G.R. No. 122156 - Manila Prince Hotel vs. Government Service Insurance System

Case Summary (G.R. No. 122156)

Applicable Law and Constitutional Basis

Operative constitution for the decision: 1987 Philippine Constitution.
Governing procedural rules and authorities relied upon in the decision: Rules of Court (notably Rule 57 on preliminary attachment, Rule 14 on alternative modes of service, Rule 4 on venue), and relevant jurisprudence cited by the Court (including Davao Light & Power Co. v. Court of Appeals; Cuartero v. Court of Appeals; Sy v. Tyson Enterprises, Inc.; Yao Ka Sin Trading; and related authorities).

Key Dates and Case Posture

Trial court proceedings and related events occurred in 1988–1989. The Court of Appeals rendered its decision on December 15, 1995, and the Supreme Court decision under review is dated August 12, 2002 (G.R. No. 125027). The trial court entered judgment against petitioner after an ex parte presentation of evidence and ordered payment of P109,376.95 plus interest, attorney’s fees and costs; the Court of Appeals affirmed; petitioner sought certiorari under Rule 45.

Facts (collapse of pertinent factual background)

Petitioner engaged respondent for freight-forwarding services in January–March 1988. Petitioner failed to pay shipping charges on subsequent shipments totaling P109,376.95. Respondent invoiced with contractual clauses providing for 18% interest on overdue accounts and attorney’s fees of 25% of amounts due. Respondent filed Civil Case No. 5875 in the Regional Trial Court (RTC), Pasay City, on June 10, 1988 for collection. Summons initially could not be served; respondent then moved for preliminary attachment on September 13, 1988; the trial court issued an order and writ of preliminary attachment (writ issued Sept. 27, 1988) and had the writ implemented on October 28, 1988. An alias summons was later issued and served on petitioner on January 26, 1989. Pre-trial was terminated by the trial court after petitioner’s counsel allegedly failed to appear timely; the trial court allowed plaintiff to present evidence ex parte and later rendered judgment for respondent. Petitioner filed motions to discharge the attachment and to dismiss for improper venue; those were denied. The Court of Appeals affirmed the trial court’s ruling; petitioner filed this Rule 45 petition.

Procedural Issues Presented

The petition before the Supreme Court raised, in essence: (1) whether the writ of preliminary attachment was improperly issued and served; (2) whether there was a valid declaration of petitioner’s default; (3) whether venue was improper; and (4) whether petitioner was correctly held liable for the claimed amount plus attorney’s fees.

Court’s Analysis — Distinction Between Issuance and Implementation of a Writ of Attachment

The Court emphasized the settled distinction between issuance of a writ of attachment and its implementation. Under Rule 57, a party may seek provisional remedies at the commencement of the action or thereafter; issuance of an order and a writ may therefore precede personal service of summons. However, when implementation of the writ commences, the court must have acquired jurisdiction over the defendant’s person; otherwise the enforcement acts cannot bind the defendant. The Court cited Davao Light & Power Co. and related authorities to reaffirm that clerical or procedural acts done prior to acquisition of personal jurisdiction (issuance of summons, order of attachment, issuance of writ) do not bind a defendant until jurisdiction is obtained either by service of summons, other coercive process, or voluntary submission.

Court’s Analysis — Service of Summons, Jurisdiction and Validity of Attachment

The Court examined the chronology: writ issued September 27, 1988; implementation (levy) conducted October 28, 1988; but personal service of an alias summons occurred only on January 26, 1989 — nearly three months after implementation. The Court held that the trial court lacked jurisdiction to implement the writ on October 28 because no personal (or substituted) service or other valid mode of service had been effected on petitioner at or before implementation. The Court noted that Rule 57, Section 5 requires that when a sheriff commences implementation of the writ, he must serve the defendant with the applicant’s affidavit and attachment bond and the order of attachment, and the Court held that such service must be accompanied by service of summons addressed to the defendant. The Court rejected respondent’s contention that exceptions applied (e.g., inability to effect personal service after diligent effort or that petitioner was temporarily abroad) because respondent did not establish substituted service or seek alternative modes contemplated by the Rules.

Court’s Analysis — Alternative Modes of Service (Rule 14) and Non-retroactivity of Subsequent Service

The Court explained that when personal service cannot be effected despite diligent inquiry, the plaintiff has recourse under Rule 14 (Sections 14–16) to obtain leave for service by publication or extraterritorial service where the defendant’s whereabouts cannot be ascertained or the defendant is temporarily out of the country. Respondent did not secure such relief prior to implementation. Consequently, the later (belated) service of summons could not confer jurisdiction retroactively to validate the earlier implementation of the writ; the law does not permit retroactive acquisition of jurisdiction that would validate coercive processes effected before jurisdiction was obtained. Thus, the writ’s implementation was fatally defective.

Court’s Analysis — Venue and Legal Personality of a Sole Proprietorship

The Court treated the venue issue separately and concluded that dismissal was warranted on venue grounds as well. The invoice’s printed clause identifying Makati as the agreed venue was not, on its face, an exclusive venue stipulation because it lacked language evincing exclusivity; venue stipulations must show an express, exclusive agreement to supplant the statutory venue rules. Absent exclusive language, a contractual venue clause is treated as

Case Syllabus (G.R. No. 122156)

Nature and Procedural Posture of the Case

Petition for review on certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision of the Court of Appeals (C.A. G.R. CV No. 25119) which affirmed the Decision of the Regional Trial Court (RTC), Branch 108, Pasay City.
Lower court judgment (RTC) upheld a writ of preliminary attachment, declared petitioner in default, and ordered petitioner to pay private respondent the sum of P109,376.95 plus 18% interest per annum, 25% attorney’s fees and costs of suit.
Court of Appeals affirmed the RTC decision on December 15, 1995; petitioner’s motion for reconsideration at the C.A. was denied in a May 20, 1996 Resolution.
Petition to the Supreme Court raises errors alleged in the issuance and service of the writ of attachment, the declaration of default, improper venue, and the obligation to pay the stated sums.

Parties and Nature of Transaction

Petitioner: Anita Mangila, exporter of sea foods doing business under the name Seafoods Products.
Private respondent: Loreta Guina, President and General Manager of Air Swift International, a single registered proprietorship engaged in freight forwarding.
Business arrangement: In January 1988 petitioner contracted freight forwarding services with private respondent for shipments to Guam, agreeing to pay private respondent cash on delivery.
Private respondent’s invoice contained contractual provisions: (a) 18% interest per annum on overdue accounts; (b) attorney’s fees equivalent to 25% of amount due in case of suit; (c) a clause stating “The agreed venue for such action is Makati, Metro Manila, Philippines.”

Factual Background and Chronology

First shipment: petitioner requested seven days within which to pay.
Subsequent shipments: on March 17, 24 and 31, 1988, petitioner failed to pay shipping charges totalling P109,376.95.
Despite several demands, petitioner did not pay; private respondent filed Civil Case No. 5875 in RTC Pasay on June 10, 1988 for collection of sum of money.
August 1, 1988: sheriff’s return showed summons was not served; a woman at petitioner’s residence said petitioner had transferred to Sto. Niño, Guagua, Pampanga; sheriff learned petitioner had left the Philippines for Guam.
September 13, 1988: private respondent filed a Motion for Preliminary Attachment alleging petitioner’s departure was with intent to defraud creditors.
September 26–27, 1988: RTC issued Order of Preliminary Attachment and, the following day, the Writ of Preliminary Attachment.
Trial court granted sheriff’s request for assistance from RTC Pampanga; October 28, 1988: sheriff of RTC Pampanga served notice of levy, order, affidavit and bond on petitioner’s household help in San Fernando, Pampanga.
November 7, 1988: petitioner filed an Urgent Motion to Discharge Attachment, expressly without submitting to jurisdiction, asserting she had not been served a copy of the Complaint and summons.
November 11, 1988 hearing: private respondent obtained a resetting to December 9, 1988; private respondent’s counsel failed to appear on December 9, so the motion was deemed submitted.
January 13, 1989: trial court granted petitioner’s Motion to Discharge Attachment upon filing of counter-bond; trial court did not rule on jurisdictional question or validity of the writ at that time.
December 26, 1988: private respondent applied for alias summons; alias summons issued January 19, 1989.
January 26, 1989: alias summons was served on petitioner—almost three months after the writ had been implemented (October 28, 1988).
February 9, 1989: petitioner filed Motion to Dismiss for improper venue (invoking the invoice venue clause).
Private respondent opposed, claiming Makati venue in invoice was an inadvertence by the printing press (general manager executed affidavit) and that petitioner knew private respondent held office in Pasay City.
Trial court denied Motion to Dismiss and gave petitioner five days to file her Answer; motion for reconsideration denied; petitioner filed Answer on June 16, 1989 and raised improper venue as defense.
Pre-trial turmoil: pre-trial set then reset; August 24, 1989 pre-trial terminated when petitioner’s counsel allegedly arrived late; RTC allowed private respondent to present evidence ex parte (September 12 and then October 10, 1989).
Petitioner filed motions for reconsideration/omnibus motions contesting the absence of any declaration of default and contending counsel was late, not absent; trial court denied these motions.
November 10, 1989 Decision: ordered petitioner to pay P109,376.95 plus 18% interest per annum, 25% attorney’s fees and costs; petitioner received copy on November 20, 1989.
Private respondent’s Motion for Execution Pending Appeal was denied by the trial court.

Issues Presented to the Supreme Court

I. Whether the RTC erred in not holding that the writ of attachment was improperly issued and served.
II. Whether there was a valid declaration of default.
III. Whether venue was improper.
IV. Whether the RTC erred in declaring petitioner obliged to pay P109,376.95 plus attorney’s fees.

Legal Principles and Authorities Applied

Distinction between issuance and implementation of a writ of attachment: issuance may occur at commencement of action or thereafter, but implementation requires that the court have acquired jurisdiction over the defendant’s person.
Rule 57, Section 1: provisional remedies may be sought “at the commencement of the action or at any time thereafter” — “commencement of the action” refers to the date of filing the complaint.
Precedent: Davao Light & Power Co., Inc. v. Court of Appeals (204 SCRA 343, 1991) — acts by court prior to jurisdiction (issuance of summons, order of attachment, writ of attachment) do not bind the defendant until jurisdiction over his person is obtained; when sheriff commences implementation of the writ, he must serve the defendant the applicant’s affidavit, attachme