Dial Corp. v Soriano (Civil Procedure)

The Dial Corp. v Judge Soriano, Imperial Vegetable Oil Co.

Facts:

·       Petitioners are foreign corporations organize and existing under the laws of US, UK, Malaysia, and are NOT domiciled in the Philippines, NOR do they have officers or agents, place of business, or property  in the Phil., they are not licensed to engaged, and ARE not engaged in business here;

·       Respondent (IVO) is a Philippine corporation;

·       The petitioners and respondent entered into a contract for delivery of coconut oil to the petitioners;

·       Those contracts stipulate that any dispute shall be resolved through arbitration, either in FOSFA or NIOP;

·       Because IVO failed to deliver, petitioners and 15 others, initiated arbitration proceedings and some have already obtained arbitration awards against respondent;

·       IVO filed a complaint for injunction against 19 foreign coconut oil buyers including petitioner, with whom its president Dominador Monteverde, entered into contract with;

·       IVO repudiated Monteverde’s contracts oon the ground that they were mere “paper trading in futures” as no actual delivery of the coconut oil was allegedly intended by the parties;

·       IVO replaced Dominador Monteverde and named Rodrigo Monteverde in his stead and disowned the former’s allegedly unauthorized acts;

·       Petitioners allegedly “harassed” IVO to recognize the contract entered into by Dominador and to come into settlement with them, which is why IVO applied for TRO and WPI; IVO also prayed for Moral Damages, Actual Damages, Exemplary Damages, and Counsel Appearances;

·       On motion of IVO, respondent judge authorized to effect EXTRATERRITORIAL SERVICE OF SUMMONS to all the defendants through DHL Philippines; Pursuant to such order, petitioners were served with summons and copy of the complaint by DHL courier service;

·       Without submitting to court’s jurisdiction, petitioners filed a motion to dismiss on the ground that the extraterritorial service of summons to them was improper and that hence the court did not acquire jurisdiction over them;

·       The respondent court denied the motion on the ground that “the present action relates to property rights which lie in contracts within the Philippines, or which defendant claim liens or interests, actual or inchoate, legal or equitable. And one of the reliefs demanded consists, wholly or in part, in excluding the defendants from interest in such property for the reason that their transactions with plaintiffs former president are ultra vires;

·       Furthermore, as “foreign corporations doing business in the Philippines without a license, they opened themselves to suit before Philippine courts”, pursuant to Sec. 133 of the Corporation Code of the Philippines;

·       Petitioner’s motion for reconsideration was also denied, hence this petition for certiorari with TRO, which the court granted;

*Directly went up to the SC

Issue: WON the extraterritorial service of summons was proper to notify petitioners and will consequently result to the court having jurisdiction;

Ruling: No, the extraterritorial service of summons was is not proper and therefore, null and void.

Only in 4 instances is extraterritorial service of summons proper:

(1)  When the action affects personal status of the plaintiffs;

(2)  When the action relates to, or the subject of which is, property within the Philippines, in which defendant has claims or lien or interest, actual or contingent;

(3)  When relief demanded in such action consists in excluding defendant from any interest in property located in the Philippines; and

(4)  When defendant non-resident’s property has been attached within the Philippines;

The complaint in this case does not involve personal status of the plaintiff, nor any property in the Philippines in which defendants have or claim an interest, or which the plaintiff has attached.

The action is purely an action for injunction to restrain the defendants from enforcing against IVO (“abusing and harassing”) its contracts for the delivery of coconut oil to the defendants, and to recover from the defendants P21 million in damages for such “harassment”.

It is clearly a PERSONAL ACTION as well as an ACTION IN PERSONAM, not an action in rem or quasi in rem.

“An action in personam is an action against a person on the basis of his personal liability, while an action in remedies (action in rem) is an action against the thing itself, instead of the person.” (Hernandez case)

A personal action is one brought for the recovery of personal property, for the enforcement of some contract or recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the person or property. (Hernandez case also)

This case is a personal action, personal or substituted service of summons on the defendants, NOT extraterritorial service, is necessary to confer jurisdiction on the court.

General rule: when defendant is not residing in the Philippines, the Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person.

Exception:

(1)  Voluntary appearance;

(2)  Affects personal status of plaintiffs;

(3)  Or intended to seize or dispose of any property, real or personal, of the defendant located in the Philippines

All of the above is because they already have jurisdiction over the res.