REPUBLIC OF THE PHILIPPINES

REGIONAL TRIAL COURT

NATIONAL CAPITAL JUDICIAL REGION
BRANCH _____, PASIG CITY

ARA,
Complainant,

- versus - CIVIL CASE NO. ________

FOR: Declaration of Nullity of

Contracts, Reconveyance of
Certificate of Shares with
Damages
YYYY, PMW, ME and JV,
Defendants.
X - - - - - - - - - - - - - - - - - - - - - - - -X

SUPPLEMENTAL REJOINDER

COMES NOW the Plaintiff, through the undersigned counsel and to this

Honorable Court submits the following by way of supplement to its

Rejoinder.

Prefatory

This submission is made necessary in the desire to have the issues

clarified. It is hoped that these discussions will make matters under

consideration less confusing and more clearly comprehensible for the

benefit of the Court in the light of the attempt and designs of the

defendant-corporation ( represented by special appearance for the

purpose of raising question on the jurisdiction of the court ) to sow

confusion.
A Motion To Dismiss was filed by defendant-corporation on the sole

ground that this Honorable Court failed to acquire jurisdiction over the

person of defendant-corporation. Counsel for defendant-corporation

cites in support of its motion to dismiss that the mode of service of

summons, as ordered by this Honorable Court (i.e. service through the

Department of Foreign Affairs ) is improper in acquiring jurisdiction over

the person of defendant-corporation. In short, what defendant –

corporation wants is to deny the Honorable Court the right to hear the

case. It seeks to frustrate the court of its exercise of its jurisdiction

probably since it knows that plaintiff’s cause is righteous. And the

Honorable Court should be wary as it is may be denying justice to its

citizen.1

What is glossed upon in the said motion to dismiss however is the fact of

this Honorable Court’s clear finding and pronouncement that

defendant-corporation has transacted business ( or has been doing

business ) in the Philippines. This makes the defendant-corporation thus

amenable to the processes of this court as herein discussed.

1
“Every State owes protection to its own citizens; and, when non-residents deal with
them, it is a legitimate and just exercise of authority to hold any appropriate property
owned by such non-residents to satisfy the claims of its citizens.” (See G.R. No. L-
825, July 20, 1948, Roman Mabanag vs. Joseph M. Gallemore ); Parenthetically, it
may be asked if public policy mandates the assumption, not the relinquishment, by
the trial court of its rightful jurisdiction in a civil action particularly where there is every
reason to protect and vindicate a plaintiff's rights for alleged tortious or wrongful acts
or conduct by private respondents (who are mostly non-resident aliens) inflicted upon
them here in the Philippines.
This Honorable Court’s order for extraterritorial service of summons is

moreover justified in that the same is among the prescribed procedure

under Section 17 of Rule 14 of the Rules of Court. Defendant-

corporation would seem to lead the Honorable Court to the wrong

conclusion that this is an action not falling within the ambit of Section

17 of Rule 14. A closer examination of the rule and the stare decisis will

show that the Honorable Court is on the right track in issuing the

questioned mode of service of summons and has a clear jurisdiction

over the ‘res’ for which it has indubitably the right to hear the case.

On the service of summons upon defendant corporation

as a foreign corporation doing business in Philippines

Plaintiff initiated the action against defendant corporation and two

individual defendants (namely, PW and ME) in their capacity as
officers of defendant corporation. The Honorable Court issued its
finding that the defendant corporation is “doing business in the
Philippines”. May the Court proceed to hear the case by acquiring
jurisdiction over defendant corporation as a foreign private juridical
entity doing business in the Philippines?

Yes, the Honorable Court can acquire jurisdiction over the defendant
corporation as a foreign private juridical entity found to be doing
business in the Philippines. The Rules of Court has a specific provision
on the service of summons upon foreign entity doing business in the
Philippines under Section 12 of Rule 14.
 Sec. 12. Service upon foreign private juridical
entity. – When the defendant is a foreign private
juridical entity which has transacted business in
the Philippines, service may be made on its
resident agent designated in accordance with
law of that purpose, or , if there be no such
agent, on the government official designated by
law to that effect, or on any of its officers or
agents within the Philippines.2

This Honorable Court should not dismiss the present action thus on lack
of jurisdiction since it can proceed to validly hear the case upon its
order of service of summons pursuant to Section 12 of Rule 14 of the
Rules of Court.

The Honorable Court can have the summons thus served upon the
Securities and Exchange Commission to validly acquire jurisdiction over
herein defendant “YYYY” as a foreign juridical entity which this
Honorable Court has found to have transacted business in the
Philippines.

Why upon the Securities and Exchange Commission? This is so since

defendant YYYY has transacted business in the Philippines, has not
registered with the Securities and Exchange Commission as foreign
corporation transacting business in the Philippines and has not
designated a resident agent for the purpose of service of summons
and since it has no agents or officers in the Philippines at present. In
such instances, this is the proper process as stated in the decision in
Pioneer International, Ltd. Vs Hon. Teofilo Guadiz, Jr., et. al. where the
Supreme Court pronounced –

2
It is to be noted that amendments have been introduced in the present version of Section
12. The phrase "doing business in the Philippines" in the former version of Section 12, Rule
14 now reads "has transacted business in the Philippines." The scope is thus broader in that
it is enough for the application of the Rule that the foreign private juridical entity "has
transacted business in the Philippines. See Pioneer International, Ltd. Vs Hon. Teofilo
Guadiz, Jr., et. al. (535 SCRA 584)
 When summons is served on a foreign juridical entity, there
are three prescribed ways: (1) service on its resident agent
designated in accordance with law for that purpose, (2)
service on the government official designated by law to
receive summons if the corporation does not have a
resident agent, and (3) service on any of the corporation’s
officers and agents within the Philippines.

In the present case, service of summons on PIL failed to

follow any of the prescribed processes. PIL had no resident
agent in the Philippines. Summons was not served on the
Securities and Exchange Commission, the designated
government agency, since PIL is not registered with SEC.3

The Motion To Dismiss filed ad cautelam ex-abundanti ( and the Reply

filed to the Opposition To Motion To Dismiss) has set to confuse this
Honorable Court by raising collateral issues such as the tentativeness of
this Honorable Court’s finding that YYYY had transacted business in the
Philippines, and allegedly the failure of plaintiff to mention the same in
its complaint. The fact is this Honorable Court has made its finding that
YYYY has transacted business in the Philippines. It has done so with
authority and in exercise of its prerogatives. Its actions on the matter is
founded on stare decisis as enunciated in Signetics Corporation vs
Court of Appeals where the high court dismissed the petition on

3
The Court here is saying that that since PIL is foreign juridical entity, service should have
been upon SEC since PIL has no duly designated resident agent as it did not register as
foreign corporation with SEC ( exact language is – “since PIL is not registered with SEC” );
Moreover in Avon PLC British Rescue Insurance Co. Ltd. Vs. Court of Appeals (G.R. No.
97642. August 29, 1997), it was clearly expressed that in case of foreign juridical entity doing
business in the Philippines but without license, the said corporation may be properly
summoned, explaining thus – “Before a foreign corporation can transact business in the
country, it must first obtain a license to transact business here and secure the proper
authorizations under existing law. If a foreign corporation engages in business activities
without the necessary requirements, it opens itself to court actions against it, but it shall not
be allowed maintain or intervene in an action, suit or proceeding for its own account in any
court or tribunal or agency in the Philippines.

The purpose of the law in requiring that foreign corporations doing business in the country be
licensed to do so, is to subject the foreign corporations doing business in the Philippines to
the jurisdiction of the courts, otherwise, a foreign corporation illegally doing business here
because of its refusal or neglect to obtain the required license and authority to do business
may successfully though unfairly plead such neglect or illegal act so as to avoid service and
thereby impugn the jurisdiction of the local courts.” [Emphasis supplied]
certiorari based on the contention that "(the) fact (of doing business in
the Philippines) must first be established in order that summons be made and
jurisdiction acquired," and ruling rather that insofar as to the issue of

determining jurisdiction, the matter is “initially determined by the

allegations of the complaint” and “cannot be made to depend on

independent pleas set up in a mere motion to dismiss”. 4

Nor is the innuendo in the Motion To Dismiss, that the complaint is

fatally deficient in failing to allege that YYYY has done business in the

Philippines, correct. A review of the complaint will show otherwise.5

On the Honorable Court acquiring jurisdiction

(1) by personal service; (2) by publication or (3) in
any other manner which the court may deem sufficient
pursuant to Sec. 17 of Rule 14 (Rules of Court) as an
action in rem or quasi in rem

4
The High Court’s pronouncement with reference to the insistence of petitioner that the fact
of doing business must be specified is as follows –

“The petitioner opines that the phrase, "(the) fact (of doing business in the Philippines) must
first be established in order that summons be made and jurisdiction acquired," used in the
above pronouncement, would indicate that a mere allegation to that effect in the complaint is
not enough — there must instead be proof of doing business. In any case, the petitioner,
points out, the allegations themselves did not sufficiently show the fact of its doing business in
the Philippines.

It should be recalled that jurisdiction and venue of actions are, as they should be, initially
determined by the allegations of the complaint. Jurisdiction cannot be made to depend on
independent pleas set up in a mere motion to dismiss, otherwise jurisdiction would become
dependent almost entirely upon the defendant.” [Emphasis supplied]

5
Paragraph 2 of the complaint states – “Defendant MMPL [defendant corporation for brevity]
is a duly organized and existing foreign corporation doing business in the Republic of the
Philippines, and which holds equity interest in MRPC, with principal office at Level 2, 45
Stirling Highway, Nedlands Western Australia.” Also in par. 12 of the complaint is the
allegation – “Accordingly, on 25th April 2007, plaintiff signed and executed a blank Loan and
Guarantee Agreement as well as Pledge Agreement [entirely drafted, crafted and prepared by
defendant Williams] pursuant to which he encumbered the above-mentioned shareholdings to
defendant corporation.” [Emphasis supplied]
Plaintiff filed this case to declare as null and void the loan agreement
and pledge agreement and to have the pledged shares of stocks be
re-conveyed to plaintiff. Alternatively, plaintiff prayed for an order to
be issued upon the defendant JV as the incumbent Corporate
Secretary of MRPC to cancel certificates delivered to YYYY and in lieu
thereof to issue in favor of plaintiff a new Certificate of Shares of equal
number and value free of any encumbrance. Notwithstanding that
YYYY is a non-resident, may the Honorable Court proceed to hear the
case as against the defendant-corporation YYYY considering that the
subject matter of the case involves that of shares of stocks in a
Philippine corporation ?

In action ‘in rem’ or ‘quasi-in rem’, jurisdiction over the ‘res’ gives to
the court the jurisdiction to hear the case. In contrast to an action ‘in
personam’, jurisdiction over the person of the defendant is essential for
the court to try the case and make its decision binding upon the
defendant. Does it make a difference if the defendant is a non-
resident of the Philippines and if the action is in personam or in rem or
quasi in rem ? If the action is in personam, jurisdiction over the
defendant , who is not residing in the country, presents a problem on
the court’s acquiring jurisdiction. This is so because jurisdiction over the
person of the defendant is required. Unless the defendant voluntarily
appears, the defendant, who resides abroad, is beyond the reach of
the court.

Where the action is ‘in rem’ or ‘quasi-in rem’, it does not matter if the
defendant is a resident of the Philippines or of another country. The
court can acquire jurisdiction by virtue of the locus of property (i.e. in
the Philippines ) 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.6 It is to
be noted that the property need not be owned by defendant but that
defendant has or claims a lien or interest, actual or contingent. It may
also involve property in which the relief demanded consists in

excluding the defendant from any interest therein.7

Plaintiff in this action is seeking to have shares of stocks upon which

defendant-corporation claims some lien ( by virtue of the pledge
agreement) be re-conveyed to plaintiff. Also, plaintiff seeks in this
action to have the shares of stock delivered to defendant–corporation

6
“When, however, the action relates to property located in the Philippines, the Philippine
courts may validly try the case, upon the principle that a "State, through its tribunals, may
subject property situated within its limits owned by non-residents to the payment of the
demand of its own citizens against them; and the exercise of this jurisdiction in no respect
infringes upon the sovereignty of the State where the owners are domiciled. Every State owes
protection to its citizens; and, when non-residents deal with them, it is a legitimate and just
exercise of authority to hold and appropriate any property owned by such non-residents to
satisfy the claims of its citizens. It is in virtue of the State's jurisdiction over the property of the
non-resident situated within its limits that its tribunals can inquire into the non-resident's
obligations to its own citizens, and the inquiry can then be carried only to the extent
necessary to control the disposition of the property.” See the leading case of Perkins vs.
Benguet Mining, et.al (G.R. 46631, November 16, 1939), quting with approval Pennoyer v.
Neff, 95 U.S., 714; 24 Law. ed., 565, 568-569.

7
The language of Section 398 of the old Civil Code Procedure and Section 17 of Rule 14 of
the Rules of Court is substantially the same except that in Section 17 is added (a) the
personal status of plaintiff and (b) in case of attachment of property of defendant, as among
grounds permitting extraterritorial service by way of exception to the general rule that it must
relate to a ‘res’ , to wit –

Section 398 of the Code of Civil Procedure provides – “When a non-resident defendant is
sued in the Philippine courts and it appears, by the complaint or by affidavits, that the action
relates to real or personal property within the Philippines in which said defendant has or
claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly
or in part, in excluding such person from any interest therein, service of summons maybe
made by publication.”

Sec. 17. 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 7; 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.
under the pledge agreement be cancelled and to have new ones
issued in his name ( for which reason it has impleaded the incumbent
corporate secretary of Montague Resources Philippines Corporation). Both

pleas of the plaintiff satisfies the requirement of an action ‘in rem’ or

‘quasi-in rem’, in that it involves a property located in the Philippines in
which the defendant has or claims interest or lien (e.g. as pledgee of the
shares )or in which the relief sought is to exclude defendant from any

interest therein (e.g. to have the shares in the possession of defendant YYYY
be cancelled and new ones issued in name of plaintiff free from the pledge ).

It is beyond dispute that the shares of stocks which plaintiff seeks to be

re-conveyed ( and thus the property involved in this action) is located
in the Philippines. This is so since MRPC is incorporated in the
Philippines, has its office here and its mining claim located in island of

Luzon in the Philippines. 8

The Honorable Court’s orders for the service of summons upon the
defendants (i) through the Australian Embassy, and (ii) the Philippine

Embassy through the Department of Foreign Affairs 9, are not improper

( as asserted by defendant-corporation ) but proper as extraterritorial
service upon the defendants, all of whom are not residing in the
Philippines and not being found in the Philippines. It is a recognition
that the action is one either ‘in rem’ or ‘quasi-in rem’ justifying

8
The case of Perkins vs. Benguet Mining cited above is identical or similar to this case in that
it also involves shares of stock as well as a party who is non-resident, and the High Court
ruling that the action qualifies as ‘quasi-in rem’ reasoned thus – “In the instant case, there
can be no question that the action brought by Eugene Arthur Perkins in his amended
complaint against the petitioner, Idonah Slade Perkins, seeks to exclude her from any interest
in a property located in the Philippines. That property consists in certain shares of stocks of
the Benguet Consolidated Mining Company, a sociedad anonima, organized in the
Philippines under the provisions of the Spanish Code of Commerce, with its principal office in
the City of Manila and which conducts its mining activities therein. The situs of the shares is in
the jurisdiction where the corporation is created, whether the certificated evidencing the
ownership of those shares are within or without that jurisdiction. (Fletcher Cyclopedia
Corporations, Permanent ed. Vol. 11, p. 95). Under these circumstances, we hold that the
action thus brought is quasi in rem, for while the judgment that may be rendered therein is not
strictly a judgment in rem, "it fixes and settles the title to the property in controversy and to
that extent partakes of the nature of the judgment in rem." (50 C.J., p 503).”
9
Under the Alias Summons dated November 3, 2009, and under the 2 nd Alias Summons
dated May 5, 2010
application of the rule on extraterritorial service. It can only be so and
not otherwise because if the action is one of ‘personam’ such orders of
the court finds no support. In an action ‘in personam’, jurisdiction over
the person of the defendant is essential for the court to acquire
jurisdiction and since the defendants are non-residents, the processes
of the court cannot reach them as the it’s processes are valid only

within the it’s territory. 10 On the other hand, in actions ‘in rem’ or
‘quasi-in rem’ , extraterritorial service is permitted and enjoined albeit
not really to acquire jurisdiction, since jurisdiction is already assured
through the control over the ‘res’ being located within the court’s
territory, but as fair play requirement as was explained in Perkins vs
Benguet Mining thus – “(S)ervice of summons in the manner provided in
Section 17 is not for the purpose of vesting it with jurisdiction but for
complying with the requirements of fair play or due process, so that he
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.” [Emphasis supplied]

As defendant-corporation is a nonresident who is not found in the

Philippines, service of summons can take any of the following modes in
accordance with Rule 14, Section 17. Such service, to be effected
outside the Philippines, must be made either (1) by personal service; (2)
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 should be sent by registered mail to
the last known address of the defendant; or (3) in any other manner

10
Thus in Perkins vs Benguet Mining (supra) it was stated – “(I)n all of these cases, it should
be noted, defendant must be a resident of the Philippines, otherwise an action in personam
cannot be brought because jurisdiction over his person is essential to make a binding
decision.”
which the court may deem sufficient.11 The orders of the Honorable
Court for the service of summons upon defendants aforementioned
are well taken under the third service of “any other manner which the
court may deem sufficient” of Section 17, Rule 14.

11
See G.R. No. 108538, January 22, 1996, Lourdes A. Valmonte and Alfredo D. Valmonte,
petitioners, vs. The Honorable Court Of Appeals, Third Division and Rosita Dimalanta,
respondents.