G.R. No. 79986
September 14, 1990
Foreign Corporation doing business in the Philippines
FACTS:
Granger Associates is a foreign corporation
which was organized in the United States and has no license to do business in
this country. Microwave Systems, Inc., is
a domestic corporation which has been sued for recovery of a sum equivalent to
US$900,633.30 allegedly due from it to the petitioner.
The claim arose from a series of agreements
concluded between the two parties, giving MSI the license to manufacture and sell
its products in the Philippines and extended to the latter certain loans,
equipment and parts. Payment of these
contracts not having been made as agreed upon, Granger filed a complaint
against MSI and the other private respondents in the Regional Trial Court.
MSI alleged the affirmative defense that the
plaintiff had no capacity to sue, being an unlicensed foreign corporation, and
moved to dismiss.
Motion to dismiss was granted by RTC which was affirmed by
the CA.
In this petition, Granger seeks the reversal of the
respondent court on the ground that MSI has failed to prove its affirmative
allegation that Granger was transacting business in the Philippines. It insists
that it has dealt only with MSI and not the general public and contends that
dealing with the public itself is an indispensable ingredient of transacting
business. It also argues that its agreements with MSI covered only one isolated
transaction for which it did not have to secure a license to be able to file
its complaint.
ISSUE:
Whether or not Granger Associates was doing
business in the Philippines?
RULING:
YES. It can be shown that the parties entered into
a series of agreements, as in successive sales of the foreign company's regular
products, that company shall be deemed as doing business in the Philippines.
The quoted stipulations show that Granger had extended its
personality in the Philippines and would receive orders for its products and
discharge its warranty obligations through the agency of MSI It would even
appear that Granger intended to transact business in the Philippines through
the instrumentality of MSI not only for the sale and warranty of its products
in this country.
There is also a showing that the investment of Granger in MSI is quite substantial,
enabling it to participate in the actual management and control of MSI In fact,
it appointed a representative in the board of directors to protect its
interests, and this director was so influential that, at his
request, the regular board meeting was converted into an annual stockholder's
meeting to take advantage of his presence.
We are convinced from an examination of the
terms and conditions of the contracts and agreements entered into between
petitioner and private respondents indicate that they established within our
country a continuous business, and not merely one of a temporary character.
Such agreements did not constitute only one isolated transaction, as the
petitioner contends, but a succession of acts signifying the intent of Granger
to extend its operations in the Philippines.
The purpose of the rule requiring foreign corporations to
secure a license to do business in the Philippines is to enable us to exercise
jurisdiction over them for the regulation of their activities in this country,
If a foreign corporation operates in the Philippines without submitting to our
laws, it is only just that it not be allowed to invoke them in our courts when
it should need them later for its own protection. While foreign investors are
always welcome in this land to collaborate with us for our mutual benefit, they
must be prepared as an indispensable condition to respect and be bound by
Philippine law in proper cases, as in the one at bar.
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