Eriks Pte., Ltd. vs. Court of Appeals; Appeals; G.R. No. 118843; February 6, 1997 Prepared by: Kathrina e !a"tro #!$R%N& By securing a license, a foreign entity would be giving assurance that it will abide by the decisions of our courts, even if adverse to it. F'!$( Petitioner Eriks Pte., Ltd., a non-resident foreign corporation, duly organized and exist existin ing g under under the the laws laws of Singa Singapor pore, e, is engag engaged ed in manufa manufactu cturin ring g and sale sale of elements used in sealing pumps, valves and pipes for industrial purposes, valves and control euipment used for industrial !uid control and P"# pipes and $ttings for industri industrial al uses. uses. %he petitioner petitioner corporat corporation ion is not licensed licensed to do &usiness &usiness in the Philippines and not engaged and is suing on an isolated transaction for which it has capacity to sue. 'n various dates, Private respondent (el$n Enriuez, )r., doing &usiness under (elrene E* #ontrols #enter and+or E* armine #ommercial, ordered ordered and received from petitioner various materials and such was delivered delivered via airfreight. airfreight. %he transfers of goods were perfected in Singapore, Singapore, for private respondents respondents accoun account, t, .'.*. .'.*. Singa Singapor pore, e, with with a /0day /0day credi creditt term. term. 1pon 1pon demand demands s made made &y petitioner, private respondents failed and refused to settle its account. Petitioner then $led a complaint with 2%# for the collection of sum of money plus interest and damages. Private respondent move to dismiss the complaint on the grounds that petitioner corporation had no legal capacity to sue. %he %rial court dismissed the action on the ground that petitioner is a foreign corporation doing &usiness in the Philippines without a license. 'n appeal, the #3 a4rmed a4rmed said said order order as it deemed deemed the the series series of transa transact ction ions s &etwee &etween n Peti Petitio tioner ner #orporation and private respondent not to &e an isolated or casual transaction. %he #3 also found petitioner to &e without legal capacity to sue. 5ence, petition to the Supreme #ourt.
%(()&( 6. 7heth 7hether er petiti petitione oners rs &usines &usiness s with with priva private te respo respond ndent ent may &e treat treated ed as isolated transactions. transactions. 8. 7hether 7hether Petitio Petitioner ner #orporatio #orporation n may maintain maintain an action in Philippi Philippine ne courts considering that it has no license to do &usiness in the country. *&+R)+%NG 6. 9', the Supreme #ourt agrees to the ruling of the lower courts that the &usiness made &y petitioner was not an isolated transaction. %he court explained that &ase on the factual evidence evidence presen presented, ted, more more than the sheer sheer num&er num&er of transact transactions ions enter entered ed into, into, a clear clear and unmist unmistak aka&l a&le e inten intentio tion n on the the part part of petiti petition oner er to continue the &ody of its &usiness in the Philippines is more than apparent. urther, its grant grant and exten extensi sion on of /0-day /0-day credi creditt terms terms to privat private e resp respond ondent ent for every every purchase purchase made, unargua&ly unargua&ly shows an intention to continue transacting with private respondent, since in the usual course of commercial transactions, credit is extended only to customers in good standing or to those on whom there is an intention to maintain long-term relationship %he court further ruled that petitioner corporation was was inde indeed ed doin doing g &usi &usine ness ss in the the coun countr try y. %he %he cour courtt cite cited d the the case case of The Mentholatum Co., Inc. vs. Mangalima, %he Mangalima, %he true test, however, seems to &e whether
the foreig foreign n corpo corpora ratio tion n is contin continui uing ng the &ody &ody or su&st su&stanc ance e of the &usine &usiness ss or enterprise for which it was organized or whether it has su&stantially retired from it and turned it over to another. %he #ourt holds that the series of transactions in uestion could not have &een isolated or casual transactions. transactions. 7hat is determinative determinative of :doing &usiness; is not really the num&er or the uantity of the transactions, &ut more importantly, the intention of an entity to continue the &ody of its &usiness in the country. %he num&er and uantity are merely evidence of such intention. 8. 9', the court ruled ruled that petitioner is is incapacitated to maintain the action. action. %he legislative never intended to &ar court access &y a foreign corporation which is doing an isolated &usiness in the country. 9either had it intended to shield de&tors from their o&ligations. 5owever, it cannot allow foreign corporations which conduct regular &usiness &usiness any access to courts without the ful$lment &y such corporations of the necess necessary ary reui reuisi sites tes to &e su&? %he foreign corporation can acuire license and may still $le new action against private respondent. %he decision of the court is not res
