G.R. No. 159333 ; January 31, 2007
Arsenio T. Mendiola, Petitioner, vs. Court of Appeals, National Labor Relations Commission, Pacific Forest Resources, Phils., Inc. and/or Cellmark AB, Respondents.

FACTS

Petitioner Arsenio T. Mendiola filed a labor complaint against Pacific Forest Resources, Inc. (Pacfor) and its foreign parent corporation, Cellmark AB, based in Sweden. The Labor Arbiter ruled in Mendiola’s favor, ordering Pacfor and Cellmark to pay him separation pay, damages, and attorney’s fees, holding them jointly and severally liable. This decision was reversed by the National Labor Relations Commission (NLRC), a ruling subsequently affirmed by the Court of Appeals. Upon Mendiola’s petition, the Supreme Court, in a Decision dated July 31, 2006, reinstated the Labor Arbiter’s award but modified it by deducting an unsubstantiated amount from the separation pay.
Respondent Pacfor filed a Motion for Reconsideration. In its motion, Pacfor argued, among other points, that the Labor Arbiter’s decision could not be enforced against its co-respondent, Cellmark AB. Pacfor contended that Cellmark, being a foreign corporation with its principal office in Sweden, was never properly served with summons in the case and did not voluntarily submit to the jurisdiction of the Labor Arbiter or any Philippine court.

ISSUE

Whether the Labor Arbiter acquired jurisdiction over the person of the foreign corporation, Cellmark AB, thereby validly holding it solidarily liable with its local subsidiary, Pacfor.

RULING

The Supreme Court partially granted Pacfor’s Motion for Reconsideration. The Court held that the Labor Arbiter never acquired jurisdiction over Cellmark AB. Jurisdiction over a defendant, whether domestic or foreign, is acquired either through valid service of summons or the defendant’s voluntary appearance. The records conclusively showed that Cellmark, a corporation organized under Swedish law, did not receive any summons from the Labor Arbiter or any other adjudicatory body in the Philippines regarding Mendiola’s complaint. Furthermore, there was no indication that Cellmark voluntarily participated in the proceedings or submitted itself to the Labor Arbiter’s authority.
Consequently, any judgment rendered against a party over whom the court has not acquired jurisdiction is void and without legal effect. The Court’s prior decision reinstating the Labor Arbiter’s award was therefore modified to the extent that it declared the judgment to be without force and effect as against respondent Cellmark AB. The solidary liability imposed by the Labor Arbiter could not stand against an entity over which jurisdiction was never properly established. The ruling on all other issues and the liability of Pacfor remained undisturbed, as the Court found no substantial arguments to warrant reconsideration on those points.