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Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-38649 March 26, 1979

FACILITIES MANAGEMENT CORPORATION, J. S. DREYER, and J. V. CATUIRA, petitioners,

vs.
LEONARDO DE LA ROSA AND THE HONORABLE COURT OF INDUSTRIAL RELATIONS, respondents.

Sycip, Salazar, Feliciano & Associates for petitioners.

Benjamin M. Mendoza for respondent Court.

MAKASIAR, J:

Petition for review on certiorari of the decision of the Court of Industrial Relations, dated February 14, 1972, ordering
petitioners herein to pay private respondent Leonardo de la Osa his overtime compensation, as wen as his swing
shift and graveyard shift premiums at the rate of fifty (50%) per cent of his basic sa (Annex E, p. 31, rollo).

The aforesaid decision was based on a report submitted by the Hearing Examiner, CIR (Dagupan City Branch), the
pertinent portions of which are quoted hereinbelow:::

In a petition filed on July 1, 1967, Leonardo dela Osa sought his reinstatement. with full backwages, as
well as the recovery of his overtime compensation, swing shift and graveyard shift differentials.
Petitioner alleged that he was employed by respondents as follows: (1) painter with an hourly rate of
$1.25 from March, 1964 to November, 1964, inclusive; (2) houseboy with an hourly rate of $1.26 from
December, 1964 to November, 1965, inclusive; (3) houseboy with an hourly rate of $1.33 from
December, 1965 to August, 1966, inclusive; and (4) cashier with an hourly rate of $1.40 from August,
1966 to March 27, 1967, inclusive. He further averred that from December, 1965 to August, 1966,
inclusive, he rendered overtime services daily and that this entire period was divided into swing and
graveyard shifts to which he was assigned, but he was not paid both overtime and night shift premiums
despite his repeated demands from respondents.

Respondents filed on August 7, 1967 their letter- answer without substantially denying the material
allegations of the basic petition but interposed the following special defenses, namely: That
respondents Facilities Management Corporation and J. S. Dreyer are domiciled in Wake Island which is
beyond the territorial jurisdiction of the Philippine Government; that respondent J. V. Catuira, though an
employee of respondent corporation presently stationed in Manila, is without power and authority of
legal representation; and that the employment contract between petitioner and respondent corporation
carries -the approval of the Department of Labor of the Philippines.

Subsequently on May 3, 1968. respondents filed a motion to dismiss the subject petition on the ground
that this Court has no Jurisdiction over the instant case, and on May 24, 1968, petitioner interposed an
opposition thereto. Said motion was denied by this Court in its Order issued on July 12, 1968
sustaining jurisdiction in accordance with the prevailing doctrine of the Supreme Court in similar cases.

xxx xxx xxx

But before we consider and discuss the foregoing issues, let us first ascertain if this Court could
acquire jurisdiction over the case at bar, it having been contended by respondents that they are
domiciled in Wake Island which is beyond the territorial jurisdiction of the Philippine Government. To
this incidental question, it may be stated that while it is true the site of work is Identified as Wake Island,
it is equally true the place of hire is established in Manila (See Section B, Filipino Employment
Contract, Exhibit '1'). Moreover, what is important is the fact that the contract of employment between
the parties litigant was shown to have been originally executed and subsequently renewed in Manila,
as asserted by petitioner and not denied by respondents. Hence, any dispute arising therefrom should
necessarily be determined in the place or venue where it was contracted.

xxx xxx xxx

From the evidence on hand, it has been proven beyond doubt that petitioner canvas assigned to and
performed work in respondent company at slight time which consisted of two different schedules,
namely, swing shift and graveyard shifts, particularly during his tenure as houseboy for the second
period and as cashier. Petitioner's testimony to this effect was not contradicted, much less rebutted, by
respondents, as revealed by the records. Since petitioner actually rendered night time services as
required by respondents, and considering the physical, moral and sociological effects arising from the
performance of such nocturnal duties, we think and honestly believe that petitioner should be
compensated at least fifty percent (50%) more than his basic wage rate. This night shift premium pay
would indeed be at par with the overtime compensation stipulated at one and one-half (1 ½) times of
the straight time rate.

xxx xxx xxx (pp. 31-36, rollo).

Apropos before this Court were filed three (3) other cases involving the same petitioner, all of which had been finally
dispoded of, as follows:

G.R. No Date of Filing Disposition

1. L-37117 July 30, 1973 Petition denied for

lack of merit on Sept.
 13, 1973. Motion for
Reconsideration
denied lack of
merit, Nov. 20,1973.

2. L-38781 June 17,1974 Petition denied for

lack of merit on June
21,1974.

3. L-39111-12 Sept. 2,1974 Case dismissed on Feb.

6, 1976, pursuant to
voluntary manifesta
tion of private respon
dent Inocente R. Riel
that his claims had all
been settled to his entire
satisfaction.

Incidentally, in connection with G.R. No. L-39111-12 (No. 3 above), WE found strong evidence that petitioner therein,
which is also the petitioner in the case at bar, "twisted the arm" of private respondent, when the latter in his
Manifestation dated July 3, 1975, stated:

3. ... Furthermore, since petitioner FMC is a foreign corporation domiciled in California, U.S.A. and has
never been engaged in business in the Philippines, nor does it have an agent or an office in this
country, there exists no valid reason for me to participate in the continuation and/or prosecution of this
case (p. 194, rollo).

— as if jurisdiction depends on the will of the parties to a case. At any rate, considering that petitioner paid the
claims of private respondent, the case had become moot and academic. Besides, the fact of such payment amounts
to an acknowledgment on the part of petitioner of the jurisdiction of the court over it.

WE have also noted that the principal question involved in each of the above-numbered three (3) cases is more or
less Identical, to wit: Is the mere act by a non-resident foreign corporation of recruiting Filipino workers for its own
use abroad, in law doing business in the Philippines?

In the case at bar, which was filed with this Court on June 3, 1974, petitioners presented, inter alia, the following
issue: ... can the CIR validly affirm a judgment against persons domiciled outside and not doing business in the
Philippines, and over whom it did not acquire jurisdiction')

While it is true that the issues presented in the decided cases are worded differently from the principal issue raised
in the case at bar, the fact remains that they all boil down to one and the same issue, which was aptly formulated
and ably resolved by Mr. Justice Ramon C. Fernandez, then with the Court of Appeals and now a member of this
Court, in CA-G.R. No. SP-01485-R, later elevated to this Court on appeal by certiorari in Case G.R. No. L-37117 this
case, the majority opinion of the Court of Appeals, which was penned by Justice Fernandez and which WE hereby
adopt, runs as follows:

The principal issue presented in this special civil action is whether petitioner has been 'doing business
in the Philippines' so that the service of summons upon its agent in the Philippines vested the Court of
First Instance of Manila with jurisdiction.

From the facts of record, the petitioner may be considered as doing busuness un the Philippines within
the the scope of Section 14, Rule 14 of the Rules of the Court which provide:

SEC 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 officers or agents within the Philippines.

Indeed, the petitioner, in compliance with Act 2486 as implemented by Department of Labor Order No.
IV dated May 20, 1968 had to appoint Jaime V. Catuira, 1322 A. Mabini, Ermita, Manila as agent for
FMC with authority to execute Employment Contracts and receive, in behalf of that corporation, legal
services from and be bound by processes of the Philippine Courts of Justice, for as long as he remains
an employee of FMC (Annex 'I', rollo, p. 56). It is a fact that when the summons for the petitioner was
served on Jaime V. Catuira he was still in the employ of the FMC.

In his motion to dismiss Annex B', p. 19, Rollo), petitioner admits that Mr. Catuira represented it in this
country 'for the purpose of making arrangements for the approval by the Department of Labor of the
employment of Filipinos who are recruited by the Company as its own employees for assignment
abroad.' In effect, Mr. Catuira was a on officer representing petitioner in the Philippines.

Under the rules and regulations promulgated by the Board of Investments which took effect Feb. 3,
1969, implementing Rep. Act No. 5455, which took effect Sept. 30, 1968, the phrase 'doing business'
has been exemption with illustrations, among them being as follows:

xxx xxx xxx

(f) the performance within the Philippines of any act or combination of acts enumerated in
section l(l) 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, not acting independently of the 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. xxx

(2) Appointing a representative or distributor who is dociled 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.

xxx xxx xxx

 (4) Opening offices, whether called 'liaison'offices, agencies or branches, unless proved
otherwise.

xxx xxx xxx

(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 (54 O.G. 53).

Recently decided by this Court — again thru Mr. Justice Ramon C. Fernandez — which is similar to the case at bar,
is G.R. No. L-26809, entitled Aetna Casualty & Curety Company, plaintiff- appellant versus Pacific Star Line, the
Bradman Co., Inc., Manila Port Service and/or Manila Railroad Company, Inc., defendants-appellees." The case is
an appeal from the decision of the Court of First Instance of Manila, Branch XVI, in its Civil Case No. 53074, entitled
Aetna Casualty & Surety Company vs. Pacific Star Lines, The Bradman Co., Inc., Manila Port Service and/or Manila
Railroad Company, Inc." dismissing the complaint on the ground that the plaintiff has no legal capacity to bring the
suit.

It appears that on February 11, 1963, Smith Bell & Co. (Philippines), Inc. and Aetna Casualty & Surety Co., Inc., as
subrogee instituted Civil Case No. 53074 in the Court of First Instance of Manila against Pacific Star Line, The
Bradman Co., Inc., Manila Port Service and/or Manila Railroad Company, Inc. to recover the amount of
US$2,300.00 representing the value of stolen and damaged cargo plus litigation expenses and exemplary damages
in the amounts of P1,000.00 and P2,000.00, respectively, with legal interest thereon from the filing of the suit and
costs.

After all the defendants had filed their answer, the defendants Manila Port Service and Manila Railroad Company,
Inc. amended their answer to allege that the plaintiff, Aetna Casualty & Surety Company, is a foreign corporation not
duly licensed to do business in the Philippines and, therefore, without capacity to sue and be sued.

After the parties submitted a partial stipulation of facts and additional documentary evidence, the case was
submitted for decision of the trial court, which dismissed the complaint on the ground that the plaintiff insurance
company is subject to the requirements of Sections 68 and 69 of Act 1459, as amended, and for its failure to comply
therewith, it has no legal capacity to bring suit in this jurisdiction. Plaintiff appealed to this Court.

The main issue involved in the appeal is whether or not the plaintiff appellant has been doing business in the
Philippines, considering the fact that it has no license to transact business in the Philippines as a foreign
corporation. WE ruled:

The object of Sections 68 and 69 of the Corporation Law was not to prevent the foreign corporation
from performing single acts, but to prevent it from acquiring a domicile for the purpose of business
without taking the steps necessary to render it amenable to suit in the local courts. It was never the
purpose of the Legislature to exclude a foreign corporation which happens to obtain an isolated order
for business from the Philippines, from securing redress in the Philippine courts (Marshall Co. vs. Elser
& Co., 46 Phil 70,75).

In Mentholatum Co., Inc., et al vs- M Court rules that-

No general rule or governing principle can be laid down as to what constitutes 'doing' or
'engaging in' or 'transacting' business. Indeed, each case must be judged in the light of its
peculiar environmental circumstances. The true test, however, seems to be whether the
foreign corporation is continuing the body or substance of the business or enterprise for
which it was organized or whether it has substantially retired from it and turned it over to
another. (Traction Cos. v. Collectors of Int Revenue [C.C.A Ohio], 223 F. 984, 987). The
term implies a continuity of commercial dealings and arrangements, and contemplates, to
that extent, the performance of acts or works or the exercise of some of the functions
normally incident to, and in progressive prosecution of, the purpose and object of its
organization (Griffin v. Implement Dealers' Mut. Fire Ins. Co., 241 N.W. 75, 77; Pauline Oil
& Gas Co. v. Mutual Tank Line Co., 246 P. 851, 852, 118 Okl. III; Automotive Material Co.
vs. American Standard Metal Products Corp., 158 N.E. 698, 703, 327 III. 367)'. 72 Phil.
524, 528-529.

And in Eastboard Navigation, Ltd., et al. vs. Juan Ysmael & Co., Inc., this Court held:

(d) While plaintiff is a foreign corporation without license to transact business in the
Philippines, it does not follow that it has no capacity to bring the present action. Such
license is not necessary because it is not engaged in business in the Philippines. In fact,
the transaction herein involved is the first business undertaken by plaintiff in the
Philippines, although on a previous occasion plaintiff's vessel was chartered by the
National Rice and Corn Corporation to carry rice cargo from abroad to the Philippines.
These two isolated transactions do not constitute engaging in business in the Philippines
within the purview of Sections 68 and 69 of the Corporation Law so as to bar plaintiff from
seeking redress in our courts. (Marshall Wens Co. vs. Henry W. Elser & Co. 49 Phil., 70;
Pacific Vegetable Oil Corporation vs. Angel O. Singson, G.R. No. L-7917, April 29, 1955)'.
102 Phil., pp. 1, 18.

Based on the rulings laid down in the foregoing cases, it cannot be said that the Aetna Casualty &
Surety Company is transacting business of insurance in the Philippines for which it must have a
license. The Contract of insurance was entered into in New York, U.S.A., and payment was made to
the consignee in its New York branch. It appears from the list of cases issued by the Clerk of Court of
the Court of First Instance of Manila that all the actions, except two (2) cases filed by Smith, Beer &
Co., Inc. against the Aetna Casualty & Surety Company, are claims against the shipper and the
arrastre operators just like the case at bar.

Consequently, since the appellant Aetna Casualty & Surety Company is not engaged in the business of
insurance in the Philippines but is merely collecting a claim assigned to it by the consignee, it is not
barred from filing the instant case although it has not secured a license to transact insurance business
in the Philippines.

Indeed, if a foreign corporation, not engaged in business in the Philippines, is not banned from seeking redress from
courts in the Philippines, a fortiori, that same corporation cannot claim exemption from being sued in Philippine
courts for acts done against a person or persons in the Philippines.

WHEREFORE, THE PETITION IS HEREBY DENIED WITH COSTS AGAINST THE PETITIONERS.
SO ORDERED.

Teehankee (Chairman), Fernandez, Guerrero, De Castro, and Melencio Herrera, JJ., concur.

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