Eriks Pte. Ltd. v. CA Eriks Pte. Ltd. v. CA: Corporate Law Case Write-Up February 6, 1997

Corporate Law Case Write-up February 6, 1997
Eriks Pte. Ltd. v. CA Eriks Pte. Ltd. v. CA
I. Facts of the case prohibits, not merely absence of the prescribed license, but it also
bars a foreign corporation “doing business” in the Philippines
Petitioner Eriks Pte. Ltd. is a non-resident foreign corporation without such license access to our courts. A foreign corporation
engaged in the manufacture and sale of elements used in sealing without such license is not ipso facto incapacitated from bringing an
pumps, valves and pipes for industrial purposes. In Eriks Pte. Ltd. action. A license is necessary only if it is “transacting or doing
own complaint, it alleged that it was duly organized under the laws business” in the country.
of Singapore, it is not licensed to do business in the Philippines, and
is suing on an isolated transaction for which it has capacity to sue. RA 7042 and jurisprudence defined what “doing business” in
the Philippines. The term implies a continuity of commercial
On various dates covering the period January 17 — August 16, dealings and arrangements, and contemplates, to that extent, the
1989, Delfin Enriquez, Jr. ordered and received from Eriks various performance of acts or works or the exercise of some of the functions
elements used in sealing pumps, valves, pipes and control normally incident to, and in progressive prosecution of, the purpose
equipment, PVC pipes and fittings. The transfers of goods were and object of its organization. The accepted rule in jurisprudence is
perfected in Singapore, in Enriquez’s account, with a 90-day credit that each case must be judged in the light of its own environmental
term. Demands were made upon Enrique to settle his account, but he circumstances. The purpose of the law is not to prevent the foreign
failed/refused to do so. Eriks then filed for the recovery of corporation from performing single or isolated acts, but to bar it
$41,939.63 or its equivalent in Philippine currency, plus interest from acquiring a domicile for the purpose of business without first
thereon and damages. Enriquez responded with a Motion to Dismiss, taking the steps necessary to render it amenable to suits in the local
contending that Eriks had no legal capacity to sue. courts.
II. Issue/s In this case, both the RTC and CA found that the transaction
between Eriks and Enriquez cannot be considered an isolated one.
Whether or not Eriks Pte. Ltd. may maintain an action in Philippine There were 17 orders and deliveries over a four-month period.
courts considering that it has no license to do business in the Enriquez made separate orders at various dates. The transactions did
country? not consist of separate deliveries for one single order. In the case at
bar, the transactions entered into are a series of commercial dealings
III. Held which would signify an intent on the part of Eriks Pte. Ltd. to do
business in the Philippines.
NO. Sec. 133 provides, “No foreign corporation transacting
business in the Philippines without a license, or its successors or More than the sheer number of transactions entered into, a clear
assigns, shall be permitted to maintain or intervene in any action, suit and unmistakable intention on the part of Eriks to continue the body
or proceeding in any court or administrative agency of the of its business in the Philippines is more than apparent. Eriks grant
Philippines; but such corporation may be sued or proceeded against and extension of 90-day credit terms to Enriquez for every purchase
before Philippine courts or administrative tribunals on any valid made, unarguably shows an intention to continue transacting with
cause of action recognized under Philippine laws.” The provision Enriquez, since in the usual course of commercial transactions, credit
G.R. NO: 118843 PONENTE: Panganiban, J.
ARTICLE; TOPIC OF CASE: Foreign corporation DIGEST MAKER: Kim

Corporate Law Case Write-up February 6, 1997
Eriks Pte. Ltd. v. CA Eriks Pte. Ltd. v. CA
is extended only to customers in good standing or to those on whom

there is an intention to maintain long-term relationship. What is
determinative of "doing business" is not really the number or the
quantity of the transactions, but more importantly, the intention of an
entity to continue the body of its business in the country. The
number and quantity are merely evidence of such intention. The
phrase "isolated transaction" has a definite and fixed meaning, i.e. a
transaction or series of transactions set apart from the common
business of a foreign enterprise in the sense that there is no intention
to engage in a progressive pursuit of the purpose and object of the
business organization.
Accordingly, Eriks Pte. Ltd. must be held to be incapacitated to

maintain the action against Enriquez. It was never the intent of the
legislature to bar court access to a foreign corporation or entity
which happens to obtain an isolated order for business in the
Philippines. Neither did it intend to shield debtors from their
legitimate liabilities or obligations. But it cannot allow foreign
corporations or entities which conduct regular business any access to
courts without the fulfillment by such corporations of the necessary
requisites to be subjected to our government's regulation and
authority. By securing a license, the foreign entity would be giving
assurance that it will abide by the decisions of our courts, even if
adverse to it.
IV. Critic
G.R. NO: 118843 PONENTE: Panganiban, J.
ARTICLE; TOPIC OF CASE: Foreign corporation DIGEST MAKER: Kim

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Corporate Law Case Write-up February 6, 1997

Eriks Pte. Ltd. v. CA Eriks Pte. Ltd. v. CA

G.R. NO: 118843 PONENTE: Panganiban, J.

ARTICLE; TOPIC OF CASE: Foreign corporation DIGEST MAKER: Kim

Eriks Pte. Ltd. v. CA Eriks Pte. Ltd. v. CA

is extended only to customers in good standing or to those on whom

Accordingly, Eriks Pte. Ltd. must be held to be incapacitated to

G.R. NO: 118843 PONENTE: Panganiban, J.

ARTICLE; TOPIC OF CASE: Foreign corporation DIGEST MAKER: Kim

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