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[ G.R. No. 115130. July 1, 1999]
X-PRESS CONTAINER LINE (UK) LTD. vs. EVERGREEN MARINE CORP., et al.
SECOND DIVISION
Gentlemen:
Quoted hereunder, for your information, is a resolution of this court dated JUL 1, 1999.
G.R. No. 115130 (X-Press Container Line (UK) Ltd.) vs. Evergreen Marine Corp., Don time Shipping Corp. and the Court of Appeals.)
Private respondent Evergreen Marine Corporation (Evergreen) is a foreign shipping company doing business in the Philippines through its agent, private respondent Don Tim Shipping Corporation (Don Tim).
On May 17, 1991, respondent Evergreen received on board its vessel, the M/S EVER-GRADE, two lots of Tang Orange Drink powder covered by Bills of Lading Nos. 04209 and 04210 placed in Container Van No. EMCU-263673-0. Respondents undertook to transport the cargo from Manila to Colombo, as port of discharge, and then to Calcutta, as place of delivery. The shipments were covered under all risk insurance policies issued by the Insurance Company of North America (ICNA).
Pursuant to a connecting carrier agreement executed on June 15, 1990 between respondent Evergreen and petitioner X-Press Container Line (UK) Ltd. (X-Press) on June 14, 1991, the cargo was transshipped from Singapore to Calcutta on board the vessel M/V LHOTSE, which is owned by Port Harcourt Passat Schiffahrfsgesellschafft GMBH (Port Harcourt), a foreign corporation with principal address at KG Beijing Muhren 31.200, Hamburg II, Germany. Sea Consortium PTE., Ltd. (Sea Consortium), a foreign corporation with principal address at 20 McCallum Street, 14-01/05 Asian Chambers, Singapore, was M/V LHOTSE's managing agent/operator, while petitioner X-Press Container Line (UK) Ltd. (X-Press), a foreign corporation with principal address at 128 Queen Victoria Street, London, EC4, P4JX, England, was the vessel's operator/time charterer.
During its voyage from Singapore to Calcutta, containers on board M/V LHOTSE, including the one containing the cargo subject of this case, allegedly fell from the vessel and were never recovered. Because respondent Evergreen refused to settle the claim against it, ICNA was compelled to pay the insured shipper of the cargo P1,122,070.90 (US$39,904.27). Having been thus subrogated to the rights and action of the shipper, ICNA filed a complaint for sum of money and damages against respondent Evergreen and Don Time in the Regional Trial Court of Makati. The case was assigned to Branch 136 and docketed there as Civil Case No. 91-3012.
In their answer, respondent Evergreen and Don Tim denied liability. Instead, they filed a third-party complaint against petitioner X-Press, Port Harcourt and Sea Consortium.
In its order dated February 3, 1992, the RTC admitted the third-party complaint and directed the issuance of summons to the third-party defendants at their respective addresses on record. On May 27, 1992, the corresponding summons were issued by the branch clerk of court.
Both petitioner and Port Harcourt filed motions to dismiss and/or quash summons. On the other hand, Sea Consortium failed to enter any appearance in this case.
In its order of July 28, 1992, the RTC quashed the summons for extraterritorial service to the third-party defendants on the ground that while it "had ordered that summons be issued to said foreign corporations, it had not directed extraterritorial service be effected nor did it set out the manner such summons may be served nor prescribed the period within which defendant must answer. The act of the branch clerk of court, done without authority, cannot be otherwise than be considered unlawful, productive of no legal effects, and must be so declared."
Accordingly, respondents Evergreen and Don Tim filed an ex-parte motion for extraterritorial service. However, in its order dated August 14, 1992, the RTC denied respondents' motion. The denial was without prejudice to its refiling "if and when third-party plaintiff can identify any property thereof in the Philippines which can be attached and upon which judgment, if rendered, may be satisfied. Pending acquisition of jurisdiction over the third-party defendants, the third-party complaint is ARCHIEVED." Respondents moved for reconsideration, but their motion was denied by the RTC in its order dated October 13, 1992.
On petition for certiorari by respondents, the Court of Appeals set aside the RTC's orders of August 14, 1992 and October 13, 1992, but only insofar as petitioner X-Press Container was concerned. It remanded the case to the trial court for issuance "of the appropriate summonses for extraterritorial service to the third-party defendant X-Press Container Line (UK) Ltd. In accordance with Section 17, Rule 14 of the Rules of Court and other appropriate proceedings." The Court of Appeals later denied petitioner's motion for reconsideration. The Court of Appeals' basis for its ruling was the following stipulation in the connecting carrier agreement between respondent Evergreen and petitioner X-Press:
10. The Carrier irrevocably agrees that it will appear, accept legal process and not contest jurisdiction in any law suit in which Evergreen is named as a defendant and which relates to claims arising out of the carriage of Evergreen's cargo aboard the Carrier's vessel pursuant to this Agreement or out of any incident occurring while Evergreen's cargo and containers are deemed to be in the Carrier's custody. Any question as to whether Evergreen's cargo or containers are in the Carrier's custody shall be subject to the legal interpretation applicable in the Court or forum hearing the applicable claim. Except as provided above, the Carrier agrees that any disputes arising out of this Agreement are subject to jurisdiction in English Courts and the Carrier irrevocably agrees that any legal suit, action or proceeding arising out of or relating to this Agreement may be instituted in the aforesaid Court and the Carrier hereby irrevocably waives to the fullest extent permitted by law any objection which it may have now or hereafter to the laying of venue, jurisdiction or forum non-convenient of each suit, action or proceedings and irrevocably submits generally and unconditionally to the jurisdiction of the aforesaid Court, provided that if Evergreen is sued in a jurisdiction other than the English Courts in regard to claims arising out of the loading, stowing, carriage and discharge of its cargo and containers, the Carrier agrees to accept service of legal process, appear in said jurisdiction and waive any defenses of jurisdiction, forum non-conveniens or venue and shall irrevocably submit generally and unconditionally to the jurisdiction of any such Court.
Petitioner argues that the Court of Appeals erred in directing summons under Rule 14, �17 when the third-party complaint against it is a personal action, as respondents merely seek reimbursement for what they may be held liable to the insurance company. Petitioner also claims that the Court of Appeals erred in applying the stipulation in the connecting carrier agreement between petitioner and respondent Evergreen, the same being effective only up to June 16, 1991, the date of said agreement's expiration. In any case, petitioner argues that, in this case, convenience and practicality dictate that the venue of action between the parties should be either Taiwan (where the connecting carrier agreement was executed) or India (the country of destination f the subject cargo).
The issues in this case are (1) whether petitioner, as a foreign corporation not doing business in the Philippines, can be sued and (2), if so, whether the Court of Appeals properly ordered the issuance of appropriate summons for extraterritorial service under Rule 14, �17. The two issues are intertwined so a discussion of the same will be made jointly.
Under the parties' connecting carrier agreement as abovequoted, respondent Evergreen can sue petitioner in Philippine courts, notwithstanding the latter's status as a foreign corporation not doing business in the Philippines. This case is analogous to Lingner & Fisher GMBH v. Intermediate Appellate Court, 1 [125 SCRA 522 (1983).] wherein the Court held that:
Whether LINGNER is or is not doing business in the Philippines will not matter because the parties had expressly stipulated in the AGREEMENT that all controversies based on the AGREEMENT "shall fall under the jurisdiction of Philippine Courts." In other words, there was a covenant on venue to the effect that LINGNER can be sued by PHILCHEM before Philippine Courts in regard to a controversy related to the AGREEMENT.
Petitioner however contends that the stipulation as to venue is inapplicable because the connecting carrier agreement expired on June 15, 1991 pursuant to paragraph 11 of the Agreement which provides:
11. DURATION
Notwithstanding Clause 4 2 [Clause 4 of the agreement provides that "Any party of this Agreement may terminate its participation herein giving sixty (60) days written notice to the other."] of this Agreement, this Agreement is valid for a period of 12 months from the date as dated.
The contention is without merit and is an obvious misreading of the agreement. It is quite clear that stipulation of the connecting carrier agreement regarding venue and jurisdiction of actions between the parties applies so long as respondent Evergreen's cause of action against petitioner was in relation to "claims arising out of the loading, showing, carriage, and discharge of its cargo and containers" by petitioner pursuant to their connecting carrier agreement. Indeed, it is not disputed that the incident which gave rise to respondent Evergreen's third-party complaint against petitioner came about when pursuant to the connecting carrier agreement petitioner undertook to transship the subject cargo of Tang Orange Drink powder from Singapore to Calcutta, during which voyage said Cargo was allegedly lost.
Petitioner argues that the Court of Appeals erred in ordering that summons by extraterritorial service be served on it, since this case does not fall under any of the four instances mentioned in Rule 14, �17 when extraterritorial service of summons is proper, i.e., (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 has or claims a lien or interest, actual or contingent; (3) when the relief demanded 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 in the Philippines. This argument is also without merit. The Court did not apply Rule 14, �17 because this case falls under one of the four instances mentioned therein but because of the stipulation regarding venue in the parties' connecting carrier agreement. In case of Lingner Fisher GMBH v. Intermediate Appellate Court, 3 [Supra note 1.] the Court applied Rule 14 �17 in ordering summons by publication on a defendant foreign corporation even if that case involves a personal action, specifically a claim for royalties. The Court held:
. . . in this case under the provisions of Section 17, Rule 14, in relation to Rule 4 of the Rules of Court, which recognizes the principle that venue can be agreed upon by the parties. If a local plaintiff and a foreign corporation have agreed on Philippine venue, summons by publication can be made on the foreign corporation of the principle of liberal construction of the rules to promote just determination of actions.
WHEREFORE, the petition is DENIED for lack of showing that the Court of Appeals committed reversible error. Martinez, J. is on leave.
Very truly yours,
TOMASITA B. MAGAY-DRIS
Clerk of Court
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