G.R. No.

175799

November 28, 2011

NM ROTHSCHILD & SONS (AUSTRALIA) LIMITED, Petitioner,

vs.
LEPANTO CONSOLIDATED MINING COMPANY, Respondent.

Facts:
On August 30, 2005, respondent Lepanto Consolidated Mining Company filed
with the Regional Trial Court (RTC) of Makati City a Complaint against petitioner NM
Rothschild & Sons (Australia) Limited praying for a judgment declaring the loan and
hedging contracts between the parties void for being contrary to Article 2018 of the
Civil Code of the Philippines and for damages. Upon respondents (plaintiffs)
motion, the trial court authorized respondents counsel to personally bring the
summons and Complaint to the Philippine Consulate General in Sydney, Australia
for the latter office to effect service of summons on petitioner (defendant).
On October 20, 2005, petitioner filed a Special Appearance With Motion to
Dismiss praying for the dismissal of the Complaint on the following grounds: (a) the
court has not acquired jurisdiction over the person of petitioner due to the defective
and improper service of summons; (b) the Complaint failed to state a cause of
action and respondent does not have any against petitioner; (c) the action is barred
by estoppel; and (d) respondent did not come to court with clean hands.
On November 29, 2005, petitioner filed two Motions: (1) a Motion for Leave to
take the deposition of Mr. Paul Murray (Director, Risk Management of petitioner)
before the Philippine Consul General; and (2) a Motion for Leave to Serve
Interrogatories on respondent.
On December 9, 2005, the trial court issued an Order denying the Motion to
Dismiss. According to the trial court, there was a proper service of summons
through the Department of Foreign Affairs (DFA) on account of the fact that the
defendant has neither applied for a license to do business in the Philippines, nor
filed with the Securities and Exchange Commission a Written Power of Attorney
designating some person on whom summons and other legal processes maybe
served. The trial court also held that the Complaint sufficiently stated a cause of
action. The other allegations in the Motion to Dismiss were brushed aside as
matters of defense which can best be ventilated during the trial.
On March 6, 2006, the trial court issued an Order denying the December 27,
2005 Motion for Reconsideration and disallowed the twin Motions for Leave to take
deposition and serve written interrogatories.
On April 3, 2006, petitioner sought redress via a Petition for Certiorari with the Court
of Appeals, alleging that the trial court committed grave abuse of discretion in denying its
Motion to Dismiss. The Petition was docketed as CA-G.R. SP No. 94382.
On September 8, 2006, the Court of Appeals rendered the assailed Decision
dismissing the Petition for Certiorari. The Court of Appeals ruled that since the denial of a

Motion to Dismiss is an interlocutory order, it cannot be the subject of a Petition for

Certiorari, and may only be reviewed in the ordinary course of law by an appeal from the
judgment after trial. On December 12, 2006, the Court of Appeals rendered the assailed
Resolution denying the petitioners Motion for Reconsideration.

Notwithstanding the foregoing, petitioner filed the present petition assailing

the September 8, 2006 Decision and the December 12, 2006 Resolution of the Court
of Appeals. Arguing against the ruling of the appellate court, petitioner insists that
(a) an order denying a motion to dismiss may be the proper subject of a petition for
certiorari; and (b) the trial court committed grave abuse of discretion in not finding
that it had not validly acquired jurisdiction over petitioner and that the plaintiff had
no cause of action.
Respondent, on the other hand, posits that: (a) the present Petition should be
dismissed for not being filed by a real party in interest and for lack of a proper
verification and certificate of non-forum shopping; (b) the Court of Appeals correctly
ruled that certiorari was not the proper remedy; and (c) the trial court correctly
denied petitioners motion to dismiss.

Issue:
1) Whether or not petitioner is real party in interest -- irrelevant

Petitioner changed its name to Investec Australia Limited. By filing (the

certiorari and signing the verification and certification against forum
shopping) in its capacity as NM Rothschild, circumstances dictate that it is
still the same entity having the same lawyers (short discussion on real
party in interest; person benefitted or injured etc.)

2) Propriety of resort to a Petition for Certiorari with the CA irrelevant

As a general rule, denial of MTD cannot be appealed by certiorari (kasi

interlocutory order lang) which is a remedy designed to correct errors of
jurisdiction and not errors of judgment.
However, we have likewise held that when the denial of the Motion to
Dismiss is tainted with grave abuse of discretion, the grant of the
extraordinary remedy of Certiorari may be justified. The resolution of the
present Petition therefore entails an inquiry into whether the Court of
Appeals correctly ruled that the trial court did not commit grave abuse of
discretion in its denial of petitioners Motion to Dismiss. A mere error in
judgment on the part of the trial court would undeniably be inadequate for
us to reverse the disposition by the Court of Appeals.

3) Issues more properly ventilated during the trial of the case

Defenses of petitioner (failure to state cause of action, barred by
estoppel, in pari delicto) can be best ventilated in the trial. Basta
evident yung establishment of a cause of action, okay.
4) Whether or not Jurisdiction over the person of Petitioner was
properly acquired. YES.
Held:

Petitioner alleges that the RTC has not acquired jurisdiction over its person on
account of the improper service of summons. Summons was served on petitioner
through the DFA, with respondents counsel personally bringing the summons and
Complaint to the Philippine Consulate General in Sydney, Australia.
In the pleadings filed by the parties before this Court, the parties entered into
a lengthy debate as to whether or not petitioner is doing business in the Philippines.
However, such discussion is completely irrelevant in the case at bar, for two
reasons. Firstly, since the Complaint was filed on August 30, 2005, the provisions
of the 1997 Rules of Civil Procedure govern the service of summons. Section 12,
Rule 14 of said rules provides:
Sec. 12. Service upon foreign private juridical entity. When the defendant is
a foreign private juridical entitywhich has transacted business in the
Philippines, service may be made on its resident agent designated in accordance
with law for 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.

The coverage of the present rule is thus broader. 30 Secondly, the service of
summons to petitioner through the DFA by the conveyance of the summons to the
Philippine Consulate General in Sydney, Australia was clearly made not through the
above-quoted Section 12, but pursuant to Section 15 of the same rule which
provides:
Sec. 15. Extraterritorial service. When the defendant does not reside and is
not found in the Philippines, and the action affects the personal status of the plaintiff
or relates to, or the subject of which is property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding the defendant from any interest
therein, or the property of the defendant has been attached within the Philippines,
service may, by leave of court, be effected out of the Philippines by personal service
as under section 6; or by publication in a newspaper of general circulation in such
places and for such time as the court may order, in which case a copy of the
summons and order of the court shall be sent by registered mail to the last known
address of the defendant, or in any other manner the court may deem sufficient. Any
order granting such leave shall specify a reasonable time, which shall not be less
than sixty (60) days after notice, within which the defendant must answer.

Breaking down Section 15, Rule 14, it is apparent that there are only four
instances wherein a defendant who is a non-resident and is not found in the country
may be served with summons by extraterritorial service, to wit: (1) when the action
affects the personal status of the plaintiffs; (2) when the action relates to, or the
subject of which is property, within the Philippines, in which the defendant claims a
lien or an interest, actual or contingent; (3) when the relief demanded in such action
consists, wholly or in part, in excluding the defendant from any interest in property
located in the Philippines; and (4) when the defendant non-resident's property has
been attached within the Philippines. In these instances, service of summons may
be effected by (a) personal service out of the country, with leave of court; (b)

publication, also with leave of court; or (c) any other manner the court may deem
sufficient.
Undoubtedly, extraterritorial service of summons applies only where
the action is in rem or quasi in rem, but not if an action is in personam.
The Complaint in the case at bar is an action to declare the loan and
Hedging Contracts between the parties void with a prayer for damages. It
is a suit in which the plaintiff seeks to be freed from its obligations to the defendant
under a contract and to hold said defendant pecuniarily liable to the plaintiff for
entering into such contract. It is therefore an action in personam, unless and until
the plaintiff attaches a property within the Philippines belonging to the defendant, in
which case the action will be converted to one quasi in rem. Since the action
involved in the case at bar is in personam and since the defendant, petitioner
Rothschild/Investec, does not reside and is not found in the Philippines, the
Philippine courts cannot try any case against it because of the impossibility of
acquiring jurisdiction over its person unless it voluntarily appears in court.
In this regard, respondent vigorously argues that petitioner should be
held to have voluntarily appeared before the trial court when it prayed for,
and was actually afforded, specific reliefs from the trial court. Respondent
points out that while petitioners Motion to Dismiss was still pending, petitioner
prayed for and was able to avail of modes of discovery against respondent, such as
written interrogatories, requests for admission, deposition, and motions for
production of documents.
It appears, however, that petitioner misunderstood our ruling in La Naval. A
close reading of La Naval reveals that the Court intended a distinction between the
raising of affirmative defenses in an Answer (which would not amount to
acceptance of the jurisdiction of the court) and the prayer for affirmative reliefs
(which would be considered acquiescence to the jurisdiction of the court)
In order to conform to the ruling in La Naval, which was decided by this Court
in 1994, the former Section 23, Rule 1444 concerning voluntary appearance was
amended to include a second sentence in its equivalent provision in the 1997 Rules
of Civil Procedure:
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.
The new second sentence, it can be observed, merely mentions other
grounds in a Motion to Dismiss aside from lack of jurisdiction over the person of the
defendant. This clearly refers to affirmative defenses, rather than affirmative reliefs.
Thus, while mindful of our ruling in La Naval and the new Section 20, Rule 20, this
Court, in several cases, ruled that seeking affirmative relief in a court is tantamount
to voluntary appearance therein.

In view of the above, we therefore rule that petitioner, by seeking

affirmative reliefs from the trial court, is deemed to have voluntarily
submitted to the jurisdiction of said court. A party cannot invoke the
jurisdiction of a court to secure affirmative relief against his opponent and
after obtaining or failing to obtain such relief, repudiate or question that
same jurisdiction. Consequently, the trial court cannot be considered to have
committed grave abuse of discretion amounting to lack or excess of jurisdiction in
the denial of the Motion to Dismiss on account of failure to acquire jurisdiction over
the person of the defendant.