Problemas geométricos

 General rule: 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

 Exception: 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 foreign corporation cannot transact business in the Philippines without the requisite license. If it does so, the responsible officers may be subjected to the penal provisions of Sec. 144.

AQUILA LEGIS FRATERNITY

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Darren L. Salipsip 98B & Ronald Patrick Rubin 06C

 General rules regarding whether or not a foreign corporation may sue or be sued in the Philippines:

1. As to whether or not it can sue.

a. A foreign corporation transacting or doing business in the Philippines with a license can sue before Philippine Courts.

b. Subject to certain exceptions, a foreign corporation doing business in the country without a license can not sue in Philippine Courts.

c. If it is not transacting business in the Philippines, even without a license, it can sue before the Philippine Courts.

2. As to whether it can be sued or not.

a. A foreign corporation transacting business in the Philippines with the requisite license can be sued in the Philippines.

b. A foreign corporation transacting business in the Philippines without a license can be sued in Philippine courts.

c. If it is doing business in the Philippines, it cannot be sued in Philippine courts for lack of jurisdiction.

 It is not the lack of required license but doing business without a license which bars a foreign corporation from access to our courts. (Universal Shipping vs. IAC)

 General rule: A foreign corporation must have the requisite license to sue before the Philippine courts.

 Exceptions:

1. The act or transaction involved is an “isolated transaction;”

2. The foreign corporation is not seeking to enforce any legal or contractual rights arising from, or growing out of any business which it has transacted in the Philippines;

3. The purpose of the suit is to protect its trademark, tradename, corporate name, reputation or goodwill;

4. The suit is based on a violation of the Revised Penal Code;

5. The foreign corporation is merely defending a suit filed against it;

6. The party is estopped to challenge the personality of the corporation by entering into a contract with it.

 Exception to an exception: 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 regarding “doing” or “engaging in” or “transacting” business is 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. 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. (Mentholatum Co., Inc. vs.

Mangaliman)

 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 is from acquiring domicile for the purpose of business without taking the steps necessary to render it amenable to suit in the local courts. The law simply means that no foreign corporation shall be permitted “to transact business in the Philippine Islands”

unless it 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. (Marshall-Wells Co. vs. Henry W. Elser & Co.)

 A foreign corporation not engaged in business in the Philippines may not be denied the right to file an action in Philippine courts for isolated transactions. (Bulakhidas vs. Navarro)

AQUILA LEGIS FRATERNITY

Corporation Law Reviewer Page 73 of 87

Darren L. Salipsip 98B & Ronald Patrick Rubin 06C

 If A foreign corporation not engaged in business in the Philippines has the right to sue on an isolated transaction, more so may it sue based on a mistake. (Swedish East Asia Co., Ltd. vs.

Manila Port Service)

 There was only one agreement between petitioners and the respondent. 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. The respondent, being a foreign corporation not doing business in the Philippines, does not need to obtain a license to do business in order to have the capacity to sue. (Atnam Consolidated, Inc. vs. CA)

 Under the rules of the BOI, the phrase „doing business‟ has been exemplified with illustrations, among them being as follows:

1. Soliciting orders, purchase (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 contract, regardless of whether the contracts are actually reduced to writing, shall constitute doing business even in the enterprise has no office or fixed place of business in the Philippines.

2. Appointing a representative or distributor who is domiciled 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 pricipal.

3. Opening offices, whether called „liaison‟ offices, agencies or branches, unless provided otherwise.

4. 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. (Facilities Management Corp.

vs. De La Rosa)

 A single act may bring the corporation within the purview of the statute where it is an act of the ordinary business of the corporation. In such a case, the single act of transaction is not merely incidental or casual, but is of such character as distinctly to indicate a purpose on the part of the operations for the conduct of a part of the corporation‟s ordinary business. (Far East Int‟l Import vs.

Nankai)

 ITEC‟s arrangement with its various business contacts in the country indicate its purpose to bring about the situation among its customers and the general public that they are dealing directly with ITEC and that ITEC is actively engage in business in the country. In determining whether a corporation does business in the Philippines or not, aside from their activities within the forum, reference may be made to the contractual agreements entered into by it with other entities in the country. (Communication Materials and Design, Inc. vs. CA)

 A foreign corporation doing business in the Philippines may sue in Philippine courts although no authorized to do business here against a Philippine citizen or entity who had contracted with and benefited by said corporation. To put it 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.

An 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.

(Communication Materials and Design, Inc. vs. CA)

 The right of a corporation to use its corporate and trade name is a property right, a right in rem, which it may assert and protect against all the world, in any of the courts of the world – even in jurisdictions where it does not transact business – just the same as it may protect its tangible property, real or personal, against trespass, or conversion. Since it is the trade and not the make that is to be protected, a trademark acknowledges no territorial boundaries or municipalities or states or nations, but extends to every market where the trader‟s goods have become known and identified by the use of the mark. (Western Equipment and Supply Co. vs. Reyes)

AQUILA LEGIS FRATERNITY

Corporation Law Reviewer Page 74 of 87

Darren L. Salipsip 98B & Ronald Patrick Rubin 06C

 A foreign corporation which has never done business in the Philippine Islands and which is unlicensed and unregistered to do business here, but is widely and favorably known in the Islands through the use therein of its products bearing its corporate and trade name has a legal right to maintain an action in the Islands. Parenthetically the Trademark Law allows a foreign corporation or juristic person to bring an action in Philippine courts for infringement of a mark or trade-name, for unfair competition, or false designation of origin and false description, whether or not it has been licensed to do business in the Philippines. (General Garments Corporation vs. Director of Patents)

 Article 8 of the Paris Convention to which the Philippines became a party provides that a trade name shall be protected in all the countries of the Union without the obligation of filing or registration, whether or not it forms part of the trademark. (Puma vs. IAC)

 A foreign corporation not doing business not doing business in the Philippines needs no license to sue before Philippine courts for infringement of trademark and unfair competition. (Le Chemise Lacoste vs. Fernandez)

 In a suit involving the violation of the Revised Penal Code the complainant foreign corporation‟s