Facts:

In the case of Banco do Brasil vs. The Court of Appeals, Hon. Arsenio M. Gonong, and Cesar S. Urbino, Sr., decided on June 16, 2000, the petitioner, Banco do Brasil, challenges the rulings of the Court of Appeals, which reinstated the February 18, 1991 decision of the Regional Trial Court of Manila (Branch 8) that found Banco do Brasil liable to private respondent Cesar Urbino Sr. for damages amounting to $300,000. The regional trial court's decision stemmed from the actions involving the vessel M/V Star Ace and its associated cargo, which were seized by customs authorities under the suspicion that they were linked to a hijacking incident. This case also had connections to another case, Vlason Enterprises Corporation v. Court of Appeals and Duraproof Services, as both cases revolved around similar antecedents.

The series of events began on January 7, 1989, when the M/V Star Ace, a ship under the local agency of Poro Point Shipping Services, docked in San Fernando, La Union.

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Facts:

Background of the Case

• This is a petition for review on certiorari of the Decision and Resolution of the Court of Appeals dated July 19, 1993 and August 15, 1995, respectively.
• The appellate orders reinstated the trial court’s Decision dated February 18, 1991 from the Regional Trial Court of Manila, Branch 8, which held Banco do Brasil liable to private respondent Cesar Urbino, Sr. for damages amounting to $300,000.00.
• The case was noted to have material antecedents similar to the Vlason Enterprises Corporation case, though the main issues are not completely identical.

Material Antecedents and Maritime Incident

• Poro Point Shipping Services, acting as the local agent of Omega Sea Transport Company (a Panamanian company), requested permission for its vessel M/V Star Ace—experiencing engine trouble—to unload its cargo and store it at the Philippine Ports Authority (PPA) compound.
• The Bureau of Customs approved the request despite lingering suspicions.
• Upon docking on January 7, 1989, customs personnel boarded the vessel suspecting it to be the hijacked M/V Silver Med, leading to the seizure of the vessel and its cargo pursuant to Section 2301 of the Tariff and Customs Code.

Seizure, Salvage Agreement, and Subsequent Customs Actions

• A notice of hearing was served on related parties, including the consignee and shipper, during the seizure proceedings.
• Amidst the procedural developments, La Union was hit by typhoons, which led the vessel to run aground and ultimately be abandoned.
• On June 8, 1989, an authorized representative (Frank Cadacio) entered into a salvage agreement with the private respondent for securing and repairing the vessel for a salvage fee of $1 million plus a fifty percent share of the cargo after expenses.
• The seizure was initially lifted by the District Collector after findings of no fraud; however, a subsequent action by Customs Commissioner Salvador M. Mison led to a forfeiture order under Section 2530 of the Tariff and Customs Code.
• Later, an acting District Collector issued a Decision decreeing the forfeiture and sale of the cargo in favor of the government.

Litigation Process – Initiation, Amendments, and Default

• Private respondent (represented by Duraproof Services) filed a Petition for Certiorari, Prohibition, and Mandamus challenging the actions of Commissioner Mison and District Collector Sy.
• The petition named several respondents including customs officials, PPA representatives, and corporate entities such as Med Line Philippines, and was later amended to include additional parties.
• Summonses were served on certain respondents, while for others (non-residents or entities without direct representation in the Philippines) summons by publication was allowed.
• Multiple motions were filed by the private respondent seeking to declare various respondents in default; however, the trial court only granted some of these motions.
• An amended petition later alleged that indispensable parties had not been included, which led to further amendments and joinder of additional respondents.
• Default was declared against several parties either by formal order or by failure to appear, allowing the private respondent to present evidence ex parte against them.

Trial Court Decision and Execution of Judgment

• On February 18, 1991, the trial court rendered its Decision awarding:
• Injunctive relief on the alienation of the vessel M/V Star Ace.
• Specific monetary awards against various parties—including salvage fees, preservation fees, maintenance fees, crew salaries, and attorney’s fees.
• Damages against Vlason Enterprises and Banco do Brasil (the latter amounting to $300,000.00).
• A subsequent Compromise Agreement reduced the adjudged amounts by 20% and was approved by the trial court.
• On March 8, 1991, private respondent moved for the execution of judgment, and sheriffs were deputized to levy and sell the defendants’ property.
• Despite motions to recall the execution filed ex parte by the Bureau of Customs, the auction proceeded, resulting in a Certificate of Sale being issued.

Special Appearance by Banco do Brasil and Jurisdictional Challenge

• On April 10, 1991, Banco do Brasil, though appearing by special appearance, filed a motion to vacate the judgment on the ground that the trial court lacked jurisdiction over it due to improper service of summons.
• The motion specifically contended that as a non-resident foreign corporation not engaged in business in the Philippines, Banco do Brasil could not be subject to personal jurisdiction absent proper service or attachment of property within the country.
• On May 20, 1991, the trial court granted Banco do Brasil’s motion, setting aside the decision against it.
• Private respondent sought reconsideration of this relief, but the motion was denied in an Order dated June 21, 1991.
• Various petitions for certiorari were subsequently consolidated and decided by the Court of Appeals, affirming and effectively giving effect to the decision of the Regional Trial Court—except as it affected Banco do Brasil.

Appellate Review and Final Development

• Banco do Brasil challenged the Court of Appeals’ declaration that the suit was in rem, contending that service by publication (extraterritorial service) was improper in an action seeking damages (in personam).
• The Supreme Court reviewed the issue on the basis of jurisdictional requirements, examining the adequacy of extraterritorial service for non-resident defendants and the finality of the trial court decision.
• The Supreme Court ultimately granted the petition, reversing and setting aside the Court of Appeals’ decisions insofar as they affected Banco do Brasil, and reinstating the trial court’s Order dated February 18, 1991 with respect to its consequences against the petitioner.

Issue:

Jurisdiction and Service of Summons

• Whether the trial court had personal jurisdiction over Banco do Brasil when the only service of summons effected was by publication (extraterritorial service) on a non-resident foreign corporation.
• Whether extraterritorial service of summons, as provided under Rule 14, Section 17, suffices to confer jurisdiction for an action in personam, particularly when the relief sought includes damages.

Finality of the Trial Court’s Decision

• Whether the decision of the trial court dated February 18, 1991 had attained finality and executory character with respect to Banco do Brasil, given that the motion to vacate was filed shortly after Banco do Brasil became aware of the case.
• The implications of the timing of service and motion filings on the finality of judgment.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)