ERIKS PTE. LTD vs. CA, and DELFIN F. ENRIQUEZ, JR. GR. 118843 Feb.

6, 1997 ISSUE: Whether Petitioner Corporation may maintain an action in Philippine courts considering that it has no license to do business in the country. HELD: Petition has no merit. The Corporation Provides that: Sec. 133. Doing business without a license. 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 actionsuit 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 resolution of the issue depends on whether Petitioners business with Private Respondent may be treated as isolated transactions. Trial Court held that: the invoices and delivery receipts covering the period of from January 17, 1989 to August 16, 1989 cannot be treated to a mean singular and isolated business transaction that is temporary in character. It indicates that plaintiff has the intention and desire to repeat the said transaction in the future in pursuit of its ordinary business. What is determinative of "doing business" is not really the number or the quantity of the transactions, but more importantly, the intention of an entity to continue the body of its business in the country. RATIONALE: Purpose of the law for requiring/obtaining a license to do business here in the Philippines is to subject the foreign corporation doing business in the Philippines to the jurisdiction of our courts. Therefore, Petitioner must be held to be incapacitated to maintain the action a quo against private respondent. Facts of the Case:

Petitioner herein is a non resident foreign corporation duly organized under the laws of the Republic of Singapore. It engaged in the manufacture and sale of elements sealing pumps, valves and pipes for industrial purposes. It is not licensed to do business in the Philippines. On various dates covering the period January 17 to August 16, 1989, Private Respondent Delfin Enriquez, Jr. doing business under the name of Delrene EB Controls Center and/or EB Karmine Commercial , ordered and received from Petitioner various elements used in sealing pumps, valves, pipes and control equipment, PVC pipes and fittings. The transfers of these goods were perfected in Singapore.

Subsequently, demands were made by Petitionerupon private respondents to settle his account, but the latter failed/refused to do so. That prompted the Petitioner-Foreign Corporation upon Private Respondent Enriquez to filed a collection suit before the RTC of Makati for recovery of S$41,939.63 or its equivalent in the Philippine currency, plus interest and damages thereon. Private Respondent responded with a Motion to Dismiss, contending that Petitioner had no legal capacity to sue. The Trial Court dismissed the action on the ground that the Petitioner-Foreign Corporation doing business in thePhilippines without a license. On appeal to CA, it affirmed the decision of the RTC on the same ground and therefore, the Petitionerforeign corporation elevated the case to the Honorable Supreme Court. The aforementioned provision prohibits, not merely absence of the prescribed license, but it also bars a foreign corporation "doing business" in the

Philippines without such license access to our courts. According to the Supreme Court , there is no definitive rule on what constitutes doing , engaging in, or transacting business, because the corporation code does not define such terms. Hence it adopted the concept in R.A. 7042 to wit: Section 3 of the said law defines the phase doing business and shall include: 1. Soliciting orders; 2. Service Contracts; 3. Opening offices whether called liason offices or branches; 4. Appointing representatives or distributors domiciled in the Philippines; or 5. Who in any calendar year stay in the country for a period or periods totalling one hundred eighty (180) days or more; 6. Participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines; and 7. 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 Home Insurance vs. Nedlloyd Lijnen [GR L-34383] Facts: [GR L-34382] On or about 13 January 1967, S. Kajita & Co., on behalf of Atlas Consolidated Mining & Development Corporation, shipped on board the SS Eastern Jupiter from Osaka, Japan, 2,361 coils of Black Hot Rolled Copper Wire Rods. The said VESSEL is owned and operated by Eastern Shipping Lines. The shipment was covered by Bill of Lading O-MA-9, with arrival notice to Phelps Dodge Copper Products Corporation of the Philippines at Manila. The shipment was insured with the Home Insurance Company against all risks in the amount of P1,580,105.06 under its Insurance Policy AS-73633. The coils discharged from the VESSEL numbered 2,361, of which 53 were in bad order. What the Phelps Dodge ultimately received at its warehouse was the same number of 2,361 coils, with 73 coils loose and partly cut, and 28 coils entangled, partly cut, and which had to be considered as scrap. Upon

weighing at Phelps Dodge's warehouse, the 2,361 coils were found to weight 263,940.85 kilos as against its invoiced weight of 264,534.00 kilos or a net loss/shortage of 593.15 kilos, or 1,209,56 lbs., according to the claims presented by the Phelps Dodge against Home Insurance, the Eastern Shipping, and Angel Jose Transportation Inc. For the loss/damage suffered by the cargo, Home Insurance paid the Phelps Dodge under its insurance policy the amount of P3,260.44, by virtue of which Home Insurance became subrogated to the rights and actions of the Phelps Dodge. Home Insurance made demands for payment against the Eastern Shipping and the Angel Jose Transportation for reimbursement of the aforesaid amount but each refused to pay the same." [GR L-34383] On or about 22 December 1966, the Hansa Transport Kontor shipped from Bremen, Germany, 30 packages of Service Parts of Farm Equipment and Implements on board the VESSEL, SS 'NEDER RIJN' owned by N. V. Nedlloyd Lijnen, and represented in the Philippines by its local agent, the Columbian Philippines, Inc.. The shipment was covered by Bill of Lading No. 22 for transportation to, and delivery at, Manila, in favor of International Harvester Macleod, Inc. The shipment was insured with Home Insurance company under its Cargo Policy AS-73735 'with average terms' for P98,567.79. The packages discharged from the VESSEL numbered 29, of which seven packages were found to be in bad order. What International Harvester ultimately received at its warehouse was the same number of 29 packages with 9 packages in bad order. Out of these 9 packages, 1 package was accepted by International Harvester in good order due to the negligible damages sustained. Upon inspection at International Harvester's warehouse, the contents of 3 out of the 8 cases were also found to be complete and intact, leaving 5 cases in bad order. The contents of these 5 packages showed several items missing in the total amount of $131.14; while the contents of the undelivered 1 package were valued at $394.66, or a total of $525.80 or P2,426.98. For the short-delivery of 1 package and the missing items in 5 other packages, Home Insurance paid International Harvester under its Insurance Cargo Policy the amount of P2,426.98, by virtue of which Home Insurance became subrogated to the rights

and actions of International Harvester. Demands were made on N.V. Nedlloyd Lijnen and International Harvester for reimbursement thereof but they failed and refused to pay the same." When the insurance contracts which formed the basis of these cases were executed, Home Insurance had not yet secured the necessary licenses and authority; but when the complaints in these two cases were filed, Home Insurance had already secured the necessary license to conduct its insurance business in the Philippines. In both cases, Home Insurance made the averment regarding its capacity to sue, as that it "is a foreign insurance company duly authorized to do business in the Philippines through its agent, Mr. Victor H. Bello, of legal age and with office address at Oledan Building, Ayala Avenue, Makati, Rizal." The Court of First Instance of Manila, Branch XVII, however, dismissed the complaints in both cases, on the ground that Home Insurance had failed to prove its capacity to sue. Home Insurance filed the petitions for review on certiorari, which were consolidated. Issue: Whether Home Insurance, a foreign corporation licensed to do business at he time of the filing of the case, has the capacity to sue for claims on contracts made when it has no license yet to do business in the Philippines. Held: As early as 1924, the Supreme Court ruled in the leading case of Marshall Wells Co. v. Henry W. Elser & Co. (46 Phil. 70) that the object of Sections 68 and 69 of the Corporation Law was to subject the foreign corporation doing business in the Philippines to the jurisdiction of Philippine courts. The Corporation Law must be given a reasonable, not an unduly harsh, interpretation which does not hamper the development of trade relations and which fosters friendly commercial intercourse among countries. The objectives enunciated in the 1924 decision are even more relevant today when we commercial relations are viewed in terms of a world economy, when the tendency is to re-examine the political boundaries separating one nation from another insofar as they define business requirements or restrict marketing conditions. The court distinguished between the denial of a right to take remedial action and the penal sanction for non-registration. Insofar as

transacting business without a license is concerned, Section 69 of the Corporation Law imposed a penal sanction imprisonment for not less than 6 months nor more than 2 years or payment of a fine not less than P200.00 nor more than P1,000.00 or both in the discretion of the court. There is a penalty for transacting business without registration. And insofar as litigation is concerned, the foreign corporation or its assignee may not maintain any suit for the recovery of any debt, claim, or demand whatever. The Corporation Law is silent on whether or not the contract executed by a foreign corporation with no capacity to sue is null and void ab initio. Still, there is no question that the contracts are enforceable. The requirement of registration affects only the remedy. Significantly, Batas Pambansa 68, the Corporation Code of the Philippines has corrected the ambiguity caused by the wording of Section 69 of the old Corporation Law. Section 133 of the present 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 in 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 old Section 69 has been reworded in terms of nonaccess to courts and administrative agencies in order to maintain or intervene in any action or proceeding. The prohibition against doing business without first securing a license is now given penal sanction which is also applicable to other violations of the Corporation Code under the general provisions of Section 144 of the Code. It is, therefore, not necessary to declare the contract null and void even as against the erring foreign corporation. The penal sanction for the violation and the denial of access to Philippine courts and administrative bodies are sufficient from the viewpoint of legislative policy. Herein, the lack of capacity at the time of the execution of the contracts was cured by the subsequent registration is also strengthened by the procedural aspects of these cases. Home Insurance averred in its complaints that it is a foreign insurance company, that it is authorized to do business in the Philippines, that its agent is Mr. Victor H. Bello, and that its office address is the Oledan Building at Ayala

Avenue, Makati. These are all the averments required by Section 4, Rule 8 of the Rules of Court. Home Insurance sufficiently alleged its capacity to sue.

required license, it can sue before Philippine courts on any transaction. Being a mere assignee does not constitute doing business in the Philippines. MR Holdings, a foreign corporation, cannot be said to be doing business simply because it became an assignee of Marcopper. MR Holdings was not doing anything else other than being a mere assignee. The only time that MR Holdings is considered to be doing business here is that if it continues the business of Marcopper which it did not. Therefore, since it is not doing business here, pursuant to the rules above, it can sue without any license before Philippine courts on an isolated transaction or on a cause of action entirely independent of any business transaction. Anent the issue of bad faith, the same was not proven. It appears that the deed of assignment was an earlier agreement incidental to the loan agreement between ADB and Marcopper which precedes the action brought by Solidbank against Marcopper. Hutchison Ports Philippines Limited vs. Subic Bay Metropolitan Authority (SBMA). In 1996, Hutchison Ports Philippines Limited (HPPL)won a public bidding made by the Subic Bay Metropolitan Authority (SBMA). The project was to develop and operate a modern marine container terminal within the Subic Bay Freeport Zone. The SBMA Board of Directors already declared HPPL as the winner but later on, the Office of the President reversed the decision of the Board and ordered a rebidding. In the rebidding however, HPPL was no longer among the qualified bidders. Eventually, HPPL filed a petition for injunction to enjoin SBMA from conducting the rebidding. ISSUE: Whether or not Hutchison has the right to file an injunction case against SBMA. HELD: No. The declaration made by the SBMA Board declaring HPPL as the winning bidder was neither final nor unassailable. Under LOI No. 620, all projects undertaken by the SBMA are subject to the approval of the Office of the President. Hence, the Board of SBMA is under the control and supervision of the President of the Philippines. Therefore, the 4

MR Holdings Ltd. vs. Sheriff Carlos Bajar Marcopper Mining Corporation was unable to pay its loans from the Asian Development Bank (ADB). Later, ADB transferred all its rights to collect from Marcopper to MR Holdings, Ltd. In order to pay MR Holdings, Marcopper assigned all its assets to MR Holdings and executed therefor a Deed of Assignment in MR Holdings favor. Meanwhile, another creditor of Marcopper, Solidbank Corporation, won a case against Marcopper. The court then issued a writ of execution directing S Carlosheriff Carlos Bajar to levy Marcoppers assets. MR Holdings then filed an opposition asserting that it is now the owner of Marcoppers assets hence, Bajar cannot levy them. The lower court denied MR Holdings on the ground that the Deed of Assignment was made in bad faith and that MR Holdings was a foreign corporation doing business without a license in the Philippines (by virtue of the Deed of Assignment) and as such cannot sue in the Philippines. ISSUE: Whether or not MR Holdings may sue on this particular transaction. HELD: Yes. The Supreme Court emphasized the following rules when it comes to foreign corporations doing business here in the Philippines: 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 with the

declaration made by the Board did not vest any right in favor of HPPL. Further, HPPL cannot sue in the Philippines. It is a foreign corporation registered under the laws of the British Virgin Islands. It did not register here in the Philippines. HPPL cannot invoke that it was suing only on an isolated transaction. The conduct of bidding is not an isolated transaction. It is doing business here in the Philippines. The Supreme Court emphasized that as a general rule, doing or engaging in or transacting business in the Philippines is a case to case basis. It has often been held that a single act or transaction may be considered as doing business when a corporation performs acts for which it was created or exercises some of the functions for which it was organized. The amount or volume of the business is of no moment, for even a singular act cannot be merely incidental or casual if it indicates the foreign corporations intention to do business. Participating in the bidding process constitutes doing business because it shows the foreign corporations intention to engage in business here. The bidding for the concession contract is but an exercise of the corporations reason for creation or existence. Therefore, HPPL has done business here without license. It cannot now sue in the Philippines without license because its participation in the bidding is not merely an isolated transaction. The primary purpose of the license requirement is to compel a foreign corporation desiring to do business within the Philippines to submit itself to the jurisdiction of the courts of the state and to enable the government to exercise jurisdiction over them for the regulation of their activities in this country.