Hathibhai Bulakhidas v. Navarro
REITERATIONFacts
The Antecedents: Petitioner, a foreign partnership, filed a complaint against Diamond Shipping Corporation, a domestic corporation, for damages due to the alleged failure to deliver goods to their proper destination. Petitioner alleged it was a foreign partnership not doing business in the Philippines and was suing under an isolated transaction. Procedural History: Respondent Diamond Shipping Corporation filed a motion to dismiss, arguing that petitioner lacked the capacity to sue and the complaint did not state a valid cause of action. The Court of First Instance dismissed the complaint, holding that a foreign corporation not doing business in the Philippines cannot sue in Philippine courts. The Petition: Petitioner sought review on certiorari of the dismissal order.
Issue(s)
Whether a foreign corporation not engaged in business in the Philippines can institute an action before Philippine courts. Whether the transaction in question constitutes 'doing business' in the Philippines.
Ruling
The order of the respondent Court dismissing the petitioner's complaint is set aside and the case is remanded for further proceedings. Costs against private respondent.
Ratio Decidendi
On the issue of whether a foreign corporation not engaged in business in the Philippines can institute an action before Philippine courts: The Supreme Court reiterated the settled rule that if a foreign corporation is not engaged in business in the Philippines, it may not be denied the right to file an action in Philippine courts for isolated transactions. The Court clarified that the purpose of Sections 68 and 69 of the Corporation Law was not to prevent foreign corporations from performing single acts but to prevent them from acquiring a domicile for business without being amenable to suit locally. The Legislature never intended to exclude a foreign corporation that obtains an isolated order from seeking redress in Philippine courts. On the issue of whether the transaction in question constitutes 'doing business' in the Philippines: The Court referred to established jurisprudence, particularly Mentholatum Co. Inc. et al. vs. Mangaliman, et al., which states that no general rule can be laid down, and each case must be judged on its peculiar circumstances. The true test is whether the foreign corporation is continuing the body or substance of its business or enterprise, or has substantially retired from it. The term 'doing business' implies continuity of commercial dealings and arrangements, and contemplates the performance of acts normally incident to the purpose and object of its organization. In Eastboard Navigation, Ltd. et al vs. Juan Ysmael & Co., Inc., the Court held that isolated transactions do not constitute engaging in business in the Philippines so as to bar a foreign corporation from seeking redress in Philippine courts. The complaint in the present case sufficiently alleged that petitioner was not engaged in business and was suing under an isolated transaction, distinguishing it from cases where such allegations were wanting.
Main Doctrine
A foreign corporation not engaged in business in the Philippines may institute an action before Philippine courts for isolated transactions.