AGILENT TECHNOLOGIES SINGAPORE (PTE) LTD., vs.

INTEGRATED SILICON
TECHNOLOGY PHILIPPINES CORP et al
G.R. No. 154618
April 14, 2004
FACTS:
Agilent Technologies Singapore (PTE) LTD., is a foreign corporation, which, by its own
admission, is not licensed to do business in the Philippines. Respondent Integrated Silicon is a
private domestic corporation, 100% foreign owned, which is engaged in the business of
manufacturing and assembling electronics components. The juridical relation among the various
parties in this case can be traced to a 5-year Value Added Assembly Services Agreement
(VAASA), between Integrated Silicon and HP-Singapore. Under the terms of the VAASA,
Integrated Silicon was to locally manufacture and assemble fiber optics for export to HP-
Singapore. HP-Singapore, for its part, was to consign raw materials to Integrated Silicon. The
VAASA had a five-year term with a provision for annual renewal by mutual written
consent. Later, with the consent of Integrated Silicon, HP-Singapore assigned all its rights and
obligations in the VAASA to Agilent. Later, Integrated Silicon filed a complaint for “Specific
Performance and Damages” against Agilent and its officers. It alleged that Agilent breached the
parties’ oral agreement to extend the VAASA. Agilent filed a separate complaint against
Integrated Silicon for “Specific Performance, Recovery of Possession, and Sum of Money with
Replevin, Preliminary Mandatory Injunction, and Damages”. Respondents filed a MTD in the
2nd case, on the grounds of lack of Agilent’s legal capacity to sue; litis pendentia; forum
shopping; and failure to state a cause of action.
The trial court denied the MTD and granted petitioner Agilent’s application for a writ of
replevin. Without filing a MR, respondents filed a petition for certiorari with the CA. The CA
granted respondents’ petition for certiorari, set aside the assailed Order of the trial court (denying
the MTD) and ordered the dismissal of the 2nd case. Hence, the instant petition.

ISSUE:
Whether or not an unlicensed foreign corporation not doing business in the Philippines lacks the
legal capacity to file suit.
HELD:
NO. A foreign corporation without a license is not ipso facto incapacitated from bringing
an action in Philippine courts. A license is necessary only if a foreign corporation is
“transacting” or “doing business” in the country. The Corporation Code provides:
Sec. 133. Doing business without a license. — No foreign corporation transacting business in the
Philippines without a license, or its successors or assigns, shall be permitted to maintain or
intervene in any action, suit or proceeding in any court or administrative agency of the
Philippines; but such corporation may be sued or proceeded against before Philippine courts or
administrative tribunals on any valid cause of action recognized under Philippine law
The principles regarding the right of a foreign corporation to bring suit in Philippine courts may
thus be condensed in four statements: (1)if a foreign corporation does business in the Philippines
without a license, it cannot sue before the Philippine courts; (2)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; (3)if
a foreign corporation does business in the Philippines without a license, a Philippine citizen or
entity which has contracted with said corporation may be estopped from challenging the foreign
corporation’s corporate personality in a suit brought before Philippine courts; and (4)if a foreign
corporation does business in the Philippines with the required license, it can sue before
Philippine courts on any transaction.

The challenge to Agilent’s legal capacity to file suit hinges on whether or not it is doing
business in the Philippines. However, there is no definitive rule on what constitutes “doing”,
“engaging in”, or “transacting” business in the Philippines. The Corporation Code itself is silent
as to what acts constitute doing or transacting business in the Philippines. The Foreign
Investments Act of 1991 (the “FIA”; Republic Act No. 7042, as amended), defines “doing
business” as follows:

Sec. 3, par. (d). The phrase “doing business” shall include soliciting orders, service
contracts, opening offices, whether called “liaison” offices or branches; appointing
representatives or distributors domiciled in the Philippines or who in any calendar year
stay in the country for a period or periods totaling one hundred eighty (180) days or
 more; participating in the management, supervision or control of any domestic business,
firm, entity, or corporation in the Philippines; and any other act or acts that imply a
continuity of commercial dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions normally incident
to, and in the progressive prosecution of, commercial gain or of the purpose and object of
the business organization.

By and large, to constitute “doing business”, the activity to be undertaken in the

Philippines is one that is for profit-making.

By the clear terms of the VAASA, Agilent’s activities in the Philippines were confined to
(1) maintaining a stock of goods in the Philippines solely for the purpose of having the same
processed by Integrated Silicon; and (2) consignment of equipment with Integrated Silicon to be
used in the processing of products for export. As such, we hold that, based on the evidence
presented thus far, Agilent cannot be deemed to be “doing business” in the Philippines.
Respondents’ contention that Agilent lacks the legal capacity to file suit is therefore devoid of
merit. As a foreign corporation not doing business in the Philippines, it needed no license before
it can sue before our courts.