Consolidated Plywood Industries v. Breva
REITERATIONFacts
The Antecedents: Consolidated Plywood Industries, Inc. (CPII) and Mindanao Hemp Export Corporation (MHEC) were co-owners of a parcel of land with improvements. CPII, after acquiring its share, occupied the property and made repairs and improvements, incurring expenses amounting to P239,837.21. CPII sought reimbursement from MHEC for one-half of these expenses. Procedural History: CPII filed a collection suit against MHEC. Summons to MHEC at its registered address in Manila was unserved as the corporation was no longer doing business there. The Securities and Exchange Commission provided the same address. The trial court ordered service of summons by publication, which was effected. MHEC failed to file an answer and was declared in default. CPII presented evidence ex parte. The trial court found CPII incurred expenses of P161,951.70 but denied reimbursement, dismissing the complaint on the ground that CPII was exclusively using the property without paying rent, thus offsetting any claim for reimbursement. The Petition: CPII appealed directly to the Supreme Court, arguing that a co-owner has the right to use the common property without paying rent and is entitled to reimbursement for necessary expenses. The Supreme Court noted that MHEC's address was still unlocatable, as indicated by the return of its resolution sent by registered mail.
Issue(s)
Whether the trial court acquired jurisdiction over the person of the defendant MHEC through service of summons by publication. Whether a co-owner who exclusively uses the common property without paying rent is entitled to reimbursement for necessary expenses incurred for its preservation.
Ruling
The Supreme Court dismissed the petitioner's action. The Court held that the trial court never acquired jurisdiction over the person of MHEC due to defective service of summons, rendering the judgment void. Therefore, the appeal was dismissed on this procedural ground.
Ratio Decidendi
On the Issue of Jurisdiction: The Supreme Court held that the petitioner's suit was a personal action (action in personam), not a real action. For actions in personam, personal service of summons within the forum is essential to acquire jurisdiction over the person of the defendant, unless the defendant voluntarily submits to the court's authority. Summons by publication, in such cases, cannot confer jurisdiction over the defendant consistent with the due process clause. The Court reiterated the rule that the proper recourse for a creditor in a similar situation is to locate properties of the debtor and cause them to be attached under Rule 57, Section 1(f) of the Rules of Court. Such attachment converts the action into a proceeding in rem or quasi in rem, allowing for valid summons by publication. Since no property of MHEC was attached prior to the service of summons by publication, the trial court failed to acquire jurisdiction over the person of MHEC. Consequently, the judgment rendered by the trial court was void. The Court directed that in any future action, personal service efforts must be exhausted before resorting to summons by publication. On the Issue of Reimbursement: Although the primary ground for dismissal was lack of jurisdiction, the Court implicitly addressed the trial court's reasoning. The trial court denied reimbursement based on Article 500 of the Civil Code, which mandates mutual accounting for benefits received and expenses made upon partition. The trial court's view was that a co-owner could not exclusively use the property without paying rent, thereby offsetting expenses. However, the Supreme Court's dismissal on jurisdictional grounds rendered this substantive issue moot in the context of the appealed decision.
Main Doctrine
Service of summons by publication, without prior attachment of the defendant's property, does not confer upon the trial court jurisdiction over the person of the defendant in an action in personam, rendering any judgment rendered thereon void.