THIRD DIVISION
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PERKIN ELMER
SINGAPORE PTE LTD., Petitioner, - versus - DAKILA
TRADING CORPORATION, Respondent. |
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G.R. No.
172242 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and NACHURA, JJ. Promulgated: |
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CHICO-NAZARIO,
J.:
The case before this Court is a Petition for
Review[1]
on Certiorari under Rule 45 of the
1997 Revised Rules of Civil Procedure seeking to annul and set aside the
Decision,[2]
dated 4 April 2006, of the Court of Appeals in CA-G.R. SP No. 78981, which
affirmed the Orders, dated 4 November 2002[3]
and 20 June 2003,[4] of
the Mandaluyong City Regional Trial Court (RTC), Branch 212, in Civil Case No.
MC99-605, which, in turn, denied the Motion to Dismiss and subsequent Motion
for Reconsideration of herein petitioner Perkin
Elmer Singapore Pte Ltd.
Petitioner
is a corporation duly organized and existing under the laws of
The
antecedents of the present case are as follows:
Respondent
entered into a Distribution Agreement[5]
on
Under the
same Distribution Agreement, respondent shall order the products of PEIA, which
it shall sell in the
On
The RTC
issued an Order,[7]
dated
Respondent
then filed Ex-Parte Motions for
Issuance of Summons and for Leave of Court to Deputize Respondent’s General
Manager, Richard A. Tee, to Serve Summons Outside of the
PEIP moved
to dismiss[11]
the Complaint filed by respondent on the ground that it states no cause of
action. Perkinelmer Asia, on the other
hand, through its counsel, sent letters, dated
Accordingly,
respondent filed an Ex-Parte Motion
to Admit Amended Complaint, together with the Amended Complaint claiming that
PEIA had become a sole proprietorship[14]
owned by the petitioner, and subsequently changed its name to Perkinelmer
Asia. Being a sole proprietorship of the
petitioner, a change in PEIA’s name and juridical status did not detract from
the fact that all its due and outstanding obligations to third parties were
assumed by the petitioner. Hence, in its
Amended Complaint[15]
respondent sought to change the name of PEIA to that of the petitioner. In an Order, dated
Meanwhile,
in an Order, dated
Petitioner
subsequently filed with the RTC a Special Appearance and Motion to Dismiss[20]
respondent’s Amended Complaint on 30 May 2002 based on the following grounds:
(1) the RTC did not acquire jurisdiction over the person of the petitioner; (2)
the respondent failed to state a cause of action against the petitioner because
it is not the real party-in-interest; (3) even assuming arguendo that the respondent correctly filed the case against the
petitioner, the Distribution Agreement which was the basis of its claim grants
PEIA the right to terminate the contract at any time; and (4) the venue was
improperly laid. The RTC in its Order,
dated
Prescinding from the above arguments of both parties, the [RTC] is inclined to DENY the Motion to Dismiss.
A careful scrutiny on (sic) the
allegation in the (Amended) Complaint would show that [herein respondent]
alleges ownership by the [herein petitioner] of shares of stocks in the
[PEIP]. Such allegation of ownership of
shares of stocks by the [petitioner] would reveal that there is an allegation
of personal property in the
The [petitioner] hinges its dismissal on the failure of the [respondent] to state a cause of action. The [RTC] would like to emphasize that in a Motion to Dismiss, it hypothetically admits the truth of the facts alleged in a complaint.
When the ground for dismissal is that the complaint states no cause of action, such fact can be determined only from the facts alleged in the complaint x x x and from no other x x x and the Court cannot consider other matters aliunde x x x. This implies that the issue must be passed upon on the basis of the allegations and declare them to be false, otherwise it would be a procedural error and a denial of due process to the [respondent] x x x.
The three (3) essential elements of a cause of action are the following:
a) The plaintiff’s legal rights;
b) A correlative obligation of the defendant;
c) The omission of the defendant in violation of the legal rights.
A cursory reading of the Amended Complaint would reveal that all of the essential elements of a cause of action are attendant in the Amended Complaint.
As for the contention that venue was improperly laid, x x x, the [RTC] in its ultimate desire that the ends of justice could be served in its fullest, cannot rule that venue was improperly laid.
x x x x
The stipulation as to the venue of a prospective action does not preclude the filing of the suit in the residence of the [respondent] under Section 2, Rule 4, Rules of Court, especially where the venue stipulation was imposed by the [petitioner] for its own benefits.
x x x x
The [RTC] further believes that it is imperative that in order to ferret out the truth, a full-blown trial is necessary for parties to be able to prove or disprove their allegations.[21]
Petitioner moved for the reconsideration of
the aforesaid Order but, it was denied by the RTC in its Order, dated
Consequently,
petitioner filed a Petition for Certiorari
under Rule 65 of the 1997 Revised Rules of Civil Procedure with application for
temporary restraining order and/or preliminary injunction before the Court of
Appeals alleging that the RTC committed grave abuse of discretion amounting to
lack or excess of jurisdiction in refusing to dismiss the Amended
Complaint. The Court of Appeals never
issued any temporary restraining order or writ of injunction. On
This brings
us to the present Petition before this Court wherein petitioner raised the
following issues.
I.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE SERVICE OF SUMMONS ON PETITIONER WAS DEFECTIVE AND THAT THE TRIAL COURT THUS FAILED TO ACQUIRE JURISDICTION OVER THE PERSON OF THE PETITIONER.
II.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT THE “SOLE ISSUE” IN THE PETITION FOR CERTIORARI FILED BEFORE IT IS THE QUESTION OF WHETHER THE TRIAL COURT ACQUIRED JURISDICTION OVER THE PERSON OF THE PETITIONER THROUGH THE EXTRATERRITORIAL SERVICE OF SUMMONS.
A.
WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GRANTED THE PETITION FOR CERTIORARI AND REVERSED THE RTC ORDERS ON THE GROUND THAT THE AMENDED COMPLAINT FAILED TO STATE A CAUSE OF ACTION AGAINST PETITIONER.
1. BASED ON THE ALLEGATIONS IN THE EX-PARTE MOTION TO ADMIT AMENDED COMPLAINT, AMENDED COMPLAINT, AND ALL DOCUMENTS ATTACHED AND/OR RELATED THERETO, PETITIONER IS NOT THE REAL PARTY-IN-INTEREST DEFENDANT IN THE CASE BELOW.
2.
ASSUMING ARGUENDO THAT RESPONDENT DAKILA FILED THIS
CASE AGAINST THE CORRECT [PARTY], INASMUCH AS THE DISTRIBUTION AGREEMENT DATED
B.
WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GRANTED THE PETITION FOR CERTIORARI AND REVERSED THE RTC ORDERS ON THE GROUND OF IMPROPER VENUE.
III.
WHETHER OR NOT PETITIONER IS ENTITLED TO A TEMPORARY RESTRAINING ORDER AND/OR WRIT OF INJUNCTION.
The
foregoing issues raised by petitioner essentially requires this Court to make a
determination of the (1) proper service of summons and acquisition of jurisdiction
by the RTC over the person of the petitioner; (2) existence of a cause of
action against petitioner in respondent’s Amended Complaint; and (3) proper
venue for respondent’s civil case against petitioner.
Petitioner contends that Civil Case No. MC99-605 involves an action for collection of sum of money and
damages arising from the alleged breach of the Distribution Agreement. The action is one in personam, or an action against a person based on his personal
liability; and for the court a quo to
acquire jurisdiction over the person of the petitioner, personal service of
summons, and not extraterritorial service of summons, must be made within the
state even if the petitioner is a non-resident.
Petitioner avers that extraterritorial service of summons stated under
Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure, is only
proper in in rem and quasi in rem cases; thus, resort to an
extraterritorial service of summons in the case at bar was erroneous. Petitioner asseverates that the allegations
in the respondent’s Amended Complaint that the petitioner has personal
properties within the Philippines does not make the present case one that
relates to, or the subject of which is, property within the Philippines
warranting the extraterritorial service of summons under Section 15, Rule 14 of
the 1997 Revised Rules of Civil Procedure.
Petitioner states that for an action to be considered as one that
relates to, or the subject of which is, property within the
Petitioner
further argues that the appellate court should have granted its Petition for Certiorari on the ground that the RTC
committed grave abuse of discretion amounting to lack or excess of jurisdiction
in refusing to dismiss respondent’s Amended Complaint for failure to state a
cause of action against petitioner which was not the real party-in-interest in
Civil Case No. MC99-605. Petitioner
claims that it had never used the name PEIA as its corporate name, and neither
did it change its name from that of PEIA.
Petitioner stresses that PEIA is an entirely different corporate entity
that is not connected in whatever manner to the petitioner. Even assuming arguendo that petitioner is the real party-in-interest in Civil
Case No. MC99-605 or that petitioner and PEIA are one and the same entity,
petitioner still avows that the respondent failed to state a cause of action
against it because the Distribution Agreement expressly grants PEIA the right
to terminate the said contract at any time.
Lastly, it
is the contention of the petitioner that the appellate court should have granted
its Petition for Certiorari because
the RTC committed grave abuse of discretion amounting to lack or excess of
jurisdiction in refusing to dismiss Civil Case No. MC99-605 for having been
filed in an improper venue. Petitioner
asserts that in the Distribution Agreement entered into between the respondent
and PEIA, both had mutually agreed to the exclusive jurisdiction of the courts
of
The
Petition is meritorious.
Jurisdiction
is the power with which courts are invested for administering justice; that is,
for hearing and deciding cases. In order for the court to have authority to
dispose of the case on the merits, it must acquire jurisdiction over the
subject matter and the parties.[22]
Jurisdiction
of the court over the subject matter is conferred only by the Constitution or
by law. It is determinable on the basis of allegations in the complaint.[23]
Courts
acquire jurisdiction over the plaintiffs upon the filing of the complaint,
while jurisdiction over the defendants in a civil case is acquired either
through the service of summons upon them in the manner required by law or
through their voluntary appearance in court and their submission to its
authority. If the defendants have not
been summoned, unless they voluntarily appear in court, the court acquires no
jurisdiction over their persons and a judgment rendered against them is null
and void. To be bound by a decision, a
party should first be subjected to the court’s jurisdiction.[24]
Thus, one
of the modes of acquiring jurisdiction over the person of the defendant or
respondent in a civil case is through service of summons. It is intended to give notice to the
defendant or respondent that a civil action has been commenced against him. The
defendant or respondent is thus put on guard as to the demands of the plaintiff
or the petitioner.[25]
The proper
service of summons differs depending on the nature of the civil case instituted
by the plaintiff or petitioner: whether it is in personam, in rem, or quasi in rem. Actions in
personam, are those actions brought against a person on the basis of his
personal liability; actions in rem
are actions against the thing itself instead of against the person; and actions
are quasi in rem, where an individual
is named as defendant and the purpose of the proceeding is to subject his or
her interest in a property to the obligation or loan burdening the property.[26]
Under
Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure, 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 plaintiff; (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.[27]
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.
When the
case instituted is an action in rem
or quasi in rem, Philippine courts
already have jurisdiction to hear and decide the case because, in actions in rem and quasi in rem, jurisdiction over the person of the defendant is not
a prerequisite to confer jurisdiction on the court, provided that the court
acquires jurisdiction over the res.[28] Thus, in such instance, extraterritorial
service of summons can be made upon the defendant. The said extraterritorial service of summons
is not for the purpose of vesting the court with jurisdiction, but for
complying with the requirements of fair play or due process, so that the
defendant will be informed of the pendency of the action against him and the
possibility that property in the Philippines belonging to him or in which he
has an interest may be subjected to a judgment in favor of the plaintiff, and
he can thereby take steps to protect his interest if he is so minded.[29] On the other hand, when the defendant or
respondent does not reside and is not found in the
In the case
at bar, this Court sustains the contention of the petitioner that there can
never be a valid extraterritorial service of summons upon it, because the case
before the court a quo involving
collection of a sum of money and damages is, indeed, an action in personam, as it deals with the
personal liability of the petitioner to the respondent by reason of the alleged
unilateral termination by the former of the Distribution Agreement. Even the Court of Appeals, in its Decision
dated
In the instant petition, [respondent’s] cause of action in Civil Case No. MC99-605 is anchored on the claim that petitioner unilaterally terminated the Distribution Agreement. Thus, [respondent] prays in its [C]omplaint that “Upon the filing of the Complaint, issue an Order fixing the amount of the bond and issue a writ of attachment requiring the sheriff to attach the properties of [Perkin-Elmer Philippines], which are not exempt from execution, and as much as may be sufficient to satisfy [respondent’s] demands.”
The action instituted by [respondent] affects the parties alone, not the whole world. Hence, it is an action in personam, i.e., any judgment therein is binding only upon the parties properly impleaded.
x x x x
The objective sought in [respondent’s] [C]omplaint was to establish a claim against petitioner for its alleged unilateral termination of [D]istribution [A]greement. Hence, to repeat, Civil Case No. MC99-605 is an action in personam because it is an action against persons, namely, herein petitioner, on the basis of its personal liability. As such, personal service of summons upon the [petitioner] is essential in order for the court to acquire of (sic) jurisdiction over [its person].[32] (Emphasis supplied.)
Thus, being
an action in personam, personal
service of summons within the
It is
incorrect for the RTC to have ruled that the allegations made by the respondent
in its Amended Complaint, which is primarily for collection of a sum of money
and damages, that the petitioner owns shares of stock within the Philippines to
which the petitioner claims interest, or an actual or contingent lien, would
make the case fall under one of the aforesaid instances wherein
extraterritorial service of summons under Section 15, Rule 14 of the 1997
Revised Rules of Civil Procedure, would be valid. The RTC in arriving at such conclusions relied
on the second instance, mentioned under Section 15, Rule 14 of the 1997 Revised
Rules of Civil Procedure (i.e., when
the action relates to, or the subject of which is property, within the
Philippines, in which the defendant claims a lien or interest, actual or
contingent), where extraterritorial service of summons can be properly
made. However, the aforesaid second
instance has no application in the case before this Court. Primarily, the Amended Complaint filed by the
respondent against the petitioner was for the collection of sum of money and
damages. The said case was neither
related nor connected to any property of the petitioner to which it claims a
lien or interest. The action for
collection of a sum of money and damages was purely based on the personal
liability of the petitioner towards the respondent. The petitioner is correct in saying that
“mere allegations of personal property within the Philippines does not
necessarily make the action as one that relates to or the subject of which is,
property within the Philippines as to warrant the extraterritorial service of
summons. For the action to be considered
one that relates to, or the subject of which, is the property within the
Moreover,
the allegations made by the respondent that the petitioner has property within
the
This Court
also finds error in the Decision of the Court of Appeals. It is provided for in the said Decision,
thus:
However, let it be emphasized that in the [C]omplaint filed before the trial court, [respondent] prayed that “Upon the filing of the Complaint, issue an Order fixing the amount of the bond and issue a writ of attachment requiring the sheriff to attach the properties of [Perkin-Elmer Philippines], which are not exempt from execution, and as much as may be sufficient to satisfy [respondent’s] demands.
In
other words, although the [C]omplaint before the trial court does not involve
the personal status of the [respondent], nevertheless, the case involves
property within the
x x x x
Hence,
it is submitted that one of the instances when exterritorial service of summons
under Section 15, Rule 14 of the Rules of Court is proper may be considered to
have been met. This is because the
[C]omplaint for collection of sum of money which is an action in personam was converted into an action
quasi in rem by the attachment of [petitioner’s] interest in [
Respondent’s
allegation in its Amended Complaint that petitioner had personal property
within the
Glaringly,
respondent’s prayer in its Amended Complaint for the issuance of a writ of
attachment over petitioner’s purported shares of stock in PEIP located within
the
If there
was no valid summons served upon petitioner, could RTC have acquired
jurisdiction over the person of the petitioner by the latter’s voluntary
appearance? As a rule, even if the
service of summons upon the defendant or respondent in a civil case is
defective, the court can still acquire jurisdiction over his person when he
voluntary appears in court or submits himself to its authority. Nonetheless, voluntary appearance, as a mode
of acquiring jurisdiction over the person of the defendant, is likewise
inapplicable in this case.
It is
settled that a party who makes a special appearance in court for the purpose of
challenging the jurisdiction of said court, based on the invalidity of the
service of summons, cannot be considered to have voluntarily submitted himself
to the jurisdiction of the court.[36] In the present case, petitioner has been
consistent in all its pleadings in assailing the service of summons upon it and
the jurisdiction of the RTC over its person.
Thus, the petitioner cannot be declared in estoppel when it filed an
Answer ad cautelam with compulsory
counterclaim before the RTC while the instant Petition was still pending before
this Court. The petitioner was in a
situation wherein it had no other choice but to file an Answer; otherwise, the
RTC would have already declared that petitioner had waived its right to file
responsive pleadings.[37] Neither can the compulsory counterclaim
contained in petitioner’s Answer ad
cautelam be considered as voluntary appearance of petitioner before the
RTC. Petitioner seeks to recover damages
and attorney’s fees as a consequence of the unfounded suit filed by respondent against it. Thus, petitioner’s compulsory counterclaim is
only consistent with its position that the respondent wrongfully filed a case
against it and the RTC erroneously exercised jurisdiction over its person.
Distinction
must be made in Civil Case No. MC99-605 as to the jurisdiction of the RTC over
respondent’s complaint and over petitioner’s counterclaim -- while it may have
no jurisdiction over the former, it may exercise jurisdiction over the
latter. The compulsory counterclaim
attached to petitioner’s Answer ad
cautelam can be treated as a separate action, wherein petitioner is the
plaintiff while respondent is the defendant.[38] Petitioner could have instituted a separate
action for the very same claims but, for the sake of expediency and to avoid
multiplicity of suits, it chose to demand the same in Civil Case No. MC99-605.[39] Jurisdiction of the RTC over the subject
matter and the parties in the counterclaim must thus be determined separately
and independently from the jurisdiction of the same court in the same case over
the subject matter and the parties in respondent’s complaint.
Moreover,
even though the petitioner raised other grounds in its Motion to Dismiss aside
from lack of jurisdiction over its person, the same is not tantamount to its
voluntary appearance or submission to the authority of the court a quo.
While in De Midgely v. Ferandos,[40]
it was held that, in a Motion to Dismiss, the allegation of grounds other than
lack of jurisdiction over the person of the defendant, including a prayer
"for such other reliefs as" may be deemed "appropriate and
proper" amounted to voluntary appearance, such ruling must be deemed superseded by the declaration of this
Court in La Naval Drug Corporation v. Court of Appeals[41]
that estoppel by jurisdiction must be unequivocal and intentional. It would be absurd to hold that petitioner
unequivocally and intentionally submitted itself to the jurisdiction of the
court by seeking other reliefs to which it might be entitled when the only
relief that it could properly ask from the trial court is the dismissal of the
complaint against it.[42] Thus, the allegation of grounds other than
lack of jurisdiction with a prayer “for such other reliefs” as may be deemed
“appropriate and proper” cannot be considered as unequivocal and intentional
estoppel. Most telling is Section 20,
Rule 14 of the Rules of Court, which expressly provides:
SEC. 20. Voluntary appearance. - The defendant’s voluntary appearance in the action shall be equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance.[43] (Emphasis supplied.)
In sum,
this Court finds that the petitioner did not submit itself voluntarily to the
authority of the court a quo; and in
the absence of valid service of summons, the RTC utterly failed to acquire
jurisdiction over the person of the petitioner.
Anent the
existence of a cause of action against petitioner and the proper venue of the
case, this Court upholds the findings of the RTC on these issues.
Dismissal
of a Complaint for failure to state a cause of action is provided for by the
Rules of Court.[44] When a Motion to Dismiss is grounded on the failure to state a cause of action, a
ruling thereon should be based only on the facts alleged in the complaint. The
court must pass upon this issue based solely
on such allegations, assuming them to be true.
For it to do otherwise would be a procedural error and a denial of
plaintiff’s right to due process.[45] While, truly, there are well-recognized
exceptions[46]
to the rule that the allegations are hypothetically admitted as true and
inquiry is confined to the face of the complaint,[47]
none of the exceptions apply in this case.
Hence, the general rule applies.
The defense of the petitioner that it is not the real party-in-interest
is evidentiary in nature which must
be proven in trial. The appellate court,
then, cannot be faulted for not granting petitioner’s Motion to Dismiss on the
ground of failure to state a cause of action.
In the same way, the appellate court did not
err in denying petitioner’s Motion to Dismiss Civil Case No. MC99-605 on the
ground of improper venue. In arriving at
such conclusion, this Court quotes with approval the following ratiocination of
the RTC:
As for the contention that venue was improperly laid, x x x, the [trial court] in its ultimate desire that the ends of justice could be served in its fullest, cannot rule that venue was improperly laid.
x x x x
The stipulation as to the venue of a prospective action does not preclude the filing of the suit in the residence of the [respondent] under Section 2, Rule 4, Rules of Court, especially where the venue stipulation was imposed by the [petitioner] for its own benefits.[48] (Emphasis supplied.)
Despite the venue stipulation found in
the Distribution Agreement stipulating that the exclusive jurisdiction over disputes arising from the same shall
lie in the courts of Singapore or of the Territory (referring to the
Philippines), whichever is elected by PEIA (or petitioner, as PEIA’s alleged
successor), the RTC of the Philippines cannot be considered as an improper
venue. Truly, the venue stipulation used
the word “exclusive,” however, a closer look on the Distribution Agreement
would reveal that the venue stipulation was really in the alternative i.e., courts of Singapore or of the
Territory, meaning, the Philippines; thus, the court a quo is not an improper venue for the present case.
Nonetheless, it bears to emphasize that
despite our findings that based on the allegations in respondent’s Complaint in
Civil Case No. MC99-605, respondent appears to have a cause of action against
the petitioner and that the RTC is the proper venue for the said case, Civil Case No. MC99-605 is still
dismissible, for the RTC never acquired jurisdiction over the person of the
petitioner. The extraterritorial
service of summons upon the petitioner produces no effect because it can only
be done if the action is in rem or quasi in rem. The case for collection of sum of money and
damages filed by the respondent against the petitioner being an action in personam, then personal service of
summons upon the petitioner within the
Finally, as regards the petitioner’s
counterclaim, which is purely for damages and attorney’s fees by reason of the
unfounded suit filed by the respondent against it, it has long been settled
that the same truly falls under the classification of compulsory counterclaim and it must be pleaded in the same action,
otherwise, it is barred.[49] In the case at bar, this Court orders the dismissal of the Complaint filed by the
respondent against the petitioner because the court a quo failed to acquire
jurisdiction over the person of the latter.
Since the Complaint of the respondent was dismissed, what will happen
then to the counterclaim of the petitioner?
Does the dismissal of the complaint carry with it the dismissal of the
counterclaim?
In the
cases of Metal Engineering Resources
Corp. v. Court of Appeals,[50]
International Container Terminal
Services, Inc. v. Court of Appeals,[51]
and BA Finance Corporation v. Co.,[52]
the Court ruled that if the court does not have jurisdiction to entertain the
main action of the case and dismisses the same, then the compulsory
counterclaim, being ancillary to the principal controversy, must likewise be
dismissed since no jurisdiction remained for any grant of relief under the
counterclaim.[53] If we follow the aforesaid pronouncement of
the Court in the cases mentioned above, the counterclaim of the herein
petitioner being compulsory in nature must also be dismissed together with the
Complaint. However, in the case of Pinga vs. Heirs of German Santiago,[54]
the Court explicitly expressed that:
Similarly, Justice Feria notes that “the present rule reaffirms the right of the defendant to move for the dismissal of the complaint and to prosecute his counterclaim, as stated in the separate opinion [of Justice Regalado in BA Finance]. Retired Court of Appeals Justice Hererra pronounces that the amendment to Section 3, Rule 17 [of the 1997 Revised Rules of Civil Procedure] settles that “nagging question “whether the dismissal of the complaint carries with it the dismissal of the counterclaim, and opines that by reason of the amendments, the rulings in Metals Engineering, International Container, and BA Finance “may be deemed abandoned.” x x x.
x x x, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule 17, those previous jural doctrines that were inconsistent with the new rules incorporated in the 1997 Rules of Civil Procedure were implicitly abandoned insofar as incidents arising after the effectivity of the new procedural rules on 1 July 1997. BA Finance, or even the doctrine that a counterclaim may be necessarily dismissed along with the complaint, clearly conflicts with the 1997 Rules of Civil Procedure. The abandonment of BA Finance as doctrine extends as far back as 1997, when the Court adopted the new Rules of Civil Procedure. If, since then, abandonment has not been affirmed in jurisprudence, it is only because no proper case has arisen that would warrant express confirmation of the new rule. That opportunity is here and now, and we thus rule that the dismissal of a complaint due to fault of the plaintiff is without prejudice to the right of the defendant to prosecute any pending counterclaims of whatever nature in the same or separate action. We confirm that BA Finance and all previous rulings of the Court that are inconsistent with this present holding are now abandoned.[55] [Emphasis supplied].
It is true
that the aforesaid declaration of the Court refers to instances covered by
Section 3, Rule 17 of the 1997 Revised Rules of Civil Procedure[56] on
dismissal of the complaint due to the fault of the plaintiff. Nonetheless, it does not also preclude the
application of the same to the instant case just because the dismissal of
respondent’s Complaint was upon the instance of the petitioner who correctly
argued lack of jurisdiction over its person.
Also in the
case of Pinga v. Heirs of German Santiago,
the Court discussed the situation wherein the very filing of the complaint by
the plaintiff against the defendant caused the violation of the latter’s
rights. As to whether the dismissal of
such a complaint should also include the dismissal of the counterclaim, the
Court acknowledged that said matter is still debatable, viz:
Whatever the nature of the counterclaim, it bears the same integral characteristics as a complaint; namely a cause (or causes) of action constituting an act or omission by which a party violates the right of another. The main difference lies in that the cause of action in the counterclaim is maintained by the defendant against the plaintiff, while the converse holds true with the complaint. Yet, as with a complaint, a counterclaim without a cause of action cannot survive.
x x
x if the dismissal of the complaint somehow eliminates the cause(s) of the
counterclaim, then the counterclaim cannot survive. Yet that hardly is the case, especially as a
general rule. More often than not, the
allegations that form the counterclaim are rooted in an act or omission of the
plaintiff other than the plaintiff’s very act of filing the complaint. Moreover, such acts or omissions imputed to
the plaintiff are often claimed to have occurred prior to the filing of the
complaint itself. The only apparent exception to this
circumstance is if it is alleged in the counterclaim that the very act of the
plaintiff in filing the complaint precisely causes the violation of the
defendant’s rights. Yet even in such an
instance, it remains debatable whether the dismissal or withdrawal of the
complaint is sufficient to obviate the pending cause of action maintained by
the defendant against the plaintiff.[57]
Based on
the aforequoted ruling of the Court, if the dismissal of the complaint somehow
eliminates the cause of the counterclaim, then the counterclaim cannot
survive. Conversely, if the counterclaim
itself states sufficient cause of action then it should stand
independently of and survive the
dismissal of the complaint. Now, having
been directly confronted with the problem of whether the compulsory
counterclaim by reason of the unfounded suit may prosper even if the main
complaint had been dismissed, we rule in
the affirmative.
It bears to
emphasize that petitioner’s counterclaim against respondent is for damages and
attorney’s fees arising from the unfounded suit. While respondent’s Complaint against
petitioner is already dismissed, petitioner may have very well already incurred
damages and litigation expenses such as attorney’s fees since it was forced to
engage legal representation in the
It may also
do well to remember that it is this Court which mandated that claims for
damages and attorney’s fees based on unfounded suit constitute compulsory
counterclaim which must be pleaded
in the same action or, otherwise, it shall be barred. It will then be iniquitous and the height of
injustice to require the petitioner to make the counterclaim in the present
action, under threat of losing his right to claim the same ever again in any
other court, yet make his right totally
dependent on the fate of the respondent’s complaint.
If indeed
the Court dismisses petitioner’s counterclaim solely on the basis of the
dismissal of respondent’s Complaint, then what remedy is left for the
petitioner? It can be said that he can still file a separate action to recover
the damages and attorney’s fees based on the unfounded suit for he cannot be
barred from doing so since he did file the compulsory counterclaim in the
present action, only that it was dismissed when respondent’s Complaint was
dismissed. However, this reasoning is
highly flawed and irrational considering that petitioner, already burdened by
the damages and attorney’s fees it may have incurred in the present case, must
again incur more damages and attorney’s fees in pursuing a separate action,
when, in the first place, it should not have been involved in any case at all.
Since
petitioner’s counterclaim is compulsory in nature and its cause of action
survives that of the dismissal of respondent’s complaint, then it should be
resolved based on its own merits and evidentiary support.
WHEREFORE, premises
considered, the instant Petition is hereby GRANTED. The Decision of the Court of Appeals, dated
SO ORDERED.
|
|
MINITA V. CHICO-NAZARIOAssociate Justice |
WE
CONCUR:
CONSUELO YNARES – SANTIAGO
Associate Justice
Chairperson
Associate Justice Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONSUELO
YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant
to Section 13, Article VIII of the Constitution, and the Division Chairperson’s
Attestation, it is hereby certified that the conclusions in the above Decision
were reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Rollo, pp. 10-69.
[2] Penned by Associate Justice Monina Arevalo-Zenarosa with Associate Justices Andres B. Reyes, Jr. and Rosmari D. Carandang, concurring; id. at 76-90.
[3] Penned by Judge Rizalina T. Capco-Umali; id. at 315-318.
[4]
[5]
[6]
[7] The reason of the trial court in
denying the prayer of the respondent for the issuance of a writ of attachment
was: “Based on the records, [respondent]
is desirous of attaching the property of [
[8]
[9]
[10]
[11]
[12]
[13]
[14] A sole proprietorship is neither a natural person nor a juridical person under Article 44 of the Civil Code. The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit. It does not vest juridical or legal personality in the sole proprietorship or empowers it to file or defend an action in court. (Yao Ka Sin Trading v. Court of Appeals, G.R. No. 53820, 15 June 1992, 209 SCRA 763, 780.) Likewise, a sole proprietorship does not possess any juridical personality separate and apart from the personality of the owner of the enterprise and the personality of the persons acting in the name of such proprietorship. Hence, any case filed against a sole proprietorship must be brought against its owner.
[15] Rollo, pp. 170-179.
[16]
[17]
[18]
[19]
[20]
[21] Rollo, pp. 316-318.
[22] Paramount
Insurance Corp. v. Japzon, G.R. No. 68037,
[23] De Leon v. Court of Appeals, 315 Phil. 140, 150 (1995).
[24] Bank
of the Philippine
[25] Paramount Insurance Corp. v. Japzon, supra note 22 at 885.
[26] Banco Do Brasil v. Court of Appeals, 389 Phil. 87, 99-100 (2000).
[27]
[28]
[29] Valmonte v. Court of Appeals, 322 Phil. 96, 106 (1996).
[30] Romualdez-Licaros v. Licaros, 449 Phil. 824, 833 (2003).
[31] Banco Do Brasil v. Court of Appeals, supra note 26.
[32] Rollo, pp. 85-87.
[33] Civil Law Commentaries by Justice Jose Y. Feria, Vol. 1, 2001 Edition, p. 138, citing therein El Banco Español-Filipino v. Palanca, 37 Phil. 921, 927 (1918).
[34] Rollo, pp. 88-89.
[35] G.R. No. L-77760,
[36] Hongkong and
Shanghai Banking Corporation Limited v.
Catalan, G.R. No. 159590,
[37]
[38] Civil Procedure Commentaries by Justice Jose Y. Feria, Vol. 1 (2001 Edition), p. 277, citing the case of Golden Ribbon Lumber Co., Inc. v. Santos, 52 O.G. 1477 (1955); Civil Procedure Commentaries by Justice Florenz D. Regalado, Vol. 1 (Seventh Revised Edition), p. 128.
[39] Section 6, Rule 6 of the 1997 Revised Rules of Civil Procedure; Reyes v. Court of Appeals, 148 Phil. 135, 149 (1971); Lafarge Cement Philippines, Inc. v. Continental Cement Corporation, G.R. No. 155173, 23 November 2004, 443 SCRA 522, 533.
[40] G.R. No. L-34314,
[41] G.R. No. 103200,
[42] Millennium
Industrial Commercial Corporation v. Tan, 383 Phil. 468, 478 (2000).
[43] 1997 Revised Rules of Civil Procedure.
[44] Section 1(g), Rule 16, 1997 Revised Rules of Civil Procedure.
[45] Indiana Aerospace University v. Commission on Higher Education, G.R. No. 139371, 4 April 2001, 356 SCRA 367, 385.
[46] There is no hypothetical admission of the veracity of
allegations if their falsity is subject to judicial notice, or if such
allegations are legally impossible, or if these refer to facts which are
inadmissible in evidence, or if by the record or document included in the
pleading these allegations appear unfounded. Also, inquiry is not confined to
the complaint if there is evidence which has been presented to the court by
stipulation of the parties, or in the course of hearings related to the case.
[47] Dabuco v. Court of Appeals, 379 Phil. 939, 950 (2000).
[48] Rollo, pp. 317-318.
[49] Tiu
[50] G.R. No. 95631,
[51] G.R. No. 90530,
[52] G.R. No. 105751,
[53] Supra note 50.
[54] G.R. No. 170354,
[55] Supra note 54.
[56] SEC. 3. Dismissal due to fault of plaintiff. - If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon the court’s own motion without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court.
[57] Pinga
vs. Heirs of German