G.R. No. 113074 , January 22, 1997
Alfred Hahn vs. Court of Appeals and Bayerische Motoren Werke Aktiengesellschaft (BMW)

FACTS

Petitioner Alfred Hahn, doing business as Hahn-Manila, was the exclusive dealer in the Philippines for respondent BMW, a German corporation. In 1967, Hahn executed a Deed of Assignment transferring the BMW trademark in the Philippines to BMW. The deed stated the parties would continue their business relations as usual without a formal contract and acknowledged Hahn as the “authorized exclusive Dealer.” In 1993, BMW informed Hahn it was terminating his exclusive dealership, citing business deficiencies, and intended to grant it to Columbia Motors Corporation. Hahn protested, claiming the assignment was made in consideration of the exclusive dealership.
Hahn filed a complaint for specific performance and damages in the Regional Trial Court (RTC) of Quezon City to compel BMW to continue the dealership. He alleged BMW was doing business in the Philippines and could be served summons through the Secretary of the Department of Trade and Industry. BMW moved to dismiss, claiming it was not doing business in the Philippines and thus the court had no jurisdiction over it. The RTC deferred resolution on the motion to dismiss and issued a writ of preliminary injunction. The Court of Appeals reversed, dismissing the complaint for lack of jurisdiction, ruling BMW was not doing business in the country.

ISSUE

Whether the Court of Appeals erred in dismissing the complaint for lack of jurisdiction over BMW, a nonresident foreign corporation, based solely on the pleadings.

RULING

Yes. The Supreme Court reversed the Court of Appeals and remanded the case to the trial court. The central issue of whether a foreign corporation is doing business in the Philippines is essentially one of fact. The allegations in Hahn’s complaint, which stated BMW was doing business in the country, were sufficient to invoke the trial court’s jurisdiction for the purpose of determining that very question. A motion to dismiss based on lack of jurisdiction requires a factual basis that typically cannot be resolved merely on the basis of uncertain allegations in the pleadings.
The trial court correctly deferred resolution of the motion to dismiss to avoid prematurely deciding a question requiring a full evidentiary basis. The appellate court erred in ruling definitively that BMW was not doing business based only on the pleadings, thereby depriving Hahn of his right to a full hearing on the merits of his cause of action. The matter of BMW’s business activities, including the nature of its relationship with its alleged Philippine agent and whether it had ceased doing business, must await the reception of evidence during a trial on the merits.