RULE 14.doc

RULE 14CIVIL PROCEDURE

117 SCRA 91

Patricio Bello vs Eugenia Ubo et alCivil Procedure – Service of Summons by a Police Officer

A land dispute arose between Bello and Ubo. Bello is claiming ownership over the property that Ubo and her son have been occupying for years – even paying taxes therefor. Ubo and her son (Porferio Regis) claimed that they inherited said land.

Bello then filed a civil suit against Ubo and Regis. Summons were issued by the court.

A certain Patrolman Castulo Yobia served the summons. What he did was go to where Ubo and her son was residing. Ubo and Regis initially refused to accept the same. But Yobia explained the nature of the Summons; that there is a civil case filed against them; that they need to find a lawyer to assist them. Ubo and Regis then reluctantly signed the summons. Thereafter, he detached the copy of the complaint and handed it to Ubo and Regis. He however took back the same afterwards; he also held on to the copy of the summons and afterwards returned to his police station.

Despite signing the summons, Ubo and Regis did not file any responsive pleadings nor did they appear in court. Eventually, the trial court declared them in default and decided in favor of Bello.

ISSUE: Whether or not there is a proper service of summons in the case at bar.

HELD: No. A police officer is not one of those enumerated as a person authorized to serve summons. The list provided in the Rules of Court is exclusive. Yobia was not a sheriff or a court officer of the province where service was made; and neither was he a person who, for special reasons, was specially authorized to serve the summons by the judge who issued the same.

Furthermore, even assuming that Yobia could be considered as a proper person to serve the summons, still there was no valid and effective service since he brought back the summons with him together with the copy of the complaint. Since there is no valid service of summons, the trial court never acquired jurisdiction over the persons of Ubo and Regis. Therefore, the ex parte proceedings that took place as well as the decision favoring Bello is null and void.

Laus v. CA, 219 SCRA 688 (1993)

Facts: This is the 10-minute case. Torres filed a complaint for Collection vs. Laus. Deputy Sheriff went to Laus’ residence to serve summons, but found that there was no one in the house. He waited for 10 minutes. Then a three-wheeled vehicle (tricykol) came w/ the savior who claimed to be the maid in the house. The Sheriff served summons upon the latter. Laus was declared in default. Before he received the final judgment, Laus filed an MTD on the ground that there was ineffective service of summons bec. there was no indication that S first exerted efforts to serve the same personally before resorting to substituted service.

Held: There was an ineffective service of summons.General Rule: Must serve personally.

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Exception: If cannot serve personally w/in reasonable period of time, may resort to Substituted Service.How can Impossibility of Service be shown? By stating efforts made to find defendant personally & the fact that such efforts failed.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; JURISDICTION; HOW JURISDICTION OVER PERSON OF DEFENDANT ACQUIRED; EFFECT OF INVALID SERVICE OF SUMMONS; CASE AT BAR. — The focal issue is whether or not the trial court acquired jurisdiction over the persons of the petitioners by virtue of the substituted service of summons effected by Deputy Sheriff Cruz. Since the petitioners did not voluntarily submit to the jurisdiction of the trial court, proper service of summons became imperative. If the service effected in the case at bar was, as claimed by the petitioners, invalid, the trial court acquired no jurisdiction over their persons. In such an instance, the order of default, judgment by default and writ of execution issued by the trial court would be null and void. . . . Since the substituted service of summons in this case was not validly effected, the trial court did not acquire jurisdiction over the persons of the petitioners. The order of default, the judgment by default, the writ of execution issued by it, as well as the auction sale of the petitioners' properties levied on execution are, therefore, all null and void.

2. ID.; ID.; SUMMONS; PERSONAL SERVICE; GENERAL RULE; SUBSTITUTED SERVICE NATURE THEREOF; PHRASE "WITHIN A REASONABLE TIME" CONSTRUED. — The general rule in this jurisdiction is that summons must be personally served; pursuant to Section 7, Rule 14 of the Revised Rules of Court, such personal service is to be accomplished by "handing a copy thereof to the defendant in person, or, if he refuses to receive it, by tendering it to him." However, if this mode of service cannot be effected within a reasonable time, substituted service may be resorted to under Section 8 of the same Rule. Section 8 provides: "SEC. 8. Substituted

Service. — If the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant's dwelling house or residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendant's office or regular place of business with some competent person in charge thereof." This provision is a reproduction of Section 8, Rule 7 of the 1940 Rules of Court except that inter alia, "promptly" in the latter was changed to "within a reasonable time" in the former. "Within a reasonable time" contemplates a period of time longer than that demarcated by the word "prompt," and presupposes that a prior attempt at personal service, within a justifiable time frame as would be necessary to bring the defendant within the jurisdiction of the court, had failed. Since substituted service is in derogation of the common law and is extraordinary in character, it must be used only as prescribed and in the circumstances authorized by statute. Statutes prescribing modes other than personal service of summons must be strictly complied with to give the court jurisdiction, and such compliance must appear affirmatively in the return.

3. ID.; ID.; ID.; HOW IMPOSSIBILITY OF PROMPT PERSONAL SERVICE SHOWN; CASE AT BAR. — In Keister vs. Navarro, this Court described how the impossibility of personal service should be shown: "Impossibility of prompt service should be shown by stating the efforts made to find the defendant personally and the fact that such efforts failed. This statement should be made in the proof of service (I Moran, Comments on the Rules of Court, 1970 Ed., p. 444). This is necessary because substituted service is in derogation of the usual method of service. It has been held that this method of service is `in derogation of the common law; it is a method extraordinary in character, and hence may be used only as prescribed and in the circumstances authorized by statute.' . . . (72 C.J.S. 1053)." A perusal of the sheriff's return in the case at bar readily reveals that it does not (a) indicate the impossibility of service of summons within a reasonable time, (b) specify the efforts exerted to locate the petitioners and (c) state that it was served on a person of sufficient age and discretion residing therein. The fact of the matter is that as disclosed in his testimony taken in connection with

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the motion for reconsideration, and the affidavit he prepared in conjunction with such hearing. Deputy Sheriff Cruz resorted to a substituted service on his first — and only — attempt to effect a personal service. Upon being informed that the petitioners were not around at that time, he immediately resorted to a substituted service through Josephine Areola, a person whose age he did not even know or attempt to discover. He did not even inquire about the whereabouts of the petitioners, the time they were expected to return home, the hours of the day they could be contacted at their house or the location of their offices, if any, in order that he could faithfully comply with the requirement of personal service.

4. ID.; ID.; ID.; SERVICE OF SUMMONS MAY BE MADE AT NIGHT, DURING THE DAY, ON A SUNDAY OR A HOLIDAY; REASON THEREFOR; CASE AT BAR. — It is all too obvious that no earnest efforts were exerted by Deputy Sheriff Cruz to effect the personal service of summons. His testimony thus attests to an undue, if not indecent, haste to serve the summons at the first attempt without making sure that personal service was, by then and even thereafter, an impossibility because either the petitioners had left for a foreign country or an unknown destination with not definite date of returning within a reasonable period or had gone into hiding to avoid service of any process from the courts. If he had only made the inquiries suggested above, he could have returned in the evening of 10 October 1989 or on any of the succeeding days — including the following Saturday and Sunday. Service of summons may be made at night as well as during the day, or even on a Sunday or holiday because of its ministerial character.

5. ID.; ID.; MOTION TO DISMISS ON GROUND OF LACK OF JURISDICTION OVER DEFENDANT'S PERSON; PERIOD FOR FILING DOES NOT COMMENCE TO RUN UNTIL DEFENDANT VOLUNTARILY SUBMITS TO COURT'S JURISDICTION; REASON THEREFOR; CASE AT BAR. — Some further comments, en passant, on the ratiocination of the respondent Court are in order. It is not accurate for the latter to have said that the petitioners' motion to dismiss was not filed seasonably because it was filed beyond the reglementary period provided in the Revised Rules of Court. Such a

conclusion would doubtless be correct if there was a valid service of summons. If, however, a defendant has not been properly summoned, the period to file a motion to dismiss for lack of jurisdiction over his person does not commence to run until he voluntarily submits to the jurisdiction of the court, since the court has no jurisdiction to adjudicate the controversy as to him until such time. In this case, petitioners did not voluntarily submit to the jurisdiction of the trial court. Consequently, the period to file a responsive pleading did not even commence to run.

6. ID.; SPECIAL CIVIL ACTIONS; CERTIORARI; WHEN INTERLOCUTORY ORDER MAY BE THE SUBJECT THEREOF; CASE AT BAR. — Nor are We persuaded by the respondent Court's declaration that even if the motion to dismiss had been filed on time, the trial court's order denying the same, being interlocutory, still cannot be the subject of a petition for certiorari. To be sure, this rule admits of an exception, as when the trial court clearly acted outside of its jurisdiction or with grave abuse of discretion in denying the motion to dismiss. This is exactly what happened in the case while it was pending before the trial court; the denial of the motion to dismiss was based solely on the ground that a judgment by default had already been entered. Certainly, this does not constitute a valid ground for the denial because the motion raises a fundamental and prejudicial issue affecting the validity of the decision by default.

7. ID.; EVIDENCE DISPUTABLE PRESUMPTIONS; PRESUMPTION OF REGULARITY IN PERFORMANCE OF OFFICIAL FUNCTIONS; DOES NOT APPLY WHERE SHERIFF'S RETURN IS PATENTLY DEFECTIVE. — Finally, respondent Court's reliance on the presumption of regularity in the performance of official functions is misplaced. We have held that such a presumption does not apply where it is patent that the sheriff's return is defective.

8. ID.; VOID JUDGMENT CAN NEVER BECOME FINAL AND EXECUTORY; ACTION TO DECLARE NULLITY OF VOID JUDGMENT IMPRESCRIPTIBLE; CASE AT BAR. — Equally unmeritorious is the respondent Court's statement that the failure of

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the petitioners to appeal from the judgment by default rendered such judgment final and unassailable. In the first place, it is axiomatic that a void judgment can never become final and executory and may even be assailed or impugned at any time. An action to declare the nullity of a void judgment does not prescribe. Secondly, the motion to dismiss in this case was filed before the petitioners received a copy of the decision by default. Since the said motion is based on the lack of jurisdiction over the persons of the petitioners which, if true — in fact, We have found it to be so — would result in the nullification not only of the default order but of the decision as well, then for all legal intents and purposes, the latter was covered by the motion. This was precisely the orientation of the trial court when it allowed the parties to submit evidence to support the motion to reconsider the Order of 5 March 1990 denying the motion to dismiss. It would certainly not have gone that far if it thought otherwise for by then, the decision had already become final.

[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 Valmontes 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 respondents counsel

in which, in regard to the partition of the property in question, she referred private respondents 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:

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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 MarineGedisco Center, Unit 3041564 A. Mabini, ErmitaMetro ManilaTelephone: 521-1736Fax: 21-2095

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 respondents motion.

In its Order dated July 3, 1992, the trial court, denied private respondents 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 courts decision was received by petitioner Alfredo D. Valmonte on January 15, 1993 at

his Manila office and on January 21, 1993 in Seattle, Washington. Hence, this petition.

The issue at bar is whether in light of the facts set forth above, petitioner Lourdes A. Valmonte was validly served with summons. In holding that she had been, the Court of Appeals stated:[1]

[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 wifes 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. Valmontes 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.

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http://sc.judiciary.gov.ph/jurisprudence/1996/jan1996/108538.htm#_ftn1


xxx xxx xxx

Turning to another point, it would not do for Us to overlook the fact that the disputed summons was served not upon just an ordinary lawyer of private respondent Lourdes A. Valmonte, but upon her lawyer husband. But that is not all, the same lawyer/husband happens to be also her co-defendant in the instant case which involves real property which, according to her lawyer/husband/ co-defendant, belongs to the conjugal partnership of the defendants (the spouses Valmonte). It is highly inconceivable and certainly it would be contrary to human nature for the lawyer/husband/co-defendant to keep to himself the fact that they (the spouses Valmonte) had been sued with regard to a property which he claims to be conjugal. Parenthetically, there is nothing in the records of the case before Us regarding any manifestation by private respondent Lourdes A. Valmonte about her lack of knowledge about the case instituted against her and her lawyer/husband/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 quodated 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 substituted service in accordance with Rule 14, 8 or by publication as provided in 17 and 18 of the same Rule.[5]

In all of these cases, it should be noted, defendant must be a resident of the Philippines, otherwise an action in personam cannot be brought because jurisdiction over his person is essential to make a binding decision.

On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the defendant is not essential for giving the court jurisdiction so long as the court acquires jurisdiction over the res. If the defendant is a nonresident and he is not found in the country, summons may be served extraterritorially in accordance with Rule 14, 17, which provides:

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

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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]

Applying the foregoing rules to the case at bar, private respondents 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 defendants 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 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.

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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 defendants husband was binding on her. But the ruling in that case is justified because summons were served upon defendants 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 defendants 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 husbands representative and attorney-in-fact in a civil case, which he had earlier filed against William Gemperle. In fact Gemperles action was for damages arising from allegedly derogatory statements contained in the complaint filed in the first case. As this Court said, i]n other words, Mrs. Schenker had authority to sue, and had actually sued, on behalf of her husband, so that she was, also, empowered to represent him in suits filed against him, particularly in a case, like the one at bar, which is a consequence of the action brought by her on his behalf. [11] Indeed, if instead of filing an independent action Gemperle filed a counterclaim in the action brought by Mr. Schenker against him, there would have been no doubt that the trial court could have acquired jurisdiction over Mr. Schenker through his agent and attorney-in-fact, Mrs. Schenker.

In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not appoint her husband as her attorney-in-fact. Although she wrote private respondent s attorney that all communications intended for her should be addressed to her husband who is also her lawyer at the latters 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 petitioners 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 areREINSTATED.

SO ORDERED.

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G.R. No. L-58340 July 16, 1991

KAWASAKI PORT SERVICE CORPORATION, NAIKAI SHIPPING CO. LTD., NAIKAI TUG BOAT SERVICE CO., THE PORT SERVICE CORPORATION, LICENSED LAND SEA PILOTS ASSOCIATION, HAYAKOMA UNYU K.K., TOKYO KISEN COMPANY, LTD., OMORI KAISOTEN, LTD., TOHOKU UNYU CO., LTD. AND SEITETSU UNYU CO., LTD., petitioners,

vs. THE HON. AUGUSTO M. AMORES, Judge of Br. XXIV, Court of First Instance of Manila, and C.F. SHARP & CO., INC., respondents.

BIDIN, J.:p

This is a petition for certiorari seeking to set aside the orders of the then Court of First Instance of Manila, * Branch XXIV in Civil Case No. 132077: (a) dated July 13, 1981 denying the special appearances of petitioners as defendants in said case to question the court's jurisdiction over the persons of the defendants and (b) dated September 22, 1981, denying the motion for reconsideration of said order.

The antecedents of this case are as follows:

On May 7, 1980, the private respondent C.F. Sharp & Co., Inc. filed a complaint for injunction and/or declaratory relief in the then Court of First Instance of Manila against seventy-nine (79) Japanese corporations as defendants, among which are the petitioners herein. Said complaint was docketed as Civil Case No. 132077. The complaint alleges, among others, that the plaintiff is a corporation organized and existing under the laws of the Philippines; that there is another corporation organized under the law of Japan with the corporate name C.F. Sharp Kabushiki Kaisha; that the plaintiff and C.F. Sharp Kabushiki Kaisha are in all respects separate and distinct from each other; that C.F. Sharp Kabushiki Kaisha appears to have incurred obligations to several creditors amongst which are defendants, also foreign corporations organized and existing under the laws of Japan; that due to financial difficulties, C.F. Sharp Kabushiki Kaisha failed and/or refused to pay its creditors; and that in view of the failure and/or refusal of said C.F. Sharp Kabushiki Kaisha to pay its alleged obligations to defendants, the latter have been demanding or have been attempting to demand from C.F. Sharp & Co., Inc., the payment of the alleged obligations to them of C.F. Sharp Kabushiki Kaisha, notwithstanding that C.F. Sharp & Co., Inc. is a corporation separate and distinct from that of C.F. Sharp Kabushiki Kaisha and that the former had no participation whatsoever or liability in connection with the transactions between the latter and the defendants.

As alleged in the complaint, the private respondent prayed for injunctive relief against the petitioners' demand from the private respondent for the payment of C.F. Sharp Kabushiki Kaisha's liabilities to the petitioners.

As an alternative to injunction, the private respondent prayed that a judicial declaration be made that, as a separate and independent corporation, it is not liable for the obligations and liabilities of C.F. Sharp Kabushiki Kaisha.

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Since the defendants are non-residents, without business addresses in the Philippines but in Japan, the private respondent prayed for leave of court to effect extraterritorial service of summons.

On June 11, 1980, the respondent judge issued an order authorizing the private respondent to effect extraterritorial service of summons on defendants therein.

Subsequently, private respondent filed an urgent ex-parte motion dated June 23, 1980 for Extraterritorial Service of Summons Upon Defendants by registered mail with return cards pursuant to Section 17 of Rule 14 of the Rules of Court.

Acting on said motion, the respondent judge issued an order dated June 30, 1980 granting the motion and authorizing extraterritorial service of summons upon defendants to be effected by registered mail with return cards.

On March 11, 1981, five of the petitioners, Kawasaki Port Service Corporation, Naikai Shipping Co., Ltd., Naikai Tug Boat Service Co., Ltd., The Port Service Corporation and Licensed Land Sea Pilots Association filed their "Special Appearance to Question Jurisdiction of This Honorable Court Over Persons of Defendants" contending that the lower court does not and cannot acquire jurisdiction over the persons of defendants on the grounds that private respondent's action does not refer to its personal status; that the action does not have for subject matter property contemplated in Section 17 of Rule 14 of the Rules of Court, that the action does not pray that defendants be excluded from any interest or property in the Philippines; that no property of the defendants has been attached; that the action is in personam; and that the action does not fall within any of the four cases mentioned in Section 17, Rule 14 of the Rules of Court.

On March 17, 1981, another three of herein petitioners, Hayakoma Unyu K.K., Tokyo Kisen Company, Ltd. and Omori Kaisoten, Ltd.

also filed their special appearance adopting the same arguments as that of the first five.

On April 28, 1981, the two other petitioners, Tohoku Unyu Co., Ltd. and Seitetsu Unyu Co., Ltd., filed their "Special Appearance to Question the Jurisdiction of the Honorable Court" over their persons adopting in toto as theirs the "Special Appearance" dated March 11, 1981 of Kawasaki Port Service.

On July 13, 1981, the respondent Court issued its order denying said special appearances. The motion for reconsideration of said order filed by the petitioners was also denied on September 22, 1981.

Hence, the present petition.

After the required pleadings were filed, the First Division of this Court, in the resolution of April 14, 1982, gave due course to the petition and required both parties to submit simultaneous memoranda within thirty (30) days from notice. Both parties complied by submitting the required memoranda.

The main issue in this case is whether or not private respondent's complaint for injunction and/or declaratory relief is within the purview of the provisions of Section 17, Rule 14 of the Rules of Court.

The petitioners contend that the respondent judge acted contrary to the provisions of Section 17 of Rule 14 for the following reasons: (1) private respondent's prayer for injunction, as a consequence of its alleged non-liability to the petitioners for debts of C.F. Sharp Kabushiki Kaisha of Japan, conclusively establishes that private respondent's cause of action does not affect its status; (2) the respondent court cannot take jurisdiction of actions against the petitioners as they are non-residents and own no property within the state; (3) the petitioners have not as yet claimed a lien or interest in the property within the Philippines at the time the action was filed which is a requirement under Section 17 of Rule 14; (4) extra-

10


territorial service on a non-resident defendant is authorized, among others, when the subject of the action is property within the Philippines in which the relief demanded consists in excluding defendant from any interest therein; and (5) inasmuch as the reliefs prayed for by the private respondent in the complaint are in personam, service by registered mail cannot be availed of because Section 17 of Rule 14 authorized this mode of service only in actions in rem or quasi in rem.

For its part, the private respondent countered that (1) the action refers to its status because the basic issue presented to the lower court for determination is its status as a corporation which has a personality that is separate, distinct and independent from the personality of another corporation, i.e., C.F. Sharp Kabushiki Kaisha of Japan; (2) under Section 17 of Rule 14, the subject matter or property involved in the action does not have to belong to the defendants. The provisions of said section contemplate of a situation where the property belongs to the plaintiff but the defendant has a claim over said property, whether that claim be actual or contingent; (3) the prayer of the plaintiff that the defendants be excluded from any interest in the properties of the plaintiff within the Philippines has the effect of excluding the defendants from the properties of the plaintiff in the Philippines for the purpose of answering for the debts of C.F. Sharp Kabushiki Kaisha of Japan to the defendants in accordance with Section 17 of Rule 14; and (4) the action before the lower court is an action quasi in rem as the remedies raised in the complaint affect the personal status of the plaintiff as a separate, distinct and independent corporation and relates to the properties of the plaintiff in the Philippines over which the petitioners have or claim an interest, actual or contingent.

The petition is impressed with merit.

Section 17, Rule 14 of the Rules of Court provides:

Section 17. Extraterritorial service. — When the defendant does not reside and is not found in the Philippines and the action affects the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under section 7; or by publication in a newspaper of general circulation in such places and for such times 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.

This Court had ruled that extraterritorial service of summons is proper only in four (4) instances, namely: "(1) when the action affects the personal status of the plaintiffs: (2) when the action relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant non-resident's property has been attached within the Philippines." (De Midgely v. Ferandos, 64 SCRA 23 [1975]; The Dial Corporation v. Soriano, 161 SCRA 737 [1988]).

In the case at bar, private respondent has two (2) alternative principal causes of action, to wit: either for declaratory relief or for injunction. Allegedly, in both cases, the status of the plaintiff is not only affected but is the main issue at hand.

As defined, "Status means a legal personal relationship, not temporary in nature nor terminable at the mere will of the parties, with which third persons and the state are concerned" (Holzer v.

11


Deutsche Reichsbahn Gesellschaft, 290 NYS 181; cited in 40 Words and Phrases, 129, Permanent Edition).

It is easy to see in the instant case, that what is sought is a declaration not only that private respondent is a corporation for there is no dispute on that matter but also that it is separate and distinct from C.F. Sharp Kabushiki Kaisha and therefore, not liable for the latter's indebtedness. It is evident that monetary obligations does not, in any way, refer to status, lights and obligations. Obligations are more or less temporary, but status is relatively permanent. But more importantly, as cited in the case of (Dy Poco v. Commissioner of Immigration, et al., 16 SCRA 618 [1966]), the prevailing rule is that "where a declaratory judgment as to a disputed fact would be determinative of issues rather than a construction of definite stated rights, status and other relations, commonly expressed in written instrument, the case is not one for declaratory judgment." Thus, considering the nature of a proceeding for declaratory judgment, wherein relief may be sought only to declare rights and not to determine or try issues, there is more valid reason to adhere to the principle that a declaratory relief proceeding is unavailable where judgment would have to be made, only after a judicial investigation of disputed issues (ibid). In fact, private respondent itself perceives that petitioners may even seek to pierce the veil of corporate identity (Rollo, p. 63).

Private respondent alleges that most if not all, of the petitioners have merely demanded or have attempted to demand from the former the payment of the obligations of C.F. Sharp K.K., (Rollo, p. 63). Otherwise stated, there is no action relating to or the subject of which are the properties of the defendants in the Philippines for it is beyond dispute that they have none in this jurisdiction nor can it be said that they have claimed any lien or interest, actual or contingent over any property herein, for as above stated, they merely demanded or attempted to demand from private respondent payment of the monetary obligations of C.F. Sharp K.K., No action in court has as yet ensued. Verily, the fact that C.F. Sharp Philippines is an entity

separate and distinct from C.F. Sharp K.K., is a matter of defense that can be raised by the former at the proper time.

Finally, the alternative relief sought is injunction, that is to enjoin petitioners from demanding from private respondent the payment of the obligations of C.F. Sharp K.K., It was not prayed that petitioners be excluded from any property located in the Philippines, nor was it alleged, much less shown, that the properties of the defendants, if any, have been attached.

Hence, as ruled by this Court, where the complaint does not involve the personal status of plaintiff, nor any property in the Philippines in which defendants have or claim an interest, or which the plaintiff has attached, but purely an action for injunction, it is a personal action as well as an action in personam, not an action in rem or quasi in rem. As a personal action, personal or substituted service of summons on the defendants, not extraterritorial service, is necessary to confer jurisdiction on the court. In an action for injunction, extra-territorial service of summons and complaint upon the non-resident defendants cannot subject them to the processes of the regional trial courts which are powerless to reach them outside the region over which they exercise their authority. Extra-territorial service of summons will not confer on the court jurisdiction or Power to compel them to obey its orders (Dial Corporation v. Soriano, 161 SCRA 738 [1988] citing Section 3-a Interim Rules of Court, Section 21, subpar. 1, BP Blg. 129).

Considering that extra-territorial service of summons on the petitioners was improper, the same was null and void.

WHEREFORE, the petition is Granted and the questioned orders dated July 13, 1981 and September 22, 1981 of the respondent Judge, are Reversed and Set Aside.

SO ORDERED.

12


If the action is in personam, this mode of service will not be available. There is no extraterritorial service of summons in an action in personam. Hence, extraterritorial service upon a nonresident in an action for injunction which is in personam is not proper

G.R. No. L-58340 July 16, 1991

KAWASAKI PORT SERVICE CORPORATION, NAIKAI SHIPPING CO. LTD., NAIKAI TUG BOAT SERVICE CO., THE PORT SERVICE CORPORATION, LICENSED LAND SEA PILOTS ASSOCIATION, HAYAKOMA UNYU K.K., TOKYO KISEN COMPANY, LTD., OMORI KAISOTEN, LTD., TOHOKU UNYU CO., LTD. AND SEITETSU UNYU CO., LTD., petitioners,

vs.

THE HON. AUGUSTO M. AMORES, Judge of Br. XXIV, Court of First Instance of Manila, and C.F. SHARP & CO., INC., respondents.

BIDIN, J.:p

This is a petition for certiorari seeking to set aside the orders of the then Court of First Instance of Manila, * Branch XXIV in Civil Case No. 132077: (a) dated July 13, 1981 denying the special appearances of petitioners as defendants in said case to question the court's jurisdiction over the persons of the defendants and (b) dated September 22, 1981, denying the motion for reconsideration of said order.

The antecedents of this case are as follows:

On May 7, 1980, the private respondent C.F. Sharp & Co., Inc. filed a complaint for injunction and/or declaratory relief in the then Court of First Instance of Manila against seventy-nine (79) Japanese corporations as defendants, among which are the petitioners herein. Said complaint was docketed as Civil Case No. 132077. The complaint alleges, among others, that the plaintiff is a corporation organized and existing under the laws of the Philippines; that there is another corporation organized under the law of Japan with the corporate name C.F. Sharp Kabushiki Kaisha; that the plaintiff and C.F. Sharp Kabushiki Kaisha are in all respects separate and distinct from each other; that C.F. Sharp Kabushiki Kaisha appears to have incurred obligations to several creditors amongst which are defendants, also foreign corporations organized and existing under the laws of Japan; that due to financial difficulties, C.F. Sharp Kabushiki Kaisha failed and/or refused to pay its creditors; and that in view of the failure and/or refusal of said C.F. Sharp Kabushiki Kaisha to pay its alleged obligations to defendants, the latter have been demanding or have been attempting to demand from C.F. Sharp & Co., Inc., the payment of the alleged obligations to them of C.F. Sharp Kabushiki Kaisha, notwithstanding that C.F. Sharp & Co., Inc. is a corporation separate and distinct from that of C.F. Sharp Kabushiki Kaisha and that the former had no participation whatsoever or liability in connection with the transactions between the latter and the defendants.

As alleged in the complaint, the private respondent prayed for injunctive relief against the petitioners' demand from the private respondent for the payment of C.F. Sharp Kabushiki Kaisha's liabilities to the petitioners.

As an alternative to injunction, the private respondent prayed that a judicial declaration be made that, as a separate and independent corporation, it is not liable for the obligations and liabilities of C.F. Sharp Kabushiki Kaisha.

13


Since the defendants are non-residents, without business addresses in the Philippines but in Japan, the private respondent prayed for leave of court to effect extraterritorial service of summons.

On June 11, 1980, the respondent judge issued an order authorizing the private respondent to effect extraterritorial service of summons on defendants therein.

Subsequently, private respondent filed an urgent ex-parte motion dated June 23, 1980 for Extraterritorial Service of Summons Upon Defendants by registered mail with return cards pursuant to Section 17 of Rule 14 of the Rules of Court.

Acting on said motion, the respondent judge issued an order dated June 30, 1980 granting the motion and authorizing extraterritorial service of summons upon defendants to be effected by registered mail with return cards.

On March 11, 1981, five of the petitioners, Kawasaki Port Service Corporation, Naikai Shipping Co., Ltd., Naikai Tug Boat Service Co., Ltd., The Port Service Corporation and Licensed Land Sea Pilots Association filed their "Special Appearance to Question Jurisdiction of This Honorable Court Over Persons of Defendants" contending that the lower court does not and cannot acquire jurisdiction over the persons of defendants on the grounds that private respondent's action does not refer to its personal status; that the action does not have for subject matter property contemplated in Section 17 of Rule 14 of the Rules of Court, that the action does not pray that defendants be excluded from any interest or property in the Philippines; that no property of the defendants has been attached; that the action is in personam; and that the action does not fall within any of the four cases mentioned in Section 17, Rule 14 of the Rules of Court.

On March 17, 1981, another three of herein petitioners, Hayakoma Unyu K.K., Tokyo Kisen Company, Ltd. and Omori Kaisoten, Ltd. also filed their special appearance adopting the same arguments as that of the first five.

On April 28, 1981, the two other petitioners, Tohoku Unyu Co., Ltd. and Seitetsu Unyu Co., Ltd., filed their "Special Appearance to Question the Jurisdiction of the Honorable Court" over their persons adopting in toto as theirs the "Special Appearance" dated March 11, 1981 of Kawasaki Port Service.

On July 13, 1981, the respondent Court issued its order denying said special appearances. The motion for reconsideration of said order filed by the petitioners was also denied on September 22, 1981.

Hence, the present petition.

After the required pleadings were filed, the First Division of this Court, in the resolution of April 14, 1982, gave due course to the petition and required both parties to submit simultaneous memoranda within thirty (30) days from notice. Both parties complied by submitting the required memoranda.

The main issue in this case is whether or not private respondent's complaint for injunction and/or declaratory relief is within the purview of the provisions of Section 17, Rule 14 of the Rules of Court.

The petitioners contend that the respondent judge acted contrary to the provisions of Section 17 of Rule 14 for the following reasons: (1) private respondent's prayer for injunction, as a consequence of its alleged non-liability to the petitioners for debts of C.F. Sharp Kabushiki Kaisha of Japan, conclusively establishes that private respondent's cause of action does not affect its status; (2) the respondent court cannot take jurisdiction of actions against the petitioners as they are non-residents and own no property within the state; (3) the petitioners have not as yet claimed a lien or interest in the property within the Philippines at the time the action was filed which is a requirement under Section 17 of Rule 14; (4) extra-territorial service on a non-resident defendant is authorized, among others, when the subject of the action is property within the Philippines in which the relief demanded consists in excluding

14


defendant from any interest therein; and (5) inasmuch as the reliefs prayed for by the private respondent in the complaint are in personam, service by registered mail cannot be availed of because Section 17 of Rule 14 authorized this mode of service only in actions in rem or quasi in rem.

For its part, the private respondent countered that (1) the action refers to its status because the basic issue presented to the lower court for determination is its status as a corporation which has a personality that is separate, distinct and independent from the personality of another corporation, i.e., C.F. Sharp Kabushiki Kaisha of Japan; (2) under Section 17 of Rule 14, the subject matter or property involved in the action does not have to belong to the defendants. The provisions of said section contemplate of a situation where the property belongs to the plaintiff but the defendant has a claim over said property, whether that claim be actual or contingent; (3) the prayer of the plaintiff that the defendants be excluded from any interest in the properties of the plaintiff within the Philippines has the effect of excluding the defendants from the properties of the plaintiff in the Philippines for the purpose of answering for the debts of C.F. Sharp Kabushiki Kaisha of Japan to the defendants in accordance with Section 17 of Rule 14; and (4) the action before the lower court is an action quasi in rem as the remedies raised in the complaint affect the personal status of the plaintiff as a separate, distinct and independent corporation and relates to the properties of the plaintiff in the Philippines over which the petitioners have or claim an interest, actual or contingent.

The petition is impressed with merit.

Section 17, Rule 14 of the Rules of Court provides:

Section 17. Extraterritorial service. — When the defendant does not reside and is not found in the Philippines and the action affects

the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under section 7; or by publication in a newspaper of general circulation in such places and for such times 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.

This Court had ruled that extraterritorial service of summons is proper only in four (4) instances, namely: "(1) when the action affects the personal status of the plaintiffs: (2) when the action relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant non-resident's property has been attached within the Philippines." (De Midgely v. Ferandos, 64 SCRA 23 [1975]; The Dial Corporation v. Soriano, 161 SCRA 737 [1988]).

In the case at bar, private respondent has two (2) alternative principal causes of action, to wit: either for declaratory relief or for injunction. Allegedly, in both cases, the status of the plaintiff is not only affected but is the main issue at hand.

As defined, "Status means a legal personal relationship, not temporary in nature nor terminable at the mere will of the parties, with which third persons and the state are concerned" (Holzer v.

15


Deutsche Reichsbahn Gesellschaft, 290 NYS 181; cited in 40 Words and Phrases, 129, Permanent Edition).

It is easy to see in the instant case, that what is sought is a declaration not only that private respondent is a corporation for there is no dispute on that matter but also that it is separate and distinct from C.F. Sharp Kabushiki Kaisha and therefore, not liable for the latter's indebtedness. It is evident that monetary obligations does not, in any way, refer to status, lights and obligations. Obligations are more or less temporary, but status is relatively permanent. But more importantly, as cited in the case of (Dy Poco v. Commissioner of Immigration, et al., 16 SCRA 618 [1966]), the prevailing rule is that "where a declaratory judgment as to a disputed fact would be determinative of issues rather than a construction of definite stated rights, status and other relations, commonly expressed in written instrument, the case is not one for declaratory judgment." Thus, considering the nature of a proceeding for declaratory judgment, wherein relief may be sought only to declare rights and not to determine or try issues, there is more valid reason to adhere to the principle that a declaratory relief proceeding is unavailable where judgment would have to be made, only after a judicial investigation of disputed issues (ibid). In fact, private respondent itself perceives that petitioners may even seek to pierce the veil of corporate identity (Rollo, p. 63).

Private respondent alleges that most if not all, of the petitioners have merely demanded or have attempted to demand from the former the payment of the obligations of C.F. Sharp K.K., (Rollo, p. 63). Otherwise stated, there is no action relating to or the subject of which are the properties of the defendants in the Philippines for it is beyond dispute that they have none in this jurisdiction nor can it be said that they have claimed any lien or interest, actual or contingent over any property herein, for as above stated, they merely demanded or attempted to demand from private respondent payment of the monetary obligations of C.F. Sharp K.K., No action in court has as yet ensued. Verily, the fact that C.F. Sharp Philippines is an entity

separate and distinct from C.F. Sharp K.K., is a matter of defense that can be raised by the former at the proper time.

Finally, the alternative relief sought is injunction, that is to enjoin petitioners from demanding from private respondent the payment of the obligations of C.F. Sharp K.K., It was not prayed that petitioners be excluded from any property located in the Philippines, nor was it alleged, much less shown, that the properties of the defendants, if any, have been attached.

Hence, as ruled by this Court, where the complaint does not involve the personal status of plaintiff, nor any property in the Philippines in which defendants have or claim an interest, or which the plaintiff has attached, but purely an action for injunction, it is a personal action as well as an action in personam, not an action in rem or quasi in rem. As a personal action, personal or substituted service of summons on the defendants, not extraterritorial service, is necessary to confer jurisdiction on the court. In an action for injunction, extra-territorial service of summons and complaint upon the non-resident defendants cannot subject them to the processes of the regional trial courts which are powerless to reach them outside the region over which they exercise their authority. Extra-territorial service of summons will not confer on the court jurisdiction or Power to compel them to obey its orders (Dial Corporation v. Soriano, 161 SCRA 738 [1988] citing Section 3-a Interim Rules of Court, Section 21, subpar. 1, BP Blg. 129).

Considering that extra-territorial service of summons on the petitioners was improper, the same was null and void.

WHEREFORE, the petition is Granted and the questioned orders dated July 13, 1981 and September 22, 1981 of the respondent Judge, are Reversed and Set Aside.

16


SO ORDERED.

[G.R. No. 82330. May 31, 1988.]

THE DIAL CORPORATION, C & T REFINERY INC., NALIN Sdn. Bhb. BERISFORD COMMODITIES, LTD., and PACIFIC MOLASSES COMPANY, Petitioners, v. THE HON. CLEMENTE M. SORIANO, Presiding Judge, Regional Trial Court, Branch 3, MANILA PUBLIC RESPONDENT and IMPERIAL VEGETABLE OIL COMPANY, INC., Respondents.

RATIO DECIDENDI

Extraterritorial service of summons does not confer jurisdiction on the courts over a non-resident defendant not found and without property in the Philippines, especially when what is involved is an action in personam against said defendant (i.e. complaint for injunction and damages).

Only in four instances is extraterritorial service of summons proper, namely: (1) when the action affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant non-resident’s property has been

attached within the Philippines. (See De Midgely v. Fernandos, 64 SCRA 23)

1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; EXTRA-TERRITORIAL SERVICE THEREOF; INSTANCES. — Only in four (4) instances is extraterritorial service of summons proper, namely:" (1) when the action affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant non-resident’s property has been attached within the Philippines" (De Midgely v. Ferandos, 64 SCRA 23).

2. ID.; ID.; ID.; IN PERSONAL ACTIONS, EXTRA-TERRITORIAL SERVICE DOES NOT CONFER JURISDICTION. — The action is purely an action for injunction to restrain the defendants from enforcing against Imperial Vegetable Oil company, Inc. ("abusing and harassing") its contracts for the delivery of coconut oil to the defendants, and to recover from the defendants P21 million in damages for such "harassment." It is clearly a personal action as well as an action in personam, not an action in rem or quasi in rem. As Civil Case No. 87-40166 is a personal action, personal or substituted service of summons on the defendants, not extraterritorial service, is necessary to confer jurisdiction on the court.

3. ID.; ID.; ACTION IN PERSONAM AND PERSONAL ACTION, BOTH DEFINED. — An action in personam is an action against a person on the basis of his personal liability, while an action

17


in rem is an action against the thing itself, instead of against the person. (Hernandez v. Rural Bank of Lucena, Inc. 76 SCRA 85). A personal action is one brought for the recovery of personal property, for the enforcement of some contract or recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the person or property (Hernandez v. Development Bank of the Philippines, 71 SCRA 292).

4. ID.; PROVISIONAL REMEDIES; INJUNCTION. — In an action for injunction, extraterritorial service of summons and complaint upon the non-resident defendants cannot subject them to the processes of the regional trial courts which are powerless to reach them outside the region over which they exercise their authority (Sec. 3-a, Interim Rules of Court; Sec. 21, subpar. 1, B.P. Blg. 129). Extraterritorial service of summons will not confer on the court jurisdiction or power to compel them to obey its orders.

GRIÑO-AQUINO, J.:

The petitioners are foreign corporations organized and existing under the laws of the United States, the United Kingdom, and Malaysia, are not domiciled in the Philippines, nor do they have officers or agents, place of business, or property in the Philippines; they are not licensed to engage, and are not engaged, in business here. The respondent Imperial Vegetable Oil Company, Inc. (or "IVO" for brevity) is a Philippine corporation which through its president, Dominador Monteverde, had entered into several contracts for the delivery of coconut oil to the petitioners. Those contracts stipulate that any dispute between the parties will be settled through arbitration under the rules of either the Federation of Oils Seeds and Fats Association (FOSFA) or the National Institute of Oil Seed Products (NIOP). Because IVO defaulted under the contracts, the petitioners and 15 others, initiated arbitration proceedings abroad, and some have already obtained arbitration awards against IVO.

On April 8, 1987, IVO filed a complaint for injunction and damages against nineteen (19) foreign coconut oil buyers including the petitioners, with whom its president, Dominador Monteverde, had entered into contracts for the delivery of coconut oil (Civil Case No. 87-40166, RTC Manila entitled "Imperial Vegetable Oil Co., Inc. v. Dial Corporation Et. Al."). IVO repudiated Monteverde’s contracts on the grounds that they were mere "paper trading in futures" as no actual delivery of the coconut oil was allegedly intended by the parties; that the Board of Directors of IVO convened in a special meeting on March 21, 1987 and removed Dominador Monteverde from his position as president of the corporation, named in his place, Rodrigo Monteverde, and disowned Dominador Monteverde’s allegedly illegal and unauthorized acts; that the defendants have allegedly "harassed" IVO to comply with Dominador’s contracts and to come to a settlement with them. IVO prayed for the issuance of a temporary restraining order or writ of preliminary injunction to stop the defendants from harassing IVO with their insistent demands to recognize the contracts entered into by Dominador Monteverde and from portraying the IVO as one that defaults on its contracts and obligations and has fallen into bad times and from interfering with IVO’s normal conduct of business. IVO also prayed that the defendants pay it moral damages of P5 million, actual damages of P10 million, exemplary damages of P5 million, attorney’s fees of P1 million, P3,000 per appearance of counsel, and litigation expenses.chanrobles virtual lawlibrary

On motion of IVO, respondent Judge authorized it to effect extraterritorial service of summons to all the defendants through DHL Philippines corporation (Annex B). Pursuant to that order, the petitioners were served with summons and copy of the complaint by DHL courier service.

18


On April 25, 1987, without submitting to the court’s jurisdiction and only for the purpose of objecting to said jurisdiction over their persons, the petitioners filed motions to dismiss the complaint against them on the ground that the extraterritorial service of summons to them was improper and that hence the court did not acquire jurisdiction over them. On December 15, 1987, the court denied their motions to dismiss and upheld the validity of the extraterritorial service of summons to them on the ground that "the present action relates to property rights which he in contracts within the Philippines, or which defendants claim liens or interests, actual or inchoate, legal or equitable (par. 2, complaint). And one of the reliefs demanded consists, wholly or in part, in excluding the defendants from any interest in such property for the reason that their transactions with plaintiff’s former president are ultra vires." Furthermore, "as foreign corporations doing business in the Philippines without a license, they opened themselves to suit before Philippine courts, pursuant to Sec. 133 of the Corporation Code of the Philippines." (Annex H) The petitioners’ motions for reconsideration of that order were also denied by the court (Annex M), hence this petition for certiorari with a prayer for the issuance of a temporary retraining order which We granted.

The petition is meritorious.

Section 17, Rule 14 of the Rules of Court provides:chanrob1es virtual 1aw library

Section 17. Extraterritorial service. — When the defendant does not recide 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 alien 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 undersection 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."cralaw virtua1aw library

Only in four (4) instances is extraterritorial service of summons proper, namely:" (1) when the action affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant non-resident’s property has been attached within the Philippines" (De Midgely v. Ferandos, 64 SCRA 23).

The complaint in this case does not involve the personal status of the plaintiff, nor any property in the Philippines in which the defendants have or claim an interest, or which the plaintiff has attached. The action is purely an action for injunction to restrain the defendants from enforcing against IVO ("abusing and harassing") its contracts for the delivery of coconut oil to the defendants, and to recover from the defendants P21 million in damages for such "harassment." It is clearly a personal action as well as an action in personam, not an action in rem or quasi in rem. "An action in personam is an action against a person on the basis of his personal liability, while an action

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in rem is an action against the thing itself, instead of against the person." (Hernandez v. Rural Bank of Lucena, Inc., 76 SCRA 85). A personal action is one brought for the recovery of personal property, for the enforcement of some contract or recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the person or property (Hernandez v. Development Bank of the Philippines, 71 SCRA 292).

As Civil Case No. 87-40166 is a personal action, personal or substituted service of summons on the defendants, not extraterritorial service, is necessary to confer jurisdiction on the court. The rule is explained in Moran’s Comments on the Rules of Court thus:jgc:chanrobles.com.ph

"As a general rule, when the defendant is not residing and is not found in the Philippines, the Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court. But, when the action affects the personal status of the plaintiff residing in the Philippines, or is intended to seize or dispose of any property, real or personal, of the defendant located in the Philippines, it may be validly tried by the Philippines courts, for then, they have jurisdiction over the res, i.e., the personal status of the plaintiff or the property of the defendant and their jurisdiction over the person of the non-resident defendant is not essential. Venue in such cases may be laid in the province where the property of the defendant or a part thereof involved in the litigation is located." (5 Moran’s Comments on the Rules of Court, 2nd Ed., p. 105.)

In an action for injunction, extraterritorial service of summons and complaint upon the non-resident defendants cannot subject them to the processes of the regional trial courts which are powerless to

reach them outside the region over which they exercise their authority (Sec. 3-a, Interim Rules of Court; Sec. 21, subpar. 1, B.P. Blg. 129). Extraterritorial service of summons will not confer on the court jurisdiction or power to compel them to obey its orders:chanrobles law library

Neither may the court by extraterritorial service of summons acquire jurisdiction to render and enforce a money judgment against a non-resident defendant who has no property in the Philippines for "the fundamental rule is that jurisdiction in personam over non-residents, so as to sustain a money judgment, must be based upon personal service within the state which renders the judgment" (Boudard v. Tait, 67 Phil. 170, 174).

Respondents’ contention that "the action below is related to property within the Philippines, specifically contractual rights that petitioners are enforcing against IVO" is specious for the "contractual rights" of the petitioners are not property found in the Philippines for the petitioners have not filed an action in the local courts to enforce said rights. They have not submitted to the jurisdiction of our courts.

The lower court invoked Section 33 of the Corporation Code which provides that a "foreign corporation transacting business in the Philippines without a license may be sued or proceeded against before Philippine courts or administrative tribunal on any valid cause of action recognized under Philippine laws." It assumed that the defendants (herein petitioners) are doing business in the Philippines, which allegation the latter denied. Even if they can be considered as such, the Corporation Code did not repeal the rules requiring proper service of summons to such corporations as provided in Rule 14 of the Rules of Court and Section 128 of the Corporation Code.

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The respondent court’s finding that, by filing motions to dismiss, the petitioners hypothetically admitted the allegations of the complaint that they are doing business in the Philippines without any license, and that they may be served with summons and other court processes through their agents or representatives enumerated in paragraph 2 of the complaint, is contradicted by its order authorizing IVO to summon them by extraterritorial service, a mode of service which is resorted to when the defendant is not found in the Philippines, does not transact business here, and has no resident agent on whom the summons may be served.chanrobles virtual lawlibrary

WHEREFORE, We hold that the extraterritorial service of summons on the petitioners was improper, hence null and void.

The petition for certiorari is granted. The orders dated April 24, 1987 (Annex B) and December 15, 1987 (Annex II) of the respondent Judge are hereby set aside. The complaint in Civil Case No. 87-40166 is hereby dismissed as against the petitioners for failure of the court to acquire jurisdiction over them.

SO ORDERED.

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