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Litton Mills V CA

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28 views2 pages

Litton Mills V CA

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TN
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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LITTON MILLS, INC., petitioner, vs. COURT OF APPEALS and GELHAAR UNIFORM COMPANY, INC.

(1996)
This is a petition to review the decision of the Court of Appeals annulling the order of the Regional Trial Court
which denied private respondent's plea that it is a foreign corporation not doing business in the Philippines
and therefore not subject to the jurisdiction of Philippine courts. SC - We sustain petitioner's contention
based on the Hrst ground, namely, that the trial court acquired jurisdiction over Gelhaar by service of
summons upon its agent pursuant to Rule 14, Sec. 14. In the case at bar, the trial court was certainly correct
in holding that Gelhaar's act in purchasing soccer jerseys to be within the ordinary course of business of the
company considering that it was engaged in the manufacture of uniforms. The acts noted above are of such a
character as to indicate a purpose to do business.

SC - We sustain petitioner's contention based on the Hrst ground, namely, that the trial court acquired
jurisdiction over Gelhaar by service of summons upon its agent pursuant to Rule 14, Sec. 14.

First. The appellate court invoked the ruling in Pacific Micronisian, in which it was stated that the fact of doing
business must Hrst be established before summons can be served in accordance with Rule 14, Sec. 14. The
Court of Appeals quoted the following portion of the opinion in that case: The above section [referring to Rule
14, Section 14] provides for three modes of effecting service upon a private corporation, namely: [enumerates the
three modes of service of summons]. But, it should be noted, in order that service may be effected in the manner
above stated, said section also requires that the foreign corporation be one which is doing business in the Philippines.
This is a sine qua non requirement. This fact must Hrst be established in order that summons can be made and
jurisdiction acquired

In the later case of Signetics Corporation v. Court of Appeals, 3 however, we clarified the holding in Pacific
Micronisian, thus: The petitioner opines that the phrase, "(the) fact (of doing business in the Philippines) must Hrst
be established in order that summons be made and jurisdiction acquired," used in the above pronouncement, would
indicate that a mere allegation to that effect in the complaint is not enough — there must instead be proof of doing
business. In any case, the petitioner points out, the allegations themselves did not suCciently show the fact of its
doing business in the Philippines.

Hence, a court need not go beyond the allegations in the complaint to determine whether or not a defendant
foreign corporation is doing business for the purpose of Rule 14, Sec. 14. In the case at bar, the allegation
that Empire, for and in behalf of Gelhaar, ordered 7,770 dozens of soccer jerseys from Litton and for this
purpose Gelhaar caused the opening of an irrevocable letter of credit in favor of Litton is a sufficient
allegation that Gelhaar was doing business in the Philippines

Second. Gelhaar contends that the contract with Litton was a single, isolated transaction and that it did not
constitute "doing business." Reference is made to Pacific Micronisian in which the only act done by the
foreign company was to employ a Filipino as a member of the crew on one of its ships. This court held that
the act was an isolated, incidental or casual transaction, not suCcient to indicate a purpose to engage in
business.

It is not really the fact that there is only a single act done that is material. The other circumstances of the case
must be considered. Thus, in Wang Laboratories, Inc. v. Mendoza, 4 it was held that where a single act or
transaction of a foreign corporation is not merely incidental or casual but is of such character as distinctly to
indicate a purpose on the part of the foreign corporation to do other business in the state, such act will be
considered as constituting doing business. 5 This Court referred to acts which were in the ordinary course of
business of the foreign corporation.

In the case at bar, the trial court was certainly correct in holding that Gelhaar's act in purchasing soccer
jerseys to be within the ordinary course of business of the company considering that it was engaged in the
manufacture of uniforms. The acts noted above are of such a character as to indicate a purpose to do
business.

In accordance with Rule 14, Sec. 14, service upon Gelhaar could be made in three ways: (1) by serving upon
the agent designated in accordance with law to accept service of summons; (2) if there is no resident agent,
by service on the government oCcial designated by law to that effect; and (3) by serving on any oCcer or
agent of said corporation within the Philippines. 6 Here, service was made through Gelhaar's agent, the
Empire Sales Philippines Corp. There was, therefore, a valid service of summons on Gelhaar, sufficient to
confer on the trial court jurisdiction over the person of Gelhaar.

Third. On the question, however, of whether the appearance of Atty. Noval in behalf of Gelhaar was binding
on the latter, we hold that the Court of Appeals correctly ruled that it was not.

Noval does not claim that he ever directly conferred with Gelhaar regarding the case. There is no evidence to
show that he notiHed Gelhaar of his appearance in its behalf, or that he furnished Gelhaar with copies of
pleadings or the answer which he filed in its behalf. No voluntary appearance by Gelhaar can, therefore, be

1
inferred from the acts of Atty. Noval. Nor can Atty. Noval's representations in the answer he considered
binding on Gelhaar. Gelhaar should be allowed a new period for filing its own answer.

CA reversed

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