THIRD DIVISION
[G.R. No. 125027.
August 12, 2002]
ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA GUINA, respondents.
D E C I S I O N
CARPIO, J.:
The Case
This is a petition fore review on
certiorari under Rule 45 of the Rules of Court, seeking to set aside the
Decision[1] of the Court of Appeals
affirming the Decision[2] of the Regional Trial
Court, Branch 108, Pasay City. The trial court upheld the writ of attachment
and the declaration of default on petitioner while ordering her to pay private
respondent P109,376.95 plus 18 percent interest per annum, 25 percent
attorney’s fees and costs of suit.
The Facts
Petitioner Anita Mangila
(“petitioner” for brevity) is an exporter of sea foods and doing business under
the name and style of Seafoods Products. Private respondent Loreta Guina
(“private respondent” for brevity) is the President and General Manager of Air
Swift International, a single registered proprietorship engaged in the freight
forwarding business.
Sometime in January 1988,
petitioner contracted the freight forwarding services of private respondent for
shipment of petitioner’s products, such as crabs, prawns and assorted fishes,
to Guam (USA) where petitioner maintains an outlet. Petitioner agreed to pay
private respondent cash on delivery. Private respondent’s invoice stipulates a
charge of 18 percent interest per annum on all overdue accounts. In case of
suit, the same invoice stipulates attorney’s fees equivalent to 25 percent of
the amount due plus costs of suit.[3]
On the first shipment, petitioner
requested for seven days within which to pay private respondent. However, for
the next three shipments, March 17, 24 and 31, 1988, petitioner failed to pay
private respondent shipping charges amounting to P109, 376.95.[4]
Despite several demands,
petitioner never paid private respondent. Thus, on June 10, 1988, private
respondent filed Civil Case No. 5875 before the Regional Trial Court of Pasay
City for collection of sum of money.
On August 1, 1988, the sheriff
filed his Sheriff’s Return showing that summons was not served on petitioner. A
woman found at petitioner’s house informed the sheriff that petitioner
transferred her residence to Sto. Niño, Guagua, Pampanga. The sheriff found out
further that petitioner had left the Philippines for Guam.[5]
Thus, on September 13, 1988,
construing petitioner’s departure from the Philippines as done with intent to
defraud her creditors, private respondent filed a Motion for Preliminary
Attachment. On September 26, 1988, the trial court issued an Order of
Preliminary Attachment[6] against petitioner. The
following day, the trial court issued a Writ of Preliminary Attachment.
The trial court granted the
request of its sheriff for assistance from their counterparts in RTC, Pampanga.
Thus, on October 28, 1988, Sheriff Alfredo San Miguel of RTC Pampanga served on
petitioner’s household help in San Fernando, Pampanga, the Notice of Levy with the
Order, Affidavit and Bond.[7]
On November 7, 1988, petitioner
filed an Urgent Motion to Discharge Attachment[8] without submitting herself
to the jurisdiction of the trial court. She pointed out that up to then, she
had not been served a copy of the Complaint and the summons. Hence, petitioner
claimed the court had not acquired jurisdiction over her person.[9]
In the hearing of the Urgent
Motion to Discharge Attachment on November 11, 1988, private respondent sought and
was granted a re-setting to December 9, 1988. On that date, private
respondent’s counsel did not appear, so the Urgent Motion to Discharge
Attachment was deemed submitted for resolution.[10]
The trial court granted the Motion
to Discharge Attachment on January 13, 1989 upon filing of petitioner’s
counter-bond. The trial court, however, did not rule on the question of
jurisdiction and on the validity of the writ of preliminary attachment.
On December 26, 1988, private
respondent applied for an alias summons, which the trial court issued on
January 19, 1989.[11] It was only on January 26,
1989 that summons was finally served on petitioner.[12]
On February 9, 1989, petitioner
filed a Motion to Dismiss the Complaint on the ground of improper venue.
Private respondent’s invoice for the freight forwarding service stipulates that
“if court litigation becomes necessary to enforce collection xxx the agreed
venue for such action is Makati, Metro Manila.”[13] Private respondent filed an
Opposition asserting that although “Makati” appears as the stipulated venue,
the same was merely an inadvertence by the printing press whose general manager
executed an affidavit[14] admitting such
inadvertence. Moreover, private respondent claimed that petitioner knew that
private respondent was holding office in Pasay City and not in Makati.[15] The lower court, finding
credence in private respondent’s assertion, denied the Motion to Dismiss and
gave petitioner five days to file her Answer. Petitioner filed a Motion for
Reconsideration but this too was denied.
Petitioner filed her Answer[16] on June 16, 1989, maintaining her contention that the venue was
improperly laid.
On June 26, 1989, the trial court
issued an Order setting the pre-trial for July 18, 1989 at 8:30 a.m. and
requiring the parties to submit their pre-trial briefs. Meanwhile, private
respondent filed a Motion to Sell Attached Properties but the trial court
denied the motion.
On motion of petitioner, the trial
court issued an Order resetting the pre-trial from July 18, 1989 to August 24,
1989 at 8:30 a.m..
On August 24, 1989, the day of the
pre-trial, the trial court issued an Order[17] terminating the pre-trial and allowing the private respondent to
present evidence ex-parte on September 12, 1989 at 8:30 a.m.. The Order stated
that when the case was called for pre-trial at 8:31 a.m., only the counsel for
private respondent appeared. Upon the trial court’s second call 20 minutes
later, petitioner’s counsel was still nowhere to be found. Thus, upon motion of
private respondent, the pre-trial was considered terminated.
On September 12, 1989, petitioner
filed her Motion for Reconsideration of the Order terminating the pre-trial.
Petitioner explained that her counsel arrived 5 minutes after the second call,
as shown by the transcript of stenographic notes, and was late because of heavy
traffic. Petitioner claims that the lower court erred in allowing private
respondent to present evidence ex-parte since there was no Order
considering the petitioner as in default. Petitioner contends that the Order of
August 24, 1989 did not state that petitioner was declared as in default but
still the court allowed private respondent to present evidence ex-parte.[18]
On October 6, 1989, the trial
court denied the Motion for Reconsideration and scheduled the presentation of
private respondent’s evidence ex-parte on October 10, 1989.
On October 10, 1989, petitioner
filed an Omnibus Motion stating that the presentation of evidence ex-parte should
be suspended because there was no declaration of petitioner as in default and
petitioner’s counsel was not absent, but merely late.
On October 18, 1989, the trial
court denied the Omnibus Motion.[19]
On November 20, 1989, the
petitioner received a copy of the Decision of November 10, 1989, ordering
petitioner to pay respondent P109,376.95 plus 18 percent interest per annum, 25
percent attorney’s fees and costs of suit. Private respondent filed a Motion
for Execution Pending Appeal but the trial court denied the same.
The Ruling of the Court
of Appeals
On December 15, 1995, the Court of
Appeals rendered a decision affirming the decision of the trial court. The
Court of Appeals upheld the validity of the issuance of the writ of attachment
and sustained the filing of the action in the RTC of Pasay. The Court of Appeals
also affirmed the declaration of default on petitioner and concluded that the
trial court did not commit any reversible error.
Petitioner filed a Motion for
Reconsideration on January 5, 1996 but the Court of Appeals denied the same in
a Resolution dated May 20, 1996.
Hence, this petition.
The Issues
The issues raised by petitioner
may be re-stated as follows:
I.
WHETHER RESPONDENT COURT 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 THERE WAS IMPROPER VENUE.
IV.
WHETHER RESPONDENT COURT ERRED IN
DECLARING THAT PETITIONER IS OBLIGED TO PAY P109, 376.95, PLUS ATTORNEY’S FEES.[20]
The Ruling of the Court
Improper
Issuance and Service of Writ of Attachment
Petitioner ascribes several errors
to the issuance and implementation of the writ of attachment. Among
petitioner’s arguments are: first, there was no ground for the issuance of the
writ since the intent to defraud her creditors had not been established; second,
the value of the properties levied exceeded the value of private respondent’s
claim. However, the crux of petitioner’s arguments rests on the question of the
validity of the writ of attachment. Because of failure to serve summons on her
before or simultaneously with the writ’s implementation, petitioner claims that
the trial court had not acquired jurisdiction over her person and thus the
service of the writ is void.
As a preliminary note, a
distinction should be made between issuance and implementation of the writ of
attachment. It is necessary to distinguish between the two to determine when
jurisdiction over the person of the defendant should be acquired to validly
implement the writ. This distinction is crucial in resolving whether there is
merit in petitioner’s argument.
This Court has long settled the
issue of when jurisdiction over the person of the defendant should be acquired
in cases where a party resorts to provisional remedies. A party to a suit may,
at any time after filing the complaint, avail of the provisional remedies under
the Rules of Court. Specifically, Rule 57 on preliminary attachment speaks of
the grant of the remedy “at the commencement of the action or at any time
thereafter.”[21] This phrase refers to the
date of filing of the complaint which is the moment that marks “the
commencement of the action.” The reference plainly is to a time before summons
is served on the defendant, or even before summons issues.
In Davao Light & Power
Co., Inc. v. Court of Appeals,[22] this Court clarified the
actual time when jurisdiction should be had:
“It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant - issuance of summons, order of attachment and writ of attachment - 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 explicitly required by Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint xxx.” (Emphasis supplied.)
Furthermore,
we have held that the grant of the provisional remedy of attachment involves
three stages: first, the court issues the order granting the application;
second, the writ of attachment issues pursuant to the order granting the writ;
and third, the writ is implemented. For the initial two stages, it is not
necessary that jurisdiction over the person of the defendant be first obtained.
However, once the implementation of the writ commences, the
court must have acquired jurisdiction over the defendant for without such
jurisdiction, the court has no power and authority to act in any manner against
the defendant. Any order issuing from the Court will not bind the defendant.[23]
In the instant case, the Writ of
Preliminary Attachment was issued on September 27, 1988 and implemented on
October 28, 1988. However, the alias summons was served only on January 26,
1989 or almost three months after the implementation of the writ of
attachment.
The trial court had the authority
to issue the Writ of Attachment on September 27 since a motion for its issuance
can be filed “at the commencement of the action.” However, on the day the writ
was implemented, the trial court should have, previously or simultaneously with
the implementation of the writ, acquired jurisdiction over the petitioner. Yet,
as was shown in the records of the case, the summons was actually served on
petitioner several months after the writ had been implemented.
Private respondent, nevertheless,
claims that the prior or contemporaneous service of summons contemplated in
Section 5 of Rule 57 provides for exceptions. Among such exceptions are “where
the summons could not be served personally or by substituted service despite
diligent efforts or where the defendant is a resident temporarily absent
therefrom x x x.” Private respondent asserts that when she commenced this
action, she tried to serve summons on petitioner but the latter could not be
located at her customary address in Kamuning, Quezon City or at her new address
in Guagua, Pampanga.[24] Furthermore, respondent
claims that petitioner was not even in Pampanga; rather, she was in Guam
purportedly on a business trip.
Private respondent never showed
that she effected substituted service on petitioner after her personal service
failed. Likewise, if it were true that private respondent could not ascertain
the whereabouts of petitioner after a diligent inquiry, still she had some
other recourse under the Rules of Civil Procedure.
The rules provide for certain
remedies in cases where personal service could not be effected on a party.
Section 14, Rule 14 of the Rules of Court provides that whenever the
defendant’s “whereabouts are unknown and cannot be ascertained by diligent
inquiry, service may, by leave of court, be effected upon him by publication in
a newspaper of general circulation x x x.” Thus, if petitioner’s whereabouts
could not be ascertained after the sheriff had served the summons at her given
address, then respondent could have immediately asked the court for service of
summons by publication on petitioner.[25]
Moreover, as private respondent
also claims that petitioner was abroad at the time of the service of summons,
this made petitioner a resident who is temporarily out of the country. This is
the exact situation contemplated in Section 16,[26] Rule 14 of the Rules of
Civil Procedure, providing for service of summons by publication.
In conclusion, we hold that the
alias summons belatedly served on petitioner cannot be deemed to have cured the
fatal defect in the enforcement of the writ. The trial court cannot enforce
such a coercive process on petitioner without first obtaining jurisdiction over
her person. The preliminary writ of attachment must be served after or
simultaneous with the service of summons on the defendant whether by personal
service, substituted service or by publication as warranted by the
circumstances of the case.[27] The subsequent service of summons
does not confer a retroactive acquisition of jurisdiction over her person
because the law does not allow for retroactivity of a belated service.
Improper Venue
Petitioner assails the filing of
this case in the RTC of Pasay and points to a provision in private respondent’s
invoice which contains the following:
“3. If court litigation becomes necessary to enforce collection, an
additional equivalent (sic) to 25% of the principal amount will be charged. The
agreed venue for such action is Makati, Metro Manila, Philippines.”[28]
Based on this provision,
petitioner contends that the action should have been instituted in the RTC of
Makati and to do otherwise would be a ground for the dismissal of the case.
We resolve to dismiss the case on
the ground of improper venue but not for the reason stated by petitioner.
The Rules of Court provide that
parties to an action may agree in writing on the venue on which an action
should be brought.[29] However, a mere stipulation
on the venue of an action is not enough to preclude parties from bringing a
case in other venues.[30] The parties must be able to
show that such stipulation is exclusive. Thus, absent words that show
the parties’ intention to restrict the filing of a suit in a particular place,
courts will allow the filing of a case in any venue, as long as jurisdictional
requirements are followed. Venue stipulations in a contract, while considered
valid and enforceable, do not as a rule supersede the general rule set forth in
Rule 4 of the Revised Rules of Court.[31] In the absence of
qualifying or restrictive words, they should be considered merely as an
agreement on additional forum, not as limiting venue to the specified place.[32]
In the instant case, the
stipulation does not limit the venue exclusively to Makati. There are no
qualifying or restrictive words in the invoice that would evince the intention
of the parties that Makati is the “only or exclusive” venue where the action
could be instituted. We therefore agree with private respondent that Makati is
not the only venue where this case could be filed.
Nevertheless, we hold that Pasay
is not the proper venue for this case.
Under the 1997 Rules of Civil
Procedure, the general rule is venue in personal actions is “where the defendant
or any of the defendants resides or may be found, or where the plaintiff or any
of the plaintiffs resides, at the election of the plaintiff.”[33] The exception to this rule
is when the parties agree on an exclusive venue other than the places mentioned
in the rules. But, as we have discussed, this exception is not applicable in
this case. Hence, following the general rule, the instant case may be brought
in the place of residence of the plaintiff or defendant, at the election of the
plaintiff (private respondent herein).
In the instant case, the residence
of private respondent (plaintiff in the lower court) was not alleged in the
complaint. Rather, what was alleged was the postal address of her sole
proprietorship, Air Swift International. It was only when private respondent
testified in court, after petitioner was declared in default, that she
mentioned her residence to be in Better Living Subdivision, Parañaque City.
In the earlier case of Sy v.
Tyson Enterprises, Inc.,[34] the reverse happened. The
plaintiff in that case was Tyson Enterprises, Inc., a corporation owned and
managed by Dominador Ti. The complaint, however, did not allege the office or
place of business of the corporation, which was in Binondo, Manila. What was
alleged was the residence of Dominador Ti, who lived in San Juan, Rizal. The
case was filed in the Court of First Instance of Rizal, Pasig. The Court there
held that the evident purpose of alleging the address of the corporation’s
president and manager was to justify the filing of the suit in Rizal, Pasig
instead of in Manila. Thus, the Court ruled that there was no question that
venue was improperly laid in that case and held that the place of business of
Tyson Enterpises, Inc. is considered as its residence for purposes of venue.
Furthermore, the Court held that the residence of its president is not the
residence of the corporation because a corporation has a personality separate
and distinct from that of its officers and stockholders.
In the instant case, it was
established in the lower court that petitioner resides in San Fernando,
Pampanga[35] while private respondent
resides in Parañaque City.[36] However, this case was
brought in Pasay City, where the business of private respondent is found. This
would have been permissible had private respondent’s business been a
corporation, just like the case in Sy v. Tyson Enterprises, Inc. However,
as admitted by private respondent in her Complaint[37] in the lower court, her
business is a sole proprietorship, and as such, does not have a separate
juridical personality that could enable it to file a suit in court.[38] In fact, there is no law
authorizing sole proprietorships to file a suit in court.[39]
A sole proprietorship does not
possess a juridical personality separate and distinct from the personality of
the owner of the enterprise.[40] The law merely recognizes
the existence of a sole proprietorship as a form of business organization
conducted for profit by a single individual and requires its proprietor or
owner to secure licenses and permits, register its business name, and pay taxes
to the national government.[41] The law does not vest a
separate legal personality on the sole proprietorship or empower it to file or
defend an action in court.[42]
Thus, not being vested with legal personality
to file this case, the sole proprietorship is not the plaintiff in this case
but rather Loreta Guina in her personal capacity. In fact, the complaint in the
lower court acknowledges in its caption that the plaintiff and defendant are
Loreta Guina and Anita Mangila, respectively. The title of the petition before
us does not state, and rightly so, Anita Mangila v. Air Swift
International, but rather Anita Mangila v. Loreta Guina. Logically
then, it is the residence of private respondent Guina, the proprietor with
the juridical personality, which should be considered as one of the proper
venues for this case.
All these considered, private
respondent should have filed this case either in San Fernando, Pampanga
(petitioner’s residence) or Parañaque (private respondent’s residence). Since
private respondent (complainant below) filed this case in Pasay, we hold that
the case should be dismissed on the ground of improper venue.
Although petitioner filed an
Urgent Motion to Discharge Attachment in the lower court, petitioner expressly
stated that she was filing the motion without submitting to the jurisdiction of
the court. At that time, petitioner had not been served the summons and a copy
of the complaint.[43] Thereafter, petitioner
timely filed a Motion to Dismiss[44] on the ground of improper
venue. Rule 16, Section 1 of the Rules of Court provides that a motion to
dismiss may be filed “[W]ithin the time for but before filing the answer to the
complaint or pleading asserting a claim.” Petitioner even raised the issue of
improper venue in his Answer[45] as a special and
affirmative defense. Petitioner also continued to raise the issue of improper
venue in her Petition for Review[46] before this Court. We thus
hold that the dismissal of this case on the ground of improper venue is
warranted.
The rules on venue, like other
procedural rules, are designed to insure a just and orderly administration of
justice or the impartial and evenhanded determination of every action and
proceeding. Obviously, this objective will not be attained if the plaintiff is
given unrestricted freedom to choose where to file the complaint or petition.[47]
We find no reason to rule on the
other issues raised by petitioner.
WHEREFORE, the petition is GRANTED on the grounds of improper
venue and invalidity of the service of the writ of attachment. The decision of
the Court of Appeals and the order of respondent judge denying the motion to
dismiss are REVERSED and SET ASIDE. Civil Case No. 5875 is hereby dismissed
without prejudice to refiling it in the proper venue. The attached properties
of petitioner are ordered returned to her immediately.
SO ORDERED.
Puno, (Chairman), and Panganiban, JJ., concur.
Sandoval-Gutierrez, J., on leave.
[1] Penned by Justice Quirino Abad Santos, Jr. with
members Justices Nathaneal de Pano, Jr. and B.A. Adefuin-Dela Cruz; Docketed as
C.A. G.R. CV No. 25119.
[2] Penned by Judge Priscilla Mijares.
[3] Rollo, p. 97.
[4] Ibid.
[5] Records of Civil Case No. 5875, p. 9 (hereinafter
Records).
[6] Ibid., p. 23.
[7] Rollo, p. 98.
[8] Records, p. 31.
[9] Rollo, p. 11.
[10] Ibid.
[11] Records, p. 86.
[12] Ibid., p. 91.
[13] Ibid., p. 97.
[14] Ibid., p. 102.
[15] Ibid., p. 100.
[16] Ibid., p. 131.
[17] Ibid., p. 161.
[18] Rollo, p. 13.
[19] Records, p. 182.
[20] Rollo, pp. 13-14.
[21] Section 1, Rule 57, Rules of Court.
[22] 204 SCRA 343 (1991).
[23] Cuartero v. Court of Appeals, 212 SCRA 260
(1992).
[24] Rollo, p. 102.
[25] UCPB v.
Ongpin, G.R. No. 146593, October 26, 2001. Sec. 14. Service upon defendant
whose identity or whereabouts are unknown.- In any action where the defendant
is designated as an unknown owner, or the like, or whenever his whereabouts are
unknown and cannot be ascertained by diligent inquiry, service, may, by leave
of court, be effected upon him by publication in a newspaper of general
circulation and in such places and for such time as the court may order
[26] Sec. 15. Extraterritorial service.- xxx,
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. xxx
Sec. 16. Residents temporarily out of the Philippines.- when
any action is commenced against a defendant who ordinarily resides within the
Philippines, but who is temporarily out of it, service, may, by leave of court,
be also effected out of the Philippines, as under the preceding section.
[27] See note 25.
[28] Supra, note 13.
[29] Rule 4 of the Revised Rules of Civil
Procedure:
Sec. 4. When rule not applicable. - This rule shall not apply-
xxx.
(b) Where the parties have validly agreed in writing before
the filing of the action on the exclusive venue thereof.
[30] Langkaan
Realty Development, Inc. v. UCPB, 347 SCRA 542 (2000).
[31] Supena v. Dela Rosa, 267 SCRA 1(1999) citing
Philippine Banking Corporation v. Tensuan, 230 SCRA 913 (1994);
Unimasters Conglomeration, Inc. v. Court of Appeals, 267 SCRA 759
(1997).
[32] Ibid.
[33] Rule 4, Section 2.
[34] 119 SCRA 367 (1982).
[35] Records, p. 31.
[36] TSN, October 24, 1989, p. 2.
[37] Records, p. 1.
[38] Yao Ka Sin Trading v. Court of Appeals, 209
SCRA 763 (1992) citing Jariol, Jr. v. Sandiganbayan, 188 SCRA 475
(1990).
[39] Juasing Hardware v. Hon. Mendoza, 201 Phil.
369 (1982), also cited in the Yao Ka Sin Trading case.
[40] Ibid.
[41] Ibid.
[42] Ibid.
[43] Records, p. 31.
[44] Ibid., p. 107.
[45] Ibid., p. 131.
[46] Rollo, p. 1.
[47] Sy v. Tyson Enterprises, Inc., see note 34.