Asiavest Limited vs. Court of Appeals

In an action in personam against a non-resident defendant who is not physically present in the forum state, personal service of summons within the state is essential to acquire jurisdiction over the defendant's person; extraterritorial service is unavailing. The Court also held that once the existence and authentication of a foreign judgment are proved, a presumption of validity attaches, shifting the burden to the challenger to prove want of jurisdiction.

Antonio Heras, a resident of Quezon City, Philippines, executed a personal guarantee for the obligations of Compania Hermanos de Navegacion S.A. Asiavest Limited sued him in Hong Kong on this guarantee. Heras had departed Hong Kong for good in October 1984. Asiavest subsequently applied for and obtained leave from the Hong Kong court to serve summons extraterritorially in the Philippines. Service was effected by leaving a copy of the writ with Heras's son-in-law at his Quezon City residence and through a local law firm. Heras did not appear in the Hong Kong proceeding, and the court rendered a monetary judgment against him. Asiavest then filed a complaint in the Regional Trial Court of Quezon City to enforce the foreign judgment.

• Nature: Action for enforcement of a foreign judgment.
• The Hong Kong Judgment: Asiavest sued Heras in Hong Kong for US$1,810,265.40 based on his personal guarantee. Because Heras had left Hong Kong permanently, Asiavest obtained leave to serve summons extraterritorially in the Philippines. An affidavit of service was filed stating a copy of the writ was left with Heras's son-in-law in Quezon City. Heras did not contest the claim, and the Hong Kong court rendered judgment.
• The Philippine Action: Asiavest filed a complaint in the RTC of Quezon City. Heras moved to dismiss for lack of jurisdiction in the Hong Kong court. At pre-trial, the parties stipulated that Heras admitted the existence of the judgment but not its validity; Asiavest was not doing business in the Philippines; and Heras's residence was New Manila, Quezon City.
• Evidence on Jurisdiction: Heras presented his former secretary, Fortunata de la Vega, who testified that Heras left Hong Kong for good in October 1984. Heras also presented Russel Warren Lousich as an expert on Hong Kong law. Lousich testified that substituted service was valid under Hong Kong law if done in accordance with Philippine laws, but he admitted on cross-examination that the Hong Kong court had authorized extraterritorial service and that an affidavit of service was filed.

• Petitioner argued that the Court of Appeals erred in requiring it to present evidence supporting the validity of the foreign judgment, contending that the presumption of validity shifts the burden to the challenger.
• Petitioner maintained that the service of summons on Heras was valid under Philippine law.
• Petitioner argued that personal service of summons in Hong Kong was not required.
• Petitioner asserted that leave of Philippine courts was not necessary to serve foreign summons within the Philippines.
• Petitioner contended that the foreign judgment did not contravene Philippine laws, sound morality, or public policy.

• Respondent countered that the Hong Kong court lacked jurisdiction over his person because he was a non-resident and summons was not personally served on him in Hong Kong.
• Respondent argued that extraterritorial service in the Philippines was defective because it was effected by a law firm clerk rather than an authorized court officer.
• Respondent maintained that notice outside the state to a non-resident is unavailing to confer jurisdiction in an in personam action for money recovery.
• Respondent argued that the foreign judgment contravened Philippine laws and public policy because it lacked findings of fact and law and violated the principle of excussion under the Civil Code.

• Procedural Issues: Whether the party seeking enforcement of a foreign judgment must present evidence of its validity beyond proving its existence and authentication.
• Substantive Issues: Whether the Hong Kong court acquired jurisdiction over the person of a non-resident defendant through extraterritorial service of summons in an action in personam.

• Procedural: The Court held that under Section 50(b), Rule 39 of the Rules of Court, once the authenticity of a foreign judgment is proved, it constitutes presumptive evidence of a right. The burden to repel the judgment on grounds of want of jurisdiction shifts to the party challenging it. Requiring the enforcing party to first establish the judgment's validity would render the legal presumption meaningless.
• Substantive: The Court held that the Hong Kong court did not acquire jurisdiction over Heras. Matters of service of process are governed by the lex fori—the law of Hong Kong. Because Heras's expert witness failed to cite specific Hong Kong law on service of summons, the processual presumption applied, presuming Hong Kong law to be similar to Philippine law. Under Philippine law, in an in personam action against a non-resident not found in the forum, personal service of summons within the state is essential to acquire jurisdiction. Heras was a non-resident of Hong Kong at the time of the suit, having left permanently and stipulating his residence as Quezon City. Extraterritorial service under Section 17, Rule 14 is inapplicable to in personam actions against non-residents. Section 18 (residents temporarily out) is also inapplicable because Heras left "for good." Consequently, the Hong Kong judgment was void for lack of jurisdiction.

• Presumption of Validity of Foreign Judgments — A foreign judgment against a person is presumptive evidence of a right between the parties. The party challenging it bears the burden of proving want of jurisdiction, want of notice, collusion, fraud, or clear mistake of law or fact. The Court applied this by ruling that Asiavest, having proved the judgment's existence and authentication, shifted the burden to Heras to prove the Hong Kong court lacked jurisdiction.
• Processual Presumption — When foreign law is not properly proved, the court presumes the foreign law to be the same as the law of the forum. The Court applied this because Heras's expert witness testified generally about Hong Kong procedure but failed to cite specific Hong Kong law on service of summons; thus, Philippine law on the matter was applied.
• Jurisdiction over Non-Residents in In Personam Actions — In an action in personam against a non-resident who does not voluntarily submit to the court's authority, personal service of summons within the forum state is essential to acquire jurisdiction over the defendant's person. If the defendant is not physically present in the forum state, the court cannot acquire jurisdiction over their person. The Court applied this to hold that extraterritorial service on Heras in the Philippines was invalid to confer jurisdiction on the Hong Kong court.

• "In an action in personam wherein the defendant is a non-resident who does not voluntarily submit himself to the authority of the court, personal service of summons within the state is essential to the acquisition of jurisdiction over [his] person."
• "The presumption of validity accorded foreign judgment would be rendered meaningless were the party seeking to enforce it be required to first establish its validity."
• "There is, however, nothing in the testimony of Mr. Lousich that touched on the specific law of Hong Kong in respect of service of summons either in actions in rem or in personam, and where the defendant is either a resident or nonresident of Hong Kong. In view of the absence of proof of the Hong Kong law on this particular issue, the presumption of identity or similarity or the so-called processual presumption shall come into play."

• Northwest Orient Airlines, Inc. v. Court of Appeals, 241 SCRA 192 (1995) — Followed. Cited for the principle that a foreign judgment is presumed valid and binding until the contrary is shown, and for the doctrine of processual presumption when foreign law is not proved.
• Boudart v. Tait, 67 Phil. 170 (1939) — Followed. Cited for the rule that in an in personam action against a non-resident, personal service of summons within the state is essential to acquire jurisdiction.
• Brown v. Brown, 3 SCRA 451 (1961) — Followed. Cited for the principle that a defendant who abandons the forum state is treated as an absentee or non-resident, requiring service of summons as one who does not reside and is not found in the forum.
• Gemperle v. Schenker, 19 SCRA 45 (1967) — Distinguished. Cited as an exception where jurisdiction over a non-resident was acquired through service on a resident wife/attorney-in-fact in a related prior case, an exception inapplicable to Heras.

• Section 50(b), Rule 39, Rules of Court (now Section 48, Rule 39) — Governs the presumptive evidence of a right accorded to foreign judgments and the grounds to repel them. Applied to shift the burden to Heras to prove want of jurisdiction.
• Section 3(n), Rule 131, Rules of Court — Presumption that a court or judge acting as such has acted in the lawful exercise of jurisdiction. Applied to presume the Hong Kong court's jurisdiction until overcome by evidence.
• Section 7, Rule 14, Rules of Court — Requires personal service of summons on the defendant. Applied by analogy under processual presumption to determine valid service in Hong Kong.
• Section 17, Rule 14, Rules of Court — Governs extraterritorial service of summons. Held inapplicable because the action was in personam against a non-resident, not in rem or quasi in rem.
• Section 18, Rule 14, Rules of Court — Governs service on residents temporarily out of the country. Held inapplicable because Heras left Hong Kong permanently, not temporarily.

Bellosillo, Vitug, and Panganiban, JJ.