Antam Consolidated, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Respondent Stokely Van Camp, Inc. (Stokely), a foreign corporation, filed a complaint for collection of sum of money against Banahaw Milling Corporation (Banahaw), Antam Consolidated, Inc., Tambunting Trading Corporation, Aurora Consolidated Securities and Investment Corporation, and United Coconut Oil Mills, Inc. (Unicom). Stokely alleged that it entered into three contracts with Coconut Oil Manufacturing (Phil.) Inc. (Comphil), which were intended to settle losses arising from Comphil's failure to deliver crude coconut oil. Comphil failed to fulfill its obligations under all three contracts, leading Stokely to sustain damages. Stokely further alleged that the petitioners, through a scheme involving Comphil's employees and the sale of Banahaw's assets/shares to Unicom, were evading their obligation to pay the damages. Stokely prayed for a writ of attachment against the petitioners' properties. Procedural History: The Regional Trial Court (RTC) initially ordered the issuance of a writ of attachment. Petitioners filed a motion to dismiss, arguing that Stokely, as an unlicensed foreign corporation, lacked the personality to sue. The RTC denied the motion to dismiss, finding the ground not indubitable, and reduced the attachment bond. The Court of Appeals (CA) affirmed the RTC's order, stating that the RTC was not yet satisfied with the necessary facts for a judicious resolution of the motion to dismiss. The CA also noted that similar issues in a related case between Unicom, Banahaw, and Stokely had already been denied for lack of merit. The Petition: Petitioners sought to set aside the RTC's order denying their motion to dismiss and the CA's decision affirming it. They argued that Stokely was doing business in the Philippines and thus required a license to sue. They also questioned the propriety of the attachment order, citing insufficient verification.
Issue(s)
Whether the respondent, a foreign corporation, has the personality to sue in the Philippines despite not being licensed to do business therein. Whether the trial court erred in issuing the order of attachment and the appellate court erred in affirming the same due to alleged insufficient verification.
Ruling
The petition is dismissed for lack of merit. The Temporary Restraining Order dated February 2, 1983, is dissolved. Costs are against the petitioners.
Ratio Decidendi
On the issue of capacity to sue: The Court ruled that Stokely, as a foreign corporation, did not need a license to do business in the Philippines because its transactions with the petitioners constituted isolated ones and did not amount to 'doing business' within the purview of the law. The Court emphasized that the three contracts were entered into solely to recover losses from the initial failed transaction and did not indicate an intention by Stokely to engage in a continuity of commercial dealings in the Philippines. The Court reiterated the principle that each case must be judged on its peculiar circumstances, and isolated or occasional transactions do not fall under the definition of 'doing business.' The Court also noted that it is a common tactic for defaulting local companies to invoke the lack of capacity to sue of unlicensed foreign companies not engaged in business in the Philippines. Therefore, the RTC and CA did not err in denying the motion to dismiss. On the issue of the writ of attachment: The Court found the petitioners' contention regarding insufficient verification to be without merit. The Court held that any defect in the original verification was cured by a subsequent affidavit executed by the assistant attorney, who affirmed that the allegations were verified from the records of Comphil and the Securities and Exchange Commission. Furthermore, the Court found that the allegations in Stokely's complaint satisfactorily justified the issuance of the writ of attachment, as they demonstrated reasonable cause to believe that the petitioners were evading their obligation through a scheme and that Banahaw's assets were likely to be sold or removed, thus necessitating the attachment to secure Stokely's claim.
Main Doctrine
A foreign corporation not engaged in business in the Philippines is not required to secure a license to do business to have the capacity to sue. Isolated transactions do not constitute 'doing business' within the purview of the law.