G.R. No. 171137 ; June 5, 2009
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner, vs. SPOUSES WILSON DY HONG PI and LOLITA DY and SPOUSES PRIMO CHUYACO, JR. and LILIA CHUYACO, Respondents.

FACTS

Petitioner Philippine Commercial International Bank (PCIB) filed a complaint for rescission and damages against Spouses Damian and Tessie Amadeo (sureties for Streamline Cotton Development Corporation) and respondent Spouses Dy and Chuyaco. PCIB alleged that the Amadeo spouses sold three real properties to respondents roughly a month before their promissory notes became due, with grossly inadequate consideration, in fraud of creditors. The case was filed on April 22, 1994, in the Regional Trial Court (RTC) of Makati City, Branch 133.
Summons was served on the Amadeo spouses, who filed a Motion to Dismiss (denied). They filed an Answer with counterclaim. Summons could not be served on respondents Dy and Chuyaco. Petitioner filed an Ex Parte Motion for Leave to Serve Summons by Publication, which was denied on September 14, 1995, on the ground that the action was in personam. Petitioner later filed an Amended Complaint to include a prayer for a writ of preliminary attachment, which was granted. However, no property was attached, and the case was dismissed without prejudice on June 26, 1998, for failure to prosecute. Petitioner filed a Motion for Reconsideration, which was granted.
Respondents filed an “Omnibus Motion to Dismiss and to Annul All Proceedings” on December 11, 1998, questioning the court’s jurisdiction over their persons. The trial court noted this motion without action on August 2, 2001, as the notice of hearing was defective, and directed that alias summons be issued to respondents, suggesting petitioner could avail of summons by publication. Respondents filed a “Motion to Dismiss (for Lack of Jurisdiction)” on February 18, 2002, which was denied on April 23, 2002. Petitioner then filed a Motion for Leave of Court to Serve Summons by Publication.
On June 17, 2003, respondents filed a “Motion to Dismiss for Failure to Prosecute,” arguing petitioner had not pursued the case against them. On November 4, 2003, respondents personally filed a “Motion for Inhibition,” alleging continuous delay and questioning the court’s competence. Their counsel later adopted this motion. On June 23, 2004, the trial court denied the motion for inhibition, ruled respondents had voluntarily submitted to the court’s jurisdiction by filing numerous motions, and granted petitioner’s motion for leave to serve summons by publication.
Respondents filed a petition for certiorari with the Court of Appeals (CA), which granted it on July 18, 2005. The CA held that the trial court erred in ruling respondents voluntarily appeared, as their motions were precisely to challenge jurisdiction and for inhibition, which did not constitute voluntary appearance. The CA also found the motion for inhibition meritorious due to the trial judge’s apparent bias. The CA annulled the trial court’s June 23, 2004 Order and directed the judge to inhibit himself. Petitioner’s motion for reconsideration was denied on January 10, 2006.

ISSUE

1. Whether respondents voluntarily submitted to the trial court’s jurisdiction by filing motions to dismiss and for inhibition.
2. Whether the trial judge should have inhibited himself from the case.

RULING

1. No, respondents did not voluntarily submit to the trial court’s jurisdiction. The Supreme Court held that filing motions to dismiss based on lack of jurisdiction, failure to prosecute, and for inhibition does not constitute voluntary appearance. Respondents consistently challenged the court’s jurisdiction over their persons, as they had not been validly served with summons. Their motions were not seeking affirmative relief on the merits but were precisely to question jurisdiction and delay. The Court emphasized that a party may appear specially to object to jurisdiction without submitting to it. The CA correctly ruled that the trial court erred in declaring voluntary appearance.
2. Yes, the trial judge should have inhibited himself. The Supreme Court found that the trial judge exhibited bias and partiality, warranting his inhibition. The judge’s June 23, 2004 Order contained harsh and disparaging remarks against respondents’ counsel, describing her as “ignorant of the law” and “incompetent,” which exceeded the bounds of judicial decorum. The judge also inconsistently ruled on the propriety of summons by publication, first denying it in 1995, then suggesting it in 2001, and finally granting it in 2004 without explanation. This inconsistency, coupled with the intemperate language, created a perception of bias. The Court upheld the CA’s directive for the judge to inhibit himself to preserve the integrity of the proceedings.
The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals’ Decision and Resolution. The trial judge was ordered to inhibit himself, and the case was to be reraffled to another branch.