Case Summary (G.R. No. 172242)
Key Dates
1 June 1990
• Distribution Agreement between PEIA and Dakila Trading.
2 August 1997
• PEIA unilaterally terminates the Distribution Agreement.
26 March 1999 & 11 January 2000
• RTC denies respondent’s writ of attachment and its reconsideration.
4 September 2000
• Alias summons issued and served on Perkinelmer Asia, mistakenly identified as PEIA.
24 July 2001
• RTC admits respondent’s Amended Complaint realigning PEIA to petitioner.
4 November 2002 & 20 June 2003
• RTC denies petitioner’s Motion to Dismiss and its reconsideration.
4 April 2006
• Court of Appeals affirms RTC orders.
Applicable Law
• 1987 Philippine Constitution (decision post-1990)
• Rule 14, Sec. 15, R. C. P.: Extraterritorial service of summons in rem/quasi in rem only.
• Rule 14, Sec. 20, R. C. P.: Voluntary appearance does not include motions raising other grounds.
• Rule 16, Sec. 1(g), R. C. P.: Dismissal for failure to state a cause of action.
• Rule 17, Sec. 3, R. C. P.: Compulsory counterclaims.
Distribution Agreement and Its Termination
Respondent was appointed sole Philippine distributor of PEIA products, with commission on sales. Under the same agreement, respondent could source products from PEIP. In August 1997, PEIA terminated the contract, prompting respondent’s suit for collection of money and damages before the Mandaluyong RTC.
Initial Proceedings and Service of Summons
Respondent sought a writ of attachment over PEIA’s alleged interest in PEIP; the RTC denied both attachment and reconsideration. Without personal service in the Philippines, respondent obtained leave for extraterritorial service under Rule 14, Sec. 15, and deputized its general manager to effect service in Singapore. Summons issued in September 2000 was served on “Perkinelmer Asia,” erroneously deemed a separate sole proprietorship owned by petitioner.
Special Appearance and Motion to Dismiss
Petitioner filed a special appearance and moved to dismiss on grounds of:
- Lack of personal jurisdiction due to defective service.
- Failure to state a cause of action; petitioner not real party-in-interest.
- Distribution Agreement’s termination clause.
- Improper venue.
RTC’s Ruling on Motion to Dismiss
The RTC denied dismissal, reasoning:
• Alleged ownership of PEIP shares established a contingent or actual interest in Philippine property, validating extraterritorial service under Rule 14, Sec. 15(2).
• The Amended Complaint stated the essential elements of a cause of action.
• Venue, though contractually stipulated as “exclusive,” was alternatively laid and respondent’s residence venue was proper.
Issues on Review
I. Validity of extraterritorial summons and RTC’s jurisdiction over petitioner.
II. Sufficiency of cause of action and proper venue.
III. Entitlement to injunctive relief.
Extraterritorial Service and Jurisdiction
Under Rule 14, Sec. 15, extraterritorial service is confined to in rem or quasi in rem actions:
• In rem: the thing itself.
• Quasi in rem: defendant’s interest in property.
Actions in personam require personal service within the Philippines. Respondent’s suit for money and damages is in personam, targeting petitioner’s personal liability, and thus cannot be served extraterritorially.
Action in Personam Versus In Rem and Quasi in Rem
The Court of Appeals correctly characterized the suit as in personam: the claim sought money recovery for unilateral contract termination. Conversion to quasi in rem requires actual attachment of defendant’s Philippine property, which never occurred. Mere allegation of share ownership does not suffice.
Invalidity of Extraterritorial Service in This Case
Because the action is in personam and petitioner is nonresident, personal service in the Philippines was indispensable. The RTC misapplied Rule 14, Sec. 15(2) by treating share-ownership allegations as ground for extraterritorial summons. The attachment application was denied; thus no quasi in rem jurisdiction ever materialized.
Voluntary Appearance and Jurisdiction
Petitioner’s special appearance and ancillary motions did not constitute voluntary appearance under Rule 14, Sec. 20. Inclusion of additional grounds does not waive the jurisdictional challenge. Consequently, RTC never acquired jurisdiction over petitioner
...continue readingCase Syllabus (G.R. No. 172242)
Facts of the Case and Distribution Agreement
- On June 1, 1990, Dakila Trading Corporation (“respondent”) entered into a Distribution Agreement with Perkin-Elmer Instruments Asia Pte Ltd. (“PEIA”), a Singapore corporation manufacturing and distributing laboratory instruments.
- Under the Agreement, respondent was appointed sole distributor of PEIA products in the Philippines, granted the right to purchase from PEIA or its Philippine affiliate, Perkin-Elmer Instruments (Philippines) Corporation (“PEIP”), and owed commission by PEIA on Philippine sales.
- PEIP, 99% owned by PEIA, was incorporated under Philippine law to wholesale scientific and analytical instruments.
- On August 2, 1997, PEIA unilaterally terminated the Distribution Agreement, prompting respondent’s complaint for collection of money and damages with writ of attachment against PEIA and PEIP before the Mandaluyong RTC, Branch 212 (Civil Case MC99-605).
Procedural Antecedents in the Trial Court
- March 26, 1999: RTC denied respondent’s motion for writ of attachment on grounds that corporate property of PEIP could not be attached for shareholder’s obligations.
- January 11, 2000: RTC denied reconsideration of the attachment order.
- April 27, 2000: RTC granted respondent leave to deputize its General Manager to serve summons abroad.
- September 28, 2000: Alias summons served on “Perkinelmer Asia,” a Singapore sole proprietorship owned by Perkin Elmer Singapore Pte Ltd. (“petitioner”), distinct from PEIA.
- PEIP moved to dismiss for failure to state a cause of action; “Perkinelmer Asia” notified wrongful service.
- Respondent filed ex parte motion to admit amended complaint alleging that PEIA became a sole proprietorship owned by petitioner, renamed Perkinelmer Asia, and assumed all obligations; RTC admitted the amended complaint on July 24, 2001.
- October 4, 2001: RTC denied PEIP’s motion to dismiss, compelling PEIP to answer.
- March 4, 2002: RTC deputized respondent’s General Manager to serve summons on petitioner in Singapore, which was effected.
Trial Court’s Denial of Petitioner’s Motion to Dismiss
- May 30,