Philsec vs.

CA

FACTS:
1. Veronica Ducat obtained separate loans from AYALA and PHILSEC amounting to
$2,500,000.00.
a. Secured by shares of stock owned by her amounting to P14,000,000.00
2. To facilitate payment, 1288 Inc., assumed Ducats obligation under an agreement
a. 1488 executes a Warranty Deed with Vendors Lien (sale) over a parcel parcel of
land in Texas for $2,800,000.00 in favor ATHONA
b. PHILSEC and AYALA extends a loan for ATHONA in the amount of
$2,500,000.00, which was subsequently paid to 1488.
c. Balance was to be paid by way of PNs issued by ATHONA in favor of 1488.
3. Subsequently, upon their receipt of the US$2,500,000.00 from 1488, Inc., PHILSEC and
AYALA released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of
stock in their possession belonging to Ducat.
4. ATHONA failed to pay the interest on the PN.
a. 1488 sued PHILSEC, AYALA, ATHONA in US for payment of the balance and
for breach of contract
b. Originally instituted in US District Court of Texas
c. Later transferred to US District Court for the Southern District of Texas where
1488 filed an amended complaint
5. ATHONA filed an answer with counterclaim
a. ANSWER: private respondents conspired in selling the property at a price over
its market value.
b. Sought for damages and excess payment made to 1488.
6. Meanwhile, PHILSEC and AYALA filed a MTD
a. GROUND: Lack of jurisdiction over their person
b. COURT: Denied
7. While the US case was pending, petitioners filed a complaint for sum of money with
damages and writ of prelim attachment against the respondents in RTC wherein the
allegations were mere reiteration of their counterclaims in the US case.
a. RTC: issued a writ of preliminary attachment against the real and personal
properties of private respondents
8. Ducat moved to dismiss the complaint
a. GROUNDS: litis pendentia; forum non conveniens; lack of cause of action
b. RTC MAKATI: granted the MTD on the basis of litis pendentia
9. 1488 also filed a MTD
a. GROUNDS: the action being in personam, extra territorial service of
summons by publication was ineffectual and did not vest the court with
jurisdiction over 1488 Inc. which is a non-resident corporation.
b. RTC MAKATI: granted the MTD. 1488 and Daid were non-residents and the
action was not an action in rem or quasi in rem, so that extraterritorial
service of summons was ineffective.
10. CA: Affirmed. The suit filed is an Action in personam for the recovery of a sum of money
for alleged tortious acts. Thus service of summons by publication did not vest the trial
court with jurisdiction over 1488, Inc. and Drago Daic.

ISSUE: Whether or not RTC Makati acquired jurisdiction over the persons of 1488 Inc. and Daic
it being an action in personam.

HELD: YES
RATIO:

It was error we think for the Court of Appeals and the trial court to hold that jurisdiction over
1488, Inc. and Daic could not be obtained because this is an action in personam and summons
were served by extraterritorial service.

Rule 14, 17 on extraterritorial service provides that service of summons on a non-resident

defendant may be effected out of the Philippines by leave of Court where, among others, the
property of the defendant has been attached within the Philippines. It is not disputed that the
properties, real and personal, of the private respondents had been attached prior to service of
summons under the Order of the trial court dated April 20, 1987.