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  • 7/21/2019 Civ Pro - Full text



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


    )* 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

  • 7/21/2019 Civ Pro - Full text


    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!.


    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