Atiko Trans v. Prudential Guarantee
REITERATIONFacts
The Antecedents: This case originated from a claim for damages filed by Prudential Guarantee and Assurance, Inc. (Prudential) against Cheng Lie Navigation Co., Ltd. (Cheng Lie) and Atiko Trans, Inc. (Atiko). The dispute arose from the damage sustained by 40 coils of electrolytic tinplates loaded on board the vessel M/S Katjana, owned or chartered by Cheng Lie, for shipment from Taiwan to Manila. The shipment was insured by Prudential, which subsequently paid Oriental Tin Can & Metal Manufacturing Co., Inc. (Oriental), the notify party and consignee, the amount of ₱205,220.97 for the damaged cargo. Prudential, as subrogee, then sought to recover this amount from the shipping entities. Procedural History: Prudential filed a complaint for sum of money against Cheng Lie and Atiko before the Metropolitan Trial Court (MeTC) of Makati City. The MeTC declared both defendants in default and, after ex-parte presentation of evidence, rendered a judgment on August 6, 2002, ordering Cheng Lie and Atiko to solidarily pay Prudential the claimed damages, attorney's fees, and costs. Atiko appealed to the Regional Trial Court (RTC), which affirmed the MeTC's decision. Both Atiko and Cheng Lie then elevated the case to the Court of Appeals (CA) via a Petition for Review, but the CA also affirmed the RTC's decision. The petitioners, Atiko and Cheng Lie, are now before the Supreme Court through this Petition for Review on Certiorari. The Petition: The petitioners, Atiko Trans, Inc. and Cheng Lie Navigation Co., Ltd., seek review of the Court of Appeals' decision, primarily arguing that the lower courts failed to acquire jurisdiction over their persons due to improper service of summons. They contend that the service of summons upon Atiko, a domestic corporation, was defective as it was received by a cashier, not an authorized officer. Consequently, they argue that the subsequent service of summons upon Cheng Lie, a foreign corporation, through Atiko, was also invalid. They also raise issues regarding the burden of proof in default judgments. The core of their petition is that the MeTC's decision, and consequently the decisions of the RTC and CA affirming it, are void for lack of jurisdiction over their persons.
Issue(s)
Whether the MeTC acquired jurisdiction over the persons of petitioners Atiko Trans, Inc. due to improper service of summons and whether Atiko Trans, Inc.'s subsequent actions constituted voluntary appearance. Whether the MeTC acquired jurisdiction over the person of petitioner Cheng Lie Navigation Co., Ltd. due to improper service of summons and whether Cheng Lie Navigation Co., Ltd. voluntarily appeared before the court. Whether the MeTC erred in declaring Cheng Lie Navigation Co., Ltd. in default. Whether the respondent Prudential Guarantee and Assurance, Inc. is required to prove the material allegations in the complaint even in a default judgment, specifically concerning Atiko Trans, Inc. Whether Atiko Trans, Inc. is the shipagent of Cheng Lie Navigation Co., Ltd. and whether Cheng Lie Navigation Co., Ltd. is a common carrier that owned, operated, and/or chartered M/S Katjana.
Ruling
The petition is PARTIALLY GRANTED. The assailed Decision of the Court of Appeals is AFFIRMED with the MODIFICATION that the judgment insofar as Cheng Lie Navigation Co., Ltd. is concerned is declared VOID for failure to acquire jurisdiction over its person as there was improper service of summons.
Ratio Decidendi
On the jurisdiction over Atiko Trans, Inc.: The Court held that while the service of summons upon Atiko, a domestic corporation, through its cashier Cristina Figueroa, was not in strict compliance with Section 11, Rule 14 of the Rules of Court, Atiko's subsequent actions constituted voluntary appearance. By filing a Notice of Appeal, Memorandum of Appeal, and Motion for Reconsideration without questioning the MeTC's jurisdiction over its person, Atiko submitted itself to the court's authority. The Court reiterated that filing pleadings seeking affirmative relief is equivalent to service of summons, and the issue of jurisdiction must be seasonably raised. The claim of improper service was deemed a mere afterthought raised for the first time in the petition before the Supreme Court. On the jurisdiction over Cheng Lie Navigation Co., Ltd.: The Court found that the MeTC did not acquire jurisdiction over Cheng Lie, a foreign juridical entity. Service of summons was coursed through Atiko, but the service upon Atiko itself was defective. Since Atiko was not properly served, the subsequent service upon it as the purported agent of Cheng Lie was also invalid. Furthermore, there was no proof that Atiko was Cheng Lie's resident agent, nor was summons served on any other officer or agent of Cheng Lie as prescribed by Section 12, Rule 14 of the Rules of Court. Cheng Lie's consistent objection to the MeTC's jurisdiction, even if pleadings were not explicitly titled as 'special appearance,' prevented it from being considered as having voluntarily appeared. On the declaration of default for Cheng Lie: Consequently, the MeTC erred in declaring Cheng Lie in default because a defendant cannot be declared in default without valid service of summons. The decision of the MeTC, insofar as Cheng Lie is concerned, was therefore void. On the requirement to prove material allegations in default judgments: The Court agreed with the respondent that the petitioners raised factual matters not proper for a petition for review on certiorari. The Court generally defers to the factual findings of lower courts, especially when affirmed by the RTC and CA. For Atiko, the issue of proving material allegations was rendered moot by its voluntary appearance, which is equivalent to service of summons, and the subsequent affirmation of the lower courts' findings on factual matters. On the agency of Atiko Trans, Inc. and the common carrier status of Cheng Lie Navigation Co., Ltd.: The Court agreed with the respondent that the petitioners raised factual matters not proper for a petition for review on certiorari. The Court generally defers to the factual findings of lower courts, especially when affirmed by the RTC and CA. However, this point became moot for Cheng Lie due to the lack of jurisdiction. For Atiko, the issue of proving material allegations was rendered moot by its voluntary appearance, which is equivalent to service of summons, and the subsequent affirmation of the lower courts' findings on factual matters.
Main Doctrine
Service of summons upon a domestic corporation must strictly comply with the rules on service of summons upon a domestic private juridical entity. Failure to acquire jurisdiction over the person of a defendant foreign private juridical entity due to improper service of summons renders the court's decision void as to that defendant. Voluntary appearance, however, can cure defects in service of summons, but only if the party seeks affirmative relief and does not consistently question the court's jurisdiction.