Civ Pro - Full text

7/21/2019 Civ Pro - Full text

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G.R. No. 102223 August 22, 1996COMMUNICATION MATERIALS AND DESIGN, INC.,ASPAC MULTI-TRADE, INC., (o!"#!$% ASPAC-ITEC

P&ILIPPINES, INC.' )* +RANCISCO S.AGUIRRE, petitioners,

vs.T&E COURT O+ APPEALS, ITEC INTERNATIONAL, INC.,

)* ITEC, INC., respondents.

TORRES, R., J.:p

Business Corporations, according to Lord Coke, "have nosouls." They do business peddling goods, wares or evenservices across national boundaries in "souless forms" inquest for prots albeit at times, unwelcomed in these strangelands venturing into uncertain markets and, the risk ofdealing with wily competitors.

This is one of the issues in the case at bar.

Contested in this petition for review on Certiorariis the!ecision of the Court of ppeals on #une $, %&&%, sustainingthe 'TC (rder dated )ebruary **, %&&%, denying thepetitioners+ otion to !ismiss, and directing the issuance of awrit of preliminary in-unction, and its companion 'esolutionof (ctober &, %&&%, denying the petitioners+ otion for'econsideration.

etitioners C(/01CT1(0 T2'1L3 0! !23140, 10C.,

5C!1, for brevity6 and 3C /LT17T'!2 10C., 53C, forbrevity6 are both domestic corporations, while petitioner)rancisco 3. guirre is their resident and ma-oritystockholder. rivate 'espondents 1T2C, 10C. and8or 1T2C,10T2'0T1(0L, 10C. 51T2C, for brevity6 are corporations dulyorgani9ed and e:isting under the laws of the 3tate oflabama, /nited 3tates of merica. There is no dispute that1T2C is a foreign corporation not licensed to do business inthe hilippines.

(n ugust %;, %&


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similar, if not identical to 1T2C+s own, and o>eringthem to 1T2C+s former customer.

(n #anuary ?%, %&&%, the complaint 6in Civil Case 0o.&%7*&;, was led with the 'egional Trial Court ofakati, Branch %?; by 1T2C, 10C. lainti> sought toen-oin, rst, preliminarily and then, after trial,

permanently@ 5%6 defendants !141TL, C!1, and)rancisco guirre and their agents and businessassociates, to cease and desist from selling orattempting to sell to L!T and to any other party,products which have been copied or manufactured "inlike manner, similar or identical to the products, waresand equipment of plainti>," and 5*6 defendant 3C,to cease and desist from using in its corporate name,letter heads, envelopes, sign boards and businessdealings, plainti>+s trademark, internationally knownas 1T2C@ and the recovery from defendants in solidum,

damages of at least A==,===.==, attorney+s fees andlitigation e:penses.

1n due time, defendants led a motion to dismiss /thecomplaint on the following grounds

5%6 That plainti> has no legal capacity to sue as it is aforeign corporation doing business in the hilippineswithout the required B(1 authority and 32C license,and 5*6 that plainti> is simply engaged in forumshopping which -usties the application against it of

the principle of "forum non conveniens".

(n )ebruary


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DE2'2)('2, the present motion forreconsideration should be, as it is hereby,denied for lack of merit. )or the same reason,the motion to have the motion forreconsideration set for oral argument likewiseshould be and is hereby denied.

3( ('!2'2!.

1

etitioners are now before us via etition for 'eviewon Certiorari1under 'ule ;A of the 'evised 'ules ofCourt.

1t is the petitioners+ submission that privaterespondents are foreign corporations actually doingbusiness in the hilippines without the requisiteauthority and license from the Board of 1nvestmentsand the 3ecurities and 2:change Commission, and

thus, disqualied from instituting the present action inour courts. 1t is their contention that the provisions ofthe 'epresentative greement, petitioner 3Ce:ecuted with private respondent 1T2C, are similarly"highly restrictive" in nature as those found in theagreements which confronted the Court in the caseof Top-Weld Manufacturing,Inc.vs. ECED S.A.etal.,16as to reduce petitioner 3C to a mere conduitor e:tension of private respondents in the hilippines.

1n that case, we ruled that respondent foreign

corporations are doing business in the hilippinesbecause when the respondents entered into thedisputed contracts with the petitioner, they werecarrying out the purposes for which they werecreated, i.e., to manufacture and market weldingproducts and equipment. The terms and conditions ofthe contracts as well as the respondents+ conductindicate that they established within our country acontinuous business, and not merely one of atemporary character. The respondents could bee:empted from the requirements of 'epublic ct A;AA

if the petitioner is an independent entity which buys

and distributes products not only of the petitioner, butalso of other manufacturers or transacts business in itsname and for its account and not in the name or forthe account of the foreign principal. reading of theagreements between the petitioner and therespondents shows that they are highly restrictive innature, thus making the petitioner a mere conduit ore:tension of the respondents.

1t is alleged that certain provisions of the"'epresentative greement" e:ecuted by the partiesare similar to those found in the License greement ofthe parties in the Top7Deld case which were consideredas "highly restrictive" by this Court. The provisions inpoint are

*.= Terms and Conditions of 3ales.

*.% 3ale of 1T2C products shall be at thepurchase price set by 1T2C from time to time./nless otherwise e:pressly agreed to in writingby 1T2C the purchase price is net to 1T2C anddoes not include any transportation charges,import charges or ta:es into or within the

Territory. ll orders from customers are sub-ectto formal acceptance by 1T2C at its Euntsville,labama /.3.. facility.

::: ::: :::

?.= !uties of 'epresentative

?.%. '2'2320TT1F2 3ELL

?.%.%. 0ot represent or o>er for sale within theTerritory any product which competes with ane:isting 1T2C product or any product which 1T2Chas under active development.


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?.%.*. ctively solicit all potential customerswithin the Territory in a systematic and businesslike manner.

?.%.?. 1nform 1T2C of all request for proposals,requests for bids, invitations to bid and the likewithin the Territory.

?.%.;. ttain the nnual 3ales 4oal for theTerritory established by 1T2C. The 3ales 4oalsfor the rst *; months is set forth onttachment two 5*6 hereto. The 3ales 4oal foradditional twelve month periods, if any, shall besent to the 3ales gent by 1T2C at the beginningof each period. These 3ales 4oals shall beincorporated into this greement and made apart hereof.

::: ::: :::

.=. 'epresentative as 1ndependent Contractor

::: ::: :::

.*. Dhen acting under this greement'2'2320TT1F2 is authori9ed to solicit saleswithin the Territory on 1T2C+s behalf but isauthori9ed to bind 1T2C only in its capacity as'epresentative and no other, and then only to

specic customers and on terms and conditionse:pressly authori9ed by 1T2C in writing.1/

side from the abovestated provisions, petitionerspoint out the following matters of record, whichallegedly bear witness to the respondents+ activitieswithin the hilippines in pursuit of their businessdealings

a. Dhile petitioner 3C was the authori9ed

e:clusive representative for three 5?6 years, itsolicited from and closed several sales for and

on behalf of private respondents as to theirproducts only and no other, to L!T, worth noless than /3 G %A illion 5p. *=, tsn, )eb. %


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al.19and again in T(7D2L!. 5supra6" 1t thus appearsthat as the respondent Court of ppeals and the trialcourt+s failure to give credence on the grounds reliedupon in support of their otion to !ismiss thatpetitioners ascribe grave abuse of discretionamounting to an e:cess of -urisdiction of said courts.

etitioners likewise argue that since privaterespondents have no capacity to bring suit here, thehilippines is not the "most convenient forum"because the trial court is devoid of any power toenforce its orders issued or decisions rendered in acase that could not have been commenced to beginwith, such that in insisting to assume and e:ercise

-urisdiction over the case below, the trial court hadgravely abused its discretion and even actuallye:ceeded its -urisdiction.

s against petitioner+s insistence that private respondent is"doing business" in the hilippines, the latter maintains thatit is not.

De can discern from a reading of 3ection % 5f6 5%6 and % 5f65*6 of the 'ules and 'egulations 1mplementing the (mnibus1nvestments Code of %&


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independence of 3C, private respondent echoesthe respondent court+s nding that the lower court didnot commit grave abuse of discretion nor acted ine:cess of -urisdiction when it found that the groundrelied upon by the petitioners in their motion todismiss does not appear to be indubitable.23

The issues before us now are whether or not privaterespondent 1T2C is an unlicensed corporation doingbusiness in the hilippines, and if it is, whether or notthis fact bars it from invoking the in-unctive authorityof our courts.

Considering the above, it is necessary to state what ismeant by "doing business" in the hilippines. 3ection%?? of the Corporation Code, provides that "0o foreigncorporation, transacting business in the hilippineswithout a license, or its successors or assigns, shall be

permitted to maintain or intervene in any action, suitor proceeding in any court or administrative agency ofthe hilippines@ but such corporation may be sued orproceeded against before hilippine Courts oradministrative tribunals on any valid cause of actionrecogni9ed under hilippine laws."2

4enerally, a "foreign corporation" has no legale:istence within the state in which it is foreign. Thisproceeds from the principle that -uridical e:istence of acorporation is conned within the territory of the state

under whose laws it was incorporated and organi9ed,and it has no legal status beyond such territory. 3uchforeign corporation may be e:cluded by any otherstate from doing business within its limits, orconditions may be imposed on the e:ercise of suchprivileges.2Before a foreign corporation can transactbusiness in this country, it must rst obtain a licenseto transact business in the hilippines, and acerticate from the appropriate government agency. 1fit transacts business in the hilippines without such alicense, it shall not be permitted to maintain or

intervene in any action, suit, or proceeding in any

court or administrative agency of the hilippines, but itmay be sued on any valid cause of action recogni9edunder hilippine laws.26

1n a long line of decisions, this Court has not altogetherprohibited foreign corporation not licensed to dobusiness in the hilippines from suing or maintainingan action in hilippine Courts. Dhat it seeks to preventis a foreign corporation doing business in thehilippines without a licensed from gaining access tohilippine Courts.2/

The purpose of the law in requiring that foreigncorporations doing business in the hilippines belicensed to do so and that they appoint an agent forservice of process is to sub-ect the foreign corporationdoing business in the hilippines to the -urisdiction ofits courts. The ob-ect is not to prevent the foreign

corporation from performing single acts, but to preventit from acquiring a domicile for the purpose of businesswithout taking steps necessary to render it amenableto suit in the local courts. 2The implication of the lawis that it was never the purpose of the legislature toe:clude a foreign corporation which happens to obtainan isolated order for business from the hilippines, andthus, in e>ect, to permit persons to avoid theircontracts made with such foreign corporations.29

There is no e:act rule or governing principle as to what

constitutes "doing" or "engaging" or "transacting"business. 1ndeed, such case must be -udged in thelight of its peculiar circumstances, upon its peculiarfacts and upon the language of the statute applicable.

The true test, however, seems to be whether theforeign corporation is continuing the body orsubstance of the business or enterprise for which itwas organi9ed.30

rticle ;; of the (mnibus 1nvestments Code of %&


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soliciting orders, purchases, service contracts,opening oHces, whether called "liaison" oHcesor branches@ appointing representatives ordistributors who are domiciled in the hilippinesor who in any calendar year stay in thehilippines for a period or periods totalling onehundred eighty 5%erent shipments to the hilippines 31and aforeign corporation which had been collectingpremiums on outstanding policies 32were regarded asdoing business here.

The same rule was observed relating to a foreigncorporation with an "e:clusive distributing agent" inthe hilippines, and which has been selling its productshere since %&*&,33and a foreign corporation engaged

in the business of manufacturing and sellingcomputers worldwide, and had installed at least *di>erent products in several corporations in thehilippines, and allowed its registered logo andtrademark to be used and made it known that theree:ists a designated distributor in the hilippines.3

1n $eorg $rot%a&n $M' and Co.vs. Isnani,3it washeld that the uninterrupted performance by a foreigncorporation of acts pursuant to its primary purposesand functions as a regional area headquarters for its

home oHce, qualies such corporation as one doingbusiness in the country.

These foregoing instances should be distinguishedfrom a single or isolated transaction or occasional,incidental, or casual transactions, which do not comewithin the meaning of the law,36for in such case, theforeign corporation is deemed not engaged in businessin the hilippines.

Dhere a single act or transaction, however, is notmerely incidental or casual but indicates the foreigncorporation+s intention to do other business in thehilippines, said single act or transaction constitutes"doing" or "engaging in" or "transacting" business inthe hilippines.3/

1n determining whether a corporation does business in

the hilippines or not, aside from their activities withinthe forum, reference may be made to the contractualagreements entered into by it with other entities in thecountry. Thus, in the Top7Deld case 5supra6, the foreigncorporation+s L1C2032 0! T2CE01CL 4'2220Tand !13T'1B/T(' 4'2220T with their localcontacts were made the basis of their being regardedby this Tribunal as corporations doing business in thecountry. Likewise, in Merill L(nc& )utures,Inc.vs.Courtof Appeals# etc. 3the )/T/'23 C(0T'CT enteredinto by the petitioner foreign corporation weighed

heavily in the court+s ruling.

Dith the abovestated precedents in mind, we arepersuaded to conclude that private respondent hadbeen "engaged in" or "doing business" in thehilippines for some time now. This is the inevitableresult after a scrutiny of the di>erent contracts andagreements entered into by 1T2C with its variousbusiness contacts in the country, particularly 3Cand Telephone 2quipment 3ales and 3ervices, 1nc.5T2331, for brevity6. The latter is a local electronics rm

engaged by 1T2C to be its local technical


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representative, and to create a service center for 1T2Cproducts sold locally. 1ts arrangements, with theseentities indicate convincingly 1T2C+s purpose to bringabout the situation among its customers and thegeneral public that they are dealing directly with 1T2C,and that 1T2C is actively engaging in business in thecountry.

1n its aster 3ervice greement39with T2331, privaterespondent required its local technical representativeto provide the employees of the technical and servicecenter with 1T2C identication cards and businesscards, and to correspond only on 1T2C, 1nc., letterhead.

T2331 personnel are instructed to answer thetelephone with "1T2C Technical ssistance Center.",such telephone being listed in the telephone bookunder the heading of 1T2C Technical ssistance Center,and all calls being recorded and forwarded to 1T2C on a

weekly basis.

Dhat is more, T2331 was obliged to provide 1T2C with amonthly report detailing the failure and repair of 1T2Cproducts, and to requisition monthly the materials andcomponents needed to replace stock consumed in thewarranty repairs of the prior month.

perusal of the agreements between petitioner 3Cand the respondents shows that there are provisionswhich are highly restrictive in nature, such as to

reduce petitioner 3C to a mere e:tension orinstrument of the private respondent.

The "0o Competing roduct" provision of the'epresentative greement between 1T2C and 3Cprovides "The 'epresentative shall not represent oro>er for sale within the Territory any product whichcompetes with an e:isting 1T2C product or any productwhich 1T2C has under active development." Likewisepertinent is the following provision "Dhen actingunder this greement, '2'2320TT1F2 is authori9ed

to solicit sales within the Territory on 1T2C+s behalf but

is authori9ed to bind 1T2C only in its capacity as'epresentative and no other, and then only to speciccustomers and on terms and conditions e:presslyauthori9ed by 1T2C in writing."

Dhen 1T2C entered into the disputed contracts with3C and T2331, they were carrying out the purposesfor which it was created, i.e., to market electronics andcommunications products. The terms and conditions ofthe contracts as well as 1T2C+s conduct indicate thatthey established within our country a continuousbusiness, and not merely one of a temporarycharacter.0

0otwithstanding such nding that 1T2C is doingbusiness in the country, petitioner is nonethelessestopped from raising this fact to bar 1T2C frominstituting this in-unction case against it.

foreign corporation doing business in the hilippinesmay sue in hilippine Courts although not authori9edto do business here against a hilippine citi9en orentity who had contracted with and beneted by saidcorporation.1To put it in another way, a party isestopped to challenge the personality of a corporationafter having acknowledged the same by entering intoa contract with it. nd the doctrine of estoppel to denycorporate e:istence applies to a foreign as well as todomestic corporations.2(ne who has dealt with a

corporation of foreign origin as a corporate entity isestopped to deny its corporate e:istence and capacity

The principle will be applied to prevent a personcontracting with a foreign corporation from later takingadvantage of its noncompliance with the statuteschieIy in cases where such person has received thebenets of the contract.3

The rule is deeply rooted in the time7honored a:iomof Commodum e* in%uria sua non &abere debetJ noperson ought to derive any advantage of his own

wrong. This is as it should be for as mandated by law,


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"every person must in the e:ercise of his rights and inthe performance of his duties, act with -ustice, giveeveryone his due, and observe honesty and goodfaith."

Concededly, corporations act through agents, likedirectors and oHcers. Corporate dealings must becharacteri9ed by utmost good faith and fairness.Corporations cannot -ust feign ignorance of the legalrules as in most cases, they are manned bysophisticated oHcers with tried management skills andlegal e:perts with practiced eye on legal problems.2ach party to a corporate transaction is e:pected toact with utmost candor and fairness and, thereby allowa reasonable proportion between benets ande:pected burdens. This is a norm which should beobserved where one or the other is a foreign entityventuring in a global market.

s observed by this Court in T(7D2L! 5supra6, vi"

The parties are charged with knowledge of the e:istinglaw at the time they enter into a contract and at thetime it is to become operative. 5Twiehaus v. 'osner,*;A 3D *d %=$@ Eall v. Bucher, **$ 3D *d &


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deemed to have acceded to such independentcharacter when it entered into the 'epresentativegreement with 1T2C, particularly, provision .*5supra6.

etitioner+s insistence on the dismissal of this actiondue to the application, or non application, of theprivate international law rule of forum nonconveniensdees well7settled rules of fair play.ccording to petitioner, the hilippine Court has novenue to apply its discretion whether to givecogni9ance or not to the present action, because it hasnot acquired -urisdiction over the person of the plainti>in the case, the latter allegedly having no personalityto sue before hilippine Courts. This argument ismisplaced because the court has already acquired

-urisdiction over the plainti> in the suit, by virtue of hisling the original complaint. nd as we have already

observed, petitioner is not at liberty to questionplainti>+s standing to sue, having already acceded tothe same by virtue of its entry into the 'epresentativegreement referred to earlier.

Thus, having acquired -urisdiction, it is now for thehilippine Court, based on the facts of the case,whether to give due course to the suit or dismiss it, onthe principle of forum non convenience./Eence, thehilippine Court may refuse to assume -urisdiction inspite of its having acquired -urisdiction. Conversely,

the court may assume -urisdiction over the case if itchooses to do so@ provided, that the followingrequisites are met %6 That the hilippine Court is oneto which the parties may conveniently resort to@ *6

That the hilippine Court is in a position to make anintelligent decision as to the law and the facts@ and, ?6

That the hilippine Court has or is likely to have powerto enforce its decision.

The aforesaid requirements having been met, and inview of the court+s disposition to give due course to

the questioned action, the matter of the present forum

not being the "most convenient" as a ground for thesuit+s dismissal, deserves scant consideration.

10 F12D () TE2 )('24(104 '21323, the instantetition is hereby !131332!. The decision of the Courtof ppeals dated #une $, %&&%, upholding the 'TC(rder dated )ebruary **, %&&%, denying thepetitioners+ otion to !ismiss, and ordering theissuance of the Drit of reliminary 1n-unction, is herebyaHrmed in toto.

3( ('!2'2!.

G.R. No. 1130/ )u!% 22, 199/AL+RED &A&N, petitioner,

vs.COURT O+ APPEALS )* AERSC&E MOTOREN ER4E

A4TIENGSELLSC&A+T (M', respondents.

MENDO5A, J.:

This is a petition for review of the decision1of the Court of

ppeals dismissing a complaint for specic performance


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which petitioner had led against private respondent on theground that the 'egional Trial Court of Kue9on City did notacquire -urisdiction over private respondent, a nonresidentforeign corporation, and of the appellate court+s orderdenying petitioner+s motion for reconsideration.

The following are the facts

etitioner lfred Eahn is a )ilipino citi9en doing businessunder the name and style "Eahn7anila." (n the other hand,private respondent Bayerische otoren Derkektiengesellschaft 5BD6 is a nonresident foreign corporatione:isting under the laws of the former )ederal 'epublic of4ermany, with principal oHce at unich, 4ermany.

(n arch $, %&$, petitioner e:ecuted in favor of privaterespondent a "!eed of ssignment with 3pecial ower ofttorney," which reads in full as follows

DE2'23, the 33140(' is the present owner andholder of the BD trademark and device in thehilippines which 33140(' uses and has been usingon the products manufactured by 3314022, and forwhich 33140(' is the authori9ed e:clusive !ealer ofthe 3314022 in the hilippines, the same beingevidenced by certicate of registration issued by the!irector of atents on %* !ecember %&? and isreferred to as Trademark 0o. %=*A@

DE2'23, the 33140(' has agreed to transfer andconsequently record said transfer of the said BDtrademark and device in favor of the 3314022 hereinwith the hilippines atent (Hce@

0(D TE2'2)('2, in view of the foregoing and inconsideration of the stipulations hereunder stated, the33140(' hereby aHrms the said assignment andtransfer in favor of the 3314022 under the followingterms and conditions

%. The 3314022 shall take appropriate steps againstany user other than 33140(' or infringer of the BDtrademark in the hilippines@ for such purpose, the33140(' shall inform the 3314022 immediately ofany such use or infringement of the said trademarkwhich comes to his knowledge and upon suchinformation the 33140(' shall automatically act asttorney71n7)act of the 3314022 for such case, withfull power, authority and responsibility to prosecuteunilaterally or in concert with 3314022, any suchinfringer of the sub-ect mark and for purposes hereofthe 33140(' is hereby named and constituted as3314022+s ttorney71n7)act, but any such suit without3314022+s consent will e:clusively be theresponsibility and for the account of the 33140(',

*. That the 33140(' and the 3314022 shallcontinue business relations as has been usual in the

past without a formal contract, and for that purpose,the dealership of 33140(' shall cover the3314022+s complete production program with theonly limitation that, for the present, in view of3314022+s limited production, the latter shall not beable to supply automobiles to 33140('.

er the agreement, the parties "continuedM businessrelations as has been usual in the past without a formalcontract." But on )ebruary %, %&&?, in a meeting with aBD representative and the president of Columbia otors

Corporation 5CC6, #ose lvare9, petitioner was informed thatBD was arranging to grant the e:clusive dealership of BDcars and products to CC, which had e:pressed interest inacquiring the same. (n )ebruary *;, %&&?, petitionerreceived conrmation of the information from BD which, ina letter, e:pressed dissatisfaction with various aspects ofpetitioner+s business, mentioning among other things, declinein sales, deteriorating services, and inadequate showroomand warehouse facilities, and petitioner+s alleged failure tocomply with the standards for an e:clusive BDdealer.20onetheless, BD e:pressed willingness to continue

business relations with the petitioner on the basis of a"standard BD importer" contract, otherwise, it said, if this


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was not acceptable to petitioner, BD would have noalternative but to terminate petitioner+s e:clusive dealershipe>ective #une ?=, %&&?.

etitioner protested, claiming that the termination of hise:clusive dealership would be a breach of the !eed ofssignment.3Eahn insisted that as long as the assignment ofits trademark and device subsisted, he remained BD+se:clusive dealer in the hilippines because the assignmentwas made in consideration of the e:clusive dealership. 1n thesame letter petitioner e:plained that the decline in sales wasdue to lower prices o>ered for BD cars in the /nited 3tatesand the fact that few customers returned for repairs andservicing because of the durability of BD parts and theeHciency of petitioner+s service.

Because of Eahn+s insistence on the former business relation,BD withdrew on arch *, %&&? its o>er of a "standard

importer contract" and terminated the e:clusive dealerrelationship e>ective #une ?=, %&&?. t a conference ofBD 'egional 1mporters held on pril *, %&&? in 3ingapore,Eahn was surprised to nd lvare9 among those invited fromthe sian region. (n pril *&, %&&?, BD proposed that Eahnand CC -ointly import and distribute BD cars and parts.

Eahn found the proposal unacceptable. (n ay %;, %&&?, heled a complaint for specic performance and damagesagainst BD to compel it to continue the e:clusivedealership. Later he led an amended complaint to include

an application for temporary restraining order and for writs ofpreliminary, mandatory and prohibitory in-unction to en-oinBD from terminating his e:clusive dealership. Eahn+samended complaint alleged in pertinent parts

*. !efendant BDM is a foreign corporation doingbusiness in the hilippines with principal oHces atunich, 4ermany. 1t may be served with summons andother court processes through the 3ecretary of the!epartment of Trade and 1ndustry of the hilippines. . ..

::: ::: :::

A. (n arch $, %&$, lainti> e:ecuted in favor ofdefendant BD a !eed of ssignment with 3pecialower of ttorney covering the trademark and inconsideration thereof, under its rst whereas clause,lainti> was duly acknowledged as the "e:clusive!ealer of the ssignee in the hilippines. . . .

::: ::: :::

in the hilippines up to thepresent, lainti>, through its rm name "EE001L" and without any monetary contribution fromdefendant BD, established BD+s goodwill andmarket presence in the hilippines. ursuant thereto,lainti> has invested a lot of money and resources in

order to single7handedly compete against othermotorcycle and car companies. . . . oreover, lainti>has built buildings and other infrastructures such asservice centers and showrooms to maintain andpromote the car and products of defendant BD.

::: ::: :::

%=. 1n a letter dated )ebruary *;, %&&?, defendantBD advised lainti> that it was willing to maintainwith lainti> a relationship but only "on the basis of a

standard BD importer contract as ad-usted to reIectthe particular situation in the hilippines" sub-ect tocertain conditions, otherwise, defendant BD wouldterminate lainti>s e:clusive dealership and anyrelationship for cause e>ective #une ?=, %&&?. . . .

::: ::: :::

%A. The actuations of defendant BD are in breach ofthe assignment agreement between itself and plainti>since the consideration for the assignment of the BDtrademark is the continuance of the e:clusive


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dealership agreement. 1t thus, follows that thee:clusive dealership should continue for so long asdefendant BD en-oys the use and ownership of thetrademark assigned to it by lainti>.

The case was docketed as Civil Case 0o. K7&?7%A&?? andraOed to Branch %=; of the Kue9on City 'egional Trial Court,which on #une %;, %&&? issued a temporary restraining order.3ummons and copies of the complaint and amendedcomplaint were thereafter served on the private respondentthrough the !epartment of Trade and 1ndustry, pursuant to'ule %;, P%; of the 'ules of Court. The order, summons andcopies of the complaint and amended complaint were latersent by the !T1 to BD via registered mail on #une %A,%&&?and received by the latter on #une *;, %&&?.

(n #une %$, %&&?, without proof of service on BD, thehearing on the application for the writ of preliminary

in-unction proceeded e* parte, with petitioner Eahntestifying. (n #une ?=, %&&?, the trial court issued an ordergranting the writ of preliminary in-unction upon the ling of abond of %==,===.==. (n #uly %?, %&&?, following the postingof the required bond, a writ of preliminary in-unction wasissued.

(n #uly %, %&&?, BD moved to dismiss the case, contendingthat the trial court did not acquire -urisdiction over it throughthe service of summons on the !epartment of Trade and1ndustry, because it 5BD6 was a foreign corporation and it

was not doing business in the hilippines. 1t contended thatthe e:ecution of the !eed of ssignment was an isolatedtransaction@ that Eahn was not its agent because the latterundertook to assemble and sell BD cars and productswithout the participation of BD and sold other products@and that Eahn was an indentor or middleman transactingbusiness in his own name and for his own account.

etitioner lfred Eahn opposed the motion. Ee argued thatBD was doing business in the hilippines through him as itsagent, as shown by the fact that BD invoices and order

forms were used to document his transactions@ that he gave

warranties as e:clusive BD dealer@ that BD oHcialsperiodically inspected standards of service rendered by him@and that he was described in service booklets andinternational publications of BD as a "BD 1mporter" or"BD Trading Company" in the hilippines.

The trial court6deferred resolution of the motion to dismissuntil after trial on the merits for the reason that the groundsadvanced by BD in its motion did not seem to beindubitable.

Dithout seeking reconsideration of the aforementioned order,BD led a petition for certiorari with the Court of ppealsalleging that

1. TE2 '23(0!20T #/!42 CT2! D1TE /0!/2E3T2 (' (TE2'D132 10#/!1C1(/3LQ 10'(C22!1043 L2!104 T(D'! TE2 133/0C2 ()

TE2 D'1T () '2L110'Q 10#/0CT1(0, 0! 10'23C'1B104 TE2 T2'3 )(' TE2 133/0C2TE2'2().

11. TE2 '23(0!20T #/!42 T20TLQ 2''2! 10!2)2''104 '23(L/T1(0 () TE2 (T1(0 T( !13133(0 TE2 4'(/0! () LCR () #/'13!1CT1(0, 0!

TE2'2BQ )1L104 T( 12!1T2LQ !13133 TE2C32A +,.

BD asked for the immediate issuance of a temporary

restraining order and, after hearing, for a writ of preliminaryin-unction, to en-oin the trial court from proceeding further inCivil Case 0o. K7&?7%A&??. rivate respondent pointed outthat, unless the trial court+s order was set aside, it would beforced to submit to the -urisdiction of the court by ling itsanswer or to accept -udgment in default, when the veryquestion was whether the court had -urisdiction over it.

The Court of ppeals en-oined the trial court from hearingpetitioner+s complaint. (n !ecember *=, %&&?, it rendered

-udgment nding the trial court guilty of grave abuse of


14/43

discretion in deferring resolution of the motion to dismiss. 1tstated

4oing by the pleadings already led with therespondent court before it came out with itsquestioned order of #uly *, %&&?, we rule and so holdthat petitioner+s 5BD6 motion to dismiss could beresolved then and there, and that the respondent

-udge+s deferment of his action thereon until after trialon the merit constitutes, to our mind, grave abuse ofdiscretion.

::: ::: :::

. . . TMhere is not much appreciable disagreement asregards the factual matters relating to the motion todismiss. Dhat truly divide 5sic6 the parties and towhich they greatly di>er is the legal conclusions they

respectively draw from such facts, 5sic6 with Eahnmaintaining that on the basis thereof, BD is doingbusiness in the hilippines while the latter asserts thatit is not.

Then, after stating that any ruling which the trial court mightmake on the motion to dismiss would anyway be elevated toit on appeal, the Court of ppeals itself resolved the motion.1t ruled that BD was not doing business in the country and,therefore, -urisdiction over it could not be acquired throughservice of summons on the !T1 pursuant to 'ule %;, P%;. +The

court upheld private respondent+s contention that Eahnacted in his own name and for his own account andindependently of BD, based on lfred Eahn+s allegationsthat he had invested his own money and resources inestablishing BD+s goodwill in the hilippines and on BD+sclaim that Eahn sold products other than those of BD. 1theld that petitioner was a mere indentor or broker and not anagent through whom private respondent BD transactedbusiness in the hilippines. Consequently, the Court ofppeals dismissed petitioner+s complaint against BD.

Eence, this appeal. etitioner contends that the Court ofppeals erred 5%6 in nding that the trial court gravelyabused its discretion in deferring action on the motion todismiss and 5*6 in nding that private respondent BD is notdoing business in the hilippines and, for this reason,dismissing petitioner+s case.

etitioner+s appeal is well taken. 'ule %;, P%; provides

P%;. Service upon private foreign corporations. J 1f thedefendant is a foreign corporation, or a nonresident

-oint stock company or association, doing business inthe hilippines, service may be made on its residentagent designated in accordance with law for thatpurpose, or, if there be no such agent, on thegovernment oHcial designated by law to that e>ect, oron any of its oHcers or agents within the hilippines.52mphasis added6.

Dhat acts are considered "doing business in the hilippines"are enumerated in P?5d6 of the )oreign 1nvestments ct of%&&% 5'.. 0o. $=;*6 as follows /

d6 the phrase "doing business" shall include solicitingorders, service contracts, opening oHces, whethercalled "liaison" oHces or branches@ appointingrepresentatives or distributors domiciled in t&e.&ilippines or who in any calendar year stay in thecountry for a period or periods totalling one hundred

eighty 5%


15/43

entity in domestic corporations duly registered to dobusiness, and8or the e:ercise of rights as suchinvestor@ nor having a nominee director or oHcer torepresent its interests in such corporation@ norappointing a representative or distributor domiciled int&e .&ilippines /&ic& transacts business in its o/nname and for its o/n account. 52mphasis supplied6

Thus, the phrase includes "appointing representatives ordistributors in the hilippines" but not when therepresentative or distributor "transacts business in its nameand for its own account." 1n addition, P%5f65%6 of the 'ules and'egulations implementing 51''6 the (mnibus 1nvestmentCode of %&, through its rm name "EE001L" and without any monetary contributions fromdefendant BD, established BD+s goodwill andmarket presence in the hilippines. ursuant thereto,lainti> invested a lot of money and resources in orderto single7handedly compete against other motorcycleand car companies. . . . oreover, lainti> has builtbuildings and other infrastructures such as servicecenters and showrooms to maintain and promote thecar and products of defendant BD.

s the above quoted allegations of the amended complaintshow, however, there is nothing to support the appellatecourt+s nding that Eahn solicited orders alone and for hisown account and without "interference from, let alonedirection of, BD." 5p. %?6 To the contrary, Eahn claimed hetook orders for BD cars and transmitted them to BD./pon receipt of the orders, BD :ed the downpayment andpricing charges, notied Eahn of the scheduled production

month for the orders, and reconrmed the orders by signingand returning to Eahn the acceptance sheets. ayment wasmade by the buyer directly to BD. Title to cars purchasedpassed directly to the buyer and Eahn never paid for thepurchase price of BD cars sold in the hilippines. Eahn wascredited with a commission equal to %;S of the purchaseprice upon the invoicing of a vehicle order by BD. /ponconrmation in writing that the vehicles had been registeredin the hilippines and serviced by him, Eahn received anadditional ?S of the full purchase price. Eahn performedafter7sale services, including warranty services, for which he

received reimbursement from BD. ll orders were oninvoices and forms of BD.


16/43

These allegations were substantially admitted by BD which,in its petition for certiorari before the Court of ppeals,stated9

&.;. s soon as the vehicles are fully manufacturedand full payment of the purchase prices are made, thevehicles are shipped to the hilippines. 5The paymentsmay be made by the purchasers or third7persons oreven by Eahn.6 The bills of lading are made up in thename of the purchasers, but Eahn7anila is thereinindicated as the person to be notied.

&.A. 1t is Eahn who picks up the vehicles from thehilippine ports, for purposes of conducting pre7delivery inspections. Thereafter, he delivers thevehicles to the purchasers.

&.. s soon as BD invoices the vehicle ordered,

Eahn is credited with a commission of fourteenpercent 5%;S6 of the full purchase price thereof, andas soon as he conrms in writing that the vehicleshave been registered in the hilippines and have beenserviced by him, he will receive an additional threepercent 5?S6 of the full purchase prices ascommission.

Contrary to the appellate court+s conclusion, thisarrangement shows an agency. n agent receives acommission upon the successful conclusion of a sale. (n the

other hand, a broker earns his pay merely by bringing thebuyer and the seller together, even if no sale is eventuallymade.

s to the service centers and showrooms which he said hehad put up at his own e:pense, Eahn said that he had tofollow BD specications as e:clusive dealer of BD in thehilippines. ccording to Eahn, BD periodically inspectedthe service centers to see to it that BD standards weremaintained. 1ndeed, it would seem from BD+s letter to Eahnthat it was for Eahn+s alleged failure to maintain BD

standards that BD was terminating Eahn+s dealership.

The fact that Eahn invested his own money to put up theseservice centers and showrooms does not necessarily provethat he is not an agent of BD. )or as already noted, thereare facts in the record which suggest that BD e:ercisedcontrol over Eahn+s activities as a dealer and made regularinspections of Eahn+s premises to enforce compliance withBD standards and specications.10)or e:ample, in its letterto Eahn dated )ebruary *?, %&&, BD stated

1n the last years we have pointed out to you in severaldiscussions and letters that we have to tackle thehilippine market more professionally and that we arethrough your present activities not adequatelyprepared to cope with the forthcoming challenges.11

1n e>ect, BD was holding Eahn accountable to it under the%&$ greement.

This case ts into the mould of Communications Materials#Inc.v.Court of Appeals,12in which the foreign corporationentered into a "'epresentative greement" and a "Licensinggreement" with a domestic corporation, by virtue of whichthe latter was appointed "e:clusive representative" in thehilippines for a stipulated commission. ursuant to thesecontracts, the domestic corporation sold products e:portedby the foreign corporation and put up a service center for theproducts sold locally. This Court held that these actsconstituted doing business in the hilippines. Thearrangement showed that the foreign corporation+s purpose

was to penetrate the hilippine market and establish itspresence in the hilippines.

1n addition, BD held out private respondent Eahn as itse:clusive distributor in the hilippines, even as it announcedin the sian region that Eahn was the "oHcial BD agent" inthe hilippines.13

The Court of ppeals also found that petitioner lfred Eahndealt in other products, and not e:clusively in BD products,and, on this basis, ruled that Eahn was not an agent of BD.

5p. %;6 This nding is based entirely on allegations of BD in


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its motion to dismiss led in the trial court and in its petitionfor certioraribefore the Court of ppeals.1But thisallegation was denied by Eahn1and therefore the Court ofppeals should not have cited it as if it were the fact.

1ndeed this is not the only factual issue raised, which shouldhave indicated to the Court of ppeals the necessity ofaHrming the trial court+s order deferring resolution of BD+smotion to dismiss. etitioner alleged that whether or not he isconsidered an agent of BD, the fact is that BD didbusiness in the hilippines because it sold cars directly tohilippine buyers. 16This was denied by BD, which claimedthat Eahn was not its agent and that, while it was true that ithad sold cars to hilippine buyers, this was done withoutsolicitation on its part.1/

1t is not true then that the question whether BD is doingbusiness could have been resolved simply by considering the

parties+ pleadings. There are genuine issues of facts whichcan only be determined on the basis of evidence dulypresented. BD cannot short circuit the process on the pleathat to compel it to go to trial would be to deny its right notto submit to the -urisdiction of the trial court which preciselyit denies. 'ule %, P? authori9es courts to defer the resolutionof a motion to dismiss until after the trial if the ground onwhich the motion is based does not appear to be indubitable.Eere the record of the case bristles with factual issues and itis not at all clear whether some allegations correspond to theproof.

nyway, private respondent need not apprehend that byresponding to the summons it would be waiving its ob-ectionto the trial court+s -urisdiction. 1t is now settled that, forpurposes of having summons served on a foreign corporationin accordance with 'ule %;, P%;, it is suHcient that it bealleged in the complaint that the foreign corporation is doingbusiness in the hilippines. The court need not go beyond theallegations of the complaint in order to determine whether ithas #urisdiction.1 determination that the foreigncorporation is doing business is only tentative and is made

only for the purpose of enabling the local court to acquire

-urisdiction over the foreign corporation through service ofsummons pursuant to 'ule %;, P%;. 3uch determination doesnot foreclose a contrary nding should evidence later showthat it is not transacting business in the country. s this Courthas e:plained

This is not to say, however, that the petitioner+s rightto question the -urisdiction of the court over its personis now to be deemed a foreclosed matter. 1f it is true,as 3ignetics claims, that its only involvement in thehilippines was through a passive investment in 3igl,which it even later disposed of, and that T2 acicis not its agent, then it cannot really be said to bedoing business in the hilippines. 1t is a defense,however, that requires the contravention of theallegations of the complaint, as well as a fullventilation, in e>ect, of the main merits of the case,which should not thus be within the province of a meremotion to dismiss. 3o, also, the issue posed by thepetitioner as to whether a foreign corporation whichhas done business in the country, but which hasceased to do business at the time of the ling of acomplaint, can still be made to answer for a cause ofaction which accrued while it was doing business, isanother matter that would yet have to await thereception and admission of evidence. 3ince thesepoints have seasonably been raised by the petitioner,there should be no real cause for what mayunderstandably be its apprehension,i.e., that by its

participation during the trial on the merits, it may,absent an invocation of separate or independentreliefs of its own, be considered to have voluntarilysubmitted itself to the court+s -urisdiction.19

)ar from committing an abuse of discretion, the trial courtproperly deferred resolution of the motion to dismiss andthus avoided prematurely deciding a question which requiresa factual basis, with the same result if it had denied themotion and conditionally assumed -urisdiction. 1t is the Courtof ppeals which, by ruling that BD is not doing business

on the basis merely of uncertain allegations in the pleadings,disposed of the whole case with nality and thereby deprived


18/43

petitioner of his right to be heard on his cause of action. 0orwas there -ustication for nullifying the writ of preliminaryin-unction issued by the trial court. lthough the in-unctionwas issued e* parte, the fact is that BD was subsequentlyheard on its defense by ling a motion to dismiss.

DE2'2)('2, the decision of the Court of ppeals is'2F2'32! and the case is '20!2! to the trial court forfurther proceedings.

3( ('!2'2!.

G.R. No. 13/23 u)# 2, 2001LITONUA GROUP O+ COMPANIES, EDDIE LITONUA )*

DANILO LITONUA, #t7t7o)#!s,8s.

TERESITA IGAN, !#so)*#)t.GON5AGA-REES, J.:

1n this petition for review on certiorari, petitioners seek toannul and set aside the 5%6 decision%of the respondent Courtof ppeals dated arch *=, *=== which reversed and setaside the decision of the 0ational Labor 'elationsCommission nding respondent guilty of abandonment and5*6 resolution*dated #une %&, *=== denying petitionersmotion for reconsideration.

The factual backdrop as found by the respondent Court ofppeals is as follows?

"s to the factual milieu, the contending parties havediametrically opposed versions. Figan tells it this way@3he was hired by the Liton-ua 4roup of Companies on)ebruary *, %&$& as tele: operator. Later, she wasassigned as accounting and payroll clerk under thesupervision of !anilo Liton-ua. 3he had beenperforming well until %&&A, when !anilo Liton-ua whowas already naturally a 5sic6 very ill7tempered, ill7

mouthed and violent employer, became more so dueto business problems. 1n fact, a complaint letter5nne: "1", p.


19/43

rollo6 But despite proof that she was not su>ering frompsychosis or organic brain syndrome as certied to bya sychiatrist of !anilo Liton-uas choice 5nne: "E", p.


20/43

!issatised, Figan led a petition for certiorari with therespondent Court of ppeals which rendered its assaileddecision dated arch *=, *=== reversing the 0L'C'esolution. The dispositive portion of the decision readss7appellants,

vs.ANTONIA PACSON, CRISPINO MEDINA )* CRESENCIA

MINA,defendants7appellees.

)4 A4 .elmo0a for plainti6s-appellants4Castelo La/ 7ce for defendants-appellees4

LARADOR, J.:


26/43

This is an appeal from an order of the Court of )irst 1nstanceof 0ueva 2ci-a, Eon. )eli: akasiar, presiding, in its Civil Case0o. ?*&, entitled "Ligaya ina, et al., plainti>s vs. Crispinoedina, et al., defendants," dismissing the complaint led inthis case. The appellant also appeals against the orderdenying the motion for reconsideration of the order ofdismissal.

The facts necessary to understand the nature of the issuespresented in this appeal, as gleaned from the pleadings, maybe brieIy stated as follows lainti>s Ligaya, #aime, 3ilvina,)austa, ablo and iguel, all surnamed ina, are alleged tobe the illegitimate children of the deceased #oaquin ina withplainti> ilar La9o from %&??7%&As, causing them damages amounting to %=,===@ thatplainti>s pray that they be declared recogni9ed illegitimatechildren of the deceased #oaquin ina, entitled to share inthe properties left by him as such illegitimate children@ thatthe deeds of sale, nne:es "B" and "C" be declared ctitious,fraudulent and therefore, null and void@ and that defendants

be required to deliver to plainti>s+ possession one7fourth ofsaid properties together with %=,=== for moral damages.

/pon the ling of the complaint the defendants presented amotion to dismiss the complaint on the ground of res%udicata, alleging that a similar action had previously beenpresented as Civil Case 0o. ?=%A in the same court, and bythe same parties against Crispino edina and Cresenciaina, in which the same allegations of plainti>s+ status andfraudulent conveyance of the properties to defendants arealleged, together with a prayer for moral damages in the sumof *=,===. 1t appears, however, that in the complaint led insaid Civil Case 0o. ?=%A, no prayer is made for thedeclaration of the liation of the plainti>s in relation or withrespect to the deceased #oaquin ina.

The motion to dismiss also copied an order of the courtissued in said Civil Case 0o. ?=%A which reads as follows

cting on the otion led by the defendants on!ecember **, %&A< for the reconsideration of the

order dated !ecember


27/43

5Bri9 v. Bri9, ;? hil. $?6, the plainti>s are herebydirected to amend their complaint within fteen 5%A6days from receipt hereof by including as partydefendant the surviving widow of the deceased

#oaquin ina and other necessary parties.

3hould the plainti>s fail to comply with this order, thiscase will be dismissed.

Lastly, another order of the same court dated )ebruary &,%&A& was quoted, the dispositive part of which reads

The fteen7day period granted to the plainti>s havingelapsed without said order having been complied with,the Court hereby dismisses this case, withoutpronouncement aa to costs.

(pposition to the motion to dismiss was presented on behalf

of the plainti>s by their attorney to which a reply was led onbehalf of the defendants. re-oinder was also led afterwhich #udge 4enaro Tan Torres, then presiding over the court,sustained the motion to dismiss in an order which reads asfollows

fter a careful consideration of the -oint motion todismiss of defendants ntonia acson and the spousesCrispino edina and Cresencia ina, dated 0ovember%%, %&A&, the opposition thereto dated 0ovember *;,%&A&, and the reply of the defendants to the

opposition, dated !ecember $, %&A&, the Court is ofthe opinion that said motion to dismiss is well taken@hence this case is hereby dismissed without costs.

lainti>s+ motion for time to submit re-oinder, dated!ecember %=, %&A&, is hereby denied because it willonly unnecessarily delay the termination of this case.

3o ordered.

Cabanatuan City, !ecember %s in thepresent case prosecuted this appeal directly to thisCourt.28/p&924:;t

s shown above the question to be resolved is whether or notthe order dismissing the previous Civil Case 0o. ?=%A barsthe present civil action 0o. ?*& of the Court of )irst 1nstance

of 0ueva 2ci-a.

1n the rst error assigned by the appellants in their brief it isargued that the dismissal of the complaint in the previousaction was in fact "at the indirect instance of the plainti>sthrough inaction or omission." De do not nd this claim

-ustied by the facts of the case. The order of the courtdismissing the complaint in the rst case contains thefollowing warning "3hould the plainti>s fail to comply withthis order, this case will be dismissed." 1n the face of thise:press warning given in the court+s order the dismissal cannot be said to have been "at the indirect instance of theplainti>s@ it was in fact caused by plainti>s+ refusal to complywith the e:press mandate contained in the order of dismissal.

The dismissal, therefore, was -ustied under 'ule ?=, 3ection? of the 'ules of Court, which reads

32C. ?.)ailure to prosecute4 J Dhen plainti> fails toappear at the time of the trial, or to prosecute hisaction for an unreasonable length of time, or to complywith these rules of any order of the court, the action

may be dismissed upon motion of the defendant orupon the court+s own motion. This dismissal shall havethe e>ect of an ad-udication upon the merits, unlessotherwise provided by court.

The above provision of the 'ules was invoked in the case,of $arc&itorena# et al4 vs4 De los Santos# et al4, 4.'. 0o. L7%$=;A, #une ?=, %&*, wherein this Court held

To order an amendment to a complaint within a certainperiod in order to implead as party plainti> or

defendant one who is not a party to the case lies


28/43

within the discretion of the Court. nd where itappears that the person to be impleaded is anindispensable party, the party to whom such order isdirected has no other choice but to comply with it. Eisrefusal or failure to comply with the order is a groundfor the dismissal of his complaint pursuant to 3ection?, 'ule, ?=, of the 'ules of Court. . . .

/nder the second assignment of error it is argued that thedismissal of the previous case was brought about by thenegligence, gross or criminal, of plainti>s+ lawyer for whichthe plainti>s7appellants should not be made to su>er. Theargument is not true to fact. The failure to amend was aresult not of the neglect of the lawyer alone but also of theplainti>s7appellants themselves. Ead the plainti>s takeneven an ordinary interest in the result of the action that theyhad led, they would have been able to secure informationfrom their lawyer that the case had been dismissed for failureto amend. /pon receipt of such information, plainti>s couldhave applied to the court for relief under 'ule ?< of the 'ulesof Court and could have had the complaint amended asdirected in the order of dismissal. 1t is not alone negligence oftheir counsel, therefore, but of themselves also that therequired amendment was not made. But assuming for thesake of argument that the failure was due to the lawyeralone, such failure would not relieve them of theresponsibility resulting from the neglect of their lawyer, forthe client is bound by the action of his counsel. 51saac v.endo9a, 4. '. 0o. L7*


29/43

G.R. No. L-/9 M% 1, 19/

AIDA ROLES, Aled a complaint in account 0egros (ccidental court (f rst

instance against respondents arreZo and 'egister of !eeds


30/43

praying for cancellation of account titles issued in respondentarreZo+s name and that she be allowed as a %8;; co7heir andco7owner of account properties to redeem account samefrom said respon. dent vendee.

The lower court dismissed account complaint and on appealrespondent c held that account sellers 5the other co7heirs6were indispensable parties and should have been impleaded

and rendered its decision that "the -udgment of accountL(D2' C(/'T is hereby set aside and let this case be, as itis, hereby ordered remanded to account L(D2' C(/'T sothat plainti> can be required to implead accountindispensable and necessary parties in account case and forsubsequent hearing for account issuance of a new

-udgment."

'espondent appellate court held that "5T6here is a proceduralerror in account C32 B2L(D. 3ince plainti> was suingdefendant for cancellation of his ownership of account!13/T2! '(2'TQ sold to him by account 32LL2'3.account latter were indispensable parties and should havebeen impleaded. They had a right to -ustify account legalityof their sale of account !13/T2! '(2'TQ to defendant inorder to free themselves from damages in favor of defendantif account sale should be ad-udged invalid. oreover, theyshould be given account chance to -ustify account sale if onlyto avoid possible criminal responsibility for estafa on falseallegation of ownership 5rt. ?%A, *aM, 'evised enal Code6,"and added that "The general rule is that if an indispensableparty is not impleaded, account case should be dismissed ...'ather than aHrm account decision dismissing plainti>+scomplaint, which will not denitely settle account concontroversy between account plainti> and account otherparties, this case should be remanded to the L(D2'C(/'T ...

etitioner+s motion for reconsideration stressing that her actis one for legal redemption against respondent as vendeeagainst whom precisely account right of redemption ise:ercised6 was denied by respondent court which ruled that

the 32LL2'3 would not be indispensable parties if what they

had sold to defendant was only their respective participationsin account !13/T2! '(2'TQ. But what was sold wasaccount entirety of account !13/T2! '(2'TQ, withaccount 32LL2'3 claiming full ownership over account same.

The 32LL2'3 took account position that plainti> was not aco7owner of account !13/T2! '(2'TQ. s a matter offact, in account +0(T1C2 () !2CL'T1(0 () E21'3E1+,account 32LL2'3 e:cluded plainti> as an heir of 2L141( and

therefore not a co7owner of account !13/T2! '(2'TQ. 1fplainti> is held entitled to redeem and account redemption isheld binding on account 32LL2'3, defendant will have causesof action, civil and criminal against account 32LL2'3 forhaving sold to him. as all account owners thereof, accountentirety of account !13/T2! '(2'TQ. Dithout account32LL2'3 being made parties in account C32 B2L(D,account redemption should not be allowed."

Eence, this petition which asserts that petitioner+s co7heirswho sold account properties to respondent arreno are not

indispensable parties but that her suit could be completelyad-udicated without them, much more so with regard to heraction as co7heir for legal redemption of account propertiesfrom said respondent7vendee under rticle %=


31/43

of Eeirship+ 5which, in e>ect. left out account petitioner andtransferred ownership of account disputed property in+totality+ to respondent arreno instead of requiring accountpresentation of a separate and true +!eclaration of Eeirship+e:ecuted by all account heirs. This requirement is all accountmore necessary, if it is noted that account 4eneral ower ofttorney presented was no longer account original copy, butonly a certied true copy from account 0otary ublic, and

was e:ecuted by account vendor co7 heirs on #une *=, %&A$,or nearly eight 5ect the true rightsand interests of the vendors7co7heirs. gainst respondentarreno the action instituted is based on account premisethat he did not acquire all the rights and interests on accountproperty, sub-ect of sale. Eis acquisition is limited only toaccount rights and interests of account vendors7co7heirs whosigned account 4eneral ower of ttorney and does notinclude account rights and interests of a co7heir, herein

petitioner, ida 'obles, who did not sign," as is clearly inaccount petition. 2

3uch action for cancellation is really secondary and is but ameans of enforcing petitioner+s claim as a co7heir andundivided co7owner of %8;; of account properties as agranddaughter of account decreased 2ulogio 'obles, whichhas been found as a fact by respondent court a well as byaccount trial court which held that +The court accepts as asuHciently established fact that plainti> being accountdaughter of #ose 'obles and therefore one of account

granddaughters of 2ulogio 'obles, is one among accountlatter+s heirs, in account same manner as plainti>+s sister,2va 'obles. The court also takes note that plainti> was not asignatory to account general power of attorney, 2:h. ++pursuant to which conveyance to account defendant of saidlots were made by )rancisco 'obles. 3

etitioner+s principal action is really therefore one for legalredemption under rticle %=


32/43

appellant is, therefore, conclusively presumed to knowaccount law that under such circumstances, account co7 heirsare entitled to redeem account portion being sold within ?=days from notice in writing of account sale, under rticle%=ect, he is a vendee withnotice of account right of redemption by account vendor+s co7heirs," and that "moreover, if vendee7appellant believed hehad a claim against account vendor by reason of account

warranty, it was his duty to have led a third7party complaintagainst account latter ...

'espondent court should therefore have ad-udged accountappeal on its merits, and if account facts be as they areindicated in its decision, to wit, account petitioner is indeed aco7heir and co7owner of %8;; of account properties and thather co7owners7coheirs had sold account same or theirhereditary rights thereto without notice to her, petitioner+saction for redemption of account properties must besustained.

CC('!104LQ, account -udgment of respondent court ishereby set aside and account case7 is remanded to it fordetermination of account merits of account appeal inconsonance with account Court+s observations in thisdecision. 0o costs.

G.R. No. L-2223 +#;!u!% 1, 196/

CLAECILLIA RADIO SSTEM,petitioner7appellant,vs.

&ON. AGUSTIN ANTILLON, s C7t% u*g# o t:#Mu)7


33/43

The Cagayan de (ro branch oHce having received thesaid message omitted, in delivering the same to the0ew Cagayan 4rocery, the word "0(T" between thewords "D3E2!" and "F1LBL2," thus changingentirely the contents and purport of the same andcausing the said addressee to su>er damages. fterservice of summons, the Clavecilla 'adio 3ystem leda motion to dismiss the complaint on the grounds that

it states no cause of action and that the venue isimproperly laid. The 0ew Cagayan 4rocery interposedan opposition to which the Clavecilla 'adio 3ystemled its re-oinder. Thereafter, the City #udge, on3eptember %


34/43

be laid properly. Dith costs against the respondents7appellees.

G.R. No. 101/ u)# 2, 1993

OUNG AUTO SUPPL CO. AND NEMESIOGARCIA, petitioners,

vs.T&E &ONORALE COURT O+ APPEALS (T&IRTEENT&DIISION' AND GEORGE C&IONG RO?AS,respondents.

Angara# Abello# Concepcion# !egala < Cru" for petitioners4

Antonio =u(les for private respondent4

@UIASON, J.:

etitioners seek to set aside the decision of respondent Courtof ppeals in C74.'. 3 0o. *A*?$, which reversed the (rderdated )ebruary


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'o:as then led, through a new counsel, a third motion fore:tension of time to submit a responsive pleading.

(n ugust %&, %& or any of the plainti>s resides, at theelection of the plainti> 3ec. *5b6 'ule ;, 'evised 'ules of

CourtM.


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There are two plainti>s in the case at bench a natural personand a domestic corporation. Both plainti>s aver in theircomplaint that they are residents of Cebu City, thus

%.%. lainti> Qoung uto 3upply Co., 1nc.,5"Q3C("6 is a domestic corporation dulyorgani9ed and e:isting under hilippine lawswith principal place of business at . #. Cuenco

venue, Cebu City. 1t also has a branch oHce at%$=< !ominga 3treet, asay City, etro anila.

lainti> 0emesio 4arcia is of legal age, married,)ilipino citi9en and with business address at

Qoung uto 3upply Co., 1nc., . #. Cuencovenue, Cebu City. . . . 5Complaint, p. %@ !ollo, p.


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G.R. No. L-1/699 M!


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"ctions a>ecting title to, or for recovery ofpossession, or for partition or condemnation of, orforeclosure of mortgage on, real property, shall becommenced and tried in the province where theproperty or any part thereof lies."

The Court of ppeals and the Court of )irst 1nstance of 'i9al,Kue9on City Branch, held that Civil Case 0o. K7A%&$ of the

latter court is an actionin personam#and that, as such, itdoes not fall within the purview of said section ?, and wasproperly instituted in the court of rst instance of theprovince in which Cacnio, as plainti> in said case, resided,pursuant to section % of said rule A.

De are unable to share such view. lthough the immediateremedy sought by Cacnio is to compel petitioner to acceptthe tender of payment allegedly made by the former, it isobvious that this relief is merely the rst step to establishCacnio+s title to the real property adverted to above.

oreover, Cacnio+s complaint is a means resorted to by himin order that he could retain the possession of said property.1n short, venue in the main case was improperly laid and theCourt of )irst 1nstance of 'i9al, Kue9on City Branch, shouldhave granted the motion to dismiss. 28/p&924:;t

DE2'2)('2, the decision appealed from is hereby reversedand another one shall be entered directing respondent #udgeto desist from taking further cogni9ance of Civil Case 0o. K7A%&$ of said court, with costs against respondent )lavianoCacnio. 1t is so ordered.

G.R. No. L-3 +#;!u!% 6, 1991

PATRIA ESUERTE )* &ERMINIA AME, petitioners,vs.

&ON. COURT O+ APPEALS (E$#8#)t: D787s7o)', &ON.RA+AEL T. MENDO5A, u*g#, !)


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'egional Trial Court6 of Cebu and docketed as Civil Case 0o.'7%$A


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any of the defendants resides or may be found,or where the plainti> or any of the plainti>sresides, at the election of the plainti>.

The choice of venue for personal actions cogni9able by the'egional Trial Court is given to the plainti> but not to theplainti>+s caprice because the matter is regulated by the'ules of Court 5seeClavecilla 'adio 3ystem v. ntillon, %&

3C' ?$&6. The rule on venue, like other procedural rules, aredesigned to insure a -ust and orderly administration of -usticeor the impartial and evenhanded determination of everyaction and proceeding 53y v. Tyson 2nterprises 1nc., %& 3C'?$6. The option of the plainti> in personal actionscogni9able by the 'egional Trial Court is either the placewhere the defendant resides or may be found or the placewhere the plainti> resides. 1f plainti> opts for the latter, he islimited to that place.

"'esides" in the rules on venue on personal actions means

the place of abode, whether permanent or temporary, of theplainti> or defendants as distinguished from "domicile" whichdenotes a :ed permanent residence 5!angwa TransportationCo., 1nc. v. 3armiento, 4.'. 0o. L7**$&A, #anuary ?%, %&$$, $A3C' %*;6. nd, in Eernande9 v. 'ural Bank of Lucena, 1nc.,4.'. 0o. L7*&$&%, #anuary %=, %&$


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complainant in the administrative case may be a privateperson, it is the government who is the aggrieved party andno award for damages may be granted in favor of privatepersons. 1n the civil action for damages, the trial court+sconcern is whether or not damages, personal to the plainti>,were caused by the acts of the defendants. The civil actionfor damages can proceed notwithstanding the pendency ofthe administrative action.

DE2'2)('2, the position is 4'0T2!. The questioneddecision of the Court of ppeals is 32T 31!2. Civil Case 0o.'7%$A7appellant,vs.

DR. ESUS P. OCAMPO, defendant7appellee.

ESCOLIN, J.:

De set aside the order of the Court of )irst 1nstance ofampanga in Civil Case 0o. ?%+s complaint on ground of improper venue.

lainti> Firgilio Capati a resident of Bacolor, ampanga, wasthe contractor of the )eati Bank for the construction of itsbuilding in 1riga, Camarines 3ur. (n ay *?, %&$, plainti>entered into a sub7contract with the defendant !r. #esus(campo, a resident of 0aga City, whereby the latter, inconsideration of the amount of *,*==.==, undertook toconstruct the vault walls, e:terior walls and columns of thesaid )eati building in accordance with the specicationsindicated therein. !efendant further bound himself tocomplete said construction on or before #une A, %&$ and, toemphasi9e this time frame for the completion of theconstruction -ob, defendant aH:ed his signature below thefollowing stipulation written in bold letters in the sub7contract "T12 13 23320T1L, T( B2 )1013E2! A #/02+ $."

Claiming that defendant nished the construction in questiononly on #une *=, %&$, plainti> led in the Court of )irst

1nstance of ampanga an action for recovery ofconsequential damages in the sum of


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%;. That all actions arising out, or relating to thiscontract may be instituted in the Court of )irst1nstance of the City of 0aga.

lainti> led an opposition to the motion, claiming that theiragreement to hold the venue in the Court of )irst 1nstance of0aga City was merely optional to both contracting parties. 1nsupport thereof, plainti> cited the use of the word "may " in

relation with the institution of any action arising out of thecontract.

The lower court, in resolving the motion to dismiss, ruled that"there was no sense in providing the aforequoted stipulation,pursuant to 3ec. ? of 'ule ; of the 'evised 'ules of Court, ifafter all, the parties are given the discretion or option of lingthe action in their respective residences," and therebyordered the dismissal of the complaint.

Eence, this appeal.

The rule on venue of personal actions cogni9able by thecourts of rst instance is found in 3ection * 5b6, 'ule ; of the'ules of Court, which provides that such "actions may becommenced and tried where the defendant or any of thedefendants resides or may be found, or where the plainti> orany of the plainti>s resides, at the election of the plainti>."

The said section is qualied by the following provisions of3ection ? of the same rule

By written agreement of the parties the venueof an action may be changed or transferred fromone province to another.

!efendant stands rm on his contention thatbecause of the aforequoted covenant containedin par. %; of the contract, he cannot be sued inany court e:cept the Court of )irst 1nstance of0aga City. De are thus called upon to rule onthe issue as to whether the stipulation of theparties on venue is restrictive in the sense that

any litigation arising from the contract can be

led only in the court of 0aga City, or merelypermissive in that the parties may submit theirdisputes not only in 0aga City but also in thecourt where the defendant or the plainti>resides, at the election of the plainti>, asprovided for by 3ection * 5b6 'ule ; of the 'ulesof Court.

1t is well settled that the word "may" is merelypermissive and operates to confer discretionupon a party. /nder ordinary circumstances, theterm "may be" connotes possibility@ it does notconnote certainty. "ay" is an au:illary verbindicating liberty, opportunity, permission orpossibility. 1

1n =icolas vs4 !eparations Commission2, a case involving theinterpretation of a stipulation as to venue along lines similarto the present one, it was held that the agreement of the

parties which provided that "all legal actions arising out ofthis contract ... ma( bebrought in and submitted to the

-urisdiction of the proper courts in the City of anila," is notmandatory.

De hold that the stipulation as to venue in the contract inquestion is simply permissive. By the said stipulation, theparties did not agree to le their suits solely and e:clusivelywith the Court of )irst 1nstance of 0aga. They merely agreedto submit their disputes to the said court, without waivingtheir right to seek recourse in the court specically indicatedin 3ection * 5b6, 'ule ; of the 'ules of Court.

3ince the complaint has been led in the Court of )irst1nstance of ampanga, where the plainti> resides, the venueof action is properly laid in accordance with 3ection * 5b6,'ule ; of the 'ules of Court.

DE2'2)('2, the order appealed from is hereby set aside.Let the records be returned to the court of origin for furtherproceedings. Costs against defendant7appellee.


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