G.R. No. L-61523 July 31, 1986
ANTAM CONSOLIDATED, INC., TAMBUNTING TRADING CORPORATION and AURORA CONSOLIDATED SECURITIES and INVESTMENT CORPORATION, petitioners, vs. THE COURT OF APPEALS, THE HONORABLE MAXIMIANO C. ASUNCION (Court of First Instance of Laguna, Branch II [Sta. Cruz]) and STOKELY VAN CAMP, INC., respondents.

FACTS

Respondent Stokely Van Camp, Inc., a foreign corporation not licensed to do business in the Philippines, filed a complaint for collection of sum of money against several domestic corporations, including petitioners. Stokely alleged that its subdivision, Capital City Product Company, entered into contracts for the purchase of coconut oil with Coconut Oil Manufacturing (Phil.) Inc. (Comphil), which subsequently failed to deliver, causing substantial losses. Stokely further alleged that Comphil, to evade its obligations, changed its name to Banahaw Milling Corporation after the Tambuntings (its owners) ceased to be directors, and that its assets were sold. Stokely prayed for a writ of attachment, which the trial court granted. Petitioners moved to dismiss the complaint on the ground that Stokely, as an unlicensed foreign corporation, lacked legal capacity to sue. The trial court denied the motion, and the Intermediate Appellate Court affirmed.

ISSUE

The primary issue is whether an unlicensed foreign corporation, which is not doing business in the Philippines, has the legal capacity to file a suit in Philippine courts for an isolated transaction.

RULING

The Supreme Court dismissed the petition, upholding the lower courts. The Court ruled that the doctrine denying an unlicensed foreign corporation the capacity to sue is based on public policy intended to protect the public from potential fraud. However, this doctrine does not apply when the foreign corporation is not engaged in business in the Philippines and is merely enforcing a right arising from a single or isolated transaction. The policy is designed to prevent domestic entities from entering into contracts with foreign firms and then repudiating their obligations simply because the foreign corporation lacks a local license. The Court found that Stokely was not doing business in the country; it was merely seeking to enforce contractual rights from specific transactions. The petitioners, engaged in the vital export of coconut oil, raised the procedural defense of lack of capacity without substantiating the merits of their defense in the main collection case. The Court also addressed a secondary issue regarding the verification for the attachment writ, finding any initial defect was cured by a subsequent affidavit and that the allegations sufficiently justified the provisional remedy. Thus, the unlicensed foreign corporation had the personality to sue for an isolated transaction, and the denial of the motion to dismiss was proper.