G.R. No. 118843 , February 06, 1997
Eriks Pte. Ltd., Petitioner, vs. Court of Appeals and Delfin F. Enriquez, Jr., Respondents.

FACTS

Petitioner Eriks Pte. Ltd., a Singaporean corporation manufacturing industrial sealing elements and PVC fittings, is not licensed to do business in the Philippines. It filed a collection suit against private respondent Delfin Enriquez, Jr., alleging that between January and August 1989, Enriquez ordered and received various industrial materials on sixteen separate occasions, as evidenced by distinct invoices, with a total value of S$41,927.43. The transactions were perfected in Singapore on F.O.B. terms with a 90-day credit period. After Enriquez failed to pay, Eriks Pte. Ltd. demanded payment and subsequently filed the suit.
The Regional Trial Court dismissed the complaint on the ground that the petitioner, as a foreign corporation doing business without a license, lacked legal capacity to sue. The Court of Appeals affirmed this dismissal, ruling that the series of transactions over several months constituted more than an isolated or casual transaction, thereby amounting to “doing business” in the Philippines without the requisite license from the Securities and Exchange Commission.

ISSUE

Whether a foreign corporation that sold its products in a series of transactions to the same Filipino buyer over a five-month period, without obtaining a license to do business, is prohibited from maintaining an action in Philippine courts to collect payment.

RULING

No, the petition has no merit. The Supreme Court affirmed the dismissal, holding that Eriks Pte. Ltd. was “doing business” in the Philippines without a license and was thus barred from maintaining the suit. The legal logic is anchored on Section 133 of the Corporation Code, which prohibits an unlicensed foreign corporation transacting business in the Philippines from maintaining any action in its courts. While the Code does not define “doing business,” the Court applied the statutory definition under the Foreign Investments Act, which includes “soliciting orders, service contracts, [and] opening offices.” The Court emphasized that the determination is a factual inquiry.
Here, the sixteen transactions over a short period, involving continuous sales and deliveries to the same buyer, demonstrated a succession of commercial acts intended for profit. This pattern negated the claim of an isolated transaction, which is typically a single or very limited business act. The purpose of the licensing requirement is a matter of public policy: to subject foreign corporations engaging in sustained business activity to Philippine jurisdiction and regulation. The Court rejected the argument that denying access to courts would cause injustice, stating that the law aims to compel compliance with local regulations, and Eriks Pte. Ltd., by engaging in repeated business, voluntarily assumed the risk of being unable to enforce its contracts in local forums due to its lack of license.