- MSG =
- 'Assignment Branch Condition size for %s is too high. [%.4g/%.4g]'
- BRANCH_NODES =
- CONDITION_NODES =
Constants included from Util
Util::ASGN_NODES, Util::EQUALS_ASGN_NODES, Util::OPERATOR_METHODS, Util::PROC_NEW_NODE, Util::SHORTHAND_ASGN_NODES
Instance Attribute Summary
Attributes inherited from Cop
#config, #corrections, #offenses, #processed_source
Methods included from ConfigurableMax
Methods included from OnMethodDef
Methods inherited from Cop
#add_offense, all, #autocorrect?, #config_to_allow_offenses, #config_to_allow_offenses=, #cop_config, cop_name, #cop_name, cop_name_with_namespace, cop_type, #debug?, #display_cop_names?, inherited, #initialize, #join_force?, lint?, #message, non_rails, qualified_cop_name, rails?, #relevant_file?, #support_autocorrect?
Methods included from IgnoredNode
#ignore_node, #ignored_node?, #part_of_ignored_node?
Methods included from Util
begins_its_line?, block_length, command?, comment_line?, const_name, first_part_of_call_chain, lambda?, lambda_or_proc?, line_range, numeric_range_size, on_node, operator?, parentheses?, proc?, range_with_surrounding_space, source_range, strip_quotes, within_node?
Methods included from PathUtil
issue_deprecation_warning, match_path?, relative_path
This cop checks that the ABC size of methods is not higher than the configured maximum. The ABC size is based on assignments, branches (method calls), and conditions. See http://c2.com/cgi/wiki?AbcMetric
G.R. No. 110318 August 28, 1996
COLUMBIA PICTURES, INC., ORION PICTURES CORPORATION, PARAMOUNT PICTURES CORPORATION, TWENTIETH CENTURY FOX FILM CORPORATION, UNITED ARTISTS CORPORATION, UNIVERSAL CITY STUDIOS, INC., THE WALT DISNEY COMPANY, and WARNER BROTHERS, INC., petitioners,
COURT OF APPEALS, SUNSHINE HOME VIDEO, INC. and DANILO A. PELINDARIO, respondents.
Before us is a petition for review on certiorari of the decision of the Court of Appeals1 promulgated on July 22, 1992 and its resolution2 of May 10, 1993 denying petitioners' motion for reconsideration, both of which sustained the order3
The material facts found by respondent appellate court are as follows:
Petitioners thereafter appealed the order of the trial court granting private respondents' motion for reconsideration, thus lifting the search warrant which it had theretofore issued, to the Court of Appeals. As stated at the outset, said appeal was dismissed and the motion for reconsideration thereof was denied. Hence, this petition was brought to this Court particularly challenging the validity of respondent court's retroactive application of the ruling in 20th Century Fox Film Corporation vs. Court of Appeals, et al.,6
Inceptively, we shall settle the procedural considerations on the matter of and the challenge to petitioners' legal standing in our courts, they being foreign corporations not licensed to do business in the Philippines.
Private respondents aver that being foreign corporations, petitioners should have such license to be able to maintain an action in Philippine courts. In so challenging petitioners' personality to sue, private respondents point to the fact that petitioners are the copyright owners or owners of exclusive rights of distribution in the Philippines of copyrighted motion pictures or films, and also to the appointment of Atty. Rico V. Domingo as their attorney-in-fact, as being constitutive of "doing business in the Philippines" under Section 1 (f)(1) and (2), Rule 1 of the Rules of the Board of Investments. As foreign corporations doing business in the Philippines, Section 133 of Batas Pambansa Blg. 68, or the Corporation Code of the Philippines, denies them the right to maintain a suit in Philippine courts in the absence of a license to do business. Consequently, they have no right to ask for the issuance of a search warrant.7
In refutation, petitioners flatly deny that they are doing business in the Philippines,8 and contend that private respondents have not adduced evidence to prove that petitioners are doing such business here, as would require them to be licensed by the Securities and Exchange Commission, other than averments in the quoted portions of petitioners' "Opposition to Urgent Motion to Lift Order of Search Warrant" dated April 28, 1988 and Atty. Rico V. Domingo's affidavit of December 14, 1987. Moreover, an exclusive right to distribute a product or the ownership of such exclusive right does not conclusively prove the act of doing business nor establish the presumption of doing business.9
The Corporation Code provides:
The obtainment of a license prescribed by Section 125 of the Corporation Code is not a condition precedent to the maintenance of any kind of action in Philippine courts by a foreign corporation. However, under the aforequoted provision, no foreign corporation shall be permitted to transact business in the Philippines, as this phrase is understood under the Corporation Code, unless it shall have the license required by law, and until it complies with the law intransacting business here, it shall not be permitted to maintain any suit in local courts.10 As thus interpreted, any foreign corporation not doing business in the Philippines may maintain an action in our courts upon any cause of action, provided that the subject matter and the defendant are within the jurisdiction of the court. It is not the absence of the prescribed license but "doing business" in the Philippines without such license which debars the foreign corporation from access to our courts. In other words, although a foreign corporation is without license to transact business in the Philippines, it does not follow that it has no capacity to bring an action. Such license is not necessary if it is not engaged in business in the Philippines.11
Statutory provisions in many jurisdictions are determinative of what constitutes "doing business" or "transacting business" within that forum, in which case said provisions are controlling there. In others where no such definition or qualification is laid down regarding acts or transactions failing within its purview, the question rests primarily on facts and intent. It is thus held that all the combined acts of a foreign corporation in the State must be considered, and every circumstance is material which indicates a purpose on the part of the corporation to engage in some part of its regular business in the State.12
No general rule or governing principles can be laid down as to what constitutes "doing" or "engaging in" or "transacting" business. Each case must be judged in the light of its own peculiar environmental circumstances.13 The true tests, however, seem 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.14
As a general proposition upon which many authorities agree in principle, subject to such modifications as may be necessary in view of the particular issue or of the terms of the statute involved, it is recognized that a foreign corporation is "doing," "transacting," "engaging in," or "carrying on" business in the State when, and ordinarily only when, it has entered the State by its agents and is there engaged in carrying on and transacting through them some substantial part of its ordinary or customary business, usually continuous in the sense that it may be distinguished from merely casual, sporadic, or occasional transactions and isolated acts.15
The Corporation Code does not itself define or categorize what acts constitute doing or transacting business in the Philippines. Jurisprudence has, however, 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 or in progressive prosecution of the purpose and subject of its organization.16
This traditional case law definition has evolved into a statutory definition, having been adopted with some qualifications in various pieces of legislation in our jurisdiction.
For instance, Republic Act No. 5455 17
Presidential Decree No. 1789,18 in Article 65 thereof, defines "doing business" to include soliciting orders, purchases, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the Philippines for 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 of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization.
The implementing rules and regulations of said presidential decree conclude the enumeration of acts constituting "doing business" with a catch-all definition, thus:
Finally, Republic Act No. 704219 embodies such concept in this wise:
Based on Article 133 of the Corporation Code and gauged by such statutory standards, petitioners are not barred from maintaining the present action. There is no showing that, under our statutory or case law, petitioners are doing, transacting, engaging in or carrying on business in the Philippines as would require obtention of a license before they can seek redress from our courts. No evidence has been offered to show that petitioners have performed any of the enumerated acts or any other specific act indicative of an intention to conduct or transact business in the Philippines.
Accordingly, the certification issued by the Securities and Exchange Commission20 stating that its records do not show the registration of petitioner film companies either as corporations or partnerships or that they have been licensed to transact business in the Philippines, while undeniably true, is of no consequence to petitioners' right to bring action in the Philippines. Verily, no record of such registration by petitioners can be expected to be found for, as aforestated, said foreign film corporations do not transact or do business in the Philippines and, therefore, do not need to be licensed in order to take recourse to our courts.
Although Section 1(g) of the Implementing Rules and Regulations of the Omnibus Investments Code lists, among others —
as acts constitutive of "doing business," the fact that petitioners are admittedly copyright owners or owners of exclusive distribution rights in the Philippines of motion pictures or films does not convert such ownership into an indicium of doing business which would require them to obtain a license before they can sue upon a cause of action in local courts.
Neither is the appointment of Atty. Rico V. Domingo as attorney-in-fact of petitioners, with express authority pursuant to a special power of attorney, inter alia —
tantamount to doing business in the Philippines. We fail to see how exercising one's legal and property rights and taking steps for the vigilant protection of said rights, particularly the appointment of an attorney-in-fact, can be deemed by and of themselves to be doing business here.
As a general rule, a foreign corporation will not be regarded as doing business in the State simply because it enters into contracts with residents of the State, where such contracts are consummated outside the State.22 In fact, a view is taken that a foreign corporation is not doing business in the State merely because sales of its product are made there or other business furthering its interests is transacted there by an alleged agent, whether a corporation or a natural person, where such activities are not under the direction and control of the foreign corporation but are engaged in by the alleged agent as an independent business.23
It is generally held that sales made to customers in the State by an independent dealer who has purchased and obtained title from the corporation to the products sold are not a doing of business by the corporation.24 Likewise, a foreign corporation which sells its products to persons styled "distributing agents" in the State, for distribution by them, is not doing business in the State so as to render it subject to service of process therein, where the contract with these purchasers is that they shall buy exclusively from the foreign corporation such goods as it manufactures and shall sell them at trade prices established by it.25
It has moreover been held that the act of a foreign corporation in engaging an attorney to represent it in a Federal court sitting in a particular State is not doing business within the scope of the minimum contact test. 26 With much more reason should this doctrine apply to the mere retainer of Atty. Domingo for legal protection against contingent acts of intellectual piracy.
In accordance with the rule that "doing business" imports only acts in furtherance of the purposes for which a foreign corporation was organized, it is held that the mere institution and prosecution or defense of a suit, particularly if the transaction which is the basis of the suit took place out of the State, do not amount to the doing of business in the State. The institution of a suit or the removal thereof is neither the making of a contract nor the doing of business within a constitutional provision placing foreign corporations licensed to do business in the State under the same regulations, limitations and liabilities with respect to such acts as domestic corporations. Merely engaging in litigation has been considered as not a sufficient minimum contact to warrant the exercise of jurisdiction over a foreign corporation.27
As a consideration aside, we have perforce to comment on private respondents' basis for arguing that petitioners are barred from maintaining suit in the Philippines. For allegedly being foreign corporations doing business in the Philippines without a license, private respondents repeatedly maintain in all their pleadings that petitioners have thereby no legal personality to bring an action before Philippine Courts.28
Among the grounds for a motion to dismiss under the Rules of Court
are lack of legal capacity to sue29
Applying the above discussion to the instant petition, the ground available for barring recourse to our courts by an unlicensed foreign corporation doing or transacting business in the Philippines should properly be "lack of capacity to sue," not "lack of personality to sue." Certainly, a corporation whose legal rights have been violated is undeniably such, if not the only, real party in interest to bring suit thereon although, for failure to comply with the licensing requirement, it is not capacitated to maintain any suit before our courts.
Lastly, on this point, we reiterate this Court's rejection of the common procedural tactics of erring local companies which, when sued by unlicensed foreign corporations not engaged in business in the Philippines, invoke the latter's supposed lack of capacity to sue. The doctrine of lack of capacity to sue based on failure to first acquire a local license is based on considerations of public policy. It was never intended to favor nor insulate from suit unscrupulous establishments or nationals in case of breach of valid obligations or violation of legal rights of unsuspecting foreign firms or entities simply because they are not licensed to do business in the country.35
Narvasa, C.J., Padilla, Davide, Jr., Romero, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco, Hermosisima, Jr., Panganiban and Torres, Jr., JJ., concur.
Bellosillo, J., took no part.
1 Rollo, CA-G.R. CV No. 20622, 155-158; Justice Quirino D. Abad-Santos, Jr., ponente, with Justices Luis A. Javellana and Eduardo R. Bengson concurring; Rollo, 36-40.
2 Ibid., 184; ibid., 42.
3 Rollo, 50-51; Original Record, 327-328.
4 Ibid., 43-49; ibid., 274-280; per Judge Buenaventura J. Guerrero.
5 Ibid., 36-37; Rollo, CA-G.R. CV No. 20622, 155-156.
6 G.R. Nos. 76649-51, August 19, 1988, 164 SCRA 655.
7 Original Record, 236-239; Rollo, 83-85, 188-190.
8 Ibid., 267-268; ibid., 124; ibid., 114-115, 169-170.
9 Rollo, 114-115, 169-170.
10 Marshall-Wells Co. vs. Henry W. Elser & Co., 46 Phil. 71 (1924).
11 Martin, T.C., Commentaries and Jurisprudence on Philippine Commercial Laws, Vol. 4, 1986 rev. ed., 371-372, citing Pacific Vegetable Oil Corporation vs. Singzon, L-7917, April 29, 1955, 96 Phil. 986 (unrep.) and Eastbound Navigation, Ltd. vs. Juan Ysmael and Co., Inc., 102 Phil. 1 (1957); La Chemise Lacoste, S.A. vs. Fernandez, etc., et al., G.R. Nos. 63795-97, May 21, 1984, 129 SCRA 373; Antam Consolidated, Inc., et al. vs. Court of Appeals, et al., G.R. No. 61523, July 31, 1986, 143 SCRA 288; Converse Rubber Corporation vs. Universal Rubber Products, Inc., et al., L-27906, January 8, 1987, 147 SCRA 154; Puma Sportschuhfabriken Rudolf Dassler, K.G. vs. Intermediate Appellate Court, et al., G.R. No. 75067, February 26, 1988, 158 SCRA 233; Merill Lynch Futures, Inc. vs. Court of Appeals, et al., G.R. No. 97816, July 24, 1992, 211 SCRA 824; Philip Morris, Inc., et al. vs. Court of Appeals, et al., G.R. No. 91332, July 16, 1993, 224 SCRA 576; Signetics Corporation vs. Court of Appeals, et al., G.R. No. 105141, August 31, 1993, 225 SCRA 737, Georg Grotjahn GMBH & Co. vs. Isnani, et al., G.R. No. 109272, August 10, 1994, 235 SCRA 216.
12 Lopez, R.N., Corporation Code of the Philippines Annonated, Vol. 3, 1994 ed., 1152-1153, citing Com. v. Wilkesbarre & H.R. Co., 251 Pa 6, 95 Atl. 915.
13 36 Am. Jur. 2d, Foreign Corporations, Sec. 317, 312-313; National Sugar Trading Corporation, et al. vs. Court of Appeals, et al., G.R. No. 110910, July 17, 1995, 246 SCRA 465.
14 Martin, T.C., op. cit., 373, citing Tracton Co. v. Collector of Internal Revenue, 223 F. 984.
15 Ibid., id., id., 314-315.
16 Mentholatum Co., Inc. vs. Mangaliman, 92 Phil. 524 (1941).
17 An Act to Require that the Making of Investments and the Doing of Business Within the Philippines by Foreigners or Business Organizations Owned in Whole or in Part by Foreigners Should Contribute to the Sound and Balanced Development of the National Economy on a Self-Sustaining Basis, and for Other Purposes; Enacted without executive approval, September 30, 1968.
18 A Decree to Revise, Amend and Codify the Investment, Agricultural and Export Incentives Acts to be Known as the Omnibus Investments Code, effective January 16, 1981. See also Art. 44 of the Omnibus Investments Code of 1987 (Executive Order No. 226, effective July 16, 1987).
19 An Act to Promote Foreign Investments, Prescribe the Procedures for Registering Enterprises Doing Business in the Philippines, and for Other Purposes; Approved, June 13, 1991.
20 Exhibit I; Original Record, 257.
21 Original Record, 268.
22 36 Am. Jur. 2d, Foreign Corporations, Sec. 335, 336.
23 Ibid., id., Sec. 362, 375-376.
24 Cannon Mfg. Co. v. Cudahy Packing Co., 267 US 333, 69 L ed 634, 45 S Ct 250; Hessig-Ellis Drug Co. v. Sly, 83 Kan 60, 109 P 770; Barnes v. Maxwell Motor Sales Corporation, 172 Ky 409, 89 SW 444; Harrell v. Peters Cartridge Co., 36 Okla 684, 129 P 872.
25 Gottschalk Co. v. Distilling & Cattle Feeding Co. (CC Md.), 50 F 681.
26 O'Brien v. Lanpar Co. (Tex Civ App) 391 SW 2d 483.
27 36 Am. Jur. 2d., Foreign Corporation, Sec. 337, 339.
28 Original Record, 236-237, 281-284; Rollo, CA-G.R. CV No. 20622, 100-102; Rollo, 83-85, 188-190.
29 Sec. 1(d), Rule 16.
30 Sec. 1(g), id.
31 Lunsod vs. Ortega, 46 Phil. 664 (1921); Recreation and Amusement Association of the Philippines vs. City of Manila, et al., 100 Phil. 950 (1957).
32 Casimiro vs. Roque, et al., 98 Phil. 880 (1956); Gonzales, et al. vs. Alegarbes, 99 Phil. 213 (1956).
33 Calano vs. Cruz, 91 Phil. 247 (1952). See also Arguelles vs. Syyap, 22 Phil. 442 (1912); Leviton Industries, et al. vs. Salvador, etc., et al., L-40163, June 19, 1982, 114 SCRA 420; Bulakhidas vs. Navarro, etc., et al., L-49695, April 7, 1986, 142 SCRA 1; Acain vs. Intermediate Appellate Court, et al., G.R. No. 72706, October 27, 1987, 155 SCRA 100; Pilipinas Shell Petroleum Corporation vs. Dumlao, etc., et al., L-44888, February 7, 1992, 206 SCRA 40.
34 Sustiguer, et al. vs. Tamayo, et al., L-29341, August 21, 1989, 176 SCRA 579. See Annotations on Legal Capacity to Sue by Severino S. Tabios, following the published decision in La Chemise Lacoste, S.A. vs. Fernandez, etc., et al., supra, fn. 11.
35 Facilities Management Corporation vs. De la Osa, et al., L-38649, March 26, 1979, 89 SCRA 131; Antam Consolidated, Inc., et al. vs. Court of Appeals, et al., and cases cited therein supra, fn. 11; Signetics Corporation vs. Court of Appeals, et al., supra, fn. 11; National Sugar Trading Corporation, et al. vs. Court of Appeals, et al., supra, fn. 13.
36 164 SCRA 655, fn. 6.
37 G.R. No. 64261, December 26, 1984, 133 SCRA 800.
38 Rollo, 80-81.
39 Ibid., 39-40.
40 Tolentino, A.M., Commentaries and Jurisprudence on The Civil Code of the Philippines, Vol. I, 1990 ed., 36.
41 Paras, E.L., Civil Code of the Philippines Annotated, 12th ed., 57.
42 Caltex (Philippines), Inc. vs. Palomar, etc., L-19650, September 29, 1966, 18 SCRA 247; Floresca, et al., vs. Philex Mining Corporation, et al., L-30642, April 30, 1985, 136 SCRA 141.
43 G.R. No. 100716, October 28, 1993, 227 SCRA 444, and cases cited therein.
44 L-30061, February 27, 1974, 55 SCRA 607.
45 G.R. No. 97998, January 27, 1992, 205 SCRA 515.
46 100 Phil. 501 (1956). See also People vs. Licera, L-39990, July 22, 1975, 65 SCRA 270.
47 People vs. Jabinal, supra, fn. 44; Unciano Paramedical College, Inc., et al. vs. Court of Appeals, et al., G.R. No. 100335, April 7, 1993, 221 SCRA 285; Tañada, et al. vs. Guingona, Jr., etc., et al., G.R. No. 113888, August 19, 1994, 235 SCRA 507.
48 De Agbayani vs. Philippine National Bank, et al., L-23127, April 29, 1971, 38 SCRA 429.
49 Rollo, 21-24, 159-163.
50 Rollo, 35.
51 Original Record, 4-7.
52 Ibid., 155-156.
53 Ibid., 12-15.
54 Ibid., 157-158.
55 Ibid., 9-10, 159-160.
56 Rollo, 85-86.
57 City of Manila vs. Cabangis, 10 Phil. 151 (1908); Kabase v. State, 31 Ala. App. 77, 12 So. 2nd, 758, 764.
58 See Phil. Movie Workers Association vs. Premiere Productions, Inc., 92 Phil. 843 (1953).
59 See 3 Jones on Evidence, Sec. 1400.
60 47 Am. Jur. 2d, Searches and Seizures, Sec. 21, 576.
61 79 CJS, Searches and Seizures, Sec. 74, 862.
62 Ibid., id., id., 863.
63 Lucich v. State, Md., 71 A. 2d 432; Smith v. State, 62 A. 2d 287, 191 Md. 329, 5 A.L.R. 2d, 386.
64 U.S. v. Nichols, D.C. Ark., 89 F. Supp. 953, 955.
65 Silver v. State, 110 Tex Crim. Rep. 512, 8 SW (2d) 144, 9 SW (2d) 358, 60 A.L.R. 290.
66 Goodman v. State, 11 A. 2d 635, 639, 178 Md. I.
67 47 Am. Jur. 2d, Searches and Seizures, Sec. 22, 516; Brinegar v. United States, 338 U.S. 160 (1949).
68 79 CJS, Search and Seizures, Sec. 74, 865.
69 Burgos, Sr., et al. vs. Chief of Staff, et al., supra, fn. 37; Quintero vs. National Bureau of Investigation, et al., L-35149, June 23, 1988, 162 SCRA 467; MHP Garments, Inc., et al. vs. Court of Appeals, et al., G.R. No. 86720, September 2, 1994, 236 SCRA 227.
70 State v. Perkins, 285 S.W. 1021, 220 Mo. App. 349.
71 State v. Norris, 109 So. 787, 161 La 988.
72 G.M. Leasing Corp. v. United States, 429 U.S. 338, 97 S Ct. 619, 50 L. Ed. 2d 530.
73 See Central Bank of the Philippines vs. Morfe, et al., L-20119, June 30, 1967, 20 SCRA 507; Luna vs. Plaza, etc., et al., L-27511, November 29, 1968, 26 SCRA 310.
74 Original Record, 277-278; Rollo, 46-47.
75 Ibid., 328; ibid., 51.
76 Rollo, CA-G.R. CV No. 20622, 177-178.
77 Promulgated on October 5, 1985.
78 18 CJS, Copyright and Literary Property, Sec. 90, 212; 18 Am Jur 2d, Copyright and Literary Property, Sec. 106, 391-392.
79 Ibid., id., Sec. 94, 217, 218.
80 Universal Pictures Co. v. Harold Lloyd Corp. (CA9 Cal), 162 F2d 354; Arnstein v. Porter (CA2 Ny), 154 F2d 464.
81 Original Record, 278; Rollo 47.
82 L-32409, February 27, 1971, 37 SCRA 823.
83 Original Record, 279; Rollo, 47.
84 Ibid., 275, 278; ibid., 44, 45.
85 Exhbit Nos. 1, 2, 3 and 4; Original Record, 174-178.
86 Martin, T.C., op cit., Vol. 2, 366.