Hahn vs. Court of Appeals PDF

Hahn vs.
Court of Appeals
ALFRED HAHN, petitioner, vs. COURT OF APPEALS and BAYERISCHE MOTOREN WERKE
AKTIENGESELLSCHAFT (BMW), respondents.
G.R. No. 113074. January 22, 1997
Filipino vs. Nonresident corporation
Jurisdiction is determined by the allegation – here, that respondent is doing business in the Philippines
Petitioner, as AGENT of the respondent foreign corporation.
AGENT – Acting on behalf of someone.
Rule 14, Section 14 (12) of the Rules of Court
NATURE OF THE ACTION: 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 Regional Trial Court of Quezon City did not acquire jurisdiction over private
respondent, a nonresident foreign corporation, and of the appellate court’s order denying petitioner’s
motion for reconsideration.
SC DECISION: WHEREFORE, the decision of the Court of Appeals is REVERSED and the case is
REMANDED to the trial court for further proceedings.
FACTS:
o Petitioner Hahn is a Filipino citizen doing business under the name and style “Hahn-Manila.” On
the other hand, private respondent Bayerische Motoren Werke Aktiengesellschaft (BMW) is a
non-resident foreign corporation existing under the laws of the former Federal Republic of
Germany, selling car and other car products.
o Plaintiff executed in favor of defendant BMW a Deed of Assignment with Special Power of
Attorney whereby Plaintiff was duly acknowledged as the “exclusive Dealer of the Assignee in
the Philippines”
o Per the agreement, the parties “continued business relations as has been usual in the past
without a formal contract.” However, in a meeting with a BMW representative and the
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.
o Petitioner protested, claiming that the termination of his exclusive dealership would be a
breach of the Deed of Assignment.
o BMW terminated the exclusive dealer relationship.
o Petitioner filed a complaint for specific performance and damages against BMW to compel it to
continue the exclusive dealership with the RTC.
o Summons and copies of the complaint and amended complaint were thereafter served on the
private respondent through the Department of Trade and Industry, pursuant to Rule 14, Section
14 of the Rules of Court. The order, summons and copies of the complaint and amended
complaint were later sent by the DTI to BMW via registered mail and received by the latter.
o BMW moved to dismiss the case, contending that the trial court did not acquire jurisdiction over
it through the service of summons on the Department of Trade and Industry, because it (BMW)
was a foreign corporation and it was not doing business in the Philippines. ~~~~~ END
o Petitioner Alfred Hahn opposed the motion. He argued that BMW was doing business in the
Philippines through him as its agent.
o The RTC denied the motion of the respondent.
o Respondent BMW filed a petition for certiorari with the CA contending that respondent judge
patently erred in deferring resolution of the motion to dismiss on the ground of lack of
jurisdiction.
o The CA granted the petition of BMW.
o It ruled that BMW was not doing business in the country and, therefore, jurisdiction over it
could not be acquired through service of summons on the DTI pursuant to Rule 14, §14 . The
court upheld private respondent’s contention that Hahn acted in his own name and for his own
account and independently 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 Appeals dismissed petitioner’s complaint against BMW.
o Hence, this appeal.
ISSUES: WON the RTC has jurisdiction over the respondent who was a non-resident foreign corporation
doing business in the Philippines. (YES)
RULING: YES, because jurisdiction over the respondent was acquired through service of summons on
the DTI in view that the respondent is a foreign corporation doing business in the Philippines as proven
by appointing plaintiff as its agent in the Philippines.
Rule 14, Section 14 provides: Section 14. Service upon private foreign corporations.—If the defendant is
a foreign corporation, or a non-resident joint stock company or association, doing business in the
Philippines, service may be made on its resident agent designated in accordance with law for that
purpose, or, if there be no such agent, on the government official designated by law to that effect, or on
any of its officer or agents within the Philippines.
The Court held that respondent is doing business here in the Philippines. Hahn and BMW had a
Representative Agreement or a Licensing Agreement. This arrangement is whereby 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 products exported
by the foreign corporation and put up a service center for the products sold locally. This Court held that
these acts constituted doing business in the Philippines. The arrangement showed that the foreign
corporation’s purpose was to penetrate the Philippine market and establish its presence in the
Philippines.
Thus, being a foreign corporation doing in the Philippines acting through an agent which is the
Plaintiff, Rule 14, Section 14 of the Rules of Court shall apply for purposes of serving summons to the
respondent in order for the RTC to acquire jurisdiction.
The question is whether petitioner Alfred Hahn is the agent or distributor in the Philippines of
private respondent BMW. If he is, BMW may be considered doing business in the Philippines and the
trial court acquired jurisdiction over it (BMW) by virtue of the service of summons on the Department of
Trade and Industry. Otherwise, if Hahn is not the agent of BMW but an independent dealer, albeit of
BMW cars and products, BMW, a foreign corporation, is not considered doing business in the Philippines
within the meaning of the Foreign Investments Act of 1991 and the IRR, and the trial court did not
acquire jurisdiction over it (BMW).
The SC ruled that Hahn acted as an agent of the respondent. Hahn claimed he took orders for
BMW cars and transmitted them to BMW. Upon receipt of the orders, BMW fixed the downpayment
and pricing charges, notified Hahn of the scheduled production month for the orders, and reconfirmed
the orders by signing and returning to Hahn the acceptance sheets. As soon as the vehicles are fully
manufactured and full payment of the purchase prices are made, the vehicles are shipped to the
Philippines. (The payments may be made by the purchasers or third-persons or even by Hahn). The bills
of lading are made up in the name of the purchasers, but Hahn-Manila is therein indicated as the person
to be notified. It is Hahn who picks up the vehicles from the Philippine ports, for purposes of conducting
pre-delivery inspections. Thereafter, he delivers the vehicles to the purchasers. As soon as BMW
invoices the vehicle ordered, Hahn is credited with a commission of fourteen percent (14%) of the full
purchase price thereof, and as soon as he confirms in writing that the vehicles have been registered in
the Philippines and have been serviced by him, he will receive an additional three percent (3%) of the
full purchase prices as commission.
This arrangement shows an agency. An agent receives a commission upon the successful
conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the
seller together, even if no sale is eventually made.
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 doingbusiness in the Philippines. The court need not go beyond theallegations of the
complaint in order to determine whether ithas jurisdiction. 18 A determination that the foreign
corporationis doing business is only tentative and is made only for thepurpose of enabling the local
court to acquire jurisdiction overthe foreign corporation through service of summons pursuantto Rule
14, §14

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What was the nature of the relationship between Alfred Hahn and BMW?

What issues did the Supreme Court consider in this case?

Hahn vs.

G.R. No. 113074. January 22, 1997

Filipino vs. Nonresident corporation

Petitioner, as AGENT of the respondent foreign corporation.

AGENT – Acting on behalf of someone.

Rule 14, Section 14 (12) of the Rules of Court

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