G.R. No. 61950, 28 September 1990
Petitioner Marubeni Nederland B.V. and D.B. Teodoro Development Corporation (DBT for short) entered into a contract whereby petitioner agreed to supply the necessary equipment, technical know-how and the general design of the construction of DBT’s lime plant at the in Iloilo for a total contract price of US$5,400,000.00 on a deferred payment basis. Simultaneously with the supply contract, the parties entered into two financing contracts, namely a construction loan agreement in the amount of US$1,600,000.00 and a cash loan agreement for US$1,500,000.00. The obligation of DBT to pay the loan amortizations on their due dates under 3 contracts were absolutely and unconditionally guaranteed by the National Investment and Development Corporation (NIDC).
Before the first installment became due, DBT wrote a letter to the NIDC interposing certain claims against the petitioner and at the same time requesting NIDC for a revision of the repayment schedule and of the amounts due under the contracts on account of petitioner’s delay in its contractual commitments. The problems regarding the lime plant were ironed out and the parties signed a “Settlement Agreement.”
However, DBT informed petitioner that it was rejecting the lime plant on the ground that it has not been constructed in accordance with their agreement. DBT made a formal demand for indemnification in the total amount of P95,150,000. Petitioner refused to accept DBT’s unilateral rejection of the plant and reasoned that the alleged operation and technical problems were “totally unrelated to the guaranteed capacity and specifications of the plant and definitely are not attributable to any fault or omission on the part of Marubeni.”
Before the first installment under the “Settlement Agreement” could be paid, private respondent Artemio Gatchalian, a stockholder of DBT sued petitioner Marubeni for contractual breach before the CFI. Gatchalian impleaded DBT as an “unwilling plaintiff” together with NIDC which, as pledgee of the voting shares in DBT has controlling interest in that corporation. Gatchalian sought indemnification in the amount of P95,150,000.00 and further prayed for a writ of preliminary injunction to enjoin DBT and NIDC from making directly or indirectly any payment to Marubeni.
Petitioner Marubeni entered a limited and special appearance and sought the dismissal of the complaint on the ground that the court a quo had no jurisdiction over the person of petitioner since it is a foreign corporation neither doing nor licensed to do business in the Philippines.
W/N petitioner Marubeni Nederland B.V. can be considered as “doing business” in the Philippines
and therefore subject to the jurisdiction of our courts?
Yes. Petitioner claims that it is a foreign corporation not doing business in the country and as an entity with its own capitalization, it is separate and distinct from Marubeni Corporation, Japan which is doing business in the Philippines through its Manila branch; that the three (3) contracts entered into with DBT were perfected and consummated in Tokyo, Japan; that the sale and purchase of the machineries and equipment for the Guimaras lime plant were isolated contracts and in no way indicated a purpose to engage in business; and that the services performed by petitioner in the Philippines were merely auxillary to the aforesaid isolated transactions entered into and perfected outside the Philippines.
Gatchalian contends that petitioner can be sued in Philippine courts on liabilities arising from even a single transaction because in reality, it is already engaging in business in the country through Marubeni Corporation, Manila branch and that they, together with Nihon Cement Company, Ltd. of Japan are but “alter egos, adjuncts, conduits instruments or branch affiliates of Marubeni Corporation of Japan”, the parent company.
Petitioner can be sued in the regular courts because it is doing business in the Philippines. The applicable law is Republic Act No. 5455 :(f) the performance within the Philippines of any act or combination of acts enumerated in Section 1 (1) of the Act shall constitute “doing business” therein. In particular, “doing business” includes: 1) Soliciting orders, purchases (sales) or service contracts. Concrete and specific solicitations by a foreign firm amounting to negotiation or fixing of the terms and conditions of sales or service contracts, regardless of whether the contracts are actually reduced to writing, shall constitute doing business even if the enterprise has no office or fixed place of business in the Philippines. . . 2) Appointing a representative or distributor who is domiciled 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. Opening offices whether called “liaison” offices, agencies or branches, unless proved otherwise. 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.
Petitioner had solicited the lime plant business from DBT through the Marubeni Manila branch. Records show that the “turn-key proposal for the . . . 300 T/D Lime Plant” was initiated by the Manila office through its Mr. T. Hojo. In a follow-up letter, Hojo committed the firm to a price reduction of $200,000.00 and submitted the proposed contract forms. As reflected in the letterhead used, it was Marubeni Corporation, Tokyo, Japan which assumed an active role in the initial stages of the negotiation. Petitioner Marubeni Nederland B.V. had no visible participation until the actual signing of the agreement in Tokyo and even there, in the space reserved for petitioner, it was the signature. of “S. Adachi as General Manager of Marubeni Corporation, Tokyo on behalf of Marubeni Nederland B.V.” which appeared.
Marubeni Nederland B.V. through the foregoing acts, had effectively solicited “orders, purchases (sales) or service contracts” as well as constituted Marubeni Corporation, Tokyo, Japan and its Manila Branch as its representative in the Philippines to transact business for its account as principal. These circumstances, taken singly or in combination, constitute “doing business in the Philippines” within the contemplation of the law.
A foreign corporation doing business in the Philippines with or without license is subject to process and jurisdiction of the local courts. it shall not be allowed, under any circumstances, to invoke its lack of license to impugn the jurisdiction of our courts.
*Case Digest by Benjie L. Sumalpong, JD – 4, Andres Bonifacio College, SY 2019 – 2020