FOREIGN CORPORATIONG.R. No. L-38649 March 26, 1979FACILITIES
MANAGEMENT CORPORATION, J. S. DREYER, and J. V.
CATUIRA,petitioners,vs.LEONARDO DE LA ROSA AND THE HONORABLE COURT
OF INDUSTRIAL RELATIONS,respondents.Sycip, Salazar, Feliciano &
Associates for petitioners.Benjamin M. Mendoza for respondent
Court.MAKASIAR,J:Petition for review on certiorari of the decision
of the Court of Industrial Relations, dated February 14, 1972,
ordering petitioners herein to pay private respondent Leonardo de
la Osa his overtime compensation, as wen as his swing shift and
graveyard shift premiums at the rate of fifty (50%) per cent of his
basic sa (Annex E, p. 31, rollo).The aforesaid decision was based
on a report submitted by the Hearing Examiner, CIR (Dagupan City
Branch), the pertinent portions of which are quoted
hereinbelow:::In a petition filed on July 1, 1967, Leonardo dela
Osa sought his reinstatement. with full backwages, as well as the
recovery of his overtime compensation, swing shift and graveyard
shift differentials. Petitioner alleged that he was employed by
respondents as follows: (1) painter with an hourly rate of $1.25
from March, 1964 to November, 1964, inclusive; (2) houseboy with an
hourly rate of $1.26 from December, 1964 to November, 1965,
inclusive; (3) houseboy with an hourly rate of $1.33 from December,
1965 to August, 1966, inclusive; and (4) cashier with an hourly
rate of $1.40 from August, 1966 to March 27, 1967, inclusive. He
further averred that from December, 1965 to August, 1966,
inclusive, he rendered overtime services daily and that this entire
period was divided into swing and graveyard shifts to which he was
assigned, but he was not paid both overtime and night shift
premiums despite his repeated demands from respondents.Respondents
filed on August 7, 1967 their letter- answer without substantially
denying the material allegations of the basic petition but
interposed the following special defenses, namely: That respondents
Facilities Management Corporation and J. S. Dreyer are domiciled in
Wake Island which is beyond the territorial jurisdiction of the
Philippine Government; that respondent J. V. Catuira, though an
employee of respondent corporation presently stationed in Manila,
is without power and authority of legal representation; and that
the employment contract between petitioner and respondent
corporation carries -the approval of the Department of Labor of the
Philippines.Subsequently on May 3, 1968. respondents filed a motion
to dismiss the subject petition on the ground that this Court has
no Jurisdiction over the instant case, and on May 24, 1968,
petitioner interposed an opposition thereto. Said motion was denied
by this Court in its Order issued on July 12, 1968 sustaining
jurisdiction in accordance with the prevailing doctrine of the
Supreme Court in similar cases.xxx xxx xxxBut before we consider
and discuss the foregoing issues, let us first ascertain if this
Court could acquire jurisdiction over the case at bar, it having
been contended by respondents that they are domiciled in Wake
Island which is beyond the territorial jurisdiction of the
Philippine Government. To this incidental question, it may be
stated that while it is true the site of work is Identified as Wake
Island, it is equally true the place of hire is established in
Manila (See Section B, Filipino Employment Contract, Exhibit '1').
Moreover, what is important is the fact that the contract of
employment between the parties litigant was shown to have been
originally executed and subsequently renewed in Manila, as asserted
by petitioner and not denied by respondents. Hence, any dispute
arising therefrom should necessarily be determined in the place or
venue where it was contracted.xxx xxx xxxFrom the evidence on hand,
it has been proven beyond doubt that petitioner canvas assigned to
and performed work in respondent company at slight time which
consisted of two different schedules, namely, swing shift and
graveyard shifts, particularly during his tenure as houseboy for
the second period and as cashier. Petitioner's testimony to this
effect was not contradicted, much less rebutted, by respondents, as
revealed by the records. Since petitioner actually rendered night
time services as required by respondents, and considering the
physical, moral and sociological effects arising from the
performance of such nocturnal duties, we think and honestly believe
that petitioner should be compensated at least fifty percent (50%)
more than his basic wage rate. This night shift premium pay would
indeed be at par with the overtime compensation stipulated at one
and one-half (1 ) times of the straight time rate.xxx xxx xxx (pp.
31-36, rollo).Apropos before this Court were filed three (3) other
cases involving the same petitioner, all of which had been finally
dispoded of, as follows:G.R. No Date of Filing Disposition1.
L-37117 July 30, 1973 Petition denied forlack of merit on Sept.13,
1973. Motion forReconsiderationdenied lack ofmerit, Nov. 20,1973.2.
L-38781 June 17,1974 Petition denied forlack of merit on
June21,1974.3. L-39111-12 Sept. 2,1974 Case dismissed on Feb.6,
1976, pursuant tovoluntary manifestation of private respondent
Inocente R. Rielthat his claims had allbeen settled to his
entiresatisfaction.Incidentally, in connection with G.R. No.
L-39111-12 (No. 3 above), WE found strong evidence that petitioner
therein, which is also the petitioner in the case at bar, "twisted
the arm" of private respondent, when the latter in his
Manifestation dated July 3, 1975, stated:3. ... Furthermore, since
petitioner FMC is a foreign corporation domiciled in California,
U.S.A. and has never been engaged in business in the Philippines,
nor does it have an agent or an office in this country, there
exists no valid reason for me to participate in the continuation
and/or prosecution of this case (p. 194, rollo). as if jurisdiction
depends on the will of the parties to a case. At any rate,
considering that petitioner paid the claims of private respondent,
the case had become moot and academic. Besides, the fact of such
payment amounts to an acknowledgment on the part of petitioner of
the jurisdiction of the court over it.WE have also noted that the
principal question involved in each of the above-numbered three (3)
cases is more or less Identical, to wit: Is the mere act by a
non-resident foreign corporation of recruiting Filipino workers for
its own use abroad, in law doing business in the Philippines?In the
case at bar, which was filed with this Court on June 3, 1974,
petitioners presented,inter alia,the following issue: ... can the
CIR validly affirm a judgment against persons domiciled outside and
not doing business in the Philippines, and over whom it did not
acquire jurisdiction')While it is true that the issues presented in
the decided cases are worded differently from the principal issue
raised in the case at bar, the fact remains that they all boil down
to one and the same issue, which was aptly formulated and ably
resolved by Mr. Justice Ramon C. Fernandez, then with the Court of
Appeals and now a member of this Court, in CA-G.R. No. SP-01485-R,
later elevated to this Court on appeal by certiorari in Case G.R.
No. L-37117 this case, the majority opinion of the Court of
Appeals, which was penned by Justice Fernandez and which WE hereby
adopt, runs as follows:The principal issue presented in this
special civil action is whether petitioner has been 'doing business
in the Philippines' so that the service of summons upon its agent
in the Philippines vested the Court of First Instance of Manila
with jurisdiction.From the facts of record, the petitioner may be
considered as doing busuness un the Philippines within the the
scope of Section 14, Rule 14 of the Rules of the Court which
provide:SEC 14. Service upon private foreign corporations. If the
defendant is a foreign corporation or a non-resident joint stock
company or association: doing business in the Philippines, service
may be made on its resident agent designated in accordance with law
for that purpose or, if there be no such agent, on the government
official designated by law to that effect, or on any of its
officers or agents within the Philippines.Indeed, the petitioner,
in compliance with Act 2486 as implemented by Department of Labor
Order No. IV dated May 20, 1968 had to appoint Jaime V. Catuira,
1322 A. Mabini, Ermita, Manila as agent for FMC with authority to
execute Employment Contracts and receive, in behalf of that
corporation, legal services from and be bound by processes of the
Philippine Courts of Justice, for as long as he remains an employee
of FMC (Annex 'I', rollo, p. 56). It is a fact that when the
summons for the petitioner was served on Jaime V. Catuira he was
still in the employ of the FMC.In his motion to dismiss Annex B',
p. 19, Rollo), petitioner admits that Mr. Catuira represented it in
this country 'for the purpose of making arrangements for the
approval by the Department of Labor of the employment of Filipinos
who are recruited by the Company as its own employees for
assignment abroad.' In effect, Mr. Catuira was a on officer
representing petitioner in the Philippines.Under the rules and
regulations promulgated by the Board of Investments which took
effect Feb. 3, 1969, implementing Rep. Act No. 5455, which took
effect Sept. 30, 1968, the phrase 'doing business' has been
exemption with illustrations, among them being as follows:xxx xxx
xxx(f) the performance within the Philippines of any act or
combination of acts enumerated in section l(l) of the Act shall
constitute 'doing business' therein. in particular, 'doing business
includes:(1) Soliciting orders, purchases (sales) or service
contracts. Concrete and specific solicitations by a foreign firm,
not acting independently of the foreign firm amounting to
negotiation or fixing of the terms and conditions of sales or
service contracts, regardless of whether the contracts are actually
reduced to writing, shall constitute doing business even if the
enterprise has no office or fixed place of business in the
Philippines. xxx(2) Appointing a representative or distributor who
is dociled in the Philippines, unless said representative or
distributor has an independent status, i.e., it transacts business
in its name and for its own account, and not in the name or for the
account of the principal.xxx xxx xxx(4) Opening offices, whether
called 'liaison'offices, agencies or branches, unless proved
otherwise.xxx xxx xxx(10) 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, or in the progressive
prosecution of, commercial gain or of the purpose and objective of
the business organization (54 O.G. 53).Recently decided by this
Court again thru Mr. Justice Ramon C. Fernandez which is similar to
the case at bar, is G.R. No. L-26809, entitledAetna Casualty &
Curety Company, plaintiff- appellant versus Pacific Star Line, the
Bradman Co., Inc., Manila Port Service and/orManila Railroad
Company, Inc., defendants-appellees." The case is an appeal from
the decision of the Court of First Instance of Manila, Branch XVI,
in its Civil Case No. 53074, entitledAetna Casualty & Surety
Company vs. Pacific Star Lines, The Bradman Co., Inc., Manila Port
Service and/or Manila Railroad Company, Inc." dismissing the
complaint on the ground that the plaintiff has no legal capacity to
bring the suit.It appears that on February 11, 1963, Smith Bell
& Co. (Philippines), Inc. and Aetna Casualty & Surety Co.,
Inc., as subrogee instituted Civil Case No. 53074 in the Court of
First Instance of Manila against Pacific Star Line, The Bradman
Co., Inc., Manila Port Service and/or Manila Railroad Company, Inc.
to recover the amount of US$2,300.00 representing the value of
stolen and damaged cargo plus litigation expenses and exemplary
damages in the amounts of P1,000.00 and P2,000.00, respectively,
with legal interest thereon from the filing of the suit and
costs.After all the defendants had filed their answer, the
defendants Manila Port Service and Manila Railroad Company, Inc.
amended their answer to allege that the plaintiff, Aetna Casualty
& Surety Company, is a foreign corporation not duly licensed to
do business in the Philippines and, therefore, without capacity to
sue and be sued.After the parties submitted a partial stipulation
of facts and additional documentary evidence, the case was
submitted for decision of the trial court, which dismissed the
complaint on the ground that the plaintiff insurance company is
subject to the requirements of Sections 68 and 69 of Act 1459, as
amended, and for its failure to comply therewith, it has no legal
capacity to bring suit in this jurisdiction. Plaintiff appealed to
this Court.The main issue involved in the appeal is whether or not
the plaintiff appellant has been doing business in the Philippines,
considering the fact that it has no license to transact business in
the Philippines as a foreign corporation. WE ruled:The object of
Sections 68 and 69 of the Corporation Law was not to prevent the
foreign corporation from performing single acts, but to prevent it
from acquiring a domicile for the purpose of business without
taking the steps necessary to render it amenable to suit in the
local courts. It was never the purpose of the Legislature to
exclude a foreign corporation which happens to obtain an isolated
order for business from the Philippines, from securing redress in
the Philippine courts (Marshall Co. vs. Elser & Co., 46 Phil
70,75).In Mentholatum Co., Inc., et al vs- M Court rules that-No
general rule or governing principle can be laid down as to what
constitutes 'doing' or 'engaging in' or 'transacting' business.
Indeed, each case must be judged in the light of its peculiar
environmental circumstances. The true test, however, seems to be
whether the foreign corporation is continuing the body or substance
of the business or enterprise for which it was organized or whether
it has substantially retired from it and turned it over to another.
(Traction Cos. v. Collectors of Int Revenue [C.C.A Ohio], 223 F.
984, 987). The term implies a continuity of commercial dealings and
arrangements, and contemplates, 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, the purpose and
object of its organization (Griffin v. Implement Dealers' Mut. Fire
Ins. Co., 241 N.W. 75, 77; Pauline Oil & Gas Co. v. Mutual Tank
Line Co., 246 P. 851, 852, 118 Okl. III; Automotive Material Co.
vs. American Standard Metal Products Corp., 158 N.E. 698, 703, 327
III. 367)'. 72 Phil. 524, 528-529.And inEastboard Navigation, Ltd.,
et al. vs. Juan Ysmael & Co., Inc.,this Court held:(d) While
plaintiff is a foreign corporation without license to transact
business in the Philippines, it does not follow that it has no
capacity to bring the present action. Such license is not necessary
because it is not engaged in business in the Philippines. In fact,
the transaction herein involved is the first business undertaken by
plaintiff in the Philippines, although on a previous occasion
plaintiff's vessel was chartered by the National Rice and Corn
Corporation to carry rice cargo from abroad to the Philippines.
These two isolated transactions do not constitute engaging in
business in the Philippines within the purview of Sections 68 and
69 of the Corporation Law so as to bar plaintiff from seeking
redress in our courts. (Marshall Wens Co. vs. Henry W. Elser &
Co. 49 Phil., 70; Pacific Vegetable Oil Corporation vs. Angel O.
Singson, G.R. No. L-7917, April 29, 1955)'. 102 Phil., pp. 1,
18.Based on the rulings laid down in the foregoing cases, it cannot
be said that the Aetna Casualty & Surety Company is transacting
business of insurance in the Philippines for which it must have a
license. The Contract of insurance was entered into in New York,
U.S.A., and payment was made to the consignee in its New York
branch. It appears from the list of cases issued by the Clerk of
Court of the Court of First Instance of Manila that all the
actions, except two (2) cases filed by Smith, Beer & Co., Inc.
against the Aetna Casualty & Surety Company, are claims against
the shipper and the arrastre operators just like the case at
bar.Consequently, since the appellant Aetna Casualty & Surety
Company is not engaged in the business of insurance in the
Philippines but is merely collecting a claim assigned to it by the
consignee, it is not barred from filing the instant case although
it has not secured a license to transact insurance business in the
Philippines.Indeed, if a foreign corporation, not engaged in
business in the Philippines, is not banned from seeking redress
from courts in the Philippines,afortiori, that same corporation
cannot claim exemption from being sued in Philippine courts for
acts done against a person or persons in the Philippines.WHEREFORE,
THE PETITION IS HEREBY DENIED WITH COSTS AGAINST THE PETITIONERS.SO
ORDERED.G.R. No. 168266 March 15, 2010CARGILL,
INC.,Petitioner,vs.INTRA STRATA ASSURANCE CORPORATION,Respondent.D
E C I S I O NCARPIO,J.:The CaseThis petition for review1assails the
26 May 2005 Decision2of the Court of Appeals in CA-G.R. CV No.
48447.The FactsPetitioner Cargill, Inc. (petitioner) is a
corporation organized and existing under the laws of the State of
Delaware, United States of America. Petitioner and Northern
Mindanao Corporation (NMC) executed a contract dated 16 August 1989
whereby NMC agreed to sell to petitioner 20,000 to 24,000 metric
tons of molasses, to be delivered from 1 January to 30 June 1990 at
the price of $44 per metric ton. The contract provides that
petitioner would open a Letter of Credit with the Bank of
Philippine Islands. Under the "red clause" of the Letter of Credit,
NMC was permitted to draw up to $500,000 representing the minimum
price of the contract upon presentation of some documents.The
contract was amended three times: first, on 11 January 1990,
increasing the purchase price of the molasses to $47.50 per metric
ton;3second, on 18 June 1990, reducing the quantity of the molasses
to 10,500 metric tons and increasing the price to $55 per metric
ton;4and third, on 22 August 1990, providing for the shipment of
5,250 metric tons of molasses on the last half of December 1990
through the first half of January 1991, and the balance of 5,250
metric tons on the last half of January 1991 through the first half
of February 1991.5The third amendment also required NMC to put up a
performance bond equivalent to $451,500, which represents the value
of 10,500 metric tons of molasses computed at $43 per metric ton.
The performance bond was intended to guarantee NMCs performance to
deliver the molasses during the prescribed shipment periods
according to the terms of the amended contract.In compliance with
the terms of the third amendment of the contract, respondent Intra
Strata Assurance Corporation (respondent) issued on 10 October 1990
a performance bond6in the sum ofP11,287,500 to guarantee NMCs
delivery of the 10,500 tons of molasses, and a surety bond7in the
sum ofP9,978,125 to guarantee the repayment of downpayment as
provided in the contract.NMC was only able to deliver 219.551
metric tons of molasses out of the agreed 10,500 metric tons. Thus,
petitioner sent demand letters to respondent claiming payment under
the performance and surety bonds. When respondent refused to pay,
petitioner filed on 12 April 1991 a complaint8for sum of money
against NMC and respondent.Petitioner, NMC, and respondent entered
into a compromise agreement,9which the trial court approved in its
Decision10dated 13 December 1991. The compromise agreement provides
that NMC would pay petitionerP3,000,000 upon signing of the
compromise agreement and would deliver to petitioner 6,991 metric
tons of molasses from 16-31 December 1991. However, NMC still
failed to comply with its obligation under the compromise
agreement. Hence, trial proceeded against respondent.On 23 November
1994, the trial court rendered a decision, the dispositive portion
of which reads:WHEREFORE, judgment is rendered in favor of
plaintiff [Cargill, Inc.], ordering defendant INTRA STRATA
ASSURANCE CORPORATION to solidarily pay plaintiff the total amount
of SIXTEEN MILLION NINE HUNDRED NINETY-THREE THOUSAND AND TWO
HUNDRED PESOS (P16,993,200.00), Philippine Currency, with interest
at the legal rate from October 10, 1990 until fully paid, plus
attorneys fees in the sum of TWO HUNDRED THOUSAND PESOS
(P200,000.00), Philippine Currency and the costs of the suit.The
Counterclaim of Intra Strata Assurance Corporation is hereby
dismissed for lack of merit.SO ORDERED.11On appeal, the Court of
Appeals reversed the trial courts decision and dismissed the
complaint. Hence, this petition.The Court of Appeals RulingThe
Court of Appeals held that petitioner does not have the capacity to
file this suit since it is a foreign corporation doing business in
the Philippines without the requisite license. The Court of Appeals
held that petitioners purchases of molasses were in pursuance of
its basic business and not just mere isolated and incidental
transactions.The IssuesPetitioner raises the following issues:1.
Whether petitioner is doing or transacting business in the
Philippines in contemplation of the law and established
jurisprudence;2. Whether respondent is estopped from invoking the
defense that petitioner has no legal capacity to sue in the
Philippines;3. Whether petitioner is seeking a review of the
findings of fact of the Court of Appeals; and4. Whether the advance
payment of $500,000 was released to NMC without the submission of
the supporting documents required in the contract and the "red
clause" Letter of Credit from which said amount was drawn.12The
Ruling of the CourtWe find the petition meritorious.Doing Business
in the Philippines and Capacity to SueThe principal issue in this
case is whether petitioner, an unlicensed foreign corporation, has
legal capacity to sue before Philippine courts. Under Article
12313of the Corporation Code, a foreign corporation must first
obtain a license and a certificate from the appropriate government
agency before it can transact business in the Philippines. Where a
foreign corporation does business in the Philippines without the
proper license, it cannot maintain any action or proceeding before
Philippine courts as provided under Section 133 of the Corporation
Code: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 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.Thus, the threshold question in
this case is whether petitioner was doing business in the
Philippines. The Corporation Code provides no definition for the
phrase "doing business." Nevertheless, Section 1 of Republic Act
No. 5455 (RA 5455),14provides that:x x x the phrase "doing
business" shall include soliciting orders, purchases, service
contracts, opening offices, whether called liaison offices or
branches; appointing representatives or distributors who are
domiciled in the Philippines or who in any calendar year stay in
the Philippines for a period or periods totalling one hundred
eighty days or more; participating in the management, supervision
or control of any domestic business firm, entity or corporation in
the Philippines; and 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. (Emphasis supplied)This is also the exact definition
provided under Article 44 of the Omnibus Investments Code of
1987.Republic Act No. 7042 (RA 7042), otherwise known as the
Foreign Investments Act of 1991, which repealed Articles 44-56 of
Book II of the Omnibus Investments Code of 1987, enumerated not
only the acts or activities which constitute "doing business" but
also those activities which are not deemed "doing business."
Section 3(d) of RA 7042 states:[T]he phrase "doing business" shall
include "soliciting orders, service contracts, opening offices,
whether called liaison offices or branches; appointing
representatives or distributors domiciled in the Philippines or who
in any calendar year stay in the country for a period or periods
totalling one hundred eighty (180) days or more; participating in
the management, supervision or control of any domestic business,
firm, entity or corporation in the Philippines; and 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: Provided,
however, That the phrase doing business shall not be deemed to
include mere investment as a shareholder by a foreign entity in
domestic corporations duly registered to do business, and/or the
exercise of rights as such investor; nor having a nominee director
or officer to represent its interests in such corporation; nor
appointing a representative or distributor domiciled in the
Philippines which transacts business in its own name and for its
own account.Since respondent is relying on Section 133 of the
Corporation Code to bar petitioner from maintaining an action in
Philippine courts, respondent bears the burden of proving that
petitioners business activities in the Philippines were not just
casual or occasional, but so systematic and regular as to manifest
continuity and permanence of activity to constitute doing business
in the Philippines. In this case, we find that respondent failed to
prove that petitioners activities in the Philippines constitute
doing business as would prevent it from bringing an action.The
determination of whether a foreign corporation is doing business in
the Philippines must be based on the facts of each case.15In the
case ofAntam Consolidated, Inc. v. CA,16in which a foreign
corporation filed an action for collection of sum of money against
petitioners therein for damages and loss sustained for the latters
failure to deliver coconut crude oil, the Court emphasized the
importance of the element of continuity of commercial activities to
constitute doing business in the Philippines. The Court held:In the
case at bar, the transactions entered into by the respondent with
the petitioners are not a series of commercial dealings which
signify an intent on the part of the respondent to do business in
the Philippines but constitute an isolated one which does not fall
under the category of "doing business." The records show that the
only reason why the respondent entered into the second and third
transactions with the petitioners was because it wanted to recover
the loss it sustained from the failure of the petitioners to
deliver the crude coconut oil under the first transaction and in
order to give the latter a chance to make good on their obligation.
x x xx x x The three seemingly different transactions were entered
into by the parties only in an effort to fulfill the basic
agreement and in no way indicate an intent on the part of the
respondent to engage in a continuity of transactions with
petitioners which will categorize it as a foreign corporation doing
business in the Philippines.17Similarly, in this case, petitioner
and NMC amended their contract three times to give a chance to NMC
to deliver to petitioner the molasses, considering that NMC already
received the minimum price of the contract. There is no showing
that the transactions between petitioner and NMC signify the intent
of petitioner to establish a continuous business or extend its
operations in the Philippines.The Implementing Rules and
Regulations of RA 7042 provide under Section 1(f), Rule I, that
"doing business" does not include the following acts:1. Mere
investment as a shareholder by a foreign entity in domestic
corporations duly registered to do business, and/or the exercise of
rights as such investor;2. Having a nominee director or officer to
represent its interests in such corporation;3. Appointing a
representative or distributor domiciled in the Philippines which
transacts business in the representative's or distributor's own
name and account;4. The publication of a general advertisement
through any print or broadcast media;5. Maintaining a stock of
goods in the Philippines solely for the purpose of having the same
processed by another entity in the Philippines;6. Consignment by a
foreign entity of equipment with a local company to be used in the
processing of products for export;7. Collecting information in the
Philippines; and8. Performing services auxiliary to an existing
isolated contract of sale which are not on a continuing basis, such
as installing in the Philippines machinery it has manufactured or
exported to the Philippines, servicing the same, training domestic
workers to operate it, and similar incidental services.Most of
these activities do not bring any direct receipts or profits to the
foreign corporation, consistent with the ruling of this Court in
National Sugar Trading Corp. v. CA18that activities within
Philippine jurisdiction that do not create earnings or profits to
the foreign corporation do not constitute doing business in the
Philippines.19In that case, the Court held that it would be
inequitable for the National Sugar Trading Corporation, a
state-owned corporation, to evade payment of a legitimate
indebtedness owing to the foreign corporation on the plea that the
latter should have obtained a license first before perfecting a
contract with the Philippine government. The Court emphasized that
the foreign corporation did not sell sugar and derive income from
the Philippines, but merely purchased sugar from the Philippine
government and allegedly paid for it in full.In this case, the
contract between petitioner and NMC involved the purchase of
molasses by petitioner from NMC. It was NMC, the domestic
corporation, which derived income from the transaction and not
petitioner. To constitute "doing business," the activity undertaken
in the Philippines should involve profit-making.20Besides, under
Section 3(d) of RA 7042, "soliciting purchases" has been deleted
from the enumeration of acts or activities which constitute "doing
business."Other factors which support the finding that petitioner
is not doing business in the Philippines are: (1) petitioner does
not have an office in the Philippines; (2) petitioner imports
products from the Philippines through its non-exclusive local
broker, whose authority to act on behalf of petitioner is limited
to soliciting purchases of products from suppliers engaged in the
sugar trade in the Philippines; and (3) the local broker is an
independent contractor and not an agent of petitioner.21As
explained by the Court in B. Van Zuiden Bros., Ltd. v. GTVL
Marketing Industries, Inc.:22An exporter in one country may export
its products to many foreign importing countries without performing
in the importing countries specific commercial acts that would
constitute doing business in the importing countries. The mere act
of exporting from ones own country, without doing any specific
commercial act within the territory of the importing country,
cannot be deemed as doing business in the importing country. The
importing country does not require jurisdiction over the foreign
exporter who has not yet performed any specific commercial act
within the territory of the importing country. Without jurisdiction
over the foreign exporter, the importing country cannot compel the
foreign exporter to secure a license to do business in the
importing country.Otherwise, Philippine exporters, by the mere act
alone of exporting their products, could be considered by the
importing countries to be doing business in those countries. This
will require Philippine exporters to secure a business license in
every foreign country where they usually export their products,
even if they do not perform any specific commercial act within the
territory of such importing countries. Such a legal concept will
have deleterious effect not only on Philippine exports, but also on
global trade.1avvphi1To be doing or "transacting business in the
Philippines" for purposes of Section 133 of the Corporation Code,
the foreign corporation must actually transact business in the
Philippines, that is, perform specific business transactions within
the Philippine territory on a continuing basis in its own name and
for its own account. Actual transaction of business within the
Philippine territory is an essential requisite for the Philippines
to to acquire jurisdiction over a foreign corporation and thus
require the foreign corporation to secure a Philippine business
license. If a foreign corporation does not transact such kind of
business in the Philippines, even if it exports its products to the
Philippines, the Philippines has no jurisdiction to require such
foreign corporation to secure a Philippine business
license.23(Emphasis supplied)In the present case, petitioner is a
foreign company merely importing molasses from a Philipine
exporter. A foreign company that merely imports goods from a
Philippine exporter, without opening an office or appointing an
agent in the Philippines, is not doing business in the
Philippines.Review of Findings of FactThe Supreme Court may review
the findings of fact of the Court of Appeals which are in conflict
with the findings of the trial court.24We find that the Court of
Appeals finding that petitioner was doing business is not supported
by evidence.Furthermore, a review of the records shows that the
trial court was correct in holding that the advance payment of
$500,000 was released to NMC in accordance with the conditions
provided under the "red clause" Letter of Credit from which said
amount was drawn. The Head of the International Operations
Department of the Bank of Philippine Islands testified that the
bank would not have paid the beneficiary if the required documents
were not complete. It is a requisite in a documentary credit
transaction that the documents should conform to the terms and
conditions of the letter of credit; otherwise, the bank will not
pay. The Head of the International Operations Department of the
Bank of Philippine Islands also testified that they received
reimbursement from the issuing bank for the $500,000 withdrawn by
NMC.25Thus, respondent had no legitimate reason to refuse payment
under the performance and surety bonds when NMC failed to perform
its part under its contract with petitioner.WHEREFORE , we GRANT
the petition. We REVERSE the Decision dated 26 May 2005 of the
Court of Appeals in CA-G.R. CV No. 48447. We REINSTATE the Decision
dated 23 November 1994 of the trial court.SO ORDERED.G.R. No.
173463 October 13, 2010GLOBAL BUSINESS HOLDINGS, INC. (formerly
Global Business Bank, Inc.),Petitioner,vs.SURECOMP SOFTWARE,
B.V.,Respondent.D E C I S I O NNACHURA,J.:Before the Court is a
petition for review on certiorari under Rule 45 of the Rules of
Court, assailing the Decision1dated May 5, 2006 and the
Resolution2dated July 10, 2006 of the Court of Appeals (CA) in
CA-G.R. SP No. 75524.The facts of the case are as follows:On March
29, 1999, respondent Surecomp Software, B.V. (Surecomp), a foreign
corporation duly organized and existing under the laws of the
Netherlands, entered into a software license agreement with Asian
Bank Corporation (ABC), a domestic corporation, for the use of its
IMEX Software System (System) in the banks computer system for a
period of twenty (20) years.3In July 2000, ABC merged with
petitioner Global Business Holdings, Inc. (Global),4with Global as
the surviving corporation. When Global took over the operations of
ABC, it found the System unworkable for its operations, and
informed Surecomp of its decision to discontinue with the agreement
and to stop further payments thereon. Consequently, for failure of
Global to pay its obligations under the agreement despite demands,
Surecomp filed a complaint for breach of contract with damages
before the Regional Trial Court (RTC) of Makati. The case was
docketed as Civil Case No. 01-1278.5In its complaint, Surecomp
alleged that it is a foreign corporation not doing business in the
Philippines and is suing on an isolated transaction. Pursuant to
the agreement, it installed the System in ABCs computers for a
consideration of US$298,000.00 as license fee. ABC also undertook
to pay Surecomp professional services, which included on-site
support and development of interfaces, and annual maintenance fees
for five (5) subsequent anniversaries, and committed to purchase
one (1) or two (2) Remote Access solutions at discounted prices. In
a separate transaction, ABC requested Surecomp to purchase on its
behalf a software called MF Cobol Runtime with a promise to
reimburse its cost. Notwithstanding the delivery of the product and
the services provided, Global failed to pay and comply with its
obligations under the agreement. Thus, Surecomp demanded payment of
actual damages amounting to US$319,955.00 and an additional amount
of US$227,610.00 for Globals unilateral pretermination of the
agreement, exemplary damages, attorneys fees and costs of
suit.6Instead of filing an answer, Global filed a motion to dismiss
based on two grounds: (1) that Surecomp had no capacity to sue
because it was doing business in the Philippines without a license;
and (2) that the claim on which the action was founded was
unenforceable under the Intellectual Property Code of the
Philippines.7On the first ground, Global argued that the contract
entered into was not an isolated transaction since the contract was
for a period of 20 years. Furthermore, Global stressed that it
could not be held accountable for any breach as the agreement was
entered into between Surecomp and ABC. It had not, in any manner,
taken part in the negotiation and execution of the agreement but
merely took over the operations of ABC as a result of the merger.
On the second ground, Global averred that the agreement, being a
technology transfer arrangement, failed to comply with Sections 87
and 88 of the Intellectual Property Code of the Philippines.8In the
interim, Global filed a motion for leave to serve written
interrogatories to Surecomp in preparation for the hearing on the
motion to dismiss, attaching thereto its written
interrogatories.After an exchange of pleadings on the motions filed
by Global, on June 18, 2002, the RTC issued an Order,9the pertinent
portions of which read:After a thorough and careful deliberation of
the respective arguments advanced by the parties in support of
their positions in these two (2) incidents, and since it cannot be
denied that there is indeed a contract entered into between the
plaintiff [Surecomp] and the defendant [Global], the latter as a
successor in interest of the merging corporation Asian Bank,
defendant [Global] is estopped from denying plaintiffs [Surecomps]
capacity to sue it for alleged breach of that contract with
damages. Its argument that it was not the one who actually
contracted with the plaintiff [Surecomp] as it was the merging
Asian Bank which did, is of no moment as it does not relieve
defendant Global Bank of its contractual obligation under the
Agreement on account of its undertaking under it:"x x x shall be
responsible for all the liabilities and obligations of ASIANBANK in
the same manner as if the Merged Bank had itself incurred such
liabilities or obligations, and any pending claim, action or
proceeding brought by or against ASIANBANK may be prosecuted by or
against the Merged Bank. The right of creditors or liens upon the
property of ASIANBANK shall not be impaired by the merger; provided
that the Merged Bank shall have the right to exercise all defenses,
rights, privileges, set-offs and counter-claims of every kind and
nature which ASIANBANK may have, or with the Merged Bank may invoke
under existing laws."It appearing however that the second ground
relied upon by the defendant [Global], i.e., that the cause of
action of the plaintiff is anchored on an unenforceable contract
under the provision of the Intellectual Property Code, will require
a hearing before the motion to dismiss can be resolved and
considering the established jurisprudence in this jurisdiction,
that availment of mode of discovery by any of the parties to a
litigation, shall be liberally construed to the end that the truth
of the controversy on hand, shall be ascertained at a less expense
with the concomitant facility and expeditiousness, the motion to
serve written interrogatories upon the plaintiff [Surecomp] filed
by the defendant [Global] is GRANTED insofar as the alleged
unenforceability of the subject contract is concerned. Accordingly,
the latter is directed to serve the written interrogatories upon
the plaintiff [Surecomp], which is required to act on it in
accordance with the pertinent rule on the matter.Necessarily, the
resolution of the motion to dismiss is held in abeyance until after
a hearing on it is property conducted, relative to the second
ground aforementioned.SO ORDERED.10Surecomp moved for partial
reconsideration, praying for an outright denial of the motion to
dismiss, while Global filed a motion for reconsideration.11On
November 27, 2002, the RTC issued an Order,12the fallo of which
reads:WHEREFORE, the Order of this Court dated 18 June 2002 is
modified. Defendants [Globals] Motion to Dismiss dated 17 October
2001 is denied on the two grounds therein alleged. Defendant
[Global] is given five (5) days from receipt of this Order within
which to file its Answer.The resolution of defendants [Globals]
Motion to Serve Written Interrogatories is held in abeyance pending
the filing of the Answer.SO ORDERED.13In partially modifying the
first assailed Order, the RTC ratiocinated, viz.:This court sees no
reason to further belabor the issue on plaintiffs capacity to sue
since there is a prima facie showing that defendant entered into a
contract with defendant and having done so, willingly, it cannot
now be made to raise the issue of capacity to sue [Merrill Lynch
Futures, Inc. v. CA, 211 SCRA 824]. That defendant was not aware of
plaintiffs lack of capacity to sue or that defendant did not
benefit from the transaction are arguments that are hardly
supported by the evidence already presented for the resolution of
the Motion to Dismiss.As to the issue of unenforceability of the
subject contract under the Intellectual Property Code, this court
finds justification in modifying the earlier Order allowing the
further presentation of evidence. It appearing that the subject
contract between the parties is an executed, rather than an
executory, contract the statute of frauds therefore finds no
application here.x x x xAs to defendants Motion to Serve Written
Interrogatories, this court finds that resort to such a discovery
mechanism while laudable is premature as defendant has yet to file
its Answer. As the case now stands, the issues are not yet joined
and the disputed facts are not clear.14Undaunted, Global filed a
petition for certiorari with prayer for the issuance of a temporary
restraining order and/or writ of preliminary injunction under Rule
65 of the Rules of Court before the CA, contending that the RTC
abused its discretion and acted in excess of its jurisdiction.15On
May 5, 2006, the CA rendered a Decision,16the dispositive portion
of which reads:WHEREFORE, premises considered, the instant petition
is DENIED. The assailed Orders dated June 18, 2002 and November 27,
2002 of the Regional Trial Court of Makati City, Branch 146, in
Civil Case No. 01-1278 are hereby AFFIRMED.SO ORDERED.17A motion
for reconsideration was filed by Global. On July 10, 2006, the CA
issued a Resolution18denying the motion for reconsideration for
lack of merit.Hence, this petition.Global presents the following
issues for resolution: (1) whether a special civil action for
certiorari is the proper remedy for a denial of a motion to
dismiss; and (2) whether Global is estopped from questioning
Surecomps capacity to sue.19The petition is bereft of merit.IAn
order denying a motion to dismiss is an interlocutory order which
neither terminates nor finally disposes of a case as it leaves
something to be done by the court before the case is finally
decided on the merits. As such, the general rule is that the denial
of a motion to dismiss cannot be questioned in a special civil
action for certiorari which is a remedy designed to correct errors
of jurisdiction and not errors of judgment.20To justify the grant
of the extraordinary remedy of certiorari, the denial of the motion
to dismiss must have been tainted with grave abuse of discretion.
By "grave abuse of discretion" is meant such capricious and
whimsical exercise of judgment that is equivalent to lack of
jurisdiction. The abuse of discretion must be grave as where the
power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility, and must be so patent and gross as
to amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act all in contemplation of
law.21In the instant case, Global did not properly substantiate its
claim of arbitrariness on the part of the trial court judge that
issued the assailed orders denying the motion to dismiss. In a
petition for certiorari, absent such showing of arbitrariness,
capriciousness, or ill motive in the disposition of the trial judge
in the case, we are constrained to uphold the courts ruling,
especially because its decision was upheld by the CA.IIThe
determination of a corporations capacity is a factual question that
requires the elicitation of a preponderant set of facts.22As a
rule, unlicensed foreign non-resident corporations doing business
in the Philippines cannot file suits in the Philippines.23This is
mandated under Section 133 of the Corporation Code, which
reads: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 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.A corporation has a 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
Securities and Exchange Commission and appoint an agent for service
of process. Without such license, it cannot institute a suit in the
Philippines.241avvphi1The exception to this rule is the doctrine of
estoppel. Global is estopped from challenging Surecomps capacity to
sue.A foreign corporation doing business in the Philippines without
license may sue in Philippine courts a Filipino citizen or a
Philippine entity that had contracted with and benefited from
it.25A party is estopped from challenging the personality of a
corporation after having acknowledged the same by entering into a
contract with it.26The principle is applied to prevent a person
contracting with a foreign corporation from later taking advantage
of its noncompliance with the statutes, chiefly in cases where such
person has received the benefits of the contract.27Due to Globals
merger with ABC and because it is the surviving corporation, it is
as if it was the one which entered into contract with Surecomp. In
the merger of two existing corporations, one of the corporations
survives and continues the business, while the other is dissolved,
and all its rights, properties, and liabilities are acquired by the
surviving corporation.28This is particularly true in this case.
Based on the findings of fact of the RTC, as affirmed by the CA,
under the terms of the merger or consolidation, Global assumed all
the liabilities and obligations of ABC as if it had incurred such
liabilities or obligations itself. In the same way, Global also has
the right to exercise all defenses, rights, privileges, and
counter-claims of every kind and nature which ABC may have or
invoke under the law. These findings of fact were never contested
by Global in any of its pleadings filed before this
Court.WHEREFORE, in view of the foregoing, the Decision dated May
5, 2006 and the Resolution dated July 10, 2006 of the Court of
Appeals in CA-G.R. SP No. 75524 are hereby AFFIRMED. Costs against
petitioner.SO ORDERED.G.R. No. 171995 April 18, 2012STEELCASE,
INC.,Petitioner,vs.DESIGN INTERNATIONAL SELECTIONS,
INC.,Respondent.D E C I S I O NMENDOZA,J.:This is a petition for
review on certiorari under Rule 45 assailing the March 31, 2005
Decision1of the Court of Appeals(CA)which affirmed the May 29, 2000
Order2of the Regional Trial Court, Branch 60, Makati City(RTC),
dismissing the complaint for sum of money in Civil Case No. 99-122
entitled "Steelcase, Inc. v. Design International Selections,
Inc."The FactsPetitioner Steelcase, Inc.(Steelcase)is a foreign
corporation existing under the laws of Michigan, United States of
America(U.S.A.), and engaged in the manufacture of office furniture
with dealers worldwide.3Respondent Design International Selections,
Inc.(DISI)is a corporation existing under Philippine Laws and
engaged in the furniture business, including the distribution of
furniture.4Sometime in 1986 or 1987, Steelcase and DISI orally
entered into a dealership agreement whereby Steelcase granted DISI
the right to market, sell, distribute, install, and service its
products to end-user customers within the Philippines. The business
relationship continued smoothly until it was terminated sometime in
January 1999 after the agreement was breached with neither party
admitting any fault.5On January 18, 1999, Steelcase filed a
complaint6for sum of money against DISI alleging, among others,
that DISI had an unpaid account of US$600,000.00. Steelcase prayed
that DISI be ordered to pay actual or compensatory damages,
exemplary damages, attorneys fees, and costs of suit.In its Answer
with Compulsory Counterclaims7dated February 4, 1999, DISI sought
the following: (1) the issuance of a temporary restraining
order(TRO)and a writ of preliminary injunction to enjoin Steelcase
from selling its products in the Philippines except through DISI;
(2) the dismissal of the complaint for lack of merit; and (3) the
payment of actual, moral and exemplary damages together with
attorneys fees and expenses of litigation. DISI alleged that the
complaint failed to state a cause of action and to contain the
required allegations on Steelcases capacity to sue in the
Philippines despite the fact that it (Steelcase) was doing business
in the Philippines without the required license to do so.
Consequently, it posited that the complaint should be dismissed
because of Steelcases lack of legal capacity to sue in Philippine
courts.On March 3, 1999, Steelcase filed its Motion to Admit
Amended Complaint8which was granted by the RTC, through then Acting
Presiding Judge Roberto C. Diokno, in its Order9dated April 26,
1999. However, Steelcase sought to further amend its complaint by
filing a Motion to Admit Second Amended Complaint10on March 13,
1999.In his Order11dated November 15, 1999, Acting Presiding Judge
Bonifacio Sanz Maceda dismissed the complaint, granted the TRO
prayed for by DISI, set aside the April 26, 1999 Order of the RTC
admitting the Amended Complaint, and denied Steelcases Motion to
Admit Second Amended Complaint. The RTC stated that in requiring
DISI to meet the Dealer Performance Expectation and in terminating
the dealership agreement with DISI based on its failure to improve
its performance in the areas of business planning, organizational
structure, operational effectiveness, and efficiency, Steelcase
unwittingly revealed that it participated in the operations of
DISI. It then concluded that Steelcase was "doing business" in the
Philippines, as contemplated by Republic Act(R.A.)No. 7042 (The
Foreign Investments Act of 1991), and since it did not have the
license to do business in the country, it was barred from seeking
redress from our courts until it obtained the requisite license to
do so. Its determination was further bolstered by the appointment
by Steelcase of a representative in the Philippines. Finally,
despite a showing that DISI transacted with the local customers in
its own name and for its own account, it was of the opinion that
any doubt in the factual environment should be resolved in favor of
a pronouncement that a foreign corporation was doing business in
the Philippines, considering the twelve-year period that DISI had
been distributing Steelcase products in the Philippines.Steelcase
moved for the reconsideration of the questioned Order but the
motion was denied by the RTC in its May 29, 2000 Order.12Aggrieved,
Steelcase elevated the case to the CA by way of appeal, assailing
the November 15, 1999 and May 29, 2000 Orders of the RTC. On March
31, 2005, the CA rendered its Decision affirming the RTC orders,
ruling that Steelcase was a foreign corporation doing or
transacting business in the Philippines without a license. The CA
stated that the following acts of Steelcase showed its intention to
pursue and continue the conduct of its business in the Philippines:
(1) sending a letter to Phinma, informing the latter that the
distribution rights for its products would be established in the
near future and directing other questions about orders for
Steelcase products to Steelcase International; (2) cancelling
orders from DISIs customers, particularly Visteon, Phils.,
Inc.(Visteon);(3) continuing to send its products to the
Philippines through Modernform Group Company Limited(Modernform),
as evidenced by an Ocean Bill of Lading; and (4) going beyond the
mere appointment of DISI as a dealer by making several impositions
on management and operations of DISI. Thus, the CA ruled that
Steelcase was barred from access to our courts for being a foreign
corporation doing business here without the requisite license to do
so.Steelcase filed a motion for reconsideration but it was denied
by the CA in its Resolution dated March 23, 2006.13Hence, this
petition.The IssuesSteelcase filed the present petition relying on
the following grounds:ITHE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR WHEN IT FOUND THAT STEELCASE HAD BEEN "DOING BUSINESS" IN THE
PHILIPPINES WITHOUT A LICENSE.IITHE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN NOT FINDING THAT RESPONDENT WAS ESTOPPED FROM
CHALLENGING STEELCASES LEGAL CAPACITY TO SUE, AS AN AFFIRMATIVE
DEFENSE IN ITS ANSWER.The issues to be resolved in this case
are:(1) Whether or not Steelcase is doing business in the
Philippines without a license; and(2) Whether or not DISI is
estopped from challenging the Steelcases legal capacity to sue.The
Courts RulingThe Court rules in favor of the petitioner.Steelcase
is an unlicensed foreign corporation NOT doing business in the
PhilippinesAnent the first issue, Steelcase argues that Section
3(d) of R.A. No. 7042 or the Foreign Investments Act of
1991(FIA)expressly states that the phrase "doing business" excludes
the appointment by a foreign corporation of a local distributor
domiciled in the Philippines which transacts business in its own
name and for its own account. Steelcase claims that it was not
doing business in the Philippines when it entered into a dealership
agreement with DISI where the latter, acting as the formers
appointed local distributor, transacted business in its own name
and for its own account. Specifically, Steelcase contends that it
was DISI that sold Steelcases furniture directly to the end-users
or customers who, in turn, directly paid DISI for the furniture
they bought. Steelcase further claims that DISI, as a non-exclusive
dealer in the Philippines, had the right to market, sell,
distribute and service Steelcase products in its own name and for
its own account. Hence, DISI was an independent distributor of
Steelcase products, and not a mere agent or conduit of Steelcase.On
the other hand, DISI argues that it was appointed by Steelcase as
the latters exclusive distributor of Steelcase products. DISI
likewise asserts that it was not allowed by Steelcase to transact
business in its own name and for its own account as Steelcase
dictated the manner by which it was to conduct its business,
including the management and solicitation of orders from customers,
thereby assuming control of its operations. DISI further insists
that Steelcase treated and considered DISI as a mere conduit, as
evidenced by the fact that Steelcase itself directly sold its
products to customers located in the Philippines who were
classified as part of their "global accounts." DISI cited other
established circumstances which prove that Steelcase was doing
business in the Philippines including the following: (1) the sale
and delivery by Steelcase of furniture to Regus, a Philippine
client, through Modernform, a Thai corporation allegedly controlled
by Steelcase; (2) the imposition by Steelcase of certain
requirements over the management and operations of DISI; (3) the
representations made by Steven Husak as Country Manager of
Steelcase; (4) the cancellation by Steelcase of orders placed by
Philippine clients; and (5) the expression by Steelcase of its
desire to maintain its business in the Philippines. Thus, Steelcase
has no legal capacity to sue in Philippine Courts because it was
doing business in the Philippines without a license to do so.The
Court agrees with the petitioner.The rule that an unlicensed
foreign corporations doing business in the Philippine do not have
the capacity to sue before the local courts is well-established.
Section 133 of the Corporation Code of the Philippines explicitly
states: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 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.The phrase "doing business" is
clearly defined in Section 3(d) of R.A. No. 7042 (Foreign
Investments Act of 1991), to wit:d) The phrase "doing business"
shall include soliciting orders, service contracts, opening
offices, whether called "liaison" offices or branches; appointing
representatives or distributors domiciled in the Philippines or who
in any calendar year stay in the country for a period or periods
totalling one hundred eighty (180) days or more; participating in
the management, supervision or control of any domestic business,
firm, entity or corporation in the Philippines; and 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: Provided,
however, That the phrase "doing business" shall not be deemed to
include mere investment as a shareholder by a foreign entity in
domestic corporations duly registered to do business, and/or the
exercise of rights as such investor; nor having a nominee director
or officer to represent its interests in such corporation; nor
appointing a representative or distributor domiciled in the
Philippines which transacts business in its own name and for its
own account; (Emphases supplied)This definition is supplemented by
its Implementing Rules and Regulations, Rule I, Section 1(f) which
elaborates on the meaning of the same phrase:f. "Doing business"
shall include soliciting orders, service contracts, opening
offices, whether liaison offices or branches; appointing
representatives or distributors, operating under full control of
the foreign corporation, domiciled in the Philippines or who in any
calendar year stay in the country for a period totalling one
hundred eighty [180] days or more; participating in the management,
supervision or control of any domestic business, firm, entity or
corporation in the Philippines; and 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.The following acts shall not be
deemed "doing business" in the Philippines:1. Mere investment as a
shareholder by a foreign entity in domestic corporations duly
registered to do business, and/or the exercise of rights as such
investor;2. Having a nominee director or officer to represent its
interest in such corporation;3. Appointing a representative or
distributor domiciled in the Philippines which transacts business
in the representative's or distributor's own name and account;4.
The publication of a general advertisement through any print or
broadcast media;5. Maintaining a stock of goods in the Philippines
solely for the purpose of having the same processed by another
entity in the Philippines;6. Consignment by a foreign entity of
equipment with a local company to be used in the processing of
products for export;7. Collecting information in the Philippines;
and8. Performing services auxiliary to an existing isolated
contract of sale which are not on a continuing basis, such as
installing in the Philippines machinery it has manufactured or
exported to the Philippines, servicing the same, training domestic
workers to operate it, and similar incidental services. (Emphases
supplied)From the preceding citations, the appointment of a
distributor in the Philippines is not sufficient to constitute
"doing business" unless it is under the full control of the foreign
corporation. On the other hand, if the distributor is an
independent entity which buys and distributes products, other than
those of the foreign corporation, for its own name and its own
account, the latter cannot be considered to be doing business in
the Philippines.14It should be kept in mind that the determination
of whether a foreign corporation is doing business in the
Philippines must be judged in light of the attendant
circumstances.15In the case at bench, it is undisputed that DISI
was founded in 1979 and is independently owned and managed by the
spouses Leandro and Josephine Bantug.16In addition to Steelcase
products, DISI also distributed products of other companies
including carpet tiles, relocatable walls and theater
settings.17The dealership agreement between Steelcase and DISI had
been described by the owner himself as:xxx basicallya buy and sell
arrangementwhereby we would inform Steelcase of the volume of the
products needed for a particular project and Steelcase would, in
turn, give special quotations or discounts after considering the
value of the entire package. In making the bid of the project, we
would then add out profit margin over Steelcases prices. After the
approval of the bid by the client, we would thereafter place the
orders to Steelcase. The latter, upon our payment, would then ship
the goods to the Philippines, with us shouldering the freight
charges and taxes.18[Emphasis supplied]This clearly belies DISIs
assertion that it was a mere conduit through which Steelcase
conducted its business in the country. From the preceding facts,
the only reasonable conclusion that can be reached is that DISI was
an independent contractor, distributing various products of
Steelcase and of other companies, acting in its own name and for
its own account.The CA, in finding Steelcase to be unlawfully
engaged in business in the Philippines, took into consideration the
delivery by Steelcase of a letter to Phinma informing the latter
that the distribution rights for its products would be established
in the near future, and also its cancellation of orders placed by
Visteon. The foregoing acts were apparently misinterpreted by the
CA. Instead of supporting the claim that Steelcase was doing
business in the country, the said acts prove otherwise. It should
be pointed out that no sale was concluded as a result of these
communications. Had Steelcase indeed been doing business in the
Philippines, it would have readily accepted and serviced the orders
from the abovementioned Philippine companies. Its decision to
voluntarily cease to sell its products in the absence of a local
distributor indicates its refusal to engage in activities which
might be construed as "doing business."Another point being raised
by DISI is the delivery and sale of Steelcase products to a
Philippine client by Modernform allegedly an agent of Steelcase.
Basic is the rule in corporation law that a corporation has a
separate and distinct personality from its stockholders and from
other corporations with which it may be connected.19Thus, despite
the admission by Steelcase that it owns 25% of Modernform, with the
remaining 75% being owned and controlled by Thai stockholders,20it
is grossly insufficient to justify piercing the veil of corporate
fiction and declare that Modernform acted as the alter ego of
Steelcase to enable it to improperly conduct business in the
Philippines. The records are bereft of any evidence which might
lend even a hint of credence to DISIs assertions. As such,
Steelcase cannot be deemed to have been doing business in the
Philippines through Modernform.Finally, both the CA and DISI rely
heavily on the Dealer Performance Expectation required by Steelcase
of its distributors to prove that DISI was not functioning
independently from Steelcase because the same imposed certain
conditions pertaining to business planning, organizational
structure, operational effectiveness and efficiency, and financial
stability. It is actually logical to expect that Steelcase, being
one of the major manufacturers of office systems furniture, would
require its dealers to meet several conditions for the grant and
continuation of a distributorship agreement. The imposition of
minimum standards concerning sales, marketing, finance and
operations is nothing more than an exercise of sound business
practice to increase sales and maximize profits for the benefit of
both Steelcase and its distributors. For as long as these
requirements do not impinge on a distributors independence, then
there is nothing wrong with placing reasonable expectations on
them.All things considered, it has been sufficiently demonstrated
that DISI was an independent contractor which sold Steelcase
products in its own name and for its own account. As a result,
Steelcase cannot be considered to be doing business in the
Philippines by its act of appointing a distributor as it falls
under one of the exceptions under R.A. No. 7042.DISI is estopped
from challenging Steelcases legal capacity to sueRegarding the
second issue, Steelcase argues that assuming arguendo that it had
been "doing business" in the Philippines without a license, DISI
was nonetheless estopped from challenging Steelcases capacity to
sue in the Philippines. Steelcase claims that since DISI was aware
that it was doing business in the Philippines without a license and
had benefited from such business, then DISI should be estopped from
raising the defense that Steelcase lacks the capacity to sue in the
Philippines by reason of its doing business without a license.On
the other hand, DISI argues that the doctrine of estoppel cannot
give Steelcase the license to do business in the Philippines or
permission to file suit in the Philippines. DISI claims that when
Steelcase entered into a dealership agreement with DISI in 1986, it
was not doing business in the Philippines. It was after such
dealership was put in place that it started to do business without
first obtaining the necessary license. Hence, estoppel cannot work
against it. Moreover, DISI claims that it suffered as a result of
Steelcases "doing business" and that it never benefited from the
dealership and, as such, it cannot be estopped from raising the
issue of lack of capacity to sue on the part of Steelcase.The
argument of Steelcase is meritorious.If indeed Steelcase had been
doing business in the Philippines without a license, DISI would
nonetheless be estopped from challenging the formers legal capacity
to sue.It cannot be denied that DISI entered into a dealership
agreement with Steelcase and profited from it for 12 years from
1987 until 1999. DISI admits that it complied with its obligations
under the dealership agreement by exerting more effort and making
substantial investments in the promotion of Steelcase products. It
also claims that it was able to establish a very good reputation
and goodwill for Steelcase and its products, resulting in the
establishment and development of a strong market for Steelcase
products in the Philippines. Because of this, DISI was very proud
to be awarded the "Steelcase International Performance Award" for
meeting sales objectives, satisfying customer needs, managing an
effective company and making a profit.21Unquestionably, entering
into a dealership agreement with Steelcase charged DISI with the
knowledge that Steelcase was not licensed to engage in business
activities in the Philippines. This Court has carefully combed the
records and found no proof that, from the inception of the
dealership agreement in 1986 until September 1998, DISI even
brought to Steelcases attention that it was improperly doing
business in the Philippines without a license. It was only towards
the latter part of 1998 that DISI deemed it necessary to inform
Steelcase of the impropriety of the conduct of its business without
the requisite Philippine license. It should, however, be noted that
DISI only raised the issue of the absence of a license with
Steelcase after it was informed that it owed the latter
US$600,000.00 for the sale and delivery of its products under their
special credit arrangement.By acknowledging the corporate entity of
Steelcase and entering into a dealership agreement with it and even
benefiting from it, DISI is estopped from questioning Steelcases
existence and capacity to sue. This is consistent with the Courts
ruling in Communication Materials and Design, Inc. v. Court of
Appeals22where it was written:Notwithstanding such finding that
ITEC is doing business in the country, petitioner is nonetheless
estopped from raising this fact to bar ITEC from instituting this
injunction case against it.A foreign corporation doing business in
the Philippines may sue in Philippine Courts although not
authorized to do business here against a Philippine citizen or
entity who had contracted with and benefited by said corporation.
To put it in another way, a party is estopped to challenge the
personality of a corporation after having acknowledged the same by
entering into a contract with it. And the doctrine of estoppel to
deny corporate existence applies to a foreign as well as to
domestic corporations. One who has dealt with a corporation of
foreign origin as a corporate entity is estopped to deny its
corporate existence and capacity: The principle will be applied to
prevent a person contracting with a foreign corporation from later
taking advantage of its noncompliance with the statutes chiefly in
cases where such person has received the benefits of the
contract.The rule is deeply rooted in the time-honored axiom of
Commodum ex injuria sua non habere debet no person ought to derive
any advantage of his own wrong. This is as it should be for as
mandated by law, "every person must in the exercise of his rights
and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith."Concededly,
corporations act through agents, like directors and officers.
Corporate dealings must be characterized by utmost good faith and
fairness. Corporations cannot just feign ignorance of the legal
rules as in most cases, they are manned by sophisticated officers
with tried management skills and legal experts with practiced eye
on legal problems. Each party to a corporate transaction is
expected to act with utmost candor and fairness and, thereby allow
a reasonable proportion between benefits and expected burdens. This
is a norm which should be observed where one or the other is a
foreign entity venturing in a global market.xxxBy entering into the
"Representative Agreement" with ITEC, petitioner is charged with
knowledge that ITEC was not licensed to engage in business
activities in the country, and is thus estopped from raising in
defense such incapacity of ITEC, having chosen to ignore or even
presumptively take advantage of the same.23(Emphases supplied)The
case of Rimbunan Hijau Group of Companies v. Oriental Wood
Processing Corporation24is likewise instructive:Respondents
unequivocal admission of the transaction which gave rise to the
complaint establishes the applicability of estoppel against it.
Rule 129, Section 4 of the Rules on Evidence provides that a
written admission made by a party in the course of the proceedings
in the same case does not require proof. We held in the case of
Elayda v. Court of Appeals, that an admission made in the pleadings
cannot be controverted by the party making such admission and are
conclusive as to him. Thus, our consistent pronouncement, as held
in cases such as Merril Lynch Futures v. Court of Appeals, is
apropos:The rule is that a party is estopped to challenge the
personality of a corporation after having acknowledged the same by
entering into a contract with it. And the doctrine of estoppel to
deny corporate existence applies to foreign as well as to domestic
corporations; "one who has dealt with a corporation of foreign
origin as a corporate entity is estopped to deny its existence and
capacity." The principle "will be applied to prevent a person
contracting with a foreign corporation from later taking advantage
of its noncompliance with the statutes, chiefly in cases where such
person has received the benefits of the contract . . ."All things
considered, respondent can no longer invoke petitioners lack of
capacity to sue in this jurisdiction.1wphi1Considerations of fair
play dictate that after having contracted and benefitted from its
business transaction with Rimbunan, respondent should be barred
from questioning the latters lack of license to transact business
in the Philippines.In the case of Antam Consolidated, Inc. v. CA,
this Court noted that it is a common ploy of defaulting local
companies which are sued by unlicensed foreign corporations not
engaged in business in the Philippines to invoke the latters lack
of capacity to sue. This practice of domestic corporations is
particularly reprehensible considering that in requiring a license,
the law never intended to prevent foreign corporations from
performing single or isolated acts in this country, or to favor
domestic corporations who renege on their obligations to foreign
firms unwary enough to engage in solitary transactions with them.
Rather, the law was intended to bar foreign corporations from
acquiring a domicile for the purpose of business without first
taking the steps necessary to render them amenable to suits in the
local courts. It was to prevent the foreign companies from enjoying
the good while disregarding the bad.As a matter of principle, this
Court will not step in to shield defaulting local companies from
the repercussions of their business dealings. While the doctrine of
lack of capacity to sue based on failure to first acquire a local
license may be resorted to in meritorious cases, it is not a magic
incantation. It cannot be called upon when no evidence exists to
support its invocation or the facts do not warrant its application.
In this case, that the respondent is estopped from challenging the
petitioners capacity to sue has been conclusively established, and
the forthcoming trial before the lower court should weigh instead
on the other defenses raised by the respondent.25(Emphases
supplied)As shown in the previously cited cases, this Court has
time and again upheld the principle that a foreign corporation
doing business in the Philippines without a license may still sue
before the Philippine courts a Filipino or a Philippine entity that
had derived some benefit from their contractual arrangement because
the latter is considered to be estopped from challenging the
personality of a corporation after it had acknowledged the said
corporation by entering into a contract with it.26InAntam
Consolidated, Inc. v. Court of Appeals,27this Court had the
occasion to draw attention to the common ploy of invoking the
incapacity to sue of an unlicensed foreign corporation utilized by
defaulting domestic companies which seek to avoid the suit by the
former. The Court cannot allow this to continue by always ruling in
favor of local companies, despite the injustice to the overseas
corporation which is left with no available remedy.During this
period of financial difficulty, our nation greatly needs to attract
more foreign investments and encourage trade between the
Philippines and other countries in order to rebuild and strengthen
our economy. While it is essential to uphold the sound public
policy behind the rule that denies unlicensed foreign corporations
doing business in the Philippines access to our courts, it must
never be used to frustrate the ends of justice by becoming an
all-encompassing shield to protect unscrupulous domestic
enterprises from foreign entities seeking redress in our country.
To do otherwise could seriously jeopardize the desirability of the
Philippines as an investment site and would possibly have the
deleterious effect of hindering trade between Philippine companies
and international corporations.WHEREFORE,the March 31, 2005
Decision of the Court of Appeals and its March 23, 2006 Resolution
are herebyREVERSEDandSET ASIDE. The dismissal order of the Regional
Trial Court dated November 15, 1999 is hereby set aside. Steelcases
Amended Complaint is hereby ordered REINSTATED and the case
isREMANDEDto the RTC for appropriate action.SO ORDERED.G.R. No.
L-34382 July 20, 1983THE HOME INSURANCE
COMPANY,petitioner,vs.EASTERN SHIPPING LINES and/or ANGEL JOSE
TRANSPORTATION, INC. and HON. A. MELENCIO-HERRERA, Presiding Judge
of the Manila Court of First Instance, Branch XVII,respondents.G.R.
No. L-34383 July 20, 1983THE HOME INSURANCE
COMPANY,petitioner,vs.N. V. NEDLLOYD LIJNEN; COLUMBIAN PHILIPPINES,
INC., and/or GUACODS, INC., and HON. A. MELENCIO-HERRERA, Presiding
Judge of the Manila Court of First Instance, Branch
XVII,respondents.No. L-34382.Zapa Law Office for petitioner.Bito,
Misa & Lozada Law Office for respondents.No. L-34383.Zapa Law
Office for petitioner.Ross, Salcedo, Del Rosario, Bito & Misa
Law office for respondents.GUTIERREZ, JR.,J.:Questioned in these
consolidated petitions for review on certiorari are the decisions
of the Court of First Instance of Manila, Branch XVII, dismissing
the complaints in Civil Case No. 71923 and in Civil Case No. 71694,
on the ground that plaintiff therein, now appellant, had failed to
prove its capacity to sue.There is no dispute over the facts of
these cases for recovery of maritime damages. In L-34382, the facts
are found in the decision of the respondent court which stated:On
or about January 13, 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 defendant Eastern Shipping Lines (CARRIER). The shipment was
covered by Bill of Lading No. O-MA-9, with arrival notice to Phelps
Dodge Copper Products Corporation of the Philippines (CONSIGNEE) at
Manila. The shipment was insured with plaintiff against all risks
in the amount of P1,580,105.06 under its Insurance Policy No.
AS-73633.xxx xxx xxxThe coils discharged from the VESSEL numbered
2,361, of which 53 were in bad order. What the CONSIGNEE 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
CONSIGNEE'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, according to Exhibit "A",
or 1,209,56 lbs., according to the claims presented by the
consignee against the plaintiff (Exhibit "D-1"), the CARRIER
(Exhibit "J-1"), and the TRANSPORTATION COMPANY (Exhibit "K-
l").For the loss/damage suffered by the cargo, plaintiff paid the
consignee under its insurance policy the amount of P3,260.44, by
virtue of which plaintiff became subrogated to the rights and
actions of the CONSIGNEE. Plaintiff made demands for payment
against the CARRIER and the TRANSPORTATION COMPANY for
reimbursement of the aforesaid amount but each refused to pay the
same. ...The facts of L-34383 are found in the decision of the
lower court as follows:On or about December 22, 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 the defendant, N. V. Nedlloyd Lijnen, and
represented in the Philippines by its local agent, the defendant
Columbian Philippines, Inc. (CARRIER). The shipment was covered by
Bill of Lading No. 22 for transportation to, and delivery at,
Manila, in favor of the consignee, international Harvester Macleod,
Inc. (CONSIGNEE). The shipment was insured with plaintiff company
under its Cargo Policy No. AS-73735 "with average terms" for
P98,567.79.xxx xxx xxxThe packages discharged from the VESSEL
numbered 29, of which seven packages were found to be in bad order.
What the CONSIGNEE 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 the CONSIGNEE in good
order due to the negligible damages sustained. Upon inspection at
the consignee'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, plaintiff paid the CONSIGNEE under its
Insurance Cargo Policy the amount of P2,426.98, by virtue of which
plaintiff became subrogated to the rights and actions of the
CONSIGNEE. Demands were made on defendants CARRIER and CONSIGNEE
for reimbursement thereof but they failed and refused to pay the
same.In both cases, the petitioner-appellant made the following
averment regarding its capacity to sue:The plaintiff 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.In
L-34382, the respondent-appellee Eastern Shipping Lines, Inc.,
filed its answer and alleged that it:Denies the allegations of
Paragraph I which refer to plaintiff's capacity to sue for lack of
knowledge or information sufficient to form a belief as to the
truth thereof.Respondent-appellee, Angel Jose Transportation, Inc.,
in turn filed its answer admitting the allegations of the
complaint, regarding the capacity of plaintiff-appellant. The
pertinent paragraph of this answer reads as follows:Angel Jose
Admits the jurisdictional averments in paragraphs 1, 2, and 3 of
the heading Parties.In L-34383, the respondents-appellees N. V.
Nedlloyd Lijhen, Columbian Philippines, Inc. and Guacods, Inc.,
filed their answers. They denied the petitioner-appellant's
capacity to sue for lack of knowledge or information sufficient to
form a belief as to the truth thereof.As earlier stated, the
respondent court dismissed the complaints in the two cases on the
same ground, that the plaintiff failed to prove its capacity to
sue. The court reasoned as follows:In the opinion of the Court, if
plaintiff had the capacity to sue, the Court should hold that a)
defendant Eastern Shipping Lines should pay plaintiff the sum of
P1,630.22 with interest at the legal rate from January 5, 1968, the
date of the institution of the Complaint, until fully paid; b)
defendant Angel Jose Transportation, Inc. should pay plaintiff the
sum of P1,630.22 also with interest at the legal rate from January
5, 1968 until fully paid; c) the counterclaim of defendant Angel
Jose transportation, Inc. should be ordered dismissed; and d) each
defendant to pay one-half of the costs.The Court is of the opinion
that Section 68 of the Corporation Law reflects a policy designed
to protect the public interest. Hence, although defendants have not
raised the question of plaintiff's compliance with that provision
of law, the Court has resolved to take the matter into account.A
suing foreign corporation, like plaintiff, has to plead
affirmatively and prove either that the transaction upon which it
bases its complaint is an isolated one, or that it is licensed to
transact business in this country, failing which, it will be deemed
that it has no valid cause of action (Atlantic Mutual Ins. Co. vs.
Cebu Stevedoring Co., Inc., 17 SCRA 1037). In view of the number of
cases filed by plaintiff before this Court, of which judicial
cognizance can be taken, and under the ruling inFar East
International Import and Export Corporation vs. Hankai Koayo Co., 6
SCRA 725, it has to be held that plaintiff is doing business in the
Philippines. Consequently, it must have a license under Section 68
of the Corporation Law before it can be allowed to sue.The
situation of plaintiff under said Section 68 has been described as
follows in Civil Case No. 71923 of this Court, entitled'Home
Insurance Co. vs. N. V. Nedlloyd Lijnen, of which judicial
cognizance can also be taken:Exhibit "R",presented by plaintiff is
a certified copy of a license, dated July 1, 1967, issued by the
Office of the Insurance Commissioner authorizing plaintiff to
transact insurance business in this country. By virtue of Section
176 of the Insurance Law, it has to be presumed that a license to
transact business under Section 68 of the Corporation Law had
previously been issued to plaintiff. No copy thereof, however, was
submitted for a reason unknown. The date of that license must not
have been much anterior to July 1, 1967. The preponderance of the
evidence would therefore call for the finding that the insurance
contract involved in this case, which was executed at Makati,
Rizal, on February 8, 1967, was contracted before plaintiff was
licensed to transact business in the Philippines.This Court views
Section 68 of the Corporation Law as reflective of a basic public
policy. Hence, it is of the opinion that, in the eyes of Philippine
law, the insurance contract involved in this case must be held void
under the provisions of Article 1409 (1) of the Civil Code, and
could not be validated by subsequent procurement of the license.
That view of the Court finds support in the following
citation:According to many authorities, a constitutional or
statutory prohibition against a foreign corporation doing business
in the state, unless such corporation has complied with conditions
prescribed, is effective to make the contracts of such corporation
void, or at least unenforceable, and prevents the maintenance by
the corporation of any action on such contracts. Although the usual
construction is to the contrary, and to the effect that only the
remedy for enforcement is affected thereby, a statute prohibiting a
non-complying corporation from suing in the state courts on any
contract has been held by some courts to render the contract void
and unenforceable by the corporation, even after its has complied
with the statute." (36 Am. Jur. 2d 299-300).xxx xxx xxxThe said
Civil Case No. 71923 was dismissed by this Court. As the insurance
contract involved herein was executed on January 20, 1967, the
instant case should also be dismissed.We resolved to consolidate
the two cases when we gave due course to the petition.The
petitioner raised the following assignments of errors:First
Assignment of ErrorTHE HONORABLE TRIAL COURT ERRED IN CONSIDERING
AS AN ISSUE THE LEGAL EXISTENCE OR CAPACITY OF
PLAINTIFF-APPELLANT.Second Assignment of ErrorTHE HONORABLE TRIAL
COURT ERRED IN DISMISSING THE COMPLAINT ON THE FINDING THAT
PLAINTIFF-APPELLANT HAS NO CAPACITY TO SUE.On the basis of factual
and equitable considerations, there is no question that the private
respondents should pay the obligations found by the trial court as
owing to