Beruflich Dokumente
Kultur Dokumente
MAKASIAR, J:
Petition for review on certiorari of the decision of the
Court of Industrial Relations, dated February 14,
1972, ordering petitioners herein to pay private
respondent Leonardo de la Osa his overtime
compensation, as wen as his swing shift and
graveyard shift premiums at the rate of fifty (50%)
per cent of his basic sa (Annex E, p. 31, rollo).
The aforesaid decision was based on a report
submitted by the Hearing Examiner, CIR (Dagupan
City Branch), the pertinent portions of which are
quoted hereinbelow:::
In a petition filed on July 1, 1967,
Leonardo dela Osa sought his
reinstatement. with full backwages,
as well as the recovery of his
overtime compensation, swing shift
and graveyard shift differentials.
Petitioner alleged that he was
employed by respondents as
follows: (1) painter with an hourly
rate of $1.25 from March, 1964 to
November, 1964, inclusive; (2)
houseboy with an hourly rate of
$1.26 from December, 1964 to
November, 1965, inclusive; (3)
houseboy with an hourly rate of
rebutted, by respondents, as
revealed by the records. Since
petitioner actually rendered night
time services as required by
respondents, and considering the
physical, moral and sociological
effects arising from the
performance of such nocturnal
duties, we think and honestly
believe that petitioner should be
compensated at least fifty percent
(50%) more than his basic wage
rate. This night shift premium pay
would indeed be at par with the
overtime compensation stipulated
at one and one-half (1 ) times of
the straight time rate.
xxx xxx xxx (pp. 31-36, rollo).
Apropos before this Court were filed three (3) other
cases involving the same petitioner, all of which had
been finally dispoded of, as follows:
G.R. No Date of Filing Disposition
1. L-37117 July 30, 1973 Petition
denied for
lack of merit on Sept.
13, 1973. Motion for
Reconsideration
denied lack of
merit, Nov. 20,1973.
2. L-38781 June 17,1974 Petition
denied for
lack of merit on June
21,1974.
3. L-39111-12 Sept. 2,1974 Case
dismissed on Feb.
6, 1976, pursuant to
voluntary manifesta
tion of private respon
dent Inocente R. Riel
that his claims had all
designated by
law to that effect,
or on any of its
officers or agents
within the
Philippines.
Indeed, the petitioner, in
compliance with Act 2486 as
implemented by Department of
Labor Order No. IV dated May 20,
1968 had to appoint Jaime V.
Catuira, 1322 A. Mabini, Ermita,
Manila as agent for FMC with
authority to execute Employment
Contracts and receive, in behalf of
that corporation, legal services
from and be bound by processes of
the Philippine Courts of Justice, for
as long as he remains an employee
of FMC (Annex 'I', rollo, p. 56). It is
a fact that when the summons for
the petitioner was served on Jaime
V. Catuira he was still in the employ
of the FMC.
In his motion to dismiss Annex B',
p. 19, Rollo), petitioner admits that
Mr. Catuira represented it in this
country 'for the purpose of making
arrangements for the approval by
the Department of Labor of the
employment of Filipinos who are
recruited by the Company as its
own employees for assignment
abroad.' In effect, Mr. Catuira was a
on officer representing petitioner in
the Philippines.
Under the rules and regulations
promulgated by the Board of
Investments which took effect Feb.
3, 1969, implementing Rep. Act No.
5455, which took effect Sept. 30,
1968, the phrase 'doing business'
has been exemption with
illustrations, among them being as
follows:
(2) Appointing a
representative or
distributor who is
dociled in the
Philippines,
unless said
representative or
distributor has an
independent
status, i.e., it
transacts
business in its
name and for its
own account, and
not in the name
or for the account
of the principal.
xxx xxx xxx
(4) Opening
offices, whether
called
'liaison'offices,
agencies or
branches, unless
proved
otherwise.
xxx xxx xxx
(10) 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, or in the
progressive
prosecution of,
commercial gain
or of the purpose
and objective of
the business
organization (54
O.G. 53).
Recently decided by this Court again thru Mr.
Justice Ramon C. Fernandez which is similar to the
case at bar, is G.R. No. L-26809, entitled Aetna
Casualty & Curety Company, plaintiff- appellant
versus Pacific Star Line, the Bradman Co., Inc.,
Manila Port Service and/or Manila Railroad Company,
Inc., defendants-appellees." The case is an appeal
from the decision of the Court of First Instance of
Manila, Branch XVI, in its Civil Case No. 53074,
entitled Aetna Casualty & Surety Company vs. Pacific
Star Lines, The Bradman Co., Inc., Manila Port
Service and/or Manila Railroad Company, Inc."
dismissing the complaint on the ground that the
plaintiff has no legal capacity to bring the suit.
It appears that on February 11, 1963, Smith Bell &
Co. (Philippines), Inc. and Aetna Casualty & Surety
Co., Inc., as subrogee instituted Civil Case No. 53074
in the Court of First Instance of Manila against Pacific
Star Line, The Bradman Co., Inc., Manila Port Service
and/or Manila Railroad Company, Inc. to recover the
amount of US$2,300.00 representing the value of
stolen and damaged cargo plus litigation expenses
and exemplary damages in the amounts of P1,000.00
and P2,000.00, respectively, with legal interest
thereon from the filing of the suit and costs.
After all the defendants had filed their answer, the
defendants Manila Port Service and Manila Railroad
Company, Inc. amended their answer to allege that
the plaintiff, Aetna Casualty & Surety Company, is a
foreign corporation not duly licensed to do business
in the Philippines and, therefore, without capacity to
sue and be sued.
After the parties submitted a partial stipulation of
facts and additional documentary evidence, the case
was submitted for decision of the trial court, which
dismissed the complaint on the ground that the
plaintiff insurance company is subject to the
requirements of Sections 68 and 69 of Act 1459, as
foreign
corporation is
continuing the
body or
substance of the
business or
enterprise for
which it was
organized or
whether it has
substantially
retired from it
and turned it
over to another.
(Traction Cos. v.
Collectors of Int
Revenue [C.C.A
Ohio], 223 F. 984,
987). The term
implies a
continuity of
commercial
dealings and
arrangements,
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
(Griffin v.
Implement
Dealers' Mut. Fire
Ins. Co., 241 N.W.
75, 77; Pauline
Oil & Gas Co. v.
Mutual Tank Line
Co., 246 P. 851,
852, 118 Okl. III;
Automotive
isolated
transactions do
not constitute
engaging in
business in the
Philippines within
the purview of
Sections 68 and
69 of the
Corporation Law
so as to bar
plaintiff from
seeking redress
in our courts.
(Marshall Wens
Co. vs. Henry W.
Elser & Co. 49
Phil., 70; Pacific
Vegetable Oil
Corporation vs.
Angel O. Singson,
G.R. No. L-7917,
April 29, 1955)'.
102 Phil., pp. 1,
18.
Based on the rulings laid down in
the foregoing cases, it cannot be
said that the Aetna Casualty &
Surety Company is transacting
business of insurance in the
Philippines for which it must have a
license. The Contract of insurance
was entered into in New York,
U.S.A., and payment was made to
the consignee in its New York
branch. It appears from the list of
cases issued by the Clerk of Court
of the Court of First Instance of
Manila that all the actions, except
two (2) cases filed by Smith, Beer
& Co., Inc. against the Aetna
Casualty & Surety Company, are
claims against the shipper and the
arrastre operators just like the case
at bar.
SO ORDERED.11
SO ORDERED.13
In partially modifying the first assailed Order, the RTC
ratiocinated, viz.:
This court sees no reason to further belabor the issue
on plaintiffs capacity to sue since there is a prima
facie showing that defendant entered into a contract
with defendant and having done so, willingly, it
cannot now be made to raise the issue of capacity to
sue [Merrill Lynch Futures, Inc. v. CA, 211 SCRA 824].
That defendant was not aware of plaintiffs lack of
capacity to sue or that defendant did not benefit
from the transaction are arguments that are hardly
supported by the evidence already presented for the
resolution of the Motion to Dismiss.
SO ORDERED.10
xxxx
The Issues
Steelcase filed the present petition relying on the
following grounds:
I
THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR WHEN IT FOUND THAT
STEELCASE HAD BEEN "DOING BUSINESS" IN
THE PHILIPPINES WITHOUT A LICENSE.
II
THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN NOT FINDING THAT
RESPONDENT WAS ESTOPPED FROM
CHALLENGING STEELCASES LEGAL CAPACITY
TO SUE, AS AN AFFIRMATIVE DEFENSE IN ITS
ANSWER.
The issues to be resolved in this case are:
(1) Whether or not Steelcase is doing
business in the Philippines without a license;
and
(2) Whether or not DISI is estopped from
challenging the Steelcases legal capacity to
sue.
The Courts Ruling
The Court rules in favor of the petitioner.
Steelcase is an unlicensed foreign corporation NOT
doing business in the Philippines
Anent the first issue, Steelcase argues that Section
3(d) of R.A. No. 7042 or the Foreign Investments Act
of 1991(FIA) expressly states that the phrase "doing
business" excludes the appointment by a foreign
corporation of a local distributor domiciled in the
Philippines which transacts business in its own name
and for its own account. Steelcase claims that it was
SO ORDERED.
Exhibit
"R",presented by
plaintiff is a
certified copy of
a license, dated
July 1, 1967,
issued by the
Office of the
Insurance
Commissioner
authorizing
plaintiff to
transact
insurance
business in this
country. By virtue
of Section 176 of
the Insurance
Law, it has to be
presumed that a
license to
transact business
under Section 68
of the
Corporation Law
had previously
been issued to
plaintiff. No copy
thereof, however,
was submitted
for a reason
unknown. The
date of that
license must not
have been much
anterior to July 1,
1967. The
preponderance of
the evidence
would therefore
call for the
finding that the
insurance
contract involved
in this case,
which was
executed at
Makati, Rizal, on
February 8, 1967,
was contracted
before plaintiff
was licensed to
transact business
in the Philippines.
This Court views
Section 68 of the
Corporation Law
as reflective of a
basic public
policy. Hence, it
is of the opinion
that, in the eyes
of Philippine law,
the insurance
contract involved
in this case must
be held void
under the
provisions of
Article 1409 (1)
of the Civil Code,
and could not be
validated by
subsequent
procurement of
the license. That
view of the Court
finds support in
the following
citation:
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SO ORDERED.
G.R. No. L-47701
Separate Opinions
MORAN, J., dissenting:
Section 69 of the Corporation Law provides that,
without license no foreign corporation may maintain
by itself or assignee any suit in the Philippine courts
for the recovery of any debt, claim or demand
whatever. But this provision, as we have held
in Western Equipment & Supply Company vs.
Reyes (51 Phil., 115), does not apply to suits for
infringement of trade marks and unfair competition,
the theory being that "the right to the use of the
corporate and trade name of a foreign corporation is
a property right, a right in rem, which it may assert
and protect in any of the courts of the world even in
PANGANIBAN, J.:
Is a foreign corporation which sold its products
sixteen times over a five-month period to the same
Filipino buyer without first obtaining a license to do
business in the Philippines, prohibited from
maintaining an action to collect payment therefor in
Philippine courts? In other words, is such foreign
corporation "doing business" in the Philippines
without the required license and thus barred access
to our court system?
This is the main issue presented for resolution in the
instant petition for review, which seeks the reversal
of the Decision 1 of the Court of Appeals, Seventh
Division, promulgated on January 25, 1995, in CAG.R. CV No. 41275 which affirmed, for want of
capacity to sue, the trial court's dismissal of the
collection suit instituted by petitioner.
The Facts
Petitioner 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. In its complaint, it alleged
that: 2
S$36,392.44
21 Mar 89 28257 618-7578-4634 415.50
04 Apr 89 28601 618-7741-7605 884.09
14 Apr 89 28900 618-7741-7631 1,269.50
25 Apr 89 29127 618-7741-9720 883.80
02 May 89 29232 (By seafreight) 120.00
05 May 89 29332 618-7796-3255 1,198.40
Total S$ 41,927.43
The transfers of goods were perfected in Singapore,
for private respondent's account, F.O.B. Singapore,
with a 90-day credit term. Subsequently, demands
were made by petitioner upon private respondent to
settle his account, but the latter failed/refused to do
so.
On August 28, 1991, petitioner corporation filed with
the Regional Trial Court of Makati, Branch 138, 4 Civil
Case No. 91-2373 entitled "Eriks Pte. Ltd. vs. Delfin
Enriquez, Jr." for the recovery of S$41,939.63 or its
equivalent in Philippine currency, plus interest
thereon and damages. Private respondent responded
with a Motion to Dismiss, contending that petitioner
corporation had no legal capacity to sue. In an Order
dated March 8, 1993, 5 the trial court dismissed the
action on the ground that petitioner is a foreign
corporation doing business in the Philippines without
a license. The dispositive portion of said order
reads: 6
WHEREFORE, in view of the
foregoing, the motion to dismiss is
hereby GRANTED and accordingly,
the above-entitled case is hereby
DISMISSED.
SO ORDERED.
On appeal, respondent Court affirmed said order as it
deemed the series of transactions between
petitioner, corporation and private respondent not to
be an "isolated or casual transaction." Thus,
respondent Court likewise found petitioner to be
without legal capacity to sue, and disposed of the
appeal as follows: 7
xxx
xxx
NARVASA, C.J.:
The capacity of a foreign corporation to maintain an
action in the Philippines against residents thereof, is
the principal question in the appellate proceedings at
bar. The issue arises from the undisputed facts now
to be briefly narrated.
On November 23, 1987, Merrill Lynch Futures, Inc.
(hereafter, simply ML FUTURES) filed a complaint
with the Regional Trial Court at Quezon City against
the Spouses Pedro M. Lara and Elisa G. Lara for the
recovery of a debt and interest thereon, damages,
and attorney's fees. 1 In its complaint ML FUTURES
described itself as
a) a non-resident foreign
corporation, not doing business in
the Philippines, duly organized and
existing under and by virtue of the
laws of the state of Delaware,
U.S.A.;" as well as
b) a "futures commission
merchant" duly licensed to act as
such in the futures markets and
exchanges in the United States, . .
essentially functioning as a broker .
. (executing) orders to buy and sell
futures contracts received from its
customers on U.S. futures
exchanges.
It also defined a "futures contract" as a "contractual
commitment to buy and sell a standardized quantity
of a particular item at a specified future settlement
date and at a price agreed upon, with the purchase
or sale being executed on a regulated futures
exchange."
ARRANGEMENTS AND
CONTEMPLATE TO THAT EXTENT
THE PERFORMANCE OF ACTS OR
WORKS, OR THE EXERCISE OF
SOME FUNCTIONS NORMALLY
INCIDENT TO, AND IN
PROGRESSIVE PROSECUTION OF
COMMERCIAL GAIN OR OF THE
PURPOSE AND OBJECT OF THE
BUSINESS ORGANIZATION.
As regards the claim that it was error for the Trial
Court to place reliance on the decision of the Court of
Appeals in CA-G.R. No. 10821-SP sustaining the
finding of the Securities & Exchange Commission that
ML FUTURES was doing business in the Philippines
since that judgment was not yet final and ML
FUTURES was not a party to that proceeding, the
Court of Appeals ruled that there was no need to
belabor the point considering that there was, in any
event, "adequate proof of the activities of MLPI . . .
which manifestly show that the plaintiff (ML
FUTURES) performed a series of business acts,
consummated contracts and undertook transactions
for the period from 1983 to October 1987," "and
because ML FUTURES had done so without license, it
consequently had "no legal personality to bring suit
in Philippine courts."
Its motion for reconsideration having been
denied, 10 ML FUTURES has appealed to this Court
on certiorari. Here, it submits the following issues for
resolution:
(a) Whether or not the annexes
appended by the Laras to their
Motion to Dismiss and Reply filed
with the Regional Trial Court, but
never authenticated or offered,
constitute admissible evidence.
(b) Whether or not in the
proceedings below, ML FUTURES
has been accorded procedural due
process.