G.R. No. 147905 May 28, 2007B. VAN ZUIDEN BROS., LTD.,Petitioner,vs. GTVL MANUFACTURING INDUSTRIES, INC.,Respondent.

The CaseBefore the Court is a petition for review1of the 18 April 2001 Decision2of the Court of Appeals in CA-G.R. CV No. 66236. The Court of Appeals affirmed the Order3of the Regional Trial Court, Branch 258, Paraaque City (trial court) dismissing the complaint for sum of money filed by B. Van Zuiden Bros., Ltd. (petitioner) against GTVL Manufacturing Industries, Inc. (respondent).The FactsOn 13 July 1999, petitioner filed a complaint for sum of money against respondent, docketed as Civil Case No. 99-0249. The pertinent portions of the complaint read:1. Plaintiff, ZUIDEN, is a corporation, incorporated under the laws of Hong Kong. x x x ZUIDEN is not engaged in business in the Philippines, but is suing before the Philippine Courts, for the reasons hereinafter stated.x x x x3. ZUIDEN is engaged in the importation and exportation of several products, including lace products.4. On several occasions, GTVL purchased lace products from [ZUIDEN].5. The procedure for these purchases, as per the instructions of GTVL, was that ZUIDEN delivers the products purchased by GTVL, to a certain Hong Kong corporation, known as Kenzar Ltd. (KENZAR), x x x and the products are then considered as sold, upon receipt by KENZAR of the goods purchased by GTVL.KENZAR had the obligation to deliver the products to the Philippines and/or to follow whatever instructions GTVL had on the matter.Insofar as ZUIDEN is concerned, upon delivery of the goods to KENZAR in Hong Kong, the transaction is concluded; and GTVL became obligated to pay the agreed purchase price.x x x x7. However, commencing October 31, 1994 up to the present, GTVL has failed and refused to pay the agreed purchase price for several deliveries ordered by it and delivered by ZUIDEN, as above-mentioned.x x x x9. In spite [sic] of said demands and in spite [sic] of promises to pay and/or admissions of liability, GTVL has failed and refused, and continues to fail and refuse, to pay the overdue amount of U.S.$32,088.02 [inclusive of interest].4Instead of filing an answer, respondent filed a Motion to Dismiss5on the ground that petitioner has no legal capacity to sue. Respondent alleged that petitioner is doing business in the Philippines without securing the required license. Accordingly, petitioner cannot sue before Philippine courts.After an exchange of several pleadings6between the parties, the trial court issued an Order on 10 November 1999 dismissing the complaint.On appeal, the Court of Appeals sustained the trial courts dismissal of the complaint.Hence, this petition.The Court of Appeals RulingIn affirming the dismissal of the complaint, the Court of Appeals relied onEriks Pte., Ltd. v. Court of Appeals.7In that case, Eriks, an unlicensed foreign corporation, sought to collect US$41,939.63 from a Filipino businessman for goods which he purchased and received on several occasions from January to May 1989. The transfers of goods took place in Singapore, for the Filipinos account, F.O.B. Singapore, with a 90-day credit term. Since the transactions involved were not isolated, this Court found Eriks to be doing business in the Philippines. Hence, this Court upheld the dismissal of the complaint on the ground that Eriks has no capacity to sue.The Court of Appeals noted that in Eriks, while the deliveries of the goods were perfected in Singapore, this Court still found Eriks to be engaged in business in the Philippines. Thus, the Court of Appeals concluded that the place of delivery of the goods (or the place where the transaction took place) is not material in determining whether a foreign corporation is doing business in the Philippines. The Court of Appeals held that what is material are the proponents to the transaction, as well as the parties to be benefited and obligated by the transaction.In this case, the Court of Appeals found that the parties entered into a contract of sale whereby petitioner sold lace products to respondent in a series of transactions. While petitioner delivered the goods in Hong Kong to Kenzar, Ltd. (Kenzar), another Hong Kong company, the party with whom petitioner transacted was actually respondent, a Philippine corporation, and not Kenzar. The Court of Appeals believed Kenzar is merely a shipping company. The Court of Appeals concluded that the delivery of the goods in Hong Kong did not exempt petitioner from being considered as doing business in the Philippines.The IssueThe sole issue in this case is whether petitioner, an unlicensed foreign corporation, has legal capacity to sue before Philippine courts. The resolution of this issue depends on whether petitioner is doing business in the Philippines.The Ruling of the CourtThe petition is meritorious.Section 133 of the Corporation Code provides:Doing business without license. No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws.The law is clear. An unlicensed foreign corporation doing business in the Philippines cannot sue before Philippine courts. On the other hand, an unlicensed foreign corporationnotdoing business in the Philippines can sue before Philippine courts.In the present controversy, petitioner is a foreign corporation which claims that it is not doing business in the Philippines. As such, it needs no license to institute a collection suit against respondent before Philippine courts.Respondent argues otherwise. Respondent insists that petitioner is doing business in the Philippines without the required license. Hence, petitioner has no legal capacity to sue before Philippine courts.Under Section 3(d) of Republic Act No. 7042 (RA 7042) or "The Foreign Investments Act of 1991," the phrase "doing business" includes:x x x soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totalling one hundred eighty (180) days or more; participating 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 commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization:Provided, however, That the phrase "doing business" shall not be 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 which transacts business in its own name and for its own account.The series of transactions between petitioner and respondent cannot be classified as "doing business" in the Philippines under Section 3(d) of RA 7042. An essential condition to be considered as "doing business" in the Philippines is the actual performance of specific commercial acts within the territory of the Philippines for the plain reason that the Philippines has no jurisdiction over commercial acts performed in foreign territories. Here, there is no showing that petitioner performed within the Philippine territory the specific acts of doing business mentioned in Section 3(d) of RA 7042. Petitioner did not also open an office here in the Philippines, appoint a representative or distributor, or manage, supervise or control a local business. While petitioner and respondent entered into a series of transactions implying a continuity of commercial dealings, the perfection and consummation of these transactions were done outside the Philippines.8In its complaint, petitioner alleged that it is engaged in the importation and exportation of several products, including lace products. Petitioner asserted that on several occasions, respondent purchased lace products from it. Petitioner also claimed that respondent instructed it to deliver the purchased goods to Kenzar, which is a Hong Kong company based in Hong Kong. Upon Kenzars receipt of the goods, the products were considered sold. Kenzar, in turn, had the obligation to deliver the lace products to the Philippines. In other words, the sale of lace products was consummated in Hong Kong.As earlier stated, the series of transactions between petitioner and respondent transpired and were consummated in Hong Kong.9We also find no single activity which petitioner performed here in the Philippines pursuant to its purpose and object as a business organization.10Moreover, petitioners desire to do business within the Philippines is not discernible from the allegations of the complaint or from its attachments. Therefore, there is no basis for ruling that petitioner is doing business in the Philippines.InEriks, respondent therein alleged the existence of a distributorship agreement between him and the foreign corporation. If duly established, such distributorship agreement could support respondents claim that petitioner was indeed doing business in the Philippines. Here, there is no such or similar agreement between petitioner and respondent.We disagree with the Court of Appeals ruling that the proponents to the transaction determine whether a foreign corporation is doing business in the Philippines, regardless of the place of delivery or place where the transaction took place. To accede to such theory makes it possible to classify, for instance, a series of transactions between a Filipino in the United States and an American company based in the United States as "doing business in the Philippines," even when these transactions are negotiated and consummated only within the United States.An exporter in one country may export its products to many foreign importing countries without performing in the importing countries specific commercial acts that would constitute doing business in the importing countries. The mere act of exporting from ones own country, without doing any specific commercial act within the territory of the importing country, cannot be deemed as doing business in the importing country. The importing country does not acquire jurisdiction over the foreign exporter who has not performed any specific commercial act within the territory of the importing country. Without jurisdiction over the foreign exporter, the importing country cannot compel the foreign exporter to secure a license to do business in the importing country.Otherwise, Philippine exporters, by the mere act alone of exporting their products, could be considered by the importing countries to be doing business in those countries. This will require Philippine exporters to secure a business license in every foreign country where they usually export their products, even if they do not perform any specific commercial act within the territory of such importing countries. Such a legal concept will have a deleterious effect not only on Philippine exports, but also on global trade.To be doing or "transacting business in the Philippines" for purposes of Section 133 of the Corporation Code, the foreign corporation mustactually transact business in the Philippines, that is, perform specific business transactions within the Philippine territory on a continuing basis in its own name and for its own account. Actual transaction of business within the Philippine territory is an essential requisite for the Philippines to acquire jurisdiction over a foreign corporation and thus require the foreign corporation to secure a Philippine business license. If a foreign corporation does not transact such kind of business in the Philippines, even if it exports its products to the Philippines, the Philippines has no jurisdiction to require such foreign corporation to secure a Philippine business license.Considering that petitioner is not doing business in the Philippines, it does not need a license in order to initiate and maintain a collection suit against respondent for the unpaid balance of respondents purchases.WHEREFORE, weGRANTthe petition. WeREVERSEthe Decision dated 18 April 2001 of the Court of Appeals in CA-G.R. CV No. 66236. No costs.SO ORDERED.

G.R. No. 118843 February 6, 1997ERIKS PTE. LTD.,petitioner,vs. COURT OF APPEALS, and DELFIN F. ENRIQUEZ, JR.,respondents.Is a foreign corporation which sold its products sixteen times over a five-month period to the same Filipino buyer without first obtaining a license to do business in the Philippines, prohibited from maintaining an action to collect payment therefor in Philippine courts? In other words, is such foreign corporation "doing business" in the Philippines without the required license and thus barred access to our court system?The FactsPetitioner Eriks Pte. Ltd. is a non-resident foreign corporation engaged in the manufacture and sale of elements used in sealing pumps, valves and pipes for industrial purposes, valves and control equipment used for industrial fluid control and PVC pipes and fittings for industrial uses. In its complaint, it alleged that:2(I)t is a corporation duly organized and existing under the laws of the Republic of Singapore with address at 18 Pasir Panjang Road #09-01, PSA Multi-Storey Complex, Singapore 0511. It is not licensed to do business in the Philippines and i(s) not so engaged and is suing on an isolated transaction for which it has capacity to sue . . . (par. 1, Complaint; p. 1, Record)On various dates covering the period January 17 August 16, 1989, private respondent Delfin Enriquez, Jr., doing business under the name and style of Delrene EB Controls Center and/or EB Karmine Commercial, ordered and received from petitioner various elements used in sealing pumps, valves, pipes and control equipment, PVC pipes and fittings. The ordered materials were delivered via airfreight under the following invoices:3The transfers of goods were perfected in Singapore, for private respondent's account, F.O.B. Singapore, with a 90-day credit term. Subsequently, demands were made by petitioner upon private respondent to settle his account, but the latter failed/refused to do so.On August 28, 1991, petitioner corporation filed with the Regional Trial Court of Makati, Branch 138,4Civil Case No. 91-2373 entitled "Eriks Pte. 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 Motion to Dismiss, contending that petitioner corporation had no legal capacity to sue. In an Order dated March 8, 1993,5the trial court dismissed the action on the ground that petitioner is a foreign corporation doing business in the Philippines without a license. The dispositive portion of said order reads:6WHEREFORE, in view of the foregoing, the motion to dismiss is hereby GRANTED and accordingly, the above-entitled case is hereby DISMISSED.SO ORDERED.On appeal, respondent Court affirmed said order as it deemed the series of transactions between petitioner, corporation and private respondent not to be an "isolated or casual transaction." Thus, respondent Court likewise found petitioner to be without legal capacity to sue, and disposed of the appeal as follows:7WHEREFORE, the appealed Order should be, as it is hereby AFFIRMED. The complaint is dismissed. No costs.SO ORDERED.Hence, this petition.The IssueThe main issue in this petition is whether petitioner corporation may maintain an action in Philippine courts considering that it has no license to do business in the country. The resolution of this issue depends on whether petitioner's business with private respondent may be treated as isolated transactions.Petitioner insists that the series of sales made to private respondent would still constitute isolated transactions despite the number of invoices covering several separate and distinct items sold and shipped over a span of four to five months, and that an affirmation of respondent Court's ruling would result in injustice and unjust enrichment.Private respondent counters that to declare petitioner as possessing capacity to sue will render nugatory the provisions of the Corporation Code and constitute a gross violation of our laws. Thus, he argues, petitioner is undeserving of legal protection.The Court's RulingThe petition has no merit.The Concept of Doing BusinessThe Corporation Code provides:Sec. 133. Doing business without a license. No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws.The aforementioned provision prohibits, not merely absence of the prescribed license, but it also bars a foreign corporation "doing business" in the Philippines without such license access to our courts.8A foreign corporation without such license is notipso factoincapacitated from bringing an action. A license is necessary only if it is "transacting or doing businessin the country.However, there is no definitive rule on what constitutes "doing," "engaging in," or "transacting" business. The Corporation Code itself does not define such terms. To fill the gap, the evolution of its statutory definition has produced a rather all-encompassing concept in Republic Act No. 70429in this wise:Sec. 3. Definitions. As used in this Act:xxx xxx xxx(d) the phrase "doing business" shall include soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totalling one hundred eight(y) (180) days or more; participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines; andany other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works,or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization:Provided, however, That the phrase "doing business" shall not be 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 which transacts business in its own name and for its own account. (emphasis supplied)In the durable case ofThe Mentholatum Co.vs.Mangaliman, this Court discoursed on the test to determine whether a foreign company is "doing business" in the Philippines, thus:10. . . The true test, however, seems to be whether the foreign corporation is continuing the body or substance of the business or enterprise for which it was organized or whether it has substantially retired from it and turned it over to another. (Traction Cos. v. Collectors of Int. Revenue [C.C.A., Ohio], 223 F. 984, 987.] The term implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in progressive prosecution of, the purpose and object of its organization.] (sic) (Griffin v. Implement Dealer's Mut. Fire Ins. Co., 241 N.W. 75, 77; Pauline Oil & Gas Co. v. Mutual Tank Line Co., 246 P. 851, 852, 118 Okl. 111; Automotive Material Co. v. American Standard Metal Products Corp., 158 N.E. 698, 703, 327 III. 367.)The accepted rule in jurisprudence is that each case must be judged in the light of its own environmental circumstances.11It should be kept in mind that the purpose of the law is to subject the foreign corporation doing business in the Philippines to the jurisdiction of our courts. It is not to prevent the foreign corporation 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 amenable to suits in the local courts.The trial court held that petitioner-corporation was doing business without a license, finding that:12The invoices and delivery receipts covering the period of (sic) from January 17, 1989 to August 16, 1989 cannot be treated to a mean singular and isolated business transaction that is temporary in character. Granting that there is no distributorship agreement between herein parties, yet by the mere fact that plaintiff, each time that the defendant posts an order delivers the items as evidenced by the several invoices and receipts of various dates only indicates that plaintiff has the intention and desire to repeat the (sic) said transaction in the future in pursuit of its ordinary business. Furthermore, "and if the corporation is doing that for which it was created, the amount or volume of the business done is immaterial and a single act of that character may constitute doing business". (See p. 603, Corp. Code, De Leon 1986 Ed.).Respondent Court affirmed this finding in its assailed Decision with this explanation:13. . . Considering the factual background as laid out above, the transaction cannot be considered as an isolated one. Note that there were 17 orders and deliveries (only sixteen per our count) over a four-month period. The appellee (private respondent) made separate orders at various dates. The transactions did not consist of separate deliveries for one single order. In the case at bar, the transactions entered into by the appellant with the appellee are a series of commercial dealings which would signify an intent on the part of the appellant (petitioner) to do business in the Philippines and could not by any stretch of the imagination be considered an isolated one, thus would fall under the category of'doing business.Even if We were to view, as contended by the appellant, that the transactions which occurred between January to August 1989, constitute a single act or isolated business transaction, this being the ordinary business of appellant corporation, it can be said to be illegally doing or transacting business without a license. . . . Here it can be clearly gleaned from the four-month period of transactions between appellant and appellee that it was a continuing business relationship, which would, without doubt, constitute doing business without a license. For all intents and purposes, appellant corporation is doing or transacting business in the Philippines without a license and that, therefore in accordance with the specific mandate of section 144 of the Corporation Code, it has no capacity to sue. (emphasis ours)We find no reason to disagree with both lower courts. More than the sheer number of transactions entered into, a clear and unmistakable intention on the part of 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 elements used in sealing pumps, valves, and pipes for industrial purposes, valves and control equipment used for industrial fluid control and PVC pipes and fittings for industrial use. Thus, the sale by petitioner of the items covered by the receipts, which are part and parcel of its main product line, was actually carried out in the progressive prosecution of commercial gain and the pursuit of the purpose and object of its business, pure and simple. Further, its grant and extension of 90-day credit terms to private respondent for every purchase made, unarguably 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. This being so, the existence of a distributorship agreement between the parties, as alleged but not proven by private respondent, would, if duly established by competent evidence, be merely corroborative, and failure to sufficiently prove said allegation will not significantly affect the finding of the courts below. Nor our own ruling. It is precisely upon the set of facts above detailed that we concur with respondent Court that petitioner corporation was doing business in the country.Equally important is the absence of any fact or circumstance which might tend even remotely to negate such intention to continue the progressive prosecution of petitioner's business activities in this country. Had private respondent not turned out to be a bad risk, in all likelihood petitioner would have indefinitely continued its commercial transactions with him, and not surprisingly, in ever increasing volumes.Thus, we hold that the series of transactions in question could not have been isolated or casual transactions. What is determinative of "doing business" is not really the number or the quantity of the transactions, but more importantly, the intention of an entity to continue the body of its business in the country. The number and quantity are merely evidence of such intention. The phrase "isolated transaction" has a definite and fixed meaning, i.e. a transaction or series of transactions set apart from the common business of a foreign enterprise in the sense that there is no intention to engage in a progressive pursuit of the purpose and object of the business organization. Whether a foreign corporation is "doing business" does not necessarily depend upon the frequency of its transactions, but more upon the nature and character of the transactions.14Given the facts of this case, we cannot see how petitioner's business dealings will fit the category of "isolated transactions" considering that its intention to continue and pursue the corpus of its business in the country had been clearly established. It has not presented any convincing argument with equally convincing evidence for us to rule otherwise.Incapacitated to Maintain SuitAccordingly and ineluctably, petitioner must be held to be incapacitated to maintain the actiona quoagainst private respondent.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, did it intend to shield debtors from their legitimate liabilities or obligations.15But it cannot allow foreign corporations or entities which conduct regular business any access to courts without the fulfillment by such corporations of the necessary requisites to be subjected to our government's regulation and authority. By securing a license, the foreign entity would be giving assurance that it will abide by the decisions of our courts, even if adverse to it.Other Remedy Still AvailableBy this judgment, we are not foreclosing petitioner's right to collect payment.Res judicatadoes not set in a case dismissed for lack of capacity to sue, because there has been no determination on the merits.16Moreover, this Court has ruled that subsequent acquisition of the license will cure the lack of capacity at the time of the execution of the contract.17The requirement of a license is not meant to put foreign corporations at a disadvantage. Rather, the doctrine of lack of capacity to sue is based on considerations of sound public policy.18Thus, it has been ruled inHome Insurancethat:19. . . The primary purpose of our statute is to compel a foreign corporation desiring to do business within the state to submit itself to the jurisdiction of the courts of this state. The statute was not intended to exclude foreign corporations from the state. . . . The better reason, the wiser and fairer policy, and the greater weight lie with those decisions which hold that where, as here, there is a prohibition with a penalty, with no express or implied declarations respecting the validity of enforceability of contracts made by qualified foreign corporations, the contracts . . . are enforceable . . . upon compliance with the law. (Peter &, Burghard Stone Co. v. Carper, 172 N.E. 319 [1930].)While we agree with petitioner that the county needs to develop trade relations and foster friendly commercial relations with other states, we also need to enforce our laws that regulate the conduct of foreigners who desire to do business here. Such strangers must follow our laws and must subject themselves to reasonable regulation by our government.WHEREFORE, premises considered, the instant petition is hereby DENIED and the assailed Decision is AFFIRMED.SO ORDERED.

G.R. No. 97816 July 24, 1992MERRILL LYNCH FUTURES, INC.,petitioner,vs. HON. COURT OF APPEALS, and the SPOUSES PEDRO M. LARA and ELISA G. LARA,respondents.The capacity of a foreign corporation to maintain an action in the Philippines against residents thereof, is the principal question in the appellate proceedings at bar. The issue arises from the undisputed facts now to be briefly narrated.On November 23, 1987, Merrill Lynch Futures, Inc. (hereafter, simply ML FUTURES) filed a complaint with the Regional Trial Court at Quezon City against the Spouses Pedro M. Lara and Elisa G. Lara for the recovery of a debt and interest thereon, damages, and attorney's fees.1In its complaint ML FUTURES described itself as a) a non-resident foreign corporation, not doing business in the Philippines, duly organized and existing under and by virtue of the laws of the state of Delaware, U.S.A.;" as well asb) a "futures commission merchant" duly licensed to act as such in the futures markets and exchanges in the United States, . . essentially functioning as a broker . . (executing) orders to buy and sell futures contracts received from its customers on U.S. futures exchanges.It also defined a "futures contract" as a "contractual commitment to buy and sell a standardized quantity of a particular item at a specified future settlement date and at a price agreed upon, with the purchase or sale being executed on a regulated futures exchange."In its complaint ML FUTURES alleged the following:1) that on September 28, 1983 it entered into a Futures Customer Agreement with the defendant spouses (Account No. 138-12161), in virtue of which it agreed to act as the latter's broker for the purchase and sale of futures contracts in the U.S.;2) that pursuant to the contract, orders to buy and sell futures contracts were transmitted to ML FUTURES by the Lara Spouses "through the facilities of Merrill Lynch Philippines, Inc., a Philippine corporation and a company servicing plaintiffs customers;23) that from the outset, the Lara Spouses "knew and were duly advised that Merrill Lynch Philippines, Inc. was not a broker in futures contracts," and that it "did not have a license from the Securities and Exchange Commission to operate as a commodity trading advisor (i.e., 'an entity which, not being a broker, furnishes advice on commodity futures to persons who trade in futures contracts');4) that in line with the above mentioned agreement and through said Merrill Lynch Philippines, Inc., the Lara Spouses actively traded in futures contracts, including "stock index futures" for four years or so,i.e., from 1983 to October, 1987,3there being more or less regular accounting and corresponding remittances of money (or crediting or debiting) made between the spouses and ML FUTURES;5) that because of a loss amounting to US$160,749.69 incurred in respect of three (3) transactions involving "index futures," and after setting this off against an amount of US$75,913.42 then owing by ML FUTURES to the Lara Spouses, said spouses became indebted to ML FUTURES for the ensuing balance of US$84,836.27, which the latter asked them to pay;6) that the Lara Spouses however refused to pay this balance, "alleging that the transactions were null and void because Merrill Lynch Philippines, Inc., the Philippine company servicing accounts of plaintiff, . . had no license to operate as a 'commodity and/or financial futures broker.'"On the foregoing essential facts, ML FUTURES prayed (1) for a preliminary attachment against defendant spouses' properties "up to the value of at least P2,267,139.50," and (2) for judgment, after trial, sentencing the spouses to pay ML FUTURES:a) the Philippine peso equivalent of $84,836.27 at the applicable exchanged rate on date of payment, with legal interest from date of demand until full payment;b) exemplary damages in the sum of at least P500,000.00; andc) attorney's fees and expenses of litigation as may be proven at the trial.Preliminary attachment issuedex parteon December 2, 1987, and the defendant spouses were duly served with summons.They then filed a motion to dismiss dated December 18, 1987 on the grounds that:(1) plaintiff ML FUTURES had "no legal capacity to sue" and(2) its "complaint states no cause of action since . . (it) is not the real party in interest."In that motion to dismiss, the defendant spouses averred that:a) although not licensed to do so, ML FUTURES had been doing business in the Philippines "at least for the last four (4) years," this being clear from the very allegations of the complaint; consequently, ML FUTURES is prohibited by law "to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines;" andb) they had never been informed that Merrill Lynch Philippines, Inc. was not licensed to do business in this country; and contrary to the allegations of the complaint, all their transactions had actually been with MERRILL LYNCH PIERCE FENNER & SMITH, INC., andnot with ML FUTURES(Merrill Lynch Futures, Inc.), in proof of which they attached to their motion to dismiss copies of eight (8) agreements, receipts or reminders, etc., executed on standard printed forms of said Merrill Lynch Pierce Fenner & Smith Inc.4ML FUTURES filed an OPPOSITION to the defendant spouses' motion to dismiss. In that motion a) it drew attention to paragraph 4 of its complaint, admitted by defendants, that the latter "have been actively trading in futures contracts . . . in U.S. futures exchanges from 1983 to 1987," and ask, "If the trading . . . (was) made in U.S., how could plaintiff be doing business in the Philippines?"b) it also drew attention to a printed form of "Merrill Lynch Futures, Inc." filled out and signed by defendant spouses when they opened an account with ML Futures, in order to supply information about themselves, including their bank's name (1) in which appear the following epigraph: "Account introduced by Merrill Lynch International, Inc.," and the following statements, to wit:This Commodity Trading Advisor (Merrill Lynch, Pierce, Fenner & Smith Philippines, Inc.) is prohibited by the Philippine Securities and Exchange Commission from accepting funds in the trading advisor's name from a client of Merrill Lynch Futures, Inc. for trading commodity interests. All funds in this trading program must be placed with Merrill Lynch Futures, Inc.;and. . . It is agreed between MERRILL LYNCH, PIERCE, FENNER & SMITH INC., and other account carrying MERRILL LYNCH entities and their customers that all legal relationships between them will be governed by applicable laws in countries outside the Philippines where sale and purchase transactions take place.c) and it argued that (1) it is not permitted for defendant spouses to present "evidence" in connection with a motion to dismiss based on failure of the complaint to state a cause of action;(2) even if the documents appended to the motion to dismiss be considered as admissible "evidence," the same would be immaterial since the documents refer to a different account number:138-12136,the defendants' account number with ML FUTURES being138-12161;(3) it is a lie for the defendant spouses to assert that they were never informed that Merrill Lynch Philippines, Inc. had not been licensed to do business in the Philippines; and(4) defendant spouses should not be allowed to "invoke the aid of the court with unclean hands.The defendant spouses filed a REPLY reaffirming their lack of awareness that Merrill Lynch Philippines, Inc.(formerly registered as Merrill Lynch, Pierce, Fenner & Smith Philippines, Inc.)5did not have a license, claiming that they learned of this only from inquiries with the Securities and Exchange Commission which elicited the information that it had denied said corporation's application to operate as a commodity futures trading advisor a denial subsequently affirmed by the Court of Appeals (Merrill Lynch Philippines, Inc. v. Securities & Exchange Commission,CA-G.R.No.10821-SP,Nov.19,1987). The spouses also submitted additional documents (Annexes J to R) involving transactions with Merrill Lynch Pierce Fenner & Smith, Inc., dating back to 1980, stressing that all but one of the documents "refer to Account No. 138-12161 which is the very account that is involved in the instant complaint."ML FUTURES filed a Rejoinder alleging it had given the spouses a disclosure statement by which the latter were made aware that the transactions they were agreeing on would take place outside of the Philippines, and that "all funds in the trading program must be placed with Merrill Lynch Futures, Inc."On January 12, 1988, the Trial Court promulgated an Order sustaining the motion to dismiss, directing the dismissal of the case and discharging the writ of preliminary attachment. It later denied ML FUTURES's motion for reconsideration, by Order dated February 29, 1988. ML FUTURES appealed to the Court of Appeals.6In its own decision promulgated on November 27, 1990,7the Court of Appeals affirmed the Trial Court's judgment. It declared that the Trial Court had seen "through the charade in the representation of MLPI and the plaintiff that MLPI is only a trading advisor and in fact it is a conduit in the plaintiff's business transactions in the Philippines as a basis for invoking the provisions of Section 133 of the Corporation Code,"8viz.:Sec. 133. Doing business without a license. No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency in the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws.It also declared that the evidence established that plaintiff had in fact been "doing business" in this country in legal contemplation, adverting toMentholatum v.Mangaliman,72 Phil. 524, 528-530, and Section 1 of Republic Act No. 5455 reading as follows:9Sec. 1. Definition and scope of this ACT. (1) As used in this Act, the term "investment" shall mean equity participation in any enterprise formed, organized, or existing under the laws of the Philippines; and the phrase "doing business"shall INCLUDE soliciting orders, purchases, service contracts, opening offices,whether called "liaison" offices or branches;appointing representativesor distributors who are domiciled in the Philippines or who in any calendar year stay in the Philippinesfor a period or periods totalling one hundred eighty days or more; participating 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 COMMERCIAL DEALINGS OR ARRANGEMENTS AND CONTEMPLATE TO THAT EXTENT THE PERFORMANCE OF ACTS OR WORKS, OR THE EXERCISE OF SOME FUNCTIONS NORMALLY INCIDENT TO, AND IN PROGRESSIVE PROSECUTION OF COMMERCIAL GAIN OR OF THE PURPOSE AND OBJECT OF THE BUSINESS ORGANIZATION.As regards the claim that it was error for the Trial Court to place reliance on the decision of the Court of Appeals in CA-G.R. No. 10821-SP sustaining the finding of the Securities & Exchange Commission that ML FUTURES was doing business in the Philippines since that judgment was not yet final and ML FUTURES was not a party to that proceeding, the Court of Appeals ruled that there was no need to belabor the point considering that there was, in any event, "adequate proof of the activities of MLPI . . . which manifestly show that the plaintiff (ML FUTURES) performed a series of business acts, consummated contracts and undertook transactions for the period from 1983 to October 1987," "and because ML FUTURES had done so without license, it consequently had "no legal personality to bring suit in Philippine courts."Its motion for reconsideration having been denied,10ML FUTURES has appealed to this Court oncertiorari. Here, it submits the following issues for resolution:(a) Whether or not the annexes appended by the Laras to their Motion to Dismiss and Reply filed with the Regional Trial Court, but never authenticated or offered, constitute admissible evidence.(b) Whether or not in the proceedings below, ML FUTURES has been accorded procedural due process.(c) Whether or not the annexes, assuming them to be admissible, established that ML FUTURES was doing business in the Philippines without a license.As just stated, the Lara Spouse's motion to dismiss was founded on two (2) grounds: (a) that the plaintiff has no legal capacity to sue, and (b) that the complaint states no cause of action (Sec. 1 [d], and [g], Rule 16, Rules of Court).As regards the second ground,i.e., that the complaint states no cause of action, the settled doctrine of course is that said ground must appear on the face of the complaint, and its existence may be determined only by the allegations of the complaint, consideration of other facts being proscribed, and any attempt to prove extraneous circumstances not being allowed.11The test of the sufficiency of the facts alleged in a complaint as constituting a cause of action is whether or not, admitting the facts alleged, the court might render a valid judgment upon the same in accordance with the prayer of the complaint.12Indeed, it is error for a judge to conduct a preliminary hearing and receive evidence on the affirmative defense of failure of the complaint to state a cause of action.13The other ground for dismissal relied upon,i.e., that the plaintiff has no legal capacity to sue may be understood in two senses: one, that the plaintiff is prohibited or otherwise incapacitated by law to institute suit in Philippine Courts,14or two, although not otherwise incapacitated in the sense just stated, that it is not a real party in interest.15Now, the Lara Spouses contend that ML Futures has no capacity to sue them because the transactions subject of the complaint were had by them, not with the plaintiff ML FUTURES, but withMerrill Lynch Pierce Fenner & Smith,Inc. Evidence is quite obviously needed in this situation, for it is not to be expected that said ground, or any facts from which its existence may be inferred, will be found in the averments of the complaint. When such a ground is asserted in a motion to dismiss, the general rule governing evidence on motions applies. The rule is embodied in Section 7, Rule 133 of the Rules of Court.Sec. 7. Evidence on motion. When a motion is based on facts not appearing of record the court may hear the matter on affidavits or depositions presented by the respective parties, but the court may direct that the matter be heard wholly or partly on oral testimony or depositions.There was, to be sure, no affidavit or deposition attached to the Lara Spouses' motion to dismiss or thereafter proffered in proof of the averments of their motion. The motion itself was not verified. What the spouses did do was to refer in their motion to documents which purported to establish that it was not with ML FUTURES that they had theretofore been dealing, but another, distinct entity, Merrill Lynch, Pierce, Fenner & Smith, Inc., copies of which documents were attached to the motion. It is significant that ML FUTURES raised no issue relative to the authenticity of the documents thus annexed to the Laras' motion. In fact, its arguments subsumed the genuineness thereof and even adverted to one or two of them. Its objection was centered on the propriety of taking account of those documents as evidence, considering the established principle that no evidence should be received in the resolution of a motion to dismiss based on an alleged failure of the complaint to state a cause of action.There being otherwise no question respecting the genuineness of the documents, nor of their relevance to at least one of the grounds for dismissal i.e., the prohibition on suits in Philippine Courts by foreign corporations doing business in the country without license it would have been a superfluity for the Court to require prior proof of their authenticity, and no error may be ascribed to the Trial Court in taking account of them in the determination of the motionon the ground, not that the complaint fails to state a cause of action as regards which evidence is improper and impermissible but that the plaintiff has no legal capacity to sue respecting which proof may and should be presented.Neither may ML FUTURES argue with any degree of tenability that it had been denied due process in the premises. As just pointed out, it was very clear from the outset that the claim of lack of its capacity to sue was being made to rest squarely on the documents annexed thereto, and ML FUTURES had more than ample opportunity to impugn those documents and require their authentication, but did not do so. To sustain its theory that there should have been identification and authentication, and formal offer, of those documents in the Trial Court pursuant to the rules of evidence would be to give unwarranted importance to technicality and make it prevail over the substance of the issue.The first question then, is, as ML FUTURES formulates it, whether or not the annexes, assuming them to be admissible, establish that (a) ML FUTURES is prohibited from suing in Philippine Courts because doing business in the country without a license, and that (b) it is not a real party in interest since the Lara Spouses had not been doing business with it, but with another corporation, Merrill Lynch, Pierce, Fenner & Smith, Inc.The Court is satisfied that the facts on record adequately establish that ML FUTURES, operating in the United States, had indeed done business with the Lara Spouses in the Philippines over several years, had done so at all times through Merrill Lynch Philippines, Inc. (MLPI), a corporation organized in this country, and had executed all these transactions without ML FUTURES being licensed to so transact business here, and without MLPI being authorized to operate as a commodity futures trading advisor. These are the factual findings of both the Trial Court and the Court of Appeals. These, too, are the conclusions of the Securities & Exchange Commission which denied MLPI's application to operate as a commodity futures trading advisor, a denial subsequently affirmed by the Court of Appeals. Prescinding from the proposition that factual findings of the Court of Appeals are generally conclusive this Court has been cited to no circumstance of substance to warrant reversal of said Appellate Court's findings or conclusions in this case.The Court is satisfied, too, that the Laras did transact business with ML FUTURES through its agent corporation organized in the Philippines, it being unnecessary to determine whether this domestic firm was MLPI (Merrill Lynch Philippines, Inc.) or Merrill Lynch Pierce Fenner & Smith (MLPI's alleged predecessor). The fact is that ML FUTURES did deal with futures contracts in exchanges in the United States in behalf and for the account of the Lara Spouses, and that on several occasions the latter received account documents and money in connection with those transactions.Given these facts, if indeed the last transaction executed by ML FUTURES in the Laras's behalf had resulted in a loss amounting to US $160,749.69; that in relation to this loss, ML FUTURES had credited the Laras with the amount of US$75,913.42 which it (ML FUTURES) then admittedly owed the spouses and thereafter sought to collect the balance, US$84,836.27, but the Laras had refused to pay (for the reasons already above stated), the crucial question is whether or not ML FUTURES may sue in Philippine Courts to establish and enforce its rights against said spouses, in light of the undeniable fact that it had transacted business in this country without being licensed to do so. In other words, if it be true that during all the time that they were transacting with ML FUTURES, the Laras were fully aware of its lack of license to do business in the Philippines, and in relation to those transactions had made payments to, and received money from it for several years, the question is whether or not the Lara Spouses are now estopped to impugn ML FUTURES' capacity to sue them in the courts of the forum.The rule is that a party is estopped to challenge the personality of a corporation after having acknowledged the same by entering into a contract with it.16And the "doctrine of estoppel to deny corporate existence applies to foreign as well as to domestic corporations;"17"one who has dealt with a corporation of foreign origin as a corporate entity is estopped to deny its corporate existence and capacity."18The principle "will be applied to prevent a person contracting with a foreign corporation from later taking advantage of its noncompliance with the statutes, chiefly in cases where such person has received the benefits of the contract (Sherwood v. Alvis, 83 Ala 115, 3 So 307, limited and distinguished in Dudley v. Collier, 87 Ala 431, 6 So 304; Spinney v. Miller, 114 Iowa 210, 86 NW 317), where such person has acted as agent for the corporation and has violated his fiduciary obligations as such, and where the statute does not provide that the contract shall be void, but merely fixes a special penalty for violation of the statute. . . ."19The doctrine was adopted by this Court as early as 1924 inAsia Banking Corporation v.Standard Products Co.,20in which the following pronouncement was made:21The general rule that in the absence of fraud of person who has contracted or otherwise dealt with an association in such a way as to recognize and in effect admit its legal existence as a corporate body is thereby estopped to deny its corporate existence in any action leading out of or involving such contract or dealing, unless its existence is attacked for causes which have arisen since making the contract or other dealing relied on as an estoppel andthis applies to foreign as well as domestic corporations. (14C.J.7; Chinese Chamber of Commerce vs. Pua Te Ching, 14 Phil. 222).There would seem to be no question that the Laras received benefits generated by their business relations with ML FUTURES. Those business relations, according to the Laras themselves, spanned a period of seven (7) years; and they evidently found those relations to be of such profitability as warranted their maintaining them for that not insignificant period of time; otherwise, it is reasonably certain that they would have terminated their dealings with ML FUTURES much, much earlier. In fact, even as regards their last transaction, in which the Laras allegedly suffered a loss in the sum of US$160,749.69, the Laras nonetheless still received some monetary advantage, for ML FUTURES credited them with the amount of US$75,913.42 then due to them, thus reducing their debt to US$84,836.27. Given these facts, and assuming that the Lara Spouses were aware from the outset that ML FUTURES had no license to do business in this country and MLPI, no authority to act as broker for it, it would appear quite inequitable for the Laras to evade payment of an otherwise legitimate indebtedness due and owing to ML FUTURES upon the plea that it should not have done business in this country in the first place, or that its agent in this country, MLPI, had no license either to operate as a "commodity and/or financial futures broker."Considerations of equity dictate that, at the very least, the issue of whether the Laras are in truth liable to ML FUTURES and if so in what amount, and whether they were so far aware of the absence of the requisite licenses on the part of ML FUTURES and its Philippine correspondent, MLPI, as to be estopped from alleging that fact as defense to such liability, should be ventilated and adjudicated on the merits by the proper trial court.WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 16478 dated November 27, 1990 and its Resolution of March 7, 1991 are REVERSED and SET ASIDE, and the Regional Trial Court at Quezon City, Branch 84, is ORDERED to reinstate Civil Case No. Q-52360 and forthwith conduct a hearing to adjudicate the issues set out in the preceding paragraph on the merits.SO ORDERED.

G.R. No. 154618 April 14, 2004AGILENT TECHNOLOGIES SINGAPORE (PTE) LTD.,petitioner,vs.INTEGRATED SILICON TECHNOLOGY PHILIPPINES CORPORATION, TEOH KIANG HONG, TEOH KIANG SENG, ANTHONY CHOO, JOANNE KATE M. DELA CRUZ, JEAN KAY M. DELA CRUZ and ROLANDO T. NACILLA,respondents.This petition for review assails the Decision dated August 12, 2002 of the Court of Appeals in CA-G.R. SP No. 66574, which dismissed Civil Case No. 3123-2001-C and annulled and set aside the Order dated September 4, 2001 issued by the Regional Trial Court of Calamba, Laguna, Branch 92.Petitioner Agilent Technologies Singapore (Pte.), Ltd. ("Agilent") is a foreign corporation, which, by its own admission, is not licensed to do business in the Philippines.1Respondent Integrated Silicon Technology Philippines Corporation ("Integrated Silicon") is a private domestic corporation, 100% foreign owned, which is engaged in the business of manufacturing and assembling electronics components.2Respondents Teoh Kiang Hong, Teoh Kiang Seng and Anthony Choo, Malaysian nationals, are current members of Integrated Silicons board of directors, while Joanne Kate M. dela Cruz, Jean Kay M. dela Cruz, and Rolando T. Nacilla are its former members.3The juridical relation among the various parties in this case can be traced to a 5-year Value Added Assembly Services Agreement ("VAASA"), entered into on April 2, 1996 between Integrated Silicon and the Hewlett-Packard Singapore (Pte.) Ltd., Singapore Components Operation ("HP-Singapore").4Under the terms of the VAASA, Integrated Silicon was to locally manufacture and assemble fiber optics for export to HP-Singapore. HP-Singapore, for its part, was to consign raw materials to Integrated Silicon; transport machinery to the plant of Integrated Silicon; and pay Integrated Silicon the purchase price of the finished products.5The VAASA had a five-year term, beginning on April 2, 1996, with a provision for annual renewal by mutual written consent.6On September 19, 1999, with the consent of Integrated Silicon,7HP-Singapore assigned all its rights and obligations in the VAASA to Agilent.8On May 25, 2001, Integrated Silicon filed a complaint for "Specific Performance and Damages" against Agilent and its officers Tan Bian Ee, Lim Chin Hong, Tey Boon Teck and Francis Khor, docketed as Civil Case No. 3110-01-C. It alleged that Agilent breached the parties oral agreement to extend the VAASA. Integrated Silicon thus prayed that defendant be ordered to execute a written extension of the VAASA for a period of five years as earlier assured and promised; to comply with the extended VAASA; and to pay actual, moral, exemplary damages and attorneys fees.9On June 1, 2001, summons and a copy of the complaint were served on Atty. Ramon Quisumbing, who returned these processes on the claim that he was not the registered agent of Agilent. Later, he entered a special appearance to assail the courts jurisdiction over the person of Agilent.On July 2, 2001, Agilent filed a separate complaint against Integrated Silicon, Teoh Kang Seng, Teoh Kiang Gong, Anthony Choo, Joanne Kate M. dela Cruz, Jean Kay M. dela Cruz and Rolando T. Nacilla,10for "Specific Performance, Recovery of Possession, and Sum of Money with Replevin, Preliminary Mandatory Injunction, and Damages", before the Regional Trial Court, Calamba, Laguna, Branch 92, docketed as Civil Case No. 3123-2001-C. Agilent prayed that a writ of replevin or, in the alternative, a writ of preliminary mandatory injunction, be issued ordering defendants to immediately return and deliver to plaintiff its equipment, machineries and the materials to be used for fiber-optic components which were left in the plant of Integrated Silicon. It further prayed that defendants be ordered to pay actual and exemplary damages and attorneys fees.11Respondents filed a Motion to Dismiss in Civil Case No. 3123-2001-C,12on the grounds of lack of Agilents legal capacity to sue;13litis pendentia;14forum shopping;15and failure to state a cause of action.16On September 4, 2001, the trial court denied the Motion to Dismiss and granted petitioner Agilents application for a writ of replevin.17Without filing a motion for reconsideration, respondents filed a petition for certiorari with the Court of Appeals.18In the meantime, upon motion filed by respondents, Judge Antonio S. Pozas of Branch 92 voluntarily inhibited himself in Civil Case No. 3123-2001-C. The case was re-raffled and assigned to Branch 35, the same branch where Civil Case No. 3110-2001-C is pending.On August 12, 2002, the Court of Appeals granted respondents petition for certiorari, set aside the assailed Order of the trial court dated September 4, 2001, and ordered the dismissal of Civil Case No. 3123-2001-C.Hence, the instant petition raising the following errors:I.THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT DISMISSING RESPONDENTS PETITION FOR CERTIORARI FOR RESPONDENTS FAILURE TO FILE A MOTION FOR RECONSIDERATION BEFORE RESORTING TO THE REMEDY OF CERTIORARI.II.THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN ANNULLING AND SETTING ASIDE THE TRIAL COURTS ORDER DATED 4 SEPTEMBER 2001 AND ORDERING THE DISMISSAL OF CIVIL CASE NO. 3123-2001-C BELOW ON THE GROUND OFLITIS PENDENTIA, ON ACCOUNT OF THE PENDENCY OF CIVIL CASE NO. 3110-2001-C.III.THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN ANNULLING AND SETTING ASIDE THE TRIAL COURTS ORDER DATED 4 SEPTEMBER 2001 AND ORDERING THE DISMISSAL OF CIVIL CASE NO. 3123-2001-C BELOW ON THE GROUND OF FORUM SHOPPING, ON ACCOUNT OF THE PENDENCY OF CIVIL CASE NO. 3110-2001-C.IV.THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN ORDERING THE DISMISSAL OF CIVIL CASE NO. 323-2001-C BELOW INSTEAD OF ORDERING IT CONSOLIDATED WITH CIVIL CASE NO. 3110-2001-C.19The two primary issues raised in this petition: (1) whether or not the Court of Appeals committed reversible error in giving due course to respondents petition, notwithstanding the failure to file a Motion for Reconsideration of the September 4, 2001 Order; and (2) whether or not the Court of Appeals committed reversible error in dismissing Civil Case No. 3123-2001-C.We find merit in the petition.The Court of Appeals, citing the case ofMalayang Manggagawa sa ESSO v. ESSO Standard Eastern, Inc.,20held that the lower court had no jurisdiction over Civil Case No. 3123-2001-C because of the pendency of Civil Case No. 3110-2001-C and, therefore, a motion for reconsideration was not necessary before resort to a petition for certiorari. This was error.Jurisdiction is fixed by law. Batas Pambansa Blg. 129 vests jurisdiction over the subject matter of Civil Case No. 3123-2001-C in the RTC.21The Court of Appeals ruling that the assailed Order issued by the RTC of Calamba, Branch 92, was a nullity for lack of jurisdiction due tolitis pendentiaand forum shopping, has no legal basis. The pendency of another action does not strip a court of the jurisdiction granted by law.The Court of Appeals further ruled that a Motion for Reconsideration was not necessary in view of the urgent necessity in this case. We are not convinced. In the case ofBache and Co. (Phils.), Inc. v. Ruiz,22relied on by the Court of Appeals, it was held that "time is of the essence in view of the tax assessments sought to be enforced by respondent officers of the Bureau of Internal Revenue against petitioner corporation, on account of which immediate and more direct action becomes necessary." Tax assessments in that case were based on documents seized by virtue of an illegal search, and the deprivation of the right to due process tainted the entire proceedings with illegality. Hence, the urgent necessity of preventing the enforcement of the tax assessments was patent. Respondents, on the other hand, cite the case ofGeronimo v. Commission on Elections,23where the urgent necessity of resolving a disqualification case for a position in local government warranted the expeditious resort to certiorari. In the case at bar, there is no analogously urgent circumstance which would necessitate the relaxation of the rule on a Motion for Reconsideration.Indeed,noneof the exceptions for dispensing with a Motion for Reconsideration is present here. None of the following cases cited by respondents serves as adequate basis for their procedural lapse.InVigan Electric Light Co., Inc. v. Public Service Commission,24the questioned order was null and void for failure of respondent tribunal to comply with due process requirements; inMatanguihan v. Tengco,25the questioned order was a patent nullity for failure to acquire jurisdiction over the defendants, which fact the records plainly disclosed; and inNational Electrification Administration v. Court of Appeals,26the questioned orders were void for vagueness. No such patent nullity is evident in the Order issued by the trial court in this case. Finally, while urgency may be a ground for dispensing with a Motion for Reconsideration, in the case ofVivo v. Cloribel,27cited by respondents, the slow progress of the case would have rendered the issues moot had a motion for reconsideration been availed of. We find no such urgent circumstance in the case at bar.Respondents, therefore, availed of a premature remedy when they immediately raised the matter to the Court of Appeals on certiorari; and the appellate court committed reversible error when it took cognizance of respondents petition instead of dismissing the same outright.We come now to the substantive issues of the petition.Litis pendentiais a Latin term which literally means "a pending suit." It is variously referred to in some decisions aslis pendensandauter action pendant. While it is normally connected with the control which the court has on a property involved in a suit during the continuance proceedings, it is more interposed as a ground for the dismissal of a civil action pending in court.Litis pendentiaas a ground for the dismissal of a civil action refers to that situation wherein another action is pending between the same parties for the same cause of action, such that the second action becomes unnecessary and vexatious. Forlitis pendentiato be invoked, the concurrence of the following requisites is necessary:(a) identity of parties or at least such as represent the same interest in both actions;(b) identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and(c) the identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amount tores judicatain the other.28The Court of Appeals correctly appreciated the identity of parties in Civil Cases No. 3123-2001-C and 3110-2001-C. Well-settled is the rule thatlis pendensrequires onlysubstantial, and not absolute, identity of parties.29There is substantial identity of parties when there is a community of interest between a party in the first case and a party in the second case, even if the latter was not impleaded in the first case.30The parties in these cases are vying over the interests of the two opposing corporations; the individuals are only incidentally impleaded, being the natural persons purportedly accused of violating these corporations rights.Likewise, the fact that the positions of the parties are reversed,i.e., the plaintiffs in the first case are the defendants in the second case or vice versa, does not negate the identity of parties for purposes of determining whether the case is dismissible on the ground oflitis pendentia.31The identity of parties notwithstanding,litis pendentiadoes not obtain in this case because of the absence of the second and third requisites. The rights asserted in each of the cases involved are separate and distinct; there are two subjects of controversy presented for adjudication; and two causes of action are clearly involved. The fact that respondents instituted a prior action for "Specific Performance and Damages" is not a ground for defeating the petitioners action for "Specific Performance, Recovery of Possession, and Sum of Money with Replevin, Preliminary Mandatory Injunction, and Damages."In Civil Case No. 3110-2001-C filed by respondents, the issue is whether or not there was a breach of an oral promise to renew of the VAASA. The issue in Civil Case No. 3123-2001-C, filed by petitioner, is whether petitioner has the right to take possession of the subject properties. Petitioners right of possession is founded on the ownership of the subject goods, which ownership is not disputed and is not contingent on the extension or non-extension of the VAASA. Hence, the replevin suit can validly be tried even while the prior suit is being litigated in the Regional Trial Court.Possession of the subject properties isnotan issue in Civil Case No. 3110-2001-C. The reliefs sought by respondent Integrated Silicon therein are as follows: (1) execution of a written extension or renewal of the VAASA; (2) compliance with the extended VAASA; and (3) payment of overdue accounts, damages, and attorneys fees. The reliefs sought by petitioner Agilent in Civil Case No. 3123-2001-C, on the other hand, are as follows: (1) issuance of a Writ of Replevin or Writ of Preliminary Mandatory Injunction; (2) recovery of possession of the subject properties; (3) damages and attorneys fees.Concededly, some items or pieces of evidence may be admissible in both actions. It cannot be said, however, thatexactlythe same evidence will support the decisions in both, since the legally significant and controlling facts in each case are entirely different. Although the VAASA figures prominently in both suits, Civil Case No. 3110-2001-C is premised on a purported breach of an oral obligation toextendthe VAASA, and damages arising out of Agilents alleged failure to comply with such purported extension. Civil Case No. 3123-2001-C, on the other hand, is premised on a breach of the VAASAitself, and damages arising to Agilent out of that purported breach.It necessarily follows that the third requisite forlitis pendentiais also absent. The following are the elements of res judicata:(a) The former judgment must be final;(b) The court which rendered judgment must have jurisdiction over the parties and the subject matter;(c) It must be a judgment on the merits; and(d) There must be between the first and second actions identity of parties, subject matter, and cause of action.32In this case, any judgment rendered in one of the actions will not amount tores judicatain the other action. There being different causes of action, the decision in one case will not constitute res judicata as to the other.Of course, a decision in one case may, to a certain extent, affect the other case. This, however, is not the test to determine the identity of the causes of action. Whatever difficulties or inconvenience may be entailed if both causes of action are pursued on separate remedies, the proper solution is not the dismissal order of the Court of Appeals. The possible consolidation of said cases, as well as stipulations and appropriate modes of discovery, may well be considered by the court below to subserve not only procedural expedience but, more important, the ends of justice.33We now proceed to the issue of forum shopping.The test for determining whether a party violated the rule against forum-shopping was laid down in the case ofBuan v. Lopez.34Forum shopping exists where the elements oflitis pendentiaare present, or where a final judgment in one case will amount tores judicatain the final other. There being nolitis pendentiain this case, a judgment in the said case will not amount tores judicatain Civil Case No. 3110-2001-C, and respondents contention on forum shopping must likewise fail.We are not unmindful of the afflictive consequences that may be suffered by both petitioner and respondents if replevin is granted by the trial court in Civil Case No. 3123-2001-C. If respondent Integrated Silicon eventually wins Civil Case No. 3110-2001-C, and the VAASAs terms are extended, petitioner corporation will have to comply with its obligations thereunder, which would include the consignment of properties similar to those it may recover by way of replevin in Civil Case No. 3123-2001-C. However, petitioner will also suffer an injustice if denied the remedy of replevin, resort to which is not only allowed but encouraged by law.Respondents argue that since Agilent is an unlicensed foreign corporation doing business in the Philippines, it lacks the legal capacity to file suit.35The assailed acts of petitioner Agilent, purportedly in the nature of "doing business" in the Philippines, are the following: (1) mere entering into the VAASA, which is a "service contract";36(2) appointment of a full-time representative in Integrated Silicon, to "oversee and supervise the production" of Agilents products;37(3) the appointment by Agilent of six full-time staff members, who were permanently stationed at Integrated Silicons facilities in order to inspect the finished goods for Agilent;38and (4) Agilents participation in the management, supervision and control of Integrated Silicon,39including instructing Integrated Silicon to hire more employees to meet Agilents increasing production needs,40regularly performing quality audit, evaluation and supervision of Integrated Silicons employees,41regularly performing inventory audit of raw materials to be used by Integrated Silicon, which was also required to provide weekly inventory updates to Agilent,42and providing and dictating Integrated Silicon on the daily production schedule, volume and models of the products to manufacture and ship for Agilent.43A foreign corporation without a license is notipso factoincapacitated from bringing an action in Philippine courts. A license is necessary only if a foreign corporation is "transacting" or "doing business" in the country. The Corporation Code provides:Sec. 133.Doing business without a license. No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws.The aforementioned provision prevents an unlicensed foreign corporation "doing business" in the Philippines from accessing our courts.In a number of cases, however, we have held that an unlicensed foreign corporation doing business in the Philippines may bring suit in Philippine courts against a Philippine citizen or entity who had contracted with and benefited from said corporation.44Such a suit is premised on the doctrine of estoppel. A party is estopped from challenging the personality of a corporation after having acknowledged the same by entering into a contract with it. This doctrine of estoppel to deny corporate existence and capacity applies to foreign as well as domestic corporations.45The application of this principle prevents a person contracting with a foreign corporation from later taking advantage of its noncompliance with the statutes chiefly in cases where such person has received the benefits of the contract.46The principles regarding the right of a foreign corporation to bring suit in Philippine courts may thus be condensed in four statements: (1) if a foreign corporation does business in the Philippines without a license, it cannot sue before the Philippine courts;47(2) if a foreign corporation isnotdoing business in the Philippines, it needs no license to sue before Philippine courts on an isolated transaction or on a cause of action entirely independent of any business transaction48; (3) if a foreign corporation does business in the Philippines without a license, a Philippine citizen or entity which has contracted with said corporation may be estopped from challenging the foreign corporations corporate personality in a suit brought before Philippine courts;49and (4) if a foreign corporation does business in the Philippineswiththe required license, it can sue before Philippine courts on any transaction.The challenge to Agilents legal capacity to file suit hinges on whether or not it is doing business in the Philippines. However, there is no definitive rule on what constitutes "doing", "engaging in", or "transacting" business in the Philippines, as this Court observed in the case ofMentholatum v. Mangaliman.50The Corporation Code itself is silent as to what acts constitute doing or transacting business in the Philippines.Jurisprudence has it, however, that the term "implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to or in progressive prosecution of the purpose and subject of its organization."51InMentholatum,52this Court discoursed on the two general tests to determine whether or not a foreign corporation can be considered as "doing business" in the Philippines. The first of these is thesubstancetest, thus:53The true test [for doing business], however, seems to be whether the foreign corporation is continuing the body of the business or enterprise for which it was organized or whether it has substantially retired from it and turned it over to another.The second test is thecontinuitytest, expressed thus:54The term [doing business] implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in the progressive prosecution of, the purpose and object of its organization.Although each case must be judged in light of its attendant circumstances, jurisprudence has evolved several guiding principles for the application of these tests. For instance, considering that it transacted with its Philippine counterpart for seven years, engaging in futures contracts, this Court concluded that the foreign corporation inMerrill Lynch Futures, Inc. v. Court of Appeals and Spouses Lara,55was doing business in the Philippines. InCommissioner of Internal Revenue v. Japan Airlines ("JAL"),56the Court held that JAL was doing business in the Philippines, i.e., its commercial dealings in the country were continuous despite the fact that no JAL aircraft landed in the country as it sold tickets in the Philippines through a general sales agent, and opened a promotions office here as well.InGeneral Corp. of the Phils. v. Union Insurance Society of Canton and Firemans Fund Insurance,57a foreign insurance corporation was held to be doing business in the Philippines, as it appointed a settling agent here, and issued 12 marine insurance policies. We held that these transactions were not isolated or casual, but manifested the continuity of the foreign corporations conduct and its intent to establish a continuous business in the country. InEriks PTE Ltd. v. Court of Appeals and Enriquez,58the foreign corporation sold its products to a Filipino buyer who ordered the goods 16 times within an eight-month period. Accordingly, this Court ruled that the corporation was doing business in the Philippines, as there was a clear intention on its part to continue the body of its business here, despite the relatively short span of time involved.Communication Materials and Design, Inc., et al. v. Court of Appeals, ITEC, et al.59andTop-Weld Manufacturing v. ECED, IRTI, et al.60both involved the License and Technical Agreement and Distributor Agreement of foreign corporations with their respective local counterparts that were the primary bases for the Courts ruling that the foreign corporations were doing business in the Philippines.61In particular, the Court cited thehighly restrictive nature of certain provisions in the agreements involved, such that, as stated in Communication Materials, the Philippine entity is reduced to a mere extension or instrument of the foreign corporation. For example, inCommunication Materials, the Court deemed the "No Competing Product" provision of the Representative Agreement therein restrictive.62The case law definition has evolved into a statutory definition, having been adopted with some qualifications in various pieces of legislation. The Foreign Investments Act of 1991 (the "FIA"; Republic Act No. 7042, as amended), defines "doing business" as follows:Sec. 3, par. (d). The phrase "doing business" shall include soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totaling one hundred eighty (180) days or more; participating 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 commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in the progressive prosecution of, commercial gain or of the purpose and object of the business organization.An analysis of the relevant case law, in conjunction with Section 1 of the Implementing Rules and Regulations of the FIA (as amended by Republic Act No. 8179), would demonstrate that the acts enumerated in the VAASA donotconstitute "doing business" in the Philippines.Section 1 of the Implementing Rules and Regulations of the FIA (as amended by Republic Act No. 8179) provides that the following shallnotbe deemed "doing business":(1) 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;(2) Having a nominee director or officer to represent its interest in such corporation;(3) Appointing a representative or distributor domiciled in the Philippines which transacts business in the representatives or distributors own name and account;(4) The publication of a general advertisement through any print or broadcast media;(5) Maintaining a stock of goods in the Philippines solely for the purpose of having the same processed by another entity in the Philippines;(6) Consignment by a foreign entity of equipment with a local company to be used in the processing of products for export;(7) Collecting information in the Philippines; and(8) Performing services auxiliary to an existing isolated contract of sale which are not on a continuing basis, such as installing in the Philippines machinery it has manufactured or exported to the Philippines, servicing the same, training domestic workers to operate it, and similar incidental services.By and large, to constitute "doing business", the activity to be undertaken in the Philippines is one that is for profit-making.63By the clear terms of the VAASA, Agilents activities in the Philippines were confined to (1) maintaining a stock of goods in the Philippines solely for the purpose of having the same processed by Integrated Silicon; and (2) consignment of equipment with Integrated Silicon to be used in the processing of products for export. As such, we hold that, based on the evidence presented thus far, Agilent cannot be deemed to be "doing business" in the Philippines. Respondents contention that Agilent lacks the legal capacity to file suit is therefore devoid of merit. As a foreign corporation not doing business in the Philippines, it needed no license before it can sue before our courts.Finally, as to Agilents purported failure to state a cause of action against the individual respondents, we likewise rule in favor of petitioner. A Motion to Dismiss hypothetically admits all the allegations in the Complaint, which plainly alleges that these individual respondents had committed or permitted the commission of acts prejudicial to Agilent. Whether or not these individuals had divested themselves of their interests in Integrated Silicon, or are no longer members of Integrated Silicons Board of Directors, is a matter of defense best threshed out during trial.WHEREFORE, PREMISES CONSIDERED,the petition isGRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 66574 dated August 12, 2002, which dismissed Civil Case No. 3123-2001-C,isREVERSEDandSET ASIDE. The Order dated September 4, 2001 issued by the Regional Trial Court of Calamba, Laguna, Branch 92, in Civil Case No. 3123-2001-C, isREINSTATED. Agilents application for a Writ of Replevin isGRANTED.No pronouncement as to costs.SO ORDERED.

VAN ZUIDEN BROS., LTD.,Petitioner,vs. GTVL MANUFACTURING INDUSTRIES, INC.,Respondent.[G.R. No. 147905, May 28, 2007]

FACTS:1. Petitioner B. Van Zuiden Bros., Ltd (Zuiden) filed a complaint for sum of money against respondent GTVL MANUFACTURING INDUSTRIES, INC2. Zuiden is a corporation, incorporated under the laws of Hong Konga. not engaged in business in the Philippinesb. engaged in the importation and exportation of several products, including lace products.c. suing before the Philippine Courts on the following reasons:i. GTVL purchased lace products from Zuidenii. procedure for these purchases, as per the instructions of GTVL:1. Zuiden delivers the products purchased by GTVL, to a certain Hong Kong corporation, known as Kenzar Ltd. (KENZAR which is located in Hong Kong) After delivery transaction is concluded GTVL is obligated to pay the agreed purchase price2. products are then considered as sold, upon receipt by KENZAR of the goods purchased by GTVL3. KENZAR had the obligation to deliver the products to the Philippines and/or to follow whatever instructions GTVL had on the matter.iii. GTVL has failed and refused to pay the agreed purchase price for several deliveries ordered by it and delivered by ZUIDEN having an overdue of U.S.$32,088.02 [inclusive of interest].3. GVTL filed a Motion to Dismissa. Zuiden has no legal capacity to sueb. Alleging that Zuiden is doing business in the Philippines without securing the required license.4. TC ordered for the dismissal of the complaint5. CA concluded that the delivery of the goods in Hong Kong did not exempt Zuiden from being considered as doing business in the Philippines.a. the parties entered into a contract of sale whereby Zuiden sold lace products to GVTL in a series of transactions. b. Zuiden delivered the goods in Hong Kong to Kenzar, Ltd. (Kenzar), another Hong Kong company, i. the party with whom Zuiden transacted was actually GVTL, a Philippine corporation, and not Kenzarii. Kenzar is merely a shipping company.

ISSUE: W/N Zuiden, an unlicensed foreign corporation, has legal capacity to sue before Philippine courts.

HELD: YES. Petition granted.1. Section 133 of the Corporation Code provides:

Doing business without license. No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws.2. The law is clear that an unlicensed foreign corporation doing business in the Philippines cannot sue before Philippine courts and an unlicensed foreign corporationnotdoing business in the Philippines can sue before Philippine courts3. IN THE CASE: ZUIDEN IS NOT DOING BUSINESS IN THE PHILIPPINESa. Under Section 3(d) of Republic Act No. 7042 (RA 7042) or "The Foreign Investments Act of 1991," the series of transactions between Zuiden and GVTL cannot be classified as "doing business" in the Philippinesi. There was no showing that the essential condition (to be considered as doing business in the Philippines), namely that the actual performance of specific commercial acts within the territory of the Philippines for the plain reason that the Philippines has no jurisdiction over commercial acts performed in foreign territories was present 1. the perfection and consummation of these transactions were done outside the Philippines namely Hong Kong (see FACTS 2.c.)4. To be doing or "transacting business in the Philippines", the foreign corporation mustactually transact business in the Philippines, meaning to perform specific business transactions within the Philippine territory on a continuing basis in its own name and for its own account. a. Actual transaction of business within the Philippine territory is an essential requisite for the Philippines to acquire jurisdiction over a foreign corporation and thus require the foreign corporation to secure a Philippine business license. b. If a foreign corporation does not transact such kind of business in the Philippines, even if it exports its products to the Philippines, the Philippines has no jurisdiction to require such foreign corporation to secure a Philippine business license.5. IN THE PRESENT CASE: Zuiden is not doing business in the Philippines, it does not need a license in order to initiate and maintain a collection suit against respondent for the unpaid balance of respondents purchases.6. The mere act of exporting from ones own country, without doing any specific commercial act within the territory of the importing country, cannot be deemed as doing business in the importing country.a. importing country does not acquire jurisdiction over the foreign exporter who has not performed any specific commercial act within the territory of the importing countryb. Without jurisdiction over the foreign exporter, the importing country cannot compel the foreign exporter to secure a license to do business in the importing country.

Eriks Pte. Ltd. vs. Court of Appeals [GR 118843, 6 February 1997]Third Division, Panganiban (J): 4 concur

Facts: Eriks Pte. Ltd. is a non-resident foreign corporation engaged in the manufacture and sale of elements used in sealing pumps, valves and pipes for industrial purposes, valves and control equipment used for industrial fluid control and PVC pipes and fittings for industrial uses. On various dates covering the period January 17 August 16, 1989, Delfin Enriquez, Jr., doing business under the name and style of Delrene EB Controls Center and/or EB Karmine Commercial, ordered and received from Eriks Pte. Ltd., various elements used in sealing pumps, valves, pipes and control equipment, PVC pipes and fittings. The transfers of goods were perfected in Singapore, for Enriquez's account, F.O.B. Singapore, with a 90-day credit term.Subsequently, demands were made by Eriks upon Enriquez to settle his account, but the latter failed/refused to do so. On 28 August 1991, Eriks filed with the Regional Trial Court of Makati, Branch 138, Civil Case 91- 2373 for the recovery of S$41,939.63 or its equivalent in Philippine currency, plus interest thereon and damages. Enriquez responded with a Motion to Dismiss, contending that Eriks had no legal capacity to sue. In an Order dated 8 March 1993, the trial court dismissed the action on the ground that Eriks is a foreign corporation doing business in the Philippines without a license. On appeal and on 25 January 1995, the appellate court (CA GR CV 41275) affirmed said order as it deemed the series of transactions between Eriks and Enriquez not to be an "isolated or casual transaction." Thus, the appellate court likewise found Eriks to be without legal capacity to sue. Eriks filed the petition for review.

Issue: Whether a foreign corporation which sold its products 16 times over a five-month period to the same Filipino buyer without first obtaining a license to do business in the Philippines, is prohibited from maintaining an action to collect payment therefor in Philippine courts.

Held: Section 133 of the Corporation Code provides that "No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall