COMMISSIONER OF CUSTOMS VS. KMK GANI FACTS: 1.

Two containers loaded with 103 cartons of merchandise covered by eleven airway bills of several supposedly Singapore based consignees arrived at the Manila International Airport. 2. The cargoes were consigned to different entities, among others, KMK Gani and Indrapal and Company, private respondents. 3. While the cargoes were at the MIA, a reliable source tipped the Bureau of Customs that the said cargoes were going to be unloaded to Manila. 4. The Suspected Cargo and Anti-Narcotics (SCAN) dispatched an agent to verify the information. 5. The cargoes were seized and thereafter subject to Seizure and Forfeiture proceedings for technical smuggling. 6. Atty. Armando Padilla entered his appearance for the consignees KMK and Indrapal. 7. Records of the case do not show any appearance of the consignees in person. 8. The Collector of Customs rules for the forfeiture of all the cargoes. 9. Appeal was made to the Commissioner of Customs. 10. The Commissioner of Customs affirmed the finding of the Collector of Customs of the presence of the intention to import the said goods in violation of the dangerous drugs Act and a Central Bank Circular in relation to the Tariff and Customs Code. 11. Appeal was then made to the Court of Tax Appeals, which reversed the decision of the Commissioner of Customs. 12. Hence this petition to review. ISSUE: Did private respondents fail to establish their personality to sue? Can private respondents sue within Philippine jurisdiction under the isolated transaction rule? HELD: No foreign corporation transacting 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 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. (Section 133, Corporation Code of the Philippines) However, a foreign corporation not engaged in the in business in the Philippines may not be denied the right to file an action in the Philippine courts for an isolated transaction. The fact that a foreign corporation is not doing business in the Philippines must be disclosed if it desires to sue in the Philippine courts under the isolated transaction rule. Without this disclosure, the court may choose to deny it the right to sue. In the case at bar, the private respondents KMK Gani and Indrapal aver that they are suing upon a singular and isolated transaction. But they failed to prove their legal existence or juridical personality as foreign corporations. *** The isolated transaction rule refers only to foreign corporations. Here the petitioners are not foreign corporations. They do not even pretend to be so. The first paragraph of their petition, containing the allegation of their identities, does not even aver their corporate character. On the contrary, KMK alleges that it is a single proprietorship while Indrapal hides under the vague identification as a firm, although both describe themselves. With the phrase Doing business in accordance with the laws of Singapore. M errill Lynch Futures vs. Court of Appeals [GR 97816, 24 July 1992]First Division, Narvasa (CJ): 3 concur, 1 took no part Facts: On 23 November 1987, Merrill Lynch futures, Inc. (ML FUTURES) filed a complaint with theRegional Trial Court at Quezon City against the Spouses Pedro M. Lara and Elisa G. Lara for the recovery of a debt and interest thereon, damages, and attorney's fees. In its complaint ML FUTURES described itself as(a) "a non-resident foreign corporation, not doing business in the Philippines, duly organized and existingunder and by virtue of the laws of the state of Delaware, U.S.A.;" as well as (b) a 'futures commissionmerchant' duly licensed to act as such in the futures markets and

exchanges in the United States, . . .essentially functioning as a broker (executing) orders to buy and sell futures contracts received from itscustomers on U.S. futures exchanges." In its complaint ML FUTURES alleged (1) that on 28 September 1983it entered into a Futures Customer Agreement with the spouses (Account 138-12161), in virtue of which itagreed to act as the latter's broker for the purchase and sale of futures contracts in the U.S.; (2) that pursuant tothe contract, orders to buy and sell futures contracts were transmitted to ML FUTURES by the Lara Spouses"through the facilities of Merrill Lynch Philippines, Inc., a Philippine corporation and a company servicingML Futures' customers;" (3) that from the outset, the Lara Spouses "knew and were duly advised that MerrillLynch Philippines, Inc. was not a broker in futures contracts," and that it "did not have a license from theSecurities and Exchange Commission to operate as a commodity trading advisor (i.e., "and entity which, notbeing a broker, furnishes advice on commodity futures to persons who trade in futures contracts"); (4) that inline with the above mentioned agreement and through said Merill Lynch Philippines, Inc., the Lara Spousesactively traded in futures contracts, including "stock index futures" for four years or so, i.e., from 1983 toOctober, 1987, there being more or less regular accounting and corresponding remittances of money (or crediting or debiting) made between the spouses and ML FUTURES; (5) that because of a loss amounting toUS $160,749.69 incurred in respect of 3 transactions involving "index futures," and after setting this off against an amount of US $75,913.42 then owing by ML FUTURES to the Lara Spouses, said spouses becameindebted to ML FUTURES for the ensuing balance of US $84,836.27, which the latter asked them to pay; (6)that the Lara Spouses however refused to pay this balance, "alleging that the transactions were null and voidbecause Merrill Lynch Philippines, Inc., the Philippine company servicing accounts of ML Futures, had nolicense to operate as a "commodity and/or financial futures broker." On the foregoing essential facts, MLFUTURES prayed (1) for a preliminary attachment against the spouses' properties "up to the value of at leastP2,267,139.50," and (2) for judgment, after trial, sentencing the spouses to pay ML FUTURES: (a) thePhilippine peso equivalent of $84,836.27 at the applicable exchange rate on date of payment, with legalinterest from the date of demand until full payment; (b) exemplary damages in the sum of at leastP500,000,00; and (c) attorney's fees and expenses of litigation as may be proven at the trial. Preliminaryattachment issued ex parte on 2 December 1987, and the spouses were duly served with summons. Thespouses filed a motion to dismiss dated 18 December 1987 on the grounds that (1) ML FUTURES had "nolegal capacity to sue" and (2) its "complaint states no cause of action since it is not the real party in interest."On 12 January 1988, the Trial Court promulgated an Order sustaining the motion to dismiss, directing thedismissal of the case and discharging the writ of preliminary attachment. It later denied ML FUTURES'smotion for reconsideration, by Order dated 29 February 1988. ML FUTURES appealed to the Court of Appeals. In its own decision promulgated on 27 November 1990, the Court of Appeals affirmed the TrialCourt's judgment. Its motion for reconsideration having been denied, ML FUTURES appealed to the SupremeCourt on certiorari. Issue [1]: Whether ML FUTURES was doing business in the Philippines without license.

Held [1]: The facts on record adequately establish that ML FUTURES, operating in the United States, hadindeed done business with the Lara Spouses in the Philippines over several years, had done so at all timesthrough Merrill Lynch Philippines, Inc. (MLPI), a corporation organized in this country, and had executed allthese transactions without ML FUTURES being licensed to so transact business here, and without MLPIbeing authorized to operate as a commodity futures trading advisor. These are the factual findings to both theTrial Court and the Court of Appeals. These, too, are the conclusions of the Securities & ExchangeCommission which denied MLPI's application to operate as a commodity futures trading advisor, a denialsubsequently affirmed by the Court of Appeals. Prescinding from the proposition that factual findings of theCourt of Appeals are generally conclusive, the Supreme Court has been cited to no circumstance of substanceto warrant reversal of said Appellate Court's findings or conclusions in this case. Further, the Laras didtransact business with ML FUTURES through its agent corporation organized in the Philippines, it beingunnecessary to determine whether this domestic firm was MLPI (Merrill Lynch Philippines, Inc.) or MerrillLynch Pierce Fenner & Smith (MLPI's alleged predecessor). The fact is that ML FUTURES did deal with 132 futures contracts in exchanges in the United States in behalf and for the account of the Lara Spouses, and thaton several occasions the latter received account documents and money in connection with those transactions.Given these facts, if indeed the last transaction executed by ML FUTURES in the Laras's behalf had resultedin a loss amounting to US $160,749.69; that in relation to this loss, ML FUTURES had credited the Laraswith the amount of US $ 75,913.42 which it (ML FUTURES) then admittedly owed the spouses andthereafter sought to collect the balance, US $84,836.27, but the Laras had refused to pay (for the reasonsalready above stated). Issue [2]: Whether in light of the fact that the Laras were fully aware of its lack of license to do business inthe Philippines, and in relation to those transactions had made payments to, and received money from it for several years the Lara Spouses are estopped to impugn ML FUTURES capacity to sue them in the courts of the forum. Held [2]: The Laras received benefits generated by their business relations with ML FUTURES. Thosebusiness relations, according to the Laras themselves, spanned a period of 7 years; and they evidently foundthose relations to be of such profitability as warranted their maintaining them for that not insignificant periodof time; otherwise, it is reasonably certain that they would have terminated their dealings with ML FUTURESmuch, much earlier. In fact, even as regards their last transaction, in which the Laras allegedly suffered a lossin the sum of US$160,749.69, the Laras nonetheless still received some monetary advantage, for MLFUTURES credited them with the amount of US $75,913.42 then due to them, thus reducing their debt to US$84,836.27. Given these facts, and assuming that the Lara Spouses were aware from the outset that MLFUTURES had no license to do business in this country and MLPI, no authority to act as broker for it, itwould appear quite inequitable for

the Laras to evade payment of an otherwise legitimate indebtedness dueand owing to ML FUTURES upon the plea that it should not have done business in this country in the firstplace, or that its agent in this country, MLPI, had no license either to operate as a "commodity and/or financialfutures broker." Considerations of equity dictate that, at the very least, the issue of whether the Laras are intruth liable to ML FUTURES and if so in what amount, and whether they were so far aware of the absence of the requisite licenses on the part of ML FUTURES and its Philippine correspondent, MLPI, as to be estoppedfrom alleging that fact as a defense to such liability, should be ventilated and adjudicated on the merits by theproper trial court. Hahn v. Court of Appeals [266 SCRA 537 (January 22, 1997)] Jurisdiction Over Foreign Corporation Doing Business in the Philippines Without a License Facts: Petitioner is a Filipino citizen doing business under the name of HahnManila. Private respondent BMW is a non-resident corporation incorporated in Germany. Petitioner executed in favor of private respondent a Deed of Assignment with a Special Power of Attorney which constituted petitioner as the exclusive dealer of private respondent as long as the assignment of its trademark and device subsisted. However, no formal contract was drawn between the two parties. Thereafter, petitioner was informed that BMW was arranging to grant the exclusive dealership of BMW cars and products to Columbia Motors Corp. (CMC). BMW expressed dissatisfaction with various aspect of petitioners business but nonetheless also expressed willingness to continue business relations with petitioner on the basis of a standard BMW contract otherwise, if said offer was unacceptable to petitioner then BMW would terminate petitioners exclusive dealership. Petitioner refused BMWs offer in which case BMW withdrew its alternative offer and terminated petitioners exclusive dealership. Petitioner therefore filed an action for specific performance and damages against BMW to compel it to continue the exclusive dealership. BMW moved to dismiss the case contending that the trial court did not acquire jurisdiction over it through the service of summons on DTI because BMW is a foreign corporation and is not doing business in the Philippines. The trial court deferred the resolution of the motion for dismissal until after trial on the merits for the reason that the grounds advanced by BMW did not seem indubitable. BMW appealed said order to the CA. The CA resolved that BMW was not doing business in the country and therefore jurisdiction over it could not have been acquired through the service of summons on DTI and it dismissed the petition.

Issue: W/N BMW is doing business in the Philippines so as to enable the court to acquire jurisdiction over it through the service of summons on the DTI. HeId: RA 7042 enumerates what acts are considered as doing business. Section 3(d) enumerating such acts includes the phrase appointing representatives or distributors in the Philippines but not when the representative or distributor transacts business in his own name for his own account. In the case at bar, petitioner is private respondent BMWs agent and not merely a broker. The record reveals that private respondent exercised control over petitioners activities as a dealer and made regular inspections of petitioners premises to enforce its standards. Since BMW is considered as doing business in the Philippines, the trial court validly acquired jurisdiction over it by virtue of the service of summons on the DTI. Furthermore, it is now settled that, for purposes of having summons served on a foreign corporation in accordance with the Rules of Court, it is sufficient that it be alleged in the complaint that the foreign corporation is doing business in the Philippines. The court need not go beyond the allegations in the complaint in order to determine whether or not it acquired jurisdiction. Such determination that the foreign corporation is doing business in the Philippines is only tentative and only for the purpose of enabling the court to acquire jurisdiction. A contrary determination may be made based on the courts findings or evidence presented.

Remedial Law Civil Procedure Cureg, M.A. Ruling: The SC ruled that as to the petitionersc o n t e n t i o n , t h e a g e n c y w a s "constituted in the common interest of the principal and the agent" and thathence it was not extinguished by thedeath of the principal (Art. 1930, CivilC o d e ) i s r e f u t e d b y t h e i n s t r u m e n t itself which explicitly provided that thepowers conferred on the agent were tobe exercised for the "sole benefit" of the principal, Carmen P. Gabriel.M o r e o v e r , C a r m e n s d e a t h d i v e s t e d Atty. Lavia of authority to representh e r a s c o u n s e l . A d e a d c l i e n t h a s n o p e r s o n a l i t y t o b e r e p r e s e n t e d b y a n attorney. Maria Aguas, et. al. vs.Hermogenes Llemos August 30, 1962 Facts:

 S o m e t i m e i n M a r c h 1 9 6 0 , certain sps. Felix G u a r d i n o a n d M a r i a A g u a s f i l e d a n a c t i o n f o r rec overy of damages before theC F I o f S a m a r a g a i n s t t h e Hermogenes Llemos. H o w e v e r , t h e d e f e n d a n t (Llemos), befo r e a n s w e r i n g t h e c o m p l a i n t a g a i n s t h i m a m o n t h after the said complaint was filed. M e a n w h i l e , t h e p l a i n t i f f s amended their complaint and hadincluded the heirs of the deceased a n d t h e i r claims for d a m a g e s b e c h a r g e a b l e a g a i n s t t h e e s t a t e o f the deceased. The heirs of the Llemos thenf i l e d a M o t i o n t o D i s m i s s t h e complaint. Thereafter, the court dismissedt h e c o m p l a i n t o n t h e g r o u n d t h a t the heirs should not be a party inthe complaint and instead, a legalr e p r e s e n t a t i v e s h o u l d h a v e b e e n made a party in the same. Plaintiffs filed a Mr. But it wasalso denied by the court. Hence, ani n s t a n t a p p e a l b e f o r e a h i g h e r court. Issue: D o t h e p l a i n t i f f s h a v e l e g a l personalities to file their claims for d a m a g e s a g a i n s t t h e e s t a t e o r c a n t h e y be parties- in-interest in t h e s e t t l e m e n t o f e s t a t e p r o c e e d i n g s t o secure their claim? Ruling: R u l e 8 6 , S e c t i o n 5 o f t h e R u l e s o f Court, which reads: xxx All claims for money against thed e c e d e n t , a r i s i n g f r o m c o n t r a c t , express or implied, whether the sameb e d u e , n o t d u e , o r c o n t i n g e n t , a l l c l a i m s f o r f u n e r a l e x p e n s e s a n d expenses for the last sickness of thed e c e d e n t , a n d j u d g m e n t f o r m o n e y a g a i n s t t h e d e c e d e n t , m u s t b e f i l e d within the time limited in the notice;otherwise they are barred forever xxx R u l e 8 7 , S e c t i o n 1 o f t h e R u l e s o f Court: Sec. 1. Actions which may and whichmay not be brought against executor o r a d m i n i s t r a t o r . x x x b u t a c t i o n s t o recover real or personal property, or an interest therein, from the estate, or to enforce a lien thereon, and actions t o r e c o v e r d a m a g e s f o r a n i n j u r y t o person or property, real or personal, may be commenced against him xxx

Thus, the plaintiffs action is not propert o b e f i l e d a g a i n s t the estate of thedeceased with respect to the abovementioned rule. Instead, it can be filedagainst the executor of administrator of the estate as a contingent claim.