FACTS:

Asian Development Bank (ADB) extended a loan to Marcopper Mining Corp. to finance the latter’s mining project.

ADB and Placer Dome, Inc., a foreign corporation which owns 40% of Marcopper, executed a “Support and Standby Credit Agreement” whereby the latter agreed to provide Marcopper with cash flow support for the payment of its obligations to ADB. 

To secure the loan, Marcopper executed in favor of ADB a “Deed of Real Estate and Chattel Mortgage”, covering substantially all of Marcopper’s properties and assets in Marinduque. 

When Marcopper defaulted in the payment of its loan obligation, Placer Dome agreed to have its subsidiary corporation, petitioner MR Holding, Ltd., assume Marcopper’s obligation to ADB. 

ADB assigned to petitioner all its rights, interests and obligations under the principal and complementary loan agreements.

Marcopper likewise executed a “Deed of Assignment” in favor of petitioner, assigning to petitioner, its assigns and/or successors-in-interest all of its properties, mining equipment and facilities.

Meanwhile, Solidbank Corp. obtained a Partial Judgment against Marcopper in a civil case before the RTC of Manila.

The RTC issued a writ of execution directing Carlos P. Bajar, respondent sheriff, to require Marcopper “to pay the sums of money to satisfy the Partial Judgment.”

Respondent Bajar issued two notices of levy on Marcopper’s personal and real properties, and over all its stocks of scrap iron and unserviceable mining equipment.

Bajar also issued two notices setting the public auction sale of the levied properties.

Having learned of the scheduled auction sale, petitioner served an “Affidavit of Third-Party Claim” upon respondent, asserting its ownership over all Marcopper’s mining properties, equipment and facilities by virtue of the “Deed of Assignment.”

Upon the denial of its “Affidavit of Third-Party Claim” by the RTC, petitioner commenced with the RTC of Boac, Marinduque, a complaint for reivindication of properties, etc., with prayer for preliminary injunction and temporary restraining order against respondents Solidbank, Marcopper, and sheriffs Bajar and Jandusay.

Petitioner’s application for a writ of preliminary injunction was denied on the ground that petitioner has no legal capacity to sue, it being a foreign corporation doing business in the Philippines without license.

Unsatisfied, petitioner elevated the matter to the CA on a Petition for Certiorari, Prohibition and Mandamus.

The CA held that there was no grave abuse of discretion on the part of the RTC Judge in denying petitioner’s prayer for a writ of preliminary injunction.

Petitioner contends that it has the legal capacity to sue and seek redress from Philippine courts as it is a non-resident foreign corporation not doing business in the Philippines and suing on isolated transactions.

ISSUE:

Whether or not petitioner have the legal capacity to sue in the Philippines.

RULING:

The petition is impressed with merit.

A review of this ruling does not pose much complexity as the principles governing a foreign corporation’s right to sue in local courts have long been settled by our Corporation Law. 

These principles may be condensed in three statements, to wit: 

a) if a foreign corporation does business in the Philippines without a license, it cannot sue before the Philippine courts; 

b) if a foreign corporation is not doing 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 transaction; and 

c) if a foreign corporation does business in the Philippines with the required license, it can sue before Philippine courts on any transaction. 

Apparently, it is not the absence of the prescribed license but the “doing (of) business” in the Philippines without such license which debars the foreign corporation from access to our courts.

Batas Pambansa Blg. 68, otherwise known as “The Corporation Code of the Philippines,” is silent as to what constitutes doing” or “transacting” business in the Philippines. 

Fortunately, jurisprudence has supplied the deficiency and has held 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, and in progressive prosecution of, the purpose and object for which the corporation was organized.” [Columbia Pictures, Inc. vs. CA, 261 SCRA 144 (1996)]

Indeed, the Court of Appeals’ holding that petitioner was determined to be “doing business” in the Philippines is based mainly on conjectures and speculation. In concluding that the “unmistakable intention” of petitioner is to continue Marcopper’s business, the CA hangs on the wobbly premise that “there is no other way for petitioner to recover its huge financial investments which it poured into Marcopper’s rehabilitation without it (petitioner) continuing Marcopper’s business in the country.” 

This is a mere presumption. Absent overt acts of petitioner from which we may directly infer its intention to continue Marcopper’s business, we cannot give our concurrence.