Perkins vs. Dizon

In an action quasi in rem against a non-resident defendant involving property located in the Philippines, Philippine courts acquire jurisdiction over the res without needing jurisdiction over the person, and service of summons by publication suffices to satisfy due process, provided the relief sought is confined to the res.

Idonah Slade Perkins is the wife of Eugene Arthur Perkins and a non-resident of the Philippines. Eugene Arthur Perkins held 52,874 shares of stock registered in his name in the Benguet Consolidated Mining Company, a sociedad anonima organized in the Philippines under the Spanish Code of Commerce, with its principal office in Manila. Conflicting claims to those shares were asserted by Perkins, his wife Idonah, and one George H. Engelhard, prompting the company to withhold dividends and refuse to recognize any single party's right to control and dispose of the shares. Section 398 of the Code of Civil Procedure governed service of summons upon non-resident defendants in actions relating to property within the Philippines.

On July 6, 1938, Eugene Arthur Perkins instituted an action in the Court of First Instance of Manila against the Benguet Consolidated Mining Company for dividends amounting to ₱71,379.90 on 52,874 shares of stock registered in his name, payment of which was being withheld by the company, and for recognition of his right to control and dispose of said shares to the exclusion of all others. The company filed its answer alleging by way of defense that the withholding of dividends and non-recognition of Perkins's right were due to demands made upon the same shares by Idonah Slade Perkins and George H. Engelhard. The company prayed that the adverse claimants be made parties and served with notice by publication, and that all parties be required to interplead and settle their rights among themselves.

On September 5, 1938, the trial court ordered Eugene Arthur Perkins to include Idonah Slade Perkins and George H. Engelhard as party defendants. The complaint was accordingly amended; in addition to the original relief, Perkins prayed that Idonah Slade Perkins and Engelhard be adjudged without interest in the shares and excluded from any claim thereon. Thereafter, summons by publication were served upon the non-resident defendants pursuant to the court's order. On December 9, 1938, Engelhard filed his answer to the amended complaint. On December 10, 1938, petitioner Idonah Slade Perkins, through counsel, filed a pleading entitled "objection to venue, motion to quash, and demurrer to jurisdiction," challenging the lower court's jurisdiction over her person. Her objection, motion, and demurrer were overruled, as was her motion for reconsideration.

Petitioner then brought the present petition for certiorari, praying that the summons by publication issued against her be declared null and void and that the respondent Judge be permanently prohibited from taking any action on the case with respect to her. She contended that the proceeding was one of interpleading and therefore an action in personam, and that the lower court lacked jurisdiction over her person because she was a non-resident. She further argued that the lower court lacked jurisdiction over the subject matter and that the issues had already been decided by a New York court and were being relitigated in a California court.

• Nature of the Action as In Personam: Petitioner contended that the proceeding instituted against her was one of interpleading under Section 120 of the Code of Civil Procedure, and therefore an action in personam, which could not validly be served by publication upon a non-resident defendant.
• Lack of Jurisdiction Over Her Person: Petitioner maintained that the lower court had no jurisdiction over her person because she is a non-resident, beyond the reach of judicial process of Philippine courts.
• Lack of Jurisdiction Over the Subject Matter and Prior Adjudications: Petitioner argued that the lower court had no jurisdiction over the subject matter of the action and that the issues had already been decided by a New York court and were being relitigated in a California court, invoking res adjudicata and lis pendens.

• Submission to Jurisdiction by Pleading Over: Respondents contended that petitioner, by pleading over the subject matter in the lower court, had submitted herself to its jurisdiction, thereby constituting voluntary appearance.

• Jurisdiction Over Non-Resident Defendant: Whether the Court of First Instance of Manila acquired jurisdiction over the person of petitioner Idonah Slade Perkins, a non-resident defendant, through service of summons by publication.
• Nature of the Action: Whether the action brought by Eugene Arthur Perkins against petitioner is in personam (as an interpleading proceeding) or quasi in rem, such that jurisdiction over the res suffices.
• Voluntary Appearance: Whether petitioner, by filing her objections and motions challenging jurisdiction, submitted herself to the jurisdiction of the lower court.

• Jurisdiction Over Non-Resident Defendant: No, the lower court did not acquire jurisdiction over petitioner's person, but such jurisdiction was non-essential. The action being quasi in rem and involving property located in the Philippines, the court acquired jurisdiction over the res, and service by publication satisfied due process.
• Nature of the Action: The action is quasi in rem, not in personam. The amended complaint sought to exclude petitioner from any interest in shares of stock of a Philippine corporation sitused in the Philippines; it was not an interpleading proceeding under Section 120, as no order compelling interpleading was issued.
• Voluntary Appearance: No. Petitioner's pleas were made not as independent grounds for relief but as additional arguments supporting her contention that the lower court lacked jurisdiction over her person; voluntary appearance cannot be implied from a mistaken or superfluous reasoning but only from the nature of the relief prayed for.

• Jurisdiction Over Non-Resident Defendant: Under Section 398 of the Code of Civil Procedure, service of summons by publication upon a non-resident defendant is authorized when the action relates to property within the Philippines in which the defendant claims an interest or when the relief demanded consists in excluding such person from any interest therein. Jurisdiction over the person of a non-resident cannot be acquired by publication, as no tribunal can extend its process beyond its territory to subject persons located in another state. However, where the action is in rem or quasi in rem in connection with property located in the Philippines, the court acquires jurisdiction over the res, and jurisdiction over the person is non-essential. Potential custody over the res suffices — actual physical custody is not required. The shares of stock of Benguet Consolidated Mining Company, a corporation organized in the Philippines with its principal office in Manila, are sitused in the Philippines regardless of where the certificates are physically located. The action sought to exclude petitioner from any interest in those shares, making it quasi in rem. Service by publication was therefore sufficient to satisfy due process, and the relief granted must be confined to the res.

• Nature of the Action: Petitioner argued the proceeding was an interpleading under Section 120 of the Code of Civil Procedure, which would make it a personal action. The Court found that the lower court did not issue an order compelling the conflicting claimants to interplead; instead, it ordered the plaintiff to amend his complaint to include the other claimants as party defendants. The amended complaint prayed that the new defendants be excluded from any interest in the shares — a relief quasi in rem in nature. The summons by publication was ordered upon the filing of this amended complaint, not upon an interpleading order. Had the court issued an order under Section 120 compelling interpleading without amending the complaint, service by publication upon the non-resident might not have been valid, as such a proceeding would be purely personal. The Court expressly declined to decide whether, after interpleading claimants have appeared, one who pleads ownership of personal property in the Philippines and seeks to exclude a non-resident claimant may validly be served by publication.

• Voluntary Appearance: Respondents argued that petitioner submitted to jurisdiction by pleading over the subject matter. The Court examined petitioner's pleadings and found that her pleas were not independent grounds for relief but additional arguments supporting her jurisdictional challenge. She claimed the lower court lacked jurisdiction over her person not only because she was a non-resident but also because the court lacked jurisdiction over the subject matter and because the issues had been adjudicated in New York and were pending in California. While these additional arguments were erroneous — jurisdiction over the subject matter, res adjudicata, and lis pendens have nothing to do with jurisdiction over the person — the Court held that voluntary appearance cannot be implied from a mistaken or superfluous reasoning but only from the nature of the relief prayed for. Petitioner therefore did not submit to the court's jurisdiction.

• Jurisdiction Over Non-Resident Defendants in Quasi in Rem Actions — A Philippine court cannot acquire jurisdiction over the person of a non-resident defendant by service of summons by publication, as no tribunal can extend its process beyond its territory. However, in an action in rem or quasi in rem involving property located in the Philippines, the court acquires jurisdiction over the res, and jurisdiction over the person is non-essential. Service by publication is required not to acquire personal jurisdiction but to satisfy the constitutional requirement of due process. The relief that may be granted must be confined to the res; the court cannot render a personal judgment against the non-resident. Potential custody over the res is sufficient — actual physical custody is not necessary.

• Situs of Shares of Stock — The situs of shares of stock is in the jurisdiction where the corporation is created, whether the certificates evidencing ownership are within or without that jurisdiction. Shares of stock in a Philippine corporation are therefore property located in the Philippines for purposes of quasi in rem jurisdiction.

• Voluntary Appearance — Voluntary appearance cannot be implied from a mistaken or superfluous reasoning advanced by a party, but only from the nature of the relief prayed for. A party who files pleadings solely to challenge jurisdiction, even if those pleadings contain erroneous additional arguments, does not thereby submit to the court's jurisdiction.

• "When the defendant is a non-resident and refuses to appear voluntary, the court cannot acquire jurisdiction over his person even if the summons be served by publication, for he is beyond the reach of judicial process." — This passage articulates the fundamental principle that jurisdiction over a non-resident's person cannot be acquired by publication, grounding the distinction between in personam and quasi in rem actions.

• "The general rule, therefore, is that a suit against a non-resident cannot be entertained by a Philippine court. Where, however, the action is in rem or quasi in rem in connection with property located in the Philippines, the court acquires jurisdiction over the res, and its jurisdiction over the person of the non-resident is non-essential." — This is the canonical formulation of the quasi in rem exception, frequently cited in Philippine jurisprudence on jurisdiction over non-residents.

• "Voluntary appearance cannot be implied from either a mistaken or superflous reasoning but from the nature of the relief prayed for." — This defines the standard for determining voluntary appearance, distinguishing genuine submissions to jurisdiction from defensive pleadings that merely contain erroneous arguments.

• El Banco Español Filipino vs. Palanca, 37 Phil. 921 — Controlling precedent. The Court relied upon the four rules laid down in this case governing jurisdiction over non-resident defendants: (1) jurisdiction over subject matter and persons distinguished; (2) personal jurisdiction cannot be acquired by publication over a non-resident; (3) in rem or quasi in rem actions require only jurisdiction over the res; and (4) service by publication in such actions satisfies due process rather than acquiring personal jurisdiction.

• Pennoyer vs. Neff, 95 U.S. 714 (1877) — Foundational authority cited extensively for the principle that no state can exercise direct jurisdiction over persons or property outside its territory, and that a personal judgment upon constructive service against a non-resident who does not appear is wholly invalid. The Court also drew upon Pennoyer's recognition that a state may subject property situated within its limits owned by non-residents to the demands of its own citizens.

• Section 398, Code of Civil Procedure — Authorizes service of summons by publication upon a non-resident defendant when the action relates to real or personal property within the Philippines in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding such person from any interest therein. Applied to uphold service by publication on petitioner, as the action sought to exclude her from any interest in shares of stock located in the Philippines.

• Section 120, Code of Civil Procedure — Governs interpleading when conflicting claims are made upon a person relating to personal property or the performance of an obligation. The Court distinguished this provision, finding that no interpleading order was issued; instead, the complaint was amended to include the adverse claimants as defendants, making the action quasi in rem rather than a personal interpleading proceeding.

Avanceña, C.J., Villa-Real, Imperial, Diaz, and Concepcion, JJ., concurred.