CASES ON SUMMONS [G.R. No. 170943. September 23, 2008.] PEDRO T. SANTOS, JR., petitioner, vs. PNOC EXPLORATION CORPORATION, respondent.

DECISION CORONA, J p: This is a petition for review 1 of the September 22, 2005 decision 2 and December 29, 2005 resolution 3 of the Court of Appeals in CA-G.R. SP No. 82482. HDCTAc On December 23, 2002, respondent PNOC Exploration Corporation filed a complaint for a sum of money against petitioner Pedro T. Santos, Jr. in the Regional Trial Court of Pasig City, Branch 167. The complaint, docketed as Civil Case No. 69262, sought to collect the amount of P698,502.10 representing petitioner's unpaid balance of the car loan 4 advanced to him by respondent when he was still a member of its board of directors. Personal service of summons to petitioner failed because he could not be located in his last known address despite earnest efforts to do so. Subsequently, on respondent's motion, the trial court allowed service of summons by publication. Respondent caused the publication of the summons in Remate, a newspaper of general circulation in the Philippines, on May 20, 2003. Thereafter, respondent submitted the affidavit of publication of the advertising manager of Remate 5 and an affidavit of service of respondent's employee 6 to the effect that he sent a copy of the summons by registered mail to petitioner's last known address. When petitioner failed to file his answer within the prescribed period, respondent moved that the case be set for the reception of its evidence ex parte. The trial court granted the motion in an order dated September 11, 2003. Respondent proceeded with the ex parte presentation and formal offer of its evidence. Thereafter, the case was deemed submitted for decision on October 15, 2003. On October 28, 2003, petitioner filed an "Omnibus Motion for Reconsideration and to Admit Attached Answer". He sought reconsideration of the September 11, 2003 order, alleging that the affidavit of service submitted by respondent failed to comply with Section 19, Rule 14 of the

Rules of Court as it was not executed by the clerk of court. He also claimed that he was denied due process as he was not notified of the September 11, 2003 order. He prayed that respondent's evidence ex parte be stricken off the records and that his answer be admitted. Respondent naturally opposed the motion. It insisted that it complied with the rules on service by publication. Moreover, pursuant to the September 11, 2003 order, petitioner was already deemed in default for failure to file an answer within the prescribed period. In an order dated February 6, 2004, the trial court denied petitioner's motion for reconsideration of the September 11, 2003 order. It held that the rules did not require the affidavit of complementary service by registered mail to be executed by the clerk of court. It also ruled that due process was observed as a copy of the September 11, 2003 order was actually mailed to petitioner at his last known address. It also denied the motion to admit petitioner's answer because the same was filed way beyond the reglementary period. Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004 orders of the trial court in the Court of Appeals via a petition for certiorari. He contended that the orders were issued with grave abuse of discretion. He imputed the following errors to the trial court: taking cognizance of the case despite lack of jurisdiction due to improper service of summons; failing to furnish him with copies of its orders and processes, particularly the September 11, 2003 order, and upholding technicality over equity and justice. During the pendency of the petition in the Court of Appeals, the trial court rendered its decision in Civil Case No. 69262. It ordered petitioner to pay P698,502.10 plus legal interest and costs of suit. 7 Meanwhile, on September 22, 2005, the Court of Appeals rendered its decision 8 sustaining the September 11, 2003 and February 6, 2004 orders of the trial court and dismissing the petition. It denied reconsideration. 9 Thus, this petition. Petitioner essentially reiterates the grounds he raised in the Court of Appeals, namely, lack of jurisdiction over his person due to improper service of summons, failure of the trial court to furnish him with copies of its orders and processes including the September 11, 2003 order and preference for technicality rather than justice and equity. In particular, he claims that the rule on service by publication under Section 14, Rule 14 of the Rules of Court applies only to actions in rem, not actions in personam like a complaint for a sum of money. He also contends that the affidavit of service of a copy of the summons should have been prepared by the clerk of court, not respondent's messenger.

The petition lacks merit. PROPRIETY OF SERVICE BY PUBLICATION Section 14, Rule 14 (on Summons) of the Rules of Court provides: SEC. 14.Service upon defendant whose identity or whereabouts are unknown. — In any action where the defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by leave of court, be effected upon him by publication in a newspaper of general circulation and in such places and for such times as the court may order. (emphasis supplied) STcEIC Since petitioner could not be personally served with summons despite diligent efforts to locate his whereabouts, respondent sought and was granted leave of court to effect service of summons upon him by publication in a newspaper of general circulation. Thus, petitioner was properly served with summons by publication. Petitioner invokes the distinction between an action in rem and an action in personam and claims that substituted service may be availed of only in an action in rem. Petitioner is wrong. The in rem/in personam distinction was significant under the old rule because it was silent as to the kind of action to which the rule was applicable. 10 Because of this silence, the Court limited the application of the old rule to in rem actions only. 11 This has been changed. The present rule expressly states that it applies "[i]n any action where the defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry." Thus, it now applies to any action, whether in personam, in rem or quasi in rem. 12 Regarding the matter of the affidavit of service, the relevant portion of Section 19, 13 Rule 14 of the Rules of Court simply speaks of the following: . . . an affidavit showing the deposit of a copy of the summons and order for publication in the post office, postage prepaid, directed to the defendant by registered mail to his last known address. Service of summons by publication is proved by the affidavit of the printer, his foreman or principal clerk, or of the editor, business or advertising manager of the newspaper which published the summons. The service of summons by publication is complemented by service of summons byregistered mail to the defendant's last known address. This complementary service is evidenced by an affidavit "showing the deposit of a copy of the summons and order for publication in the post office, postage

even assuming that the service of summons was defective. CORRECTNESS OF NON-ADMISSION OF ANSWER Petitioner failed to file his answer within the required period. C. ASIAVEST MERCHANT BANKERS (M) BERHAD.. Such reception of evidence may be delegated to the clerk of court. Indeed.] that was a finding that the defendant [that is. he may be declared in default upon motion of the plaintiff with notice to the said defendant. petitioner. To pursue the matter to its logical conclusion.Default. 16 Nemo tenetur ad impossibile. No. 2004 order. 15 Since no motion to declare petitioner in default was filed. Considering that the answer was belatedly filed. if a party declared in default is entitled to notice of subsequent proceedings.. 4. never in contravention thereof. Moreover. 2003 order was nonetheless still mailed to petitioner at his last known address but it was unclaimed. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance. reason and practicality. common sense. ENTITLEMENT TO NOTICE OF PROCEEDINGS The trial court allowed respondent to present its evidence ex parte on account of petitioner's failure to file his answer within the prescribed period. herein petitioner] was in default for failure to file an answer or any responsive pleading within the period fixed in the publication as precisely the defendant [could not] be found and for which reason. no answer has been filed with the Court within the required period and/or forthcoming. While the trial court ordinarily does the mailing of copies of its orders and processes. 2003 order did not limit itself to permitting respondent to present its evidence ex parte but in effect issued an order of default. directed to the defendant by registered mail to his last known address.R. Thereupon. no default order should have been issued. Equity is available only in the absence of law. 20. vs. The effects of a defendant's failure to file an answer within the time allowed therefor are governed by Sections 3 and 4. even petitioner himself does not dispute that he failed to file his answer on time. 19 Equity may be applied only in the absence of rules of procedure. do not require that the affidavit of complementary service be executed by the clerk of court. 2003 allowing the presentation of evidence ex-parte precisely ordered that "despite and notwithstanding service of summons by publication. 2003 was mailed to the defendant at his last known address but it was not claimed. Rule 9 (on Effect of Failure to Plead) of the Rules of Court: SEC. and proof of such failure. it was reasonable to expect that the defendant will not receive any notice or order in his last known address. 14 This was equivalent to service of summons and vested the trial court with jurisdiction over the person of petitioner. The law obliges no one to perform an impossibility. the trial court stated: ADSTCa The disputed Order of September 11." The rules. upon motion of the claiming party with notice to the defending party. the petition is hereby DENIED. the record[s] will bear out that a copy of the order of September 11. SEC. there is obviously no way notice can be sent to him and the notice requirement cannot apply to him. [it was] impractical to send any notice or order to him. .Effect of order of default. all the more should a party who has not been declared in default be entitled to such notice. 2003 order regarding the period for filing the answer. The Government Corporate Counsel for respondents. the duty to make the complementary service by registered mail is imposed on the party who resorts to service by publication. In this connection. Sycip Salazar Hernandez & Gatmaitan for petitioner. the September 11. (emphasis supplied) If the defendant fails to file his answer on time. That was in fact why he had to file an "Omnibus Motion for Reconsideration and to Admit Attached Answer". unless the court in its discretion requires the plaintiff to submit evidence.] In this case. even if petitioner was not validly declared in default. It is simply illogical to notify the defendant of the Order of September 11. SO ORDERED. however. declare the defending party in default. Rule 14 of the Rules of Court states: SEC. declaration of. Puno. In case he is declared in default. not as its replacement. Petitioner's plea for equity must fail in the face of the clear and express language of the rules of procedure and of the September 11. [G. the trial court acquired jurisdiction over the person of petitioner by his own voluntary appearance in the action against him. he would not have moved for the admission of his answer had he filed it on time. Section 20. But respondent moved only for the ex parte presentation of evidence. Nonetheless. Be that as it may. (emphasis supplied) Petitioner voluntarily appeared in the action when he filed the "Omnibus Motion for Reconsideration and to Admit Attached Answer". 110263. (emphasis supplied) As is readily apparent.["] Effectively[. COURT OF APPEALS and PHILIPPINE NATIONAL CONSTRUCTION CORPORATION. the trial court did not abuse its discretion in denying its admission. he could not reasonably demand that copies of orders and processes be furnished him. a copy of the September 11. 3. But the trial court could not validly do that as an order of default can be made only upon motion of the claiming party.Voluntary appearance. not for the declaration of petitioner in default. Petitioner assails this action on the part of the trial court as well as the said court's failure to furnish him with copies of orders and processes issued in the course of the proceedings. the court shall proceed to render judgment granting the plaintiff such relief as his pleading may warrant. — A party in default shall be entitled to notice of subsequent proceedings but not to take part in the trial. concur. service of summons by publication was ordered. In other words. Costs against petitioner. JJ. The law does not require that the impossible be done. Hence. 18 Hence. the court shall. — If the defending party fails to answer within the time allowed therefor.J. Carpio. 2003 simply on account of the reality that he was no longer residing and/or found on his last known address and his whereabouts unknown — thus the publication of the summons. 2001. The defaulting defendant may not take part in the trial but shall be entitled to notice of subsequent proceedings. 17 Laws and rules must be interpreted in a way that they are in accordance with logic. WHEREFORE.prepaid. Azcuna and Leonardo-de Castro. respondents. — The defendant's voluntary appearance in the action shall be equivalent to service of summons. unless the court in its discretion requires the claimant to submit evidence. the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant. July 20. But what happens if the residence or whereabouts of the defending party is not known or he cannot be located? In such a case. In its February 6.

Asiavest Merchant Bankers (M) Berhad.. SHAcID 3. Rule 131 of the Revised Rules of Court.. Petition granted.. For its failure to secure payment from private respondent under the judgment. It may not be taken judicial notice of and must be pleaded and proved like any . — The reasons or grounds relied upon by private respondent in preventing enforcement and recognition of the Malaysian judgment primarily refer to matters of remedy and procedure taken by the Malaysian High Court relative to the suit for collection initiated by petitioner. herein private respondent. SYLLABUS 1. that upon the filing of the case. of a tribunal of a foreign country having jurisdiction to pronounce the same is presumptive evidence of a right as between the parties and their successors-in-interest by a subsequent title. The judgment may. until a contrary showing. Such was clearly erroneous and would render meaningless the presumption of validity accorded a foreign judgment were the party seeking to enforce it be required to first establish its validity. fraud. no sovereign is bound to give effect within its dominion to a judgment rendered by a tribunal of another country. 1983 on Cora S. the trial court rendered its Decision which dismissed petitioner's complaint. said foreign judgment enjoys presumptive validity. 4. RECOGNITION OF FOREIGN JUDGMENT. collusion. that the trial upon regular proceedings has been conducted. But instead of doing so. Advocates and Solicitors. JUDGMENT. be assailed by evidence of want of jurisdiction. 1983 at the registered office of private respondent and on March 21. . Messrs. want of notice to private respondent. ID. which was the governing law at the time the instant case was decided by the trial and respondent appellate court. In addition to the said testimonial evidence. In the instant case. Kuala Lumpur. Ultimately. Private respondent opposed the complaint.ID. on the basis of a presumption of regularity of proceedings and the giving of due notice in the foreign forum. PROCEDURAL LAW OF THE COURT OF COUNTRY IN WHICH THE JUDGMENT WAS RENDERED MUST BE PLEADED AND PROVED. therefore. then known as Construction and Development Corporation of the Philippines. was sued by his client. EFFECT OF FOREIGN JUDGMENT. petitioner sufficiently established the existence of the money judgment of the High Court of Malaya by the evidence it offered. the presumption of validity and regularity of the proceedings and the decision thereafter rendered by the High Court of Malaya must stand. with address at 24th Floor. remains a question of fact.. it is tainted with want of jurisdiction. a court. that because private respondent failed to file a statement of defense within two (2) weeks. ID. Needless to stress..ID. entered their conditional appearance for private respondent questioning the regularity of the service of the writ of summons but subsequently withdrew the same when it realized that the writ was properly served. — In the instant case. a valid judgment rendered by a foreign tribunal may be recognized insofar as the immediate parties and the underlying cause of action are concerned so long as it is convincingly shown that there has been an opportunity for a full and fair hearing before a court of competent jurisdiction. whether in the Philippines or elsewhere. In due time. that the matter was then heard before the High Court of Kuala Lumpur in a series of dates where private respondent was represented by counsel. the recognition to be accorded a foreign judgment is not necessarily affected by the fact that the procedure in the courts of the country in which such judgment was rendered differs from that of the courts of the country in which the judgment is relied on. — A foreign judgment is presumed to be valid and binding in the country from which it comes. the law of Malaysia in this case. Hence. collusion and/or fraud. that the writ of summons were served on March 17. IEHSDA A foreign judgment is presumed to be valid and binding in the country from which it comes. ID. As to what the Malaysian procedural law is. Hence. petitioner subsequently filed a complaint before the Regional Trial Court of Pasig. a corporation organized under the laws of Malaysia. a financial planning officer of private respondent for Southeast Asia operations. that private respondent. Under Section 50(b).. testified to the effect that he is in active practice of the law profession in Malaysia. enjoys the presumption that it was acting in the lawful exercise of its jurisdiction. and that there is nothing to indicate either a prejudice in court and in the system of laws under which it is sitting or fraud in procuring the judgment. Hence. to enforce the judgment of the High Court of Malaya. however. Allen and Gledhill. the authority of counsel to appear and represent a defendant and the formal requirements in a decision are governed by the lex fori or the internal law of the forum. in Kuala Lumpur. ID. On its part. the party attacking a foreign judgment is tasked with the burden of overcoming its presumptive validity. 1995. RECOGNITION ACCORDED THEREON NOT AFFECTED BY THE FACT THAT PROCEDURE IN COURTS OF COUNTRY IN WHICH THE JUDGMENT WAS RENDERED DIFFERS FROM THAT OF THE COURT OF COUNTRY IN WHICH THE JUDGMENT IS RELIED ON. Deala. not of law. Having thus proven. or clear mistake of law or fact. 2. utility and convenience of nations have established a usage among civilized states by which final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious under certain conditions that may vary in different countries. ENJOYS PRESUMPTIVE VALIDITY. ID.ID. is tasked with the burden of overcoming its presumptive validity. ID. petitioner filed an application for summary judgment and submitted affidavits and documentary evidence in support of its claim. against a person.. Furthermore. — In this case. In addition. a corporation duly incorporated and existing under Philippine laws. it is the procedural law of Malaysia where the judgment was rendered that determines the validity of the service of court process on private respondent as well as other matters raised by it.REMEDIAL LAW. until a contrary showing. both testimonial and documentary. In this jurisdiction.. matters of remedy and procedure such as those relating to the service of summons or court process upon the defendant. In addition. petitioner claimed that the High Court of Malaya acquired jurisdiction over the person of private respondent by its voluntary submission to the court's jurisdiction through its appointed counsel. petitioner Asiavest Merchant Bankers (M) Berhad.. a judgment. and there is a clear mistake of law or fact. EXISTENCE AND AUTHENTICITY THEREOF MUST BE PROVED.e. Rule 39 of the Revised Rules of Court. being the party challenging the judgment rendered by the High Court of Malaya. ID. through the foregoing evidence.. i. then known as Construction and Development Corporation of the Philippines. following due citation or voluntary appearance of the defendant and under a system of jurisprudence likely to secure an impartial administration of justice. contending that the alleged judgment of the High Court of Malaya should be denied recognition or enforcement since on its face. on the basis of a presumption of regularity of proceedings and the giving of due notice in the foreign forum. FOREIGN JUDGMENT. the party attacking a foreign judgment. CASE AT BAR. UMBC Building. Khay Chay Tee. petitioner offered the following documentary evidence: . once the authenticity of the foreign judgment is proved. the ultimate duty to demonstrate the alleged invalidity of such foreign judgment. the existence and authenticity of the foreign judgment. whether in the Philippines or elsewhere. under Section 3(n). a court.. enjoys the presumption that it was acting in the lawful exercise of its jurisdiction.. Having thus proven the existence and authenticity of the foreign judgment. petitioner elevated the matter before the Supreme Court. Mr. in the absence of a special compact.. Vinayak Prabhakar Pradhan. that he was connected with Skrine and Company as Legal Assistant up to 1981.SYNOPSIS On September 13. however. ID. presented as petitioner's sole witness.. to prove otherwise. obtained a favorable money judgment for its collection suit from the High Court of Malaya in Kuala Lumpur against herein private respondent Philippine National Construction Corporation.ID. ID. once the authenticity of the foreign judgment is proved. that the burden lay upon petitioner to prove the validity of the money judgment. The decision of the trial court was affirmed by the Court of Appeals. Jalan Sulaiman. and that the end result of all these proceedings is the judgment sought to be enforced. CASE AT BAR. want of notice to the party. the rules of comity.. private respondent's counsel waived any and all objections to the High Court's jurisdiction in a pleading filed before the Court. ID. — Generally.. Accordingly. Metro Manila. . Private respondent had. the Court found that the petitioner sufficiently established the existence of the money judgment of the High Court of Malaya by the evidence it offered. EXECUTION AND ENFORCEMENT. respondent merely argued to which the trial court agreed. said foreign judgment enjoys presumptive validity and the burden then fell upon the party who disputes its validity. ID. 5.

fraud based on facts not controverted or resolved in the case where judgment is rendered. September 13. It was then incumbent upon private respondent to present evidence as to what that Malaysian procedural law is and to show that under it. ID. for the completion of Paloh Hanai and Kuantan By-Pass Project. INTERNAL LAW OF THE FORUM GOVERNS MATTERS OF REMEDY AND PROCEDURE. Hence. ID. TCADEc 8. Branch 168 in Civil Case No. 3rd Floor. 1985.521. Bhd.23 (Ringgit Five million one hundred and eight thousand two hundred and ninety and Sen twenty-three) together with interest at the rate of 12% per annum on: — (i)the sum of $2. 1991 of the Regional Trial Court of Pasig.32 from the 11th day of March 1983 to the date of payment. thus: SUIT NO. Sections 24 and 25 of Rule 132 of the Revised Rules of Court provide that it may be evidenced by an official publication or by a duly attested or authenticated copy thereof. to which the trial court agreed.108.ID.. JR.00 (Ringgit Three Hundred and Fifty) costs. — There is no merit to the argument that the foreign judgment is not enforceable in view of the absence of any statement of facts and law upon which the award in favor of the petitioner was based. As aforestated... 7. ID.. and SETaHC (ii)the sum of $2. The facts which the trial court found "intriguing" amounted to mere conjectures and specious observations. Such is clearly erroneous and would render meaningless the presumption of validity accorded a foreign judgment were the party seeking to enforce it be required to first establish its validity.. such is not per se indicative of collusion or fraud. fraud and clear mistake of fact and law tainted the judgment of the High Court of Malaya. then known as Construction and Development Corporation of the Philippines. IT IS THIS DAY ADJUDGED that the 2nd defendant do pay the Plaintiffs the sum of $5. Besar.Construction & Development Corporation of the PhilippinesDefendant JUDGMENT The 2nd Defendant having entered appearance herein and the Court having under Order 14. Metro Manila. Solicitors for the Plaintiffs abovenamed.423.ID.Asiavest-CDCP Sdn.. is contradicted by evidence on record that recovery was also sought against Asiavest-CDCP Sdn. On September 13.. ID. ID. the High Court of Malaya (Commercial Division) rendered judgment in favor of the petitioner and against the private respondent which is also designated therein as the "2nd Defendant. Accordingly. the lex fori or the internal law of the forum governs matters of remedy and procedure. Bhd. Kuala Lumpur. such unsubstantiated allegation cannot give rise to liability therein. i. Leboh Pasar. ID. ID. no clear evidence of the same was adduced or shown. C638 OF 1983 Between Asiavest Merchant Bankers (M) BerhadPlaintiffs And 6.91 from the 2nd day of March 1983 to the date of payment. — On the ground that collusion. Dated the 13th day of September." 3 Petitioner sought to recover the indemnity of the performance bond it had put up in favor of private respondent to guarantee the completion of the Felda Project and the non-payment of the loan it extended to Asiavest-CDCP Sdn. Bhd. Bhd. But instead of doing so. Fraud to hinder the enforcement within the jurisdiction of a foreign judgment must be extrinsic.Asiavest — CDCP Sdn. and it. a valid judgment may be rendered even without stating in the judgment every fact and law upon which the judgment is based. and Construction and Development Corporation of the Philippines. Skrine & Co. petitioner initiated a suit for collection against private respondent. Furthermore.ID. — Private respondent had the ultimate duty to demonstrate the alleged invalidity of such foreign judgment.other fact. 1985. J p: And 1. INTRINSIC FRAUD CANNOT MILITATE AGAINST ENFORCEMENT THEREOF.." The judgment reads in full: SUIT NO.R. 4. Considering that under the procedural rules of the High Court of Malaya. private respondent merely argued. as alleged by it. Rule 3 ordered that judgment as hereinafter provided be entered for the Plaintiffs against the 2nd Defendant. 1993 in CA-G.e.. Intrinsic fraud is one which goes to the very existence of the cause of action is deemed already adjudged.586. Straits Trading Building. The trial court's finding on the absence of judgment against Asiavest-CDCP Sdn.. PARTY CHALLENGING THE FOREIGN JUDGMENT HAS BURDEN OF PROVING INVALIDITY THEREOF. 1985. It did not.. It appears that sometime in 1983. Bhd.290. then the same must be accorded respect and the courts in this jurisdiction cannot invalidate the judgment of the foreign court simply because our rules provide otherwise. The petitioner Asiavest Merchant Bankers (M) Berhad is a corporation organized under the laws of Malaysia while private respondent Philippine National Construction Corporation is a corporation duly incorporated and existing under Philippine laws. No. that the burden lay upon petitioner to prove the validity of the money judgment. but the same was found insolvent. is invalid. CV No. ID. C638 of 1983 Between Asiavest Merchant Bankers (M) BerhadPlaintiffs . the High Court of Malaya issued an Order directing the private respondent (also designated therein as the "2nd Defendant") to pay petitioner interest on the sums covered by the said Judgment. High Court. the presumption of validity and regularity of service of summons and the decision thereafter rendered by the High Court of Malaya must stand. and $350. 56368 which dismissed the complaint of petitioner Asiavest Merchant Bankers (M) Berhad for the enforcement of the money judgment of the High Court of Malaya in Kuala Lumpur against private respondent Philippine National Construction Corporation. before the High Court of Malaya in Kuala Lumpur entitled "Asiavest Merchant Bankers (M) Berhad v.. being the party challenging the judgment rendered by the High Court of Malaya. the assailed service of summons upon a financial officer of a corporation. Senior Assistant Registrar. Before us is a petition for review on certiorari of the Decision 1 of the Court of Appeals dated May 19. Kuala Lumpur This Judgment is filed by Messrs. Evidence is wanting on the alleged extrinsic fraud.. even when the foreign judgment is based on the drafts prepared by counsel for the successful party. or that which would go to the jurisdiction of the court or would deprive the party against whom judgment is rendered a chance to defend the action to which he has a meritorious defense. DECISION DE LEON. therefore.7/83) 4 On the same day. cannot militate against the recognition or enforcement of the foreign judgment.. 35871 affirming the Decision 2 dated October 14. 2.866. ID.. (VP/Ong/81194.

Asiavest-CDCP Sdn. 1988 the complaint before Regional Trial Court of Pasig. 1983 at the registered office of private respondent and on March 21. Furthermore. 13 however. 14 In this jurisdiction. want of notice to private respondent. presented as petitioner's sole witness. a judgment. SaIHDA .521. Bhd. private respondent's counsel waived any and all objections to the High Court's jurisdiction in a pleading filed before the court. the instant petition which is anchored on two (2) assigned errors. whether in the Philippines or elsewhere. which was the governing law at the time the instant case was decided by the trial court and respondent appellate court. is tasked with the burden of overcoming its presumptive validity. Khay Chay Tee. 1983 on Cora S. Dated the 13th day of September. 1991 dismissing petitioner's complaint. In the instant case. it is tainted with want of jurisdiction. against a person. Palpanaban Devarajoo of Counsel for the Plaintiffs and Mr. Asiavest Merchant Bankers (M) Berhad. of a tribunal of a foreign country having jurisdiction to pronounce the same is presumptive evidence of a right as between the parties and their successorsin-interest by a subsequent title. 1985. 1984 and the Affidavit of Lee Foong Mee affirmed on the 14th day of August 1984 both filed herein AND UPON HEARING Mr. or clear mistake of law or fact. 20 that II Senior Assistant Registrar. and there is a clear mistake of law or fact.108. following due citation or voluntary appearance of the defendant and under a system of jurisprudence likely to secure an impartial administration of justice. the trial court rendered its Decision dated October 14. 1993. 16 Rule 39 of the Revised Rules of Court. and (ii)the sum of $2. Hence. be assailed by evidence of want of jurisdiction. want of notice to the party. a court. denied by the trial court considering that the grounds relied upon are not the proper grounds in a motion to dismiss under Rule 16 of the Revised Rules of Court. The judgment may. Rule 131 of the Revised Rules of Court. then known as Construction and Development Corporation of the Philippines. Khaw Chay Tee of Counsel for the 2nd Defendant above-named AND UPON HEARING Counsel as aforesaid BY CONSENT IT WAS ORDERED that the 2nd Defendant do pay the Plaintiffs interest at a rate to be assessed AND the same coming on for assessment this day in the presence of Mr. 8 Dismissal was. the petitioner contended that the High Court of Malaya acquired jurisdiction over the person of private respondent by its voluntary submission to the court's jurisdiction through its appointed counsel. 1988. Under Section 50(b). Generally. Deala. 12 to wit: I THE COURT OF APPEALS ERRED IN HOLDING THAT THE MALAYSIAN COURT DID NOT ACQUIRE PERSONAL JURISDICTION OVER PNCC. 15 A foreign judgment is presumed to be valid and binding in the country from which it comes. however. the rules of comity. 7 Private respondent sought the dismissal of the case via a Motion to Dismiss filed on October 5. once the authenticity of the foreign judgment is proved. Petitioner interposed an appeal with the Court of Appeals. in the absence of a special compact. Palpanaban Devarajoo of Counsel for the Plaintiffs and Mr. 5 THE COURT OF APPEALS ERRED IN DENYING RECOGNITION AND ENFORCEMENT TO (SIC) THE MALAYSIAN COURT JUDGMENT.866. contending that the alleged judgment of the High Court of Malaya should be denied recognition or enforcement since on its face. testified to the effect that he is in active practice of the law profession in Malaysia.00AND IT WAS FURTHER ORDERED that the plaintiffs be at liberty to apply for payment of interest AND upon the application of the Plaintiffs for payment of interest coming on for hearing on the 1st day of August in the presence of Mr. but the appellate court dismissed the same and affirmed the decision of the trial court in a Decision dated May 19. and that there is nothing to indicate either a prejudice in court and in the system of laws under which it is sitting or fraud in procuring the judgment. the party attacking a foreign judgment. petitioner sufficiently established the existence of the money judgment of the High Court of Malaya by the evidence it offered. was sued by his client. 9 On May 22. High Court. however. 1989. 19 that the writ of summons were served on March 17. fraud.Construction & Development Corporation of the PhilippinesDefendants BEFORE THE SENIOR ASSISTANT REGISTRAR CIK SUSILA S. under Section 3(n). NOTWITHSTANDING THAT (a) THE FOREIGN COURT HAD SERVED SUMMONS ON PNCC AT ITS MALAYSIA OFFICE. that the trial upon regular proceedings has been conducted. on the basis of a presumption of regularity of proceedings and the giving of due notice in the foreign forum. Kuala Lumpur. 17 that he was connected with Skrine and Company as Legal Assistant up to 1981. until a contrary showing. private respondent filed its Answer with Compulsory Counterclaim 10 and therein raised the grounds it brought up in its motion to dismiss. no sovereign is bound to give effect within its dominion to a judgment rendered by a tribunal of another country. 18 that private respondent. Khaw Chay Tee of Counsel for the 2nd Defendant AND UPON HEARING Counsel as aforesaid BY CONSENT IT IS ORDERED that the 2nd Defendant do pay the Plaintiffs interest at the rate of 12% per annum on: (i)the sum of $2.423. 1989. In addition. Khaw Chay Tee of Counsel for the 2nd Defendant abovenamed on the 26th day of December 1984 IT WAS ORDERED that the Plaintiffs be at liberty to sign final judgment against the 2nd Defendant for the sum of $5.1. petitioner initiated on September 5. AND (b) PNCC ITSELF APPEARED BY COUNSEL IN THE CASE BEFORE THAT COURT. utility and convenience of nations have established a usage among civilized states by which final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious under certain conditions that may vary in different countries. to enforce the judgment of the High Court of Malaya. a financial planning officer of private respondent for Southeast Asia operations.23 AND IT WAS ORDERED that the 2nd Defendant do pay the Plaintiffs the costs of suit at $350. Hence. T.586. Thomas of Counsel for the Plaintiffs and Mr. Following unsuccessful attempts 6 to secure payment from private respondent under the judgment. In its Reply 11 filed on June 8. collusion and/or fraud. a valid judgment rendered by a foreign tribunal may be recognized insofar as the immediate parties and the underlying cause of action are concerned so long as it is convincingly shown that there has been an opportunity for a full and fair hearing before a court of competent jurisdiction. 2. Mr. the Plaintiffs in this action AND UPON READING the Summons in Chambers dated the 16th day of August.32 from the 11th day of March 1983 to the date of Payment. In due time. in Kuala Lumpur. Metro Manila. PARAM THIS 13th DAY OF SEPTEMBER 1985IN CHAMBERS ORDER Upon the application of Asiavest Merchant Bankers (M) Berhad. enjoys the presumption that it was acting in the lawful exercise of its jurisdiction.91 from the 2nd day of March 1983 to the date of payment.290. collusion. Vinayak Prabhakar Pradhan.

namely. 1984. 32 (j)Record of the Court's Proceedings in Civil Case No. 44 On the matter of alleged lack of authority of the law firm of Allen and Gledhill to represent private respondent. and its local counsel. Mr. C638 of 1983. 47 . on the other hand. Executive Secretary and a member of the staff of the Corporate Secretariat Section of the Corporate Legal Division. Kuala Lumpur. It was then incumbent upon private respondent to present evidence as to what that Malaysian procedural law is and to show that under it. As to what the Malaysian procedural law is. remains a question of fact. Advocates and Solicitors. and Virginia Abelardo. 33 (k)Petitioner's verified Application for Summary Judgment dated August 14. through the foregoing evidence.23 Malaysian Ringgit plus interests from March 1983 until fully paid. Jalan Sulaiman. is invalid. that Cora Deala was not authorized to receive summons for and in behalf of the private respondent. matters of remedy and procedure such as those relating to the service of summons or court process upon the defendant. the authority of counsel to appear and represent a defendant and the formal requirements in a decision are governed by the lex fori or the internal law of the forum. Sections 24 and 25 of Rule 132 of the Revised Rules of Court provide that it may be evidenced by an official publication or by a duly attested or authenticated copy thereof. herein private respondent. Messrs. entered their conditional appearance for private respondent questioning the regularity of the service of the writ of summons but subsequently withdrew the same when it realized that the writ was properly served. with address at 24th Floor. the law of Malaysia in this case. 37 that under the joint venture. 1983 filed by counsel for private respondent with the Malaysian High Court. an accountant of private respondent. as alleged by it. Writ of Summons and Affidavit of Service of such writ in petitioner's suit against private respondent before the Malaysian High Court. to prove otherwise.upon the filing of the case. (a) that jurisdiction was not acquired by the Malaysian Court over the person of private respondent due to alleged improper service of summons upon private respondent and the alleged lack of authority of its counsel to appear and represent private respondent in the suit. C638 of 1983. In this case. Sycip Salazar Law Offices. Calupitan's testimony centered on the following: that from January to December 1982 he was assigned in Malaysia as Project Comptroller of the Pahang Project Package A and B for road construction under the joint venture of private respondent and Asiavest Holdings. 39 Ms. 30 (h)Memorandum of Conditional Appearance dated March 28. the recognition to be accorded a foreign judgment is not necessarily affected by the fact that the procedure in the courts of the country in which such judgment was rendered differs from that of the courts of the country in which the judgment is relied on. 27 (e)Letters between petitioner's Malaysian counsel. It did not. which is fifty-one percent (51%) while private respondent would handle the technical aspect of the project. not only did the private respondent's witnesses admit that the said law firm of Allen and Gledhill were its counsels in its transactions in Malaysia. 1985 directing private respondent to pay petitioner the sum of $5. 45 but of greater significance is the fact that petitioner offered in evidence relevant Malaysian jurisprudence 46 to the effect that (a) it is not necessary under Malaysian law for counsel appearing before the Malaysian High Court to submit a special power of attorney authorizing him to represent a client before said court. 42 Ultimately. petitioner offered the following documentary evidence: (a)A certified and authenticated copy of the Judgment promulgated by the Malaysian High Court dated September 13. submitted during the proceedings before the Malaysian High Court. petitioner filed an application for summary judgment and submitted affidavits and documentary evidence in support of its claim. of private respondent. Needless to stress. Private respondent failed to sufficiently discharge the burden that fell upon it — to prove by clear and convincing evidence the grounds which it relied upon to prevent enforcement of the Malaysian High Court judgment. the existence and authenticity of the foreign judgment. 22 that the matter was then heard before the High Court of Kuala Lumpur in a series of dates where private respondent was represented by counsel. and (c) that counsel appearing before the Malaysian High Court need not comply with certain pre-requisites as required under Philippine law to appear and compromise judgments on behalf of their clients before said court. 38 and. the presumption of validity and regularity of service of summons and the decision thereafter rendered by the High Court of Malaya must stand. fraud and clear mistake of fact or law. (b) that counsel appearing before the Malaysian High Court has full authority to compromise the suit. Abelardo's testimony..e. and (c) not only were the requisites for enforcement or recognition allegedly not complied with but also that the Malaysian judgment is allegedly contrary to the Constitutional prescription that the "every decision must state the facts and law on which it is based. 23 and that the end result of all these proceedings is the judgment sought to be enforced. Calupitan." 36 Private respondent relied solely on the testimony of its two (2) witnesses. UMBC Building. Alfredo N. namely. 1990 showing attorney's fees paid by and due from petitioner. Asiavest Holdings would handle the financial aspect of the project. it is the procedural law of Malaysia where the judgment was rendered that determines the validity of the service of court process on private respondent as well as other matters raised by it. 25 (c)Computation of principal and interest due as of January 31. 35 Having thus proven. relative to institution of the action in the Philippines. 21 that because private respondent failed to file a statement of defense within two (2) weeks. Accordingly. both of whom failed to shed light and amplify its defense or claim for non-enforcement of the foreign judgment against it.. 34 and (l)Letter dated November 6. focused on the following: that there was no board resolution authorizing Allen and Gledhill to admit all the claims of petitioner in the suit brought before the High Court of Malaya. 41 The foregoing reasons or grounds relied upon by private respondent in preventing enforcement and recognition of the Malaysian judgment primarily refer to matters of remedy and procedure taken by the Malaysian High Court relative to the suit for collection initiated by petitioner. (b) the foreign judgment is allegedly tainted by evident collusion. 29 (g)Statement of Claim. In addition to the said testimonial evidence. the assailed service of summons upon a financial officer of a corporation.108. counsel for private respondent.IDESTH Mr. 26 (d)Letter and Statement of Account of petitioner's counsel in Malaysia indicating the costs for prosecuting and implementing the Malaysian High Court's Judgment. Skrine and Co. 28 (f)Billing Memorandum of Sycip Salazar Law Offices dated January 2. 1985 from petitioner's Malaysian counsel to private respondent's counsel in Malaysia. 24 (b)A certified and authenticated copy of the Order dated September 13. It may not be taken judicial notice of and must be pleaded and proved like any other fact. 40 though on cross-examination she admitted that Allen and Gledhill were the retained lawyers of private respondent in Malaysia. 1985 issued by the Malaysian High Court in Civil Suit No. 1990 on the amount adjudged payable to petitioner by private respondent. 31 (i)Summons in Chambers and Affidavit of Khaw Chay Tee. 43 i. Allen and Gledhill. not of law. or forty-nine percent (49%).290. said foreign judgment enjoys presumptive validity and the burden then fell upon the party who disputes its validity.

Such conditional appearance was in fact subsequently withdrawn when counsel realized that the writ was properly served. in turn. JJ. The respondent was likewise granted the right to purchase and sell the products of PEIA subject to the terms and conditions set forth in the Distribution Agreement. dated 12 October 2000 12 and 15 November 2000. and involved in the business of wholesale trading of all kinds of scientific. PEIP is a corporation duly organized and existing under Philippine laws. biotechnological. there is no merit to the argument that the foreign judgment is not enforceable in view of the absence of any statement of facts and law upon which the award in favor of the petitioner was based. SP No. dated 27 April 2000. an Alias Summons. Hence. Lastly. 52 Evidence is wanting on the alleged extrinsic fraud. MC99-605. the instant petition is GRANTED. either from PEIA itself or from Perkin-Elmer Instruments (Philippines) Corporation (PEIP). prompting respondent to file before the RTC of Mandaluyong City. i. no clear evidence of the same was adduced or shown. is contradicted by evidence on record that recovery was also sought against Asiavest-CDCP Sdn. 1991 in Civil Case No. a Singaporean based sole proprietorship. which affirmed the Orders.. a Complaint 6 for Collection of Sum of Money and Damages with Prayer for Issuance of a Writ of Attachment against PEIA and PEIP. The Decision of the Court of Appeals dated May 19. Bhd. Such is clearly erroneous and would render meaningless the presumption of validity accorded a foreign judgment were the party seeking to enforce it be required to first establish its validity. dated 4 September 2000.] PERKIN ELMER SINGAPORE PTE LTD. 1985 of the High Court of Malaya in Kuala Lumpur is REVERSED and SET ASIDE. All in all. but the same was found insolvent. such is not per se indicative of collusion or fraud. fraud and clear mistake of fact and law tainted the judgment of the High Court of Malaya. of the Court of Appeals in CA-G..R. shall give respondent a commission for the sale of its products in the Philippines. cannot be considered as voluntary submission to the jurisdiction of the High Court of Malaya. 13 to the respondent and to the RTC. 2007. But instead of doing so. concur. and analytical instruments and appliances. Richard A. 48 On the ground that collusion. 53 Considering that under the procedural rules of the High Court of Malaya. 9 which the RTC granted in its Order. It is not considered as a foreign corporation "doing business" in the Philippines. Perkinelmer Asia.R. CV No. then the same must be accorded respect and the courts in this jurisdiction cannot invalidate the judgment of the foreign court simply because our rules provide otherwise. 50 or that which would go to the jurisdiction of the court or would deprive the party against whom judgment is rendered a chance to defend the action to which he has a meritorious defense. Petitioner is a corporation duly organized and existing under the laws of Singapore. that the burden lay upon petitioner to prove the validity of the money judgment. to Serve Summons Outside of the Philippines. aDHCEA Costs against the private respondent. PEIP moved to dismiss 11 the Complaint filed by respondent on the ground that it states no cause of action. Branch 212. 78981. the lex fori or the internal law of the forum governs matters of remedy and procedure. therefore. 172242. allegedly. 4 of the Mandaluyong City Regional Trial Court (RTC). August 14. dated 11 January 2000. a separate and distinct entity from PEIA. dated 4 November 2002 3 and 20 June 2003. By virtue of the said agreement. PEIA allegedly owned 99% of the shares of PEIP. 1993 in CA-G. producing. 56368 of the Regional Trial Court of Pasig. PEIA unilaterally terminated the Distribution Agreement. PEIA appointed the respondent as the sole distributor of its products in the Philippines. DAKILA TRADING CORPORATION. DECISION CHICO-NAZARIO. and engaged in the business of selling and leasing out laboratory instrumentation and process control instrumentation. was issued by the RTC to PEIA. As aforestated. 54 WHEREFORE. Tee. Quisumbing. respondent shall order the products of PEIA. 51 Intrinsic fraud is one which goes to the very existence of the cause of action is deemed already adjudged.e. on the other hand. But the said Alias Summons was served on 28 September 2000 and received byPerkinelmer Asia. The antecedents of the present case are as follows: Respondent entered into a Distribution Agreement 5 on 1 June 1990 with Perkin-Elmer Instruments Asia Pte Ltd. MC99-605. cannot militate against the recognition or enforcement of the foreign judgment. selling or distributing various laboratory/analytical instruments. private respondent merely argued. The RTC issued an Order. fraud based on facts not controverted or resolved in the case where judgment is rendered. an affiliate of PEIA. 49 Furthermore. On 2 August 1997. Herein respondent Dakila Trading Corporation is a corporation organized and existing under Philippine laws. 2 dated 4 April 2006. on the other hand. [G. denied the Motion to Dismiss and subsequent Motion for Reconsideration of herein petitioner Perkin Elmer Singapore Pte Ltd.ADCEcI Under the same Distribution Agreement. and trading of laboratory chemicals and supplies. 10 Thus. however. respondent. SO ORDERED. The trial court's finding on the absence of judgment against Asiavest-CDCP Sdn.R. . The respondent moved for the reconsideration of the said Order but it was denied in another Order. PEIA. Bellosillo.. denying respondent's prayer for the issuance of a writ of attachment. and another in its stead is hereby rendered ORDERING private respondent Philippine National Construction Corporation to pay petitioner Asiavest Merchant Bankers (M) Berhad the amounts adjudged in the said foreign Judgment. Branch 212. even when the foreign judgment is based on the drafts prepared by counsel for the successful party. inasmuch as said conditional appearance was not premised on the alleged lack of authority of said counsel but the conditional appearance was entered to question the regularity of the service of the writ of summons. Bhd. a corporation duly organized and existing under the laws of Singapore and engaged in the business of manufacturing. and it. there is no basis for or truth to the appellate court's conclusion that the conditional appearance of private respondent's counsel who was allegedly not authorized to appear and represent. (PEIA). vs. which it shall sell in the Philippines. Mendoza and Buena. a valid judgment may be rendered even without stating in the judgment every fact and law upon which the judgment is based. J. 8 Respondent then filed Ex-Parte Motions for Issuance of Summons and for Leave of Court to Deputize Respondent's General Manager. No. such unsubstantiated allegation cannot give rise to liability therein. owned by the petitioner and. to which the trial court agreed. The facts which the trial court found "intriguing" amounted to mere conjectures and specious observations. private respondent had the ultimate duty to demonstrate the alleged invalidity of such foreign judgment. which. respectively. in Civil Case No. subject of the said case. docketed as Civil Case No. J p: The case before this Court is a Petition for Review 1 on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to annul and set aside the Decision. 35871 sustaining the Decision dated October 14. being the party challenging the judgment rendered by the High Court of Malaya. to inform them of the wrongful service of summons upon Perkinelmer Asia. 7 dated 26 March 1999.. sent letters. Branch 168 denying the enforcement of the Judgment dated September 13. petitioner.Furthermore. through its counsel. Fraud to hinder the enforcement within the jurisdiction of a foreign judgment must be extrinsic. is on official business.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE SERVICE OF SUMMONS ON PETITIONER WAS DEFECTIVE AND THAT THE TRIAL COURT THUS FAILED TO ACQUIRE JURISDICTION OVER THE PERSON OF THE PETITIONER. dated 24 July 2001. the RTC denied the Motion to Dismiss filed by PEIP. 16 the RTC admitted the Amended Complaint filed by the respondent. Respondent then filed another Motion 17 for the Issuance of Summons and for Leave of Court to Deputize Respondent's General Manager.ASSUMING ARGUENDO THAT RESPONDENT DAKILA FILED THIS CASE AGAINST THE CORRECT [PARTY]. Being a sole proprietorship of the petitioner. a change in PEIA's name and juridical status did not detract from the fact that all its due and outstanding obligations to third parties were assumed by the petitioner. WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT THE "SOLE ISSUE" IN THE PETITION FORCERTIORARI FILED BEFORE IT IS THE QUESTION OF WHETHER THE TRIAL COURT ACQUIRED JURISDICTION OVER THE PERSON OF THE PETITIONER THROUGH THE EXTRATERRITORIAL SERVICE OF SUMMONS. cannot rule that venue was improperly laid. I. 1. dated 4 November 2002. . it does relate to a property of the [petitioner]. dated 10 October 2001. the [RTC] in its ultimate desire that the ends of justice could be served in its fullest. This implies that the issue must be passed upon on the basis of the allegations and declare them to be false. . A cursory reading of the Amended Complaint would reveal that all of the essential elements of a cause of action are attendant in the Amended Complaint. The RTC in its Order. b)A correlative obligation of the defendant. AND ALL DOCUMENTS ATTACHED AND/OR RELATED THERETO. WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GRANTED THE PETITION FOR CERTIORARI AND REVERSED THE RTC ORDERS ON THE GROUND THAT THE AMENDED COMPLAINT FAILED TO STATE A CAUSE OF ACTION AGAINST PETITIONER. When the ground for dismissal is that the complaint states no cause of action. compelling the latter to file its Answer to the Amended Complaint. dated 4 March 2002. . 18 the RTC deputized respondent's General Manager to serve summons on petitioner in Singapore. (3) even assuming arguendo that the respondent correctly filed the case against the petitioner. 2. it hypothetically admits the truth of the facts alleged in a complaint. the Distribution Agreement which was the basis of its claim grants PEIA the right to terminate the contract at any time. Such allegation of ownership of shares of stocks by the [petitioner] would reveal that there is an allegation of personal property in the Philippines. EcaDCI The [petitioner] hinges its dismissal on the failure of the [respondent] to state a cause of action. PETITIONER IS NOT THE REAL PARTYIN-INTEREST DEFENDANT IN THE CASE BELOW. . to Serve Summons Outside the Philippines. Consequently. Richard A. . . II. As for the contention that venue was improperly laid. Tee. The [RTC] would like to emphasize that in a Motion to Dismiss. Shares of stocks represent personal property of the shareholder. AMENDED COMPLAINT. (2) the respondent failed to state a cause of action against the petitioner because it is not the real party-in-interest. A careful scrutiny on (sic) the allegation in the (Amended) Complaint would show that [herein respondent] alleges ownership by the [herein petitioner] of shares of stocks in the [PEIP]. and subsequently changed its name to Perkinelmer Asia. Hence. The Court of Appeals never issued any temporary restraining order or writ of injunction. ratiocinating as follows: Prescinding from the above arguments of both parties.BASED ON THE ALLEGATIONS IN THE EX-PARTE MOTION TO ADMIT AMENDED COMPLAINT. . the [RTC] is inclined to DENY the Motion to Dismiss. RESPONDENT DAKILA FAILS TO STATE A CAUSE OF ACTION IN THE CASE BELOW. . 21 TADaCH Petitioner moved for the reconsideration of the aforesaid Order but. This brings us to the present Petition before this Court wherein petitioner raised the following issues. . xxx xxx xxx The [RTC] further believes that it is imperative that in order to ferret out the truth. otherwise it would be a procedural error and a denial of due process to the [respondent] . In another Order. it follows that even though the Amended Complaint is primarily for damages. to which the latter has a claim interest (sic). together with the Amended Complaint claiming that PEIA had become a sole proprietorship 14 owned by the petitioner. A. . . The three (3) essential elements of a cause of action are the following: a)The plaintiff's legal rights. Acting on the said Order. xxx xxx xxx The stipulation as to the venue of a prospective action does not preclude the filing of the suit in the residence of the [respondent] under Section 2. or an actual or contingent lien. respondent filed an Ex-Parte Motion to Admit Amended Complaint. the Court of Appeals rendered a Decision affirming the RTC Orders of 4 November 2002 and 20 June 2003. . . such fact can be determined only from the facts alleged in the complaint . a full-blown trial is necessary for parties to be able to prove or disapprove their allegations. INASMUCH AS THE DISTRIBUTION AGREEMENT DATED 1 JUNE 1990 GRANTS [PEIA] THE RIGHT TO TERMINATE THE CONTRACT AT ANY TIME. and (4) the venue was improperly laid. Rules of Court. c)The omission of the defendant in violation of the legal rights. petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure with application for temporary restraining order and/or preliminary injunction before the Court of Appeals alleging that the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in refusing to dismiss the Amended Complaint. Rule 14. Thus. denied petitioner's Motion to Dismiss. it was denied by the RTC in its Order. which will make it fall under one of the requisite (sic) for extraterritorial service under Section 15. B. Meanwhile. Rule 4. in its Amended Complaint 15 respondent sought to change the name of PEIA to that of the petitioner. Petitioner subsequently filed with the RTC a Special Appearance and Motion to Dismiss 20 respondent's Amended Complaint on 30 May 2002 based on the following grounds: (1) the RTC did not acquire jurisdiction over the person of the petitioner. and the Court cannot consider other matters aliunde . of the Rules of Court. .. especially where the venue stipulation was imposed by the [petitioner] for its own benefits. dated 20 June 2003. respondent's General Manager went to Singapore and served summons on the petitioner. Thus. On 4 April 2006. The RTC thus issued summons 19 to the petitioner. and from no other . in an Order. In an Order.Accordingly. it could be gainfully said that the summons had been validly served for [RTC] to acquire jurisdiction over the [petitioner].

resort to an extraterritorial service of summons in the case at bar was erroneous. Also. property within the Philippines. In order for the court to have authority to dispose of the case on the merits. which is 99% owned by petitioner (as the supposed successor of PEIA). 25 The proper service of summons differs depending on the nature of the civil case instituted by the plaintiff or petitioner: whether it is in personam. in excluding the defendant from any interest in property located in the Philippines. it must acquire jurisdiction over the subject matter and the parties. MC99-605. the main subject matter of the action must be the property within the Philippines itself. (3) when the relief demanded in such action consists. or the subject of which is. MC99-605 involves an action for collection of sum of money and damages arising from the alleged breach of the Distribution Agreement. To be bound by a decision. Petitioner asseverates that the allegations in the respondent's Amended Complaint that the petitioner has personal properties within the Philippines does not make the present case one that relates to. but for complying with the requirements of fair play or due process. Petitioner stresses that PEIA is an entirely different corporate entity that is not connected in whatever manner to the petitioner. the extraterritorial service of summons on the petitioner was not validly effected. Jurisdiction is the power with which courts are invested for administering justice. Rule 14 of the 1997 Revised Rules of Civil Procedure. Petitioner states that for an action to be considered as one that relates to. 23 Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint. 28 Thus. and not extraterritorial service of summons. The defendant or respondent is thus put on guard as to the demands of the plaintiff or the petitioner. WHETHER OR NOT PETITIONER IS ENTITLED TO A TEMPORARY RESTRAINING ORDER AND/OR WRIT OF INJUNCTION. then the nature of Civil Case No. 30 and the action involved is in personam. with leave of court. both had mutually agreed to the exclusive jurisdiction of the courts of Singapore or of the Philippines as elected by PEIA. service of summons may be effected by (a) personal service out of the country. that is. and such was not the situation in this case. It is intended to give notice to the defendant or respondent that a civil action has been commenced against him. Petitioner asserts that in the Distribution Agreement entered into between the respondent and PEIA. must be made within the state even if the petitioner is a non-resident. 29 On the other hand. Rule 14 of the 1997 Revised Rules of Civil Procedure. one of the modes of acquiring jurisdiction over the person of the defendant or respondent in a civil case is through service of summons. Philippine courts cannot try any case against . MC99-605 for having been filed in an improper venue. and actions are quasi in rem. so that the defendant will be informed of the pendency of the action against him and the possibility that property in the Philippines belonging to him or in which he has an interest may be subjected to a judgment in favor of the plaintiff. Actions in personam. or (c) any other manner the court may deem sufficient. for hearing and deciding cases. dated 26 March 1999. personal service of summons. (2) existence of a cause of action against petitioner in respondent's Amended Complaint.WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GRANTED THE PETITION FOR CERTIORARI AND REVERSED THE RTC ORDERS ON THE GROUND OF IMPROPER VENUE. but not if an action is in personam. 22 Jurisdiction of the court over the subject matter is conferred only by the Constitution or by law. a party should first be subjected to the court's jurisdiction. (b) publication. actual or contingent. EcHTDI The Petition is meritorious. 24 Thus. 27 IDEHCa Undoubtedly. Petitioner claims that it had never used the name PEIA as its corporate name. or the subject of which is property. (2) when the action relates to. Resultantly. within the Philippines. also with leave of court. it is the contention of the petitioner that the appellate court should have 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. Rule 14 of the 1997 Revised Rules of Civil Procedure. the court acquires no jurisdiction over their persons and a judgment rendered against them is null and void. or the subject of which is. or quasi in rem. and (3) proper venue for respondent's civil case against petitioner. If the defendants have not been summoned. and (4) when the defendant non-resident's property has been attached within the Philippines. in rem. jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court. or an action against a person based on his personal liability. and did not give the RTC jurisdiction over the petitioner. Philippine courts already have jurisdiction to hear and decide the case because. and neither did it change its name from that of PEIA. in which the defendant claims a lien or an interest. are those actions brought against a person on the basis of his personal liability. 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 loan burdening the property. the Complaint filed by the respondent before the RTC in the Philippines should have been dismissed on the ground of improper venue. thus. the prayer in respondent's Amended Complaint for the issuance of a writ of attachment over the personal property of PEIP. Even assuming arguendo that petitioner is the real party-in-interest in Civil Case No. The said extraterritorial service of summons is not for the purpose of vesting the court with jurisdiction. extraterritorial service of summons can be made upon the defendant. Absent any waiver by PEIA of its right to choose the venue of the dispute. extraterritorial service of summons applies only where the action is in rem or quasi in rem. Likewise. the petitioner points out that since the respondent's prayer for the issuance of a writ of attachment was denied by the RTC in its Order. Petitioner avers that extraterritorial service of summons stated under Section 15. is only proper in in rem and quasi in rem cases. MC99-605 or that petitioner and PEIA are one and the same entity. 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 lack or excess of jurisdiction in refusing to dismiss respondent's Amended Complaint for failure to state a cause of action against petitioner which was not the real party-in-interest in Civil Case No. MC99-605 remains in personam. provided that the court acquires jurisdiction over the res. Petitioner contends that Civil Case No. In these instances. there are only four instances wherein a defendant who is a non-resident and is not found in the country may be served with summons by extraterritorial service. unless they voluntarily appear in court. Lastly. property within the Philippines warranting the extraterritorial service of summons under Section 15. petitioner still avows that the respondent failed to state a cause of action against it because the Distribution Agreement expressly grants PEIA the right to terminate the said contract at any time. while jurisdiction over the defendants in a civil case is acquired either through the service of summons upon them in the manner required by law or through their voluntary appearance in court and their submission to its authority. III. contrary to the ruling of the Court of Appeals that by the attachment of the petitioner's interest in PEIP the action in personam was converted to an action quasi in rem. and he can thereby take steps to protect his interest if he is so minded. 26 Under Section 15. The action is one in personam. actionsin rem are actions against the thing itself instead of against the person. and for the court a quo to acquire jurisdiction over the person of the petitioner. in such instance. It is determinable on the basis of allegations in the complaint. wholly or in part. when the defendant or respondent does not reside and is not found in the Philippines. cIACaT The foregoing issues raised by petitioner essentially requires this Court to make a determination of the (1) proper service of summons and acquisition of jurisdiction by the RTC over the person of the petitioner. did not convert the action from one in personam to one that is quasi in rem. in actions in rem and quasi in rem. to wit: (1) when the action affects the personal status of the plaintiff. When the case instituted is an action in rem or quasi in rem.

Rule 14 of the 1997 Revised Rules of Civil Procedure (i. would make the case fall under one of the aforesaid instances wherein extraterritorial service of summons under Section 15. indeed. personal service of summons upon the [petitioner] is essential in order for the court to acquire of (sic) jurisdiction over [its person]. property within the Philippines as to warrant the extraterritorial service of summons. Primarily. 32 (Emphasis supplied. MC99605 is anchored on the claim that petitioner unilaterally terminated the Distribution Agreement. judgment will be limited to the res. the Amended Complaint filed by the respondent against the petitioner was for the collection of sum of money and damages. not the whole world. or which the [respondent] has attached. within the Philippines. In other words. when the non-resident defendant's property has been attached within the Philippines).) Respondent's allegation in its Amended Complaint that petitioner had personal property within the Philippines in the form of shares of stock in PEIP does not convert Civil Case No. and this is not possible in the present case because the petitioner is a non-resident and is not found within the Philippines.e. MC99-605 from an action in personam to one quasi in rem. herein petitioner. this Court sustains the contention of the petitioner that there can never be a valid extraterritorial service of summons upon it. make the extraterritorial service of summons upon the petitioner valid. respondent's prayer in its Amended Complaint for the issuance of a writ of attachment over petitioner's purported shares of stock in PEIP located within the Philippines was denied by the court a quo in its Order dated 26 In the instant petition.. The action for collection of a sum of money and damages was purely based on the personal liability of the petitioner towards the respondent.e. This Court also finds error in the Decision of the Court of Appeals.him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court. Thus. Rule 14 of the Rules of Court is proper may be considered to have been met. It is provided for in the said Decision. or the subject of which is. i. and as much as may be sufficient to satisfy [respondent's] demands. EaICAD xxx xxx xxx The objective sought in [respondent's] [C]omplaint was to establish a claim against petitioner for its alleged unilateral termination of [D]istribution [A]greement. that the non-resident defendant's personal property located within the Philippines must have been actually attached. or an actual or contingent lien. Hence." The action instituted by [respondent] affects the parties alone. although the [C]omplaint before the trial court does not involve the personal status of the [respondent]. [respondent] prays in its [C]omplaint that "Upon the filing of the Complaint. which are not exempt from execution. thus: However. 34(Emphasis supplied. HAaDcS Glaringly. the allegations made by the respondent that the petitioner has property within the Philippines were in support of its application for the issuance of a writ of attachment. an action involving title to or possession of real or personal property — such as the foreclosure of real estate or chattel mortgage where the mortgagor does not reside or is not found in the Philippines — can be considered as an action which relates to. This is because the [C]omplaint for collection of sum of money which is an action in personam was converted into an action quasi in rem by the attachment of [petitioner's] interest in [PerkinElmer Philippines]. where extraterritorial service of summons can be properly made. which was denied by the RTC. to repeat. it is clear from the foregoing that the Complaint filed by the respondent against the petitioner does not really relate to. However. the action in personam which required personal service of summons was never converted into an action in rem where service by publication would have been valid. and in such instance. Rule 14 of the 1997 Revised Rules of Civil Procedure (i. It is incorrect for the RTC to have ruled that the allegations made by the respondent in its Amended Complaint. Hence. property within the Philippines.e. personal service of summons within the Philippines is necessary in order for the RTC to validly acquire jurisdiction over the person of the petitioner. The petitioner is correct in saying that "mere allegations of personal property within the Philippines does not necessarily make the action as one that relates to or the subject of which is. or the subject of which is property. as to convert the action in personam to an action in rem or quasi in rem and.) Thus. MC99-605 is an action in personam because it is an action against persons. which are not exempt from execution. For the action to be considered one that relates to. so as to qualify said case under the fourth instance mentioned in Section 15. This Court in the case of Venturanza v. . actual or contingent. issue an Order fixing the amount of the bond and issue a writ of attachment requiring the sheriff to attach the properties of [Perkin-Elmer Philippines]. which is one of the instances where extraterritorial service of summons is proper. Even the Court of Appeals." By analogy. 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 personal property belonging to the non-resident defendant within the Philippines but. Hence. is the property within the Philippines. on the basis of its personal liability. that the petitioner owns shares of stock within the Philippines to which the petitioner claims interest. property within the Philippines of the petitioner. and as much as may be sufficient to satisfy [respondent's] demands. when the action relates to. or the subject of which. actual or contingent). [respondent] prayed that "Upon the filing of the Complaint. Respondent's allegation in its Amended Complaint that petitioner had personal property within the Philippines in the form of shares of stock in PEIP did not make Civil Case No. Court of Appeals 35 ruled that when the attachment was void from the beginning. in which the defendant claims a lien or interest. As such. the aforesaid second instance has no application in the case before this Court. in its Decision dated 4 April 2004. because the case before the court a quo involving collection of a sum of money and damages is. let it be emphasized that in the [C]omplaint filed before the trial court. nevertheless.. any judgment therein is binding only upon the parties properly impleaded. it is submitted that one of the instances when exterritorial service of summons under Section 15. [respondent's] cause of action in Civil Case No. The RTC in arriving at such conclusions relied on the second instance. the case involves property within the Philippines in which the [petitioner] has or claim an interest. MC99-605 fall under any of the four instances mentioned in Section 15. 31 In the case at bar. In the said Decision the appellate court ruled that: subsequently. namely. xxx xxx xxx Hence. issue an Order fixing the amount of the bond and issue a writ of attachment requiring the sheriff to attach the properties of [Perkin-Elmer Philippines]. the appellate court erred in declaring that the present case. wherein extraterritorial service of summons upon the petitioner would have been valid. more precisely. being an action in personam. Civil Case No. would be valid.. in which the defendant claims a lien or interest. was converted to an action quasi in rem because of respondent's allegations in its Amended Complaint that petitioner had personal property within the Philippines. mentioned under Section 15. it is an action in personam. an action in personam. The said case was neither related nor connected to any property of the petitioner to which it claims a lien or interest. Rule 14 of the 1997 Revised Rules of Civil Procedure. the main subject matter of the action must be the property itself of the petitioner in the Philippines. 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 Agreement. Hence. which is an action in personam. upheld the nature of the instant case as an action in personam. which is primarily for collection of a sum of money and damages. 33 DHTCaI Moreover. Rule 14 of the Rules of Court. or the subject of which is.

then.March 1999. the general rule applies. even though the petitioner raised other grounds in its Motion to Dismiss aside from lack of jurisdiction over its person. as PEIA's alleged successor).Voluntary appearance. Respondent's Motion for Reconsideration of the said Order was likewise denied by the RTC in its subsequent Order. 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. otherwise. Petitioner seeks to recover damages and attorney's fees as a consequence of the unfounded suit filed by respondent against it. there are well-recognized exceptions 46 to the rule that the allegations are hypothetically admitted as true and inquiry is confined to the face of the complaint. xxx xxx xxx The stipulation as to the venue of a prospective action does not preclude the filing of the suit in the residence of the [respondent] under Section 2. Truly. Having failed to do so. 45 While. the extraterritorial service of summons was not validly effected by the RTC against the petitioner. petitioner's compulsory counterclaim is only consistent with its position that the respondent wrongfully filed a case against it and the RTC erroneously exercised jurisdiction over its person. this Court quotes with approval the following ratiocination of the RTC: As for the contention that venue was improperly laid. As a result. 40 it was held that. the RTC can never subject petitioner to its Distinction must be made in Civil Case No. as a mode of acquiring jurisdiction over the person of the defendant. the Philippines. cannot rule that venue was improperly laid. hence. dated 11 January 2000. Rules of Court. based on the invalidity of the service of summons. Ferandos. 37 Neither can the compulsory counterclaim contained in petitioner's Answer ad cautelam be considered as voluntary appearance of petitioner before the RTC. Hence. the RTC would have already declared that petitioner had waived its right to file responsive pleadings. 36 In the present case. and in the absence of valid service of summons. and the RTC thus failed to acquire jurisdiction over the person of the petitioner. MC99-605. cannot be faulted for not granting petitioner's Motion to Dismiss on the ground of failure to state a cause of action. especially where the venue stipulation was imposed by the [petitioner] for its own benefits. the appellate court did not err in denying petitioner's Motion to Dismiss Civil Case No. remains an action in personam. the court can still acquire jurisdiction over his person when he voluntary appears in court or submits himself to its authority. Evidently. — The defendant's voluntary appearance in the action shall be equivalent to service of summons.. The appellate court. 38 Petitioner could have . The compulsory counterclaim attached to petitioner's Answer ad cautelam can be treated as a separate action. 20. meaning. the [trial court] in its ultimate desire that the ends of justice could be served in its fullest. MC99-605 is still dismissible. a ruling thereon should be based only on the facts alleged in the complaint. Court of Appeals 41 that estoppel by jurisdiction must be unequivocal and intentional. respondent appears to have a cause of action against the petitioner and that the RTC is the proper venue for the said case. It is settled that a party who makes a special appearance in court for the purpose of challenging the jurisdiction of said court. While in De Midgely v. . such ruling must be deemed superseded by the declaration of this Court in La Naval Drug Corporation v. the court a quo is not an improper venue for the present case. wherein petitioner is the plaintiff while respondent is the defendant. 42 Thus. the same is not tantamount to its voluntary appearance or submission to the authority of the court a quo. it chose to demand the same in Civil Case No. MC99-605. even if the service of summons upon the defendant or respondent in a civil case is defective. for collection of sum of money and damages. MC99-605 as to the jurisdiction of the RTC over respondent's complaint and over petitioner's counterclaim — while it may have no jurisdiction over the former. for the RTC never acquired jurisdiction over the person of the petitioner. courts of Singapore or of the Territory. had not been attached. The defense of the petitioner that it is not the real party-in-interest is evidentiary in nature which must be proven in trial. the RTC utterly failed to acquire jurisdiction over the person of the petitioner. voluntary appearance. Rule 4. Civil Case No. Rule 14 of the Rules of Court. the allegation of grounds other than lack of jurisdiction over the person of the defendant. truly. it may exercise jurisdiction over the latter. 43 (Emphasis supplied. Moreover.e. Theinclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance. the venue stipulation used the word "exclusive. 39 Jurisdiction of the RTC over the subject matter and the parties in the counterclaim must thus be determined separately and independently from the jurisdiction of the same court in the same case over the subject matter and the parties in respondent's complaint. is likewise inapplicable in this case. Civil Case No. then personal service of summons upon the petitioner within the Philippines is essential for the RTC to validly acquire jurisdiction over the person of the petitioner. 47 none of the exceptions apply in this case. MC99-605. IDCHTE instituted a separate action for the very same claims but. the allegation of grounds other than lack of jurisdiction with a prayer "for such other reliefs" as may be deemed "appropriate and proper" cannot be considered as unequivocal and intentional estoppel. Thus. the petitioner cannot be declared in estoppel when it filed an Answer ad cautelam with compulsory counterclaim before the RTC while the instant Petition was still pending before this Court. EcTIDA In the same way. The petitioner was in a situation wherein it had no other choice but to file an Answer. in the form of shares of stock in PEIP. this Court finds that the petitioner did not submit itself voluntarily to the authority of the court a quo. which expressly provides: SEC. The court must pass upon this issue based solely on such allegations. 44 When a Motion to Dismiss is grounded on the failure to state a cause of action.. assuming them to be true. MC99-605 on the ground of improper venue. Nonetheless. . including a prayer "for such other reliefs as" may be deemed "appropriate and proper" amounted to voluntary appearance." however. The RTC is therefore bereft of any authority to act upon the Complaint filed before it by the respondent insofar as the petitioner is concerned. cannot be considered to have voluntarily submitted himself to the jurisdiction of the court. . If there was no valid summons served upon petitioner. Nonetheless. whichever is elected by PEIA (or petitioner. Thus. In arriving at such conclusion. in a Motion to Dismiss. a closer look on the Distribution Agreement would reveal that the venue stipulation was really in the alternative i. The case for collection of sum of money and damages filed by the respondent against the petitioner being an action in personam.) In sum. thus. the RTC of the Philippines cannot be considered as an improper venue. 48 (Emphasis supplied. The extraterritorial service of summons upon the petitioner produces no effect because it can only be done if the action is in rem or quasi in rem. for the sake of expediency and to avoid multiplicity of suits. It would be absurd to hold that petitioner unequivocally and intentionally submitted itself to the jurisdiction of the court by seeking other reliefs to which it might be entitled when the only relief that it could properly ask from the trial court is the dismissal of the complaint against it.) Despite the venue stipulation found in the Distribution Agreement stipulating that the exclusive jurisdiction over disputes arising from the same shall lie in the courts of Singapore or of the Territory (referring to the Philippines). this Court upholds the findings of the RTC on these issues. it bears to emphasize that despite our findings that based on the allegations in respondent's Complaint in Civil Case No. Dismissal of a Complaint for failure to state a cause of action is provided for by the Rules of Court. Anent the existence of a cause of action against petitioner and the proper venue of the case. For it to do otherwise would be a procedural error and a denial of plaintiff's right to due process. could RTC have acquired jurisdiction over the person of the petitioner by the latter's voluntary appearance? As a rule. Most telling is Section 20. petitioner's alleged personal property within the Philippines.

However. when. . for petitioner's purported personal property was never attached. . then the counterclaim cannot survive. Yet. if the counterclaim itself states sufficient cause of action then it should stand independently of and survive the dismissal of the complaint. Rule 17 [of the 1997 Revised Rules of Civil Procedure] settles that "nagging question "whether the dismissal of the complaint carries with it the dismissal of the counterclaim. It will then be iniquitous and the height of injustice to require the petitioner to make the counterclaim in the present action. it does not also preclude the application of the same to the instant case just because the dismissal of respondent's Complaint was upon the instance of the petitioner who correctly argued lack of jurisdiction over its person. Yet even in such an instance. 57 Based on the aforequoted ruling of the Court. since then. the Court discussed the situation wherein the very filing of the complaint by the plaintiff against the defendant caused the violation of the latter's rights. 51and BA Finance Corporation v. Co. yet make his right totally dependent on the fate of the respondent's complaint.. as regards the petitioner's counterclaim. TEHIaA It bears to emphasize that petitioner's counterclaim against respondent is for damages and attorney's fees arising from the unfounded suit. we rule in the affirmative. in the first place. as stated in the separate opinion [of Justice Regalado in BA Finance]. . TESDcA plaintiff in filing the complaint precisely causes the violation of the defendant's rights. while the converse holds true with the complaint. and opines that by reason of the amendments. and we thus rule that the dismissal of a complaint due to fault of the plaintiff is without prejudice to the right of the defendant to prosecute any pending counterclaims of whatever nature in the same or separate action. However. We confirm that BA Finance and all previous rulings of the Court that are inconsistent with this present holding are now abandoned. The main difference lies in that the cause of action in the counterclaim is maintained by the defendant against the plaintiff. it remains debatable whether the dismissal or withdrawal of the complaint is sufficient to obviate the pending cause of action maintained by the defendant against the plaintiff. Heirs of German Santiago. namely a cause (or causes) of action constituting an act or omission by which a party violates the right of another. petitioner may have very well already incurred damages and litigation expenses such as attorney's fees since it was forced to engage legal representation in the Philippines to protect its rights and to assert lack of jurisdiction of the courts over its person by virtue of the improper service of summons upon it. As to whether the dismissal of such a complaint should also include the dismissal of the counterclaim. . Yet that hardly is the case. this Court orders the dismissal of the Complaint filed by the respondent against the petitioner because the court a quo failed to acquire jurisdiction over the person of the latter. Also in the case of Pinga v. the cause of action of petitioner's counterclaim is not eliminated by the mere dismissal of respondent's complaint. if the dismissal of the complaint somehow eliminates the cause of the counterclaim. being ancillary to the principal controversy. it bears the same integral characteristics as a complaint. when the Court promulgated the 1997 Rules of Civil Procedure. Court of Appeals. the extraterritorial service of summons upon the petitioner remains invalid. If. 49 In the case at bar. or even the doctrine that a counterclaim may be necessarily dismissed along with the complaint. clearly conflicts with the 1997 Rules of Civil Procedure. otherwise.jurisdiction. Now. Moreover. Since the Complaint of the respondent was dismissed. BA Finance. thus. if the dismissal of the complaint somehow eliminates the cause(s) of the counterclaim. and BA Finance "may be deemed abandoned. the rulings in Metals Engineering. it shall be barred. 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 personam to one that was quasi in rem. Hence. In light of the foregoing findings. Nonetheless. what will happen then to the counterclaim of the petitioner? Does the dismissal of the complaint carry with it the dismissal of the counterclaim? In the cases of Metal Engineering Resources Corp. then the compulsory counterclaim. the Court acknowledged that said matter is still debatable. Inc. The abandonment of BA Finance as doctrine extends as far back as 1997. it should not have been involved in any case at all. it is only because no proper case has arisen that would warrant express confirmation of the new rule. 54 the Court explicitly expressed that: Similarly. . International Container. It may also do well to remember that it is this Court which mandated that claims for damages and attorney's fees based on unfounded suit constitute compulsory counterclaim which must be pleaded in the same action or. which is purely for damages and attorney's fees by reason of the unfounded suit filed by the respondent against it. 52 the Court ruled that if the court does not have jurisdiction to entertain the main action of the case and dismisses the same. 55 [Emphasis supplied]. More often than not. Rule 17 of the 1997 Revised Rules of Civil Procedure56 on dismissal of the complaint due to the fault of the plaintiff. That opportunity is here and now. . . the allegations that form the counterclaim are rooted in an act or omission of the plaintiff other than the plaintiff's very act of filing the complaint. otherwise. If indeed the Court dismisses petitioner's counterclaim solely on the basis of the dismissal of respondent's Complaint. this reasoning is highly flawed and irrational considering that petitioner. abandonment has not been affirmed in jurisprudence. such acts or omissions imputed to the plaintiff are often claimed to have occurred prior to the filing of the complaint itself." . Conversely. it is barred. then what remedy is left for the petitioner? It can be said that he can still file a separate action to recover the damages and attorney's fees based on the unfounded suit for he cannot be barred from doing so since he did file the compulsory counterclaim in the present action. Heirs of German Santiago. the counterclaim of the herein petitioner being compulsory in nature must also be dismissed together with the Complaint. Court of Appeals. Retired Court of Appeals Justice Hererra pronounces that the amendment to Section 3. it has long been settled that the same truly falls under the classification of compulsory counterclaim and it must be pleaded in the same action. v.. a counterclaim without a cause of action cannot survive. because the extraterritorial service of summons was not validly effected upon the petitioner and the RTC never acquired jurisdiction over its person. must likewise be dismissed since no jurisdiction remained for any grant of relief under the counterclaim. Justice Feria notes that "the present rule reaffirms the right of the defendant to move for the dismissal of the complaint and to prosecute his counterclaim. then the counterclaim cannot survive. viz: Whatever the nature of the counterclaim. already burdened by the damages and attorney's fees it may have incurred in the present case. having been directly confronted with the problem of whether the compulsory counterclaim by reason of the unfounded suit may prosper even if the main complaint had been dismissed. 53 If we follow the aforesaid pronouncement of the Court in the cases mentioned above. . as with a complaint. only that it was dismissed when respondent's Complaint was dismissed. v. under threat of losing his right to claim the same ever again in any other court. THaCAI Finally. those previous jural doctrines that were inconsistent with the new rules incorporated in the 1997 Rules of Civil Procedure were implicitly abandoned insofar as incidents arising after the effectivity of the new procedural rules on 1 July 1997. this Court concludes that the RTC has no power to hear and decide the case against the petitioner. when the Court adopted the new Rules of Civil Procedure. must again incur more damages and attorney's fees in pursuing a separate action. especially as a general rule. . While respondent's Complaint against petitioner is already dismissed. The only apparent exception to this circumstance is if it is alleged in the counterclaim that the very act of the . in the case of Pinga vs. 50 International Container Terminal Services. including the amended Rule 17. It is true that the aforesaid declaration of the Court refers to instances covered by Section 3.

00 per month. is DIRECTED to proceed without further delay with the resolution of respondent's Complaint in Civil Case No. marked as Annexes "A" to "I. SP No. respondents. will be accepted by both PIONEER and the respective parties. under the letterhead of Ital Tech Distributors. dated 4 November 2002 and 20 June 2003. PIL contacted him in May 1996 and asked if he could join it in establishing a pre-mixed concrete plant and in overseeing its operations in the Philippines. I am now able to confirm my offer to engage you as a consultant to Pioneer International Ltd. Klepzig (Klepzig). (PIL) 7 in its special appearance.. Branch 212.Since petitioner's counterclaim is compulsory in nature and its cause of action survives that of the dismissal of respondent's complaint. 3. Branch 212. 2007. SHCaEA Todaro attached nine letters." Annex "B" 9 shows that on 4 September 1996. WHEREFORE. TODARO. SO ORDERED. dated 4 April 2006. MC99-605 as to defendant PEIP. Inc. vs. Muntinlupa. 54062. The Regional Trial Court of Mandaluyong City. Inc. sent a letter to McDonald of PIL. JJ. responded by fax to Todaro's faxed letter to McDonald and proposed that Todaro "join Pioneer on a retainer basis for 2 to 3 months on the understanding that [Todaro] would become a permanent employee if as we expect. with a retainer fee of U. in CA-G." to his complaint. there were several meetings and exchanges of letters between Todaro and the officers of Pioneer Concrete (Hong Kong) Limited. Pioneer Concrete Philippines.R." The faxed letter to McDonald referred to by Lindsay is not found in the rollo and was not attached to Todaro's complaint. HON. Todaro confirmed the following to McDonald: 1. DECISION CARPIO. MC99-605.. then it should be resolved based on its own merits and evidentiary support. is hereby REVERSED AND SET ASIDE. who was Klepzig's Executive Assistant. concur.R. TEOFILO GUADIZ. PIL and its codefendants were served copies of the summons and of the complaint at PPHI and PCPI's office in Alabang. •Driver and secretarial support-basis for reimbursement of this to be agreed. Ynares-Santiago. Inc. John G. to Todaro of Ital Tech Distributors.. under the letterhead of Ital Tech Distributors. on a permanent basis..000 per month billed on monthly basis and payable 15 days from billing date. The trial court denied the motion to dismiss filed by Pioneer International.] PIONEER INTERNATIONAL. will be hired as well. while PCPI and PPHI are corporations duly organized under Philippine laws. 2. According to Todaro. under the letterhead of Pioneer Concrete (Hong Kong) Limited. PIL is engaged in the ready-mix and concrete aggregates business and has established a presence worldwide. 1996. the instant Petition is hereby GRANTED. PIL established PPHI as the holding company of the stocks of its operating company in the Philippines. Should Pioneer proceed with an investment in the Philippines.That I am accepting the proposal of PIONEER INT'L. Todaro alleged that PIL is a corporation duly organized under Australian laws. of the Regional Trial Court of Mandaluyong City. Austria-Martinez and Nachura. (PCPI). •Additional pre-approved expenses to be reimbursed. (PPHI). Todaro further alleged that he was the managing director of Betonval Readyconcrete. $15. Lindsay. by PIONEER as soon as the company is established. Ltd. Todaro. The Facts On 16 January 1998. October 11. as a consultant for three (3) months. Pioneer will probably be in a position to make a decision on proceeding with an investment by mid January '97.That Gino Martinel and the Sales Manager — Jun Ong. Inc. Todaro (Todaro) filed a complaint for sum of money and damages with preliminary attachment against PIL. in Civil Case No. starting October 1. under the letterhead of Ital Tech Distributors. Remuneration package will be mutually agreed upon by PIONEER and the undersigned. as well as petitioner's counterclaim.That after three (3) months consultancy. affirming the Orders. LTD. PPHI. and Philip J.. then Pioneer would offer you a position to manage the premixed concrete operations. faxed another letter to Lindsay of Pioneer Concrete (Hong Kong) Limited. Todaro met with several of PIL's representatives and even gave PIL the names of three of his subordinates in Betonval whom he would like to join him in PIL. J p: The Case This is a petition for review on certiorari 1 of the Decision 2 dated 27 September 2001 and of the Resolution 3 dated 14 January 2003 of the Court of Appeals (appellate court) in CA-G. McDonald is the Chief Executive Officer of PIL's Hong Kong office while Klepzig is the President and Managing Director of PPHI and PCPI. STcAIa Annex "F" 13 shows Todaro's faxed reply. reflecting your contributions so far and to continue until Pioneer makes a decision. The basis for your consultancy would be: •Monthly fee USD 15. Pioneer Philippines Holdings. to McDonald of Pioneer Concrete Group HK dated 19 . and PIL. I could have charged your company with a much higher fee. Before Todaro filed his complaint. (Betonval) from June 1975 up to his resignation in February 1996. in his capacity as Presiding Judge of Regional Trial Court. through Cecille L. Todaro requested that the letter contain a statement on his remuneration package and on his permanent employment "with PIONEER once it has established itself on a permanent basis in the Philippines.. No. Annex "A" 8 shows that on 15 July 1996. De Leon (De Leon). PCPI. Otherwise. Antonio D. Inc. likewise. Makati City. Inc." Todaro. petitioner. our entry proceeds.000. Todaro asked for a formal letter addressed to him about the proposed retainer.. sent a letter to Max Lindsay (Lindsay) of Pioneer Concrete (Hong Kong) Limited. under the letterhead of Pioneer Concrete Group HK. JR. The first three paragraphs of McDonald's letter read: Further to our recent meeting in Hong Kong. Pioneer Concrete Group HK.S. 98-124. I should be employed by PIONEER INT'L. on a permanent basis. 156848. Branch 147. Salary. Footnotes [G. Annex "E" 12 is a faxed letter dated 18 November 1996 of McDonald. The Decision of the Court of Appeals. and ANTONIO D. For his part." Annex "D" 11 shows that Todaro. Respondent's Amended Complaint in Civil Case No. SP No.R. premises considered. as its Managing Director or CEO in the Philippines. under the letterhead of Ital Tech Distributors. Annex "C" 10 shows that on the same date as that of Annex "B. No costs.. Todaro wrote that "[m]y aim is to run again a ready-mix concrete company in the Philippines and not to be a part-time consultant. The Decision affirmed the Orders 4 dated 4 January 1999 5 and 3 June 1999 6 of Branch 147 of the Regional Trial Court of Makati City (trial court) in Civil Case No. 78981. •Arrangement to commence from 1st November '96. Todaro confirmed his availability and expressed interest in joining PIL. and all the proceedings against petitioner in the court a quo by virtue thereof are hereby DECLARED NULL AND VOID. Inc. MC99-605 as against the petitioner is hereby ordered DISMISSED. Inc. McDonald (McDonald).

Todaro informed McDonald that he was willing to extend assistance to the Pioneer representative from Queensland. PIL then filed a petition for review on certiorari before this Court. Todaro confirmed McDonald's package concerning the consultancy and reiterated his desire to be the manager of Pioneer's Philippine business venture. Mr. 1999 and June 3. A. HcTEaA Annex "I" 16 shows the letter dated 20 October 1997 of K. Finally. 98-124 are hereby AFFIRMED in toto. filed a separate motion to dismiss. I wish you all the best for the future. Dr. PPHI. Finally. 20 TSIDEa The Ruling of the Trial Court On 4 January 1999. PCPI. Folwell (Folwell). The assailed Orders dated January 4. I have discussed and examined the material regarding your association with Pioneer over the period from mid 1996 through to September 1997. prove its contention. premises considered. PIL's Executive General Manager of Australia and Asia. PPHI. Annex "G" 14 shows Todaro's faxed reply. holding that PIL did business in the Philippines when it entered into a contract with Todaro. Clearly your consultancy services to Pioneer Hong Kong are well documented and have been appropriately rewarded. and your refusal to consider my terms of offer of permanent employment. However. to McDonald of PIL dated 8 April 1997. PPHI.Moreover. the complaint does not contain appropriate allegations of ultimate facts showing that [PIL] is doing or transacting business in the Philippines. the complaint should be dismissed on the ground of forum non-conveniens. the present petition for certiorari is hereby DENIED DUE COURSE and accordingly DISMISSED. and Klepzig filed a joint reply. SO ORDERED. PIL also questioned the service of summons on it. to Todaro. The tenor of the letter revealed that Todaro had not yet occupied his expected position. under the letterhead of Ital Tech Distributors. in regard to your request and expectation to be given permanent employment with Pioneer Philippines Holdings.. Todaro filed a Consolidated Opposition dated 26 August 1998 to refute PIL's assertions. a motion to dismiss Todaro's complaint. PIL did not file an answer before the trial court and instead filed a petition for certiorari before the appellate court.M. The appellate court stated that PIL's motion raised no new substantial or weighty arguments that could impel the appellate court from departing or overturning its previous decision. Folwell's message reads: Thank you for your letter to Dr. Inc.[PIL] is a foreign corporation "not doing business" in the Philippines. The trial court also asserted its jurisdiction over PIL.[The trial court] did not and cannot acquire jurisdiction over the person of [PIL] considering that: A.November 1996. Assuming arguendo that Klepzig is PIL's agent in the Philippines. Klepzig was authorized to terminate this association and the letter he sent to you dated 18th September has my support. The trial court stated that the merits of a motion to dismiss a complaint for lack of cause of action are tested on the strength of the allegation of facts in the complaint. PIL maintained that the complaint does not state a cause of action because there was no perfected contract. 1999 of the Regional Trial Court of Makati City. Folwell confirmed the contents of Klepzig's 18 September 1997 letter. Thank you for your involvement with Pioneer. and Klepzig. Mr. whom PIL claims is not its agent. The trial court denied the motions to dismiss filed by PIL. I am informed that negotiations to reach agreement on appropriate terms and conditions have not been successful. I will see that they pay you at the previous rates until the end of August. PIL's co-defendants. leave me no alternative but to withdraw these offers of employment with this company. PCPI. Schubert has asked me to investigate this matter. PCPI. This. Branch 147. Todaro filed a consolidated opposition. Although PIL questions the service of summons on Klepzig. I regret that we do not wish to pursue our association with you any further. to formally advise you that the agreement will cease from August 31st as per our previous discussions. PIL filed.1. by special appearance. Inc. The trial court found that the allegations in the complaint sufficiently establish a cause of action. and Klepzig likewise filed an urgent omnibus motion. Therefore. it was not Klepzig but De Leon who received the summons for PIL. PCPI. The trial court gave PIL. PCPI. The employment conditions you specified in your letter to John McDonald dated 11th September are well beyond our expectations. Todaro. the trial court found that it is more convenient to hear and decide the case in the Philippines because Todaro resides in the Philippines and the contract allegedly breached involves employment in the Philippines. the cause of action does not lie within the jurisdiction of the NLRC but with the trial court. Annex "H" 15 shows Klepzig's letter. 17 PIL asserted that the trial court has no jurisdiction over PIL because PIL is a foreign corporation not doing business in the Philippines. PCPI. Schubert dated 29th September 1997 regarding the alleged breach of contract with you. PIL further stated that the National Labor Relations Commission (NLRC). in Civil Case No. . The Ruling of the Appellate Court The appellate court denied PIL's petition and affirmed the trial court's ruling in toto. and Klepzig. They have authorized me on behalf of Pioneer International Ltd. The trial court issued an order 19 on 3 June 1999 denying the motions of PIL. the trial court ruled that PIL failed to adduce evidence to On 14 January 2003. Klepzig's message reads: It has not proven possible for this company to meet with your expectations regarding the conditions of your providing Pioneer with consultancy services. The Issues PIL raised the following issues before this Court: A. As you provided services under your previous agreement with our Pioneer Hong Kong office during the month of August. a Reply on 2 October 1998. and no personal judgment could be rendered by the trial court against PIL because PIL is a foreign corporation not doing business in the Philippines and there was improper service of summons on PIL. PPHI. on the issue offorum non-conveniens. and not the trial court. and Klepzig 15 days within which to file their respective answers. It claimed that assuming that the trial court has jurisdiction over the subject matter of the action. and Klepzig. under the letterhead of PPHI.2. PPHI. (Emphasis added) cIADaC PIL filed. to Todaro dated 18 September 1997. has jurisdiction over the subject matter of the action. still by special appearance. The dispositive portion of the appellate court's decision reads: WHEREFORE. PPHI. the appellate court dismissed 21 PIL's motion for reconsideration for lack of merit. The trial court declared that Todaro's cause of action is based on an alleged breach of a contractual obligation and an alleged violation of Articles 19 and 21 of the Civil Code. to which PIL. the trial court issued an order 18 which ruled in favor of Todaro. PIL filed an urgent omnibus motion for the reconsideration of the trial court's 4 January 1999 order and for the deferment of filing its answer.

Under the circumstances. A cause of action exists if the following elements are present. McDonald. Thus. the trial court should do so only after vital facts are established to determine whether special circumstances require the court's desistance. the trial court is limited to the four corners of the complaint and its annexes. PIL's mere investment in PPHI does not constitute "doing business. The veracity of the allegations will have to be examined during the trial on the merits. the test being whether. 23 In the present case. or any of its officers or agents within the Philippines. the Pioneer Group and the other defendants did not act with justice. PIL was doing business in the Philippines when it negotiated Todaro's employment with PPHI. and not on the veracity. 366 [1954])." sufficiently establish a cause of action for breach of contract and/or violation of Articles 19 and 21 of the New Civil Code.Alternatively. Rule 2 of the 1997 Rules of Civil Procedure states that a cause of action is the act or omission by which a party violates a right of another. (2) an obligation on the part of the named defendant to respect or not to violate such right. whereby. Whether or not these allegations are true is immaterial for the court cannot inquire into the truth thereof. service may be made on its resident agent designated in accordance with law for that purpose. given the allegations of fact in the complaint. vs. give [Todaro] his due and observe honesty and good faith and/or they have willfully caused injury to [Todaro] in a manner that is contrary to morals. the rulings of the trial and appellate courts on the issues raised by PIL are correct. 19 and 21 of the New Civil Code. is a direct breach of an obligation under a valid and perfected contract. The propriety of dismissing a case based on forum non-conveniens requires a factual determination. Cause of Action Section 2. Forum Non-Conveniens The doctrine of forum non-conveniens requires an examination of the truthfulness of the allegations in the complaint. PIL insists that its sole act of "transacting" or "doing business" in the Philippines consisted of its investment in PPHI. assuming without conceding. whether called "liaison" offices or branches. including annexes. The general rule is that the allegations in a complaint are sufficient to constitute a cause of action against the defendants if. In resolving a motion to dismiss based on lack of cause of action. paragraphs 30-33 alleging as follows: "30. on a permanent basis. admitting the facts alleged. the summary of Todaro's allegations states that PIL. that there was no contractual obligation on the part of the Pioneer Group to employ [Todaro] on a permanent basis. states: The phrase "doing business" shall include soliciting orders.[The trial court] did not and cannot acquire jurisdiction over the subject matter of the complaint since the allegations contained therein indubitably show that [Todaro] bases his claims on an alleged breach of an employment contract. 24 It should be emphasized that the presence of a cause of action rests on the sufficiency. and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages. that PIL is a foreign corporation not doing business in the Philippines and because of this. consent and/or approval of the defendants who acted in concert and/or in conspiracy with one another. the court can render a valid judgment upon the same in accordance with the prayer therein. Apart from the issue on service of summons. 22 The Ruling of the Court The petition has partial merit. 95 Phil. C. Section 12. IHaECA As to the first sub-issue. The refusal of the defendants to comply with the Pioneer Group's undertaking to employ [Todaro] to manage their Philippine ready-mix operations. of the allegations in the complaint. the Pioneer Group would employ [Todaro]. Foreign Investments Act of 1991. motions and all evidence on record. Transacting Business in the Philippines and Service of Summons The first level has two sub-issues: PIL's transaction of business in the Philippines and the service of summons on PIL. Under Philippine law. Second. in their Philippine operations..[Todaro] does not have a cause of action and the complaint fails to state a cause of action. [the trial court] still failed to acquire jurisdiction since summons was improperly served on [PIL]. or. based on the allegations in Todaro's complaint. good customs. Section 1.3. It is not yet necessary for the trial court to examine the truthfulness of the allegations in the complaint. PPHI. there is a valid contract entered into between [Todaro] and the Pioneer Group. that Todaro's claims are based on an alleged breach of an employment contract so Todaro should have filed his complaint before the NLRC and not before the trial court. Rule 14 of the 1997 Rules of Civil Procedure provides the manner by which summons may be served upon a foreign juridical entity which has transacted business in the Philippines. service contracts. on the government official designated by law to that effect. Thus: Service upon foreign private juridical entity. [the trial court] committed grave abuse of discretion when it took cognizance of the case. 32. et al.A." However. opening offices. among others. exclusive jurisdiction is vested with the [NLRC]. and public policy.Assuming arguendo that jurisdiction may be acquired over the person of [PIL]. we affirm the lower courts' ruling and declare that. on a permanent basis. it is more properly considered a matter of defense. as mandated under Arts. 31. to manage and operate the ready-mix concrete operations. the service of summons on PIL did not follow the mandated procedure. Todaro's allegations are thus sufficient to establish a cause of action. a valid judgment could be rendered in accordance with the prayer in the complaint. We quote with approval the trial court's ruling on this matter: aEHAIS On the issue of lack of cause of action — It is well-settled that the merits of a motion to dismiss a complaint for lack of cause of action is tested on the strength of the allegations of fact contained in the complaint and no other (De Jesus.All of the acts set forth in the foregoing have been done with the knowledge. D. .The Pioneer Group has decided to invest in the Philippines. if there be no such agent. First. 7042. if the Pioneer Group decides to invest in the Philippines. Rule 16 of the 1997 Rules of Civil Procedure does not mention forum non-conveniens as a ground for filing a motion to dismiss. et al. Jurisprudence is settled in that in resolving a motion to dismiss. Such examination is proper during the trial on the merits. We affirm with modification the rulings of the trial and appellate courts. 33. Section 3 (d) of Republic Act No. — When the defendant is a foreign juridical entity which has transacted business in the Philippines. Belarmino. 25 Jurisdiction over PIL PIL questions the trial court's exercise of jurisdiction over it on two levels. specifically paragraphs 13-33 thereof. B. namely: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created. This Court finds that the allegations of the complaint.Pursuant to the principle of forum non-conveniens. a court can consider all the pleadings filed in the case. and Klepzig did not fulfill their contractual obligation to employ Todaro on a permanent basis in PIL's Philippine office. While it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground. hence. PCPI.

this Court is of the opinion and so holds that no employer-employee relationship actually exists." Klepzig of PPHI stated that PIL authorized him to tell Todaro about the cessation of his consultancy. and/or the exercise of rights as such investor." 26 As to the second sub-issue. thus: It could not be denied that there was no existing contract yet to speak of between PIONEER INTL. brought about a breach of an obligation on a valid and perfected agreement. the designated government agency. In this instance. and [Todaro]. agent. The annexes that Todaro attached to his complaint give us an idea on the extent of PIL's involvement in the negotiations regarding Todaro's employment. These confirmations and references tell us that. there was improper service of summons on PIL since summons was not served personally on Klepzig. (Rollo.. De Leon was not PIL's agent but a mere employee of Klepzig. 32 The authority given by PIL to Klepzig to notify Todaro implies that Klepzig was likewise authorized to receive Todaro's response to PIL's notice. secretary. p. In Annex "E. The appellate court stated its ruling on this matter. the sheriff 33 resorted to substituted service. IaTSED At present. or any of its directors. Finally. However. Finally. which was duly confirmed by PIONEER INTL. supervision or control of any domestic business.. was the confirmation of the offer to engage the services of the former as consultant of PIONEER INTL. acting in behalf of PIONEER INTL. PIL had no resident agent in the Philippines. in Annex "I. When summons is served on a foreign juridical entity. the various Pioneer corporations were not acting as separate corporations. and (3) service on any of the corporation's officers or agents within the Philippines. but also to give notice to the defendant that an action has been commenced against it and to afford it an opportunity to be heard on the claim made against it. Rule 14 now reads "has transacted business in the Philippines. It cannot be denied that PIL had knowledge of and even authorized the non-implementation of Todaro's alleged permanent employment. the trial court will not acquire jurisdiction over the defendant. service of summons on PIL failed to follow any of the prescribed processes. That the phrase "doing business" shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business. Section 11 of Rule 14 provides that when the defendant is a domestic private juridical entity. NLRC Jurisdiction As to the second level. entity or corporation in the Philippines. Todaro prays for payment of damages due him because of PIL's non-implementation of Todaro's alleged employment agreement with PPHI. There being no employer-employee relationship established between [PIL] and [Todaro]. agent. managements." The present Section 11 qualified "manager" to "general manager" and "secretary" to "corporate secretary. service may be made on the "president. service of summons should be made in person on the defendant. However." The previous version of Section 11 allowed for the service of summons on the "president. Such are managerial and operational acts in directing and establishing commercial operations in the Philippines. and operations. the word "Pioneer" was used to refer not just to PIL alone but also to all corporations negotiating with Todaro under the Pioneer name. Todaro responded to PIL's notice by filing a complaint before the trial court." The scope is thus broader in that it is enough for the application of the Rule that the foreign private juridical entity "has transacted business in the Philippines. In effect. corporate secretary. Summons was not served on the Securities and Exchange Commission (SEC). we apply the rule on substituted service of summons on a natural person and we find that no reason was given to justify the service of PIL's summons on De Leon. or inhouse counsel." The present Section 11 also removed "cashier. and any other act or acts that imply a continuity of commercial dealings or arrangements and contemplate to that extent the performance of acts or works. As further proof of the interconnection of the various Pioneer corporations with regard to their negotiations with Todaro. Instead. 27 Substituted service is resorted to only upon the concurrence of two requisites: (1) when the defendant cannot be served personally within a reasonable time and (2) when there is impossibility of prompt service as shown by the statement in the proof of service in the efforts made to find the defendant personally and that such efforts failed. (2) service on the government official designated by law to receive summons if the corporation does not have a resident agent. The behavior of the various Pioneer corporations shoots down their defense that the corporations have separate and distinct personalities. Since there was an absence of an employment contract between the two parties. The failure on the part of PIONEER INTL. managing partner. Record reveals that all that was agreed upon by [Todaro] and the Pioneer Concrete. to abide by the said agreement. McDonald of Pioneer Concrete Group HK confirmed Todaro's engagement as consultant of PIL (Annex "E") while Folwell of PIL stated that Todaro rendered consultancy services to Pioneer HK (Annex "I"). 34 . a domestic corporation. Schubert and to Pioneer Hong Kong. nor having a nominee director or officer to represent its interests in such corporation. 30 In the present case. otherwise. 31 since PIL is not registered with the SEC. and fully. For symmetry. or any of its directors" from the exclusive enumeration. summons was served on De Leon. Summons for PIL was served on De Leon. nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account. Thus. the various officers and companies under the Pioneer brand name do not work independently of each other. it could be said that the instant case falls within the jurisdiction of the regular courts of justice as the money claim of [Todaro] did not arise out of or in connection with [an] employer-employee relationship. 132). and any substituted service other than by the statute is considered ineffective. firm. faithfully. (Emphases added) PIL's alleged acts in actively negotiating to employ Todaro to run its premixed concrete operations in the Philippines. are not mere acts of a passive investor in a domestic corporation. 28 The statutory requirements of substituted service must be followed strictly. In fact. the phrase "doing business in the Philippines" in the former version of Section 12. The requirements of the rule on summons must be strictly followed. there are three prescribed ways: (1) service on its resident agent designated in accordance with law for that purpose. participating in the management. treasurer. The various Pioneer corporations were all working in concert to negotiate an employment contract between Todaro and PPHI. and in progressive prosecution of commercial gain or of the purpose and object of the business organization: Provided." McDonald of Pioneer Concrete Group HK confirmed his offer to engage Todaro as a consultant of PIL. in the letters to Todaro. It is a method extraordinary in character and may be used only as prescribed and in the circumstances authorized by the statute. Substituted service is in derogation of the usual method of service. In Annex "F. In Annex "H. In this sense. 29 The need for strict compliance with the requirements of the rule on summons is also exemplified in the exclusive enumeration of the agents of a domestic private juridical entity who are authorized to receive summons. in this instance. the purpose of summons is not only to acquire jurisdiction over the person of the defendant. or the exercise of some of the functions normally incident to.appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totaling one hundred eighty [180] days or more. Klepzig is PIL's "agent within the Philippines" because PIL authorized Klepzig to notify Todaro of the cessation of his consultancy (Annexes "H" and "I")." Folwell of PIL wrote to Todaro to confirm that "Pioneer" no longer wishes to be associated with Todaro and that Klepzig is authorized to terminate this association." Todaro accepted the consultancy. general manager. When summons is to be served on a natural person. which acts are hypothetically admitted in PIL's motion to dismiss. we rule that PIL transacted business in the Philippines and Klepzig was its agent within the Philippines. manager. Klepzig's Executive Assistant. Folwell further referred to a Dr. Klepzig's Executive Assistant. however. summons was not served personally on Klepzig as agent of PIL. cashier.

The case is remanded to the trial court for proper service of summons and trial. PIL's liability for the non-implementation of the alleged employment agreement is a civil dispute properly belonging to the regular courts. not between PIL and Todaro. Quisumbing.. Jr.Todaro's employment in the Philippines would not be with PIL but with PPHI as stated in the 20 October 1997 letter of Folwell. 36 WHEREFORE. the employer-employee relationship would be between PPHI and Todaro.. No costs. concur. Assuming the existence of the employment agreement. . The Decision dated 27 September 2001 and the Resolution dated 14 January 2003 of the appellate court are AFFIRMED with the MODIFICATION that there was improper service of summons on Pioneer International. based on "violation of Articles 19 and 21 of the New Civil Code" for the "clear and evident bad faith and malice" 35 on the part of defendants. JJ. Carpio-Morales. in addition to breach of contract. Tinga and Velasco. The NLRC's jurisdiction is limited to those enumerated under Article 217 of the Labor Code. the petition is PARTIALLY GRANTED. Ltd. SO ORDERED. Todaro's causes of action as stated in his complaint are.

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