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Facts: The National Bureau of Investigation has engaged in an anti-flm piracy drive

by investigating various video establishments in Metro Manila involving cases


violating PD No. !" as amended" including #unshine $ome %ideo Inc. &'#unshine()"
o*ned and operated by Danilo +. Pelindario *ith address at No. , Mayfair -enter"
Magallanes" Ma.ati" Metro Manila.
/n November 0" 0!12" NBI #enior +gent 3auro -. 4eyes applied for a search
*arrant *ith the court a quo against #unshine see.ing the sei5ure" among others" of
pirated video tapes of copyrighted flms" *hich the court granted.
In the course of the search of the premises indicated in the search *arrant"
the NBI +gents found and sei5ed various video tapes of duly copyrighted motion
pictures6flms o*ned or e7clusively distributed by -olumbia Pictures" Inc. et al
&-olumbia et al.)
Thereafter" the court has lifted the search *arrant *hich it had therefore issued
after a series of motions" up until the -+.
In the #-" #unshine challenged -olumbia et al8s legal standing in our courts"
they being foreign corporations not licensed to do business in the Philippines.
Issue: 9hether or not -olumbia et al *ere 'doing business( in the Philippines" thus"
needs to be licensed before having a legal standing in Philippine courts.
Sunshines contention:
-olumbia et al" being foreign corporations" should have such license to be
able to maintain an action in Philippine courts.
#unshine point to the fact that -olumbia et al are the copyright o*ners or
o*ners of e7clusive rights of distribution in the Philippines of copyrighted motion
pictures or flms" and also to the appointment of +tty. 4ico %. Domingo as their
attorney-in-fact" as being constitutive of 'doing business in the Philippines( under
#ection 0&f) &0) and &:)" 4ule 0 of the 4ules of the Board of Investments. +s foreign
corporations doing business in the Philippines" #ection 0;; of Batas Pambansa Blg.
,1" or the -orporation -ode of the Philippines" denies them the right to maintain a
suit in Philippine courts in the absence of a license to do business. -onse<uently"
they have no right to as. for the issuance of a search *arrant.
Columbia et als contention:
-olumbia et al denied that they are doing business in the Philippines

and
contend that #unshine have not adduced evidence to prove that petitioners are
doing such business here" as *ould re<uire them to be licensed by the #ecurities
and =7change -ommission.
Moreover" an e7clusive right to distribute a product or the o*nership of such
e7clusive right does not conclusively prove the act of doing business nor establish
the presumption of doing business.
Ruling: No" foreign flm corporations do not transact or do business in the
Philippines and" therefore" do not need to be licensed in order to ta.e recourse to
our courts.
+s acts constitutive of 'doing business"( the fact that -olumbia et al are admittedly
copyright o*ners or o*ners of e7clusive distribution rights in the Philippines of
motion pictures or flms does not convert such o*nership into an indicium of doing
business *hich *ould re<uire them to obtain a license before they can sue upon a
cause of action in local courts.
Neither is the appointment of +tty. 4ico %. Domingo as attorney-in-fact of -olumbia
et al." *ith e7press authority pursuant to a special po*er of attorney
Held:
Based on +rticle 0;; of the -orporation -ode and gauged by such statutory
standards" -olumbia et al are not barred from maintaining the present
action. There is no sho*ing that" under our statutory or case la*" -olumbia et al
are doing" transacting" engaging in or carrying on business in the Philippines as
*ould re<uire obtention of a license before they can see. redress from our
courts. No evidence has been o>ered to sho* that petitioners have performed any
of the enumerated acts or any other specifc act indicative of an intention to
conduct or transact business in the Philippines.
+rticle 0:? and +rticle 0;; of the -orporation -ode of the Philippines" as
interpreted" says that any foreign corporation not doing business in the Philippines
may maintain an action in our courts upon any cause of action" provided that the
sub@ect matter and the defendant are *ithin the @urisdiction of the court. It is not
the absence of the prescribed license but 'doing business( in the Philippines
*ithout such license *hich debars the foreign corporation from access to our
courts. In other *ords" although a foreign corporation is *ithout license to transact
business in the Philippines" it does not follo* that it has no capacity to bring an
action. #uch license is not necessary if it is not engaged in business in the
Philippines.
No general rule or governing principles can be laid do*n as to *hat constitutes
'doing( or 'engaging in( or 'transacting( business. =ach case must be @udged in
the light of its o*n peculiar environmental circumstances. The true tests" ho*ever"
seem to be *hether the foreign corporation is continuing the body or substance of
the business or enterprise for *hich it *as organi5ed or *hether it has substantially
retired from it and turned it over to another.
+uthorities agrees that a foreign corporation is 'doing"( 'transacting"(
'engaging in"( or 'carrying on( business in the #tate *hen" and ordinarily only
*hen" it has entered the #tate by its agents and is there engaged in carrying on and
transacting through them some substantial part of its ordinary or customary
business" usually continuous in the sense that it may be distinguished from merely
casual" sporadic" or occasional transactions and isolated acts.
The -orporation -ode does not itself defne or categori5e *hat acts constitute
doing or transacting business in the Philippines. Aurisprudence has" ho*ever" held
that the term implies a continuity of commercial dealings and arrangements" and
contemplates" to that e7tent" the performance of acts or *or.s or the e7ercise of
some of the functions normally incident to or in progressive prosecution of the
purpose and sub@ect of its organi5ation.
+s a general rule" a foreign corporation *ill not be regarded as doing business in
the #tate simply because it enters into contracts *ith residents of the #tate" *here
such contracts are consummated outside the #tate. In fact" a vie* is ta.en that a
foreign corporation is not doing business in the state merely because sales of its
product are made there or other business furthering its interests is transacted there
by an alleged agent" *hether a corporation or a natural person" *here such
activities are not under the direction and control of the foreign corporation but are
engaged in by the alleged agent as an independent business.
It is generally held that sales made to customers in the #tate by an independent
dealer *ho has purchased and obtained title from the corporation to the products
sold are not a doing of business by the corporation. 3i.e*ise" a foreign corporation
*hich sells its products to persons styled 'distributing agents( in the #tate" for
distribution by them" is not doing business in the #tate so as to render it sub@ect to
service of process therein" *here the contract *ith these purchasers is that they
shall buy e7clusively from the foreign corporation such goods as it manufactures
and shall sell them at trade prices established by it.
Merely engaging in litigation has been considered as not a suBcient minimum
contact to *arrant the e7ercise of @urisdiction over a foreign corporation.