Greorg Grotjahn vs. Isnani (235 SCRA 216) G.R. No. 109272 August 10, 1994 GEORG GROTJAHN GMBH & CO., petitioner, vs. HON. LUCIA VIOLAGO ISNANI, Presiding Judge, Regional Trial Court, Makati, Br. 59; ROMANA R. LANCHINEBRE; and TEOFILO A. LANCHINEBRE, resp

 DOCTRINE: IN SUMMARY: it appears that if a corporation by estoppel exist and enters into a contract and transact business with a third party, the latter has three possible remedies: (1) He may file a suit against the ostensible corporation to recover from the corporate properties; (2) He may file the case directly against the associates personally liable who held out the association as a corporation; and (3) Against both the ostensible corporation and persons forming it, jointly and severally. The last two remedies may not, however, be availed of if the third party by his conduct is estopped from denying the existence of the association as a corporation and as such, recovery should be limited only against the corporate assets.

FACTS:
​Petitioner is a German company who was granted a license to establish a regional or area headquarters in the Philippines. Private respondent Romana Lanchinebre was a sales representative of petitioner who made advances totalling P35,000 which were left unpaid. Petitioner filed a complaint for the collection of a sum of money which was dismissed by the judge holding, among others, that the license of petitioner does not include the license to do business in the Philippines.

ISSUE:
​Whether petitioner has capacity to sue.

HELD:
YES. Private respondent is estopped from assailing the personality of petitioner. “The rule is that the 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 foreign as well as domestic corporation; one who has dealt with a corporation of foreign origin as a corporate entity is estopped to deny its corporate existence and capacity. The principle will be applied to prevent a person contracting with a foreign corporation from later taking advantage of its non-compliance with the statutes chiefly in case where such person has received the benefits of the contract” (Merill Lynch Futures, Inc. vs. CA). In the case of Merill Lynch Futures, the SC held that a foreign corporation doing business in the Philippines may sue in Philippine courts although not authorized to do business here against the Philippine citizen who had contracted with and been benefited by said corporation. Citing and applying the doctrine laid down in Asia Banking Corp. vs. Standard Products Co., Inc. IN SUMMARY: it appears that if a corporation by estoppel exist and enters into a contract and transact business with a third party, the latter has three possible remedies: (1) He may file a suit against the ostensible corporation to recover from the corporate properties; (2) He may file the case directly against the associates personally liable who held out the association as a corporation; and (3) Against both the ostensible corporation and persons forming it, jointly and severally. The last two remedies may not, however, be availed of if the third party by his conduct is estopped from denying the existence of the association as a corporation and as such, recovery should be limited only against the corporate assets.