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. WHAT IS THE TEST OF DOING BUSINESS IN THE PHILIPPINES?

Whether or not there is continuity of transactions which are in pursuance of the


normal business of the corporation. (Metholatum v. Mangaliman)

FACILITIES MANAGEMENT CORP. V. DE LA OSA (89 SCRA 131; 1979)


The Court of Industrial Relations ordered Facilities Management Corporation
(FMC) to pay Dela Osa his overtime compensation, swing shift and graveyard
shift premiums. FMC filed a petition for review on certiorari on the issue of
whether the CIR can validly affirm a judgment against persons domiciled outside
and not doing business in the Phil. and over whom it did not acquire jurisdiction.
The Supreme Court held that the petitioner may be considered as doing business
in the Philippines within the scope of Sec. 14, Rule 14 of the Rules of Court:
Sec. 14. Service upon private foreign corp. - If the defendant is a foreign corp., or
a non- resident joint stock corporation or association, doing business in the Phil.,
service may be made on its resident agent, on the government official designated
by law to the effect, or to an y of its officers or agents within the Philippines.
FMC had appointed Jaime Catuira as its agent with authority to execute
Employment Contracts and receive, on behalf of the corp., legal services from,
and be bound by processes of the Phil. Courts, for as long as he remains an
employee of FMS. If a foreign corp. not engaged in business in the Phil., through
an Agent, is not barred from seeking redress from courts in the Phil., that same
corp. cannot claim exemption done against a person or persons in the Phil..
NOTE: Under Sec. 12, Rule 14 of the 1997 Rules of Civil Procedure, the term
"doing business" has been replaced with the phrase "has transacted business,"
thereby allowing suits based on isolated transactions.

PACIFIC VEGETABLE OIL V. SINGSON (G.R. No. 7917; April 29, 1955)
This is an action instituted by the plaintiff, a foreign corporation, against the
defendant to recover a sum of money for damages suffered by the plaintiff as a
consequence of the failure of the defendant to deliver copra which he sold and
bound himself to deliver to the plaintiff. Defendant filed a motion to dismiss on the
ground that the plaintiff failed to obtain a license to transact business in the Phil
and, consequently, it had no personality to file an action.

Has appellant transacted business in the Philippines in contemplation of law?

Contrary to the findings of the trial court, the copra in question was actually sold
by the defendant to the plaintiff in the US, the agreed price to be covered by an
irrevocable letter of credit to be opened at the Bank of California, and delivery to
be made at the port of destination. It follows that the appellant corporation has
not transacted business in the Phil in contemplation of Sec. 68 and 69 which
require any foreign corporation to obtain a license before it could transact
business, or before it could have personality to file a suit in the Phil.. It was never
the purpose of the Legislature to exclude a foreign corporation which happens to
obtain an isolated order of business from the Phil., from securing redress in the
Phil. Courts, and thus, in effect, to permit persons to avoid their contracts made
with such foreign corp.. The lower court erred in holding that the appellant
corporation has no personality to maintain the present action.
AETNA CASUALTY & SURETY CO. VS. PACIFIC STAR LINE (80 SCRA 635;
1977)
Aetna as subrogee of I. Shalom sued Pacific Star Line (PSL), the common carrier
for the loss of Linen & Cotton piece goods due to pilferage and damage
amounting to US$2,300.00. PSL contends that Aetna has no license to transact
insurance business in the Philippines as gathered from the Insurance
Commission and SEC . It also argues that since said company has filed 13 other
civil suits, they should be considered as doing business here and not merely
having entered into an isolated transaction.
Based on rulings in Mentholatum and Eastboard Navigation, the Supreme Court
held that Aetna is not transacting business in the Philippines for which it needs to
have a license. The contract was entered into in New York and payment was
made to the consignee in the New York branch. Moreover, Aetna was not
engaged in the business of insurance in the Philippines but was merely collecting
a claim assigned to it by consignee. Because it was not doing business in the
Philippines, it was not subject to Sec. 68-69 of the Corporation Law and therefore
was not barred from filing the instant case although it had not secured a license
to transact insurance business in the Philippines.
TOPWELD MANUEL VS. ECED (138 SCRA 120; 1985)
Topweld entered into 2 separate contracts with foreign entities: a license and
technical assistance agreement with IRTI, and a distributor agreement with
ECED, SA. When Topweld found out that the foreign corporations were looking
into replacing Topweld as licensee and distributor, the latter went to court to ask
for a writ of preliminary injunction to restrain the foreign corporations from
negotiating with 3rd parties as violative of RA 5445 (4).
Although IRTI and ECED were doing business in the Philippines, since they had
not secured a license from BOI, the foreign corporations were not bound by the
requirement on termination and Topweld could not invoke the same against the
former. Moreover, it was incumbent upon Topweld to know whether or not IRTI
and ECED were properly authorized to engage in such agreements. The
Supreme Court held that both parties were guilty of violating RA 5445. Being in
pari delicto, Topweld was not entitled to the relief prayed for.

ANTAM CONSOLIDATED VS. CA (143 SCRA 289; 1986)


Stokely Van Camp Inc. filed a complaint against Banahaw, Antam, Tambunting
and Unicorn for the collection of a sum of money for failure to deliver 500 tons of
crude coconut oil. Antam et al asked for dismissal of case on ground that Stokely
was a foreign corporation not licensed to do business in the Philippines and
therefore had no personality to maintain the suit.
The SC held that the transactions entered into by Stokely with Antam et al (3
transactions, either as buyer or seller) were not a series of commercial dealings
which signify an intent on the part of the respondent
to do business in Philippines but constitute an isolated transaction. The records
show that the 2nd and 3rd transactions were entered into because Antam wanted
to recover the loss it sustained from the failure of the petitioners to deliver the
crude oil under the first transaction and in order to give the latter a chance to
make good on their obligation. There was only one agreement between the
parties, and that was the delivery of the 500 tons of crude coconut oil.