DOCTRINE: Under Section 133 of the Corporation Code, 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 proceedings in any court or administrative agency of the
Philippines, but such corporation may be sued or proceeded against before
the Philippine courts or administrative tribunals on any valid cause of action
recognized under Philippine laws.
TITLE: COMMISSIONER OF INTERNAL REVENUE VS.
INTERREPUBLIC GROUP OF COMPANIES INC, G.R. NO. 207309,
AUGUST 14, 2019, REYES, J, JR., J:

FACTS: Respondent, Interrepublic Group of Companies, Inc. (IGC) is a

non-resident foreign corporation duly organized and existing under and by
virtue of the laws of the State of Delaware, United States of America.
The IGC owns 2,999,998 shares or 30% of the total outstanding and voting
capital stock of Melana World Group Philippines, Inc., (Melana), a domestic
corporation duly organized and existing under the laws of the Philippines
engaged in the general advertising business.
The IGC filed an administrative claim for refund, IGC submitted to CIR
additional documents in support of its administrative claim for refund or
issuance of TCC.
The CIR failed to act on IGCs claim for refund or issuance of TCC, this
prompted the IGC to file a petition for review with the Court of Tax Appeals
(CTA).
ISSUE: WON a non-resident foreign corporation which collects dividends
from the Philippines sue here to claim such refunds.
RULING: We agree with the CTA that the IGC was able to comply with all
the requisites in order for its claim for refund to be granted.
Section 133 of the Corporation Code provides that 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 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 the
Philippine laws.
The aforementioned provisions bars a foreign corporation transacting
business in the Philippines without such license to our courts. Thus, in
order for a foreign corporation to sue in the Philippine courts, a license is
necessary only if it is transacting or doing business in the country.
Conversely, if an unlicensed foreign corporation is. Not transacting or doing
business in the Philippines, it can be permitted to bring an action even
without such license.
The general rule that a foreign corporation is the same juridical entity as its
branch office in the Philippines cannot apply here.

DOCTRINE: Under Article 123 of 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.
TITLE: CARGILL, INC. VS. INTRA STRATA ASSURANCE
CORPORATION, G.R. NUMBER 168266, MARCH 15, 2010, CARPIO, J.:
FACTS: Cargill, Inc., is a corporation organized and existing under the laws
of the State of Delaware, United States of America.
Cargill and Northern Mindanao Corporation (NMC) executed a contract
dated August 16, 1989, whereby NMC agreed to sell to Cargill a metric
tons of Molasses. The contract provides that Cargill would open a letter of
credit with BPI.
NMC required the third amendment to put up a performance bond. 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.
NMC was not able to deliver the agreed metric tons of molasses. Thus,
Cargill sent demand letters to respondent claiming payment under the
performance and surety bonds. However, ISAC refused to pay.
Subsequently, a compromise agreement duly approved by the trial court
was entered into by the three corporations. The agreement provides that
NMC would pay Cargill. However, NMC still failed to comply with its
obligation under the compromise agreement. Hence, trial proceeded
against ISAC.
The trial court rendered a decision in favor of Cargill and dismissed the
counteraction of ISAC.
On appeal, the CA reversed the trial Courts decision and dismissed the
complaint on the ground that Cargill does not have the capacity to file the
suit since it is a foreign corporation doing business in the Philippines
without the requisites license.
ISSUE: Whether petitioner, an unlicensed foreign corporation has legal
capacity to sue before Philippine courts?
RULING: No, Cargill has no legal capacity to sue before the Philippine
courts.
Under Article 123 of 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 proceedings before the Philippine courts as
provided under Section 133 of the Corporation Code.
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.
In the present case, petitioner is a foreign company merely importing
molasses from a Philippine exporter. A foreign company that merely
imports goods from a Philippines exporter, without opening an office or
appointing an agent in the Philippines, is not doing business in the
Philippines.
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 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.

DOCTRINE: 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.
TITLE: STEELCASE, INC VS. DESIGN INTERNATIONAL SELECTIONS,
INC. (DISI) G.R. NUMBER 171995, APRIL 18, 2012, MENDOZA, J.:
FACTS: Petitioner Steelcase Inc., is a foreign corporation existing under
the laws of Michigan, United States of America, and engaged in the
manufacture of office furniture with dealers worldwide. Respondent DISI is
a corporation existing under Philippine laws and engaged in the furniture
business, including the distribution of furniture.
Steelcase, Inc., granted Design International Selections, Inc., (DISI), the
right to market, sell and distribute, install, and service its products to end-
user customers with the Philippines. Steelcase argues that Section 3(d) of
R.A. 7042 or the Foreign Investment Act of 1991 expressly states that the
phrase doing business exclude 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. On the other hand, DISI argues that
it was appointed by Steelcase as the latter’s exclusive distributor of
Steelcase products - the dealership agreement between Steelcase and
DISI had been described by the owner himself as basically a buy and sell
arrangement.
ISSUE: Whether or not Steelcase is doing business in the Philippines.
RULING: No, the appointment of a distributor 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.
Here, DISI was an independent contractor which sold Steelcase products in
its own name and in its own account. As a result, Steelcase cannot be
considered to be doing business in the Philippines by its own act of
appointing a distributor as it falls under one of the exception under R.A. No.
7042.
According to the SC the following acts shall not be doing business in the
Philippines: (a) mere investment as a shareholder by a foreign entity in
domestic corporations duly registered to do business, and/or exercise of
right as such investor; (b) having a nominee director or officer to represent
its interest in such corporation; (c) appointing a representative or distributor
domiciled in the Philippines which transacts business in the representatives
own name and account; (d) the publication of a general advertisement
through any print or broadcast media; (e) maintaining a stock of goods in
the Philippines solely for the purpose of having the same processed by
another entity in the Philippines; (f) consignment by a foreign entity of
equipment with a local company to be used in the processing of products
for export; (g) collecting information in the Philippines; and (h) performing
services auxiliary to an existing isolated contract of sale which are not 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.
The SC said that DISI was founded in 1979 and is independently owned
and managed. In addition to Steelcase products, DISI also distributed
products of other companies including carpet titles, relocatable walls and
theater settings. The dealership agreement between Steelcase and DISI
assertion that it was a mere conduit through which Steelcase conducted its
business in the country. As a result, Steelcase cannot be considered to be
doing business in the Philippines by its act or appointing a distributor as it
falls under one of the exceptions under R.A. 7042.
DOCTRINE: appointing a representative or distributor domiciled in the
Philippines which transacts business in its own name and for its own
account" is not considered as "doing business," the Implementing Rules
and Regulations of Republic Act No. 7042 clarifies that "doing business"
includes "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 or periods totaling one
hundred eighty (180) days or more.
AIR CANADA vs. COMMISSIONER OF INTERNAL REVENUE; G.R. No.
169507; January 11, 2006; LEONEN, J.:
FACTS: Air Canada is a "foreign corporation organized and existing under
the laws of Canada.5 On April 24, 2000, it was granted an authority to
operate as an offline carrier by the Civil Aeronautics Board, subject to
certain conditions, which authority would expire on April 24, 2005. As an
off-line carrier, Air Canada] does not have flights originating from or coming
to the Philippines and does not operate any airplane in the Philippines.
On July 1, 1999, Air Canada engaged the services of Aerotel Ltd., Corp. as
its general sales agent in the Philippines. Aerotel "sells Air Canada’s
passage documents in the Philippines.
Air Canada filed a written claim for refund of alleged erroneously paid
income taxes before the Bureau of Internal Revenue. To prevent the
running of the prescriptive period, Air Canada filed a Petition for Review
before the Court of Tax Appeals
ISSUE: Whether or not petitioner Air Canada, as an offline international
carrier selling passage documents through a general sales agent in the
Philippines, is a resident foreign corporation
RULING: Petitioner is undoubtedly "doing business" or "engaged in trade
or business" in the Philippines.
Aerotel performs acts or works or exercises functions that are incidental
and beneficial to the purpose of petitioner’s business. The activities of
Aerotel bring direct receipts or profits to petitioner. There is nothing on
record to show that Aerotel solicited orders alone and for its own account
and without interference from, let alone direction of, petitioner. On the
contrary, Aerotel cannot "enter into any contract on behalf of petitioner Air
Canada without the express written consent of [the latter, and it must
perform its functions according to the standards required by petitioner.68
Through Aerotel, petitioner is able to engage in an economic activity in the
Philippines.
Further, petitioner was issued by the Civil Aeronautics Board an authority to
operate as an offline carrier in the Philippines for a period of five years, or
from April 24, 2000 until April 24, 2005.69
Petitioner is, therefore, a resident foreign corporation that is taxable on its
income derived from sources within the Philippines. Petitioner’s income
from sale of airline tickets, through Aerotel, is income realized from the
pursuit of its business activities in the Philippines.