SBMA v. Universal International Group of Taiwan September 14, 2000 Panganiban, J.

Facts UIG and SBMA entered into a Lease and Development Agreement (LDA) wherein SBMA leased to UIG the Binictan Golf Course and appurenant facilities thereto to be transforemed into a world-class 18-hole golf course/resort. The LDA contained pre-termination clauses which authorizes SBMA, after due notice to UIG, to terminate the lease and immediately take possession of the property if UIG commits a material breach of any of the contracts conditions. SBMA wrote UIG, calling its attention to its failure to deliver its various contactual obligations. UIG imputed the delay to the default of its main contractor, FF Cruz, but committed itself to comply with its undertakibngs. The following month, SBMA declared UIG in default. Six months later, UIG still failed to satisfy its obligations so SBMA served a letter of pre-termination to UIG. Shortly thereafter, the golf course was formally closed and SBMA took possession of the subject premises. UIG filed a complaint against SBMA for Injuction and Damages with prayer for TRO and preliminary injuction. TC granted UIGs prayer and ordered SBMA to restore possession of the golf course to UIG. In a subsequent order, TC denied SBMAs motion to dismiss. CA upheld UIGs capacity to sue, holding that SBMA is estopped from questioning its standing. It also held that UIGDC1 and SBGCCI2 were real parties in interest because they made substantial investments in the venture and had been in possession in property when SBMA took over. Issues/Held 1. WON UIG has capacity to sue. YES. As a general rule, unlicensed foreign non-resident corporations cannot file suits in the Philippines. A corporation has legal status only within the state or territory in which it was organized. For this reason, a corporation organized in another country has no personality to file suits in the Philippines. In order to subject a foreign corporation doing business in the country to the jurisdiction of our courts, it must acquire a license from the SEC and appoint an agent for service of process. Without such license, it cannot institute a suit in the Philippines. However, after contracting with a foreign corporation, a domestic firm is estopped from denying the formers capacity to sue. 2. WON UIGDC and SBGCCI are real parties in interest. YES. According to Sec. 2, Rule 3 of the Rules of Court defines a real party in interest as the party who stands to be benefited or injured by the judgment of the suit, or the party entitled to the avails of the suit. In this case, the CA made a factual finding that UIGDC and SBGCCI were in possession of the property
1 2

UIG International Development Corporation Subic Bay Gold and Country Club, Inc.

when SBMA took over. Moreover, it also found that they had already made substantial investments in the project. The CA is correct in holding that UIGDC and SBGCCI stand to be benefitted or injured by the present suit and should be deemed real parties in interest. 3. WON RTC has jurisdiction over the suit. YES. According to petitioners, the RTC has no jurisdiction over the case because ejectment suits are cognizable by municipal courts. However, the complaint reveals that it sought to enjoin petitioners from rescinding the contract and taking over the property. While possession was a necessary consequence of the suit, it was merely incidental. The main issue is not ejectment, but whether SBMA could rescind the LDA. Because it was a dispute that was incapable of pecuniary estimation, it was within the jurisdiction of the RTC.