NM ROTHSCHILD & SONS (AUSTRALIA) LIMITED vs LEPANTO CONSOLIDATED

MINING COMPANY
G.R. No. 175799
November 28, 2011
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 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 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

Extraterritorial service
G.R. No. 159699, March 16, 2005
ACANCE VS. CA
FACTS:

Angela Paglicawan and Vernier Quijano were married and bore 4 legitimate
children (Quijano siblings) herein respondents. However, their relationship turn
sour.
Angela met his second husband Jesus Acance. After Vernier passed away in
1989, Jesus and Angela got married in 1990 and bore 3 children (Acance
siblings) herein petitioners. The latter are now residing in United States.
The dispute started when the Acance siblings executed Extra-Judicial Settlement
of the Estate and Waiver of Rights of the lots situated in Muntinlupa City.
The Quijano siblings now filed an amended complaint before the RTC of
Muntinlupa for the annulment of the extra-judicial settlement on the ground that
subject real properties are conjugal properties of Angela and Vernier, that they
have a valid right to succeed over the said properties as the lawful and
compulsory heirs and that the signature of Angela thereon was a forgery.
Upon motion of the respondents, the court a quo issued an order declaring the
petitioners in default for their failure to file an answer to the amended complaint.
Atty. Rosalino Acance representing petitioners filed with the court a quo a
Motion to Lift/Set Aside Order of Default. He alleged that he had not received a
copy of the complaint. The motion was however denied by the court.
It explained that the petitioners are all residing abroad but the real
properties subject of the complaint are situated in Muntinlupa City.
Accordingly, upon motion, they were deemed served with the summons
and the amended complaint through publication thereof in a newspaper
of general circulation in Muntinlupa City, where the properties are
located, and nationwide on October 20, 2001. The petitioners had sixty
(60) days from the last publication or until December 2, 2001 within
which to file their answer. However, they failed to do so.
Petitioners filed with the Court of Appeals a petition for certiorari but was
denied for failure of petitioners to first file a Motion for Reconsideration.
Hence, this petition.

ISSUE:
Whether petitioners are served with a valid extraterritorial service of
summons.
RULING:
NO.

The court a quo acted with grave abuse of discretion in declaring the petitioners
in default without showing that there was full compliance with the requirements for
extraterritorial service of summons under Section 15, Rule 14 of the Rules of Court.
The said provision reads:

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.

The petitioners are citizens of the United States and residents thereof. Further,
the suit against them involves real property wherein the petitioners, as defendants
therein, have an interest. These facts clearly warranted extraterritorial service of
summons in accordance with Section 15, Rule 14 of the Rules of Court. The
rationale for service of summons on a nonresident defendant is explained, thus:

We repeat, service of summons on a nonresident defendant who is not

found in the country is required, not for purposes of physically acquiring
jurisdiction over his person but simply in pursuance of the requirements of
fair play, so that he may be informed of the pendency of the action against him
and the possibility that the property in the Philippines belonging to him or in which
he has an interest may be subjected to a judgment in favor of a resident, and that
he may thereby be accorded an opportunity to defend in the action, if he be so
minded. The only relief that may be granted in such an action against such a
nonresident defendant, who does not choose to submit himself to the jurisdiction of
the Philippine court, is limited to the res.[6]

In its Order dated April 26, 2002, the court a quo declared the petitioners in
default in this wise:

Since the last publication of this case more than 60 days ago, no answer has been
filed by any of the Defendants, the MOTION TO DECLARE THE DEFENDANTS IN
DEFAULT is, therefore, granted; hence Defendants, SPS. JESULITO P. ACANCE &
VILMA ACANCE, SPS. MANUEL P. ACANCE & GUIA ACANCE, and SPS. NESTOR P.
ACANCE & LYNNE ACANCE are defaulted.

But the service of summons in this case is defective. There was no showing
that copies of the summons and the amended complaint were duly served
at the petitioners last known correct address by registered mail, as a
complement to the publication pursuant to Section 15, Rule 14 of the Rules of
Court[8] and in compliance with the court a quos Order dated July 1, 2001 granting
the respondents motion for leave to serve summons by publication.
The respondents averred that a copy of the summons and order of the court
together with a copy of the amended complaint had been sent to each of the three
(3) defendants in their respective addresses by registered mail, as evidenced by
Registry Receipt No. 26832 for Nestor P. Acance dated November 13, 2001; Registry
receipt No. 26833 for Jesulito P. Acance dated November 13, 2001 and Registry
Receipt No. 26834 for Manuel P. Acance dated November 13, 2001, all sent from the
Makati City Branch Post Office. [9] However, except for this bare allegation, the
corresponding registry receipts or copies thereof were not presented to
show compliance with the rules.

Further, there was likewise non-compliance with Section 19, Rule 15 of the Rules
of Court relating to the proof of service by publication. The said provision reads:

Sec. 19. Proof of service by publication. If the service has been made by
publication, service may be proved by the affidavit of the printer, his
foreman, or principal clerk, or of the editor, business or advertising
manager, to which affidavit a copy of the publication shall be attached, and by an
affidavit showing the deposit of a copy of the summons and order for publication in
the post office, postage prepaid, directed to the defendant by registered mail to his
last known address.

While the respondents claimed that they had complied with the service of
summons by publication in a newspaper of general circulation,[10] it does not
appear that they had presented to the court a quo the affidavit of the
printer, his foreman, or principal clerk, or of the editor, business or
advertising manager of the Remate, where the publication was
allegedly made, to prove such service by publication. Neither did they
present an affidavit showing the deposit of a copy of the summons and
order of publication in the post office, postage prepaid, directed to the
petitioners by registered mail to their last known addresses.

The failure to strictly comply correctly with the requirements of the

rules regarding the mailing of copies of the summons and the order for its
publication is a fatal defect in the service of summons. [

It is the duty of the court to require the fullest compliance with all the requirements
of the statute permitting service by publication. Where service is obtained by
publication, the entire proceeding should be closely scrutinized by the courts and a
strict compliance with every condition of law should be exacted. Otherwise great
abuses may occur, and the rights of persons and property may be made to depend
upon the elastic conscience of interested parties rather than the enlightened
judgment of the court or judge.[
Petition is granted.

"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 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, 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 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 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.