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HahnvsCA:113074:January22,1997:J.Mendoza:SecondDivision

SECONDDIVISION

[G.R.No.113074.January22,1997]

ALFRED HAHN, petitioner, vs. COURT OF APPEALS and BAYERISCHE


MOTORENWERKEAKTIENGESELLSCHAFT(BMW),respondents.
DECISION
MENDOZA,J.:

This is a petition for review of the decision[1] of the Court of Appeals dismissing a complaint for
specific performance which petitioner had filed against private respondent on the ground that the
RegionalTrialCourtofQuezonCitydidnotacquirejurisdictionoverprivaterespondent,anonresident
foreigncorporation,andoftheappellatecourt'sorderdenyingpetitioner'smotionforreconsideration.
Thefollowingarethefacts:
PetitionerAlfredHahnisaFilipinocitizendoingbusinessunderthenameandstyle"HahnManila."Onthe
otherhand,privaterespondentBayerischeMotorenWerkeAktiengesellschaft(BMW)isanonresidentforeign
corporationexistingunderthelawsoftheformerFederalRepublicofGermany,withprincipalofficeatMunich,
Germany.
OnMarch7,1967,petitionerexecutedinfavorofprivaterespondenta"DeedofAssignmentwith
SpecialPowerofAttorney,"whichreadsinfullasfollows:
WHEREAS,theASSIGNORisthepresentownerandholderoftheBMWtrademarkanddeviceinthe
PhilippineswhichASSIGNORusesandhasbeenusingontheproductsmanufacturedbyASSIGNEE,andfor
whichASSIGNORistheauthorizedexclusiveDealeroftheASSIGNEEinthePhilippines,thesamebeing
evidencedbycertificateofregistrationissuedbytheDirectorofPatentson12December1963andisreferredto
asTrademarkNo.10625
WHEREAS,theASSIGNORhasagreedtotransferandconsequentlyrecordsaidtransferofthesaidBMW
trademarkanddeviceinfavoroftheASSIGNEEhereinwiththePhilippinesPatentOffice
NOWTHEREFORE,inviewoftheforegoingandinconsiderationofthestipulationshereunderstated,the
ASSIGNORherebyaffirmsthesaidassignmentandtransferinfavoroftheASSIGNEEunderthefollowing
termsandconditions:
1.TheASSIGNEEshalltakeappropriatestepsagainstanyuserotherthanASSIGNORorinfringeroftheBMW
trademarkinthePhilippines,forsuchpurpose,theASSIGNORshallinformtheASSIGNEEimmediatelyofany
suchuseorinfringementofthesaidtrademarkwhichcomestohisknowledgeanduponsuchinformationthe
ASSIGNORshallautomaticallyactasAttorneyInFactoftheASSIGNEEforsuchcase,withfullpower,
authorityandresponsibilitytoprosecuteunilaterallyorinconcertwithASSIGNEE,anysuchinfringerofthe
subjectmarkandforpurposeshereoftheASSIGNORisherebynamedandconstitutedasASSIGNEE's
AttorneyInFact,butanysuchsuitwithoutASSIGNEE'sconsentwillexclusivelybetheresponsibilityandfor
theaccountoftheASSIGNOR,
2.ThattheASSIGNORandtheASSIGNEEshallcontinuebusinessrelationsashasbeenusualinthepast
withoutaformalcontract,andforthatpurpose,thedealershipofASSIGNORshallcovertheASSIGNEE's
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completeproductionprogramwiththeonlylimitationthat,forthepresent,inviewofASSIGNEE'slimited
production,thelattershallnotbeabletosupplyautomobilestoASSIGNOR.
Per the agreement, the parties "continue[d] business relations as has been usual in the past
withoutaformalcontract."ButonFebruary16,1993,inameetingwithaBMWrepresentativeandthe
president of Columbia Motors Corporation (CMC), Jose Alvarez, petitioner was informed that BMW
was arranging to grant the exclusive dealership of BMW cars and products to CMC, which had
expressed interest in acquiring the same. On February 24, 1993, petitioner received confirmation of
the information from BMW which, in a letter, expressed dissatisfaction with various aspects of
petitioner's business, mentioning among other things, decline in sales, deteriorating services, and
inadequate showroom and warehouse facilities, and petitioner's alleged failure to comply with the
standards for an exclusive BMW dealer.[2] Nonetheless, BMW expressed willingness to continue
businessrelationswiththepetitioneronthebasisofa"standardBMWimporter"contract,otherwise,it
said, if this was not acceptable to petitioner, BMW would have no alternative but to terminate
petitioner'sexclusivedealershipeffectiveJune30,1993.
Petitionerprotested,claimingthattheterminationofhisexclusivedealershipwouldbeabreachof
theDeedofAssignment.[3]Hahninsistedthataslongastheassignmentofitstrademarkanddevice
subsisted,heremainedBMW'sexclusivedealerinthePhilippinesbecausetheassignmentwasmade
inconsiderationoftheexclusivedealership.Inthesameletterpetitionerexplainedthatthedeclinein
sales was due to lower prices offered for BMW cars in the United States and the fact that few
customersreturnedforrepairsandservicingbecauseofthedurabilityofBMWpartsandtheefficiency
ofpetitioner'sservice.
BecauseofHahn'sinsistenceontheformerbusinessrelation,BMWwithdrewonMarch26,1993
its offer of a "standard importer contract" and terminated the exclusive dealer relationship effective
June30,1993.[4]At a conference of BMW Regional Importers held on April 26, 1993 in Singapore,
Hahn was surprised to find Alvarez among those invited from the Asian region. On April 29, 1993,
BMWproposedthatHahnandCMCjointlyimportanddistributeBMWcarsandparts.
Hahn found the proposal unacceptable. On May 14, 1993, he filed a complaint for specific
performanceanddamagesagainstBMWtocompelittocontinuetheexclusivedealership.Laterhe
filedanamendedcomplainttoincludeanapplicationfortemporaryrestrainingorderandforwritsof
preliminary, mandatory and prohibitory injunction to enjoin BMW from terminating his exclusive
dealership.Hahn'samendedcomplaintallegedinpertinentparts:
2.Defendant[BMW]isaforeigncorporationdoingbusinessinthePhilippineswithprincipalofficesatMunich,
Germany.ItmaybeservedwithsummonsandothercourtprocessesthroughtheSecretaryoftheDepartmentof
TradeandIndustryofthePhilippines....
....
5.OnMarch7,1967,PlaintiffexecutedinfavorofdefendantBMWaDeedofAssignmentwithSpecialPower
ofAttorneycoveringthetrademarkandinconsiderationthereof,underitsfirstwhereasclause,Plaintiffwas
dulyacknowledgedasthe"exclusiveDealeroftheAssigneeinthePhilippines"....
....
8.Fromthetimethetrademark"BMW&DEVICE"wasfirstusedbythePlaintiffinthePhilippinesuptothe
present,Plaintiff,throughitsfirmname"HAHNMANILA"andwithoutanymonetarycontributionfrom
defendantBMW,establishedBMW'sgoodwillandmarketpresenceinthePhilippines.Pursuantthereto,Plaintiff
hasinvestedalotofmoneyandresourcesinordertosinglehandedlycompeteagainstothermotorcycleandcar
companies....Moreover,Plaintiffhasbuiltbuildingsandotherinfrastructuressuchasservicecentersand
showroomstomaintainandpromotethecarandproductsofdefendantBMW.
....
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10.InaletterdatedFebruary24,1993,defendantBMWadvisedPlaintiffthatitwaswillingtomaintainwith
Plaintiffarelationshipbutonly"onthebasisofastandardBMWimportercontractasadjustedtoreflectthe
particularsituationinthePhilippines"subjecttocertainconditions,otherwise,defendantBMWwouldterminate
Plaintiff'sexclusivedealershipandanyrelationshipforcauseeffectiveJune30,1993....
....
15.TheactuationsofdefendantBMWareinbreachoftheassignmentagreementbetweenitselfandplaintiff
sincetheconsiderationfortheassignmentoftheBMWtrademarkisthecontinuanceoftheexclusivedealership
agreement.Itthus,followsthattheexclusivedealershipshouldcontinueforsolongasdefendantBMWenjoys
theuseandownershipofthetrademarkassignedtoitbyPlaintiff.
ThecasewasdocketedasCivilCaseNo.Q9315933andraffledtoBranch104oftheQuezon
City Regional Trial Court, which on June 14, 1993 issued a temporary restraining order. Summons
andcopiesofthecomplaintandamendedcomplaintwerethereafterservedontheprivaterespondent
through the Department of Trade and Industry, pursuant to Rule 14, 14 of the Rules of Court. The
order, summons and copies of the complaint and amended complaint were later sent by the DTI to
BMWviaregisteredmailonJune15,1993[5]andreceivedbythelatteronJune24,1993.
OnJune17,1993,withoutproofofserviceonBMW,thehearingontheapplicationforthewritof
preliminaryinjunctionproceededexparte,withpetitionerHahntestifying.OnJune30,1993,thetrial
court issued an order granting the writ of preliminary injunction upon the filing of a bond of
P100,000.00. On July 13, 1993, following the posting of the required bond, a writ of preliminary
injunctionwasissued.
OnJuly1,1993,BMWmovedtodismissthecase,contendingthatthetrialcourtdidnotacquire
jurisdictionoveritthroughtheserviceofsummonsontheDepartmentofTradeandIndustry,because
it(BMW)wasaforeigncorporationanditwasnotdoingbusinessinthePhilippines.Itcontendedthat
the execution of the Deed of Assignment was an isolated transaction that Hahn was not its agent
becausethelatterundertooktoassembleandsellBMWcarsandproductswithouttheparticipationof
BMWandsoldotherproductsandthatHahnwasanindentorormiddlemantransactingbusinessin
hisownnameandforhisownaccount.
Petitioner Alfred Hahn opposed the motion. He argued that BMW was doing business in the
Philippinesthroughhimasitsagent,asshownbythefactthatBMWinvoicesandorderformswere
used to document his transactions that he gave warranties as exclusive BMW dealer that BMW
officials periodically inspected standards of service rendered by him and that he was described in
service booklets and international publications of BMW as a "BMW Importer" or "BMW Trading
Company"inthePhilippines.
Thetrialcourt[6]deferredresolutionoftheMotiontodismissuntilaftertrialonthemeritsforthe
reasonthatthegroundsadvancedbyBMWinitsmotiondidnotseemtobeindubitable.
Without seeking reconsideration of the aforementioned order, BMW filed a petition for certiorari
withtheCourtofAppealsallegingthat:
I.THERESPONDENTJUDGEACTEDWITHUNDUEHASTEOROTHERWISEINJUDICIOUSLYIN
PROCEEDINGSLEADINGTOWARDTHEISSUANCEOFTHEWRITOFPRELIMINARY
INJUNCTION,ANDINPRESCRIBINGTHETERMSFORTHEISSUANCETHEREOF.
II.THERESPONDENTJUDGEPATENTLYERREDINDEFERRINGRESOLUTIONOFTHEMOTION
TODISMISSONTHEGROUNDOFLACKOFJURISDICTION,ANDTHEREBYFAILINGTO
IMMEDIATELYDISMISSTHECASEAQUO.
BMWaskedfortheimmediateissuanceofatemporaryrestrainingorderand,afterhearing,forawrit
ofpreliminaryinjunction,toenjointhetrialcourtfromproceedingfurtherinCivilCaseNo.Q9315933.
Privaterespondentpointedoutthat,unlessthetrialcourt'sorderwassetaside,itwouldbeforcedto
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submit to the jurisdiction of the court by filing its answer or to accept judgment in default, when the
veryquestionwaswhetherthecourthadjurisdictionoverit.
The Court of Appeals enjoined the trial court from hearing petitioner's complaint. On December
20, 1993, it rendered judgment finding the trial court guilty of grave abuse of discretion in deferring
resolutionofthemotiontodismiss.Itstated:
Goingbythepleadingsalreadyfiledwiththerespondentcourtbeforeitcameoutwithitsquestionedorderof
July26,1993,weruleandsoholdthatpetitioner's(BMW)motiontodismisscouldberesolvedthenandthere,
andthattherespondentjudge'sdefermentofhisactionthereonuntilaftertrialonthemeritconstitutes,toour
mind,graveabuseofdiscretion.
....
...[T]hereisnotmuchappreciabledisagreementasregardsthefactualmattersrelating,tothemotionto
dismiss.Whattrulydivide(sic)thepartiesandtowhichtheygreatlydifferisthelegalconclusionsthey
respectivelydrawfromsuchfacts,(sic)withHahnmaintainingthatonthebasisthereof,BMWisdoingbusiness
inthePhilippineswhilethelatterassertsthatitisnot.
Then,afterstatingthatanyrulingwhichthetrialcourtmightmakeonthemotiontodismisswould
anywaybeelevatedtoitonappeal,theCourtofAppealsitselfresolvedthemotion.ItruledthatBMW
wasnotdoingbusinessinthecountryand,therefore,jurisdictionoveritcouldnotbeacquiredthrough
service of summons on the DTI pursuant to Rule 14, Section 14. The court upheld private
respondent'scontentionthatHahnactedinhisownnameandforhisownaccountandindependently
of BMW, based on Alfred Hahn's allegations that he had invested his own money and resources in
establishing BMW's goodwill in the Philippines and on BMW's claim that Hahn sold products other
than those of BMW. It held that petitioner was a mere indentor or broker and not an agent through
whom private respondent BMW transacted business in the Philippines. Consequently, the Court of
Appealsdismissedpetitioner'scomplaintagainstBMW.
Hence,thisappeal.PetitionercontendsthattheCourtofAppealserred(1)infindingthatthetrial
courtgravelyabuseditsdiscretionindeferringactiononthemotiontodismissand(2)infindingthat
private respondent BMW is not doing business in the Philippines and, for this reason, dismissing
petitioner'scase.
Petitioner'sappealiswelltaken.Rule14,14provides:
14.Serviceuponforeigncorporations.Ifthedefendantisaforeigncorporation,oranonresidentjointstock
companyorassociation,doingbusinessinthePhilippines,servicemaybemadeonitsresidentagent
designatedinaccordancewithlawforthatpurpose,or,iftherebenosuchagent,onthegovernmentofficial
designatedbylawtothateffect,oronanyofitsofficersoragentswithinthePhilippines.(Emphasisadded)
What acts are considered "doing business in the Philippines" are enumerated in 3(d) of the
ForeignInvestmentsActof1991(R.A.No.7042)asfollows:[7]
d)thephrase"doingbusiness"shallincludesolicitingorders,servicecontracts,openingoffices,whether
called"liaison"officesorbranches,appointingrepresentativesordistributorsdomiciledinthe
Philippinesorwhoinanycalendaryearstayinthecountryforaperiodorperiodstotallingonehundred
eighty(180)daysormoreparticipatinginthemanagement,supervisionorcontrolofanydomestic
business,firm,entityorcorporationinthePhilippinesandanyotheractoractsthatimplyacontinuity
ofcommercialdealingsorarrangementsandcontemplatetothatextenttheperformanceofactsor
works,ortheexerciseofsomeofthefunctionsnormallyincidentto,andinprogressiveprosecution
of,commercialgainorofthepurposeandobjectofthebusinessorganization:Provided,however,That
thephrase"doingbusiness"shallnotbedeemedtoincludemereinvestmentasashareholderbya
foreignentityindomesticcorporationsdulyregisteredtodobusiness,and/ortheexerciseofrightsassuch
investornorhaving,anomineedirectororofficertorepresentitsinterestsinsuchcorporationnor
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appointingarepresentativeordistributordomiciledinthePhilippineswhichtransactsbusinessinits
ownnameandforitsownaccount.(Emphasissupplied)
Thus, the phrase includes "appointing representatives or distributors in the Philippines" but not
when the representative or distributor "transacts business in its name and for its own account." In
addition, Section 1(f)(1) of the Rules and Regulations implementing (IRR) the Omnibus Investment
Codeof1987(E.O.No.226)provided:
(f)"Doingbusiness"shallbeanyactorcombinationofacts,enumeratedinArticle44oftheCode.Inparticular,
"doingbusiness"includes:
(1)....Aforeignfirmwhichdoesbusinessthroughmiddlemenactingintheirownnames,suchasindentors,
commercialbrokersorcommissionmerchants,shallnotbedeemeddoingbusinessinthePhilippines.Butsuch
indentors,commercialbrokersorcommissionmerchantsshallbetheonesdeemedtobedoingbusinessinthe
Philippines.
The question is whether petitioner Alfred Hahn is the agent or distributor in the Philippines of
privaterespondentBMW.Ifheis,BMWmaybeconsidereddoingbusinessinthePhilippinesandthe
trialcourtacquiredjurisdictionoverit(BMW)byvirtueoftheserviceofsummonsontheDepartment
ofTradeandIndustry.Otherwise,ifHahnisnottheagentofBMWbutanindependentdealer,albeitof
BMW cars and products, BMW, a foreign corporation, is not considered doing business in the
PhilippineswithinthemeaningoftheForeignInvestmentsActof1991andtheIRR,andthetrialcourt
didnotacquirejurisdictionoverit(BMW).
The Court of Appeals held that petitioner Alfred Hahn acted in his own name and for his own
accountandnotasagentordistributorinthePhilippinesofBMWonthegroundthat"healonehad
contactswithindividualsorentitiesinterestedinacquiringBMWvehicles.Independencecharacterizes
Hahn's undertakings, for which reason he is to be considered, under governing statutes, as doing
business." (p. 13) In support of this conclusion, the appellate court cited the following allegations in
Hahn'samendedcomplaint:
8.Fromthetimethetrademark"BMW&DEVICE"wasfirstusedbythePlaintiffinthePhilippinesuptothe
present,Plaintiff,throughitsfirmname"HAHNMANILA"andwithoutanymonetarycontributionsfrom
defendantBMWestablishedBMW'sgoodwillandmarketpresenceinthePhilippines.Pursuantthereto,
Plaintiffinvestedalotofmoneyandresourcesinordertosinglehandedlycompeteagainstothermotorcycleand
carcompanies....Moreover,Plaintiffhasbuiltbuildingsandotherinfrastructuressuchasservicecentersand
showroomstomaintainandpromotethecarandproductsofdefendantBMW.
As the above quoted allegations of the amended complaint show, however, there is nothing to
support the appellate court's finding that Hahn solicited orders alone and for his own account and
without"interferencefrom,letalonedirectionof,BMW."(p.13)Tothecontrary,Hahnclaimedhetook
ordersforBMWcarsandtransmittedthemtoBMW.Uponreceiptoftheorders,BMWfixedthedown
payment and pricing charges, notified Hahn of the scheduled production month for the orders, and
reconfirmedtheordersbysigningandreturningtoHahntheacceptancesheets.Paymentwasmade
by the buyer directly to BMW. Title to cars purchased passed directly to the buyer and Hahn never
paidforthepurchasepriceofBMWcarssoldinthePhilippines.Hahnwascreditedwithacommission
equalto14%ofthepurchasepriceupontheinvoicingofavehicleorderbyBMW.Uponconfirmation
inwritingthatthevehicleshadbeenregisteredinthePhilippinesandservicedbyhim,Hahnreceived
an additional 3% of the full purchase price. Hahn performed aftersale services, including, warranty
services,forwhichhereceivedreimbursementfromBMW.Allorderswereoninvoicesandformsof
BMW.[8]
These allegations were substantially admitted by BMW which, in its petition for certiorari before
theCourtofAppeals,stated:[9]
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9.4.Assoonasthevehiclesarefullymanufacturedandfullpaymentofthepurchasepricesaremade,the
vehiclesareshippedtothePhilippines.(Thepaymentsmaybemadebythepurchasersorthirdpersonsoreven
byHahn.)Thebillsofladingaremadeupinthenameofthepurchasers,butHahnManilaisthereinindicatedas
thepersontobenotified.
9.5.ItisHahnwhopicksupthevehiclesfromthePhilippineports,forpurposesofconductingpredelivery
inspections.Thereafter,hedeliversthevehiclestothepurchasers.
9.6.AssoonasBMWinvoicesthevehicleordered,Hahniscreditedwithacommissionoffourteenpercent
(14%)ofthefullpurchasepricethereof,andassoonasheconfirmsinwriting,thatthevehicleshavebeen
registeredinthePhilippinesandhavebeenservicedbyhim,hewillreceiveanadditionalthreepercent(3%)of
thefullpurchasepricesascommission.
Contrary to the appellate court's conclusion, this arrangement shows an agency. An agent
receivesacommissionuponthesuccessfulconclusionofasale.Ontheotherhand,abrokerearns
hispaymerelybybringingthebuyerandthesellertogether,evenifnosaleiseventuallymade.
Astotheservicecentersandshowroomswhichhesaidhehadputupathisownexpense,Hahn
said that he had to follow BMW specifications as exclusive dealer of BMW in the Philippines.
AccordingtoHahn,BMWperiodicallyinspectedtheservicecenterstoseetoitthatBMWstandards
were maintained. Indeed, it would seem from BMW's letter to Hahn that it was for Hahn's alleged
failuretomaintainBMWstandardsthatBMWwasterminatingHahn'sdealership.
ThefactthatHahninvestedhisownmoneytoputuptheseservicecentersandshowroomsdoes
not necessarily prove that he is not an agent of BMW. For as already noted, there are facts in the
recordwhichsuggestthatBMWexercisedcontroloverHahn'sactivitiesasadealerandmaderegular
inspectionsofHahn'spremisestoenforcecompliancewithBMWstandardsandspecifications.[10]For
example,initslettertoHahndatedFebruary23,1996,BMWstated:
Inthelastyearswehavepointedouttoyouinseveraldiscussionsandlettersthatwehavetotacklethe
Philippinemarketmoreprofessionallyandthatwearethroughyourpresentactivitiesnotadequately
preparedtocopewiththeforthcomingchallenges.[11]
Ineffect,BMWwasholdingHahnaccountabletoitunderthe1967Agreement.
This case fits into the mould of Communications Materials, Inc. v. Court of Appeals,[12] in which
theforeigncorporationenteredintoa"RepresentativeAgreement"anda"LicensingAgreement"with
a domestic corporation, by virtue of which the latter was appointed "exclusive representative" in the
Philippines for a stipulated commission. Pursuant to these contracts, the domestic corporation sold
productsexportedbytheforeigncorporationandputupaservicecenterfortheproductssoldlocally.
This Court held that these acts constituted doing business in the Philippines. The arrangement
showedthattheforeigncorporation'spurposewastopenetratethePhilippinemarketandestablishits
presenceinthePhilippines.
Inaddition,BMWheldoutprivaterespondentHahnasitsexclusivedistributorinthePhilippines,
evenasitannouncedintheAsianregionthatHahnwasthe"officialBMWagent"inthePhilippines.[13]
The Court of Appeals also found that petitioner Alfred Hahn dealt in other products, and not
exclusivelyinBMWproducts,and,onthisbasis,ruledthatHahnwasnotanagentofBMW.(p.14)
ThisfindingisbasedentirelyonallegationsofBMWinitsmotiontodismissfiledinthetrialcourtand
initspetitionforcertioraribeforetheCourtofAppeals.[14]ButthisallegationwasdeniedbyHahn[15]
andthereforetheCourtofAppealsshouldnothaveciteditasifitwerethefact.
Indeed this is not the only factual issue raised, which should have indicated to the Court of
Appeals the necessity of affirming the trial court's order deferring resolution of BMW's motion to
dismiss. Petitioner alleged that whether or not he is considered an agent of BMW, the fact is that
BMWdidbusinessinthePhilippinesbecauseitsoldcarsdirectlytoPhilippinebuyers. [16]Thiswas
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deniedbyBMW,whichclaimedthatHahnwasnotitsagentandthat,whileitwastruethatithadsold
carstoPhilippinebuyers,thiswasdonewithoutsolicitationonitspart.[17]
It is not true then that the question whether BMW is doing business could have been resolved
simply by considering the parties' pleadings. There are genuine issues of facts which can only be
determined on the basis of evidence duly presented. BMW cannot short circuit the process on the
pleathattocompelittogototrialwouldbetodenyitsrightnottosubmittothejurisdictionofthetrial
court which precisely it denies. Rule 16, 3 authorizes courts to defer the resolution of a motion to
dismiss until after the trial if the ground on which the motion is based does not appear to be
indubitable.Heretherecordofthecasebristleswithfactualissuesanditisnotatallclearwhether
someallegationscorrespondtotheproof.
Anyway,privaterespondentneednotapprehendthatbyrespondingtothesummonsitwouldbe
waiving its objection to the trial court's jurisdiction. It is now settled that. for purposes of having
summons served on a foreign corporation in accordance with Rule 14, 14, it is sufficient that it be
alleged in the complaint that the foreign corporation is doing business in the Philippines. The court
neednotgobeyondtheallegationsofthecomplaintinordertodeterminewhetherithasjurisdiction.
[18]
Adeterminationthattheforeigncorporationisdoingbusinessisonlytentativeandismadeonlyfor
the purpose of enabling the local court to acquire jurisdiction over the foreign corporation through
serviceofsummonspursuanttoRule14,14.Suchdeterminationdoesnotforecloseacontraryfinding
should evidence later show that it is not transacting business in the country. As this Court has
explained:
Thisisnottosay,however,thatthepetitioner'srighttoquestionthejurisdictionofthecourtoveritspersonis
nowtobedeemedaforeclosedmatter.Ifitistrue,asSigneticsclaims,thatitsonlyinvolvementinthe
PhilippineswasthroughapassiveinvestmentinSigfil,whichitevenlaterdisposedof,andthatTEAMPacificis
notitsagent,thenitcannotreallybesaidtobedoingbusinessinthePhilippines.Itisadefense,however,that
requiresthecontraventionoftheallegationsofthecomplaint,aswellasafullventilation,ineffect,ofthemain
meritsofthecase,whichshouldnotthusbewithintheprovinceofameremotiontodismiss.So,also,theissue
posedbythepetitionerastowhetheraforeigncorporationwhichhasdonebusinessinthecountry,butwhich
hasceasedtodobusinessatthetimeofthefiling,ofacomplaint,canstillbemadetoanswerforacauseof
actionwhichaccruedwhileitwasdoing,business,isanothermatterthatwouldyethavetoawaitthereception
andadmissionofevidence.Sincethesepointshaveseasonablybeenraisedbythepetitioner,thereshouldbeno
realcauseforwhatmayunderstandablybeitsapprehension,i.e.,thatbyitsparticipationduringthetrialonthe
merits,itmay,absentaninvocationofseparateorindependentreliefsofitsown,beconsideredtohave
voluntarilysubmitteditselftothecourt'sjurisdiction.[19]
Far from committing an abuse of discretion, the trial court properly deferred resolution of the
motion to dismiss and thus avoided prematurely deciding a question which requires a factual basis,
withthesameresultifithaddeniedthemotionandconditionallyassumedjurisdiction.ItistheCourt
of Appeals which, by ruling that BMW is not doing business on the basis merely of uncertain
allegationsinthepleadings,disposedofthewholecasewithfinalityandtherebydeprivedpetitionerof
his right to be heard on his cause of action. Nor was there justification for nullifying the writ of
preliminaryinjunctionissuedbythetrialcourt.Althoughtheinjunctionwasissuedexparte,thefactis
thatBMWwassubsequentlyheardonitsdefensebyfilingamotiontodismiss.
WHEREFORE,thedecisionoftheCourtofAppealsisREVERSEDandthecaseisREMANDED
tothetrialcourtforfurtherproceedings.
SOORDERED.
Regalado,(Chairman),Romero,Puno,andTorres,Jr.,JJ.,concur.

[1]PerJusticeCancioC.GarciaandconcurredinbyJusticesRamonU.MabutasandAntonioM.Martinez,chairman.
[2]Rollo,pp.7578.
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[3]Rollo,pp.7982.
[4]Rollo,pp.8384.
[5]Rollo,p.593.
[6]PerJudgeMaximianoAsuncion.
[7]TheForeignInvestmentsActof1991supersededArts.4456oftheOmnibusInvestmentsCode.
[8]Rollo,pp.96,140141.
[9]Id.,p.141.
[10]WangLaboratories,Inc.v.Mendoza,156SCRA44(1987).
[11]Rollo,p.75.
[12]G.R.No.102223,Aug.22,1996.
[13]Rollo,p.213.
[14]Rollo,pp.91,163.
[15]Rollo,p.124.
[16]Rollo,pp.245,292.
[17]Rollo,pp.177,284,600.
[18]LittonMills.Inc.v.CourtofAppeals.G.R.No.94980.May15,1996SigneticsCorp.v.CourtofAppeals,225SCRA

737(1993).
[19]SigneticsCorp.v.CourtofAppeals,225SCRAat746.

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