G.R. No. L-63557 October 28, 1983
LINGNER & FISHER GMBH, petitioner, vs. INTERMEDIATE APPELLATE COURT, HON. RICARDO L. PRONOVE JR. and PHILIPPINE CHEMICAL LABORATORIES, INC., respondents.

FACTS

Petitioner Lingner & Fisher GMBH (Lingner), a foreign corporation, entered into an Agency Agreement with private respondent Philippine Chemical Laboratories, Inc. (Philchem). The agreement appointed Philchem as the exclusive importer of Lingner’s products in the Philippines and contained a Royalty Clause entitling Philchem to royalties for five years post-termination. Crucially, the agreement stipulated that “all legal settlements within the compass of this AGREEMENT shall fall under the jurisdiction of Philippine courts.” The agreement was terminated on August 31, 1977. When Philchem’s royalty claim remained unsettled, it filed a complaint. Summons could not be served on Beecham, an associated entity, leading Philchem to file an amended complaint naming Lingner and Beecham as defendants and seeking to serve summons on Lingner’s local law firm.
Lingner, through a special appearance by its law firm, moved to dismiss the complaint on two grounds: first, that it was not doing business in the Philippines and thus could not be sued locally; and second, that service of summons through its law firm was invalid. The Trial Court denied the motion, a decision sustained by the Intermediate Appellate Court. The appellate court also denied Lingner’s request for an evidentiary hearing on whether it was doing business in the Philippines.

ISSUE

The primary issue is whether the Philippine courts can validly acquire jurisdiction over Lingner, a foreign corporation, for a suit arising from the Agency Agreement, notwithstanding questions about its doing business in the Philippines and the propriety of service of summons.

RULING

The Supreme Court upheld the denial of the Motion to Dismiss, albeit on different grounds from the appellate court. The Court ruled that an evidentiary hearing on whether Lingner was doing business in the Philippines was unnecessary. The determinative factor was not Lingner’s business status but the parties’ contractual consent to Philippine jurisdiction. The Agreement explicitly stipulated that all legal settlements arising from it “shall fall under the jurisdiction of Philippine courts.” This constituted a clear and voluntary submission to the jurisdiction of Philippine courts by both parties, including the foreign corporation.
Consequently, Lingner could be sued in the Philippines based on this consent, irrespective of whether it was engaged in business within the country. Regarding service of summons, the Court held that the initial attempt to serve Lingner through its law firm was improper, as the firm was acting as counsel, not a resident agent. However, the Court provided a remedy. Since the parties agreed on Philippine venue, the rules on extraterritorial service apply. The Court directed the trial court to allow Philchem to apply for alias summons to be served on Lingner by publication under Section 17, Rule 14 of the Rules of Court, thereby ensuring due process while giving effect to the parties’ jurisdictional covenant.