G.R. No. 9498 May 15, 1996
LITTON MILLS, INC., petitioner, vs. COURT OF APPEALS and GELHAAR UNIFORM COMPANY, INC., respondents.

FACTS

Petitioner Litton Mills entered into a contract to supply soccer jerseys to respondent Gelhaar Uniform Company, a foreign corporation, through its local agent, Empire Sales Philippines Corporation. The agreement required an inspection certificate from Empire before Litton could collect payment via a letter of credit. Litton made several shipments, but Empire refused to issue the certificate for a final shipment. Consequently, Litton filed a complaint for specific performance and damages against both Empire and Gelhaar in the Regional Trial Court (RTC). The RTC issued a writ of preliminary mandatory injunction, compelling Empire to issue the certificate, which it did. Atty. Remie Noval filed numerous motions for extension and an answer on behalf of both defendants. Later, the law firm of Sycip, Salazar entered a special appearance for Gelhaar, moving to dismiss on the ground that Gelhaar was a foreign corporation not doing business in the Philippines and thus not subject to the RTC’s jurisdiction. It also contested Atty. Noval’s authority to represent Gelhaar. The RTC denied the motion, finding Gelhaar was doing business locally. The Court of Appeals reversed, annulling the RTC’s orders.

ISSUE

Whether the trial court acquired jurisdiction over the person of the foreign corporation, Gelhaar Uniform Company, Inc.

RULING

Yes, the Supreme Court reversed the Court of Appeals and reinstated the RTC’s order, with modification. Jurisdiction over Gelhaar was validly acquired through service of summons upon its local agent, Empire Sales, pursuant to Rule 14, Section 14 of the Rules of Court. The Court clarified that the doctrine in Pacific Micronisian Lines, Inc. v. Del Rosario, requiring prior proof that a foreign corporation is doing business before effecting substituted service, applies only when the corporation’s doing of business is disputed. Here, Gelhaar’s engagement in business through a local agent was evident from the very transaction subject of the suit—a series of purchases through a resident agent with authority to inspect and certify goods. This constituted “doing business” under Philippine law. Therefore, service on Empire was valid. However, the Court agreed with the appellate court that Atty. Noval’s appearance did not bind Gelhaar, as his authority was effectively repudiated and not proven. Consequently, while jurisdiction was properly acquired via summons, Gelhaar was granted a new period to file its answer.