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70661 April 9, 1987 motion was premised on the ground that the court had no jurisdiction over the defendants
FILMERCO COMMERCIAL CO., INC., SPOUSES JAIME and ANA MARIA MIGUEL, petitioners, because no valid summons was served on them.
vs. On November 26, 1984, after opposition to motion, reply, rejoinder and sub-rejoinder had
HON. INTERMEDIATE APPELLATE COURT respondents. been duly submitted, the lower court issued an order denying the aforesaid motion.
On December 3, 1984, while the public auction of the attached properties was in progress,
the defendants filed a motion for reconsideration of the November 26, 1984 order.
GUTIERREZ, JR., J.: Without waiting for the resolution of the aforesaid motion for reconsideration, the
The main issue in this petition is whether or not the petitioners were served valid summons defendants filed with the Intermediate Appellate Court a petition for certiorari and
so as to bring their within the jurisdiction of the court. prohibition, injunction and preliminary restraining order against the lower court's decision
Filmerco Commercial Co., Inc., (Filmerco) obtained two separate loans from the Bank of and orders.
Philippine Islands (BPI) on November 26, 1982 and December 26, 1982 respectively. As The appellate court dismissed the petition. A motion for reconsideration was likewise
security for the payment of the obligation stated in the promissory notes, spouses Jaime and denied.
Ana Maria Miguel executed a deed of continuing suretyship wherein the Miguels bound Hence, this petition.
themselves jointly and solidarily with Filmerco for the payment of the latter's obligation The petitioners submit that no valid summons was served upon them. Therefore, they
under the loan-accounts. contend that the lower court had not acquired jurisdiction over their persons thus resulting
The loans remained outstanding even after they became due and demandable. Hence, on in the nullity of its decision.
May 5,1983, BPI filed a complaint docketed as Civil Case No. 2807 for recovery of a sum of According to the sheriff's return dated September 7, 1983, summons and copy of the
money against Filmerco and spouses Jaime and Ana Maria Miguel before the Regional Trial complaint were not served on the petitioners at 31 Sta. Escolastica Street, Pasay City, their
Court of Makati, Rizal. given principal place of business and had to be returned to the court unserved for the
Upon motion of the plaintiff, the defendants were d in default for failure to file an answer reason that the "defendants have already vacated the premises and/or addresses more than
within the reglementary period. The plaintiff was then allowed to present its evidence ex- a year ago and no definite information could be had regarding their present whereabouts."
parte after which the lower court on June 11, 1984 rendered a decision, the dispositive Three separate summons for each of the defendants were addressed to 31 Sta. Scholastics
portion of which reads: Street, Pasay City, Metro Manila.
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor Upon motion of the private respondent (plaintiff in the case) the lower court issued alias
of the plaintiff and against the defendants, ordering the latter to pay, jointly summons.
and severally, the former: According to the sheriff's return dated March 31, 1984, summons were duly served upon
a) the sum of P308,525.17 plus 10% interest per annum and 12% penalty fee "defendant-spouses Jaime and Ana Maria Miguel at No. 18, Yuchengco Drive, Pacific
per annum from May 21, 1984 until the amount is fully paid; Malayan Village, Alabang, Muntinlupa, Metro Manila, thru Mrs. Angle Morger, a person
b) the sum equivalent to 20% of the total amount due as and for attorney's residing therein of suitable age and discretion to receive service of that nature and who
fees; received the said court processes for and in behalf of the defendants but refused to sign." It
c) to pay the costs of suit. (p.52, Rollo) was noted therein that the defendant spouses are "duly served" but that the other
On the ground that the period to appeal expired without any decision having been defendant Filmerco was "not and could not be served"and the summons pertaining to it was
appealed, the plaintiff filed a motion for execution of judgment before the lower court. This " returned unserved."
motion was granted and a writ of execution was issued against Filmerco and the Miguels. Petitioner spouses, Jaime and Ana Maria Miguel contend that the substituted service of
Pursuant to the writ of execution, respondent Sheriff Villapana levied on and attached summons upon their persons thru Mrs. Angle Morger at No. 18 Yuchengco Drive, Pacific
alleged properties of Filmerco and the Miguels. These properties were scheduled for sale on Malayan Village, Alabang, Muntinlupa, Metro Manila was in- valid for the following reasons:
September 20, 1984. (1) at the time of the service they were not residents of the said address, and (2) Mrs. Angle
On September 25, 1984, the defendants filed a motion to set aside the decision, writ of Morger was not authorized to receive papers or documents for them. They submitted
execution, notice of levy/attachment and to restrain the holding of the auction sale. The affidavits of Angle Morger to prove their point.
There can be no dispute that service of summons upon the defendant is necessary in order Drive, Pacific Malayan Village, Alabang, Metro Manila; that they leased the said premises
that a court may acquire jurisdiction over his person. Any judgment without such service in from the owner thereof as evidenced by a contract of lease dated August 8, 1983; that they
the absence of a valid waiver is null and void. (Keister v. Navarro, 77 SCRA 209). have been occupying the premises since September 1, 1983; that on March 31, 1984, Sheriff
Pursuant to Section 7, Rule 14 of the Revised Rules of court, summons must be served on Villapana attempted to serve the official summons and a copy of a complaint against
the defendant. However, when the defendant cannot be served personally within a spouses Jaime and Ana Maria Miguel and Filmerco Commercial Inc.; that she informed the
reasonable time after efforts to locate him have failed, substituted service may be made. sheriff that the Miguels do not reside in the place and that neither was said residence the
In the case at bar, there is no question that personal service of summons upon the dwelling place of the Miguel spouses; that she does not know Filmerco, Inc.; that despite
defendants could not be made because they moved out from their given address and their the fact that she informed the sheriff that she is not authorized by the spouses and Filmerco
whereabouts were unknown as indicated in the sheriff's return. Hence, the court resorted to to receive any papers for them, the sheriff left, leaving some documents with her maid,
substituted service of summons provided for under Section 8, Rule 14 of the Revised Rules Daday Lopez; that she did not affix her signature on the documents being then served by the
of Court: sheriff nor did the maid affix hers; that the documents left by the sheriff with the maid were
SEC. 8. Substituted service. If the defendant cannot be served within a not even ascertained nor read by the affiant. Mrs. Morger's manifestation is not refuted or
reasonable time as provided in the preceding section, service may be rebutted.
effected (a) by leaving copies of the summons at the defendant's dwelling Obviously, the address No. 18 Yuchengco Drive, Pacific Malayan Village, Alabang,
house or residence with some person of suitable age and discretion then Muntinlupa, Metro Manila was neither the "residence" nor the "dwelling house" of the
residing therein, or (b) by leaving the copies at defendant's office or regular petitioners at the time summons was served upon them as contemplated by the Rules.
place of business with some competent person in charge thereof. Moreover, Angle Morger is not a proper person with whom the copies of the summons
In the case of Keister v. Navarro (supra), we construed this rule as follows: could be left. The sheriff 's return indicates that she refused to sign the summons and the
xxx xxx xxx same was returned to the court unsigned. This fact adds credence to Angle Morger's
... [U]nder the controlling decisions, the statutory requirements of manifestation about her informing the sheriff that she was not authorized to receive papers
substituted service must be followed strictly, faithfully and fully, and any in behalf of the defendant-spouses and that she refused to receive them. We ruled in the
substituted service other than that authorized by the statute is considered case earlier cited:
ineffective. (Ibid., pp. 1053-1054). xxx xxx xxx
Indeed, the constitutional requirement of due process requires that the ... [T]he rule designates the persons to whom copies of the process may be
service be such as may be reasonably expected to give the desired notice to left. The rule presupposes that such a relation of confidence exists between
the party of the claim against him. (Perkins v. Dizon, 69 Phil. 186; Dy Reyes the person with whom the copy is left and the defendant and therefore,
v. Ortega, 16 SCRA 903) assumes that such person win deliver the process to defendant or in some
xxx xxx xxx way give notice thereof. (Keister v. Navarro, supra)
... The terms "dwelling house" or "residence" are generally held to refer to Mrs. Morger's manifestation negates any close relationship between herself and the
the time of service, hence it is not sufficient "to leave the copy at defendant-spouses to qualify her as representative of the former to receive summons in
defendant's former dwelling house, residence, or place of abode, as the their behalf.
case may be, after his removal therefrom." (72 C.J.S. 1059) They refer to the The private respondent merely relies on the sheriff's return that summons was duly served
place where the person named in the summons is living at the time when on the spouses and states that to disregard the return would be disastrous as "self-serving
the service is made, even though he may be temporarily out of the country affidavits" would be preferred over the presumption of regularity in the discharge of official
at the time. Similary, the terms "office" or "regular place of business" refer functions. It urges that the sheriff's return should be given credence over the affidavit.
to the office or place of business of defendant at the time of service. ... (at A sheriff's certification that he duly served summons on a defendant does not necessarily
p. 215) mean that he validly served the summons. In this particular case, there is a strong showing
Applying these principles to the case at bar, we find that no valid service of summons upon that Mr. and Mrs. Jaime Miguel are notresidents of 18 Yuchengco Drive, Pacific Malayan
the defendant spouses could be effected thru Mrs. Angle Morger. In her affidavits, Mrs. Village, Alabang, Muntinlupa. The respondent, itself, states that the spouses are hiding to
Morger manifested that she and her husband are the bona fide residents of 18 Yuchengco escape their obligations. Sworn statements of Mrs. Angle Morger assert that she and her
husband are lessees of the premises and are the actual residents therein. The respondents generally the perpetration of knavery or crime, (Koppel Phil. v. Yatco, 77
claim these statements are self-serving. Whether self-serving or not, the fact remains that Phil. 496; Lidell & Co. v. Collector, G.R. No. L-9687, June 30, 1961;
Mrs. Morger was seen by the sheriff as the then person in that house. The respondents have Commissioner v. Norton & Harrison Company, G.R. No. L- 17618, Aug. 31,
absolutely no grounds, other than suspicions, for their contention that the Miguels and not 1964; and Guevarra, Phil. Corp. Law, 1961 ed., p. 7) the veil with which the
the Morgers are the actual residents at that address. law covers and isolates the corporation from the members or stockholders
In the light of these facts, the appellate court's reliance on the sheriff's return that summons who compose it will be drifted to allow for its consideration merely as an
upon defendant-spouses thru Angle Morger was "duly served" in consonance with the aggregation of individuals. (Villa Rey Transit, Inc. v. Ferrer, 25 SCRA 845-
principle of presumption in favor of regularity of performance of official functions of a public 857).
officer (Section 5, Rule 13, Rules of Court) has no basis. In effect, this doctrine refers to determination of liability and not to determination of
With regards to the petitioner corporation, the sheriff's return categorically states that the jurisdiction.
alias summons was not served upon the corporation. Moreover, the private respondent This is so because the doctrine of piercing the veil of corporate fiction comes to play only
filed a motion to declare defendant-spouses Jaime and Ana Maria Miguel alone, in during the trial of the case after the court has already acquired jurisdiction over the
default without including the petitioner corporation (Annex E, p. 64, Rollo) corporation. Hence, before this doctrine can be applied, based on the evidence to be
These facts not withstanding the trial court declared all the defendants in default and presented, it is imperative that the court must first have jurisdiction over the corporation.
rendered a decision also against the petitioner corporation. This decision was affirmed by For the court to acquire jurisdiction over a domestic corporation such as the
the appellate court which applied the doctrine of piercing the veil of corporate fiction. The petitionercorporation, summons must be served upon it through the officers of the
appellate court stated: corporation enumerated in Section 13, Rule 14 of the Revised Rules of Court. There is not
The records disclose that petitioner-spouses are both directors of even a semblance of any effort to serve summons upon an officer as such Since, the
respondent-Corporation being the majority stockholder of FILMERCO summons intended for the petitioner-corporation was "not and could not be served" as
(Annex "A," Comment). The records, also, reveal that both petitioner- certified in the sheriff's return, the lower court never acquired jurisdiction over the
spouses and petitioner-corporation were impleaded as party defendants in petitioner-corporation. It follows that the judgment against the petitioner-corporation is
the civil case filed before the lower court. Hence, petitioner-corporation null and void
cannot now claim to have been improperly served with summons. This The allegations that the petitioners deliberately concealed their whereabouts to escape the
Court, therefore, finds justifiable reason for the lower court's order piercing payment of just and valid obligations appear to have some basis. However, allegations such
the veil of corporate fiction. ... (p. 56, rollo) as these do not justify the appellate court's upholding a judgment wherein the trial court
We have already found that there was no valid summons effected upon petitioner-spouses. has not acquired jurisdiction over the persons of the defendants.
Since, the appellate court considered service of summons upon the petitioner-spouses as The private respondent has chosen to employ a procedure which is strictly in personam. As
constituting service of summons upon the petitioner-corporation, the inevitable conclusion indicated in the cases of Citizens Surety and Insurance, Inc. v. Melencio-Herrera (38 SCRA
is that no valid summons could have been effected upon the petitioner-corporation. 369) and Magdalena Estate, Inc. v. Nieto (125 SCRA 758) it is also possible to use
Moreover, even if we assume that there was valid service of summons upon the petitioner- proceedings in rem or quasi in rem to achieve the same desired ends. There may be other
spouses, it does not necessarily follow that there was also valid service of summons upon ways which, if utilized, would insure that the courts acquire jurisdiction over defendants in
the petitioner-corporation. recovery of money cases but the shortcut method approved by the respondent court is not
We have explained the doctrine of piercing the veil of corporate fiction in the following one of them.
manner: WHEREFORE, the instant petition is hereby GRANTED. The lower court's decision in Civil
The doctrine that a corporation is a legal entity distinct and separate from Case No. 2807 is SET ASIDE. The case is remanded to the trial court for proper service of
the members and stockholders who compose it is recognized and respected summons and trial.
in all cases which are within reason and the law. (Borja v. Vasquez, 74 Phil. SO ORDERED
56), When the fiction is urged as a means of perpetrating a fraud or an
illegal act or as a vehicle for the evasion of an existing obligation, the
circumvention of statutes, the achievement or perfection of a monopoly or
UNITED COCONUT PLANTERS BANK, petitioner, vs. ROBERTO V. ONGPIN, respondent. 1996. On the same date, petitioner entered into an agreement with TODAY for the
publication of the summons on October 4, 11, and 18, 1996. Petitioner received the trial
DECISION courts order at the close of office hours on October 3, 1996. Attempts to prevent the
publication by requesting the trial court through telephone to inform the newspaper
MENDOZA, J.: publisher of its order and informing the newspaper itself of the same proved futile, as
nobody in the court was contacted by petitioner while the telephone lines of the newspaper
This is a petition for review on certiorari of the decision, dated December 27, 2000, of were busy. As a result, TODAY published the summons on October 4, 1996. It was only on
the Court of Appeals,[1] setting aside the orders, dated April 19, 1999 and October 13, 1999, October 8, 1996 that petitioner was able to inform the newspaper of the October 2, 1996
of the Regional Trial Court, Branch 133, Makati City in Civil Case No. 95-1594 entitled United order and to request the latter to hold in abeyance further publication of the summons.[5]
Coconut Planters Bank v. Roberto V. Ongpin. On February 27, 1997, the Court of Appeals promulgated its decision, the dispositive
The facts are as follows: portion of which states:
On November 17, 1994, Philippine Apparel, Inc. (PAI) entered into a credit agreement
with petitioner United Coconut Planters Bank for a case-to-case credit line in the amount of THE FOREGOING CONSIDERED, the issuance of a Writ of Attachment together with the
US$500,000.00. Respondent Roberto V. Ongpin, then controlling stockholder of PAI, signed Notice of Garnishment is hereby validated: but the implementation of the Writ of
as surety, binding himself jointly and severally liable with PAI for the same amount. PAI Attachment/Garnishment is prohibited until after the Court shall have acquired jurisdiction
availed of the credit line by drawing on short-term loans and opening letters of credit for the over the person of the petitioner, either through voluntary appearance or service of
importation of goods, which amounted to US$650,986.34 or P16,526,653.00.[2] summons.
As PAI failed to pay its obligations, petitioner filed a complaint against respondent SO ORDERED.[6]
Ongpin with the Regional Trial Court, Branch 133, Makati to enforce his obligation as surety
of PAI. Petitioner sought the issuance of a writ of preliminary attachment on the following On March 19, 1997, petitioner filed a motion for reconsideration with the appeals court
grounds: (1) respondent, in fraud of creditors, had transferred residence to Hongkong; (2) insofar as it held that the trial court had no jurisdiction on the person of petitioner and for
his obligation was not covered by any collateral; and (3) PAI and its officers, including this reason suspended implementation of the writ of attachment/garnishment. However,
respondent, with intent to defraud, did not disclose the fact that the Bureau of Customs had the Court of Appeals denied petitioners motion.
claims against PAI for unpaid customs duties and taxes in the amount of P284,010,387.00, On August 1, 1997, petitioner filed a petition for certiorari with this Court. Again, during
which fact could have affected petitioners decision whether to grant the loan to PAI. the pendency of the case, petitioner filed with the trial court on August 15, 1997 another
On November 10, 1995, the trial court issued an order granting petitioners prayer for Motion to Serve Summons through Publication with Leave of Court. In the meantime, on
the issuance of a writ of preliminary attachment. On November 16, 1995, a writ of August 27, 1997, this Court issued a resolution dismissing petitioners petition for review
attachment and a notice of garnishment were issued by the trial court, addressed to the on certiorari for failure of petitioner to comply with procedural requirements.[7]
president and corporate secretary of the Dominion Asian Equities garnishing 8,315,600 On November 27, 1997, Deputy Sheriff Glenn B. Parra, together with Atty. Rodulfo
shares of stock belonging to respondent.[3] Baculi, Jr., representative of petitioner, went to the PILTEL office at the Bankers Center
On November 21, 1995, respondent, making a special appearance through counsel, Building, Ayala Avenue, Makati City to serve summons on respondent, who was then the
moved to dismiss the complaint and to quash the writ of attachment and garnishment on chairman of the board of PILTEL and was expected to attend a board meeting on that day.
the ground that the trial court had no jurisdiction over the person of respondent, the Upon arrival, they asked the receptionist, Arlene Cuenco, if respondent would attend the
summons prepared on October 30, 1995 having been unserved as of November 17, 1995. meeting. Cuenco conferred with Anne V. Morallo, executive secretary of the president of
The trial court denied the urgent motion as well as respondents subsequent motion for PILTEL, who then called respondents office at the BA Lepanto Building, Paseo de Roxas Ave.,
reconsideration.[4] Makati City. Morallo was informed that respondent was not going to attend the meeting.
On May 24, 1996, respondent filed a petition for certiorari in the Court of Appeals Nevertheless, Sheriff Parra and Atty. Baculi waited until 11:30 a. m. They proceeded to
assailing the orders of the trial court. During the pendency of the petition, on May 27, 1996, respondents office at the BA Lepanto Building when respondent failed to appear at the
petitioner filed with the trial court a Motion for Leave to Serve Summons Through board meeting. The security guard at BA Lepanto told them that respondent was holding
Publication. Its motion was granted, but the publication was held in abeyance on October 2,
office at the 14th floor, but when they reached the said floor, they were told by a member A. RESPONDENT ONGPIN, AT THE TIME OF SUBSTITUTED SERVICE OF
of the Internal Security Personnel that respondent was not known at that place. SUMMONS, WAS CHAIRMAN OF THE BOARD OF DIRECTORS OF PILTEL
In the afternoon of the same day, Sheriff Parra returned to the PILTEL office to serve WHOSE OFFICES SHOULD BE CONSIDERED HIS REGULAR PLACE OF
the summons on respondent. There, he met for the first time Anne V. Morallo, who told him BUSINESS.
that she was authorized to receive court processes for and on behalf of respondent even B. MS. ANNE V. MORALLO, THE EXECUTIVE SECRETARY OF THE PRESIDENT OF
though the latter was not holding office in the building. Morallo was so advised by Atty. PILTEL WAS NOT ONLY AUTHORIZED TO RECEIVE SUMMONS AND COURT
Joseph Santiago, Chief of the Legal Department of PILTEL. Thus, Sheriff Parra served the PROCESSES ON BEHALF OF RESPONDENT ONGPIN, BUT WAS ALSO A
summons on Morallo who received it accordingly. However, when Morallo tried to forward COMPETENT PERSON TO RECEIVE SUMMONS.
the court process to respondent, the latters lawyer, Atty. David S. Narvasa, refused to C. THE ONLY REASON WHY MS. ANNE V. MORALLO DID NOT TRANSMIT THE
receive it.[8] SUMMONS TO RESPONDENT ONGPIN WAS THAT RESPONDENT ONGPINS
After serving summons through Morallo, Sheriff Parra then implemented the writ of COUNSEL, ALSO THE LEGAL COUNSEL OF PILTEL, ADVISED HER TO KEEP IT.
attachment by serving notices of garnishment on the following: (1) Stock Transfer Office -
This assignment of errors boils down to the following questions: (1) whether or not
FEBTC; (2) Professional Stock Transfer; (3) Stock Transfer Services; (4) The Corporate
respondent Ongpins continuous special appearances before the court for five years may be
Secretary, Belle Corp., Tagaytay Highlands; and (5) International Exchange Bank, Head Office
deemed voluntary appearance as contemplated by the Revised Rules on Civil Procedure on
and all branches thereof.[9]
acquisition of jurisdiction over the person of defendant; and (2) whether or not the
On December 4, 1997, respondent filed with the trial court an Urgent Omnibus Motion:
substituted service of summons on Anne V. Morallo, executive secretary of the president of
(a) to Dismiss; (b) for Prohibition of the Implementation of the Writ of Attachment dated 16
PILTEL, was valid.
November 1995; (c) for Quashal of the Notice of Garnishment dated 27 November 1997;
First. Petitioner maintains that the trial court had already acquired jurisdiction over the
and (d) for Release of Properties attached thereby. On April 19, 1999, the trial court denied
person of respondent Ongpin by virtue of the numerous appearances by his counsel and
respondents motion for lack of merit. Respondents motion for reconsideration was likewise
respondents undeniable knowledge of the complaint against him.
denied on October 13, 1999.
This contention has no merit. A party who makes a special appearance in court
Consequently, respondent filed a petition for certiorari with application for a
challenging the jurisdiction of said court based on the ground, e. g., invalidity of the service
Temporary Restraining Order and Writ of Preliminary Injunction in the Court of Appeals. The
of summons, cannot be considered to have submitted himself to the jurisdiction of the
Court of Appeals promulgated its decision on December 27, 2000, annulling and setting
court.[11] In fact, in La Naval Drug Corp. vs. Court of Appeals,[12] this Court ruled that even the
aside the orders of the trial court, dated April 19, 1999 and October 13, 1999, on the ground
assertion of affirmative defenses aside from lack of jurisdiction over the person of the
that PILTEL was not the regular place of business of respondent and that, even if it was,
defendant cannot be considered a waiver of the defense of lack of jurisdiction over such
Morallo could not be considered a competent person in charge of respondents office, as she
person.
was the executive secretary of the president of PILTEL and not of respondent. Hence, this
In the present case, although respondent had indeed filed numerous pleadings, these
petition for review under Rule 45 of the Revised Rules of Civil Procedure.[10]
pleadings were precisely for the purpose of contesting the jurisdiction of the court over the
Petitioner makes the following assignment of errors:
person of respondent on the ground that there was no valid service of summons on him. It
would be absurd to hold that respondent, by making such appearance, thereby submitted
THE COURT OF APPEALS ERRED IN ANNULLING THE ORDERS OF THE TRIAL COURT DATED 19
himself to the jurisdiction of the court.
APRIL 1999 AND 13 OCTOBER 1999 BECAUSE:
Petitioner cites the ruling in Macapagal v. Court of Appeals[13] for its contention that the
feigned unawareness of a defendant is equivalent to voluntary appearance. The facts
I. RESPONDENT ONGPIN, AFTER FIVE LONG YEARS OF SPECIAL APPEARANCE,
of Macapagal are, however, different from the facts of this case. In that case, this Court
SHOULD BE DEEMED TO HAVE VOLUNTARILY SUBJECTED HIMSELF TO THE
considered the petitioner to have been validly served summons based on its findings that
JURISDICTION OF THE TRIAL COURT.
summons was served on the legal counsel of the two corporations and its officers and
II. THE SUBSTITUTED SERVICE OF SUMMONS ON RESPONDENT ONGPIN ON 27
directors. Petitioners defense that at the time of the service of summons he was no longer
NOVEMBER 1997 WAS VALID, CONSIDERING THAT:
connected with both corporations, having resigned from them before such service, was
dismissed by this Court as flimsy. The finding of this Court on the feigned unawareness of Thus, the process server already knew that respondent was not holding office at the PILTEL
petitioner was based on the fact that Philfinances woes were widely publicized. This, office but somewhere else.
together with counsels authority to receive service of summons on behalf of petitioner, was As the PILTEL office is not respondents regular place of business, it cannot therefore be
the basis for this Courts ruling that jurisdiction over the person of the latter had already said that Anne V. Morallo, the person who received the service of summons in behalf of
been acquired by the trial court. respondent, was authorized to receive service of process on behalf of respondent.
In contrast, summons in this case was served on the executive secretary of the Third. It is not clear whether respondent could be personally served with summons
president of PILTEL, a company which is not a party to the present action. Respondent because he had transferred residence to Hongkong. Thus in its complaint, petitioner alleged
Ongpin, through counsel, entered numerous special appearances in court precisely to that respondents address was either at ATA Capital Corporation, 3404 1 Exchange Square,
question the courts jurisdiction over his person either due to failure to serve summons or to #8 Connaught Place, Central Hongkong or South China Morning, Post Center #22 Tai Fat
an invalid service of summons on him. Jurisdiction cannot be acquired over the person of Street, Taipo Industrial Estate, Taipo, New Territories, Hongkong. But later, it tried to
respondent even if he knows of the case against him unless he is validly served with personally serve summons on respondent at the PILTEL office, where he served as chairman
summons.[14] of the board of directors. When respondent failed to attend the meeting, the process server
Second. Petitioner contends that the Court of Appeals erred in ruling that (1) proceeded to the BA Lepanto Building, Paseo de Roxas, Makati City, where, as the process
substituted service of summons at the PILTEL office where respondent sits as chairman of server learned from Morallo, respondent was allegedly holding office.
the board is invalid as the PILTEL office is not his regular place of business; and (2) Anne V. Under the Rules, if a defendant is a non-resident and his property in the Philippines had
Morallo, the executive secretary of PILTELs president, was not authorized to receive the been attached, service may, by leave of court, be effected outside the Philippines or by
summons on behalf of respondent Ongpin as she was not his executive secretary but that of publication in a newspaper of general circulation.[17] In the same manner, if the
the presidents. whereabouts of the defendant is unknown and cannot be ascertained by diligent inquiry,
We think no error was incurred by the Court of Appeals in this ruling. Rule 14, 7 of the service may, by leave of court, likewise be effected by publication in a newspaper of general
1997 Revised Rules of Civil Procedure provides that if, for justifiable causes, personal service circulation.[18] In this case, the plaintiff must show that the address of defendant is unknown
cannot be effected on defendant, service may be effected (a) by leaving copies of the and cannot be ascertained by diligent inquiry.[19]
summons at the defendants residence with some person of suitable age and discretion It is clear that petitioner is not without remedy under the Revised Rules of Civil
residing therein, or (b) by leaving the copies at defendants office or regular place of business Procedure to enforce the writ of attachment through a valid service of summons. If, indeed,
with some competent person in charge thereof.[15] The word office or the phrase regular respondent is no longer a resident of the Philippines, petitioner still can, by leave of court,
place of business refers to the office or place of business of the defendant at the time of serve summons by publication, as it in fact tried to do. The records show that petitioner
service. The rule specifically designates the persons to whom copies of the process should attempted to serve summons by publication, but later abandoned its effort and for some
be left. In Mapa vs. Court of Appeals,[16] substituted service of summons in a person claiming reason attempted personal service instead.
to be authorized to receive service of summons in behalf of the corporation was held to be If, on the other hand, respondent is a resident and petitioner cannot determine the
invalid as far as jurisdiction over the person of the chairman of the board was concerned correct address of respondent, petitioner only needs to show that respondents address is
inasmuch as he was not holding office in the corporation but in his residence. Thus, it does unknown and cannot be ascertained by diligent inquiry. Upon compliance with this
not necessarily follow that the regular place of business of a chairman of the board of requirement, it can validly serve summons by publication in a newspaper of general
directors is the same as the address of the corporation as it is possible for him to hold office circulation.
elsewhere. Petitioner cannot fall back on allegations of knowledge of respondent to avoid
In the case at bar, the corporation (PILTEL), where substituted summons was served complying with the standards and guidelines set by the Rules. What we said in Oate v.
and of which respondent was the chairman of the board, was not even a party to the Abrogar[20]bears repeating in this case:
present suit. Respondent was sued in his personal capacity as surety for PAI. Even from the
initial inquiries made by the sheriff and petitioners representative in the office of PILTEL, it ... More important than the need for insuring success in the enforcement of the writ is the
was evident that respondent was not holding office there. Indeed, Morallo, executive need for affirming a principle on that most fundamental of all requisites the jurisdiction of
secretary of the PILTEL, had to call respondents secretary at the BA Lepanto Building, Paseo the court issuing attachment over the person of the defendant. It may be that the same
de Roxas, to find out whether he was attending the board meeting to be held on that day. result would follow from requiring that a new writ be served all over again. The symbolic
significance of such an act, however, is that it would affirm our commitment to the rule of
law.
CHICO-NAZARIO, J.: The RTC issued an Order,[7] dated 26 March 1999, denying respondents prayer for
the issuance of a writ of attachment. The respondent moved for the reconsideration of the
The case before this Court is a Petition for Review[1] on Certiorari under Rule 45 of said Order but it was denied in another Order, dated 11 January 2000.[8]
the 1997 Revised Rules of Civil Procedure seeking to annul and set aside the
Decision,[2] dated 4 April 2006, of the Court of Appeals in CA-G.R. SP No. 78981, which Respondent then filed Ex-Parte Motions for Issuance of Summons and for Leave of
affirmed the Orders, dated 4 November 2002[3] and 20 June 2003,[4] of the Mandaluyong Court to Deputize Respondents General Manager, Richard A. Tee, to Serve Summons
City Regional Trial Court (RTC), Branch 212, in Civil Case No. MC99-605, which, in turn, Outside of the Philippines,[9] which the RTC granted in its Order, dated 27 April
denied the Motion to Dismiss and subsequent Motion for Reconsideration of herein 2000.[10] Thus, an Alias Summons, dated 4 September 2000, was issued by the RTC to
petitioner Perkin Elmer Singapore Pte Ltd. PEIA.But the said Alias Summons was served on 28 September 2000 and received
by Perkinelmer Asia, a Singaporean based sole proprietorship, owned by the petitioner and,
Petitioner is a corporation duly organized and existing under the laws allegedly, a separate and distinct entity from PEIA.
of Singapore. It is not considered as a foreign corporation doing business in
the Philippines. Herein respondent Dakila Trading Corporation is a corporation organized PEIP moved to dismiss[11] the Complaint filed by respondent on the ground that it
and existing under Philippine laws, and engaged in the business of selling and leasing out states no cause of action. Perkinelmer Asia, on the other hand, through its counsel, sent
laboratory instrumentation and process control instrumentation, and trading of laboratory letters, dated 12 October 2000[12] and 15 November 2000,[13] to the respondent and to the
chemicals and supplies. RTC, respectively, to inform them of the wrongful service of summons upon Perkinelmer
Asia.
The antecedents of the present case are as follows:
Accordingly, respondent filed an Ex-Parte Motion to Admit Amended Complaint,
[5]
Respondent entered into a Distribution Agreement on 1 June 1990 with Perkin- together with the Amended Complaint claiming that PEIA had become a sole
Elmer Instruments Asia Pte Ltd. (PEIA), a corporation duly organized and existing under the proprietorship[14] owned by the petitioner, and subsequently changed its name to
laws of Singapore and engaged in the business of manufacturing, producing, selling or Perkinelmer Asia. Being a sole proprietorship of the petitioner, a change in PEIAs name and
distributing various laboratory/analytical instruments. By virtue of the said agreement, PEIA juridical status did not detract from the fact that all its due and outstanding obligations to
appointed the respondent as the sole distributor of its products in the Philippines. The third parties were assumed by the petitioner. Hence, in its Amended
Complaint[15]respondent sought to change the name of PEIA to that of the petitioner. In an to Dismiss, it hypothetically admits the truth of the facts alleged in a
Order, dated 24 July 2001,[16] the RTC admitted the Amended Complaint filed by the complaint.
respondent.Respondent then filed another Motion[17] for the Issuance of Summons and for
Leave of Court to Deputize Respondents General Manager, Richard A. Tee, to Serve When the ground for dismissal is that the complaint states no cause of
Summons Outside the Philippines. In another Order, dated 4 March 2002,[18] the RTC action, such fact can be determined only from the facts alleged in the
deputized respondents General Manager to serve summons on petitioner in Singapore. The complaint x x x and from no other x x x and the Court cannot consider other
RTC thus issued summons[19] to the petitioner. Acting on the said Order, respondents matters aliunde x x x. This implies that the issue must be passed upon on
General Manager went to Singapore and served summons on the petitioner. the basis of the allegations and declare them to be false, otherwise it would
be a procedural error and a denial of due process to the [respondent] x x x.
Meanwhile, in an Order, dated 10 October 2001, the RTC denied the Motion to
Dismiss filed by PEIP, compelling the latter to file its Answer to the Amended Complaint. The three (3) essential elements of a cause of action are the
following:
Petitioner subsequently filed with the RTC a Special Appearance and Motion to
[20]
Dismiss respondents Amended Complaint on 30 May 2002 based on the following a) The plaintiffs legal rights;
grounds: (1) the RTC did not acquire jurisdiction over the person of the petitioner; (2) the b) A correlative obligation of the defendant;
respondent failed to state a cause of action against the petitioner because it is not the real c) The omission of the defendant in violation of the legal
party-in-interest; (3) even assuming arguendo that the respondent correctly filed the case rights.
against the petitioner, the Distribution Agreement which was the basis of its claim grants
PEIA the right to terminate the contract at any time; and (4) the venue was improperly A cursory reading of the Amended Complaint would reveal that all
laid. The RTC in its Order, dated 4 November 2002, denied petitioners Motion to Dismiss, of the essential elements of a cause of action are attendant in the Amended
ratiocinating as follows: Complaint.
Prescinding from the above arguments of both parties, the [RTC] is inclined As for the contention that venue was improperly laid, x x x, the [RTC] in its
to DENY the Motion to Dismiss. ultimate desire that the ends of justice could be served in its fullest, cannot
rule that venue was improperly laid.
A careful scrutiny on (sic) the allegation in the (Amended) Complaint would
show that [herein respondent] alleges ownership by the [herein petitioner] xxxx
of shares of stocks in the [PEIP]. Such allegation of ownership of shares of
stocks by the [petitioner] would reveal that there is an allegation of The stipulation as to the venue of a prospective action does not preclude
personal property in the Philippines. Shares of stocks represent personal the filing of the suit in the residence of the [respondent] under Section 2,
property of the shareholder. Thus, it follows that even though the Amended Rule 4, Rules of Court, especially where the venue stipulation was imposed
Complaint is primarily for damages, it does relate to a property of the by the [petitioner] for its own benefits.
[petitioner], to which the latter has a claim interest (sic), or an actual or
contingent lien, which will make it fall under one of the requisite (sic) for xxxx
extraterritorial service under Section 15, Rule 14, of the Rules of
Court. Thus, it could be gainfully said that the summons had been validly The [RTC] further believes that it is imperative that in order to ferret out the
served for [RTC] to acquire jurisdiction over the [petitioner]. truth, a full-blown trial is necessary for parties to be able to prove or
disprove their allegations.[21]
The [petitioner] hinges its dismissal on the failure of the [respondent] to
state a cause of action. The [RTC] would like to emphasize that in a Motion
Petitioner moved for the reconsideration of the aforesaid Order but, it was denied AND/OR RELATED THERETO, PETITIONER IS NOT THE REAL
by the RTC in its Order, dated 20 June 2003. PARTY-IN-INTEREST DEFENDANT IN THE CASE BELOW.
Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 2. ASSUMING ARGUENDO THAT RESPONDENT
Revised Rules of Civil Procedure with application for temporary restraining order and/or DAKILA FILED THIS CASE AGAINST THE CORRECT [PARTY],
preliminary injunction before the Court of Appeals alleging that the RTC committed grave INASMUCH AS THE DISTRIBUTION AGREEMENT DATED 1
abuse of discretion amounting to lack or excess of jurisdiction in refusing to dismiss the JUNE 1990 GRANTS [PEIA] THE RIGHT TO TERMINATE THE
Amended Complaint. The Court of Appeals never issued any temporary restraining order or CONTRACT AT ANY TIME, RESPONDENT DAKILA FAILS TO
writ of injunction. On 4 April 2006, the Court of Appeals rendered a Decision affirming the STATE A CAUSE OF ACTION IN THE CASE BELOW.
RTC Orders of 4 November 2002 and 20 June 2003.
B.
This brings us to the present Petition before this Court wherein petitioner raised the
following issues. WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE
GRANTED THE PETITION FOR CERTIORARI AND REVERSED
I. THE RTC ORDERS ON THE GROUND OF IMPROPER VENUE.
II.
The foregoing issues raised by petitioner essentially requires this Court to make a
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE determination of the (1) proper service of summons and acquisition of jurisdiction by the
ERROR IN RULING THAT THE SOLE ISSUE IN THE PETITION RTC over the person of the petitioner; (2) existence of a cause of action against petitioner in
FOR CERTIORARI FILED BEFORE IT IS THE QUESTION OF WHETHER THE TRIAL respondents Amended Complaint; and (3) proper venue for respondents civil case against
COURT ACQUIRED JURISDICTION OVER THE PERSON OF THE PETITIONER petitioner.
THROUGH THE EXTRATERRITORIAL SERVICE OF SUMMONS.
A. Petitioner contends that Civil Case No. MC99-605 involves an action for collection of
sum of money and damages arising from the alleged breach of the Distribution
WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE Agreement. The action is one in personam, or an action against a person based on his
GRANTED THE PETITION FOR CERTIORARI AND REVERSED personal liability; and for the court a quo to acquire jurisdiction over the person of the
THE RTC ORDERS ON THE GROUND THAT THE AMENDED petitioner, personal service of summons, and not extraterritorial service of summons, must
COMPLAINT FAILED TO STATE A CAUSE OF ACTION AGAINST be made within the state even if the petitioner is a non-resident. Petitioner avers that
PETITIONER. extraterritorial service of summons stated under Section 15, Rule 14 of the 1997 Revised
Rules of Civil Procedure, is only proper in in rem and quasi in rem cases; thus, resort to an
1. BASED ON THE ALLEGATIONS IN THE EX- extraterritorial service of summons in the case at bar was erroneous. Petitioner asseverates
PARTE MOTION TO ADMIT AMENDED COMPLAINT, that the allegations in the respondents Amended Complaint that the petitioner has personal
AMENDED COMPLAINT, AND ALL DOCUMENTS ATTACHED properties within the Philippines does not make the present case one that relates to, or the
subject of which is, property within the Philippines warranting the extraterritorial service of
summons under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure. Petitioner Jurisdiction is the power with which courts are invested for administering justice;
states that for an action to be considered as one that relates to, or the subject of which is, that is, for hearing and deciding cases. In order for the court to have authority to dispose of
property within the Philippines, the main subject matter of the action must be the property the case on the merits, it must acquire jurisdiction over the subject matter and the
within the Philippines itself, and such was not the situation in this case. Likewise, the prayer parties.[22]
in respondents Amended Complaint for the issuance of a writ of attachment over the
personal property of PEIP, which is 99% owned by petitioner (as the supposed successor of Jurisdiction of the court over the subject matter is conferred only by the
PEIA), did not convert the action from one in personam to one that is quasi in rem. Also, the Constitution or by law. It is determinable on the basis of allegations in the complaint.[23]
petitioner points out that since the respondents prayer for the issuance of a writ of
attachment was denied by the RTC in its Order, dated 26 March 1999, then the nature of Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, while
Civil Case No. MC99-605 remains in personam, contrary to the ruling of the Court of Appeals jurisdiction over the defendants in a civil case is acquired either through the service of
that by the attachment of the petitioners interest in PEIP the action in personam was summons upon them in the manner required by law or through their voluntary appearance
converted to an action quasi in rem.Resultantly, the extraterritorial service of summons on in court and their submission to its authority. If the defendants have not been summoned,
the petitioner was not validly effected, and did not give the RTC jurisdiction over the unless they voluntarily appear in court, the court acquires no jurisdiction over their persons
petitioner. and a judgment rendered against them is null and void. To be bound by a decision, a party
should first be subjected to the courts jurisdiction.[24]
Petitioner further argues that the appellate court should have granted its Petition
for Certiorari on the ground that the RTC committed grave abuse of discretion amounting to Thus, one of the modes of acquiring jurisdiction over the person of the defendant or
lack or excess of jurisdiction in refusing to dismiss respondents Amended Complaint for respondent in a civil case is through service of summons. It is intended to give notice to the
failure to state a cause of action against petitioner which was not the real party-in-interest defendant or respondent that a civil action has been commenced against him. The
in Civil Case No. MC99-605. Petitioner claims that it had never used the name PEIA as its defendant or respondent is thus put on guard as to the demands of the plaintiff or the
corporate name, and neither did it change its name from that of PEIA.Petitioner stresses petitioner.[25]
that PEIA is an entirely different corporate entity that is not connected in whatever manner
to the petitioner. Even assuming arguendo that petitioner is the real party-in-interest in Civil The proper service of summons differs depending on the nature of the civil case
Case No. MC99-605 or that petitioner and PEIA are one and the same entity, petitioner still instituted by the plaintiff or petitioner: whether it is in personam, in rem, or quasi in
avows that the respondent failed to state a cause of action against it because the rem.Actions in personam, are those actions brought against a person on the basis of his
Distribution Agreement expressly grants PEIA the right to terminate the said contract at any personal liability; actions in rem are actions against the thing itself instead of against the
time. person; and actions are quasi in rem, where an individual is named as defendant and the
purpose of the proceeding is to subject his or her interest in a property to the obligation or
Lastly, it is the contention of the petitioner that the appellate court should have loan burdening the property.[26]
granted its Petition for Certiorari because the RTC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in refusing to dismiss Civil Case No. MC99-605 for Under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure, there are
having been filed in an improper venue. Petitioner asserts that in the Distribution only four instances wherein a defendant who is a non-resident and is not found in the
Agreement entered into between the respondent and PEIA, both had mutually agreed to country may be served with summons by extraterritorial service, to wit: (1) when the action
the exclusive jurisdiction of the courts of Singapore or of the Philippines as elected by affects the personal status of the plaintiff; (2) when the action relates to, or the subject of
PEIA. Absent any waiver by PEIA of its right to choose the venue of the dispute, the which is property, within the Philippines, in which the defendant claims a lien or an interest,
Complaint filed by the respondent before the RTC in the Philippines should have been actual or contingent; (3) when the relief demanded in such action consists, wholly or in part,
dismissed on the ground of improper venue. in excluding the defendant from any interest in property located in the Philippines; and (4)
when the defendant non-residents property has been attached within the Philippines. In
The Petition is meritorious. 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 The action instituted by [respondent] affects the parties alone, not
manner the court may deem sufficient.[27] the whole world. Hence, it is an action in personam, i.e., any judgment
therein is binding only upon the parties properly impleaded.
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. xxxx
When the case instituted is an action in rem or quasi in rem, Philippine courts The objective sought in [respondents] [C]omplaint was to establish
already have jurisdiction to hear and decide the case because, in actions in rem and quasi in a claim against petitioner for its alleged unilateral termination of
rem, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction [D]istribution [A]greement. Hence, to repeat, Civil Case No. MC99-605 is an
on the court, provided that the court acquires jurisdiction over the res.[28] Thus, in such action in personam because it is an action against persons, namely, herein
instance, extraterritorial service of summons can be made upon the defendant. The said petitioner, on the basis of its personal liability. As such, personal service of
extraterritorial service of summons is not for the purpose of vesting the court with summons upon the [petitioner] is essential in order for the court to
jurisdiction, but for complying with the requirements of fair play or due process, so that the acquire of (sic) jurisdiction over [its person].[32] (Emphasis supplied.)
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 Thus, being an action in personam, personal service of summons within the Philippines is
interest if he is so minded.[29] On the other hand, when the defendant or respondent does necessary in order for the RTC to validly acquire jurisdiction over the person of the
not reside and is not found in the Philippines,[30] and the action involved is in personam, petitioner, and this is not possible in the present case because the petitioner is a non-
Philippine courts cannot try any case against him because of the impossibility of acquiring resident and is not found within the Philippines. Respondents allegation in its Amended
jurisdiction over his person unless he voluntarily appears in court.[31] Complaint that petitioner had personal property within the Philippines in the form of shares
of stock in PEIP did not make Civil Case No. MC99-605 fall under any of the four instances
In the case at bar, this Court sustains the contention of the petitioner that there can mentioned in Section 15, Rule 14 of the Rules of Court, as to convert the action in
never be a valid extraterritorial service of summons upon it, because the case before the personam to an action in rem or quasi in rem and, subsequently, make the extraterritorial
court a quo involving collection of a sum of money and damages is, indeed, an action in service of summons upon the petitioner valid.
personam, as it deals with the personal liability of the petitioner to the respondent by
reason of the alleged unilateral termination by the former of the Distribution It is incorrect for the RTC to have ruled that the allegations made by the respondent
Agreement. Even the Court of Appeals, in its Decision dated 4 April 2004, upheld the nature in its Amended Complaint, which is primarily for collection of a sum of money and damages,
of the instant case as an action in personam. In the said Decision the appellate court ruled that the petitioner owns shares of stock within the Philippines to which the petitioner claims
that: interest, or an actual or contingent lien, would make the case fall under one of the aforesaid
instances wherein extraterritorial service of summons under Section 15, Rule 14 of the 1997
In the instant petition, [respondents] cause of action in Civil Case Revised Rules of Civil Procedure, would be valid. The RTC in arriving at such conclusions
No. MC99-605 is anchored on the claim that petitioner unilaterally relied on the second instance, mentioned under Section 15, Rule 14 of the 1997 Revised
terminated the Distribution Agreement. Thus, [respondent] prays in its Rules of Civil Procedure (i.e., when the action relates to, or the subject of which is property,
[C]omplaint that Upon the filing of the Complaint, issue an Order fixing the within the Philippines, in which the defendant claims a lien or interest, actual or contingent),
amount of the bond and issue a writ of attachment requiring the sheriff to where extraterritorial service of summons can be properly made. However, the aforesaid
attach the properties of [Perkin-Elmer Philippines], which are not exempt second instance has no application in the case before this Court. Primarily, the Amended
from execution, and as much as may be sufficient to satisfy [respondents] Complaint filed by the respondent against the petitioner was for the collection of sum of
demands. money and damages. The said case was neither related nor connected to any property of
the petitioner to which it claims a lien or interest. The action for collection of a sum of
money and damages was purely based on the personal liability of the petitioner towards the
respondent. The petitioner is correct in saying that mere allegations of personal property converted into an action quasi in rem by the attachment of [petitioners]
within the Philippines does not necessarily make the action as one that relates to or the interest in [Perkin-Elmer Philippines].[34] (Emphasis supplied.)
subject of which is, property within the Philippines as to warrant the extraterritorial service
of summons. For the action to be considered one that relates to, or the subject of which, is
the property within the Philippines, the main subject matter of the action must be the Respondents allegation in its Amended Complaint that petitioner had personal
property itself of the petitioner in the Philippines. By analogy, an action involving title to or property within the Philippines in the form of shares of stock in PEIP does not convert Civil
possession of real or personal property -- such as the foreclosure of real estate or chattel Case No. MC99-605 from an action in personam to one quasi in rem, so as to qualify said
mortgage where the mortgagor does not reside or is not found in the Philippines -- can be case under the fourth instance mentioned in Section 15, Rule 14 of the 1997 Revised Rules
considered as an action which relates to, or the subject of which is, property within the of Civil Procedure (i.e., when the non-resident defendants property has been attached
Philippines, in which the defendant claims a lien or interest, actual or contingent; and in within the Philippines), wherein extraterritorial service of summons upon the petitioner
such instance, judgment will be limited to the res.[33] would have been valid. It is worthy to note that what is required under the aforesaid
provision of the Revised Rules of Civil Procedure is not a mere allegation of the existence of
Moreover, the allegations made by the respondent that the petitioner has property personal property belonging to the non-resident defendant within the Philippines but, more
within the Philippines were in support of its application for the issuance of a writ of precisely, that the non-resident defendants personal property located within the
attachment, which was denied by the RTC. Hence, it is clear from the foregoing that the Philippines must have been actually attached. This Court in the case of Venturanza v. Court
Complaint filed by the respondent against the petitioner does not really relate to, or the of Appeals[35] ruled that when the attachment was void from the beginning, the action in
subject of which is, property within the Philippines of the petitioner. personam which required personal service of summons was never converted into an
action in rem where service by publication would have been valid.Hence, the appellate court
This Court also finds error in the Decision of the Court of Appeals. It is provided for erred in declaring that the present case, which is an action in personam, was converted to
in the said Decision, thus: an action quasi in rem because of respondents allegations in its Amended Complaint that
petitioner had personal property within the Philippines.
However, let it be emphasized that in the [C]omplaint filed before
the trial court, [respondent] prayed that Upon the filing of the Complaint, Glaringly, respondents prayer in its Amended Complaint for the issuance of a writ of
issue an Order fixing the amount of the bond and issue a writ of attachment attachment over petitioners purported shares of stock in PEIP located within
requiring the sheriff to attach the properties of [Perkin-Elmer Philippines], the Philippines was denied by the court a quo in its Order dated 26 March
which are not exempt from execution, and as much as may be sufficient to 1999. Respondents Motion for Reconsideration of the said Order was likewise denied by the
satisfy [respondents] demands. RTC in its subsequent Order, dated 11 January 2000. Evidently, petitioners alleged personal
property within the Philippines, in the form of shares of stock in PEIP, had not been
In other words, although the [C]omplaint before the trial court does attached; hence, Civil Case No. MC99-605, for collection of sum of money and damages,
not involve the personal status of the [respondent], nevertheless, the case remains an action in personam. As a result, the extraterritorial service of summons was not
involves property within the Philippines in which the [petitioner] has or validly effected by the RTC against the petitioner, and the RTC thus failed to acquire
claim an interest, or which the [respondent] has attached, which is one of jurisdiction over the person of the petitioner. The RTC is therefore bereft of any authority to
the instances where extraterritorial service of summons is proper. act upon the Complaint filed before it by the respondent insofar as the petitioner is
concerned.
xxxx
If there was no valid summons served upon petitioner, could RTC have acquired
Hence, it is submitted that one of the instances when exterritorial jurisdiction over the person of the petitioner by the latters voluntary appearance? As a rule,
service of summons under Section 15, Rule 14 of the Rules of Court is even if the service of summons upon the defendant or respondent in a civil case is defective,
proper may be considered to have been met.This is because the [C]omplaint the court can still acquire jurisdiction over his person when he voluntary appears in court or
for collection of sum of money which is an action in personam was
submits himself to its authority. Nonetheless, voluntary appearance, as a mode of acquiring submitted itself to the jurisdiction of the court by seeking other reliefs to which it might be
jurisdiction over the person of the defendant, is likewise inapplicable in this case. entitled when the only relief that it could properly ask from the trial court is the dismissal of
the complaint against it.[42] Thus, the allegation of grounds other than lack of jurisdiction
It is settled that a party who makes a special appearance in court for the purpose of with a prayer for such other reliefs as may be deemed appropriate and proper cannot be
challenging the jurisdiction of said court, based on the invalidity of the service of summons, considered as unequivocal and intentional estoppel. Most telling is Section 20, Rule 14 of
cannot be considered to have voluntarily submitted himself to the jurisdiction of the the Rules of Court, which expressly provides:
court.[36] In the present case, petitioner has been consistent in all its pleadings in assailing
the service of summons upon it and the jurisdiction of the RTC over its person. Thus, the SEC. 20. Voluntary appearance. - The defendants voluntary
petitioner cannot be declared in estoppel when it filed an Answer ad cautelamwith appearance in the action shall be equivalent to service of
compulsory counterclaim before the RTC while the instant Petition was still pending before summons. The inclusion in a motion to dismiss of other grounds aside from
this Court. The petitioner was in a situation wherein it had no other choice but to file an lack of jurisdiction over the person of the defendant shall not be deemed a
Answer; otherwise, the RTC would have already declared that petitioner had waived its right voluntary appearance.[43] (Emphasis supplied.)
to file responsive pleadings.[37] Neither can the compulsory counterclaim contained in
petitioners Answer ad cautelam be considered as voluntary appearance of petitioner before
the RTC. Petitioner seeks to recover damages and attorneys fees as a consequence of In sum, this Court finds that the petitioner did not submit itself voluntarily to the
the unfounded suit filed by respondent against it. Thus, petitioners compulsory authority of the court a quo; and in the absence of valid service of summons, the RTC utterly
counterclaim is only consistent with its position that the respondent wrongfully filed a case failed to acquire jurisdiction over the person of the petitioner.
against it and the RTC erroneously exercised jurisdiction over its person.
Anent the existence of a cause of action against petitioner and the proper venue of
Distinction must be made in Civil Case No. MC99-605 as to the jurisdiction of the the case, this Court upholds the findings of the RTC on these issues.
RTC over respondents complaint and over petitioners counterclaim -- while it may have no
jurisdiction over the former, it may exercise jurisdiction over the latter. The compulsory Dismissal of a Complaint for failure to state a cause of action is provided for by the
counterclaim attached to petitioners Answer ad cautelam can be treated as a separate Rules of Court.[44] When a Motion to Dismiss is grounded on the failure to state a cause of
action, wherein petitioner is the plaintiff while respondent is the defendant.[38] Petitioner action, a ruling thereon should be based only on the facts alleged in the complaint. The
could have instituted a separate action for the very same claims but, for the sake of court must pass upon this issue based solely on such allegations, assuming them to be
expediency and to avoid multiplicity of suits, it chose to demand the same in Civil Case No. true. For it to do otherwise would be a procedural error and a denial of plaintiffs right to
MC99-605.[39] Jurisdiction of the RTC over the subject matter and the parties in the due process.[45] While, truly, there are well-recognized exceptions[46] to the rule that the
counterclaim must thus be determined separately and independently from the jurisdiction allegations are hypothetically admitted as true and inquiry is confined to the face of the
of the same court in the same case over the subject matter and the parties in respondents complaint,[47] none of the exceptions apply in this case. Hence, the general rule applies. The
complaint. defense of the petitioner that it is not the real party-in-interest is evidentiary in nature
which must be proven in trial. The appellate court, then, cannot be faulted for not granting
Moreover, even though the petitioner raised other grounds in its Motion to Dismiss petitioners Motion to Dismiss on the ground of failure to state a cause of action.
aside from lack of jurisdiction over its person, the same is not tantamount to its voluntary
appearance or submission to the authority of the court a quo. While in De Midgely v. In the same way, the appellate court did not err in denying petitioners Motion to
Ferandos,[40] it was held that, in a Motion to Dismiss, the allegation of grounds other than Dismiss Civil Case No. MC99-605 on the ground of improper venue. In arriving at such
lack of jurisdiction over the person of the defendant, including a prayer "for such other conclusion, this Court quotes with approval the following ratiocination of the RTC:
reliefs as" may be deemed "appropriate and proper" amounted to voluntary appearance,
such ruling must be deemed superseded by the declaration of this Court in La Naval Drug As for the contention that venue was improperly laid, x x x, the [trial
Corporation v. Court of Appeals[41] that estoppel by jurisdiction must be unequivocal and court] in its ultimate desire that the ends of justice could be served in its
intentional. It would be absurd to hold that petitioner unequivocally and intentionally fullest, cannot rule that venue was improperly laid.
orders the dismissal of the Complaint filed by the respondent against the petitioner
xxxx because the court a quo failed to acquire jurisdiction over the person of the latter.Since
the Complaint of the respondent was dismissed, what will happen then to the counterclaim
The stipulation as to the venue of a prospective action does not preclude of the petitioner? Does the dismissal of the complaint carry with it the dismissal of the
the filing of the suit in the residence of the [respondent] under Section 2, counterclaim?
Rule 4, Rules of Court, especially where the venue stipulation was
imposed by the [petitioner] for its own benefits.[48] (Emphasis supplied.) In the cases of Metal Engineering Resources Corp. v. Court of
Appeals,[50] International Container Terminal Services, Inc. v. Court of Appeals,[51] and BA
Despite the venue stipulation found in the Distribution Agreement stipulating that Finance Corporation v. Co.,[52] the Court ruled that if the court does not have jurisdiction to
the exclusive jurisdiction over disputes arising from the same shall lie in the courts of entertain the main action of the case and dismisses the same, then the compulsory
Singapore or of the Territory (referring to the Philippines), whichever is elected by PEIA (or counterclaim, being ancillary to the principal controversy, must likewise be dismissed since
petitioner, as PEIAs alleged successor), the RTC of the Philippines cannot be considered as no jurisdiction remained for any grant of relief under the counterclaim.[53] If we follow the
an improper venue. Truly, the venue stipulation used the word exclusive, however, a closer aforesaid pronouncement of the Court in the cases mentioned above, the counterclaim of
look on the Distribution Agreement would reveal that the venue stipulation was really in the the herein petitioner being compulsory in nature must also be dismissed together with the
alternative i.e., courts of Singapore or of the Territory, meaning, the Philippines; thus, the Complaint. However, in the case of Pinga vs. Heirs of German Santiago,[54] the Court
court a quo is not an improper venue for the present case. explicitly expressed that:
Nonetheless, it bears to emphasize that despite our findings that based on the allegations in Similarly, Justice Feria notes that the present rule reaffirms the right
respondents Complaint in Civil Case No. MC99-605, respondent appears to have a cause of of the defendant to move for the dismissal of the complaint and to
action against the petitioner and that the RTC is the proper venue for the said case, Civil prosecute his counterclaim, as stated in the separate opinion [of Justice
Case No. MC99-605 is still dismissible, for the RTC never acquired jurisdiction over the Regalado in BA Finance]. Retired Court of Appeals Justice Hererra
person of the petitioner. The extraterritorial service of summons upon the petitioner pronounces that the amendment to Section 3, Rule 17 [of the 1997 Revised
produces no effect because it can only be done if the action is in rem or quasi in rem. The Rules of Civil Procedure] settles that nagging question whether the
case for collection of sum of money and damages filed by the respondent against the dismissal of the complaint carries with it the dismissal of the counterclaim,
petitioner being an action in personam, then personal service of summons upon the and opines that by reason of the amendments, the rulings in Metals
petitioner within the Philippines is essential for the RTC to validly acquire jurisdiction over Engineering, International Container, and BA Finance may be deemed
the person of the petitioner. Having failed to do so, the RTC can never subject petitioner to abandoned. x x x.
its jurisdiction. The mere allegation made by the respondent that the petitioner had shares
of stock within the Philippines was not enough to convert the action from one in x x x, when the Court promulgated the 1997 Rules of Civil
personam to one that was quasi in rem, for petitioners purported personal property was Procedure, including the amended Rule 17, those previous jural doctrines
never attached; thus, the extraterritorial service of summons upon the petitioner remains that were inconsistent with the new rules incorporated in the 1997 Rules of
invalid. In light of the foregoing findings, this Court concludes that the RTC has no power to Civil Procedure were implicitly abandoned insofar as incidents arising after
hear and decide the case against the petitioner, because the extraterritorial service of the effectivity of the new procedural rules on 1 July 1997. BA Finance, or
summons was not validly effected upon the petitioner and the RTC never acquired even the doctrine that a counterclaim may be necessarily dismissed along
jurisdiction over its person. with the complaint, clearly conflicts with the 1997 Rules of Civil
Procedure. The abandonment of BA Finance as doctrine extends as far back
Finally, as regards the petitioners counterclaim, which is purely for damages and attorneys as 1997, when the Court adopted the new Rules of Civil Procedure. If, since
fees by reason of the unfounded suit filed by the respondent against it, it has long been then, abandonment has not been affirmed in jurisprudence, it is only
settled that the same truly falls under the classification of compulsory counterclaim and it because no proper case has arisen that would warrant express confirmation
must be pleaded in the same action, otherwise, it is barred.[49] In the case at bar, this Court of the new rule. That opportunity is here and now, and we thus rule that
the dismissal of a complaint due to fault of the plaintiff is without complaint is sufficient to obviate the pending cause of action maintained
prejudice to the right of the defendant to prosecute any pending by the defendant against the plaintiff.[57]
counterclaims of whatever nature in the same or separate action. We Based on the aforequoted ruling of the Court, if the dismissal of the complaint
confirm that BA Finance and all previous rulings of the Court that are somehow eliminates the cause of the counterclaim, then the counterclaim cannot
inconsistent with this present holding are now abandoned.[55] [Emphasis survive.Conversely, if the counterclaim itself states sufficient cause of action then
supplied]. it should stand independently of and survive the dismissal of the complaint. Now, having
been directly confronted with the problem of whether the compulsory counterclaim by
It is true that the aforesaid declaration of the Court refers to instances covered by reason of the unfounded suit may prosper even if the main complaint had been
Section 3, Rule 17 of the 1997 Revised Rules of Civil Procedure[56] on dismissal of the dismissed, we rule in the affirmative.
complaint due to the fault of the plaintiff. Nonetheless, it does not also preclude the
application of the same to the instant case just because the dismissal of respondents It bears to emphasize that petitioners counterclaim against respondent is for
Complaint was upon the instance of the petitioner who correctly argued lack of jurisdiction damages and attorneys fees arising from the unfounded suit. While respondents Complaint
over its person. against petitioner is already dismissed, petitioner may have very well already incurred
damages and litigation expenses such as attorneys fees since it was forced to engage legal
Also in the case of Pinga v. Heirs of German Santiago, the Court discussed the representation in the Philippines to protect its rights and to assert lack of jurisdiction of the
situation wherein the very filing of the complaint by the plaintiff against the defendant courts over its person by virtue of the improper service of summons upon it. Hence, the
caused the violation of the latters rights. As to whether the dismissal of such a complaint cause of action of petitioners counterclaim is not eliminated by the mere dismissal of
should also include the dismissal of the counterclaim, the Court acknowledged that said respondents complaint.
matter is still debatable, viz:
It may also do well to remember that it is this Court which mandated that claims for
Whatever the nature of the counterclaim, it bears the same integral damages and attorneys fees based on unfounded suit constitute compulsory
characteristics as a complaint; namely a cause (or causes) of action counterclaim which must be pleaded in the same action or, otherwise, it shall be barred. It
constituting an act or omission by which a party violates the right of will then be iniquitous and the height of injustice to require the petitioner to make the
another. The main difference lies in that the cause of action in the counterclaim in the present action, under threat of losing his right to claim the same ever
counterclaim is maintained by the defendant against the plaintiff, while the again in any other court, yet make his right totally dependent on the fate of the
converse holds true with the complaint. Yet, as with a complaint, a respondents complaint.
counterclaim without a cause of action cannot survive.
If indeed the Court dismisses petitioners counterclaim solely on the basis of the
x x x if the dismissal of the complaint somehow eliminates the dismissal of respondents Complaint, then what remedy is left for the petitioner? It can be
cause(s) of the counterclaim, then the counterclaim cannot survive. Yet that said that he can still file a separate action to recover the damages and attorneys fees based
hardly is the case, especially as a general rule.More often than not, the on the unfounded suit for he cannot be barred from doing so since he did file the
allegations that form the counterclaim are rooted in an act or omission of compulsory counterclaim in the present action, only that it was dismissed when
the plaintiff other than the plaintiffs very act of filing the respondents Complaint was dismissed. However, this reasoning is highly flawed and
complaint. Moreover, such acts or omissions imputed to the plaintiff are irrational considering that petitioner, already burdened by the damages and attorneys fees
often claimed to have occurred prior to the filing of the complaint itself. The it may have incurred in the present case, must again incur more damages and attorneys fees
only apparent exception to this circumstance is if it is alleged in the in pursuing a separate action, when, in the first place, it should not have been involved in
counterclaim that the very act of the plaintiff in filing the complaint any case at all.
precisely causes the violation of the defendants rights. Yet even in such an
instance, it remains debatable whether the dismissal or withdrawal of the
Since petitioners counterclaim is compulsory in nature and its cause of action
survives that of the dismissal of respondents complaint, then it should be resolved based on
its own merits and evidentiary support.