Far East International Import v. Nankai Kogyo
REITERATIONFacts
The Antecedents: On December 26, 1956, Far East International Import & Export Corporation (Far East), a Philippine corporation, entered into a Contract of Sale of Steel Scrap with Nankai Kogyo Co., Ltd. (Nankai), a Japanese corporation. The contract stipulated a quantity of approximately 5,000 metric tons, with payment to be made via an irrevocable Letter of Credit. A force majeure clause was included, and disputes were to be settled by arbitration in Japan. Nankai opened a Letter of Credit for $312,500.00 on January 30, 1957. On March 15, 1957, Nankai's vessels arrived to load the scrap steel. However, due to the impending expiration of Far East's export license on March 18, 1957, loading was stopped after only 1,058.6 metric tons were loaded onto the SS Mina. The export license could not be extended due to a change in Philippine administration. Nankai acknowledged receipt of the loaded scrap but claimed damages. Far East requested a Bill of Lading from the shipping agent to effect payment, but this was refused as Nankai had already obtained it. Procedural History: Far East filed a complaint for Specific Performance, damages, and injunctive relief against Nankai and the shipping company. Nankai filed a Special Appearance and Motion to Dismiss, alleging lack of jurisdiction over its person and the subject matter, and failure to state a cause of action. Far East opposed this. Subsequently, Far East sought to amend its complaint to allege that Nankai was doing business in the Philippines and to claim payment for the scrap. Nankai opposed the amended complaint. The lower court denied the initial motion to dismiss but later admitted the amended complaint. Nankai filed an Answer to the amended complaint. The lower court rendered judgment absolving the shipping company and the bank, and ordered Nankai to pay Far East $67,710.50 plus interest and attorney's fees. Nankai appealed. The Petition: Nankai appealed the decision of the lower court, assigning as errors the court's acquisition of jurisdiction over the subject matter and the person of the defendant-appellant, and the propriety of the award.
Issue(s)
Whether the Philippine courts acquired jurisdiction over the subject matter and the person of the defendant-appellant, Nankai Kogyo Co., Ltd. Whether the award granted by the lower court was proper.
Ruling
The Supreme Court affirmed the judgment of the lower court, holding that it had acquired jurisdiction over the person of the defendant-appellant and that the award was proper. The Court ruled that Nankai, by filing an answer and participating in the trial on the merits after its special appearance to contest jurisdiction, waived its objection to the court's jurisdiction. Furthermore, the Court found that Nankai's actions indicated it was 'doing business' in the Philippines, making it amenable to Philippine jurisdiction.
Ratio Decidendi
On the issue of jurisdiction over the person and subject matter: The Court reiterated that service of summons upon a foreign corporation doing business in the Philippines can be made on its resident agent, the designated government official, or any officer or agent within the Philippines. In this case, Far East complied with the third mode by serving summons on Mr. Ishida and Mr. Tominaga, who were officers of Nankai. Although Nankai entered a Special Appearance to contest jurisdiction, it subsequently filed an Answer and invoked non-jurisdictional grounds for dismissal, thereby submitting to the court's jurisdiction. The Court emphasized that even if a defendant objects to jurisdiction, alleging any non-jurisdictional ground for dismissal subjects them to the court's jurisdiction. Furthermore, by going into trial on the merits and presenting evidence, Nankai unequivocally consented to the court's jurisdiction, waiving the arbitration clause in the contract. The Court distinguished this case from Pacific Micronesian Line, Inc. v. Baens del Rosario, et al., where the foreign corporation's act was isolated and incidental, unlike Nankai's actions which indicated a purpose to engage in business in the Philippines. On the propriety of the award: The Court noted that there was no appeal on the lower court's findings that Far East's failure to make full shipment was due to government intervention, which was a force majeure event covered by the contract. The Court found that Nankai's defense of lack of jurisdiction was unavailing given its actions. The testimony of Atty. Pablo Ocampo, corroborated by Nabuo Yoshida, indicated that Nankai was indeed doing business in the Philippines, with representatives inquiring about mining operations and establishing a temporary office. This demonstrated a desire to continue engaging in business in the Philippines, making it a base for its operations. The Court concluded that Nankai's actions were not merely incidental or casual but were of a character that distinctly indicated a purpose to do other business in the Philippines, thus subjecting it to the jurisdiction of Philippine courts and validating the award.
Main Doctrine
A foreign corporation that engages in a single, substantial act of business in the Philippines, which is not merely incidental or casual but indicates a purpose to engage in further business, is considered 'doing business' and is subject to Philippine jurisdiction. Furthermore, a foreign corporation that initially enters a special appearance to contest jurisdiction but subsequently files an answer and participates in the trial on the merits, thereby invoking the court's jurisdiction for non-jurisdictional grounds, waives its objection to jurisdiction.