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COMMUNICATION MATERIALS AND DESIGN, INC et al vs.CA et al.G.R. No. 102223August 22, 1996

FACTS: Petitioners COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI) and ASPAC MULTI-TRADE INC., (ASPAC) are both domestic corporations.. Private Respondents ITEC, INC. and/or ITEC, INTERNATIONAL, INC. (ITEC) are corporations duly organized and existing under the laws of the State of Alabama, USA. There is no dispute that ITEC is a foreign corporation not licensed to do business in the Philippines.

ITEC entered into a contract with ASPAC referred to as “Representative Agreement”. Pursuant to the contract, ITEC engaged ASPAC as its “exclusive representative” in the Philippines for the sale of ITEC’s products, in consideration of which, ASPAC was paid a stipulated commission. Through a “License Agreement” entered into by the same parties later on, ASPAC was able to incorporate and use the name “ITEC” in its own name. Thus , ASPAC Multi-Trade, Inc. became legally and publicly known as ASPAC-ITEC (Philippines).One year into the second term of the parties’ Representative Agreement, ITEC decided to terminate the same, because petitioner ASPAC allegedly violated its contractual commitment as stipulated in their agreements. ITEC charges the petitioners and another Philippine Corporation, DIGITAL BASE COMMUNICATIONS, INC. (DIGITAL), the President of which is likewise petitioner Aguirre, of using knowledge and information of ITEC’s products specifications to develop their own line of equipment and product support, which are similar, if not identical to ITEC’s own, and offering them to ITEC’s former customer.

The complaint was filed with the RTC-Makati by ITEC, INC. Defendants filed a MTD the complaint on the following grounds: (1) That plaintiff has no legal capacity to sue as it is a foreign corporation doing business in the Philippines without the required BOI authority and SEC license, and (2) that plaintiff is simply engaged in forum shopping which justifies the application against it of the principle of “forum non conveniens”. The MTD was denied.

Petitioners elevated the case to the respondent CA on a Petition for Certiorari and Prohibition under Rule 65 of the Revised ROC. It was dismissed as well. MR denied, hence this Petition for Review on Certiorari under Rule 45.

ISSUE:1. Did the Philippine court acquire jurisdiction over the person of the petitioner corp, despite allegations of lack of capacity to sue because of non-registration?2. Can the Philippine court give due course to the suit or dismiss it, on the principle of forum non convenience?

HELD: petition dismissed.

1. YES; We are persuaded to conclude that ITEC had been “engaged in” or “doing business” in the Philippines for some time now. This is the inevitable result after a scrutiny of the different contracts and agreements entered into by ITEC with its various business contacts in the country. Its arrangements, with these entities indicate convincingly that ITEC is actively engaging in business in the country.

A foreign corporation doing business in the Philippines may sue in Philippine Courts although not authorized to do business here against a Philippine citizen or entity who had contracted with and benefited by said corporation. To put it in another way, a party is estopped to challenge the personality of a corporation after having acknowledged the same by entering into a contract with it. And the doctrine of estoppel to deny corporate existence applies to a foreign as well as to domestic corporations. One who has dealt with a corporation of foreign origin as a corporate entity is estopped to deny its corporate existence and capacity.

In Antam Consolidated Inc. vs. CA et al. we expressed our chagrin over this commonly used scheme of defaulting local companies which are being sued by unlicensed foreign companies not engaged in business in the Philippines to invoke the lack of capacity to sue of such foreign companies. Obviously, the same ploy is resorted to by ASPAC to prevent the injunctive action filed by ITEC to enjoin petitioner from using knowledge possibly acquired in violation of fiduciary arrangements between the parties.

2. YES; Petitioner’s insistence on the dismissal of this action due to the application, or non application, of the private international law rule of forum non conveniens defies well-settled rules of fair play. According to petitioner, the Philippine Court has no venue to apply its discretion whether to give cognizance or not to the

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present action, because it has not acquired jurisdiction over the person of the plaintiff in the case, the latter allegedly having no personality to sue before Philippine Courts. This argument is misplaced because the court has already acquired jurisdiction over the plaintiff in the suit, by virtue of his filing the original complaint. And as we have already observed, petitioner is not at liberty to question plaintiff’s standing to sue, having already acceded to the same by virtue of its entry into the Representative Agreement referred to earlier.

Thus, having acquired jurisdiction, it is now for the Philippine Court, based on the facts of the case, whether to give due course to the suit or dismiss it, on the principle of forum non convenience. Hence, the Philippine Court may refuse to assume jurisdiction in spite of its having acquired jurisdiction. Conversely, the court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met:

1) That the Philippine Court is one to which the parties may conveniently resort to;2) That the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and,3) That the Philippine Court has or is likely to have power to enforce its decision.The aforesaid requirements having been met, and in view 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 the suit’s dismissal, deserves scant consideration.

SBMA v. Universal International Group of Taiwan

September 14, 2000

Panganiban, J.

Facts

UIG and SBMA entered into a “Lease and Development Agreement” (LDA) wherein SBMA leased to UIG the Binictan Golf Course and appurenant facilities thereto to be transforemed into a world-class 18-hole golf course/resort.

The LDA contained pre-termination clauses which authorizes SBMA, after due notice to UIG, to terminate the lease and immediately take possession of the property if UIG commits a material breach of any of the contract’s conditions.

SBMA wrote UIG, calling its attention to its failure to deliver its various contactual obligations. UIG imputed the delay to the default of its main contractor, FF Cruz, but committed itself to comply

with its undertakibngs. The following month, SBMA declared UIG in default. Six months later, UIG still failed to satisfy its obligations so SBMA served a letter of pre-termination to

UIG. Shortly thereafter, the golf course was formally closed and SBMA took possession of the subject premises.

UIG filed a complaint against SBMA for Injuction and Damages with prayer for TRO and preliminary injuction.

TC granted UIG’s prayer and ordered SBMA to restore possession of the golf course to UIG. In a subsequent order, TC denied SBMA’s motion to dismiss.

CA upheld UIG’s capacity to sue, holding that SBMA is estopped from questioning its standing. It also held that UIGDC1 and SBGCCI2 were real parties in interest because they made substantial investments in the venture and had been in possession in property when SBMA took over.

Issues/Held

1. WON UIG has capacity to sue.YES. As a general rule, unlicensed foreign non-resident corporations cannot file suits in the Philippines. A corporation has legal status only within the state or territory in which it was organized. For this reason, a corporation organized in another country has no personality to file suits in the Philippines. In order to subject a foreign corporation doing business in the country to the jurisdiction of our courts, it must acquire a license from the SEC and appoint an agent for service of process. Without such license, it cannot institute

1 UIG International Development Corporation2 Subic Bay Gold and Country Club, Inc.

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a suit in the Philippines. However, after contracting with a foreign corporation, a domestic firm is estopped from denying the former’s capacity to sue.

2. WON UIGDC and SBGCCI are real parties in interest.YES. According to Sec. 2, Rule 3 of the Rules of Court defines a real party in interest as the party who stands to be benefited or injured by the judgment of the suit, or the party entitled to the avails of the suit. In this case, the CA made a factual finding that UIGDC and SBGCCI were in possession of the property when SBMA took over. Moreover, it also found that they had already made substantial investments in the project. The CA is correct in holding that UIGDC and SBGCCI stand to be benefitted or injured by the present suit and should be deemed real parties in interest.

3. WON RTC has jurisdiction over the suit.YES. According to petitioners, the RTC has no jurisdiction over the case because ejectment suits are cognizable by municipal courts. However, the complaint reveals that it sought to enjoin petitioners from rescinding the contract and taking over the property. While possession was a necessary consequence of the suit, it was merely incidental. The main issue is not ejectment, but whether SBMA could rescind the LDA. Because it was a dispute that was incapable of pecuniary estimation, it was within the jurisdiction of the RTC.

Columbia Pictures v. Flores, G.R. No. 78631, June 29, 1993

I.      THE FACTS

As a consequence of a complaint filed by the Motion Picture Association of America, Inc., NBI agents conducted surveillance operations on certain video establishments, among them respondent FGT Video Network, Inc. (FGT), for“unauthorized sale, rental, reproduction and/or disposition of copyrighted film," a violation of PD 49 (the old Intellectual Property Law). After an NBI agent was able to havecopyrighted motion pictures “Cleopatra” (owned by 20th Century Fox) and “The Ten Commandments” (owned by Paramount) reproduced in video format in FGT, the NBI applied for and was able to obtain from the respondent judge the subject Search Warrant No. 45 which reads:

TO ANY PEACE OFFICER:

GREETINGS:

It appearing to the satisfaction of the Undersigned after examining under oath NBI Senior Agent Lauro C. Reyes and his witnesses Mr. Danilo Manalang and Ms. Rebecca Benitez-Cruz, that there is a probable cause to believe that Violation of Section 56 P.D. No. 49 as amended by P.D. No. 1988 (otherwise known as the Decree on Protection of Intellectual Property) has been committed and that there are good and sufficient reasons to believe that FGT Video Network, Inc., Manuel Mendoza, Alfredo C. Ongyanco, Eric Apolonio, Susan Yang and Eduardo Yotoko are responsible and have in control/possession at No. 4 Epifanio de los Santos corner Connecticut, Greenhills, San Juan, Metro Manila (per attached sketch and list of MPAA member Company Titles) the following properties to wit:

(a)   Pirated video tapes of the copyrighted motion pictures/films the titles of which are mentioned in the attached list;

(b)   Posters, advertising leaflets, flyers, brochures, invoices, lists of titles being reproduced or retaped, journals, ledgers, jon (sic) order slips, delivery slips and books of accounts bearing and/or mentioning the pirated films with titles (as per attached list), or otherwise used in the reproduction/retaping business of the defendants;

(c)  Television sets, video cassette recorders, rewinders, tape head cleaners, accessories, equipment and other machines and paraphernalia or materials used or intended to be used in the unlawful sale, lease, distribution, or possession for purpose of sale, lease, distribution, circulation or public exhibition of the above-mentioned pirated video tapes which they are

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keeping and concealing in the premises above-described, which should be seized and brought to the Undersigned.

You are hereby commanded to make an immediate search at any time in the day between 8:00 A.M. to 5:00 P.M. of the premises above-described and forthwith seize and take possession of the above-enumerated personal properties, and bring said properties to the undersigned immediately upon implementation to be dealt with as the law directs.

In the course of the implementation of the search warrant in the premises of FGT, the NBI agents found and seized various video tapes of copyrighted films owned and exclusively distributed by petitioners. Also seized were machines and equipment, television sets, paraphernalia, materials, accessories, rewinders, tape head cleaners, statements of order, return slips, video prints, flyers, production orders, and posters.

FGT moved for the release of the seized television sets, video cassette recorders, rewinders, tape head cleaners, accessories, equipment and other machines or paraphernalia seized by virtue of the subject warrant. It argued that as a licensed video reproducer, it had the right possess the seized reproduction equipment, which are not illegal per se, but are rather exclusively used and intended to be used for reproduction and not in the “sale, lease, distribution or possession for purposes of sale, lease distribution, circulation or public exhibition of pirated video tapes.”

Finding that FGT was a registered and duly licensed distributor and in certain instances and under special instructions and conditions reproducer of videograms and that, therefore, its right to possess and use the seized equipment had been placed in serious doubt, the lower court ordered the return of the “television sets, video cassette recorders, rewinders, tape head cleaners, accessories, equipment and other machines or paraphernalia” to FGT.

II.    THE ISSUE

Did the respondent judge act with grave abuse of discretion amounting to lack of jurisdiction in ordering the immediate return of some of the items seized by virtue of the search warrant?

III.   THE RULING

[The High Tribunal DISMISSED the petition and AFFIRMED the order of the respondent Judge Flores.]

NO, the respondent judge DID NOT act with grave abuse of discretion amounting to lack of jurisdiction in ordering the immediate return of some of the items seized by virtue of the search warrant.

Search Warrant No. 45 fails to satisfy the test of legality. This is more so because the Court has previously decided a case dealing with virtually the same kind of search warrant. In 20th Century Fox vs. CA, the Court upheld the legality of the order of the lower court lifting the search warrant issued under circumstances similar to those obtaining in the case at bar. A striking similarity between this case and 20th Century Fox is the fact that Search Warrant No. 45, specifically paragraph (c) thereof describing the articles to be seized, contains an almost identical description as the warrant issued in the 20th Century Fox case, to wit:

(c) Television sets, Video Cassettes Recorders, rewinders, tape head cleaners, accessories, equipments and other machines used or intended to be used in the unlawful reproduction, sale, rental/lease, distribution of the above-mentioned video tapes which she is keeping and concealing in the premises above-described.

On the propriety of the seizure of the articles above-described, the Court held in20th Century Fox:

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Television sets, video cassette recorders, rewinders and tape cleaners are articles which can be found in a video tape store engaged in the legitimate business of lending or renting out betamax tapes. In short,these articles and appliances are generally connected with, or related to a legitimate business not necessarily involving piracy of intellectual property or infringement of copyright laws. Hence, including these articles without specification and/or particularity that they were really instruments in violating an Anti-Piracy law makes the search warrant too general which could result in the confiscation of all items found in any video store.

The language used in paragraph (c) of Search Warrant No. 45 is thus too all-embracing as to include all the paraphernalia of FGT in the operation of its business. As the search warrant is in the nature of a general one, it is constitutionally objectionable.

 The Court concluded that the respondent judge did not gravely abuse his discretion in ordering the immediate release of the enumerated items, but that he was merely correcting his own erroneous conclusions in issuing Search Warrant No. 45. This can be gleaned from his statement that “. . . the machines and equipment could have been used or intended to be used in the illegal reproduction of tapes of the copyrighted motion pictures/films, yet, it cannot be said with moral certainty that the machines or equipment(s) were used in violating the law by the mere fact that pirated video tapes of the copyrighted motion pictures/films were reproduced. As already stated, FGT Video Network, Inc. is a registered and duly licensed distributor and in certain instances and under special instructions . . . reproducer of videograms, and as such, it has the right to keep in its possession, maintain and operate reproduction equipment(s) and paraphernalia(s).

Eriks Pte. Ltd. vs. CA Case DigestEriks Pte. Ltd. vs. Court of Appeals[GR 118843, 6 February 1997]

Facts: Eriks Pte. Ltd. is a non-resident foreign corporation engaged in the manufacture and sale of elements used in sealing pumps, valves and pipes for industrial purposes, valves and control equipment used for industrial fluid control and PVC pipes and fittings for industrial uses. On various dates covering the period January 17 — August 16, 1989, Delfin Enriquez, Jr., doing business under the name and style of Delrene EB Controls Center and/or EB Karmine Commercial, ordered and received from Eriks Pte. Ltd. various elements used in sealing pumps, valves, pipes and control equipment, PVC pipes and fittings. The transfers of goods were perfected in Singapore, for Enriquez's account, F.O.B. Singapore, with a 90-day credit term. Subsequently, demands were made by Eriks upon Enriquez to settle his account, but the latter failed/refused to do so. On 28 August 1991, Eriks filed with the Regional Trial Court of Makati, Branch 138, Civil Case 91-2373 for the recovery of S$41,939.63 or its equivalent in Philippine currency, plus interest thereon and damages. Enriquez responded with a Motion to Dismiss, contending that Eriks had no legal capacity to sue. In an Order dated 8 March 1993, the trial court dismissed the action on the ground that Eriks is a foreign corporation doing business in the Philippines without a license. 

On appeal and on 25 January 1995, the appellate court (CA GR CV 41275) affirmed said order as it deemed the series of transactions between Eriks and Enriquez not to be an "isolated or casual transaction." Thus, the appellate court likewise found Eriks to be without legal capacity to sue. Eriks filed the petition for review. 

Issue: Whether a foreign corporation which sold its products 16 times over a five-month period to the same Filipino buyer without first obtaining a license to do business in the Philippines, is prohibited from maintaining an action to collect payment therefor in Philippine courts. 

Held: Section 133 of the Corporation Code provides that "No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws." The provision prohibits, not merely absence of the prescribed license, but it also bars a foreign corporation "doing business" in the Philippines without such license access to Philippine courts. A foreign corporation without such license is not ipso facto incapacitated from bringing an action. A license is necessary only if it is

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"transacting or doing business" in the country. However, there is no definitive rule on what constitutes "doing," "engaging in," or "transacting" business. The Corporation Code itself does not define such terms. To fill the gap, the evolution of its statutory definition has produced a rather all-encompassing concept in Republic Act 7042 in this wise: "The phrase 'doing business' shall include soliciting orders, service contracts, opening offices, whether called 'liaison' offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totaling one hundred eight(y) (180) days or more; participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization: Provided, however, That the phrase 'doing business' shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor; nor having a nominee director or officer to represent its interests in such corporation; nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account." The accepted rule in jurisprudence is that each case must be judged in the light of its own environmental circumstances. It should be kept in mind that the purpose of the law is to subject the foreign corporation doing business in the Philippines to the jurisdiction of Philippine courts. It is not to prevent the foreign corporation from performing single or isolated acts, but to bar it from acquiring a domicile for the purpose of business without first taking the steps necessary to render it amenable to suits in the local courts. Herein, more than the sheer number of transactions entered into, a clear and unmistakable intention on the part of Eriks to continue the body of its business in the Philippines is more than apparent. As alleged in its complaint, it is engaged in the manufacture and sale of elements used in sealing pumps, valves, and pipes for industrial purposes, valves and control equipment used for industrial fluid control and PVC pipes and fittings for industrial use. 

Thus, the sale by Eriks of the items covered by the receipts, which are part and parcel of its main product line, was actually carried out in the progressive prosecution of commercial gain and the pursuit of the purpose and object of its business, pure and simple. Further, its grant and extension of 90-day credit terms to Enriquez for every purchase made, unarguably shows an intention to continue transacting with Enriquez, since in the usual course of commercial transactions, credit is extended only to customers in good standing or to those on whom there is an intention to maintain long-term relationship. The series of transactions in question could not have been isolated or casual transactions. What is determinative of "doing business" is not really the number or the quantity of the transactions, but more importantly, the intention of an entity to continue the body of its business in the country. The number and quantity are merely evidence of such intention. The phrase "isolated transaction" has a definite and fixed meaning, i.e. a transaction or series of transactions set apart from the common business of a foreign enterprise in the sense that there is no intention to engage in a progressive pursuit of the purpose and object of the business organization. Whether a foreign corporation is "doing business" does not necessarily depend upon the frequency of its transactions, but more upon the nature and character of the transactions. Given the facts of the case, the Court cannot see how Eriks' business dealings will fit the category of "isolated transactions" considering that its intention to continue and pursue the corpus of its business in the country had been clearly established. It has not presented any convincing argument with equally convincing evidence for the Court to rule otherwise. Accordingly and ineluctably, Eriks must be held to be incapacitated to maintain the action a quo against Enriquez. 

 [G.R. No. 97642. August 29, 1997]AVON INSURANCE PLC, BRITISH RESERVE INSURANCE. CO. LTD., et al petitioners, vs.COURT OF APPEALS, REGIONAL TRIAL COURT OF MANILA, BRANCH 51,YUPANGCO COTTON MILLS, WORLDWIDE SURETY & INSURANCE CO., INC.,respondents .Facts:Respondent Yupangco Cotton Mills filed a complaint against several foreign reinsurance companies (amongwhich are petitioners) to collect their alleged percentage liability under contract treaties between the foreign insurancecompanies and the international insurance broker C.J. Boatright, acting

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as agent for respondent Worldwide Suretyand Insurance Company. Inasmuch as petitioners are not engaged in business in the Philippines with no offices,places of business or agents in the Philippines, the reinsurance treaties having been entered abroad, service of summons upon motion of respondent Yupangco, was made upon petitioners through the Office of the InsuranceCommissioner. Petitioners, by counsel on special appearance, seasonably filed motions to dismiss disputing the jurisdiction of respondent Court and the extra-territorial service of summons. Respondent Yupangco filed itsopposition to the motions to dismiss, petitioners filed their reply, and respondent Yupangco filed its rejoinder. In anOrder dated April 30, 1990, respondent Court denied the motions to dismiss and directed petitioners to file their answer. On May 29, 1990, petitioners filed their notice of appeal. In an order dated June 4, 1990, respondent courtdenied due course to the appeal.It all started with Yupangco Cotton Mills engaged to secure with Worldwide Security and Insurance Co. Inc.,several of its properties totaling P200 Million.These contracts were covered by reinsurance treaties betweenWorldwide Surety and Insurance, and several foreign reinsurance companies including the petitioners through CJBoatrwright acting as agent of Worldwide Surety and Insurance. A Fire then razed the properties insured onDecember 1969 and May 2, 1981. A Deed of Assignment made by Worldwide Surety and Insurance acknowledged aremaining balance of P19,444,447.75 still due and assigned to Yupangco all reinsurance proceeds still collectiblefrom all the foreign reinsurance companies. Yupangco then filed a collection suit on the above petitioners. The serviceof summons were made through the office of the Insurance Commissioner but since the international reinsurersquestion the jurisdiction the trial court the case has not proceeded to trial on the merits . The reinsurer is questioningalso the service of summons through extraterritorial service under Sect 17 Rule 14 of the Rules of Court nor throughthe Insurance Commissioner under Sec 14. Yupangco also contends that since the reinsurers question the jurisdictionof the court they are deemed to have submitted to the jurisdiction of the court.ISSUE: WON the international reinsurers are ―doing business in the Philippines‖. WON the Philippine court has jurisdiction over these international reinsurers who are not doing business in thePhilippinesHELD:NoRATIO:International reinsurers are not ―doing business in the Philippines‖ and the Philippine court has not acquired jurisdiction over them.The reinsurance treaties between the petitioners and Worldwide Surety and Insurance were made through aninternational insurance broker and NOT through any entity or means remotely connected with the Philippines.Reinsurance company is not doing business in a certain state even if the property or lives which are insured by theoriginal insurer company are located in that state. Reinsurance Contract is generally separate and distinctarrangement from the original contract of insurance.Doing business in the Philippines –must be judged in the light of its peculiar circumstances upon its peculiar factsand upon the language of the statute applicable.The True test is whether the corporation is continuing the body or substance of the business or enterprise for which it was organized. If there exist a domestic agent of the foreign corporation it can be served with summonsthrough that agent without proving that such corporation is doing business in the Philippines or not.There was no allegation or demonstration of the existence of petitioners’ domestic agent but avers simply that they are doing business not only abroad but in the Philippines. Petitioners had not performed any act which would give the general public the impression that it had been engaging or intends to engage in its ordinary and usualbusiness undertaking in the country.The purpose of the law in requiring that foreign corporations doing business in the country be licensed to do so, isto subject the foreign corporations doing business in the Philippines to the jurisdiction of the courts, otherwise, aforeign corporation illegally doing business here because of its refusal or neglect to obtain the required license andauthority to do business may successfully though unfairly plead such neglect or illegal act so as to avoid service andthereby impugn the jurisdiction of the local courts. Voluntary appearance before the lower court to question the jurisdiction is not equivalent to submission to jurisdiction.The SC disposed the case in favor of the international insurers (petitioners’) declaring that the lower court has not acquired and cannot acquire jurisdiction over them and was ordered to desist from maintaining further proceedingagainst them.

Granger Associates vs Microwave Systems-FERNANDEZ

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Note: Granger is the principal and Microwave Systems is the agent.

Facts: The foreign corporation is Granger Associates, the herein petitioner, which was organized in theUnited States and has no license to do business in this country. The domestic corporation is MicrowaveSystems, Inc., one of the herein private respondents, which has been sued for recovery of a sumequivalent to US$900,633.30 allegedly due from it to the petitioner.The claim arose from a series of agreements concluded between the two parties, principally thecontract dated March 28, 1977, under which Granger licensed MSI to manufacture and sell its productsin the Philippines and extended to the latter certain loans, equipment and parts; the contract datedMay 17, 1979, for the sale by Granger of its Model 7100/7200 Multiplex Equipment to MSI

 Payment of these contracts not having been made as agreed upon, Granger filed a complaint against MSI and the other private respondents on June 29, 1984, in the Regional Trial Court of Pasay City. Thiswas docketed as Civil Case No. 1982-P. In its answer, MSI alleged the affirmative defense that theplaintiff had no capacity to sue, being an unlicensed foreign corporation, and moved to dismiss.The law invoked by the defendants was Section 133 of the Corporation Code reading as follows:No foreign corporation transacting business in the Philippines without a license, or its successors orassigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court oradministrative agency of the Philippines; ...RTC: sustained the defendants and granted motion to dismissCA: affirmedHence this petitionW/N Granger has capacity to sue? Yes, but not in this case because of technicality. Petitioner did not assail that it should be under the exception.The true test, however, seems to be whether the foreign corporation is continuing the body orsubstance of the business or enterprise for which it was organized or whether it has substantiallyretired from it and turned it over to another. The term implies a continuity of commercial dealings andarrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in progressive prosecution of, the purpose and object of its organization.We are convinced from an examination of the terms and conditions of the contracts and agreementsentered into between petitioner and private respondents indicate that they established within ourcountry a continuous business, and not merely one of a temporary character. Such agreements did not constitute only one isolated transaction, as the petitioner contends, but a succession of acts signifyingthe intent of Granger to extend its operations in the Philippines.In any event, it is now settled that even one single transaction may be construed as transactingbusiness in the Philippines under certain circumstances, as we observed inFar East International Import and Export Corporation v. Nankai Kogyo Co., Ltd.’10thus:The rule stated in the preceding section that the doing of a single act does not constitute businesswithin the meaning of statutes prescribing the conditions to be complied with by foreign corporationsmust be qualified to this extent, that a single act may bring the corporation within the purview of thestatute where it is an act of the ordinary business of the corporation. In such a case, the single act ortransaction is not merely incidental or casual, but is of such character as distinctly to indicate apurpose on the part of the foreign corporation to do other business in the state, and to make the state abase of operations for the conduct of a part of the corporations' ordinary business.It is also the rule that the factual findings of the lower court are binding on this Court in the absence of any of those exceptional circumstances we have enumerated in many cases that warrant a different conclusion. Having assailed the finding of the respondent court that the petitioner is doing business inthe Philippines, the petitioner had the burden of showing that such finding fell under the exceptionrather than the rule and so should be reviewed and reversed. The petitioner has not done this.The purpose of the rule requiring foreign corporations to secure a license to do business in thePhilippines is to enable us to exercise jurisdiction over them for the regulation of their activities in thiscountry.SC: Petition deniedCOMMISSIONER OF CUSTOMS VS. KMK GANI 182 SCRA 591

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 FACTS:1. Two containers loaded with 103 cartons of merchandise covered by eleven airway bills of several supposedly Singapore based consignees arrived at the Manila International Airport.2. The cargoes were consigned to different entities, among others, KMK Gani and Indrapal and Company, private respondents.3. While the cargoes were at the MIA, a “reliable source” tipped the Bureau of Customs that the said cargoes were going to be unloaded to Manila.4. The Suspected Cargo and Anti-Narcotics (SCAN) dispatched an agent to verify the information.5. The cargoes were seized and thereafter subject to Seizure and Forfeiture proceedings for “technical smuggling.”6. Atty. Armando Padilla entered his appearance for the consignees KMK and Indrapal.7. Records of the case do not show any appearance of the consignees in person.8. The Collector of Customs rules for the forfeiture of all the cargoes.9. Appeal was made to the Commissioner of Customs.10. The Commissioner of Customs affirmed the finding of the Collector of Customs of the presence of the intention to import the said goods in violation of the dangerous drugs Act and a Central Bank Circular in relation to the Tariff and Customs Code.11. Appeal was then made to the Court of Tax Appeals, which reversed the decision of the Commissioner of Customs.12. Hence this petition to review.

ISSUE:Did private respondents fail to establish their personality to sue?Can private respondents sue within Philippine jurisdiction under the “isolated transaction rule”?

HELD:No foreign corporation transacting in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws. (Section 133, Corporation Code of the Philippines)However, a foreign corporation not engaged in the in business in the Philippines may not be denied the right to file an action in the Philippine courts for an isolated transaction.

The fact that a foreign corporation is not doing business in the Philippines must be disclosed if it desires to sue in the Philippine courts under the “isolated transaction rule.” Without this disclosure, the court may choose to deny it the right to sue.

In the case at bar, the private respondents KMK Gani and Indrapal aver that they are “suing upon a singular and isolated transaction.” But they failed to prove their legal existence or juridical personality as foreign corporations.

*** The “isolated transaction rule” refers only to foreign corporations. Here the petitioners are not foreign corporations. They do not even pretend to be so. The first paragraph of their petition, containing the allegation of their identities, does not even aver their corporate character. On the contrary, KMK alleges that it is a “single proprietorship” while Indrapal hides under the vague identification as a “firm”, although both describe themselves. With the phrase “Doing business in accordance with the laws of Singapore.”_____________

Signetics Corp. v. CA Digest

G.R. No. 105141 August 31, 1993Ponente: Vitug, J.:

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Service of Summons on Foreign Corporations

Facts:

1. The petitioner, Signetics was organized under the laws of the United States of America. Through Signetics Filipinas Corporation (SigFil), a wholly-owned subsidiary, Signetics entered into lease contract over a piece of land with Fruehauf Electronics Phils., Inc. (Freuhauf). 

2. Freuhauf sued Signetics for damages, accounting or return of certain machinery, equipment and accessories, as well as the transfer of title and surrender of possession of the buildings, installations and improvements on the leased land, before the RTC of Pasig (Civil Case No. 59264). Claiming that Signetics caused SigFil to insert in the lease contract the words "machineries, equipment and accessories," the defendants were able to withdraw these assets from the cost-free transfer provision of the contract. 

3. Service of summons was made on Signetics through TEAM Pacific Corp. on the basis of the allegation that Signetics is a "subsidiary of US PHILIPS CORPORATION, and may be served summons at Philips Electrical Lamps, Inc., Las Piñas, Metro Manila and/or c/o Technology Electronics Assembly & Management (TEAM) Pacific Corporation, Electronics Avenue, FTI Complex, Taguig, Metro Manila," service of summons was made on Signetics through TEAM Pacific Corporation.

4. Petitioner filed a motion to dismiss the complaint on the ground of lack of jurisdiction over its person. Invoking Section 14, Rule 14, of the Rules of Court and the rule laid down in Pacific Micronisian Line, Inc., v. Del Rosario and Pelington  to the effect that the fact of doing business in the Philippines should first be established in order that summons could be validly made and jurisdiction acquired by the court over a foreign corporation. 

5. The RTC denied the Motion to dismiss. While the CA affirmed RTC. Hence this petition. The petitioner argues that what was effectively alleged in the complaint as an activity of doing business was "the mere equity investment" of petitioner in SigFil, which the petitioner insists, had theretofore been transferred to TEAM holdings, Ltd.

Issue: Whether or not the lower court, had correctly assumed jurisdiction over the petitioner, a foreign corporation, on its claim in a motion to dismiss, that it had since ceased to do business in the Philippines.

YES.

1. Signetics cannot, at least in this early stage, assail, on the one hand, the veracity and correctness of the allegations in the complaint and proceed, on the other hand, to prove its own, in order to hasten a peremptory escape. As explained by the Court in Pacific Micronisian, summons may be served upon an agent of the defendant who may not necessarily be its "resident agent designated in accordance with law." The term "agent", in the context it is used in Section 14, refers to its general meaning, i.e., one who acts on behalf of a principal. 

The allegations in the complaint have thus been able to amply convey that not only is TEAM Pacific the business conduit of the petitioner in the Philippines but that, also, by the charge of fraud, is none other than the petitioner itself.

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2. The rule is that, a foreign corporation, although not engaged in business in the Philippines, may still look up to our courts for relief; reciprocally, such corporation may likewise be "sued in Philippine courts for acts done against a person or persons in the Philippines" (Facilities Management Corporation v. De la Osa), provided that, in the latter case, it would not be impossible for court processes to reach the foreign corporation, a matter that can later be consequential in the proper execution of judgment. Hence, a State may not exercise jurisdiction in the absence of some good basis (and not offensive to traditional notions of fair play and substantial justice) for effectively exercising it, whether the proceedings are in rem, quasi in rem or in personam.

PHILIPS EXPORT VS. COURT OF APPEALS- CORPORATE TRADE NAME

A corporation’s right to use its corporate and trade name is a property right, a right in rem, which it may assert and protect against the whole world.

FACTS:Philips Export B.V. (PEBV) filed with the SEC for the cancellation of the word “Philips” the corporate name of Standard Philips Corporation in view of its prior registration with the Bureau of Patents and the SEC. However, Standard Philips refused to amend its Articles of Incorporation so PEBV filed with the SEC a petition for the issuance of a Writ of Preliminary Injunction, however this was denied ruling that it can only be done when the corporate names are identical and they have at least 2 words different. This was affirmed by the SEC en banc and the Court of Appeals thus the case at bar.

ISSUE:Whether or not Standard Philips can be enjoined from using Philips in its corporate name

RULING: YESA corporation’s right to use its corporate and trade name is a property right, a right in rem, which it may assert and protect against the whole world. According to Sec. 18 of the Corporation Code, no corporate name may be allowed if the proposed name is identical or deceptively confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing law.

For the prohibition to apply, 2 requisites must be present:(1) the complainant corporation must have acquired a prior right over the use of such corporate name and(2) the proposed name is either identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or patently deceptive, confusing or contrary to existing law.

With regard to the 1st requisite, PEBV adopted the name “Philips” part of its name 26 years before Standard Philips. As regards the 2nd, the test for the existence of confusing similarity is whether the similarity is such as to mislead a person using ordinary care and discrimination. Standard Philips only contains one word, “Standard”, different from that of PEBV. The 2 companies’ products are also the same, or cover the same line of products. Although PEBV primarily deals with electrical products, it has also shipped to its subsidiaries machines and parts which fall under the classification of “chains, rollers, belts, bearings and cutting saw”, the goods which Standard Philips also produce. Also, among Standard Philips’ primary purposes are to buy, sell trade x x x electrical wiring devices, electrical component, electrical supplies. Given these, there is nothing to prevent Standard Philips from dealing in the same line of business of electrical devices. The use of “Philips” by Standard Philips tends to show its intention to ride on the popularity and established goodwill of PEBV.

SANTOS vs. COURT OF APPEALS

G.R. No. 120820. August 1, 2000

Facts:

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Spouses Santos owned the house and lot in Better Living Subdivision, Paranaque, Metro

Manila. The land together with the house, was mortgaged with the Rural Bank of Salinas,

Inc., to secure a loan of P150K. The bank sent Rosalinda Santos a letter demanding

payment of P16K in unpaid interest and other charges. Since the Santos couple had no

funds, Rosalinda offered to sell the house and lot to Carmen Caseda. After inspecting the

real property, Carmen and her husband agreed.

Carmen and Rosalinda signed a document, involving the sale of the house – P350K as full

amount, P54K as downpayment. Among other condition set is that Caseda will pay the

balance of the mortgage in the bank, real estate taxes and the electric and water bills.

The Casedas complied with the bank mortgage and the bills. The Santoses, seeing that

the Casedas lacked the means to pay the remaining installments and/or amortization of

the loan, repossessed the property. The Santoses then collected the rentals from the

tenants. Carmen approached petitioners and offered to pay the balance of the purchase

price for the house and lot. The parties, however, could not agree, and the deal could not

push through because the Santoses wanted a higher price.

Carmen is now praying that the Santoses execute the final deed of conveyance over the

property.

Issue: WON there was a perfected contract of sale? NO

Held:

A contract is what the law defines it to be, taking into consideration its essential

elements, and not what the contracting parties call it. Article 1458 expressly obliges the

vendor to transfer ownership of the thing sold as an essential element of a contract of

sale. This is because the transfer of ownership in exchange for a price paid or promised

is the very essence of a contract of sale.

There was no transfer of ownership simultaneously with the delivery of the property

purportedly sold. The records clearly show that, notwithstanding the fact that the

Casedas first took then lost possession of the disputed house and lot, the title to the

property has remained always in the name of Rosalinda Santos. Although the parties had

agreed that the Casedas would assume the mortgage, all amortization payments made

by Carmen Caseda to the bank were in the name of Rosalinda Santos. The foregoing

circumstances categorically and clearly show that no valid transfer of ownership was

made by the Santoses to the Casedas. Absent this essential element, their agreement

cannot be deemed a contract of sale.

It was a contract to sell. Ownership is reserved by the vendor and is not to pass until full

payment of the purchase price. This we find fully applicable and understandable in this

case, given that the property involved is a titled realty under mortgage to a bank and

would require notarial and other formalities of law before transfer thereof could be

validly effected.

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The CA cannot order rescission. If the vendor should eject the vendee for failure to meet

the condition precedent, he is enforcing the contract and not rescinding it. When the

petitioners in the instant case repossessed the disputed house and lot for failure of

private respondents to pay the purchase price in full, they were merely enforcing the

contract and not rescinding it.

PHILIPS EXPORT VS. COURT OF APPEALS- CORPORATE TRADE NAME

A corporation’s right to use its corporate and trade name is a property right, a right in rem, which it

may assert and protect against the whole world.

FACTS:

Philips Export B.V. (PEBV) filed with the SEC for the cancellation of the word “Philips” the corporate

name of Standard Philips Corporation in view of its prior registration with the Bureau of Patents and

the SEC. However, Standard Philips refused to amend its Articles of Incorporation so PEBV filed with

the SEC a petition for the issuance of a Writ of Preliminary Injunction, however this was denied ruling

that it can only be done when the corporate names are identical and they have at least 2 words

different. This was affirmed by the SEC en banc and the Court of Appeals thus the case at bar.

ISSUE:

Whether or not Standard Philips can be enjoined from using Philips in its corporate name

RULING: YES

A corporation’s right to use its corporate and trade name is a property right, a right in rem, which it

may assert and protect against the whole world. According to Sec. 18 of the Corporation Code, no

corporate name may be allowed if the proposed name is identical or deceptively confusingly similar to

that of any existing corporation or to any other name already protected by law or is patently

deceptive, confusing or contrary to existing law.

For the prohibition to apply, 2 requisites must be present:

(1) the complainant corporation must have acquired a prior right over the use of such corporate name

and

(2) the proposed name is either identical or deceptively or confusingly similar to that of any existing

corporation or to any other name already protected by law or patently deceptive, confusing or

contrary to existing law.

With regard to the 1st requisite, PEBV adopted the name “Philips” part of its name 26 years before

Standard Philips. As regards the 2nd, the test for the existence of confusing similarity is whether the

similarity is such as to mislead a person using ordinary care and discrimination. Standard Philips only

contains one word, “Standard”, different from that of PEBV. The 2 companies’ products are also the

same, or cover the same line of products. Although PEBV primarily deals with electrical products, it

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has also shipped to its subsidiaries machines and parts which fall under the classification of “chains,

rollers, belts, bearings and cutting saw”, the goods which Standard Philips also produce. Also, among

Standard Philips’ primary purposes are to buy, sell trade x x x electrical wiring devices, electrical

component, electrical supplies. Given these, there is nothing to prevent Standard Philips from dealing

in the same line of business of electrical devices. The use of “Philips” by Standard Philips tends to

show its intention to ride on the popularity and established goodwill of PEBV.

Young Auto Supply vs CA Case DigestYoung Auto Supply vs. Court of Appeals[GR 104175, 25 June 1993]

Facts: On 28 October 1987, Young Auto Supply Co. Inc. (YASCO) represented by Nemesio Garcia, its president, Nelson Garcia and Vicente Sy, sold all of their shares of stock in Consolidated Marketing & Development Corporation (CMDC) to George C. Roxas. The purchase price was P8,000,000.00 payable as follows: a down payment of P4,000,000.00 and the balance of P4,000,000.00 in four postdated checks of P1,000,000.00 each. Immediately after the execution of the agreement, Roxas took full control of the four markets of CMDC. However, the vendors held on to the stock certificates of CMDC as security pending full payment of the balance of the purchase price. The first check of P4,000,000.00, representing the down payment, was honored by the drawee bank but the four other checks representing the balance of P4,000,000.00 were dishonored. In the meantime, Roxas sold one of the markets to a third party. Out of the proceeds of the sale, YASCO received P600,000.00, leaving a balance of P3,400,000.00. 

Subsequently, Nelson Garcia and Vicente Sy assigned all their rights and title to the proceeds of the sale of the CMDC shares to Nemesio Garcia. On 10 June 1988, YASCO and Garcia filed a complaint against Roxas in the Regional Trial Court, Branch 11, Cebu City, praying that Roxas be ordered to pay them the sum of P3,400,000.00 or that full control of the three markets be turned over to YASCO and Garcia. The complaint also prayed for the forfeiture of the partial payment of P4,600,000.00 and the payment of attorney's fees and costs. Failing to submit his answer, and on 19 August 1988, the trial court declared Roxas in default. The order of default was, however, lifted upon motion of Roxas. On 22 August 1988, Roxas filed a motion to dismiss. After a hearing, wherein testimonial and documentary evidence were presented by both parties, the trial court in an Order dated 8 February 1991 denied Roxas' motion to dismiss. After receiving said order, Roxas filed another motion for extension of time to submit his answer. He also filed a motion for reconsideration, which the trial court denied in its Order dated 10 April 1991 for being pro-forma. Roxas was again declared in default, on the ground that his motion for reconsideration did not toll the running of the period to file his answer. On 3 May 1991, Roxas filed an unverified Motion to Lift the Order of Default which was not accompanied with the required affidavit of merit. But without waiting for the resolution of the motion, he filed a petition for certiorari with the Court of Appeals. The Court of Appeals dismissal of the complaint on the ground of improper venue. A subsequent motion for reconsideration by YASCO was to no avail. YASCO and Garcia filed the petition. 

Issue: Whether the venue for the case against YASCO and Garcia in Cebu City was improperly laid. 

Held: A corporation has no residence in the same sense in which this term is applied to a natural person. But for practical purposes, a corporation is in a metaphysical sense a resident of the place where its principal office is located as stated in the articles of incorporation. The Corporation Code precisely requires each corporation to specify in its articles of incorporation the "place where the principal office of the corporation is to be located which must be within the Philippines." The purpose of this requirement is to fix the residence of a corporation in a definite place, instead of allowing it to be ambulatory. Actions cannot be filed against a corporation in any place where the corporation maintains its branch offices. The Court ruled that to allow an action to be instituted in any place where the corporation has branch offices, would create confusion and work untold inconvenience to said entity. By the same token, a corporation cannot be allowed to file personal actions in a place other than its principal place of business unless such a place is also the residence of a co-plaintiff or a defendant. With the finding that the residence of YASCO for purposes of venue is in Cebu City, where

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its principal place of business is located, it becomes unnecessary to decide whether Garcia is also a resident of Cebu City and whether Roxas was in estoppel from questioning the choice of Cebu City as the venue. The decision of the Court of Appeals was set aside.HANG LUNG BANK V. SAULOGG.R. No. 73765 August 26, 1991FACTS: Hang Lung Bank, which was not doing business in the Philippines, entered into twocontinuing guarantee agreements with Cordova Chin San in Hongkong whereby the latteragreed to pay on demand all sums of money which may be due the bank from WorlderEnterprises to the extent of the total amount of two hundred fifty thousand Hongkong dollars.Worlder Enterprises having defaulted in its payment, petitioner filed in the Supreme Court ofHongkong a collection suit against Worlder Enterprises and Chin San. Summonses wereallegedly served upon Worlder Enterprises and Chin San at their addresses in Hongkong butthey failed to respond thereto. Consequently, the Supreme Court of Hongkong ruled thatWorlder Enterprises and Cordova Chin san liable. A demand letter to Chin San at his Philippineaddress was sent but no response was made thereto triggering the petitioner to institute in thePhilippine court an action seeking "the enforcement of its just and valid claims against privaterespondent, who is a local resident, for a sum of money based on a transaction which was perfected, executed and consummated abroad." In his answer to the complaint, Chin San raisedas affirmative defenses: lack of cause of action, incapacity to sue and improper venue.Lower Court’s Decision: The case was dismissed for lack of jurisdiction.Court of Appeals Decision: The MR was denied for lack of merit.ISSUE:1. Whether or not the foreign banking corporation has the capacity to file action.HELD: Yes.A foreign corporation may sue in this jurisdiction for infringement of trademark and unfaircompetition although it is not doing business in the Philippines 13 because the Philippines wasa party to the Convention of the Union of Paris for the Protection of Industrial Property.We even went further to say that a foreign corporation not licensed to do business in thePhilippines may not be denied the right to file an action in our courts for an isolated transactionin this country.Since petitioner Foreign Banking Corporation was not doing business in the Philippines, it maynot be denied the privilege of pursuing its claims against private respondent for a contractGeneral Rule Foreign Corporation should first obtain license in RP to sue;Except ion If the transaction based on was transacted "wholly or fully" outside RPRat ioGrowth and development of business relations between Filipinos and foreignnationals.Xavier Henry Lopez ZamoraPrivate International Law9which was entered into and consummated outside the Philippines. Otherwise we will behampering the growth and development of business relations between Filipino citizens andforeign nationals. Worse, we will be allowing the law to serve as a protective shield forunscrupulous Filipino citizens who have business relationships abroad.

Ang Ping vs. Court of Appeals (310 SCRA 343)Related Topic: Jurisdiction over the parties.This is a petition for review oncertiorari assailing the Decision of the CA dismissing Ang Ping's prayer for annulment of the judgment of the RTC in Civil Case entitled "Unibancard Corporationvs. Tingson and Ang Ping." Likewise under review is the Court of Appeals' Resolution denying the petitioner's motion for reconsideration.Facts: Juan Tingson applied for and was issued a Unicard credit card, Harry Ang Ping as co-obligor(jointly and severally). Tingson defaulted on his obligations with Unibancard prompting the latter tofile a collection suit with the RTC of Makati. The summonses for both Tingson and Ang Ping wereallegedly served on February 15, 1988 at Mandaluyong and San Juan, Metro Manila, respectively.In both cases, the person who received the summons was a certain Jonas Umali. On May 12, 1988,a certain Atty. Benito Salazar filed an answer purportedly on behalf of Tingson and Ang Ping. Atthe pre-trial, on the other hand, a certain Atty. Lauro Sandoval represented Tingson and Ang Ping.Later, during trial, defendants' counsel did not present any evidence on their behalf; hence, the trialcourt deemed that the defendants had waived their right to present evidence and submitted the casefor decision on the basis solely of the respondent Corporation's evidence. The trial court rendered judgment holding Tingson and Ang Ping jointly and severally liable. Thereafter, series of writ ofexecutions were served against Ang Ping. On

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1994, Ang Ping filed with the Court of Appeals a petition to annul the judgment of the trial court which was the basis of the various writs ofexecution issued against him. He alleged that the judgment in question was rendered without due process of law as he was not given his day in court. He argued that since there was no valid serviceof summons upon him and he never appeared before the court by himself or by counsel, the trialcourt never acquired jurisdiction over his person, thus, the judgment cannot be enforced againsthim.The Court of Appeals dismissed the petition after finding that petitioner Ang Ping was properly placed under the jurisdiction of the trial court which rendered the assailed judgment.Hence, this petition.Issue: Whether or not the RTC acquired jurisdiction over the person of Ang Ping either by hisvoluntary appearance in court and his submission to its authority or by service of summons?Ruling: No. As regards the alleged appearance of a lawyer in behalf of the petitioner during the proceedings in the trial court, the same cannot be considered as the voluntary appearancecontemplated by the rules. In the first place, the records are bereft of any showing that petitionerAng Ping personally appeared at any stage in the proceedings of the trial court. Second, nodocument vesting authority in the lawyer who purportedly represented him appears on record. Atthe pre-trial, for instance, Atty. Sandoval who claimed to be the counsel for the defendants did not present any special power of attorney executed by Ang Ping. The rules require that the party-litiganthimself must appear for pre-trial but if he chooses to be represented thereat, he should grant aspecial power of attorney to his counsel or representative. Likewise, In this case, the records showthat the summons addressed to Ang Ping was delivered by substituted service, with a certain JonasUmali signing as the one who received the summons. As correctly pointed out by Ang Ping,however, there was no explanation in the proof of service justifying the resort to substituted service.In fact, the records are bereft of any showing that a proof of service was even filed after suchsubstituted service.Held: The judgment sought to be executed against Ang Ping was indeed rendered without jurisdiction as he was not properly served with summons and neither did he voluntarily submithimself to the authority of the trial court. The essence of due process is to be found in thereasonable opportunity to be heard and submit any evidence one may have in support of his defense.It is elementary that before a person can be deprived of his property, he should first be informed ofthe claim against him and the theory on which such claim is premised. Not having been dulyaccorded his day in court, petitioner cannot thus be bound by the judgment in the collection suit.

 The petition is GRANTED and the decision of the Court of Appeals is REVERSED. Accordingly,the decision of the Regional Trial Court in Civil Case No. 18843 is SET ASIDE.

Banco de Brazil v. CA

In 1989, Cesar Urbino, Sr. sued Poro Point Shipping Services for damages the former incurred when one of the latter’s ship ran aground causing losses to Urbino. Urbino impleaded Banco Do Brasil (BDB), a foreign corporation not engaged in business in the Philippines nor does it have any office here or any agent. BDB was impleaded simply because it has a claim over the sunken ship. BDB however failed to appear multiple times. Eventually, a judgment was rendered and BDB was adjudged to pay $300,000.00 in damages in favor of Urbino for BDB being a nuisance defendant.BDB assailed the said decision as it argued that there was no valid service of summons because the summons was issued to the ambassador of Brazil. Further, the other summons which were made through publication is not applicable to BDB as it alleged that the action against them is in personam.ISSUE: Whether or not the court acquired jurisdiction over Banco Do Brasil.HELD: No. Banco Do Brasil is correct. Although the suit is originally in rem as it was BDB’s claim on the sunken ship which was used as the basis for it being impleaded, the action nevertheless became an in personam one when Urbino asked for damages in the said amount. As such, only a personal service of summons would have vested the court jurisdiction over BDB. Where the action is in personam, one brought against a person on the basis of his personal liability, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. When the defendant is a non-resident, personal service of summons within the state is essential to the acquisition of jurisdiction over the person. This cannot be done, however, if the defendant is not physically present in the country, and thus, the court cannot acquire jurisdiction over his person and therefore cannot validly try and decide the case against him.

E.B. Villarosa and Partner Co., Ltd. vs. Benito, [G.R. No. 136426 August 6, 1999]Post under case digests, Remedial Law at Thursday, March 08, 2012 Posted by Schizophrenic Mind

Facts: Petitioner is a limited partnership with principal office address at Davao City and with branch

offices at Parañaque, MM and Lapasan, Cagayan de Oro City. Petitioner and private respondent

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executed a Deed of Sale with Development Agreement wherein the former agreed to develop certain

parcels of land located at Cagayan de Oro belonging to the latter into a housing subdivision for

theconstruction of low cost housing units. They further agreed that in case of litigation regarding any

dispute arising therefrom, the venue shall be in the proper courts of Makati. private respondent,

asplaintiff, filed a Complaint for Breach of Contract and Damagesagainst petitioner, as defendant,

before the RTC Makati for failure of the latter to comply with its contractual obligation in that, other

than a few unfinished low cost houses, there were no substantial developments therein. Summons,

together with the complaint, were served upon the defendant, through its Branch Manager at the

stated address at Cagayan de Oro City but the Sheriff's Return ofService stated that the summons

was duly served "upon defendantE.B. Villarosa & Partner Co., Ltd. thru its Branch Manager Engr. at

their new office Villa Gonzalo, Nazareth, Cagayan de Oro City, and evidenced by the signature on the

face of the original copy of the summons. Defendant prayed for the dismissal of the complaint on the

ground of improper service of summons and for lack of jurisdiction over the person of the defendant.

It contends that the RTC did not acquire jurisdiction over its person since the summons was

improperly served upon its employee in its branch office atCagayan de Oro City who is not one of

those persons named in Section 11, Rule 14 RoC upon whom service of summons may be

made. plaintiff filed an Opposition to Defendant's Motion to Dismiss.plaintiff filed a Motion to Declare

Defendant in Default. the trial court issued an Order denying defendant's Motion to Dismiss as well as

plaintiffs Motion to Declare Defendant in Default. defendant, filed a Motion for Reconsideration

alleging that Sec.11, Rule 14 of the new Rules did not liberalize but, on the contrary, restricted the

service of summons on persons enumerated therein; and that the new provision is very specific and

clear in that the word "manager" was changed to "general manager", "secretary" to "corporate

secretary", and excluding therefrom agent and director. Defendant's Motion for Reconsideration was

denied, hence this petition.

Issue: Whether or not the trial court acquired jurisdiction over the person of petitioner upon service of

summons on its Branch Manager

Held: No. the enumeration of persons to whom summons may be served is "restricted, limited and

exclusive" following the rule on statutory construction expressio unios est exclusio alterius and argues

that if the Rules of Court Revision Committee intended to liberalize the rule on service of summons, it

could have easily done so by clear and concise language. under the new Rules, service of summons

upon an agent of the corporation is no longer authorized. The designation of persons or officers who

are authorized to accept summons for a domestic corporation or partnership is now limited and more

clearly specified in Section 11, Rule 14 of the 1997 Rules of Civil Procedure. The rule now states

"general manager" instead of only "manager"; "corporate secretary" instead of "secretary"; and

"treasurer" instead of "cashier." The phrase "agent, or any of its directors" is conspicuously deleted in

the new rule.

Valmonte v. CA Digest

G.R. No. 108538 January 22, 1996Service of Summons

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Facts:

1. Petitioner Lourdes A. Valmonte is a foreign resident. Petitioners Lourdes and Alfredo are husband and wife both residents of 90222 Carkeek Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D. Valmonte, who is a member of the Philippine bar, however, practices his profession in the Philippines, commuting for this purpose between his residence in the state of Washington and Manila, where he holds office at S-304 Gedisco Centre, 1564 A. Mabini, Ermita, Manila.2.  Private respondent Rosita Dimalanta, who is the sister of petitioner filed an action for partition against former and her husband. She alleged that, the plaintiff is of legal age, a widow and is at present a resident of 14823 Conway Road, Chesterfield, Missouri, U.S.A., while the defendants are spouses but, for purposes of this complaint may be served with summons at Gedisco Center, Unit 304, 1564 A. Mabini St., Ermita, Manila where defendant Alfredo D. Valmonte as defendant Lourdes Arreola Valmonte’s spouse holds office and where he can be found.He husband was also her counsel, who has a law office in the Philippines. The summons were served on her husband.

3. Petitioner in a letter, referred private respondent’s counsel to her husband as the party to whom all communications intended for her should be sent. Service of summons was then made upon petitioner Alfredo at his office in Manila. Alfredo D. Valmonte accepted his summons, but not the one for Lourdes, on the ground that he was not authorized to accept the process on her behalf. Accordingly the process server left without leaving a copy of the summons and complaint for petitioner Lourdes A. Valmonte.4.  Petitioner Alfredo D. Valmonte thereafter filed his Answer with Counterclaim. Petitioner Lourdes A. Valmonte, however, did not file her Answer. For this reason private respondent moved to declare her in default. Petitioner Alfredo D. Valmonte entered a special appearance in behalf of his wife and opposed the private respondent’s motion. RTC denied the MR of respondents. CA declared petitioner Lourdes in default. Said decision was received by Alfredo hence this petition.

Issue: Whether or not petitioner Lourdes A. Valmonte was validly served with summons.NO.There was no valid service of summons  on Lourdes.

1.       The action herein is in the nature of an action quasi in rem. Such an action is essentially for the purpose of affecting the defendant’s interest in a specific property and not to render a judgment against him. As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines, service of summons on her must be in accordance with Rule 14, § 17. Such service, to be effective outside the Philippines, must be made either (1) by personal service; (2) by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court should be sent by registered mail to the last known address of the defendant; or (3) in any other manner which the court may deem sufficient.

2.       In the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was not done by means of any of the first two modes. This mode of service, like the first two, must be made outside the Philippines, such as through the Philippine Embassy in the foreign country where the defendant resides. The service of summons on petitioner Alfredo D. Valmonte was not made upon the order of the court as required by Rule 14, § 17 and certainly was not a mode deemed sufficient by the court which in fact refused to consider the service to be valid and on that basis declare petitioner Lourdes A. Valmonte in default for her failure to file an answer.

3.       Secondly, the service in the attempted manner on petitioner was not made upon prior leave of the trial court as required also in Rule 14, § 17. As provided in § 19, such leave must be applied for by motion in writing, supported by affidavit of the plaintiff or some person on his behalf and setting forth the grounds for the application.

4.       Finally, and most importantly, because there was no order granting such leave, petitioner Lourdes was not given ample time to file her Answer which, according to the rules, shall be not less than sixty (60) days after notice.

 BF Corporation v. CA, 288 SCRA 267 (1998)Facts:

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Petitioner and respondent Shangri-la Properties, Inc. entered into an agreementwhereby the latter engaged the former to construct the main structure of the "EDSA PlazaProject," a shopping mall complex in Mandaluyong. Petitioner incurred delay in the constructionwork that SPI considered as "serious and substantial." On the other hand, according topetitioner, the construction works "progressed in faithful compliance with the First Agreementuntil a fire broke out damaging Phase I" of the Project. Hence, SPI proposed the re-negotiationof the agreement between them.Petitioner and SPI entered into a written agreement denominated as "Agreement for theExecution of Builder's Work for the EDSA Plaza Project." Said agreement would cover the construction work on said project as of May 1, 1991 until its eventual completion. According toSPI, petitioner "failed to complete the construction works and abandoned the project." Thisresulted in disagreements between the parties as regards their respective liabilities under thecontract.Petitioner filed with the RTC of Pasig a complaint for collection of the balance due under the construction agreement. SPI and its co-defendants filed a motion to suspend proceedingsinstead of filing an answer. The motion was anchored on defendants' allegation that the formaltrade contract for the construction of the project provided for a clause requiring prior resort toarbitration before judicial intervention could be invoked in any dispute arising from the contract.Petitioner opposed said motion claiming that there was no formal contract between the partiesalthough they entered into an agreement defining their rights and obligations in undertaking theproject.Thereafter, upon a finding that an arbitration clause indeed exists, the lower court deniedthe motion to suspend proceedings as the Conditions of Contract was not duly executed or signed by the parties, and the failure of the defendants to submit any signed copy of the saiddocument,.The lower court then ruled that, assuming that the arbitration clause was valid andbinding, still, it was "too late in the day for defendants to invoke arbitration. Considering the factthat under the supposed Arbitration Clause invoked by defendants, it is required that "Notice of the demand for arbitration of a dispute shall be filed in writing with the other party . . . . in nocase . . . . later than the time of final payment . . . "which apparently, had elapsed becausedefendants have failed to file any written notice of any demand for arbitration during the saidlong period of one year and eight months. The CA annulled the orders of the RTC.Issue:WON a petition for certiorari is proper Held: Yes. The rule that the special civil action of certiorari may not be invoked as a substitutefor the remedy of appeal. The Court has likewise ruled that "certiorari will not be issued to cureerrors in proceedings or correct erroneous conclusions of law or fact. As long as a court actswithin its jurisdiction, any alleged errors committed in the exercise of its jurisdiction will amountto nothing more than errors of judgment which are reviewable by timely appeal and not by aspecial civil action of certiorari ." 

 The question of jurisdiction, which is a question of law depends on the determination of the existence of the arbitration clause, which is a question of fact. In the instant case, the lower court found that there exists an arbitration clause. However, it ruled that in contemplation of law,said arbitration clause does not exist. It is that mode of appeal taken by private respondentsbefore the CA that is being questioned by the petitioners before this Court. But at the heart of said issue is the question of whether there exists an Arbitration Clause because if an ArbitrationClause does not exist, then private respondents took the wrong mode of appeal before the CA.For this Court to be able to resolve the question of whether private respondents took theproper mode of appeal, which, incidentally, is a question of law, then it has to answer the coreissue of whether there exists an Arbitration Clause which, admittedly, is a question of fact.Moreover, where a rigid application of the rule thatcertiorari cannot be a substitute for appeal will result in a manifest failure or miscarriage of justice, the provisions of the Rules of Court which are technical rules may be relaxed. As we shall show hereunder, had the CAdismissed the petition for certiorari , the issue of whether or not an arbitration clause exists in the contract would not have been resolved in accordance with evidence extant in the record of the case. Consequently, this would have resulted in a judicial rejection of a contractual provision agreed by the parties to the contract. In the same vein, this Court holds that the question of the existence of the

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arbitration clause in the contract between petitioner and private respondents is a legal issue that must be determined in this petition for review on certiorari .

Intellectual Property Law – Law on Trademarks, Service Marks and Trade – Trademark Infringement – Unfair CompetitionDel Monte Corporation is an American corporation which is not engaged in business in the Philippines. Though not engaging business here, it has given authority to Philippine Packing Corporation (Philpack) the right to manufacture, distribute and sell in the Philippines various agricultural products, including catsup, under the Del Monte trademark and logo. In 1965, Del Monte also authorized PPC to register with the Patent Office the Del Monte catsup bottle configuration. Philpack was issued a certificate of trademark registration under the Supplemental Register.Later, Del Monte and Philpack learned that Sunshine Sauce Manufacturing was using Del Monte bottles in selling its products and that Sunshine Sauce’s logo is similar to that of Del Monte. The RTC of Makati as well as the Court of Appeals ruled that there was no infringement because the trademarks used between the two are different in designs and that the use of Del Monte bottles by Sunshine Sauce does not constitute unfair competition because as ruled in Shell Company vs Insular Petroleum: “selling oil in containers of another with markings erased, without intent to deceive, was not unfair competition.”ISSUE: Whether or not there is unfair competition and infringement in the case at bar.HELD: Yes. The Supreme Court recognizes that there really are distinctions between the designs of the logos or trademarks of Del Monte and Sunshine Sauce. However, it has been that side by side comparison is not the final test of similarity. Sunshine Sauce’s logo is a colorable imitation of Del Monte’s trademark. The word “catsup” in both bottles is printed in white and the style of the print/letter is the same. Although the logo of Sunshine is not a tomato, the figure nevertheless approximates that of a tomato. The person who infringes a trade mark does not normally copy out but only makes colorable changes, employing enough points of similarity to confuse the public with enough points of differences to confuse the courts. What is undeniable is the fact that when a manufacturer prepares to package his product, he has before him a boundless choice of words, phrases, colors and symbols sufficient to distinguish his product from the others. When as in this case, Sunshine chose, without a reasonable explanation, to use the same colors and letters as those used by Del Monte though the field of its selection was so broad, the inevitable conclusion is that it was done deliberately to deceive.The Supreme Court also ruled that Del Monte does not have the exclusive right to use Del Monte bottles in the Philippines because Philpack’s patent was only registered under the Supplemental Register and not with the Principal Register. Under the law, registration under the Supplemental Register is not a basis for a case of infringement because unlike registration under the Principal Register, it does not grant exclusive use of the patent. However, the bottles of Del Monte do say in embossed letters: “Del Monte Corporation, Not to be Refilled”. And yet Sunshine Sauce refilled these bottles with its catsup products. This clearly shows the Sunshine Sauce’s bad faith and its intention to capitalize on the Del Monte’s reputation and goodwill and pass off its own product as that of Del Monte.

PHILIPPINE ALUMINUM WHEELS INC. vs. FASGI ENTERPRISES

FACTSOn 01 June 1978, FASGI Enterprises Incorporated ("FASGI"), a corporation organized and existing under and by virtue of the laws of the State of California, United States of America, entered into a distributorship arrangement with Philippine Aluminum Wheels, Incorporated ("PAWI"), a Philippine corporation, and Fratelli Pedrini Sarezzo S.P.A. ("FPS"), an Italian corporation. The agreement provided for the purchase, importation and distributorship in the United States of aluminum wheels manufactured by PAWI. FASGI then paid PAWI the FOB value of the wheels. Unfortunately, FASGI later found the shipment to be defective and in non-compliance with the contract.

On 21 September 1979, FASGI instituted an action against PAWI and FPS for breach of contract and recovery of damages in the amount of US$2,316,591.00 before the United States District Court for the Central District of California. In the interim, two agreements were entered by the parties but PAWI kept on failing to discharge its obligations therein. Irked by PAWI's persistent default, FASGI filed with the US District Court of the Central

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District of California the agreements for judgment against PAWI. On 24 August 1982, FASGI filed a notice of entry of judgment. Unable to obtain satisfaction of the final judgment within the United States, FASGI filed a complaint for "enforcement of foreign judgment", before RTC Makati. The Makati court, however, dismissed the case, on the ground that the decree was tainted with collusion, fraud, and clear mistake of law and fact. The lower court ruled that the foreign judgment ignored the reciprocal obligations of the parties. While the assailed foreign judgment ordered the return by PAWI of the purchase amount, no similar order was made requiring FASGI to return to PAWI the third and fourth containers of wheels. This situation, amounted to an unjust enrichment on the part of FASGI. Furthermore, the RTC said, agreements which the California court had based its judgment were a nullity for having been entered into by Mr. Thomas Ready, counsel for PAWI, without the latter's authorization. However, the Court of Appeals reversed this decision.

ISSUEShould the Philippine Court enforce the foreign judgment? YES

RULINGIn this jurisdiction, a valid judgment rendered by a foreign tribunal may be recognized insofar as the immediate parties and the underlying cause of action are concerned so long as it is convincingly shown that there has been an opportunity for a full and fair hearing before a court of competent jurisdiction; that trial upon regular proceedings has been conducted, following due citation or voluntary appearance of the defendant and under a system of jurisprudence likely to secure an impartial administration of justice; and that there is nothing to indicate either a prejudice in court and in the system of laws under which it is sitting or fraud in procuring the judgment. PAWI claims that its counsel, Mr. Ready, has acted without its authority. Verily, in this jurisdiction, it is clear that an attorney cannot, without a client's authorization, settle the action or subject matter of the litigation even when he honestly believes that such a settlement will best serve his client's interest. However, PAWI failed to substantiate this complain with sufficient evidence. Hence, the foreign judgment must be enforced.

Even if PAWI assailed that fraud tainted the agreements which the US Court based its judgment, this cannot prevent the enforcement of said judgment. PAWI claimed that there was collusion and fraud in the signing of the agreements. Although the US Court already adjudicated on this matter, PAWI insisted on raising it again in this Court. Fraud, to hinder the enforcement within this jurisdiction of a foreign judgment, must be extrinsic, i.e., fraud based on facts not controverted or resolved in the case where judgment is rendered, or that which would go to the jurisdiction of the court or would deprive the party against whom judgment is rendered a chance to defend the action to which he has a meritorious case or defense. In fine, intrinsic fraud, that is, fraud which goes to the very existence of the cause of action - such as fraud in obtaining the consent to a contract - is deemed already adjudged, and it, therefore, cannot militate against the recognition or enforcement of the foreign judgment.

Intellectual Property – Law on Copyright – Forum Shopping – Litis Pendentia 

Wilson Ong Ching Kian Chung is selling vermicelli (sotanghon) using his copyrighted cellophane

wrapper with the two-dragons designed label. In 1993, Wilson Ong sued Lorenzo Tan for infringing

upon his copyrighted cellophanes. Wilson Ong alleged that Tan was importing sotanghon from China

National Cereals, Oils and Foodstuffs Import and Export Corporation (CEROILFOOD SHANDONG)

and then Tan would use Wilson Ong’s copyrighted cellophanes to sell the sotanghon (vermicelli).

While the case was pending before the Quezon City RTC, China National Cereals filed another

complaint to cancel the copyright of Wilson Ong before the Manila RTC. Judge Palattao of the Manila

RTC issued a temporary restraining order enjoining Wilson Ong from using his copyrighted

cellophanes.

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Eventually, Wilson Ong appealed before the Court of Appeals questioning the TRO. The Court of

Appeals in the body of its decision cited that the case before the Manila RTC should have been

dismissed because of litis pendentia and forum shopping, there being an existing case before the QC

RTC which a co-equal court of the Manila RTC. But in the dispositive portion of the CA decision, it

said that the Manila RTC has the discretion to dismiss the case. Manila RTC did not dismiss the case

but rather it ordered the cancellation of Wilson Ong’s copyright. The Manila RTC invoked that though

the CA cited forum shopping and litis pendentia as grounds for dismissing the case the CA did not

order Manila RTC to actually dismiss the case but rather it gave the Manila RTC the discretion to

continue hearing the case.

ISSUE: Whether or not the Manila RTC is correct.

HELD: No. The general rule states that the dispositive portion of a Judgment becomes the subject of

execution. However, there are exceptions to this rule and one of the exceptions is that if the

dispositive portion differs with the discussion in the body of the decision such as in the case at bar.

This is because the dispositive portion finds support from the decision’s ratio decidendi.

The Quezon City court and the Manila court have concurrent jurisdiction over the case. However,

when the Quezon City court acquired jurisdiction over the case, it excluded all other courts of

concurrent jurisdiction from acquiring jurisdiction over the same. The Manila court is, therefore,

devoid of jurisdiction over the complaint filed resulting in the assailed decision which must perforce be

declared null and void. To hold otherwise would be to risk instances where courts of concurrent

jurisdiction might have conflicting orders.

OIL AND NATURAL GAS vs. CA

For those who did not take up arbitration: Big commercial contracts, particularly international commercial contracts now usually have a provision to submit all disputes to arbitration. In arbitration, the parties are free to choose who the arbitrators who will render the award. An award in an arbitration proceeding is equivalent to a ruling or decision of a court. After parties present their arguments and evidence, the arbitrators render the award. The winning party goes to court to have the award “confirmed” by a judge or magistrate. Once confirmed by the court, the party can have it enforced. In this case, the parties agreed on an arbitrator and the arbitration proceedings were held in India. The award of the arbitrator was then confirmed or adopted by a court in India. It was the Indian court’s ruling which was being sought to be enforced here in the Philippines. They did this by filing a complaint for the enforcement of a foreign judgment in the RTC of Pasig.

FACTS Oil and Natural Gas Commission is a foreign corporation, owned and controlled by

the Government of India. Pacific Cement Co is a Philippine corporation. Pacific was supposed to deliver more than 4,000 metric tons of oil well cement to

Bombay and Calcutta but because of a dispute with the carrier, the shipment never reached the destination. Despite payment by Oil and Natural, as well as repeated demands, Pacific does not deliver the oil well cement.

During negotiations, the parties agreed that the Pacific will replace the oil well cement with Class “G” cement. Pacific did deliver the Class “G” cement but they were not according to specifications. Oil and Natural informed Pacific that they will submit the dispute to arbitration as provided for in their contract.

The dispute was therefore submitted to arbitration, the arbitrator was Shri Malhotra, an employee of Oil and Natural Gas. The decision of the arbitrator was in favour of Oil and Natural Gas. The arbitral decision was confirmed by an Indian court.

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Oil and Natural Gas filed a complaint in Pasig RTC for the enforcement of the foreign judgment. This was opposed by Pacific for being “bereft of any statement of facts and law upon which the award in favor of the petitioner was based.” The judgment of the Indian court apparently simply adopted the award of the arbitrator without stating anything by way of support for its judgment.

The Pasig RTC dismissed the complaint. The RTC said that the contract provided for some disputes to be settled by the regular court and some to be submitted to arbitration. This type, the RTC said, was for the courts. “Consequently, the proceedings had before the arbitrator were null and void and the foreign court had therefore, adopted no legal award which could be the source of an enforceable right.”

The CA affirmed the dismissal by the RTC. Aside from agreeing with the RTC that the arbitral award was void, the CA also said “that the full text of the judgment of the foreign court contains the dispositive portion only and indicates no findings of fact and law as basis for the award. Hence, the said judgment cannot be enforced by any Philippine court as it would violate the constitutional provision that no decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based.”

ISSUEWhether or not the judgment of the foreign court is enforceable in this jurisdiction in view of the private respondent's allegation that it is bereft of any statement of facts and law upon which the award in favor of the petitioner was based.

RULINGYes, it is enforceable in this jurisdiction. The SC said that “even in this jurisdiction, incorporation by reference is allowed if only to avoid the cumbersome reproduction of the decision of the lower courts, or portions thereof, in the decision of the higher court. This is particularly true when the decision sought to be incorporated is a lengthy and thorough discussion of the facts and conclusions arrived at, as in this case, where Award Paper No. 3/B-1 consists of eighteen (18) single spaced pages..” In effect, the SC was saying that we also do in this country what the Indian court did and it was okay for as long as the award or decision adopted was complete in terms of the discussion of the facts and conclusions. The 18 pages of single spaced award by the arbitrator was, according to the SC, complete enough. The short decision of the Indian court which merely adopted the award was acceptable in our jurisdiction.Furthermore, the recognition to be accorded a foreign judgment is not necessarily affected by the fact that the procedure in the courts of the country in which such judgment was rendered differs from that of the courts of the country in which the judgment is relied on. This Court has held that matters of remedy and procedure are governed by the lex fori or the internal law of the forum. Thus, if under the procedural rules of the Civil Court of Dehra Dun, India, a valid judgment may be rendered by adopting the arbitrators findings, then the same must be accorded respect. In the same vein, if the procedure in the foreign court mandates that an Order of the Court becomes final and executory upon failure to pay the necessary docket fees, then the courts in this jurisdiction cannot invalidate the order of the foreign court simply because our rules provide otherwise.

Finally, we reiterate hereunder our pronouncement in the case of Northwest Orient Airlines, Inc. v. Court of Appeals that:

"A foreign judgment is presumed to be valid and binding in the country from which it comes, until the contrary is shown. It is also proper to presume the regularity of the proceedings and the giving of due notice therein.”

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"Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in personam of a tribunal of a foreign country having jurisdiction to pronounce the same is presumptive evidence of a right as between the parties and their successors-in-interest by a subsequent title. The judgment may, however, be assailed by evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of Rule 131, a court, whether of the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful exercise of jurisdiction and has regularly performed its official duty."

Consequently, the party attacking a foreign judgment (Pacific Cement) had the burden of overcoming the presumption of its validity which it failed to do in the instant case.

The foreign judgment being valid, there is nothing else left to be done than to order its enforcement, despite the fact that Oil and Natural Gas merely prays for, the remand of the case to the RTC for further proceedings. As this Court has ruled on the validity and enforceability of the said foreign judgment in this jurisdiction, further proceedings in the RTC for the reception of evidence to prove otherwise are no longer necessary.

ASIAVEST VS. CA AND PNCC   Leave a comment

ASIAVEST MERCHANT BANKERS (M) BERHAD vs. CA and PNCCG.R. No. 110263, July 20, 2001

Facts: Petitioner Asiavest Merchant Bankers (M) Berhad is a corporation organized under the laws of Malaysia while private respondent Philippine National Construction Corporation is a corporation duly incorporated and existing under Philippine laws.

Petitioner initiated a suit for collection against private respondent, then known as Construction and Development Corporation of the Philippines, before the High Court of Malaya in Kuala Lumpur entitled “Asiavest Merchant Bankers (M) Berhad v. Asiavest CDCP Sdn. Bhd. and Construction and Development Corporation of the Philippines.”

Petitioner sought to recover the indemnity of the performance bond it had put up in favor of private respondent to guarantee the completion of the Felda Project and the nonpayment of the loan it extended to Asiavest-CDCP Sdn. Bhd. for the completion of Paloh Hanai and Kuantan By Pass; Project.

The High Court of Malaya (Commercial Division) rendered judgment in favor of the petitioner and against the private respondent. Following unsuccessful attempts to secure payment from private respondent under the judgment, petitioner initiated the complaint before RTC of Pasig, Metro Manila, to enforce the judgment of the High Court of Malaya.

Private respondent sought the dismissal of the case via a Motion to Dismiss, contending that the alleged judgment of the High Court of Malaya should be denied recognition or enforcement since on in face, it is tainted with want of jurisdiction, want of notice to private respondent, collusion and/or fraud, and there is a clear mistake of law or fact. Dismissal was, however, denied by the trial court considering that the grounds relied upon are not the proper grounds in a motion to dismiss under Rule 16 of the Revised Rules of Court.

Subsequently, private respondent filed its Answer with Compulsory Counter claim’s and therein raised the grounds it brought up in its motion to dismiss. In its Reply filed, the petitioner contended that the High Court of Malaya acquired jurisdiction over the person of private respondent by its voluntary submission the court’s jurisdiction through its

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appointed counsel. Furthermore, private respondent’s counsel waived any and all objections to the High Court’s jurisdiction in a pleading filed before the court.

In due time, the trial court rendered its decision dismissing petitioner’s complaint. Petitioner interposed an appeal with the Court of Appeals, but the appellate court dismissed the same and affirmed the decision of the trial court.

Issue: Whether or not the CA erred in denying recognition and enforcement to the Malaysian Court judgment.

Ruling: Yes.

Generally, in the absence of a special compact, no sovereign is bound to give effect within its dominion to a judgment rendered by a tribunal of another country; however, the rules of comity, utility and convenience of nations have established a usage among civilized states by which final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious under certain conditions that may vary in different countries.

In this jurisdiction, a valid judgment rendered by a foreign tribunal may be recognized insofar as the immediate parties and the underlying cause of action are concerned so long as it is convincingly shown that there has been an opportunity for a full and fair hearing before a court of competent jurisdiction; that the trial upon regular proceedings has been conducted, following due citation or voluntary appearance of the defendant and under a system of jurisprudence likely to secure an impartial administration of justice; and that there is nothing to indicate either a prejudice in court and in the system of laws under which it is sitting or fraud in procuring the judgment.

A foreign judgment is presumed to be valid and binding in the country from which it comes, until a contrary showing, on the basis of a presumption of regularity of proceedings and the giving of due notice in the foreign forum Under Section 50(b), Rule 39 of the Revised Rules of Court, which was the governing law at the time the instant case was decided by the trial court and respondent appellate court, a judgment, against a person, of a tribunal of a foreign country having jurisdiction to pronounce the same is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title. The judgment may, however, be assailed by evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. In addition, under Section 3(n), Rule 131 of the Revised Rules of Court, a court, whether in the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful exercise of its jurisdiction. Hence, once the authenticity of the foreign judgment is proved, the party attacking a foreign judgment, is tasked with the burden of overcoming its presumptive validity.

In the instant case, petitioner sufficiently established the existence of the money judgment of the High Court of Malaya by the evidence it offered. Petitioner’s sole witness, testified to the effect that he is in active practice of the law profession in Malaysia; that he was connected with Skrine and Company as Legal Assistant up to 1981; that private respondent, then known as Construction and Development Corporation of the Philippines, was sued by his client, Asiavest Merchant Bankers (M) Berhad, in Kuala Lumpur; that the writ of summons were served on March 17, 1983 at the registered office of private respondent and on March 21, 1983 on Cora S. Deala, a financial planning officer of private respondent for Southeast Asia operations; that upon the filing of the case, Messrs. Allen and Gledhill, Advocates and Solicitors, with address at 24th Floor, UMBC Building, Jalan Sulaiman, Kuala Lumpur, entered their conditional

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appearance for private respondent questioning the regularity of the service of the writ of summons but subsequently withdrew the same when it realized that the writ was properly served; that because private respondent failed to file a statement of defense within two (2) weeks, petitioner filed an application for summary judgment and submitted affidavits and documentary evidence in support of its claim; that the matter was then heard before the High Court of Kuala Lumpur in a series of dates where private respondent was represented by counsel; and that the end result of all these proceedings is the judgment sought to be enforced.

In addition to the said testimonial evidence, petitioner also offered the documentary evidence to support their claim.

Having thus proven, through the foregoing evidence, the existence and authenticity of the foreign judgment, said foreign judgment enjoys presumptive validity and the burden then fell upon the party who disputes its validity, herein private respondent, to prove otherwise. However, private respondent failed to sufficiently discharge the burden that fell upon it – to prove by clear and convincing evidence the grounds which it relied upon to prevent enforcement of the Malaysian High Court judgment.