what they avoided forfeiting and waiving -- both in their Omnibus
Motion ad Cautelam to Admit Motion to Dismiss and Answer with Compulsory Counter-
Claim14 and in their Motion to Dismiss15 -- was their right to invoke the grounds of
improper venue and litis pendentia. They argued therein:
"3. x x x. To be sure, the [respondents] have already prepared a finalized draft of
their [M]otion to [D]ismiss the case at bar, based on the twin compelling grounds
of 'improper venue' and [the] additional fact that 'there exists a case between the
parties involving the same transaction/s covered by the plaintiff's cause of action.'
x x x;
"4. That as things now stand, the [respondents] are confronted with the dilemma
of filing their [M]otion to [D]ismiss based on the legal grounds stated above and
thus avoid forfeiture and waiver of these rights as provided for by the Rules and
also file the corresponding [M]otion to [A]dmit x x x [A]nswer as mandated by the
Omnibus Rule.
x x x x x x x x x"16
Verily, respondents did not raise in their Motion to Dismiss the issue of jurisdiction over
their persons; they raised only improper venue and litis pendentia. Hence, whatever
defect there was in the manner of service should be deemed waived. 17
Voluntary Appearance and Submission
CIVIL PROCEDURE CASES Summons (Rule 14)
Assuming arguendo that the service of summons was defective, such flaw was cured
and respondents are deemed to have submitted themselves to the jurisdiction of the trial
court when they filed an Omnibus Motion to Admit the Motion to Dismiss and Answer with
Counterclaim, an Answer with Counterclaim, a Motion to Inhibit, and a Motion for
Reconsideration and Plea to Reset Pre-trial. The filing of Motions seeking affirmative
relief -- 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 considered
voluntary submission to the jurisdiction of the court. 18 Having invoked the trial court's
jurisdiction to secure affirmative relief, respondents cannot -- after failing to obtain the
relief prayed for -- repudiate the very same authority they have invoked. 19
Second Issue:
Propriety of the Petition for Certiorari
Petitioner contends that the certiorari Petition filed by respondents before the CA was
improper, because other remedies in the ordinary course of law were available to them.
Thus, he argues that the CA erred when it took cognizance of and granted the Petition.
Well-settled is the rule that certiorari will lie only when a court has acted without or in
excess of jurisdiction or with grave abuse of discretion. 20 As a condition for the filing of a
petition for certiorari, Section 1 of Rule 65 of the Rules of Court additionally requires that
"no appeal nor any plain, speedy and adequate remedy in the ordinary course of law"
must be available.21 It is axiomatic that the availability of the right of appeal precludes
recourse to the special civil action for certiorari.22
Here, the trial court's judgment was a final Decision that disposed of the case. It was
therefore a fit subject of an appeal. 23 However, instead of appealing the Decision,
respondents filed a Petition for certiorari on September 11, 2001.
Be that as it may, a petition for certiorari may be treated as a petition for review under
Rule 45. Such move is in accordance with the liberal spirit pervading the Rules of Court
and in the interest of substantial justice, especially (1) if the petition was filed within the
reglementary period for filing a petition for review; 24 (2) errors of judgment are
averred;25 and (3) there is sufficient reason to justify the relaxation of the rules. 26 Besides,
it is axiomatic that the nature of an action is determined by the allegations of the
complaint or petition and the character of the relief sought.27 The Court explained:
"x x x. It cannot x x x be claimed that this petition is being used as a substitute for appeal
after that remedy has been lost through the fault of petitioner. Moreover, stripped of
22

allegations of 'grave abuse of discretion,' the petition actually avers errors of judgment
rather than of jurisdiction, which are the subject of a petition for review." 28
The present case satisfies all the above requisites. The Petition for certiorari before the
CA was filed within the reglementary period of appeal. A review of the records shows that
respondents filed their Petition on September 11, 2001 -- four days after they had
received the RTC Decision. Verily, there were still 11 days to go before the lapse of the
period for filing an appeal. Aside from charging grave abuse of discretion and lack of
jurisdiction, they likewise assigned as errors the order and the judgment of default as
well as the RTC's allegedly unconscionable and iniquitous award of liquidated
damages.29 We find the latter issue particularly significant, considering that the trial court
awarded P1,500,000 as liquidated damages without the benefit of a hearing and out of
an obligation impugned by respondents because of petitioner's failure to pay. 30 Hence,
there are enough reasons to treat the Petition for certiorari as a petition for review.
In view of the foregoing, we rule that the Petition effectively tolled the finality of the trial
court Decision.31Consequently, the appellate court had jurisdiction to pass upon the
assigned errors. The question that remains is whether it was correct in setting aside the
Decision and in dismissing the case.
Trial Court's Default Orders Erroneous
A review of the assailed Decision reveals that the alleged lack of jurisdiction of the trial
court over the defendants therein was the reason why the CA nullified the former's
default judgment and dismissed the case without prejudice. However, we have ruled
earlier that the lower court had acquired jurisdiction over them. Given this fact, the CA
erred in dismissing the case; as a consequence, it failed to rule on the propriety of the
Order and the judgment of default. To avoid circuitousness and further delay, the Court
deems it necessary to now rule on this issue.
As much as possible, suits should be decided on the merits and not on
technicalities.32 For this reason, courts have repeatedly been admonished against default
orders and judgments that lay more emphasis on procedural niceties at the expense of
substantial justice.33 Not being based upon the merits of the controversy, such issuances
may indeed amount to a considerable injustice resulting in serious consequences on the
part of the defendant. Thus, it is necessary to examine carefully the grounds upon which
these orders and judgments are sought to be set aside.34 1vvphi1.nt
CIVIL PROCEDURE CASES Summons (Rule 14)
Respondents herein were declared in default by the trial court on May 22, 2001,
purportedly because of their delay in filing an answer. Its unexpected volte face came six
months after it had ruled to admit their Answer on November 16, 2000, as follows:
"That with respect to the Motion to Admit Answer, this Court is not in favor of terminating
this case on the basis of technicality for failure to answer on time, hence, as ruled in the
case of Nantz v. Jugo and Cruz, 43 O.G. No. 11, p. 4620, it was held:
'Lapses in the literal observance of a rule of procedure will be overlooked when they do
not involve public policy, when they arose from an honest mistake or unforeseen
accident, when they have not prejudiced the adverse party and have not deprived the
court ot its authority. Conceived in the best traditions of practical and moral justice and
common sense, the Rules of Court frown upon hairsplitting technicalities that do not
square with their liberal tendency and with the ends of justice unless something in the
nature of the factors just stated intervene. x x x'
"WHEREFORE, x x x in the interest of justice, the Answer of the [respondents] is hereby
admitted."35
Indiana Aerospace University v. Commission on Higher Education 36 held that no practical
purpose was served in declaring the defendants in default when their Answer had
already been filed -- albeit after the 15-day period, but before they were declared as
such. Applying that ruling to the present case, we find that respondents were, therefore,
imprudently declared in default.1a\^/phi1.net
WHEREFORE, the Petition is hereby GRANTED IN PART, and the Decision of the Court
of Appeals MODIFIED. The trial court's Order of Default dated May 22, 2001 and
Judgment of Default dated August 23, 2001 are ANNULLED, and the case remanded to
the trial court for further proceedings on the merits. No costs.
SO ORDERED.
23

G.R. No. 144662 October 13, 2003
SPOUSES EFREN MASON and DIGNA MASON, petitioners, vs. THE HONORABLE
COURT OF APPEALS and COLUMBUS PHILIPPINES BUS
CORPORATION, respondents.
This petition for review assails the decision,1 dated May 12, 2000, of the Court of Appeals
and its resolution2dated August 25, 2000 in CA-G.R. SP No. 54649 denying petitioners
motion for reconsideration. The decision set aside the decision 3 of the Regional Trial
Court of Pasay City, Branch 112, in Civil Case No. 98-1567 and directed said court to
conduct further proceedings on the complaint for rescission of lease contract.
The antecedent facts of the case, as found by the Court of Appeals, are as follows:
Petitioners spouses Efren and Digna Mason owned two parcels of land located along
Epifanio delos Santos Avenue in Pasay City. On March 30, 1993, petitioners and private
respondent Columbus Philippines Bus Corporation (hereafter Columbus) entered into a
lease contract, under which Columbus undertook to construct a building worth ten million
pesos (P10,000,000) at the end of the third year of the lease. Because private
respondent failed to comply with this stipulation, the petitioners on November 13, 1998,
filed a complaint for rescission of contract with damages against private respondent
before the Regional Trial Court of Pasay City, docketed as Civil Case No. 98-1567.
Summons was served upon private respondent through a certain Ayreen Rejalde. While
the receiving copy of the summons described Rejalde as a secretary of Columbus, the
sheriffs return described Rejalde as a secretary to the corporate president, duly
authorized to receive legal processes.
Private respondent failed to file its answer or other responsive pleading, hence
petitioners filed a motion to declare private respondent in default. The motion was
granted and petitioners were allowed to present evidence ex-parte. Thereafter, the case
was submitted for decision.
CIVIL PROCEDURE CASES Summons (Rule 14)
2. To pay plaintiffs the amount of P63,862.57 beginning November 1998 until
defendant and the sub-lessee vacate the leased property by way of reasonable
compensation for the use of the properties;
3. and all other persons and entities claiming rights under it, to surrender
possession to plaintiffs and to vacate the leased premises;
4. to pay plaintiffs the amount of P300,000.00 as and by way of moral damages;
5. to pay plaintiffs the amount of P100,000.00 as and by way of exemplary
damages;
6. to pay plaintiffs attorneys fees in the amount of P100,000.00; and
7. to pay the cost of suit.
SO ORDERED.4
That decision became final on May 12, 1999. The following day, private respondent filed
a motion to lift order of default, which was opposed by petitioners. The trial court ordered
the parties to submit their respective memoranda. However, without waiting for the same,
the trial court on May 26, 1999, denied the motion to lift order of default, thus:
It appearing that the decision rendered by this Court on April 27, 1999 became final and
executory on May 12, 1999, defendants Motion to Lift Order of Default is hereby
DENIED. Concomitant thereto, plaintiffs Motion for Execution is hereby GRANTED.
The Order of this Court on May 21, 1999 allowing the parties to file their respective
memoranda within ten (10) days from May 21, 1999 is hereby revoked and set aside,
since the incidents can be resolved based on the records.

On April 22, 1999, the trial court rendered its decision whose dispositive portion reads:
WHEREFORE, let a writ of execution issue to enforce and implement the final and
executory decision rendered by this Court on April 27, 1999.
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
plaintiffs and against defendant declaring the contract of lease rescinded, terminated and
SO ORDERED.5
cancelled, and ordering defendant:
Private respondent filed a motion for reconsideration, which was denied. Undaunted,
1. To pay plaintiffs the amount of P10 Million which is the value of the building
private respondent filed a manifestation and motion to lift the writ of execution. It suffered
which defendant failed to construct on the leased properties, as and by way [of]
the same fate as the motion for reconsideration for being dilatory. The branch sheriff was
actual damages;
directed to proceed with the enforcement of the decision.
24

Private respondent appealed to the Court of Appeals, which ruled in its favor, thus:
WHEREFORE, the petition is GRANTED; the decision in Civil Case No. 98-1567 and all
the proceedings therein, including the order of default and writ of execution, are SET
ASIDE. The court a quo is ORDERED to require petitioner to file its answer and
thereafter to conduct further appropriate proceedings with reasonable dispatch.
SO ORDERED.6
The Court of Appeals held that the trial court erred when it denied private respondents
motion to lift order of default. The appellate court pointed out that private respondent was
not properly served with summons, thus it cannot be faulted if it failed to file an Answer.
Section 11, 7 Rule 14 of the 1997 Rules of Civil Procedure requires that service of
summons upon domestic private juridical entity shall be made through its president,
managing partner, general manager, corporate secretary, treasurer or in-house counsel.
Since service upon private respondent was made through a certain Ayreen Rejalde, a
mere filing clerk in private respondents office, as evidenced by the latters employment
record, such service cannot be considered valid. Consequently, the subsequent
proceedings, including the order of default, judgment by default and its execution, were
also invalid because the trial court did not acquire jurisdiction over private respondent.
Besides, judgments by default are not favored, especially so when there is a prima
facie showing that the defaulting party has a meritorious defense, which in this case was
grounded on the contract of lease sued upon, said the Court of Appeals.
Petitioner filed a motion for reconsideration, but to no avail. Hence, this petition for
review averring that the Court of Appeals erred in:
I. HOLDING THAT THERE WAS NO VALID SERVICE OF SUMMONS UPON
PRIVATE RESPONDENT COLUMBUS PHILIPPINES BUS CORPORATION
II. NOT HOLDING THAT THERE WAS VALID SERVICE OF SUMMONS
CONFORMABLY WITH THE SUBSTANTIAL COMPLIANCE RULE.
III. HOLDING THAT WITH THE ADOPTION OF SECTION 11, RULE 14 OF THE 1997
RULES OF CIVIL PROCEDURE, THE SUBSTANTIAL COMPLIANCE RULE NO
LONGER APPLIES.
IV. NOT HOLDING THAT JURISDICTION WAS ACQUIRED OVER PRIVATE
RESPONDENT COLUMBUS PHILIPPINES BUS CORPORATION AND THAT ITS
MOTION TO LIFT ORDER OF DEFAULT LACKS MERIT.8
CIVIL PROCEDURE CASES Summons (Rule 14)
The issues in this case may be succinctly stated as follows:
a. Whether there was valid service of summons on private respondent for the trial
court to acquire jurisdiction, and
b. Whether private respondents motion to lift order of default was in order.
On the first issue, petitioners contend that while Section 11, Rule 14 of the 1997 Rules of
Civil Procedure clearly specifies the persons authorized to receive summons on behalf of
a private juridical entity, said provision did not abandon or render inapplicable the
substantial compliance rule. Petitioners cite Millenium Industrial Commercial Corporation
v. Tan,9 and maintain that this Court, by referring to E.B Villarosa & Partner Co., Ltd. v.
Judge Benito,10 effectively ruled that said provision is the statement of the general rule on
service of summons upon corporation and the substantial compliance rule is the
exception. Petitioners claim that this Court, in an array of cases, upheld the substantial
compliance rule when it allowed the validity of the service of summons on the
corporations employee other than those mentioned in the Rule where said summons
and complaint were in fact seasonably received by the corporation from said employee.
Petitioners insist that technicality must not defeat speedy justice.
Petitioners stress that even though the summons was received by a mere filing clerk in
private respondents corporation, there was substantial compliance with Section 11, Rule
14 because the summons actually reached private respondent. This can be gleaned from
private respondents motion to lift order of default where private respondent did not
question the validity of the service of summons but explained in paragraph three thereof
that its failure to answer the complaint was due to its impression that the case would not
be pursued by petitioners because the corporation already made payments to them. 11
From said averment, according to petitioners, private respondent in effect admitted that it
received the summons. Notwithstanding this, private respondent did not file its answer to
the complaint, said the petitioners. This is tantamount to negligence which the court
cannot tolerate, petitioners conclude. There being valid service of summons, the
Regional Trial Court acquired jurisdiction over private respondent, according to
petitioners.
Petitioners further contend that the Court of Appeals reliance on E.B Villarosa & Partner
Co., Ltd. v. Judge Benito, 12 in denying their motion for reconsideration was misplaced,
because the factual milieu in said case was different from that in the instant case. In
Villarosa, according to them, there was no showing of actual receipt by the defendant
25

corporation of the summons while in this case, private respondent actually received the
summons.
Private respondent counters that nowhere in the Millenium case did this Court expressly
state or remotely imply that we have not abandoned the doctrine of substantial
compliance. Private respondent claims that petitioners misquoted the portion of the
Millenium decision where this Court cited the Villarosa case, to make it appear that the
Villarosa ruling, which provides an interpretation of Section 11, Rule 14 of the 1997 Rules
of Civil Procedure, states the general rule on the service of summons upon corporations
where the substantial compliance rule is the exception. Private respondent avers that
what this Court discussed in the Millenium case was the rule on service of summons
under the old Rules of Court prior to the promulgation and effectivity of the 1997 Rules of
Civil Procedure. The Millenium case held that as a general rule, service upon one who is
not enumerated in Section 13,13 Rule 14 of the then Rules of Court is invalid, according to
private respondent. An exception is when the summons is actually received by the
corporation, which means that there was substantial compliance with the rule. Private
respondent stresses that since the exception referred to the old rule, it cannot be made
to apply to the new rule, which clearly specifies and limits the persons authorized to
receive the summons in behalf of the corporation. 1a\^/phi1.net
Neither can petitioners rely on Millenium to justify their theory, adds private respondent,
because at the time the complaint in this case was filed with the trial court, the 1997
Rules of Civil Procedure were already in effect. The case law applicable in the instant
case, contends private respondent, is Villarosa which squarely provides for the proper
interpretation of the new rule on the service of summons upon domestic corporation,
thus:
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.14
According to private respondent, service through Ayreen Rejalde, a mere filing clerk of
private respondent and not one of those enumerated above, is invalid.
We find private respondents submission on this issue meritorious.
CIVIL PROCEDURE CASES Summons (Rule 14)
The question of whether the substantial compliance rule is still applicable under Section
11, Rule 14 of the 1997 Rules of Civil Procedure has been settled in Villarosa which
applies squarely to the instant case. In the said case, petitioner E.B. Villarosa & Partner
Co. Ltd. (hereafter Villarosa) with principal office address at 102 Juan Luna St., Davao
City and with branches at 2492 Bay View Drive, Tambo, Paraaque, Metro Manila and
Kolambog, Lapasan, Cagayan de Oro City, entered into a sale with development
agreement with private respondent Imperial Development Corporation. As Villarosa failed
to comply with its contractual obligation, private respondent initiated a suit for breach of
contract and damages at the Regional Trial Court of Makati. Summons, together with the
complaint, was served upon Villarosa through its branch manager at Kolambog,
Lapasan, Cagayan de Oro City. Villarosa filed a Special Appearance with Motion to
Dismiss on the ground of improper service of summons and lack of jurisdiction. The trial
court denied the motion and ruled that there was substantial compliance with the rule,
thus, it acquired jurisdiction over Villarosa. The latter questioned the denial before us in
its petition for certiorari. We decided in Villarosas favor and declared the trial court
without jurisdiction to take cognizance of the case. We held that there was no valid
1awphi1.nt
service of summons on Villarosa as service was made through a person not included in
the enumeration in Section 11, Rule 14 of the 1997 Rules of Civil Procedure, which
revised the Section 13, Rule 14 of the 1964 Rules of Court. We discarded the trial courts
basis for denying the motion to dismiss, namely, private respondents substantial
compliance with the rule on service of summons, and fully agreed with petitioners
assertions that the enumeration under the new rule is restricted, limited and exclusive,
following the rule in statutory construction that expressio unios est exclusio alterius. Had
the Rules of Court Revision Committee intended to liberalize the rule on service of
summons, we said, it could have easily done so by clear and concise language. Absent a
manifest intent to liberalize the rule, we stressed strict compliance with Section 11, Rule
14 of the 1997 Rules of Civil Procedure.
Neither can herein petitioners invoke our ruling in Millenium to support their position for
said case is not on all fours with the instant case. We must stress that Millenium was
decided when the 1964 Rules of Court were still in force and effect, unlike the instant
case which falls under the new rule. Hence, the cases 15 cited by petitioners where we
upheld the doctrine of substantial compliance must be deemed overturned by Villarosa,
which is the later case.
At this juncture, it is worth emphasizing that notice to enable the other party to be heard
and to present evidence is not a mere technicality or a trivial matter in any administrative
or judicial proceedings. The service of summons is a vital and indispensable ingredient of
due process.16 We will deprive private respondent of its right to present its defense in this
multi-million peso suit, if we disregard compliance with the rules on service of summons.
26
 CIVIL PROCEDURE CASES Summons (Rule 14)
On the second issue, petitioners claim that private respondents motion to lift order of
default was not in order for it was filed late, contrary to the provision in sub-paragraph
(b), Section 3,17 Rule 9 of the 1997 Rules of Civil Procedure, which requires filing of the
motion after notice but before judgment. Also, the motion was (a) not under oath; (b) did
not show the fraud, accident, mistake or excusable neglect that caused private
respondents failure to answer; and (c) did not show private respondents meritorious
defense.

Private respondent, in turn, argues that since service upon it was invalid, the trial court
did not acquire jurisdiction over it. Hence, all the subsequent proceedings in the trial
court are null and void, including the order of default. This renders the second issue now
moot and academic.

We find merit in private respondents submissions. Since we have ruled that service of
summons upon private respondent through its filing clerk cannot be considered valid, it
necessarily follows therefore that the Regional Trial Court of Pasay City did not acquire
jurisdiction over private respondent.18 Consequently, all the subsequent proceedings held
before it, including the order of default, are null and void. 19 As private respondent points
out, the second issue has become moot and academic.

WHEREFORE, the instant petition is DENIED. The questioned decision, as well as the
resolution, of the Court of Appeals in CA-G.R. SP No. 54649 are AFFIRMED. Costs
against petitioners.

SO ORDERED.

27

G.R. No. 159590 October 18, 2004
HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, petitioner, vs.
CECILIA DIEZ CATALAN, respondent.
x----------------------------x
G.R. No. 159591 October 18, 2004
HSBC INTERNATIONAL TRUSTEE LIMITED, petitioner, vs. CECILIA DIEZ
CATALAN, respondent.
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 the reversal of
the consolidated Decision,1 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.
01-11372, due to HSBANKs alleged wanton refusal to pay her the value of five
HSBANK checks issued by Frederick Arthur Thomson (Thomson) amounting to
HK$3,200,000.00.2
On February 7, 2001, summons was served on HSBANK at the Enterprise Center, Tower
I, Ayala Avenue corner Paseo de Roxas St., Makati City.3 HSBANK filed a Motion for
Extension of Time to File Answer or Motion to Dismiss dated February 21, 2001. 4 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 HSBANK; and (e) plaintiff engages in forum-shopping.5
On September 10, 2001, Catalan filed an Amended Complaint impleading petitioner
HSBC TRUSTEE as co-defendant and invoking Article 19 of the Civil Code as basis for
her cause of action.6
The Amended Complaint alleges:
CIVIL PROCEDURE CASES Summons (Rule 14)
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. DATE AMOUNT
807852 Mar. 15, 1997 $600,000.00
807853 Mar. 17, 1997 800,000.00
807854 Mar. 17, 1997 600,000.00
807855 Mar. 22, 1997 600,000.00
807856 Mar. 23, 1997 600,000.00
TOTAL $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
funded. On March 18, 1997, Thomson wrote a letter to a certain Ricky Sousa 7 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
28

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 to liability for abuse of right. 8
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 damages, attorneys fees and litigation
expenses.9
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 re-deposit the checks or make a
formal protest; (d) the RTC has not acquired jurisdiction over the person of HSBANK for
CIVIL PROCEDURE CASES Summons (Rule 14)
improper service of summons; and, (e) it did not submit to the jurisdiction of the RTC by
filing a motion for extension of time to file a motion to dismiss. 10
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 the RTC over
it.11 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 HSBC TRUSTEE. 12
On May 15, 2002, the RTC issued an Order denying the two motions to dismiss. 13 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 14 but both
proved futile as they were denied by the RTC in an Order dated December 20, 2002. 15
On February 21, 2003, Catalan moved to declare HSBANK and HSBC TRUSTEE in
default for failure to file their answer to the amended complaint.
29

On March 5, 2003, HSBANK and HSBC TRUSTEE filed separate petitions for certiorari
and/or prohibition with the CA, docketed as CA-G.R. SP Nos. 75756 16 and
75757,17 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 prohibition then
pending with the CA."18
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 petitions for
certiorari.19 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.
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
CIVIL PROCEDURE CASES Summons (Rule 14)
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 SUBMITTING AN ANSWER TO THE
AMENDED COMPLAINT.20
In G.R. No. 159591, HSBC TRUSTEE also assigns the foregoing first, second and fifth
errors as its own.21 In addition, it claims that:
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT
ORDERING THE DISMISSAL OF THE AMENDED COMPLAINT AGAINST
HSBC TRUSTEE DESPITE THE FACT IT HAS NOT BEEN DULY SERVED
WITH SUMMONS.22
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
30

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 therein? 23 The inquiry is into the
sufficiency, not the veracity of the material allegations. 24 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 presented by the defendants. 25
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
CIVIL PROCEDURE CASES Summons (Rule 14)
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 thereby committed for which the
wrongdoer must be held responsible. 26 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 prudence and in good faith; but not when he acts with
negligence or abuse.27 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 intention to injure another.28
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 faith;
and (c) for the sole intent of prejudicing or injuring another.29
In this instance, after carefully examining the amended complaint, we are convinced that
the allegations therein are in the nature of an action 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 certifies 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 some of the claims asserted therein. 30
31

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 judicata and
thus would cause the dismissal of the rest.31
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 the other.32
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 causes of action are not the
same.33 Consequently, HSBANKs reliance on the principle of forum-shopping is clearly
misplaced.
CIVIL PROCEDURE CASES Summons (Rule 14)
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 the persons
voluntary appearance in court.34
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 File Answer
or Motion to Dismiss.35HSBANK 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 considered voluntary
submission to the jurisdiction of the court. 36 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" 37 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 court. 38 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
cautelam before 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
32

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.
CIVIL PROCEDURE CASES Summons (Rule 14)
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.

In French Oil Mill Machinery Co., Inc. vs. Court of Appeals, 39 we had occasion to rule that SO ORDERED.
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" and the court in
determining such fact need not go beyond the allegations therein.40

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 sorcery; extracting
substance out of nothingness.41

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 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 undertaken by
the RTC is therefore null and void.42Accordingly, the complaint against HSBC TRUSTEE
should have been dismissed for lack of jurisdiction over it.

33

G.R. No. 147530 June 29, 2005
PABLO B. CASIMINA, then General Manager of the Philippine Fisheries
Development Authority, petitioner, vs. HON. EMILIO B. LEGASPI, in his capacity as
Presiding Judge of RTC of Iloilo, Branch 22 and EMMANUEL T.
ILLERA, respondents.
Before us is a petition for review under Rule 45 of the Rules of Civil Procedure for the
nullification of the decision dated August 18, 2000 of Hon. Emilio B. Legaspi, presiding
judge of the Regional Trial Court of Iloilo City, Branch 22 in Civil Case No. 00-26187,
directing petitioner to desist from giving effect to the re-assignment of private respondent
from his permanent station in Iloilo City to the Quezon City office.
The facts follow.
Private respondent Emmanuel T. Illera was the Port Manager of the Iloilo Fishing Port
Complex (IFPC) while petitioner Pablo B. Casimina was the then General Manager of the
Philippine Fisheries Development Authority (PFDA) with offices in Quezon City.
On March 17, 2000, petitioner Casimina issued Special Order No. 82 1 re-assigning
private respondent from Iloilo to the central office in Quezon City:
17 March 2000
SPECIAL ORDER
No. 82
Series of 2000
Subject: REASSIGNMENT OF PERSONNEL
In the exigency of the service, Mr. EMMANUEL T. ILLERA, Port Manager of the Iloilo
Fish Port Complex (IFPC) is hereby reassigned to the Central Office of the General
Manager effective 03 April 2000. To assume responsibility of over-all port administration,
Engr. TITO C. COSEJO, Port Manager, Navotas Fish Port Complex (NFPC) is hereby re-
assigned and designated as Acting Port Manager of the Iloilo Fish Port Complex.
Mr. Illera and Engr. Cosejo should immediately clear themselves of their administrative
accountabilities before proceeding to their new place of assignment.
This Order shall remain effective until revoked in writing by the undersigned.
CIVIL PROCEDURE CASES Summons (Rule 14)
(SGD.) PABLO B. CASIMINA
General Manager
On March 22, 2000, private respondent sent a memorandum 2 to petitioner praying for a
reconsideration of the above order. He wrote
22 March 2000
M E M O R AN D U M
F O R: The General Manager, PFDA
T H R U: The Asst. General Manager, PFDA
F R O M: The Port Manager, PFDA-IFPC
SUBJECT: REASSIGNMENT
In the late afternoon of 21 March 2000, S.O. no. 82 s. 2000 was faxed to my office. I was
surprised when my staff gave this communication to me the next day because
considering my transfer or any employees transfers for that matter would have far
reaching official and personal consequences as well, I expected that this matter should
have at least first been discussed with me. As it is I do not know for what reasons if any I
am being reassigned or even what I am supposed to be doing in your office when I get
there. The S.O. itself is silent on these matters.
My situation becomes quite ironic when we look at S.O. no. 81 s. 2000 which is dated 14
March 2000. Before this Order referring to Ms. Irma Catains detail to Central Office was
even prepared, Ms. Catain first talked to you, me and Atty. Paz to whose office she will
be assigned. When we accepted her personal reasons for reassignment our offices
worked out the details of her transfer and so the Special Order was issued. If you will
recall, last 18 January 2000 an undated S.O. No. 024 was issued transferring Engr. P.
Zapanta, the IFPC Acting EMD chief to General Santos and no prior consultation was
also done. I thought with the procedure observed in Ms. Catains case all that was
behind us.
In view therefore of the above I am requesting that S.O. No. 82 s.2000 be reconsidered.
(SGD.) EMMANUEL T. ILLERA
34

On March 29, 2000, petitioner issued a memorandum to private respondent stating
3
therein the reason for the re-assignment. He explained
29 March 2000
M E M O R AN D U M
T O: The Port Manager, IFPC
F R O M: The General Manager
SUBJECT: Reassignment to Central Office
Your response dated 22 March 2000 to Special Order No. 82 Series of 2000 regarding
your reassignment to the Central Office is noted.
While in the Central Office, you are expected to help review and formulate credit and
collection policies that would negate the accumulation of uncollected accounts
receivables, in addition to the other duties that may be assigned to you in the interest of
the service.
In this connection, you are hereby ordered to cease and desist from the further
performance of your duties as Port Manager of the Iloilo Fish Port Complex effective 03
April 2000 and to assume duties and responsibilities as stated.
For strict compliance.
(SGD.) PABLO B. CASIMINA
After receiving the memorandum, private respondent immediately filed a case for
injunction with prayer for temporary restraining order and a writ of preliminary injunction
against petitioner in the RTC of Iloilo, Branch 22 docketed as Civil Case No. 00-26187, to
restrain petitioner from transferring him to the central office in Quezon City.
On April 14, 2000, petitioner, through counsel, filed an omnibus motion for the dismissal
of the complaint on the grounds of lack of jurisdiction over his person and the subject
matter, and lack of cause of action. He averred that he never received any summons or
copy of the complaint against him, hence, the court never acquired jurisdiction over his
person. He further contended that the case involved personnel movement of a
CIVIL PROCEDURE CASES Summons (Rule 14)
government employee in the public service and should have been appealed to the Civil
Service Commission instead of the regular courts.
The trial court denied petitioners motion to dismiss the complaint against him and
granted the writ of preliminary injunction prayed for by private respondent ordering
petitioner to "desist from giving effect to the re-assignment of plaintiff (herein private
respondent) from his permanent station in Iloilo City to the Quezon City office." 4
Petitioner moved for a reconsideration of the above decision but it was denied, hence,
this appeal. He raises the following as the issues for our consideration:
A. Whether or not public respondent, Hon. Emilio B. Legaspi, in his capacity as
Presiding Judge of the Regional Trial Court of Iloilo, Branch 22, exercised grave
abuse of discretion which is tantamount to lack of or in excess of jurisdiction in
deciding the case when the said trial court has not acquired jurisdiction over the
person of the petitioner and the subject matter of the case;
B. Whether or not the instant case should be dismissed for lack of cause of
action on the ground of private respondents failure to exhaust administrative
remedies.5
Petitioner contends that the court a quo did not acquire jurisdiction over his person
because the summons, together with a copy of the complaint, was not personally served
on him. He argues that the summons was served by the sheriff in the PFDA office in the
Iloilo Fishing Port Complex while his office was in Quezon City. He further contends that
when Assistant Government Corporate Counsel Reynaldo R. Tansioco, Government
Corporate Attorney Ruben S. de la Paz and Government Corporate Attorney Mariano C.
Alojado appeared in court during the hearing of the motion for the issuance of a
preliminary injunction on April 18, 2000, they did so only to inform the court that they had
filed an omnibus motion to dismiss the complaint against petitioner on the ground of lack
of jurisdiction over his person and over the subject matter of the case.
We find the petition meritorious.
A court acquires jurisdiction over a person either through a valid service of summons or
the persons voluntary appearance in court. A court must necessarily have jurisdiction
over a party for the latter to be bound by a court decision. 6
35

Generally accepted is the principle that no man shall be affected by any proceeding to
which he is a stranger, and strangers to a case are not bound by judgment rendered by
the court.7
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 may acquire jurisdiction over his
person.8 As a rule, summons should be personally served on the defendant. 9 It is only
when summons cannot be served personally within a reasonable period of time that
substituted service may be resorted to. 10 The Rules specify two modes for effecting
substituted service of summons, to wit:
a) by leaving copies of the summons at the defendants residence with some
person of suitable age and discretion then residing therein, or
b) by leaving the copies at defendants office or regular place of business with
some competent person in charge thereof.11
Here, petitioner never received the summons against him, whether personally or in his
office. The records show that petitioners official address as the General Manager of the
Philippine Fisheries Development Authority (PFDA) was in Quezon City. Yet, the
summons, together with a copy of the complaint, was served not in his Manila office but
in PFDAs Iloilo branch office and received by the records receiving officer there. We
have held that the failure to faithfully, strictly and fully comply with the requirements of
substituted service renders the service ineffective. 12
In ruling that there was a valid service of summons, respondent judge "presumed that
the said Records Receiving Officer (was) authorized to receive the communication or
court processes addressed to the defendant."13 He further surmised and held that:
One thing sure is, he forwarded it to their Manila, Quezon City Central Office. In fact,
Engr. Tito Cosejo who briefly acted as the Department Manager of the Iloilo Fishing Port
Complex, appeared in Court during the summary hearing on the plaintiffs prayer for the
issuance of the TRO on April 4, 2000 and informed the Court that the summons was
received by their Central Office when defendant was on his way to the province. There
was therefore substantial compliance of the rule on service of summons.
We disagree.
The doctrine of substantial compliance requires that for there to be a valid service of
summons, actual receipt of the summons by the defendant through the person served
CIVIL PROCEDURE CASES Summons (Rule 14)
must be shown. We further require that where there is substituted service, there should
14
be a report indicating that the person who received the summons in the defendants
behalf was one with whom petitioner had a relation of confidence ensuring that the latter
would receive or would be notified of the summons issued in his name. 15 None of these
was observed in the case at bar.
We cannot infer actual receipt of summons by petitioner from the fact that the
government corporate counsel filed a motion to dismiss the case against him and Mr.
Cosejo appeared on his behalf during the summary hearing for the issuance of a
temporary restraining order to ask for the postponement of the case. It is well-settled that
a party who makes a special appearance in court challenging the jurisdiction of said
court based on the ground of invalidity of summons, among others, cannot be considered
to have submitted himself to the jurisdiction of the court. 16 Even the assertion of
affirmative defenses, aside from lack of jurisdiction over the person of the defendant,
cannot be considered a waiver of the defense of lack of jurisdiction over such person. 17
Since the trial court did not acquire jurisdiction over the person of petitioner, he could not
have been bound by the decision of respondent judge ordering him to desist from
transferring private respondent from his station in Iloilo City to the central office in
Quezon City. Any decision rendered without jurisdiction is a total nullity and may be
struck down at any time, even on appeal, before this Court.
On the issue of lack of jurisdiction over the subject matter, we agree with petitioner that
this case falls within the jurisdiction of the Civil Service Commission (CSC) because it
involves the movement of government personnel to promote order and efficiency in
public service. The 1987 Constitution specifically mandates that:
Section 3. The Civil Service Commission, as the central personnel agency of the
government, shall establish a career service and adopt measures to promote morale,
efficiency, integrity, responsiveness, progressiveness, and courtesy in the civil
service. It shall strengthen the merits and rewards system, integrate all human
resources development programs for all levels and ranks, and institutionalize a
management climate conducive to public accountability. It shall submit to the President
and the Congress an annual report on its personnel programs.18 (emphasis ours)
Personnel actions, i.e., appointments, promotions, transfers, re-assignments, etc., are
specifically provided for in Section 26 (3), Chapter 5, Book V, Subtitle A, of Executive
Order No. 292, or the Administrative Code of 1987. Thus,
36

Section 26. Personnel Actions. xxx any action denoting the movement or progress of
personnel in the civil service shall be known as personnel action. Such action shall
include appointment through certification, promotion, transfer, reinstatement, re-
employment, detail, reassignment, demotion, and separation. All personnel actions shall
be in accordance with such rules, standards, and regulations as may be promulgated by
the Commission.
CIVIL PROCEDURE CASES Summons (Rule 14)
to take cognizance of the case without private respondent first exhausting the
administrative remedies available to him.
WHEREFORE, foregoing premises considered, the petition is hereby GRANTED. The
decision in Civil Case No. 00-26187, and the order denying the motion for its
reconsideration, are hereby ANNULLED AND SET ASIDE.SO ORDERED.

xxx xxx xxx

(3) Transfer. A transfer is a movement from one position to another which is of equivalent
rank, level, or salary without break in service involving the issuance of an appointment.

It shall not be considered disciplinary when made in the interest of public

service, in which case, the employee concerned shall be informed of the reason
therefore. If the employee believes that there is no justification for the transfer, he
may appeal his case to the Commission. (emphasis ours)

xxx xxx xxx

While we are aware that the power to transfer and re-assign government employees
from one office to another can be abused by some unscrupulous government officials,
not all transfers, however, amount to removal from office. 19

(N)either does illegality attach to the transfer of an employee from his assigned station
to the main office, effected in good faith and in the interest of the service pursuant to
Sec. 32 of the Civil Service Act.20

Here, petitioner ordered the transfer of private respondent from the Iloilo branch to the
main office in Manila in the exigency of the service and in order to

help review and formulate credit and collection policies that would negate the
accumulation of uncollected accounts receivables, in addition to the other duties that
may be assigned to (him) in the interest of the service.21

There is nothing to show from the facts presented to us that the order transferring private
respondent to Manila was done in bad faith or motivated by ill will. We thus find his
refusal to transfer to the main office to be without basis.

In any event, if private respondent believed that his transfer was unjustified, his remedy
was to appeal to the Civil Service Commission. 22 It was therefore wrong for the trial court
37

G.R. No. 155488 December 6, 2006
ERLINDA R. VELAYO-FONG, petitioner, vs.SPOUSES RAYMOND and MARIA HEDY
VELAYO, respondents.
Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure seeking the reversal of the Decision 1 of the Court of Appeals (CA) dated
May 14, 2002 in CA-G.R. CV No. 54434 which affirmed the Decision of the Regional Trial
Court, Branch 105, Quezon City (RTC) in Civil Case No. Q-93-17133; and the CA
Resolution2 dated October 1, 2002 which denied petitioner's motion for reconsideration.
The procedural antecedents and factual background of the case are as follows:
On August 9, 1993, Raymond Velayo (Raymond) and his wife, Maria Hedy Velayo
(respondents) filed a complaint for sum of money and damages with prayer for
preliminary attachment against Erlinda R. Velayo-Fong (petitioner), Rodolfo R. Velayo, Jr.
(Rodolfo Jr.) and Roberto R. Velayo (Roberto). 3 Raymond is the half-brother of petitioner
and her co-defendants.
In their Complaint, respondents allege that petitioner, a resident of 1860 Alamoana
Boulevard, Honolulu, Hawaii, USA, and her co-defendants, who are residents of the
Philippines, made it appear that their common father, Rodolfo Velayo, Sr. (Rodolfo Sr.)
and petitioner had filed a complaint against Raymond before the National Bureau of
Investigation (NBI), accusing Raymond of the crimes of estafa and kidnapping a minor;
that petitioner and her co-defendants also requested that respondents be included in the
Hold Departure List of the Bureau of Immigration and Deportation (BID) which was
granted, thereby preventing them from leaving the country and resulting in the
cancellation of respondents' trips abroad and caused all of respondents' business
transactions and operations to be paralyzed to their damage and prejudice; that
petitioner and her co-defendants also filed a petition before the Securities and Exchange
Commission (SEC) docketed as Case No. 4422 entitled "Rodolfo Velayo Sr. et al. v.
Raymond Velayo et al." which caused respondents' funds to be frozen and paralyzed the
latters' business transactions and operations to their damage and prejudice. Since
petitioner was a non-resident and not found in the Philippines, respondents prayed for a
writ of preliminary attachment against petitioner's properties located in the Philippines.
Before respondents' application for a writ of preliminary attachment can be acted upon
by the RTC, respondents filed on September 10, 1993 an Urgent Motion praying that the
summons addressed to petitioner be served to her at Suite 201, Sunset View Towers
Condominium, Roxas Boulevard, Pasay City and at No. 5040 P. Burgos Street, T. Towers
CIVIL PROCEDURE CASES Summons (Rule 14)
Condominium, Makati. In its Order dated September 13, 1993, the RTC granted the said
4
motion.5
The Process Server submitted the Officer's Return, to wit:
THIS IS TO CERTIFY, that after several failed attempts to serve the copy of
summons and complaint issued in the above-entitled case at the given
addresses of defendant Erlinda Velayo as mentioned in the Order of this Court
dated September 13, 1993, finally, on the 23 rd day of September, 1993, at the
instance of herein plaintiffs through counsel, undersigned was able to SERVED
(sic) personally upon defendant Erlinda Velayo the copy of summons together
with the thereto attached copy of the complaint, not at her two (2) given
addresses, but at the lobby of Intercontinental Hotel, Makati, Metro Manila, right
in the presence of lobby counter personnel by the name of Ms. A. Zulueta, but
said defendant refused to sign in receipt thereof.
I FURTHER CERTIFY, that on the 27th day of September, 1993, copy of the same
WAS SERVED personally upon the other defendant Rodolfo R. Velayo, Jr., at
No. Block 57, Lots 17 and 19, G. Sanchez Street, BF Resort Village, Las Pias,
Metro Manila, but who also refused to sign in receipt thereof.
WHEREFORE, original copy of the summons is now being respectfully returned
to the Honorable Court DULY SERVED.
Quezon City, Philippines, September 30, 1993.6
Upon ex-parte motions7 of respondents, the RTC in its Order dated November 23, 1993
and January 5, 1994, declared petitioner and her co-defendant in default for failure to file
an answer and ordered the ex-parte presentation of respondents' evidence. 8
On June 15, 1994, the RTC rendered its Decision in respondents' favor, the dispositive
portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering the
defendants to pay the plaintiffs:
1. the amount of P65,000.00 as actual damages;
2. the amount of P200,000.00 as moral damages;
38

3. Attorney's fees in the amount of P5,000,00 it being a judgment by default; and
4. cost of suit.
SO ORDERED.9
On September 1, 1994, petitioner filed a Motion to Set Aside Order of Default claiming
that she was prevented from filing a responsive pleading and defending herself against
respondents' complaint because of fraud, accident or mistake; that contrary to the
Officer's Return, no summons was served upon her; that she has valid and meritorious
defenses to refute respondents' material allegations. 10 Respondents opposed said
Motion.11
In its Order dated May 29, 1995, the RTC denied petitioner's Motion ruling that the
presumption of regularity in the discharge of the function of the Process Server was not
sufficiently overcome by petitioner's allegation to the contrary; that there was no evident
reason for the Process Server to make a false narration regarding the service of
summons to defaulting defendant in the Officer's Return.12
On September 4, 1995, respondents filed a Motion for Execution. 13 On September 22,
1995, petitioner filed an Opposition to Motion for Execution contending that she has not
yet received the Decision and it is not yet final and executory as against her.14
In its Order dated January 3, 1996, the RTC, finding that the Decision dated June 15,
1994 and the Order dated May 29, 1995 were indeed not furnished or served upon
petitioner, denied respondents' motion for execution against petitioner and ordered that
petitioner be furnished the said Decision and Order.15
On March 28, 1996, the RTC issued an Order directing the issuance of the writ of
execution against petitioner's co-defendant.16
On May 23, 1996, petitioner, through her counsel, finally received the Decision dated
June 15, 1994 and the Order dated May 29, 1995.17
Petitioner filed an appeal with the CA questioning the propriety and validity of the service
of summons made upon her. Respondents opposed the appeal, arguing that the petition
should be dismissed since it raised pure questions of law, which is not within the CA's
jurisdiction to resolve under Section 2 (c) of Rule 41 of the Revised Rules of Court; that,
in any case, petitioner's reliance on the rule of extraterritorial service is misplaced; that
the judgment by default has long been final and executory since as early as August 1994
CIVIL PROCEDURE CASES Summons (Rule 14)
petitioner became aware of the judgment by default when she verified the status of the
case; that petitioner should have filed a motion for new trial or a petition for relief from
judgment and not a motion to set aside the order of default since there was already a
judgment by default.
On May 14, 2002, the CA rendered its Decision affirming the Decision and Order of the
RTC18 ruling that it (CA) has jurisdiction since the petition raised a question of fact, that
is, whether petitioner was properly served with summons; that the judgment by default
was not yet final and executory against petitioner since the records reveal and the RTC
Order dated January 3, 1996 confirmed that she was not furnished or served a copy of
the decision; that petitioner was validly served with summons since the complaint for
damages is an action in personam and only personal, not extraterritorial service, of
summons, within the forum, is essential for the acquisition of jurisdiction over her person;
that petitioner's allegations that
she did not know what was being served upon her and that somebody just hurled papers
at her were not substantiated by competent evidence and cannot overcome the
presumption of regularity of performance of official functions in favor of the Officer's
Return.
Petitioner filed a Motion for Reconsideration 19 but the CA denied it in its Resolution dated
October 1, 2002.20
Hence, the present petition anchored on the following grounds:
I
THE COURT OF APPEALS PATENTLY ERRED IN NOT RULING THAT
PETITIONER WAS NOT VALIDLY SERVED WITH SUMMONS.
II
THE COURT OF APPEALS PATENTLY ERRED IN NOT RULING THAT
PETITIONER WAS PREVENTED FROM FILING RESPONSIVE PLEADING
AND DEFENDING AGAINST RESPONDENTS' COMPLAINT BECAUSE OF
FRAUD, ACCIDENT AND MISTAKE.21
Parties filed their respective Memoranda on September 8 and 9, 2005.
39

Petitioner argues that summons should have been served through extraterritorial service
since she is a non-resident; that the RTC should have lifted the order of default since a
default judgment is frowned upon and parties should be given their day in court; that she
was prevented from filing a responsive pleading and defending against respondents'
complaint
through fraud, accident or mistake considering that the statement in the Officer's Return
that she was personally served summons is inaccurate; that
she does not remember having been served with summons during the said date but
remembers that a man hurled some papers at her while she was entering the elevator
and, not knowing what the papers were all about, she threw back the papers to the man
before the elevator closed; that she has a valid and meritorious defense to refute the
material allegations of respondents' complaint.
On the other hand, respondents contend that petitioner was validly served with summons
since the rules do not require that service be made upon her at her place of residence as
alleged in the complaint or stated in the summons; that extraterritorial service applies
only when the defendant does not reside and is not found in the Philippines; that
petitioner erred in filing a motion to set aside the order of default at the time when a
default judgment was already rendered by the RTC since the proper remedy is a motion
for new trial or a petition for relief from judgment under Rule 38; that the issue on
summons is a pure question of law which the CA does not have jurisdiction to resolve
under Section 2 (c) of Rule 41 of the 1997 Rules of Civil Procedure. 22
The Court finds it proper to resolve first whether the issue involved in the appeal filed
with the CA is a question of law and therefore not within the jurisdiction of the CA to
resolve.
In Murillo v. Consul,23 which was later adopted by the 1997 Rules of Civil Procedure, the
Court clarified the three modes of appeal from decisions of the RTC, namely: (a) ordinary
appeal or appeal by writ of error, where judgment was rendered in a civil or criminal
action by the RTC in the exercise of original jurisdiction; (b) petition for review, where
judgment was
rendered by the RTC in the exercise of appellate jurisdiction; and (c) petition for review to
the Supreme Court.
The first mode of appeal, governed by Rule 41, is taken to the Court of Appeals on
questions of fact or mixed questions of fact and law. The second mode of appeal,
CIVIL PROCEDURE CASES Summons (Rule 14)
covered by Rule 42, is brought to the Court of Appeals on questions of fact, of law, or
mixed questions of fact and law. The third mode of appeal, provided for by Rule 45, is
elevated to the Supreme Court only on questions of law.
A question of law arises when there is doubt as to what the law is on a certain state of
facts, while there is a question of fact when the doubt arises as to the truth or falsity of
the alleged facts.24 For a question to be one of law, the same must not involve an
examination of the probative value of the evidence presented by the litigants or any of
them.25 The resolution of the issue must rest solely on what the law provides on the given
set of circumstances. Once it is clear that the issue invites a review of the evidence
presented, the question posed is one of fact. 26 Thus, the test of whether a question is one
of law or of fact is not the appellation given to such question by the party raising the
same; rather, it is whether the appellate court can
determine the issue raised without reviewing or evaluating the evidence, in which case, it
is a question of law; otherwise it is a question of fact.27
Respondents' claim that the issues raised by petitioner before the CA are pure legal
questions is not tenable.
A scrutiny of petitioner's petition before the CA reveals that it raised two issues: (a) the
propriety of the service effected on a non-resident; and (b) the validity of the service
made upon her. The first is a question of law. There is indeed a question as to what and
how the law should be applied. The second is a question of fact. The resolution of said
issue entails a review of the factual circumstances that led the RTC to conclude that
service was validly effected upon petitioner. Therefore, petitioner properly brought the
case to the CA via the first mode of appeal under the aegis of Rule 41.
How may service of summons be effected on a non-resident?
Section 17,28 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 relief demanded consists, wholly or in part, in excluding the defendant from
any interest therein, or the property of the defendant has been attached in 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
40

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.
Under this provision, when the defendant is a nonresident and he is not found in the
country, summons may be served extraterritorially. There are only four instances when
extraterritorial service of summons is proper, namely: (a) when the action affects the
personal status of the plaintiffs; (b) 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; (c) 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 (d)
when the defendant's property has been attached within the Philippines. 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.
Thus, extrajudicial service of summons apply only where the action is in rem, that is, 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. The rationale
for this is that 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.29
Where the action is in personam, that is, one brought against a person on the basis of
her 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.30 Summons on the defendant must be served by handing a copy thereof to the
defendant in person, or, if he refuses to receive it, by tendering it to him. 31 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.32
CIVIL PROCEDURE CASES Summons (Rule 14)
In the present case, respondents' cause of action in Civil Case No. Q-93-17133 is
anchored on the claim that petitioner and her co-defendants maliciously instituted a
criminal complaint before the NBI and a petition before the SEC which prevented the
respondents from leaving the country and paralyzed the latters' business transactions.
Respondents pray that actual and moral damages, plus attorney's fees, be awarded in
their favor. The action instituted by respondents affect the parties alone, not the whole
world. Any judgment therein is binding only upon the parties properly impleaded. 33 Thus,
it is an action in personam. As such, personal service of summons upon the defendants
is essential in order for the court to acquire jurisdiction over their persons. 34
The Court notes that the complaint filed with the RTC alleged that petitioner is a non-
resident who is not found in the Philippines for which reason respondents initially prayed
that a writ of preliminary attachment be issued against her properties within the
Philippines to confer jurisdiction upon the RTC. However, respondents did not pursue its
application for said writ when petitioner was subsequently found physically present in the
Philippines and personal service of summons was effected on her.
Was there a valid service of summons on petitioner? The answer is in the affirmative.
Petitioner's bare allegation that the statement in the "Officer's Return that she was
personally served summons is inaccurate" is not sufficient. A process server's certificate
of service is prima facie evidence of the facts as set out in the certificate. 35 Between the
claim of non-receipt of summons by a party against the assertion of an official whose
duty is to send notices, the latter assertion is fortified by the presumption that official duty
has been regularly performed.36 To overcome the presumption of regularity of
performance of official functions in favor of such Officer's Return, the evidence against it
must be clear and convincing. Petitioner having been unable to come forward with the
requisite quantum of proof to the contrary, the presumption of regularity of performance
on the part of the process server stands.
The Court need not make a long discussion on the propriety of the remedy adopted by
petitioner in the RTC of filing a motion to set aside the order of default at a time when
there was already a judgment by default. As aptly held by the CA, since petitioner was
not furnished or served a copy of the judgment of default, there was no notice yet of such
judgment as against her. Thus, the remedy of filing a motion to set aside the order of
default in the RTC was proper.
Petitioner's argument that the RTC should have set aside the order of default and
applied the liberal interpretation of rules with a view of affording parties their day in court
41
 CIVIL PROCEDURE CASES Summons (Rule 14)
is not tenable. While indeed default orders are not viewed with favor, the party seeking to Costs against petitioner. SO ORDERED.
have the order of default lifted must

first show that her failure to file an answer or any other responsive pleading was due to
fraud, accident, mistake, or excusable neglect and then she must show that she has a
valid and meritorious defense.37

In this case, petitioner failed to show that her failure to file an answer was due to fraud,
accident, mistake or excusable neglect. Except for her bare unsupported allegation that
the summons were only thrown to her at the elevator, petitioner did not present any
competent evidence to justify the setting aside of the order of default.

Moreover, when a party files a motion to lift order of default, she must also show that she
has a meritorious defense or that something would be gained by having the order of
default set aside.38 The term meritorious defense implies that the applicant has the
burden of proving such a defense in order to have the judgment set aside. The cases
usually do not require such a strong showing. The test employed appears to be
essentially the same as used in considering summary judgment, that is, whether there is
enough evidence to present an issue for submission to the trier of fact, or a showing that
on the undisputed facts it is not clear that the judgment is warranted as a matter of
law. 39 The defendant must show that she has a meritorious defense otherwise the grant
of her motion will prove to be a useless exercise. Thus, her motion must be accompanied
by a statement of the evidence which she intends to present if the motion is granted and
which is such as to warrant a reasonable belief that the result of the case would probably
be otherwise if a new trial is granted.40

In the present case, petitioner contented herself with stating in her affidavit of merit that
the cases against respondent Raymond were filed at the instance of her father. 41 Such
allegation is a conclusion rather than a statement of facts showing a meritorious defense.
The affidavit failed to controvert the facts alleged by the respondents. Petitioner has not
shown

that she has a meritorious defense.

Thus, since petitioner failed to show that her failure file an answer was not due to fraud,
accident, mistake, or excusable neglect; and that she had a valid and meritorious
defense, there is no merit to her prayer for a liberal interpretation of procedural rules.

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of
the Court of Appeals are AFFIRMED.

42

G.R. No. 170943 September 23, 2008
PEDRO T. SANTOS, JR, Petitioner vs. PNOC EXPLORATION CORPORATION,
Respondent
This is a petition for review1 of the September 22, 2005 decision2 and December 29,
2005 resolution3 of the Court of Appeals in CA-G.R. SP No. 82482.
On December 23, 2002, respondent PNOC Exploration Corporation filed a complaint for
a sum of money against petitioner Pedro T. Santos, Jr. in the Regional Trial Court of
Pasig City, Branch 167. The complaint, docketed as Civil Case No. 69262, sought to
collect the amount of P698,502.10 representing petitioners unpaid balance of the car
loan4 advanced to him by respondent when he was still a member of its board of
directors.
Personal service of summons to petitioner failed because he could not be located in his
last known address despite earnest efforts to do so. Subsequently, on respondents
motion, the trial court allowed service of summons by publication.
Respondent caused the publication of the summons in Remate, a newspaper of general
circulation in the Philippines, on May 20, 2003. Thereafter, respondent submitted the
affidavit of publication of the advertising manager of Remate 5 and an affidavit of service
of respondents employee6 to the effect that he sent a copy of the summons by registered
mail to petitioners last known address.
When petitioner failed to file his answer within the prescribed period, respondent moved
that the case be set for the reception of its evidence ex parte. The trial court granted the
motion in an order dated September 11, 2003.
Respondent proceeded with the ex parte presentation and formal offer of its evidence.
Thereafter, the case was deemed submitted for decision on October 15, 2003.
On October 28, 2003, petitioner filed an "Omnibus Motion for Reconsideration and to
Admit Attached Answer." He sought reconsideration of the September 11, 2003 order,
alleging that the affidavit of service submitted by respondent failed to comply with
Section 19, Rule 14 of the Rules of Court as it was not executed by the clerk of court. He
also claimed that he was denied due process as he was not notified of the September
11, 2003 order. He prayed that respondents evidence ex parte be stricken off the records
and that his answer be admitted.
CIVIL PROCEDURE CASES Summons (Rule 14)
Respondent naturally opposed the motion. It insisted that it complied with the rules on
service by publication. Moreover, pursuant to the September 11, 2003 order, petitioner
was already deemed in default for failure to file an answer within the prescribed period.
In an order dated February 6, 2004, the trial court denied petitioners motion for
reconsideration of the September 11, 2003 order. It held that the rules did not require the
affidavit of complementary service by registered mail to be executed by the clerk of court.
It also ruled that due process was observed as a copy of the September 11, 2003 order
was actually mailed to petitioner at his last known address. It also denied the motion to
admit petitioners answer because the same was filed way beyond the reglementary
period.
Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004 orders of
the trial court in the Court of Appeals via a petition for certiorari. He contended that the
orders were issued with grave abuse of discretion. He imputed the following errors to the
trial court: taking cognizance of the case despite lack of jurisdiction due to improper
service of summons; failing to furnish him with copies of its orders and processes,
particularly the September 11, 2003 order, and upholding technicality over equity and
justice.
During the pendency of the petition in the Court of Appeals, the trial court rendered its
decision in Civil Case No. 69262. It ordered petitioner to pay P698,502.10 plus legal
interest and costs of suit.7
Meanwhile, on September 22, 2005, the Court of Appeals rendered its
decision8 sustaining the September 11, 2003 and February 6, 2004 orders of the trial
court and dismissing the petition. It denied reconsideration.9 Thus, this petition.
Petitioner essentially reiterates the grounds he raised in the Court of Appeals, namely,
lack of jurisdiction over his person due to improper service of summons, failure of the trial
court to furnish him with copies of its orders and processes including the September 11,
2003 order and preference for technicality rather than justice and equity. In particular, he
claims that the rule on service by publication under Section 14, Rule 14 of the Rules of
Court applies only to actions in rem, not actions in personam like a complaint for a sum
of money. He also contends that the affidavit of service of a copy of the summons should
have been prepared by the clerk of court, not respondents messenger.
The petition lacks merit.
ProprietyOf
43

Service By Publication
Section 14, Rule 14 (on Summons) of the Rules of Court provides:
SEC. 14. Service upon defendant whose identity or whereabouts are unknown. In any
action where the defendant is designated as an unknown owner, or the like,
or whenever his whereabouts are unknown and cannot be ascertained by diligent
inquiry, service may, by leave of court, be effected upon him by publication in a
newspaper of general circulation and in such places and for such times as the court
may order. (emphasis supplied)
Since petitioner could not be personally served with summons despite diligent efforts to
locate his whereabouts, respondent sought and was granted leave of court to effect
service of summons upon him by publication in a newspaper of general circulation. Thus,
petitioner was properly served with summons by publication.
Petitioner invokes the distinction between an action in rem and an action in
personam and claims that substituted service may be availed of only in an action in rem.
Petitioner is wrong. The in rem/in personam distinction was significant under the old rule
because it was silent as to the kind of action to which the rule was applicable. 10 Because
of this silence, the Court limited the application of the old rule to in rem actions only.11
This has been changed. The present rule expressly states that it applies "[i]n any
action where the defendant is designated as an unknown owner, or the like, or whenever
his whereabouts are unknown and cannot be ascertained by diligent inquiry." Thus, it
now applies to any action, whether in personam, in rem or quasi in rem.12
Regarding the matter of the affidavit of service, the relevant portion of Section 19, 13 Rule
14 of the Rules of Court simply speaks of the following:
an affidavit showing the deposit of a copy of the summons and order for publication in
the post office, postage prepaid, directed to the defendant by registered mail to his last
known address.
CIVIL PROCEDURE CASES Summons (Rule 14)
Service of summons by publication is proved by the affidavit of the printer, his foreman or
principal clerk, or of the editor, business or advertising manager of the newspaper which
published the summons. The service of summons by publication is complemented by
service of summons by registered mail to the defendants last known address. This
complementary service is evidenced by an affidavit "showing the deposit of a copy of the
summons and order for publication in the post office, postage prepaid, directed to the
defendant by registered mail to his last known address."
The rules, however, do not require that the affidavit of complementary service be
executed by the clerk of court. While the trial court ordinarily does the mailing of copies
of its orders and processes, the duty to make the complementary service by registered
mail is imposed on the party who resorts to service by publication.
Moreover, even assuming that the service of summons was defective, the trial court
acquired jurisdiction over the person of petitioner by his own voluntary
appearance in the action against him. In this connection, Section 20, Rule 14 of the
Rules of Court states:
SEC. 20. Voluntary appearance. The defendants voluntary appearance in the
action shall be equivalent to service of summons. 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. (emphasis supplied)
Petitioner voluntarily appeared in the action when he filed the "Omnibus Motion for
Reconsideration and to Admit Attached Answer." 14 This was equivalent to service of
summons and vested the trial court with jurisdiction over the person of petitioner.
EntitlementTo
Notice Of Proceedings
The trial court allowed respondent to present its evidence ex parte on account of
petitioners failure to file his answer within the prescribed period. Petitioner assails this
action on the part of the trial court as well as the said courts failure to furnish him with
copies of orders and processes issued in the course of the proceedings.
The effects of a defendants failure to file an answer within the time allowed therefor are
governed by Sections 3 and 4, Rule 9 (on Effect of Failure to Plead) of the Rules of
Court:
44

SEC. 3. Default; declaration of. If the defending party fails to answer within the
time allowed therefor, the court shall, upon motion of the claiming party with
notice to the defending party, and proof of such failure, declare the defending
party in default. Thereupon, the court shall proceed to render judgment granting the
claimant such relief as his pleading may warrant, unless the court in its discretion
requires the claimant to submit evidence. Such reception of evidence may be delegated
to the clerk of court.
SEC. 4. Effect of order of default. A party in default shall be entitled to notice of
subsequent proceedings but not to take part in the trial. (emphasis supplied)
If the defendant fails to file his answer on time, he may be declared in default upon
motion of the plaintiff with notice to the said defendant. In case he is declared in default,
the court shall proceed to render judgment granting the plaintiff such relief as his
pleading may warrant, unless the court in its discretion requires the plaintiff to submit
evidence. The defaulting defendant may not take part in the trial but shall be entitled to
notice of subsequent proceedings.
In this case, even petitioner himself does not dispute that he failed to file his answer on
time. That was in fact why he had to file an "Omnibus Motion for Reconsideration and to
Admit Attached Answer." But respondent moved only for the ex parte presentation of
evidence, not for the declaration of petitioner in default. In its February 6, 2004 order, the
trial court stated:
The disputed Order of September 11, 2003 allowing the presentation of evidence ex-
parte precisely ordered that "despite and notwithstanding service of summons by
publication, no answer has been filed with the Court within the required period and/or
forthcoming.["] Effectively[,] that was a finding that the defendant [that is, herein
petitioner] was in default for failure to file an answer or any responsive pleading
within the period fixed in the publication as precisely the defendant [could not] be found
and for which reason, service of summons by publication was ordered. It is simply
illogical to notify the defendant of the Order of September 11, 2003 simply on account of
the reality that he was no longer residing and/or found on his last known address and his
whereabouts unknown thus the publication of the summons. In other words, it was
reasonable to expect that the defendant will not receive any notice or order in his last
known address. Hence, [it was] impractical to send any notice or order to
him. Nonetheless, the record[s] will bear out that a copy of the order of September
11, 2003 was mailed to the defendant at his last known address but it was not
claimed. (emphasis supplied)
CIVIL PROCEDURE CASES Summons (Rule 14)
As is readily apparent, the September 11, 2003 order did not limit itself to permitting
respondent to present its evidence ex parte but in effect issued an order of default. But
the trial court could not validly do that as an order of default can be made only upon
motion of the claiming party.15 Since no motion to declare petitioner in default was filed,
no default order should have been issued.
To pursue the matter to its logical conclusion, if a party declared in default is entitled to
notice of subsequent proceedings, all the more should a party who has not been
declared in default be entitled to such notice. But what happens if the residence or
whereabouts of the defending party is not known or he cannot be located? In such a
case, there is obviously no way notice can be sent to him and the notice requirement
cannot apply to him. The law does not require that the impossible be done. 16 Nemo
tenetur ad impossibile. The law obliges no one to perform an impossibility.17 Laws and
rules must be interpreted in a way that they are in accordance with logic, common sense,
reason and practicality.18
Hence, even if petitioner was not validly declared in default, he could not reasonably
demand that copies of orders and processes be furnished him. Be that as it may, a copy
of the September 11, 2003 order was nonetheless still mailed to petitioner at his last
known address but it was unclaimed.
CorrectnessOf
Non-Admission Of Answer
Petitioner failed to file his answer within the required period. Indeed, he would not have
moved for the admission of his answer had he filed it on time. Considering that the
answer was belatedly filed, the trial court did not abuse its discretion in denying its
admission.
Petitioners plea for equity must fail in the face of the clear and express language of the
rules of procedure and of the September 11, 2003 order regarding the period for filing the
answer. Equity is available only in the absence of law, not as its replacement. 19 Equity
may be applied only in the absence of rules of procedure, never in contravention thereof.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.
45
CIVIL PROCEDURE CASES Summons (Rule 14)

46

G.R. No. 183802 September 17, 2009
ALEXANDER TAM WONG, Petitioner, vs. CATHERINE FACTOR-
KOYAMA, Respondent.
For Review on Certiorari, under Rule 45 of the Revised Rules of Court, are the
Resolutions dated 17 January 2008 1 and 18 July 20082 of the Court of Appeals
dismissing outright the Petition for Certiorari, under Rule 65 of the same Rules, of
Alexander Tam Wong (Wong) in CA-G.R. SP No. 101860, for being the wrong remedy.
Wong intended to assail before the appellate court the Orders dated 25 September
20073 and 18 December 20074 of the Regional Trial Court (RTC), Branch 121 of
Caloocan City, which, respectively, declared him in default in Civil Case No. C-21860 and
denied his Motion to Dismiss the Complaint in said case.
The present controversy originates from a Complaint 5 dated 17 July 2007, for specific
performance, sum of money, and damages, filed with the RTC by private respondent
Catherine Factor-Koyama (Koyama) against Wong, docketed as Civil Case No. C-21860.
Koyama alleged in her Complaint that Wong deliberately refused to execute and deliver
a deed of absolute sale, and to surrender the condominium certificate of title (CCT)
pertaining to a condominium unit, particularly described as A3-4B California Garden
Square, with an area of 57.5 square meters and located at Libertad Street corner
Calbayog Street, Mandaluyong City, Metro Manila (subject property), which she had
already bought from him. Koyama further averred that she had been renting out the
subject property to foreign tourists, but Wong padlocked the same while she was in
Japan attending to her business. When she requested him to open the subject property,
he reportedly mauled her, causing her physical injuries, and also took her personal
belongings.
On 24 July 2007, the RTC issued summons 6 addressed to Wong at his residence, No. 21
West Riverside Street, San Francisco Del Monte, Quezon City. However, the original
summons and the accompanying copy of the Complaint and its Annexes were eventually
returned to the RTC by Sheriff IV Renebert B. Baloloy (Sheriff Baloloy), who indicated in
his Sheriffs Return dated 14 August 2007 that said court process should already be
deemed "DULY SERVED." According to his Return, 7 Sheriff Baloloy had repeatedly
attempted to serve the summons at Wongs residential address on 27 July 2007, 8
August 2007, and 10 August 2007, but Wong was always not around according to the
latters housemaids, Marie Sandoval (Sandoval) and Loren Lopez (Lopez). Sheriff
Baloloy then attempted to leave the summons with Criz Mira (Mira), Wongs caretaker,
who is of legal age, and residing at the same address for two and a half years, but Mira
refused to acknowledge or receive the same.
CIVIL PROCEDURE CASES Summons (Rule 14)
On 25 September 2007, after the lapse of the 15-day reglementary period 8 without Wong
filing an answer to the Complaint in Civil Case No. C-21860, Koyama moved for the RTC
to declare him in default, and to allow her to present her evidence ex parte and/or to
render judgment in her favor. The RTC set Koyamas Motion for hearing on 25 October
2007 at 8:30 in the morning or as soon as counsel and the matter may be heard. 9
On 25 September 2007, the RTC, presided by public respondent Hon. Adoracion
Angeles, issued an Order10declaring Wong in default.
Wong subsequently filed with the RTC, by registered mail sent on 5 October 2007, a
Manifestation11 claiming that he did not receive any summons from said court. According
to him, he was only informed unofficially by a tricycle driver on 27 September 2007
regarding papers from a court in Caloocan City, which the tricycle driver returned to the
court after failing to locate Wong. This prompted Wong to file an inquiry 12 dated 28
September 2007 with the Office of the Clerk of Court of the RTC of Caloocan City as
regards any case that might have been filed against him. In response, the Office of the
Clerk of Court of the RTC of Caloocan City issued a Certification 13 dated 3 October 2007
bearing the details of Civil Case No. C-21860, which Koyama had instituted against him.
Wong asserted that he would not hesitate to submit himself to the jurisdiction of the RTC,
should the proper procedure be observed.
In its Order14 dated 9 October 2007, the RTC stressed that, as early as 25 September
2007, Wong had been declared in default.
Wong, by special appearance of counsel, then filed with the RTC on 22 October 2007 a
Motion to Dismiss15 Civil Case No. C-21860, asserting, among other grounds, that there
was no service of summons upon him, hence, the RTC did not acquire jurisdiction over
his person; and that he was not given the opportunity to oppose Koyamas Motion to
have him declared in default.
In her Opposition16 to the Motion to Dismiss, filed on 5 November 2007, Koyama
maintained that there was a proper substituted service of the summons, consequently,
the RTC acquired jurisdiction over the person of Wong; and that Wong was served a
copy of the Motion to have him declared in default on 3 October 2007, as evidenced by
the Registry Return Card.17
Wong filed a Reply18 on 7 November 2007 to Koyamas aforementioned Opposition,
denying that a Loren Lopez or Criz Mira resided at his home address. Said housemaids
were fictitious, as proven by the Certificate 19 issued by Junn L. Sta. Maria, Punong
Barangay of San Francisco Del Monte, Quezon City on 7 November 2007, stating that
47

Loren Lopez and Criz Mira were not residents of 21-B Westriverside St., San Francisco
Del Monte, Quezon City.
The RTC denied Wongs Motion to Dismiss for lack of merit. In its Order 20 dated 18
December 2007, the RTC declared that Sheriff Baloloy validly resorted to a substituted
service of the summons, pursuant to Section 7, Rule 14 of the Revised Rules of
Court.21 Sheriff Baloloys performance of his official duty enjoyed the presumption of
regularity, and Wong failed to rebut the same by merely presenting
the Barangay Certificate, which is "not a role model of accuracy," especially when
referring to mere transient residents in the area, such as lessees, housemaids or
caretakers.
Wong went before the Court of Appeals via a Petition for Certiorari22 under Rule 65 of the
Revised Rules of Court contending that the RTC committed grave abuse of discretion,
amounting to lack or excess of jurisdiction, in issuing its Orders dated 25 September
2007 and 18 October 2007 in which it, respectively, declared Wong in default in Civil
Case No. C-21860 and denied his Motion to Dismiss the Complaint in the same case.
Wong insisted that there was no valid service of summons upon him, and that he was not
notified of Koyamas Motion to have him declared in default.
The Court of Appeals, in a Resolution 23 dated 17 January 2008, dismissed Wongs
Petition for Certiorari outright for being the improper remedy.
According to the Court of Appeals, Wong should have availed himself of the following
remedies for RTC Order dated 25 September 2007, declaring him in default:
As to the first assailed Order declaring [Wong] in default, the remedies available to a
party declared in default were reiterated in Cerezo v. Tuazon, viz:
a) The defendant in default may, at any time after discovery thereof and before
judgment, file a motion under oath to set aside the order of default on the ground
that his failure to answer was due to fraud, accident, mistake or excusable
negligence, and that he has a meritorious defense (Sec. 3, Rule 18 [now Sec.
3(b), Rule 9]);
b) If the judgment has already been rendered when the defendant discovered the
default, but before the same has become final and executory, he may file a
motion for new trial under Section 1(a) of Rule 37;
CIVIL PROCEDURE CASES Summons (Rule 14)
c) If the defendant discovered the default after the judgment has become final
and executory, he may file a petition for relief under Section 2 [now Section 1] of
Rule 38; and
d) He may also appeal from the judgment rendered against him as contrary to
the evidence or to the law, even if no petition to set aside the order of default has
been presented by him (Sec. 2, Rule 41).
Moreover, a petition for certiorari to declare the nullity of a judgment by default is also
available if the trial court improperly declared a party in default, or even if the trial court
properly declared a party in default, if grave abuse of discretion attended such
declaration.24
As for the 18 December 2007 Order of the RTC denying Wongs Motion to Dismiss, the
appellate court held:
As to the second assailed Order denying petitioners Motion to Dismiss, the said Order is
interlocutory and is not a proper subject of a petition for certiorari. Even in the face of an
error of judgment on the part of a judge denying the motion to dismiss, certiorari will not
lie. Certiorari is not a remedy to correct errors of procedure.
Let it be stressed at this point that basic rule that when a motion to dismiss is denied by
the trial court, the remedy is not to file a petition for certiorari, but to appeal after a
decision has been rendered. An order denying a motion to dismiss is interlocutory, and
so the proper remedy in such a case is to appeal after a decision has been rendered. A
writ of certiorari is not intended to correct every controversial interlocutory ruling; it is
resorted only to correct a grave abuse of discretion or a whimsical exercise of judgment
equivalent to lack of jurisdiction. Its function is limited to keeping an inferior court within
its jurisdiction and to relieve persons from arbitrary actsacts which courts or judges
have no power or authority in law to perform. It is not designed to correct erroneous
findings and conclusions made by the courts.25
Ultimately, the Court of Appeals decreed:
WHEREFORE, premises considered, the Petition is DISMISSED outright.26
Wong filed a Motion for Reconsideration27 of the foregoing Resolution on 6 February
2008, but the Court of Appeals denied the same for lack of merit in a Resolution 28 dated
18 July 2008.
48

Hence, Wong filed the instant Petition before this Court.
In the meantime, since neither the Court of Appeals nor this Court issued a Temporary
Restraining Order (TRO) or writ of preliminary injunction enjoining the proceedings in
Civil Case No. C-21860, the RTC continued hearing the said case. In an Order 29 dated
20 November 2008, the RTC motu proprio allowed Wong to cross-examine Koyama
during the hearing on 23 January 2009, even though it did not lift its 25 September 2007
Order, which had declared him in default. The RTC reasoned:
The Court believes that the interest of justice and fair play would be better served if the
[herein petitioner Wong] would be given the chance to cross examine the witness, and
for which reason the Court suspends the proceedings and resets the continuation of the
hearing of this case on January 23, 2009 at 8:30 a.m.
Wong, through counsel, actively participated in the hearing held on 23 January 2009 by
extensively cross-examining Koyama.30 After said hearing, he filed before this Court, on
18 February 2009, a Motion for Clarification31 as to the validity of the RTC Order dated 20
November 2008 allowing him to cross-examine Koyama, but without lifting the Order of
Default.
On 8 July 2009, the RTC rendered its Decision 32 in Civil Case No. C-21860, the
dispositive of which reads:
WHEREFORE, premises considered, the contract of sale between the parties relative to
the sale of the condominium unit is hereby RESCINDED and the [herein petitioner Wong]
is ordered to pay the [herein respondent Koyama] the sum of TWO MILLION TWO
HUNDRED FOUR THOUSAND (Php2,204,000.00) PESOS with legal rate of interest
from the date of demand on May 25, 2007; to pay the plaintiff the sum of TWO
HUNDRED THOUSAND (Php200,000.00) PESOS as and for attorneys fees; to pay
another sum of TWO THOUSAND FIVE HUNDRED (Php2,500.00) PESOS per court
appearance for six (6) times and to pay the costs of suit.
Wong avers herein that the RTC did not acquire jurisdiction over his person since he was
not served the summons.
CIVIL PROCEDURE CASES Summons (Rule 14)
Summons is a writ by which the defendant is notified of the action brought against him or
her. In a civil action, jurisdiction over the defendant is acquired either upon a valid service
of summons or the defendant's voluntary appearance in court. When the defendant does
not voluntarily submit to the court's jurisdiction or when there is no valid service of
summons, any judgment of the court, which has no jurisdiction over the person of the
defendant, is null and void.33
Where the action is in personam, i.e., one that seeks to impose some responsibility or
liability directly upon the person of the defendant through the judgment of a court, 34 and
the defendant is in the Philippines, the service of summons may be made through
personal or substituted service in the manner described in Sections 6 and 7, Rule 14 of
the Revised Rules of Court, which provide:
SEC. 6. Service in person on defendant. Whenever practicable, the summons shall be
served by handing a copy thereof to the defendant in person, or if he refuses to receive
and sign for it, by tendering it to him.
SEC. 7. Substituted service. If, for justifiable causes, 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 defendants residence with some person of
suitable age and discretion then residing therein; or (b) by leaving the copies at the
defendants office or regular place of business with some competent person in charge
thereof.
It is well-established that a summons upon a respondent or a defendant must be served
by handing a copy thereof to him in person or, if he refuses to receive it, by tendering it to
him. Personal service of summons most effectively ensures that the notice desired under
the constitutional requirement of due process is accomplished. 35The essence of personal
service is the handing or tendering of a copy of the summons to the defendant himself. 36
Under our procedural rules, service of summons in person of defendants is generally
preferred over substituted service.37 Substituted service derogates the regular method of
personal service. It is an extraordinary method since it seeks to bind the respondent or
the defendant to the consequences of a suit even though notice of such action is served
not upon him but upon another to whom the law could only presume would notify him of
the pending proceedings.38
The Court requires that the Sheriffs Return clearly and convincingly show the
impracticability or hopelessness of personal service. 39 Proof of service of summons must
(a) indicate the impossibility of service of summons within a reasonable time; (b) specify
49

the efforts exerted to locate the defendant; and (c) state that the summons was served
upon a person of sufficient age and discretion who is residing in the address, or who is in
charge of the office or regular place of business, of the defendant. It is likewise required
that the pertinent facts proving these circumstances be stated in the proof of service or in
the officers return. The failure to comply faithfully, strictly and fully with all the foregoing
requirements of substituted service renders the service of summons ineffective. 40
Sheriff Baloloys Return dated 14 August 2007 described the circumstances surrounding
the service of the summons upon Wong as follows:
THIS IS TO CERTIFY that on August 27, 2007, the undersigned Sheriff IV was in receipt
of a copy of summons, complaint together with annexes in the above-entitled case
issued by this Honorable Court for service, below were the proceedings taken thereon, to
wit:
That on July 27, 2007, the undersigned went to the residence of the Defendant located at
#21 West Riverside St. San Francisco Del Monte, Quezon City to serve the said
summons, complaint and its annexes but Mr. Wong was not around. According to Ms.
Marie Sandoval, housemaid, the subject was out (sic) for office;
That on August 8, 2007, the undersigned tried to serve again the said summons,
complaint and its annexes but according again to Ms. Sandoval, the subject was out of
town;
That on August 10, 2007, the undersigned went again to the said residence to serve the
same summons, complaint and its annexes but Ms. Loren Lopez, another housemaid,
said that Mr. Wong was out again (sic) for office; and
That in the interest of justice, the undersigned left the said summons complaint and its
annexes to Mr. Wongs caretaker, Mr. Criz Mira of legal age who reside at the said
address for almost two and a half years but he refused to acknowledge/receive the said
summons.
WHEREFORE, the original summons, complaint and its annexes is hereby returned to
this Honorable Court with the information DULY SERVED.41 1avvphi1
The Court, after a careful study of Sheriff Baloloys afore-quoted Return, finds that he
improperly resorted to substituted service upon Wong of the summons for Civil Case No.
C-21860.
CIVIL PROCEDURE CASES Summons (Rule 14)
Apart from establishing that Sheriff Baloloy went to Wongs residence on three different
dates, and that the latter was not around every time, there is nothing else in the Sheriffs
Return to establish that Sheriff Baloloy exerted extraordinary efforts to locate Wong.
During his visits to Wongs residence on 27 July 2007 and 10 August 2007, Sheriff
Baloloy was informed by the housemaids that Wong was at his office. There is no
showing, however, that Sheriff Baloloy exerted effort to know Wongs office address,
verify his presence thereat, and/or personally serve the summons upon him at his
office.42 Although Wong was out of town when Sheriff Baloloy attempted to serve the
summons at the formers residence on 8 August 2007, there was no indication that
Wongs absence was other than temporary or that he would not soon return.
Evidently, the Return failed to relay if sufficient efforts were exerted by Sheriff Baloloy to
locate Wong, as well as the impossibility of personal service of summons upon Wong
within a reasonable time. Sheriff Baloloys three visits to Wongs residence hardly
constitute effort on his part to locate Wong; and Wongs absence from his residence
during Sheriff Baloloys visits, since Wong was at the office or out-of-town, does not
connote impossibility of personal service of summons upon him. It must be stressed that,
before resorting to substituted service, a sheriff is enjoined to try his best efforts to
accomplish personal service on the defendant. And since the defendant is expected to
try to avoid and evade service of summons, the sheriff must be resourceful, persevering,
canny, and diligent in serving the process on the defendant. 43
Nevertheless, even without valid service of summons, a court may still acquire
jurisdiction over the person of the defendant, if the latter voluntarily appears before it.
Section 20, Rule 14 of the Revised Rules of Court recognizes that:
Section 20. Voluntary Appearance.The defendants voluntary appearance in the action
shall be equivalent to service of summons. 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. (Emphasis ours.)
The RTC acquired jurisdiction over Wong by virtue of his voluntary appearance before it
in Civil Case No. C-21860. The Court is not referring to Wongs filing of his Motion to
Dismiss the Complaint in Civil Case No. C-21860, on the ground of lack of jurisdiction of
the RTC over his person, because that clearly does not constitute voluntary appearance.
The Court, instead, calls attention to the RTC Order dated 20 November 2008 allowing
Wong to cross-examine Koyama. Wong, through his counsel, took advantage of the
opportunity opened to him by the said Order and aggressively questioned her during the
23 January 2009 hearing, despite his knowledge that the RTC had not yet lifted the 25
September 2007 Order declaring him in default. By actively participating in the 23
50
 CIVIL PROCEDURE CASES Summons (Rule 14)
January 2009 hearing, he effectively acknowledged full control of the RTC over Civil
Case No. C-21860 and over his person as the defendant therein; he is, thus, deemed to
have voluntarily submitted himself to the jurisdiction of said trial court.

The Court further stresses the fact that the RTC already rendered a Decision in Civil
Case No. C-21860 on 8 July 2009. Wong filed with the RTC a Notice of Appeal on 10
August 2009. Given these developments, the Court deems it unnecessary to still address
the issue of whether Wong was improperly declared in default by the RTC in its Order
dated 25 September 2007. Following the remedies cited in Cerezo v. Tuazon, 44 Wong
could already raise and include said issue in his appeal of the RTC Decision dated 8 July
2009 to the Court of Appeals. The Court can no longer grant him any remedy herein
without preempting the action of the Court of Appeals on Wongs appeal of the RTC
judgment.

IN VIEW WHEREOF, the Petition is DENIED. Costs against the petitioner.

SO ORDERED.

51

G.R. No. 175799 November 28, 2011
NM ROTHSCHILD & SONS (AUSTRALIA) LIMITED, Petitioner, vs. LEPANTO
CONSOLIDATED MINING COMPANY, Respondent.
This is a Petition for Review on Certiorari assailing the Decision 1 of the Court of Appeals
dated September 8, 2006 in CA-G.R. SP No. 94382 and its Resolution 2 dated December
12, 2006, denying the Motion for Reconsideration.
On August 30, 2005, respondent Lepanto Consolidated Mining Company filed with the
Regional Trial Court (RTC) of Makati City a Complaint 3 against petitioner NM Rothschild
& Sons (Australia) Limited praying for a judgment declaring the loan and hedging
contracts between the parties void for being contrary to Article 2018 4 of the Civil Code of
the Philippines and for damages. The Complaint was docketed as Civil Case No. 05-782,
and was raffled to Branch 150. Upon respondents (plaintiffs) motion, the trial court
authorized respondents counsel to personally bring the summons and Complaint to the
Philippine Consulate General in Sydney, Australia for the latter office to effect service of
summons on petitioner (defendant).
On October 20, 2005, petitioner filed a Special Appearance With Motion to
Dismiss5 praying for the dismissal of the Complaint on the following grounds: (a) the
court has not acquired jurisdiction over the person of petitioner due to the defective and
improper service of summons; (b) the Complaint failed to state a cause of action and
respondent does not have any against petitioner; (c) the action is barred by estoppel;
and (d) respondent did not come to court with clean hands.
On November 29, 2005, petitioner filed two Motions: (1) a Motion for Leave to take the
deposition of Mr. Paul Murray (Director, Risk Management of petitioner) before the
Philippine Consul General; and (2) a Motion for Leave to Serve Interrogatories on
respondent.
On December 9, 2005, the trial court issued an Order 6 denying the Motion to Dismiss.
According to the trial court, there was a proper service of summons through the
Department of Foreign Affairs (DFA) on account of the fact that the defendant has neither
applied for a license to do business in the Philippines, nor filed with the Securities and
Exchange Commission (SEC) a Written Power of Attorney designating some person on
whom summons and other legal processes maybe served. The trial court also held that
the Complaint sufficiently stated a cause of action. The other allegations in the Motion to
Dismiss were brushed aside as matters of defense which can best be ventilated during
the trial.
CIVIL PROCEDURE CASES Summons (Rule 14)
On December 27, 2005, petitioner filed a Motion for Reconsideration. 7 On March 6, 2006,
the trial court issued an Order denying the December 27, 2005 Motion for
Reconsideration and disallowed the twin Motions for Leave to take deposition and serve
written interrogatories.8
On April 3, 2006, petitioner sought redress via a Petition for Certiorari 9 with the Court of
Appeals, alleging that the trial court committed grave abuse of discretion in denying its
Motion to Dismiss. The Petition was docketed as CA-G.R. SP No. 94382.
On September 8, 2006, the Court of Appeals rendered the assailed Decision dismissing
the Petition for Certiorari. The Court of Appeals ruled that since the denial of a Motion to
Dismiss is an interlocutory order, it cannot be the subject of a Petition for Certiorari, and
may only be reviewed in the ordinary course of law by an appeal from the judgment after
trial. On December 12, 2006, the Court of Appeals rendered the assailed Resolution
denying the petitioners Motion for Reconsideration.
Meanwhile, on December 28, 2006, the trial court issued an Order directing respondent
to answer some of the questions in petitioners Interrogatories to Plaintiff dated
September 7, 2006.
Notwithstanding the foregoing, petitioner filed the present petition assailing the
September 8, 2006 Decision and the December 12, 2006 Resolution of the Court of
Appeals. Arguing against the ruling of the appellate court, petitioner insists that (a) an
order denying a motion to dismiss may be the proper subject of a petition for certiorari;
and (b) the trial court committed grave abuse of discretion in not finding that it had not
validly acquired jurisdiction over petitioner and that the plaintiff had no cause of action.
Respondent, on the other hand, posits that: (a) the present Petition should be dismissed
for not being filed by a real party in interest and for lack of a proper verification and
certificate of non-forum shopping; (b) the Court of Appeals correctly ruled that certiorari
was not the proper remedy; and (c) the trial court correctly denied petitioners motion to
dismiss.
Our discussion of the issues raised by the parties follows:
Whether petitioner is a real party in interest
Respondent argues that the present Petition should be dismissed on the ground that
petitioner no longer existed as a corporation at the time said Petition was filed on
February 1, 2007. Respondent points out that as of the date of the filing of the Petition,
52

there is no such corporation that goes by the name NM Rothschild and Sons (Australia)
Limited. Thus, according to respondent, the present Petition was not filed by a real party
in interest, citing our ruling in Philips Export B.V. v. Court of Appeals,10 wherein we held:
A name is peculiarly important as necessary to the very existence of a corporation
(American Steel Foundries vs. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160;
Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First National Bank vs. Huntington
Distilling Co., 40 W Va 530, 23 SE 792). Its name is one of its attributes, an element of its
existence, and essential to its identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule
as to corporations is that each corporation must have a name by which it is to sue and be
sued and do all legal acts. The name of a corporation in this respect designates the
corporation in the same manner as the name of an individual designates the person
(Cincinnati Cooperage Co. vs. Bate, 96 Ky 356, 26 SW 538; Newport Mechanics Mfg.
Co. vs. Starbird, 10 NH 123); and the right to use its corporate name is as much a part of
the corporate franchise as any other privilege granted (Federal Secur. Co. vs. Federal
Secur. Corp., 129 Or 375, 276 P 1100, 66 ALR 934; Paulino vs. Portuguese Beneficial
Association, 18 RI 165, 26 A 36).11
In its Memorandum12 before this Court, petitioner started to refer to itself as Investec
Australia Limited (formerly "NM Rothschild & Sons [Australia] Limited") and captioned
said Memorandum accordingly. Petitioner claims that NM Rothschild and Sons
(Australia) Limited still exists as a corporation under the laws of Australia under said new
name. It presented before us documents evidencing the process in the Australian
Securities & Investment Commission on the change of petitioners company name from
NM Rothschild and Sons (Australia) Limited to Investec Australia Limited. 13
We find the submissions of petitioner on the change of its corporate name satisfactory
and resolve not to dismiss the present Petition for Review on the ground of not being
prosecuted under the name of the real party in interest. While we stand by our
pronouncement in Philips Export on the importance of the corporate name to the very
existence of corporations and the significance thereof in the corporations right to sue, we
shall not go so far as to dismiss a case filed by the proper party using its former name
when adequate identification is presented. A real party in interest is the party who stands
to be benefited or injured by the judgment in the suit, or the party entitled to the avails of
the suit.14 There is no doubt in our minds that the party who filed the present Petition,
having presented sufficient evidence of its identity and being represented by the same
counsel as that of the defendant in the case sought to be dismissed, is the entity that will
be benefited if this Court grants the dismissal prayed for.
CIVIL PROCEDURE CASES Summons (Rule 14)
Since the main objection of respondent to the verification and certification against forum
shopping likewise depends on the supposed inexistence of the corporation named
therein, we give no credit to said objection in light of the foregoing discussion.
Propriety of the Resort to a Petition for Certiorari with the Court of Appeals
We have held time and again that an order denying a Motion to Dismiss is an
interlocutory order which neither terminates nor finally disposes of a case as it leaves
something to be done by the court before the case is finally decided on the merits. The
general rule, therefore, is that the denial of a Motion to Dismiss cannot be questioned in
a special civil action for Certiorari which is a remedy designed to correct errors of
jurisdiction and not errors of judgment. 15 However, we have likewise held that when the
denial of the Motion to Dismiss is tainted with grave abuse of discretion, the grant of the
extraordinary remedy of Certiorari may be justified. By "grave abuse of discretion" is
meant:
[S]uch capricious and whimsical exercise of judgment that is equivalent to lack of
jurisdiction. The abuse of discretion must be grave as where the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and must be so
patent and gross as to amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act all in contemplation of law.16
The resolution of the present Petition therefore entails an inquiry into whether the Court
of Appeals correctly ruled that the trial court did not commit grave abuse of discretion in
its denial of petitioners Motion to Dismiss. A mere error in judgment on the part of the
trial court would undeniably be inadequate for us to reverse the disposition by the Court
of Appeals.
Issues more properly ventilated during the trial of the case
As previously stated, petitioner seeks the dismissal of Civil Case No. 05-782 on the
following grounds: (a) lack of jurisdiction over the person of petitioner due to the
defective and improper service of summons; (b) failure of the Complaint to state a cause
of action and absence of a cause of action; (c) the action is barred by estoppel; and (d)
respondent did not come to court with clean hands.
As correctly ruled by both the trial court and the Court of Appeals, the alleged absence of
a cause of action (as opposed to the failure to state a cause of action), the alleged
estoppel on the part of petitioner, and the argument that respondent is in pari delicto in
the execution of the challenged contracts, are not grounds in a Motion to Dismiss as
53

enumerated in Section 1, Rule 16 of the Rules of Court. Rather, such defenses raise
17
evidentiary issues closely related to the validity and/or existence of respondents alleged
cause of action and should therefore be threshed out during the trial.
As regards the allegation of failure to state a cause of action, while the same is usually
available as a ground in a Motion to Dismiss, said ground cannot be ruled upon in the
present Petition without going into the very merits of the main case.
It is basic that "[a] cause of action is the act or omission by which a party violates a right
of another."18 Its elements are the following: (1) a right existing in favor of the plaintiff, (2)
a duty on the part of the defendant to respect the plaintiff's right, and (3) an act or
omission of the defendant in violation of such right. 19 We have held that to sustain a
Motion to Dismiss for lack of cause of action, the complaint must show that the claim for
relief does not exist and not only that the claim was defectively stated or is ambiguous,
indefinite or uncertain.20
The trial court held that the Complaint in the case at bar contains all the three elements
of a cause of action, i.e., it alleges that: (1) plaintiff has the right to ask for the declaration
of nullity of the Hedging Contracts for being null and void and contrary to Article 2018 of
the Civil Code of the Philippines; (2) defendant has the corresponding obligation not to
enforce the Hedging Contracts because they are in the nature of wagering or gambling
agreements and therefore the transactions implementing those contracts are null and
void under Philippine laws; and (3) defendant ignored the advice and intends to enforce
the Hedging Contracts by demanding financial payments due therefrom. 21
The rule is that in a Motion to Dismiss, a defendant hypothetically admits the truth of the
material allegations of the ultimate facts contained in the plaintiff's complaint. 22 However,
this principle of hypothetical admission admits of exceptions. Thus, in Tan v. Court of
Appeals, 23 we held:
The flaw in this conclusion is that, while conveniently echoing the general rule that
averments in the complaint are deemed hypothetically admitted upon the filing of a
motion to dismiss grounded on the failure to state a cause of action, it did not take into
account the equally established limitations to such rule, i.e., that a motion to dismiss
does not admit the truth of mere epithets of fraud; nor allegations of legal
conclusions; nor an erroneous statement of law; nor mere inferences or conclusions
from facts not stated; nor mere conclusions of law; nor allegations of fact the falsity of
which is subject to judicial notice; nor matters of evidence; nor surplusage and irrelevant
matter; nor scandalous matter inserted merely to insult the opposing party; nor to legally
impossible facts; nor to facts which appear unfounded by a record incorporated in the
CIVIL PROCEDURE CASES Summons (Rule 14)
pleading, or by a document referred to; and, nor to general averments contradicted by
more specific averments. A more judicious resolution of a motion to dismiss, therefore,
necessitates that the court be not restricted to the consideration of the facts alleged in
the complaint and inferences fairly deducible therefrom. Courts may consider other facts
within the range of judicial notice as well as relevant laws and jurisprudence which the
courts are bound to take into account, and they are also fairly entitled to examine
records/documents duly incorporated into the complaint by the pleader himself in
ruling on the demurrer to the complaint.24 (Emphases supplied.)
In the case at bar, respondent asserts in the Complaint that the Hedging Contracts are
void for being contrary to Article 2018 25 of the Civil Code. Respondent claims that under
the Hedging Contracts, despite the express stipulation for deliveries of gold, the intention
of the parties was allegedly merely to compel each other to pay the difference between
the value of the gold at the forward price stated in the contract and its market price at the
supposed time of delivery.
Whether such an agreement is void is a mere allegation of a conclusion of law, which
therefore cannot be hypothetically admitted. Quite properly, the relevant portions of the
contracts sought to be nullified, as well as a copy of the contract itself, are incorporated
in the Complaint. The determination of whether or not the Complaint stated a cause of
action would therefore involve an inquiry into whether or not the assailed contracts are
void under Philippine laws. This is, precisely, the very issue to be determined in Civil
Case No. 05-782. Indeed, petitioners defense against the charge of nullity of the
Hedging Contracts is the purported intent of the parties that actual deliveries of gold be
made pursuant thereto. Such a defense requires the presentation of evidence on the
merits of the case. An issue that "requires the contravention of the allegations of the
complaint, as well as the full ventilation, in effect, of the main merits of the case, should
not be within the province of a mere Motion to Dismiss." 26 The trial court, therefore,
correctly denied the Motion to Dismiss on this ground.
It is also settled in jurisprudence that allegations of estoppel and bad faith require proof.
Thus, in Paraaque Kings Enterprises, Inc. v. Court of Appeals, 27 we ruled:
Having come to the conclusion that the complaint states a valid cause of action for
breach of the right of first refusal and that the trial court should thus not have dismissed
the complaint, we find no more need to pass upon the question of whether the complaint
states a cause of action for damages or whether the complaint is barred by
estoppel or laches. As these matters require presentation and/or determination of
facts, they can be best resolved after trial on the merits.28 (Emphases supplied.)
54

On the proposition in the Motion to Dismiss that respondent has come to court with
unclean hands, suffice it to state that the determination of whether one acted in bad faith
and whether damages may be awarded is evidentiary in nature. Thus, we have
previously held that "[a]s a matter of defense, it can be best passed upon after a full-
blown trial on the merits."29
Jurisdiction over the person of petitioner
Petitioner alleges that the RTC has not acquired jurisdiction over its person on account of
the improper service of summons. Summons was served on petitioner through the DFA,
with respondents counsel personally bringing the summons and Complaint to the
Philippine Consulate General in Sydney, Australia.
In the pleadings filed by the parties before this Court, the parties entered into a lengthy
debate as to whether or not petitioner is doing business in the Philippines. However,
such discussion is completely irrelevant in the case at bar, for two reasons. Firstly, since
the Complaint was filed on August 30, 2005, the provisions of the 1997 Rules of Civil
Procedure govern the service of summons. Section 12, Rule 14 of said rules 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. (Emphasis supplied.)
This is a significant amendment of the former Section 14 of said rule which previously
provided:
Sec. 14. Service upon private foreign corporations. If the defendant is a foreign
corporation, or a nonresident joint stock company or association, doing 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. (Emphasis
supplied.)
The coverage of the present rule is thus broader. 30 Secondly, the service of summons to
petitioner through the DFA by the conveyance of the summons to the Philippine
Consulate General in Sydney, Australia was clearly made not through the above-quoted
Section 12, but pursuant to Section 15 of the same rule which provides:
CIVIL PROCEDURE CASES Summons (Rule 14)
Sec. 15. 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 6; 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.
Respondent argues31 that extraterritorial service of summons upon foreign private
juridical entities is not proscribed under the Rules of Court, and is in fact within the
authority of the trial court to adopt, in accordance with Section 6, Rule 135:
Sec. 6. Means to carry jurisdiction into effect. When by law jurisdiction is conferred on
a court or judicial officer, all auxiliary writs, processes and other means necessary to
carry it into effect may be employed by such court or officer; and if the procedure to be
followed in the exercise of such jurisdiction is not specifically pointed out by law or by
these rules, any suitable process or mode of proceeding may be adopted which appears
comformable to the spirit of said law or rules.
Section 15, Rule 14, however, is the specific provision dealing precisely with the service
of summons on a defendant which does not reside and is not found in the Philippines,
while Rule 135 (which is in Part V of the Rules of Court entitled Legal Ethics) concerns
the general powers and duties of courts and judicial officers.
Breaking down Section 15, Rule 14, it is apparent that there are only four instances
wherein a defendant who is a non-resident and is not found in the country may be served
with summons by extraterritorial service, to wit: (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 an 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 effected by (a) personal service out of the
55

country, with leave of court; (b) publication, also with leave of court; or (c) any other
manner the court may deem sufficient.32
Proceeding from this enumeration, we held in Perkin Elmer Singapore Pte Ltd. v. Dakila
Trading Corporation33that:
Undoubtedly, extraterritorial service of summons applies only where the action is
in rem or quasi in rem, but not if an action is in personam.
When the case instituted is an action in rem or quasi in rem, Philippine courts already
have jurisdiction to hear and decide the case because, in actions in rem and quasi in
rem, jurisdiction over the person of the defendant is not a prerequisite to confer
jurisdiction on the court, provided that the court acquires jurisdiction over the res. Thus,
in such instance, extraterritorial service of summons can be made upon the defendant.
The said extraterritorial service of summons is not for the purpose of vesting the court
with jurisdiction, but for complying with the requirements of fair play or due process, so
that the defendant will be informed of the pendency of the action 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. On the other hand, when the defendant or
respondent does not reside and is not found in the Philippines, and the action
involved is in personam, Philippine courts cannot try any case against him
because of the impossibility of acquiring jurisdiction over his person unless he
voluntarily appears in court.34 (Emphases supplied.)
In Domagas v. Jensen,35 we held that:
[T]he aim and object of an action determine its character. Whether a proceeding is in
rem, or in personam, or quasi in rem for that matter, is determined by its nature and
purpose, and by these only. A proceeding in personam is a proceeding to enforce
personal rights and obligations brought against the person and is based on the
jurisdiction of the person, although it may involve his right to, or the exercise of
ownership of, specific property, or seek to compel him to control or dispose of it in
accordance with the mandate of the court. The purpose of a proceeding in personam is
to impose, through the judgment of a court, some responsibility or liability directly upon
the person of the defendant. Of this character are suits to compel a defendant to
specifically perform some act or actions to fasten a pecuniary liability on him. 36
It is likewise settled that "[a]n action in personam is lodged against a person based on
personal liability; an action in rem is directed against the thing itself instead of the
CIVIL PROCEDURE CASES Summons (Rule 14)
person; while an action quasi in rem names a person as defendant, but its object is to
subject that persons interest in a property to a corresponding lien or obligation." 37
The Complaint in the case at bar is an action to declare the loan and Hedging
Contracts between the parties void with a prayer for damages. It is a suit in which
the plaintiff seeks to be freed from its obligations to the defendant under a contract and
to hold said defendant pecuniarily liable to the plaintiff for entering into such contract. It is
therefore an action in personam, unless and until the plaintiff attaches a property within
the Philippines belonging to the defendant, in which case the action will be converted to
one quasi in rem.
Since the action involved in the case at bar is in personam and since the defendant,
petitioner Rothschild/Investec, does not reside and is not found in the Philippines, the
Philippine courts cannot try any case against it because of the impossibility of acquiring
jurisdiction over its person unless it voluntarily appears in court. 38
In this regard, respondent vigorously argues that petitioner should be held to have
voluntarily appeared before the trial court when it prayed for, and was actually afforded,
specific reliefs from the trial court. 39 Respondent points out that while petitioners Motion
to Dismiss was still pending, petitioner prayed for and was able to avail of modes of
discovery against respondent, such as written interrogatories, requests for admission,
deposition, and motions for production of documents.40
Petitioner counters that under this Courts ruling in the leading case of La Naval Drug
Corporation v. Court of Appeals,41 a party may file a Motion to Dismiss on the ground of
lack of jurisdiction over its person, and at the same time raise affirmative defenses and
pray for affirmative relief, without waiving its objection to the acquisition of jurisdiction
over its person.42
It appears, however, that petitioner misunderstood our ruling in La Naval. A close reading
of La Naval reveals that the Court intended a distinction between the raising of
affirmative defenses in an Answer (which would not amount to acceptance of the
jurisdiction of the court) and the prayer for affirmative reliefs (which would be considered
acquiescence to the jurisdiction of the court):
In the same manner that a plaintiff may assert two or more causes of action in a
court suit, a defendant is likewise expressly allowed, under Section 2, Rule 8, of
the Rules of Court, to put up his own defenses alternatively or even
hypothetically. Indeed, under Section 2, Rule 9, of the Rules of Court, defenses and
objections not pleaded either in a motion to dismiss or in an answer, except for the failure
56

to state a cause of action, are deemed waived. We take this to mean that a defendant
may, in fact, feel enjoined to set up, along with his objection to the court's jurisdiction
over his person, all other possible defenses. It thus appears that it is not the invocation of
any of such defenses, but the failure to so raise them, that can result in waiver or
estoppel. By defenses, of course, we refer to the grounds provided for in Rule 16 of
the Rules of Court that must be asserted in a motion to dismiss or by way of
affirmative defenses in an answer.
Mindful of the foregoing, in Signetics Corporation vs. Court of Appeals and
Freuhauf Electronics Phils., Inc. (225 SCRA 737, 738), we lately ruled:
"This is not to say, however, that the petitioner's right to question the jurisdiction
of the court over its person is now to be deemed a foreclosed matter. If it is true, as
Signetics claims, that its only involvement in the Philippines was through a passive
investment in Sigfil, which it even later disposed of, and that TEAM Pacific is not its
agent, then it cannot really be said to be doing business in the Philippines. It is a
defense, however, that requires the contravention of the allegations of the complaint, as
well as a full ventilation, in effect, of the main merits of the case, which should not thus
be within the province of a mere motion to dismiss. So, also, the issue posed by the
petitioner as to whether a foreign corporation which has done business in the country,
but which has ceased to do business at the time of the filing of a complaint, can still be
made to answer for a cause of action which accrued while it was doing business, is
another matter that would yet have to await the reception and admission of
evidence. Since these points have seasonably been raised by the petitioner, there
should be no real cause for what may understandably be its apprehension, i.e.,
that by its participation during the trial on the merits, it may, absent an invocation
of separate or independent reliefs of its own, be considered to have voluntarily
submitted itself to the court's jurisdiction."43 (Emphases supplied.)
In order to conform to the ruling in La Naval, which was decided by this Court in 1994,
the former Section 23, Rule 1444 concerning voluntary appearance was amended to
include a second sentence in its equivalent provision in the 1997 Rules of Civil
Procedure:
SEC. 20. Voluntary appearance. The defendant's voluntary appearance in the action
shall be equivalent to service of summons. The inclusion in a motion to dismiss of
CIVIL PROCEDURE CASES Summons (Rule 14)
other grounds aside from lack of jurisdiction over the person of the defendant
shall not be deemed a voluntary appearance. (Emphasis supplied.)
The new second sentence, it can be observed, merely mentions other grounds in a
Motion to Dismiss aside from lack of jurisdiction over the person of the defendant. This
clearly refers to affirmative defenses, rather than affirmative reliefs.
Thus, while mindful of our ruling in La Naval and the new Section 20, Rule 20, this Court,
in several cases, ruled that seeking affirmative relief in a court is tantamount to voluntary
appearance therein.45 Thus, in Philippine Commercial International Bank v. Dy Hong
Pi,46 wherein defendants filed a "Motion for Inhibition without submitting themselves to
the jurisdiction of this Honorable Court" subsequent to their filing of a "Motion to Dismiss
(for Lack of Jurisdiction)," we held:
Besides, any lingering doubts on the issue of voluntary appearance dissipate when the
respondents' motion for inhibition is considered. This motion seeks a sole relief: inhibition
of Judge Napoleon Inoturan from further hearing the case. Evidently, by seeking
affirmative relief other than dismissal of the case, respondents manifested their
voluntary submission to the court's jurisdiction. It is well-settled that the active
participation of a party in the proceedings is tantamount to an invocation of the court's
jurisdiction and a willingness to abide by the resolution of the case, and will bar said
party from later on impugning the court's jurisdiction. 47 (Emphasis supplied.)
1wphi1
In view of the above, we therefore rule that petitioner, by seeking affirmative reliefs from
the trial court, is deemed to have voluntarily submitted to the jurisdiction of said court. A
party cannot invoke the jurisdiction of a court to secure affirmative relief against his
opponent and after obtaining or failing to obtain such relief, repudiate or question that
same jurisdiction.48 Consequently, the trial court cannot be considered to have committed
grave abuse of discretion amounting to lack or excess of jurisdiction in the denial of the
Motion to Dismiss on account of failure to acquire jurisdiction over the person of the
defendant.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision of the
Court of Appeals dated September 8, 2006 and its Resolution dated December 12, 2006
in CA-G.R. SP No. 94382 are hereby AFFIRMED. No pronouncement as to costs. SO
ORDERED.
57