MARUBENI NEDERLAND B.V. PETITIONER, VS. THE HONORABLE JUDGE RICARDO P. TENSUAN, PRESIDING JUDGE OF THE COURT OF FIRST INSTANCE OF RIZAL, BRANCH IV, QUEZON CITY AND ARTEMIO GATCH…

On October 23, 1976, in Tokyo, Japan, petitioner Marubeni
Nederland B.V. and D.B. Teodoro Development
Corporation (DBT for short) entered into a contract whereby petitioner agreed
to supply all the necessary equipment, machinery, materials, techni­cal
know-how and the general design of the construction of DBT’s
lime plant at the Guimaras Islands in Iloilo for a
total contract price of US$5,400.000.00 on a deferred payment basis.  Simultane­ously with the supply contract, the
parties entered into two financing contracts, namely a construction loan
agreement in the amount of US $1,600,000.00 and a cash loan agreement for US
$1,500,000.00.  The obligation of DBT to
pay the loan amortizations on their due dates under the three (3) contracts
were absolutely and unconditionally guaranteed by the National Investment and
Development Corporation (NIDC).

Pursuant to the terms of the financing contracts, the loan
amortizations of DBT fell due on January
7, 1980, July 7, 1980
and January 7, 1981.  But before the first installment became due,
DBT wrote a letter to the NIDC interposing certain claims against the
petitioner and at the same time requesting NIDC for a revision of the repayment
schedule and of the amounts due under the contracts on account of petitioner’s delay in the performance of its contractual
commitments.^[1]
In due time, the problems regarding the lime plant were ironed out and the
parties signed a “Settlement Agreement” on July 2, 1981.^[2]

However, on May 14, 1982,
DBT, through counsel, informed petitioner that it was rejecting the lime plant
on the ground that it has not been constructed in accordance with their agree­ment.  DBT made a formal demand for indemnification
in the total amount of P95,150,000.^[3]
In its letter dated June 1, 1982,
petitioner refused to accept DBT’s unilateral
rejection of the plant and reasoned that the alleged operation and technical
problems were “totally unrelated to the guaranteed capacity and
specifications of the plant and definitely are not attributable to any fault or
omission on the part of Marubeni.”^[4]

Before the first installment under the “Settlement
Agreement” could be paid, private respondent Artemio
Gatchalian, stockholder of DBT, sued petitioner
Marubeni for contractual breach before the then Court of First Instance of Rizal, Branch 4, Quezon City.^[5]
In his complaint filed on June 22, 1982, Gatchalian impleaded DBT as an “unwilling plaintiff x x x for whose primary benefit th(e) action (wa)s being
prosecuted” together with NIDC which, as pledgee
of the voting shares in, DBT, has controlling interest in that corporation.^[6] Gatchalian sought indemnification in the amount of P95,150,000.00 and further prayed for a writ of preliminary
injunction to enjoin DBT and  NIDC from
making directly or indirectly any payment to Marubeni in connection with the
contracts they had entered into.  On June 25, 1982, respondent judge
issued a temporary restraining order directed against DBT and NIDC and set the
injunction for hearing.^[7]

On July 5, 1982,
petitioner Marubeni entered a limited and special appearance and sought the
dismissal of the complaint on the ground that the court a quo had no
jurisdiction over the person of petitioner since it is a foreign corporation
neither doing nor licensed to do business in the Philippines.  Private respondent opposed that motion.  On September
22, 1982, the lower court denied petitioner’s motion to dismiss for
lack of merit and gave it ten (10) days within which to file an answer.  Petitioner opted to elevate the
jurisdictional issue directly to the High Court.^[8]
Hence, this petition for certiorari and prohibition
with prayer for a temporary restraining order.  On October
6,1982, we issued the restraining order
and subsequently required the parties to file simultaneous memoranda.

The pivotal issue in this case is whether or not petitioner
Marubeni Nederland B.V. can be considered as “doing business” in the Philippines
and therefore subject to the jurisdiction of our courts.

Petitioner claims that it is a foreign corporation not doing business
in the country and as an entity with its own capitalization, it is separate and
distinct from Marubeni Corporation, Japan which is doing business in the
Philippines through its Manila branch; that the three (3) contracts entered
into with DBT were perfected and consummated in Tokyo, Japan; that the sale and
purchase of the machineries and equipment for the Guimaras
lime plant were isolated contracts and in no way indicated a purpose to engage
in business; and that the services performed by petitioner in the Philippines
were merely auxiliary to the aforesaid isolated transactions entered into and
perfected outside the Philippines.

On the other hand, private respondent Gatchalian
contends that petitioner can be sued in Philippine courts on liabilities
arising from even a single transaction because in reality, it is already
engaging in business in the country through Marubeni Corporation, Manila branch
and that they, together with Nihon Cement Company, Ltd. of Japan are but
“alter egos, adjuncts, conduits, instruments or branch affiliates of
Marubeni Corpora­tion of Japan”, the parent company.^[9]

In resolving the issue at hand, we reiterate that there is no
general rule or principle that can be laid down to determine what constitutes
doing or engaging in business.  Each case
must be judged in the light of its peculiar factual milieu and upon the
language of the statute applicable.^[10]

Contrary to petitioner’s allegations, we hold that petition­er
can be sued in the regular courts because it is doing business in the Philippines.  The applicable law is Republic Act No. 5455
as implemented by the following rules and regulations of the Board of
Investments which took effect on February
3, 1969.  Thus:

”
x x x         x x x        x x x

”
(f) the performance within the Philippines
of any act or combination of acts enumerated in Section 1 (1) of the Act shall
constitute ‘doing business’ therein-in. 
In particular, ‘doing business’ includes:

”
1) Soliciting orders, purchases (sales) or service contracts.  Concrete and specific solicitations by a
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        xxx
        xxx .

“2) Appointing
a representative or distributor who is domiciled 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.”^[11]

It cannot be denied that petitioner had solicited the lime plant
business from DBT through the Marubeni Manila branch.  Records show that the “turn-key proposal
for the x x x 300 T/D Lime
Plant” was initiated by the Manila office through
its Mr. T. Hojo. 
In a follow-up letter dated August
3, 1976, Hojo committed the firm to a
price reduction of $200,000.00 and submitted the proposed contract forms.  As reflected in the letterhead used, it was
Marubeni Corporation, Tokyo, Japan
which assumed an active role in the initial stages of the negotiation.  Petitioner Maru­beni Nederland B.V. had no
visible participation until the actual signing of the October 28, 1976 agreement in Tokyo
and even there, in the space reserved for petitioner, it was the signature of
“S. Adachi as General Manager of Marubeni Corporation, Tokyo
on behalf of Marubeni Nederland B.V.” which appeared.^[12]

Even assuming for the sake of argument that Marubeni Nederland B.
V. is a different and separate business entity from Marubeni Japan and its
Manila branch, in this particular transaction, at least, Marubeni Nederland B.
V. through the foregoing acts, had effectively solicited “orders,
purchases (sales) or service contracts” as well as constituted Marubeni
Corporation, Tokyo, Japan and its Manila Branch as its representative in the
Philippines to transact business for its account as principal.  These circumstances, taken singly or in
combination, constitute “doing business in the Philippines”
within the contemplation of the law.

 At this juncture it must
be emphasized that a foreign corporation doing business in the Philippines
with or without license is subject to process and jurisdiction of the local
courts.  If such
corporation is properly licensed, well and good.  But it shall not be allowed, under any
circumstances, to invoke its lack of license to impugn the jurisdiction of our
courts.^[13]

Finally, petitioner contends that it was denied due process when
respondent Judge Tensuan peremptorily denied its
motion to dismiss without giving petitioner any opportunity to present evidence
at a hearing set for this purpose.^[14]

The alleged denial of due process is more apparent than
real.  Under Section 13, Rule 16 of the
Revised Rules of Court, the court, when confronted with a motion to dismiss, is
given two courses of action, to wit:  (1)
to deny or grant the motion or allow amendment of the pleading or (2) to defer
the hearing and determination of the motion until the trial on the merits, if
the ground alleged therein does not appear to be indubitable.

In the case at bar, assuming there was no formal hearing on the
motion to dismiss prior to its rejection, such did not unduly prejudice the
rights of petitioner.  Respondent court
still had to conduct trial on the merits during which time it could grant the
motion after sufficient evidence has been presented showing without any
question the want of jurisdiction over the person of the movant.  It would have been different had respondent
court sustained petitioner’s motion to dismiss without the required hearing in
which case, the corrective writ of certiorari would have issued against
said court.  In the absence of a hearing,
the appellate court, in an appeal from an order of dismissal, would have had no
means of determining or resolving the legality of the proceedings and the
sufficiency of the proofs on which the order was based.

WHEREFORE, the petition is DISMISSED for lack of
merit.  Respondent Court is hereby
directed to proceed with the hearing of Civil Case No. Q-35534
with dispatch.  This decision is
immediately executory.  Costs against the
petitioner.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin, and Cortes, JJ., concur.

^[1] Rollo, pp. 308-317.

^[2] Rollo, p. 321.

^[3] Rollo, p. 372.

^[4] Rollo, p. 372.

^[5] Civil Case No. Q-35534.

^[6] Rollo, p. 31.

^[7] Rollo, p. 45.

^[8] Rollo, pp. 101-102.

^[9] Rollo, p. 55.

^[10] Mentholatum Co. Inc. vs. Mangaliman,
72 Phil. 524; Far East International Import and Export Corporation vs. Nankai Kogyo Co., Ltd., No. L-13525, November 30, 1962, 6 SCRA 725; Facilities Management Corporation vs. De La
Rosa, No. L-38649, March 26, 1979, 89 SCRA 131; Top-Weld Manufacturing Inc. vs. ECED, S.A. et
al., No. L-44944, August 9, 1985;
Wang Laboratories, Inc. vs. Mendoza, G.R. No. 72147, December 1,1987,
156 SCRA 44.

^[11]
54 O.G. 53, cited in Facilities Management Corporation vs. De la Osa, No. L-38649, March 26,
1979, 89 SCRA 131, 135-136. See also 65 O.G. No. 29, p. 7410.

^[12] Rollo,
pp. 158, 201 and 258.

^[13] General Corporation of the Philippines, et al. vs. Union Insurance Society of Canton Ltd., et al.,
87 Phil. 313.

^[14] Rollo, p. 12.