SECOND DIVISION
|
PIONEER INTERNATIONAL, LTD., Petitioner,
- versus - HON. TEOFILO GUADIZ, JR., in his capacity as Presiding Judge of Regional
Trial Court, Branch 147, Makati City, and ANTONIO
D. TODARO, Respondents. |
|
G.R.
No. 156848 Present: QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ. Promulgated: October 11, 2007 |
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D E C I S I O N
CARPIO, J.:
The Case
This is a
petition for review on certiorari[1] of
the Decision[2]
dated
The Facts
On
Todaro alleged that PIL is a corporation duly organized
under Australian laws, while PCPI and PPHI are corporations duly organized
under Philippine laws. PIL is engaged in
the ready-mix and concrete aggregates business and has established a presence
worldwide. PIL established PPHI as the
holding company of the stocks of its operating company in the
Before Todaro filed his complaint, there were several meetings and
exchanges of letters between Todaro and the officers
of Pioneer Concrete (
Todaro attached nine letters, marked as Annexes “A” to “I,”
to his complaint. Annex “A”[8]
shows that on
Annex “B”[9]
shows that on
Annex “C”[10]
shows that on the same date as that of Annex “B,” Todaro,
under the letterhead of Ital Tech Distributors, Inc., faxed another letter to
Lindsay of Pioneer Concrete (Hong Kong)
Limited. Todaro
asked for a formal letter addressed to him about the proposed retainer. Todaro requested
that the letter contain a statement on his remuneration package and on his permanent employment “with PIONEER
once it has established itself on a permanent basis in the
Annex “D”[11]
shows that Todaro, under the letterhead of Ital Tech
Distributors, Inc., sent a letter to McDonald of PIL. Todaro confirmed
the following to McDonald:
1.
That I am accepting the proposal of PIONEER INT’L. as a
consultant for three (3) months, starting
2.
That after three (3) months consultancy, I should be
employed by PIONEER INT’L., on a permanent basis, as its Managing Director or
CEO in the
3. That Gino Martinel and the Sales Manager – Jun Ong, will be hired as well, on a permanent basis, by PIONEER as soon as the company is established. Salary, likewise, will be accepted by both PIONEER and the respective parties.
Annex “E”[12]
is a faxed letter dated
Further to our recent meeting in
Pioneer will probably be in a position to make a decision on proceeding with an investment by mid January ‘97.
The basis for your consultancy would be:
n Monthly fee USD 15,000 per month billed on monthly basis and payable 15 days from billing date.
n Additional pre-approved expenses to be reimbursed.
n Driver and secretarial support-basis for reimbursement of this to be agreed.
n
Arrangement to commence from
Annex “F”[13] shows Todaro’s faxed reply, under the letterhead of Ital Tech
Distributors, Inc., to McDonald of Pioneer Concrete Group HK dated
Annex “G”[14]
shows Todaro’s faxed reply, under the letterhead of
Ital Tech Distributors, Inc., to McDonald of PIL dated
Annex “H”[15]
shows Klepzig’s letter, under the letterhead of PPHI,
to Todaro dated
It has not proven possible for this company to meet with your expectations regarding the conditions of your providing Pioneer with consultancy services. This, and your refusal to consider my terms of offer of permanent employment, leave me no alternative but to withdraw these offers of employment with this company.
As you provided services under your previous agreement with our Pioneer Hong Kong office during the month of August, I will see that they pay you at the previous rates until the end of August. They have authorized me on behalf of Pioneer International Ltd. to formally advise you that the agreement will cease from August 31st as per our previous discussions.
Annex “I”[16]
shows the letter dated 20 October 1997 of K.M. Folwell
(Folwell), PIL’s Executive
General Manager of Australia and Asia, to Todaro. Folwell confirmed
the contents of Klepzig’s
Thank you for your letter to Dr. Schubert dated
I have discussed and examined the material regarding your association with Pioneer over the period from mid 1996 through to September 1997.
Clearly your consultancy services to Pioneer Hong Kong are well documented and have been appropriately rewarded. However, in regard to your request and expectation to be given permanent employment with Pioneer Philippines Holdings, Inc. I am informed that negotiations to reach agreement on appropriate terms and conditions have not been successful.
The employment conditions you specified in your letter to John McDonald dated 11th September are well beyond our expectations.
Mr. Todaro, I regret that we do not wish to pursue our association with you any further. Mr. Klepzig was authorized to terminate this association and the letter he sent to you dated 18th September has my support.
Thank you for your involvement with Pioneer. I wish you all the best for the future. (Emphasis added)
PIL filed, by
special appearance, a motion to dismiss Todaro’s
complaint. PIL’s co-defendants, PCPI, PPHI, and Klepzig, filed a separate motion to dismiss.[17] PIL asserted that the trial court has no
jurisdiction over PIL because PIL is a foreign corporation not doing business
in the
Todaro filed a Consolidated Opposition dated
The Ruling of the Trial Court
On
The trial court
stated that the merits of a motion to dismiss a complaint for lack of cause of
action are tested on the strength of the allegation of facts in the
complaint. The trial court found that
the allegations in the complaint sufficiently establish a cause of action. The trial court declared that Todaro’s cause of action is based on an alleged breach of a
contractual obligation and an alleged violation of Articles 19 and 21 of the
Civil Code. Therefore, the cause of
action does not lie within the jurisdiction of the NLRC but with the trial
court.
The trial
court also asserted its jurisdiction over PIL, holding that PIL did business in
the
PIL filed an urgent omnibus motion
for the reconsideration of the trial court’s
PIL did not
file an answer before the trial court and instead filed a petition for
certiorari before the appellate court.
The Ruling of the Appellate Court
The appellate court denied PIL’s
petition and affirmed the trial court’s ruling in toto. The dispositive
portion of the appellate court’s decision reads:
WHEREFORE,
premises considered, the present petition for certiorari is hereby DENIED DUE
COURSE and accordingly DISMISSED. The
assailed Orders dated
SO
ORDERED.[20]
On
The Issues
PIL raised the
following issues before this Court:
A. [The trial court] did not and cannot acquire jurisdiction over the person of [PIL] considering that:
A.1. [PIL] is a foreign corporation “not doing
business” in the
A.2. Moreover,
the complaint does not contain appropriate allegations
of ultimate facts showing that [PIL] is
doing or transacting business in the
A.3. Assuming arguendo that jurisdiction may be acquired over the person of [PIL], [the trial court] still failed to acquire jurisdiction since summons was improperly served on [PIL].
B. [Todaro] does not have a cause of action and the complaint fails to state a cause of action. Jurisprudence is settled in that in resolving a motion to dismiss, a court can consider all the pleadings filed in the case, including annexes, motions and all evidence on record.
C. [The trial court] did not and cannot acquire jurisdiction over the subject matter of the complaint since the allegations contained therein indubitably show that [Todaro] bases his claims on an alleged breach of an employment contract. Thus, exclusive jurisdiction is vested with the [NLRC].
D.
Pursuant to the principle of forum non-conveniens, [the trial court] committed grave abuse of
discretion when it took cognizance of the case.[22]
The Ruling of the Court
The petition
has partial merit. We affirm with modification the rulings of the
trial and appellate courts. Apart from
the issue on service of summons, the rulings of the trial and appellate courts
on the issues raised by PIL are correct.
Cause of Action
Section 2,
Rule 2 of the 1997 Rules of Civil Procedure states that a cause of action is
the act or omission by which a party violates a right of another.
The
general rule is that the allegations in a complaint are sufficient to
constitute a cause of action against the defendants if, admitting the facts
alleged, the court can render a valid judgment upon the same in accordance with
the prayer therein. A cause of action
exists if the following elements are present, namely: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an
obligation on the part of the named defendant to respect or not to violate such
right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the plaintiff for which the latter
may maintain an action for recovery of damages.[23]
In the present
case, the summary of Todaro’s allegations states that
PIL, PCPI, PPHI, McDonald, and Klepzig did not
fulfill their contractual obligation to employ Todaro
on a permanent basis in PIL’s Philippine office. Todaro’s
allegations are thus sufficient to establish a cause of action. We quote with approval the trial court’s
ruling on this matter:
On the issue of lack of cause of action – It is well-settled that the merits of a motion to dismiss a complaint for lack of cause of action is tested on the strength of the allegations of fact contained in the complaint and no other (De Jesus, et al. vs. Belarmino, et al., 95 Phil. 366 [1954]). This Court finds that the allegations of the complaint, specifically paragraphs 13-33 thereof, paragraphs 30-33 alleging as follows:
“30. All of the acts set forth in the foregoing have been done with the knowledge, consent and/or approval of the defendants who acted in concert and/or in conspiracy with one another.
31. Under the circumstances, there is a valid contract entered into between [Todaro] and the Pioneer Group, whereby, among others, the Pioneer Group would employ [Todaro], on a permanent basis, to manage and operate the ready-mix concrete operations, if the Pioneer Group decides to invest in the Philippines.
32.
The Pioneer Group has decided to
invest in the
33. Alternatively, assuming without conceding, that there was no contractual obligation on the part of the Pioneer Group to employ [Todaro] on a permanent basis, in their Philippine operations, the Pioneer Group and the other defendants did not act with justice, give [Todaro] his due and observe honesty and good faith and/or they have willfully caused injury to [Todaro] in a manner that is contrary to morals, good customs, and public policy, as mandated under Arts. 19 and 21 of the New Civil Code.”
sufficiently establish a cause of action for breach of contract and/or violation of Articles 19 and 21 of the New Civil Code. Whether or not these allegations are true is immaterial for the court cannot inquire into the truth thereof, the test being whether, given the allegations of fact in the complaint, a valid judgment could be rendered in accordance with the prayer in the complaint.[24]
It should be
emphasized that the presence of a cause of action rests on the sufficiency, and
not on the veracity, of the allegations in the complaint. The veracity of the allegations will have to
be examined during the trial on the merits.
In resolving a motion to dismiss based on lack of cause of action, the
trial court is limited to the four corners of the complaint and its
annexes. It is not yet necessary for the
trial court to examine the truthfulness of the allegations in the
complaint. Such examination is proper
during the trial on the merits.
Forum Non-Conveniens
The doctrine
of forum non-conveniens requires an
examination of the truthfulness of the allegations in the complaint. Section 1, Rule 16 of the 1997 Rules of Civil
Procedure does not mention forum non-conveniens
as a ground for filing a motion to dismiss.
The propriety of dismissing a case based on forum non-conveniens requires a factual determination; hence, it
is more properly considered a matter of defense. While it is within the discretion of the
trial court to abstain from assuming jurisdiction on this ground, the trial
court should do so only after vital facts are established to determine whether
special circumstances require the court’s desistance.[25]
Jurisdiction over PIL
PIL questions
the trial court’s exercise of jurisdiction over it on two levels. First, that PIL is a foreign corporation not
doing business in the
Transacting Business in
the
Service of Summons
The first
level has two sub-issues: PIL’s transaction of business in the
Service upon foreign private juridical entity. — When the defendant is a foreign juridical entity which has transacted business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or, if there be no such agent, on the government official designated by law to that effect, or any of its officers or agents within the Philippines.
As to the
first sub-issue, PIL insists that its sole act of “transacting” or “doing
business” in the
The phrase “doing business” shall include soliciting orders, service contracts, opening offices, whether called “liaison” offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totaling one hundred eighty [180] days or more; participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of commercial gain or of the purpose and object of the business organization: Provided, however, That the phrase “doing business” shall not be deemed to include 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; nor having a nominee director or officer to represent its interests in such corporation; nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account; (Emphases added)
PIL’s alleged acts in actively negotiating to employ Todaro to run its pre-mixed concrete operations in the
As further proof of the
interconnection of the various Pioneer corporations with regard to their
negotiations with Todaro, McDonald of Pioneer
Concrete Group HK confirmed Todaro’s engagement as
consultant of PIL (Annex “E”) while Folwell of PIL
stated that Todaro rendered consultancy services to
Pioneer HK (Annex “I”). In this sense,
the various Pioneer corporations were not acting as separate corporations. The behavior of the various Pioneer
corporations shoots down their defense that the corporations have separate and
distinct personalities, managements, and operations. The various Pioneer corporations were all
working in concert to negotiate an employment contract between Todaro and PPHI, a domestic corporation.
Finally, the phrase “doing business
in the Philippines” in the former version of Section 12, Rule 14 now reads “has
transacted business in the Philippines.”
The scope is thus broader in that it is enough for the application of
the Rule that the foreign private juridical entity “has transacted business in the
As to the
second sub-issue, the purpose of summons is not only to acquire jurisdiction
over the person of the defendant, but also to give notice to the defendant that
an action has been commenced against it and to afford it an opportunity to be
heard on the claim made against it. The
requirements of the rule on summons must be strictly followed; otherwise, the
trial court will not acquire jurisdiction over the defendant.
When summons
is to be served on a natural person, service of summons should be made in person
on the defendant.[27] Substituted service is resorted to only upon
the concurrence of two requisites: (1) when the defendant cannot be served
personally within a reasonable time and (2) when there is impossibility of
prompt service as shown by the statement in the proof of service in the efforts
made to find the defendant personally and that such efforts failed.[28]
The statutory
requirements of substituted service must be followed strictly, faithfully, and
fully, and any substituted service other than by the statute is considered
ineffective. Substituted service is in
derogation of the usual method of
service. It is a method extraordinary in
character and may be used only as prescribed and in the circumstances
authorized by the statute.[29] The need for strict compliance with the
requirements of the rule on summons is also exemplified in the exclusive
enumeration of the agents of a domestic private juridical entity who are
authorized to receive summons.
At present,
Section 11 of Rule 14 provides that when the defendant is a domestic private
juridical entity, service may be made on the “president, managing partner,
general manager, corporate secretary, treasurer, or in-house counsel.” The previous version of Section 11 allowed
for the service of summons on the “president, manager, secretary, cashier,
agent, or any of its directors.” The
present Section 11 qualified “manager” to “general manager” and “secretary” to
“corporate secretary.” The present
Section 11 also removed “cashier, agent, or any of its directors” from the
exclusive enumeration.
When summons
is served on a foreign juridical entity, there are three prescribed ways: (1)
service on its resident agent designated in accordance with law for that
purpose, (2) service on the government official designated by law to receive
summons if the corporation does not have a resident agent, and (3) service on
any of the corporation’s officers or agents within the Philippines.[30]
In the present
case, service of summons on PIL failed to follow any of the prescribed
processes. PIL had no resident agent in
the
However,
summons was not served personally on Klepzig as agent
of PIL. Instead, summons was served on
De Leon, Klepzig’s Executive Assistant. In this instance, De
Thus, we rule
that PIL transacted business in the
NLRC Jurisdiction
As to the
second level, Todaro prays for payment of damages due
him because of PIL’s non-implementation of Todaro’s alleged employment agreement with PPHI. The appellate court stated its ruling on
this matter, thus:
It could
not be denied that there was no existing contract yet to speak of between
PIONEER INTL. and [Todaro]. Since there was an absence of an employment
contract between the two parties, this Court is of the opinion and so holds
that no employer-employee relationship actually exists. Record reveals that all that was agreed upon
by [Todaro] and the Pioneer Concrete, acting in
behalf of PIONEER INTL., was the confirmation of the offer to engage the
services of the former as consultant of PIONEER INTL. (Rollo,
p. 132). The failure on the part of
PIONEER INTL. to abide by the said agreement, which was duly confirmed by
PIONEER INTL., brought about a breach of an obligation on a valid and perfected
agreement. There being no
employer-employee relationship established between [PIL] and [Todaro], it could be said that the instant case falls
within the jurisdiction of the regular courts of justice as the money claim of
[Todaro] did not arise out of or in connection with
[an] employer-employee relationship.[34]
Todaro’s employment in the
WHEREFORE, the petition is PARTIALLY
GRANTED. The Decision dated
SO ORDERED.
ANTONIO
T. CARPIO
Associate
Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
|
CONCHITA CARPIO MORALES Associate Justice |
DANTE
O. TINGA Associate
Justice |
PRESBITERO J. VELASCO, JR.
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
LEONARDO
A. QUISUMBING
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution,
and the Division Chairperson’s Attestation, I certify that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
[1] Under Rule 45 of the 1997 Rules of Civil Procedure.
[2] Rollo, pp. 86-95. Penned by Associate Justice Bennie A. Adefuin-Dela Cruz with Associate Justices Andres B. Reyes, Jr. and Amelita G. Tolentino, concurring.
[3]
[4] Penned by Judge Teofilo L. Guadiz, Jr.
[5] Rollo, pp. 96-100.
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17] This Court rendered its Decision in
G.R. No. 154830, Pioneer Concrete Philippines, Inc., Pioneer Philippines Holdings, Inc.,
and Philip J. Klepzig v. Antonio D. Todaro, on
[18] Rollo, pp. 96-100.
[19]
[20]
[21]
[22]
[23]
[24] Rollo, pp. 99-100.
[25] See Bank of
[26] Oscar m. herrera, I Remedial Law 686 (2000).
[27] Section 6, Rule 14 of the 1997 Rules of Civil Procedure.
[28] See Keister v. Judge Navarro, 167 Phil. 567 (1977).
[29] Toyota Cubao,
Inc. v. Court of Appeals, 346 Phil. 181 (1997); Laus
v. Court of Appeals, G.R. No. 101256,
[30] Section 12, Rule 14 of the 1997 Rules of Civil Procedure.
[31] Section 128, The Corporation Code
of the
[32] Rollo, pp. 171-172.
[34] Rollo, p. 93.
[35]
[36] Article 217 of the Labor Code, as amended, reads:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and
6. Except claims for Employees
Compensation, Social Security, Medicare and maternity benefits, all other
claims arising from employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied with a claim for
reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements.