WHEREFORE, judgment is rendered in favor of plaintiff [Cargill, Inc.], ordering defendant INTRA STRATA ASSURANCE CORPORATION to solidarily pay plaintiff the total amount of SIXTEEN MILLION NINE HUNDRED NINETY-THREE THOUSAND AND TWO HUNDRED PESOS (P16,993,200.00), Philippine Currency, with interest at the legal rate from October 10, 1990 until fully paid, plus attorney's fees in the sum of TWO HUNDRED THOUSAND PESOS (P200,000.00), Philippine Currency and the costs of the suit.
The Counterclaim of Intra Strata Assurance Corporation is hereby dismissed for lack of merit.
SO ORDERED.11
- Whether petitioner is doing or transacting business in the Philippines in contemplation of the law and established jurisprudence;
- Whether respondent is estopped from invoking the defense that petitioner has no legal capacity to sue in the Philippines;
- Whether petitioner is seeking a review of the findings of fact of the Court of Appeals; and
- Whether the advance payment of $500,000 was released to NMC without the submission of the supporting documents required in the contract and the "red clause" Letter of Credit from which said amount was drawn.12
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.
x x x the phrase "doing business" shall include soliciting orders, purchases, service contracts, opening offices, whether called 'liaison' offices or branches; appointing representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the Philippines for a period or periods totalling one hundred eighty days or more; participating in the management, supervision or control of any domestic business firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization. (Emphasis supplied)
[T]he phrase "doing business" shall include "soliciting orders, service contracts, opening offices, whether called 'liaison' offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country 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 of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization: Provided, however, That the phrase 'doing business' shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor; nor having a nominee director or officer to represent its interests 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.
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 transaction and in order to give the latter a chance to make good on their obligation. x x x
x x x 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.17
1. Mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor;
2. Having a nominee director or officer to represent its interests in such corporation;
3. Appointing a representative or distributor domiciled in the Philippines which transacts business in the representative's or distributor's own name and account;
4. The publication of a general advertisement through any print or broast media;
5. Maintaining a stock of goods in the Philippines solely for the purpose of having the same processed by another entity in the Philippines;
6. Consignment by a foreign entity of equipment with a local company to be used in the processing of products for export;
7. Collecting information in the Philippines; and
8. Performing services auxiliary to an existing isolated contract of sale which are not on a continuing basis, such as installing in the Philippines machinery it has manufactured or exported to the Philippines, servicing the same, training domestic workers to operate it, and similar incidental services.
An exporter in one country may export its products to many foreign importing countries without performing in the importing countries specific commercial acts that would constitute doing business in the importing countries. The mere act of exporting from one's own country, without doing any specific commercial act within the territory of the importing country, cannot be deemed as doing business in the importing country. The importing country does not require jurisdiction over the foreign exporter who has not yet performed any specific commercial act within the territory of the importing country. Without jurisdiction over the foreign exporter, the importing country cannot compel the foreign exporter to secure a license to do business in the importing country.
Otherwise, Philippine exporters, by the mere act alone of exporting their products, could be considered by the importing countries to be doing business in those countries. This will require Philippine exporters to secure a business license in every foreign country where they usually export their products, even if they do not perform any specific commercial act within the territory of such importing countries. Such a legal concept will have deleterious effect not only on Philippine exports, but also on global trade.
To be doing or "transacting business in the Philippines" for purposes of Section 133 of the Corporation Code, the foreign corporation must actually transact business in the Philippines, that is, perform specific business transactions within the Philippine territory on a continuing basis in its own name and for its own account. Actual transaction of business within the Philippine territory is an essential requisite for the Philippines to to acquire jurisdiction over a foreign corporation and thus require the foreign corporation to secure a Philippine business license. If a foreign corporation does not transact such kind of business in the Philippines, even if it exports its products to the Philippines, the Philippines has no jurisdiction to require such foreign corporation to secure a Philippine business license.23 (Emphasis supplied)
Endnotes:
* Designated additional member per Raffle dated 8 March 2010.
1Under Rule 45 of the 1997 Rules of Civil Procedure.
2Penned by Associate Justice Roberto A. Barrios with Associate Justices Amelita G. Tolentino and Vicente S. E. Veloso, concurring.
3 Records, p. 393.
4 Id. at 394-395.
5 Id. at 396-397.
6 Id. at 398.
7 Id. at 399.
8 Id. at 1-8.
9 Id. at 251-254.
10 Id. at 258-261.
11 CA rollo, pp. 89-90.
12 Rollo, pp. 154-155.
13 Section 123 of the Corporation Code reads:SEC. 123. Definition and rights of foreign corporations. - For the purpose 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. (Emphasis supplied)
14 Entitled "AN ACT TO REQUIRE THAT THE MAKING OF INVESTMENTS AND THE DOING OF BUSINESS WITHIN THE PHILIPPINES BY FOREIGNERS OR BUSINESS ORGANIZATIONS OWNED IN WHOLE OR IN PART BY FOREIGNERS SHOULD CONTRIBUTE TO THE SOUND AND BALANCED DEVELOPMENT OF THE NATIONAL ECONOMY ON A SELF SUSTAINING BASIS, AND FOR OTHER PURPOSES." RA 5455 was approved on 30 September 1968.
15 Rimbunan Hijau Group of Companies v. Oriental Wood Processing Corporation, G.R. No. 152228, 23 September 2005, 470 SCRA 650; MR Holdings, Ltd. v. Sheriff Bajar, 430 Phil. 443 (2002); Top-Weld Manufacturing, Inc. v. ECED, S.A., IRTI, S.A., Eutectic Corp., 222 Phil. 424 (1985).
16 227 Phil. 267 (1986).
17Id. at 274-275.
18 316 Phil. 562 (1995).
19C. VILLANUEVA, PHILIPPINE CORPORATE LAW 801-802 (2001).
20 Agilent Technologies Singapore (PTE) Ltd. v. Integrated Silicon Technology Phil. Corp., 471 Phil. 582 (2004).
21 See Exh. "T" (contract between petitioner and its broker, Agrotex Commodities, Inc.), records, pp. 553-557.
22 G.R. No. 147905, 28 May 2007, 523 SCRA 233.
23 Id. at 242-243.
24 AMA Computer College-East Rizal v. Ignacio, G.R. No. 178520, 23 June 2009, 590 SCRA 633; Producers Bank of the Philippines v. Excelsa Industries, Inc., G.R. No. 152071, 8 May 2009, 587 SCRA 370; Cavile v. Litania-Hong, G.R. No. 179540, 13 March 2009, 581 SCRA 408; Microsoft Corp. v. Maxicorp, Inc., 481 Phil. 550 (2004).
25 TSN, 14 June 1993, pp. 19-25. The Head of the International Operations Department of the Bank of Philippine Islands further testified that most of the documents supporting the negotiations in 1989 could no longer be found in their files since they only keep current records and at the time she testified, the records before 1991 were already destroyed.