Philippine Supreme Court Jurisprudence > Year 2002 > August 2002 Decisions > G.R. No. 125027 August 12, 2002 - ANITA MANGILA v. COURT OF APPEALS, ET AL.:

This is a petition for 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.chanrob1es virtua1 1aw 1ibrary



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.chanrob1es virtua1 1aw 1ibrary

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 . . . 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.chanrob1es virtua1 1aw 1ibrary

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.chanrob1es virtua1 1aw 1ibrary

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 raised by petitioner may be re-stated as follows:chanrob1es virtual 1aw library



WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT THE WRIT OF ATTACHMENT WAS IMPROPERLY-ISSUED AND SERVED;



WHETHER THERE WAS A VALID DECLARATION OF DEFAULT;



WHETHER THERE WAS IMPROPER VENUE.



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.chanrob1es virtua1 1aw 1ibrary

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 anytime 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:jgc:chanrobles.com.ph

"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 . . ." (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.chanrob1es virtua1 1aw 1ibrary

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 . . ." 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 . . ." 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.25cralaw:red

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.chanrobles.com.ph : red

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:jgc:chanrobles.com.ph

"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).chanrob1es virtua1 1aw 1ibrary

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 Enterprises, 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.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.

Puno and Panganiban, JJ., concur.

Sandoval-Gutierrez, J., is on leave.

Endnotes:

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1. Penned by Justice Quirino Abad Santos, Jr. with members justices Nathanael de Pano, Jr. and B.A. Adefuin-Dela Cruz; Docketed as CA-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. — . . ., 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. . .

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:chanrob1es virtual 1aw library

Sec. 4. When Rule not applicable. — This Rule shall not apply — . . .

(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.