Far East International vs Nankai (GR NO. L-13525 November 30, 1962)

Far East International Import and Export Corporation vs Nankai Kogyo Co. Ltd. etal
GR NO. L-13525 November 30, 1962

Facts: On December 26, 1956, the Far East International Import & Export Corporation, Far East for short, organized under Philippine Laws, entered into a Contract of Sale of Steel Scrap with the Nankai Kogyo Co., Ltd., Nankai for short, a foreign corporation organized under Japanese Laws with address at Osaka, Japan. The buyer sign in Japan and the seller in Manila, Philippines. Upon perfection of the contract and after having been informed of the readiness to ship and that the Export License was to expire on March 18, 1957, Nankai opened a letter for credit (No. 38/80049) with the China Banking Corporation, issued by the Nippon Kangyo, Ltd., Tokyo, Japan, in the amount of $312,500.00 on January 30, 1957. On March 15, 1957, only four (4) days before the expiration of the Far East licence, three (3) boats sent by Nankai arrived in the Philippines, one to load in Manila, the other two at Poro Point, San Fernando, La Union, and Tacloban, Leyte, respectively. On March 19, 1957, the expiration of the export license, only 1,058.6 metric tons of scrap steel was loaded on the SS Mina (loading in Manila). The loading was accordingly stopped. The boat at Poro Point was also unloaded of the 200 metric tons, for the same reason. An agreement was reached whereby the Far East would seek an extension of the license. However, the untimely death of President Magsaysay and the taking over by President Garcia changed the picture, for the latter and/or his agents refused to extend the license. The two boats sailed to Japan without any cargo, the third (SS Mina) only 1,058.6 metric tons. As repeated requests, both against the shipping agent and the buyers (Nankai), for the issuance of the of Bill Lading were ignored, Far East filed on May 16, 1957, the present complaint for Specific Performance, damages, a writ of preliminary mandatory injunction directed against Nankai and the shipping company, to issue and deliver to the plaintiff, a complete set of negotiable of Lading for the 1,058.6 metric tons of scrap and a writ of preliminary injunction against the China Banking Corporation and the Nankai to maintain the Letter Credit. The lower court issued on May 17, 1957 an ex parte writ of preliminary injunction, after Far East had posted a bond in the amount of P50,000.00.

Issue: Whether or not the trial court acquired jurisdiction over the subject matter and over the person of the defendant-appellant.

Held: Yes. It is true that the defendant entered a Special Appearance, wherein it contested the jurisdiction of the Philippines Courts to take cognizance of the case on grounds contained in the various pleadings presented by it. The motion to dismiss on the ground of lack of jurisdiction had been overruled because it did not appear indubitable. Subsequently, however, the defendant filed its Answer and invoked defenses and grounds for dismissal of complaint other than lack of jurisdiction, which circumstance vested upon the Court jurisdiction to take cognizance of the case.

Even though the defendant objects to the jurisdiction of the court, if at the same time he alleges any non-jurisdictional ground for dismissing the action, the Court acquires jurisdiction over him. Even though he does not intend to confer jurisdiction upon the court, his appearance for some other purpose than to object to the jurisdiction subjects him to jurisdiction of the court.Even though he does not wish to submit to the jurisdiction of the court, he cannot ask the court to act upon any question except the question of jurisdiction, without conferring jurisdiction upon the court.

Thus though a Special appearance to object to the jurisdiction is not a submission, if it is followed by a motion to dismiss or to quash the motion invokes the jurisdiction of Court to decide the issue raised by the motion; and a decision of that issue binds the defendant. Therefore if the decision of the motion is based upon a finding of facts necessary to jurisdiction, this finding binds the defendant and the court acquires jurisdiction to determine the merits of the case.

Undoubtedly if after his objection to the jurisdiction is wrongly overruled, a defendant files a cross complaint demanding affirmative relief, he cannot thereafter claim that the court had no jurisdiction over him.

Not only did appellant allege non-jurisdictional grounds in its pleadings to have the complaint dismissed, but it also went into trial on the merits and presented evidence destined to resist appellee’s claim. Verily, there could not be a better situation of acquired jurisdiction based on consent. Consequently, the provision of the contract wherein it was agreed that disputes should be submitted to a Board of Arbitration which may be formed in Japan (in the supposition that it can apply to the matter in dispute – payment of the scrap), seems to have been waived with appellant’s voluntary submission. Apart from the fact that the clause employs the word “may”.

The appellant alleges that the lower court did not acquire jurisdiction, because it was not doing business in the Philippines and the requirement of summons had not been fulfilled. It is difficult to lay down any rule of universal application to determine when a foreign corporation is doing business. Each case must turn upon its own peculiar facts and upon the language of the statute applicable. But from the proven facts obtaining in this particular case, the appellant’s defense of lack of jurisdiction appears unavailing.

In the instant case, the testimony of Atty. Pablo Ocampo that appellant was doing business in the Philippines corroborated by no less than Nabuo Yoshida, one of appellant’s officers, that he was sent to the Philippines by his company to look into the operation of mines, thereby revealing the defendant’s desire to continue engaging in business here, after receiving the shipment of the iron under consideration, making the Philippines a base thereof.


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