THIRDDIVISION

[G.R.No.118843.February6,1997]

ERIKSPTE.LTD.,petitioner,vs.COURTOFAPPEALSandDELFINF.ENRIQUEZ,JR.,respondents.
DECISION
PANGANIBAN,J.:

IsaforeigncorporationwhichsolditsproductssixteentimesoverafivemonthperiodtothesameFilipinobuyerwithoutfirstobtainingalicensetodobusinessin
thePhilippines,prohibitedfrommaintaininganactiontocollectpaymentthereforinPhilippinecourts?Inotherwords,issuchforeigncorporationdoingbusinessin
thePhilippineswithouttherequiredlicenseandthusbarredaccesstoourcourtsystem?
This is the main issue presented for resolution in the instant petition for review, which seeks the reversal of the Decision[1] of the Court of Appeals, Seventh
Division, promulgated on January 25, 1995, in CAG.R. CV No. 41275 which affirmed, for want of capacity to sue, the trial courts dismissal of the collection suit
institutedbypetitioner.
TheFacts
Petitioner Eriks Pte. Ltd. is a nonresident foreign corporation engaged in the manufacture and sale of elements used in sealing pumps, valves and pipes for
industrialpurposes,valvesandcontrolequipmentusedforindustrialfluidcontrolandPVCpipesandfittingsforindustrialuses.Initscomplaint,itallegedthat:[2]
(I)tisacorporationdulyorganizedandexistingunderthelawsoftheRepublicofSingaporewithaddressat18PasirPanjangRoad#0901,PSAMultiStoreyComplex,Singapore
0511.ItisnotlicensedtodobusinessinthePhilippinesandi(s)notsoengagedandissuingonanisolatedtransactionforwhichithascapacitytosuexxx.(par.1,Complaintp.1,
Record)
OnvariousdatescoveringtheperiodJanuary17August16,1989,privaterespondentDelfinEnriquez,Jr.,doingbusinessunderthenameandstyleofDelrene
EB Controls Center and/or EB Karmine Commercial, ordered and received from petitioner various elements used in sealing pumps, valves, pipes and control
equipment,PVCpipesandfittings.Theorderedmaterialsweredeliveredviaairfreightunderthefollowinginvoices:[3]
Date
17Jan89

InvoiceNo.
27065

AWBNo.
61874962941

Amount
S$5,010.59

24Feb89
02Mar89

03Mar89
03Mar89
10Mar89

21Mar89
14Apr89
19Apr89
16Aug89

21Mar89
04Apr89
14Apr89
25Apr89
02May89
05May89
15May89

31May89

27738
27855

27876
27877
28046

28258
28901
29001
31669

28257
28601
28900
29127
29232
29332
29497

29844

61875536672
(freight&hand
lingchargesper
Inv.27738)
61875537501
61875537501
61875783256/
61875783481
61875784634
61877417631
Selfcollect
(handcarriedbybuyer)

61875784634
61877417605
61877417631
61877419720
(Byseafreight)
61877963255
(Freight&hand
lingchargesper
Inv.29127)

61877965646

Total

14,402.13
1,164.18

1,394.32
1,641.57
7,854.60

27.72
2,756.53
458.80
1,862.00

S$36,392.44
415.50
884.09
1,269.50
883.80
120.00
1,198.40
111.94

S$4,989.29
545.70

S$545.70

S$41,927.43
===========

ThetransfersofgoodswereperfectedinSingapore,forprivaterespondentsaccount,F.O.B.Singapore,witha90daycreditterm.Subsequently,demandswere
madebypetitioneruponprivaterespondenttosettlehisaccount,butthelatterfailed/refusedtodoso.
OnAugust28,1991,petitionercorporationfiledwiththeRegionalTrialCourtofMakati,Branch138,[4]CivilCaseNo.912373entitledEriksPte.Ltd.vs.Delfin
Enriquez, Jr. for the recovery of S$41,939.63 or its equivalent in Philippine currency, plus interest thereon and damages. Private respondent responded with a
MotiontoDismiss,contendingthatpetitionercorporationhadnolegalcapacitytosue.InanOrderdatedMarch8,1993,[5]thetrialcourtdismissedtheactiononthe
groundthatpetitionerisaforeigncorporationdoingbusinessinthePhilippineswithoutalicense.Thedispositiveportionofsaidorderreads:[6]
WHEREFORE,inviewoftheforegoing,themotiontodismissisherebyGRANTEDandaccordingly,theaboveentitledcaseisherebyDISMISSED.

SOORDERED.
On appeal, respondent Court affirmed said order as it deemed the series of transactions between petitioner corporation and private respondent not to be an
isolatedorcasualtransaction.Thus,respondentCourtlikewisefoundpetitionertobewithoutlegalcapacitytosue,anddisposedoftheappealasfollows:[7]
WHEREFORE,theappealedOrdershouldbe,asitisherebyAFFIRMED.Thecomplaintisdismissed.Nocosts.
SOORDERED.
Hence,thispetition.
TheIssue
ThemainissueinthispetitioniswhetherpetitionercorporationmaymaintainanactioninPhilippinecourtsconsideringthatithasnolicensetodobusinessinthe
country.Theresolutionofthisissuedependsonwhetherpetitionersbusinesswithprivaterespondentmaybetreatedasisolatedtransactions.
Petitionerinsiststhattheseriesofsalesmadetoprivaterespondentwouldstillconstituteisolatedtransactionsdespitethenumberofinvoicescoveringseveral
separate and distinct items sold and shipped over a span of four to five months, and that an affirmation of respondent Courts ruling would result in injustice and
unjustenrichment.
PrivaterespondentcountersthattodeclarepetitioneraspossessingcapacitytosuewillrendernugatorytheprovisionsoftheCorporationCodeandconstitutea
grossviolationofourlaws.Thus,heargues,petitionerisundeservingoflegalprotection.
TheCourtsRuling
Thepetitionhasnomerit.
TheConceptofDoingBusiness
TheCorporationCodeprovides:
Sec.133.Doingbusinesswithoutalicense.NoforeigncorporationtransactingbusinessinthePhilippineswithoutalicense,oritssuccessorsorassigns,shallbepermittedto
maintainorinterveneinanyaction,suitorproceedinginanycourtoradministrativeagencyofthePhilippinesbutsuchcorporationmaybesuedorproceededagainstbefore
PhilippinecourtsoradministrativetribunalsonanyvalidcauseofactionrecognizedunderPhilippinelaws.
Theaforementionedprovisionprohibits,notmerelyabsenceoftheprescribedlicense,butitalsobarsaforeigncorporationdoingbusinessinthePhilippines
withoutsuchlicenseaccesstoourcourts.[8]Aforeigncorporationwithoutsuchlicenseisnotipsofactoincapacitatedfrombringinganaction.Alicenseisnecessary

onlyifitistransactingordoingbusinessinthecountry.
However,thereisnodefinitiveruleonwhatconstitutesdoing,engagingin,ortransactingbusiness.TheCorporationCodeitselfdoesnotdefinesuchterms.
Tofillthegap,theevolutionofitsstatutorydefinitionhasproducedaratherallencompassingconceptinRepublicActNo.7042[9]inthiswise:
SEC.3.Definitions.AsusedinthisAct:
xxxxxx
xxx
(d) the phrase doing business shall include soliciting orders, service contracts, opening offices, whether called liaison offices or branches appointing representatives or
distributorsdomiciledinthePhilippinesorwhoinanycalendaryearstayinthecountryforaperiodorperiodstotallingonehundredeight(y)(180)daysormoreparticipating
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
commercialdealingsorarrangements,andcontemplatetothatextenttheperformanceofactsorworks,ortheexerciseofsomeofthefunctionsnormallyincidentto,andin
progressiveprosecutionof,commercialgainorofthepurposeandobjectofthebusinessorganization:Provided,however,Thatthephrasedoingbusinessshallnotbe
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
whichtransactsbusinessinitsownnameandforitsownaccount.(underscoringsupplied)

InthedurablecaseofTheMentholatumCo.vs.Mangaliman,thisCourtdiscoursedonthetesttodeterminewhetheraforeigncompanyisdoingbusinessinthe
Philippines,thus:[10]
xxxThetruetest,however,seemstobewhethertheforeigncorporationiscontinuingthebodyorsubstanceofthebusinessorenterpriseforwhichitwasorganizedorwhetherit
hassubstantiallyretiredfromitandturneditovertoanother.(TractionCos.v.CollectorsofInt.Revenue[C.C.A.,Ohio],223F.984,987.]Thetermimpliesacontinuityof
commercialdealingsandarrangements,andcontemplates,tothatextent,theperformanceofactsorworksortheexerciseofsomeofthefunctionsnormallyincidentto,andin
progressiveprosecutionof,thepurposeandobjectofitsorganization.](sic)(Griffinv.ImplementDealersMut.FireIns.Co.,241N.W.75,77PaulineOil&GasCo.v.Mutual
TankLineCo.,246P.851,852,118Okl.111AutomotiveMaterialCo.v.AmericanStandardMetalProductsCorp.,158N.E.698,703,327III.367.)
Theacceptedruleinjurisprudenceisthateachcasemustbejudgedinthelightofitsownenvironmentalcircumstances.[11]Itshouldbekeptinmindthatthe
purposeofthelawistosubjecttheforeigncorporationdoingbusinessinthePhilippinestothejurisdictionofourcourts.Itisnottopreventtheforeigncorporation
from performing single or isolated acts, but to bar it from acquiring a domicile for the purpose of business without first taking the steps necessary to render it
amenabletosuitsinthelocalcourts.
Thetrialcourtheldthatpetitionercorporationwasdoingbusinesswithoutalicense,findingthat:[12]
Theinvoicesanddeliveryreceiptscoveringtheperiodof(sic)fromJanuary17,1989toAugust16,1989cannotbetreatedtomeanasingularandisolatedbusinesstransactionthatis
temporaryincharacter.Grantingthatthereisnodistributorshipagreementbetweenhereinparties,yetbythemerefactthatplaintiff,eachtimethatthedefendantpostsanorder
deliverstheitemsasevidencedbytheseveralinvoicesandreceiptsofvariousdatesonlyindicatesthatplaintiffhastheintentionanddesiretorepeatthe(sic)saidtransactioninthe
futureinpursuitofitsordinarybusiness.Furthermore,andifthecorporationisdoingthatforwhichitwascreated,theamountorvolumeofthebusinessdoneisimmaterialanda
singleactofthatcharactermayconstitutedoingbusiness.(Seep.603,Corp.Code,DeLeon1986Ed.).

RespondentCourtaffirmedthisfindinginitsassailedDecisionwiththisexplanation:[13]
xxxConsideringthefactualbackgroundaslaidoutabove,thetransactioncannotbeconsideredasanisolatedone.Notethattherewere17ordersanddeliveries(onlysixteenper
ourcount)overafourmonthperiod.Theappellee(privaterespondent)madeseparateordersatvariousdates.Thetransactionsdidnotconsistofseparatedeliveriesforonesingle
order.Inthecaseatbar,thetransactionsenteredintobytheappellantwiththeappelleeareaseriesofcommercialdealingswhichwouldsignifyanintentonthepartoftheappellant
(petitioner)todobusinessinthePhilippinesandcouldnotbyanystretchoftheimaginationbeconsideredanisolatedone,thuswouldfallunderthecategoryofdoingbusiness.
EvenifWeweretoview,ascontendedbytheappellant,thatthetransactionswhichoccurredbetweenJanuarytoAugust1989,constituteasingleactorisolated
businesstransaction,thisbeingtheordinarybusinessofappellantcorporation,itcanbesaidtobeillegallydoingortransactingbusinesswithoutalicense.xxx
Hereitcanbeclearlygleanedfromthefourmonthperiodoftransactionsbetweenappellantandappelleethatitwasacontinuingbusinessrelationship,whichwould,
without doubt, constitute doing business without a license.For all intents and purposes, appellant corporation is doing or transacting business in the Philippines
withoutalicenseandthat,therefore,inaccordancewiththespecificmandateofSection144oftheCorporationCode,ithasnocapacitytosue.(additionours)
Wefindnoreasontodisagreewithbothlowercourts.Morethanthesheernumberoftransactionsenteredinto,aclearandunmistakableintentiononthepartof
petitioner to continue the body of its business in the Philippines is more than apparent.As alleged in its complaint, it is engaged in the manufacture and sale of
elementsusedinsealingpumps,valves,andpipesforindustrialpurposes,valvesandcontrolequipmentusedforindustrialfluidcontrolandPVCpipesandfittings
forindustrialuse.Thus,thesalebypetitioneroftheitemscoveredbythereceipts,whicharepartandparcelofitsmainproductline,wasactuallycarriedoutinthe
progressiveprosecutionofcommercialgainandthepursuitofthepurposeandobjectofitsbusiness,pureandsimple.Further,itsgrantandextensionof90day
credittermstoprivaterespondentforeverypurchasemade,unarguablyshowsanintentiontocontinuetransactingwithprivaterespondent,sinceintheusualcourse
ofcommercialtransactions,creditisextendedonlytocustomersingoodstandingortothoseonwhomthereisanintentiontomaintainlongtermrelationship.This
beingso,theexistenceofadistributorshipagreementbetweentheparties,asallegedbutnotprovenbyprivaterespondent,would,ifdulyestablishedbycompetent
evidence,bemerelycorroborative,andfailuretosufficientlyprovesaidallegationwillnotsignificantlyaffectthefindingofthecourtsbelow.Norourownruling.Itis
preciselyuponthesetoffactsabovedetailedthatweconcurwithrespondentCourtthatpetitionercorporationwasdoingbusinessinthecountry.
Equallyimportantistheabsenceofanyfactorcircumstancewhichmighttendevenremotelytonegatesuchintentiontocontinuetheprogressiveprosecutionof
petitionersbusinessactivitiesinthiscountry.Hadprivaterespondentnotturnedouttobeabadrisk,inalllikelihoodpetitionerwouldhaveindefinitelycontinuedits
commercialtransactionswithhim,andnotsurprisingly,ineverincreasingvolumes.
Thus,weholdthattheseriesoftransactionsinquestioncouldnothavebeenisolatedorcasualtransactions.Whatisdeterminativeofdoingbusinessisnot
reallythenumberorthequantityofthetransactions,butmoreimportantly,theintentionofanentitytocontinuethebodyofitsbusinessinthecountry.Thenumber
andquantityaremerelyevidenceofsuchintention.Thephraseisolatedtransactionhasadefiniteandfixedmeaning,i.e.atransactionorseriesoftransactionsset
apartfromthecommonbusinessofaforeignenterpriseinthesensethatthereisnointentiontoengageinaprogressivepursuitofthepurposeandobjectofthe
businessorganization.Whether a foreign corporation is doing business does not necessarily depend upon the frequency of its transactions, but more upon the
natureandcharacterofthetransactions.[14]
Given the facts of this case, we cannot see how petitioners business dealings will fit the category of isolated transactions considering that its intention to
continueandpursuethecorpusofitsbusinessinthecountryhadbeenclearlyestablished.Ithasnotpresentedanyconvincingargumentwithequallyconvincing
evidenceforustoruleotherwise.

IncapacitatedtoMaintainSuit
Accordinglyandineluctably,petitionermustbeheldtobeincapacitatedtomaintaintheactionaquoagainstprivaterespondent.
It was never the intent of the legislature to bar court access to a foreign corporation or entity which happens to obtain an isolated order for business in the
Philippines.Neither,diditintendtoshielddebtorsfromtheirlegitimateliabilitiesorobligations.[15]Butitcannotallowforeigncorporationsorentitieswhichconduct
regular business any access to courts without the fulfillment by such corporations of the necessary requisites to be subjected to our governments regulation and
authority.Bysecuringalicense,theforeignentitywouldbegivingassurancethatitwillabidebythedecisionsofourcourts,evenifadversetoit.
OtherRemedyStillAvailable
Bythisjudgment,wearenotforeclosingpetitionersrighttocollectpayment.Resjudicatadoesnotsetinacasedismissedforlackofcapacitytosue,because
therehasbeennodeterminationonthemerits.[16]Moreover,thisCourthasruledthatsubsequentacquisitionofthelicensewillcurethelackofcapacityatthetimeof
theexecutionofthecontract.[17]
Therequirementofalicenseisnotmeanttoputforeigncorporationsatadisadvantage.Rather,thedoctrineoflackofcapacitytosueisbasedonconsiderations
ofsoundpublicpolicy.[18]Thus,ithasbeenruledinHomeInsurancethat:[19]
xxxTheprimarypurposeofourstatuteistocompelaforeigncorporationdesiringtodobusinesswithinthestatetosubmititselftothejurisdictionofthecourtsofthisstate.The
statutewasnotintendedtoexcludeforeigncorporationsfromthestate.xxxxThebetterreason,thewiserandfairerpolicy,andthegreaterweightliewiththosedecisionswhich
holdthatwhere,ashere,thereisaprohibitionwithapenalty,withnoexpressorimplieddeclarationsrespectingthevalidityofenforceabilityofcontractsmadebyqualifiedforeign
corporations,thecontractsxxxareenforceablexxxuponcompliancewiththelaw.(Peter&BurghardStoneCo.v.Carper,172N.E.319[1930].)
Whileweagreewithpetitionerthatthecountryneedstodeveloptraderelationsandfosterfriendlycommercialrelationswithotherstates,wealsoneedtoenforce
ourlawsthatregulatetheconductofforeignerswhodesiretodobusinesshere.Suchstrangersmustfollowourlawsandmustsubjectthemselvestoreasonable
regulationbyourgovernment.
WHEREFORE,premisesconsidered,theinstantpetitionisherebyDENIEDandtheassailedDecisionisAFFIRMED.
SOORDERED.
Narvasa,C.J.,(Chairman),Davide,Jr.,Melo,andFrancisco,JJ.,concur.
[1]PennedbyJ.AntonioM.MartinezandconcurredinbyJJ.FerminA.Martin,Jr.andDelilahVidallonMagtolis.
[2]Rollo,p.31.
[3]Rollo,pp.1213.

[4]PresidedbyJudgeFernandoP.Agdamag.
[5]Rollo,pp.5051.
[6]CARollo,p.29.
[7]Rollo,p.35.
[8]ColumbiaPictures,Inc.,etal.vs.CourtofAppeals,etal.,G.R.No.110318,promulgatedonAugust28,1996,p.6.
[9]AnActtoPromoteForeignInvestments,PrescribetheProceduresforRegisteringEnterprisesDoingBusinessinthePhilippines,andforOtherPurposesapprovedonJune13,1991.
[10]TheMentholatumCo.,Inc.,etal.vs.Mangaliman,etal.,72Phil524,528529(1941).
[11]Op.cit.,p.7NationalSugarTradingCorporation,etal.vs.CourtofAppeals,etal.,246SCRA465,469,July17,1995andTheMentholatumCo.,Inc.,vs.Mangaliman,supra,p.528.
[12]Rollo,pp.5051.
[13]Rollo,pp.3334.
[14]13WordsandPhrases,PermanentEdition195citingBrandtjen&Klugevs.Nanson,115P.2d731,733,9Wash.2d362.
[15]MarshallWellsCo.vs.Elser&Co.,46Phil.70,75(1924).
[16]Licupvs.ManilaRailroadCompany,2SCRA267,270,May30,1961.
[17]HomeInsuranceCompanyvs.EasternShippingLines,123SCRA424,439,July20,1988.
[18]NationalSugarTradingCorp.vs.C.A.,supra.,p.470.
[19]HomeInsuranceCo.vs.EasternShippingLines,supra.,p.437.