G.R. No. 138104 – 430 Phil. 443 – 380 SCRA 617 – Mercantile Law – Corporation Law – License Requirement – Foreign Corporation – Being an assignee does not automatically mean “doing business”
Marcopper Mining Corporation was unable to pay its loans from the Asian Development Bank (ADB). Later, ADB transferred all its rights to collect from Marcopper to MR Holdings, Ltd. In order to pay MR Holdings, Marcopper assigned all its assets to MR Holdings and executed therefor a Deed of Assignment in MR Holdings’ favor.
Meanwhile, another creditor of Marcopper, Solidbank Corporation, won a case against Marcopper. The court then issued a writ of execution directing Sheriff Carlos Bajar to levy Marcopper’s assets.
MR Holdings then filed an opposition asserting that it is now the owner of Marcopper’s assets hence, Bajar cannot levy them. The lower court denied MR Holdings on the ground that the Deed of Assignment was made in bad faith and that MR Holdings was a foreign corporation doing business without a license in the Philippines (by virtue of the Deed of Assignment) and as such cannot sue in the Philippines.
ISSUE: Whether or not MR Holdings may sue on this particular transaction.
HELD: Yes. The Supreme Court emphasized the following rules when it comes to foreign corporations doing business here in the Philippines:
- if a foreign corporation does business in the Philippines without a license, it cannot sue before the Philippine courts;
- if a foreign corporation is not doing business in the Philippines, it needs no license to sue before Philippine courts on an isolated transaction or on a cause of action entirely independent of any business transaction;
- if a foreign corporation does business in the Philippines with the required license, it can sue before Philippine courts on any transaction.
Being a mere assignee does not constitute “doing business” in the Philippines. MR Holdings, a foreign corporation, cannot be said to be doing business simply because it became an assignee of Marcopper. MR Holdings was not doing anything else other than being a mere assignee. The only time that MR Holdings is considered to be doing business here is that if it continues the business of Marcopper – which it did not.
Therefore, since it is not doing business here, pursuant to the rules above, it can sue without any license before Philippine courts on an isolated transaction or on a cause of action entirely independent of any business transaction.
Anent the issue of bad faith, the same was not proven. It appears that the deed of assignment was an earlier agreement incidental to the loan agreement between ADB and Marcopper which precedes the action brought by Solidbank against Marcopper.
