MR Holdings, Ltd

v.
Sheriff Carlos Bajar, et al.
G.R. No. 138104
April 11, 2002
Facts:

MR Holdings, Ltd (MR Holdings) is a subsidiary of the foreign corporation, Placer Dome,
Inc. (Placer Dome) which in turn owns 40% share in Marcopper Mining Corporation (Marcopper),
a Philippine company which has an existing loan agreement with the Asian Development Bank
(ADB) where Placer Dome undertook to provide Marcopper with cash flow support for the
payment of its obligations to ADB. Upon default by Marcopper of its loan with ADB, MR holdings
assumed the loan and consequently, was assigned with all the rights, assets, equipment, and
facilities of Marcopper. However, it appears that prior to the assignment Solidbank was awarded
a favorable money judgment against Marcopper, which the respondents sought to enforce by
sale through public auction. Upon learning of the impending sale, MR Holdings filed a third party
claim and a restraining order to enjoin the sale, which the RTC denied holding that MR Holdings
had no capacity to sue in Philippine Courts being a foreign corporation engaged in business
without a license to do so. CA affirmed the RTC’s decision, hence this petition.

Issue: Whether or not MR Holdings was doing business in the Philippines without a license.

Ruling: No, it was not doing business in the Philippines.

The Corporation Law has settled the principles governing a foreign corporation’s right to
sue in local courts to wit: a) if a foreign corporation does business in the Philippines without a
license, it cannot sue before the Philippine courts; b) 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; and c) if a foreign
corporation does business in the Philippines with the required license, it can sue before Philippine
courts on any transaction. Apparently, it is not the absence of the prescribed license but the
"doing (of) business" in the Philippines without such license which debars the foreign corporation
from access to our courts. The Corporation Code of the Philippines," is silent as to what
constitutes doing" or "transacting" business in the Philippines, but Jurisprudence provides that it
"implies a continuity of commercial dealings and arrangements, and contemplates, to that
extent, the performance of acts or works or the exercise of some of the functions normally
incident to, and in progressive prosecution of, the purpose and object for which the corporation
was organized." The true test, however, seems to be 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. In this case, categorizing
it as "doing business" under the "Assignment Agreement" and the "Deed of Assignment is not
tenable. At this early stage and with petitioner’s acts or transactions limited to the assignment
contracts, it cannot be said that it had performed acts intended to continue the business for
which it was organized.