French Oil Mill Machinery Co., Inc. v. Court of Appeals
MODIFICATIONFacts
The Antecedents: Private respondent filed a complaint for breach of contract with damages against petitioner, a foreign corporation, and its alleged Philippine agent, Trans-World Trading Company. The complaint alleged that petitioner was doing business in the Philippines through Trans-World, its agent, and that summons could be served on Trans-World. Procedural History: Summons was served on Trans-World, which moved to dismiss. Petitioner also filed a special appearance with a motion to dismiss, arguing lack of jurisdiction due to improper service of summons, as it was not doing business in the Philippines and Trans-World was not its agent. The Regional Trial Court (RTC) initially dismissed the complaint but reversed its order upon motion for reconsideration, ruling that summons was properly served, petitioner was doing business in the Philippines, and Trans-World was its agent. Petitioner elevated the case to the Court of Appeals (CA) via certiorari and prohibition, which was denied. Petitioner then filed a petition for review with the Supreme Court. The Petition: Petitioner contended that it was not doing business in the Philippines and that Trans-World was not its agent, thus the summons served on Trans-World had no effect on petitioner.
Issue(s)
Whether the allegations in the complaint were sufficient to establish that petitioner was doing business in the Philippines for purposes of service of summons. Whether the service of summons on Trans-World Trading Company was valid as service upon petitioner's agent. Whether the filing of an answer, instead of a motion to dismiss, automatically constitutes voluntary appearance for purposes of summons.
Ruling
The petition is DENIED for lack of merit. The Supreme Court affirmed the ruling of the Court of Appeals, upholding the jurisdiction of the RTC over the person of the petitioner.
Ratio Decidendi
On the sufficiency of allegations for 'doing business': The Court held that for purposes of the rule on summons, it is sufficient that it be alleged in the complaint that the foreign corporation is doing business in the Philippines. The court, in determining such fact, need not go beyond the allegations therein. The allegations that petitioner entered into a contract with private respondent to supply and install machineries and that the first shipment was received were deemed sufficient for this preliminary determination. The determination of 'doing business' is tentative and only to enable the court to acquire jurisdiction, not a final determination of liability. On the validity of service of summons on the alleged agent: The Court found that while a general allegation of agency in the complaint is insufficient to show the agency relationship, it is necessary that there be specific allegations establishing the connection between the principal foreign corporation and its alleged agent with respect to the transaction in question. However, the Court noted that the determination of the principal-agent relationship from the allegations is preliminary and not conclusive. As both lower courts found that petitioner treated Trans-World as its Philippine agent in the transaction, and this factual assessment is binding on the Supreme Court in the absence of exceptional circumstances, the service of summons on Trans-World was deemed valid. On voluntary appearance: The Court clarified that the filing of an answer per se does not automatically constitute voluntary appearance for purposes of summons. When a defendant's appearance is precisely to object to the court's jurisdiction over his person, it cannot be considered an appearance in court. However, this point was rendered moot as petitioner did not file an answer.
Main Doctrine
For purposes of acquiring jurisdiction over a foreign corporation through service of summons, allegations in the complaint that the foreign corporation is doing business in the Philippines and that a local entity is its agent are sufficient for a preliminary determination, and the court need not go beyond these allegations. However, the determination of the agency relationship requires specific allegations establishing the connection between the principal foreign corporation and its alleged agent concerning the transaction in question, and a general allegation of agency is insufficient. Factual findings of lower courts regarding the agency relationship, when supported by substantial evidence, are binding on the Supreme Court.