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NM ROTHSCHILD v. LEPANTO CONSOLIDATED MINING COMPANY

FACTS:

The respondent, Lepanto Consolidated Mining Company, filed a complaint against the petitioner, NM Rothschild & Sons (Australia) Limited, seeking a declaration that the loan and hedging contracts between them were void and claiming damages. The complaint was filed before the Regional Trial Court (RTC) of Makati City and was assigned to Branch 150 of the RTC. The respondent filed a motion to authorize its counsel to personally bring the summons and complaint to the Philippine Consulate General in Sydney, Australia for service of summons on the petitioner, which the trial court granted. The petitioner filed a special appearance with a motion to dismiss on several grounds, including lack of jurisdiction due to defective service of summons, failure to state a cause of action, and estoppel. The trial court denied the motion to dismiss, ruling that there was proper service of summons through the Department of Foreign Affairs (DFA) as the petitioner had not applied for a license to do business in the Philippines or filed a written power of attorney designating a person to receive summons and legal processes. The petitioner filed a motion for reconsideration, which was denied, and also sought to take the deposition of a witness and serve interrogatories on the respondent, but the trial court disallowed these motions. The petitioner filed a petition for certiorari with the Court of Appeals, which dismissed the petition, ruling that the denial of a motion to dismiss is an interlocutory order and can only be reviewed through an appeal from the judgment after trial. The petitioner then filed a petition for review on certiorari with the Supreme Court, arguing that the denial of its motion to dismiss could be the proper subject of a petition for certiorari, while the respondent argued that the petition should be dismissed due to lack of proper verification and certification of non-forum shopping and because the petitioner no longer existed as a corporation at the time the petition was filed.

In another proceeding, the petitioner, Investec Australia Limited (formerly known as NM Rothschild & Sons [Australia] Limited), filed a petition for review before the court. The respondent, Bank of the Philippine Islands (BPI), filed a motion to dismiss the petition on various grounds, including lack of jurisdiction over the person of the petitioner due to defective summons, failure to state a cause of action, estoppel, and the respondent's lack of clean hands. The trial court denied the motion to dismiss, prompting the petitioner to file a petition for certiorari with the Court of Appeals. The Court of Appeals affirmed the denial, stating that there was no grave abuse of discretion in the trial court's ruling. The petitioner argued that the alleged absence of a cause of action, estoppel, and the respondent's alleged wrongdoing should be considered in a motion to dismiss, but both the trial court and the Court of Appeals held that these issues should be addressed during the trial. The petitioner also asserted that the respondent failed to properly serve the summons and provided evidence of changing its corporate name from NM Rothschild & Sons (Australia) Limited to Investec Australia Limited. The Court found the petitioner's submissions regarding the name change satisfactory and decided not to dismiss the case based on the ground of not being prosecuted under the name of the real party in interest. The respondent objected to the verification and certification against forum shopping, citing the supposed non-existence of the corporation named in the documents, but the Court disregarded this objection considering the petitioner's evidence. The main issue to be resolved was whether the Court of Appeals correctly ruled that the trial court did not commit grave abuse of discretion in denying the motion to dismiss. The Court clarified that the denial of a motion to dismiss can only be questioned through a special civil action for Certiorari when it is tainted with grave abuse of discretion.

ISSUES:

  1. Whether the complaint stated a cause of action for the nullity of the Hedging Contracts.

  2. Whether the allegations of estoppel and bad faith require proof.

  3. Whether the court acquired jurisdiction over the person of the petitioner through the proper service of summons.

  4. Whether extraterritorial service of summons is allowed in a case that is in personam.

  5. Whether the Philippine courts have jurisdiction over the defendant, petitioner Rothschild/Investec, who does not reside and is not found in the Philippines.

  6. Whether petitioner's actions in seeking specific reliefs from the trial court constitute voluntary appearance and acceptance of the court's jurisdiction.

  7. Whether or not the respondents' filing of a "Motion to Dismiss (for Lack of Jurisdiction)" amounts to a voluntary appearance in court.

  8. Whether or not the respondents' subsequent motion for inhibition from further hearing the case negates their voluntary submission to the court's jurisdiction.

RULING:

  1. The determination of whether or not the complaint stated a cause of action for the nullity of the Hedging Contracts involves an inquiry into whether or not the contracts are void under Philippine laws. Since the contracts were incorporated in the complaint, the trial court correctly denied the motion to dismiss on this ground.

  2. Allegations of estoppel and bad faith require proof and can be best resolved after a full trial on the merits. Therefore, the court did not need to pass upon these matters in ruling on the motion to dismiss.

  3. The service of summons to the petitioner through the DFA and the Philippine Consulate General in Sydney, Australia was proper under Section 15 of the Rules of Civil Procedure, which governs extraterritorial service.

  4. Extraterritorial service of summons is not allowed in a case that is in personam. It only applies in actions that are in rem or quasi in rem. In actions in rem or quasi in rem, Philippine courts already have jurisdiction to hear and decide the case because jurisdiction over the person of the defendant is not a prerequisite, as long as the court acquires jurisdiction over the res. However, in actions in personam, Philippine courts cannot try the case against a defendant who does not reside and is not found in the Philippines unless the defendant voluntarily appears in court.

  5. The Philippine courts do not have jurisdiction over the defendant, petitioner Rothschild/Investec, who does not reside and is not found in the Philippines. In personam actions can only be tried by Philippine courts if the defendant voluntarily appears in court. Jurisdiction cannot be acquired over the defendant's person if it does not voluntarily appear.

  6. Seeking specific reliefs from the trial court, such as modes of discovery, does not constitute voluntary appearance and acceptance of the court's jurisdiction. While the defendant can raise affirmative defenses and pray for affirmative reliefs, this does not waive its objection to the court's jurisdiction over its person. The inclusion of other grounds aside from lack of jurisdiction in a Motion to Dismiss, such as affirmative defenses, is not considered voluntary appearance.

  7. The respondents' filing of a "Motion to Dismiss (for Lack of Jurisdiction)" does not amount to a voluntary appearance in court.

  8. The respondents' subsequent motion for inhibition from further hearing the case does not negate their voluntary submission to the court's jurisdiction.

PRINCIPLES:

  • Courts are not restricted to the consideration of the facts alleged in the complaint and may consider other facts within the range of judicial notice and relevant laws and jurisprudence in ruling on a motion to dismiss.

  • Allegations of estoppel and bad faith require proof and can be best resolved after a full trial on the merits.

  • Proper service of summons to a foreign private juridical entity can be made on its resident agent designated in accordance with law, or if there is no such agent, on the government official designated by law, or on any of its officers or agents within the Philippines. Extraterritorial service may also be allowed under certain circumstances.

  • Extraterritorial service of summons applies only in actions that are in rem or quasi in rem, not in actions in personam.

  • Actions in rem are proceedings to enforce personal rights and obligations brought against the person based on the jurisdiction of the person.

  • Actions in personam impose a responsibility or liability directly upon the person of the defendant.

  • Actions quasi in rem name a person as defendant but seek to subject that person's interest in property to a lien or obligation.

  • In personam actions can only be tried by Philippine courts if the defendant voluntarily appears in court.

  • Seeking specific reliefs from the trial court, such as modes of discovery, does not constitute voluntary appearance and acceptance of the court's jurisdiction.

  • The inclusion of affirmative defenses in a Motion to Dismiss does not waive the defendant's objection to the court's jurisdiction over its person.

  • The active participation of a party in the proceedings is tantamount to an invocation of the court's jurisdiction and a willingness to abide by the resolution of the case, and will bar said party from later on impugning the court's jurisdiction.

  • 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.

  • 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.