CHAPTER 18: FOREIGN CORPORATIONS A.

DEFINITION: As to the Philippines, any corporation, which owe its existence to the laws of another state, government or country is a foreign corporation. Elsewise stated, a foreign corporation is one created or organized under the laws of any state or government other than those of the forum. 4. The place in the Philippines where the corporation intends to operate; 5. The specific purpose or purposes which the corporation intends to pursue in the transaction of its business in the Philippines: Provided, That said purpose or purposes are those specifically stated in the certificate of authority issued by the appropriate government agency; 6. The names and addresses of the present directors and officers of the corporation; 7. A statement of its authorized capital stock and the aggregate number of shares which the corporation has authority to issue, itemized by classes, par value of shares, shares without par value, and series, if any; 8. A statement of its outstanding capital stock and the aggregate number of shares which the corporation has issued, itemized by classes, par value of shares, shares without par value, and series, if any; 9. A statement of the amount actually paid in; and 10. Such additional information as may be necessary or appropriate in order to enable the Securities and Exchange Commission to determine whether such corporation is entitled to a license to transact business in the Philippines, and to determine and assess the fees payable. Attached to the application for license shall be a duly executed certificate under oath by the authorized official or officials of the jurisdiction of its incorporation, attesting to the fact that the laws of the country or state of the applicant allow Filipino citizens and corporations to do business therein, and that the applicant is an existing corporation in good standing. If such certificate is in a foreign language, a translation thereof in English under oath of the translator shall be attached thereto. The application for a license to transact business in the Philippines shall likewise be accompanied by a statement under oath of the president or any other person authorized by the corporation, showing to the satisfaction of the Securities and Exchange Commission and other governmental agency in the proper cases that the applicant is solvent and in sound financial condition, and setting forth the assets and liabilities of the corporation as of the date not exceeding one (1) year immediately prior to the filing of the application. Foreign banking, financial and insurance corporations shall, in addition to the above requirements, comply with the provisions of existing laws applicable to them. In the case of all other foreign corporations, no application for license to transact business in the Philippines shall be accepted by the Securities and Exchange Commission without previous authority from the appropriate government agency, whenever required by law. Foreign corporations already issued a license to transact business in the Philippine prior to the effectivity of the Code continues to have such authority under the terms and conditions of the license. Sec. 124 provides: Sec. 124. Application to existing foreign corporations. - Every foreign corporation which on the date of the effectivity of this Code is authorized to do business in the Philippines under a license therefore issued to it, shall continue to have such authority under the terms and condition of its license, subject to the provisions of this Code and other special laws. Upon compliance with the provision of Sec. 125, other special laws and the rules and regulations implementing them, the SEC shall thereafter issue the license. Within 60 days after the issuance of the license, a foreign corporation, except those engaged in foreign banking or insurance, shall deposit with the SEC, for the benefit of creditors, securities consisting of (1) bonds or other evidence of indebtedness of the Philippine government or its political subdivision, or of a GOCC, (2) shares of stock in registered enterprises as this term is defined under RA 5186, (3) shares of stock in domestic corporations registered in the stock exchange and (4) shares of stock in domestic insurance companies and banks or any combination thereof with an actual market value of P100,000.00. Additional securities may be required by the SEC if the market value of the securities n deposit has decreased by at least 10%. Sec. 126 provides: Sec. 126. Issuance of a license. - If the Securities and Exchange Commission is satisfied that the applicant has complied with all the

Sec. 123. Definition and rights of foreign corporations. - For the purposes of this Code, a foreign corporation is one formed, organized or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or state. It shall have the right to transact business in the Philippines after it shall have obtained a license to transact business in this country in accordance with this Code and a certificate of authority from the appropriate government agency.

AND WHOSE LAWS ALLOW FILIPINO CITIZENS AND CORPORATIONS TO DO BUSINESS IN ITS OWN COUNTRY OR STATE: is not an accurate inclusion in the definition as any corporation
registered or organized under the laws of another state is necessarily a foreign corporation WON the state of its corporation allow Filipino citizens or corporations to do business in that forum.

The said phrase was inserted by framers of the law only as a condition precedent to the grant of a license to do business in the Philippines.

INCORPORATION TEST: is applied in determining whether a corporation is

domestic or foreign. If it is incorporated in another state, it is a foreign corporation, while if it is registered under Philippine laws, it is deemed a Filipino or domestic corporation irrespective of the nationality of its stockholders. Thus, a corporation registered under the Foreign Investments Act of 1991 (RA No. 7074) or the Trade Liberalization Law of 2000 (RA No. 8762) with 100% foreign equity is considered a Filipino or domestic corporation and not foreign.

CONTROL TEST: In times of war and for purposes of security of the state,
however, the control test would apply in determining the corporate nationality, i.e., the citizenship of the controlling stockholders determines the nationality of the corporation.

CORPORATE PERSONALITY BEYOND BORDERS:

B. APPLICATION FOR LICENSE

Under Sec. 123, a foreign corporation cannot transact business in the Philippines unless it has obtained a license or permit to do so in accordance with the laws of the country and a certificate of authority from the appropriate government agency such as the Banko Sentral ng Pilipinas for banking institutions or the Office of the Insurance Commission for insurance companies, etc. A certificate of authority from the Board of Investments is no longer required under RA 7042. Said certificate of authority is only necessary for the purpose of availing the incentives granted and allowed under the Omnibus Investments Code. The manner in which a foreign corporation may obtain a license to do business in the Philippines is laid down in Sec. 125: Sec. 125. Application for a license. - A foreign corporation applying for a license to transact business in the Philippines shall submit to the Securities and Exchange Commission a copy of its articles of incorporation and by-laws, certified in accordance with law, and their translation to an official language of the Philippines, if necessary. The application shall be under oath and, unless already stated in its articles of incorporation, shall specifically set forth the following: 1. The date and term of incorporation; 2. The address, including the street number, of the principal office of the corporation in the country or state of incorporation; 3. The name and address of its resident agent authorized to accept summons and process in all legal proceedings and, pending the establishment of a local office, all notices affecting the corporation;

requirements of this Code and other special laws, rules and regulations, the Commission shall issue a license to the applicant to transact business in the Philippines for the purpose or purposes specified in such license. Upon issuance of the license, such foreign corporation may commence to transact business in the Philippines and continue to do so for as long as it retains its authority to act as a corporation under the laws of the country or state of its incorporation, unless such license is sooner surrendered, revoked, suspended or annulled in accordance with this Code or other special laws. Within sixty (60) days after the issuance of the license to transact business in the Philippines, the license, except foreign banking or insurance corporation, shall deposit with the Securities and Exchange Commission for the benefit of present and future creditors of the licensee in the Philippines, securities satisfactory to the Securities and Exchange Commission, consisting of bonds or other evidence of indebtedness of the Government of the Philippines, its political subdivisions and instrumentalities, or of government-owned or controlled corporations and entities, shares of stock in "registered enterprises" as this term is defined in Republic Act No. 5186, shares of stock in domestic corporations registered in the stock exchange, or shares of stock in domestic insurance companies and banks, or any combination of these kinds of securities, with an actual market value of at least one hundred thousand (P100,000.) pesos; Provided, however, That within six (6) months after each fiscal year of the licensee, the Securities and Exchange Commission shall require the licensee to deposit additional securities equivalent in actual market value to two (2%) percent of the amount by which the licensee's gross income for that fiscal year exceeds five million (P5,000,000.00) pesos. The Securities and Exchange Commission shall also require deposit of additional securities if the actual market value of the securities on deposit has decreased by at least ten (10%) percent of their actual market value at the time they were deposited. The Securities and Exchange Commission may at its discretion release part of the additional securities deposited with it if the gross income of the licensee has decreased, or if the actual market value of the total securities on deposit has increased, by more than ten (10%) percent of the actual market value of the securities at the time they were deposited. The Securities and Exchange Commission may, from time to time, allow the licensee to substitute other securities for those already on deposit as long as the licensee is solvent. Such licensee shall be entitled to collect the interest or dividends on the securities deposited. In the event the licensee ceases to do business in the Philippines, the securities deposited as aforesaid shall be returned, upon the licensee's application therefor and upon proof to the satisfaction of the Securities and Exchange Commission that the licensee has no liability to Philippine residents, including the Government of the Republic of the Philippines.

international trade which principally serves as a supervision, communications and coordinating center for its subsidiaries, branches or affiliates in the Asia-Pacific Region and other foreign markets and which does not earn or derive income in the Philippines (Sec. 2(2), RA 8756). It cannot in any manner, participate in the management of any subsidiary or branch office in the Philippines nor shall it market goods and services in behalf of its mother company, branches or affiliates. 5. Regional Operating Headquarters is a foreign business entity which is allowed to derive income in the Philippines by performing qualifying services exclusively to its affiliates, subsidiaries or branches in the Philippines, in the Asia-Pacific Region and in other foreign markets (Sec. 2(3), RA 8756). Qualifying services, under RA 8756, include among others: general administration and planning, business planning and coordination, sourcing or procurement of raw materials and components, corporate finance advisory services, marketing control and sales promotion, training and personnel management, logistic service, research and development services and the like. The Regional or Area Headquarters and Regional Operating Headquarters are granted certain tax incentives such as exemption from all kinds of local taxes, fees or charges imposed by local government units except real property tax on land improvements; tax and duty-free importation of training materials and equipment; and importation of motor vehicles. 6. Regional Warehouse one whose activities are limited to serving as supply depot of Regional or Area Headquarters or Regional Operating Headquarters in the Philippines, after securing a license therefor from the Philippine Economic Zone Authority (PEZA) or the concerned ecozone authorities. The regional warehouse shall only be used for the storage, deposit and safekeeping of its spare parts, components, marking, labelling and cutting or altering to customers specifications but shall not directly engage in trade nor solicit business, promote any sale nor enter into contracts for the sale or disposition of goods in the Philippines, except those for delivery to an authorized distributor in the country. Joint Venture is a one-time grouping of two or more persons, natural or juridical, for carrying out a specified undertaking. Under Sec. 1, L of RA 7042, it is combination of property, money, efforts, skill or knowledge to carry out a single business enterprise for profit, which is duly registered with the SEC as a corporation or partnership. No license to do business is required on the part of the foreign corporation entering into such kind of a business venture since mere investment does no constitute doing business as per the Implementing Rules and Regulations of RA 7042 unless, of course, the foreign corporation actively participates in the management thereof. RESIDENT AGENT the grant of license to do or transact business in corporation is required to designate its resident and other legal processes my be served in all against such corporation. Sec. 128 provides:

7.

OBJECTIVE OF LICENSE: is not to prevent the foreign corporation from

performing isolated or single act, but to prevent it from acquiring a domicile for the purpose of pursuing its business without taking steps to render it amenable to suit in the local courts. If the foreign corporation transacts business in the Philippines without the requisite license, its officers may be subjected to the penal provisions of Sec. 144 of the Code. D. C. 1. MODE OF ENTRY OF FOREIGN CORPORATIONS Branch Office of a foreign corporation is one which carries out the business activities of the foreign corporation itself and derives income from the Philippines (Sec. 1, C, IRR of RA No. 7042). As such, the juridical entity involved is one and the same; Representative or Liason Office one which deals directly with the clients of the parent company but does not derive income from the host country and is fully subsidized by the head office. It undertakes activities such as but not limited to information dissemination and promotion of the companys products; Local Subsidiary A foreign corporation may form or organize a separate corporation under the Foreign Investment Act (RA 7042) by making at least a majority of the investments therein. The corporation thus formed becomes known as a local subsidiary of the investing foreign corporation which becomes a legally independent unit governed by the laws of the Philippines. Ballantine calls it domestication in the sense that the foreign corporation is granted the right to obtain a charter or organize itself into a domestic corporation under the general laws of the other state; Regional or Area Headquarters is an office whose purpose is to act as an administrative branch of a multinational company engaged in

As a condition precedent to the Philippines, the foreign agent on whom summons actions or legal proceedings

2.

3.

4.

Sec. 128. Resident agent; service of process. - The Securities and Exchange Commission shall require as a condition precedent to the issuance of the license to transact business in the Philippines by any foreign corporation that such corporation file with the Securities and Exchange Commission a written power of attorney designating some person who must be a resident of the Philippines, on whom any summons and other legal processes may be served in all actions or other legal proceedings against such corporation, and consenting that service upon such resident agent shall be admitted and held as valid as if served upon the duly authorized officers of the foreign corporation at its home office. Any such foreign corporation shall likewise execute and file with the Securities and Exchange Commission an agreement or stipulation, executed by the proper authorities of said

corporation, in form and substance as follows: "The (name of foreign corporation) does hereby stipulate and agree, in consideration of its being granted by the Securities and Exchange Commission a license to transact business in the Philippines, that if at any time said corporation shall cease to transact business in the Philippines, or shall be without any resident agent in the Philippines on whom any summons or other legal processes may be served, then in any action or proceeding arising out of any business or transaction which occurred in the Philippines, service of any summons or other legal process may be made upon the Securities and Exchange Commission and that such service shall have the same force and effect as if made upon the duly-authorized officers of the corporation at its home office." Whenever such service of summons or other process shall be made upon the Securities and Exchange Commission, the Commission shall, within ten (10) days thereafter, transmit by mail a copy of such summons or other legal process to the corporation at its home or principal office. The sending of such copy by the Commission shall be necessary part of and shall complete such service. All expenses incurred by the Commission for such service shall be paid in advance by the party at whose instance the service is made. In case of a change of address of the resident agent, it shall be his or its duty to immediately notify in writing the Securities and Exchange Commission of the new address. As to who may be appointed as resident agent, the Corporation Code provides: Sec. 127. Who may be a resident agent. - A resident agent may be either an individual residing in the Philippines or a domestic corporation lawfully transacting business in the Philippines: Provided, That in the case of an individual, he must be of good moral character and of sound financial standing. Culled from the provisions of Sec. 128 is that the necessity of the appointment of a resident agent is only for the purpose of receiving summons and other legal processes in any legal action or proceeding against the foreign corporation. And, when a foreign corporation has designated a person to receive summons in judicial proceedings affecting the corporation that designation is exclusive and service of summons is without force and effect unless made on him (Poizat vs. Mogan). Thus, while the law allows service upon the SEC (Sec. 128), or any of its officers or agents within the Philippines (Sec. 13, Rule 14, Rules of Civil Procedure), the latter two modes may become effective only if the foreign corporation failed or neglected to designate such a person or an agent. In a decision, therefore, rendered by the SC in the case of General Corporation of the Philippines vs. Union Insurance Soc. Of Canton Ltd (87 Phil 313), it was held that where such foreign corporation actually doing business here has not applied for a license to do and has not designated an agent to receive summons, then service of summons on it will be made pursuant to the provisions of the Rules of Court. If such foreign corporation has a license to do business, then summons to it will be served on the agent designated by it for the purpose, or otherwise in accordance with the Corporation Law. E. DOING BUSINESS WITHOUT LICENSE AND ITS EFFECT

CAPACITY TO SUE and BE SUED: The corporation may not likewise sue or
intervene in any action, suit or proceeding in any court or administrative agency of the Philippines while it may be sued or proceeded against before such court or agency on any valid cause of action recognized under the law.

WHETHER OR NOT IT CAN SUE:

1. 2. 3.

A foreign corporation transacting or doing business in the Philippines with a license can sue before Philippine Courts; Subject to certain exceptions, a foreign corporation doing business in the country without a license cannot sue in Philippine Courts; and If it is not transacting business in the Philippines, even without a license, it can sue before the Philippine Courts.

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) EXCEPTIONS:

1.

Foreign corporations can sue before the Philippine Courts if the act or transaction involved is an isolated transaction or the 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

2.

(Western Equipment Supply vs. Reyes)

Neither is a license required before a foreign corporation may sue before the forum if the purpose of the suit is to protect its trademark, trade name, corporate name, reputation or goodwill; (Western Equipment

3. 4. 5.

Supply vs. Reyes)

Or where it is based on a violation of the Revised Penal Code (Le Chemise Lacoste, SA vs. Fernandez); Or merely defending a suit filed against it (Time, Inc. vs. Reyes) Or where a party is estopped to challenge the personality of the corporation by entering into a contract with it (Communications

Materials and Design, Inc. vs. CA and ITEC) WHETHER OR NOT IT CAN BE SUED:
1. 2. 3.

A foreign corporation transacting business in the Philippines with the requisite license can be sued in Philippine Courts; A foreign corporation transacting business in the Philippines without a license can be sued in Philippine Courts; If it is not doing business in the Philippines, it cannot be sued in Philippine Courts for lack of jurisdiction.

DOING BUSINESS: As to what constitutes doing business or

transacting business which would bar a foreign corporation from access to our courts, no general rule or governing principle can be laid down. Indeed, such case must be judged in the light of its peculiar environmental circumstance. However, the TRUE TEST 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. The term implies a continuity of commercial dealings and arrangements and contemplates, to the extent, the performance of acts or works or the exercise of some functions normally incident to and in progressive prosecution of, the purpose and objects of its organization

(Metholatum, Inc. vs. Mangaliman)

PRESENT STATE OF LAW AS TO DOING BUSINESS: under the

A foreign corporation must secure the necessary license before it can transact or do business in the Philippines. This is the clear import of Sec. 123 when it states that it shall have the right to transact business in the Philippines after it shall have obtained a license. Without such a license, the law provides for certain consequences: Sec. 133. Doing business without a license. - 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 tribunals on any valid cause of action recognized under Philippine laws.

Foreign Investment Act (Sec. 3, d), doing business would include: 1. Soliciting orders, service contracts; 2. Opening offices, whether called liason offices or branches; 3. Appointing representatives or distributor domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totalling 180 days or more; 4. Participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines; 5. Any other act that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of functions normally incident to and in progressive prosecution of commercial gain or of the purpose and object of the business organization.

Provided, however, that the phrase doing business shall not be deemed to

RESPONSIBLE OFFICERS: of a foreign corporation doing business in the

Philippines without the requisite license may be subject to the penal sanctions provided for in Sec. 144 of the Code which may either be imprisonment or fine.

include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or exercise of rights as such investor, nor having a nominee director or officer to represent its interest in such corporation; nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account.

ISOLATED TRANSACTION: even if it is pursuant of the usual business Osa)

ISSUE: WON obtaining a license is required before a foreign corporation can maintain any kind of action in the courts of the Philippine Islands? HELD: No. 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 corporations 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. The law simply means that no foreign corporation shall be permitted "to transact business in the Philippine Islands," as this phrase is known in corporation law, 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. A contrary holding would bring the law to the verge of unconstitutionality, a result which should be and can be easily avoided. The order appealed from shall be set aside and the record shall be returned to the court of origin for further proceedings. Without special finding as to costs in this instance, it is so ordered. HATHIBHAI BULAKHIDAS, petitioner, vs. THE HONORABLE PEDRO L. NAVARRO, as Presiding Judge of the Court of First Instance of Rizal, Seventh Judicial District, Pasig, Metro Manila, Branch 11 and DIAMOND SHIPPING CORPORATION, respondent.

does not constitute doing business the doing of which would not bar a foreign corporation from access to Philippine Courts (Facilities Mgt. vs. Dela THE MENTHOLATUM CO., INC., ET AL., petitioners, vs. ANACLETO MANGALIMAN, ET AL., respondents

(G.R. No. L-47701; June 27, 1941)

FACTS: A complaint was filed by herein petitioner, a foreign corporation having Philippine-American Drug Co. as its sole distributor, for infringement of trademark for its product Mentholatum and unfair competition alleging that herein respondents Anacleto and Florencio Mangaliman prepared a medicament and salve named Mentholiman which they sold to the public packed in the same size, color and shape as its product Metholatum. ISSUE: WON petitioner corporation is transacting business in the Philippines? HELD: No. No general rule or governing principle can be laid down as to what constitutes "doing" or "engaging in" or "transacting" business. Indeed, each case must be judged in the light of its peculiar environmental circumstances. 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. (Griffin v. Implement Dealers' Mut. Fire Ins. Co., 241 N. W. 75, 77; Pauline Oil & Gas Co. v. Mutual Tank Line Co., 246 P. 851, 852, 118 Okl. 111; Automotive Material Co. v. American Standard Metal Products Corp., 158 N. E. 698, 703, 327 III. 367.) In its decision of June 29, 1940, the Court of Appeals concluded that "it is undeniable that the Mentholatum Co., through its agent, the PhilippineAmerican Drug Co., Inc., has been doing business in the Philippines by selling its products here since the year 1929, at least." This is assailed by petitioners as a pure conclusion of law. This finding is predicated upon the testimony of Mr. Roy Springer of the Philippine-American Drug Co., Inc., and the pleadings filed by petitioners. The complaint filed in the Court of First Instance of Manila on October 1, 1935, clearly stated that the Philippine-American Drug Co., Inc., is the exclusive distributing agent in the Philippine Islands of the Mentholatum Co., Inc., in the sale and distribution of its product known as the Mentholatum." The object of the pleadings being to draw the lines of battle between litigants and to indicate fairly the nature of the claims or defenses of both parties, a party cannot subsequently take a position contradictory to, or inconsistent with, his pleadings, as the facts therein admitted are to be taken as true for the purpose of the action. It follows that whatever transactions the Philippine-American Drug Co., Inc., had executed in view of the law, the Mentholatum Co., Inc., did it itself. And, the Mentholatum Co., Inc., being a foreign corporation doing business in the Philippines without the license required by section 68 of the Corporation Law, it may not prosecute this action for violation of trade mark and unfair competition. The writ prayed for should be, as it hereby is, denied, with costs against the petitioners.

(G.R. No. L-49695; April 7, 1986)

FACTS: Petitioner, a foreign partnership, filed a complaint for damages against respondent Diamond Shipping Corporation having failed to deliver the goods shipped to it by petitioner to their proper destination. Said complaint alleged that the plaintiff is not doing business in the Philippines and that it is suing under an isolated transaction. Defendant filed a motion to dismiss on the ground that plaintiff has no capacity to sue which was granted. ISSUE: WON a corporation not engaged in business in the Philippines can institute an action before our courts? HELD: Yes. This issue is already well-settled in this jurisdiction. In Aetna Casualty and Surety Co. vs. Pacific Star Lines, 80 SCRA 635, is a case similar to the present one in that the action is also one for recovery of damages sustained by cargo shipped on defendants' vessels. Defendants set up the defense that plaintiff is a foreign corporation not duly licensed to do business in the Philippines and, therefore, without capacity to sue and be sued. In overruling said defense, this Court said: It is settled that if a foreign corporation is not engaged in business in the Philippines, it may not be denied the right to file an action in Philippine courts for isolated transactions. The object of Sections 68 and 69 of the Corporation law 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. 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 in Eastboard Navigation, Ltd. et al vs. Juan Ysmael & Co., Inc., this Court held that:

ISOLATED TRANSACTION
MARSHALL-WELLS COMPANY, plaintiff-appellant, vs. HENRY W. ELSER & CO., INC., defendant-appellee

(G.R. No. 22015; September 1, 1924)

FACTS: Plaintiff sued defendant for the unpaid balance of a bill of goods amounting to P2,660.74, for which the plaintiff holds accepted drafts. Defendant demurred on the ground that plaintiff had no capacity to sue which the trial court granted. And in as much as the plaintiff could not allege compliance with the statute, the order was allowed to become final and no appeal was perfected.

(d) 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. (Marshall Wells Co. vs. Henry W. Elser & Co. 49 Phil., 70; Pacific Vegetable Oil Corporation vs. Angle O. Singson, G.R. No. L-7917, April 29, 1955.) Again, in Facilities Management Corporation vs. De la Osa 89 SCRA 131, 139, following Aetna Casualty & Surety Co. vs. Pacific Star Line, supra, held a foreign corporation not engaged in business in the Philippines is not barred from seeking redress from the courts of the Philippines. WHEREFORE, the order of respondent Court dismissing the petitioner's complaint is hereby set aside and the case remanded for further proceedings, with costs against private respondent. THE SWEDISH EAST ASIA CO., LTD., petitioner, vs. MANILA PORT SERVICE AND/OR MANILA RAILROAD COMPANY, respondents

FACTS: Respondent Stokely Van Camp, Inc., a corporation organized and existing under the laws of the state of Indiana, 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. One of respondents subdivision Capital City Product Company (Capital City) entered into a contracts where Coconut Oil Manufacturing (Phil), Inc. (Comphil) were to sell to the former 500 long tons of crude coconut oil at US$0.30/lb, which it failed to comply with and Capital City was forced to buy its coconut oil needs from the open market at a higher price resulting in a loss of US$103,600. A 2nd contract was entered into to settle Capital Citys loss, Comphil was supposed to repurchase the coconut oil earlier purchased from the open market at a price of US$ 0.3925/lb, but the latter failed to pay. To compensate for the loss, Comphil entered into a 3rd contract agreeing to sell the same quantity of coconut oil at a price of US$0.3425/lb which was below the market price. That by the discounted amount, Comphil would have compensated for the loss Capital City sustained. But still, Comphil failed to deliver. Petitioners filed a motion to dismiss the complaint on the ground that respondent had no personality to maintain a suit which was denied. The subsequent petition for certiorari was dismissed by the appellate court. ISSUE: WON respondent is doing business in the Philippines? HELD: No. In the case of Top-Weld Manufacturing, Inc. v. ECED, S.A. (138 SCRA 118,127-128), we stated: There is no general rule or governing principle laid down as to what constitutes doing' or 'engaging in' or 'transacting business in the Philippines. Each case must be judged in the Light of its peculiar circumstance (Mentholatum Co. v. Mangaliman, 72 Phil.524). Thus, a foreign corporation with a settling agent in the Philippines which issues twelve marine policies covering different shipments to the Philippines (General Corporation of the Philippines v. Union Insurance Society of Canton, Ltd., 87 Phil. 313) and a foreign corporation which had been collecting premiums on outstanding policies (Manufacturing Life Insurance Co., v. Meer, 89 Phil. 351) were regarded as doing business here. 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. (Far East International Import and Export Corporation v. Nankai Kogyo, Co., 6 SCRA 725). In the Mentholatum Co. v. Mangaliman case earlier cited, this Court held: xxx xxx xxx ...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 warning-organized or whether it has substantially was retired from it and turned it over to another. (Traction Cos. v. Collectors of Int. Revenue [CCA., 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 workers or the exercise of some of the functions normally incident to, and in progressive prosecution of, the purpose and object of its organization. (Griffin v. Implement Dealers' Mut. Fire Ins. Co., 241 N.W. 75, 77, Pauline Oil & Gas Co. v. Mutual Tank Line Co., 246 P. 851, 852, 118 Okl. 111; Automotive Material Co. v. American Standard Metal Products Corp., 158 N.E. 698, 703, 327 111. 367.) ' In the case at bar, 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

(G.R. No. L-26332; October 26, 1968)

FACTS: MS SUDAN, owned and operated by petitioner, a swedish company without license in the Philippines, discharged cargo to herein respondent. By mistake, cargo destined for Hongkong consisting of 16 bundles of lifts and mild steel tees window sections covering which the petitioner had issued a bill of lading to a Hongkong consignee, were also landed at Manila. The erroneous discharge was obviously engendered by the fact that the same ship on the same day discharged 40 similar bundles destined for consignee in the Philippines. Petitioner, through a complaint filed in the CFI of Manila, sought for the recovery of the value of the missing goods which it paid to the Hongkong consignee, which was granted by the lower court. On appeal, the CA reversed the trial courts decision. ISSUE: WON petitioner should be barred from access to our courts? HELD: No. The respondents challenge the petitioner's capacity to sue, it being admittedly a foreign corporation without license to engage in business in the Philippines, citing section 69 of the Corporation Law. It must be stated however that this section is not applicable to a foreign corporation performing single acts or "isolated transactions." There is nothing in the record to show that the petitioner has been in the Philippines engaged in continuing business or enterprise for which it was organized, when the sixteen bundles were erroneously discharged in Manila, for it to be considered as transacting business in the Philippines. The fact is that the bundles, the value of which is sought to be recovered, were landed not as a result of a business transaction, "isolated" or otherwise, but due to a mistaken belief that they were part of the shipment of forty similar bundles consigned to persons or entities in the Philippines. There is no justification, therefore, for invoking the provisions of section 69 of the Corporation Law. ACCORDINGLY, the judgment of the Court of Appeals is reversed, and another judgment is hereby rendered ordering the respondents, jointly and severally, to pay the petitioner the sum of P2,349.62 with interest thereon at the rate of 6% per annum from March 13, 1961, the date of the filing of the complaint, until the amount shall have been fully paid, and the sum of P600 as attorney's fees. Costs against the respondents. 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

(G.R. No. L-61523; July 31, 1986)

transaction and in order to give the latter a chance to make good on their obligation. Instead of making an outright demand on the petitioners, the respondent opted to try to push through with the transaction to recover the amount of US$103,600.00 it lost. This explains why in the second transaction, the petitioners were supposed to buy back the crude coconut oil they should have delivered to the respondent in an amount which will earn the latter a profit of US$103,600.00. When this failed the third transaction was entered into by the parties whereby the petitioners were supposed to sell crude coconut oil to the respondent at a discounted rate, the total amount of such discount being US$103,600.00. Unfortunately, the petitioners failed to deliver again, prompting the respondent to file the suit below. From these facts alone, it can be deduced that 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. Thus, the trial court, and the appellate court did not err in denying the petitioners' motion to dismiss not only because the ground thereof does not appear to be indubitable but because 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 We agree with the respondent that it is a common ploy of defaulting local companies which are sued by unlicensed foreign companies not engaged in business in the Philippines to invoke lack of capacity to sue. The respondent cites decisions from 1907 to 1957 recognizing and rejecting the improper use of this procedural tactic. (Damfschieffs Rhedered Union v. Cia Trans-atlantica, 8 Phil. 766 11907]; Marshall-Wells Co. v. Henry W. Elser & Co., 49 Phil. 70 [1924]; Western Equipment Co. v. Reyes, 51 Phil. 115 [1927]; Central Republic Bank v. Bustamante, 71 Phil. 359 [1941]; Pacific Vegetable Oil Co. v. Singson, 96 Phil.-986 [1955]; Eastboard Navigation, Ltd. v. Juan Ysmael and Co., Inc., 102 Phil. 1 [1957]). The doctrine of lack of capacity to sue based on failure to first acquire a local license is based on considerations of sound public policy. It intended to favor domestic corporations who enter was never into solitary transactions with unwary foreign firms and then repudiate their obligations simply because the latter are not licensed to do business in this country. The petitioners in this case are engaged in the exportation of coconut oil, an export item so vital in our country's economy. They filed this petition on the ground that Stokely is an unlicensed foreign corporation without a bare allegation or showing that their defenses in the collection case are valid and meritorious. We cannot fault the two courts below for acting as they did. WHEREFORE, IN VIEW OF THE FOREGOING, the petition is DISMISSED for lack of merit. The Temporary Restraining Order dated February 2, 1983 is hereby DISSOLVED. Costs against the petitioners.

ISSUE: WON petitioner, FMC, has been doing business in the Philippines to vest the Philippine court with jurisdiction? HELD: Yes. From the facts of record, the petitioner may be considered as doing business in the Philippines within the scope of Section 14, Rule 14 of the Rules of the Court which provide: SEC 14. Service upon private foreign corporations. If the defendant is a foreign corporation or a non-resident joint stock company or association: doing business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose or, if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines. Indeed, the petitioner, in compliance with Act 2486 as implemented by Department of Labor Order No. IV dated May 20, 1968 had to appoint Jaime V. Catuira, 1322 A. Mabini, Ermita, Manila as agent for FMC with authority to execute Employment Contracts and receive, in behalf of that corporation, legal services from and be bound by processes of the Philippine Courts of Justice, for as long as he remains an employee of FMC (Annex 'I', rollo, p. 56). It is a fact that when the summons for the petitioner was served on Jaime V. Catuira he was still in the employ of the FMC. In his motion to dismiss Annex B', p. 19, Rollo), petitioner admits that Mr. Catuira represented it in this country 'for the purpose of making arrangements for the approval by the Department of Labor of the employment of Filipinos who are recruited by the Company as its own employees for assignment abroad.' In effect, Mr. Catuira was an officer representing petitioner in the Philippines. Under the rules and regulations promulgated by the Board of Investments which took effect Feb. 3, 1969, implementing Rep. Act No. 5455, which took effect Sept. 30, 1968, the phrase 'doing business' has been exemption with illustrations, among them being as follows: xxx xxx xxx (f) the performance within the Philippines of any act or combination of acts enumerated in section l(l) of the Act shall constitute 'doing business' therein. in particular, 'doing business includes: (1) Soliciting orders, purchases (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 contracts, regardless of whether the contracts are actually reduced to writing, shall constitute doing business even if the enterprise has no office or fixed place of business in the Philippines. xxx (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 principal. xxx xxx xxx (4) Opening offices, whether called 'liaison'offices, agencies or branches, unless proved otherwise. xxx xxx xxx (10) 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 Indeed, if a foreign corporation, not engaged in business in the Philippines, is not banned from seeking redress from courts in the Philippines, a fortiori, that same corporation cannot claim exemption from being sued in Philippine courts for acts done against a person or persons in the Philippines. WHEREFORE, THE PETITION IS HEREBY DENIED WITH COSTS AGAINST THE PETITIONERS

HAVING A REPRESENTATIVE IN THE PHILIPPINES

FACILITIES MANAGEMENT CORPORATION, J. S. DREYER, and J. V. CATUIRA, petitioners, vs. LEONARDO DE LA OSA AND THE HONORABLE COURT OF INDUSTRIAL RELATIONS, respondents

(G.R. No. L-38649; March 26, 1979)

FACTS: Respondent Leonardo dela Osa filed a petition for reinstatement with recovery of his overtime compensation, swing shift and graveyard shift differentials. Petitioner corporation filed a letter-answer interposing special defenses: 1. Facilities Management Corporation and JS Deyer are domiciled in Wake Islands and is beyond the territorial jurisdiction of the Philippine Government; and 2. JV Catuira, though an employee of respondent corporation and stationed in Manila does not have power and authority of legal representation; and 3. The employment of respondent is with approval of the Department of Labor of the Philippines. Subsequently, a motion to dismiss was filed which was denied.

SINGLE ACT WITH INTENTION TO CONTINUE DOING BUSINESS

FAR EAST INTERNATIONAL IMPORT and EXPORT CORPORATION, plaintiff-appellee,

vs. NANKAI KOGYO CO. LTD., ET AL., defendants, NANKAI KOGYO CO., LTD., defendant-appellant

(G.R. No. L-13525; November 30, 1962)

transported nor even solicited the transportation passengers and cargoes to and from the Philippines. In words, petitioner engaged the services of Pelingon not as part of the operation of its business but merely to employ

FACTS: Plaintiff Far East entered into a contract with herein appellant Nankai for the sale of steel scrap. Only 1,058.6 metric tons were delivered upon the expiration of the export license of Far East. Far East later on wrote to Everett Steamship Corporation, requesting the issuance of a complete set of the Bill of Lading for the shipment, in order that payment thereof be effected against the letter of credit opened by Nankai. For failure of Nankai and the shipping agent to comply, Far East filed a complaint for specific performance. Nankai filed a motion to dismiss, on the ground of lack of jurisdiction over its person and the subject matter, which was denied. ISSUE: WON the trial court acquired jurisdiction over the subject matter and over the person of the defendant-appellant through the proper service of summons? HELD: Yes. Defendant contends that Philippine Courts have no jurisdiction to take cognizance of the case because the Nankai is not doing business in the islands; and that while it has entered into the transaction in question, same, however, does not constitute "doing business", so as to make it amenable to summons and subject it to the Court's jurisdiction. It bolstered this claim by a provision in the contract which provides that "In case of disputes, Board of Arbitration may be formed in Japan. Decision of the Board of Arbitration shall be final and binding on both BUYER and SELLER". The rule pertinent to the questions in issue provides SEC. 14. Service upon private foreign corporations. If the defendant is a foreign corporation, or a non-resident joint stock company or association, doing business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or, if there be no such agent, on the government official designated by law to that effect, or on any officer or agent within the Philipines. (Rule 7). The above rule indicates three modes of effecting service of summons upon a private, foreign corporation, viz: (1) by serving upon the agent designated in accordance with law to accept service of summons; (2) if there is no resident agent, by service on the government cial designated by law to that effect; and (3) by serving on any officer or agent of said corporation with Philippines. The plaintiff complied with the third stated above, for it has been shown that Mr. Ishida, who personally signed the contract for the purchase of the scrap in question in behalf of the Nankai Kogyo, the Trade Manager of said Company, Mr. Tominaga the Chief of the Petroleum Section of the same company and Mr. Yoshida was the man-in-charge of the Import Section of the company's Tokyo Branch. All these three, including the first two who were served with Summons, were officers of the defendant company. Not only did appellant allege non-jurisdictional grounds in its pleadings to have the complaint dismissed, but it also went into trial on the merits and presented evidence destined to resist appellee's claim. Verily, there could not be a better situation of acquired jurisdiction based on consent. Consequently, the provision of the contract wherein it was agreed that disputes should be submitted to a Board of Arbitration which may be formed in Japan (in the supposition that it can apply to the matter in dispute - payment of the scrap), seems to have been waived with appellant's voluntary submission. Apart from the fact that the clause employs the word "may". From the proven facts obtaining in this particular case, the appellant's defense of lack of jurisdiction appears unavailing. The case of Pacific Micronesian Line, Inc. v. Baens del Rosario, et al., G.R. No. L-7154, October 23, 1954, relied upon in the Motion to Dismiss and other pleadings presented by defendant-appellant, stand on a different footing. Therein, We made the following pronouncements: . . . . And the only act it did here was to secure the services of Luceno Pelingon to act as cook and chief steward in one of its vessels authorizing to that effect the Luzon Stevedoring Co., Inc., a domestic corporation, and the contract of employment was entered into on July 18, 1951. It further appears that petitioner has never sent its ships to the Philippines nor has it

him as member of the crew in one of its ships. That act apparently is an isolated one, incidental, or casual, and "not of a character to indicate a purpose to engage in business" within the meaning of the rule. (Emphasis
ours.) ISSUE2: WON the single act done in this case can be considered as doing business in the Philippines? HELD: Yes. In the instant case, the testimony of Atty. Pablo Ocampo that appellant was doing business in the Philippines corroborated by no less than Nabuo Yoshida, one of appellant's officers, that he was sent to the Philippines by his company to look into the operation of mines, thereby revealing the defendant's desire to continue engaging in business here, after receiving the shipment of the iron under consideration, making the Philippines a base thereof.

The rule stated in the preceding section that the doing of a single act doesnot constitute business within the meaning of statutes prescribing the conditions to be complied with the foreign corporations must be qualified to this extent, that a single act may bring the corporation. In such a

case, the single act of transaction is not merly 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, and to make the state a basis of operations for the conduct of a part of corporation's ordinary business. (17 Fletchers Cyc. of Corporations, sec. 8470, pp. 572573, and authorities cited therein.) (Emphasis ours.) WHEREFORE, the judgment appealed from is hereby affirmed, with costs against defendant-appellant Nankai Kogyo.

ESTOPPED TO QUESTION PERSONALITY TO SUE

COMMUNICATION MATERIALS AND DESIGN, INC., ASPAC MULTITRADE, INC., (formerly ASPAC-ITEC PHILIPPINES, INC.) and FRANCISCO S. AGUIRRE, petitioners, vs. THE COURT OF APPEALS, ITEC INTERNATIONAL, INC., and ITEC, INC., respondents

(G.R. No. 102223; August 22, 1996)

FACTS: Respondent ITEC entered into a contract with petitioner ASPAC referred to as Representative Agreement where ASPEC was assigned as ITECs exclusive representative in the Philippines for the sale of ITECs products. By virtue of said contract, ASPAC sold electronic products exported by ITEC, to their sole customer PLDT. ASPAC and PLDT executed a document entitled PLDT-ASPAC/ITEC PROTOCOL which defined the project detais for the supply of ITECs Interface Equipment in connection with the 5 th Expansion Program of PLDT. ITEC later on terminated its representative agreement with ASPAC and fied a complaint alleging that the latter and another corporation Digital Base Communications, Inc. (DIGITAL), the president of which is Francisco Aguirre who is also the president of ASPAC, used knowledge and information of ITECs product specifications to develop their own line of equipment and product support, which are similar, if not identical to ITECs own and offering them to ITECs customers. Defendants filed a motion to dismiss on the ground that ITEC had no legal capacity to sue as it is a foreign corporation doing business in the Philippines without the required license, which was denied. On appeal, the CA affirmed the decision of the trial court. ISSUE: WON private respondents ITEC is an unlicensed corporation doing business in the Philippines, and WON it is barred from invoking the injunctive authority of the courts? HELD: Yes and No (by estoppel). Generally, a "foreign corporation" has no legal existence within the state in which it is foreign. This proceeds from the principle that juridical existence of a corporation is confined within the territory of the state under whose laws it was incorporated and organized, and it has no legal status beyond such territory. Such foreign corporation may be excluded by any other state from

doing business within its limits, or conditions may be imposed on the exercise of such privileges. Before a foreign corporation can transact business in this 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 maintain or intervene in any action, suit, or proceeding in any court or administrative agency of the Philippines, but it may be sued on any valid cause of action recognized under Philippine laws. 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 prevent is a foreign corporation doing business in the Philippines without a license from gaining access to Philippine Courts. The purpose of the law in requiring that foreign corporations doing business in the Philippines be licensed 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 business without taking 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, and thus, in effect, to permit persons to avoid their contracts made with such foreign corporations. There is no exact rule or governing principle as to what constitutes "doing" or "engaging" or "transacting" business. Indeed, such case must be judged in the light of its peculiar circumstances, upon its peculiar facts and upon the language of the statute applicable. 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. Article 44 of the Omnibus Investments Code of 1987 defines the phrase to 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 (180) 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 or 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. Thus, a foreign corporation with a settling agent in the Philippines which issued twelve marine policies covering different shipments to the Philippines and a foreign corporation which had been collecting premiums on outstanding policies were regarded as doing business here. The same rule was observed relating to a foreign corporation with an "exclusive distributing agent" in the Philippines, and which has been selling its products here since 1929, and a foreign corporation engaged in the business of manufacturing and selling computers worldwide, and had installed at least 26 different products in several corporations in the Philippines, and allowed its registered logo and trademark to be used and made it known that there exists a designated distributor in the Philippines. In Georg Grotjahn GMBH and Co. vs. Isnani, it was held that the uninterrupted performance by a foreign corporation of acts pursuant to its primary purposes and functions as a regional area headquarters for its home office, qualifies such corporation as one doing business in the country. These foregoing instances should be distinguished from a single or isolated transaction or occasional, incidental, or casual transactions, which do not come within the meaning of the law, for in such case, the foreign corporation is deemed not engaged in business in the Philippines.

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. 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. Thus, in the Top-Weld 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., the FUTURES CONTRACT entered into by the petitioner foreign corporation weighed heavily in the court's ruling. With the above-stated precedents in mind, we are persuaded to conclude that private respondent had been "engaged in" or "doing business" in the Philippines for some time now. This is the inevitable result after a scrutiny of

the different contracts and agreements entered into by ITEC with its various business contacts in the country, particularly ASPAC and Telephone Equipment Sales and Services, Inc. (TESSI, for brevity). The latter is a local
electronics firm engaged by ITEC to be its local technical representative, and to create 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 dealing directly with ITEC, and that ITEC is actively engaging in business in the country. In its Master Service Agreement with TESSI, private respondent required its local technical representative to provide the employees of the technical and service center with ITEC identification cards and business cards, and to 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 Technical Assistance Center, and all calls being recorded and forwarded to ITEC on a weekly basis. What is more, TESSI was obliged to provide ITEC with a monthly report detailing the failure and repair of ITEC products, and to requisition monthly the materials and components needed to replace stock consumed in the warranty repairs of the prior month. A perusal of the agreements between petitioner ASPAC and the respondents shows that there are provisions which are highly restrictive in nature, such as to reduce petitioner ASPAC to a mere extension or instrument of the private respondent. 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 capacity as Representative and no other, and then only to specific customers and on terms and conditions expressly authorized by ITEC in writing." When ITEC entered into the disputed contracts with ASPAC and TESSI, they were carrying out the purposes for which it was created, i.e., to market electronics and communications products. The terms and conditions of the contracts as well as ITEC's conduct indicate that they established within our country a continuous business, and not merely one of a temporary character. Notwithstanding such finding that ITEC is doing business in the country, petitioner is nonetheless estopped from raising this fact to bar ITEC from instituting this injunction case against it. A foreign corporation doing business in the Philippines may sue in Philippine Courts although not authorized to do business here against a Philippine citizen or entity who had contracted with and benefited by said corporation. 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 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. The rule is deeply rooted in the time-honored axiom of Commodum ex injuria sua non habere debet no person ought to derive any advantage of his own wrong. This is as it should be for as mandated by law, "every person must in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith." Concededly, corporations act through agents, like directors and officers. Corporate dealings must be characterized by utmost good faith and fairness. Corporations cannot just feign ignorance of the legal rules as in most cases, they are manned by sophisticated officers with tried management skills and legal experts with practiced eye on legal problems. Each party to a corporate transaction is expected to act with utmost candor and fairness and, thereby allow a reasonable proportion between benefits and expected burdens. This is a norm which should be observed where one or the other is a foreign entity venturing in a global market. As observed by this Court in TOP-WELD (supra), viz: The parties are charged with knowledge of the existing law at the time they enter into a contract and at the 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 foreign contemporary. In this case, the record shows that, at least, petitioner had actual knowledge of the 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 bolster its claim. We, therefore sustain the appellate court's view that "it was incumbent upon TOP-WELD to 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 circumvented and evaded when the petitioner entered into said agreements despite the prohibition of R.A. No. 5455. The parties in this case being equally guilty of violating R.A. No. 5455, they are in pari delicto, in which case it follows as a consequence that petitioner is not entitled to the relief prayed for in this case. 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 corporation doing business in the Philippines to the jurisdiction of its courts. It was never intended to favor domestic corporations who enter into solitary transactions with unwary foreign firms and then repudiate their obligations simply because the latter are not licensed to do business in this country. In Antam Consolidated Inc. vs. Court of Appeals, et al. 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 ploy is resorted to by ASPAC to prevent the injunctive action filed by ITEC to enjoin petitioner from using knowledge possibly acquired in violation of fiduciary arrangements between the parties. By entering into the "Representative Agreement" with ITEC, Petitioner is charged with knowledge that ITEC 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. In Top-Weld, we ruled that a foreign corporation may be exempted from the license requirement in order to institute an action in our courts if its representative in the country maintained an independent status during the existence of the disputed contract. Petitioner is deemed to have acceded to such independent character when it entered into the Representative Agreement with ITEC, particularly, provision 6.2 (supra). IN VIEW OF THE FOREGOING PREMISES, the instant Petition is hereby DISMISSED. The decision of the 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 affirmed in toto.

WESTERN EQUIPMENT AND SUPPLY COMPANY, WESTERN ELECTRIC COMPANY, INC., W. Z. SMITH and FELIX C. REYES, plaintiffs-appellees, vs. FIDEL A. REYES, as Director of the Bureau of Commerce and Industry, HENRY HERMAN, PETER O'BRIEN, MANUEL B. DIAZ, FELIPE MAPOY and ARTEMIO ZAMORA, defendants-appellants.

(G.R. No. L-27897 December 2, 1927)

FACTS: The present case was filed and tried on the following facts: 1. Petitioner Western Equipment and Supply Company, through its duly authorized agent, the plaintiff, Felix Reyes, applied to the defendant Director of Bureau of Commerce and Industry (BCI) for the issuance of a license to engage in business in the Philippine Islands which was granted on Aug. 23, 1926. 2. On the other hand, Western Electric Company, Inc, also organized and existing under the laws of Nevada, was not issued such license but it was alleged that it has never engaged in business herein. That a Philippine corporation known as Electric Supply Company, Inc., where defendant Henry Herman was president, has been importing the manufactures of plaintiff Western Electric Company, Inc. That defendant Henry Herman signed and filed AOI with the defendant Fidel Reyes, as Director of BCI, with the intention to organize a domestic corporation to be known as Western Electric Company, Inc. for the purpose, among others things, of manufacturing, buying, selling and dealing generally in electrical and telephone apparatus and supplies in violation of a trademark over Western Electric existing in Washington, DC.

3.

4.

The lower court decided in favor of plaintiffs. ISSUE: WON plaintiff corporation can maintain an action to restraint residents and inhabitants of the Philippines from organizing a corporation, when said inhabitants have knowledge of the existence of such foreign corporation? HELD: Yes. In the case of Marshall-Wells Co. vs. Henry W. Elser & Co. (46 Phil., 70, 76), this court held: The noncompliance of a foreign corporation with the pleaded as an affirmative defense. Thereafter, it must evidence, first, that the plaintiff is a foreign corporation, doing business in the Philippines, and third, that it has proper license as provided by the statute. statute may be appear from the second, that it is not obtained the

If it had been stipulated that the plaintiff, Western Electric Company, Inc., had been doing business in the Philippine Islands without first obtaining a license, another and a very different question would be presented. That company is not here seeking to enforce any legal or contract rights arising from, or growing out of, any business which it has transacted in the Philippine Islands. The sole purpose of the action: "Is to protect its reputation, its corporate name, its goodwill, whenever that reputation, corporate name or goodwill have, through the natural development of its trade, established themselves." And it contends that its rights to the use of its corporate and trade name: Is a property right, a right in rem, which 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. Citing sec. 10, Nims on Unfair Competition and Trade-Marks and cases cited; secs. 21-22, Hopkins on Trade-Marks, Trade Names and Unfair Competition and cases cited." That point is sustained by the authorities, and is well stated in Hanover Star Milling Co. vs. Allen and Wheeler Co. (208 Fed., 513), in which they syllabus says: Since it is the trade and not the mark that is to be protected, a trade-mark acknowledges no territorial boundaries of 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

TRADEMARK INFRINGEMENT

It is very apparent that the purpose and intent of Herman and his associates in seeking to incorporate under the name of Western Electric Company, Inc., was to unfairly and unjustly compete in the Philippine Islands with the Western Electric Company, Inc., in articles which are manufactured by, and bear the name of, that company, all of which is prohibited by Act No. 666, and was made known to the defendant Reyes by the letter known in the record to the defendant Reyes by the letter known in the record as Exhibit A. The plaintiff, Western Electric Company, Inc., has been in existence as a corporation for over fifty years, during which time it has established a reputation all over the world including the Philippine Islands, for the kind and quality of its manufactured articles, and it is very apparent that the whole purpose and intent of Herman and his associates in seeking to incorporate another corporation under the identical name of Western Electric Company, Inc., and for the same identical purpose as that of the plaintiff, is to trespass upon and profit by its good name and business reputation. The very fact that Herman and his associates have sought the use of that particular name for that identical purpose is conclusive evidence of the fraudulent intent with which it is done. The judgment of the lower court is affirmed, with costs

products bearing its corporate and trade name has a legal right to maintain an action in the Islands. Parenthetically, it may be stated that the ruling in the Mentholatum case was subsequently derogated when Congress, purposely to "counteract the effects" of said case, enacted Republic Act No. 638, inserting Section 21-A in the Trademark Law, which 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 under Act Numbered Fourteen hundred and fifty-nine, as amended, otherwise known as the Corporation Law, at the time it brings complaint." Petitioner argues that Section 21-A militates against respondent's capacity to maintain a suit for cancellation, since it requires, before a foreign corporation may bring an action, that its trademark or tradename has been registered under the Trademark Law. The argument misses the essential point in the said provision, which is that the foreign corporation is allowed there under to sue "whether or not it has been licensed to do business in the Philippines" pursuant to the Corporation Law (precisely to counteract the effects of the decision in the Mentholatum case). In any event, respondent in the present case is not suing for infringement or unfair competition under Section 21-A, but for cancellation under Section 17, on one of the grounds enumerated in Section 4. The first kind of action, it maybe stated, is cognizable by the Courts of First Instance (Sec. 27); the second partakes of an administrative proceeding before the Patent Office (Sec. 18, in relation to Sec. 8). And while a suit under Section 21-A requires that the mark or tradename alleged to have been infringed has been "registered or assigned" to the suing foreign corporation, a suit for cancellation of the registration of a mark or tradename under Section 17 has no such requirement. For such mark or tradename should not have been registered in the first place (and consequently may be cancelled if so registered) if it "consists of or comprises a mark or tradename which so resembles a mark or tradename ... previously used in the Philippines by another and not abandoned, as to be likely, when applied to or used in connection with goods, business or services of the applicant, to cause confusion or mistake or to deceive purchasers; ..."(Sec. 4d). WHEREFORE, the petition is dismissed, and the resolution of the Director of Patents dated August 6, 1964 is affirmed, with costs. PUMA SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G., petitioner vs. THE INTERMEDIATE APPELLATE COURT and MIL-ORO MANUFACTURING CORPORATION, respondents

GENERAL GARMENTS CORPORATION, petitioner, vs. THE DIRECTOR OF PATENTS and PURITAN CORPORATION, respondents

SPORTSWEAR

(G.R. No. L-24295; September 30, 1971)

FACTS: Respondent Puritan Sportswear Corporation, a corporation organized and exiting under the laws of the state of Pensylvania, USA filed a petition with the Philippine Patent Office for the cancellation of the petitioners trademark Puritan, alleging ownership and prior use in the Philippines of the said trademark for assorted mens wear, such as sweaters, shirts, jackets, undershirts and briefs, which has not been abandoned. It further alleged that the registration thereof by petitioner had been obtained fraudulently and in violation of Sec. 17(c) of RA 166, in relation to Sec. 4(d) thereof. Petitioner filed a motion to dismiss on several grounds which may be synthesized to respondents lack of capacity to maintain suit in the Philippines which was denied. ISSUE: WON Respondent Puritan Sportswear can maintain the suit? HELD: Yes. That respondent is a juridical person should be beyond serious dispute. 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 (Secs. 68 and 69, Corporation Law) 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. As first enunciated in Marshall-Wells Co. v. Elser & Co. "the object of the statute (Secs. 68 and 69, Corporation Law) 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 (being) 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. ..." The principle has since then been applied in a number of other cases. A more or less analogous question arose in Western Equipment & Supply Co. v. Reyes, 51 Phil. 115. The syllabus of the report, which is a correct statement of the doctrine laid down in the decision, reads as follows: 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

(G.R. No. 75067; February 26, 1988)

FACTS: Petitioner, a corporation organized and existing under the laws of the Federal Republic of Germany filed a complaint of patent or trademark infringement against herein respondent before the RTC of Makati. Private respondent filed a motion to dismiss on the ground that petitioner had no capacity to sue which was denied. On appeal, the CA reversed the trial court. ISSUE: WON petitioner had capacity to sue? HELD: Yes. Petitioner maintains that it has substantially complied with the requirements of Section 21-A of Republic Act R.A. No. 166, as amended. According to the petitioner, its complaint specifically alleged that it is not doing business in the Philippines and is suing under the said Repulbic Act; that Section 21-A thereof provides that "the country of which the said corporation or juristic person is a citizen, or in which it is domiciled, by treaty, convention or law, grants a similar privilege to corporate or juristic persons of the Philippines" but does not mandatorily require that such reciprocity between the Federal Republic of Germany and the Philippines be pleaded; that such reciprocity arrangement is embodied in and supplied by the Union Convention for the Protection of Industrial Property Paris Convention) to which both the Philippines and Federal Republic of Germany are signatories and that since the Paris 'Convention is a treaty which, pursuant to our Constitution, forms part of the law of the land, our courts are bound to take judicial notice of such treaty, and, consequently, this fact need not be averred in the complaint. We agree.

In the leading case of La Chemise Lacoste, S.A .v. Fernandez, (129 SCRA 373), we ruled: But even assuming the truth of the private respondents allegation that the petitioner failed to allege material facto in its petition relative to capacity to sue, the petitioner may still maintain the present suit against respondent Hernandes. As early as 1927, this Court was, and it still is, of the view that a foreign corporation not doing business in the Philippines needs no license to sue before Philippine courts for infringement of trademark and unfair competition. Thus, in Western Equipment and Supply Co. v. Reyes (51 Phil. 11 5), this Court held that 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. Quoting the Paris Convention and the case of Vanity Fair Mills, Inc. v. T. Eaton, Co. (234 F. 2d 633), this Court further said: By the same token, the petitioner should be given the same treatment in the Philippines as we make available to our own citizens. We are obligated to assure to nationals of 'countries of the Union' an effective protection against unfair competition in the same way that they are obligated to similarly protect Filipino citizens and firms. In the case of of Cerverse Rubber Corporation V. Universal Rubber Products, Inc. (174 SCRA 165), we likewise re-aafirmed our adherence to the Paris Convention: The ruling in the aforecited case is in consonance with the Convention of Converse Rubber Corporation v. Universal Rubber Products, Inc. (I 47 SCRA 165), we likewise re-affirmed our adherence to the Paris Convention: the Union of Paris for the Protection of Industrial Property to which the Philippines became a party on September 27, 1965. Article 8 thereof provides that 'a trade name [corporation name] shall be protected in all the countries of the Union without the obligation of filing or registration,

(G.R. No. L-65659 May 2l, 1984)

FACTS: Petitioner, a corporation organized and existing under the laws of France and not doing business in the Philippines, filed with the NBI a lettercomplaint alleging therein the acts of unfair competition being committed by respondent Hemandas and requesting their assistance in his apprehension and prosecution, after Hermandas acquired a patent for the use of CHEMISE LACOSTE & DEVICE. NBI filed with the respondent court for two search warrant which was issued and for which a motion to quash was filed by Hermandas alleging that his trademark is different from that of petitioner, which was granted by respondent court. ISSUE: WON petitioner, having a representative, is doing business in the Philippines? HELD: No. Respondent states that not only is the petitioner not doing business in the Philippines but it also is not licensed to do business in the Philippines. He also cites the case of Leviton Industries v. Salvador (114 SCRA 420) to support his contention The Leviton case, however, involved a complaint for unfair competition under Section 21-A of Republic Act No. 166 which provides: Sec. 21 A. Any foreign corporation or juristic person to which a mark or tradename has been registered or assigned under this Act may bring an action hereunder for infringement, for unfair competition, or false designation of origin and false description, whether or not it has been licensed to do business in the Philippines under Act numbered Fourteen Hundred and Fifty-Nine, as amended, otherwise known as the Corporation Law, at the time it brings the complaint; Provided, That the country of which the said foreign corporation or juristic person is a citizen, or in which it is domiciled, by treaty, convention or law, grants a similar privilege to corporate or juristic persons of the Philippines. We held that it was not enough for Leviton, a foreign corporation organized and existing under the laws of the State of New York, United States of America, to merely allege that it is a foreign corporation. It averred in Paragraph 2 of its complaint that its action was being filed under the provisions of Section 21-A of Republic Act No. 166, as amended. Compliance with the requirements imposed by the above-cited provision was necessary because Section 21-A of Republic Act No. 166 having explicitly laid down certain conditions in a specific proviso, the same must be expressly averred before a successful prosecution may ensue. It is therefore, necessary for the foreign corporation to comply with these requirements or aver why it should be exempted from them, if such was the case. The foreign corporation may have the right to sue before Philippine courts, but our rules on pleadings require that the qualifying circumstances necessary for the assertion of such right should first be affirmatively pleaded. In contradistinction, the present case involves a complaint for violation of Article 189 of the Revised Penal Code. The Leviton case is not applicable. Asserting a distinctly different position from the Leviton argument, Hemandas argued in his brief that the petitioner was doing business in the Philippines but was not licensed to do so. To support this argument, he states that the applicable ruling is the case of Mentholatum Co., Inc. v. Mangaliman: (72 Phil. 524) where Mentholatum Co. Inc., a foreign corporation and PhilippineAmerican Drug Co., the former's exclusive distributing agent in the Philippines filed a complaint for infringement of trademark and unfair competition against the Mangalimans. The argument has no merit. The Mentholatum case is distinct from and inapplicable to the case at bar. Philippine American Drug Co., Inc., was admittedly selling products of its principal Mentholatum Co., Inc., in the latter's name or for the latter's account. Thus, this Court held that "whatever transactions the Philippine-American Drug Co., Inc. had executed in view of the law, the Mentholatum Co., Inc., did it itself. And, the Mentholatum Co., Inc., being a foreign doing business in the Philippines without the license required by Section 68 of the Corporation Law, it may not prosecute this action for violation of trademark and unfair competition." In the present case, however, the petitioner is a foreign corporation not doing business in the Philippines. The marketing of its products in the Philippines is done through an exclusive distributor, Rustan Commercial Corporation. The latter is an independent entity which buys and then markets

whether or not it forms part of the trademark.'

The mandate of the aforementioned Convention finds implementation in Section 37 of RA No. 166, otherwise known as the trademark Law:

Rights of Foreign Registrants. Persons who are nationals of, domiciled

in, or have a bona fide or effective business or commercial establishment in any foreign country, which is a party to an international convention or treaty relating to marks or tradenames on the represssion of unfair competition to which the Philippines may be party, shall be entitled to the benefits and subject to the provisions of this Act ...

Tradenames of persons described in the first paragraph of this section shall be protected without the obligation of filing or registration whether or not they form part of marks. We, therefore, hold that the petitioner had the legal capacity to file the action below.

SUING FOR VIOLATION OF THE PENAL CODE AND AGENT DOING BUSINESS UNDER ITS OWN NAME
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. L-63796-97; May 2, 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

not only products of the petitioner but also many other products bearing equally well-known and established trademarks and tradenames. In other words, Rustan is not a mere agent or conduit of the petitioner. The rules and regulations promulgated by the Board of Investments pursuant to its rule-making power under Presidential Decree No. 1789, otherwise known as the Omnibus Investment Code, support a finding that the petitioner is not doing business in the Philippines. Rule I, Sec. 1 (g) of said rules and regulations defines "doing business" as one" which includes, inter alia: (1) ... A foreign firm which does business through middlemen acting on their own names, such as indentors, commercial brokers or commission merchants, shall not be deemed doing business in the Philippines. But such indentors, commercial brokers or commission merchants shall be the ones deemed to be doing 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 account, and not in the name or for the account of a principal. Thus, where a foreign firm is represented by a person or local company which does not act in its name but in the name of the foreign firm the latter is doing business in the Philippines. xxx xxx xxx Applying the above provisions to the facts of this case, we find and conclude that the petitioner is not doing business in the Philippines. Rustan is actually a middleman acting and transacting business in its own name and or its own account and not in the name or for the account of the petitioner. ISSUE2: WON the criminal case can be maintained even if the foreign corporation is doing business without a license? HELD: Yes. But even assuming the truth of the private respondent's allegation that the petitioner failed to allege material facts in its petition relative to capacity to sue, the petitioner may still maintain the present suit against respondent Hemandas. As early as 1927, this Court was, and it still is, of the view that a foreign corporation not doing business in the Philippines needs no license to sue before Philippine courts for infringement of trademark and unfair competition. Our recognizing the capacity of the petitioner to sue is not by any means novel or precedent setting. Our jurisprudence is replete with cases illustrating instances when foreign corporations not doing business in the Philippines may nonetheless sue in our courts. In East Board Navigation Ltd, v. Ysmael and Co., Inc. (102 Phil. 1), we recognized a right of foreign corporation to sue on isolated transactions. In General Garments Corp. v. Director of Patents (41 SCRA 50), we sustained the right of Puritan Sportswear Corp., a foreign corporation not licensed to do and not doing business in the Philippines, to file a petition for cancellation of a trademark before the Patent Office. More important is the nature of the case which led to this petition. What preceded this petition for certiorari was a letter complaint filed before the NBI charging Hemandas with a criminal offense, i.e., violation of Article 189 of the Revised Penal Code. If prosecution follows after the completion of the preliminary investigation being conducted by the Special Prosecutor the information shall be in the name of the People of the Philippines and no longer the petitioner which is only an aggrieved party since a criminal offense is essentially an act against the State. It is the latter which is principally the injured party although there is a private right violated. Petitioner's capacity to sue would become, therefore, of not much significance in the main case. We cannot snow a possible violator of our criminal statutes to escape prosecution upon a far-fetched contention that the aggrieved party or victim of a crime has no standing to sue. ISSUE3: WON petitioner has a right to maintain a suit for infringement of trademarks? HELD: Yes. We are moreover recognizing our duties and the rights of foreign states under the Paris Convention for the Protection of Industrial Property to which the Philippines and France are parties. We are simply interpreting and enforcing a solemn international commitment of the Philippines embodied in a multilateral treaty to which we are a party and which we entered into because it is in our national interest to do so.

The Paris Convention provides in part that: ARTICLE 2 (2) Nationals of each of the countries of the Union shall as regards the protection of industrial property, enjoy in all the other countries of the Union the advantages that their respective laws now grant, or may hereafter grant, to nationals, without prejudice to the rights specially provided by the present Convention. Consequently, they shall have the same protection as the latter, and the same legal remedy against any infringement of their rights, provided they observe the conditions and formalities imposed upon nationals. xxx xxx xxx ARTICLE 6 (1) The countries of the Union undertake, either administratively if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration and to prohibit the use of a trademark which constitutes a reproduction, imitation or translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to be well-known in that country as being already the mark of a person entitled to the benefits of the present Convention and used for Identical or similar goods. These provisions shall also apply when the essential part of the mark constitutes a reproduction of any such wellknown mark or an imitation liable to create confusion therewith. xxx xxx xxx ARTICLE 8 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 a trademark. xxx xxx xxx ARTICLE 10bis (1) The countries of the Union are bound to assure to persons entitled to the benefits of the Union effective protection against unfair competition A treaty or convention is not a mere moral obligation to be enforced or not at the whims of an incumbent head of a Ministry. It creates a legally binding obligation on the parties founded on the generally accepted principle of international law of pacta sunt servanda which has been adopted as part of the law of our land. (Constitution, Art. II, Sec. 3). We have carefully gone over the records of all the cases filed in this Court and find more than enough evidence to sustain a finding that the petitioner is the owner of the trademarks "LACOSTE", "CHEMISE LACOSTE", the crocodile or alligator device, and the composite mark of LACOSTE and the representation of the crocodile or alligator. Any pretensions of the private respondent that he is the owner are absolutely without basis. Any further ventilation of the issue of ownership before the Patent Office will be a superfluity and a dilatory tactic. The records show that the goodwill and reputation of the petitioner's products bearing the trademark LACOSTE date back even before 1964 when LACOSTE clothing apparels were first marketed in the Philippines. To allow Hemandas to continue using the trademark Lacoste for the simple reason that he was the first registrant in the Supplemental Register of a trademark used in international commerce and not belonging to him is to render nugatory the very essence of the law on trademarks and tradenames. WHEREFORE, the petition in G.R. NOS. 63797-97 is hereby GRANTED. The order dated April 22, 1983 of the respondent regional trial court is REVERSED and SET ASIDE. F. CAPACITY TO SUE

GENERAL RULE: A corporations capacity to sue must be affirmatively

pleaded in order that it may proceed and effectively institute a case in Philippine courts. Thus, in the case for instance of a complaint for unfair labor competition under Sec. 21-A of RA No. 166, it was held that it is necessary for the foreign corporation to comply with the provision thereof or aver why it should be exempted from them, if such be the case. The foreign corporation may have the right to sue before our courts but our rules on pleadings

require that the qualifying circumstances necessary for the assertion of such right should first be affirmatively pleaded (Leviton Industries vs Salvador).

The orders appealed from are affirmed, with costs against plaintiffsappellants OLYMPIA BUSINESS MACHINES CO. (PHIL.) INC. and CALIFORNIA INSURANCE CO., LTD., petitioners, vs. E. RAZON, INC., TOYO LINE, LTD., and SEA BRIDGE CONTAINER SHIPPING LINES, INC., respondents.

EXCEPTIONS: EFFECT OF NON-PLEADING: If the dismissal of the case is based on the

failure of the foreign corporation to aver its capacity to sue, would not, however, bar the institution of the same action, dismissal should not be allowed, especially so if it would be an idle, circuitous ceremony considering the absence of any meritorious substantial defense of the defendant. Technical rules should not be accorded undue importance to frustrate and defeat a plainly valid claim (Olympia Business Machines vs. E. Razon, Inc.)

(G.R. No. 75631; October 28, 1987)

COMPLAINT BASED ON VIOLATION OF RPC OR THE CORPORATION IS MERELY DEFENDING ITSELF: averment of capacity to sue is not

FACTS: Olympia Office Machines, Ltd., a foreign corporation with offices at Hongkong, shipped 300 portable typewriters to its sister company in Manila, Olympia Business Machines Company (Phil.), Inc., such shipment insured with California Insurance Co., Ltd. another foreign corporation. The typewriters were discharged at North Harbor, Manila into the custody of the carriers agent which in turn turned it over to E. Razon, Inc. While in the latters possession, part of the shipment was stolen. California Insurance was subrogated to the claim for loss after paying Olympia (Phil). Both Olympia (Phil.) and California thereafter brought a suit against E. Razon, Inc., the carrier and the container company, which had earlier refused to make good the loss of the goods. For E.Razons failure to appear at the pre-trial and after ex-parte reception of evidence, the trial court decided for California. On Razons motion, the order was set aside and Razon amended his answer that California is a foreign corporation doing business in the Philippines without a license to do so and that it cannot maintain suit in this jurisdiction. But once again, Razon failed to appear at the pre-trial, as a result, the trial court revived the decision. On appeal, the IAC reversed the decision holding, among others, that California failed to allege in the complaint its capacity to sue. ISSUE: WON the failure of California to aver its capacity to sue is fatal? HELD: The slightest reflection will however immediately make Tear that between the factual settings of the Atlantic Mutual case and the case at bar, there are distinctions of no little significance. In the former, Atlantic Mutual Insurance Co. and Continental Insurance Co., two (2) American firms, brought suit as subrogees of the shipper and/or consignee of the goods ensured without joining the latter. In the case at hand, the action was instituted by both the subrogee, California Insurance Co., Ltd., and the subrogor, a domestic corporation, Olympia (Philippines) about whose capacity to sue no dispute exists. In Atlantic Mutual, the plaintiffs' lack of capacity to sue was raised by the defendant at the earliest opportunity, through a motion to dismiss filed within the reglementary period to answer in accordance with Rule 16 of the Rules of Court. In the case at bar, the defendant was twice declared in default, and the defense of lack of capacity to sue, was not raised until after 'the first declaration of default had been lifted. Moreover, there Is a pronouncement by the Court of Appeals in the instant case, that the defendant had no meritorious defenses save that of lack of capacity to sue on the part of the plaintiff. These circumstances proscribe the application to the controversy at bar of the doctrine in Atlantic Mutual. The defendant's conduct in this case strongly indicates the absence of any valid defense on its part against the plaintiffs' claims: the defendant failed to appear for pre-trial despite notice, not once, but twice and was in consequence twice declared in default. The lack of any meritorious defense on its part was in fact confirmed by the declaration of the Court of Appeals, which it has not challenged, that three (3) errors attributed by it to the Trial Court were "unmeritorious except the second," i. e., plaintiff's lack of capacity to sue. Even assuming incapacity on the part of California, no such incapacity may be attributed to its coplaintiff, Olympia Business Machines Co. (Phil.), Inc. And if strictly necessary, the latter could quite easily execute a cancellation of the deed of subrogation or of re-assignment of the right of action from California back to Olympia. Moreover, the dismissal of the case at this stage, would not bar the institution by California of the same action, this time alleging in its complaint that it was suing on a single, isolated transaction. But this would be an Idle, circuitous ceremony in the light of the unchallenged declaration by the Court of Appeals of the absence of any meritorious substantial defense on the part of defendant Razon. This would be to accord undue importance and significance to technical rules, to allow an inflexible, unreasoning adherence to such technical rules to frustrate and defeat a plainly valid claim.

likewise necessary as laid down in the case of Chemise Lacoste vs. Fernandez, or when the foreign corporation is not suing or maintaining a suit but is merely defending itself from one filed against it (Times, Inc. vs. Reyes). ATLANTIC MUTUAL INSURANCE COMPANY and CONTINENTAL INSURANCE COMPANY, plaintiffs and appellants, vs. CEBU STEVEDORING CO., INC., defendant and appellee

(G.R. No. L-18961; August 31, 1966)

FACTS: Plaintiff-appellants, organized and existing under the laws of the US, sued herein defendant-appellee, as subrogee to the shipper and consignee, alleging that the latter undertook to carry a shipment of copra for delivery to P&G Company at Cebu City but upon discharge, a portion of the copra was found damaged. Defendant moved to dismiss on the ground that the complaints on the ground of failure to allege compliance with Sec. 69 of the Corporation Law which was granted after failure of the plaintiff to comply with the amendment of the complaint. ISSUE: WON plaintiff-appellants have the right to sue as to the defects n the pleadings and procedures? HELD: No. It should be noted that insofar as the allegations in the complaint have a bearing on appellants' capacity to sue, all that is averred is that they are both foreign corporations existing under the laws of the United States. This averment conjures two alternative possibilities: either they are engaged in business in the Philippines or they are not so engaged. If the first, they must have been duly licensed in order to maintain this suit; if the second, if the transaction sued upon is singular and isolated, no such license is required. In either case, the qualifying circumstance is an essential part of the element of plaintiffs' capacity to sue and must be affirmatively pleaded. To be sure, under the Rules of Court (Section 11, Rule 15) in force prior to the promulgation of the Revised Rules on January 1, 1964, it was not necessary to aver the capacity of a party to sue except to the extent required to show jurisdiction of the court. In our opinion, however, such rule does not apply in all situations and under all circumstances. The theory behind a similar rule in the United States is "that capacity ... of a party for purpose of suit is not in dispute in the great bulk of cases, and that pleading and proof can be simplified by a rule that an averment of such matter is not necessary, except to show jurisdiction."1 But where as in the present case, the law denies to a foreign corporation the right to maintain suit unless it has previously complied with a certain requirement, then such compliance, or the fact that the suing corporation is exempt therefrom, becomes a necessary averment in the complaint. These are matters peculiarly within the knowledge of appellants alone, and it would be unfair to impose upon appellee the burden of asserting and proving the contrary. It is enough that foreign corporations are allowed by law to seek redress in our courts under certain conditions: the interpretation of the law should not go so far as to include, in effect, an inference that those conditions have been met from the mere fact that the party suing is a foreign corporation. It was indeed in the light of these and other consideration that this Court has seen fit to amend the former rule by requiring in the Revised Rules (Section 4, Rule 8) that "facts showing the capacity of a party to sue or be sued or the authority of a party to sue or be sued in a representative capacity or the legal existence of an organized association of persons that is made a party, must be averred."

WHEREFORE, the judgment of the Intermediate Appellate Court subject of the appeal is reverse and that of the Trial Court, dated February 1, 1980 reinstated and affirmed, with costs against the respondents. TIME, INC., petitioner, vs. HON. ANDRES REYES, as Judge of the Court of First Instance of Rizal, ELISEO S. ZARI, as Deputy Clerk of Court, Branch VI, Court of First Instance of Rizal, ANTONIO J. VILLEGAS and JUAN PONCE ENRILE, respondents.

(G.R. No. L-45144; April 3, 1939)

FACTS: Herein defendant-appellee Insular Lumber Company is a corporation existing and organized under the laws of the State of New York licensed to engage business in the Philippines. The plaintiff-appellant Grey, holder of 57 shares (which is less than 3% of the outstanding capital stock of defendant corporation), was denied access to the books and records of the company because, as alleged, the laws of New York provide that only a stockholder who own at least 3% of the outstanding capital stock of a corporation may make a written request to the treasurer or other fiscal officer for a statement of its affairs; that plaintiff neither has the 3% requirement nor made the written request. Plaintiff raises the Corporation Law which does not provide such requirements and gives any stockholder the right to examine the books of the corporation. Such law, being the law upon which the defendant corporation was issued a license to do business in the Philippines. ISSUE: WON appellant, as a stockholder, is entitled to inspect and examine the books and records of transactions of appellee? HELD: Under ection 77 Stock Corporation Law of New York. Under this law, plaintiff has the right to be furnished by the treasurer or other fiscal officer of the corporation with statement of its affairs embracing a particular account of all its assets and liabilities. In the third place, inasmuch as plaintiff, either at the hearing or in his motion for new trial, did not ask to have the stipulation of facts altered or changed, he cannot now, for the first time on appeal, raise the question that aside from the right conferred upon him by section 77 of the Stock Corporation Law of New York, he also entitled under the common law to examine and inspect the books and records of the defendant corporation. In the fourth place, neither can this right under the common law be granted the defendant in the present case, since the same can only be granted at the discretion of the court, under certain conditions, to wit: (a) That the stockholder of a corporation in New York has the right to inspect its books and records if it can be shown that he seeks information for an honest purpose (14 C. J., 853), or to protect his interest as stockholder. (In re Steinway, 159 N. Y., 250; 53 N. E., 1103; 45 L. R. A., 461 [aff. 31 App. Div., 70; 52 N. Y. S., 343]). (b) That said right to examine and inspect the books of the corporation must be exercised in good faith, for a specific and honest purpose, and not to gratify curiosity, or for speculative or vexatious purposes. (14 C. J., 854, 855.) The appellant has made no effort to prove or even allege that the information he desired to obtain through the examination and inspection of defendant's books was necessary to protect his interests as stockholder of the corporation, or that it was for a specific and honest purpose, and not to gratify curiosity, nor for speculative or vexatious purposes. In view of the foregoing, we affirm the judgment of the lower court, with costs against the appellant. H. AMENDMENTS TO THE ARTICLES OF INCORPROATION

(G.R. No. L-28882; May 31, 1971)

FACTS: Herein respondents Antonio Villegas and Juan Ponce Enrile sought to recover from herein petitioner damages upon an alleged libel arising from a publication of Time (Asia Edition) magazine, in its issue entitled Corruption in Asia. Petitioner filed a motion to dismiss on lack of jurisdiction and improper venue which was deferred until after the trial of the case. ISSUE: WON the petition for certiorari and prohibition will prosper? HELD: The dismissal of the present petition is asked on the ground that the petitioner foreign corporation failed to allege its capacity to sue in the courts of the Philippines. Respondents rely on section 69 of the Corporation law, which provides: SEC. 69. No foreign corporation or corporations formed, organized, or existing under any laws other than those of the Philippines shall be permitted to ... maintain by itself or assignee any suit for the recovery of any debt, claim, or demand whatever, unless it shall have the license prescribed in the section immediately preceding. ..." ...; They also invoke the ruling in Marshall-Wells Co. vs. Elser & Co., Inc. 7 that no foreign corporation may be permitted to maintain any suit in the local courts unless it shall have the license required by the law, and the ruling in Atlantic Mutual Ins. Co., Inc. vs. Cebu Stevedoring Co., Inc. 8 that "where ... the law denies to a foreign corporation the right to maintain suit unless it has previously complied with a certain requirement, then such compliance or the fact that the suing corporation is exempt therefrom, becomes a necessary averment in the complaint." We fail to see how these doctrines can be a propos in the case at bar, since the petitioner is not "maintaining any suit" but is merely defending one against itself; it did not file any complaint but only a corollary defensive petition to prohibit the lower court from further proceeding with a suit that it had no jurisdiction to entertain. Petitioner's failure to aver its legal capacity to institute the present petition is not fatal, for ... A foreign corporation may, by writ of prohibition, seek relief against the wrongful assumption of jurisdiction. And a foreign corporation seeking a writ of prohibition against further maintenance of a suit, on the ground of want of jurisdiction in which jurisdiction is not bound by the ruling of the court in which the suit was brought, on a motion to quash service of summons, that it has jurisdiction. WHEREFORE, the writs applied for are granted: the respondent Court of First Instance of Rizal is declared without jurisdiction to take cognizance of its Civil Case No. 10403; and its orders issued in connection therewith are hereby annulled and set aside,. Respondent court is further commanded to desist from further proceedings in Civil case No. 10403 aforesaid. Costs against private respondents, Antonio J. Villegas and Juan Ponce Enrile. G. LAWS GOVERNING FOREIGN CORPORATIONS

Sec. 129. Law applicable. - Any foreign corporation lawfully doing business in the Philippines shall be bound by all laws, rules and regulations applicable to domestic corporations of the same class, except such only as provide for the creation, formation, organization or dissolution of corporations or those which fix the relations, liabilities, responsibilities, or duties of stockholders, members, or officers of corporations to each other or to the corporation. M. E. GREY, plaintiff-appellant, vs. INSULAR LUMBER COMPANY, defendant-appelle

Sec. 130. Amendments to articles of incorporation or by-laws of foreign corporations. - Whenever the articles of incorporation or by-laws of a foreign corporation authorized to transact business in the Philippines are amended, such foreign corporation shall, within sixty (60) days after the amendment becomes effective, file with the Securities and Exchange Commission, and in the proper cases with the appropriate government agency, a duly authenticated copy of the articles of incorporation or by-laws, as amended, indicating clearly in capital letters or by underscoring the change or changes made, duly certified by the authorized official or officials of the country or state of incorporation. The filing thereof shall not of itself enlarge or alter the purpose or purposes for which such corporation is authorized to transact business in the Philippines. I. AMENDMENT OF LICENSE

Sec. 131. Amended license. - A foreign corporation authorized to transact business in the Philippines shall obtain an amended license in the event it changes its corporate name, or desires to pursue in the Philippines other or additional purposes, by submitting an application therefor to the Securities

and Exchange Commission, favorably government agency in the proper cases. J. MERGER/CONSOLIDATION

endorsed

by

the

appropriate

petition for withdrawal of license. No certificate of withdrawal shall be issued by the Securities and Exchange Commission unless all the following requirements are met; 1. All claims which have accrued in the Philippines have been paid, compromised or settled; 2. All taxes, imposts, assessments, and penalties, if any, lawfully due to the Philippine Government or any of its agencies or political subdivisions have been paid; and 3. The petition for withdrawal of license has been published once a week for three (3) consecutive weeks in a newspaper of general circulation in the Philippines. CHAPTER 19: MISCELLANEOUS PROVISIONS (TITLE XVI) Sec. 137. Outstanding capital stock defined. - The term "outstanding capital stock", as used in this Code, means the total shares of stock issued under binding subscription agreements to subscribers or stockholders, whether or not fully or partially paid, except treasury shares. Sec. 138. Designation of governing boards. - The provisions of specific provisions of this Code to the contrary notwithstanding, non-stock or special corporations may, through their articles of incorporation or their by-laws, designate their governing boards by any name other than as board of trustees. Sec. 139. Incorporation and other fees. - The Securities and Exchange Commission is hereby authorized to collect and receive fees as authorized by law or by rules and regulations promulgated by the Commission. Sec. 140. Stock ownership in certain corporations. - Pursuant to the duties specified by Article XIV of the Constitution, the National Economic and Development Authority shall, from time to time, make a determination of whether the corporate vehicle has been used by any corporation or by business or industry to frustrate the provisions thereof or of applicable laws, and shall submit to the Batasang Pambansa, whenever deemed necessary, a report of its findings, including recommendations for their prevention or correction. Maximum limits may be set by the Batasang Pambansa for stockholdings in corporations declared by it to be vested with a public interest pursuant to the provisions of this section, belonging to individuals or groups of individuals related to each other by consanguinity or affinity or by close business interests, or whenever it is necessary to achieve national objectives, prevent illegal monopolies or combinations in restraint or trade, or to implement national economic policies declared in laws, rules and regulations designed to promote the general welfare and foster economic development. In recommending to the Batasang Pambansa corporations, business or industries to be declared vested with a public interest and in formulating proposals for limitations on stock ownership, the National Economic and Development Authority shall consider the type and nature of the industry, the size of the enterprise, the economies of scale, the geographic location, the extent of Filipino ownership, the labor intensity of the activity, the export potential, as well as other factors which are germane to the realization and promotion of business and industry. Sec. 141. Annual report or corporations. - Every corporation, domestic or foreign, lawfully doing business in the Philippines shall submit to the Securities and Exchange Commission an annual report of its operations, together with a financial statement of its assets and liabilities, certified by any independent certified public accountant in appropriate cases, covering the preceding fiscal year and such other requirements as the Securities and Exchange Commission may require. Such report shall be submitted within such period as may be prescribed by the Securities and Exchange Commission. Sec. 142. Confidential nature of examination results. - All interrogatories propounded by the Securities and Exchange Commission and the answers thereto, as well as the results of any examination made by the Commission or by any other official authorized by law to make an examination of the operations, books and records of any corporation, shall be kept strictly confidential, except insofar as the law may require the same to be made public or where such interrogatories, answers or results are

Sec. 132. Merger or consolidation involving a foreign corporation licensed in the Philippines. - One or more foreign corporations authorized to transact business in the Philippines may merge or consolidate with any domestic corporation or corporations if such is permitted under Philippine laws and by the law of its incorporation: Provided, That the requirements on merger or consolidation as provided in this Code are followed. Whenever a foreign corporation authorized to transact business in the Philippines shall be a party to a merger or consolidation in its home country or state as permitted by the law of its incorporation, such foreign corporation shall, within sixty (60) days after such merger or consolidation becomes effective, file with the Securities and Exchange Commission, and in proper cases with the appropriate government agency, a copy of the articles of merger or consolidation duly authenticated by the proper official or officials of the country or state under the laws of which merger or consolidation was effected: Provided, however, That if the absorbed corporation is the foreign corporation doing business in the Philippines, the latter shall at the same time file a petition for withdrawal of it license in accordance with this Title. K. REVOCATION OF LICENSE

Sec. 134. Revocation of license. - Without prejudice to other grounds provided by special laws, the license of a foreign corporation to transact business in the Philippines may be revoked or suspended by the Securities and Exchange Commission upon any of the following grounds: 1. Failure to file its annual report or pay any fees as required by this Code; 2. Failure to appoint and maintain a resident agent in the Philippines as required by this Title; 3. Failure, after change of its resident agent or of his address, to submit to the Securities and Exchange Commission a statement of such change as required by this Title; 4. Failure to submit to the Securities and Exchange Commission an authenticated copy of any amendment to its articles of incorporation or bylaws or of any articles of merger or consolidation within the time prescribed by this Title; 5. A misrepresentation of any material matter in any application, report, affidavit or other document submitted by such corporation pursuant to this Title; 6. Failure to pay any and all taxes, imposts, assessments or penalties, if any, lawfully due to the Philippine Government or any of its agencies or political subdivisions; 7. Transacting business in the Philippines outside of the purpose or purposes for which such corporation is authorized under its license; 8. Transacting business in the Philippines as agent of or acting for and in behalf of any foreign corporation or entity not duly licensed to do business in the Philippines; or 9. Any other ground as would render it unfit to transact business in the Philippines. Sec. 135. Issuance of certificate of revocation. - Upon the revocation of any such license to transact business in the Philippines, the Securities and Exchange Commission shall issue a corresponding certificate of revocation, furnishing a copy thereof to the appropriate government agency in the proper cases. The Securities and Exchange Commission shall also mail to the corporation at its registered office in the Philippines a notice of such revocation accompanied by a copy of the certificate of revocation. L. WITHDRAWAL OF FOREIGN CORPORATIONS

Sec. 136. Withdrawal of foreign corporations. - Subject to existing laws and regulations, a foreign corporation licensed to transact business in the Philippines may be allowed to withdraw from the Philippines by filing a

necessary to be presented as evidence before any court. Sec. 143. Rule-making power of the Securities and Exchange Commission. - The Securities and Exchange Commission shall have the power and authority to implement the provisions of this Code, and to promulgate rules and regulations reasonably necessary to enable it to perform its duties hereunder, particularly in the prevention of fraud and abuses on the part of the controlling stockholders, members, directors, trustees or officers. Sec. 144. Violations of the Code. - Violations of any of the provisions of this Code or its amendments not otherwise specifically penalized therein shall be punished by a fine of not less than one thousand (P1,000.00) pesos but not more than ten thousand (P10,000.00) pesos or by imprisonment for not less than thirty (30) days but not more than five (5) years, or both, in the discretion of the court. If the violation is committed by a corporation, the same may, after notice and hearing, be dissolved in appropriate proceedings before the Securities and Exchange Commission: Provided, That such dissolution shall not preclude the institution of appropriate action against the director, trustee or officer of the corporation responsible for said violation: Provided, further, That nothing in this section shall be construed to repeal the other causes for dissolution of a corporation provided in this Code. Sec. 145. Amendment or repeal. - No right or remedy in favor of or against any corporation, its stockholders, members, directors, trustees, or officers, nor any liability incurred by any such corporation, stockholders, members, directors, trustees, or officers, shall be removed or impaired either by the subsequent dissolution of said corporation or by any subsequent amendment or repeal of this Code or of any part thereof. Sec. 146. Repealing clause. - Except as expressly provided by this Code, all laws or parts thereof inconsistent with any provision of this Code shall be deemed repealed. Sec. 147. Separability of provisions. - Should any provision of this Code or any part thereof be declared invalid or unconstitutional, the other provisions, so far as they are separable, shall remain in force. Sec. 148. Applicability to existing corporations. - All corporations lawfully existing and doing business in the Philippines on the date of the effectivity of this Code and heretofore authorized, licensed or registered by the Securities and Exchange Commission, shall be deemed to have been authorized, licensed or registered under the provisions of this Code, subject to the terms and conditions of its license, and shall be governed by the provisions hereof: Provided, That if any such corporation is affected by the new requirements of this Code, said corporation shall, unless otherwise herein provided, be given a period of not more than two (2) years from the effectivity of this Code within which to comply with the same. Sec. 149. Effectivity. - This Code shall take effect immediately upon its approval.