Case Summary (G.R. No. 87880)
Background of the Case
Litton Mills entered into an agreement with Empire Sales Philippines Corporation, the local agent of Gelhaar, to supply 7,770 dozens of soccer jerseys. A critical aspect of this agreement required that before Litton could collect payment via a letter of credit, an inspection certificate confirming the jerseys' satisfactory condition must be provided by Empire. Following some difficulties with the issuance of this certificate, Litton filed a complaint in the Regional Trial Court of Pasig, seeking specific performance and damages.
Trial Court Proceedings
In response to the complaint, the Regional Trial Court initially granted a writ of preliminary mandatory injunction compelling Empire to issue the inspection certificate, which it did promptly, allowing the shipment to proceed. Subsequently, various motions for extension of time to file an answer were filed by Gelhaar’s counsel, Atty. Remie Noval, which the court mostly granted.
Motion to Dismiss and Jurisdictional Issue
At a later stage, a different law firm entered a special appearance on behalf of Gelhaar, contesting the jurisdiction of the Philippine courts over the company. They stated that Gelhaar, as a foreign corporation, was not doing business in the Philippines, thereby rendering the service of summons invalid. The trial court ultimately ruled that Gelhaar was indeed doing business in the Philippines and upheld its jurisdiction, which prompted Gelhaar to file a certiorari petition in the Court of Appeals.
Court of Appeals Decision
The Court of Appeals determined that the trial court erred by not requiring proof of Gelhaar's business activities in the Philippines before asserting jurisdiction. It emphasized that mere allegations of doing business were insufficient and pointed out that Atty. Noval’s authority to represent Gelhaar was not adequately established. Thus, the appellate court reversed the trial court's decision and required a new summons to be issued to Empire, contingent on establishing the claim that Gelhaar was doing business in the Philippines.
Supreme Court Ruling
Upon petitioning the Supreme Court, Litton argued that jurisdiction over Gelhaar had been established through service on its agent and by virtue of Atty. Noval's appearance. The Supreme Court upheld the trial court’s assertion of jurisdiction, stating that Gelhaar's entry into a contract for the sale of jerseys constituted doing business in the Philippines. The court clarified that the allegations of the complaint were adequate to establish that Gelhaar was engaging in business activities in the country. The court also countered Gelhaar's argument that its connection with Litton was merely an isolated transaction, recognizing that such a commercial act was within the corporation's ordinary business activities.
Authority of Atty. Noval
Regarding Atty. Noval's authority, the Supreme Court agreed with
...continue readingCase Syllabus (G.R. No. 87880)
Case Background
- The case involves a petition filed by Litton Mills, Inc. (Litton) to review a decision made by the Court of Appeals which annulled an order from the Regional Trial Court (RTC) denying Gelhaar Uniform Company, Inc. (Gelhaar)’s claim of being a foreign corporation not conducting business in the Philippines.
- Litton entered into a contract with Empire Sales Philippines Corporation (Empire), the local agent of Gelhaar, to supply 7,770 dozens of soccer jerseys.
- The contract stipulated that for Litton to collect payment via a letter of credit, an inspection certificate from Empire was required to confirm that the goods were satisfactory.
Events Leading to the Case
- Litton shipped a total of 4,770 dozens of jerseys between December 2 and December 30, 1983.
- A fifth shipment of 2,110 dozens was inspected by Empire from January 9 to January 19, 1984, but Empire refused to issue the inspection certificate.
- Litton filed a complaint for specific performance at the RTC on January 23, 1984, seeking a writ of preliminary mandatory injunction to compel Empire to issue the necessary certificate and to recover damages.
Procedural History
- The RTC granted Litton's request for a writ on January 25, 1984, leading Empire to issue the inspection certificate the following day, allowing for the timely shipment of goods.
- A series of motions for extension of time to file an answer from the defendants, represented by Atty. Remie Noval, were