01 Antam v.

CA
No. L – 61523 (31 July 1986)
Gutierrez Jr., J. / Tita K

Subject Matter: Foreign Corporations

Summary:
 Respondent entered into an agreement with petitioner wherein petitioner agreed to sell and deliver to respondent 500 tons of
coconut oil. Petitioner failed to deliver and so respondent resorted to buying from the open market at a higher price. As a result,
respondent incurred a loss of US$103,600. Subsequently, to compensate for the said loss, a second and third agreements were
entered into. However, petitioner still defaulted in the succeeding agreement. Respondent filed a complaint against petitioner.
Petitioner filed a motion to dimiss alleging respondent’s lack of personality to sue. However the trial court and appelate court
denied the motion to dismiss on the ground that respondent, a foreign corporation not doing business in the Philippines is not
required to obtain a license to do business to have the capacity to sue. The SC as well denied this petition.

Doctrines:
 Where the three transactions indicate no intent by foreign corporation to engage in continuity of transactions, they do not
constitute doing business in the Philippines.
 Foreign corporation not doing business in the Philippines is not required to obtain a license to do business to have the capacity
to sue.
 It is a common ploy of defaulting local companies by unlicensed foreign corporations not engaged in business in the Philippines
to invoke lack of capacity to sue.

Parties:
Antam Consolidated, Inc. (Antan),
Petitioner Tambunting Trading Corporation (Tambunting), and
Aurora Consolidated Securities and Investment Corporation (Aurora)
Court of Appeals,
Respondent CFI Judge Maximiano Asuncion, and
Stokelyn Van Camp, Inc. (Stokelyn)
Facts:
Stokelyn is a foreign Corporation organized under the laws of Indiana, USA, whose principal office is also in Indiana.
One of Stokelyn’s subdivision is Capital City Product Company (Capital City) whose principal office is in Ohio.
Contract #1:
On August 21, 1978, Capital City and Coconut Oil Manufacturing (Phil.) Inc. (Comphil) entered into a contract wherein Comphil
undertook to sell and deliver 500 long tons of crude coconut oil to Capital City at c.i.f. price of US$0.30/lb.
However, Comphil failed to deliver the coconut oil. Capital City covered its need for coconut oil by buying from the open market
although at a price substantially higher than Comphil’s price. As a result, Capital City sustained a loss of US$ 103,600.
Contract #2:
To settle Capital City’s loss under the (first) contract, the parties entered into a second conract on November 3, 1978.
Comphil undertook to buy 500 long tons of coconut oil from Capital City at c.i.f. price of US$0.3925/lb.
The second contract states that “it was a wash out against the first contract” so that Comphil was supposed to repurchase the
undelivered coconut oil at US$.0.3925 from Capital City by paying the latter US$ 103,600, which is Capital City’s total loss under
the first contract.
However, Comphil again failed to pay said amount.
Contract #3:
To settle Capital City’s loss, it entered into a third contract with Comphil on January 24, 1978,
Wherein Comphil undertook to sell and deliver to Capital City the same quantity of crude oil at a discounted price1 such that
Comphil wwas to have settled its US$ 103,600 liability to Capital City.
However, Comphil failed to deliver the coconut oil.
Capital City sustained damages in the maount of US$175,000.

1 9.25 cents/lb. instead of 44.3 cents/lb.

 After repeated demads from Comphil, the latter still refuses to pay the said amount.
The filing of action:
Stokelyn filed a complaint for collection of money against Antam, Tambunting, Aurora, Banahaw Milling Corp (Banahaw). and
United Coconut Oil Mills, Inc. (Unicom).
Stokelyn prayed for a writ of attachment.
Why petitioners were included in the action?:
It was alleged that the petitioners evaded their obligation to respondent by the devious scheme of using Tambunting employees
to replace the Tambuntings in the management of Banahaw (previously Comphil) and disposing of Banahaw’s oil mill or their
interests to Unicom.
More specific allegations (you can skip this part!):
After Capital City made repeated demands against Comphil, the Tambuntings ceased to become directors of Comphil and were replaced
by Tambuntings employees. These new directors then changed the name of Comphil to Banahaw. These directors also authorized
Antonio Tambunting, who was neither a director nor officer, to sell its oil mill. Banahaw also sold its entire outstanding capital stock to
Unicom resulting to Unicom taking over the operations and assets of Banahaw. The OCS sold to Unicom were owned by the Tambuntings,
thus it was actually the Tambuntings who benefitted from the sale.
Petitioner’s motion to dismiss:

Petitioners filed a motion to dismiss the complaint on the ground that respondent, being a foreign corporation not licensed to
do business in the Philippines, had no personality to maintain the instant suit.

CFI denied the motion to dismiss because the reson cited does not appear to be indubitable.
The IAC also dismissed the petition due to res judicata. It ruled that in Unicom and Banahav vs. Asuncion and Stokelyn, where
the facts and issued raised were intrinsically the same, it already denied the petition for certiorari for lack of merit and the same
was upheld by the SC.
Issue/s:

1. WON the IAC erred in denying the petitioner’s motion to dismiss because the respondent. (NO)

Petitioner’s argument:

1) Stokelyn is a foreign corporation, doing business in the Philippines as it has partisipated in three transactions, either as a
seller or buyer, which are in the pursuit of the purpose for which it was organized.
2) The test of whether one is doing business in the Philippines is “Whether there is continuity of transactions which are in the
pursuance of the normal business of the corporation”.

Ratio:

No – the TC and IAC did not err in denying the motion to dismiss because the respondent, being a foreign corporation not doing
business in the Philippines, does not need to obtain a license to do business in order to have the capacity to sue.

 Top-Weld Manufacturing, Inc. v. ECED, SA:

There is no general rule or governing principle laid down as to what constitute ‘doing’ or ‘engaging in’ or ‘transacting’
business in the Philippines. Each case must be adjudged in the light of its peculiar circumstances.

Where a single act or transaction is not merely incidental or casual but indicates the foreign corporation’s intention to do
other business in the Philippines, said single act or transaction constitutes ‘doing’ or ‘engaging’ or ‘transacting’ business in
the Philippines.

 Mentholatum Co. v. Mangaliman

The true test is 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.
 The term implies a continuity of commercial dealings and arrangements, and contemplates the performance of acts or
workers or the exercise of some of the functions normally incident to, and in progressive prosecution, of the purpose and
objcet of its organization.

o In this case, the transactions between the respondent and petitioners are not a series of commercial dealings
showing intent on the part of the respondent to do business in the Philippines.
o The only reason why the respondent entered into the second and third transactions with the petitioners was
because it wanted to recover the loss it sustained from petitioner’s failure to deliver coconut oil under the first
transaction and to give the latter a chance to make good on their obligation instead of making an outright demand
on the petitioner.
o There was only one agreement that is the delivery of 500 tons coconut oil by Comphil to Capital City. The
Succeeding transactions were in effort to fulfill the basic agreement and IN NO WAY indicate intent on the part of
the respondent to engage in a continuity of transactions with petitioners which will categorize it as a foreign
corporation doing business in the Philippines.
 It is a common ploy of defaulting local companies by unlicensed foreign corporations not engaged in business in the
Philippines to invoke lack of capacity to sue.

Wherefore, in view of the foregoing, the petition is dismissed for lack of merit.