Columbia Pictures Inc.

vs CA
GR No. 110318

The mere institution and prosecution or defense of a suit, particularly if the transaction which is the basis of the suit took place
out of the State, do not amount to the doing of business in the State.

Facts:

Columbia Pictures, et al. had lodged a formal complaint with the NBI, vis-à-vis their anti-film piracy drive. Eventually, the NBI
obtained a search warrant against Sunshine Video seeking to seize pirated videotapes, among others. The NBI carried out the
seizure, and filed a return with the trial court. However, the trial court eventually granted a motion to lift the order of the
search warrant – the contention was that the master tapes of the copyrighted films from which the pirated films were allegedly
copied were never presented in the proceedings for the issuance of the search warrants. The CA dismissed the appeal brought
before it. Hence, Columbia Pictures, et al. brought the case before the SC. Sunshine Video contended that Columbia Pictures, et
al. being foreign corporations doing business in the Philippines should have a license in order to maintain an action in Philippine
courts – and without such license, it had no right to ask for the issuance of a search warrant. Sunshine Video submitted that the
fact that Columbia Pictures, et al. were copyright owners or owners of exclusive rights of distribution in the Philippines of
copyrighted motion pictures, and the fact that Atty. Domingo had been appointed as their attorney-in-fact constituted “doing
business in the Philippines.” As foreign corporations doing business in the Philippines, Section 133 of Batas Pambansa Blg. 68,
or the Corporation Code of the Philippines, denies them the right to maintain a suit in Philippine courts in the absence of a
license to do business. Consequently, they have no right to ask for the issuance of a search warrant.

Issue:

WON Columbia Pictures, et al. have legal capacity to sue in the Philippines

Held:

YES. Under the Sec 133 of the Corporation Code, no foreign corporation shall be permitted to transact business in the
Philippines, as this phrase is understood under the Corporation Code, unless it shall have the license required by law, until it
complies with the law in transacting business here, it shall not be permitted to maintain any suit in local courts. However, such
license is not necessary if it is not engaged in business in the Philippines. Any foreign corporation not doing business in the
Philippines may maintain an action in our courts upon any cause of action, provided that the subject matter and the defendant
are within the jurisdiction of the court.

No general rule or governing principles can be laid down as to what constitutes “doing” or “engaging in” or “transacting
business. The true tests, however, seem to be whether the foreign corporation is continuing the body or substance of the
business or enterprise for which it was organized. Based on Art 133 of the Corporation Code, petitioners are not barred from
maintaining the present action.

As a general rule a foreign corporation will not be regarded as doing business in the State simply because it enters into
contracts with residents of the State. It has been held that the act of a foreign corporation in engaging an attorney to represent
it in a federal court is not doing business within the scope of the minimum contact test. The mere institution and prosecution or
defense of a suit, particularly if the transaction which is the basis of the suit took place out of the State, do not amount to the
doing of business in the State.