OFFICIAL'GAZETTE

\VoL. 64, No. 33 .

plaintiff admitted the payment to it of $3,530.00 by the de

fendant on the account in controversy. Defendant, relies
upon its Exhibit 9-A to support its claim that, it had al
ready paid the plaintiff the amount of $14,839.85 on account
of the value of the merchandise thereby leaving a balance
of only $7,858.37. It is to be noted that Exhibit 9-A is
merely a statement of accountability of the account in ques
tion prepared by defendant's accountant and attached to
defendant's letter of June 25,1954 (Exhibit 9) to its agent,
Murray' Kern, in New York, XI.S.A. Certainly, this state
ment of accountability, which was never confirmed by the
plaintiff, is not the best evidence, of payment by the defend
ant of the obligation in question to the extent specified
therein. In fact, it is to be noted that the correctness of
said statement of accountability was even repudiated by
defendants own agent, Murray Kern, to whom it was sent.
(Deposition of-Kern, Question. No. 6 and answer, Cross-,
interrogatories, Exhibit D.) Undoubtedly, the best evidence
to prove payment would be receipts showing the same.
Other evidence may be presented in lieu thereof, if such
receipts are not available. The fact of payment may also
be established, not only by documentary evidence, but also
by parol evidence specially in civil cases where preponde
rance of evidence is the rule. (Montfort vs. Aguinaldo,
L-4104, May 2, 1952. Allegations of payment,. however,
are special defenses and the defendant has the burden of
proving the alleged payment* by a preponderance of evi
dence.- (Kneedler vs. Paterno, et al, 85 Phil. 189; Vda. de
Atas vs. Hautea, CA-G.R. No. 636-R, June 17, 1947.) In
the case at bar, however, no receipts or other satisfactory
evidence was presented by the defendant to prove its al
leged . payment in question to the plaintiff. ' Considering
that.the plaintiff has satisfactorily proven the existence of
defendants obligation, the burden of proof was upon said
defendant to show that it had been discharged. (Behn,
Meyer & Co. vs. Rosatzin, 5 Phil. 662.) This, the defend
ant has failed to do in the instant case. We see, therefore,
no reason why the findings of the lower court on this regard
should be disturbed.
*

W herefore, finding the judgment appealed from to be

in accordance with-Jaw and the evidence, the same is here
by affirmed in tato, with costs against defendant-appellant.
. I t is so ordered.
Villa/mor and Perez, JJ., concur.
Judgment affirmed. '

8314

'

* - *'

. OFFICIAL GAZETTE

VOL. 64, No. -33

sion of the profits made by the defendant as agreed upon

by the parties; hence, the present action was instituted.
(Deposition of Norman Ma, pp. 2-4, Exhibit C; Deposition
of Murray Kern, pp. 2-7, Exhibit D.)
* On the other hand, the defendant tried to establish by
its evidence that it dealt directly with Murray Kern and
that the latter was not its agent in New York in the trans
action in question. It claimed that the agreement involv
ing the merchandise,, which is the subject matter of this
suit, .was concluded verbally in N ew York between Murray
Kern and the representative of the defendant named Oscar
Garcia when the latter went to the United States of Am e
rica in 1948, as manager of defendants Indent Depart-,
ment. According to Angel Syyap and defendants
accountant, Aldrico Arroyo, the plaintiff and the defendant,
together with Murray Kern, mere partners in the transac
tion with the agreement that the goods would be sent by
the partners in New York to the defendant in the Philip
pines on consignment basis to be sold by the latter, the value
thereof 'to be remitted by the defendant to his partners in
New York after the sale of the goods and the profits from
such sale would be divided among the three partners.
On the other handi according to Oscar Garcia, Murray"
Kern represented the plaintiff in the deal, and the agree
ment was that the defendant would sell the merchandise in
question and the profits therefrom were to be divided
equally between the defendant and the plaintiff, the former
to remit to the plaintiff the value of the goods after the
sale, as well as the share o f the profits pertaining to the
latter. In 1948, the defendant .received the clothing ma
terials in dispute with a total value of $22,246.04 or
P44,492.08. The defendant claims, however, that it had
already paid to the plaintiff the amount of $14,839.85 of
the account, leaving a balance of $7,858.37 (Exhibits 9 and
9 -A ). Angel Syyap, too, alleged that he had already re
mitted to Murray Kern the 2 /3 portion of the profits
derived from the sale o f the goods in question.
From the evidence on *record, there appears to be no
dispute that the clothing materials, which are the subject
matter of this action, worth $22,246.04 (P44,492.08), were
shipped from the United States to, and received by the
defendant here in the Philippines. Thereafter, there was
a verbal agreement that the defendant would pay for the
cost of said merchandise and that there would be a division
of profits derived from the sale thereof. It appears, too,
that the plaintiff, Wing On Company, is a foreign partner
ship, which is not duly licensed to transact business in the
Philippines (Exhibit A) and that the transaction in ques
tion, was an isolated transaction.

A ugust. 12, 1968

. OFFICIAL GAZETTE

basis of said principle, considering that the defendant is a

resident of the Philippines.
"
It is true that the agreement in question involving the
purchase of clothing materials was entered into in New
York, U.S.A. The goods, however, were delivered to, and
received and sold by the- defendant in this jurisdiction.
Considering that, as above-stated,, the Wing On Company
of New York may sue in Philippine courts in connection
with the transaction in question and, considering, further, .
that the present suit arising from said transaction is in the
nature of a personal action, the case m ay be commenced -and tried where the defendant-resides or may be found, or
where the plaintiff resides, at the election of the plaintiff.
(Section 2b, Kule 4 of the Rules of Court.) Consequently,
venue in the instant case was not improperly laid and the
court a quo did not err in taking cognizance of the case. (Marshall-Wells Co. vs. Henry W. Elser Co., supra; Kelsens Principles of International Law, 52 Ed. pp. 264-256.)

Likewise, appellant claims that th is case is barred by

prescription on the ground that the cause of action, if any, *
accrued in 1948 when the merchandise in question, was re- ceived by the defendant. .While it is true that the contract'
in dispute was oral and, therefore, under Article 1145 of
the Civil Code, any action upon it must be commenced with
i n six years, it cannot also be gainsaid that the prescription
of actions is interrupted when they are filed before the
court; when.there is a written extrajudicial demand by the
creditors, and when there is any written acknowledgment
of the debt by the debtor. (Article 1155, Civil Code).

** A s examination of the exhibits of record shows that on

October 30, 1951,. or only three years after the accrual of
-plaintiffs cause of action, the defendant sent a letter to *
the plaintiff through the latters Norman Ma acknowledg
ing that the account in question had been outstanding for a
long time and promising to settle the same as soon as pos
sible (Exhibit E - l ) . Subsequently, in 1953, 1954 and
1956, defendant sent five more letters to the plaintiff, rei
terating its promise to liquidate the account in question
(Exhibits E -3, E -6, E -7 and E -10) and stating definitely
that the defendant would commence payment thereof at
PI,800.00 a month beginning January, 1957 (Exhibit E 12). On July 9,1958, the present suit was Instituted with
the filing of the original complaint. Considering all these
circumstances, it is obvious that plaintiffs action has not
prescribed, for the reason that the prescriptive period was
interrupted and such interruption dated as far back as in
October, 1951 (Exhibit E - l) .
Finally, appellant assails the finding of the trial court
/
that it had paid to the plaintiff the amount of $3,530.00,
leaving only a balance of $18,716.04 (P37,432.08). The

8316

OFFICIAL GAZETTE

V ol. 64, No. 33

terms, considered in connection with its object, and in connection with

the spirit of the entire law. (State vs. American Book Co. [1904],
69 Kan. 1; American De Forest Wireless Telegraph Co. vs. Superior
Court of City and County of San Francisco and Hebbard [1908],
153 Cal. 533; 5 Thompson on Corporations 2d ed., Chap. 184.)

' From the above-quoted portion of the decision, we believe'

that, by its fair and reasonable intendment, the same ap
plies with equal force to other foreign juridical persons
which are not corporations, such as the plaintiff company
involved in the present litigation.; In the case at bar, the
facts show that the transaction in question was an isolated
act, contract or transaction. As such, it does not consti
tute .doing or transacting business within the meaning
of the law; (Sections 68 and 6 9 ,the Corporatons Law, as
amended;.Pacific Micrinisian Lines, Inc. vs. Del Rosario,
supra;, Mentholathum Co., Inc., et al. vs.- Mangaliman,
supra; General Corp. of the Philippines & Mayon Invest
ment Co. vs. Union Insurance of the Society of Canton, 48
O.G. No. 1, p. 73.) Consquently, the plaintiff, although a
foreign juridical person or entity, not duly licensed to trans
act business in the Philippines, has the legal personality
to bring and maintain the present suit arising from the
transaction in question. In short, in this particular case,
the obtaining of a license to transact business is not a con
dition precedent to the institution of- the action. (Mar
shall-Wells Co. vs. Henry W. Elser, supra; Pacific Vegetable
Oil Corp. vs. Singzon, supra; Mexico Refractories vs.
Picspa Corp. ICAl 49 O.G. 3913.) ' I t is only when the
foreign corporation is doing or transacting business within
the purview of the law-that it has to have a license before
it can sue in our courts.
Appellant contends, too, that the trial court should have
declined jurisdiction over the present suit, pursuant to the
principle of forum non -conveniens in Private International
Law that where the ends of justice strongly indicate that
the controversy may be more suitably tried elsewhere, then
jurisdiction should be declined and the parties relegated to
relief to be sought in another forum.' There, is no merit
in this contention.
' We believe that the facts surrounding the present case
do not warrant the application of qny recognized rules of
Private International Law. It is a well-established practice
in the application of the principle of forum 1turn conveniens
that unless the balance is strongly in favor of the defend
ant, the plaintiffs choice of forum should rarely be dis
turbed, .and that, furthermore, the consideration of
inadequacy- to.enforce the judgment, which is one of the
important factors to be considered in the application of said
principle, would precisely constitute a problem to the plain
tiff if the local courts decline to assume jurisdiction on the

^August 12,1968

-.OFFICIAL GAZETTE

to pay it the amount of To,000.00 as damages and P2,000.00

as attorneys fees, plus the costs.
? -* _
After the corresponding trial of the case, the lower court
rendered a decision on July 1, 1962, the dispositive part of
which reads as follow s:
Wherefore, judgm ent is hereby rendered in favor of plaintiff and
against defendant as follows:
__.
.. $

(i) Ordering defendant to pay plaintiff the amount of P37,432.08,

with legal interest from the filing of the complaint until the same is
fully paid;
;
'
>.
- (2) Ordering defendant to pay plaintiff the sum of P3,000.00 as
and for attorneys fees;
(3) Ordering defendant to make an accounting of the profits rea
lized from the sale of the merchandise subject matter of this com-'
plaint and dividing the same with plaintiff as agreed upon;
(4) Dismissing the counterclaim of defendant; and
(5) Ordering-defendant to pay the costs.

JV

From the said judgment, the defendant appealed to this

Court and assigned the following alleged errors committed
by the court a quo:

* ':s
1. The lower'court never acquired jurisdiction over the person of
the plaintiff, hence, the lower court had no jurisdiction to try and
decide the instant case.; 2. The lower Court erred in not declining jurisdiction over the pre
sent case
*
3. The lower court erred in not holding that plaintiff-appellee had
no legal capacity to sue. '
" &,
' 4. The ower court erred in not holding that the complaint does not
state a cause of action.
5. The lower court erred in holding that the defendant-appellant
is still indebted to plaintiif-appellee in the amount of P37,432.08.

The evidence for the plaintiff shows that Wing On Com

pany is a foreign partnership, with business address in
New York County, New York, U.S.A. (Exhibit A ). Some
time in the year 1948, the defendant, A. Syyap & Co., Inc.,
thru its agent, Murray Kern, in New York,, negotiated with
the.plaintiff for the purchase of clothing materials under
the agreement that the defendant would pay the plaintiff
the value thereof after the sale of the goods by the defend
ant and that the profits derived from such sale would be
divided between them. Accordingly, i n ' the said year,
1948, the plaintiff shipped to. the defendant the clothing
materials in question, -worth $22,246.04, which were re
ceived by the latter and eventually sold by it. The defend
ant, however, was able to pay the plaintiff only the sum of
$3,530.00 on account of the value of the merchandise in
question (Exhibit G ), leaving a balance of $18,716.04.
Despite, however, plaintiffs demands on the defendant and
its agents, Murray Kern, and the promises of the defendant
to pay the account in full (Exhibits E - l, E -3, E -4, E-5,
E -7, E-10 and E -1 2 ), the defendant failed to settle the
said account. Neither was there any accounting or divi-

. 8313

8312

"

OFFICIAL GAZETTE

Vol. 64, No. 33.

In its amended complaint, the plaintiff alleges that it is

a juridical person duly organized and existing under and*
by virtue of the laws of New York State, U.S.A., w ith prin- .
cipal offices located in New York I, New York; that be
tween the months of May and August, 1948, the defendant,
a domestic corporation, ordered from the plaintiff various .
quantities of clothing materials with a total value o f "
$22,246.04 (P44,492.08), which were shipped on credit to,
and received by the defendant, with the undertaking that
the same would be paid after delivery in Manila; that after
the sale of the merchandise, it was agreed that the profits
realized would be divided between the plaintiff and the de
fendant; that the defendant had only paid the plaintiff the
sum of $3,530.00 (P7,060.00) as o f the date of the institu
tion of the action, thereby leaving a balance of P37,432.08
still due and payable, plus plaintiffs share of whatever pro
fits were realized from the sale of the merchandise; and
that, despite its promises, the defendant has failed and re
fused to pay the said balance, nor has it made an accounting
or division of the profits as agreed upon. In its amended
complaint, the plaintiff prayed that the defendant be or
dered to pay the former the amount of F37,432.08, plus
legal'interest from the filing of the case until the same is
fully p aid ; that the defendant be ordered to pay the plain
tiff P10,000.00 as reimbursement for attorneys fees; and
that the defendant be ordered to make an accounting of the
profits realized from the sale of the merchandise in question
and to divide the same with the plaintiff, as agreed upon.
In its answer with counterclaim to the amended com
plaint, the defendant denied the allegations in paragraph 1
thereof concerning the juridical personality of the plaintiff
and denied that it ordered the goods in question from the
plaintiff or that there was an agreement between the plain
tiff and the defendant that the profits realized from the sale
of-the goods would be divided between them. Defendant
alleged further that it dealt with one Murray Kern of New
York regarding the clothing materials in question, who, in
turn, contracted with the plaintiff; that the agreement be
tween the defendant and Murray Kern was that any profits
which might be realized from the sale of the goods received
by it from Murray Kern would be equally divided between
them; and that out of the value of the merchandise in ques
tion, which amounted to $22,246.04 (P44,492.08), it had
already paid the amount of $14,839.85, leaving a balance of
$7,858.37 only. As a special defense, defendant alleged
that the plaintiff had no legal capacity to sue and be sued,
it being a foreign corporation not duly licensed to transact
business in the Philippines. The defendant prayed that
the complaint be dismissed and that the plaintiff be ordered

A u g u st 12, 1968

OFFICIAL GAZETTE

8311-

- (No. 28130-R. April 17, 1967]

Wing on Company, plaintiff and appellee, vs. A. Syyap .&

Co., I nc., defendant and appellant.
1. Obligations, and Contracts; I solated T ransactions ; F oreign
Corporations; R ight to S ub in T h is J urisdiction .Since an

isolated act, contract, or transaction does not constitute doing

or transacting business within the meaning of the law (Secs.
68 and 69, the Corporation Law, as amended; Pacific Micrinisian Lines, Inc. vs. Del Rosario, 5D Phil. 5271; Mentholathum
Co., Inc.,' et al, vs. Mangaliman, 40 0. G. 1838; General Corp.
of thdPhilippines & Mayon Investment Co. vs. Union Insurance
of the Society of Canton, 48 O. G. No. 1, p. 73), a foreign juri
dical person or entity, not duly licensed to transact business
in the Philippines, has the legal personality to bring asd maina tain a suit in this jurisdiction arising from such isolated
transaction.
*
..
=,
&
2. I d.; I d.; I d.; I d.; F orum N on Conveniens.In the application
- of the principle of forum non conveniens, unless the balance is
strongly in favor of the resident defendant, the non-residents '
, . choice of forum should rarely be disturbed. The consideration
of inadequacy to enforce the judgment precisely constitutes a
. problem to the non-resident if the local courts decline to assume
jurisdiction on the basis of said principle.
3. I d.; I d.; I d.; I d.; V enue .In an isolated transaction of- a foreign
juridical person or entity, not> duly licensed to transact business
in the Philippines, a personal action affecting ,.the transaction
and originally cognizable in a Court of First Instance may be
commenced by the foreign entity in the place or province where
the defendant resides or may be found and the court of such
place can take cognizance thereof (Sec. 2 (b), Rule 4, Rules of
' Court; Marshall-Wells Co* vs. Henry W. Elser Co., 46 Phil. 70;
Kelsens Principles of International Law 52 ed., pp. 254-256).
4. I d.; E vidence ; S pecial D efenses ; P ayment; B urden

of

P roof.

Allegations of payment are special defenses and the defendant

has the burden of proving payment or discharge of the obliga
tion by a preponderance of evidence (Kneedler vs. Paterno. et
al., 85 Phil. 189; Vda. de Atas vs. Hautea, CA-G.R. No. 636-R,
June 17, 1947; Behon, Meyer & Co. vs. Rosatzin, 5 Phil. 662),

APPEAL from a judgment of the Court of First Instance

of Manila. Luis B. Reyes, J.
The facts are stated in the opinion of the Court.
Apolvnar F. Tolentino for defendant and appellant.
Bienvenido A . Tan, Jr. for plaintiff and appellee.

Nolasco,
' This, is an appeal interposed by the defendant from-the
judgment of the Court of First of Manila in Civil Case No.
36827 for recovery of sum of- money.
,
On July 9, 1958, the defendant filed a motion to dismiss,
the final determination of which was deferred until after
the trial of the present case in the order of the court below
dated August 2, 1958. After the defendant had .answered
the complaint, the plaintiff filed an amended complaint which
. was admitted by the trial court on February 21, 1959.

A ugust 12,1968

OFFICIAL GAZETTE

Appellant now contends that the court a, qicp had no

jurisdiction to try and decide the case for the reasons that
the action was filed by one who is not the agent or repre
sentative of the plaintiff authorized to bring and. maintain
the suit .and that the plaintiff had no legal capacity to sue
the defendant. We find this contention to be untenable.
The record shows that the motion to admit *amended
complaint, dated February 1G, 1959, and the amended com
plaint attached thereto were signed and filed by Atty.
Bienvenido A. Tan, Jr. as counsel for the plaintiff. Con
sidering that the authority of said counsel to appear for the
plaintiff was never questioned in the court a quo, it is to be
presumed that said counsel was properly authorized to file
the amended complaint and to appear for his client. It is
only now, before this Court, however, where his authority,
to appear has been questioned for the first time by the de- .
fendant. Needless to say, we are satisfied that said counsel
was duly authorized by the plaintiff to file the complaint
and to appear in its behalf in the case at bar. (Section 21',
Rule 138, Rules of Court; Republic of the Philippines vs.
Philippine Resources Development Corp. and the Court of
Appeals, 55 O.G. 2881-2882.) The provisions of Section
21, Rule 127 of the Old Rules of Court (now Section 23 of
Rule 138, Rules of Court) invoked by the appellant, to our
mind, are not in point.
On the question of the legal capacity of the plaintiff to
sue in Philippine Courts, it is our opinion that the rulings
of the Supreme Court in Marshall-Wells Co. vs. Henry W.
Elser and Co., 46 Phil. 70; Pacific Vegetable Oil Corp. vs.
Singzon, L-7917, April 29, 1955, Eastboard Navigation
Ltd. vs. Juan Ysmael & Co., L-9090, September 10, 1957,
Mentholathum Co., Inc., et al. vs. Mangaliman, et al., 40
O.G. 1838 and Pacific Micrinisian Lines, Inc. vs. Del Ro
sario, 50 Phil. 5271, are applicable to the case at bar, to
sustain the finding that the plaintiff herein had legal capa
city to sue. In the case of Marshall-Wells Co. vs. Henry
W. Elser, Co., supra, the Supreme Court stated:
The object of the statute was to subject the foreign corporation
doing business in the Philippines to the jurisdiction of its courts.
The object of the statute was not to prevent the foreign corporation
from performing single acts, but to prevent it from acquiring a do
micile for the purpose of businesswithout taking the steps necessary
to render it amenable to suit in the local courts. The implication of
the law is that 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, and thus, in effect, to permit persons to avoid th ir contracts
made with such foreign corporations. The effect of the statute pre
venting foreign corporations from doing business and from bringing
actions in the local courts, except on compliance with elaborate re
quirements, must not be unduly extended or improperly applied. It
should not be construed to extend beyond the plain meaning of its
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