1

Hilton v. Guyot case brief Facts

Hilton v. Guyot case brief summary
159 U.S. 113 (1895) Hilton (Plaintiff) and Libbey (Plaintiff), New York citizens trading in Paris, were sued in France
by Guyot (Defendant), the administrator of a French firm, for sums allegedly owed to that
CASE SYNOPSIS firm. The Plaintiffs appeared and litigated the merits in the French proceeding. The French
Defendants appealed an order from the Circuit Court of the United States (SDNY), which
court rendered a judgment against them that was affirmed by a higher court and became
directed a verdict for plaintiffs in the amount that a French court had awarded.
final. Defendant then sought to enforce that judgment in federal district court in New York.
Defendants alleged fraud on the plaintiff's part.
That court held the judgment enforceable without retrial on the merits. The Plaintiffs then
CASE FACTS appealed to the U.S. Supreme Court.
Plaintiffs sued the defendants in a French court under a contract claim.
The defendants alleged fraud on the (Ps) part, and the (Ds) sought an injunction from Issue
bringing suit. The court, however, would not admit evidence and entered a directed verdict
for plaintiff. Do laws have any effect, of their own force, beyond the limits of the sovereignty from which
A French appeals court affirmed the judgment. its authority is derived?
Defendants sought review in the United States.
Held
DISCUSSION
(Gray, J.) No. No law has any effect, of its own force, beyond the limits of the sovereignty
The court stated that comity was reciprocal. from which its authority is derived. No sovereign is bound, unless by special compact, to
Because France did not recognize final judgments of the U.S., and would try such execute within his dominions a judgment rendered by the tribunals of another state, and if
judgments anew, judgements given by France would be given the same treatment. execution be sought by suit upon the judgment or otherwise, the tribunal in which the suit is
Therefore, the comity of the United States did not require the court to give brought, or from which execution is sought, is, on principle, at liberty to examine into the
conclusive effect to the judgments of the courts of France. merits of such judgment, and to give effect to it or not, as may be found just and equitable.
Defendants could be granted a new trial. However, the general comity, utility and convenience of nations have established a usage
among most civilized states, by which the final judgments of foreign courts of competent
jurisdiction are reciprocally carried into execution, under certain regulations and restrictions,
CONCLUSION
which differ in different countries. Additionally, judgments rendered in France, or in any
The judgment was reversed and the cause was remanded for a new trial.
Comity was not afforded to foreign judgments when the country did not reciprocate comity. foreign country, by the laws of which our own judgments are reviewable upon the merits, are
not entitled to full credit and conclusive effect when sued upon in this country, but are prima
Brief Fact Summary facie evidence only of the justice of the plaintiffs claim. Reversed.

Hilton (Plaintiff) and Libbey (Plaintiff) appealed from a federal district court holding that a
French court judgment against them for amounts allegedly owed to a French firm was
enforceable without retrial on the merits.
Dissent
(Fuller, C.J.) The doctrine of res judicata should be applicable to domestic judgments as well
as to foreign judgments, and rests on the same general ground of public policy that there
should be an end of litigation.

Synopsis of Rule of Law Discussion

No law has any effect, of its own force, beyond the limits of the sovereignty from which its The Courts decision in Hilton v. Guyot reflects the traditional rule of reciprocity. According
authority is derived. to this concept, foreign nation judgments were granted the same or comparable treatment
as American judgments were given by the judgment nation. Since the Court in Hilton found
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that French courts would not have enforced or executed a judgment rendered in this
country, it therefore held that the French judgment at issue should be nonconclusive here.

THIRD DIVISION
G.R. No. 147369 October 23, 2003
Spouses PATRICK JOSE and RAFAELA JOSE, petitioners,
vs.
Spouses HELEN BOYON and ROMEO BOYON, respondents.
DECISION
PANGANIBAN, J.:
In general, substituted service can be availed of only after a clear showing that personal
service of summons was not legally possible. Also, service by publication is applicable in
actions in rem and quasi in rem, but not in personal suits such as the present one which is for
specific performance.
The Case
Before the Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court,
assailing the February 26, 2001 Decision2 of the Court of Appeals (CA) in CA-GR SP No. 60888.
The dispositive portion of the CA Decision is worded as follows:
"WHEREFORE, on the basis of what prescinds, the assailed resolution and orders issued by
the public respondent are perforce ANNULLED and SET ASIDE. This pronouncement is
nonetheless rendered without prejudice to the refiling of the same case by the private
respondents with the court a quo."3
The Facts
The factual antecedents of the case are narrated by the CA in this wise:
"On July 2, 1998, [petitioners] Patrick and Rafaela Jose lodged a complaint for specific
performance against [respondents] Helen and Romeo Boyon to compel them to facilitate the
transfer of ownership of a parcel of land subject of a controverted sale. The action was
lodged before the Regional Trial Court of Muntinlupa which is presided by herein public
respondent Judge N.C. Perello. On July 21, 1998, respondent judge, through the acting
Branch Clerk of Court of Branch 276 of the RTC of Muntinlupa City, issued summons to the
[respondents]. As per return of the summons, substituted service was resorted to by the
process server allegedly because efforts to serve the summons personally to the
[respondents] failed. On December 9, 1998, [petitioners] filed before the trial court an Ex-
parte Motion for Leave of Court to Effect Summons by Publication. On December 28, 1998,
public respondent issued an Order granting the Ex-parte Motion for Leave of Court to Effect
3
Summons by Publication. On July 30, 1999, the respondent judge, sans a written motion,
issued an Order declaring herein [respondents] in default for failure to file their respective
answers. As a consequence of the declaration of default, [petitioners] were allowed to
submit their evidence ex-parte. Ultimately, on December 7, 1999, respondent judge issued
the assailed resolution, the dispositive portion of which reads as follows:
x x x Therefore, Spouses Helen and Romeo Boyon are directed to execute the necessary
document with the effect of withdrawing the Affidavit of Loss they filed and annotated with
the Register of Deeds of Makati City so that title to the parcel of land subject of the Deed of
Absolute Sale in favor of the Plaintiffs be transferred in their names. Thereafter the Register
of Deeds of Makati City or Muntinlupa City may cancel Transfer of Certificate of Title No.
149635 of the Defendants and issue another to Plaintiff under the deed of sale, clean and
free of any reported encumbrance.
Defendants are also directed to pay Plaintiffs actual expenses in the amount of P20,000 and
attorneys fees of P20,000 including costs of this suit.
"On January 5, 2000, [respondent] Helen Boyon, who was then residing in the United States
of America, was surprised to learn from her sister Elizabeth Boyon, of the resolution issued
by the respondent court. On January 18, 2000, [respondents] filed an Ad Cautelam motion
questioning, among others, the validity of the service of summons effected by the court a
quo. On March 17, 2000, the public respondent issued an Order denying the said motion on
the basis of the defaulted [respondents] supposed loss of standing in court. On March 29,
2000, the [respondents] once again raised the issue of jurisdiction of the trial court via a
motion for reconsideration. On June 22, 2000, however, an Order was issued by the public
respondent denying the said motion. The [petitioners] moved for the execution of the
controverted judgment which the respondent judge ultimately granted."4
Thereafter, respondents filed before the CA a Petition for certiorari under Rule 65 of the
Revised Rules of Civil Procedure, questioning the jurisdiction of the regional trial court (RTC).
Ruling of the Court of Appeals
The CA held that the trial court had no authority to issue the questioned Resolution and
Orders. According to the appellate court, the RTC never acquired jurisdiction over
respondents because of the invalid service of summons upon them. First, the sheriff failed to
comply with the requirements of substituted service of summons, because he did not specify
in the Return of Summons the prior efforts he had made to locate them and the impossibility
of promptly serving the summons upon them by personal service. Second, the subsequent
summons by publication was equally infirm, because the Complaint was a suit for specific
performance and therefore an action in personam. Consequently, the Resolution and the
Orders were null and void, since the RTC had never acquired jurisdiction over respondents.
Hence, this Petition.5

Issues
In their Memorandum, petitioners raise the following issues for our consideration:
"A. The Honorable Court of Appeals erred in not holding that the assailed
Resolution dated December 7, 1999 was already final and executory
"B. The Honorable Court of Appeals erred in giving due course to the Petition for
Certiorari of private respondents despite the pendency of an appeal earlier filed
"C. The Honorable Court erred in not holding that the Petition for Certiorari was
time barred
"D. The Honorable Court of Appeals erred in holding that the proceedings in the
lower court are null and void due to invalid and defective service of summons and
the court did not acquire jurisdiction over the person of the respondents."6
In sum, the main issue revolves around the validity of the service of summons on
respondents.1vvphi1.nt
The Courts Ruling
The Petition has no merit.
Main Issue:
Validity of the Service of Summons
Petitioners aver that the CA erred in ruling that the service of summons on respondents was
invalid. They submit that although the case filed before the trial court was denominated as
an action for specific performance, it was actually an action quasi in rem, because it involved
a piece of real property located in the Philippines. They further argue that in actions quasi in
rem involving ownership of a parcel of land, it is sufficient that the trial court acquire
jurisdiction over the res. Thus, the summons by publication, which they effected subsequent
to the substituted service of summons, was allegedly sufficient.
On the other hand, respondents maintain that the proceedings in the trial court were null
and void because of the invalid and defective service of summons. According to them, the
Return of Summons issued by the process server of the RTC failed to state that he had
exerted earnest efforts to effect the service of summons. He allegedly tried to serve it
personally on them on July 22, 1998 at No. 32 Ariza Drive, Camella Homes, Alabang. He,
however, resorted to substituted service on that same day, supposedly because he could not
4
find respondents in the above address. They further allege that the person to whom he gave
the summons was not even a resident of that address.
Respondents contend that when summons is served by substituted service, the return must
show that it was impossible to serve the summons personally, and that efforts had been
exerted toward that end. They add that noncompliance with the rule on substituted service
renders invalid all proceedings relative thereto.
As to the summons by publication subsequently effected by petitioners, respondents argue
that the case filed before the trial court was an action for specific performance and,
therefore, an action in personam. As such, the summons by publication was insufficient to
enable the trial court to acquire jurisdiction over the persons of respondents.
Respondents conclude that even granting that the service of summons by publication was
permissible under the circumstances, it would still be defective and invalid because of the
failure of petitioners to observe the requirements of law, like an Affidavit attesting that the
latter deposited in the post office a copy of the summons and of the order of publication,
paid the postage, and sent the documents by registered mail to the formers last known
address.1awphi1.nt
We agree with respondents. In general, trial courts acquire jurisdiction over the person of the
defendant by the service of summons. Where the action is in personam and the defendant is
in the Philippines, such service may be done by personal or substituted service, following the
procedures laid out in Sections 6 and 7 of Rule 14 of the Revised Rules of Court, which read:
"Section 6. Service in person on defendant. - Whenever practicable, the summons shall be
served by handing a copy thereof to the defendant in person, or, if he refuses to receive and
sign for it, by tendering it to him.
"Section 7. Substituted service. - If, for justifiable causes, the defendant cannot be served
within a reasonable time as provided in the preceding section, service may be effected (a) by
leaving copies of the summons at the defendant's residence with some person of suitable
age and discretion then residing therein, or (b) by leaving the copies at defendants office or
regular place of business with some competent person in charge thereof."
As can be gleaned from the above-quoted Sections, personal service of summons is preferred
to substituted service. Only if the former cannot be made promptly can the process server
resort to the latter. Moreover, the proof of service of summons must (a) indicate the
impossibility of service of summons within a reasonable time; (b) specify the efforts exerted
to locate the defendant; and (c) state that the summons was served upon a person of
sufficient age and discretion who is residing in the address, or who is in charge of the office
or regular place of business, of the defendant.7 It is likewise required that the pertinent facts
proving these circumstances be stated in the proof of service or in the officers return. The

failure to comply faithfully, strictly and fully with all the foregoing requirements of
substituted service renders the service of summons ineffective.8
Defective Personal Service of Summons
In the instant case, it appears that the process server hastily and capriciously resorted to
substituted service of summons without actually exerting any genuine effort to locate
respondents. A review of the records9 reveals that the only effort he exerted was to go to No.
32 Ariza Drive, Camella Homes, Alabang on July 22, 1998, to try to serve the summons
personally on respondents. While the Return of Summons states that efforts to do so were
ineffectual and unavailing because Helen Boyon was in the United States and Romeo Boyon
was in Bicol, it did not mention exactly what efforts -- if any -- were undertaken to find
respondents. Furthermore, it did not specify where or from whom the process server
obtained the information on their whereabouts. The pertinent portion of the Return of
Summons is reproduced as follows:
"That efforts to serve the said Summons personally upon defendants Sps. Helen and Romeo
Boyon were made but the same were ineffectual and unavailing for the reason that
defendant Helen Boyon is somewhere in the United States of America and defendant Romeo
Boyon is in Bicol thus substituted service was made in accordance with Section 7, Rule 14, of
the Revised Rules of Court."10
The Return of Summons shows that no effort was actually exerted and no positive step taken
by either the process server or petitioners to locate and serve the summons personally on
respondents. At best, the Return merely states the alleged whereabouts of respondents
without indicating that such information was verified from a person who had knowledge
thereof. Certainly, without specifying the details of the attendant circumstances or of the
efforts exerted to serve the summons, a general statement that such efforts were made will
not suffice for purposes of complying with the rules of substituted service of summons.
The necessity of stating in the process servers Return or Proof of Service the material facts
and circumstances sustaining the validity of substituted service was explained by this Court
in Hamilton v. Levy,11 from which we quote:
"x x x The pertinent facts and circumstances attendant to the service of summons must be
stated in the proof of service or Officers Return; otherwise, any substituted service made in
lieu of personal service cannot be upheld. This is necessary because substituted service is in
derogation of the usual method of service. It is a method extraordinary in character and
hence may be used only as prescribed and in the circumstances authorized by statute. Here,
no such explanation was made. Failure to faithfully, strictly, and fully comply with the
requirements of substituted service renders said service ineffective."12
5
Moreover, the requirements of substituted service of summons and the effect of
noncompliance with the subsequent proceedings therefor were discussed in Madrigal v.
Court of Appeals13 as follows:
"In a long line of cases, this Court held that the impossibility of personal service justifying
availment of substituted service should be explained in the proof of service; why efforts
exerted towards personal service failed. The pertinent facts and circumstances attendant to
the service of summons must be stated in the proof of service or Officers Return; otherwise,
the substituted service cannot be upheld. It bears stressing that since service of summons,
especially for actions in personam, is essential for the acquisition of jurisdiction over the
person of the defendant, the resort to a substituted service must be duly justified. Failure to
do so would invalidate all subsequent proceedings on jurisdictional grounds."14
Summons by Publication Improper
It must be noted that extraterritorial service of summons or summons by publication applies
only when the action is in rem or quasi in rem. The first is an action against the thing itself
instead of against the defendants person; in the latter, an individual is named as defendant,
and the purpose is to subject that individuals interest in a piece of property to the obligation
or loan burdening it.15
In the instant case, what was filed before the trial court was an action for specific
performance directed against respondents. While the suit incidentally involved a piece of
land, the ownership or possession thereof was not put in issue, since they did not assert any
interest or right over it. Moreover, this Court has consistently declared that an action for
specific performance is an action in personam.16
Having failed to serve the summons on respondents properly, the RTC did not validly acquire
jurisdiction over their persons. Consequently, due process demands that all the proceedings
conducted subsequent thereto should be deemed null and void. 17
WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED.
Costs against petitioners.
SO ORDERED.
FACTS:
Petitioners lodged a complaint before the RTC for specific performance against respondents
to compel them to facilitate the transfer of ownership of a parcel of land subject of a
controverted sale. Respondent judge, through the acting Branch Clerk of Court issued
summons to the [respondents]. As per return of the summons, substituted service was
resorted to by the process server allegedly because efforts to serve the summons personally
to the [respondents] failed. Petioners filed before the trial court an Ex-parte Motion for
Leave of Court to Effect Summons by Publication which was granted. The respondent judge,
 6

sans a written motion, issued an Order declaring herein [respondents] in default for failure to
file their respective answers. As a consequence of the declaration of default, [petitioners]
were allowed to submit their evidence ex-parte. The lower court ruled in favor of petitioners.
On appeal, the CA held that the trial court had no authority to issue the questioned
Resolution and Orders. According to the appellate court, the RTC never acquired jurisdiction
over respondents because of the invalid service of summons upon them.

ISSUE: WON there was valid service of summons?

HELD:
NO. In general, trial courts acquire jurisdiction over the person of the defendant by the
service of summons. Where the action is in personam and the defendant is in the Philippines,
such service may be done by personal or substituted service, following the procedures laid
out in Sections 6 and 7 of Rule 14 of the Revised Rules of Court. As can be gleaned from the
rules, personal service of summons is preferred to substituted service. Only if the former
cannot be made promptly can the process server resort to the latter. Moreover, the proof of
service of summons must (a) indicate the impossibility of service of summons within a
reasonable time; (b) specify the efforts exerted to locate the defendant; and (c) state that
the summons was served upon a person of sufficient age and discretion who is residing in the
address, or who is in charge of the office or regular place of business, of the defendant. It is
likewise required that the pertinent facts proving these circumstances be stated in the proof
of service or in the officers return. The failure to comply faithfully, strictly and fully with all
the foregoing requirements of substituted service renders the service of summons
ineffective. In the instant case, it appears that the process server hastily and capriciously
resorted to substituted service of summons without actually exerting any genuine effort to
locate respondents. Summons by publication in this case was also improper. It must be noted
that extraterritorial service of summons or summons by publication applies only when the
action is in rem or quasi in rem.

FIRST DIVISION
G.R. No. L-82330 May 31, 1988
THE DIAL CORPORATION, C & T REFINERY INC., NALIN Sdn. Bhb. BERISFORD COMMODITIES,
LTD., and PACIFIC MOLASSES COMPANY, petitioners,
vs.
THE HON. CLEMENTE M. SORIANO, Presiding Judge, Regional Trial Court, Branch 3, MANILA
PUBLIC RESPONDENT and IMPERIAL VEGETABLE OIL COMPANY, INC., respondents.
GRIO-AQUINO, J.:
The petitioners are foreign corporations organized and existing under the laws of the United
States, the United Kingdom, and Malaysia, are not domiciled in the Philippines, nor do they
have officers or agents, place of business, or property in the Philippines; they are not licensed
to engage, and are not engaged, in business here. The respondent Imperial Vegetable Oil
Company, Inc. (or "IVO" for brevity) is a Philippine corporation which through its president,
Dominador Monteverde, had entered into several contracts for the delivery of coconut oil to
the petitioners. Those contracts stipulate that any dispute between the parties will be settled
through arbitration under the rules of either the Federation of Oils Seeds and Fats
Association (FOSFA) or the National Institute of Oil Seed Products (NIOP). Because IVO
defaulted under the contracts, the petitioners and 15 others, initiated arbitration
proceedings abroad, and some have already obtained arbitration awards against IVO.
On April 8, 1987, IVO filed a complaint for injunction and damages against nineteen (19)
foreign coconut oil buyers including the petitioners, with whom its president, Dominador
Monteverde, had entered into contracts for the delivery of coconut oil (Civil Case No. 87-
40166, RTC Manila entitled "Imperial Vegetable Oil Co., Inc. vs. Dial Corporation et al."). IVO
repudiated Monteverde's contracts on the grounds that they were mere "paper trading in
futures" as no actual delivery of the coconut oil was allegedly intended by the parties; that
the Board of Directors of IVO convened in a special meeting on March 21, 1987 and removed
Dominador Monteverde from his position as president of the corporation, named in his
place, Rodrigo Monteverde, and disowned Dominador Monteverde's allegedly illegal and
unauthorized acts; that the defendants have allegedly "harassed" IVO to comply with
Dominador's contracts and to come to a settlement with them. IVO prayed for the issuance
of a temporary restraining order or writ of preliminary injunction to stop the defendants
from harassing IVO with their insistent demands to recognize the contracts entered into by
Dominador Monteverde and from portraying the IVO as one that defaults on its contracts
and obligations and has fallen into bad times and from interfering with IVO's normal conduct
of business. IVO also prayed that the defendants pay it moral damages of P5 million, actual
damages of P10 million, exemplary damages of P5 million, attorney's fees of P1 million,
P3,000 per appearance of counsel, and litigation expenses.
On motion of IVO, respondent Judge authorized it to effect extraterritorial service of
summons to all the defendants through DHL Philippines corporation (Annex B). Pursuant to
7
that order, the petitioners were served with summons and copy of the complaint by DHL
courier service.
On April 25, 1987, without submitting to the court's jurisdiction and only for the purpose of
objecting to said jurisdiction over their persons, the petitioners filed motions to dismiss the
complaint against them on the ground that the extraterritorial service of summons to them
was improper and that hence the court did not acquire jurisdiction over them. On December
15, 1987, the court denied their motions to dismiss and upheld the validity of the
extraterritorial service of summons to them on the ground that "the present action relates to
property rights which lie in contracts within the Philippines, or which defendants claim liens
or interests, actual or inchoate, legal or equitable (par. 2, complaint). And one of the reliefs
demanded consists, wholly or in part, in excluding the defendants from any interest in such
property for the reason that their transactions with plaintiff's former president are ultra
vires." Furthermore, "as foreign corporations doing business in the Philippines without a
license, they opened themselves to suit before Philippine courts, pursuant to Sec. 133 of the
Corporation Code of the Philippines." (Annex H) The petitioners' motions for reconsideration
of that order were also denied by the court (Annex M), hence this petition for certiorari with
a prayer for the issuance of a temporary retraining order which We granted.
The petition is meritorious.
Section 17, Rule 14 of the Rules of Court provides:
Section 17. Extraterritorial service. When the defendant does not reside and is
not found in the Philippines and the action affects the personal status of the
plaintiff or relates to, or the subject of which is, property within the Philippines, in
which the defendant has or claims a lien or interest, actual or contingent, or in
which the relief demanded consists, wholly or in part, in excluding the defendant
from any interest therein, or the property of the defendant has been attached
within the Philippines, service may, by leave of court, be effected out of the
Philippines by personal service as under section 7; or by publication in a newspaper
of general circulation in such places and for such time as the court may order, in
which case a copy of the summons and order of the court shall be sent by
registered mail to the last known address of the defendant, or in any other manner
the court may deem sufficient. Any order granting such leave shall specify a
reasonable time, which shag not be less than sixty (60) days after notice, within
which the defendant must answer.
Only in four (4) instances is extraterritorial service of summons proper, namely: "(1) when
the action affects the personal status of the plaintiffs; (2) when the action relates to, or the
subject of which is, property within the Philippines, in which the defendant has or claims a
lien or interest, actual or contingent; (3) when the relief demanded in such action consists,
wholly or in part, in excluding the defendant from any interest in property located in the
Philippines; and (4) when the defendant non-resident's property has been attached within
the Philippines" (De Midgely vs. Fernandos, 64 SCRA 23).
 8

The complaint in this case does not involve the personal status of the plaintiff, nor any
property in the Philippines in which the defendants have or claim an interest, or which the
plaintiff has attached. The action is purely an action for injunction to restrain the defendants
from enforcing against IVO ("abusing and harassing") its contracts for the delivery of coconut
oil to the defendants, and to recover from the defendants P21 million in damages for such
"harassment." It is clearly a personal action as well as an action in personam, not an action in
rem or quasi in rem. "An action in personam is an action against a person on the basis of his
personal liability, while an action in remedies is an action against the thing itself, instead of
against the person." (Hernandez vs. Rural Bank of Lucena, Inc., 76 SCRA 85). A personal
action is one brought for the recovery of personal property, for the enforcement of some
contract or recovery of damages for its breach, or for the recovery of damages for the
commission of an injury to the person or property (Hernandez vs. Development Bank of the
Philippines, 71 SCRA 292).<re||an1w>
As Civil Case No. 87-40166 is a personal action, personal or substituted service of summons
on the defendants, not extraterritorial service, is necessary to confer jurisdiction on the
court. The rule is explained in Moran's Comments on the Rules of Court thus:
As a general rule, when the defendant is not residing and is not found in the
Philippines, the Philippine courts cannot try any case against him because of the
impossibility of acquiring jurisdiction over his person unless he voluntarily appears
in court. But, when the action affects the personal status of the plaintiff residing in
the Philippines, or is intended to seize or dispose of any property, real or personal,
of the defendant located in the Philippines, it may be validly tried by the Philippine
courts, for then, they have jurisdiction over the res, i.e., the personal status of the
plaintiff or the property of the defendant and their jurisdiction over the person of
the non-resident defendant is not essential. Venue in such cases may be laid in the
province where the property of the defendant or a part thereof involved in the
litigation is located. (5 Moran's Comments on the Rules of Court, 2nd Ed., p. 105.)
"contractual rights" of the petitioners are not property found in the Philippines for the
petitioners have not filed an action in the local courts to enforce said rights. They have not
submitted to the jurisdiction of our courts.
The lower court invoked Section 33 of the Corporation Code which provides that a "foreign
corporation transacting business in the Philippines without a license may be sued or
proceeded against before Philippine courts or administrative tribunal on any valid cause of
action recognized under Philippine laws." It assumed that the defendants (herein petitioners)
are doing business in the Philippines, which allegation the latter denied. Even if they can be
considered as such, the Corporation Code did not repeal the rules requiring proper service of
summons to such corporations as provided in Rule 14 of the Rules of Court and Section 128
of the Corporation Code.
The respondent court's finding that, by filing motions to dismiss, the petitioners
hypothetically admitted the allegations of the complaint that they are doing business in the
Philippines without any license, and that they may be served with summons and other court
processes through their agents or representatives enumerated in paragraph 2 of the
complaint, is contradicted by its order authorizing IVO to summon them by extraterritorial
service, a mode of service which is resorted to when the defendant is not found in the
Philippines, does not transact business here, and has no resident agent on whom the
summons may be served.
WHEREFORE, We hold that the extraterritorial service of summons on the petitioners was
improper, hence null and void. The petition for certiorari is granted.
The orders dated April 24, 1987 (Annex B) and December 15, 1987 (Annex H) of the
respondent Judge are hereby set aside. The complaint in Civil Case No. 87-40166 is hereby
dismissed as against the petitioners for failure of the court to acquire jurisdiction over them.

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

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

Respondents' contention that "the action below is related to property within the Philippines,
specifically contractual rights that petitioners are enforcing against IVO" is specious for the
 9

SECOND DIVISION On October 13, 1987, the trial court motu proprio set aside its order of March 11, 1987 9 on
the ground that the attachment of property was improper because petitioners' claims were
unliquidated. Accordingly, all properties garnished and attached pursuant to the writ of
attachment were ordered released. Petitioners moved for reconsideration of the court's
order. On December 21, 1987, the trial court modified its order 10 by allowing attachment in
G.R. No. 107314 September 17, 1998
the amount of P30,000.00 to answer for actual damages for the death of Jose Villareal. The
amount represents the value of human life as then fixed by this Court.
PATRICIA S. VILLAREAL, for herself and as guardian of her minor children, CLAIRE HOPE and
TRICIA, both surnamed VILLAREAL, petitioners,
On August 39, 1988, petitioners filed a Motion for Leave to Serve Summons by Publication
vs.
which was granted by the trial court in an order dated August 31, 1988. 11
THE COURT OF APPEALS, ELISEO SEVILLA, and ERNA SEVILLA, respondents.

Accordingly, copies of the order, summons, complaint, and the affidavit of merit were
MENDOZA, J.:
published in the Manila Times on November 29, December 6, and 13, 1988. 12 In addition,
copies of the aforesaid order, summons, complaint, and affidavit of merit were sent by
Petitioners seek a review of the decision, 1 dated December 23, 1991, of the Court of Appeals registered mail to the last known address of private respondents in the United States. 13 On
nullifying the decision and orders of the Regional Trial Court in Civil Case No. 16194 and January 17, 1989, the mail matter were returned to the Branch Clerk of Court with a notation
remanding the said case to the court a quo for further proceedings as well as the resolution which said "Moved, left no address." 14
of the Court of Appeals denying reconsideration of its decision.
Meanwhile, at the instance of petitioner Patricia Villareal, an Information 15 charging private
The complaint in this case was filed by petitioner Patricia Villareal to recover damages in the respondents with murder was filed on October 10, 1988 with the Regional Trial Court of
total amount of P1,944,000.00 from private respondents Eliseo and Erna Sevilla and certain Makati, where it was docketed as Criminal Case No. 555.
John Does for the killing on June 6, 1986 of petitioner's husband Jose Villareal. The
complaint, docketed as Civil Case No. 16194, was filed with the Regional Trial Court of
On March 7, 1989, petitioners filed a Motion to Declare Defendants in Default for failure to
Makati, Metro Manila. It was found that prior to the filing of the complaint on March 2, 1987,
file their Answer within the 60-day period counted from the last day of publication. Private
the Sevillas had abruptly left the country (at least two months after the murder) and had
respondents were declared in default on April 11, 1989, and petitioners were then allowed to
started disposing of their properties in the Philippines. 2
present evidence
ex-parte. 16
On March 11, 1987, after a hearing, during which witness Deborah Alamares gave private
respondents' address in the United States as allegedly divulged to her by private respondent
After presenting their evidence, petitioners amended their complaint to make it conform to
Erna Sevilla herself, 3 the trial court ordered the Sevillas' properties in the Philippines
the evidence. 17 On the supposition that they had proven damages in a much bigger amount
attached, 4 upon the posting of a bond in the amount of P500,000.00. Pursuant to this,
than that prayed for in the original complaint, they increased the amount of damages prayed
Deputy Sheriff Eulalio C. Juanson attached private respondents' personal and real properties
for to P13,082,888.00 plus 50% of this amount as attorney's fees. In addition, Patricia
on March 17, 18, and 19, 1987. 5
Villareal's children were included as plaintiffs.

On July 21, 1987, petitioners filed a Motion for Leave for Extraterritorial Service pursuant to
On August 29, 1989, the trial court admitted the Amended Complaint and granted
Rule 14, 17 alleging that private respondents were non-residents. The judge granted the
petitioners' Motion for Extra-territorial Service of Summons. 18 Accordingly, summons were
motion 6 and authorized the service of summons by registered mail at private respondents'
published once a week 19 for three consecutive weeks in the newspaper Abante. Copies of
address in California, U.S.A. This mail was received on August 17, 1987 by a certain "D. Pyle,"
the Amended Complaint, the summons, and the order were sent by registered mail to the
whose signature appears on the registry return card. 7
last known addresses of private respondents at Paraaque, Metro Manila and the United
States. However, the summons and the accompanying papers mailed were returned to the
Petitioners then moved to declare private respondents in default for failure to answer court with the notation "MOVED" for the letter addressed to the Paraaque residence, and
notwithstanding service of summons. However, petitioners' motion was denied 8 on October "REFUSED TO RECEIVE" for the letter addressed to the United States residence. 20
12, 1987 by the judge for the reason that "perhaps the address given by the plaintiff
(petitioners herein) is not the correct address of the defendants (private respondents herein)
or that they have already moved out.

On December 27, 1989, Attorney Teresita Marbibi filed a formal request in court seeking
photocopies of all the pleadings and orders pertinent to the case, including the summons and
the Amended Complaint. 21 In her letter, she stated that she was making the request "for the
purpose of protecting the interest of the defendants whose sister contracted our services." 22
On January 24, 1990, upon motion of the petitioners, the trial court declared the private
respondents in default for the second time 23 for having failed to file their Answer to the
Amended Complaint within 60 days after publication of the summons. It also declared the
case submitted for decision, upon being informed by the petitioners that the very same
evidence earlier presented would be reproduced and adopted in support of the Amended
Complaint. 24
On February 7, 1990, counsel for private respondents. Teresita Marbibi, filed a Notice of
Appearance 25 on their behalf.
On February 14, 1990, again through counsel, private respondents filed a verified Motion to
Lift Order of Default with Motion for Reconsideration 26 claiming that they were totally
unaware of the existence of the case at bar; that their inability to come forth promptly with
responsive pleading was due to accident, mistake, or excusable neglect; and, that the
allegation of petitioners that they were the killers of Jose Villareal was not true. Petitioners
filed an Opposition to the Motion, to which private respondents filed a Reply.
On March 27, 1990, the trial court issued an order 27 denying the Motion to Lift Order of
Default with Motion for Reconsideration, on the ground that private respondents herein
failed to comply with the requirements of Rule 18, 3.
On April 2, 1990, the trial court rendered a decision 28 finding private respondents liable for
the killing of Jose Villareal and ordering them jointly and severally to pay petitioners more
than P10 million in damages. The trial court found that private respondent Erna Sevilla and
the victim Jose Villareal were lovers; that private respondent Eliseo Sevilla, Erna's husband, is
a very jealous husband who inflicts physical injuries upon his wife; that apparently, private
respondent Eliseo discovered his wife's infidelity; and, that in conspiracy with several other
persons, including his wife Erna whom he seemed to have threatened, private respondent
Eliseo hatched a plan whereby Erna was to lure Jose Villareal to a carpark near the latter's
office where Eliseo and his companions were to attack and kill Jose. The trial court found that
after the killing, private respondents lost no time in disposing of their properties in the
Philippines, pulling out their children from school, and escaping to the United States.
Copies of the order dated March 27, 1990 denying the Motion to Lift Order of Default with
Motion for Reconsideration and the decision dated April 2, 1990 were received by private
respondents on the same day, April 7, 1990. Private respondents filed a Motion for
Reconsideration with Motion to Set Aside Decision asking the court to reconsider and/or set
aside the decision dated April 2, 1990 and the order of March 27, 1990. 29 On May 17, 1990,
they filed a Supplemental Motion for Reconsideration with Reply of the order dated March
27, 1990 and the decision dated April 2, 1990, asserting for the first time that the court did
10
not acquire jurisdiction over their persons. On July 16, 1990, they filed a Consolidated
Memorandum 30 in support of their aforesaid Motion for Reconsideration with Reply.
On August 10, 1990, the trial court issued an order 31 denying private respondents' Motion
for Reconsideration with Motion to Set Aside Decision and the Supplemental Motion for
Reconsideration with Reply. The trial court simultaneously granted petitioners' Motion for
Execution Pending Appeal. Consequently, on August 14, 1990, a Writ of Execution Pending
Appeal was issued. 23
On August 15, 1990, the Deputy Sheriff of the court served and registered with the Register
of Deeds of Paraaque a Notice of Levy over the properties said to be owned by private
respondents and covered by TCT Nos. 36350 (now 41338) and 36351 (now 41335) in their
names. 33 On August 16, 1990, the Deputy Sheriff served upon private respondents' counsel
the Notice of Levy with supporting papers, one of which was a photocopy of the denial order
dated August 10, 1990. 34
On August 21, 1990, private respondents' counsel received by mail a duplicate original copy
of the denial order of August 10, 1990. 35 On the same date, counsel filed a Notice of Appeal
of the denial order dated August 10, 1990 and the decision dated April 2, 1990. 36
Petitioners filed a Motion to Dismiss Notice of Appeal, contending that the Notice was filed
out of time, which private respondents opposed. Petitioners then filed a Supplemental
Comment to Motion to Dismiss dated October 4, 1990.
On October 2, 1990, the trial court issued an order 37 denying due course to the Notice of
Appeal on the ground that private respondents had only a day from August 16, 1990 (the day
they received a photocopy of the order denying their Motion for Reconsideration with
Motion to Set Aside Decision and their Supplemental Motion for Reconsideration with
Reply), not from August 21, 1990 (the day on which they received the duplicate original of
the said order) to perfect their appeal. As the Notice of Appeal was filed only on August 21,
1990, the trial court ruled that it was late. This order was received by private respondents'
counsel on October 18, 1990.
On October 25, 1990, private respondents, through counsel, filed a Motion to Set
Aside/Reconsider Order Dated October 2, 1990. 38
This was denied by the trial court in its order dated December 17,
1990, 39 a copy of which was received by private respondents' counsel on January 16, 1991. 40
On January 16, 1991, private respondents then filed a Notice of
Appeal. 41 from the orders dated December 17, 1990 and October 2, 1990 and again from the
order dated August 10, 1990.

On January 29, 1991, the trial court issued an Entry of Judgment, 42 a copy of which was
received by counsel for private respondents on February 13, 1991. On February 15, 1991, the
private respondents filed a Motion for Reconsideration with Motion to Elevate Records to
the Court of Appeals and Motion to Quash Entry of Judgment, 43 but the motions were
denied by the trial court in its order of August 1, 1991. 44
On September 11, 1991, private respondents filed in the Court of Appeals a petition
for certiorari, prohibition, and mandamus with preliminary injunction, 45 alleging that the
trial court had acted without or in excess of jurisdiction and with grave abuse of discretion in
issuing the aforesaid orders and decisions and that there was neither appeal nor any plain,
speedy and adequate remedy open to them in the ordinary course of law. Private
respondents contended (1) that the trial court never acquired jurisdiction over them since
they are non-resident defendants and petitioners' action is purely in personam and (2) that
they were denied due process of law. 46
On December 23, 1991, 47 the Court of Appeals granted the petition, ruling that the trial
court was guilty of grave abuse of discretion. The dispositive portion of its decision reads:
WHEREFORE, the writs prayed for in the petition are GRANTED. The orders of
default, the hearing ex-parte, the default judgment, the execution pending appeal,
the respective orders denying the motions for reconsideration, and all subsequent
orders related thereto are hereby declared null and void and are set aside. The
attachment on the properties of petitioners [private respondents here] shall
remain in force. The trial court is ordered to require petitioners to file their answer
within fifteen (15) days from notice, and thence to proceed in the disposition of the
case in accordance with the ordinary civil procedure.
Petitioners moved for a reconsideration, 48 but their motion was denied 49 by the appellate
court in a resolution dated September 30, 1992. Hence, this petition for review.
First. The Court of Appeals nullified the several orders and the decision rendered by the trial
court against private respondents on the ground that the trial court did not acquire
jurisdiction over them. It ruled that the extraterritorial service of summons did not confer on
the trial court jurisdiction to render and enforce a money judgment against the private
respondents who are non-residents. On the authority of Banco Espaol-Filipino v.
Palanca, 50 it held that the only effect of the conversion of an action in personam filed against
non-resident defendants into one quasi-in rem by virtue of the attachment of their
properties in the country was to subject such properties to the payment of the demand
which the court might find to be due petitioners, the plaintiffs below. Otherwise, the trial
court could not render a personal judgment against the private respondents, as it did in this
case, and enforce it against them. The Court of Appeals concluded that in doing so, the trial
court committed grave abuse of discretion. 51
It is true that where the defendant in an action in personam is a non-resident, as in this case,
and refuses to appear and submit to the jurisdiction of the court, the jurisdiction of the latter
11
is limited to the property within the country which the court may have ordered attached. In
such a case, the property itself is "the sole thing which is impleaded and is the responsible
object which is the subject of the judicial power." 52 Accordingly, "the relief must be confined
to the res, and the court cannot lawfully render a personal judgment against him." 53
But this Court also acknowledged in Banco Espaol-Filipino that if property is attached and
later the defendant appears, "the cause becomes mainly a suit in personam, with the added
incident that the property attached remains liable, under the control of the court, to answer
to any demand which may be established against the defendant by the final judgment of the
court." 54 This rule was affirmed in Mabanag v. Gallemore 55 in which it was held:
The main action in an attachment or garnishment suit is in rem until jurisdiction of
the defendant is secured. Thereafter, it is in personam and also in rem, unless
jurisdiction of the res is lost as by dissolution of the attachment. If jurisdiction of
the defendant is acquired but jurisdiction of the res is lost, it is then purely in
personam. . . . a proceeding against property without jurisdiction of the person of
the defendant is in substance a proceeding in rem; and where there is jurisdiction
of the defendant, but the proceeding against the property continues, that
proceeding is none the less necessarily in rem, although in form there is but a single
proceeding. (4 Am. Jur., 556-557.)
As the remedy is administered in some states, the theory of an attachment,
whether it is by process against or to subject the property or effects of a resident or
non-resident of the state, is that it partakes essentially of the nature and character
of a proceeding in personam and not a proceeding in rem. And if the defendant
appears the action proceeds in accordance with the practice governing
proceedings in personam. But where the defendant fails to appear in the action,
the proceeding is to be considered as one in the nature of a proceeding in rem. And
where the court acts directly on the property, the title thereof being charged by
the court without the intervention of the party, the proceeding unquestionably is
one in rem in the fullest meaning of the term.
In attachment proceedings against a non-resident defendant where personal
service on him is lacking, it is elementary that the court must obtain jurisdiction of
the property of the defendant. If no steps have been taken to acquire jurisdiction
of the defendant's person, and he has not appeared and answered or otherwise
submitted himself to the jurisdiction of the court, the court is without jurisdiction
to render judgment until there has been a lawful seizure of property owned by him
within the jurisdiction of the court. (2 R.C.L., 800-804.) 56
In this case, not only was property in the Philippines of private respondents attached, but,
what is more, private respondents subsequently appeared in the trial court and submitted to
its jurisdiction. Consequently, the jurisdiction of the trial court to render a judgment in
personam against them is undoubted.

Private respondents contend that the claims for which their property was attached are
unliquidated and, therefore, the attachment is totally invalid. While below they conceded
that the attachment was valid at least to the extent of P30,000.00 (then considered the value
of human life), they now contend that even this amount is unliquidated.
As private respondents thus admit, this point was not raised in the Court of Appeals by them.
It is only now that it is being urged. However, this point is now largely immaterial inasmuch
as the jurisdiction of the trial court to render a personal judgment against private
respondents derived not so much from the validity of the attachment as from the voluntary
submission of private respondents to its authority.
There can be no question regarding the trial court's acquisition of jurisdiction over the
persons of respondents when the latter's counsel entered her appearance on their behalf on
February 7, 1990. Through counsel, private respondents voluntarily appeared by filing a
Notice of Appearance without qualification and a Motion to Lift Order of Default with Motion
for Reconsideration, in which they prayed for affirmative reliefs, thus submitting to the
jurisdiction of the court. The following instances have been considered voluntary submission
to the jurisdiction of the court: the filing by defendant of a motion to admit answer; 57 the
filing of a motion for reconsideration of the judgment by default; 58 and the filing of a petition
to set aside the judgment of default. 59
Not only did private respondents voluntarily submit themselves to the jurisdiction of the trial
court, they never questioned the validity of the mode of service of summons, that is, by
extraterritorial service upon them. As already stated, private respondents filed a notice of
appearance without qualification.
In Flores v. Zurbito, it was held: 60
He may appear by presenting a motion, for example, and unless by such
appearance he specifically objects to the jurisdiction of the court, he thereby gives
his assent to the jurisdiction of the court over his person. When the appearance is
by motion objecting to the jurisdiction of the court over his person, it must be for
the sole and separate purpose of objecting to the jurisdiction of the court. If his
motion is for any other purpose than to object to the jurisdiction of the court over
his person, he thereby submits himself to the jurisdiction of the court. (Handy vs.
Insurance Co., 37 Ohio St., 366; Elliott vs. Lawhead, 43 Ohio St., 171; New Jersey vs.
New York, 6 Peters [U.S.], 323 Livingston vs. Gibbons, 4 Johnson's Chancery [N.Y.],
94; . . . ). An appearance in court, either in person or by counsel, for any purpose
other than to expressly object to the jurisdiction of the court over the person,
waives want of process and service of notice. Such an appearance gives the court
jurisdiction over the person. (Henderson vs. Carbondale etc., Co., 140 U.S., 25;
Rhode Island vs Massachusetts, 12 Peters, [U.S.], 657.). . . . His appearance without
objecting to the jurisdiction of the court waives all objections to the form and
manner of service of notice. (Provident etc. Association v. Ford, 114 U.S., 635, 639.)
12
In La Naval Drug Corp. v. court of Appeals, 61 it was held:
Jurisdiction over the person must be seasonably raised, i.e., that it is pleaded in a
motion to dismiss or by way of an affirmative defense in an answer. Voluntary
appearance shall be deemed a waiver of this defense.
In Boticano v. Chu, Jr., 62 it was stated:
. . . one of the circumstances considered by the Court as indicative of waiver by the
defendant-appellant of any alleged defect of jurisdiction over his person arising
from defective or even want of process, is his failure to raise the question of
jurisdiction in the Court of First Instance and at the first opportunity. It has been
held that upon general principles, defects in jurisdiction arising from irregularities in
the commencement of the proceedings, defective process or even absence of
process may be waived by a failure to make seasonable objections. (Castro v. Cebu
Portland Cement Co., 71 Phil. 481 [1941] citing Machan v. De la Trinidad, 3 Phil.
684; Vergara v. Laciapag, 28 Phil. 439; U.S. v. Inductivo, 40 Phil. 84; Soriano v.
Ramirez, 44 Phil. 519).
Private respondents thus waived any defect in service of summons or even want of process
because for the court to validly decide their plea, it necessarily had to acquire jurisdiction
upon their persons. 63
Second. The Court of Appeals found the trial court to have committed grave abuse of
discretion in denying private respondents' Motion to Lift Order of Default with Motion for
Reconsideration for the following reasons: Private respondents resided in the United States
which local newspapers do not reach and they came to know of the case against them only
on January 5, 1990 from well-meaning friends. These circumstances, it was held, constituted
accident, mistake, or excusable neglect excusing private respondents' failure to answer the
complaint and justifying the lifting of the default order under Rule 18, 3.
In addition, the appellate court maintains that the trial court's observation that the Motion
contains no specific facts or statements showing petitioner's meritorious defense is not
accurate. It points out that it is clearly stated in the said Motion that they did not kill
petitioner's husband. Indeed, according to the Court of Appeals, the defense is meritorious
because if proved, such circumstance will defeat petitioner's claim for damages. 64
Under Rule 18, 3, a motion to lift an order of default must allege with particularity the facts
constituting the fraud, accident, mistake, or excusable neglect which caused his failure to
answer. 65 In this case, the private respondents' motion merely alleged that private
respondents were residents of the United States which local newspapers do not reach and
that they did not know about the case filed against them until January 5, 1990 when well-
meaning friends informed them about the matter. 66

There are factual considerations in this case which belie private respondents' allegations of
good faith. In his Special Power of Attorney, 67 which was submitted to the trial court as an
annex of private respondents' Supplemental Motion for Reconsideration with Reply, private
respondent Eliseo Sevilla gave as their residential address in the United States the same
address to which summons had been sent three times before by the trial court. 68 The last
summons sent to private respondents by registered mail was returned to the court with the
notation "REFUSED TO RECEIVE." This was long before January 5, 1990 when, according to
private respondents, they were informed by friends of the case pending against them. That
private respondents refused to receive the summons is of no moment. As has been held, the
refusal of a defendant (in this case private respondents) to receive summons is a technicality
resorted to by those who attempt to frustrate the service upon them. 69 The trial court was
justified in thinking that private respondents were trying to deceive it by claiming that they
did not know about the case until they were told about it on January 5, 1990 by well-
meaning friends.
Indeed, private respondents did not dispute the trial court's finding of deception on their
part, nor did they ever offer any explanation for this in any of their numerous pleadings. For
as early as December 27, 1989 and thus prior to the second declaration of default, private
respondents' counsel, Atty. Marbibi, made a formal written request to the trial court for
permission to photocopy all pleadings and orders relating to the case "for the purpose of
protecting the interest of the defendants whose sister contracted our services." Among the
papers photocopied were the Amended Complaint and Summons pursuant thereto. 70 This
fact gives the lie to the allegation in the Motion to Set Aside the Order of Default that private
respondents did not know of the case against them until January 5, 1990. Private
respondents could have at least asked for an extension of time to file their answer before
they were declared in default for the second time if it was really their intention in good faith
to participate in the case. They cannot claim that the reason they could not do so was
because they had appeared only to question jurisdiction over their persons because they had
already asked for affirmative reliefs prior to their raising the issue of jurisdiction over their
persons.
Private respondents have thus failed to show good faith which is central to the concept of
"excusable neglect" justifying failure to answer.
[W]hat must be shown is that the failure to respond was attributable to mishap
and not indifference or deliberate disregard of the notice. In the case of ordinary
individuals, the test is in essence one of good faith. 71
In our opinion, the trial court correctly slammed the blatant attempt of private respondents
to foist a falsehood upon it.
The motion to lift order of default, aside from the requirements in Rule 18, 3, must show
that the defendant has a meritorious defense or that something would be gained by having
the order of default set aside. 72 Otherwise, and if the motion is not accompanied by
affidavits of merits, it may properly be denied. 73
13
As regards this requirement, private respondents contented themselves with just one
statement that they "have absolutely no knowledge, much less any hand, in the incident
falsely imputed to them." 74 Such allegation is a conclusion rather than a statement of facts
showing a meritorious defense. The affidavit must controvert the facts alleged by the
petitioners.
[The term meritorious defense] may imply that the applicant has the burden of
proving such a defense in order to have the judgment set aside. The cases usually
do not require such a strong showing. The test employed appears to be essentially
the same as used in considering summary judgment, i.e., whether there is enough
evidence to present an issue for submission to the trier of fact, or a showing that on
the undisputed facts it is not clear that the judgment is warranted as a matter of
law. 75
. . . The defendant must show that she has a meritorious defense otherwise the
grant of her motion will prove to be a useless exercise. Thus, her motion must be
accompanied by a statement of the evidence which she intends to present if the
motion is granted and which is such as to warrant a reasonable belief that the
result of the case would probably be otherwise if a new trial is granted. 76
Since private respondents' failure to file an answer or any other responsive pleading was not
due to fraud, accident, mistake, or excusable neglect and they failed to show they had a valid
and meritorious defense, we think the trial court did not commit an abuse of discretion in
refusing to lift its order of default. "Grave abuse of discretion," it bears repeating, means
capricious, arbitrary, despotic, and whimsical exercise of judgment and is rightly treated as
equivalent to lack of jurisdiction. 77 Here, it cannot justly be said that, in issuing its disputed
order denying private respondents' Motion to Lift the Order of Default and Motion for
Reconsideration, the trial court acted in this fashion so as to call for the annulment of its
orders and its decision. The Court of Appeals seriously erred in holding otherwise and setting
aside the order of the trial court.
Third. We agree with the Court of Appeals, however, that the trial court is guilty of grave
abuse of discretion in denying due course to private respondents' appeal. The trial court held
that its decision had become final on the basis of the following facts: 78 that the private
respondents received the judgment by default on April 7, 1990, one day later than the
petitioners; that on April 21, 1990, they filed a Motion for Reconsideration with Motion to
Set Aside Decision through registered mail; that on August 10, 1990, the trial court issued an
order denying said Motion; that on August 16, 1990, a photocopy of the said order was
served along with the Writ of Execution Pending Appeal (granted upon Motion for Execution
Pending Appeal) and Notice of Levy of Real Properties by its Sheriff; that on August 21, 1990,
the duplicate original copy of the order of August 10, 1990 sent by registered mail to the
private respondents' counsel was received; and, that on the same day, August 21, 1990, said
counsel filed a Notice of Appeal. On the basis of these findings, the trial court concluded: 79

. . . While it may be true that they received copy of the August 10 order which was
sent to their counsel thru registered mail on August 13, 1990 only on August 21,
1990 as they claimed in the opposition to motion to dismiss appeal, however
defendants forgot the fact that on August 16, 1990, the Sheriff of this Court served
upon them, thru counsel, a copy of said August 10 order, together with the Writ of
Execution Pending Appeal and Notice of Levy. This is certified to by the Sheriff in
his "Report."
When the defendants therefore filed their Notice of Appeal on August 21, 1990,
they were already late and the period to appeal had expired as the period started
to run again on the 17th day of August and it is the last day to perfect appeal.
The question is from which date the period for filing an appeal should be counted: from
August 16, 1990, when private respondents received a photocopy of the order denying their
Motion for Reconsideration of the decision, or from August 21, 1990, when they received by
registered mail the duplicate original of the same order? It is to be recalled that the
photocopy of the order was given to private respondents by the sheriff in connection with his
service of the Writ of Execution and Notice of Levy on Real Properties. It was one of the
supporting documents attached to the Notice of Levy on Real Properties.
We hold that the period for filing an appeal commenced to run again after it had been
interrupted by the filing of private respondents' Motion for Reconsideration of the decision
only on August 21, 1990. It cannot be from August 16, 1990 when private respondents'
counsel was given a mere photocopy of the court's order. Such copy lacks assurance of its
genuineness, considering that photocopies can easily be tampered with, for the purpose of
enabling private respondents to determine whether or not to appeal and, in the event they
choose to do so, what issues to raise on appeal. It was not in fact intended to be a substitute
for the copy of the order which was served only on August 21, 1990. The trial court,
therefore, should have given due course to private respondents' appeal. Denied the right to
appeal, private respondents perforce had to resort to a petition for certiorari, prohibition,
and mandamus.
Petitioners contend, however, that private respondents' petition for certiorari in the Court of
Appeals was not filed within a reasonable time and therefore should have been denied. They
claim that private respondents received the trial court's order denying their motion for a
reconsideration of the court's refusal to give due course to the first Notice of Appeal on
January 16, 1991 and that from such date until September 11, 1991 when the petition
for certiorari was filed, almost eight months had already elapsed, clearly exceeding the
benchmark of 90 days considered as "reasonable time" for filing petitions of this nature.
This contention has no merit. The relevant date for purposes of determining whether the
petition for certiorari was filed within a reasonable time is August 13, 1991, when private
respondents received the trial court's order denying their motion to quash the entry of
judgment which the trial court had issued earlier. It is to be noted that the trial court did not
act on the second Notice of Appeal. It simply entered judgment on January 29, 1991. The
14
private respondent had a right to be notified of the action on their second Notice of Appeal.
They were not guilty of dilatory tactics. Indeed, the moment the trial court entered
judgment, they immediately moved to quash the entry of judgment. When their Motion to
Quash was denied in an order which also commented on their second Notice of Appeal, they
filed the petition for certiorari. From August 13, 1991 to September 11, 1991 is a period of
only 29 days.
It is also important to note that petitioners questioned the timeliness of private respondents'
action (their filing of the petition for certiorari, prohibition, and mandamus) only after the
Court of Appeals had rendered a decision. They filed a comment on private respondents'
petition, but they did not question the timeliness of its filing by alleging that the petition was
filed more than 90 days then considered to be a "reasonable time" for filing petitions
for certiorari (It is now 60 days under Rule 65, 4 of the Rules of Civil Procedure). It was only
after the Court of Appeals rendered judgment against them that petitioners raised the
question in their Motion for Reconsideration. Petitioners thus waived their objection to the
timeliness of the filing of the petition in the Court of Appeals.
To recapitulate, we hold: (1) that the trial court acquired jurisdiction over the persons of
private respondents; (2) that it validly declared them in default; (3) that consequently, its
decision is valid and private respondents' remedy was to appeal from the decision; (4) that
private respondents' appeal was timely and therefore it was grave abuse of discretion for the
trial court to hold that private respondents' notice of appeal was filed late and for that
reason deny due course to it.
WHEREFORE, the decision of the Court of Appeals is REVERSED insofar as it nullified and set
aside the orders of default, the hearing ex-parte the default judgment, the execution pending
appeal, and all other orders related thereto issued prior to the order refusing to give due
course to the appeal of private respondents of the Regional Trial Court of Makati, Branch
132, and AFFIRMED insofar as it set aside the orders refusing to five due course to private
respondents' appeal and ordering the entry of the judgment by default and insofar as it
ordered that the attachment on the properties of private respondents be maintained. The
Regional Trial Court of Makati, Branch 132, is hereby ORDERED to give due course to the
appeal of private respondents.
SO ORDERED.
VILLAREAL vs. CAG.R. No. 107314 September 17, 1998
FACTS:
The complaint to recover damages for killing petitioner's husband Jose Villareal was filed
with the RTC of Makati, Metro Manila. It was found that prior to the filing of the complaint,
the Sevillas had abruptly left the country and had started disposing of their properties in the
Philippines. On August 39, 1988, petitioners filed a Motion for Leave to Serve Summons by
 15

Publication which was later granted by the trial court. Meanwhile, at the instance of
petitioner Patricia, an information charging private respondents with murder was filed on
October 10, 1988 with the RTC of Makati. Defendants were declared in Default for failure to
file their Answer within the60-day period counted from the last day of publication and
petitioners were then allowed to present evidence ex-parte. After presenting their evidence,
petitioners amended their complaint to make it conform to the evidence. The trial court
admitted the Amended Complaint and granted petitioners' Motion for Extra-territorial
Service of Summons. Accordingly, summons was published once a week for three
consecutive weeks in the newspaper Abante. Copies of the Amended Complaint, the
summons, and the order were sent by registered mail to the last known addresses of private
respondents at Paraaque, Metro Manila and the United States. On February7, 1990, counsel
for private respondents, Teresita Marbibi, filed a Notice of Appearance on their behalf. On
February 14, 1990, again through counsel, private respondents filed a verified Motion to Lift
Order of Default with Motion for Reconsideration. On March 27, 1990, the trial court issued
an order denying the Motion to Lift Order of Default with Motion for Reconsideration, on the
ground that private respondents herein failed to comply with the requirements of Rule 18.
On April 2, 1990, the trial court rendered a decision finding private respondents liable for the
killing of Jose Villareal. Subsequent motions, without questioning courts jurisdiction, were
later filed by the private respondents but were also later denied by the trial court. Thus on
September 11, 1991, private respondents filed in the CA a petition for certiorari, prohibition,
and mandamus with preliminary injunction, alleging (1) that the trial court never acquired
jurisdiction over them since they are non-resident defendants and petitioners' action is
purely in personam and (2) that they were denied due process of law.
defendant appears, "the cause becomes mainly a suit in personam, with the added incident
that the property attached remains liable, under the control of the court, to answer to any
demand which may be established against the defendant by the final judgment of the court."
In this case, not only was property in the Philippines of private respondents attached, but,
what is more, private respondents subsequently appeared in the trial court and submitted to
its jurisdiction. Consequently, the jurisdiction of the trial court to render a judgment in
personam against them is undoubted. There can be no question regarding the trial court's
acquisition of jurisdiction over the persons of respondents when the latter's counsel entered
her appearance on their behalf on February 7, 1990. Through counsel, private respondents
voluntarily appeared by filing a Notice of Appearance without qualification and a Motion to
Lift Order of Default with Motion for Reconsideration, in which they prayed for affirmative
reliefs, thus submitting to the jurisdiction of the court. The following instances have been
considered voluntary submission to the jurisdiction of the court: the filing by defendant of a
motion to admit answer; the filing of a motion for reconsideration of the judgment by
default; and the filing of a petition to set aside the judgment of default. Not only did private
respondents voluntarily submit themselves to the jurisdiction of the trial court, they never
questioned the validity of the mode of service of summons, that is, by extraterritorial service
upon them. As already stated, private respondents filed a notice of appearance without
qualification.

CA granted the petition. Petitioners moved for reconsideration, but their motion was denied
by the appellate court in a resolution dated September 30, 1992.Hence, this petition for
review.

ISSUE:

Whether or not the trial court acquired jurisdiction over the private respondents.

RULING:

It is true that where the defendant in an action in personam is a non-resident, as in this case,
and refuses to appear and submit to the jurisdiction of the court, the jurisdiction of the latter
is limited to the property within the country which the court may have ordered attached. In
such a case, the property itself is "the sole thing which is impleaded and is the responsible
object which is the subject of the judicial power." Accordingly, "the relief must be confined to
the res, and the court cannot lawfully render a personal judgment against him." But the
Court also acknowledged in Banco Espaol-Filipino that if property is attached and later the

EN BANC
G.R. No. L-11390 March 26, 1918
EL BANCO ESPAOL-FILIPINO, plaintiff-appellant,
vs.
VICENTE PALANCA, administrator of the estate of Engracio Palanca
Tanquinyeng, defendant-appellant.
STREET, J.:
This action was instituted upon March 31, 1908, by "El Banco Espanol-Filipino" to foreclose a
mortgage upon various parcels of real property situated in the city of Manila. The mortgage
in question is dated June 16, 1906, and was executed by the original defendant herein,
Engracio Palanca Tanquinyeng y Limquingco, as security for a debt owing by him to the bank.
Upon March 31, 1906, the debt amounted to P218,294.10 and was drawing interest at the
rate of 8 per centum per annum, payable at the end of each quarter. It appears that the
parties to this mortgage at that time estimated the value of the property in question at
P292,558, which was about P75,000 in excess of the indebtedness. After the execution of this
instrument by the mortgagor, he returned to China which appears to have been his native
country; and he there died, upon January 29, 1810, without again returning to the Philippine
Islands.
As the defendant was a nonresident at the time of the institution of the present action, it
was necessary for the plaintiff in the foreclosure proceeding to give notice to the defendant
by publication pursuant to section 399 of the Code of Civil Procedure. An order for
publication was accordingly obtained from the court, and publication was made in due form
in a newspaper of the city of Manila. At the same time that the order of the court should
deposit in the post office in a stamped envelope a copy of the summons and complaint
directed to the defendant at his last place of residence, to wit, the city of Amoy, in the
Empire of China. This order was made pursuant to the following provision contained in
section 399 of the Code of Civil Procedure:
In case of publication, where the residence of a nonresident or absent defendant is
known, the judge must direct a copy of the summons and complaint to be
forthwith deposited by the clerk in the post-office, postage prepaid, directed to the
person to be served, at his place of residence
Whether the clerk complied with this order does not affirmatively appear. There is, however,
among the papers pertaining to this case, an affidavit, dated April 4, 1908, signed by
Bernardo Chan y Garcia, an employee of the attorneys of the bank, showing that upon that
date he had deposited in the Manila post-office a registered letter, addressed to Engracio
Palanca Tanquinyeng, at Manila, containing copies of the complaint, the plaintiff's affidavit,
the summons, and the order of the court directing publication as aforesaid. It appears from
16
the postmaster's receipt that Bernardo probably used an envelope obtained from the clerk's
office, as the receipt purports to show that the letter emanated from the office.
The cause proceeded in usual course in the Court of First Instance; and the defendant not
having appeared, judgment was, upon July 2, 1908, taken against him by default. Upon July 3,
1908, a decision was rendered in favor of the plaintiff. In this decision it was recited that
publication had been properly made in a periodical, but nothing was said about this notice
having been given mail. The court, upon this occasion, found that the indebtedness of the
defendant amounted to P249,355. 32, with interest from March 31, 1908. Accordingly it was
ordered that the defendant should, on or before July 6, 1908, deliver said amount to the
clerk of the court to be applied to the satisfaction of the judgment, and it was declared that
in case of the failure of the defendant to satisfy the judgment within such period, the
mortgage property located in the city of Manila should be exposed to public sale. The
payment contemplated in said order was never made; and upon July 8, 1908, the court
ordered the sale of the property. The sale took place upon July 30, 1908, and the property
was bought in by the bank for the sum of P110,200. Upon August 7, 1908, this sale was
confirmed by the court.
About seven years after the confirmation of this sale, or to the precise, upon June 25, 1915, a
motion was made in this cause by Vicente Palanca, as administrator of the estate of the
original defendant, Engracio Palanca Tanquinyeng y Limquingco, wherein the applicant
requested the court to set aside the order of default of July 2, 1908, and the judgment
rendered upon July 3, 1908, and to vacate all the proceedings subsequent thereto. The basis
of this application, as set forth in the motion itself, was that the order of default and the
judgment rendered thereon were void because the court had never acquired jurisdiction
over the defendant or over the subject of the action.
At the hearing in the court below the application to vacate the judgment was denied, and
from this action of the court Vicente Planca, as administrator of the estate of the original
defendant, has appealed. No other feature of the case is here under consideration than such
as related to the action of the court upon said motion.
The case presents several questions of importance, which will be discussed in what appears
to be the sequence of most convenient development. In the first part of this opinion we shall,
for the purpose of argument, assume that the clerk of the Court of First Instance did not
obey the order of the court in the matter of mailing the papers which he was directed to
send to the defendant in Amoy; and in this connection we shall consider, first, whether the
court acquired the necessary jurisdiction to enable it to proceed with the foreclosure of the
mortgage and, secondly, whether those proceedings were conducted in such manner as to
constitute due process of law.
The word "jurisdiction," as applied to the faculty of exercising judicial power, is used in
several different, though related, senses since it may have reference (1) to the authority of
the court to entertain a particular kind of action or to administer a particular kind of relief, or

it may refer to the power of the court over the parties, or (2) over the property which is the
subject to the litigation.
The sovereign authority which organizes a court determines the nature and extent of its
powers in general and thus fixes its competency or jurisdiction with reference to the actions
which it may entertain and the relief it may grant.
Jurisdiction over the person is acquired by the voluntary appearance of a party in court and
his submission to its authority, or it is acquired by the coercive power of legal process
exerted over the person.
Jurisdiction over the property which is the subject of the litigation may result either from a
seizure of the property under legal process, whereby it is brought into the actual custody of
the law, or it may result from the institution of legal proceedings wherein, under special
provisions of law, the power of the court over the property is recognized and made effective.
In the latter case the property, though at all times within the potential power of the court,
may never be taken into actual custody at all. An illustration of the jurisdiction acquired by
actual seizure is found in attachment proceedings, where the property is seized at the
beginning of the action, or some subsequent stage of its progress, and held to abide the final
event of the litigation. An illustration of what we term potential jurisdiction over the res, is
found in the proceeding to register the title of land under our system for the registration of
land. Here the court, without taking actual physical control over the property assumes, at the
instance of some person claiming to be owner, to exercise a jurisdiction in rem over the
property and to adjudicate the title in favor of the petitioner against all the world.
In the terminology of American law the action to foreclose a mortgage is said to be a
proceeding quasi in rem, by which is expressed the idea that while it is not strictly speaking
an action in rem yet it partakes of that nature and is substantially such. The expression
"action in rem" is, in its narrow application, used only with reference to certain proceedings
in courts of admiralty wherein the property alone is treated as responsible for the claim or
obligation upon which the proceedings are based. The action quasi rem differs from the true
action in rem in the circumstance that in the former an individual is named as defendant, and
the purpose of the proceeding is to subject his interest therein to the obligation or lien
burdening the property. All proceedings having for their sole object the sale or other
disposition of the property of the defendant, whether by attachment, foreclosure, or other
form of remedy, are in a general way thus designated. The judgment entered in these
proceedings is conclusive only between the parties.
In speaking of the proceeding to foreclose a mortgage the author of a well known treaties,
has said:
Though nominally against person, such suits are to vindicate liens; they proceed
upon seizure; they treat property as primarily indebted; and, with the qualification
above-mentioned, they are substantially property actions. In the civil law, they are
styled hypothecary actions, and their sole object is the enforcement of the lien
17
against the res; in the common law, they would be different in chancery did not
treat the conditional conveyance as a mere hypothecation, and the creditor's right
ass an equitable lien; so, in both, the suit is real action so far as it is against
property, and seeks the judicial recognition of a property debt, and an order for the
sale of the res. (Waples, Proceedings In Rem. sec. 607.)
It is true that in proceedings of this character, if the defendant for whom publication is made
appears, the action becomes as to him a personal action and is conducted as such. This,
however, does not affect the proposition that where the defendant fails to appear the action
is quasi in rem; and it should therefore be considered with reference to the principles
governing actions in rem.
There is an instructive analogy between the foreclosure proceeding and an action of
attachment, concerning which the Supreme Court of the United States has used the
following language:
If the defendant appears, the cause becomes mainly a suit in personam, with the
added incident, that the property attached remains liable, under the control of the
court, to answer to any demand which may be established against the defendant
by the final judgment of the court. But, if there is no appearance of the defendant,
and no service of process on him, the case becomes, in its essential nature, a
proceeding in rem, the only effect of which is to subject the property attached to
the payment of the defendant which the court may find to be due to the plaintiff.
(Cooper vs. Reynolds, 10 Wall., 308.)
In an ordinary attachment proceeding, if the defendant is not personally served, the
preliminary seizure is to, be considered necessary in order to confer jurisdiction upon the
court. In this case the lien on the property is acquired by the seizure; and the purpose of the
proceedings is to subject the property to that lien. If a lien already exists, whether created by
mortgage, contract, or statute, the preliminary seizure is not necessary; and the court
proceeds to enforce such lien in the manner provided by law precisely as though the
property had been seized upon attachment. (Roller vs. Holly, 176 U. S., 398, 405; 44 L. ed.,
520.) It results that the mere circumstance that in an attachment the property may be seized
at the inception of the proceedings, while in the foreclosure suit it is not taken into legal
custody until the time comes for the sale, does not materially affect the fundamental
principle involved in both cases, which is that the court is here exercising a jurisdiction over
the property in a proceeding directed essentially in rem.
Passing now to a consideration of the jurisdiction of the Court of First Instance in a mortgage
foreclosure, it is evident that the court derives its authority to entertain the action primarily
from the statutes organizing the court. The jurisdiction of the court, in this most general
sense, over the cause of action is obvious and requires no comment. Jurisdiction over the
person of the defendant, if acquired at all in such an action, is obtained by the voluntary
submission of the defendant or by the personal service of process upon him within the
territory where the process is valid. If, however, the defendant is a nonresident and,

remaining beyond the range of the personal process of the court, refuses to come in
voluntarily, the court never acquires jurisdiction over the person at all. Here the property
itself is in fact the sole thing which is impleaded and is the responsible object which is the
subject of the exercise of judicial power. It follows that the jurisdiction of the court in such
case is based exclusively on the power which, under the law, it possesses over the property;
and any discussion relative to the jurisdiction of the court over the person of the defendant is
entirely apart from the case. The jurisdiction of the court over the property, considered as
the exclusive object of such action, is evidently based upon the following conditions and
considerations, namely: (1) that the property is located within the district; (2) that the
purpose of the litigation is to subject the property by sale to an obligation fixed upon it by
the mortgage; and (3) that the court at a proper stage of the proceedings takes the property
into custody, if necessary, and expose it to sale for the purpose of satisfying the mortgage
debt. An obvious corollary is that no other relief can be granted in this proceeding than such
as can be enforced against the property.
We may then, from what has been stated, formulated the following proposition relative to
the foreclosure proceeding against the property of a nonresident mortgagor who fails to
come in and submit himself personally to the jurisdiction of the court: (I) That the jurisdiction
of the court is derived from the power which it possesses over the property; (II) that
jurisdiction over the person is not acquired and is nonessential; (III) that the relief granted by
the court must be limited to such as can be enforced against the property itself.
It is important that the bearing of these propositions be clearly apprehended, for there are
many expressions in the American reports from which it might be inferred that the court
acquires personal jurisdiction over the person of the defendant by publication and notice;
but such is not the case. In truth the proposition that jurisdiction over the person of a
nonresident cannot be acquired by publication and notice was never clearly understood even
in the American courts until after the decision had been rendered by the Supreme Court of
the United States in the leading case of Pennoyer vs. Neff (95 U. S. 714; 24 L. ed., 565). In the
light of that decision, and of other decisions which have subsequently been rendered in that
and other courts, the proposition that jurisdiction over the person cannot be thus acquired
by publication and notice is no longer open to question; and it is now fully established that a
personal judgment upon constructive or substituted service against a nonresident who does
not appear is wholly invalid. This doctrine applies to all kinds of constructive or substituted
process, including service by publication and personal service outside of the jurisdiction in
which the judgment is rendered; and the only exception seems to be found in the case where
the nonresident defendant has expressly or impliedly consented to the mode of service.
(Note to Raher vs. Raher, 35 L. R. A. [N. S. ], 292; see also 50 L .R. A., 585; 35 L. R. A. [N. S.],
312
The idea upon which the decision in Pennoyer vs. Neff (supra) proceeds is that the process
from the tribunals of one State cannot run into other States or countries and that due
process of law requires that the defendant shall be brought under the power of the court by
service of process within the State, or by his voluntary appearance, in order to authorize the
court to pass upon the question of his personal liability. The doctrine established by the
18
Supreme Court of the United States on this point, being based upon the constitutional
conception of due process of law, is binding upon the courts of the Philippine Islands.
Involved in this decision is the principle that in proceedings in rem or quasi in rem against a
nonresident who is not served personally within the state, and who does not appear, the
relief must be confined to the res, and the court cannot lawfully render a personal judgment
against him. (Dewey vs. Des Moines, 173 U. S., 193; 43 L. ed., 665; Heidritter vs. Elizabeth Oil
Cloth Co., 112 U. S., 294; 28 L. ed., 729.) Therefore in an action to foreclose a mortgage
against a nonresident, upon whom service has been effected exclusively by publication, no
personal judgment for the deficiency can be entered. (Latta vs. Tutton, 122 Cal., 279;
Blumberg vs. Birch, 99 Cal., 416.)
It is suggested in the brief of the appellant that the judgment entered in the court below
offends against the principle just stated and that this judgment is void because the court in
fact entered a personal judgment against the absent debtor for the full amount of the
indebtedness secured by the mortgage. We do not so interpret the judgment.
In a foreclosure proceeding against a nonresident owner it is necessary for the court, as in all
cases of foreclosure, to ascertain the amount due, as prescribed in section 256 of the Code of
Civil Procedure, and to make an order requiring the defendant to pay the money into court.
This step is a necessary precursor of the order of sale. In the present case the judgment
which was entered contains the following words:
Because it is declared that the said defendant Engracio Palanca Tanquinyeng y
Limquingco, is indebted in the amount of P249,355.32, plus the interest, to the
'Banco Espanol-Filipino' . . . therefore said appellant is ordered to deliver the above
amount etc., etc.
This is not the language of a personal judgment. Instead it is clearly intended merely as a
compliance with the requirement that the amount due shall be ascertained and that the
evidence of this it may be observed that according to the Code of Civil Procedure a personal
judgment against the debtor for the deficiency is not to be rendered until after the property
has been sold and the proceeds applied to the mortgage debt. (sec. 260).
The conclusion upon this phase of the case is that whatever may be the effect in other
respects of the failure of the clerk of the Court of First Instance to mail the proper papers to
the defendant in Amoy, China, such irregularity could in no wise impair or defeat the
jurisdiction of the court, for in our opinion that jurisdiction rest upon a basis much more
secure than would be supplied by any form of notice that could be given to a resident of a
foreign country.
Before leaving this branch of the case, we wish to observe that we are fully aware that many
reported cases can be cited in which it is assumed that the question of the sufficiency of
publication or notice in a case of this kind is a question affecting the jurisdiction of the court,
and the court is sometimes said to acquire jurisdiction by virtue of the publication. This
phraseology was undoubtedly originally adopted by the court because of the analogy

between service by the publication and personal service of process upon the defendant; and,
as has already been suggested, prior to the decision of Pennoyer vs. Neff (supra) the
difference between the legal effects of the two forms of service was obscure. It is accordingly
not surprising that the modes of expression which had already been molded into legal
tradition before that case was decided have been brought down to the present day. But it is
clear that the legal principle here involved is not effected by the peculiar language in which
the courts have expounded their ideas.
We now proceed to a discussion of the question whether the supposed irregularity in the
proceedings was of such gravity as to amount to a denial of that "due process of law" which
was secured by the Act of Congress in force in these Islands at the time this mortgage was
foreclosed. (Act of July 1, 1902, sec. 5.) In dealing with questions involving the application of
the constitutional provisions relating to due process of law the Supreme Court of the United
States has refrained from attempting to define with precision the meaning of that
expression, the reason being that the idea expressed therein is applicable under so many
diverse conditions as to make any attempt ay precise definition hazardous and unprofitable.
As applied to a judicial proceeding, however, it may be laid down with certainty that the
requirement of due process is satisfied if the following conditions are present, namely; (1)
There must be a court or tribunal clothed with judicial power to hear and determine the
matter before it; (2) jurisdiction must be lawfully acquired over the person of the defendant
or over the property which is the subject of the proceeding; (3) the defendant must be given
an opportunity to be heard; and (4) judgment must be rendered upon lawful hearing.
Passing at once to the requisite that the defendant shall have an opportunity to be heard, we
observe that in a foreclosure case some notification of the proceedings to the nonresident
owner, prescribing the time within which appearance must be made, is everywhere
recognized as essential. To answer this necessity the statutes generally provide for
publication, and usually in addition thereto, for the mailing of notice to the defendant, if his
residence is known. Though commonly called constructive, or substituted service of process
in any true sense. It is merely a means provided by law whereby the owner may be
admonished that his property is the subject of judicial proceedings and that it is incumbent
upon him to take such steps as he sees fit to protect it. In speaking of notice of this character
a distinguish master of constitutional law has used the following language:
. . . if the owners are named in the proceedings, and personal notice is provided
for, it is rather from tenderness to their interests, and in order to make sure that
the opportunity for a hearing shall not be lost to them, than from any necessity
that the case shall assume that form. (Cooley on Taxation [2d. ed.], 527, quoted in
Leigh vs. Green, 193 U. S., 79, 80.)
It will be observed that this mode of notification does not involve any absolute assurance
that the absent owner shall thereby receive actual notice. The periodical containing the
publication may never in fact come to his hands, and the chances that he should discover the
notice may often be very slight. Even where notice is sent by mail the probability of his
receiving it, though much increased, is dependent upon the correctness of the address to
19
which it is forwarded as well as upon the regularity and security of the mail service. It will be
noted, furthermore, that the provision of our law relative to the mailing of notice does not
absolutely require the mailing of notice unconditionally and in every event, but only in the
case where the defendant's residence is known. In the light of all these facts, it is evident
that actual notice to the defendant in cases of this kind is not, under the law, to be
considered absolutely necessary.
The idea upon which the law proceeds in recognizing the efficacy of a means of notification
which may fall short of actual notice is apparently this: Property is always assumed to be in
the possession of its owner, in person or by agent; and he may be safely held, under certain
conditions, to be affected with knowledge that proceedings have been instituted for its
condemnation and sale.
It is the duty of the owner of real estate, who is a nonresident, to take measures
that in some way he shall be represented when his property is called into
requisition, and if he fails to do this, and fails to get notice by the ordinary
publications which have usually been required in such cases, it is his misfortune,
and he must abide the consequences. (6 R. C. L., sec. 445 [p. 450]).
It has been well said by an American court:
If property of a nonresident cannot be reached by legal process upon the
constructive notice, then our statutes were passed in vain, and are mere empty
legislative declarations, without either force, or meaning; for if the person is not
within the jurisdiction of the court, no personal judgment can be rendered, and if
the judgment cannot operate upon the property, then no effective judgment at all
can be rendered, so that the result would be that the courts would be powerless to
assist a citizen against a nonresident. Such a result would be a deplorable one.
(Quarl vs. Abbett, 102 Ind., 233; 52 Am. Rep., 662, 667.)
It is, of course universally recognized that the statutory provisions relative to publication or
other form of notice against a nonresident owner should be complied with; and in respect to
the publication of notice in the newspaper it may be stated that strict compliance with the
requirements of the law has been held to be essential. In Guaranty Trust etc. Co. vs. Green
Cove etc., Railroad Co. (139 U. S., 137, 138), it was held that where newspaper publication
was made for 19 weeks, when the statute required 20, the publication was insufficient.
With respect to the provisions of our own statute, relative to the sending of notice by mail,
the requirement is that the judge shall direct that the notice be deposited in the mail by the
clerk of the court, and it is not in terms declared that the notice must be deposited in the
mail. We consider this to be of some significance; and it seems to us that, having due regard
to the principles upon which the giving of such notice is required, the absent owner of the
mortgaged property must, so far as the due process of law is concerned, take the risk
incident to the possible failure of the clerk to perform his duty, somewhat as he takes the risk
that the mail clerk or the mail carrier might possibly lose or destroy the parcel or envelope

containing the notice before it should reach its destination and be delivered to him. This idea
seems to be strengthened by the consideration that placing upon the clerk the duty of
sending notice by mail, the performance of that act is put effectually beyond the control of
the plaintiff in the litigation. At any rate it is obvious that so much of section 399 of the Code
of Civil Procedure as relates to the sending of notice by mail was complied with when the
court made the order. The question as to what may be the consequences of the failure of the
record to show the proof of compliance with that requirement will be discussed by us further
on.
The observations which have just been made lead to the conclusion that the failure of the
clerk to mail the notice, if in fact he did so fail in his duty, is not such an irregularity, as
amounts to a denial of due process of law; and hence in our opinion that irregularity, if
proved, would not avoid the judgment in this case. Notice was given by publication in a
newspaper and this is the only form of notice which the law unconditionally requires. This in
our opinion is all that was absolutely necessary to sustain the proceedings.
It will be observed that in considering the effect of this irregularity, it makes a difference
whether it be viewed as a question involving jurisdiction or as a question involving due
process of law. In the matter of jurisdiction there can be no distinction between the much
and the little. The court either has jurisdiction or it has not; and if the requirement as to the
mailing of notice should be considered as a step antecedent to the acquiring of jurisdiction,
there could be no escape from the conclusion that the failure to take that step was fatal to
the validity of the judgment. In the application of the idea of due process of law, on the other
hand, it is clearly unnecessary to be so rigorous. The jurisdiction being once established, all
that due process of law thereafter requires is an opportunity for the defendant to be heard;
and as publication was duly made in the newspaper, it would seem highly unreasonable to
hold that failure to mail the notice was fatal. We think that in applying the requirement of
due process of law, it is permissible to reflect upon the purposes of the provision which is
supposed to have been violated and the principle underlying the exercise of judicial power in
these proceedings. Judge in the light of these conceptions, we think that the provision of Act
of Congress declaring that no person shall be deprived of his property without due process of
law has not been infringed.
In the progress of this discussion we have stated the two conclusions; (1) that the failure of
the clerk to send the notice to the defendant by mail did not destroy the jurisdiction of the
court and (2) that such irregularity did not infringe the requirement of due process of law. As
a consequence of these conclusions the irregularity in question is in some measure shorn of
its potency. It is still necessary, however, to consider its effect considered as a simple
irregularity of procedure; and it would be idle to pretend that even in this aspect the
irregularity is not grave enough. From this point of view, however, it is obvious that any
motion to vacate the judgment on the ground of the irregularity in question must fail unless
it shows that the defendant was prejudiced by that irregularity. The least, therefore, that can
be required of the proponent of such a motion is to show that he had a good defense against
the action to foreclose the mortgage. Nothing of the kind is, however, shown either in the
motion or in the affidavit which accompanies the motion.
20
An application to open or vacate a judgment because of an irregularity or defect in the
proceedings is usually required to be supported by an affidavit showing the grounds on
which the relief is sought, and in addition to this showing also a meritorious defense to the
action. It is held that a general statement that a party has a good defense to the action is
insufficient. The necessary facts must be averred. Of course if a judgment is void upon its
face a showing of the existence of a meritorious defense is not necessary. (10 R. C. L., 718.)
The lapse of time is also a circumstance deeply affecting this aspect of the case. In this
connection we quote the following passage from the encyclopedic treatise now in course of
publication:
Where, however, the judgment is not void on its face, and may therefore be
enforced if permitted to stand on the record, courts in many instances refuse to
exercise their quasi equitable powers to vacate a judgement after the lapse of the
term ay which it was entered, except in clear cases, to promote the ends of justice,
and where it appears that the party making the application is himself without fault
and has acted in good faith and with ordinary diligence. Laches on the part of the
applicant, if unexplained, is deemed sufficient ground for refusing the relief to
which he might otherwise be entitled. Something is due to the finality of
judgments, and acquiescence or unnecessary delay is fatal to motions of this
character, since courts are always reluctant to interfere with judgments, and
especially where they have been executed or satisfied. The moving party has the
burden of showing diligence, and unless it is shown affirmatively the court will not
ordinarily exercise its discretion in his favor. (15 R. C. L., 694, 695.)
It is stated in the affidavit that the defendant, Engracio Palanca Tanquinyeng y Limquingco,
died January 29, 1910. The mortgage under which the property was sold was executed far
back in 1906; and the proceedings in the foreclosure were closed by the order of court
confirming the sale dated August 7, 1908. It passes the rational bounds of human credulity to
suppose that a man who had placed a mortgage upon property worth nearly P300,000 and
had then gone away from the scene of his life activities to end his days in the city of Amoy,
China, should have long remained in ignorance of the fact that the mortgage had been
foreclosed and the property sold, even supposing that he had no knowledge of those
proceedings while they were being conducted. It is more in keeping with the ordinary course
of things that he should have acquired information as to what was transpiring in his affairs at
Manila; and upon the basis of this rational assumption we are authorized, in the absence of
proof to the contrary, to presume that he did have, or soon acquired, information as to the
sale of his property.
The Code of Civil Procedure, indeed, expressly declares that there is a presumption that
things have happened according to the ordinary habits of life (sec. 334 [26]); and we cannot
conceive of a situation more appropriate than this for applying the presumption thus defined
by the lawgiver. In support of this presumption, as applied to the present case, it is
permissible to consider the probability that the defendant may have received actual notice of
these proceedings from the unofficial notice addressed to him in Manila which was mailed by

an employee of the bank's attorneys. Adopting almost the exact words used by the Supreme
Court of the United States in Grannis vs. Ordeans (234 U. S., 385; 58 L. ed., 1363), we may say
that in view of the well-known skill of postal officials and employees in making proper
delivery of letters defectively addressed, we think the presumption is clear and strong that
this notice reached the defendant, there being no proof that it was ever returned by the
postal officials as undelivered. And if it was delivered in Manila, instead of being forwarded
to Amoy, China, there is a probability that the recipient was a person sufficiently interested
in his affairs to send it or communicate its contents to him.
Of course if the jurisdiction of the court or the sufficiency of the process of law depended
upon the mailing of the notice by the clerk, the reflections in which we are now indulging
would be idle and frivolous; but the considerations mentioned are introduced in order to
show the propriety of applying to this situation the legal presumption to which allusion has
been made. Upon that presumption, supported by the circumstances of this case, ,we do not
hesitate to found the conclusion that the defendant voluntarily abandoned all thought of
saving his property from the obligation which he had placed upon it; that knowledge of the
proceedings should be imputed to him; and that he acquiesced in the consequences of those
proceedings after they had been accomplished. Under these circumstances it is clear that the
merit of this motion is, as we have already stated, adversely affected in a high degree by the
delay in asking for relief. Nor is it an adequate reply to say that the proponent of this motion
is an administrator who only qualified a few months before this motion was made. No
disability on the part of the defendant himself existed from the time when the foreclosure
was effected until his death; and we believe that the delay in the appointment of the
administrator and institution of this action is a circumstance which is imputable to the parties
in interest whoever they may have been. Of course if the minor heirs had instituted an action
in their own right to recover the property, it would have been different.
It is, however, argued that the defendant has suffered prejudice by reason of the fact that
the bank became the purchaser of the property at the foreclosure sale for a price greatly
below that which had been agreed upon in the mortgage as the upset price of the property.
In this connection, it appears that in article nine of the mortgage which was the subject of
this foreclosure, as amended by the notarial document of July 19, 1906, the parties to this
mortgage made a stipulation to the effect that the value therein placed upon the mortgaged
properties should serve as a basis of sale in case the debt should remain unpaid and the bank
should proceed to a foreclosure. The upset price stated in that stipulation for all the parcels
involved in this foreclosure was P286,000. It is said in behalf of the appellant that when the
bank bought in the property for the sum of P110,200 it violated that stipulation.
It has been held by this court that a clause in a mortgage providing for a tipo, or upset price,
does not prevent a foreclosure, nor affect the validity of a sale made in the foreclosure
proceedings. (Yangco vs. Cruz Herrera and Wy Piaco, 11 Phil. Rep., 402; Banco-Espaol
Filipino vs. Donaldson, Sim and Co., 5 Phil. Rep., 418.) In both the cases here cited the
property was purchased at the foreclosure sale, not by the creditor or mortgagee, but by a
third party. Whether the same rule should be applied in a case where the mortgagee himself
becomes the purchaser has apparently not been decided by this court in any reported
21
decision, and this question need not here be considered, since it is evident that if any liability
was incurred by the bank by purchasing for a price below that fixed in the stipulation, its
liability was a personal liability derived from the contract of mortgage; and as we have
already demonstrated such a liability could not be the subject of adjudication in an action
where the court had no jurisdiction over the person of the defendant. If the plaintiff bank
became liable to account for the difference between the upset price and the price at which in
bought in the property, that liability remains unaffected by the disposition which the court
made of this case; and the fact that the bank may have violated such an obligation can in no
wise affect the validity of the judgment entered in the Court of First Instance.
In connection with the entire failure of the motion to show either a meritorious defense to
the action or that the defendant had suffered any prejudice of which the law can take notice,
we may be permitted to add that in our opinion a motion of this kind, which proposes to
unsettle judicial proceedings long ago closed, can not be considered with favor, unless based
upon grounds which appeal to the conscience of the court. Public policy requires that judicial
proceedings be upheld. The maximum here applicable is non quieta movere. As was once
said by Judge Brewer, afterwards a member of the Supreme Court of the United States:
Public policy requires that judicial proceedings be upheld, and that titles obtained
in those proceedings be safe from the ruthless hand of collateral attack. If technical
defects are adjudged potent to destroy such titles, a judicial sale will never realize
that value of the property, for no prudent man will risk his money in bidding for
and buying that title which he has reason to fear may years thereafter be swept
away through some occult and not readily discoverable defect. (Martin vs. Pond, 30
Fed., 15.)
In the case where that language was used an attempt was made to annul certain foreclosure
proceedings on the ground that the affidavit upon which the order of publication was based
erroneously stated that the State of Kansas, when he was in fact residing in another State. It
was held that this mistake did not affect the validity of the proceedings.
In the preceding discussion we have assumed that the clerk failed to send the notice by post
as required by the order of the court. We now proceed to consider whether this is a proper
assumption; and the proposition which we propose to establish is that there is a legal
presumption that the clerk performed his duty as the ministerial officer of the court, which
presumption is not overcome by any other facts appearing in the cause.
In subsection 14 of section 334 of the Code of Civil Procedure it is declared that there is a
presumption "that official duty has been regularly performed;" and in subsection 18 it is
declared that there is a presumption "that the ordinary course of business has been
followed." These presumptions are of course in no sense novelties, as they express ideas
which have always been recognized. Omnia presumuntur rite et solemniter esse acta donec
probetur in contrarium. There is therefore clearly a legal presumption that the clerk
performed his duty about mailing this notice; and we think that strong considerations of
policy require that this presumption should be allowed to operate with full force under the

circumstances of this case. A party to an action has no control over the clerk of the court; and
has no right to meddle unduly with the business of the clerk in the performance of his duties.
Having no control over this officer, the litigant must depend upon the court to see that the
duties imposed on the clerk are performed.
Other considerations no less potent contribute to strengthen the conclusion just stated.
There is no principle of law better settled than that after jurisdiction has once been required,
every act of a court of general jurisdiction shall be presumed to have been rightly done. This
rule is applied to every judgment or decree rendered in the various stages of the proceedings
from their initiation to their completion (Voorhees vs. United States Bank, 10 Pet., 314; 35 U.
S., 449); and if the record is silent with respect to any fact which must have been established
before the court could have rightly acted, it will be presumed that such fact was properly
brought to its knowledge. (The Lessee of Grignon vs. Astor, 2 How., 319; 11 L. ed., 283.)
In making the order of sale [of the real state of a decedent] the court are presumed
to have adjudged every question necessary to justify such order or decree, viz: The
death of the owners; that the petitioners were his administrators; that the personal
estate was insufficient to pay the debts of the deceased; that the private acts of
Assembly, as to the manner of sale, were within the constitutional power of the
Legislature, and that all the provisions of the law as to notices which are directory
to the administrators have been complied with. . . . The court is not bound to enter
upon the record the evidence on which any fact was decided. (Florentine vs.
Barton, 2 Wall., 210; 17 L. ed., 785.) Especially does all this apply after long lapse of
time.
Applegate vs. Lexington and Carter County Mining Co. (117 U. S., 255) contains an instructive
discussion in a case analogous to that which is now before us. It there appeared that in order
to foreclose a mortgage in the State of Kentucky against a nonresident debtor it was
necessary that publication should be made in a newspaper for a specified period of time, also
be posted at the front door of the court house and be published on some Sunday,
immediately after divine service, in such church as the court should direct. In a certain action
judgment had been entered against a nonresident, after publication in pursuance of these
provisions. Many years later the validity of the proceedings was called in question in another
action. It was proved from the files of an ancient periodical that publication had been made
in its columns as required by law; but no proof was offered to show the publication of the
order at the church, or the posting of it at the front door of the court-house. It was insisted
by one of the parties that the judgment of the court was void for lack of jurisdiction. But the
Supreme Court of the United States said:
The court which made the decree . . . was a court of general jurisdiction. Therefore
every presumption not inconsistent with the record is to be indulged in favor of its
jurisdiction. . . . It is to be presumed that the court before making its decree took
care of to see that its order for constructive service, on which its right to make the
decree depended, had been obeyed.
22
It is true that in this case the former judgment was the subject of collateral , or indirect
attack, while in the case at bar the motion to vacate the judgment is direct proceeding for
relief against it. The same general presumption, however, is indulged in favor of the
judgment of a court of general jurisdiction, whether it is the subject of direct or indirect
attack the only difference being that in case of indirect attack the judgment is conclusively
presumed to be valid unless the record affirmatively shows it to be void, while in case of
direct attack the presumption in favor of its validity may in certain cases be overcome by
proof extrinsic to the record.
The presumption that the clerk performed his duty and that the court made its decree with
the knowledge that the requirements of law had been complied with appear to be amply
sufficient to support the conclusion that the notice was sent by the clerk as required by the
order. It is true that there ought to be found among the papers on file in this cause an
affidavit, as required by section 400 of the Code of Civil Procedure, showing that the order
was in fact so sent by the clerk; and no such affidavit appears. The record is therefore silent
where it ought to speak. But the very purpose of the law in recognizing these presumptions is
to enable the court to sustain a prior judgment in the face of such an omission. If we were to
hold that the judgment in this case is void because the proper affidavit is not present in the
file of papers which we call the record, the result would be that in the future every title in the
Islands resting upon a judgment like that now before us would depend, for its continued
security, upon the presence of such affidavit among the papers and would be liable at any
moment to be destroyed by the disappearance of that piece of paper. We think that no
court, with a proper regard for the security of judicial proceedings and for the interests which
have by law been confided to the courts, would incline to favor such a conclusion. In our
opinion the proper course in a case of this kind is to hold that the legal presumption that the
clerk performed his duty still maintains notwithstanding the absence from the record of the
proper proof of that fact.
In this connection it is important to bear in mind that under the practice prevailing in the
Philippine Islands the word "record" is used in a loose and broad sense, as indicating the
collective mass of papers which contain the history of all the successive steps taken in a case
and which are finally deposited in the archives of the clerk's office as a memorial of the
litigation. It is a matter of general information that no judgment roll, or book of final record,
is commonly kept in our courts for the purpose of recording the pleadings and principal
proceedings in actions which have been terminated; and in particular, no such record is kept
in the Court of First Instance of the city of Manila. There is, indeed, a section of the Code of
Civil Procedure which directs that such a book of final record shall be kept; but this provision
has, as a matter of common knowledge, been generally ignored. The result is that in the
present case we do not have the assistance of the recitals of such a record to enable us to
pass upon the validity of this judgment and as already stated the question must be
determined by examining the papers contained in the entire file.
But it is insisted by counsel for this motion that the affidavit of Bernardo Chan y Garcia
showing that upon April 4, 1908, he sent a notification through the mail addressed to the
defendant at Manila, Philippine Islands, should be accepted as affirmative proof that the

clerk of the court failed in his duty and that, instead of himself sending the requisite notice
through the mail, he relied upon Bernardo to send it for him. We do not think that this is by
any means a necessary inference. Of course if it had affirmatively appeared that the clerk
himself had attempted to comply with this order and had directed the notification to Manila
when he should have directed it to Amoy, this would be conclusive that he had failed to
comply with the exact terms of the order; but such is not this case. That the clerk of the
attorneys for the plaintiff erroneously sent a notification to the defendant at a mistaken
address affords in our opinion very slight basis for supposing that the clerk may not have sent
notice to the right address.
There is undoubtedly good authority to support the position that when the record states the
evidence or makes an averment with reference to a jurisdictional fact, it will not be
presumed that there was other or different evidence respecting the fact, or that the fact was
otherwise than stated. If, to give an illustration, it appears from the return of the officer that
the summons was served at a particular place or in a particular manner, it will not be
presumed that service was also made at another place or in a different manner; or if it
appears that service was made upon a person other than the defendant, it will not be
presumed, in the silence of the record, that it was made upon the defendant also (Galpin vs.
Page, 18 Wall., 350, 366; Settlemier vs. Sullivan, 97 U. S., 444, 449). While we believe that
these propositions are entirely correct as applied to the case where the person making the
return is the officer who is by law required to make the return, we do not think that it is
properly applicable where, as in the present case, the affidavit was made by a person who, so
far as the provisions of law are concerned, was a mere intermeddler.
The last question of importance which we propose to consider is whether a motion in the
cause is admissible as a proceeding to obtain relief in such a case as this. If the motion
prevails the judgment of July 2, 1908, and all subsequent proceedings will be set aside, and
the litigation will be renewed, proceeding again from the date mentioned as if the progress
of the action had not been interrupted. The proponent of the motion does not ask the favor
of being permitted to interpose a defense. His purpose is merely to annul the effective
judgment of the court, to the end that the litigation may again resume its regular course.
There is only one section of the Code of Civil Procedure which expressly recognizes the
authority of a Court of First Instance to set aside a final judgment and permit a renewal of
the litigation in the same cause. This is as follows:
SEC. 113. Upon such terms as may be just the court may relieve a party or legal
representative from the judgment, order, or other proceeding taken against him
through his mistake, inadvertence, surprise, or excusable neglect; Provided, That
application thereof be made within a reasonable time, but in no case exceeding six
months after such judgment, order, or proceeding was taken.
An additional remedy by petition to the Supreme Court is supplied by section 513 of the
same Code. The first paragraph of this section, in so far as pertinent to this discussion,
provides as follows:
23
When a judgment is rendered by a Court of First Instance upon default, and a party
thereto is unjustly deprived of a hearing by fraud, accident, mistake or excusable
negligence, and the Court of First Instance which rendered the judgment has finally
adjourned so that no adequate remedy exists in that court, the party so deprived of
a hearing may present his petition to the Supreme Court within sixty days after he
first learns of the rendition of such judgment, and not thereafter, setting forth the
facts and praying to have judgment set aside. . . .
It is evident that the proceeding contemplated in this section is intended to supplement the
remedy provided by section 113; and we believe the conclusion irresistible that there is no
other means recognized by law whereby a defeated party can, by a proceeding in the same
cause, procure a judgment to be set aside, with a view to the renewal of the litigation.
The Code of Civil Procedure purports to be a complete system of practice in civil causes, and
it contains provisions describing with much fullness the various steps to be taken in the
conduct of such proceedings. To this end it defines with precision the method of beginning,
conducting, and concluding the civil action of whatever species; and by section 795 of the
same Code it is declared that the procedure in all civil action shall be in accordance with the
provisions of this Code. We are therefore of the opinion that the remedies prescribed in
sections 113 and 513 are exclusive of all others, so far as relates to the opening and
continuation of a litigation which has been once concluded.
The motion in the present case does not conform to the requirements of either of these
provisions; and the consequence is that in our opinion the action of the Court of First
Instance in dismissing the motion was proper.
If the question were admittedly one relating merely to an irregularity of procedure, we
cannot suppose that this proceeding would have taken the form of a motion in the cause,
since it is clear that, if based on such an error, the came to late for relief in the Court of First
Instance. But as we have already seen, the motion attacks the judgment of the court as void
for want of jurisdiction over the defendant. The idea underlying the motion therefore is that
inasmuch as the judgment is a nullity it can be attacked in any way and at any time. If the
judgment were in fact void upon its face, that is, if it were shown to be a nullity by virtue of
its own recitals, there might possibly be something in this. Where a judgment or judicial
order is void in this sense it may be said to be a lawless thing, which can be treated as an
outlaw and slain at sight, or ignored wherever and whenever it exhibits its head.
But the judgment in question is not void in any such sense. It is entirely regular in form, and
the alleged defect is one which is not apparent upon its face. It follows that even if the
judgment could be shown to be void for want of jurisdiction, or for lack of due process of
law, the party aggrieved thereby is bound to resort to some appropriate proceeding to
obtain relief. Under accepted principles of law and practice, long recognized in American
courts, a proper remedy in such case, after the time for appeal or review has passed, is for
the aggrieved party to bring an action to enjoin the judgment, if not already carried into
effect; or if the property has already been disposed of he may institute suit to recover it. In

every situation of this character an appropriate remedy is at hand; and if property has been
taken without due process, the law concedes due process to recover it. We accordingly old
that, assuming the judgment to have been void as alleged by the proponent of this motion,
the proper remedy was by an original proceeding and not by motion in the cause. As we have
already seen our Code of Civil Procedure defines the conditions under which relief against a
judgment may be productive of conclusion for this court to recognize such a proceeding as
proper under conditions different from those defined by law. Upon the point of procedure
here involved, we refer to the case of People vs. Harrison (84 Cal., 607) wherein it was held
that a motion will not lie to vacate a judgment after the lapse of the time limited by statute if
the judgment is not void on its face; and in all cases, after the lapse of the time limited by
statute if the judgment is not void on its face; and all cases, after the lapse of such time,
when an attempt is made to vacate the judgment by a proceeding in court for that purpose
an action regularly brought is preferable, and should be required. It will be noted taken
verbatim from the California Code (sec. 473).
The conclusions stated in this opinion indicate that the judgment appealed from is without
error, and the same is accordingly affirmed, with costs. So ordered.
El Banco Espanol-Filipino vs. Palanca
G.R. No. L-11390, March 26, 1918
* JURISDICTION, HOW ACQUIRED: Jurisdiction over the property which is the subject of the
litigation may result either from a seizure of the property under legal process, whereby it is
brought into the actual custody of the law, or it may result from the institution of legal
proceedings wherein, under special provisions of law, the power of the court over the
property is recognized and made effective.
* The action to foreclose a mortgage is said to be a proceeding quasi in rem, by which is
expressed the idea that while it is not strictly speaking an action in rem yet it partakes of that
nature and is substantially such.
* DUE PROCESS IN FORECLOSURE PROCEEDINGS: Property is always assumed to be in the
possession of its owner, in person or by agent; and he may be safely held, under certain
conditions, to be affected with knowledge that proceedings have been instituted for its
condemnation and sale.
FACTS:
Engracio Palanca Tanquinyeng y Limquingco mortgaged various parcels of real property in
Manila to El Banco Espanol-Filipino. Afterwards, Engracio returned to China and there he
died on January 29, 1810 without returning again to the Philippines. The mortgagor then
instituted foreclosure proceeding but since defendant is a non-resident, it was necessary to
24
give notice by publication. The Clerk of Court was also directed to send copy of the summons
to the defendants last known address, which is in Amoy, China. It is not shown whether the
Clerk complied with this requirement. Nevertheless, after publication in a newspaper of the
City of Manila, the cause proceeded and judgment by default was rendered. The decision
was likewise published and afterwards sale by public auction was held with the bank as the
highest bidder. On August 7, 1908, this sale was confirmed by the court. However, about
seven years after the confirmation of this sale, a motion was made by Vicente Palanca, as
administrator of the estate of the original defendant, wherein the applicant requested the
court to set aside the order of default and the judgment, and to vacate all the proceedings
subsequent thereto. The basis of this application was that the order of default and the
judgment rendered thereon were void because the court had never acquired jurisdiction
over the defendant or over the subject of the action.
ISSUE:
* Whether or not the lower court acquired jurisdiction over the defendant and the subject
matter of the action
* Whether or not due process of law was observed
RULING:
On Jurisdiction
The word jurisdiction is used in several different, though related, senses since it may have
reference (1) to the authority of the court to entertain a particular kind of action or to
administer a particular kind of relief, or it may refer to the power of the court over the
parties, or (2) over the property which is the subject to the litigation.
The sovereign authority which organizes a court determines the nature and extent of its
powers in general and thus fixes its competency or jurisdiction with reference to the actions
which it may entertain and the relief it may grant.
How Jurisdiction is Acquired
Jurisdiction over the person is acquired by the voluntary appearance of a party in court and
his submission to its authority, or it is acquired by the coercive power of legal process
exerted over the person.
Jurisdiction over the property which is the subject of the litigation may result either from a
seizure of the property under legal process, whereby it is brought into the actual custody of

the law, or it may result from the institution of legal proceedings wherein, under special
provisions of law, the power of the court over the property is recognized and made effective.
In the latter case the property, though at all times within the potential power of the court,
may never be taken into actual custody at all. An illustration of the jurisdiction acquired by
actual seizure is found in attachment proceedings, where the property is seized at the
beginning of the action, or some subsequent stage of its progress, and held to abide the final
event of the litigation. An illustration of what we term potential jurisdiction over the res, is
found in the proceeding to register the title of land under our system for the registration of
land. Here the court, without taking actual physical control over the property assumes, at the
instance of some person claiming to be owner, to exercise a jurisdiction in rem over the
property and to adjudicate the title in favor of the petitioner against all the world.
In the terminology of American law the action to foreclose a mortgage is said to be a
proceeding quasi in rem, by which is expressed the idea that while it is not strictly speaking
an action in rem yet it partakes of that nature and is substantially such. The expression
"action in rem" is, in its narrow application, used only with reference to certain proceedings
in courts of admiralty wherein the property alone is treated as responsible for the claim or
obligation upon which the proceedings are based. The action quasi rem differs from the true
action in rem in the circumstance that in the former an individual is named as defendant, and
the purpose of the proceeding is to subject his interest therein to the obligation or lien
burdening the property. All proceedings having for their sole object the sale or other
disposition of the property of the defendant, whether by attachment, foreclosure, or other
form of remedy, are in a general way thus designated. The judgment entered in these
proceedings is conclusive only between the parties.
It is true that in proceedings of this character, if the defendant for whom publication is made
appears, the action becomes as to him a personal action and is conducted as such. This,
however, does not affect the proposition that where the defendant fails to appear the action
is quasi in rem; and it should therefore be considered with reference to the principles
governing actions in rem.
FACTS:
Original Defendant Engracion Palanca Tanguinyen y Limquingco executed a mortgage upon
various real property situated in Manila as security for a debt owing by him to Plaintiff El
Banco Espaol-Filipino. After executing the same, he returned to China, his native country,
and died there without returning to the Philippines.
As the Defendant was a non-resident at the time of the institution of the foreclosure of said
mortgage, it was necessary for the Plaintiff therein to give notice to the former by
publication pursuant to Section 399 of the Code of Civil Procedure. An Order for Publication
25
was accordingly obtained from the court, and publication was made in due form in a
newspaper of the City of Manila. At the same time that the order of the court should deposit
in the post office in a stamped envelope a copy of the Summons and Complaint directed to
the Defendant at his last place of residence, to wit, the City of Amoy, in the Empire of China.
Whether the clerk complied with this order does not affirmatively appear. An Affidavit,
however, was signed by Bernardo Chan y Garcia, the banks attorney, showing that he had
deposited in the Manila post-office a registered letter, addressed to Engracio Palanca
Tanquinyeng, at Manila, containing copies of the Complaint, the Plaintiffs Affidavit, the
Summons, and the aforesaid Order for Publication. It appears from the postmasters receipt
that Bernardo probably used an envelope obtained from the clerks office, as the receipt
purports to show that the letter emanated from the office.
The Defendant not having appeared, Judgment by Default was then taken against him before
the trial court and a Decision rendered in favor of Plaintiff. In this Decision, it was recited that
publication had been properly made in a periodical, but nothing was said about notice having
been given by mail. Foreclosure of the subject property proceeded and sale was confirmed
by the court thereafter.
Seven years after the confirmation sale, Vicente Palanca, as administrator of the Defendants
estate, moved that the Order of Default and the above Judgment rendered thereon be
declared void. Said Motion to Vacate Judgment was denied; hence, this Appeal.
ISSUE:
Whether or not the trial court acquired the necessary jurisdiction over the property to
proceed with the foreclosure proceeding?
ARGUMENT:
Defendant-Appellant Vicente Palanca argues that the Order of Default and the Judgment
rendered thereon were void because the court had never acquired jurisdiction over the
person of the Defendant or over the subject of the action.
RULING:
Yes. The action to foreclose a mortgage is quasi in rem. The property itself is the sole thing
which is impleaded and which is the subject of the exercise of judicial power. The jurisdiction
of the court is derived from the power which it possesses over the property. The jurisdiction
over the person is non-essential.
 26

The Judgment appealed from is without error, and the same is accordingly affirmed, with We may then, from what has been stated, formulate the following proposition relative to the
costs against Defendant-Appellant. foreclosure proceeding against the property of a non-resident mortgagor who fails to come
in and submit himself personally to the jurisdiction of the court: (I) that the jurisdiction of the
court is derived from the power which it possesses over the property; (II) that jurisdiction
over the person is not acquired and is non-essential; (III) that the relief granted by the court
RATIO DECIDENDI:
must be limited to such as can be enforced against the property itself.
In the terminology of American law the action to foreclose a mortgage is said to be a
In the light of the decision in Pennoyer vs. Neff [1878], and of other decisions which have
proceeding quasi in rem, by which is expressed the idea that while it is not strictly speaking
subsequently been rendered in that and other courts, the proposition that jurisdiction over
an action in rem yet it partakes of that nature and is substantially such The action quasi in
the person cannot be thus acquired by publication and notice is no longer open to question;
rem differs from the true action in rem in the circumstance that in the former an individual is
and it is now fully established that a personal judgment upon constructive or substituted
named as defendant, and the purpose of the proceeding is to subject his interest therein to
service against a non-resident who does not appear is wholly invalid. This doctrine applies to
the obligation or lien burdening the property. All proceedings having for their sole object the
all kinds of constructive or substituted process, including service by publication and personal
sale or other disposition of the property of the defendant, whether by attachment,
service outside of the jurisdiction in which the judgment is rendered; and the only exception
foreclosure, or other form of remedy, are in a general way thus designated. The judgment
seems to be found in the case where the non-resident defendant has expressly or impliedly
entered in these proceedings is conclusive only between the parties.
consented to the mode of service.
It is true that in proceedings of this character, if the defendant for whom publication is made
The idea upon which the decision in Pennoyer vs. Neff [1878] proceeds is that the process
appears, the action becomes as to him a personal action and is conducted as such. This,
from the tribunals of one State cannot run into other States or countries and that due
however, does not affect the proposition that where the defendant fails to appear the action
process of law requires that the defendant shall be brought under the power of the court by
is quasi in rem; and it should therefore be considered with reference to the principles
service of process within the State, or by his voluntary appearance, in order to authorize the
governing actions in rem If the defendant appears, the cause becomes mainly a suit in
court to pass upon the question of his personal liability. The doctrine established by the
personam, with the added incident, that the property attached remains liable, under the
Supreme Court of the United States on this point, being based upon the constitutional
control of the court, to answer to any demand which may be established against the
conception of due process of law, is binding upon the courts of the Philippine Islands.
defendant by the final judgment of the court. But, if there is no appearance of the defendant,
Involved in this decision is the principle that in proceedings in rem or quasi in rem against a
and no service of process on him, the case becomes, in its essential nature, a proceeding in
non-resident who is not served personally within the state, and who does not appear, the
rem, the only effect of which is to subject the property attached to the payment of the
relief must be confined to the res, and the court cannot lawfully render a personal judgment
defendant which the court may find to be due to the plaintiff (Cooper vs. Reynolds [1869]).
against him (Dewey vs. Des Moines, 173 U. S., 193; 43 L. ed., 665; Heidritter vs. Elizabeth Oil
Cloth Co., 112 U. S., 294; 28 L. ed., 729.). Therefore in an action to foreclose a mortgage
Here the property itself is in fact the sole thing which is impleaded and is the responsible
against a non-resident, upon whom service has been effected exclusively by publication, no
object which is the subject of the exercise of judicial power. It follows that the jurisdiction of
personal judgment for the deficiency can be entered (Latta vs. Tutton, 122 Cal., 279;
the court in such case is based exclusively on the power which, under the law, it possesses
Blumberg vs. Birch, 99 Cal., 416.).
over the property; and any discussion relative to the jurisdiction of the court over the person
of the defendant is entirely apart from the case. The jurisdiction of the court over the
property, considered as the exclusive object of such action, is evidently based upon the
following conditions and considerations, namely: (1) that the property is located within the
district; (2) that the purpose of the litigation is to subject the property by sale to an
obligation fixed upon it by the mortgage; and (3) that the court at a proper stage of the
proceedings takes the property into custody, if necessary, and expose it to sale for the
purpose of satisfying the mortgage debt. An obvious corollary is that no other relief can be
granted in this proceeding than such as can be enforced against the property.

EN BANC
G.R. No. L-1403 October 29, 1948
VICENTE CALUAG and JULIANA GARCIA, petitioners,
vs.
POTENCIANO PECSON and ANGEL H. MOJICA, Judges of the Court of First Instance of
Bulacan, and LEON ALEJO, respondents.
FERIA, J.:
This is a petition for certiorari and prohibition filed by the petitioners on the ground that the
respondent judge acted without or in excess of the jurisdiction of the court in rendering the
resolution dated April 1, 1947, which declares the petitioners guilty of contempt of court for
not complying or performing the order of the court of January 7, 1947, in case No. 5486 of
the Court of First Instance of Bulacan, requiring the petitioners to execute a deed of sale in
favor of plaintiff over one-half of the land pro indiviso in question, within ten days from the
receipt of copy of said resolution, and which orders that the petitioners be imprisoned until
they perform the said act.
The first ground on which the petition is based is that the judgment of the court which the
petitioners are ordered to perform has not yet become final. This ground is unfounded. From
the pleadings and annexes it appears that the judgment of the lower against the petitioners
was appealed to the Court of Appeals and was affirmed by the latter in its decision
promulgated on May 30, 1944; that the petition to appeal to the Supreme Court by certiorari
filed by the petitioners was denied on July 24, 1944; that a motion for reconsideration filed
by the petitioners was also denied on August 21, 1944; that the record of the case, having
been destroyed during the liberation, was reconstituted; that on September 24, 1945, the
Deputy Clerk of this Court wrote a letter to and notified the petitioners of the resolution of
the Court declaring said record reconstituted, together with the copies of the decision of the
Court of Appeals and resolutions of the Supreme Court during Japanese occupation of June
24 and August 21, 1944; and that on October 23, 1946, the clerk of Court of First Instance of
Bulacan notified the attorneys for both parties of the said decision of the Court of Appeals
and resolutions of the Supreme Court. There can be no question, therefore, that the
judgment of the Court of First Instance above-mentioned, as affirmed by the Court of
Appeals, has become final and executory.
The other two grounds alleged by the petitioners in support of the present petition for
certiorari are: that plaintiff's action abated or was extinguished upon the death of the
plaintiff Fortunato Alejo, because his right of legal redemption was a personal one, and
therefore not transferable to his successors in interest; and that, even assuming that it is a
personal one and therefore transferable, his successors in interest have failed to secure the
substitution of said deceased by his legal representative under section 17, Rule 3. These
reasons or grounds do not deserve any serious consideration, not only because they are
without merits, but because the Court of First Instance of Bulacan, having jurisdiction to
27
render that judgment, the latter cannot be disobeyed however erroneous it may be
(Compaia General de Tabacos vs. Alhambra Cigar & Cigarette Mfg. Co., 33 Phil., 503;
Golding vs. Balatbat, 36 Phil., 941). And this Court cannot in this proceeding correct any error
which may have been committed by the lower court.
However, although not alleged, we may properly take judicial notice of the fact that the
respondent Judges have acted without jurisdiction in proceeding against and declaring the
petitioners guilty of contempt of court.
The contempt supposed to have been committed by the petitioners is not a direct contempt
under section 1, Rule 64, for it is not a misbehavior in the presence of or so near a court or
judge as to interrupt the administration of justice. It is an indirect contempt or disobedience
of a lawful order of the court, under section 3, Rule 64, of the Rules of Court. According to
sections 4 and 5 of said rule, where a contempt under section 3 has been committed against
a superior court or judge the charge may be filed with such superior court, and the accused
put under custody; but if the hearing is ordered to be had forthwith, the accused may be
released from custody upon filing a bond in an amount to be fixed by the court for his
appearance to answer the charge. From the record it appears that no charge for contempt
was filed against the petitioners nor was a trial held. The only proceeding had in this case
which led to the conviction of the defendants are: the order of January 7, 1947, issued by the
lower court requiring the defendants to execute the deed of conveyance as direct in the
judgment within ten days from the receipt of the copy of said order, with the admonition
that upon failure to do so said petitioners will be dealt with for contempt of court; the
motion of March 21, 1947, filed by the attorney for the respondent Leon Alejo, administrator
of the estate of Fortunato Alejo, that the petitioners be punished for contempt; and the
resolution of the court of April 1, 1947, denying the second motion for reconsideration of
March 17, 1947, of the order of January 7, 1947, filed by the petitioners, and ordering the
petitioners to be imprisoned in the provincial jail until they have complied with the order of
the court above mentioned.
It is well settled that jurisdiction of the subject matter of a particular case is something more
than the general power conferred by law upon a court to take cognizance of cases of the
general class to which the particular case belongs. It is not enough that a court has power in
abstract to try and decide the class of litigations to which a case belongs; it is necessary that
said power be properly invoked, or called into activity, by the filing of a petition, complaint or
other appropriate pleading. A Court of First Instance has an abstract jurisdiction or power to
try and decide criminal cases for homicide committed within its territorial jurisdiction; but it
has no power to try and decide a criminal case against a person for homicide committed
within its territory, unless a complaint or information against him be filed with the said court.
And it has also power to try civil cases involving title to real estate situated within its district;
but it has no jurisdiction to take cognizance of a dispute or controversy between two persons
over title of real property located in his province, unless a proper complaint be filed with its
court. So, although the Court of First Instance of Bulacan has power conferred by law to
punish as guilty of indirect contempt a party who disobeys its order or judgment, it did not
have or acquire jurisdiction of the particular case under consideration to declare the

petitioners guilty of indirect contempt, and order their confinement until they have executed
the deed of conveyance in question, because neither a charge has been filed against them
nor a hearing thereof held as required by law.
The respondent Judge Angel Mojica acted not only without jurisdiction in proceeding against
and declaring the petitioners guilty of contempt, but also in excess of jurisdiction in ordering
the confinement of the petitioners, because it had no power to impose such punishment
upon the latter.
The respondent judge has no power under the law to order the confinement of the
petitioners until they have compiled with the order of the court. Section 9, Rule 39, in
connection with section 7 of Rule 64, provides that if a person is required by a judgment or
order of the court to perform any other act than the payment of money or sale or delivery of
real or personal property, and said person disobeys such judgment or order while it is yet in
his power to perform it, he may be punished for contempt and imprisoned until he performs
said order. This provision is applicable only to specific acts other than those provided for or
covered by section 10 of the same Rule, that is, it refers to a specific act which the party or
person must personally do, because his personal qualification and circumstances have been
taken into consideration in accordance with the provision of article 1161 of the Civil Code.
But if a judgment directs a party to execute a conveyance of land or to deliver deeds or other
documents or to perform any specific act which may be performed by some other person, or
in some other way provided by law with the same effect, as in the present case, section 10,
and not said section 9 of Rule 39 applies; and under the provision of said section 10, the
court may direct the act to be done at the cost of the disobedient party, by some other
person appointed or designated by the court, and the act when so done shall have like effect
as if done by the party himself.
It is also well settled by the authorities that a judgment may be void for want of power to
render the particular judgment, though the court may have had jurisdiction over the subject
matter and the parties. A wrong decision made within the limits of the court's authority is
erroneous and may be corrected on appeal or other direct review, but a wrong, or for that
matter a correct, decision is void, and may be set aside either directly or collaterally, where
the court exceeds its jurisdiction and power in rendering it. Hence though the court has
acquired jurisdiction over the subject matter and the particular case has been submitted
properly to it for hearing and decision, it will overstep its jurisdiction if it renders a judgment
which it has no power under the law to render. A sentence which imposes upon the
defendant in a criminal prosecution a penalty different from or in excess of the maximum
which the court is authorized by law to impose for the offense of which the defendant was
convicted, is void for want or excess of jurisdiction, as to the excess in the latter case. And a
judgment of imprisonment which the court has no constitutional or statutory power to
impose, as in the present case, may also be collaterally attacked for want or rather in excess
of jurisdiction.
In Cruz vs. Director of Prisons (17 Phil., 269, 272, 273), this Court said the following applicable
to punishment imposed for contempt of court:
28
. . . The courts uniformly hold that where a sentence imposes a punishment in
excess of the power of the court to impose, such sentence is void as to the excess,
and some of the courts hold that the sentence is void in toto; but the weight of
authority sustains the proposition that such a sentence is void only as to the excess
imposed in case the parts are separable, the rule being that the petitioner is not
entitled to his discharge on a writ of habeas corpus unless he has served out so
much of the sentence as was valid. (Ex parte Erdmann, 88 Cal., 579; Lowrey vs.
Hogue, 85 Cal., 600; Armstrong vs. People, 37 Ill., 459; State vs. Brannon, 34 La
Ann., 942; People vs. Liscomb, 19 Am. Rep., 211; In re Taylor, 7 S. D., 382, 45 L. R.
A., 136; Ex parte Mooney, 26 W. Va., 36, 53 Am. Rep., 59; U. S. vs. Pridgeon, 153 U.
S., 48; In re Graham, 138 U. S., 461.)
In the present case, in view of the failure of the petitioners to execute the deed of
conveyance directed in the judgment of the court, the respondent may, under section 10,
Rule 39, either order its execution by some other person appointed or designated by the
court at the expense of the petitioners, or enter a judgment divesting the title of the
petitioner over the property in question and vesting it in Leon Alejo, administrator of estate
of the deceased Fortunato Alejo, and such judgment has the force and effect of a conveyance
executed in due form of law.
In view of the foregoing, the order of the court of April 7, 1947, ordering the confinement of
the petitioners in the provincial jail until they have complied with the order of the court, is
set aside without costs. So ordered.
Facts:
This is a petition for certiorari and prohibition filed by the petitioners on the ground that the
respondent judge acted without or in excess of the jurisdiction of the court in rendering the
resolution dated April 1, 1947, which declares the petitioners guilty of contempt of court for
not complying or performing the order of the court of January 7, 1947, in case No. 5486 of
the Court of First Instance of Bulacan, requiring the petitioners to execute a deed of sale in
favor of plaintiff over one-half of the land pro indiviso in question, within ten days from the
receipt of copy of said resolution, and which orders that the petitioners be imprisoned until
they perform the said act. The first ground on which the petition is based is that the
judgment of the court which the petitioners are ordered to perform has not yet become
final. This ground is unfounded. From the pleadings and annexes it appears that the
judgment of the lower against the petitioners was appealed to the Court of Appeals and was
affirmed by the latter in its decision promulgated on May 30, 1944; that the petition to
appeal to the Supreme Court by certiorari filed by the petitioners was denied on July 24,
1944; that a motion for reconsideration filed by the petitioners was also denied on August
21, 1944; that the record of the case, having been destroyed during the liberation, was
reconstituted; that on September 24, 1945, the Deputy Clerk of this Court wrote a letter to
and notified the petitioners of the resolution of the Court declaring said record reconstituted,
 29

together with the copies of the decision of the Court of Appeals and resolutions of the said order. This provision is applicable only to specific acts other than those provided for or
Supreme Court during Japanese occupation of June 24 and August 21, 1944; and that on covered by section 10 of the same Rule, that is, it refers to a specific act which the party or
October 23, 1946, the clerk of Court of First Instance of Bulacan notified the attorneys for person must personally do, because his personal qualification and circumstances have been
both parties of the said decision of the Court of Appeals and resolutions of the Supreme taken into consideration in accordance with the provision of article 1161 of the Civil Code.
Court. There can be no question, therefore, that the judgment of the Court of First Instance But if a judgment directs a party to execute a conveyance of land or to deliver deeds or other
above-mentioned, as affirmed by the Court of Appeals, has become final and executory. documents or to perform any specific act which may be performed by some other person, or
in some other way provided by law with the same effect, as in the present case, section 10,
Issue: Whether or not the lower court has jurisdiction to declare the petitioners in contempt. and not said section 9 of Rule 39 applies; and under the provision of said section 10, the
court may direct the act to be done at the cost of the disobedient party, by some other
Held:
person appointed or designated by the court, and the act when so done shall have like effect
as if done by the party himself.
No. It is well settled that jurisdiction of the subject matter of a particular case is something
more than the general power conferred by law upon a court to take cognizance of cases of
It is also well settled by the authorities that a judgment may be void for want of power to
the general class to which the particular case belongs. It is not enough that a court has power
render the particular judgment, though the court may have had jurisdiction over the subject
in abstract to try and decide the class of litigations to which a case belongs; it is necessary
matter and the parties. A wrong decision made within the limits of the courts authority is
that said power be properly invoked, or called into activity, by the filing of a petition,
erroneous and may be corrected on appeal or other direct review, but a wrong, or for that
complaint or other appropriate pleading. A Court of First Instance has an abstract jurisdiction
matter a correct, decision is void, and may be set aside either directly or collaterally, where
or power to try and decide criminal cases for homicide committed within its territorial
the court exceeds its jurisdiction and power in rendering it. Hence though the court has
jurisdiction; but it has no power to try and decide a criminal case against a person for
acquired jurisdiction over the subject matter and the particular case has been submitted
homicide committed within its territory, unless a complaint or information against him be
properly to it for hearing and decision, it will overstep its jurisdiction if it renders a judgment
filed with the said court. And it has also power to try civil cases involving title to real estate
which it has no power under the law to render. A sentence which imposes upon the
situated within its district; but it has no jurisdiction to take cognizance of a dispute or
defendant in a criminal prosecution a penalty different from or in excess of the maximum
controversy between two persons over title of real property located in his province, unless a
which the court is authorized by law to impose for the offense of which the defendant was
proper complaint be filed with its court. So, although the Court of First Instance of Bulacan
convicted, is void for want or excess of jurisdiction, as to the excess in the latter case. And a
has power conferred by law to punish as guilty of indirect contempt a party who disobeys its
judgment of imprisonment which the court has no constitutional or statutory power to
order or judgment, it did not have or acquire jurisdiction of the particular case under
impose, as in the present case, may also be collaterally attacked for want or rather in excess
consideration to declare the petitioners guilty of indirect contempt, and order their
of jurisdiction.
confinement until they have executed the deed of conveyance in question, because neither a
charge has been filed against them nor a hearing thereof held as required by law. In the present case, in view of the failure of the petitioners to execute the deed of
conveyance directed in the judgment of the court, the respondent may, under section 10,
The respondent Judge Angel Mojica acted not only without jurisdiction in proceeding against
Rule 39, either order its execution by some other person appointed or designated by the
and declaring the petitioners guilty of contempt, but also in excess of jurisdiction in ordering
court at the expense of the petitioners, or enter a judgment divesting the title of the
the confinement of the petitioners, because it had no power to impose such punishment
petitioner over the property in question and vesting it in Leon Alejo, administrator of estate
upon the latter.
of the deceased Fortunato Alejo, and such judgment has the force and effect of a conveyance
executed in due form of law.
The respondent judge has no power under the law to order the confinement of the
petitioners until they have complied with the order of the court. Section 9, Rule 39, in
connection with section 7 of Rule 64, provides that if a person is required by a judgment or
order of the court to perform any other act than the payment of money or sale or delivery of
real or personal property, and said person disobeys such judgment or order while it is yet in
his power to perform it, he may be punished for contempt and imprisoned until he performs

International Shoe v. State of Washington, 326 U.S. 310 (1945)
International Shoe v. State of Washington
No. 107
Argued November 14, 1945
Decided December 3, 1945
326 U.S. 310
APPEAL FROM THE SUPREME COURT OF WASHINGTON
Syllabus
Activities within a State of salesmen in the employ of a foreign corporation, exhibiting
samples of merchandise and soliciting orders from prospective buyers to be accepted or
rejected by the corporation at a point outside the State, were systematic and continuous,
and resulted in a large volume of interstate business. A statute of the State requires
employers to pay into the state unemployment compensation fund a specified percentage of
the wages paid for the services of employees within the State.
Held:
1. In view of 26 U.S.C. 1606(a) , providing that no person shall be relieved from compliance
with a state law requiring payments to an unemployment fund on the ground that he is
engaged in interstate commerce, the fact that the corporation is engaged in interstate
commerce does not relieve it from liability for payments to the state unemployment
compensation fund. P. 326 U. S. 315.
2. The activities in behalf of the corporation render it amenable to suit in courts of the State
to recover payments due to the state unemployment compensation fund. P. 326 U. S. 320.
(a) The activities in question established between the State and the corporation sufficient
contacts or ties to make it reasonable and just, and in conformity to the due process
requirements of the Fourteenth Amendment, for the State to enforce against the
corporation an obligation arising out of such activities. P. 326 U. S. 320.
(b) In such a suit to recover payments due to the unemployment compensation fund, service
of process upon one of the corporation's salesmen within the State, and notice sent by
registered mail to the corporation at its home office, satisfies the requirements of due
process. P. 326 U. S. 320.
30
Page 326 U. S. 311
3. The tax imposed by the state unemployment compensation statute -- construed by the
state court, in its application to the corporation, as a tax on the privilege of employing
salesmen within the State -- does not violate the due process clause of the Fourteenth
Amendment. P. 326 U. S. 321.
22 Wash.2d 146, 154 P.2d 801, affirmed.
APPEAL from a judgment upholding the constitutionality of a state unemployment
compensation statute as applied to the appellant corporation.
MR. CHIEF JUSTICE STONE delivered the opinion of the Court.
The questions for decision are (1) whether, within the limitations of the due process clause of
the Fourteenth Amendment, appellant, a Delaware corporation, has, by its activities in the
State of Washington, rendered itself amenable to proceedings in the courts of that state to
recover unpaid contributions to the state unemployment compensation fund exacted by
state statutes, Washington Unemployment Compensation Act, Washington Revised Statutes,
9998-103a through 9998-123a, 1941 Supp., and (2) whether the state can exact those
contributions consistently with the due process clause of the Fourteenth Amendment.
The statutes in question set up a comprehensive scheme of unemployment compensation,
the costs of which are defrayed by contributions required to be made by employers to a state
unemployment compensation fund.
Page 326 U. S. 312
The contributions are a specified percentage of the wages payable annually by each
employer for his employees' services in the state. The assessment and collection of the
contributions and the fund are administered by appellees. Section 14(c) of the Act
(Wash.Rev.Stat., 1941 Supp., 9998-114c) authorizes appellee Commissioner to issue an
order and notice of assessment of delinquent contributions upon prescribed personal service
of the notice upon the employer if found within the state, or, if not so found, by mailing the
notice to the employer by registered mail at his last known address. That section also
authorizes the Commissioner to collect the assessment by distraint if it is not paid within ten
days after service of the notice. By 14e and 6b, the order of assessment may be
administratively reviewed by an appeal tribunal within the office of unemployment upon
petition of the employer, and this determination is, by 6i, made subject to judicial review
on questions of law by the state Superior Court, with further right of appeal in the state
Supreme Court, as in other civil cases.
In this case, notice of assessment for the years in question was personally served upon a
sales solicitor employed by appellant in the State of Washington, and a copy of the notice

was mailed by registered mail to appellant at its address in St. Louis, Missouri. Appellant
appeared specially before the office of unemployment, and moved to set aside the order and
notice of assessment on the ground that the service upon appellant's salesman was not
proper service upon appellant; that appellant was not a corporation of the State of
Washington, and was not doing business within the state; that it had no agent within the
state upon whom service could be made; and that appellant is not an employer, and does
not furnish employment within the meaning of the statute.
The motion was heard on evidence and a stipulation of facts by the appeal tribunal, which
denied the motion
Page 326 U. S. 313
and ruled that appellee Commissioner was entitled to recover the unpaid contributions. That
action was affirmed by the Commissioner; both the Superior Court and the Supreme Court
affirmed. 22 Wash.2d 146, 154 P.2d 801. Appellant in each of these courts assailed the
statute as applied, as a violation of the due process clause of the Fourteenth Amendment,
and as imposing a constitutionally prohibited burden on interstate commerce. The cause
comes here on appeal under 237(a) of the Judicial Code, 28 U.S.C. 344(a), appellant
assigning as error that the challenged statutes, as applied, infringe the due process clause of
the Fourteenth Amendment and the commerce clause.
The facts, as found by the appeal tribunal and accepted by the state Superior Court and
Supreme Court, are not in dispute. Appellant is a Delaware corporation, having its principal
place of business in St. Louis, Missouri, and is engaged in the manufacture and sale of shoes
and other footwear. It maintains places of business in several states other than Washington,
at which its manufacturing is carried on and from which its merchandise is distributed
interstate through several sales units or branches located outside the State of Washington.
Appellant has no office in Washington, and makes no contracts either for sale or purchase of
merchandise there. It maintains no stock of merchandise in that state, and makes there no
deliveries of goods in intrastate commerce. During the years from 1937 to 1940, now in
question, appellant employed eleven to thirteen salesmen under direct supervision and
control of sales managers located in St. Louis. These salesmen resided in Washington; their
principal activities were confined to that state, and they were compensated by commissions
based upon the amount of their sales. The commissions for each year totaled more than
$31,000. Appellant supplies its salesmen with a line of samples, each consisting of one shoe
of a pair, which
Page 326 U. S. 314
they display to prospective purchasers. On occasion, they rent permanent sample rooms, for
exhibiting samples, in business buildings, or rent rooms in hotels or business buildings
temporarily for that purpose. The cost of such rentals is reimbursed by appellant.
31
The authority of the salesmen is limited to exhibiting their samples and soliciting orders from
prospective buyers, at prices and on terms fixed by appellant. The salesmen transmit the
orders to appellant's office in St. Louis for acceptance or rejection, and, when accepted, the
merchandise for filling the orders is shipped f.o.b. from points outside Washington to the
purchasers within the state. All the merchandise shipped into Washington is invoiced at the
place of shipment, from which collections are made. No salesman has authority to enter into
contracts or to make collections.
The Supreme Court of Washington was of opinion that the regular and systematic solicitation
of orders in the state by appellant's salesmen, resulting in a continuous flow of appellant's
product into the state, was sufficient to constitute doing business in the state so as to make
appellant amenable to suit in its courts. But it was also of opinion that there were sufficient
additional activities shown to bring the case within the rule, frequently stated, that
solicitation within a state by the agents of a foreign corporation plus some additional
activities there are sufficient to render the corporation amenable to suit brought in the
courts of the state to enforce an obligation arising out of its activities there. International
Harvester Co. v. Kentucky, 234 U. S. 579, 234 U. S. 587; People's Tobacco Co. v. American
Tobacco Co., 246 U. S. 79, 246 U. S. 87; Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129,
134 F.2d 511, 516. The court found such additional activities in the salesmen's display of
samples sometimes in permanent display rooms, and the salesmen's residence within the
state, continued over a period of years, all resulting in a
Page 326 U. S. 315
substantial volume of merchandise regularly shipped by appellant to purchasers within the
state. The court also held that the statute, as applied, did not invade the constitutional
power of Congress to regulate interstate commerce, and did not impose a prohibited burden
on such commerce.
Appellant's argument, renewed here, that the statute imposes an unconstitutional burden on
interstate commerce need not detain us. For 53 Stat. 1391, 26 U.S.C. 1606(a) provides that
"No person required under a State law to make payments to an unemployment fund shall be
relieved from compliance therewith on the ground that he is engaged in interstate or foreign
commerce, or that the State law does not distinguish between employees engaged in
interstate or foreign commerce and those engaged in intrastate commerce."
It is no longer debatable that Congress, in the exercise of the commerce power, may
authorize the states, in specified ways, to regulate interstate commerce or impose burdens
upon it. Kentucky Whip & Collar Co. v. Illinois Central R. Co., 299 U. S. 334; Perkins v.
Pennsylvania, 314 U.S. 586; Standard Dredging Corp. v. Murphy, 319 U. S. 306, 319 U. S.
308; Hooven & Allison Co. v. Evatt, 324 U. S. 652, 324 U. S. 679; Southern Pacific Co. v.
Arizona, 325 U. S. 761, 325 U. S. 769.

Appellant also insists that its activities within the state were not sufficient to manifest its
"presence" there, and that, in its absence, the state courts were without jurisdiction, that,
consequently, it was a denial of due process for the state to subject appellant to suit. It refers
to those cases in which it was said that the mere solicitation of orders for the purchase of
goods within a state, to be accepted without the state and filled by shipment of the
purchased goods interstate, does not render the corporation seller amenable to suit within
the state. See Green v. Chicago, B. & Q. R. Co., 205 U. S. 530, 205 U. S. 533; International
Harvester Co. v. Kentucky, supra, 234 U. S. 586-587; Philadelphia
Page 326 U. S. 316
& Reading R. Co. v. McKibbin, 243 U. S. 264, 243 U. S. 268; People's Tobacco Co. v. American
Tobacco Co., supra, 246 U. S. 87. And appellant further argues that, since it was not present
within the state, it is a denial of due process to subject it to taxation or other money
exaction. It thus denies the power of the state to lay the tax or to subject appellant to a suit
for its collection.
Historically, the jurisdiction of courts to render judgment in personam is grounded on
their de facto power over the defendant's person. Hence, his presence within the territorial
jurisdiction of a court was prerequisite to its rendition of a judgment personally binding
him. Pennoyer v. Neff, 95 U. S. 714, 95 U. S. 733. But now that the capias ad
respondendum has given way to personal service of summons or other form of notice, due
process requires only that, in order to subject a defendant to a judgment in personam, if he
be not present within the territory of the forum, he have certain minimum contacts with it
such that the maintenance of the suit does not offend "traditional notions of fair play and
substantial justice." Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463. See Holmes, J.,
in McDonald v. Mabee, 243 U. S. 90, 243 U. S. 91.Compare Hoopeston Canning Co. v.
Cullen, 318 U. S. 313, 318 U. S. 316, 318 U. S. 319. See Blackmer v. United States, 284 U. S.
421; Hess v. Pawloski, 274 U. S. 352; Young v. Masci, 289 U. S. 253. ,
Since the corporate personality is a fiction, although a fiction intended to be acted upon as
though it were a fact, Klein v. Board of Supervisors, 282 U. S. 19, 282 U. S. 24, it is clear that,
unlike an individual, its "presence" without, as well as within, the state of its origin can be
manifested only by activities carried on in its behalf by those who are authorized to act for it.
To say that the corporation is so far "present" there as to satisfy due process requirements,
for purposes of taxation or the maintenance of suits against it in the courts of the state, is to
beg the question to be decided. For the terms "present" or "presence" are
Page 326 U. S. 317
used merely to symbolize those activities of the corporation's agent within the state which
courts will deem to be sufficient to satisfy the demands of due process. L. Hand, J.,
in Hutchinson v. Chase & Gilbert, 45 F.2d 139, 141. Those demands may be met by such
contacts of the corporation with the state of the forum as make it reasonable, in the context
of our federal system of government, to require the corporation to defend the particular suit
32
which is brought there. An "estimate of the inconveniences" which would result to the
corporation from a trial away from its "home" or principal place of business is relevant in this
connection. Hutchinson v. Chase & Gilbert, supra, 141.
"Presence" in the state in this sense has never been doubted when the activities of the
corporation there have not only been continuous and systematic, but also give rise to the
liabilities sued on, even though no consent to be sued or authorization to an agent to accept
service of process has been given. St. Clair v. Cox, 106 U. S. 350, 106 U. S. 355; Connecticut
Mutual Co. v. Spratley, 172 U. S. 602, 172 U. S. 610-611; Pennsylvania Lumbermen's Ins. Co. v.
Meyer, 197 U. S. 407, 197 U. S. 414-415; Commercial Mutual Co. v. Davis, 213 U. S. 245, 213
U. S. 255-256; International Harvester Co. v. Kentucky, supra; cf. St. Louis S.W. R. Co. v.
Alexander, 227 U. S. 218. Conversely, it has been generally recognized that the casual
presence of the corporate agent, or even his conduct of single or isolated items of activities
in a state in the corporation's behalf, are not enough to subject it to suit on causes of action
unconnected with the activities there. St. Clair v. Cox, supra, 106 U. S. 359, 106 U. S. 360; Old
Wayne Life Assn. v. McDonough, 204 U. S. 8, 204 U. S. 21; Frene v. Louisville Cement Co.,
supra, 515, and cases cited. To require the corporation in such circumstances to defend the
suit away from its home or other jurisdiction where it carries on more substantial activities
has been thought to lay too great and unreasonable a burden on the corporation to comport
with due process.
Page 326 U. S. 318
While it has been held, in cases on which appellant relies, that continuous activity of some
sorts within a state is not enough to support the demand that the corporation be amenable
to suits unrelated to that activity, Old Wayne Life Assn. v. McDonough, supra; Green v.
Chicago, B. & Q. R. Co., supra; Simon v. Southern R. Co., 236 U. S. 115; People's Tobacco Co. v.
American Tobacco Co., supra; cf. Davis v. Farmers Co-operative Co., 262 U. S. 312, 262 U. S.
317, there have been instances in which the continuous corporate operations within a state
were thought so substantial and of such a nature as to justify suit against it on causes of
action arising from dealings entirely distinct from those activities. See Missouri, K. & T. R. Co.
v. Reynolds, 255 U.S. 565; Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915; cf. St.
Louis S.W. R. Co. v. Alexander, supra.
Finally, although the commission of some single or occasional acts of the corporate agent in a
state sufficient to impose an obligation or liability on the corporation has not been thought
to confer upon the state authority to enforce it, Rosenberg Bros. & Co. v. Curtis Brown
Co., 260 U. S. 516, other such acts, because of their nature and quality and the circumstances
of their commission, may be deemed sufficient to render the corporation liable to suit. Cf.
Kane v. New Jersey, 242 U. S. 160; Hess v. Pawloski, supra; Young v. Masci, supra. True, some
of the decisions holding the corporation amenable to suit have been supported by resort to
the legal fiction that it has given its consent to service and suit, consent being implied from
its presence in the state through the acts of its authorized agents. Lafayette Insurance Co. v.
French, 18 How. 404, 59 U. S. 407; St. Clair v. Cox, supra, 106 U. S. 356; Commercial Mutual
Co. v. Davis, supra, 213 U. S. 254; Washington v. Superior Court, 289 U. S. 361, 289 U. S. 364-

365. But, more realistically, it may be said that those authorized acts were of such a nature as
to justify the fiction. Smolik v. Philadelphia &
Page 326 U. S. 319
Reading Co., 222 F. 148, 151. Henderson, The Position of Foreign Corporations in American
Constitutional Law, 94-95.
It is evident that the criteria by which we mark the boundary line between those activities
which justify the subjection of a corporation to suit and those which do not cannot be simply
mechanical or quantitative. The test is not merely, as has sometimes been suggested,
whether the activity, which the corporation has seen fit to procure through its agents in
another state, is a little more or a little less. St. Louis S.W. R. Co. v. Alexander, supra, 227 U. S.
228; International Harvester Co. v. Kentucky, supra, 234 U. S. 587. Whether due process is
satisfied must depend, rather, upon the quality and nature of the activity in relation to the
fair and orderly administration of the laws which it was the purpose of the due process
clause to insure. That clause does not contemplate that a state may make binding a
judgment in personam against an individual or corporate defendant with which the state has
no contacts, ties, or relations. Cf. Pennoyer v. Neff, supra; Minnesota Commercial Assn. v.
Benn, 261 U. S. 140.
But, to the extent that a corporation exercises the privilege of conducting activities within a
state, it enjoys the benefits and protection of the laws of that state. The exercise of that
privilege may give rise to obligations, and, so far as those obligations arise out of or are
connected with the activities within the state, a procedure which requires the corporation to
respond to a suit brought to enforce them can, in most instances, hardly be said to be
undue. Compare International Harvester Co. v. Kentucky, supra, with Green v. Chicago, B. &
Q. R. Co., supra, and People's Tobacco Co. v. American Tobacco Co., supra. Compare
Connecticut Mutual Co. v. Spratley, supra, 172 U. S. 619, 172 U. S. 620, and Commercial
Mutual Co. v. Davis, supra, with Old Wayne Life Assn. v. McDonough, supra. See 29 Columbia
Law Review, 187-195.
Page 326 U. S. 320
Applying these standards, the activities carried on in behalf of appellant in the State of
Washington were neither irregular nor casual. They were systematic and continuous
throughout the years in question. They resulted in a large volume of interstate business, in
the course of which appellant received the benefits and protection of the laws of the state,
including the right to resort to the courts for the enforcement of its rights. The obligation
which is here sued upon arose out of those very activities. It is evident that these operations
establish sufficient contacts or ties with the state of the forum to make it reasonable and
just, according to our traditional conception of fair play and substantial justice, to permit the
state to enforce the obligations which appellant has incurred there. Hence, we cannot say
that the maintenance of the present suit in the State of Washington involves an
unreasonable or undue procedure.
33
We are likewise unable to conclude that the service of the process within the state upon an
agent whose activities establish appellant's "presence" there was not sufficient notice of the
suit, or that the suit was so unrelated to those activities as to make the agent an
inappropriate vehicle for communicating the notice. It is enough that appellant has
established such contacts with the state that the particular form of substituted service
adopted there gives reasonable assurance that the notice will be actual. Connecticut Mutual
Co. v. Spratley, supra, 172 U. S. 618, 172 U. S. 619; Board of Trade v. Hammond Elevator
Co., 198 U. S. 424, 198 U. S. 437-438; Commercial Mutual Co. v. Davis, supra, 213 U. S. 254-
255. Cf. Riverside Mills v. Menefee, 237 U. S. 189, 237 U. S. 194, 237 U. S. 195; See Knowles v.
Gaslight & Coke Co., 19 Wall. 58, 86 U. S. 61; McDonald v. Mabee, supra; Milliken v. Meyer,
supra. Nor can we say that the mailing of the notice of suit to appellant by registered mail at
its home office was not reasonably calculated to apprise appellant of the suit. Compare Hess
v. Pawloski, supra, with McDonald v. Mabee, supra,
Page 326 U. S. 321
243 U. S. 92, and Wuchter v. Pizzutti, 276 U. S. 13, 276 U. S. 19, 276 U. S. 24; cf. Becquet v.
MacCarthy, 2 B. & Ad. 951; Maubourquet v. Wyse, 1 Ir.Rep.C.L. 471. See Washington v.
Superior Court, supra, 289 U. S. 365.
Only a word need be said of appellant's liability for the demanded contributions to the state
unemployment fund. The Supreme Court of Washington, construing and applying the
statute, has held that it imposes a tax on the privilege of employing appellant's salesmen
within the state measured by a percentage of the wages, here, the commissions payable to
the salesmen. This construction we accept for purposes of determining the constitutional
validity of the statute. The right to employ labor has been deemed an appropriate subject of
taxation in this country and England, both before and since the adoption of the
Constitution. Steward Machine Co. v. Davis, 301 U. S. 548, 301 U. S. 579, et seq. And such a
tax imposed upon the employer for unemployment benefits is within the constitutional
power of the states. Carmichael v. Southern Coal Co., 301 U. S. 495, 301 U. S. 508, et seq.
Appellant having rendered itself amenable to suit upon obligations arising out of the
activities of its salesmen in Washington, the state may maintain the present suit in
personam to collect the tax laid upon the exercise of the privilege of employing appellant's
salesmen within the state. For Washington has made one of those activities which, taken
together, establish appellant's "presence" there for purposes of suit the taxable event by
which the state brings appellant within the reach of its taxing power. The state thus has
constitutional power to lay the tax and to subject appellant to a suit to recover it. The
activities which establish its "presence" subject it alike to taxation by the state and to suit to
recover the tax. Equitable Life Society v. Pennsylvania, 238 U. S. 143, 238 U. S. 146; cf.
International Harvester Co. v. Department of Taxation, 322 U. S. 435, 322 U. S. 442, et seq.;
Hoopeston Canning Co. v. Cullen,
Page 326 U. S. 322

supra, 318 U. S. 316-319; see General Trading Co. v. Tax Comm'n, 322 U. S. 335.
Affirmed.
MR. JUSTICE JACKSON took no part in the consideration or decision of this case.
MR. JUSTICE BLACK delivered the following opinion.
Congress, pursuant to its constitutional power to regulate commerce, has expressly provided
that a State shall not be prohibited from levying the kind of unemployment compensation tax
here challenged. 26 U.S.C. 1600. We have twice decided that this Congressional consent is an
adequate answer to a claim that imposition of the tax violates the Commerce Clause. Perkins
v. Pennsylvania, 314 U.S. 586, affirming 342 Pa. 529; Standard Dredging Corp. v. Murphy, 319
U. S. 306, 319 U. S. 308. Two determinations by this Court of an issue so palpably without
merit are sufficient. Consequently, that part of this appeal which again seeks to raise the
question seems so patently frivolous as to make the case a fit candidate for dismissal. Fay v.
Crozer, 217 U. S. 455. Nor is the further ground advanced on this appeal, that the State of
Washington has denied appellant due process of law, any less devoid of substance. It is my
view, therefore, that we should dismiss the appeal as unsubstantial, [Footnote 1] Seaboard
Air Line R. Co. v. Watson, 287 U. S. 86, 287 U. S. 90, 287 U. S. 92, and decline the invitation to
formulate broad rules as to the meaning of due process, which here would amount to
deciding a constitutional question "in advance of the necessity for its decision." Federation of
Labor v. McAdory, 325 U. S. 450, 325 U. S. 461.
Page 326 U. S. 323
Certainly appellant cannot, in the light of our past decisions, meritoriously claim that notice
by registered mail and by personal service on its sales solicitors in Washington did not meet
the requirements of procedural due process. And the due process clause is not brought in
issue any more by appellant's further conceptualistic contention that Washington could not
levy a tax or bring suit against the corporation because it did not honor that State with its
mystical "presence." For it is unthinkable that the vague due process clause was ever
intended to prohibit a State from regulating or taxing a business carried on within its
boundaries simply because this is done by agents of a corporation organized and having its
headquarters elsewhere. To read this into the due process clause would, in fact, result in
depriving a State's citizens of due process by taking from the State the power to protect
them in their business dealings within its boundaries with representatives of a foreign
corporation. Nothing could be more irrational, or more designed to defeat the function of
our federative system of government. Certainly a State, at the very least, has power to tax
and sue those dealing with its citizens within its boundaries, as we have held
before. Hoopeston Canning Co. v. Cullen, 318 U. S. 313. Were the Court to follow this
principle, it would provide a workable standard for cases where, as here, no other questions
are involved. The Court has not chosen to do so, but instead has engaged in an unnecessary
discussion, in the course of which it has announced vague Constitutional criteria applied for
the first time to the issue before us. It has thus introduced uncertain elements confusing the
34
simple pattern and tending to curtail the exercise of State powers to an extent not justified
by the Constitution.
The criteria adopted, insofar as they can be identified, read as follows: Due Process does
permit State courts to "enforce the obligations which appellant has incurred" if
Page 326 U. S. 324
it be found "reasonable and just according to our traditional conception of fair play and
substantial justice." And this, in turn, means that we will "permit" the State to act if, upon
"an 'estimate of the inconveniences' which would result to the corporation from a trial away
from its 'home' or principal place of business,"
we conclude that it is "reasonable" to subject it to suit in a State where it is doing business.
It is true that this Court did use the terms "fair play" and "substantial justice" in explaining
the philosophy underlying the holding that it could not be "due process of law" to render a
personal judgment against a defendant without notice and an opportunity to be
heard. Milliken v. Meyer, 311 U. S. 457. In McDonald v. Mabee, 243 U. S. 90, 243 U. S. 91,
cited in the Milliken, case, Mr. Justice Holmes, speaking for the Court, warned against judicial
curtailment of this opportunity to be heard, and referred to such a curtailment as a denial of
"fair play," which even the common law would have deemed "contrary to natural justice."
And previous cases had indicated that the ancient rule against judgments without notice had
stemmed from "natural justice" concepts. These cases, while giving additional reasons why
notice under particular circumstances is inadequate, did not mean thereby that all legislative
enactments which this Court might deem to be contrary to natural justice ought to be held
invalid under the due process clause. None of the cases purport to support or could support
a holding that a State can tax and sue corporations only if its action comports with this
Court's notions of "natural justice." I should have thought the Tenth Amendment settled
that.
I believe that the Federal Constitution leaves to each State, without any "ifs" or "buts," a
power to tax and to open the doors of its courts for its citizens to sue corporations whose
agents do business in those States. Believing that the Constitution gave the States that
power, I think it a judicial deprivation to condition its exercise upon this
Page 326 U. S. 325
Court's notion of "fair play," however appealing that term may be. Nor can I stretch the
meaning of due process so far as to authorize this Court to deprive a State of the right to
afford judicial protection to its citizens on the ground that it would be more "convenient" for
the corporation to be sued somewhere else.

There is a strong emotional appeal in the words "fair play," "justice," and "reasonableness."
But they were not chosen by those who wrote the original Constitution or the Fourteenth
Amendment as a measuring rod for this Court to use in invalidating State or Federal laws
passed by elected legislative representatives. No one, not even those who most feared a
democratic government, ever formally proposed that courts should be given power to
invalidate legislation under any such elastic standards. Express prohibitions against certain
types of legislation are found in the Constitution, and, under the long-settled practice, courts
invalidate laws found to conflict with them. This requires interpretation, and interpretation,
it is true, may result in extension of the Constitution's purpose. But that is no reason for
reading the due process clause so as to restrict a State's power to tax and sue those whose
activities affect persons and businesses within the State, provided proper service can be had.
Superimposing the natural justice concept on the Constitution's specific prohibitions could
operate as a drastic abridgment of democratic safeguards they embody, such as freedom of
speech, press and religion, [Footnote 2] and the right to counsel. This
Page 326 U. S. 326
has already happened. Betts v. Brady, 316 U. S. 455. Compare Feldman v. United States, 322
U. S. 487, 322 U. S. 494-503. For application of this natural law concept, whether under the
terms "reasonableness," "justice," or "fair play," makes judges the supreme arbiters of the
country's laws and practices. Polk Co. v. Glover, 305 U. S. 5, 305 U. S. 17-18; Federal Power
Commission v. Natural Gas Pipeline Co., 315 U. S. 575, 315 U. S. 600, n. 4. This result, I
believe, alters the form of government our Constitution provides. I cannot agree.
True, the State's power is here upheld. But the rule announced means that tomorrow's
judgment may strike down a State or Federal enactment on the ground that it does not
conform to this Court's idea of natural justice. I therefore find myself moved by the same
fears that caused Mr. Justice Holmes to say in 1930:
"I have not yet adequately expressed the more than anxiety that I feel at the ever-increasing
scope given to the Fourteenth Amendment in cutting down what I believe to be the
constitutional rights of the States. As the decisions now stand, I see hardly any limit but the
sky to the invalidating of those rights if they happen to strike a majority of this Court as for
any reason undesirable."
Baldwin v. Missouri, 281 U. S. 586, 281 U. S. 595.
Brief Fact Summary. Defendant was an out of state company that employed salesmen within
the state of Washington. Washington sued Defendant to recover unpaid unemployment
taxes and served Defendant in two ways: (1) by mail and (2) by serving one of its salesmen
within the state. Defendant appealed from a verdict for Washington, claiming that
Washington had no personal jurisdiction over Defendant.
35
Synopsis of Rule of Law. In order for a state to exercise personal jurisdiction over a
defendant, the defendant must have such minimum contacts with the state so that
exercising jurisdiction over the defendant would not offend traditional notions of fair play
and substantial justice.
Facts. International Shoe Co., Defendant, was a company based in Delaware with an office in
St. Louis, Missouri. Defendant employed salesmen that resided in Washington to sell their
product in the state of Washington. Defendant regularly shipped orders to the salesmen who
accepted them, the salesmen would display the products at places in Washington, and the
salesmen were compensated by commission for sale of the products. The salesmen were also
reimbursed for the cost of renting the places of business in Washington. Washington sued
Defendant after Defendant failed to make contributions to an unemployment compensation
fund exacted by state statutes. The Washington statute said that the commissioner could
issue personal service if Defendant was found within the state, or by mailing it to Defendant
if Defendant was not in the state. The notice of assessment was served upon Defendants
salesperson and a copy of the notice was mailed to Defendant. Defendant appeared
specially, moving to set aside the order that service upon the salesperson was proper service.
Defendant also argued that it did not do business in the state, that there was no agent
upon which service could be made, and that Defendant did not furnish employment within
the meaning of the statute. Defendant also argued that the statute violated the Due Process
Clause of the Fourteenth Amendment and imposed a prohibitive burden of interstate
commerce. The trial court found for Washington and the Supreme Court of Washington
affirmed, reasoning that the continuous flow of Defendants product into Washington was
sufficient to establish personal jurisdiction. Defendant appealed.
Issue. Is service of process upon Defendants agent sufficient notice when the corporations
activities result in a large volume of interstate business so that the corporation receives the
protection of the laws of the state and the suit is related to the activities which make the
corporation present?
Held. Yes. Affirmed. The general rule is that in order to have jurisdiction with someone
outside the state, the person must have certain minimum contacts with it such that the
maintenance of the suit does not offend traditional notions of fair play and substantial
justice. For a corporation, the minimum contacts required are not just continuous and
systematic activities but also those that give rise to the liabilities sued on. Defendant could
have sued someone in Washington. It was afforded the protection of the laws of that state,
and therefore it should be subject to suit.
Dissent. The states power to tax should not be qualified by an ambiguous statement
regarding fair play and substantial justice.
 36

Discussion. This decision articulates the rule for determining whether a state has personal
jurisdiction over an absent defendant via the minimum contacts test. In general,
International Shoe demonstrates that contacts with a state should be evaluated in terms of
how fair it would be to exercise jurisdiction over an absent defendant.

Pennoyer v. Neff, 95 U.S. 714 (1878)
Pennoyer v. Neff
95 U.S. 714
ERROR TO THE CIRCUIT COURT OF THE UNITED STATES
FOR THE DISTRICT OF OREGON
Syllabus
1. A statute of Oregon, after providing for service of summons upon parties or their
representatives, personally or at their residence, declares that, when service cannot be thus
made, and the defendant, after due diligence, cannot be found within the State, and
"that fact appears, by affidavit, to the satisfaction of the court or judge thereof, and it, in like
manner, appears that a cause of action exists against the defendant, or that he is a proper
party to an action relating to real property in the State, such court or judge may grant an
order that the service be made by publication of summons . . . when the defendant is not a
resident of the State, but has property therein, and the court has jurisdiction of the subject of
the action,"
-- the order to designate a newspaper of the county where the action is commenced in which
the publication shall be made -- and that proof of such publication shall be "the affidavit of
the printer, or his foreman, or his principal clerk."
Held, that defects in the affidavit for the order can only be taken advantage of on appeal, or
by some other direct proceeding, and cannot be urged to impeach the judgment collaterally,
and that the provision as to proof of the publication is satisfied when the affidavit is made by
the editor of the paper.
2. A personal judgment is without any validity if it be rendered by a State court in an action
upon a money demand against a nonresident of the State who was served by a publication of
summons, but upon whom no personal service of process within the State was made, and
who did not appear; and no title to property passes by a sale under an execution issued upon
such a judgment.
3. The State, having within her territory property of a nonresident, may hold and appropriate
it to satisfy the claims of her citizens against him, and her tribunals may inquire into his
obligations to the extent necessary to control the disposition of that property. If he has no
property in the State, there is nothing upon which her tribunals can adjudicate.
37
4. Substituted service by publication, or in any other authorized form, is sufficient to inform a
nonresident of the object of proceedings taken where
Page 95 U. S. 715
property is once brought under the control of the court by seizure or some equivalent act,
but where the suit is brought to determine his personal rights and obligations, that is, where
it is merely in personam, such service upon him is ineffectual for any purpose.
5. Process from the tribunals of one State cannot run into another State and summon a party
there domiciled to respond to proceedings against him, and publication of process or of
notice within the State in which the tribunal sits cannot create any greater obligation upon
him to appear. Process sent to him out of the State, and process published within it, are
equally unavailing in proceedings to establish his personal liability.
6. Except in cases affecting the personal status of the plaintiff, and in those wherein that
mode of service may be considered to have been assented to in advance, the substituted
service of process by publication allowed by the law of Oregon and by similar laws in other
States where actions are brought against nonresidents is effectual only where, in connection
with process against the person for commencing the action, property in the State is brought
under the control of the court and subjected to its disposition by process adapted to that
purpose, or where the judgment is sought as a means of reaching such property or affecting
some interest therein; in other words, where the action is in the nature of a proceeding in
rem.
7. Whilst the courts of the United States are not foreign tribunals in their relations to the
State courts, they are tribunals of a different sovereignty, and are bound to give a judgment
of a State court only the same faith and credit to which it is entitled in the courts of another
State.
8. The term "due process of law," when applied to judicial proceedings, means a course of
legal proceedings according to those rules and principles which have been established by our
jurisprudence for the protection and enforcement of private rights. To give such proceedings
any validity, there must be a competent tribunal to pass upon their subject matter, and if
that involves merely a determination of the personal liability of the defendant, he must be
brought within its jurisdiction by service of process within the State, or by his voluntary
appearance.
This action was brought by Neff against Pennoyer for the recovery of a tract of land situated
in Multnomah County, Oregon. Pennoyer, in his answer, denied Neff's title and right to
possession, and set up a title in himself.

By consent of parties, and in pursuance of their written stipulation filed in the case, the cause
was tried by the court, and a special verdict given, upon which judgment was rendered in
favor of Neff; whereupon Pennoyer sued out this writ of error.
The parties respectively claimed title as follows: Neff under a patent issued to him by the
United States, March 19,
Page 95 U. S. 716
1866; and Pennoyer by virtue of a sale made by the sheriff of said county, under an execution
sued out upon a judgment against Neff, rendered Feb. 19, 1866, by the Circuit Court for said
county, in an action wherein he was defendant and J. H. Mitchell was plaintiff. Neff was then
a nonresident of Oregon.
In Mitchell v. Neff, jurisdiction of Neff was obtained by service of summons by publication.
Pennoyer offered in evidence duly certified copies of the complaint, summons, order for
publication of summons, affidavit of service by publication, and the judgment in that case, to
the introduction of which papers the plaintiff objected because, 1, said judgment is in
personam, and appears to have been given without the appearance of the defendant in the
action or personal service of the summons upon him, and while he was a nonresident of the
State, and is, therefore, void; 2, said judgment is not in rem, and therefore constitutes no
basis of title in the defendant; 3, said copies of complaint, &c., do not show jurisdiction to
give the judgment alleged, either in rem or personam; and, 4, it appears from said papers
that no proof of service by publication was ever made, the affidavit thereof being made by
the "editor" of the "Pacific Christian Advocate," and not by "the printer, or his foreman or
principal clerk." The court admitted the evidence subject to the objections.
The finding of the court in regard to the facts bearing upon the asserted jurisdiction of the
State court is as follows: --
That, on Nov. 13, 1865, Mitchell applied to said Circuit Court, upon his own affidavit of that
date, for an order allowing the service of the summons in said action to be made upon Neff
by publication thereof, whereupon said court made said order, in the words following:
"Now, at this day, comes the plaintiff in his proper person, and by his attorneys, Mitchell and
Dolph, and files affidavit of plaintiff, and motion for an order of publication of summons, as
follows, to wit:"
"Now comes the plaintiff, by his attorneys, and upon the affidavit of plaintiff, herewith filed,
moves the court for an order of publication of summons against defendant, as required by
law, he being a nonresident;"
"and it appearing to the satisfaction of the court that the defendant cannot, after due
diligence, be
38
Page 95 U. S. 717
found in this State, and that he is a nonresident thereof, that his place of residence is
unknown to plaintiff, and cannot, with reasonable diligence, be ascertained by him, and that
the plaintiff has a cause of action of action against defendant, and that defendant has
property in this county and State, it is ordered and adjudged by the court that service of the
summons in this action be made by publication for six weeks successively in the 'Pacific
Christian Advocate,' a weekly newspaper published in Multnomah County, Oregon, and this
action is continued for such service."
That the affidavit of plaintiff, referred to in said order, is in the words following:
"I, J. H. Mitchell, being first duly sworn, say that the defendant, Marcus Neff, is a nonresident
of this State; that he resides somewhere in the State of California, at what place affiant
knows not, and he cannot be found in this State; that plaintiff has a just cause of action
against defendant for a money demand on account; that this court has jurisdiction of such
action; that the defendant has property in this county and State."
That the complaint in said action was verified and filed on Nov. 3, 1865, and contained facts
tending to prove that, at that date, said Mitchell had a cause of action against said Neff for
services as an attorney, performed "between Jan. 1, 1862, and May 15, 1863." That the entry
of judgment in said action contained the following averments:
"And it appearing to the court that the defendant was, at the time of the commencement of
this action, and ever since has been, a nonresident of this State; and it further appearing that
he has property in this State, and that defendant had notice of the pendency of this action by
publication of the summons for six successive weeks in the 'Pacific Christian Advocate,' a
weekly newspaper of general circulation published in Multnomah County, State of Oregon,
the last issue of which was more than twenty days before the first day of this term."
That the affidavit showing the publication of the summons in the "Advocate" aforesaid was
made as stated therein by the "editor" of that paper. That said complaint, summons, affidavit
of Mitchell and of the "editor" of the "Advocate" aforesaid, and entry of judgment, were in
the judgment roll, made up by the clerk in the case, but the order for publication of the
summons aforesaid was not placed in said roll
Page 95 U. S. 718
by said clerk, but remains on the files of said court; and that, when said court made said
order for publication, and gave said judgment against Neff, the only evidence it had before it
to prove the facts necessary to give it jurisdiction therefor, and particularly to authorize it to
find and state that Neff's residence was unknown to Mitchell, and could not, with reasonable
diligence, be ascertained by him, and that Neff had notice of the pendency of said action by
the publication of the summons as aforesaid, was, so far as appears by the said roll and the
 39

records and files of the said court, the said complaint and affidavits of Mitchell and the editor execution issued on such judgment to a purchaser in good faith shall not be thereby
of the "Advocate." affected."

The statute of Oregon at the time of the commencement of the suit against Neff was as "SECT. 60. Proof of the service of summons shall be, in case of publication, the affidavit of the
follows: -- printer, or his foreman, or his principal clerk, showing the same."

"SECT. 55. When service of the summons cannot be made as prescribed in the last preceding MR. JUSTICE FIELD delivered the opinion of the court.
section, and the defendant, after due diligence, cannot be found within the State, and when
that fact appears, by affidavit, to the satisfaction of the court or judge thereof, or justice in This is an action to recover the possession of a tract of land, of the alleged value of $15,000,
an action in a justice's court, and it also appears that a cause of action exists against the situated in the State of Oregon. The plaintiff asserts title to the premises by a patent of the
defendant, or that he is a proper party to an action relating to real property in this State, United States issued to him in 1866, under the act of Congress of Sept. 27, 1850, usually
such court or judge or justice may grant an order that the service be made by publication of known as the Donation Law of Oregon. The defendant claims to have acquired the premises
summons in either of the following cases: . . ." under a sheriff's deed, made upon a sale of the property on execution issued upon a
judgment recovered against the plaintiff in one of the circuit courts of the State. The case
"3. When the defendant is not a resident of the State, but has property therein, and the court turns upon the validity of this judgment.
has jurisdiction of the subject of the action."
It appears from the record that the judgment was rendered in February, 1866, in favor of J.
"SECT. 56. The order shall direct the publication to be made in a newspaper published in the H. Mitchell, for less than $300, including costs, in an action brought by him upon a demand
county where the action is commenced, and, if no newspaper be published in the county, for services as an attorney; that, at the time the action was commenced and the judgment
then in a newspaper to be designated as most likely to give notice to the person to be rendered, the defendant therein, the plaintiff here, was a nonresident of the State;
served, and for such length of time as may be deemed reasonable, not less than once a week
for six weeks. In case of publication, the court or judge shall also direct a copy of the Page 95 U. S. 720
summons and complaint to be forthwith deposited in the post office, directed to the
defendant, at his place of residence, unless it shall appear that such residence is neither
that he was not personally served with process, and did not appear therein; and that the
known to the party making the application, nor can, with reasonable diligence, be
judgment was entered upon his default in not answering the complaint, upon a constructive
ascertained by him. When publication is ordered, personal service of a copy of the summons
service of summons by publication.
and complaint out of the State shall be equivalent to publication and deposit in the post
office. In either case, the defendant shall appear and answer by the first day of the term
following the The Code of Oregon provides for such service when an action is brought against a
nonresident and absent defendant who has property within the State. It also provides, where
the action is for the recovery of money or damages, for the attachment of the property of
Page 95 U. S. 719
the nonresident. And it also declares that no natural person is subject to the jurisdiction of a
court of the State
expiration of the time prescribed in the order for publication; and, if he does not, judgment
may be taken against him for want thereof. In case of personal service out of the State, the
"unless he appear in the court, or be found within the State, or be a resident thereof, or have
summons shall specify the time prescribed in the order for publication."
property therein; and, in the last case, only to the extent of such property at the time the
jurisdiction attached."
"SECT. 57. The defendant against whom publication is ordered, or his personal
representatives, on application and sufficient cause shown, at any time before judgment,
Construing this latter provision to mean that, in an action for money or damages where a
shall be allowed to defend the action; and the defendant against whom publication is
defendant does not appear in the court, and is not found within the State, and is not a
ordered, or his representatives, may in like manner, upon good cause shown, and upon such
resident thereof, but has property therein, the jurisdiction of the court extends only over
terms as may be proper, be allowed to defend after judgment, and within one year after the
such property, the declaration expresses a principle of general, if not universal, law. The
entry of such judgment, on such terms as may be just; and, if the defence be successful, and
authority of every tribunal is necessarily restricted by the territorial limits of the State in
the judgment or any part thereof have been collected or otherwise enforced, such restitution
which it is established. Any attempt to exercise authority beyond those limits would be
may thereupon be compelled as the court shall direct. But the title to property sold upon
deemed in every other forum, as has been said by this Court, an illegitimate assumption of

power, and be resisted as mere abuse. D'Arcy v. Ketchum et al., 11 How. 165. In the case
against the plaintiff, the property here in controversy sold under the judgment rendered was
not attached, nor in any way brought under the jurisdiction of the court. Its first connection
with the case was caused by a levy of the execution. It was not, therefore, disposed of
pursuant to any adjudication, but only in enforcement of a personal judgment, having no
relation to the property, rendered against a nonresident without service of process upon him
in the action or his appearance therein. The court below did not consider that an attachment
of the property was essential to its jurisdiction or to the validity of the sale, but held that the
judgment was invalid from defects in the affidavit upon which the order of publication was
obtained and in the affidavit by which the publication was proved.
Page 95 U. S. 721
There is some difference of opinion among the members of this Court as to the rulings upon
these alleged defects. The majority are of opinion that, inasmuch as the statute requires, for
an order of publication, that certain facts shall appear by affidavit to the satisfaction of the
court or judge, defects in such affidavit can only be taken advantage of on appeal, or by some
other direct proceeding, and cannot be urged to impeach the judgment collaterally. The
majority of the court are also of opinion that the provision of the statute requiring proof of
the publication in a newspaper to be made by the "affidavit of the printer, or his foreman, or
his principal clerk" is satisfied when the affidavit is made by the editor of the paper. The term
"printer," in their judgment, is there used not to indicate the person who sets up the type --
he does not usually have a foreman or clerks -- it is rather used as synonymous with
publisher. The Supreme Court of New York so held in one case; observing that, for the
purpose of making the required proof, publishers were "within the spirit of the
statute." Bunce v. Reed, 16 Barb. (N. Y.) 350. And, following this ruling, the Supreme Court of
California held that an affidavit made by a "publisher and proprietor" was sufficient. Sharp v.
Daugney, 33 Cal. 512. The term "editor," as used when the statute of New York was passed,
from which the Oregon law is borrowed, usually included not only the person who wrote or
selected the articles for publication, but the person who published the paper and put it into
circulation. Webster, in an early edition of his Dictionary, gives as one of the definitions of an
editor, a person "who superintends the publication of a newspaper." It is principally since
that time that the business of an editor has been separated from that of a publisher and
printer, and has become an independent profession.
If, therefore, we were confined to the rulings of the court below upon the defects in the
affidavits mentioned, we should be unable to uphold its decision. But it was also contended
in that court, and is insisted upon here, that the judgment in the State court against the
plaintiff was void for want of personal service of process on him, or of his appearance in the
action in which it was rendered and that the premises in controversy could not be subjected
to the payment of the demand
Page 95 U. S. 722
40
of a resident creditor except by a proceeding in rem, that is, by a direct proceeding against
the property for that purpose. If these positions are sound, the ruling of the Circuit Court as
to the invalidity of that judgment must be sustained notwithstanding our dissent from the
reasons upon which it was made. And that they are sound would seem to follow from two
well established principles of public law respecting the jurisdiction of an independent State
over persons and property. The several States of the Union are not, it is true, in every respect
independent, many of the right and powers which originally belonged to them being now
vested in the government created by the Constitution. But, except as restrained and limited
by that instrument, they possess and exercise the authority of independent States, and the
principles of public law to which we have referred are applicable to them. One of these
principles is that every State possesses exclusive jurisdiction and sovereignty over persons
and property within its territory. As a consequence, every State has the power to determine
for itself the civil status and capacities of its inhabitants; to prescribe the subjects upon which
they may contract, the forms and solemnities with which their contracts shall be executed,
the rights and obligations arising from them, and the mode in which their validity shall be
determined and their obligations enforced; and also the regulate the manner and conditions
upon which property situated within such territory, both personal and real, may be acquired,
enjoyed, and transferred. The other principle of public law referred to follows from the one
mentioned; that is, that no State can exercise direct jurisdiction and authority over persons
or property without its territory. Story, Confl. Laws, c. 2; Wheat. Int. Law, pt. 2, c. 2. The
several States are of equal dignity and authority, and the independence of one implies the
exclusion of power from all others. And so it is laid down by jurists as an elementary principle
that the laws of one State have no operation outside of its territory except so far as is
allowed by comity, and that no tribunal established by it can extend its process beyond that
territory so as to subject either persons or property to its decisions. "Any exertion of
authority of this sort beyond this limit," says Story, "is a mere nullity, and incapable of
binding
Page 95 U. S. 723
such persons or property in any other tribunals." Story, Confl.Laws, sect. 539.
But as contracts made in one State may be enforceable only in another State, and property
may be held by nonresidents, the exercise of the jurisdiction which every State is admitted to
possess over persons and property within its own territory will often affect persons and
property without it. To any influence exerted in this way by a State affecting persons resident
or property situated elsewhere, no objection can be justly taken; whilst any direct exertion of
authority upon them, in an attempt to give ex-territorial operation to its laws, or to enforce
an ex-territorial jurisdiction by its tribunals, would be deemed an encroachment upon the
independence of the State in which the persons are domiciled or the property is situated,
and be resisted as usurpation.
Thus the State, through its tribunals, may compel persons domiciled within its limits to
execute, in pursuance of their contracts respecting property elsewhere situated, instruments
in such form and with such solemnities as to transfer the title, so far as such formalities can

be complied with; and the exercise of this jurisdiction in no manner interferes with the
supreme control over the property by the State within which it is situated. Penn v. Lord
Baltimore, 1 Ves. 444; Massie v. Watts, 6 Cranch 148; Watkins v. Holman, 16 Pet. 25; Corbett
v. Nutt, 10 Wall. 464.
So the State, through its tribunals, may subject property situated within its limits owned by
nonresidents to the payment of the demand of its own citizens against them, and the
exercise of this jurisdiction in no respect infringes upon the sovereignty of the State where
the owners are domiciled. Every State owes protection to its own citizens, and, when
nonresidents deal with them, it is a legitimate and just exercise of authority to hold and
appropriate any property owned by such nonresidents to satisfy the claims of its citizens. It is
in virtue of the State's jurisdiction over the property of the nonresident situated within its
limits that its tribunals can inquire into that nonresident's obligations to its own citizens, and
the inquiry can then be carried only to the extent necessary to control the disposition of the
property. If the nonresident
Page 95 U. S. 724
have no property in the State, there is nothing upon which the tribunals can adjudicate.
These views are not new. They have been frequently expressed, with more or less
distinctness, in opinions of eminent judges, and have been carried into adjudications in
numerous cases. Thus, in Picquet v. Swan, 5 Mas. 35, Mr. Justice Story said:--
"Where a party is within a territory, he may justly be subjected to its process, and bound
personally by the judgment pronounced on such process against him. Where he is not within
such territory, and is not personally subject to its laws, if, on account of his supposed or
actual property being within the territory, process by the local laws may, by attachment, go
to compel his appearance, and, for his default to appear, judgment may be pronounced
against him, such a judgment must, upon general principles, be deemed only to bind him to
the extent of such property, and cannot have the effect of a conclusive judgment in
personam, for the plain reason, that, except so far as the property is concerned, it is a
judgment coram non judice."
And in Boswell's Lessee v. Otis, 9 How. 336, where the title of the plaintiff in ejectment was
acquired on a sheriff's sale under a money decree rendered upon publication of notice
against nonresidents, in a suit brought to enforce a contract relating to land, Mr. Justice
McLean said:--
"Jurisdiction is acquired in one of two modes: first, as against the person of the defendant by
the service of process; or, secondly, by a procedure against the property of the defendant
within the jurisdiction of the court. In the latter case, the defendant is not personally bound
by the judgment beyond the property in question. And it is immaterial whether the
41
proceeding against the property be by an attachment or bill in chancery. It must be
substantially a proceeding in rem."
These citations are not made as authoritative expositions of the law, for the language was
perhaps not essential to the decision of the cases in which it was used, but as expressions of
the opinion of eminent jurists. But in Cooper v. Reynolds, reported in the 10th of Wallace, it
was essential to the disposition of the case to declare the effect of a personal action against
an absent party, without the jurisdiction of the court, not served
Page 95 U. S. 725
with process or voluntarily submitting to the tribunal, when it was sought to subject his
property to the payment of a demand of a resident complainant; and, in the opinion there
delivered, we have a clear statement of the law as to the efficacy of such actions, and the
jurisdiction of the court over them. In that case, the action was for damages for alleged false
imprisonment of the plaintiff; and, upon his affidavit that the defendants had fled from the
State, or had absconded or concealed themselves so that the ordinary process of law could
not reach them, a writ of attachment was sued out against their property. Publication was
ordered by the court, giving notice to them to appear and plead, answer or demur, or that
the action would be taken as confessed and proceeded in ex parte as to them. Publication
was had, but they made default, and judgment was entered against them, and the attached
property was sold under it. The purchaser having been put into possession of the property,
the original owner brought ejectment for its recovery. In considering the character of the
proceeding, the Court, speaking through Mr. Justice Miller, said:--
"Its essential purpose or nature is to establish, by the judgment of the court, a demand or
claim against the defendant, and subject his property lying within the territorial jurisdiction
of the court to the payment of that demand. But the plaintiff is met at the commencement of
his proceedings by the fact that the defendant is not within the territorial jurisdiction, and
cannot be served with any process by which he can be brought personally within the power
of the court. For this difficulty, the statute has provided a remedy. It says that, upon
affidavit's being made of that fact, a writ of attachment may be issued and levied on any of
the defendant's property, and a publication may be made warning him to appear; and that
thereafter the court may proceed in the case, whether he appears or not. If the defendant
appears, the cause becomes mainly a suit in personam, with the added incident that the
property attached remains liable, under the control of the court, to answer to any demand
which may be established against the defendant by the final judgment of the court. But if
there is no appearance of the defendant, and no service of process on him, the case becomes
in its essential nature a proceeding in rem, the only effect of which is to subject the property
attached to the payment of the demand which the court may find to be due to the plaintiff.
That such is
Page 95 U. S. 726

the nature of this proceeding in this latter class of cases is clearly evinced by two well
established propositions: first, the judgment of the court, though in form a personal
judgment against the defendant, has no effect beyond the property attached in that suit. No
general execution can be issued for any balance unpaid after the attached property is
exhausted. No suit can be maintained on such a judgment in the same court, or in any other;
nor can it be used as evidence in any other proceeding not affecting the attached property;
nor could the costs in that proceeding be collected of defendant out of any other property
than that attached in the suit. Second, the court in such a suit cannot proceed unless the
officer finds some property of defendant on which to levy the writ of attachment. A return
that none can be found is the end of the case, and deprives the court of further jurisdiction,
though the publication may have been duly made and proven in court."
The fact that the defendants in that case had fled from the State, or had concealed
themselves, so as not to be reached by the ordinary process of the court, and were not
nonresidents, was not made a point in the decision. The opinion treated them as being
without the territorial jurisdiction of the court, and the grounds and extent of its authority
over persons and property thus situated were considered when they were not brought
within its jurisdiction by personal service or voluntary appearance.
The writer of the present opinion considered that some of the objections to the preliminary
proceedings in the attachment suit were well taken, and therefore dissented from the
judgment of the Court, but, to the doctrine declared in the above citation, he agreed, and he
may add that it received the approval of all the judges. It is the only doctrine consistent with
proper protection to citizens of other States. If, without personal service, judgments in
personam, obtained ex parte against nonresidents and absent parties, upon mere publication
of process, which, in the great majority of cases, would never be seen by the parties
interested, could be upheld and enforced, they would be the constant instruments of fraud
and oppression. Judgments for all sorts of claims upon contracts and for torts, real or
pretended, would be thus obtained, under which property would be seized, when the
evidence of the transactions upon
Page 95 U. S. 727
which they were founded, if they ever had any existence, had perished.
Substituted service by publication, or in any other authorized form, may be sufficient to
inform parties of the object of proceedings taken where property is once brought under the
control of the court by seizure or some equivalent act. The law assumes that property is
always in the possession of its owner, in person or by agent, and it proceeds upon the theory
that its seizure will inform him not only that it is taken into the custody of the court, but that
he must look to any proceedings authorized by law upon such seizure for its condemnation
and sale. Such service may also be sufficient in cases where the object of the action is to
reach and dispose of property in the State, or of some interest therein, by enforcing a
contract or a lien respecting the same, or to partition it among different owners, or, when
the public is a party, to condemn and appropriate it for a public purpose. In other words,
42
such service may answer in all actions which are substantially proceedings in rem. But where
the entire object of the action is to determine the personal rights and obligations of the
defendants, that is, where the suit is merely in personam, constructive service in this form
upon a nonresident is ineffectual for any purpose. Process from the tribunals of one State
cannot run into another State, and summon parties there domiciled to leave its territory and
respond to proceedings against them. Publication of process or notice within the State where
the tribunal sits cannot create any greater obligation upon the nonresident to appear.
Process sent to him out of the State, and process published within it, are equally unavailing in
proceedings to establish his personal liability.
The want of authority of the tribunals of a State to adjudicate upon the obligations of
nonresidents, where they have no property within its limits, is not denied by the court below:
but the position is assumed, that, where they have property within the State, it is immaterial
whether the property is in the first instance brought under the control of the court by
attachment or some other equivalent act, and afterwards applied by its judgment to the
satisfaction of demands against its owner; or such demands be first established in a personal
action, and
Page 95 U. S. 728
the property of the nonresident be afterwards seized and sold on execution. But the answer
to this position has already been given in the statement that the jurisdiction of the court to
inquire into and determine his obligations at all is only incidental to its jurisdiction over the
property. Its jurisdiction in that respect cannot be made to depend upon facts to be
ascertained after it has tried the cause and rendered the judgment. If the judgment be
previously void, it will not become valid by the subsequent discovery of property of the
defendant, or by his subsequent acquisition of it. The judgment, if void when rendered, will
always remain void; it cannot occupy the doubtful position of being valid if property be
found, and void if there be none. Even if the position assumed were confined to cases where
the nonresident defendant possessed property in the State at the commencement of the
action, it would still make the validity of the proceedings and judgment depend upon the
question whether, before the levy of the execution, the defendant had or had not disposed
of the property. If, before the levy, the property should be sold, then, according to this
position, the judgment would not be binding. This doctrine would introduce a new element
of uncertainty in judicial proceedings. The contrary is the law: the validity of every judgment
depends upon the jurisdiction of the court before it is rendered, not upon what may occur
subsequently. In Webster v. Reid, reported in 11th of Howard, the plaintiff claimed title to
land sold under judgments recovered in suits brought in a territorial court of Iowa, upon
publication of notice under a law of the territory, without service of process; and the court
said:
"These suits were not a proceeding in rem against the land, but were in personam against the
owners of it. Whether they all resided within the territory or not does not appear, nor is it a
matter of any importance. No person is required to answer in a suit on whom process has
not been served, or whose property has not been attached. In this case, there was no

personal notice, nor an attachment or other proceeding against the land, until after the
judgments. The judgments, therefore, are nullities, and did not authorize the executions on
which the land was sold. "
Page 95 U. S. 729
The force and effect of judgments rendered against nonresidents without personal service of
process upon them, or their voluntary appearance, have been the subject of frequent
consideration in the courts of the United States and of the several States, as attempts have
been made to enforce such judgments in States other than those in which they were
rendered, under the provision of the Constitution requiring that "full faith and credit shall be
given in each State to the public acts, records, and judicial proceedings of every other State;"
and the act of Congress providing for the mode of authenticating such acts, records, and
proceedings, and declaring that, when thus authenticated,
"they shall have such faith and credit given to them in every court within the United States as
they have by law or usage in the courts of the State from which they are or shall or taken."
In the earlier cases, it was supposed that the act gave to all judgments the same effect in
other States which they had by law in the State where rendered. But this view was
afterwards qualified so as to make the act applicable only when the court rendering the
judgment had jurisdiction of the parties and of the subject matter, and not to preclude an
inquiry into the jurisdiction of the court in which the judgment was rendered, or the right of
the State itself to exercise authority over the person or the subject matter. M'Elmoyle v.
Cohen, 13 Pet. 312. In the case of D'Arcy v. Ketchum, reported in the 11th of Howard, this
view is stated with great clearness. That was an action in the Circuit Court of the United
States for Louisiana, brought upon a judgment rendered in New York under a State statute,
against two joint debtors, only one of whom had been served with process, the other being a
nonresident of the State. The Circuit Court held the judgment conclusive and binding upon
the nonresident not served with process, but this Court reversed its decision, observing, that
it was a familiar rule that countries foreign to our own disregarded a judgment merely
against the person, where the defendant had not been served with process nor had a day in
court; that national comity was never thus extended; that the proceeding was deemed an
illegitimate assumption of power, and resisted as mere abuse; that no faith and credit or
force and effect had been given to such judgments by any State of the Union, so far
Page 95 U. S. 730
as known; and that the State courts had uniformly, and in many instances, held them to be
void. "The international law," said the court,
"as it existed among the States in 1790, was that a judgment rendered in one State, assuming
to bind the person of a citizen of another, was void within the foreign State, when the
43
defendant had not been served with process or voluntarily made defence, because neither
the legislative jurisdiction nor that of courts of justice had binding force."
And the Court held that the act of Congress did not intend to declare a new rule, or to
embrace judicial records of this description. As was stated in a subsequent case, the doctrine
of this Court is that the act
"was not designed to displace that principle of natural justice which requires a person to
have notice of a suit before he can be conclusively bound by its result, nor those rules of
public law which protect persons and property within one State from the exercise of
jurisdiction over them by another."
The Lafayette Insurance Co. v. French et al., 18 How. 404.
This whole subject has been very fully and learnedly considered in the recent case
of Thompson v. Whitman, 18 Wall. 457, where all the authorities are carefully reviewed and
distinguished, and the conclusion above stated is not only reaffirmed, but the doctrine is
asserted that the record of a judgment rendered in another State may be contradicted as to
the facts necessary to give the court jurisdiction against its recital of their existence. In all the
cases brought in the State and Federal courts, where attempts have been made under the
act of Congress to give effect in one State to personal judgments rendered in another State
against nonresidents, without service upon them, or upon substituted service by publication,
or in some other form, it has been held, without an exception, so far as we are aware, that
such judgments were without any binding force except as to property, or interests in
property, within the State, to reach and affect which was the object of the action in which
the judgment was rendered, and which property was brought under control of the court in
connection with the process against the person. The proceeding in such cases, though in the
form of a personal action, has been uniformly treated, where service was not obtained, and
the party did not voluntarily
Page 95 U. S. 731
appear, as effectual and binding merely as a proceeding in rem, and as having no operation
beyond the disposition of the property, or some interest therein. And the reason assigned for
this conclusion has been that which we have already stated -- that the tribunals of one State
have no jurisdiction over persons beyond its limits, and can inquire only into their obligations
to its citizens when exercising its conceded jurisdiction over their property within its limits.
In Bissell v. Briggs, decided by the Supreme Court of Massachusetts as early as 1813, the law
is stated substantially in conformity with these views. In that case, the court considered at
length the effect of the constitutional provision, and the act of Congress mentioned, and
after stating that, in order to entitle the judgment rendered in any court of the United States
to the full faith and credit mentioned in the Constitution, the court must have had
jurisdiction not only of the cause, but of the parties, it proceeded to illustrate its position by
observing, that, where a debtor living in one State has goods, effects, and credits in another,
his creditor living in the other State may have the property attached pursuant to its laws,

and, on recovering judgment, have the property applied to its satisfaction, and that the party
in whose hands the property was would be protected by the judgment in the State of the
debtor against a suit for it, because the court rendering the judgment had jurisdiction to that
extent; but that, if the property attached were insufficient to satisfy the judgment, and the
creditor should sue on that judgment in the State of the debtor, he would fail because the
defendant was not amenable to the court rendering the judgment. In other words, it was
held that over the property within the State the court had jurisdiction by the attachment, but
had none over his person, and that any determination of his liability, except so far as was
necessary for the disposition of the property, was invalid.
In Kilbourn v. Woodworth, 5 Johns. (N.Y.) 37, an action of debt was brought in New York upon
a personal judgment recovered in Massachusetts. The defendant in that judgment was not
served with process, and the suit was commenced by the attachment of a bedstead
belonging to the defendant, accompanied with a summons to appear, served on his wife
after she had left her place in Massachusetts. The court held that
Page 95 U. S. 732
the attachment bound only the property attached as a proceeding in rem, and that it could
not bind the defendant, observing, that to bind a defendant personally when he was never
personally summoned or had notice of the proceeding would be contrary to the first
principles of justice, repeating the language in that respect of Chief Justice DeGrey, used in
the case of Fisher v. Lane, 3 Wils. 297, in 1772. See also Borden v. Fitch, 15 Johns. (N. Y.) 121,
and the cases there cited, and Harris v. Hardeman et al., 14 How. 334. To the same purport,
decisions are found in all the State courts. In several of the cases, the decision has been
accompanied with the observation that a personal judgment thus recovered has no binding
force without the State in which it is rendered, implying that, in such State, it may be valid
and binding. But if the court has no jurisdiction over the person of the defendant by reason
of his nonresidence, and consequently no authority to pass upon his personal rights and
obligations; if the whole proceeding, without service upon him or his appearance, is coram
non judice and void; if to hold a defendant bound by such a judgment is contrary to the first
principles of justice -- it is difficult to see how the judgment can legitimately have any force
within the State. The language used can be justified only on the ground that there was no
mode of directly reviewing such judgment or impeaching its validity within the State where
rendered, and that therefore it could be called in question only when its enforcement was
elsewhere attempted. In later cases, this language is repeated with less frequency than
formerly, it beginning to be considered, as it always ought to have been, that a judgment
which can be treated in any State of this Union as contrary to the first principles of justice,
and as an absolute nullity, because rendered without any jurisdiction of the tribunal over the
party, is not entitled to any respect in the State where rendered. Smith v. McCutchen, 38 Mo.
415; Darrance v. Preston, 18 Iowa, 396; Hakes v. Shupe, 27 id. 465; Mitchell's Administrator v.
Gray, 18 Ind. 123.
44
Be that as it may, the courts of the United States are not required to give effect to judgments
of this character when any right is claimed under them. Whilst they are not foreign tribunals
in their relations to the State courts, they are tribunals
Page 95 U. S. 733
of a different sovereignty, exercising a distinct and independent jurisdiction, and are bound
to give to the judgments of the State courts only the same faith and credit which the courts
of another State are bound to give to them.
Since the adoption of the Fourteenth Amendment to the Federal Constitution, the validity of
such judgments may be directly questioned, and their enforcement in the State resisted, on
the ground that proceedings in a court of justice to determine the personal rights and
obligations of parties over whom that court has no jurisdiction do not constitute due process
of law. Whatever difficulty may be experienced in giving to those terms a definition which
will embrace every permissible exertion of power affecting private rights, and exclude such
as is forbidden, there can be no doubt of their meaning when applied to judicial proceedings.
They then mean a course of legal proceedings according to those rules and principles which
have been established in our systems of jurisprudence for the protection and enforcement of
private rights. To give such proceedings any validity, there must be a tribunal competent by
its constitution -- that is, by the law of its creation -- to pass upon the subject matter of the
suit; and if that involves merely a determination of the personal liability of the defendant, he
must be brought within its jurisdiction by service of process within the State, or his voluntary
appearance.
Except in cases affecting the personal status of the plaintiff and cases in which that mode of
service may be considered to have been assented to in advance, as hereinafter mentioned,
the substituted service of process by publication, allowed by the law of Oregon and by similar
laws in other States, where actions are brought against nonresidents, is effectual only where,
in connection with process against the person for commencing the action, property in the
State is brought under the control of the court, and subjected to its disposition by process
adapted to that purpose, or where the judgment is sought as a means of reaching such
property or affecting some interest therein; in other words, where the action is in the nature
of a proceeding in rem. As stated by Cooley in his Treatise on Constitutional Limitations 405,
for any other purpose than to subject the property of a nonresident to valid claims against
Page 95 U. S. 734
him in the State, "due process of law would require appearance or personal service before
the defendant could be personally bound by any judgment rendered."
It is true that, in a strict sense, a proceeding in rem is one taken directly against property, and
has for its object the disposition of the property, without reference to the title of individual
claimants; but, in a larger and more general sense, the terms are applied to actions between

parties where the direct object is to reach and dispose of property owned by them, or of
some interest therein. Such are cases commenced by attachment against the property of
debtors, or instituted to partition real estate, foreclose a mortgage, or enforce a lien. So far
as they affect property in the State, they are substantially proceedings in rem in the broader
sense which we have mentioned.
It is hardly necessary to observe that, in all we have said, we have had reference to
proceedings in courts of first instance, and to their jurisdiction, and not to proceedings in an
appellate tribunal to review the action of such courts. The latter may be taken upon such
notice, personal or constructive, as the State creating the tribunal may provide. They are
considered as rather a continuation of the original litigation than the commencement of a
new action. Nations et al. v. Johnson et al., 24 How. 195.
It follows from the views expressed that the personal judgment recovered in the State court
of Oregon against the plaintiff herein, then a nonresident of the State, was without any
validity, and did not authorize a sale of the property in controversy.
To prevent any misapplication of the views expressed in this opinion, it is proper to observe
that we do not mean to assert by anything we have said that a State may not authorize
proceedings to determine the status of one of its citizens towards a nonresident which would
be binding within the State, though made without service of process or personal notice to
the nonresident. The jurisdiction which every State possesses to determine the civil status
and capacities of all its inhabitants involves authority to prescribe the conditions on which
proceedings affecting them may be commenced and carried on within its territory. The State,
for example, has absolute
Page 95 U. S. 735
right to prescribe the conditions upon which the marriage relation between its own citizens
shall be created, and the causes for which it may be dissolved. One of the parties guilty of
acts for which, by the law of the State, a dissolution may be granted may have removed to a
State where no dissolution is permitted. The complaining party would, therefore, fail if a
divorce were sought in the State of the defendant; and if application could not be made to
the tribunals of the complainant's domicile in such case, and proceedings be there instituted
without personal service of process or personal notice to the offending party, the injured
citizen would be without redress. Bish. Marr. and Div., sect. 156.
Neither do we mean to assert that a State may not require a nonresident entering into a
partnership or association within its limits, or making contracts enforceable there, to appoint
an agent or representative in the State to receive service of process and notice in legal
proceedings instituted with respect to such partnership, association, or contracts, or to
designate a place where such service may be made and notice given, and provide, upon their
failure, to make such appointment or to designate such place that service may be made upon
a public officer designated for that purpose, or in some other prescribed way, and that
judgments rendered upon such service may not be binding upon the nonresidents both
45
within and without the State. As was said by the Court of Exchequer in Vallee v. Dumergue, 4
Exch. 290,
"It is not contrary to natural justice that a man who has agreed to receive a particular mode
of notification of legal proceedings should be bound by a judgment in which that particular
mode of notification has been followed, even though he may not have actual notice of
them."
See also The Lafayette Insurance Co. v. French et al., 18 How. 404, and Gillespie v.
Commercial Mutual Marine Insurance Co., 12 Gray (Mass.), 201. Nor do we doubt that a
State, on creating corporations or other institutions for pecuniary or charitable purposes,
may provide a mode in which their conduct may be investigated, their obligations enforced,
or their charters revoked, which shall require other than personal service upon their officers
or members. Parties becoming members of such corporations or institutions would hold their
Page 95 U. S. 736
interest subject to the conditions prescribed by law. Copin v. Adamson, Law Rep. 9 Ex. 345.
In the present case, there is no feature of this kind, and consequently no consideration of
what would be the effect of such legislation in enforcing the contract of a nonresident can
arise. The question here respects only the validity of a money judgment rendered in one
State in an action upon a simple contract against the resident of another without service of
process upon him or his appearance therein.
Judgment affirmed.
MR. JUSTICE HUNT dissenting.
I am compelled to dissent from the opinion and judgment of the court, and, deeming the
question involved to be important, I take leave to record my views upon it.
The judgment of the court below was placed upon the ground that the provisions of the
statute were not complied with. This is of comparatively little importance, as it affects the
present case only. The judgment of this Court is based upon the theory that the legislature
had no power to pass the law in question; that the principle of the statute is vicious, and
every proceeding under it void. It, therefore, affects all like cases, past and future, and in
every State.
The precise case is this: a statute of Oregon authorizes suits to be commenced by the service
of a summons. In the case of a nonresident of the State, it authorizes the service of the
summons to be made by publication for not less than six weeks, in a newspaper published in
the county where the action is commenced. A copy of the summons must also be sent by
mail, directed to the defendant at his place of residence, unless it be shown that the

residence is not known and cannot be ascertained. It authorizes a judgment and execution to
be obtained in such proceeding. Judgment in a suit commenced by one Mitchell in the Circuit
Court of Multnomah County, where the summons was thus served, was obtained against
Neff, the present plaintiff, and the land in question, situate in Multnomah County, was
bought by the defendant Pennoyer at a sale upon the judgment in such suit. This court now
holds that, by reason of the absence of a personal service of
Page 95 U. S. 737
the summons on the defendant, the Circuit Court of Oregon had no jurisdiction, its judgment
could not authorize the sale of land in said county, and, as a necessary result, a purchaser of
land under it obtained no title; that, as to the former owner, it is a case of depriving a person
of his property without due process of law.
In my opinion, this decision is at variance with the long established practice under the
statutes of the States of this Union, is unsound in principle, and, I fear, may be disastrous in
its effects. It tends to produce confusion in titles which have been obtained under similar
statutes in existence for nearly a century; it invites litigation and strife, and overthrows a well
settled rule of property.
The result of the authorities on the subject, and the sound conclusions to be drawn from the
principles which should govern the decision, as I shall endeavor to show, are these:--
1. A sovereign State must necessarily have such control over the real and personal property
actually being within its limits, as that it may subject the same to the payment of debts justly
due to its citizens.
2. This result is not altered by the circumstance that the owner of the property is
nonresident, and so absent from the State that legal process cannot be served upon him
personally.
3. Personal notice of a proceeding by which title to property is passed is not indispensable; it
is competent to the State to authorize substituted service by publication or otherwise, as the
commencement of a suit against nonresidents, the judgment in which will authorize the sale
of property in such State.
4. It belongs to the legislative power of the State to determine what shall be the modes and
means proper to be adopted to give notice to an absent defendant of the commencement of
a suit; and if they are such as are reasonably likely to communicate to him information of the
proceeding against him, and are in good faith designed to give him such information, and an
opportunity to defend is provided for him in the event of his appearance in the suit, it is not
competent to the judiciary to declare that such proceeding is void as not being by due
process of law.
46
5. Whether the property of such nonresident shall be seized
Page 95 U. S. 738
upon attachment as the commencement of a suit which shall be carried into judgment and
execution, upon which it shall then be sold, or whether it shall be sold upon an execution and
judgment without such preliminary seizure, is a matter not of constitutional power, but of
municipal regulation only.
To say that a sovereign State has the power to ordain that the property of nonresidents
within its territory may be subjected to the payment of debts due to its citizens, if the
property is levied upon at the commencement of a suit, but that it has not such power if the
property is levied upon at the end of the suit, is a refinement and a depreciation of a great
general principle that, in my judgment, cannot be sustained.
A reference to the statutes of the different States, and to the statutes of the United States,
and to the decided cases, and a consideration of the principles on which they stand, will
more clearly exhibit my view of the question.
The statutes are of two classes: first, those which authorize the commencement of actions by
publication, accompanied by an attachment which is levied upon property, more or less, of
an absent debtor; second, those giving the like mode of commencing a suit without an
attachment.
The statute of Oregon relating to publication of summons, supra, p. 95 U. S. 718, under which
the question arises, is nearly a transcript of a series of provisions contained in the New York
statute, adopted thirty years since. The latter authorizes the commencement of a suit against
a nonresident by the publication of an order for his appearance, for a time not less than six
weeks, in such newspapers as shall be most likely to give notice to him, and the deposit of a
copy of the summons and complaint in the post office, directed to him at his residence, if it
can be ascertained; and provides for the allowance to defend the action before judgment,
and within seven years after its rendition, upon good cause shown, and that, if the defence
be successful, restitution shall be ordered. It then declares: "But the title to property sold
under such judgment to a purchaser in good faith shall not be thereby affected." Code, sects.
34, 35; 5 Edm.Rev.Stat. of N.Y., pp. 37-39.
Provisions similar in their effect, in authorizing the commencement of suits by attachment
against absent debtors, in
Page 95 U. S. 739
which all of the property of the absent debtor, real and personal, not merely that seized
upon the attachment, is placed under the control of trustees, who sell it for the benefit of all
the creditors, and make just distribution thereof, conveying absolute title to the property

sold have been upon the statute book of New York for more than sixty years. 2 id., p. 2 and
following; 1 Rev.Laws, 1813, p. 157.
The statute of New York, before the Code, respecting proceedings in chancery where absent
debtors are parties, had long been in use in that State, and was adopted in all cases of
chancery jurisdiction. Whenever a defendant resided out of the State, his appearance might
be compelled by publication in the manner pointed out. A decree might pass against him,
and performance be compelled by sequestration of his real or personal property, or by
causing possession of specific property to be delivered, where that relief is sought. T he relief
was not confined to cases of mortgage foreclosure, or where there was a specific claim upon
the property, but included cases requiring the payment of money as well. 2 Edm.Rev.Stat.
N.Y., pp. 193-195; 186, m.
I doubt not that many valuable titles are now held by virtue of the provisions of these
statutes.
The statute of California authorizes the service of a summons on a nonresident defendant by
publication, permitting him to come in and defend upon the merits within one year after the
entry of judgment. Code, sects. 10,412, 10,473. In its general character, it is like the statutes
of Oregon and New York already referred to.
The Code of Iowa, sect. 2618, that of Nevada, sect. 1093, and that of Wisconsin, are to the
same general effect. The Revised Statutes of Ohio, sects. 70, 75, 2 Swan & Critchfield, provide
for a similar publication, and that the defendant may come in to defend within five years
after the entry of the judgment, but that the title to property held by any purchaser in good
faith under the judgment shall not be affected thereby.
The attachment laws of New Jersey, Nixon Dig. (4th ed.), p. 55, are like those of New York
already quoted, by which title may be transferred to all the property of a nonresident debtor.
And the provisions of the Pennsylvania statute regulating
Page 95 U. S. 740
proceedings in equity, Brightly's Purden's Dig., p. 5988, sects. 51, 52, give the same authority
in substance, and the same result is produced as under the New York statute.
Without going into a wearisome detail of the statutes of the various States, it is safe to say
that nearly every State in the Union provides a process by which the lands and other
property of a nonresident debtor may be subjected to the payment of his debts, through a
judgment or decree against the owner, obtained upon a substituted service of the summons
or writ commencing the action.
The principle of substituted service is also a rule of property under the statutes of the United
States.
47
The act of Congress "to amend the law of the District of Columbia in relation to judicial
proceedings therein," approved Feb. 23, 1867, 14 Stat. 403, contains the same general
provisions. It enacts (sect. 7) that publication may be substituted for personal service when
the defendant cannot be found in suits for partition, divorce, by attachment, for the
foreclosure of mortgages and deeds of trust, and for the enforcement of mechanics' liens
and all other liens against real or personal property, and in all actions at law or in equity
having for their immediate object the enforcement or establishment of any lawful right,
claim, or demand to or against any real or personal property within the jurisdiction of the
court.
A following section points out the mode of proceeding, and closes in these words:
"The decree, besides subjecting the thing upon which the lien has attached to the
satisfaction of the plaintiff's demand against the defendant, shall adjudge that the plaintiff
recover his demand against the defendant, and that he may have execution thereof as at
law."
Sect. 10.
A formal judgment against the debtor is thus authorized by means of which any other
property of the defendant within the jurisdiction of the court, in addition to that which is the
subject of the lien, may be sold, and the title transferred to the purchaser.
All these statutes are now adjudged to be unconstitutional and void. The titles obtained
under them are not of the value
Page 95 U. S. 741
of the paper on which they are recorded, except where a preliminary attachment was issued.
Some of the statutes and several of the authorities I cite go further than the present case
requires. In this case, property lying in the State where the suit was brought, owned by the
nonresident debtor, was sold upon the judgment against him, and it is on the title to that
property that the controversy turns.
The question whether, in a suit commenced like the present one, a judgment can be
obtained which, if sued upon in another State, will be conclusive against the debtor, is not
before us; nor does the question arise as to the faith and credit to be given in one State to a
judgment recovered in another. The learning on that subject is not applicable. The point is
simply whether land lying in the same State may be subjected to process at the end of a suit
thus commenced.

It is here necessary only to maintain the principle laid down by Judge Cooley in his work on
Constitutional Limitations, p. 404, and cited by Mr. Justice Field in Galpin v. Page, 3 Sawyer
93, in these words:
"The fact that process was not personally served is a conclusive objection to the judgment as
a personal claim, unless the defendant caused his appearance to be entered in the
attachment proceedings. Where a party has property in a State, and resides elsewhere, his
property is justly subject to all valid claims that may exist against him there; but, beyond this,
due process of law would require appearance or personal service before the defendant could
be personally bound by any judgment rendered."
The learned author does not make it a condition that there should be a preliminary seizure of
the property by attachment; he lays down the rule that all a person's property in a State may
be subjected to all valid claims there existing against him.
The objection now made that suits commenced by substituted service, as by publication, and
judgments obtained without actual notice to the debtor, are in violation of that
constitutional provision that no man shall be deprived of his property "without due process
of law," has often been presented.
In Matter of the Empire City Bank, 18 N.Y. 199, which
Page 95 U. S. 742
was a statutory proceeding to establish and to enforce the responsibility of the stockholders
of a banking corporation, and the proceedings in which resulted in a personal judgment
against the stockholders for the amount found due, the eminent and learned Judge Denio,
speaking as the organ of the Court of Appeals, says:
"The notice of hearing is to be personal, or by service at the residence of the parties who live
in the county, or by advertisement as to others. It may therefore happen that some of the
persons who are made liable will not have received actual notice, and the question is
whether personal service of process or actual notice to the party is essential to constitute
due process of law. We have not been referred to any adjudication holding that no man's
right of property can be affected by judicial proceedings unless he have personal notice. It
may be admitted that a statute which should authorize any debt or damages to be adjudged
against a person upon a purely ex parte proceeding, without a pretence of notice or any
provision for defending, would be a violation of the Constitution, and be void; but where the
legislature has prescribed a kind of notice by which it is reasonably probable that the party
proceeded against will be apprised of what is going on against him, and an opportunity is
afforded him to defend, I am of the opinion that the courts have not the power to pronounce
the proceeding illegal. The legislature has uniformly acted upon that understanding of the
Constitution."
48
Numerous provisions of the statutes of the State are commented upon, after which he
proceeds:
"Various prudential regulations are made with respect to these remedies; but it may possibly
happen, notwithstanding all these precautions, that a citizen who owes nothing, and has
done none of the acts mentioned in the statute, may be deprived of his estate without any
actual knowledge of the process by which it has been taken from him. If we hold, as we must
in order to sustain this legislation, that the Constitution does not positively require personal
notice in order to constitute a legal proceeding due process of law, it then belongs to the
legislature to determine whether the case calls for this kind of exceptional legislation, and
what manner of constructive notice shall be sufficient to reasonably apprise the party
proceeded against of the legal steps which are taken against him. "
Page 95 U. S. 743
In Happy v. Mosher, 48 id. 313, the court say:
"An approved definition of due process of law is 'law in its regular administration through
courts of justice.' 2 Kent Com. 13. It need not be a legal proceeding according to the course
of the common law, neither must there be personal notice to the party whose property is in
question. It is sufficient if a kind of notice is provided by which it is reasonably probable that
the party proceeded against will be apprised of what is going on against him, and an
opportunity afforded him to defend."
The same language is used in Westervelt v. Gregg, 12 id. 202, and in Campbell v.
Evans, 45 id. 356. Campbell v. Evans and The Empire City Bank are cases not of proceedings
against property to enforce a lien or claim, but, in each of them, a personal judgment in
damages was rendered against the party complaining.
It is undoubtedly true, that, in many cases where the question respecting due process of law
has arisen, the case in hand was that of a proceeding in rem. It is true also, as is asserted,
that the process of a State cannot be supposed to run beyond its own territory. It is equally
true, however, that, in every instance where the question has been presented, the validity of
substituted service, which is used to subject property within the State belonging to a
nonresident to a judgment obtained by means thereof has been sustained. I have found no
case in which it is adjudged that a statute must require a preliminary seizure of such property
as necessary to the validity of the proceeding against it, or that there must have been a
previous specific lien upon it; that is, I have found no case where such has been the judgment
of the court upon facts making necessary the decision of the point. On the contrary, in the
case of the attachment laws of New York and of New Jersey, which distribute all of the
nonresident's property, not merely that levied on by the attachment, and in several of the
reported cases already referred to, where the judgment was sustained, neither of these
preliminary facts existed.

The case of Galpin v. Page, reported in 18 Wall. 350 and again in 3 Sawyer 93, is cited in
hostility to the views I have expressed. There may be general expressions which will justify
Page 95 U. S. 744
this suggestion, but the judgment is in harmony with those principles. In the case as reported
in this Court, it was held that the title of the purchaser under a decree against a nonresident
infant was invalid, for two reasons: 1st, that there was no jurisdiction of the proceeding
under the statute of California, on account of the entire absence of an affidavit of
nonresidence, and of diligent inquiry for the residence of the debtor; 2d, the absence of any
order for publication in Eaton's case -- both of which are conditions precedent to the
jurisdiction of the court to take any action on the subject. The title was held void, also, for
the reason that the decree under which it was obtained had been reversed in the State court,
and the title was not taken at the sale, nor held then by a purchaser in good faith, the
purchase being made by one of the attorneys in the suit, and the title being transferred to his
law partner after the reversal of the decree. The court held that there was a failure of
jurisdiction in the court under which the plaintiff claimed title, and that he could not recover.
The learned justice who delivered the opinion in the Circuit Court and in this Court expressly
affirms the authority of a State over persons not only, but property as well, within its limits,
and this by means of a substituted service. The judgment so obtained, he insists, can properly
be used as a means of reaching property within the State, which is thus brought under the
control of the court and subjected to its judgment. This is the precise point in controversy in
the present action.
The case of Cooper v. Reynolds, 10 Wall. 308, is cited for the same purpose. There, the
judgment of the court below, refusing to give effect to a judgment obtained upon an order of
publication against a nonresident, was reversed in this Court. The suit was commenced, or
immediately accompanied (it is not clear which), by an attachment which was levied upon
the real estate sold, and for the recovery of which this action was brought. This Court
sustained the title founded upon the suit commenced against the nonresident by
attachment. In the opinion delivered in that case, there may be remarks, by way of argument
or illustration, tending to show that a judgment obtained in a suit not commenced by the
levy of an attachment will not give title to land purchased under it. They are,
Page 95 U. S. 745
however, extrajudicial, the decision itself sustaining the judgment obtained under the State
statute by publication.
Webster v. Reid, 11 How. 437, is also cited. There, the action involved the title to certain
lands in the State of Iowa, being lands formerly belonging to the half-breeds of the Sac and
Fox tribes; and title was claimed against the Indian right under the statutes of June 2, 1838,
and January, 1839. By these statutes, commissioners were appointed who were authorized
to hear claims for accounts against the Indians, and commence actions for the same, giving a
notice thereof of eight weeks in the Iowa "Territorial Gazette," and to enter up judgments
49
which should be a lien on the lands. It was provided that it should not be necessary to name
the defendants in the suits, but the words "owners of the half-breed lands lying in Lee
County" should be a sufficient designation of the defendants in such suits; and it provided
that the trials should be by the court, and not by a jury. It will be observed that the lands
were not only within the limits of the territory of Iowa, but that all the Indians who were
made defendants under the name mentioned were also residents of Iowa, and, for aught
that appears to the contrary, of the very county of Lee in which the proceeding was taken.
Nonresidence was not a fact in the case. Moreover, they were Indians, and, presumptively,
not citizens of any State, and the judgments under which the lands were sold were rendered
by the commissioners for their own services under the act.
The court found abundant reasons, six in number, for refusing to sustain the title thus
obtained. The act was apparently an attempt dishonestly to obtain the Indian title, and not
intended to give a substitution for a personal service which would be likely, or was
reasonably designed, to reach the persons to be affected.
The case of Voorhees v. Jackson, 10 Pet. 449, affirmed the title levied under the attachment
laws of Ohio, and laid down the principle of assuming that all had been rightly done by a
court having general jurisdiction of the subject matter.
In Cooper v. Smith, 25 Iowa, 269, it is said that where no process is served on the defendant,
nor property attached, nor garnishee charged, nor appearance entered, a judgment based
Page 95 U. S. 746
on a publication of the pendency of the suit will be void, and may be impeached, collaterally
or otherwise, and forms no bar to a recovery in opposition to it, nor any foundation for a title
claimed under it. The language is very general, and goes much beyond the requirement of
the case, which was an appeal from a personal judgment obtained by publication against the
defendant, and where, as the court say, the petition was not properly verified. All that the
court decided was that this judgment should be reversed. This is quite a different question
from the one before us. Titles obtained by purchase at a sale upon an erroneous judgment
are generally good, although the judgment itself be afterwards reversed.McGoon v. Scales, 9
Wall. 311.
In Darrance v. Preston, 18 Iowa, 396, the distinction is pointed out between the validity of a
judgment as to the amount realized from the sale of property within the jurisdiction of the
court and its validity beyond that amount. Picquet v. Swan, 5 Mas. 35; Bissell v. Briggs, 9
Mass. 462; Ewer v. Coffin, 1 Cush. (Mass.) 23, are cited, but neither of them in its facts
touches the question before us.
In Drake on Attachment, the rule is laid down in very general language; but none of the cases
cited by him will control the present case. They are the following:--

Eaton v. Bridger, 33 N. H. 228, was decided upon the peculiar terms of the New Hampshire
statute, which forbids the entry of a judgment unless the debtor was served with process, or
actually appeared and answered in the suit. The court say the judgment was "not only
unauthorized by law, but rendered in violation of its express provisions."
Johnson v. Dodge was a proceeding in the same action to obtain a reversal on appeal of the
general judgment, and did not arise upon a contest for property sold under the
judgment. Carleton v. Washington Insurance Co., 35 id. 162, and Bruce v. Cloutman, 45 id. 37,
are to the same effect and upon the same statute.
Smith v. McCutchen, 38 Mo. 415, was a motion in the former suit to set aside the execution
by a garnishee, and it was held that the statute was intended to extend to that class of
cases. Abbott v. Shepard, 44 id. 273, is to the same effect, and is based upon Smith v.
McCutchen, supra.
Page 95 U. S. 747
So, in Eastman v. Wadleigh, 65 Me. 251, the question arose in debt on the judgment, not
upon a holding of land purchased under the judgment. It was decided upon the express
language of the statute of Maine, strongly implying the power of the legislature to make it
otherwise, had they so chosen.
It is said that the case where a preliminary seizure has been made, and jurisdiction thereby
conferred, differs from that where the property is seized at the end of the action, in this: in
the first case, the property is supposed to be so near to its owner that, if seizure is made of it,
he will be aware of the fact, and have his opportunity to defend, and jurisdiction of the
person is thus obtained. This, however, is matter of discretion and of judgment only. Such
seizure is not in itself notice to the defendant, and it is not certain that he will by that means
receive notice. Adopted as a means of communicating it, and although a very good means, it
is not the only one, nor necessarily better than a publication of the pendency of the suit,
made with an honest intention to reach the debtor. Who shall assume to say to the
legislature that, if it authorizes a particular mode of giving notice to a debtor, its action may
be sustained, but, if it adopts any or all others, its action is unconstitutional and void? The
rule is universal that modes, means, questions of expediency or necessity are exclusively
within the judgment of the legislature, and that the judiciary cannot review them. This has
been so held in relation to a bank of the United States, to the legal tender act, and to cases
arising under other provisions of the Constitution.
In Jarvis v. Barrett, 14 Wis. 591, such is the holding. The court say:
"The essential fact on which the publication is made to depend is property of the defendant
in the State, and not whether it has been attached. . . . There is no magic about the writ [of
attachment] which should make it the exclusive remedy. The same legislative power which
devised it can devise some other, and declare that it shall have the same force and effect.
50
The particular means to be used are always within the control of the legislature, so that the
end be not beyond the scope of legislative power."
If the legislature shall think that publication and deposit in the post office are likely to give
the notice, there seems to be
Page 95 U. S. 748
nothing in the nature of things to prevent their adoption in lieu of the attachment. The point
of power cannot be thus controlled.
That a State can subject land within its limits belonging to nonresident owners to debts due
to its own citizens as it can legislate upon all other local matters -- that it can prescribe the
mode and process by which it is to be reached -- seems to me very plain.
I am not willing to declare that a sovereign State cannot subject the land within its limits to
the payment of debts due to its citizens, or that the power to do so depends upon the fact
whether its statute shall authorize the property to be levied upon at the commencement of
the suit or at its termination. This is a matter of detail, and I am of opinion that, if reasonable
notice be given, with an opportunity to defend when appearance is made, the question of
power will be fully satisfied.
Brief Fact Summary. Defendant Neff was being sued by Mitchell in Oregon for unpaid legal
fees. A default judgment was entered against Defendant for his failure to come to court or
otherwise resist the lawsuit, despite the fact that he was not personally served with process,
nor was a resident of Oregon. Later, in an attempt to collect upon his judgment, Mitchell
attached land located in Oregon belonging to Defendant, and had it sold to Plaintiff Pennoyer
through a Sheriffs sale.
Synopsis of Rule of Law. Proceedings in a court of law to determine the personal rights and
obligations of parties over whom the court has not jurisdiction are invalid for want of due
process of law.
Facts.
Mitchell, a lawyer, sued Defendant, his client, in Oregon state court for unpaid legal fees. At
the time Defendant was a non-resident of the state who was not personally served with
process. Constructive service was issued upon Defendant by publication. Defendant did not
come to court or otherwise resist the lawsuit, and default judgment was entered against him.
After the default judgment, Defendant acquired 300 acres of land in Oregon. To satisfy his
judgment against Defendant, Mitchell had the sheriff seize and sell Defendants land. The
land was purchased by Plaintiff, who received a sheriffs deed as evidence of title. The sheriff
 51

then turned the sale proceeds over to Mitchell. Shortly after the sheriffs sale, Defendant
discovered what had happened to his land and brought suit against Plaintiff to recover the
land. This appeal followed after Defendant lost his suit against Plaintiff.

Issue.

Can judgments obtained against non-residents who fail to appear in court be sustained by
default judgments where service of process is accomplished solely through publication (i.e.
constructive service)?

Is constructive service sufficient notice to attach property within the forum state owned by a
non-resident?

Held.

No. The personal judgment recovered in the state court of Oregon against Plaintiff was
without validity, and the decision of the Court of Appeals overturning that judgment was
affirmed.

When a suit is merely in personam (i.e. against a person), constructive service through
publication upon a non-resident is ineffective.

No state can exercise direct jurisdiction and authority over persons or property without its
territory. However, a state may subject property within its boundaries to the payments of its
citizens, even when the land is owned by a non-resident, without infringing upon the
sovereignty of the state of residency of the landowner.

Discussion. Here the Supreme Court of the United States is distinguishing between suits in
personam, and in rem. An in personam suit is a suit against a person, whose purpose is to
determine the personal rights and obligations of the defendant. An in rem action,
meanwhile, is an action where jurisdiction pertains to property. Thus the court reasoned that
constructive service is sufficient to inform parties of action taken against any properties
owned by them within the forum state, because property is always in possession of the
owner, and seizure of the property will inform the owner of legal action taken against him.

SECOND DIVISION
G.R. No. 103493 June 19, 1997
PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and
ATHONA HOLDINGS, N.V., petitioners,
vs.
THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT,
PRECIOSO R. PERLAS, and WILLIAM H. CRAIG, respondents.
MENDOZA, J.:
This case presents for determination the conclusiveness of a foreign judgment upon the
rights of the parties under the same cause of action asserted in a case in our local court.
Petitioners brought this case in the Regional Trial Court of Makati, Branch 56, which, in view
of the pendency at the time of the foreign action, dismissed Civil Case No. 16563 on the
ground of litis pendentia, in addition to forum non conveniens. On appeal, the Court of
Appeals affirmed. Hence this petition for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from
petitioners Ayala International Finance Limited (hereafter called AYALA) 1 and Philsec
Investment Corporation (hereafter called PHILSEC) in the sum of US$2,500,000.00, secured
by shares of stock owned by Ducat with a market value of P14,088,995.00. In order to
facilitate the payment of the loans, private respondent 1488, Inc., through its president,
private respondent Drago Daic, assumed Ducat's obligation under an Agreement, dated
January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with Vendor's Lien by which
it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land in
Harris County, Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA extended a loan
to ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase price. The
balance of US$307,209.02 was to be paid by means of a promissory note executed by
ATHONA in favor of 1488, Inc. 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.
As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount
covered by the note became due and demandable. Accordingly, on October 17, 1985, private
respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in the United States for
payment of the balance of US$307,209.02 and for damages for breach of contract and for
fraud allegedly perpetrated by petitioners in misrepresenting the marketability of the shares
of stock delivered to 1488, Inc. under the Agreement. Originally instituted in the United
States District Court of Texas, 165th Judicial District, where it was docketed as Case No. 85-
57746, the venue of the action was later transferred to the United States District Court for
52
the Southern District of Texas, where 1488, Inc. filed an amended complaint, reiterating its
allegations in the original complaint. ATHONA filed an answer with counterclaim, impleading
private respondents herein as counterdefendants, for allegedly conspiring in selling the
property at a price over its market value. Private respondent Perlas, who had allegedly
appraised the property, was later dropped as counterdefendant. ATHONA sought the
recovery of damages and excess payment allegedly made to 1488, Inc. and, in the
alternative, the rescission of sale of the property. For their part, PHILSEC and AYALA filed a
motion to dismiss on the ground of lack of jurisdiction over their person, but, as their motion
was denied, they later filed a joint answer with counterclaim against private respondents and
Edgardo V. Guevarra, PHILSEC's own former president, for the rescission of the sale on the
ground that the property had been overvalued. On March 13, 1990, the United States District
Court for the Southern District of Texas dismissed the counterclaim against Edgardo V.
Guevarra on the ground that it was "frivolous and [was] brought against him simply to
humiliate and embarrass him." For this reason, the U.S. court imposed so-called Rule 11
sanctions on PHILSEC and AYALA and ordered them to pay damages to Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States, petitioners
filed a complaint "For Sum of Money with Damages and Writ of Preliminary Attachment"
against private respondents in the Regional Trial Court of Makati, where it was docketed as
Civil Case No. 16563. The complaint reiterated the allegation of petitioners in their respective
counterclaims in Civil Action No. H-86-440 of the United States District Court of Southern
Texas that private respondents committed fraud by selling the property at a price 400
percent more than its true value of US$800,000.00. Petitioners claimed that, as a result of
private respondents' fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA were
induced to enter into the Agreement and to purchase the Houston property. Petitioners
prayed that private respondents be ordered to return to ATHONA the excess payment of
US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court issued a writ of
preliminary attachment against the real and personal properties of private respondents. 2
Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis
pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S.,
(2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause
of action. Ducat contended that the alleged overpricing of the property prejudiced only
petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale
and whose only participation was to extend financial accommodation to ATHONA under a
separate loan agreement. On the other hand, private respondents 1488, Inc. and its
president Daic filed a joint "Special Appearance and Qualified Motion to Dismiss," contending
that the action being in personam, extraterritorial service of summons by publication was
ineffectual and did not vest the court with jurisdiction over 1488, Inc., which is a non-
resident foreign corporation, and Daic, who is a non-resident alien.
On January 26, 1988, the trial court granted Ducat's motion to dismiss, stating that "the
evidentiary requirements of the controversy may be more suitably tried before the forum of
the litis pendentia in the U.S., under the principle in private international law of forum non
conveniens," even as it noted that Ducat was not a party in the U.S. case.

A separate hearing was held with regard to 1488, Inc. and Daic's motion to dismiss. On March
9, 1988, the trial court 3 granted the motion to dismiss filed by 1488, Inc. and Daic on the
ground of litis pendentia considering that
the "main factual element" of the cause of action in this case which is the
validity of the sale of real property in the United States between
defendant 1488 and plaintiff ATHONA is the subject matter of the
pending case in the United States District Court which, under the doctrine
of forum non conveniens, is the better (if not exclusive) forum to litigate
matters needed to determine the assessment and/or fluctuations of the
fair market value of real estate situated in Houston, Texas, U.S.A. from
the date of the transaction in 1983 up to the present and verily, . . .
(emphasis by trial court)
The trial court also held itself without jurisdiction over 1488, Inc. and Daic because
they were non-residents and the action was not an action in rem or quasi in rem, so
that extraterritorial service of summons was ineffective. The trial court
subsequently lifted the writ of attachment it had earlier issued against the shares
of stocks of 1488, Inc. and Daic.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying
the principle of litis pendentia and forum non conveniens and in ruling that it had no
jurisdiction over the defendants, despite the previous attachment of shares of stocks
belonging to 1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals 4 affirmed the dismissal of Civil Case No. 16563
against Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the
defendants are Philsec, the Ayala International Finance Ltd. (BPI-IFL's former name)
and the Athona Holdings, NV. The case at bar involves the same parties. The
transaction sued upon by the parties, in both cases is the Warranty Deed executed
by and between Athona Holdings and 1488 Inc. In the U.S. case, breach of contract
and the promissory note are sued upon by 1488 Inc., which likewise alleges fraud
employed by herein appellants, on the marketability of Ducat's securities given in
exchange for the Texas property. The recovery of a sum of money and damages, for
fraud purportedly committed by appellees, in overpricing the Texas land, constitute
the action before the Philippine court, which likewise stems from the same
Warranty Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in personam
for the recovery of a sum of money for alleged tortious acts, so that service of
summons by publication did not vest the trial court with jurisdiction over 1488, Inc.
and Drago Daic. The dismissal of Civil Case No. 16563 on the ground of forum non
53
conveniens was likewise affirmed by the Court of Appeals on the ground that the
case can be better tried and decided by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction,
and involve foreign elements, to wit: 1) the property subject matter of
the sale is situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-
resident foreign corporation; 3) although the buyer, Athona Holdings, a
foreign corporation which does not claim to be doing business in the
Philippines, is wholly owned by Philsec, a domestic corporation, Athona
Holdings is also owned by BPI-IFL, also a foreign corporation; 4) the
Warranty Deed was executed in Texas, U.S.A.
In their present appeal, petitioners contend that:
1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME PARTIES FOR THE
SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING THE
TRIAL COURT'S DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE.
2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE COURT OF
APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF THE CIVIL ACTION IS
LIKEWISE NOT APPLICABLE.
3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS ERRED IN NOT
HOLDING THAT PHILIPPINE PUBLIC POLICY REQUIRED THE ASSUMPTION, NOT THE
RELINQUISHMENT, BY THE TRIAL COURT OF ITS RIGHTFUL JURISDICTION IN THE CIVIL ACTION
FOR THERE IS EVERY REASON TO PROTECT AND VINDICATE PETITIONERS' RIGHTS FOR
TORTIOUS OR WRONGFUL ACTS OR CONDUCT PRIVATE RESPONDENTS (WHO ARE MOSTLY
NON-RESIDENT ALIENS) INFLICTED UPON THEM HERE IN THE PHILIPPINES.
We will deal with these contentions in the order in which they are made.
First. It is important to note in connection with the first point that while the present case was
pending in the Court of Appeals, the United States District Court for the Southern District of
Texas rendered judgment 5 in the case before it. The judgment, which was in favor of private
respondents, was affirmed on appeal by the Circuit Court of Appeals. 6 Thus, the principal
issue to be resolved in this case is whether Civil Case No. 16536 is barred by the judgment of
the U.S. court.
Private respondents contend that for a foreign judgment to be pleaded as res judicata, a
judgment admitting the foreign decision is not necessary. On the other hand, petitioners
argue that the foreign judgment cannot be given the effect of res judicata without giving
them an opportunity to impeach it on grounds stated in Rule 39, 50 of the Rules of Court, to
wit: "want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law
or fact."

Petitioners' contention is meritorious. While this Court has given the effect of res judicata to
foreign judgments in several cases, 7 it was after the parties opposed to the judgment had
been given ample opportunity to repel them on grounds allowed under the law. 8 It is not
necessary for this purpose to initiate a separate action or proceeding for enforcement of the
foreign judgment. What is essential is that there is opportunity to challenge the foreign
judgment, in order for the court to properly determine its efficacy. This is because in this
jurisdiction, with respect to actions in personam, as distinguished from actions in rem, a
foreign judgment merely constitutes prima facie evidence of
the justness of the claim of a party and, as such, is subject to proof to the contrary. 9 Rule 39,
50 provides:
Sec. 50. Effect of foreign judgments. The effect of a judgment of a tribunal of a
foreign country, having jurisdiction to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the
title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence
of a right as between the parties and their successors in interest by a subsequent
title; but the judgment may be repelled by evidence of a want of jurisdiction, want
of notice to the party, collusion, fraud, or clear mistake of law or fact.
Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of
Canton, Ltd., 10 which private respondents invoke for claiming conclusive effect for the
foreign judgment in their favor, the foreign judgment was considered res judicata because
this Court found "from the evidence as well as from appellant's own pleadings" 11 that the
foreign court did not make a "clear mistake of law or fact" or that its judgment was void for
want of jurisdiction or because of fraud or collusion by the defendants. Trial had been
previously held in the lower court and only afterward was a decision rendered, declaring the
judgment of the Supreme Court of the State of Washington to have the effect of res judicata
in the case before the lower court. In the same vein, in Philippines International Shipping
Corp. v. Court of Appeals, 12 this Court held that the foreign judgment was valid and
enforceable in the Philippines there being no showing that it was vitiated by want of notice
to the party, collusion, fraud or clear mistake of law or fact. The prima facie presumption
under the Rule had not been rebutted.
In the case at bar, it cannot be said that petitioners were given the opportunity to challenge
the judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights
of private respondents. The proceedings in the trial court were summary. Neither the trial
court nor the appellate court was even furnished copies of the pleadings in the U.S. court or
apprised of the evidence presented thereat, to assure a proper determination of whether the
issues then being litigated in the U.S. court were exactly the issues raised in this case such
that the judgment that might be rendered would constitute res judicata. As the trial court
stated in its disputed order dated March 9, 1988.
54
On the plaintiff's claim in its Opposition that the causes of action of this
case and the pending case in the United States are not identical, precisely
the Order of January 26, 1988 never found that the causes of action of
this case and the case pending before the USA Court, were identical.
(emphasis added)
It was error therefore for the Court of Appeals to summarily rule that petitioners'
action is barred by the principle of res judicata. Petitioners in fact questioned the
jurisdiction of the U.S. court over their persons, but their claim was brushed aside
by both the trial court and the Court of Appeals. 13
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the
enforcement of judgment in the Regional Trial Court of Makati, where it was docketed as
Civil Case No. 92-1070 and assigned to Branch 134, although the proceedings were
suspended because of the pendency of this case. To sustain the appellate court's ruling that
the foreign judgment constitutes res judicata and is a bar to the claim of petitioners would
effectively preclude petitioners from repelling the judgment in the case for enforcement. An
absurdity could then arise: a foreign judgment is not subject to challenge by the plaintiff
against whom it is invoked, if it is pleaded to resist a claim as in this case, but it may be
opposed by the defendant if the foreign judgment is sought to be enforced against him in a
separate proceeding. This is plainly untenable. It has been held therefore that:
[A] foreign judgment may not be enforced if it is not recognized in the
jurisdiction where affirmative relief is being sought. Hence, in the interest
of justice, the complaint should be considered as a petition for the
recognition of the Hongkong judgment under Section 50 (b), Rule 39 of
the Rules of Court in order that the defendant, private respondent
herein, may present evidence of lack of jurisdiction, notice, collusion,
fraud or clear mistake of fact and law, if applicable. 14
Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-
1070 should be consolidated. 15 After all, the two have been filed in the Regional Trial Court
of Makati, albeit in different salas, this case being assigned to Branch 56 (Judge Fernando V.
Gorospe), while Civil Case No. 92-1070 is pending in Branch 134 of Judge Ignacio Capulong. In
such proceedings, petitioners should have the burden of impeaching the foreign judgment
and only in the event they succeed in doing so may they proceed with their action against
private respondents.
Second. Nor is the trial court's refusal to take cognizance of the case justifiable under the
principle of forum non conveniens. First, a motion to dismiss is limited to the grounds under
Rule 16, 1, which does not include forum non conveniens. 16 The propriety of dismissing a
case based on this principle requires a factual determination, hence, it is more properly
considered a matter of defense. Second, while it is within the discretion of the trial court to
abstain from assuming jurisdiction on this ground, it should do so only after "vital facts are
established, to determine whether special circumstances" require the court's desistance. 17

In this case, the trial court abstained from taking jurisdiction solely on the basis of the
pleadings filed by private respondents in connection with the motion to dismiss. It failed to
consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the
defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the latter's
debt which was the object of the transaction under litigation. The trial court arbitrarily
dismissed the case even after finding that Ducat was not a party in the U.S. case.
Third. 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." 18 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. 19
Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to
suspend the proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce
so-called Rule 11 sanctions imposed on the petitioners by the U.S. court, the Court finds that
the judgment sought to be enforced is severable from the main judgment under
consideration in Civil Case No. 16563. The separability of Guevara's claim is not only admitted
by petitioners, 20 it appears from the pleadings that petitioners only belatedly impleaded
Guevarra as defendant in Civil Case No. 16563. 21 Hence, the TRO should be lifted and Civil
Case No. 92-1445 allowed to proceed.
WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is
REMANDED to the Regional Trial Court of Makati for consolidation with Civil Case No. 92-
1070 and for further proceedings in accordance with this decision. The temporary restraining
order issued on June 29, 1994 is hereby LIFTED.
SO ORDERED.
FACTS:
Private respondent Ducat obtained separate loans from petitioners Ayala International
Finance Limited (AYALA) and Philsec Investment Corp (PHILSEC), secured by shares of stock
owned by Ducat.
In order to facilitate the payment of the loans, private respondent 1488, Inc., through its
president, private respondent Daic, assumed Ducats obligation under an Agreement,
whereby 1488, Inc. executed a Warranty Deed with Vendors Lien by which it sold to
petitioner Athona Holdings, N.V. (ATHONA) a parcel of land in Texas, U.S.A., while PHILSEC
and AYALA extended a loan to ATHONA as initial payment of the purchase price. The balance
was to be paid by means of a promissory note executed by ATHONA in favor of 1488, Inc.
55
Subsequently, upon their receipt of the money 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.
As ATHONA failed to pay the interest on the balance, the entire amount covered by the note
became due and demandable. Accordingly, private respondent 1488, Inc. sued petitioners
PHILSEC, AYALA, and ATHONA in the United States for payment of the balance and for
damages for breach of contract and for fraud allegedly perpetrated by petitioners in
misrepresenting the marketability of the shares of stock delivered to 1488, Inc. under the
Agreement.
While the Civil Case was pending in the United States, petitioners filed a complaint For Sum
of Money with Damages and Writ of Preliminary Attachment against private respondents in
the RTC Makati. The complaint reiterated the allegation of petitioners in their respective
counterclaims in the Civil Action in the United States District Court of Southern Texas that
private respondents committed fraud by selling the property at a price 400 percent more
than its true value.
Ducat moved to dismiss the Civil Case in the RTC-Makati on the grounds of (1) litis pendentia,
vis-a-vis the Civil Action in the U.S., (2) forum non conveniens, and (3) failure of petitioners
PHILSEC and BPI-IFL to state a cause of action.
The trial court granted Ducats MTD, stating that the evidentiary requirements of the
controversy may be more suitably tried before the forum of the litis pendentia in the U.S.,
under the principle in private international law of forum non conveniens, even as it noted
that Ducat was not a party in the U.S. case.
Petitioners appealed to the CA, arguing that the trial court erred in applying the principle of
litis pendentia and forum non conveniens.
The CA affirmed the dismissal of Civil Case against Ducat, 1488, Inc., and Daic on the ground
of litis pendentia.
ISSUE: is the Civil Case in the RTC-Makati barred by the judgment of the U.S. court?
HELD:
CA reversed. Case remanded to RTC-Makati
NO
While this Court has given the effect of res judicata to foreign judgments in several cases, it
was after the parties opposed to the judgment had been given ample opportunity to repel
 56

them on grounds allowed under the law. This is because in this jurisdiction, with respect to
actions in personam, as distinguished from actions in rem, a foreign judgment merely
constitutes prima facie evidence of the justness of the claim of a party and, as such, is subject
to proof to the contrary. Rule 39, 50 provides:

Sec. 50. Effect of foreign judgments. The effect of a judgment of a tribunal of a foreign
country, having jurisdiction to pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to
the thing;

(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as
between the parties and their successors in interest by a subsequent title; but the judgment
may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact.

In the case at bar, it cannot be said that petitioners were given the opportunity to challenge
the judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights
of private respondents. The proceedings in the trial court were summary. Neither the trial
court nor the appellate court was even furnished copies of the pleadings in the U.S. court or
apprised of the evidence presented thereat, to assure a proper determination of whether the
issues then being litigated in the U.S. court were exactly the issues raised in this case such
that the judgment that might be rendered would constitute res judicata.

Second. Nor is the trial courts refusal to take cognizance of the case justifiable under the
principle of forum non conveniens:

First, a MTD is limited to the grounds under Rule 16, sec.1, which does not include forum non
conveniens. The propriety of dismissing a case based on this principle requires a factual
determination, hence, it is more properly considered a matter of defense.

Second, while it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after vital facts are established, to determine
whether special circumstances require the courts desistance.

EN BANC
G.R. No. 93262 December 29, 1991
DAVAO LIGHT & POWER CO., INC., petitioner,
vs.
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or QUEENSLAND TOURIST INN,
and TEODORICO ADARNA, respondents.
NARVASA, J.:p
Subject of the appellate proceedings at bar is the decision of the Court of Appeals in CA-G.R.
Sp. No. 1967 entitled "Queensland Hotel, Inc., etc. and Adarna v. Davao Light & Power
Co., Inc.," promulgated on May 4, 1990. 1 That decision nullified and set aside the writ of
preliminary attachment issued by the Regional Trial Court of Davao City 2 in Civil Case No.
19513-89 on application of the plaintiff (Davao Light & Power Co.), before the service of
summons on the defendants (herein respondents Queensland Co., Inc. and Adarna).
Following is the chronology of the undisputed material facts culled from the Appellate
Tribunal's judgment of May 4, 1990.
1. On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light) filed a
verified complaint for recovery of a sum of money and damages against Queensland Hotel,
etc. and Teodorico Adarna (docketed as Civil Case No. 19513-89). The complaint contained
an ex parte application for a writ of preliminary attachment.
2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by raffle, issued
an Order granting the ex parte application and fixing the attachment bond at P4,600,513.37.
3. On May 11, 1989 the attachment bond having been submitted by Davao Light, the writ of
attachment issued.
4. On May 12, 1989, the summons and a copy of the complaint, as well as the writ of
attachment and a copy of the attachment bond, were served on defendants Queensland and
Adarna; and pursuant to the writ, the sheriff seized properties belonging to the latter.
5. On September 6, 1989, defendants Queensland and Adarna filed a motion to discharge the
attachment for lack of jurisdiction to issue the same because at the time the order of
attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11, 1989),
the Trial Court had not yet acquired jurisdiction over the cause and over the persons of the
defendants.
57
6. On September 14, 1989, Davao Light filed an opposition to the motion to discharge
attachment.
7. On September 19, 1989, the Trial Court issued an Order denying the motion to discharge.
This Order of September 19, 1989 was successfully challenged by Queensland and Adarna in
a special civil action of certiorari instituted by them in the Court of Appeals. The Order was,
as aforestated, annulled by the Court of Appeals in its Decision of May 4, 1990. The Appellate
Court's decision closed with the following disposition:
. . . the Orders dated May 3, 1989 granting the issuance of a writ of preliminary
attachment, dated September 19, 1989 denying the motion to discharge
attachment; dated November 7, 1989 denying petitioner's motion for
reconsideration; as well as all other orders emanating therefrom, specially the Writ
of Attachment dated May 11, 1989 and Notice of Levy on Preliminary Attachment
dated May 11, 1989, are hereby declared null and void and the attachment hereby
ordered DISCHARGED.
The Appellate Tribunal declared that
. . . While it is true that a prayer for the issuance of a writ of preliminary
attachment may be included m the complaint, as is usually done, it is
likewise true that the Court does not acquire jurisdiction over the person
of the defendant until he is duly summoned or voluntarily appears, and
adding the phrase that it be issued "ex parte" does not confer said
jurisdiction before actual summons had been made, nor retroact
jurisdiction upon summons being made. . . .
It went on to say, citing Sievert v. Court of Appeals, 3 that "in a proceedings in
attachment," the "critical time which must be identified is . . . when the trial court
acquires authority under law to act coercively against the defendant or his property
. . .;" and that "the critical time is the of the vesting of jurisdiction in the court over
the person of the defendant in the main case."
Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light seeks in
the present appellate proceedings.
The question is whether or not a writ of preliminary attachment may issue ex parte against a
defendant before acquisition of jurisdiction of the latter's person by service of summons or
his voluntary submission to the Court's authority.
The Court rules that the question must be answered in the affirmative and that
consequently, the petition for review will have to be granted.

It is incorrect to theorize that after an action or proceeding has been commenced and
jurisdiction over the person of the plaintiff has been vested in the court, but before the
acquisition of jurisdiction over the person of the defendant (either by service of summons or
his voluntary submission to the court's authority), nothing can be validly done by the plaintiff
or the court. It is wrong to assume that the validity of acts done during this period should be
defendant on, or held in suspension until, the actual obtention of jurisdiction over the
defendant's person. The obtention by the court of jurisdiction over the person of the
defendant is one thing; quite another is the acquisition of jurisdiction over the person of the
plaintiff or over the subject-matter or nature of the action, or the res or object hereof.
An action or proceeding is commenced by the filing of the complaint or other initiatory
pleading. 4 By that act, the jurisdiction of the court over the subject matter or nature of the
action or proceeding is invoked or called into activity; 5 and it is thus that the court acquires
jurisdiction over said subject matter or nature of the action. 6 And it is by that self-same act
of the plaintiff (or petitioner) of filing the complaint (or other appropriate pleading) by
which he signifies his submission to the court's power and authority that jurisdiction is
acquired by the court over his person. 7 On the other hand, jurisdiction over the person of
the defendant is obtained, as above stated, by the service of summons or other coercive
process upon him or by his voluntary submission to the authority of the court. 8
The events that follow the filing of the complaint as a matter of routine are well known. After
the complaint is filed, summons issues to the defendant, the summons is then transmitted to
the sheriff, and finally, service of the summons is effected on the defendant in any of the
ways authorized by the Rules of Court. There is thus ordinarily some appreciable interval of
time between the day of the filing of the complaint and the day of service of summons of the
defendant. During this period, different acts may be done by the plaintiff or by the Court,
which are unquestionable validity and propriety. Among these, for example, are the
appointment of a guardian ad litem, 9 the grant of authority to the plaintiff to prosecute the
suit as a pauper litigant, 10 the amendment of the complaint by the plaintiff as a matter of
right without leave of court, 11 authorization by the Court of service of summons by
publication, 12 the dismissal of the action by the plaintiff on mere notice. 13
This, too, is true with regard to the provisional remedies of preliminary attachment,
preliminary injunction, receivership or replevin. 14 They may be validly and properly applied
for and granted even before the defendant is summoned or is heard from.
A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional
remedy in virtue of which a plaintiff or other party may, at the commencement of the action
or at any time thereafter, have the property of the adverse party taken into the custody of
the court as security for the satisfaction of any judgment that may be recovered. 15 It is a
remedy which is purely statutory in respect of which the law requires a strict construction of
the provisions granting it. 16 Withal no principle, statutory or jurisprudential, prohibits its
issuance by any court before acquisition of jurisdiction over the person of the defendant.
58
Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at
any time thereafter." 17 The phase, "at the commencement of the action," obviously refers
to the date of the filing of the complaint which, as above pointed out, is the date that
marks "the commencement of the action;" 18 and the reference plainly is to a time before
summons is served on the defendant, or even before summons issues. What the rule is
saying quite clearly is that after an action is properly commenced by the filing of the
complaint and the payment of all requisite docket and other fees the plaintiff may apply
for and obtain a writ of preliminary attachment upon fulfillment of the pertinent requisites
laid down by law, and that he may do so at any time, either before or after service of
summons on the defendant. And this indeed, has been the immemorial practice sanctioned
by the courts: for the plaintiff or other proper party to incorporate the application for
attachment in the complaint or other appropriate pleading (counter-claim, cross-claim, third-
party claim) and for the Trial Court to issue the writ ex-parte at the commencement of the
action if it finds the application otherwise sufficient in form and substance.
In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or application for
preliminary attachment is not generally necessary unless otherwise directed by the Trial
Court in its discretion. 20 And in Filinvest Credit Corporation v. Relova, 21 the Court declared
that "(n)othing in the Rules of Court makes notice and hearing indispensable and mandatory
requisites for the issuance of a writ of attachment." The only pre-requisite is that the Court
be satisfied, upon consideration of "the affidavit of the applicant or of some other person
who personally knows the facts, that a sufficient cause of action exists, that the case is one of
those mentioned in Section 1 . . . (Rule 57), that there is no other sufficient security for the
claim sought to be enforced by the action, and that the amount due to the applicant, or the
value of the property the possession of which he is entitled to recover, is as much as the sum
for which the order (of attachment) is granted above all legal counterclaims." 22 If the court
be so satisfied, the "order of attachment shall be granted," 23 and the writ shall issue upon
the applicant's posting of "a bond executed to the adverse party in an amount to be fixed by
the judge, not exceeding the plaintiffs claim, conditioned that the latter will pay all the costs
which may be adjudged to the adverse party and all damages which he may sustain by
reason of the attachment, if the court shall finally adjudge that the applicant was not entitled
thereto." 24
In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on April 18,
1989, 25 this Court had occasion to emphasize the postulate that no hearing is required on
an application for preliminary attachment, with notice to the defendant, for the reason that
this "would defeat the objective of the remedy . . . (since the) time which such a hearing
would take, could be enough to enable the defendant to abscond or dispose of his property
before a writ of attachment issues." As observed by a former member of this Court, 26 such a
procedure would warn absconding debtors-defendants of the commencement of the suit
against them and the probable seizure of their properties, and thus give them the advantage
of time to hide their assets, leaving the creditor-plaintiff holding the proverbial empty bag; it
would place the creditor-applicant in danger of losing any security for a favorable judgment
and thus give him only an illusory victory.

Withal, ample modes of recourse against a preliminary attachment are secured by law to the
defendant. The relative ease with which a preliminary attachment may be obtained is
matched and paralleled by the relative facility with which the attachment may legitimately
be prevented or frustrated. These modes of recourse against preliminary attachments
granted by Rule 57 were discussed at some length by the separate opinion in Mindanao
Savings & Loans Asso. Inc. v. CA., supra.
That separate opinion stressed that there are two (2) ways of discharging an
attachment: first, by the posting of a counterbond; and second, by a showing of its improper
or irregular issuance.
1.0. The submission of a counterbond is an efficacious mode of lifting an attachment already
enforced against property, or even of preventing its enforcement altogether.
1.1. When property has already been seized under attachment, the attachment may be
discharged upon counterbond in accordance with Section 12 of Rule 57.
Sec. 12. Discharge of attachment upon giving counterbond. At any time after an
order of attachment has been granted, the party whose property has been
attached or the person appearing in his behalf, may, upon reasonable notice to the
applicant, apply to the judge who granted the order, or to the judge of the court in
which the action is pending, for an order discharging the attachment wholly or in
part on the security given . . . in an amount equal to the value of the property
attached as determined by the judge to secure the payment of any judgment that
the attaching creditor may recover in the action. . . .
1.2. But even before actual levy on property, seizure under attachment may be prevented
also upon counterbond. The defendant need not wait until his property is seized before
seeking the discharge of the attachment by a counterbond. This is made possible by Section 5
of Rule 57.
Sec. 5. Manner of attaching property. The officer executing the order shall
without delay attach, to await judgment and execution in the action, all the
properties of the party against whom the order is issued in the province, not
exempt from execution, or so much thereof as may be sufficient to satisfy the
applicant's demand, unless the former makes a deposit with the clerk or judge of
the court from which the order issued, or gives a counter-bond executed to the
applicant, in an amount sufficient to satisfy such demand besides costs, or in an
amount equal to the value of the property which is about to be attached, to secure
payment to the applicant of any judgment which he may recover in the action. . . .
(Emphasis supplied)
2.0. Aside from the filing of a counterbond, a preliminary attachment may also be lifted or
discharged on the ground that it has been irregularly or improperly issued, in accordance
59
with Section 13 of Rule 57. Like the first, this second mode of lifting an attachment may be
resorted to even before any property has been levied on. Indeed, it may be availed of after
property has been released from a levy on attachment, as is made clear by said Section
13, viz.:
Sec. 13. Discharge of attachment for improper or irregular issuance. The party
whose property has been attached may also, at any time either BEFORE or AFTER
the release of the attached property, or before any attachment shall have been
actually levied, upon reasonable notice to the attaching creditor, apply to the judge
who granted the order, or to the judge of the court in which the action is pending,
for an order to discharge the attachment on the ground that the same was
improperly or irregularly issued. If the motion be made on affidavits on the part of
the party whose property has been attached, but not otherwise, the attaching
creditor may oppose the same by counter-affidavits or other evidence in addition
to that on which the attachment was made. . . . (Emphasis supplied)
This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987), The
attachment debtor cannot be deemed to have waived any defect in the issuance of the
attachment writ by simply availing himself of one way of discharging the attachment writ,
instead of the other. Moreover, the filing of a counterbond is a speedier way of discharging
the attachment writ maliciously sought out by the attaching creditor instead of the other
way, which, in most instances . . . would require presentation of evidence in a fullblown trial
on the merits, and cannot easily be settled in a pending incident of the case." 27
It may not be amiss to here reiterate other related principles dealt with in Mindanao Savings
& Loans Asso. Inc. v. C.A., supra., 28 to wit:
(a) When an attachment may not be dissolved by a showing of its irregular or
improper issuance:
. . . (W)hen the preliminary attachment is issued upon a ground which is at the
same time the applicant's cause of action; e.g., "an action for money or property
embezzled or fraudulently misapplied or converted to his own use by a public
officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk,
in the course of his employment as such, or by any other person in a fiduciary
capacity, or for a willful violation of duty." (Sec. 1 [b], Rule 57), or "an action against
a party who has been guilty of fraud m contracting the debt or incurring the
obligation upon which the action is brought" (Sec. 1 [d], Rule 57), the defendant is
not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57
by offering to show the falsity of the factual averments in the plaintiff's application
and affidavits on which the writ was based and consequently that the writ based
thereon had been improperly or irregularly issued (SEE Benitez v. I.A.C., 154 SCRA
41) the reason being that the hearing on such a motion for dissolution of the
writ would be tantamount to a trial of the merits of the action. In other words, the
merits of the action would be ventilated at a mere hearing of a motion, instead of

at the regular trial. Therefore, when the writ of attachment is of this nature, the
only way it can be dissolved is by a counterbond (G.B. Inc. v. Sanchez, 98 Phil. 886).
(b) Effect of the dissolution of a preliminary attachment on the plaintiffs attachment bond:
. . . The dissolution of the preliminary attachment upon security given, or a showing
of its irregular or improper issuance, does not of course operate to discharge the
sureties on plaintiff's own attachment bond. The reason is simple. That bond is
"executed to the adverse party, . . . conditioned that the . . . (applicant) will pay all
the costs which may be adjudged to the adverse party and all damages which he
may sustain by reason of the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto" (SEC. 4, Rule 57). Hence, until that
determination is made, as to the applicant's entitlement to the attachment, his
bond must stand and cannot be with-drawn.
With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58),
receivership (Rule 59), replevin or delivery of personal property (Rule 60), the rule is the
same: they may also issue ex parte. 29
It goes without saying that whatever be the acts done by the Court prior to the acquisition of
jurisdiction over the person of defendant, as above indicated issuance of summons, order
of attachment and writ of attachment (and/or appointments of guardian ad litem, or grant of
authority to the plaintiff to prosecute the suit as a pauper litigant, or amendment of the
complaint by the plaintiff as a matter of right without leave of court 30 and however valid
and proper they might otherwise be, these do not and cannot bind and affect the defendant
until and unless jurisdiction over his person is eventually obtained by the court, either by
service on him of summons or other coercive process or his voluntary submission to the
court's authority. Hence, when the sheriff or other proper officer commences
implementation of the writ of attachment, it is essential that he serve on the defendant not
only a copy of the applicant's affidavit and attachment bond, and of the order of attachment,
as explicity required by Section 5 of Rule 57, but also the summons addressed to said
defendant as well as a copy of the complaint and order for appointment of guardian ad
litem, if any, as also explicity directed by Section 3, Rule 14 of the Rules of Court. Service of
all such documents is indispensable not only for the acquisition of jurisdiction over the
person of the defendant, but also upon considerations of fairness, to apprise the defendant
of the complaint against him, of the issuance of a writ of preliminary attachment and the
grounds therefor and thus accord him the opportunity to prevent attachment of his property
by the posting of a counterbond in an amount equal to the plaintiff's claim in the complaint
pursuant to Section 5 (or Section 12), Rule 57, or dissolving it by causing dismissal of the
complaint itself on any of the grounds set forth in Rule 16, or demonstrating the insufficiency
of the applicant's affidavit or bond in accordance with Section 13, Rule 57.
It was on account of the failure to comply with this fundamental requirement of service of
summons and the other documents above indicated that writs of attachment issued by the
Trial Court ex parte were struck down by this Court's Third Division in two (2) cases,
60
namely: Sievert v. Court of Appeals, 31 and BAC Manufacturing and Sales Corporation
v. Court of Appeals, et al. 32 In contrast to the case at bar where the summons and a copy
of the complaint, as well as the order and writ of attachment and the attachment bond were
served on the defendant in Sievert, levy on attachment was attempted notwithstanding
that only the petition for issuance of the writ of preliminary attachment was served on the
defendant, without any prior or accompanying summons and copy of the complaint; and
in BAC Manufacturing and Sales Corporation, neither the summons nor the order granting
the preliminary attachment or the writ of attachment itself was served on the defendant
"before or at the time the levy was made."
For the guidance of all concerned, the Court reiterates and reaffirms the proposition that
writs of attachment may properly issue ex parte provided that the Court is satisfied that the
relevant requisites therefor have been fulfilled by the applicant, although it may, in its
discretion, require prior hearing on the application with notice to the defendant; but that
levy on property pursuant to the writ thus issued may not be validly effected unless
preceded, or contemporaneously accompanied, by service on the defendant of summons, a
copy of the complaint (and of the appointment of guardian ad litem, if any), the application
for attachment (if not incorporated in but submitted separately from the complaint), the
order of attachment, and the plaintiff's attachment bond.
WHEREFORE, the petition is GRANTED; the challenged decision of the Court of Appeals is
hereby REVERSED, and the order and writ of attachment issued by Hon. Milagros C. Nartatez,
Presiding Judge of Branch 8, Regional Trial Court of Davao City in Civil Case No. 19513-89
against Queensland Hotel or Motel or Queensland Tourist Inn and Teodorico Adarna are
hereby REINSTATED. Costs against private respondents.
SO ORDERED.
Facts:
Davao Light and Power Inc, Co. filed a complaint for recovery of sum of money and damages
against Queensland Hotel and Teodorico Adarna. The complaint contained an ex parte
application for a writ of preliminary attachment.
Judge Nartatez granted the writ and fixed the attachment bond at around P4Million. The
summons, copy of complaint, writ of attachment, copy of attachment bond were served
upon Queensland and Adarna. Pursuant to the writ, the Sheriff seized the properties of the
latter.
Queensland and Adarna filed a motion to discharge the attachment for lack of jurisdiction to
issue the same because at the time the order of attachment was promulgated (May 3, 1989)
and the attachment writ issued (May 11,1989), the Trial Court had not yet acquired
jurisdiction over cause and person of defendants.
 61

Trial Court denied the motion to discharge.
CA annulled the Trial Courts Order. Davao seeks to reverse CAs order.
Issue:
Whether or not preliminary attachment may issue ex parte against a defendant before
acquiring jurisdiction over his person.
Held:
Yes. Rule 57 speaks of the grant of the remedy at the commencement of the action or at
any time thereafter What the rule is saying is that after an action is properly commenced
(by filing of the complaint and payment of all requisite docket and other fees), the plaintiff
may apply for and obtain a writ of preliminary attachment. This he may do so, before or
after, the summons to the defendant.
The CA decision is reversed and the writ of attachment issued by Judge Nartatez is
reinstated.
Preliminary Attachment provisional remedy in virtue of which a plaintiff or other party
may, at the commencement of the action or at any time thereafter, have the property of the
adverse party taken into custody of court as security for satisfaction of judgment to be
recovered.
Nature of Attachment: a remedy which is purely statutory in respect of which the law
requires a strict of construction of the provisions granting it. No principle, whether statutory
or through jurisprudence, prohibits its issuance by any court before the acquisition of
jurisdiction over the person.
Yes. A writ of preliminary attachment may be issued before the court acquires jurisdiction
over the person of the defendant.
Ratio Decidendi
The court may validly issue a writ of preliminary injunction prior to the acquisition
of jurisdiction over the person of the defendant. There is an appreciable period of time
between the commencement of the action (takes place upon the filing of an initiatory
pleading) and the service of summons to the defendant. In the meanwhile, there are a
number of actions which the plaintiff or the court may validly take, including the application
for and grant of the provisional remedy of preliminary attachment. There is nothing in the
law which prohibits the court from granting the remedy prior to the acquisition of jurisdiction
over the person of the defendant. In fact, Rule 57 of the Rules of Court allows the granting of
a writ of preliminary injunction at the commencement of the suit. In the cases of Toledo v.
Burgos and Filinvest Credit Corporation v. Relova, it was held that notice and hearing are not
prerequisites to the issuance of a writ of preliminary attachment. Further, in the case
of Mindanao Savings & Loan Association, Inc. v. Court of Appeals, it was ruled that giving
notice to the defendant would defeat the purpose of the remedy by affording him or her the
opportunity to dispose of his properties before the writ can be issued.
A preliminary attachment may be discharged with the same ease as obtaining it. In any case,
the ease of availing the provisional remedy of preliminary attachment is matched by the ease
with which it can be remedied by either the posting of a counterbond, or by a showing of its
improper or irregular issuance. The second means of defeating a preliminary attachement,
however, may not be availed of if the writ was issued upon a ground which is at the same
time the applicant's cause of action.
Preliminary attachment not binding until jurisdiction over the person of the defendant is
acquired. The writ of preliminary attachment, however, even though validly issued, is not
binding upon the defendant until jurisdiction over his person is first acquired.

Facts
The Davao Light and Power Co., Inc. ("Davao Light") filed a collection suit against Queensland
Hotel ("Queensland") and Teodorico Adarna ("Adarna") with an ex parte application for a
writ of preliminary attachment. On 3 May 1989, the trial court issued an Order of
Attachment, and the corresponding Writ of Attachment on 11 May 1989. On 12 May 1989,
the summons, a copy of the complaint, and the writ of attachment was served upon
Queensland and Adarna. Queensland and Adarna filed a motion to discharge the attachment
on the ground that at the time the Order of Attachment and Writ of Attachment were issued,
the trial court has yet to acquire jurisdiction over the cause of action and over the persons of
the defendants.

Issue: Whether or not the writ of preliminary attachment was validly issued.

Held

IRST DIVISION
G.R. No. 72494 August 11, 1989
HONGKONG AND SHANGHAI BANKING CORPORATION, petitioner,
vs.
JACK ROBERT SHERMAN, DEODATO RELOJ and THE INTERMEDIATE APPELLATE
COURT, respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Intermediate Appellate Court
(now Court of Appeals) dated August 2, 1985, which reversed the order of the Regional Trial
Court dated February 28,1985 denying the Motion to Dismiss filed by private respondents
Jack Robert Sherman and Deodato Reloj.
A complaint for collection of a sum of money (pp. 49-52, Rollo) was filed by petitioner
Hongkong and Shanghai Banking Corporation (hereinafter referred to as petitioner BANK)
against private respondents Jack Robert Sherman and Deodato Reloj, docketed as Civil Case
No. Q-42850 before the Regional Trial Court of Quezon City, Branch 84.
It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (hereinafter referred
to as COMPANY), a company incorporated in Singapore applied with, and was granted by, the
Singapore branch of petitioner BANK an overdraft facility in the maximum amount of
Singapore dollars 200,000.00 (which amount was subsequently increased to Singapore
dollars 375,000.00) with interest at 3% over petitioner BANK prime rate, payable monthly, on
amounts due under said overdraft facility; as a security for the repayment by the COMPANY
of sums advanced by petitioner BANK to it through the aforesaid overdraft facility, on
October 7, 1982, both private respondents and a certain Robin de Clive Lowe, all of whom
were directors of the COMPANY at such time, executed a Joint and Several Guarantee (p.
53, Rollo) in favor of petitioner BANK whereby private respondents and Lowe agreed to pay,
jointly and severally, on demand all sums owed by the COMPANY to petitioner BANK under
the aforestated overdraft facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations and liabilities arising hereunder shall be
construed and determined under and may be enforced in accordance with the laws
of the Republic of Singapore. We hereby agree that the Courts of Singapore shall
have jurisdiction over all disputes arising under this guarantee. ... (p. 33-A, Rollo).
The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of the
obligation from private respondents, conformably with the provisions of the Joint and
62
Several Guarantee. Inasmuch as the private respondents still failed to pay, petitioner BANK
filed the above-mentioned complaint.
On December 14,1984, private respondents filed a motion to dismiss (pp 54-56, Rollo) which
was opposed by petitioner BANK (pp. 58-62, Rollo). Acting on the motion, the trial court
issued an order dated February 28, 1985 (pp, 64-65, Rollo), which read as follows:
In a Motion to Dismiss filed on December 14, 1984, the defendants seek the
dismissal of the complaint on two grounds, namely:
1. That the court has no jurisdiction over the subject matter of the complaint; and
2. That the court has no jurisdiction over the persons of the defendants.
In the light of the Opposition thereto filed by plaintiff, the Court finds no merit in
the motion. "On the first ground, defendants claim that by virtue of the provision in
the Guarantee (the actionable document) which reads
This guarantee and all rights, obligations and liabilities arising hereunder
shall be construed and determined under and may be enforced in
accordance with the laws of the Republic of Singapore. We hereby agree
that the courts in Singapore shall have jurisdiction over all disputes
arising under this guarantee, the Court has no jurisdiction over the
subject matter of the case. The Court finds and concludes otherwise.
There is nothing in the Guarantee which says that the courts of Singapore
shall have jurisdiction to the exclusion of the courts of other countries or
nations. Also, it has long been established in law and jurisprudence that
jurisdiction of courts is fixed by law; it cannot be conferred by the will,
submission or consent of the parties.
On the second ground, it is asserted that defendant Robert' , Sherman is
not a citizen nor a resident of the Philippines. This argument holds no
water. Jurisdiction over the persons of defendants is acquired by service
of summons and copy of the complaint on them. There has been a valid
service of summons on both defendants and in fact the same is admitted
when said defendants filed a 'Motion for Extension of Time to File
Responsive Pleading on December 5, 1984.
WHEREFORE, the Motion to Dismiss is hereby DENIED.
SO ORDERED.

A motion for reconsideration of the said order was filed by private respondents which was,
however, denied (p. 66, Rollo).
Private respondents then filed before the respondent Intermediate Appellate Court (now
Court of Appeals) a petition for prohibition with preliminary injunction and/or prayer for a
restraining order (pp. 39-48, Rollo). On August 2, 1985, the respondent Court rendered a
decision (p. 37, Rollo), the dispositive portion of which reads:
WHEREFORE, the petition for prohibition with preliminary injuction is hereby
GRANTED. The respondent Court is enjoined from taking further cognizance of the
case and to dismiss the same for filing with the proper court of Singapore which is
the proper forum. No costs.
SO ORDERED.
The motion for reconsideration was denied (p. 38, Rollo), hence, the present petition.
The main issue is whether or not Philippine courts have jurisdiction over the suit.
The controversy stems from the interpretation of a provision in the Joint and Several
Guarantee, to wit:
(14) This guarantee and all rights, obligations and liabilites arising hereunder shall
be construed and determined under and may be enforced in accordance with the
laws of the Republic of Singapore. We hereby agree that the Courts in Singapore
shall have jurisdiction over all disputes arising under this guarantee. ... (p. 53-
A, Rollo)
In rendering the decision in favor of private respondents, the Court of Appeals made, the
following observations (pp. 35-36, Rollo):
There are significant aspects of the case to which our attention is invited. The loan
was obtained by Eastern Book Service PTE, Ltd., a company incorporated
in Singapore. The loan was granted by the Singapore Branch of Hongkong and
Shanghai Banking Corporation. The Joint and Several Guarantee was also
concluded in Singapore. The loan was in Singaporean dollars and the repayment
thereof also in the same currency. The transaction, to say the least, took place in
Singporean setting in which the law of that country is the measure by which that
relationship of the parties will be governed.
Contrary to the position taken by respondents, the guarantee agreement
compliance that any litigation will be before the courts of Singapore and that the
rights and obligations of the parties shall be construed and determined in
63
accordance with the laws of the Republic of Singapore. A closer examination of
paragraph 14 of the Guarantee Agreement upon which the motion to dismiss is
based, employs in clear and unmistakeable (sic) terms the word 'shall' which under
statutory construction is mandatory.
Thus it was ruled that:
... the word 'shall' is imperative, operating to impose a duty which may be enforced
(Dizon vs. Encarnacion, 9 SCRA 714).lwph1.t
There is nothing more imperative and restrictive than what the agreement
categorically commands that 'all rights, obligations, and liabilities arising
hereunder shall be construed and determined under and may be enforced in
accordance with the laws of the Republic of Singapore.'
While it is true that "the transaction took place in Singaporean setting" and that the Joint and
Several Guarantee contains a choice-of-forum clause, the very essence of due process
dictates that the stipulation that "[t]his guarantee and all rights, obligations and liabilities
arising hereunder shall be construed and determined under and may be enforced in
accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in
Singapore shall have jurisdiction over all disputes arising under this guarantee" be liberally
construed. One basic principle underlies all rules of jurisdiction in International Law: a State
does not have jurisdiction in the absence of some reasonable basis for exercising it, whether
the proceedings are in rem quasi in rem or in personam. To be reasonable, the jurisdiction
must be based on some minimum contacts that will not offend traditional notions of fair play
and substantial justice (J. Salonga, Private International Law, 1981, p. 46). Indeed, as pointed-
out by petitioner BANK at the outset, the instant case presents a very odd situation. In the
ordinary habits of life, anyone would be disinclined to litigate before a foreign tribunal, with
more reason as a defendant. However, in this case, private respondents are Philippine
residents (a fact which was not disputed by them) who would rather face a complaint against
them before a foreign court and in the process incur considerable expenses, not to mention
inconvenience, than to have a Philippine court try and resolve the case. Private respondents'
stance is hardly comprehensible, unless their ultimate intent is to evade, or at least delay, the
payment of a just obligation.
The defense of private respondents that the complaint should have been filed in Singapore is
based merely on technicality. They did not even claim, much less prove, that the filing of the
action here will cause them any unnecessary trouble, damage, or expense. On the other
hand, there is no showing that petitioner BANK filed the action here just to harass private
respondents.
In the case of Polytrade Corporation vs. Blanco, G.R. No. L-27033, October 31, 1969, 30 SCRA
187, it was ruled:

... An accurate reading, however, of the stipulation, 'The parties agree to sue and
be sued in the Courts of Manila,' does not preclude the filing of suits in the
residence of plaintiff or defendant. The plain meaning is that the parties merely
consented to be sued in Manila. Qualifying or restrictive words which would
indicate that Manila and Manila alone is the venue are totally absent therefrom.
We cannot read into that clause that plaintiff and defendant bound themselves to
file suits with respect to the last two transactions in question only or exclusively in
Manila. For, that agreement did not change or transfer venue. It simply is
permissive. The parties solely agreed to add the courts of Manila as tribunals to
which they may resort. They did not waive their right to pursue remedy in the
courts specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non
praesumitur.
This ruling was reiterated in the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., et al.,
G.R. No. 57250, October 30, 1981, 108 SCRA 740, where the stipulation was "[i]n case of
litigation, jurisdiction shall be vested in the Court of Davao City." We held:
Anent the claim that Davao City had been stipulated as the venue, suffice it to say
that a stipulation as to venue does not preclude the filing of suits in the residence
of plaintiff or defendant under Section 2 (b), Rule 4, Rules of Court, in the absence
of qualifying or restrictive words in the agreement which would indicate that the
place named is the only venue agreed upon by the parties.
Applying the foregoing to the case at bar, the parties did not thereby stipulate that only the
courts of Singapore, to the exclusion of all the rest, has jurisdiction. Neither did the clause in
question operate to divest Philippine courts of jurisdiction. In International Law, jurisdiction
is often defined as the light of a State to exercise authority over persons and things within its
boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction over
travelling sovereigns, ambassadors and diplomatic representatives of other States, and
foreign military units stationed in or marching through State territory with the permission of
the latter's authorities. This authority, which finds its source in the concept of sovereignty, is
exclusive within and throughout the domain of the State. A State is competent to take hold
of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all
kinds of cases brought before them (J. Salonga, Private International Law, 1981, pp. 37-
38).lwph1.t
As regards the issue on improper venue, petitioner BANK avers that the objection to
improper venue has been waived. However, We agree with the ruling of the respondent
Court that:
While in the main, the motion to dismiss fails to categorically use with exactitude
the words 'improper venue' it can be perceived from the general thrust and
context of the motion that what is meant is improper venue, The use of the word
'jurisdiction' was merely an attempt to copy-cat the same word employed in the
guarantee agreement but conveys the concept of venue. Brushing aside all
64
technicalities, it would appear that jurisdiction was used loosely as to be
synonymous with venue. It is in this spirit that this Court must view the motion to
dismiss. ... (p. 35, Rollo).
At any rate, this issue is now of no moment because We hold that venue here was properly
laid for the same reasons discussed above.
The respondent Court likewise ruled that (pp. 36-37, Rollo):
... In a conflict problem, a court will simply refuse to entertain the case if it is not
authorized by law to exercise jurisdiction. And even if it is so authorized, it may still
refuse to entertain the case by applying the principle of forum non conveniens. ...
However, whether a suit should be entertained or dismissed on the basis of the principle
of forum non conveniens depends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial court (J. Salonga, Private International Law,
1981, p. 49).lwph1.t Thus, the respondent Court should not have relied on such principle.
Although the Joint and Several Guarantee prepared by petitioner BANK is a contract of
adhesion and that consequently, it cannot be permitted to take a stand contrary to the
stipulations of the contract, substantial bases exist for petitioner Bank's choice of forum, as
discussed earlier.
Lastly, private respondents allege that neither the petitioner based at Hongkong nor its
Philippine branch is involved in the transaction sued upon. This is a vain attempt on their part
to further thwart the proceedings below inasmuch as well-known is the rule that a defendant
cannot plead any defense that has not been interposed in the court below.
ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the decision of
the Regional Trial Court is REINSTATED, with costs against private respondents. This decision
is immediately executory.
SO ORDERED.
FACTS:
It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (COMPANY), a
company incorporated in Singapore applied with and was granted by HSBC Singapore branch
an overdraft facility in the maximum amount of Singapore dollars 200,000 with interest at 3%
over HSBC prime rate, payable monthly, on amounts due under said overdraft facility.
As a security for the repayment by the COMPANY of sums advanced by HSBC to it through
the aforesaid overdraft facility, in 1982, both private respondents and a certain Lowe, all of

whom were directors of the COMPANY at such time, executed a Joint and Several Guarantee
in favor of HSBC whereby private respondents and Lowe agreed to pay, jointly and severally,
on demand all sums owed by the COMPANY to petitioner BANK under the aforestated
overdraft facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations and liabilities arising hereunder shall be construed
and determined under and may be enforced in accordance with the laws of the Republic of
Singapore. We hereby agree that the Courts of Singapore shall have jurisdiction over all
disputes arising under this guarantee.
The COMPANY failed to pay its obligation. Thus, HSBC demanded payment and inasmuch as
the private respondents still failed to pay, HSBC filed A complaint for collection of a sum of
money against private respondents Sherman and Reloj before RTC of Quezon City.
Private respondents filed an MTD on the ground of lack of jurisdiction over the subject
matter. The trial court denied the motion. They then filed before the respondent IAC a
petition for prohibition with preliminary injunction and/or prayer for a restraining order. The
IAC rendered a decision enjoining the RTC Quezon City from taking further cognizance of the
case and to dismiss the same for filing with the proper court of Singapore which is the proper
forum. MR denied, hence this petition.
ISSUE: Do Philippine courts have jurisdiction over the suit, vis-a-vis the Guarantee stipulation
regarding jurisdiction?
HELD: YES
One basic principle underlies all rules of jurisdiction in International Law: a State does not
have jurisdiction in the absence of some reasonable basis for exercising it, whether the
proceedings are in rem quasi in rem or in personam. To be reasonable, the jurisdiction must
be based on some minimum contacts that will not offend traditional notions of fair play and
substantial justice
The defense of private respondents that the complaint should have been filed in Singapore is
based merely on technicality. They did not even claim, much less prove, that the filing of the
action here will cause them any unnecessary trouble, damage, or expense. On the other
hand, there is no showing that petitioner BANK filed the action here just to harass private
respondents.
In the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., where the stipulation was [i]n
case of litigation, jurisdiction shall be vested in the Court of Davao City. We held:
65
Anent the claim that Davao City had been stipulated as the venue, suffice it to say that a
stipulation as to venue does not preclude the filing of suits in the residence of plaintiff or
defendant under Section 2 (b), Rule 4, ROC, in the absence of qualifying or restrictive words
in the agreement which would indicate that the place named is the only venue agreed upon
by the parties.
Applying the foregoing to the case at bar, the parties did not thereby stipulate that only the
courts of Singapore, to the exclusion of all the rest, has jurisdiction. Neither did the clause in
question operate to divest Philippine courts of jurisdiction. In International Law, jurisdiction
is often defined as the light of a State to exercise authority over persons and things within its
boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction over
travelling sovereigns, ambassadors and diplomatic representatives of other States, and
foreign military units stationed in or marching through State territory with the permission of
the latters authorities. This authority, which finds its source in the concept of sovereignty, is
exclusive within and throughout the domain of the State. A State is competent to take hold
of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all
kinds of cases brought before them
NOTES:
The respondent IAC likewise ruled that:
In a conflict problem, a court will simply refuse to entertain the case if it is not authorized
by law to exercise jurisdiction. And even if it is so authorized, it may still refuse to entertain
the case by applying the principle of forum non conveniens.
However, whether a suit should be entertained or dismissed on the basis of the principle of
forum non conveniens depends largely upon the facts of the particular case and is addressed
to the sound discretion of the trial court. Thus, the IAC should not have relied on such
principle.
Facts:
Eastern Book & Supply Service (Singapore) was granted by HSBC Singapore an overdraft
facility. Sherman, et. al. and directors of Eastern Book executed a Joint and Several
Guarantee in favor of HSBC. Eastern Book defaulted. Hence, HSBC filed a suit for collection
against them before the Regional Trial Court of Quezon City. Sherman filed a Motion to
Dismiss on the ground of lack of jurisdiction over the complaint and persons of the
defendants. The guarantee provides: This guarantee and all rights, obligations and liabilities
arising hereunder shall be construed and determined under and may be enforced in
accordance with the laws of the Republic of Singapore.
 66

Held: Philippine courts have jurisdiction over the suit. The stipulation shall be liberally
construed. A stipulation as to venue does not preclude the filing of suits in the residence of
plaintiff or defendant under Sec 2 (b), Rule 4 of the Rules of Court, in the absence of
qualifying or restrictive words in the agreement which indicate that the place named is the
only venue agreed upon by the parties. The parties did not thereby stipulate that only the
courts of Singapore, to the exclusion of all the rest, have jurisdiction. Neither did the clause
in question operate to divest Philippine courts of jurisdiction. In International Law,
jurisdiction is often defined as the right of a state to exercise authority over persons and
things within its boundaries subject to certain exceptions. This authority, which finds its
source in the concept of sovereignty, is exclusive within and throughout the domain of the
state. A state is competent to take hold of any judicial matter it sees fit by making its courts
and agencies assume jurisdiction over all kinds of cases brought before them.

SECOND DIVISION
[G.R. Nos. 121576-78. June 16, 2000]
BANCO DO BRASIL, petitioner, vs. THE COURT OF APPEALS, HON. ARSENIO M. GONONG,
and CESAR S. URBINO, SR., respondents.
DECISION
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision1 [Penned by Associate Justice
Jainal D. Rasul and concurred in by Associate Justices Segundino G. Chua and Consuelo
Ynares-Santiago, now Associate Justice of the Supreme Court, in CA-G.R. S.P. Nos. 24669,
28387 & 29317, Rollo, pp. 33-47.] and the Resolution2 [Id., pp. 49-53.] of the Court of
Appeals3 [Former Special Eighth Division.] dated July 19, 1993 and August 15, 1995,
respectively, which reinstated the entire Decision4 [Penned by Judge Arsenio M. Gonong,
Civil Case No. 89-51451, Records, Vol. 2, pp. 517-528.] dated February 18, 1991 of the
Regional Trial Court of Manila, Branch 8, holding, among others, petitioner Banco do Brasil
liable to private respondent Cesar Urbino, Sr. for damages amounting to $300,000.00.5 [The
Appellate Court erroneously declared in its decision that the amount of P300,000.00 was
awarded by the trial court, Rollo, p. 36.]
At the outset, let us state that this case should have been consolidated with the recently
decided case of Vlason Enterprises Corporation v. Court of Appeals and Duraproof Services,
represented by its General Manager, Cesar Urbino Sr.6 [G.R. Nos. 121662-64, July 6, 1999,
Third Division, penned by Associate Justice Artemio V. Panganiban and concurred in by
Associate Justices Jose C. Vitug, Fidel P. Purisima, and Minerva P. Gonzaga-Reyes.], for these
two (2) cases involved the same material antecedents, though the main issue proffered in
the present petition vary with the Vlason case.
The material antecedents, as quoted from the Vlason7 [Decision in G.R. Nos. 121662-64, pp.
3-13.] case, are:
Poro Point Shipping Services, then acting as the local agent of Omega Sea Transport
Company of Honduras & Panama, a Panamanian Company (hereafter referred to as
Omega), requested permission for its vessel M/V Star Ace, which had engine
trouble, to unload its cargo and to store it at the Philippine Ports Authority (PPA)
compound in San Fernando, La Union while awaiting transhipment to Hongkong.
The request was approved by the Bureau of Customs.8 [Records, Vol. 1, pp. 27-
31.] Despite the approval, the customs personnel boarded the vessel when it
docked on January 7, 1989, on suspicion that it was the hijacked M/V Silver Med
owned by Med Line Philippines Co., and that its cargo would be smuggled into the
country.9 [Records, Vol. 1, p. 32.] The district customs collector seized said vessel
67
and its cargo pursuant to Section 2301, Tariff and Customs Code. A notice of
hearing of SFLU Seizure Identification No. 3-89 was served on its consignee,
Singkong Trading Co. of Hongkong, and its shipper, Dusit International Co., Ltd. of
Thailand.
While seizure proceedings were ongoing, La Union was hit by three typhoons, and
the vessel ran aground and was abandoned. On June 8, 1989, its authorized
representative, Frank Cadacio, entered into salvage agreement with private
respondent to secure and repair the vessel at the agreed consideration of $1
million and "fifty percent (50%) [of] the cargo after all expenses, cost and
taxes."10 [Records, Vol. 1, pp. 36-39.]
Finding that no fraud was committed, the District Collector of Customs, Aurelio M.
Quiray, lifted the warrant of seizure on July 1989.11 [Decision dated July 17, 1989,
in SFLU Seizure Identification No. 3-89; Records, Vol. 1, pp. 54-68.] However, in a
Second Indorsement dated November 11, 1989, then Customs Commissioner
Salvador M. Mison declined to issue a clearance for Quirays Decision; instead, he
forfeited the vessel and its cargo in accordance with Section 2530 of the Tariff and
Customs Code.12 [2nd Indorsement dated November 1989; Records, Vol. 1, pp. 70-
71.] Accordingly, acting District Collector of Customs John S. Sy issued a Decision
decreeing the forfeiture and the sale of the cargo in favor of the
government.13 [Decision dated November 17, 1989, Records, Vol. 1, pp. 74-86.]
To enforce its preferred salvors lien, herein Private Respondent Duraproof Services
filed with the Regional Trial Court of Manila a Petition for Certiorari, Prohibition
and Mandamus14 [Docketed as Civil Case No. 89-51451 and raffled to Branch 8;
Records, Vol. 1, pp. 1-26.] assailing the actions of Commissioner Mison and District
Collector Sy. Also impleaded as respondents were PPA Representative Silverio
Mangaoang and Med Line Philippines, Inc.
On January 10, 1989, private respondent amended its Petition15 [Ibid., pp. 122-
145.] to include former District Collector Quiray; PPA Port Manager Adolfo Ll.
Amor, Jr.; x Vlason Enterprises as represented by its president, Vicente Angliongto;
Singkong Trading Company as represented by Atty. Eddie Tamondong; Banco Du
Brasil; Dusit International Co.; Thai-Nan Enterprises Ltd., and Thai-United Trading
Co., Ltd.16 [Amended Petition, id., pp. 122 & 128-129.] x x x
Summonses for the amended Petition were served on Atty. Joseph Capuyan for
Med Line Philippines: Anglionto (through his secretary, Betty Bebero), Atty.
Tamondong and Commissioner Mison.17 [Sheriffs Return, id., pp. 160-164 &
171.] Upon motion of the private respondent, the trial court allowed summons by
publication to be served upon defendants who were not residents and had no
direct representative in the country.18 [Id., pp. 153-156.]
 68

On January 29, 1990, private respondent moved to declare respondents in default,
but the trial court denied the motion in its February 23, 1990 Order19 [Id., pp. 214-
215.], because Mangaoang and Amor had jointly filed a Motion to Dismiss, while
Mison and Med Line had moved separately for an extension to file a similar
motion.20 [Eventually, both separately filed their motions to dismiss.] Later it
rendered an Order dated July 2, 1990, giving due course to the motions to dismiss
filed by Mangaoang and Amor on the ground of litis pendentia, and by the
commissioner and district collector of customs on the ground of lack of
jurisdiction.21 [Records, Vol. 1, pp. 325-326.] In another Order, the trial court
dismissed the action against Med Line Philippines on the ground of litis
pendentia.22 [Order dated September 10, 1990; Records, Vol. 2, p. 359.]
On February 18, 1991, the trial court disposed as follows:
summons.] Cesar Urbino, general manager of private respondent, testified and
adduced evidence against the other respondents, x x x.33 [RTC Decision, p. 7; Rollo,
p. 92; penned by Judge Arsenio M. Gonong.]
On December 29, 1990, private respondent and Rada, representing Omega,
entered into a Memorandum of Agreement stipulating that Rada would write and
notify Omega regarding the demand for salvage fees of private respondent; and
that if Rada did not receive any instruction from his principal, he would assign the
vessel in favor of the salvor.34 [Memorandum of Agreement, id., pp. 511-512.]

On two other occasions, private respondent again moved to declare the following
"WHEREFORE, IN VIEW OF THE FOREGOING, based on the allegations,
in default: [Vlason], Quiray, Sy and Mison on March 26, 1990;23 [Records, Vol. 1,
prayer and evidence adduced, both testimonial and documentary, the
pp. 237-238.] and Banco [do] Bra[s]il, Dusit International Co., Inc., Thai-Nan
Court is convinced, that, indeed, defendants/respondents are liable to
Enterprises Ltd. and Thai-United Trading Co., Ltd. on August 24, 1990.24 [Ibid., pp.
[private respondent] in the amount as prayed for in the petition for which
351-352.] There is no record, however, that the trial court acted upon the motions.
it renders judgment as follows:
On September 18, 1990, [private respondent] filed another Motion for leave to
amend the petition,25 [Records, Vol. 2, pp. 370-371.] alleging that its counsel failed
to include "necessary and/or indispensable parties": Omega represented by 1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, [r]elief [c]aptain of the
Cadacio; and M/V Star Ace represented by Capt. Nahon Rada, relief captain. Aside vessel and Omega Sea Transport Company, Inc., represented by Frank Cadacio[,] is ordered
from impleading these additional respondents, private respondent also alleged in to refrain from alienating or [transferring] the vessel M/V Star Ace to any third parties;
the Second (actually, third) Amended Petition26 [Motion for Leave to Admit
Second Amended Petition and Supplemental Petition, ibid., p. 370; Second 2. Singkong Trading Company to pay the following:
Amended Petition with Supplemental Petition, ibid., pp. 372-398.] that the owners
of the vessel intended to transfer and alienate their rights and interest over the a. Taxes due the government;
vessel and its cargo, to the detriment of the private respondent.

b. Salvage fees on the vessel in the amount of $1,000,000.00 based on xxx Lloyds
The trial court granted leave to private respondent to amend its Petition, but only Standard Form of Salvage Agreement;
to exclude the customs commissioner and the district collector.27 [Order dated
September 28, 1990, Records, Vol. 2, p. 407.] Instead, private respondent filed the
"Second Amended Petition with Supplemental Petition" against Singkong Trading c. Preservation, securing and guarding fees on the vessel in the amount of
Company; and Omega and M/V Star Ace,28 [Records, Vol. 2, pp. 414-415.] to which $225,000.00;
Cadacio and Rada filed a Joint Answer.29 [Ibid., pp. 425-288.]
d. Maintenance fees in the amount of P2,685,000.00;
Declared in default in an Order issued by the trial court on January 23, 1991, were
the following: Singkong Trading Co., Commissioner Mison, M/V Star Ace and e. Salaries of the crew from August 16, 1989 to December 1989 in the amount of
Omega.30 [Id., p. 506.] Private respondent filed, and the trial court granted, an ex $43,000.00 and unpaid salaries from January 1990 up to the present;
parte Motion to present evidence against the defaulting respondents.31 [Order
dated December 10, 1990, id., p. 492.] Only private respondent, Atty. Tamondong, f. Attorneys fees in the amount of P656,000.00;
Commissioner Mison, Omega and M/V Star Ace appeared in the next pretrial
hearing; thus, the trial court declared the other respondents in default and allowed
3. [Vlason] Enterprises to pay [private respondent] in the amount of P3,000,000.00 for
private respondent to present evidence against them.32 [Order dated January 23,
damages;
1991, Records, Vol. 2, p. 506. The records (pp. 493-495), however, show that only
Duraproof Service, Singkong Trading and M/V Star Ace were served

4. Banco [Du] Brasil to pay [private respondent] in the amount of $300,000.00 in
damages;35 [Italics supplied.] and finally,
5. Costs of [s]uit."
Subsequently, upon the motion of Omega, Singkong Trading Co., and private
respondent, the trial court approved a Compromise Agreement36 [Records, Vol. 2,
pp. 535-538.] among the movants, reducing by 20 percent the amounts adjudged.
For their part, respondents-movants agreed not to appeal the Decision.37 [Order
dated March 6, 1991, ibid., pp. 539-541. Private respondent entered into two
separate compromise agreements with Singkong Trading Co. (id., pp. 535-536) and
another with Omega (id., pp. 537-538). Both agreements were dated March 4,
1991.] On March 8, 1991, private respondent moved for the execution of
judgment, claiming that the trial court Decision had already become final and
executory. The Motion was granted and a Writ of Execution was issued. To satisfy
the Decision, Sheriffs Jorge Victorino, Amado Sevilla and Dionisio Camagon were
deputized on March 13, 1991 to levy and to sell on execution the defendants vessel
and personal property.
On March 18, 1991, the Bureau of Customs also filed an ex parte Motion to recall
the execution, and to quash the notice of levy and the sale on execution. Despite
this Motion, the auction sale was conducted on March 21, 1991 by Sheriff
Camagon, with private respondent submitting the winning bid. The trial court
ordered the deputy sheriffs to cease and desist from implementing the Writ of
Execution and from levying on the personal property of the defendants.
Nevertheless, Sheriff Camagon issued the corresponding Certificate of Sale on
March 27, 1991.
On April 10, 1991, petitioner Banco do Brasil filed, by special appearance, an Urgent Motion
to Vacate Judgement and to Dismiss Case38 [Rollo, pp. 67-73.] on the ground that the
February 18, 1991 Decision of the trial court is void with respect to it for having been
rendered without validly acquiring jurisdiction over the person of Banco do Brasil. Petitioner
subsequently amended its petition39 [Rollo, pp. 74-80.] to specifically aver that its special
appearance is solely for the purpose of questioning the Courts exercise of personal
jurisdiction.
On May 20, 1991, the trial court issued an Order40 [Rollo, pp. 81-82.] acting favorably on
petitioners motion and set aside as against petitioner the decision dated February 18, 1991
for having been rendered without jurisdiction over Banco do Brasils person. Private
respondent sought reconsideration41 [Records, Vol. 3, pp. 103-105.] of the Order dated May
20, 1991. However, the trial court in an Order42 [Rollo, p. 83.] dated June 21, 1991 denied
said motion.
Meanwhile, a certiorari petition43 [Docketed as CA-G.R. SP No. 24669.] was filed by private
respondent before public respondent Court of Appeals seeking to nullify the cease and desist
69
Order dated April 5, 1991 issued by Judge Arsenio M. Gonong. Two (2) more separate
petitions for certiorari were subsequently filed by private respondent. The second
petition44 [Docketed as CA-G.R. SP No. 28387.] sought to nullify the Order45 [Penned by
Judge Bernardo P. Pardo, then Executive Judge, and now Associate Justice of the Supreme
Court.] dated June 26, 1992 setting aside the Deputy Sheriffs return dated April 1, 1991 as
well as the certificate of sale issued by Deputy Sheriff Camagon. The third
petition46 [Docketed as CA-G.R. SP No. 29317.] sought to nullify the Order dated October 5,
1992 of the Court of Tax Appeals directing the Commissioner of Customs to place Bureau of
Customs and PNP officers and guards to secure the M/V Star Ace and its cargoes, make
inventory of the goods stored in the premises as indicated to belong to the private
respondent. Likewise challenged was the Order dated August 17, 1992 authorizing the sale of
M/V Star Ace and its cargoes.
These three (3) petitions were consolidated and on July 19, 1993, the appellate court
rendered its Decision47 [See Note 1, supra.] granting private respondents petitions, thereby
nullifying and setting aside the disputed orders and effectively "giving way to
the entire [decision dated February 18, 1991 of the x x x Regional Trial Court of Manila,
Branch 8, in Civil Case No. 89-51451 which remains valid, final andexecutory, if not yet wholly
executed."48 [Rollo, p. 46.]
Private respondent Urbino, Vlason Enterprises and petitioner Banco do Brasil filed separate
motions for reconsideration. For its part, petitioner Banco do Brasil sought reconsideration,
insofar as its liability for damages, on the ground that there was no valid service of summons
as service was on the wrong party the ambassador of Brazil. Hence, it argued, the trial court
did not acquire jurisdiction over petitioner Banco do Brasil.49 [Rollo, pp. 107.] Nonetheless,
the appellate court denied the motions for reconsideration in its Resolution50 [See Note
2, supra.] dated August 15, 1995.
Hence, the instant petition.
Petitioner Banco do Brasil takes exception to the appellate courts declaration that the suit
below is in rem, not in personam,51 [Rollo, pp. 19-21.] thus, service of summons by
publication was sufficient for the court to acquire jurisdiction over the person of petitioner
Banco do Brasil, and thereby liable to private respondent Cesar Urbino for damages claimed,
amounting to $300,000.00. Petitioner further challenges the finding that the February 18,
1991 decision of the trial court was already final and thus, cannot be modified or
assailed.52 [Rollo, p. 22-23.]
Petitioner avers that the action filed against it is an action for damages, as such it is an
action in personam which requires personal service of summons be made upon it for the
court to acquire jurisdiction over it. However, inasmuch as petitioner Banco do Brasil is
a non-resident foreign corporation, not engaged in business in the Philippines, unless it has
property located in the Philippines which may be attached to convert the action into an
action in rem, the court cannot acquire jurisdiction over it in respect of an action in
personam.

The petition bears merit, thus the same should be as it is hereby granted.
First. When the defendant is a nonresident and he is not found in the country, summons may
be served extraterritorially in accordance with Rule 14, Section 1753 [Section 17.
Extraterritorial service When the defendant does not reside and is not found in the
Philippines and the action affects the personal status of the plaintiff or relates to, or the
subject of which, is property within the Philippines, in which the defendant has or claims a
lien or interest, actual or contingent, or in which relief demanded consists, wholly or in part,
in excluding the defendant from any interest therein, or the property of the defendant has
been attached in the Philippines, service may, by leave of court, be effected out of the
Philippines by personal service as under section 7; or by publication in a newspaper of
general circulation in such places and for such time as the court may order, in which case a
copy of the summons and order of the court shall be sent by registered mail to the last
known address of the defendant, or in any other manner the court may deem sufficient. Any
order granting such leave shall specify a reasonable time, which shall not be less than sixty
(60) days after notice, within which the defendant must answer.] of the Rules of Court. Under
this provision, there are only four (4) instances when extraterritorial service of summons is
proper, namely: "(1) when the action affects the personal status of the plaintiffs; (2) when
the action relates to, or the subject of which is property, within the Philippines, in which the
defendant claims a lien or interest, actual or contingent; (3) when the relief demanded in
such action consists, wholly or in part, in excluding the defendant from any interest in
property located in the Philippines; and (4) when the defendant non-residents property has
been attached within the Philippines."54 [Ibid., now Sec. 15 of the 1997 Rules of Civil
Procedure.] In these instances, service of summons may be effected by (a) personal service
out of the country, with leave of court; (b) publication, also with leave of court; or (c) any
other manner the court may deem sufficient.55 [Ibid..]
Clear from the foregoing, extrajudicial service of summons apply only where the action is in
rem, an action against the thing itself instead of against the person, or in an action quasi in
rem, where an individual is named as defendant and the purpose of the proceeding is to
subject his interest therein to the obligation or loan burdening the property. This is so
inasmuch as, in in rem and quasi in rem actions, jurisdiction over the person of the defendant
is not a prerequisite to confer jurisdiction on the court provided that the court acquires
jurisdiction over the res.56 [Asiavest Limited v. Court of Appeals, 296 SCRA 539, 552-554
[1998]; Valmonte v. Court of Appeals, 252 SCRA 92, 99-102 [1996].]
However, where the action is in personam, one brought against a person on the basis of his
personal liability, jurisdiction over the person of the defendant is necessary for the court to
validly try and decide the case. When the defendant is a non-resident, personal service of
summons within the state is essential to the acquisition of jurisdiction over the
person.57 [The Dial Corporation v. Soriano, 161 SCRA 737, 743 [1988] citing Boudard v. Tait,
67 Phil 170, 174 [1939].] This cannot be done, however, if the defendant is not physically
present in the country, and thus, the court cannot acquire jurisdiction over his person and
therefore cannot validly try and decide the case against him.58 [Asiavest Limited v. Court of
Appeals, supra. at 554.]
70
In the instant case, private respondents suit against petitioner is premised on petitioners
being one of the claimants of the subject vessel M/V Star Ace.59 [Records, Vol. 1, pp. 128-
129.] Thus, it can be said that private respondent initially sought only to exclude petitioner
from claiming interest over the subject vessel M/V Star Ace. However, private respondent
testified during the presentation of evidence that, for being a nuisance defendant, petitioner
caused irreparable damage to private respondent in the amount of $300,000.00.60 [Records,
Vol. 2, p. 567.] Therefore, while the action is in rem, by claiming damages, the relief
demanded went beyond the res and sought a relief totally alien to the action.
It must be stressed that any relief granted in rem or quasi in rem actions must be confined to
the res, and the court cannot lawfully render a personal judgment against the
defendant.61 [Villareal v. Court of Appeals, 295 SCRA 511, 525 [1998].] Clearly, the
publication of summons effected by private respondent is invalid and ineffective for the trial
court to acquire jurisdiction over the person of petitioner, since by seeking to recover
damages from petitioner for the alleged commission of an injury to his person or
property62 [The Dial Corporation v. Soriano, supra. at 742 citing Hernandez v. Development
Bank of the Phil., 71 SCRA 290, 292-293 [1976].] caused by petitioners being a nuisance
defendant, private respondents action became in personam. Bearing in mind the in
personam nature of the action, personal or, if not possible, substituted service of summons
on petitioner, and not extraterritorial service, is necessary to confer jurisdiction over the
person of petitioner and validly hold it liable to private respondent for damages. Thus, the
trial court had no jurisdiction to award damages amounting to $300,000.00 in favor of
private respondent and as against herein petitioner.
Second. We settled the issue of finality of the trial courts decision dated February 18, 1991 in
the Vlason case, wherein we stated that, considering the admiralty case involved multiple
defendants, "each defendant had a different period within which to appeal, depending on
the date of receipt of decision."63 [Decision in G.R. Nos. 121662-64, p. 27.] Only upon the
lapse of the reglementary period to appeal, with no appeal perfected within such period,
does the decision become final and executory.64 [Ibid.]
In the case of petitioner, its Motion to Vacate Judgment and to Dismiss Case was filed on
April 10, 1991, only six (6) days after it learned of the existence of the case upon being
informed by the Embassy of the Federative Republic of Brazil in the Philippines, on April 4,
1991, of the February 18, 1991 decision.65 [Rollo, pp. 67-80.] Thus, in the absence of any
evidence on the date of receipt of decision, other than the alleged April 4, 1991 date when
petitioner learned of the decision, the February 18, 1991 decision of the trial court cannot be
said to have attained finality as regards the petitioner.
WHEREFORE, the subject petition is hereby GRANTED. The Decision and the Resolution of
the Court of Appeals dated July 19, 1993 and August 15, 1995, respectively, in CA-G.R. SP
Nos. 24669, 28387 and 29317 are hereby REVERSED and SET ASIDE insofar as they affect
petitioner Banco do Brasil. The Order dated May 20, 1991 of the Regional Trial Court of
Manila, Branch 8 in Civil Case No. 89-51451 is REINSTATED.

SO ORDERED.
333 SCRA 545 Conflict of Laws Private International Law Service of Summons in In
Personam Cases
In 1989, Cesar Urbino, Sr. sued Poro Point Shipping Services for damages the former incurred
when one of the latters ship ran aground causing losses to Urbino. Urbino impleaded Banco
Do Brasil (BDB), a foreign corporation not engaged in business in the Philippines nor does it
have any office here or any agent. BDB was impleaded simply because it has a claim over the
sunken ship. BDB however failed to appear multiple times. Eventually, a judgment was
rendered and BDB was adjudged to pay $300,000.00 in damages in favor of Urbino for BDB
being a nuisance defendant.
BDB assailed the said decision as it argued that there was no valid service of summons
because the summons was issued to the ambassador of Brazil. Further, the other summons
which were made through publication is not applicable to BDB as it alleged that the action
against them is in personam.
ISSUE: Whether or not the court acquired jurisdiction over Banco Do Brasil.
HELD:
No. Banco Do Brasil is correct. Although the suit is originally in rem as it was BDBs claim on
the sunken ship which was used as the basis for it being impleaded, the action nevertheless
became an in personam one when Urbino asked for damages in the said amount. As such,
only a personal service of summons would have vested the court jurisdiction over BDB.
Where the action is in personam, one brought against a person on the basis of his personal
liability, jurisdiction over the person of the defendant is necessary for the court to validly try
and decide the case. When the defendant is a non-resident, personal service of summons
within the state is essential to the acquisition of jurisdiction over the person. This cannot be
done, however, if the defendant is not physically present in the country, and thus, the court
cannot acquire jurisdiction over his person and therefore cannot validly try and decide the
case against him.
Rule 14, Section 15 - Banco do Brasil vs Court of Appeals 333 SCRA 545 (June 16, 2000)
Ponente: Justice De Leon Facts:
M/V Star Ace a vessel owned and operated by Poro Point Shipping Services (PPSS) ran
aground in La Union during a typhoon. In 1989, Cesar Urbino, Sr. sued PPSS for damages. He
also impleaded Banco do Brasil (BDB) for the sole reason that it has a claim over the ship.
BDB is a foreign corporation not engaged in business in the Philippines. The Trial court ruled
in favor of Urbino. BDB appealed arguing that there was no valid service of summons
because the same was issued to the ambassador of Brazil and that summon through
publication was inapplicable to it as the action against them is an action in personam.
71
Issue: Whether or not the summons were properly issued.
Held:
The summons was not properly issued. When the defendant is a non-resident and he is not
found in the country, summons may be served extraterritorially in accordance with Rule 14,
Section 17 (now section 15) of the Rules of Court. Under this provision, there are only four
(4) instances when extraterritorial service of summons is proper, namely: "(1) when the
action affects the personal status of the plaintiffs; (2) when the action relates to, or the
subject of which is property, within the Philippines, in which the defendant claims a lien or
interest, actual or contingent; (3) when the relief demanded in such action consists, wholly or
in part, in excluding the defendant from any interest in property located in the Philippines;
and (4) when the defendant non-residents property has been attached within the
Philippines." In these instances, service of summons may be effected by (a) personal service
out of the country, with leave of court; (b) publication, also with leave of court; or (c) any
other manner the court may deem sufficient. Extrajudicial services of summons apply only
where the action is in rem. However, where the action is in personam, jurisdiction over the
person of the defendant is necessary for the court to validly try and decide the case. When
the defendant is a non-resident, personal service of summons within the state is essential to
the acquisition of jurisdiction over the person. This cannot be done, however, if the
defendant is not physically present in the country, and thus, the court cannot acquire
jurisdiction over his person and therefore cannot validly try and decide the case against him.
In the present case, the relief demanded went beyond the res by making a claim for
damages, thus, converting the respondents action into an action in personam. Bearing in
mind the in personam nature of the action, personal or, if not possible, substituted service of
summons on petitioner, and not extraterritorial service, is necessary to confer jurisdiction
over the person of petitioner and validly hold it liable to private respondent for damages.
333 SCRA 545 Conflict of Laws Private International Law Service of Summons in In
Personam Cases
In 1989, Cesar Urbino, Sr. sued Poro Point Shipping Services for damages the former incurred
when one of the latters ship ran aground causing losses to Urbino. Urbino impleaded Banco
Do Brasil (BDB), a foreign corporation not engaged in business in the Philippines nor does it
have any office here or any agent. BDB was impleaded simply because it has a claim over the
sunken ship. BDB however failed to appear multiple times. Eventually, a judgment was
rendered and BDB was adjudged to pay $300,000.00 in damages in favor of Urbino for BDB
being a nuisance defendant.
BDB assailed the said decision as it argued that there was no valid service of summons
because the summons was issued to the ambassador of Brazil. Further, the other summons
 72

which were made through publication is not applicable to BDB as it alleged that the action
against them is in personam.

ISSUE: Whether or not the court acquired jurisdiction over Banco Do Brasil.

HELD:

No. Banco Do Brasil is correct. Although the suit is originally in rem as it was BDBs claim on
the sunken ship which was used as the basis for it being impleaded, the action nevertheless
became an in personam one when Urbino asked for damages in the said amount. As such,
only a personal service of summons would have vested the court jurisdiction over BDB.
Where the action is in personam, one brought against a person on the basis of his personal
liability, jurisdiction over the person of the defendant is necessary for the court to validly try
and decide the case. When the defendant is a non-resident, personal service of summons
within the state is essential to the acquisition of jurisdiction over the person. This cannot be
done, however, if the defendant is not physically present in the country, and thus, the court
cannot acquire jurisdiction over his person and therefore cannot validly try and decide the
case against him.

FIRST DIVISION
G.R. No. 175799 November 28, 2011
NM ROTHSCHILD & SONS (AUSTRALIA) LIMITED, Petitioner,
vs.
LEPANTO CONSOLIDATED MINING COMPANY, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Decision1
This is a Petition for Review on Certiorari assailing the of the Court of Appeals
dated September 8, 2006 in CA-G.R. SP No. 94382 and its Resolution2 dated December 12,
2006, denying the Motion for Reconsideration.
On August 30, 2005, respondent Lepanto Consolidated Mining Company filed with the
Regional Trial Court (RTC) of Makati City a Complaint3 against petitioner NM Rothschild &
Sons (Australia) Limited praying for a judgment declaring the loan and hedging contracts
between the parties void for being contrary to Article 20184 of the Civil Code of the
Philippines and for damages. The Complaint was docketed as Civil Case No. 05-782, and was
raffled to Branch 150. Upon respondents (plaintiffs) motion, the trial court authorized
respondents counsel to personally bring the summons and Complaint to the Philippine
Consulate General in Sydney, Australia for the latter office to effect service of summons on
petitioner (defendant).
On October 20, 2005, petitioner filed a Special Appearance With Motion to Dismiss5 praying
for the dismissal of the Complaint on the following grounds: (a) the court has not acquired
jurisdiction over the person of petitioner due to the defective and improper service of
summons; (b) the Complaint failed to state a cause of action and respondent does not have
any against petitioner; (c) the action is barred by estoppel; and (d) respondent did not come
to court with clean hands.
On November 29, 2005, petitioner filed two Motions: (1) a Motion for Leave to take the
deposition of Mr. Paul Murray (Director, Risk Management of petitioner) before the
Philippine Consul General; and (2) a Motion for Leave to Serve Interrogatories on
respondent.
On December 9, 2005, the trial court issued an Order6 denying the Motion to Dismiss.
According to the trial court, there was a proper service of summons through the Department
of Foreign Affairs (DFA) on account of the fact that the defendant has neither applied for a
license to do business in the Philippines, nor filed with the Securities and Exchange
Commission (SEC) a Written Power of Attorney designating some person on whom summons
and other legal processes maybe served. The trial court also held that the Complaint
73
sufficiently stated a cause of action. The other allegations in the Motion to Dismiss were
brushed aside as matters of defense which can best be ventilated during the trial.
On December 27, 2005, petitioner filed a Motion for Reconsideration.7 On March 6, 2006, the
trial court issued an Order denying the December 27, 2005 Motion for Reconsideration and
disallowed the twin Motions for Leave to take deposition and serve written interrogatories.8
On April 3, 2006, petitioner sought redress via a Petition for Certiorari9 with the Court of
Appeals, alleging that the trial court committed grave abuse of discretion in denying its
Motion to Dismiss. The Petition was docketed as CA-G.R. SP No. 94382.
On September 8, 2006, the Court of Appeals rendered the assailed Decision dismissing the
Petition for Certiorari. The Court of Appeals ruled that since the denial of a Motion to Dismiss
is an interlocutory order, it cannot be the subject of a Petition for Certiorari, and may only be
reviewed in the ordinary course of law by an appeal from the judgment after trial. On
December 12, 2006, the Court of Appeals rendered the assailed Resolution denying the
petitioners Motion for Reconsideration.
Meanwhile, on December 28, 2006, the trial court issued an Order directing respondent to
answer some of the questions in petitioners Interrogatories to Plaintiff dated September 7,
2006.
Notwithstanding the foregoing, petitioner filed the present petition assailing the September
8, 2006 Decision and the December 12, 2006 Resolution of the Court of Appeals. Arguing
against the ruling of the appellate court, petitioner insists that (a) an order denying a motion
to dismiss may be the proper subject of a petition for certiorari; and (b) the trial court
committed grave abuse of discretion in not finding that it had not validly acquired jurisdiction
over petitioner and that the plaintiff had no cause of action.
Respondent, on the other hand, posits that: (a) the present Petition should be dismissed for
not being filed by a real party in interest and for lack of a proper verification and certificate of
non-forum shopping; (b) the Court of Appeals correctly ruled that certiorari was not the
proper remedy; and (c) the trial court correctly denied petitioners motion to dismiss.
Our discussion of the issues raised by the parties follows:
Whether petitioner is a real party in interest
Respondent argues that the present Petition should be dismissed on the ground that
petitioner no longer existed as a corporation at the time said Petition was filed on February
1, 2007. Respondent points out that as of the date of the filing of the Petition, there is no
such corporation that goes by the name NM Rothschild and Sons (Australia) Limited. Thus,
according to respondent, the present Petition was not filed by a real party in interest, citing
our ruling in Philips Export B.V. v. Court of Appeals,10 wherein we held:

A name is peculiarly important as necessary to the very existence of a corporation (American
Steel Foundries vs. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160; Lauman vs. Lebanon
Valley R. Co., 30 Pa 42; First National Bank vs. Huntington Distilling Co., 40 W Va 530, 23 SE
792). Its name is one of its attributes, an element of its existence, and essential to its identity
(6 Fletcher [Perm Ed], pp. 3-4). The general rule as to corporations is that each corporation
must have a name by which it is to sue and be sued and do all legal acts. The name of a
corporation in this respect designates the corporation in the same manner as the name of an
individual designates the person (Cincinnati Cooperage Co. vs. Bate, 96 Ky 356, 26 SW 538;
Newport Mechanics Mfg. Co. vs. Starbird, 10 NH 123); and the right to use its corporate
name is as much a part of the corporate franchise as any other privilege granted (Federal
Secur. Co. vs. Federal Secur. Corp., 129 Or 375, 276 P 1100, 66 ALR 934; Paulino vs.
Portuguese Beneficial Association, 18 RI 165, 26 A 36).11
In its Memorandum12 before this Court, petitioner started to refer to itself as Investec
Australia Limited (formerly "NM Rothschild & Sons [Australia] Limited") and captioned said
Memorandum accordingly. Petitioner claims that NM Rothschild and Sons (Australia) Limited
still exists as a corporation under the laws of Australia under said new name. It presented
before us documents evidencing the process in the Australian Securities & Investment
Commission on the change of petitioners company name from NM Rothschild and Sons
(Australia) Limited to Investec Australia Limited.13
We find the submissions of petitioner on the change of its corporate name satisfactory and
resolve not to dismiss the present Petition for Review on the ground of not being prosecuted
under the name of the real party in interest. While we stand by our pronouncement in Philips
Export on the importance of the corporate name to the very existence of corporations and
the significance thereof in the corporations right to sue, we shall not go so far as to dismiss a
case filed by the proper party using its former name when adequate identification is
presented. A real party in interest is the party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit.14 There is no doubt in our
minds that the party who filed the present Petition, having presented sufficient evidence of
its identity and being represented by the same counsel as that of the defendant in the case
sought to be dismissed, is the entity that will be benefited if this Court grants the dismissal
prayed for.
Since the main objection of respondent to the verification and certification against forum
shopping likewise depends on the supposed inexistence of the corporation named therein,
we give no credit to said objection in light of the foregoing discussion.
Propriety of the Resort to a Petition for Certiorari with the Court of Appeals
We have held time and again that an order denying a Motion to Dismiss is an interlocutory
order which neither terminates nor finally disposes of a case as it leaves something to be
done by the court before the case is finally decided on the merits. The general rule,
therefore, is that the denial of a Motion to Dismiss cannot be questioned in a special civil
action for Certiorari which is a remedy designed to correct errors of jurisdiction and not
74
errors of judgment.15 However, we have likewise held that when the denial of the Motion to
Dismiss is tainted with grave abuse of discretion, the grant of the extraordinary remedy of
Certiorari may be justified. By "grave abuse of discretion" is meant:
[S]uch capricious and whimsical exercise of judgment that is equivalent to lack of jurisdiction.
The abuse of discretion must be grave as where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and must be so patent and gross
as to amount to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined by or to act all in contemplation of law.16
The resolution of the present Petition therefore entails an inquiry into whether the Court of
Appeals correctly ruled that the trial court did not commit grave abuse of discretion in its
denial of petitioners Motion to Dismiss. A mere error in judgment on the part of the trial
court would undeniably be inadequate for us to reverse the disposition by the Court of
Appeals.
Issues more properly ventilated during the trial of the case
As previously stated, petitioner seeks the dismissal of Civil Case No. 05-782 on the following
grounds: (a) lack of jurisdiction over the person of petitioner due to the defective and
improper service of summons; (b) failure of the Complaint to state a cause of action and
absence of a cause of action; (c) the action is barred by estoppel; and (d) respondent did not
come to court with clean hands.
As correctly ruled by both the trial court and the Court of Appeals, the alleged absence of a
cause of action (as opposed to the failure to state a cause of action), the alleged estoppel on
the part of petitioner, and the argument that respondent is in pari delicto in the execution of
the challenged contracts, are not grounds in a Motion to Dismiss as enumerated in Section 1,
Rule 1617 of the Rules of Court. Rather, such defenses raise evidentiary issues closely related
to the validity and/or existence of respondents alleged cause of action and should therefore
be threshed out during the trial.
As regards the allegation of failure to state a cause of action, while the same is usually
available as a ground in a Motion to Dismiss, said ground cannot be ruled upon in the present
Petition without going into the very merits of the main case.
It is basic that "[a] cause of action is the act or omission by which a party violates a right of
another."18 Its elements are the following: (1) a right existing in favor of the plaintiff, (2) a
duty on the part of the defendant to respect the plaintiff's right, and (3) an act or omission of
the defendant in violation of such right.19 We have held that to sustain a Motion to Dismiss
for lack of cause of action, the complaint must show that the claim for relief does not exist
and not only that the claim was defectively stated or is ambiguous, indefinite or uncertain.20

The trial court held that the Complaint in the case at bar contains all the three elements of a
cause of action, i.e., it alleges that: (1) plaintiff has the right to ask for the declaration of
nullity of the Hedging Contracts for being null and void and contrary to Article 2018 of the
Civil Code of the Philippines; (2) defendant has the corresponding obligation not to enforce
the Hedging Contracts because they are in the nature of wagering or gambling agreements
and therefore the transactions implementing those contracts are null and void under
Philippine laws; and (3) defendant ignored the advice and intends to enforce the Hedging
Contracts by demanding financial payments due therefrom.21
The rule is that in a Motion to Dismiss, a defendant hypothetically admits the truth of the
material allegations of the ultimate facts contained in the plaintiff's complaint.22 However,
this principle of hypothetical admission admits of exceptions. Thus, in Tan v. Court of
Appeals, 23 we held:
The flaw in this conclusion is that, while conveniently echoing the general rule that
averments in the complaint are deemed hypothetically admitted upon the filing of a motion
to dismiss grounded on the failure to state a cause of action, it did not take into account the
equally established limitations to such rule, i.e., that a motion to dismiss does not admit the
truth of mere epithets of fraud; nor allegations of legal conclusions; nor an erroneous
statement of law; nor mere inferences or conclusions from facts not stated; nor mere
conclusions of law; nor allegations of fact the falsity of which is subject to judicial notice; nor
matters of evidence; nor surplusage and irrelevant matter; nor scandalous matter inserted
merely to insult the opposing party; nor to legally impossible facts; nor to facts which appear
unfounded by a record incorporated in the pleading, or by a document referred to; and, nor
to general averments contradicted by more specific averments. A more judicious resolution
of a motion to dismiss, therefore, necessitates that the court be not restricted to the
consideration of the facts alleged in the complaint and inferences fairly deducible therefrom.
Courts may consider other facts within the range of judicial notice as well as relevant laws
and jurisprudence which the courts are bound to take into account, and they are also fairly
entitled to examine records/documents duly incorporated into the complaint by the
pleader himself in ruling on the demurrer to the complaint.24 (Emphases supplied.)
In the case at bar, respondent asserts in the Complaint that the Hedging Contracts are void
for being contrary to Article 201825 of the Civil Code. Respondent claims that under the
Hedging Contracts, despite the express stipulation for deliveries of gold, the intention of the
parties was allegedly merely to compel each other to pay the difference between the value
of the gold at the forward price stated in the contract and its market price at the supposed
time of delivery.
Whether such an agreement is void is a mere allegation of a conclusion of law, which
therefore cannot be hypothetically admitted. Quite properly, the relevant portions of the
contracts sought to be nullified, as well as a copy of the contract itself, are incorporated in
the Complaint. The determination of whether or not the Complaint stated a cause of action
would therefore involve an inquiry into whether or not the assailed contracts are void under
Philippine laws. This is, precisely, the very issue to be determined in Civil Case No. 05-782.
75
Indeed, petitioners defense against the charge of nullity of the Hedging Contracts is the
purported intent of the parties that actual deliveries of gold be made pursuant thereto. Such
a defense requires the presentation of evidence on the merits of the case. An issue that
"requires the contravention of the allegations of the complaint, as well as the full ventilation,
in effect, of the main merits of the case, should not be within the province of a mere Motion
to Dismiss."26 The trial court, therefore, correctly denied the Motion to Dismiss on this
ground.
It is also settled in jurisprudence that allegations of estoppel and bad faith require proof.
Thus, in Paraaque Kings Enterprises, Inc. v. Court of Appeals,27 we ruled:
Having come to the conclusion that the complaint states a valid cause of action for breach of
the right of first refusal and that the trial court should thus not have dismissed the complaint,
we find no more need to pass upon the question of whether the complaint states a cause of
action for damages or whether the complaint is barred by estoppel or laches. As these
matters require presentation and/or determination of facts, they can be best resolved after
trial on the merits.28 (Emphases supplied.)
On the proposition in the Motion to Dismiss that respondent has come to court with unclean
hands, suffice it to state that the determination of whether one acted in bad faith and
whether damages may be awarded is evidentiary in nature. Thus, we have previously held
that "[a]s a matter of defense, it can be best passed upon after a full-blown trial on the
merits."29
Jurisdiction over the person of petitioner
Petitioner alleges that the RTC has not acquired jurisdiction over its person on account of the
improper service of summons. Summons was served on petitioner through the DFA, with
respondents counsel personally bringing the summons and Complaint to the Philippine
Consulate General in Sydney, Australia.
In the pleadings filed by the parties before this Court, the parties entered into a lengthy
debate as to whether or not petitioner is doing business in the Philippines. However, such
discussion is completely irrelevant in the case at bar, for two reasons. Firstly, since the
Complaint was filed on August 30, 2005, the provisions of the 1997 Rules of Civil Procedure
govern the service of summons. Section 12, Rule 14 of said rules provides:
Sec. 12. Service upon foreign private juridical entity. When the defendant is a foreign
private juridical entity which has transacted business in the Philippines, service may be
made on its resident agent designated in accordance with law for that purpose, or, if there
be no such agent, on the government official designated by law to that effect, or on any of its
officers or agents within the Philippines. (Emphasis supplied.)

This is a significant amendment of the former Section 14 of said rule which previously
provided:
Sec. 14. Service upon private foreign corporations. If the defendant is a foreign
corporation, or a nonresident joint stock company or association, doing business in the
Philippines, service may be made on its resident agent designated in accordance with law for
that purpose, or if there be no such agent, on the government official designated by law to
that effect, or on any of its officers or agents within the Philippines. (Emphasis supplied.)
The coverage of the present rule is thus broader.30 Secondly, the service of summons to
petitioner through the DFA by the conveyance of the summons to the Philippine Consulate
General in Sydney, Australia was clearly made not through the above-quoted Section 12, but
pursuant to Section 15 of the same rule which provides:
Sec. 15. Extraterritorial service. When the defendant does not reside and is not found in the
Philippines, and the action affects the personal status of the plaintiff or relates to, or the
subject of which is property within the Philippines, in which the defendant has or claims a
lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in
part, in excluding the defendant from any interest therein, or the property of the defendant
has been attached within the Philippines, service may, by leave of court, be effected out of
the Philippines by personal service as under section 6; or by publication in a newspaper of
general circulation in such places and for such time as the court may order, in which case a
copy of the summons and order of the court shall be sent by registered mail to the last
known address of the defendant, or in any other manner the court may deem sufficient. Any
order granting such leave shall specify a reasonable time, which shall not be less than sixty
(60) days after notice, within which the defendant must answer.
Respondent argues31 that extraterritorial service of summons upon foreign private juridical
entities is not proscribed under the Rules of Court, and is in fact within the authority of the
trial court to adopt, in accordance with Section 6, Rule 135:
Sec. 6. Means to carry jurisdiction into effect. When by law jurisdiction is conferred on a
court or judicial officer, all auxiliary writs, processes and other means necessary to carry it
into effect may be employed by such court or officer; and if the procedure to be followed in
the exercise of such jurisdiction is not specifically pointed out by law or by these rules, any
suitable process or mode of proceeding may be adopted which appears comformable to the
spirit of said law or rules.
Section 15, Rule 14, however, is the specific provision dealing precisely with the service of
summons on a defendant which does not reside and is not found in the Philippines, while
Rule 135 (which is in Part V of the Rules of Court entitled Legal Ethics) concerns the general
powers and duties of courts and judicial officers.
76
Breaking down Section 15, Rule 14, it is apparent that there are only four instances wherein a
defendant who is a non-resident and is not found in the country may be served with
summons by extraterritorial service, to wit: (1) when the action affects the personal status of
the plaintiffs; (2) when the action relates to, or the subject of which is property, within the
Philippines, in which the defendant claims a lien or an interest, actual or contingent; (3) when
the relief demanded in such action consists, wholly or in part, in excluding the defendant
from any interest in property located in the Philippines; and (4) when the defendant non-
resident's property has been attached within the Philippines. In these instances, service of
summons may be effected by (a) personal service out of the country, with leave of court; (b)
publication, also with leave of court; or (c) any other manner the court may deem
sufficient.32
Proceeding from this enumeration, we held in Perkin Elmer Singapore Pte Ltd. v. Dakila
Trading Corporation33 that:
Undoubtedly, extraterritorial service of summons applies only where the action is in rem or
quasi in rem, but not if an action is in personam.
When the case instituted is an action in rem or quasi in rem, Philippine courts already have
jurisdiction to hear and decide the case because, in actions in rem and quasi in rem,
jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on
the court, provided that the court acquires jurisdiction over the res. Thus, in such instance,
extraterritorial service of summons can be made upon the defendant. The said
extraterritorial service of summons is not for the purpose of vesting the court with
jurisdiction, but for complying with the requirements of fair play or due process, so that the
defendant will be informed of the pendency of the action against him and the possibility that
property in the Philippines belonging to him or in which he has an interest may be subjected
to a judgment in favor of the plaintiff, and he can thereby take steps to protect his interest if
he is so minded. On the other hand, when the defendant or respondent does not reside and
is not found in the Philippines, and the action involved is in personam, Philippine courts
cannot try any case against him because of the impossibility of acquiring jurisdiction over
his person unless he voluntarily appears in court.34 (Emphases supplied.)
In Domagas v. Jensen,35 we held that:
[T]he aim and object of an action determine its character. Whether a proceeding is in rem, or
in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by
these only. A proceeding in personam is a proceeding to enforce personal rights and
obligations brought against the person and is based on the jurisdiction of the person,
although it may involve his right to, or the exercise of ownership of, specific property, or seek
to compel him to control or dispose of it in accordance with the mandate of the court. The
purpose of a proceeding in personam is to impose, through the judgment of a court, some
responsibility or liability directly upon the person of the defendant. Of this character are suits
to compel a defendant to specifically perform some act or actions to fasten a pecuniary
liability on him.36

It is likewise settled that "[a]n action in personam is lodged against a person based on
personal liability; an action in rem is directed against the thing itself instead of the person;
while an action quasi in rem names a person as defendant, but its object is to subject that
persons interest in a property to a corresponding lien or obligation."37
The Complaint in the case at bar is an action to declare the loan and Hedging Contracts
between the parties void with a prayer for damages. It is a suit in which the plaintiff seeks
to be freed from its obligations to the defendant under a contract and to hold said defendant
pecuniarily liable to the plaintiff for entering into such contract. It is therefore an action in
personam, unless and until the plaintiff attaches a property within the Philippines belonging
to the defendant, in which case the action will be converted to one quasi in rem.
Since the action involved in the case at bar is in personam and since the defendant,
petitioner Rothschild/Investec, does not reside and is not found in the Philippines, the
Philippine courts cannot try any case against it because of the impossibility of acquiring
jurisdiction over its person unless it voluntarily appears in court.38
In this regard, respondent vigorously argues that petitioner should be held to have
voluntarily appeared before the trial court when it prayed for, and was actually afforded,
specific reliefs from the trial court.39 Respondent points out that while petitioners Motion to
Dismiss was still pending, petitioner prayed for and was able to avail of modes of discovery
against respondent, such as written interrogatories, requests for admission, deposition, and
motions for production of documents.40
Petitioner counters that under this Courts ruling in the leading case of La Naval Drug
Corporation v. Court of Appeals,41 a party may file a Motion to Dismiss on the ground of lack
of jurisdiction over its person, and at the same time raise affirmative defenses and pray for
affirmative relief, without waiving its objection to the acquisition of jurisdiction over its
person.42
It appears, however, that petitioner misunderstood our ruling in La Naval. A close reading of
La Naval reveals that the Court intended a distinction between the raising of affirmative
defenses in an Answer (which would not amount to acceptance of the jurisdiction of the
court) and the prayer for affirmative reliefs (which would be considered acquiescence to the
jurisdiction of the court):
In the same manner that a plaintiff may assert two or more causes of action in a court suit,
a defendant is likewise expressly allowed, under Section 2, Rule 8, of the Rules of Court, to
put up his own defenses alternatively or even hypothetically. Indeed, under Section 2, Rule
9, of the Rules of Court, defenses and objections not pleaded either in a motion to dismiss or
in an answer, except for the failure to state a cause of action, are deemed waived. We take
this to mean that a defendant may, in fact, feel enjoined to set up, along with his objection to
the court's jurisdiction over his person, all other possible defenses. It thus appears that it is
not the invocation of any of such defenses, but the failure to so raise them, that can result in
waiver or estoppel. By defenses, of course, we refer to the grounds provided for in Rule 16
77
of the Rules of Court that must be asserted in a motion to dismiss or by way of affirmative
defenses in an answer.
Mindful of the foregoing, in Signetics Corporation vs. Court of Appeals and Freuhauf
Electronics Phils., Inc. (225 SCRA 737, 738), we lately ruled:
"This is not to say, however, that the petitioner's right to question the jurisdiction of the
court over its person is now to be deemed a foreclosed matter. If it is true, as Signetics
claims, that its only involvement in the Philippines was through a passive investment in Sigfil,
which it even later disposed of, and that TEAM Pacific is not its agent, then it cannot really be
said to be doing business in the Philippines. It is a defense, however, that requires the
contravention of the allegations of the complaint, as well as a full ventilation, in effect, of the
main merits of the case, which should not thus be within the province of a mere motion to
dismiss. So, also, the issue posed by the petitioner as to whether a foreign corporation which
has done business in the country, but which has ceased to do business at the time of the
filing of a complaint, can still be made to answer for a cause of action which accrued while it
was doing business, is another matter that would yet have to await the reception and
admission of evidence. Since these points have seasonably been raised by the petitioner,
there should be no real cause for what may understandably be its apprehension, i.e., that
by its participation during the trial on the merits, it may, absent an invocation of separate
or independent reliefs of its own, be considered to have voluntarily submitted itself to the
court's jurisdiction."43 (Emphases supplied.)
In order to conform to the ruling in La Naval, which was decided by this Court in 1994, the
former Section 23, Rule 1444 concerning voluntary appearance was amended to include a
second sentence in its equivalent provision in the 1997 Rules of Civil Procedure:
SEC. 20. Voluntary appearance. The defendant's voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds
aside from lack of jurisdiction over the person of the defendant shall not be deemed a
voluntary appearance. (Emphasis supplied.)
The new second sentence, it can be observed, merely mentions other grounds in a Motion to
Dismiss aside from lack of jurisdiction over the person of the defendant. This clearly refers to
affirmative defenses, rather than affirmative reliefs.
Thus, while mindful of our ruling in La Naval and the new Section 20, Rule 20, this Court, in
several cases, ruled that seeking affirmative relief in a court is tantamount to voluntary
appearance therein.45 Thus, in Philippine Commercial International Bank v. Dy Hong
Pi,46 wherein defendants filed a "Motion for Inhibition without submitting themselves to the
jurisdiction of this Honorable Court" subsequent to their filing of a "Motion to Dismiss (for
Lack of Jurisdiction)," we held:

Besides, any lingering doubts on the issue of voluntary appearance dissipate when the
respondents' motion for inhibition is considered. This motion seeks a sole relief: inhibition of
Judge Napoleon Inoturan from further hearing the case. Evidently, by seeking affirmative
relief other than dismissal of the case, respondents manifested their voluntary submission
to the court's jurisdiction. It is well-settled that the active participation of a party in the
proceedings is tantamount to an invocation of the court's jurisdiction and a willingness to
abide by the resolution of the case, and will bar said party from later on impugning the
court's jurisdiction.47 (Emphasis supplied.)1wphi1
In view of the above, we therefore rule that petitioner, by seeking affirmative reliefs from the
trial court, is deemed to have voluntarily submitted to the jurisdiction of said court. A party
cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and
after obtaining or failing to obtain such relief, repudiate or question that same
jurisdiction.48 Consequently, the trial court cannot be considered to have committed grave
abuse of discretion amounting to lack or excess of jurisdiction in the denial of the Motion to
Dismiss on account of failure to acquire jurisdiction over the person of the defendant.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision of the Court of
Appeals dated September 8, 2006 and its Resolution dated December 12, 2006 in CA-G.R. SP
No. 94382 are hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
FACTS:
On August 30, 2005, Lepanto Consolidated Mining Company filed with the Regional Trial
Court of Makati City a Complaint against NM Rothschild & Sons (Australia) Limited praying
for a judgment declaring the loan and hedging contracts between the parties void for being
contrary to Article 2018 of the Civil Code of the Philippines and for damages.
Upon respondents motion, the trial court authorized respondents counsel to personally
bring the summons and Complaint to the Philippine Consulate General in Sydney, Australia
for the latter office to effect service of summons on petitioner.
On October 20, 2005, petitioner filed a Special Appearance With Motion to Dismiss praying
for the dismissal of the Complaint on the grounds that the court has not acquired jurisdiction
over the person of petitioner due to the defective and improper service of summons; the
Complaint failed to state a cause of action; respondent does not have any against petitioner;
and other grounds.
On December 9, 2005, the trial court issued an Order denying the Motion to Dismiss
providing that there was a proper service of summons through the Department of Foreign
Affairs on account of the fact that the defendant has neither applied for a license to do
business in the Philippines, nor filed with the Securities and Exchange Commission a Written
Power of Attorney designating some person on whom summons and other legal processes
maybe served. The trial court also held that the Complaint sufficiently stated a cause of
78
action. The other allegations in the Motion to Dismiss were brushed aside as matters of
defense which can best be ventilated during the trial.
On April 3, 2006, petitioner sought redress via a Petition for Certiorari with the Court of
Appeals, alleging that the trial court committed grave abuse of discretion in denying its
Motion to Dismiss.
On September 8, 2006, the Court of Appeals rendered the assailed Decision dismissing the
Petition for Certiorari.
Hence, petitioner filed the present petition assailing the Decision and Resolution of the Court
of Appeals.
ISSUE: Whether or not the RTC is considered to have committed grave abuse of discretion
amounting to lack or excess of jurisdiction in the denial of the Motion to Dismiss on account
of its failure to acquire jurisdiction over the person of the defendant.
HELD:
Petitioner alleges that the RTC has not acquired jurisdiction over its person on account of the
improper service of summons. Summons was served on petitioner through the DFA, with
respondents counsel personally bringing the summons and Complaint to the Philippine
Consulate General in Sydney, Australia.
Respondent argues that extraterritorial service of summons upon foreign private juridical
entities is not proscribed under the Rules of Court.
Section 15, Rule 14, however, is the specific provision dealing precisely with the service of
summons on a defendant which does not reside and is not found in the Philippines.
Breaking down Section 15, Rule 14, it is apparent that there are only four instances wherein a
defendant who is a non-resident and is not found in the country may be served with
summons by extraterritorial service, to wit: (1) when the action affects the personal status of
the plaintiffs; (2) when the action relates to, or the subject of which is property, within the
Philippines, in which the defendant claims a lien or an interest, actual or contingent; (3) when
the relief demanded in such action consists, wholly or in part, in excluding the defendant
from any interest in property located in the Philippines; and (4) when the defendant non-
resident's property has been attached within the Philippines. In these instances, service of
summons may be effected by (a) personal service out of the country, with leave of court; (b)
publication, also with leave of court; or (c) any other manner the court may deem sufficient.
Undoubtedly, extraterritorial service of summons applies only where the action is in
rem or quasi in rem, but not if an action is in personam. . On the other hand, when the
defendant or respondent does not reside and is not found in the Philippines, and the action
involved is in personam, Philippine courts cannot try any case against him because of the
impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court
It is likewise settled that an action in personam is lodged against a person based on personal
liability; an action in rem is directed against the thing itself instead of the person; while an
action quasi in rem names a person as defendant, but its object is to subject that persons
interest in a property to a corresponding lien or obligation.
The Complaint in the case at bar is an action to declare the loan and Hedging Contracts
between the parties void with a prayer for damages. It is a suit in which the plaintiff seeks to
be freed from its obligations to the defendant under a contract and to hold said defendant
pecuniarily liable to the plaintiff for entering into such contract. It is therefore an action in
 79

personam, unless and until the plaintiff attaches a property within the Philippines belonging
to the defendant, in which case the action will be converted to onequasi in rem.
Since the action involved in the case at bar is in personam and since the defendant,
petitioner Rothschild/Investec, does not reside and is not found in the Philippines, the
Philippine courts cannot try any case against it because of the impossibility of acquiring
jurisdiction over its person unless it voluntarily appears in court
In this regard, respondent vigorously argues that petitioner should be held to have
voluntarily appeared before the trial court when it prayed for, and was actually afforded,
specific reliefs from the trial court.
The Court therefore rule that petitioner, by seeking affirmative reliefs from the trial court, is
deemed to have voluntarily submitted to the jurisdiction of said court. A party cannot invoke
the jurisdiction of a court to secure affirmative relief against his opponent and after
obtaining or failing to obtain such relief, repudiate or question that same jurisdiction
Consequently, the trial court cannot be considered to have committed grave abuse of
discretion amounting to lack or excess of jurisdiction in the denial of the Motion to Dismiss
on account of failure to acquire jurisdiction over the person of the defendant.
Petition is DENIED
 80

FIRST DIVISION On April 24, 1980, bailiff returned to the defendant's office to serve the summons.
Mr. Dinozo refused to accept the same claiming that he was no longer an employee
G.R. No. 112573 February 9, 1995 of the defendant.

NORTHWEST ORIENT AIRLINES, INC. petitioner, After the two attempts of service were unsuccessful, the judge of the Tokyo District
vs. Court decided to have the complaint and the writs of summons served at the head
COURT OF APPEALS and C.F. SHARP & COMPANY INC., respondents. office of the defendant in Manila. On July 11, 1980, the Director of the Tokyo
District Court requested the Supreme Court of Japan to serve the summons
through diplomatic channels upon the defendant's head office in Manila.
PADILLA, JR., J.:

On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit the
This petition for review on certiorari seeks to set aside the decision of the Court of Appeals
writ of summons (p. 276, Records). Despite receipt of the same, defendant failed to
affirming the dismissal of the petitioner's complaint to enforce the judgment of a Japanese
appear at the scheduled hearing. Thus, the Tokyo Court proceeded to hear the
court. The principal issue here is whether a Japanese court can acquire jurisdiction over a
plaintiff's complaint and on [January 29, 1981], rendered judgment ordering the
Philippine corporation doing business in Japan by serving summons through diplomatic
defendant to pay the plaintiff the sum of 83,158,195 Yen and damages for delay at
channels on the Philippine corporation at its principal office in Manila after prior attempts to
the rate of 6% per annum from August 28, 1980 up to and until payment is
serve summons in Japan had failed.
completed (pp. 12-14, Records).

Petitioner Northwest Orient Airlines, Inc. (hereinafter NORTHWEST), a corporation organized

On March 24, 1981, defendant received from Deputy Sheriff Balingit copy of the
under the laws of the State of Minnesota, U.S.A., sought to enforce in Civil Case No. 83-
judgment. Defendant not having appealed the judgment, the same became final
17637 of the Regional Trial Court (RTC), Branch 54, Manila, a judgment rendered in its favor
and executory.
by a Japanese court against private respondent C.F. Sharp & Company, Inc., (hereinafter
SHARP), a corporation incorporated under Philippine laws.
Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983, a
1
suit for enforcement of the judgment was filed by plaintiff before the Regional Trial
As found by the Court of Appeals in the challenged decision of 10 November 1993, the
Court of Manila Branch 54. 2
following are the factual and procedural antecedents of this controversy:

On July 16, 1983, defendant filed its answer averring that the judgment of the
On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp & Company,
Japanese Court sought to be enforced is null and void and unenforceable in this
through its Japan branch, entered into an International Passenger Sales Agency
jurisdiction having been rendered without due and proper notice to the defendant
Agreement, whereby the former authorized the latter to sell its air transportation
and/or with collusion or fraud and/or upon a clear mistake of law and fact (pp. 41-
tickets. Unable to remit the proceeds of the ticket sales made by defendant on
45, Rec.).
behalf of the plaintiff under the said agreement, plaintiff on March 25, 1980 sued
defendant in Tokyo, Japan, for collection of the unremitted proceeds of the ticket
sales, with claim for damages. Unable to settle the case amicably, the case was tried on the merits. After the
plaintiff rested its case, defendant on April 21, 1989, filed a Motion for Judgment
on a Demurrer to Evidence based on two grounds:
On April 11, 1980, a writ of summons was issued by the 36th Civil Department,
(1) the foreign judgment sought to be enforced is null and void for want of
Tokyo District Court of Japan against defendant at its office at the Taiheiyo
jurisdiction and (2) the said judgment is contrary to Philippine law and public policy
Building, 3rd floor, 132, Yamashita-cho, Naka-ku, Yokohoma, Kanagawa Prefecture.
and rendered without due process of law. Plaintiff filed its opposition after which
The attempt to serve the summons was unsuccessful because the bailiff was
the court a quo rendered the now assailed decision dated June 21, 1989 granting
advised by a person in the office that Mr. Dinozo, the person believed to be
the demurrer motion and dismissing the complaint (Decision, pp. 376-378,
authorized to receive court processes was in Manila and would be back on April 24,
Records). In granting the demurrer motion, the trial court held that:
1980.

The foreign judgment in the Japanese Court sought in this action is null and void for
want of jurisdiction over the person of the defendant considering that this is an

action in personam; the Japanese Court did not acquire jurisdiction over the person
of the defendant because jurisprudence requires that the defendant be served with
summons in Japan in order for the Japanese Court to acquire jurisdiction over it,
the process of the Court in Japan sent to the Philippines which is outside Japanese
jurisdiction cannot confer jurisdiction over the defendant in the case before the
Japanese Court of the case at bar. Boudard versus Tait 67 Phil. 170. The plaintiff
contends that the Japanese Court acquired jurisdiction because the defendant is a
resident of Japan, having four (4) branches doing business therein and in fact had a
permit from the Japanese government to conduct business in Japan (citing the
exhibits presented by the plaintiff); if this is so then service of summons should
have been made upon the defendant in Japan in any of these alleged four
branches; as admitted by the plaintiff the service of the summons issued by the
Japanese Court was made in the Philippines thru a Philippine Sheriff. This Court
agrees that if the defendant in a foreign court is a resident in the court of that
foreign court such court could acquire jurisdiction over the person of the defendant
but it must be served upon the defendant in the territorial jurisdiction of the
foreign court. Such is not the case here because the defendant was served with
summons in the Philippines and not in Japan.
Unable to accept the said decision, plaintiff on July 11, 1989 moved for
reconsideration of the decision, filing at the same time a conditional Notice of
Appeal, asking the court to treat the said notice of appeal "as in effect after and
upon issuance of the court's denial of the motion for reconsideration."
Defendant opposed the motion for reconsideration to which a Reply dated August
28, 1989 was filed by the plaintiff.
On October 16, 1989, the lower court disregarded the Motion for Reconsideration
and gave due course to the plaintiff's Notice of Appeal. 3
In its decision, the Court of Appeals sustained the trial court. It agreed with the latter in its
reliance upon Boudard vs. Tait 4 wherein it was held that "the process of the court has no
extraterritorial effect and no jurisdiction is acquired over the person of the defendant by
serving him beyond the boundaries of the state." To support its position, the Court of
Appeals further stated:
In an action strictly in personam, such as the instant case, personal service of
summons within the forum is required for the court to acquire jurisdiction over the
defendant (Magdalena Estate Inc. vs. Nieto, 125 SCRA 230). To confer jurisdiction
on the court, personal or substituted service of summons on the defendant not
extraterritorial service is necessary (Dial Corp vs. Soriano, 161 SCRA 739).
But while plaintiff-appellant concedes that the collection suit filed is an action in
personam, it is its theory that a distinction must be made between an action in
personam against a resident defendant and an action in personam against a non-
81
resident defendant. Jurisdiction is acquired over a non-resident defendant only if
he is served personally within the jurisdiction of the court and over a resident
defendant if by personal, substituted or constructive service conformably to
statutory authorization. Plaintiff-appellant argues that since the defendant-
appellee maintains branches in Japan it is considered a resident defendant.
Corollarily, personal, substituted or constructive service of summons when made in
compliance with the procedural rules is sufficient to give the court jurisdiction to
render judgment in personam.
Such an argument does not persuade.
It is a general rule that processes of the court cannot lawfully be served outside the
territorial limits of the jurisdiction of the court from which it issues (Carter vs.
Carter; 41 S.E. 2d 532, 201) and this is regardless of the residence or citizenship of
the party thus served (Iowa-Rahr vs. Rahr, 129 NW 494, 150 Iowa 511, 35 LRC, NS,
292, Am. Case 1912 D680). There must be actual service within the proper
territorial limits on defendant or someone authorized to accept service for him.
Thus, a defendant, whether a resident or not in the forum where the action is filed,
must be served with summons within that forum.
But even assuming a distinction between a resident defendant and non-resident
defendant were to be adopted, such distinction applies only to natural persons and
not in the corporations. This finds support in the concept that "a corporation has
no home or residence in the sense in which those terms are applied to natural
persons" (Claude Neon Lights vs. Phil. Advertising Corp., 57 Phil. 607). Thus, as cited
by the defendant-appellee in its brief:
Residence is said to be an attribute of a natural person, and can be predicated on
an artificial being only by more or less imperfect analogy. Strictly speaking,
therefore, a corporation can have no local residence or habitation. It has been said
that a corporation is a mere ideal existence, subsisting only in contemplation of law
an invisible being which can have, in fact, no locality and can occupy no space,
and therefore cannot have a dwelling place. (18 Am. Jur. 2d, p. 693 citing Kimmerle
v. Topeka, 88 370, 128 p. 367; Wood v. Hartfold F. Ins. Co., 13 Conn 202)
Jurisprudence so holds that the foreign or domestic character of a corporation is to
be determined by the place of its origin where its charter was granted and not by
the location of its business activities (Jennings v. Idaho Rail Light & P. Co., 26 Idaho
703, 146 p. 101), A corporation is a "resident" and an inhabitant of the state in
which it is incorporated and no other (36 Am. Jur. 2d, p. 49).
Defendant-appellee is a Philippine Corporation duly organized under the Philippine
laws. Clearly, its residence is the Philippines, the place of its incorporation, and not
Japan. While defendant-appellee maintains branches in Japan, this will not make it
a resident of Japan. A corporation does not become a resident of another by

engaging in business there even though licensed by that state and in terms given all
the rights and privileges of a domestic corporation (Galveston H. & S.A.R. Co. vs.
Gonzales, 151 US 496, 38 L ed. 248, 4 S Ct. 401).
On this premise, defendant appellee is a non-resident corporation. As such, court
processes must be served upon it at a place within the state in which the action is
brought and not elsewhere (St. Clair vs. Cox, 106 US 350, 27 L ed. 222, 1 S. Ct.
354). 5
It then concluded that the service of summons effected in Manila or beyond the territorial
boundaries of Japan was null and did not confer jurisdiction upon the Tokyo District Court
over the person of SHARP; hence, its decision was void.
Unable to obtain a reconsideration of the decision, NORTHWEST elevated the case to this
Court contending that the respondent court erred in holding that SHARP was not a resident
of Japan and that summons on SHARP could only be validly served within that country.
A foreign judgment is presumed to be valid and binding in the country from which it comes,
until the contrary is shown. It is also proper to presume the regularity of the proceedings and
the giving of due notice therein. 6
Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in personam 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, however, be assailed by evidence of want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of
Rule 131, a court, whether of the Philippines or elsewhere, enjoys the presumption that it
was acting in the lawful exercise of jurisdiction and has regularly performed its official duty.
Consequently, the party attacking a foreign judgment has the burden of overcoming the
presumption of its validity.7 Being the party challenging the judgment rendered by the
Japanese court, SHARP had the duty to demonstrate the invalidity of such judgment. In an
attempt to discharge that burden, it contends that the extraterritorial service of summons
effected at its home office in the Philippines was not only ineffectual but also void, and the
Japanese Court did not, therefore acquire jurisdiction over it.
It is settled that matters of remedy and procedure such as those relating to the service of
process upon a defendant are governed by the lex fori or the internal law of the forum. 8 In
this case, it is the procedural law of Japan where the judgment was rendered that determines
the validity of the extraterritorial service of process on SHARP. As to what this law is is a
question of fact, not of law. It may not be taken judicial notice of and must be pleaded and
proved like any other fact. 9 Sections 24 and 25, Rule 132 of the Rules of Court provide that it
may be evidenced by an official publication or by a duly attested or authenticated copy
thereof. It was then incumbent upon SHARP to present evidence as to what that Japanese
82
procedural law is and to show that under it, the assailed extraterritorial service is invalid. It
did not. Accordingly, the presumption of validity and regularity of the service of summons
and the decision thereafter rendered by the Japanese court must stand.
Alternatively in the light of the absence of proof regarding Japanese
law, the presumption of identity or similarity or the so-called processual presumption 10 may
be invoked. Applying it, the Japanese law on the matter is presumed to be similar with the
Philippine law on service of summons on a private foreign corporation doing business in the
Philippines. Section 14, Rule 14 of the Rules of Court provides that if the defendant is a
foreign corporation doing business in the Philippines, service may be made: (1) on its
resident agent designated in accordance with law for that purpose, or, (2) if there is no such
resident agent, on the government official designated by law to that effect; or (3) on any of
its officers or agents within the Philippines.
If the foreign corporation has designated an agent to receive summons, the designation is
exclusive, and service of summons is without force and gives the court no jurisdiction unless
made upon him. 11
Where the corporation has no such agent, service shall be made on the government official
designated by law, to wit: (a) the Insurance Commissioner in the case of a foreign insurance
company; (b) the Superintendent of Banks, in the case of a foreign banking corporation; and
(c) the Securities and Exchange Commission, in the case of other foreign corporations duly
licensed to do business in the Philippines. Whenever service of process is so made, the
government office or official served shall transmit by mail a copy of the summons or other
legal proccess to the corporation at its home or principal office. The sending of such copy is a
necessary part of the service. 12
SHARP contends that the laws authorizing service of process upon the Securities and
Exchange Commission, the Superintendent of Banks, and the Insurance Commissioner, as the
case may be, presuppose a situation wherein the foreign corporation doing business in the
country no longer has any branches or offices within the Philippines. Such contention is
belied by the pertinent provisions of the said laws. Thus, Section 128 of the Corporation
Code 13 and Section 190 of the Insurance Code 14 clearly contemplate two situations: (1) if the
corporation had left the Philippines or had ceased to transact business therein, and (2) if the
corporation has no designated agent. Section 17 of the General Banking Act 15 does not even
speak a corporation which had ceased to transact business in the Philippines.
Nowhere in its pleadings did SHARP profess to having had a resident agent authorized to
receive court processes in Japan. This silence could only mean, or least create an impression,
that it had none. Hence, service on the designated government official or on any of SHARP's
officers or agents in Japan could be availed of. The respondent, however, insists that only
service of any of its officers or employees in its branches in Japan could be resorted to. We
do not agree. As found by the respondent court, two attempts at service were made at
SHARP's Yokohama branch. Both were unsuccessful. On the first attempt, Mr. Dinozo, who
was believed to be the person authorized to accept court process, was in Manila. On the

second, Mr. Dinozo was present, but to accept the summons because, according to him, he
was no longer an employee of SHARP. While it may be true that service could have been
made upon any of the officers or agents of SHARP at its three other branches in Japan, the
availability of such a recourse would not preclude service upon the proper government
official, as stated above.
As found by the Court of Appeals, it was the Tokyo District Court which ordered that
summons for SHARP be served at its head office in the Philippine's after the two attempts of
service had failed. 16 The Tokyo District Court requested the Supreme Court of Japan to cause
the delivery of the summons and other legal documents to the Philippines. Acting on that
request, the Supreme Court of Japan sent the summons together with the other legal
documents to the Ministry of Foreign Affairs of Japan which, in turn, forwarded the same to
the Japanese Embassy in Manila . Thereafter, the court processes were delivered to the
Ministry (now Department) of Foreign Affairs of the Philippines, then to the Executive Judge
of the Court of First Instance (now Regional Trial Court) of Manila, who forthwith ordered
Deputy Sheriff Rolando Balingit to serve the same on SHARP at its principal office in Manila.
This service is equivalent to service on the proper government official under Section 14, Rule
14 of the Rules of Court, in relation to Section 128 of the Corporation Code. Hence, SHARP's
contention that such manner of service is not valid under Philippine laws holds no water. 17
In deciding against the petitioner, the respondent court sustained the trial court's reliance
on Boudard vs. Tait 18where this Court held:
The fundamental rule is that jurisdiction in personam over nonresidents, so as to
sustain a money judgment, must be based upon personal service within the state
which renders the judgment.
The process of a court, has no extraterritorial effect, and no jurisdiction is acquired
over the person of the defendant by serving him beyond the boundaries of the
state. Nor has a judgment of a court of a foreign country against a resident of this
country having no property in such foreign country based on process served here,
any effect here against either the defendant personally or his property situated
here.
Process issuing from the courts of one state or country cannot run into another,
and although a nonresident defendant may have been personally served with such
process in the state or country of his domicile, it will not give such jurisdiction as to
authorize a personal judgment against him.
It further availed of the ruling in Magdalena Estate, Inc. vs. Nieto 19 and Dial
Corp. vs. Soriano, 20 as well as the principle laid down by the Iowa Supreme Court in the 1911
case of Raher vs. Raher. 21
83
The first three cases are, however, inapplicable. Boudard involved the enforcement of a
judgment of the civil division of the Court of First Instance of Hanoi, French Indo-China. The
trial court dismissed the case because the Hanoi court never acquired jurisdiction over the
person of the defendant considering that "[t]he, evidence adduced at the trial conclusively
proves that neither the appellee [the defendant] nor his agent or employees were ever in
Hanoi, French Indo-China; and that the deceased Marie Theodore Jerome Boudard had
never, at any time, been his employee." In Magdalena Estate, what was declared invalid
resulting in the failure of the court to acquire jurisdiction over the person of the defendants
in an action in personam was the service of summons through publication against non-
appearing resident defendants. It was claimed that the latter concealed themselves to avoid
personal service of summons upon them. In Dial, the defendants were foreign corporations
which were not, domiciled and licensed to engage in business in the Philippines and which
did not have officers or agents, places of business, or properties here. On the other hand, in
the instant case, SHARP was doing business in Japan and was maintaining four branches
therein.
Insofar as to the Philippines is concerned, Raher is a thing of the past. In that case, a divided
Supreme Court of Iowa declared that the principle that there can be no jurisdiction in a court
of a territory to render a personal judgment against anyone upon service made outside its
limits was applicable alike to cases of residents and non-residents. The principle was put at
rest by the United States Supreme Court when it ruled in the 1940 case of Milliken
vs. Meyer 22 that domicile in the state is alone sufficient to bring an absent defendant within
the reach of the state's jurisdiction for purposes of a personal judgment by means of
appropriate substituted service or personal service without the state. This principle is
embodied in section 18, Rule 14 of the Rules of Court which allows service of summons on
residents temporarily out of the Philippines to be made out of the country. The rationale for
this rule was explained in Milliken as follows:
[T]he authority of a state over one of its citizens is not terminated by the mere fact
of his absence from the state. The state which accords him privileges and affords
protection to him and his property by virtue of his domicile may also exact
reciprocal duties. "Enjoyment of the privileges of residence within the state, and
the attendant right to invoke the protection of its laws, are inseparable" from the
various incidences of state citizenship. The responsibilities of that citizenship arise
out of the relationship to the state which domicile creates. That relationship is not
dissolved by mere absence from the state. The attendant duties, like the rights and
privileges incident to domicile, are not dependent on continuous presence in the
state. One such incident of domicile is amenability to suit within the state even
during sojourns without the state, where the state has provided and employed a
reasonable method for apprising such an absent party of the proceedings against
him. 23
The domicile of a corporation belongs to the state where it was incorporated. 24 In a strict
technical sense, such domicile as a corporation may have is single in its essence and a
corporation can have only one domicile which is the state of its creation. 25

Nonetheless, a corporation formed in one-state may, for certain purposes, be regarded a
resident in another state in which it has offices and transacts business. This is the rule in our
jurisdiction and apropos thereto, it may be necessery to quote what we stated in State
Investment House, Inc, vs. Citibank, N.A., 26 to wit:
The issue is whether these Philippine branches or units may be considered
"residents of the Philippine Islands" as that term is used in Section 20 of the
Insolvency Law . . . or residents of the state under the laws of which they were
respectively incorporated. The answer cannot be found in the Insolvency Law itself,
which contains no definition of the term, resident, or any clear indication of its
meaning. There are however other statutes, albeit of subsequent enactment and
effectivity, from which enlightening notions of the term may be derived.
The National Internal Revenue Code declares that the term "'resident foreign
corporation' applies to a foreign corporation engaged in trade or business within
the Philippines," as distinguished from a "'non-resident foreign corporation' . . .
(which is one) not engaged in trade or bussiness within the Philippines." [Sec. 20,
pars. (h) and (i)].
The Offshore Banking Law, Presidential Decree No. 1034, states "that branches,
subsidiaries, affiliation, extension offices or any other units of corporation or
juridical person organized under the laws of any foreign country operating in the
Philippines shall be considered residents of the Philippines. [Sec. 1(e)].
The General Banking Act, Republic Act No. 337, places "branches and agencies in
the Philippines of foreign banks . . . (which are) called Philippine branches," in the
same category as "commercial banks, savings associations, mortgage banks,
development banks, rural banks, stock savings and loan associations" (which have
been formed and organized under Philippine laws), making no distinction between
the former and the latter in so far as the terms "banking institutions" and "bank"
are used in the Act [Sec. 2], declaring on the contrary that in "all matters not
specifically covered by special provisions applicable only to foreign banks, or their
branches and agencies in the Philippines, said foreign banks or their branches and
agencies lawfully doing business in the Philippines "shall be bound by all laws,
rules, and regulations applicable to domestic banking corporations of the same
class, except such laws, rules and regulations as provided for the creation,
formation, organization, or dissolution of corporations or as fix the relation,
liabilities, responsibilities, or duties of members, stockholders or officers of
corporation. [Sec. 18].
This court itself has already had occasion to hold [Claude Neon Lights, Fed. Inc. vs.
Philippine Advertising Corp., 57 Phil. 607] that a foreign corporation licitly doing
business in the Philippines, which is a defendant in a civil suit, may not be
considered a non-resident within the scope of the legal provision authorizing
attachment against a defendant not residing in the Philippine Islands; [Sec. 424, in
84
relation to Sec. 412 of Act No. 190, the Code of Civil Procedure; Sec. 1(f), Rule 59 of
the Rules of 1940, Sec. 1(f), Rule 57, Rules of 1964] in other words, a preliminary
attachment may not be applied for and granted solely on the asserted fact that the
defendant is a foreign corporation authorized to do business in the Philippines
and is consequently and necessarily, "a party who resides out of the Philippines."
Parenthetically, if it may not be considered as a party not residing in the
Philippines, or as a party who resides out of the country, then, logically, it must be
considered a party who does reside in the Philippines, who is a resident of the
country. Be this as it may, this Court pointed out that:
. . . Our laws and jurisprudence indicate a purpose to assimilate foreign
corporations, duly licensed to do business here, to the status of domestic
corporations. (Cf. Section 73, Act No. 1459, and Marshall Wells Co. vs.
Henry W. Elser & Co., 46 Phil. 70, 76; Yu Cong Eng vs. Trinidad, 47 Phil.
385, 411) We think it would be entirely out of line with this policy should
we make a discrimination against a foreign corporation, like the
petitioner, and subject its property to the harsh writ of seizure by
attachment when it has complied not only with every requirement of law
made specially of foreign corporations, but in addition with every
requirement of law made of domestic corporations. . . .
Obviously, the assimilation of foreign corporations authorized to do business in the
Philippines "to the status of domestic corporations, subsumes their being found
and operating as corporations, hence, residing, in the country.
The same principle is recognized in American law: that the residence of a
corporation, if it can be said to have a residence, is necessarily where it exercises
corporate functions . . .;" that it is considered as dwelling "in the place where its
business is done . . .," as being "located where its franchises are exercised . . .," and
as being "present where it is engaged in the prosecution of the corporate
enterprise;" that a "foreign corporation licensed to do business in a state is a
resident of any country where it maintains an office or agent for transaction of its
usual and customary business for venue purposes;" and that the "necessary
element in its signification is locality of existence." [Words and Phrases, Permanent
Ed., vol. 37, pp. 394, 412, 493].
In as much as SHARP was admittedly doing business in Japan through its four duly registered
branches at the time the collection suit against it was filed, then in the light of the processual
presumption, SHARP may be deemed a resident of Japan, and, as such, was amenable to the
jurisdiction of the courts therein and may be deemed to have assented to the said courts'
lawful methods of serving process. 27
Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid not
only under the processual presumption but also because of the presumption of regularity of
performance of official duty.

We find NORTHWEST's claim for attorney's fees, litigation expenses, and exemplary damages
to be without merit. We find no evidence that would justify an award for attorney's fees and
litigation expenses under Article 2208 of the Civil Code of the Philippines. Nor is an award for
exemplary damages warranted. Under Article 2234 of the Civil Code, before the court may
consider the question of whether or not exemplary damages should be awarded, the plaintiff
must show that he is entitled to moral, temperate, or compensatory damaged. There being
no such proof presented by NORTHWEST, no exemplary damages may be adjudged in its
favor.
WHEREFORE, the instant petition is partly GRANTED, and the challenged decision is
AFFIRMED insofar as it denied NORTHWEST's claims for attorneys fees, litigation expenses,
and exemplary damages but REVERSED insofar as in sustained the trial court's dismissal of
NORTHWEST's complaint in Civil Case No. 83-17637 of Branch 54 of the Regional Trial Court
of Manila, and another in its stead is hereby rendered ORDERING private respondent C.F.
SHARP L COMPANY, INC. to pay to NORTHWEST the amounts adjudged in the foreign
judgment subject of said case, with interest thereon at the legal rate from the filing of the
complaint therein until the said foreign judgment is fully satisfied.
Costs against the private respondent.
SO ORDERED.
FACTS
[In 1974, an International Passenger Sales Agency Agreement was entered into by plaintiff
Northwest Orient Airlines (Northwest) and defendant C.F. Sharp & Co. (Sharp), through its
Japan branch, whereby Northwest authorized Sharp to sell the former's airlines tickets.
Sharp failed to remit the proceeds of the ticket sales it made on behalf of Northwest under
the agreement which led the latter to sue in Tokyo for collection of the unremitted amount,
with claim for damages.
The Tokyo District Court of Japan issued a writ of sum-mons against Sharp at its office in
Yokohama, Japan but the bailiff failed twice to serve the writs. Finally, the Tokyo District
Court decided to have the writs of summons served at Sharp's head office in Manila. Sharp
accepted the writs but despite such receipt, it failed to appear at the hearings. The District
Court proceeded to hear the complaint and rendered judgment ordering Sharp to pay
Northwest the sum of 83,158,195 Yen plus damages. Sharp failed to appeal and the
judgment became final and executory.
85
Northwest failed to execute the decision in Japan, hence, it filed a suit for enforcement of the
judgment before the Regional Trial Court of Manila. Sharp filed its answer averring that the
judgment of the Japanese court is null and void and unenforceable in this jurisdiction having
been rendered without due and proper notice to Sharp.
The case for enforcement of judgment was tried on the merits. Sharp filed a Motion for
Judgment on a Demurrer to Evidence. The trial court granted the demurrer motion, hold-ing
that the foreign judgment in the Japanese court sought to be enforced is null and void for
want of jurisdiction over the person of the defendant. Northwest appealed but the Court of
Appeals sustained the trial court, holding that the process of the court has no extraterritorial
effect and no jurisdiction was acquired over the person of the defendant by serving him
beyond the boundaries of the state. Hence, this appeal by Northwest.]
RULING
"A foreign judgment is presumed to be valid and binding in the country from which it comes,
until the contrary is shown. It is also proper to presume the regularity of the proceedings and
the giving of due notice therein.
Under Section 50, Rule 39 of the Rules of Court, a judg-ment in an action in personam of a
tribunal of a foreign country having jurisdiction to pronounce the same is pre-sumptive
evidence of a right as between the parties and their successors-in-interest by a subsequent
title. The judgment may, however, be assailed by evidence of want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of
Rule 131, a court, whether of the Philippines or elsewhere, enjoys the presump-tion that it
was acting in the lawful exercise of jurisdiction and has regularly performed its official duty.
Consequently, the party attacking a foreign judgment has the burden of overcoming the
presumption of its validity. Being the party challenging the judgment rendered by the
Japanese court, SHARP had the duty to demonstrate the invalidity of such judgment. In an
attempt to discharge that burden, it contends that the extraterritorial service of sum-mons
effected as its home office in the Philippines was not only ineffectual but also void, and the
Japanese Court did not, therefore, acquire jurisdiction over it.
It is settled that matters of remedy and procedure such as those relating to the service of
process upon a defendant are governed by the lex fori or the internal law of the forum. In
this case, it is the procedural law of Japan where the judgment was rendered that determines
the validity of the extraterritorial service'of process on SHARP. As to what this law is is a
question of fact, not of law. It may not be taken judicial notice of and must be pleaded and
proved like any other fact. Sections 24 and 25, Rule 132 of the Rules of Court provide that it
may be evidenced by an official publication or by a duly attested or authenticated copy

thereof. It was then incumbent upon SHARP to present evidence as to what that Japanese
procedural law is and to show taat under it, the assailed extraterritorial service is invalid. It
did not. Accord-ingly, the presumption of validity and regularity of the service of summons
and the decision thereafter rendered by the Japanese court must stand.
Alternatively, in the light of the absence of proof re-garding Japanese law, the presumption
of identity or similar-ity or the so-called processual presumpcion may be invoked. Applying it,
the Japanese law on the matter is presumed to be similar with the Philippine law on service
of summons on a private foreign corporation doing business ir, the Philippines. Section 14 of
the Rules of Court provides that if the defendant is a foreign corporation doing business in
the Philippines, service may be made: 1) on its resident agent designated in accordance with
law for that purpose, or 2) if there is no such resident agent, on the government official
designated by law to that effect, or 3) on any of its officers or agents within the Philippines.
If the foreign corporation has designated an agent to re-ceive summons, the designation is
exclusive, and service of summons is without force and gives the court no jurisdiction unless
made upon him.
Where the corporation has no such great agent, service shall be made on the government
official designated by law, to wit: (a) the Insurance Commissioner, in the case of a foreign
insurance company; (b) the Superintendent of Banks, in the case of a foreign banking
corporation; and (c) the Securities and Exchange Commission, in the case of other foreign
corporations duly licensed to do business in the Philippines. Whenever service of process is
so made, the government office or official served shall transmit by mail a copy of the
sum-mons or other legal process to the corporation at its home or principal office. The
sending of such copy is a necessary part of the service.
Nowhere in its pleadings did SHARP profess to having had a resident agent authorized to
receive court processes in Japan. This silence could only mean, or at least create an
impression, that it had none. Hence, service on the designated government official or any of
its officers or agents in Japan could be availed of.
As found by the Court of Appeals, it was the Tokyo Dis-trict Court which ordered that
summons for SHARP be served at its head office in the Philippines after the two attempts of
service had failed. The Tokyo District Court requested the Supreme Court of Japan to cause
the delivery of the summons and other legal documents to the Philippines. Acting on that
request, the Supreme Court of Japan sent the summons together with the other legal
documents to the Ministry of Foreign Affairs of Japan, which in turn, forwarded the same to
the Japanese Embassy in Manila. Thereafter, the court processes were delivered to the
Ministry (now Department) of Foreign Affairs of the Philippines then to the Executive Judge
of the Court of First Instance (now Regional Trial Court) of Manila, who forthwith ordered
86
Deputy Sheriff Rolando Balingit to serve the same on SHARP at its principal office in Manila.
This service is equivalent to service on the proper government official under Section 14, Rule
14 of the Rules of Court, in relation to Section 128 of the Corporation Code. Hence, SHARP's
contention that such manner of service is not valid under Philippine law holds no water.
Inasmuch as SHARP was admittedly doing business in Japan through its four registered
branches at the time the collection suit against it was filed, then in the light of the processual
presumption, SHARP may be deemed a resident of JAPAN, and, as such, was amenable to the
jurisdiction of the courts therein and may be deemed to have assented to the said courts'
lawful methods of serving process.
Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid not
only under the proces-sual presumption but also because of the presumption of regularity of
performance of official duty.
FACTS:
Northwest Airlines (Northwest) and C.F. Sharp & Company (C.F.), through its Japan
branch, entered into an International Passenger Sales Agency Agreement, whereby the
Northwest authorized the C.F. to sell its air transportation tickets
March 25, 1980: Unable to remit the proceeds of the ticket sales, Northwest sued C.F. in
Tokyo, Japan, for collection of the unremitted proceeds of the ticket sales, with claim for
damages
April 11, 1980: writ of summons was issued by the 36th Civil Department, Tokyo District
Court of Japan
The attempt to serve the summons was unsuccessful because Mr. Dinozo was in Manila
and would be back on April 24, 1980
April 24, 1980: Mr. Dinozo returned to C.F. Office to serve the summons but he refused
to receive claiming that he no longer an employee
After the 2 attempts of service were unsuccessful, Supreme Court of Japan sent the
summons together with the other legal documents to the Ministry of Foreign Affairs of
Japan> Japanese Embassy in Manila>Ministry (now Department) of Foreign Affairs of the
Philippines>Executive Judge of the Court of First Instance (now Regional Trial Court) of
Manila who ordered Deputy Sheriff Rolando Balingit>C.F. Main Office
August 28, 1980: C.F. received from Deputy Sheriff Rolando Balingit the writ of summons
but failed to appear at the scheduled hearing.
January 29, 1981: Tokyo Court rendered judgment ordering the C.F. to pay 83,158,195
Yen and damages for delay at the rate of 6% per annum from August 28, 1980 up to and
until payment is completed
March 24, 1981: C.F. received from Deputy Sheriff Balingit copy of the judgment. C.F. did
not appeal so it became final and executory
May 20, 1983: Northwest filed a suit for enforcement of the judgment a RTC
July 16, 1983: C.F. averred that the Japanese Court sought to be enforced is null and void
and unenforceable in this jurisdiction having been rendered without due and proper
notice and/or with collusion or fraud and/or upon a clear mistake of law and fact. The
 87

foreign judgment in the Japanese Court sought in this action is null and void for want of
jurisdiction over the person of the defendant considering that this is an action in
personam. The process of the Court in Japan sent to the Philippines which is outside
Japanese jurisdiction cannot confer jurisdiction over the defendant in the case before the
Japanese Court of the case at bar
CA sustained RTC: Court agrees that if the C.F. in a foreign court is a resident in the court
of that foreign court such court could acquire jurisdiction over the person of C.F. but it
must be served in the territorial jurisdiction of the foreign court
ISSUE: W/N the Japanese Court has jurisdiction over C.F.
In as much as SHARP was admittedly doing business in Japan through its four duly
registered branches at the time the collection suit against it was filed, then in the light of
the processual presumption, SHARP may be deemed a resident of Japan, and, as such,
was amenable to the jurisdiction of the courts therein and may be deemed to have
assented to the said courts' lawful methods of serving process.
Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid
not only under the processual presumption but also because of the presumption of
regularity of performance of official duty.

HELD: YES. instant petition is partly GRANTED, and the challenged decision is AFFIRMED
insofar as it denied NORTHWEST's claims for attorneys fees, litigation expenses, and
exemplary damages
Consequently, the party attacking (C.F.) a foreign judgment has the burden of
overcoming the presumption of its validity
Accordingly, the presumption of validity and regularity of the service of summons and
the decision thereafter rendered by the Japanese court must stand.
Applying it, the Japanese law on the matter is presumed to be similar with the Philippine
law on service of summons on a private foreign corporation doing business in the
Philippines. Section 14, Rule 14 of the Rules of Court provides that if the defendant is a
foreign corporation doing business in the Philippines, service may be made:
(1) on its resident agent designated in accordance with law for that purpose, or,
(2) if there is no such resident agent, on the government official designated by law to
that effect; or
(3) on any of its officers or agents within the Philippines.
If the foreign corporation has designated an agent to receive summons, the designation
is exclusive, and service of summons is without force and gives the court no jurisdiction
unless made upon him.
Where the corporation has no such agent, service shall be made on the government
official designated by law, to wit:
(a) the Insurance Commissioner in the case of a foreign insurance company
(b) the Superintendent of Banks, in the case of a foreign banking corporation
(c) the Securities and Exchange Commission, in the case of other foreign corporations
duly licensed to do business in the Philippines. Whenever service of process is so made,
the government office or official served shall transmit by mail a copy of the summons or
other legal proccess to the corporation at its home or principal office. The sending of
such copy is a necessary part of the service.
The service on the proper government official under Section 14, Rule 14 of the Rules of
Court, in relation to Section 128 of the Corporation Code
Our laws and jurisprudence indicate a purpose to assimilate foreign corporations, duly
licensed to do business here, to the status of domestic corporations
We think it would be entirely out of line with this policy should we make a discrimination
against a foreign corporation, like the petitioner, and subject its property to the harsh
writ of seizure by attachment when it has complied not only with every requirement of
law made specially of foreign corporations, but in addition with every requirement of law
made of domestic corporations