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RepublicofthePhilippines
SUPREMECOURT
Manila

SECONDDIVISION

G.R.No.102223August22,1996

COMMUNICATION MATERIALS AND DESIGN, INC., ASPAC MULTITRADE, INC., (formerly ASPACITEC
PHILIPPINES,INC.)andFRANCISCOS.AGUIRRE,petitioners,
vs.
THECOURTOFAPPEALS,ITECINTERNATIONAL,INC.,andITEC,INC.,respondents.

TORRES,JR.,J.:p

BusinessCorporations,accordingtoLordCoke,"havenosouls."Theydobusinesspeddlinggoods,wares
or even services across national boundaries in "souless forms" in quest for profits albeit at times,
unwelcomed in these strange lands venturing into uncertain markets and, the risk of dealing with wily
competitors.

Thisisoneoftheissuesinthecaseatbar.

ContestedinthispetitionforreviewonCertiorariistheDecisionoftheCourtofAppealsonJune7,1991,
sustaining the RTC Order dated February 22, 1991, denying the petitioners' Motion to Dismiss, and
directingtheissuanceofawritofpreliminaryinjunction,anditscompanionResolutionofOctober9,1991,
denyingthepetitioners'MotionforReconsideration.

Petitioners COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI, for brevity) and ASPAC MULTI
TRADEINC.,(ASPAC,forbrevity)arebothdomesticcorporations,whilepetitionerFranciscoS.Aguirreis
theirPresidentandmajoritystockholder.PrivateRespondentsITEC,INC.and/orITEC,INTERNATIONAL,
INC. (ITEC, for brevity) are corporations duly organized and existing under the laws of the State of
Alabama,UnitedStatesofAmerica.ThereisnodisputethatITECisaforeigncorporationnotlicensedto
dobusinessinthePhilippines.

On August 14, 1987, ITEC entered into a contract with petitioner ASPAC referred to as "Representative
Agreement".1 Pursuant to the contract, ITEC engaged ASPAC as its "exclusive representative" in the Philippines
forthesaleofITEC'sproducts,inconsiderationofwhich,ASPACwaspaidastipulatedcommission.Theagreement
wassignedbyG.A.ClarkandFranciscoS.Aguirre,presidentsofITECandASPACrespectively,forandinbehalfof
their companies.2 The said agreement was initially for a term of twentyfour months. After the lapse of the agreed
period,theagreementwasrenewedforanothertwentyfourmonths.

Througha"LicenseAgreement"3 entered into by the same parties on November 10, 1988, ASPAC was able to
incorporateandusethename"ITEC"initsownname.Thus,ASPACMultiTrade,Inc.becamelegallyandpublicly
knownasASPACITEC(Philippines).

Byvirtueofsaidcontracts,ASPACsoldelectronicproducts,exportedbyITEC,totheirsolecustomer,the
PhilippineLongDistanceTelephoneCompany,(PLDT,forbrevity).

Tofacilitatetheirtransactions,ASPAC,dealingunderitsnewappellation,andPLDTexecutedadocument
entitled"PLDTASPAC/ITECPROTOCOL"4 which defined the project details for the supply of ITEC's Interface
EquipmentinconnectionwiththeFifthExpansionProgramofPLDT.

One year into the second term of the parties' Representative Agreement, ITEC decided to terminate the
same, because petitioner ASPAC allegedly violated its contractual commitment as stipulated in their
agreements.5
ITECchargesthepetitionersandanotherPhilippineCorporation,DIGITALBASECOMMUNICATIONS,INC.
(DIGITAL, for brevity), the President of which is likewise petitioner Aguirre, of using knowledge and
informationofITEC'sproductsspecificationstodeveloptheirownlineofequipmentandproductsupport,
whicharesimilar,ifnotidenticaltoITEC'sown,andofferingthemtoITEC'sformercustomer.

OnJanuary31,1991,thecomplaint6inCivilCaseNo.91294,wasfiledwiththeRegionalTrialCourtofMakati,
Branch 134 by ITEC, INC. Plaintiff sought to enjoin, first, preliminarily and then, after trial, permanently (1)
defendants DIGITAL, CMDI, and Francisco Aguirre and their agents and business associates, to cease and desist
fromsellingorattemptingtoselltoPLDTandtoanyotherparty,productswhichhavebeencopiedormanufactured
"in like manner, similar or identical to the products, wares and equipment of plaintiff," and (2) defendant ASPAC, to
cease and desist from using in its corporate name, letter heads, envelopes, sign boards and business dealings,
plaintiff's trademark, internationally known as ITEC and the recovery from defendants in solidum, damages of at
leastP500,000.00,attorney'sfeesandlitigationexpenses.

Induetime,defendantsfiledamotiontodismiss7thecomplaintonthefollowinggrounds:

(1)ThatplaintiffhasnolegalcapacitytosueasitisaforeigncorporationdoingbusinessinthePhilippines
without the required BOI authority and SEC license, and (2) that plaintiff is simply engaged in forum
shoppingwhichjustifiestheapplicationagainstitoftheprincipleof"forumnonconveniens".

On February 8, 1991, the complaint was amended by virtue of which ITEC INTERNATIONAL, INC. was
substitutedasplaintiffinsteadofITEC,INC.8

IntheirSupplementalMotiontoDismiss,9 defendants took note of the amendment of the complaint and asked
the court to consider in toto their motion to dismiss and their supplemental motion as their answer to the amended
complaint.

Afterconductinghearingsontheprayerforpreliminaryinjunction,thecourtaquo on February 22, 1991,


issueditsOrder:10(1)denyingthemotiontodismissforbeingdevoidoflegalmeritwitharejectionofbothgrounds
relied upon by the defendants in their motion to dismiss, and (2) directing the issuance of a writ of preliminary
injunctiononthesameday.

Fromtheforegoingorder,petitionerselevatedthecasetotherespondentCourtofAppealsonaPetitionfor
CertiorariandProhibition11 under Rule 65 of the Revised Rules of Court, assailing and seeking the nullification
andthesettingasideoftheOrderandtheWritofPreliminaryInjunctionissuedbytheRegionalTrialCourt.

Therespondentappellatecourtstated,thus:

We find no reason whether in law or from the facts of record, to disagree with the (lower court's)
ruling.WethereforeareunabletofindinrespondentJudge'sissuanceofsaidwritthegraveabuseof
discretionascribedtheretobythepetitioners.

Infine,WefindthatthepetitionprimafaciedoesnotshowthatCertiorariliesinthepresentcaseand
therefore,thepetitiondoesnotdeservetobegivenduecourse.

WHEREFORE,thepresentpetitionshouldbe,asitishereby,deniedduecourseandaccordingly,is
herebydismissed.Costsagainstthepetitioners.

SOORDERED.12

Petitionersfiledamotionforreconsideration13 on June 7, 1991, which was likewise denied by the respondent


court.

WHEREFORE, the present motion for reconsideration should be, as it is hereby, denied for lack of
merit.Forthesamereason,themotiontohavethemotionforreconsiderationsetfororalargument
likewiseshouldbeandisherebydenied.

SOORDERED.14

Petitioners are now before us via Petition for Review on Certiorari15 under Rule 45 of the Revised Rules of
Court.

Itisthepetitioners'submissionthatprivaterespondentsareforeigncorporationsactuallydoingbusinessin
thePhilippineswithouttherequisiteauthorityandlicensefromtheBoardofInvestmentsandtheSecurities
andExchangeCommission,andthus,disqualifiedfrominstitutingthepresentactioninourcourts.Itistheir
contention that the provisions of the Representative Agreement, petitioner ASPAC executed with private
respondent ITEC, are similarly "highly restrictive" in nature as those found in the agreements which
confronted the Court in the case of TopWeld Manufacturing, Inc. vs. ECED S.A. et al., 16 as to reduce
petitionerASPACtoamereconduitorextensionofprivaterespondentsinthePhilippines.

Inthatcase,weruledthatrespondentforeigncorporationsaredoingbusinessinthePhilippinesbecause
when the respondents entered into the disputed contracts with the petitioner, they were carrying out the
purposes for which they were created, i.e., to manufacture and market welding products and equipment.
The terms and conditions of the contracts as well as the respondents' conduct indicate that they
established within our country a continuous business, and not merely one of a temporary character. The
respondents could be exempted from the requirements of Republic Act 5455 if the petitioner is an
independent entity which buys and distributes products not only of the petitioner, but also of other
manufacturersortransactsbusinessinitsnameandforitsaccountandnotinthenameorfortheaccount
of the foreign principal. A reading of the agreements between the petitioner and the respondents shows
that they are highly restrictive in nature, thus making the petitioner a mere conduit or extension of the
respondents.

Itisallegedthatcertainprovisionsofthe"RepresentativeAgreement"executedbythepartiesaresimilarto
thosefoundintheLicenseAgreementofthepartiesintheTopWeldcasewhichwereconsideredas"highly
restrictive"bythisCourt.Theprovisionsinpointare:

2.0TermsandConditionsofSales.

2.1 Sale of ITEC products shall be at the purchase price set by ITEC from time to time. Unless
otherwise expressly agreed to in writing by ITEC the purchase price is net to ITEC and does not
include any transportation charges, import charges or taxes into or within the Territory. All orders
fromcustomersaresubjecttoformalacceptancebyITECatitsHuntsville,AlabamaU.S.A.facility.

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3.0DutiesofRepresentative

3.1.REPRESENTATIVESHALL:

3.1.1.NotrepresentorofferforsalewithintheTerritoryanyproductwhichcompeteswithanexisting
ITECproductoranyproductwhichITEChasunderactivedevelopment.

3.1.2. Actively solicit all potential customers within the Territory in a systematic and business like
manner.

3.1.3.InformITECofallrequestforproposals,requestsforbids,invitationstobidandthelikewithin
theTerritory.

3.1.4.AttaintheAnnualSalesGoalfortheTerritoryestablishedbyITEC.TheSalesGoalsforthefirst
24 months is set forth on Attachment two (2) hereto. The Sales Goal for additional twelve month
periods,ifany,shallbesenttotheSalesAgentbyITECatthebeginningofeachperiod.TheseSales
GoalsshallbeincorporatedintothisAgreementandmadeaparthereof.

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6.0.RepresentativeasIndependentContractor

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6.2. When acting under this Agreement REPRESENTATIVE is authorized to solicit sales within the
TerritoryonITEC'sbehalfbutisauthorizedtobindITEConlyinitscapacityasRepresentativeandno
other,andthenonlytospecificcustomersandontermsandconditionsexpresslyauthorizedbyITEC
inwriting.17

Asidefromtheabovestatedprovisions,petitionerspointoutthefollowingmattersofrecord,whichallegedly
bearwitnesstotherespondents'activitieswithinthePhilippinesinpursuitoftheirbusinessdealings:

a.WhilepetitionerASPACwastheauthorizedexclusiverepresentativeforthree(3)years,itsolicited
fromandclosedseveralsalesforandonbehalfofprivaterespondentsastotheirproductsonlyand
noother,toPLDT,worthnolessthanUS$15Million(p.20,tsn,Feb.18,1991)

b. Contract No. 1 (Exhibit for Petitioners) which covered these sales and identified by private
respondents' sole witness, Mr. Clarence Long, is not in the name of petitioner ASPAC as such
representative,butinthenameofprivaterespondentITEC,INC.(p.20,tsn,Feb.18,1991)
c. The document denominated as "PLDTASPAC/ITEC PROTOCOL (Annex C of the original and
amended complaints) which defined the responsibilities of the parties thereto as to the supply,
installationandmaintenanceoftheITECequipmentsoldundersaidContractNo.1is,asitsverytitle
indicates,inthenamesjointlyofthepetitionerASPACandprivaterespondents

d.ToevidencereceiptofthepurchasepriceofUS$15Million,privaterespondentITEC,Inc.issued
in its letter head, a Confirmation of payment dated November 13, 1989 and its Invoice dated
November22,1989(Annexes1and2oftheMotiontoDismissandmarkedasExhibits2and3for
the petitioners), both of which were identified by private respondent's sole witness, Mr. Clarence
Long(pp.2527,tsn,Feb.18,1991).18

PetitionerscontendthattheaboveactsoractivitiesbeliethesupposedindependenceofpetitionerASPAC
fromprivaterespondents."Theunrebuttedevidenceonrecordbelowforthepetitionerslikewiserevealthe
continuouscharacterofdoingbusinessinthePhilippinesbyprivaterespondentsbasedonthestandards
laiddownbythisCourtinWangLaboratories,Inc.vs.Hon.RafaelT.Mendoza,etal.19 and again in TOP
WELD.(supra)"ItthusappearsthatastherespondentCourtofAppealsandthetrialcourt'sfailuretogivecredence
on the grounds relied upon in support of their Motion to Dismiss that petitioners ascribe grave abuse of discretion
amountingtoanexcessofjurisdictionofsaidcourts.

Petitionerslikewisearguethatsinceprivaterespondentshavenocapacitytobringsuithere,thePhilippines
is not the "most convenient forum" because the trial court is devoid of any power to enforce its orders
issued or decisions rendered in a case that could not have been commenced to begin with, such that in
insisting to assume and exercise jurisdiction over the case below, the trial court had gravely abused its
discretionandevenactuallyexceededitsjurisdiction.

Asagainstpetitioner'sinsistencethatprivaterespondentis"doingbusiness"inthePhilippines,thelattermaintains
thatitisnot.

WecandiscernfromareadingofSection1(f)(1)and1(f)(2)oftheRulesandRegulationsImplementingthe
OmnibusInvestmentsCodeof1987,thefollowing:

(1) A foreign firm is deemed not engaged in business in the Philippines if it transacts business
throughmiddlemen,actingintheirownnames,suchasindebtors,commercialbookerscommercial
merchants.

(2) A foreign corporation is deemed not "doing business" if its representative domiciled in the
Philippineshasanindependentstatusinthatittransactsbusinessinitsnameandforitsaccount.20

Private respondent argues that a scrutiny of its Representative Agreement with the Petitioners will show
thatalthoughASPACwasnamedasrepresentativeofITEC.,ASPACactuallyactedinitsownnameandfor
itsownaccount.Thefollowingprovisionsareparticularlymentioned:

3.1.7.1.IntheeventthatREPRESENTATIVEimportsdirectlyfromITEC,REPRESENTATIVEwillpay
for its own account all customs duties and import fees imposed on any ITEC products all import
expediting or handling charges and expenses imposed on ITEC products and any stamp tax fees
imposedonITEC.

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4.1. As complete consideration and payment for acting as representative under this Agreement,
REPRESENTATIVEshallreceiveasalescommissionequivalenttoapercentumoftheFOBvalueof
all ITEC equipment sold to customers within the territory as a direct result of REPRESENTATIVE's
salesefforts.21

Moreimportantly,privaterespondentchargesASPACofadmittingitsindependencefromITECbyentering
andascribingtoprovisionNo.6oftheRepresentativeAgreement.

6.0RepresentativeasIndependentContractor

6.1. When performing any of its duties under this Agreement, REPRESENTATIVE shall act as an
independentcontractorandnotasanemployee,worker,laborer,partner,jointventurerofITECas
thesetermsaredefinedbythelaws,regulations,decreesorthelikeofanyjurisdiction,includingthe
jurisdictionoftheUnitedStates,thestateofAlabamaandtheTerritory.22

AlthoughitadmitsthattheRepresentativeAgreementcontainsprovisionswhichbothsupportandbeliethe
independenceofASPAC,privaterespondentechoestherespondentcourt'sfindingthatthelowercourtdid
notcommitgraveabuseofdiscretionnoractedinexcessofjurisdictionwhenitfoundthatthegroundrelied
uponbythepetitionersintheirmotiontodismissdoesnotappeartobeindubitable.23

TheissuesbeforeusnowarewhetherornotprivaterespondentITECisanunlicensedcorporationdoing
businessinthePhilippines,andifitis,whetherornotthisfactbarsitfrominvokingtheinjunctiveauthority
ofourcourts.

Consideringtheabove,itisnecessarytostatewhatismeantby"doingbusiness"inthePhilippines.Section
133oftheCorporationCode,providesthat"Noforeigncorporation,transactingbusinessinthePhilippines
withoutalicense,oritssuccessorsorassigns,shallbepermittedtomaintainorinterveneinanyaction,suit
orproceedinginanycourtoradministrativeagencyofthePhilippinesbutsuchcorporationmaybesuedor
proceeded against before Philippine Courts or administrative tribunals on any valid cause of action
recognizedunderPhilippinelaws."24

Generally,a"foreigncorporation"hasnolegalexistencewithinthestateinwhichitisforeign.Thisproceeds
fromtheprinciplethatjuridicalexistenceofacorporationisconfinedwithintheterritoryofthestateunder
whose laws it was incorporated and organized, and it has no legal status beyond such territory. Such
foreigncorporationmaybeexcludedbyanyotherstatefromdoingbusinesswithinitslimits,orconditions
maybeimposedontheexerciseofsuchprivileges.25Beforeaforeigncorporationcantransactbusinessinthis
country, it must first obtain a license to transact business in the Philippines, and a certificate from the appropriate
government agency. If it transacts business in the Philippines without such a license, it shall not be permitted to
maintainorinterveneinanyaction,suit,orproceedinginanycourtoradministrativeagencyofthePhilippines,butit
maybesuedonanyvalidcauseofactionrecognizedunderPhilippinelaws.26

In a long line of decisions, this Court has not altogether prohibited foreign corporation not licensed to do
business in the Philippines from suing or maintaining an action in Philippine Courts. What it seeks to
preventisaforeigncorporationdoingbusinessinthePhilippineswithoutalicensedfromgainingaccessto
PhilippineCourts.27

ThepurposeofthelawinrequiringthatforeigncorporationsdoingbusinessinthePhilippinesbelicensed
to do so and that they appoint an agent for service of process is to subject the foreign corporation doing
business in the Philippines to the jurisdiction of its courts. The object is not to prevent the foreign
corporation from performing single acts, but to prevent it from acquiring a domicile for the purpose of
businesswithouttakingstepsnecessarytorenderitamenabletosuitinthelocalcourts.28Theimplicationof
thelawisthatitwasneverthepurposeofthelegislaturetoexcludeaforeigncorporationwhichhappenstoobtainan
isolatedorderforbusinessfromthePhilippines,andthus,ineffect,topermitpersonstoavoidtheircontractsmade
withsuchforeigncorporations.29

Thereisnoexactruleorgoverningprincipleastowhatconstitutes"doing"or"engaging"or"transacting"
business.Indeed,suchcasemustbejudgedinthelightofitspeculiarcircumstances,uponitspeculiarfacts
anduponthelanguageofthestatuteapplicable.Thetruetest,however,seemstobewhethertheforeign
corporationiscontinuingthebodyorsubstanceofthebusinessorenterpriseforwhichitwasorganized.30

Article44oftheOmnibusInvestmentsCodeof1987definesthephrasetoinclude:

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 (180)
daysormoreparticipatinginthemanagement,supervisionorcontrolofanydomesticbusinessfirm,
entityorcorporationinthePhilippines,andanyotheractoractsthatimplyacontinuityorcommercial
dealings or arrangements and contemplate to that extent the performance of acts or works, or the
exerciseofsomeofthefunctionsnormallyincidentto,andinprogressiveprosecutionof,commercial
gainorofthepurposeandobjectofthebusinessorganization.

Thus, a foreign corporation with a settling agent in the Philippines which issued twelve marine policies
coveringdifferentshipmentstothePhilippines31andaforeigncorporationwhichhadbeencollectingpremiums
onoutstandingpolicies32wereregardedasdoingbusinesshere.

Thesamerulewasobservedrelatingtoaforeigncorporationwithan"exclusivedistributingagent"inthe
Philippines,andwhichhasbeensellingitsproductsheresince1929,33 and a foreign corporation engaged in
the business of manufacturing and selling computers worldwide, and had installed at least 26 different products in
severalcorporationsinthePhilippines,andalloweditsregisteredlogoandtrademarktobeusedandmadeitknown
thatthereexistsadesignateddistributorinthePhilippines.34
In Georg Grotjahn GMBH and Co. vs. Isnani, 35 it was held that the uninterrupted performance by a foreign
corporationofactspursuanttoitsprimarypurposesandfunctionsasaregionalareaheadquartersforitshomeoffice,
qualifiessuchcorporationasonedoingbusinessinthecountry.

These foregoing instances should be distinguished from a single or isolated transaction or occasional,
incidental,orcasualtransactions,whichdonotcomewithinthemeaningofthelaw,36forinsuchcase,the
foreigncorporationisdeemednotengagedinbusinessinthePhilippines.

Where a single act or transaction, however, is not merely incidental or casual but indicates the foreign
corporation's intention to do other business in the Philippines, said single act or transaction constitutes
"doing"or"engagingin"or"transacting"businessinthePhilippines.37

In determining whether a corporation does business in the Philippines or not, aside from their activities
withintheforum,referencemaybemadetothecontractualagreementsenteredintobyitwithotherentities
in the country. Thus, in the TopWeld case (supra), the foreign corporation's LICENSE AND TECHNICAL
AGREEMENT and DISTRIBUTOR AGREEMENT with their local contacts were made the basis of their
being regarded by this Tribunal as corporations doing business in the country. Likewise, in Merill Lynch
Futures, Inc. vs. Court of Appeals, etc. 38 the FUTURES CONTRACT entered into by the petitioner foreign
corporationweighedheavilyinthecourt'sruling.

Withtheabovestatedprecedentsinmind,wearepersuadedtoconcludethatprivaterespondenthadbeen
"engagedin"or"doingbusiness"inthePhilippinesforsometimenow.Thisistheinevitableresultaftera
scrutinyofthedifferentcontractsandagreementsenteredintobyITECwithitsvariousbusinesscontactsin
the country, particularly ASPAC and Telephone Equipment Sales and Services, Inc. (TESSI, for brevity).
ThelatterisalocalelectronicsfirmengagedbyITECtobeitslocaltechnicalrepresentative,andtocreate
a service center for ITEC products sold locally. Its arrangements, with these entities indicate convincingly
ITEC's purpose to bring about the situation among its customers and the general public that they are
dealingdirectlywithITEC,andthatITECisactivelyengaginginbusinessinthecountry.

InitsMasterServiceAgreement39 with TESSI, private respondent required its local technical representative to
providetheemployeesofthetechnicalandservicecenterwithITECidentificationcardsandbusinesscards,andto
correspond only on ITEC, Inc., letterhead. TESSI personnel are instructed to answer the telephone with "ITEC
Technical Assistance Center.", such telephone being listed in the telephone book under the heading of ITEC
TechnicalAssistanceCenter,andallcallsbeingrecordedandforwardedtoITEConaweeklybasis.

Whatismore,TESSIwasobligedtoprovideITECwithamonthlyreportdetailingthefailureandrepairof
ITEC products, and to requisition monthly the materials and components needed to replace stock
consumedinthewarrantyrepairsofthepriormonth.

A perusal of the agreements between petitioner ASPAC and the respondents shows that there are
provisionswhicharehighlyrestrictiveinnature,suchastoreducepetitionerASPACtoamereextensionor
instrumentoftheprivaterespondent.

The "No Competing Product" provision of the Representative Agreement between ITEC and ASPAC
provides: "The Representative shall not represent or offer for sale within the Territory any product which
competes with an existing ITEC product or any product which ITEC has under active development."
Likewise pertinent is the following provision: "When acting under this Agreement, REPRESENTATIVE is
authorized to solicit sales within the Territory on ITEC's behalf but is authorized to bind ITEC only in its
capacityasRepresentativeandnoother,andthenonlytospecificcustomersandontermsandconditions
expresslyauthorizedbyITECinwriting."

When ITEC entered into the disputed contracts with ASPAC and TESSI, they were carrying out the
purposesforwhichitwascreated,i.e.,tomarketelectronicsandcommunicationsproducts.Thetermsand
conditions of the contracts as well as ITEC's conduct indicate that they established within our country a
continuousbusiness,andnotmerelyoneofatemporarycharacter.40

NotwithstandingsuchfindingthatITECisdoingbusinessinthecountry,petitionerisnonethelessestopped
fromraisingthisfacttobarITECfrominstitutingthisinjunctioncaseagainstit.

A foreign corporation doing business in the Philippines may sue in Philippine Courts although not
authorizedtodobusinesshereagainstaPhilippinecitizenorentitywhohadcontractedwithandbenefited
bysaidcorporation.41 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
corporateexistenceappliestoaforeignaswellastodomesticcorporations.42Onewhohasdealtwithacorporation
offoreignoriginasacorporateentityisestoppedtodenyitscorporateexistenceandcapacity:Theprinciplewillbe
applied to prevent a person contracting with a foreign corporation from later taking advantage of its noncompliance
withthestatuteschieflyincaseswheresuchpersonhasreceivedthebenefitsofthecontract.43

TheruleisdeeplyrootedinthetimehonoredaxiomofCommodumexinjuriasuanonhaberedebetno
person ought to derive any advantage of his own wrong. This is as it should be for as mandated by law,
"everypersonmustintheexerciseofhisrightsandintheperformanceofhisduties,actwithjustice,give
everyonehisdue,andobservehonestyandgoodfaith."44

Concededly, corporations act through agents, like directors and officers. Corporate dealings must be
characterizedbyutmostgoodfaithandfairness.Corporationscannotjustfeignignoranceofthelegalrules
asinmostcases,theyaremannedbysophisticatedofficerswithtriedmanagementskillsandlegalexperts
withpracticedeyeonlegalproblems.Eachpartytoacorporatetransactionisexpectedtoactwithutmost
candorandfairnessand,therebyallowareasonableproportionbetweenbenefitsandexpectedburdens.
This is a norm which should be observed where one or the other is a foreign entity venturing in a global
market.

AsobservedbythisCourtinTOPWELD(supra),viz:

Thepartiesarechargedwithknowledgeoftheexistinglawatthetimetheyenterintoacontractandatthe
time it is to become operative. (Twiehaus v. Rosner, 245 SW 2d 107 Hall v. Bucher, 227 SW 2d 98).
Moreover, a person is presumed to be more knowledgeable about his own state law than his alien or
foreigncontemporary.Inthiscase,therecordshowsthat,atleast,petitionerhadactualknowledgeofthe
applicability of R.A. No. 5455 at the time the contract was executed and at all times thereafter. This
conclusion is compelled by the fact that the same statute is now being propounded by the petitioner to
bolsteritsclaim.We,thereforesustaintheappellatecourt'sviewthat"itwasincumbentuponTOPWELDto
know whether or not IRTI and ECED were properly authorized to engage in business in the Philippines
when they entered into the licensing and distributorship agreements." The very purpose of the law was
circumventedandevadedwhenthepetitionerenteredintosaidagreementsdespitetheprohibitionofR.A.
No.5455.ThepartiesinthiscasebeingequallyguiltyofviolatingR.A.No.5455,theyareinparidelicto,in
whichcaseitfollowsasaconsequencethatpetitionerisnotentitledtothereliefprayedforinthiscase.

The doctrine of lack of capacity to sue based on the failure to acquire a local license is based on
considerations of sound public policy. The license requirement was imposed to subject the foreign
corporationdoingbusinessinthePhilippinestothejurisdictionofitscourts.Itwasneverintendedtofavor
domestic corporations who enter into solitary transactions with unwary foreign firms and then repudiate
theirobligationssimplybecausethelatterarenotlicensedtodobusinessinthiscountry.45

InAntamConsolidatedInc.vs.CourtofAppeals,etal.46 we expressed our chagrin over this commonly used


scheme of defaulting local companies which are being sued by unlicensed foreign companies not engaged in
business in the Philippines to invoke the lack of capacity to sue of such foreign companies. Obviously, the same
ployisresortedtobyASPACtopreventtheinjunctiveactionfiledbyITECtoenjoinpetitionerfromusingknowledge
possiblyacquiredinviolationoffiduciaryarrangementsbetweentheparties.

Byenteringintothe"RepresentativeAgreement"withITEC,PetitionerischargedwithknowledgethatITEC
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.

InTopWeld,weruledthataforeigncorporationmaybeexemptedfromthelicenserequirementinorderto
instituteanactioninourcourtsifitsrepresentativeinthecountrymaintainedanindependentstatusduring
the existence of the disputed contract. Petitioner is deemed to have acceded to such independent
characterwhenitenteredintotheRepresentativeAgreementwithITEC,particularly,provision6.2(supra).

Petitioner'sinsistenceonthedismissalofthisactionduetotheapplication,ornonapplication,oftheprivate
internationallawruleofforumnonconveniensdefieswellsettledrulesoffairplay.Accordingtopetitioner,
thePhilippineCourthasnovenuetoapplyitsdiscretionwhethertogivecognizanceornottothepresent
action, because it has not acquired jurisdiction over the person of the plaintiff in the case, the latter
allegedly having no personality to sue before Philippine Courts. This argument is misplaced because the
court has already acquired jurisdiction over the plaintiff in the suit, by virtue of his filing the original
complaint. And as we have already observed, petitioner is not at liberty to question plaintiff's standing to
sue,havingalreadyaccededtothesamebyvirtueofitsentryintotheRepresentativeAgreementreferred
toearlier.

Thus,havingacquiredjurisdiction,itisnowforthePhilippineCourt,basedonthefactsofthecase,whether
to give due course to the suit or dismiss it, on the principle of forum non convenience. 47 Hence, the
Philippine Court may refuse to assume jurisdiction in spite of its having acquired jurisdiction. Conversely, the court
mayassumejurisdictionoverthecaseifitchoosestodosoprovided,thatthefollowingrequisitesaremet:1)That
the Philippine Court is one to which the parties may conveniently resort to 2) That the Philippine Court is in a
positiontomakeanintelligentdecisionastothelawandthefactsand,3)ThatthePhilippineCourthasorislikely
tohavepowertoenforceitsdecision.48

Theaforesaidrequirementshavingbeenmet,andinviewofthecourt'sdispositiontogiveduecourseto
thequestionedaction,thematterofthepresentforumnotbeingthe"mostconvenient"asagroundforthe
suit'sdismissal,deservesscantconsideration.

INVIEWOFTHEFOREGOINGPREMISES,theinstantPetitionisherebyDISMISSED.Thedecisionofthe
Court of Appeals dated June 7, 1991, upholding the RTC Order dated February 22, 1991, denying the
petitioners' Motion to Dismiss, and ordering the issuance of the Writ of Preliminary Injunction, is hereby
affirmedintoto.

SOORDERED.

Regalado,Romero,PunoandMendoza,JJ.,concur.

Footnotes

1Annex"A",ComplaintofPlaintiffITEC,Inc.,pp.98106,Rollo.

2Ibid.,p.105.

3Annex"B",Ibid.,pp.107109,Rollo.

4Annex"C",Ibid.,pp.110123,Rollo.

5Annex"E",Ibid.,p.127,Rollo.

6ComplaintofPlaintiffITEC,Inc.,p.86,Rollo.

7MotiontoDismiss,p.216233,Rollo.

8AmendedComplaintbyplaintiffITEC,Inc.,pp.260289,Rollo.

9SupplementalMotiontoDismiss,pp.275282,Rollo.

10OrderofRTCJudgeIgnacioCapulong,Branch164,pp.283286,Rollo.

11Annex"D",PetitionforReview,pp.5085,Rollo.

12 Court of Appeals Decision, dated June 7, 1991, penned by Associate Justice Lorna S. Lombosdela
Fuente,concurredinbyAssociateJusticesAlfredoM.MarigomenandJainalD.Rasul,pp.4046,Rollo.

13Annex"K",PetitionforReview,pp.359385,Rollo.

14CourtofAppealsResolution,datedOctober9,1991,AssociateJusticeLornaS.LombosDelaFuente,
JJ,concurredbyAssociateJusticesAlfredoM.MarigomenandJainalRasul,p.48,Rollo.

15PetitionforReview,pp.238,Rollo.

16G.R.No.L44944,August9,1985,138SCRA118.

17Annex"A",ComplaintofplaintiffITEC,Inc.,pp.98106,Rollo.

18PetitionforReview,p.18,Rollo.

19G.R.No.72147,December1,1987,156SCRA44.

20CommentofprivaterespondentITEC,Inc.,p.402,Rollo.

21Annex"A",ComplaintofITEC,Inc.,p.101,Rollo.

22Ibid.,p.102.

23CommentofprivaterespondentITEC,Inc.,p.405,Rollo.

24MentholatumCo.,Inc.,etal.,vs.Mangaliman,etal.,G.R.No.47701,June27,1941,72Phil.524.