Case Digest

DE LEON, SHAINA P.
BSLM 3B
NATIONAL SUGAR TRADING CORP. V. CA, (316 Phil 562, 1195)
G.R. No. 110910 July 17, 1995
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court
of the Decision dated June 30, 1993 of the Court of Appeals in CA-G.R. SP No. 29781.
We deny the petition.
FACTS
National Sugar Trading Corporation (NASUTRA) was a domestic corporation

created to engage in the trading of sugar and was a subsidiary of the Philippine Sugar
Commission (PSC), an entity owned and controlled by the Philippine government.
The NASUTRA and PSC were phased out respectively by P.D. No. 1971 in 1985 and E.O.
No. 18 in 1986, which at the same time created petitioner Sugar Regulatory
Administration (SRA) to administer over the sugar industry. However, Eastern Sugar
Corporation is a corporation organized and existing under the laws of Hongkong. A
complaint was filed against NASUTRA in the Regional Trial Court on August 7, 1991,
for "Specific Performance and Partial Rescission of Contract and Damages," The
complaint alleged that: (1) Private respondent is a foreign corporation with principal
office at Flat 1609 Connaught Place, Hongkong and is not doing business in the
Philippines; (2) Eastern Sugar Corporation and NASUTRA entered into a "Contract for
the Purchase and Sale of Sugar" (3) Payment was made, however, NASUTRA failed to
completely deliver the stipulated quantity of sugar. The latter thus prayed for specific
performance of the remaining obligation in the contract, and in the event of non-
compliance, for partial rescission thereof with damages.
The complaint was rejected on June 8, 1992, by the trial court due to the
Eastern Sugar Corporation's lack of ability to litigate. In a petition filed under Rule 65
of the Revised Rules of Court, NASUTRA and SRA challenged the order before the
Court of Appeals. On June 30, 1993, the Court of Appeals ruled against the petition,
dismissing it. Hence, the petition was filed with this Court under Rule 45 of the
Revised Rules of Court.
DE LEON, SHAINA P.
BSLM 3B
ISSUE
Whether or not the Eastern Sugar Corporation has the capacity in a domestic court
being a foreign corporation not doing business in the Philippines?
RULING
YES. It would be inequitable for NASUTRA, a government-own corporation to evade

payment of a legitimate indebtedness owing to Eastern Sugar Corporation upon the
plea that they should have acquired a license first before perfecting a contract with the
Philippine government. Furthermore, the doctrine of lack of capacity to sue based on
failure to acquire a local license is based on considerations of sound public policy. The
license requirement was imposed to subject the foreign corporation doing business in
the Philippines to the jurisdiction of its courts. It was never intended to favor domestic
corporation that enters into solitary transaction with unwary foreign firms and then
repudiates their obligation simply because the latter are not licensed to do business in
this country.
DE LEON, SHAINA P.
BSLM 3B
AETNA CASUALTY & SURETY ASSURANCE CORP V. PACIFIC STAR LINES (80
SCRA 835)
G.R. No. L-26809 December 29, 1977
FERNANDEZ, J.:
This is an appeal from the decision of the Court of First Instance of Manila, Branch
XVI, in Civil Case No. 53074 entitled Aetna Casualty & Surety Company vs. Pacific Star
Line, The Bradman Co. Inc., Manila Port Service and/or Manila Railroad Company,
Inc." dismissing the complaint on the ground that the plaintiff has no legal capacity to
bring this suit and making no finding as to the liability of the defendants.
FACTS
On February 11, 1963, Smith Bell & Co. (Philippines), Inc. and Aetna Surety Casualty &
Surety Co. Inc., instituted Civil Case No. 53074 in the Court of First Instance of Manila
against Pacific Star Line, The Bradman Co. Inc., Manila Port Service and/or Manila
Railroad Company, Inc. to recover the amount of US $2,300.00 representing the value
of the stolen and damaged cargo. The complaint stated that Pacific Star Line, as a
common carrier, was operating the vessel SS Ampal on a commercial run between
United States and Philippine Ports including Manila; The Bradman Co. Inc., was the
ship agent in the Philippines for the SS Ampal and/or Pacific Star Line; that the Manila
Railroad Co. Inc. and Manila Port Service were the arrastre operators in the port of
Manila and were authorized to delivery cargoes discharged into their custody.
SS Ampal delivered from New York cargo for which Star Line issued Bill of Lading with
Shalom Co as shipper and Judy Phil Inc as consignee. Due to the negligence of
defendants, the shipment sustained damages. Shalom Co filed a claim against
defendants but they refused to pay. Since the shipment was insured, Aetna paid the
value of the cargo to Shalom Inc. Thus, this action by Aetna to the rights of Shalom
Inc. The trial court dismissed the complaint because there has been a ruling that
foreign corporation may file a suit in the Philippines in isolated cases. But the case
here is not that. The evidence shows that the Aetna has been filing actions in the
DE LEON, SHAINA P.
BSLM 3B
Philippines not just in isolated instances, but in numerous cases and therefore, has
been doing business in this country, contrary to Philippine law.
ISSUE
Whether or not the appellant, Aetna Casualty & Surety Company, has been doing
business in the Philippines.
RULING
NO. It is a fact that said appellant has no license to transact business in the
Philippines as a foreign corporation. The object of Sections 68 and 69 of the
Corporation Law was not to prevent the foreign corporation from performing single
acts, but to prevent it from acquiring a domicile for the purpose of business without
taking the steps necessary to render it amenable to suit in the local courts. It was
never the purpose of the Legislature to exclude a foreign corporation which happens
to obtain an isolated order for business from the Philippines, from securing redress in
the Philippine courts. In Eastboard Navigation, Ltd., et al. vs. Juan Ysmael & Co., Inc.,
this Court held that “..a foreign corporation without license to transact business in the
Philippines, it does not follow that it has no to bring the present action. Such license is
not necessary because it is not engaged in business in the Philippines.” Aetna Casualty
& Surety Company is transacting business of insurance in the Philippines for which it
must have a license. The contract of insurance was entered into in New York, U.S.A.,
and payment was made to the consignee in its New York branch. It appears from the
list of cases issued by the Clerk of Court of the Court of First Instance of Manila that
all the actions, except two (2) cases filed by Smith, Bell & Co., Inc. against the Aetna
Casualty & Surety Company, are claims against the shipper and the arrastre operators
just like the case at bar.
Hence, Aetna Casualty & Surety Company is not engaged in the business of insurance
in the Philippines but is merely collecting a claim assigned to it by the consignee, it is
not barred from filing the instant case although it has not secured a license to transact
insurance business in the Philippines.
DE LEON, SHAINA P.
BSLM 3B

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DE LEON, SHAINA P.

G.R. No. 110910 July 17, 1995

We deny the petition.

National Sugar Trading Corporation (NASUTRA) was a domestic corporation

YES. It would be inequitable for NASUTRA, a government-own corporation to evade

G.R. No. L-26809 December 29, 1977

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