Columbia Pictures v. CA (1996) Regalado, J.

Concept: Foreign Corporations

FACTS:
Columbia Pictures, et al. had lodged a formal complaint with the NBI, vis--vis their anti-film piracy
drive. Eventually, the NBI obtained a search warrant against Sunshine Video seeking to seize pirated
video tapes, among others. The NBI carried out the seizure, and filed a return with the trial court.
However, the trial court eventually granted a motion to lift the order of search warrant the contention
was that the master tapes of the copyrighted films from which the pirated films were allegedly copied
were never presented in the proceedings for the issuance of the search warrants. The CA dismissed the
appeal brought before it. Hence, Columbia Pictures, et al. brought the case before the SC. Sunshine
Video contended that Columbia Pictures, et al. (being foreign corporations doing business
in the Philippines) should have a license in order to maintain an action in Philippine courts
and without such license, it had no right to ask for the issuance of a search warrant.
Sunshine video submitted that the fact that Columbia Pictures, et al. were copyright owners or owners
of exclusive rights of distribution in the Philippines of copyrighted motion pictures, AND the fact that
Att. Domingo had been appointed as their atty.-in-fact constituted doing business in the Philippines,
under the Rules of the Board of Investments.
ISSUE:
Do Colombia Pictures, et al. have legal personality to sue in the Philippines?
HELD:
YES. Under the Sec. 133 of the Corp. Code, no foreign corporation shall be permitted to transact
business in the Philippines, as this phrase is understood under the Corporation Code, unless it shall
have the license required by law, and until it complies with the law in transacting business here, it shall
not be permitted to maintain any suit in local courts. However, such license is not necessary if it is not
engaged in business in the Philippines. Any foreign corporation not doing business in the Philippines
may maintain an action in our courts upon any cause of action, provided that the subject matter and
the defendant are within the jurisdiction of the court.
No general rule or governing principles can be laid down as to what constitutes "doing" or "engaging
in" or "transacting" business. The true tests, however, seem to be whether the foreign corporation is
continuing the body or substance of the business or enterprise for which it was organized (as
distinguished from merely casual, sporadic, or occasional transactions and isolated acts) or whether it
has substantially retired from it and turned it over to another. Based on Article 133 of the
Corporation Code and gauged by statutory standards, petitioners are not barred from
maintaining the present action. There is no showing that, under our statutory or case law,
petitioners are doing, transacting, engaging in or carrying on business in the Philippines as would
require obtention of a license before they can seek redress from our courts.
As a general rule, a foreign corporation will not be regarded as doing business in the State simply
because it enters into contracts with residents of the State, where such contracts are consummated
outside the State. It has moreover been held that the act of a foreign corporation in engaging an
attorney to represent it in a Federal court sitting in a particular State is not doing business within the
scope of the minimum contact test. The mere institution and prosecution or defense of a suit,
particularly if the transaction which is the basis of the suit took place out of the State, do not amount
to the doing of business in the State.