Ms. Alma D. Fernandez-Mallonga

October 26, 1998 Ms. Alma D. Fernandez-Mallonga MR Holdings, Ltd. c/o Atty. Lincoln Tan 2nd Floor Belman Bldg. corner Cordillera St. & Quezon Ave.,Quezon City M a d a m : This refers to your letter dated October 7, 1998, requesting confirmation on the following: 1. The substitution of the Asian Development Bank (ADB) as creditor of Marcopper Mining Corporation (MMC) by MR Holdings, Ltd.,a foreign corporation ,pursuant to a Deed of Assignment of the credit and the mortgage over the assets executed by ADB to MRH constitutes an isolated transaction ,and which under existing laws, MRH is not required to obtain a license to do business in the Philippines; and 2. MRH has the legal personality to sue in the Philippines for the protection of its rights under the Deed of Assignment executed by ADB over the mortgaged properties and assets of MMC which are being levied by unsecured creditors of MMC. Relative to the first query, the weight of authority maintains that where the corporation enters into a single agreement or engages in isolated business act or transaction within a particular state, with no intention to repeat the same or make such state a basis for the conduct of any part of its corporate business, such corporation cannot be said to be doing business or transacting business within the meaning of the usual statutory provisions regulating the transaction of business by foreign corporation. (17 Fletcher, Cyclopedia Corporation, Sec. 8469) Thus, under Philippine jurisdiction, the term " doing business " is defined under Sec. 3 (d) of RA No. 7042, otherwise known as the Foreign Investments Act of 1991, as follows: "The phrase " doing business " shall include soliciting orders, service contracts, opening offices, whether called "liaison" officers 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 continuing 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 progressive prosecution of; commercial gain or of the purpose and object of the business organization; Provided, however, That the phrase "doing business" shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor, nor having a nominee director or officer to represent its interests in such corporation, nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account." (Emphasis supplied) It can be gleaned from the above-cited provision that for a business activity or dealing to be considered doing business, there should be an element of continuity of conduct in that respect. Under the facts presented, said element is not present. Thus, taking into consideration the several pronouncements of this Commission that a foreign corporation whose activity in the Philippines is only limited to an isolated business transaction with no intention to repeat the same is not considered doing business, we hereby confirm your view that the transaction described in your letter is not deemed doing business in the Philippines, and hence, the foreign corporation is exempted from obtaining a license to do business in the Philippines. This opinion is strictly confined to the facts given in your letter. Regarding the issue of whether or not the foreign corporation under the given situation can institute an action before Philippine courts, it is already well-settled in this jurisdiction that if a foreign corporation is not engaged in business in the Philippines, it may not be denied the right to file an action in the Philippine courts for "isolated transactions ". (Hathibhai Bulakhidas vs. the Honorable Pedro L. Navarro, etc., and Diamond Shipping Corporation, G.R. No. L-49695, 4/17/86) Under the "isolated transaction rule", the capacity to sue must be affirmatively pleaded and its legal existence or juridical personality as a foreign corporation must be proved (Commissioner v. K.M.K. Gani, G.R. No. 73722, February 26, 1990). Very truly yours, (SGD.) DANILO L. CONCEPCION Associate Commissioner