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.
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.
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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 ) 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 manifestation
of private respondent 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 business in 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 an 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 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 (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
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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 thatNo 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.
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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.