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1. Avon Insurance v.

Yupangco Cotton Mills engaged to secure with Worldwide several of its
o These contracts were covered by reinsurance treaties between
Worldwide and several foreign reinsurance companies, including Avon
et al.
While the policies were in effect, the insured properties were razed by fire.
Partial payments were made by Worldwide and some of the reinsurance
companies to YCM.
Worldwide assigned all of its collectibles from Avon et al in favor of YCM.
Thus YCM instituted a collection suit against Avon et al before the RTC of
Since Avon et al are not engaged in business in the PH and do not have
offices/agents, the summons was served upon them thru the Office of the
Insurance Commissioner, pursuant to Sec. 14, Rule 14 of the RoC.
Avon et al moved to dismiss the complaint, claiming lack of jurisdiction of the
court and contesting the extra-territorial service of summons.
The lower court denied the MTDs and ordered Avon et al to file their answers.
Avon et al filed a petition for certiorari with the CA:
o Foreign corp not doing business in the PH, no office, place of business
or agents so no jurisdiction
o Extra-territorial service of summons null and void because complaint
for collection is not one affecting Avon et als status, not relating to
property within the PH.

2. Marshall-Wells v. Elser (1924)

Marshall-Wells Co. (US) sued Henry Elser & Co. (PH) in the CFI of Manila for a
bill of goods sold by MWC to Elser.
Elser demurred to the complaint, alleging that MWC has no legal capacity to
sue since MWC failed to comply with PH laws which is require of foreign
corporation who want to do business in the PH.
The demurrer was granted/sustained.

Issue: WON acquisition of a license to do business in the PH is a condition precedent

to maintaining any action in the PH courts by a foreign corp NO

Sec. 69 of the Corp. Law: No foreign corp or corp formed, organized or

existing under any laws other than those of the PH shall be permitted to
transact business in the PH or maintain by itself or assignee any suit for the
recovery of the any debt, claim, or demand whatever, unless it shall have the
license prescribed in Sec. 68.
o Any officer/director/agent of the corp or any person transacting
business for any foreign corp not having the license prescribed shall be

punished by imprisonment for not less than 6 months nor more than 2
years or by a fine of not less than P200 nor more than P1k or by both.
Corporations have no legal status beyond the bounds of the sovereignty by
which they are created.
A state may restrict the right of a foreign corporation to engage in business
within its limits, and to sue in its courts.
But by virtue of state comity, a corporation created by the laws of one state
is usually allowed to transact business in other states and to sue in the courts
of the forum.
The object of Sec. 69 was to subject the foreign corporation doing business in
the PH to the jurisdiction of its courts.
The object of the statute was not to prevent the foreign corp 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.
The implication of the law is that it was never the purpose of the legislature
to exclude a foreign corp which happens to obtain an isolated order for
business from the PH, from securing redress in the PH courts.
The effect of the statute, except on compliance with elaborate requirements,
must not be unduly extended or improperly applied.
The law simply means that no foreign corp shall be permitted to transact
business in the PH unless is shall have the license required by law, and until
it complies with the law, shall not be permitted to maintain any suit in the
local courts.
Non-compliance with the statute may be pleaded as an affirmative defense.
It must thereafter appear from the evidence that the plaintiff is a foreign
corp, that it is doing business in the PH, and that it has not obtained the
proper license as provided by the statute.

3. Home Insurance Co v. Eastern Shipping Lines

Case 1

S. Kajita & Co., on behalf of Atlas Mining, shipped coils of copper wire rods on
board the SS Eastern Jupiter from Osaka.
The vessel was owned and operated by Eastern Shipping Lines.
The shipment was insured with Home Insurance Corp (HIC).
The shipment was covered by a Bill of Lading, with arrival notice to Phelps
Dodge Copper Products.
Several coils discharged from the vessel were in bad order.
o Hence, HIC paid Phelps Dodge under the insurance policy, by virtue of
which, HIC became subrogated to the rights and actions of Phelps
o HIC made demands for payment against Eastern Shipping for
reimbursement to no avail.

Case 2

Hansa Transport shipped farm equipment on board SS Neder Rijn, owned by

NV Nedlloyd Lijnen.
The shipment was covered by Bill of Lading in favor of Harvester Maclead, the
consignee and insured with Home Insurance.
Upon inspection, some packages were delivered in bad order.

HIC averred that it is a foreign insurance company authorized to do business

in the PH thru its agent, Mr. Victor Bello.
Eastern Shipping and NV Nedlloyd Linjen contested HICs capacity to sue for
lack of knowledge or information sufficient to form a belief as to the truth
The lower court dismissed the complaints, holding that HIC failed to prove its
capacity to sue.
o Reasoning: a suing foreign corp, like HIC, as 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
o No certified copy of a license after July 1, 1967 was submitted.

Issue: WON HIC could maintain a suit

Held: YES
At first, HIC was not licensed to do business. This was also during the time
when the contracts were entered into.
However, when the cases were filed, HIC had already secured the necessary
license to conduct its insurance business in the PH.
The Corp Law was silent on whether or not the contract executed by a foreign
corporation with no capacity to sue was null and void ab initio.
In US jurisprudence, they are merely voidable.
Under the Corp Code, it is not necessary to declare the contract null and void
even as against the erring foreign corporation.
The penal sanction for the violation and the denial of access to our courts and
administrative bodies are sufficient from the viewpoint of legislative policy.
Lack of capacity at the time of the execution of the contracts was
cured by the subsequent registration.
HIC sufficiently alleged its capacity to sue.

4. Mentholatum v. Mangaliman

Mentholatum Co. and the Philippine American Drug Co instituted an action

against Anacleto and Florecio Mangaliman, and the Director of the Bureau of
Commerce for trademark infringement and unfair competition.
Mentholatum, a US corp which manufactures a salve called Mentholatum

Philippine American Drug Co. is its exclusive distributing agent in the PH.
In 1919 and 1921, Mentholatum registered with the Bureau of Commerce and
Industry the word Mentholatum as trademark for its products.
The Mangaliman brothers allegedly prepared a medicament and salve named
Mentholiman which was in a container of the same size, color and shapes
as Mentholatum.
CA held that the activities of Mentholatum were business transactions in the
PH, and that by section 69 of the Corp Law, it may not maintain the suit.

Issue: WON Mentholatum is transacting business in the Philippines

Held: YES
No general rule or governing principle can be laid down as to what
constitutes doing or engaging in or transacting business.
Each case must be judged in the light of its peculiar environmental
True test: whether the foreign corp is continuing the body/substance of the
business for which it was organized or whether it has substantially retired
from it and turned it over to another.
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.
Undeniably, Mentholatum, thru its agent PADC, has been doing business in
the PH by selling its products.
Whatever transactions the PADC had executed in view of the law, the
Mentholatum Co. did it itself.
And Mentholatum, being a foreign corp doing business in the Philippines
without a license as required by Sec. 68, it may not prosecute the action for
violation of trademark and unfair competition.
Neither may PADC maintain such action for the reason that the distinguishing
features of the agent being his representative character and derivative
authority, it cannot now, to the advantage of its principal, claim an
independent standing in court.
5. Pacific Vegetable Oil v. Singzon