Corporate Law Case Write-up VOL 5 SCRA [503]

Signetics v CA Signetics v CA

I. Facts of the case II. Issue/s

1. The petitioner, Signetics was organized under the laws of the W/N the lower court validly assumed jurisdiction over the petitioner, a
United States of America. Through Signetics Filipinas foreign corporation on its claim of motion to dismiss. YES.
Corporation (SigFil), a wholly-owned subsidiary, Signetics
entered into a lease contract over a piece of land with Fruehauf
III. Held
Electronics Phils., Inc. (Freuhauf).
The complaint, in this instance, has alleged, among other things, that
2. In a case subsequently filed by the local company against the
Signetics had become interested in engaging in business in the
American corporation for damages arising from the lease contract
Philippines; that it had actually organized SigFil, as its local business
conduit or actual operating entity in the Philippines; that, through
3. Freuhauf sued Signetics for damages, accounting or return of
Sigfil, it had entered into the lease contract involving properties in the
certain machinery, equipment and accessories, as well as the
Philippines a situation that could have allowed Frehauf to avail itself
transfer of title and surrender of possession of the buildings,
of the provisions of Section 17, Rule 14, on extraterritorial service of
installations and improvements on the leased land, before the
summons since the relief sought consists in excluding the defendant
RTC of Pasig.
from any interest in property within the Philippines); and that while
Signetics may have had transferred all its shareholdings (before the
4. Service of summons was made on Signetics through TEAM
complaint was filed) in favor of TEAM Holdings, Ltd., another
Pacific Corp. on the basis of the allegation that Signetics is a
foreign corporation, SIGFIL's corporate name, however, was forthwith
"subsidiary of US PHILIPS CORPORATION, and may be served
changed to TEAM Pacific corporation, which Freuhauf claims is a
summons at Philips Electrical Lamps, Inc., Las Piñas, Metro
"devious" attempt to "shield chicanery and to perpetuate fraud
Manila and/or c/o Technology Electronics Assembly &
Management (TEAM) Pacific Corporation, Electronics Avenue,
Signetics cannot, at least in this early stage, assail, on the one hand,
FTI Complex, Taguig, Metro Manila," service of summons was
the veracity and correctness of the allegations in the complaint and
made on Signetics through TEAM Pacific Corporation.
proceed, on the other hand, to prove its own, in order to hasten a
peremptory escape. As explained by the Court in Pacific Micronisian,
5. In effect the local company wanted to pierce the corporate veil
summons may be served upon an agent of the defendant who may not
and treating the wholly owned subsidiary and the American
necessarily be its "resident agent designated in accordance with law."
parent company as one and the same
The term "agent", in the context it is used in Section 14, refers to its
general meaning, i.e., one who acts on behalf of a principal.
6. Signetics filed a Motion to Dismiss by way of special appearance
(this is for the purpose for challenging the jurisdiction of the
The allegations in the complaint have thus been able to amply convey
court) on the ground of lack for jurisdiction over the person.
that not only is TEAM Pacific the business conduit of the petitioner in
the Philippines but that, also, by the charge of fraud, is none other than
7. Signetics Contention: Invoked Section 14 Rule 14 of the Rules of
the petitioner itself.
Court and jurisprudence that the fact of doing business on the
Philippines shuld first be established in order that summons could
The rule is that, a foreign corporation, although not engaged in
be validly made and jurisdiction acquired by the court over a
business in the Philippines, may still look up to our courts for relief;
foreign corporation.
reciprocally, such corporation may likewise be "sued in Philippine

G.R. NO: 105141 PONENTE: Vitug, J.

courts for acts done against a person or persons in the Philippines" It shall have the right to transact business in the Philippines after obtaining
(Facilities Management Corporation v. De la Osa), provided that, in a license for that purpose in accordance with this Code and a certificate of
the latter case, it would not be impossible for court processes to reach authority from the appropriate government agency. Which again would be
the foreign corporation, a matter that can later be consequential in the copied from the corporation code of 1980. This would mean that the
proper execution of judgment. Hence, a State may not exercise doctrines in this case would still be made applicable today.
jurisdiction in the absence of some good basis (and not offensive to But for the sake of discussing the doctrine further. The case provides
traditional notions of fair play and substantial justice) for effectively that evidence is not necessary to establish a foreign corporation whch in
exercising it, whether the proceedings are in rem, quasi in rem or in sum the court will look into the allegations in the complaint. The foreign
personam. corporation then may dispute by filing a motion to dismiss, it is in that
forum where the foreign corporation may adduce evidence that they are not
In sum the doctrine of this case is effectively: Evidence is not doing business in the Philippines. In this case citing the facilities doctrine
necessary to establish that a foreign corporation is doing business in the supreme court held that a foreign may still call upon Philippine courts
the Philippines. for relief. And in return they may also be sues BUT it should not be
impossible to serve the summons on the foreign corporation. Therefore, you
The minimum requirement is that when someone sues a foreign may sue a foreign corporation even if it is not doing business here in the
corporation, is to allege facts in the complaint that the corporation is Philippines BUT this is under the assumption that service may be properly
doing business in the Philippines. served.
Next, even if the foreign corporation is not doing business here in the
IV. Critic country but has real properties in the country such in the case for the land or
even for buildings, a person may sue a foreign corporation on those
This case does not invoke provisions of the corporation code. The properties which are in the Philippines which is an action in REM, thus
main doctrine of this case involves due process and jurisdiction over a effectively you are not suing the corporation per se but you are now brining
foreign corporation. The provision of laws applicable to foreign the action against the property which is valid.
corporations are provided in SEC. 146. Law Applicable. – A foreign
corporation lawfully doing business in the Philippines shall be bound by all
laws, rules and regulations applicable to domestic corporations of the same
class, except those which provide for the creation, formation, organization
or dissolution of corporations or those which fix the relations, liabilities,
responsibilities, or duties of stockholders, members, or officers of
corporations to each other or to the corporation. Therefore, the rules of
court and acquiring jurisdiction in rules of court apply to foreign
corporations. This provision is a mere copy of Section 129 of the
Corporation code of 1980.

Section 140 defines that is foreign corporation and it provides: For

G.R. NO: 105141 PONENTE: Vitug, J.