COMMUNICATION MATERIALS 

AND DESIGN, INC et al vs.CA et

al.G . R . N o . 1 0 2 2 2 3 August 22, 1996

FACTS petitioners COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI)

and ASPAC MULTI-TRADE INC., (ASPAC) a r e b o t h d o m e s t i c c o r p o r a t i o n s . .
Private Respondents ITEC, INC. and/or ITEC, INTERNATIONAL,  INC.
(ITEC) are c o r p o r a t i o n s d u l y o r g a n i z e d   a n d   e x i s t i n g u n d e r t h e
laws of the State of Alabama, USA. There is no dispute that
ITEC is a foreign corporation not licensed to do business in
the Philippines. ITEC entered into a contract with ASPAC
referred to as “Representative Agreement”. Pursuant to
the contract, ITEC engaged ASPAC as its “exclusive
representative” in the Philippines for the sale of ITEC’s
products, in consideration of which, ASPAC was  paid
a stipulated commission. Through a “License Agreement”
e n t e r e d i n t o b y t h e   s a m e p a r t i e s later on, ASPAC was able to
incorporate and use the name “ITEC” in its own name. Thus , ASPAC
Multi-Trade, Inc. became legally and publicly  known as ASPAC-ITEC
(Philippines).O n e y e a r i n t o t h e s e c o n d   t e r m o f t h e p a r t i e s ’
Representative Agreement, ITEC decided to terminate
the same, because petitioner ASPAC allegedly violated its
contractual commitment as stipulated in their agreements. ITEC
charges the petitioners and another Philippine  Corporation, DIGITAL
BASE COMMUNICATIONS, INC. (DIGITAL), the President of which is
likewise petitioner Aguirre, of using knowledge and information of
ITEC’s products specifications to develop their own line of equipment
and product support, which are similar, if not identical to ITEC’s
own, and offering them to ITEC’s former customer. The complaint
was filed with the RTC-Makati by ITEC, INC. Defendants  filed a MTD
the complaint on the following grounds: (1) That plaintiff has no
legal capacity to sue as it is a foreign corporation doing business in
the Philippines without the required BOI authority and SEC license,
and (2) that plaintiff is simply engaged in forum shopping
w h i c h  justifies the application against it of the principle of “forum non conveniens”.
The MTD was denied. P e t i t i o n e r s elevated the case to the
respondent CA on a Petition for Certiorari and Prohibition
u n d e r R u l e 6 5   o f t h e Revised ROC. It was dismissed as well. MR
denied, hence this Petition for Review on Certiorari under Rule 45.

I S S U E :1. Di d t h e P h i l i p p i n e   c o u r t a c q u i r e j u r i s d i c t i o n   o v e r t h e
person of the petitioner corp, despite allegations of lack
o f   capacity to  s u e b e c a u s e   o f n o n - r e g i s t r a t i o n ?
2. Can the Philippine court give due course to the  suit or dismiss
it, on the principle of forum non convenience?

HELD pe t i t i o n d i s m i s s e d . 1 . Y E S ; W e a r e p e r s u a d e d t o   c o n c l u d e
that ITEC had been “engaged in” or “doing business” in the
P h i l i p p i n e s f o r some time now. This is the inevitable result after a
scrutiny of the different contracts and agreements entered in toby
ITEC with its various business contacts in the country. Its
arrangements, with these entities indicate convincingly that ITEC is
actively engaging in business in the country. A f o r e i g n c o r p o r a t i o n
doing business in the Philippines may sue in Philippine Courts
although not authorized to do business here against
a Philippine citizen or entity who had contracted with
and benefited by said corporation. To put it in another way, a
party is estopped to challenge the personality of a
corporation after having acknowledged the same by entering
into a contract with it. And the doctrine of estoppel to deny
corporate existence applies to a foreign as well as
to domestic corporations. One who has dealt with a
corporation of foreign origin as a corporate entity is
e s t o p p e d   t o d e n y i t s c o r p o r a t e e x i s t e n c e a n d c a p a c i t y . In
Antam Consolidated Inc. vs. CA et al. we expressed our chagrin over
this commonly used scheme of defaulting l o c a l c o m p a n i e s w h i c h
are being sued by unlicensed foreign companies not engaged
i n b u s i n e s s   i n t h e P h i l i p p i n e s t o invoke the lack of capacity to
sue of such foreign companies. Obviously, the same ploy is
resorted to by ASPAC to prevent the injunctive action filed by ITEC
to enjoin petitioner from using knowledge possibly acquired in
violation of f i d u c i a r y a r r a n g e m e n t s b e t w e e n t h e p a r t i e s . 2.
YES; Petitioner’s insistence on the  dismissal of this action due to  the
application, or non application, of the private international law  rule
of forum non conveniens defies well-settled rules of fair play.
According to petitioner, the P h i l i p p i n e C o u r t h a s   n o v e n u e
to apply its discretion whether to give cognizance or not to
t h e p r e s e n t a c t i o n , because it has not acquired jurisdiction over
the person of the plaintiff in the case, the latter allegedly having no
personality to sue before Philippine Courts. This argument is
m i s p l a c e d b e c a u s e   t h e c o u r t h a s   a l r e a d y a c q u i r e d  jurisdiction
over the plaintiff in the suit, by virtue of his filing the original complaint. And as we
have already o b s e r v e d , p e t i t i o n e r i s n o t   a t l i b e r t y t o q u e s t i o n
plaintiff’s standing to sue, having already acceded  to
t h e   s a m e b y virtue of its entry into the Representative Agreement
referred to earlier. Thus, having acquired jurisdiction, it is now for
the Philippine Court, based on the facts of the case, whether to give
due course to the suit or dismiss it, on the principle of forum non
convenience. Hence, the Philippine Court mayrefuse to  assume
jurisdiction in spite of its having acquired jurisdiction.
Conversely, the court may assume jurisdiction over the case if it
choses to do so provided that the following requisites are met: (a)
that the Philippine courts would be the court to which the parties
would conveniently resort to. (b)that the Philippine courts is in a
position to make an intelligent decision as to the law and the facts.
(c)that the Philippine court has or is likely to have power to enforce
its decisions.

The aforesaid requirements having been met, and in view of the

court’s disposition to give due course to the questioned action, the
matter of the forum not being the most convenient as ground for the
suits dismissal deserves scant consideration.