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249. Pacific Vegetable Oil v.

Singzon AUTHOR: S A Y O
GR. No. L-7917 NOTES:
TOPIC: Transacting business (Foreign corp)

PONENTE:
FACTS:

 This is an action instituted by the plaintiff (foreign corporation), against defendant to P157,760 as damages
suffered by plaintiff for failure of the defendant to deliver 300 tons.

 August 1947- Singzon, acting through a broker in San Francisco, sold to Pacific 500 tons of copra for shipment
covered by an irrevocable L/C.

 Consequently, Bank of California, on behalf of Pacific, opened an irrevocable letter of credit with China Bank in
the Philippines.

 Singzon failed to ship the 500 tons of copra and as a result, a conditional amicable settlement was arrived at under
which Singzon promised to ship 300 tons of copra with the understanding that if he effectually ship said 300 tons
of copra not later than February, the original contract would be considered cancelled otherwise Singzon shall pay
Pacific $10,000 as damages and shall furthermore be obliged to fulfill all his obligations under original contract.

 Singzon failed to ship and deliver the 300 tons. Hence, Pacific demanded from Singzon the payment of $10,000
but he failed and refused to ship the 500 tons of copra. As a result of the default, Pacific was forced to purchase
copra from the world marker and thus incurred additional expenses.

 Singzon filed MTD on the ground that petitioner failed to obtain license to transact business in the Philippines and
consequently, it had no personality to file the action.

 RTC denied MTD and MR.

 CA dismissed the case (Pacific had no personality to institute the present case even if it afterwards obtained a
license to transact business upon the theory that this belated act did not have the effect of curing the defect.)

ISSUE(S): W/N appellant transacted business in the Philippines in contemplation of law?

HELD: No, it was transacted in the US. However, action may proceed

RATIO:

 It appears from the facts:


o The copra in question was actually sold by the defendant to the plaintiff in the US.
o The contract was entered into in the US by appellee’s broker and appellant’s representatives.
o The payment of the price was to be made at San Francisco, California, through a letter of credit to be
opened at the Bank of California
o The price agreed upon was $142 per 2,000 lbs., CIF Pacific Coast and, it was judicially interpreted, this is
taken to indicate that the delivery is to be made at the port of destination.

 It is therefore clear that the contract covering the copra has not only entered into in the US but it was agreed to be
consummated there. It follows that Pacific has not transacted business in the Philippines in contemplation of
Sections 68 and 69 of the Corporation Law which require any foreign corporation to obtain a license before it
could transact business, or before it could have personality to file suit in the Philippines.

 It appearing that Pacific has not transacted business in the Philippines and as such it is not required to obtain a
license before acquiring personality to bring court action, it may be stated that the appellant, even if a foreign
corporation, can maintain the present action because, as aptly said by this Court, “it was never the purpose of
the Legislature to exclude a foreign corporation which happens to obtain an isolated order for business in the
Philippines, from securing redress in the Philippine courts, and thus, in effect, to permit persons to avoid their
contracts made with such foreign corporation.”

 Wherefore, the decision appealed from is reversed. Pacific is entitled to prosecute its claim in the Philippine courts
against Singzon.

CASE LAW/ DOCTRINE:


“it was never the purpose of the Legislature to exclude a foreign corporation which happens to obtain an isolated order
for business in the Philippines, from securing redress in the Philippine courts, and thus, in effect, to permit persons to
avoid their contracts made with such foreign corporation.”

.
DISSENTING/CONCURRING OPINION(S):