[G.R. No. 22015. September 1, 1924.

MARSHALL-WELLS COMPANY, plaintiff-appellant, vs. HENRY W.

ELSER & CO., INC., defendant-appellee.

MALCOLM, J  : p

FACTS:

Marshall-Wells Company, an Oregon corporation, sued Henry W. Elser & Co.,

Inc., a domestic corporation, in the trial court of Manila, for the unpaid balance on
a bill of goods amounting to P2,660.74, sold by Marshall-Wells to defendant and
for which plaintiff holds accepted drafts. Defendant demurred to the complaint on
the statutory ground that the plaintiff has not legal capacity to sue as it was not
authorized to do business in the Philippines. The trial judge sustained the
demurrer.

ISSUE: Whether petitioner, a foreign corporation, not registered in the Philippines

can file a suit against defendant for its obligation.

RULING:

YES. The object of the statute was to subject the foreign corporation doing
business in the Philippines to the jurisdiction of its courts. The object of the
statute 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. The
implication of the law is that 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, and
thus, in effect, to permit persons to avoid their contracts made with such foreign
corporations. The effect of the statute preventing foreign corporation from doing
business and from bringing actions in the local courts, except on compliance with
elaborate requirements, must not be unduly extended or improperly applied. It
should not be construed to extend beyond the plain meaning of its terms,
considered in connection with its object, and in connection with the spirit of the
entire law.
[G.R. No. L-24295. September 30, 1971.]

GENERAL GARMENTS CORPORATION, petitioner, vs. THE DIRECTOR

OF PATENTS and PURITAN SPORTSWEAR
CORPORATION, respondents.

MAKALINTAL, J  : p

FACTS:

The General Garments Corporation is the owner of the trademark

"Puritan," issued on November 15, 1962 for assorted men's wear, such as
sweaters, shirts jackets, undershirts and briefs. On March 9, 1964 the Puritan
Sportswear Corporation, organized and existing in and under the laws of the
state of Pennsylvania, U.S.A., filed a petition with the Philippine Patent Office
for the cancellation of the trademark "Puritan" registered in the name of
petitioner, alleging ownership and prior use in the Philippines of the said
trademark on the same kinds of goods. General Garments Corporation moved
to dismiss the petition on the ground respondent being a foreign corporation
which is not licensed to do and is not doing business in the Philippines, is not
considered as a person under Philippine laws and consequently is not
comprehended within the term "any person" who may apply for cancellation of
a mark or trade-name under Section 17(c) of the Trademark Law. The
Director of Patents denied the motion to dismiss.

ISSUE: Whether Puritan Sportswear Corporation, which is a foreign corporation

not licensed and not doing business in the Philippines, has legal capacity to
maintain a suit in the Philippine Patent Office for cancellation of a trademark
registered thereon.

RULING:
YES. The fact that it may not transact business in the Philippines unless it has
obtained a license for that purpose, nor maintain a suit in Philippine courts for
the recovery of any debt, claim or demand without such license does not make
respondent any less a juridical person. Indeed an exception to the license
requirement has been recognized in this jurisdiction, namely, where a foreign
corporation sues on an isolated transaction.
 [G.R. Nos. 63796-97. May 21, 1984.]

LA CHEMISE LACOSTE, S. A., petitioner, vs. HON. OSCAR C.

FERNANDEZ, Presiding Judge of Branch XLIX, Regional Trial
Court, National Capital Judicial Region, Manila and
GOBINDRAM HEMANDAS, respondents.

[G.R. No. 65659. May 21, 1984.]

GOBINDRAM HEMANDAS SUJANANI, petitioner, vs. HON.

ROBERTO V. ONGPIN, in his capacity as Minister of Trade and
Industry, and HON. CESAR SAN DIEGO, in his capacity as
Director of Patents, respondents.

GUTIERREZ, JR., J  : p

FACTS:

Hemandas & Co., a duly licensed domestic firm applied for and was issued
license for the trademark "CHEMISE LACOSTE & CROCODILE DEVICE" by
the Philippine Patent Office for use on T-shirts, sportswear and other garment
products of the company. Thereafter, Hemandas & Co. assigned to
respondent Gobindram Hemandas all rights, title, and interest in the
trademark "CHEMISE LACOSTE & DEVICE". Petitioner later on applied and
was granted the trademark "Crocodile Device" but the same was opposed by
the Games and Garments. Petitioner filed with the NBI a complaint against
Hemandas. A search warrant was issued by the court against Gobindram
Hemandas’ premises. Hemandas filed a motion to quash the search warrants
alleging that the trademark used by him was different from petitioner's
trademark, the same was granted by the court and recalled the warrant.
Hemandas argues in his comment on the petition for certiorari that the
petitioner being a foreign corporation failed to allege essential facts bearing
upon its capacity to sue before Philippine courts.
 ISSUE: Whether petitioner, a foreign corporation, has the capacity to sue
before the Philippine courts

RULING: YES. A foreign corporation not doing business in the

Philippines needs no license to sue before Philippine courts for infringement
of trademark and unfair competition. A foreign corporation which has never
done any business in the Philippines and which is unlicensed and
unregistered to do business here, but is widely and favorably known in the
Philippines through the use therein of its products bearing its corporate and
tradename, has a legal right to maintain an action in the Philippines to restrain
the residents and inhabitants thereof from organizing a corporation therein
bearing the same name as the foreign corporation, when it appears that they
have personal knowledge of the existence of such a foreign corporation, and it
is apparent that the purpose of the proposed domestic corporation is to deal
and trade in the same goods as those of the foreign corporation.

[G.R. No. 94980. May 15, 1996.]

LITTON MILLS, INC., petitioner, vs. COURT OF APPEALS and

GELHAAR UNIFORM COMPANY, INC.,respondents.

MENDOZA, J  : p

FACTS:

Petitioner Litton Mills, Inc. (Litton) entered into an agreement with

Empire Sales Philippines Corporation (Empire), as local agent of private
respondent Gelhaar Uniform Company (Gelhaar), a corporation organized
under the laws of the United States, whereby Litton agreed to supply Gelhaar
soccer jerseys. The agreement stipulated that before it could collect from the
bank on the letter of credit, Litton must present an inspection certificate issued
by Gelhaar's agent in the Philippines, Empire Sales, that the goods were in
satisfactory condition. Upon the fifth shipment Empire refused to issue the
required certificate of inspection. Litton then filed with the RTC a complaint for
specific performance. Counsel of Gelhaar moved to dismiss the case and to
 quash the summons on the ground that Gelhaar was a foreign corporation not
doing business in the Philippines, and as such, was beyond the reach of the
local courts.

ISSUE: Whether Gelhaar as a foreign corporation not doing business in the

Philippines was beyond the reach of the local courts.

RULING: NO. The trial court acquired jurisdiction over Gelhaar by

service of summons upon its agent pursuant to Rule 14, Sec. 14. A court
need not go beyond the allegations in the complaint to determine whether or
not a defendant foreign corporation is doing business for the purpose of Rule
14, Sec. 14.

Where a single act or transaction of a foreign corporation is not merely

incidental or casual but is of such character as distinctly to indicate a purpose on
the part of the foreign corporation to do other business in the state, such act will
be considered as constituting doing business. 5 This Court referred to acts which
were in the ordinary course of business of the foreign corporation. In the case at
bar, the trial court was certainly correct in holding that Gelhaar's act in
purchasing soccer jerseys to be within the ordinary course of business of the
company considering that it was engaged in the manufacture of uniforms. The
acts noted above are of such a character as to indicate a purpose to do
business.

[G.R. No. 154618. April 14, 2004.]

AGILENT TECHNOLOGIES SINGAPORE (PTE) LTD., petitioner, vs.

INTEGRATED SILICON TECHNOLOGY PHILIPPINES CORPORATION,
TEOH KIANG HONG, TEOH KIANG SENG, ANTHONY CHOO, JOANNE
KATE M. DELA CRUZ, JEAN KAY M. DELA CRUZ and ROLANDO T.
NACILLA, respondents.

YNARES-SANTIAGO, J  : p
FACTS:

A -year Value Added Assembly Services Agreement (“VAASA”), was entered into
between Integrated Silicon and the Hewlett-Packard Singapore. Among the
provisions of the VAASA for annual renewal by mutual written consent. With the
consent of Integrated Silicon, HP-Singapore assigned all its rights and
obligations in the VAASA to Agilent. Integrated Silicon filed a complaint for
“Specific Performance and Damages” against Agilent and its officers. It alleged
that Agilent breached the parties’ oral agreement to extend the VAASA.
Integrated Silicon thus prayed that defendant be ordered to execute a written
extension of the VAASA for a period of five years as earlier assured and
promised; to comply with the extended VAASA. Agilent also filed a complaint
against Integrated. Respondents filed a Motion to Dismiss on the grounds of lack
of Agilent’s legal capacity to sue.

ISSUE: Whether Agilent has the legal capacity to sue respondent.

RULING: YES. A foreign corporation without a license is not ipso

facto incapacitated from bringing an action in Philippine courts. A license is
necessary only if a foreign corporation is “transacting” or “doing business” in the
country. An unlicensed foreign corporation doing business in the Philippines may
bring suit in Philippine courts against a Philippine citizen or entity who had
contracted with and benefited from said corporation. 44 Such a suit is premised
on the doctrine of estoppel. A party is estopped from challenging the personality
of a corporation after having acknowledged the same by entering into a contract
with it. This doctrine of estoppel to deny corporate existence and capacity applies
to foreign as well as domestic corporations. 45 The application of this principle
prevents 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. 46
The principles regarding the right of a foreign corporation to bring suit in
Philippine courts may thus be condensed in four statements: (1) if a foreign
corporation does business in the Philippines without a license, it cannot sue
before the Philippine courts; 47 (2) if a foreign corporation is not doing business in
the Philippines, it needs no license to sue before Philippine courts on an isolated
transaction or on a cause of action entirely independent of any business
transaction 48 ; (3) if a foreign corporation does business in the Philippines
without a license, a Philippine citizen or entity which has contracted with said
corporation may be estopped from challenging the foreign corporation’s
corporate personality in a suit brought before Philippine courts; 49 and (4) if a
foreign corporation does business in the Philippines with the required license, it
can sue before Philippine courts on any transaction.
The challenge to Agilent’s legal capacity to file suit hinges on whether or
not it is doing business in the Philippines. However, there is no definitive rule on
what constitutes “doing”, “engaging in”, or “transacting” business in the
Philippines, as this Court observed in the case of Mentholatum
v. Mangaliman. 50 The Corporation Code itself is silent as to what acts constitute
doing or transacting business in the Philippines.
Jurisprudence has it, however, that 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 or in progressive prosecution of the purpose and subject of its
organization.” 51
In Mentholatum, 52 this Court discoursed on the two general tests to
determine whether or not a foreign corporation can be considered as “doing
business” in the Philippines. The first of these is the substance test, thus: 53
The true test [for doing business], however, seems to be whether
the foreign corporation is continuing the body of the business or
enterprise for which it was organized or whether it has substantially
retired from it and turned it over to another.
The second test is the continuity test, expressed thus: 54
The term [doing business] 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 the progressive prosecution of, the purpose
and object of its organization.

[G.R. No. 97816. July 24, 1992.]

MERRILL LYNCH FUTURES, INC., petitioner, vs. HON. COURT OF

APPEALS, and the SPOUSES PEDRO M. LARA and ELISA G.
LARA, respondents.

NARVASA, C.J  : p

FACTS:
Merrill Lynch Futures, Inc. (hereafter, simply ML FUTURES), a non-resident
foreign corporation, not doing business in the Philippines, duly organized and
existing under and by virtue of the laws of the state of Delaware, U.S.A filed a
complaint with the Regional Trial Court at Quezon City against the Spouses
Pedro M. Lara and Elisa G. Lara for the recovery of a debt and interest thereon,
damages, and attorney's fees. Petitioner alleged that it entered into a contract
with the Laras’ in which it agreed as the latter’s broker for the purchase and
sale of futures contracts in the U.S but the Laras refused to pay its balance.
Motion to dismiss was filed by the spouses Lara on the ground that ML
FUTURES had no legal capacity to sue. They alleged that they are not aware that
Merrill did not have a license, The trial court sustained the motion to dismiss
which was also affirmed by the appellate court.

ISSUE: Whether Merrill has the capacity to sue.

RULING: YES. The Court is satisfied that the facts on record adequately
establish that ML FUTURES, operating in the United States, had indeed done
business with the Lara Spouses in the Philippines over several years, had done
so at all times through Merrill Lynch Philippines, Inc. (MLPI), a corporation
organized in this country, and had executed all these transactions without ML
FUTURES being licensed to so transact business here, and without MLPI being
authorized to operate as a commodity futures trading advisor.

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. 16 And
the "doctrine of estoppel to deny corporate existence applies to foreign as well
as to domestic corporations;" 17 "one who has dealt with a corporation of foreign
origin as a corporate entity is estopped to deny its corporate existence and
capacity."18 The principle "will be applied to prevent a person contracting with a
foreign corporations from later taking advantage of its noncompliance with the
statues, chiefly in cases where such person has received the benefits of the
contract (Sherwood v. Alvis, 83 Ala 115, 3 So 307, limited and distinguished in
Dudley v. Collier, 87 Ala 431, 6 So 304; Spinney v. Miller 114 Iowa 210, 86 NW
317), where such person has acted as agent for the corporation and has
violated his fiduciary obligations as such, and where the statute does not
provide that the contract shall be void, but merely fixes a special penalty for
violation of the statute. . . ." 
[G.R. No. L-44944. August 9, 1985.]

TOP-WELD MANUFACTURING, INC., petitioner, vs. ECED, S.A., IRTI, S.A.,

EUTECTIC CORPORATION, VICTOR C. GAERLAN, and THE HON. COURT
OF APPEALS, respondents.

GUTIERREZ, JR., J  : p

FACTS:

Petitioner Top-weld Manufacturing, Inc. (Top-weld) is a Philippine corporation

engaged in the business of manufacturing and selling welding supplies and
equipment. It entered into separate contracts with two different foreign entities,
namely IRTI, S.A organized under the laws of Switzerland and ECED, S.A
under Panama. Upon learning that the two foreign entities were negotiating with
another group to replace the petitioner as their licensee and distributor, the
latter filed an action against the two corporations and Victor C. Gaerlan, a
Filipino citizen alleged to be the representative and employee of these
corporations. It sought the issuance of a writ of preliminary injunction to restrain
the corporations from negotiating with third persons or from actually carrying
out the transfer of its distributorship and franchising rights as well as prohibition
for defendants to terminate their contracts. It further invoked the provisions of
No. 9, Section 4 of Republic Act 5455 on alien firms doing business in the
Philippines.

ISSUE: Whether respondent corporations can be considered as "doing

business" in the Philippines and, therefore, subject to the provisions of R.A. No.
5455.
RULING: YES. The acts of these corporations should be distinguished from a
single or isolated business transaction or occasional, incidental and casual
transactions which do not come within the meaning of the law. 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 "engaging in" or "transacting"
business in the Philippines.
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.
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. This fact is even more strengthened by
the admission of the respondents that they are negotiating with another group
for the transfer of the distributorship and franchising rights from the petitioner.

[G.R. No. L-61523. July 31, 1986.]

ANTAM CONSOLIDATED, INC., TAMBUNTING TRADING

CORPORATION and AURORA CONSOLIDATED SECURITIES and
INVESTMENT CORPORATION, petitioners, vs. THE COURT OF
APPEALS, THE HONORABLE MAXIMIANO C. ASUNCION (Court of
First Instance of Laguna, Branch II [Sta. Cruz]) and STOKELY VAN
CAMP, INC., respondents.

GUTIERREZ, JR., J  : p

FACTS:

Respondent Stokely Van Camp. Inc., a foreign corporation organized under

the law of USA, not engaged in doing business in the Philippines filed a
 complaint against Banahaw Milling Corporation, Antam Consolidated, Inc.,
Tambunting Trading Corporation, Aurora Consolidated Securities and
Investment Corporation, and United Coconut Oil Mills, Inc. (Unicom) for
collection of sum of money. It alleged that it entered through its subdivision
Capital into a contract of sale with Comphil for crude coconut oil from the
latter but it did not deliver said oil which led for them to buy a much expensive
ones in the market and resulted for their loss.

ISSUE: Whether respondent as a foreign corporation has the capacity to sue

in the Philippines.

RULING: YES. 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. In reality, there was only one
agreement between the petitioners and the respondent and that was the
delivery by the former of 500 long tons of crude coconut oil to the latter, who
in turn, must pay the corresponding price for the same. 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.
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.

[G.R. No. 168266. March 15, 2010.]

CARGILL, INC., petitioner, vs. INTRA STRATA ASSURANCE
CORPORATION, respondent.

CARPIO, J  : p

FACTS:
Petitioner 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
whereby NMC agreed to sell to petitioner 20,000 to 24,000 metric tons of
molasses. The contract provides that petitioner would open a Letter of Credit
with the Bank of Philippine Islands and NMC was permitted to draw up to
$500,000 representing the minimum price of the contract upon presentation of
some documents. When the contract was amended for the third time, it
required NMC to put up a performance bond and thus, respondent Intra Strata
Assurance Corporation issued the bond to guarantee NMC's delivery of the
molasses. NMC was only able to deliver 219.551 metric tons of molasses out
of the agreed 10,500 metric tons. After repeated demands, petitioner filed a
case against NMC for sum of money. The trial court ordered Intra to pay
petitioner but the same was reversed by the CA on the ground that petitioner
does not have the capacity to file the suit since it is a foreign corporation
doing business in the Philippines without the requisite license.

ISSUE: Whether petitioner is doing or transacting business in the Philippines.

RULING: NO. Section 1 of Republic Act No. 5455(RA 5455), 14 provides that: . .

. 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.
In this case, we find that respondent failed to prove that petitioner's
activities in the Philippines constitute doing business as would prevent it from
bringing an action. 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; DTIACH

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; and
8. 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. CA 18 that activities within Philippine jurisdiction that do not
create earnings or profits to the foreign corporation do not constitute doing
business in the Philippines. 19 In 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. 

To 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 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. 

[G.R. No. L-2832. November 24, 1906.]

REV. JORGE BARLIN, in his capacity as apostolic administrator of

this vacant bishopric and legal representative of the general interests
of the Roman Catholic Apostolic Church in the diocese of Nueva
Caceres, plaintiff-appellee, vs. P. VICENTE RAMIREZ, ex-rector of the
Roman Catholic Apostolic Parochial Church of Lagonoy, AND THE
MUNICIPALITY OF LAGONOY, defendants-appellants.

WILLARD, J  : p

FACTS: