GR 105141; (August, 1993) (Digest)
G.R. No. 105141 August 31, 1993
SIGNETICS CORPORATION, petitioner, vs. COURT OF APPEALS and FRUEHAUF ELECTRONICS PHILS. INC., respondents.
FACTS
Petitioner Signetics Corporation (Signetics), a foreign corporation organized under U.S. laws, entered into a lease contract over land in the Philippines with private respondent Fruehauf Electronics Phils., Inc. (Fruehauf) through Signetics Filipinas Corporation (SigFil), its wholly-owned domestic subsidiary. Fruehauf filed a complaint for damages, accounting, and other reliefs against Signetics before the Regional Trial Court of Pasig. Summons was served on Signetics through TEAM Pacific Corporation, based on the allegation in the complaint that Signetics could be served there. Signetics, by special appearance, filed a motion to dismiss on the ground of lack of jurisdiction over its person, claiming it had ceased doing business in the Philippines. The trial court denied the motion, citing that a foreign corporation not doing business may still be sued for acts done against persons in the Philippines, and that the complaint’s allegations sufficiently indicated Signetics was doing business. The Court of Appeals affirmed the trial court’s orders. Signetics elevated the case to the Supreme Court, arguing that prior proof of doing business is required for valid service of summons on a foreign corporation.
ISSUE
Whether the trial court correctly assumed jurisdiction over the foreign corporation, Signetics, based on the factual allegations in the complaint, despite Signetics’ claim in its motion to dismiss that it had ceased doing business in the Philippines.
RULING
The Supreme Court ruled for the affirmance of the appealed decision, denying the petition. The Court held that jurisdiction is initially determined by the allegations in the complaint, not by the defenses in a motion to dismiss. The complaint contained sufficient allegations to establish that Signetics was doing business in the Philippines, such as its interest in engaging in business, organizing a wholly-owned subsidiary as its local conduit, entering into a lease contract concerning Philippine property, and its subsequent business activities and transfers. The issue of whether Signetics had ceased doing business is a matter of defense requiring a full trial on the merits, not proper for a motion to dismiss. The Court distinguished the cited case of Hyopsung Maritime Co., Ltd. v. Court of Appeals, as it involved a contract entirely executed and consummated abroad with no Philippine contact, unlike this case where the cause of action arose from acts and property within the Philippines. The trial court was directed to proceed with the case.