G.R. No. 112573 February 9, 1995
NORTHWEST ORIENT AIRLINES, INC., petitioner, vs. COURT OF APPEALS and C.F. SHARP & COMPANY INC., respondents.

FACTS

Petitioner Northwest Orient Airlines, Inc. (NORTHWEST), a U.S. corporation, sought to enforce in the Regional Trial Court of Manila a judgment rendered in its favor by the Tokyo District Court of Japan against private respondent C.F. Sharp & Company, Inc. (SHARP), a Philippine corporation. The Japanese case was for collection of unremitted proceeds from an International Passenger Sales Agency Agreement where SHARP, through its Japan branch, sold tickets for NORTHWEST. The Tokyo District Court issued summons to SHARP’s office in Yokohama, Japan, but service failed on two attempts. The court then ordered service through diplomatic channels to SHARP’s head office in Manila, which was effected by a Philippine sheriff. SHARP failed to appear in the Japanese court, which then proceeded to render a default judgment. NORTHWEST, unable to execute the judgment in Japan, filed an action for its enforcement in the Philippines. The RTC dismissed the complaint via a demurrer to evidence, ruling the foreign judgment was void for lack of jurisdiction over SHARP, as service of summons was made extraterritorially in Manila for an action in personam. The Court of Appeals affirmed the dismissal.

ISSUE

Whether the Tokyo District Court of Japan acquired jurisdiction over SHARP, a Philippine corporation doing business in Japan, by serving summons through diplomatic channels on its principal office in Manila after failed attempts at service in Japan.

RULING

The Supreme Court denied the petition and affirmed the decisions of the lower courts. The Japanese judgment was declared null and void and unenforceable in the Philippines for lack of jurisdiction. The Court held that the action for collection of a sum of money was an action in personam. Jurisdiction over the defendant in an action in personam is acquired only by voluntary appearance or by personal or substituted service of summons within the forum state. The service of summons by the Japanese court upon SHARP in Manila, outside Japanese territory, was invalid and did not confer jurisdiction. The Court rejected the argument that SHARP, by maintaining branches in Japan, was a resident defendant there. A corporation’s residence, for purposes of legal summons, is the state of its incorporation—in this case, the Philippines. Engaging in business in another state does not make a corporation a resident of that state. Therefore, SHARP was a non-resident foreign corporation in relation to Japan, and the Japanese court’s process had no extraterritorial effect. The foreign judgment, rendered without jurisdiction, was not entitled to recognition and enforcement under Philippine law.