Agilent Technologies Singapore vs. Integrated Silicon Techngology Philippines Corp. Case Digest

Agilent Technologies Singapore vs. Integrated Silicon Techngology Philippines Corp.

[GR 154618, 14 April 2004]

Facts: Agilent Technologies Singapore (Pte.), Ltd. is a foreign corporation, which, by its own admission, is not licensed to do business in the Philippines. Integrated Silicon Technology Philippines Corporation is a private domestic corporation, 100% foreign owned, which is engaged in the business of manufacturing and assembling electronics components. Teoh Kiang Hong, Teoh Kiang Seng and Anthony Choo, Malaysian nationals, are current members of Integrated Silicon’s board of directors, while Joanne Kate M. dela Cruz, Jean Kay M. dela Cruz, and Rolando T. Nacilla are its former members. The juridical relation among the various parties in the case can be traced to a 5-year Value Added Assembly Services Agreement (VAASA), entered into on 2 April 1996 between Integrated Silicon and the Hewlett-Packard Singapore (Pte.) Ltd., Singapore Components Operation (HP-Singapore). Under the terms of the VAASA, Integrated Silicon was to locally manufacture and assemble fiber optics for export to HP-Singapore. 

HP-Singapore, for its part, was to consign raw materials to Integrated Silicon; transport machinery to the plant of Integrated Silicon; and pay Integrated Silicon the purchase price of the finished products. The VAASA had a five-year term, beginning on 2 April 1996, with a provision for annual renewal by mutual written consent. On 19 September 1999, with the consent of Integrated Silicon, HP-Singapore assigned all its rights and obligations in the VAASA to Agilent. On 25 May 2001, Integrated Silicon filed a complaint for “Specific Performance and Damages” against Agilent and its officers Tan Bian Ee, Lim Chin Hong, Tey Boon Teck and Francis Khor (Civil Case 3110-01-C), alleging that Agilent breached the parties’ oral agreement to extend the VAASA. Integrated Silicon thus prayed that Agilent be ordered to execute a written extension of the VAASA for a period of five years as earlier assured and promised; to comply with the extended VAASA; and to pay actual, moral, exemplary damages and attorney’s fees. 

On 1 June 2001, summons and a copy of the complaint were served on Atty. Ramon Quisumbing, who returned these processes on the claim that he was not the registered agent of Agilent. Later, he entered a special appearance to assail the court’s jurisdiction over the person of Agilent. On 2 July 2001, Agilent filed a separate complaint against Integrated Silicon, Teoh Kang Seng, Teoh Kiang Gong, Anthony Choo, Joanne Kate M. dela Cruz, Jean Kay M. dela Cruz and Rolando T. Nacilla, for “Specific Performance, Recovery of Possession, and Sum of Money with Replevin, Preliminary Mandatory Injunction, and Damages”, before the Regional Trial Court, Calamba, Laguna, Branch 92 (Civil Case 3123-2001-C). Agilent prayed that a writ of replevin or, in the alternative, a writ of preliminary mandatory injunction, be issued ordering Integrated Silicon, et. al. to immediately return and deliver to Agilent its equipment, machineries and the materials to be used for fiber-optic components which were left in the plant of Integrated Silicon; and that the latter be ordered to pay actual and exemplary damages and attorney’s fees. Integrated Silicon, et. al. filed a Motion to Dismiss in Civil Case No. 3123-2001-C, on the grounds of lack of Agilent’s legal capacity to sue; litis pendentia; forum shopping; and failure to state a cause of action. On 4 September 2001, the trial court denied the Motion to Dismiss and granted Agilent’s application for a writ of replevin. 

Without filing a motion for reconsideration, Integrated Silicon, et. al. filed a petition for certiorari with the Court of Appeals. In the meantime, upon motion filed by Integrated Silicon, et. al., Judge Antonio S. Pozas of Branch 92 voluntarily inhibited himself in Civil Case 3123-2001-C. The case was re-raffled and assigned to Branch 35, the same branch where Civil Case 3110-2001-C is pending. On 12 August 2002, the Court of Appeals granted Integrated Silicon, et. al.’s petition for certiorari, set aside the assailed Order of the trial court dated 4 September 2001, and ordered the dismissal of Civil Case 3123-2001-C. Agilent filed the petition for review. 

Issue:

1. Whether a foreign corporation without a license is incapacitated from bringing an action in Philippine courts. 
2. Whether Agilent was doing business in the Philippines. 

Held: 

1. A foreign corporation without a license is not ipso facto incapacitated from bringing an action in Philippine courts. A license is necessary only if a foreign corporation is “transacting” or “doing business” in the country. Section 133 of the Corporation Code provides that "No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws." The aforementioned provision prevents an unlicensed foreign corporation “doing business” in the Philippines from accessing our courts. In a number of cases, however, the Court held that an unlicensed foreign corporation doing business in the Philippines may bring suit in Philippine courts against a Philippine citizen or entity who had contracted with and benefited from said corporation. Such a suit is premised on the doctrine of estoppel. A party is estopped from challenging the personality of a corporation after having acknowledged the same by entering into a contract with it. This doctrine of estoppel to deny corporate existence and capacity applies to foreign as well as domestic corporations. The application of this principle prevents a person contracting with a foreign corporation from later taking advantage of its noncompliance with the statutes chiefly in cases where such person has received the benefits of the contract. The principles regarding the right of a foreign corporation to bring suit in Philippine courts may thus be condensed in four statements: (1) if a foreign corporation does business in the Philippines without a license, it cannot sue before the Philippine courts; (2) if a foreign corporation is not doing business in the Philippines, it needs no license to sue before Philippine courts on an isolated transaction or on a cause of action entirely independent of any business transaction; (3) if a foreign corporation does business in the Philippines without a license, a Philippine citizen or entity which has contracted with said corporation may be estopped from challenging the foreign corporation’s corporate personality in a suit brought before Philippine courts; and (4) if a foreign corporation does business in the Philippines with the required license, it can sue before Philippine courts on any transaction. 

2. The challenge to Agilent’s legal capacity to file suit hinges on whether or not it is doing business in the Philippines. However, there is no definitive rule on what constitutes “doing”, “engaging in”, or “transacting” business in the Philippines, the Corporation Code itself is silent as to what acts constitute doing or transacting business in the Philippines. An analysis of the relevant case law, in conjunction with Section 1 of the Implementing Rules and Regulations of the Foreign Investments Act of 1991 (FIA, as amended by RA 8179), would demonstrate that the acts enumerated in the VAASA do not constitute “doing business” in the Philippines. Section 1 of the Implementing Rules and Regulations of the FIA (as amended by RA 8179) provides that the following shall not be deemed “doing business”: (1) Mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor; (2) Having a nominee director or officer to represent its interest in such corporation; (3) Appointing a representative or distributor domiciled in the Philippines which transacts business in the representative’s or distributor’s own name and account; (4) The publication of a general advertisement through any print or broadcast media; (5) Maintaining a stock of goods in the Philippines solely for the purpose of having the same processed by another entity in the Philippines; (6) Consignment by a foreign entity of equipment with a local company to be used in the processing of products for export; (7) Collecting information in the Philippines; and (8) Performing services auxiliary to an existing isolated contract of sale which are not on a continuing basis, such as installing in the Philippines machinery it has manufactured or exported to the Philippines, servicing the same, training domestic workers to operate it, and similar incidental services. By and large, to constitute “doing business”, the activity to be undertaken in the Philippines is one that is for profit-making. Herein, by the clear terms of the VAASA, Agilent’s activities in the Philippines were confined to (1) maintaining a stock of goods in the Philippines solely for the purpose of having the same processed by Integrated Silicon; and (2) consignment of equipment with Integrated Silicon to be used in the processing of products for export. As such, Agilent cannot be deemed to be “doing business” in the Philippines. Integrated Silicon, et. al.’s contention that Agilent lacks the legal capacity to file suit is therefore devoid of merit. As a foreign corporation not doing business in the Philippines, it needed no license before it can sue before our courts.

GONZALES vs PAGCOR Case Digest

RAMON A. GONZALES v. PHILIPPINES AMUSEMENT AND GAMING CORPORATION, et al. 

429 SCRA 533 (2004), THIRD DIVISION (Carpio Morales, J.) 

While PAGCOR is allowed under its charter to enter into operator’s and/or management contracts, it is not allowed under the same charter to relinquish or share its franchise, much less grant a veritable franchise to another entity such as SAGE. PAGCOR can not delegate its power in view of the legal principle of delegata potestas delegare non potest, inasmuch as there is nothing in the charter to show that it has been expressly authorized to do so. 

FACTS: Petitioner Ramon A. Gonzales, as a citizen, taxpayer and member of the Philippine Bar, filed a Petition seeking to restrain respondent Philippine Amusement and Gaming Corporation (PAGCOR) from continuing its operations and prohibit it and its co-respondents Sports and Games Entertainment Corporation (SAGE), Best World Gaming and Entertainment Corporation (BEST WORLD), Belle Jai-alai Corporation (BELLE) and Filipinas Gaming Entertainment Totalizator Corporation (FILGAME)from enforcing: (1) the Grant of an Authority and Agreement for the Operation of Sports Betting and Internet Gambling executed between PAGCOR and SAGE; (2) the Grant of Authority to Operate Computerized Bingo Games between PAGCOR and BEST WORLD; and (3) the ―Agreement‖ among PAGCOR, BELLE and FILGAME to conduct jai-alai operations.
 In Del Mar v. Phil. Amusement and Gaming Corp., et al., the Court enjoined PAGCOR, BELLE, and FILGAME from managing, maintaining and operating jai-alai games and from enforcing the agreement entered into by them for that purpose. Then, PAGCOR et al. filed several motions for clarification, which the Supreme Court denied. 

Respondents BELLE and FILGAME filed a Manifestation stating that they were impleaded in the instant petition by reason of the agreement which they executed with PAGCOR. The said agreement was already declared invalid by the Supreme Court. In its comment, the respondent BEST WORLD stated that it had been unable to operate its bingo terminals and bingo games since its closure and shut down by PAGCOR and DILG. 

ISSUE: 

1. Whether or not Presidential Decree (P.D.) 1869, as amended (the PAGCOR Charter), is unconstitutional for having been issued pursuant to an unlawful exercise of legislative power by then President Ferdinand E. Marcos 
2. Whether or not the contracts entered into by PAGCOR with its BELLE and FILGAME are void for being undue delegations by PAGCOR of its franchise to operate and maintain gambling casinos, sports, gaming pools and the like 

HELD: 

That the P.D. 1869 has been rendered moot and academic 

In assailing the constitutionality of P.D. 1869, Gonzales does not point to any inconsistency between it and the present Constitution. Instead, it questions its issuance as an illegal exercise of legislative powers by then President Marcos. 

Indeed, while Gonzales made several poignant observations regarding the jurisprudence in the foregoing cases, the Court is unable to accept his invitation to re-examine said cases for the simple reason that the power conferred on it by the Constitution is limited to the adjudication of actual controversies and the determination of whether a branch or instrumentality of the government has acted with grave abuse of discretion amounting to lack or excess of jurisdiction. Even with its expanded jurisdiction, it is beyond the powers of this Court to re-write history. 

Since Gonzeles did not endeavor to show that P.D. 1869 itself is inconsistent with the Constitution, his prayer that PAGCOR be enjoined from continuing its operations and doing acts in furtherance of its existence must necessarily be denied. 

Movants may derive some satisfaction in the knowledge that Gonzales‘ prayer that respondents be enjoined from enforcing the "Agreement" among PAGCOR, BELLE and FILGAME to conduct jaialai operations and the "Grant of an Authority and Agreement for the Operation of Sports Betting and Internet Gambling" between PAGCOR and SAGE had been granted, albeit in the separate aforementioned cases of Del Mar and Jaworski. 

That the contracts entered into by PAGCOR with BELLE and FILGAME is void 

The second issue has already been raised in the Del Mar cases, this Court ruling that PAGCOR "has a valid franchise to, but only by itself (i.e., not in association with any other person or entity) operate, maintain and/or manage the game of jai-alai," and that, consequently, the Agreement of June 17, 1999 among PAGCOR, BELLE and FILGAME was without force and effect. 

While PAGCOR is allowed under its charter to enter into operator‘s and/or management contracts, it is not allowed under the same charter to relinquish or share its franchise, much less grant a veritable franchise to another entity such as SAGE. PAGCOR can not delegate its power in view of the legal principle of delegata potestas delegare non potest, inasmuch as there is nothing in the charter to show that it has been expressly authorized to do so. In Lim v. Pacquing, the Court clarified that "since ADC has no franchise from Congress to operate the jai-alai, it may not so operate even if it has a license or permit from the City Mayor to operate the jai-alai in the City of Manila." By the same token, SAGE has to obtain a separate legislative franchise and not "ride on" PAGCOR‘s franchise if it were to legally operate on-line Internet gambling. 

Luzon Stevedoring Corporation vs. CA Case Digest

Luzon Stevedoring Corporation vs. Court of Appeals 

(156 SCRA 169) 

Facts: A maritime collision occurred between the tanker CAVITE owned by LSCO and MV Fernando Escano (a passenger ship) owned by Escano, as a result the passenger ship sunk. An action in admiralty was filed by Escano against Luzon. The trial court held that LSCO Cavite was solely to blame for the collision and held that Luzon’s claim that its liability should be limited under Article 837 of the Code of Commerce has not been established. The Court of Appeals affirmed the trial court. The SC also affirmed the CA. Upon two motions for reconsideration, the Supreme Court gave course to the petition. 

Issue: Whether or not in order to claim limited liability under Article 837 of the Code of Commerce, it is necessary that the owner abandon the vessel 

Held: Yes, abandonment is necessary to claim the limited liability wherein it shall be limited to the value of the vessel with all the appurtenances and freightage earned in the voyage. However, if the injury was due to the ship owner’s fault, the ship owner may not avail of his right to avail of limited liability by abandoning the vessel. 

The real nature of the liability of the ship owner or agent is embodied in the Code of Commerce. Articles 587, 590 and 837 are intended to limit the liability of the ship owner, provided that the owner or agent abandons the vessel. Although Article 837 does not specifically provide that in case of collision there should be abandonment, to enjoy such limited liability, said article is a mere amplification of the provisions of Articles 587 and 590 which makes it a mere superfluity. 

The exception to this rule in Article 837 is when the vessel is totally lost in which case there is no vessel to abandon, thus abandonment is not required. Because of such loss, the liability of the owner or agent is extinguished. However, they are still personally liable for claims under the Workmen’s Compensation Act and for repairs on the vessel prior to its loss. 

In case of illegal or tortious acts of the captain, the liability of the owner and agent is subsidiary. In such cases, the owner or agent may avail of Article 837 by abandoning the vessel. But if the injury is caused by the owner’s fault as where he engages the services of an inexperienced captain or engineer, he cannot avail of the provisions of Article 837 by abandoning the vessel. He is personally liable for such damages. 

In this case, the Court held that the petitioner is a t fault and since he did not abandon the vessel, he cannot invoke the benefit of Article 837 to limit his liability to the value of the vessel, all appurtenances and freightage earned during the voyage.