B. VAN VAN ZU ZUID IDEN EN BROS BROS., ., LT LTD. D. vs. vs. GT GTVL VL MANUFACTURING MANUFACTURI NG INDUSTRIES, INDUSTRIE S, INC. G.R. No. 147905, Ma !", !007 Fa#$s% B. VAN ZUIDEN BROS., LTD &ZUIDEN' filed &ZUIDEN' filed a comp compla lain intt for for sm sm of mone mone! ! a"ai a"ains nstt #TVL #TVL $ANU% ANU%A A&TUR &TURIN IN# # INDUST DUSTRI RIES ES,, IN& 'GTVL'. (laintiff ZUIDEN is a corporation, incorporated nder t)e la*s of +on" on". ZUIDEN is not en"a"ed en"a"ed in -siness -siness in t)e ()ilippine ()ilippines, s, -t is sin sin" " -efo -efore re t)e t)e ()il ()ilip ippi pine ne &or &orts ts,, for for t)e t)e reasons )ereinafter stated. It is en"a"ed in t)e importation and eportation of se/eral prodcts, incldin" incldin" lace prodcts. prodcts. On se/eral se/eral occasions, occasions, #TVL prc)ased lace prodcts from ZUIDEN. T)e procedre for t)ese prc)ases, as per t)e instrctions of #TVL, *as t)at ZUIDEN deli/ers t)e prodcts prc)ased -! #TVL, to a certain +on" on" corporation corporation,, 0no*n as en1ar en1ar Ltd. 'ENZAR2, and t)e prodcts are t)en considered considered as sold, pon receipt -! ENZAR ENZAR of t)e "oods prc)ased -! #TVL. ENZAR )ad t)e o-li"ation to deli/er t)e prodcts to t)e t)e ()il ()ilip ippi pine ness and3 and3or or to foll follo* o* *)at *)ate/ e/er er instrctions #TVL )ad on t)e matter. Insofar as ZUIDEN is concerned, pon deli/er! of t)e t)e "ood "oodss to ENZ ENZAR AR in +on" +on" on" on",, t)e t)e transa transacti ction on is concl conclded ded44 and #TVL #TVL -ecame -ecame o-li o-li"a "ate ted d to pa! pa! t)e t)e a"re a"reed ed prc prc)a )ase se pric price. e. +o*e/er, #TVL )as failed and refsed to pa! t)e a"reed a"reed prc)a prc)ase se price price for se/era se/erall deli/e deli/erie riess orde ordere red d -! it and and deli deli/e /ere red d -! ZUID ZUIDEN EN,, as a-o/e5mentioned. In spite of said demands and in spite of promises to pa! and3or admissions of lia-i lia-ili lit! t!,, #TVL #TVL )as )as fail failed ed and and ref refse sed, d, and and contines to fail and refse, to pa! t)e o/erde amont of U.S.678,9::.98 inclsi/e of interest. #TVL filed a $otion to Dismiss instead on t)e "rond t)at petitioner )as no le"al capacit! to se. se. #TVL #TVL alle alle"e "ed d t)at t)at ZUID ZUIDEN EN is doin doin" " -siness in t)e ()ilippines *it)ot secrin" t)e re;ired re;ired license. license. Accordin"l Accordin"l!, !, ZUIDEN ZUIDEN cannot cannot se -efore ()ilippine corts. RTC< RTC< dismissed t)e complaint CA < It sstained t)e trial corts dismissal of t)e compla complaint int.. &A fond fond t)at t)at t)e partie partiess enter entered ed into a contract of sale *)ere-! ZUIDEN sold lace prodcts to #TVL in a series of transactions.
=)ile ZUIDEN deli/ered t)e "oods in +on" on" on" to en1ar en1ar,, Ltd. Ltd. 'en1a 'en1ar2, r2, anot)e anot)err +on" +on" on" compan!, t)e part! *it) *)om ZUIDEN tran transa sact cted ed *as *as act actal all! l! #TVL #TVL,, a ()il ()ilip ippi pine ne corporation, and not en1ar. It -elie/ed en1ar is merel! a s)ippin" compan! and conclded t)at t)e deli/er! of t)e "oods in +on" +on" on" on" did did not not eem eempt pt peti petiti tion oner er from from -ein" considered as doin" -siness in t)e ()ilippines. +ence, t)is petition. Iss()% =)et)er petitioner ZUIDEN, an nlicensed forei" forei"n n corpo corporat ration ion,, )as le"al le"al capaci capacit! t! to se -efore ()ilippine corts. (The resolution of this issue depends depends on whether whether petitioner petitioner is doing doing business in the Philippines.) R(*+-% T)e petiti petition on is merito meritorio rios. s. ZUIDEN is not doing business in the Philippines, Philippines , it does not not need need a lice licens nsee in orde orderr to init initia iate te and and maintain a collection sit a"ainst respondent for t)e npaid -alance of #TVL>s prc)ases. S)#$ S)#$+o +o 1 1 o/ $) $) Co2 Co2o oa$ a$+o +o Co3) Co3) 2ov+3)s% Doing business without license. license . No fore forei" i"n n corp corpor orat atio ion n tran transac sacti tin" n" -siness in t)e ()ilippines *it)ot a lic license ense,, or its sc sccessor ssorss or assi assi"n "ns, s, s)all )all -e perm permiitted ted to maintain or inter/ene in an! action, sit or proceedin" in an! cort or admi admin nistr istrat atii/e a"e a"enc! nc! of t)e t)e ()ilippine ()ilippines4 s4 -t sc) corporatio corporation n ma! -e sed or proceeded a"ainst -efore ()ilippine corts or admi admini nist stra rati ti/e /e tritri-n nal alss on an! an! /alid case of action reco"ni1ed nder ()ilippine la*s. T)e la* la* is clear lear.. An nlic license nsed fore foreii"n corporatio corporation n doin" doin" -siness -siness in t)e ()ilippine ()ilippiness cannot cannot se -efore -efore ()ilip ()ilippin pinee corts corts.. On t)e ot)er )and, an nlicensed forei"n corporation o$ o$ doin" -siness in t)e ()ilippines can se -efore ()ilippine corts. corts. In t)e present contro/ers!, ZUIDEN is a forei"n corpora corporatio tion n *)ic) *)ic) claims claims t)at t)at it is o$ o$ doin"
-siness in t)e ()ilippines. As sc), it needs no license to institte a collection sit a"ainst respondent -efore ()ilippine corts. #TVL ar"es ot)er*ise. It insists t)at ZUIDEN is doin" -siness in t)e ()ilippines *it)ot t)e re;ired license. +ence, ZUIDEN )as no le"al capacit! to se -efore ()ilippine corts. Under Section 7'd2 of Rep-lic Act No. ?9@8 'RA ?9@82 or T) Fo)+- Iv)s$)$s A#$ o/ 1991, t)e p)rase doin" -siness incldes< solicitin" orders, ser/ice contracts, openin" offices, *)et)er called liaison offices or -ranc)es4 appointin" representati/es or distri-tors domiciled in t)e ()ilippines or *)o in an! calendar !ear sta! in t)e contr! for a period or periods totallin" one )ndred ei")t! ':92 da!s or more4 participatin" in t)e mana"ement, sper/ision or control of an! domestic -siness, firm, entit! or corporation in t)e ()ilippines4 and an! ot)er act or acts t)at impl! a continit! of commercial dealin"s or arran"ements, and contemplate to t)at etent t)e performance of acts or *or0s, or t)e eercise of some of t)e fnctions normall! incident to, and in pro"ressi/e prosection of, commercial "ain or of t)e prpose and o-ect of t)e -siness or"ani1ation< Provided, however, T)at t)e p)rase doin" -siness s)all not -e deemed to inclde mere in/estment as a s)are)older -! a forei"n entit! in domestic corporations dl! re"istered to do -siness, and3or t)e eercise of ri")ts as sc) in/estor4 nor )a/in" a nominee director or officer to represent its interests in sc) corporation4 nor appointin" a representati/e or distri-tor domiciled in t)e ()ilippines *)ic) transacts -siness in its o*n name and for its o*n accont. T) s)+)s o/ $asa#$+os )$6)) ZUIDEN a3 GTVL #ao$ ) #*ass+/+)3 as 3o+- (s+)ss + $) +*+22+)s (3) S)#$+o &3' o/ RA 704!. An essential condition to -e considered as doin" -siness in
t)e ()ilippines is t)e actual performance of specific commercial acts within the territory of the Philippines for t)e plain reason t)at t)e ()ilippines )as no risdiction o/er commercial acts performed in forei"n territories. +ere, $)) +s o so6+- $a$ ZUIDEN 2)/o)3 6+$+ $) +*+22+) $)+$o $) s2)#+/+# a#$s o/ 3o+ (s+)ss )$+o)3 + S)#$+o &3' o/ RA 704!. ZUIDEN did not also open an office )ere in t)e ()ilippines, appoint a representati/e or distri-tor, or mana"e, sper/ise or control a local -siness. =)ile ZUIDEN and #TVL entered into a series of transactions impl!in" a continit! of commercial dealin"s, t)e perfection and consmmation of t)ese transactions *ere done otside t)e ()ilippines. In its complaint, ZUIDEN alle"ed t)at it is en"a"ed in t)e importation and eportation of se/eral prodcts, incldin" lace prodcts. ZUIDEN asserted t)at on se/eral occasions, #TVL prc)ased lace prodcts from it. ZUIDEN also claimed t)at respondent instrcted it to deli/er t)e prc)ased "oods to en1ar, *)ic) is a +on" on" compan! -ased in +on" on". Upon en1ars receipt of t)e "oods, t)e prodcts *ere considered sold. en1ar, in trn, )ad t)e o-li"ation to deli/er t)e lace prodcts to t)e ()ilippines. In ot)er *ords, t)e sale of lace prodcts *as consmmated in +on" on". As earlier stated, t)e series of transactions -et*een ZUIDEN and #TVL transpired and *ere consmmated in +on" on". =e also find no sin"le acti/it! *)ic) petitioner performed )ere in t)e ()ilippines prsant to its prpose and o-ect as a -siness or"ani1ation. C9 $oreo/er, petitioners desire to do -siness *it)in t)e ()ilippines is not discerni-le from t)e alle"ations of t)e complaint or from its attac)ments. T)erefore, t)ere is no -asis for rlin" t)at petitioner is doin" -siness in t)e ()ilippines. S& disa"rees *it) t)e &A>s rlin" t)at t)e proponents to t)e transaction determine *)et)er a forei"n corporation is doin" -siness in t)e ()ilippines, re"ardless of t)e place of deli/er! or place *)ere t)e transaction too0 place. To accede to sc) t)eor! ma0es it possi-le to classif!, for instance, a series of transactions -et*een a %ilipino in t)e United States and an American compan! -ased in t)e United States as doin" -siness in t)e ()ilippines, e/en *)en
t)ese transactions are ne"otiated and consmmated onl! *it)in t)e United S tates. An eporter in one contr! ma! eport its prodcts to man! forei"n importin" contries *it)ot performin" in t)e importin" contries specific commercial acts t)at *old constitte doin" -siness in t)e importin" contries. T)e mere act of eportin" from ones o*n contr!, *it)ot doin" an! specific commercial act *it)in t)e territor! of t)e importin" contr!, cannot -e deemed as doin" -siness in t)e importin" contr!. T)e importin" contr! does not ac;ire risdiction o/er t)e forei"n eporter *)o )as not performed an! specific commercial act *it)in t)e territor! of t)e importin" contr!. =it)ot risdiction o/er t)e forei"n eporter, t)e importin" contr! cannot compel t)e forei"n eporter to secre a license to do -siness in t)e importin" contr!.
To be doing or transacting business in the Philippines for prposes of Section 77 of t)e &orporation &ode, $) /o)+- #o2oa$+o (s$ actually transact business in the Philippines, $a$ +s, 2)/o s2)#+/+# (s+)ss $asa#$+os 6+$+ $) +*+22+) $)+$o o a #o$+(+- as+s + +$s o6 a) a3 /o +$s o6 a##o($. Actal transaction of -siness *it)in t)e ()ilippine territor! is an essential re;isite for t)e ()ilippines to ac;ire risdiction o/er a forei"n corporation and t)s re;ire t)e forei"n corporation to secre a ()ilippine -siness license. If a forei"n corporation does not transact sc) 0ind of -siness in t)e ()ilippines, e/en if it eports its prodcts to t)e ()ilippines, t)e ()ilippines )as no risdiction to re;ire sc) forei"n corporation to secre a ()ilippine -siness license.
