Gala vs Ellice Facts:  Spouses Manuel and Alicia Gala, their children Guia Domingo, Ofelia Gala, Raul

Gala, and Rita Benson, and their encargados Virgilio Galeon and JulianJader formed and organized the Ellice Agro-Industrial Corporation.  Name Number of Shares Amount Manuel R. Gala 11, 700 1,170,000.00 Alicia E. Gala Guia G. Domingo Ofelia E. Gala Raul E. Gala Rita G. Benson Virgilio Galeon Julian Jader  1 23,200 16 40 40 2 1 2,320,000.00 1,600.00 4,000.00 4,000.00 200.00 100.00 100.00

TOTAL 35,000 P3,500,000.0 Also,Guia Domingo, Ofelia Gala, Raul Gala, Virgilio Galeon and Julian Jader incorporated the Margo Management and Development Corporation (Margo) Name Number of Shares Amount Raul E. Gala 6,640 66,400.00 Ofelia E. Gala 6,640 66,400.00 Guia G. Domingo 6,640 66,400.00 Virgilio Galeon 40 40.00 Julian Jader 40 40.00 TOTAL 20,000 P200,000.00  Several transfer took place in Margo and Ellice Corporation by the Stockholders  Thus, as of the date on which this case was commenced, the stockholdings in Ellice were allocated as follows: Name Number of Shares Amount Margo 24,312.5 2,431,250.00 Alicia Gala 21,480.2 2,148,020.00 Raul Gala 2,704.5 270,450.00 Ofelia Gala 980.8 98,080.00 Gina Domingo 516 51,600.00 Rita Benson 2 200.00 Virgilio Galeon 1 100.00 Julian Jader 1 100.00 Adnan Alonto 1 100.00 Elias Cresencio 1 100.00 TOTAL 50,000 P5,000,000.00  A stockholders’ meeting of Margo was held, where a new board of directors was elected.  That same day, the newly-elected board elected a new set of officers. o Raul Gala was elected as chairman, president and general manager. o The board approved several actions, including the commencement of proceedings to annul certain dispositions of Margo’s property made by Alicia Gala.  The board also resolved to change the name of the corporation to MRG Management and Development Corporation

Inc. Jose with 10 shares and designated as secretary. 17880 4 and known as Dulay . financial losses and the dissipation of assets and o Also praying for.  Lastly to warrant resort to the extraordinary remedy of piercing the veil of corporate fiction. amount to collateral attacks which are prohibited in this jurisdiction  The best proof of the purpose of a corporation is its articles of incorporation and by-laws. Celia Dulay-Mendoza with 10 shares. A family corporation should serve as a rallying point for family unity and prosperity. a domestic corporation with the following as members of its Board of Directors: Manuel R. The Articles of Incorporation of Ellice and Margo shows no sign of the allegedly illegal purposes that petitioners are complaining of. Dulay vs CA Petitioner Manuel R. o In the case at bar. a special stockholders’ meeting of Ellice was held to elect a new board of directors. It is hoped that people reacquaint themselves with the concepts of mutual aid and security that are the original driving forces behind the formation of family corporations and use these tenets in order to facilitate more civil. diversion of funds. Through this device. Dulay with 19.  The reliefs sought by petitioners should have been raised in a proceeding for settlement of estate. this contention. not as a flashpoint for familial strife.  SEC ruled in favor of petitioners. and mandamus will lie to compel it to issue the certificate of incorporation  Thus. accounting and restitution by the directors and officers.  The concept of a close corporation organized for the purpose of running a family business or managing family property has formed the backbone of Philippine commerce and industry. is lawful. president and general manager. Hence. Similarly. must fail. Dulay Enterprises. there must be proof that the corporation is being used as a cloak or cover for fraud or illegality. SC cannot disregard their separate juridical personalities. among others. They have not presented any evidence to show how the separate juridical entities of Ellice and Margo were used by the respondents to commit fraudulent. Filipino families have been able to turn their humble. if not more amicable. illegal or unjust acts. even if Ellice and Margo were organized for the purpose of exempting the properties of the Gala spouses from the coverage of land reform legislation and avoiding estate taxes. Dulay with 10 shares. and Atty. or to work injustice and petitioners have failed to prove that Ellice and Margo were being used thus. Linda E. treasurer and general manager. too. Dulay with 10 shares and designated as vice-president. as stated in the Articles of Incorporation. rather than in the present intra-corporate controversy. the nullification of the elections of directors and officers of both Margo Management and Development Corporation and Ellice Industrial Corporation. then the SEC has no authority to inquire whether the corporation has purposes other than those stated. Plaridel C.960 shares and designated as president. owned a property covered by TCT No. and the dissolution of Ellice AgroIndustrial Corporation for alleged mismanagement. settlements of family corporate disputes.  Respondents filed against petitioners with the Securities and Exchange Commission (SEC) a petition o for the appointment of a management committee or receiver. It is well to note that. Virgilio E. Raul Gala was elected as chairman. hard-earned life savings into going concerns capable of providing them and their families with a modicum of material comfort and financial security as a reward for years of hard work. SEC enbanc reversed the decision  Petitioners insist that the purposes for which Ellice and Margo were organized should be declared as illegal and contrary to public policy for it was organized for exempting the properties of the Gala spouses from the coverage of land reform legislation and avoiding estate taxes and prays that the separate juridical entity of Ellice and Margo should be disregard and instead piercing of the corporate veil be applied Issue: W/N petitioners are correct? NO  Petitioners’ contentions impugning the legality of the purposes for which Ellice and Margo were organized. if a corporation’s purpose. Atty.

The directors are accustomed to take informal action with the express or implied acquiese of all the stockholders. unless he promptly files his written . Dulay and spouses Veloso executed a Memorandum to the Deed of Absolute Sale giving Manuel Dulay within (2) years P200k Private respondent Veloso. If a directors' meeting is held without call or notice. Veloso failed to pay. without knowledge of Manuel Dulay. 101. Petitioners contend that the respondent court had acted with grave abuse of discretion when it applied the doctrine of piercing the veil of corporate entity in the instant case considering that the sale of the subject property between private respondents spouses Veloso and Manuel Dulay has no binding effect on petitioner corporation as Board Resolution No. Harrison Street.Apartment consisting of sixteen (16) apartment units on a six hundred eighty-nine (689) square meters lot. All the stockholders have actual or implied knowledge of the action and make no prompt objection thereto in writing. torres acquired the property thru extrajudicial forclosure sale as evidenced by the certificate of Sheriff’s sale. Section 101 of the Corporation Code of the Philippines provides: Sec. Thereafter. 18 which authorized the sale of the subject property was resolved without the approval of all the members of the board of directors and said Board Resolution was prepared by a person not designated by the corporation to be its secretary. written consent thereto is signed by all the directors. or 2. more or less. Pasay City. 18 sold the subject property to respondents spouses Theresa and Veloso for 300k. an action taken therein within the corporate powers is deemed ratified by a director who failed to attend. MTC: Ordered the tenants of Dulay to vacate the premises RTC: Affirmed CA: Affirmed Hence this petition: there are 2 contentions 1. Dulay by virtue of board resolution no. Private respondent Maria Veloso nor her assignee Manuel Dulay were not able to redeem.B. Unless the by-laws provide otherwise. Private respondent Torress filed for ejectment against the tenants of petitioner corporation. W/n petitioner’s contention correct? No SC: We do not agree. or 3. evidenced by a deed of sale. Before or after such action is taken. located at Seventh Street (now Buendia Extension) and F. All the directors have express or implied knowledge of the action in question and none of them makes prompt objection thereto in writing. or 4. mortgaged the property to private respondent Torres. any action by the directors of a close corporation without a meeting shall nevertheless be deemed valid if: 1. When board meeting is unnecessary or improperly held.

San Juan Steel (SJ) through its president. . Plaridel C.   Narrow distribution of ownership does not. Inc. 24 San Juan Steel Structural v. and the spouses Maria Theresa V. Andres Co. At any rate. entered into an Agreement with Respondent Motorich Sales Corporation represented by its treasurer. is typical: four-fifths of its incorporators being close relatives namely. to private respondents spouses Veloso is null and void as the alleged Board Resolution No. As correctly pointed out by the respondent Court of Appeals: w/n petitioner’s contention correct? No Appellant Virgilio E. In the instant case. that Maria Socorro R. the said entity is loosely referred to as a "family corporation". however. .objection with the secretary of the corporation after having knowledge thereof. There is no denying the fact. treasurer and general manager almost had absolute control over the business and affairs of the corporation. Dulay was not only president and treasurer but also the general manager of the corporation. three (3) children and their father whose name identifies their corporation Consequently. . Inc. Dulay at times acted as secretary. petitioner corporation is liable for the act of Manuel Dulay and the sale of the subject property to private respondents by Manuel Dulay is valid and binding. The corporation was a closed family corporation and the only non-relative in the board of directors was Atty. was a corporate act of the former and not a personal transaction of Manuel R. CA. 18 was passed without the knowledge and consent of the other members of the board of directors cannot be sustained. . by itself. In ordinary parlance. Or just because there are just 1 or two owners of subscribed capital stock the corporation is a close one. Inc. Dulay Enterprises. Quezon City to SJ Steel . Petitioners' claim that the sale of the subject property by its president. Dulay Enterprises. Motorich Corp (1998) Doctrine: Close Corporation. 2. the Court can not lose sight of the fact that the Manuel R. As stated by the trial court: . Nenita Lee Gruenberg Agreement is for the sale of Motorich’s 414 sqm lot in Acropolis. Facts:   February 14. however. Dulay Enterprises. the sale between Manuel R. Dulay. Dulay's is a incorporator and one of the board of directors designated at the time of the organization of Manuel R. .. if imprecise. Manuel Dulay. 1989. petitioner corporation is classified as a close corporation and consequently a board resolution authorizing the sale or mortgage of the subject property is not necessary to bind the corporation for the action of its president. in his case. petitioner Virgilio Dulay failed to do. Jose who appeared on paper as the secretary. Veloso. This is so because Manuel R. make a close corporation. fairly reflects the cohesiveness of a group and the parochial instincts of the individual members of such an aggrupation of which Manuel R. The nomenclature. is a closed family corporation where the incorporators and directors belong to one single family. Dulay as president. corporate action taken at a board meeting without proper call or notice in a close corporation is deemed ratified by the absent director unless the latter promptly files his written objection with the secretary of the corporation after having knowledge of the meeting which. It cannot be concealed that Manuel R. Inc. Dulay Enterprise. Veloso and Castrense C.

During the negotiations between AAFES Taxi Drivers Association and CFTI re: separation benefits. If piercing of veil of corporate fiction is in order as Nenita and husband own all the shares of stocks of Motorich? 2. Antolin as VP] held a concessionaire's contract with AAFES for the operation of taxi services in Clark Air Base. or o (2) a preemption of shares is restricted in favor of any stockholder or of the corporation. Motorich is a close corporation HELD:     Court ruled in favor of Motorich Contract not binding on Motorich as it did not authorize Nenita to sell its lot in Acropolis o Motorich has separate and distinct personality from its stockholder Motorich not a close corporation The articles of incorporation of Motorich Sales Corporation does not contain any provision that make it a close corporation (Close Corporation as defined in Sec. 96. However. by itself.866% of its subscribed capital stock.     Nenita received earnest money of P100. The mere ownership by a single stockholder or by another corporation of all or capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personalities. this also is a downpayment Balance to be paid on 2 March 1989 o but Nenita did not show up during the meeting where Motorich was to give the check representing the balance Nenita gave a handwritten receipt to Andres Co However. Motorich does not become a close corporation just because Spouses Reynaldo and Nenita Gruenberg owned 99. Respondents were previously employed by CFTI as taxi drivers. but respondents refused to accept it. it is clear that Motorich is not a close corporation.86% of the shares of Motorich. it was agreed that separated drivers will be given P500/year of service.000 from Andres Co. make a close corporation. or o (3) listing its stocks in any stock exchange or making a public offering of such stocks is prohibited. Narrow distribution of ownership does not. From its articles of incorporation. Definition and Applicability of Title) stating that: o (1) the number of stockholders shall not exceed 20. Motorich refused to pursue the sale and said that Nenita was not authorized to sell Motorich’s lot SJ alleged that piercing of veil of corporate fiction is in order as Nenita and her husband own 99. hence it is a close corporation WON: 1. NLRC Facts CFTI [Sergio as President. Other drivers accepted the amount. . AAFES was dissolved as a result of the US military bases phase-out.     Naguiat v.

S. however. Labor Arbiter ruled in favor of the respondents. the employer can have ways for evading payment of backwages. Naguiat was presumed to be managing and controlling taxi business on behalf of NE. Naguiat] a) A. and AAFES TDA. was carrying out his responsibilities as CFTI c) NE is a separate corporation completely (trading business). CFTI's defense that the cessation of business was due to financial losses and lost business opportunity. etc. b) LC 283: separation pay = 1 month pay or at least 1/2 month pay/year of service.200/year of service for humanitarian consideration. AAFES. 4. in supervising taxi drivers. whichever is higher c) NLRC did not commit GAD in ruling that respondents were entitled to separation pay of $120 (half of $240 monthly pay) per year of service Liability of NE. and supervised their employment.C. Naguiat are jointly and severally liable with CFTI. and held that Naguiat Enterprises. S.C. through NOWM. Ransom. SC however reversed NLRC and upheld LA. saying that if the policy of the law were otherwise. controlled. and NOT due to great financial loss as the business was earning profitably at the time of closure. Naguiat. CFTI and officers NE not liable a) LA found that respondents were employees of CFTI as they received salary from said office. They alleged that they were hired by CFTI and then assigned to NE which managed. 100. 5) [To the extent that the stockholders are actively engaged in the management or 2. NLRC . b) Employer . it is neither respondents' indirect employer nor labor-only contractor d) Constitution of CFTI-AAFES TDA provided that members are CFTI employees and that for collective bargaining purposes. directly or indirectly (LC 212c) c) Applying the ruling on A. Naguiat (NE). filed a complaint against S. none of the motions for execution could be implemented for failure to find leviable assets. the definite employer is CFTI CFTI president solidarily liable [S. NLRC issued a second resolution denying the MfR of the petitioners. and A. . Naguiat falls within the meaning of "employer" who may be held jointly and severally liable for the obligations of the corporation to the dismissed employees d) Both CFTI and NE were close family corporations (Corp. 3. NLRC affirmed LA's decision with modification by granting separation pay $120/year of service.any person acting in the interest of an employer. (upheld by SC) b) S. Backwages were computed. ordering CFTI to pay respondents corporation filed application for clearance to cease operations. NLRC however said that officers of a corporation are not personally liable for official acts unless they exceeded scope of authority.The respondents. LA granted union's prayer that officers and agents be personally held liable for payment of backwages. They averred that they were entitled to separation pay based on their earnings of $15 for working 16 days/month. Ransom Labor Union-CCLU v. Issues and Holding 1. Naguiat. par. Amount of separation pay a) Labor Arbiter correctly found that CFTI stopped the taxi business because of the phase-out of the US military bases. S. Code Sec.

who paid thecorresponding estate tax due. orderingValley Golf to convey ownership of the Golf Share.] Said stockholders shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability insurance] e) cf.52 out of the proceeds of the sale of the Golf Share. subscribed and paid in full 1 Golf Share of the petitioner and was subsequently issued with a stock certificate which indicated a par valueof P9. Fermin Z. Naguiat] a) Was not shown that he acted in the capacity of a GM b) No evidence on the extent of his participation in the management.Respondent. It was alleged by the petitioner that Caram stopped paying his monthly dues andthat it has sent 5 letters to Caram concerning his delinquent account. Caram.000.operation of the business [.000. The RTC approved a project of partition of Caram’s estate and the Golf Share was adjudicated to the wife. breach of legal duty h) S. No. Foreign Corporation .066. Damagestotaling P90. which amount had been in the custody of the petitioner. No denial of due process since the Naguiats availed of the chance to present positions before LA VALLEY GOLF & COUNTRY CLUB.the Caram heirs were subsequently informed in a letter that they were entitled to the refund of P11.. or in the alternative. paragraph 2 of the Corporation Code.The members and their guests are entitled to play golf on the said course and avail of thefacilities and privilege. 158805 | April 16. Petitioner. Jr. NLRC: director / officer may still be held solidarily liable with a corporation by a specific provision of law f) WON there was corporate tort.00. ROSA O.It was only through a letter that the heirs of Caram learned of the sale of the Golf Sharefollowing their inquiry with Valley Golf about the Golf Share. The shareholders are likewise assessed monthly membership dues.G.scribd. to issue one fully paidshare of stock of Valley Golf of the same class as the Golf Share to the wife. After a series of correspondence. DE CARAM. the Caram family andthe RTC included the Golf Share as part of Caram’s estate.Cong. VDA. ashare stock could only be deemed delinquent and sold in an extrajudicial sale at public auctiononly upon the failure of the stockholder to pay the unpaid subscription or balance for the share. non-profit corporation which operates a golf course. Unaware of the pending controversy over the Golf Share.000. The SEC Hearing Officer rendered a decision in favor of the wife. including that on the golf Share.violation of a right given or the omission of a duty imposed by law. respondent’s husband. INC. the section could not have applied in Caram’s case since he had fully paid for the Golf Share and he had been assessed not for the share itself but for his delinquent club dues.R. YES g) TORT . MAM Realty Development v. The Golf Share wassubsequently sold at public auction for P25. 2009 Source: http://www. NOWM's personality to represent respondents a) Petitioners held in estoppel for not raising issue before LA or NLRC 7.. operation of business FACTS: Petitioner is a duly constituted non-stock. Naguiat is solidarily liable for corporate tort because he actively engaged in CFTI's management or operation 5.00 were also awarded to the wife. Caram’swife filed an action for reconveyance of the Golf Share with damages before the SECagainst Valley Golf.. The SEC hearing officer ruled that under Section 67..However.00 after the BOD had authorized the sale andthe Notice of Auction Sale was published in the Philippine Daily Inquirer Caram thereafter died and hiis wife initiated intestate proceedings before the RTC of IloIlo. CFTI VP not personally liable [A. vs.

unless it shall have the license required by law. must not be unduly extended or improperly applied. A contrary holding would bring the law to the verge of unconstitutionality. an Oregon corporation. in effect. Defendant demurred to the complaint on the statutory ground that the plaintiff has no legal capacity to sue. provides that no foreign corporation “shall be permitted to transact business in the Philippine Islands until after it shall have obtained a license for that purpose from the Chief of the Mercantile Register of the Bureau of Commerce and Industry. of the Corporation Law a condition precedent to the maintaining of any kind of action in the courts of the Philippine Islands by a foreign corporation? HELD: The object of the statute was to subject the foreign corporation doing business in the Philippines to the jurisdiction of its courts. desires for the court to consider the particular point under discussion with reference to all the law. a domestic corporation for the unpaid balance of a bill of goods amounting to P2. as amended by Act No. neither does it show that it was authorized to do business in the Philippine Islands. claim. counsel stated that “The said complaint does not show that the plaintiff has complied with the laws of the Philippine Islands in that which is required of foreign corporations desiring to do business in the Philippine Islands. and third. except on compliance with elaborate requirements. but to prevent it from acquiring a domicile for the purpose of business without taking the steps necessary to render it amenable to suit in the local courts. Thereafter.” Plaintiff. Inc.” as this phrase is known in corporation law. The noncompliance of a foreign corporation with the statute may be pleaded as an affirmative defense. and thereafter to give the law a common sense interpretation. and thus. sued Henry W. The object of the statute was not to prevent the foreign corporation from performing single acts.74. that it has not obtained the proper license as provided by the statute. considered in connection with its object. shall not be permitted to maintain any suit in the local courts. second. a result which should be and can be easily avoided.” upon order either of the Secretary of Finance or the Secretary of Commerce and Communications. Marshal-Wells vs Elser-MAGSUMBOL DOCTRINE: Under Rationale for Requiring License—The object of the statute was to subject the foreign corporation doing business in the Philippines to the jurisdiction of its courts. 2900. that the plaintiff is a foreign corporation. 1459) contains six sections relating particularly to foreign corporations. 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. and setting forth the resources and . as amended. that it is doing business in the Philippines. Inasmuch as the plaintiff could not allege compliance with the statute. PROVISIONS GOVERNING FOREIGN CORPORATIONS: The Corporation Law (Act No. showing to the satisfaction of the proper Secretary that the corporation is solvent and in sound financial condition. The effect of the statute preventing foreign corporations from doing business and from bringing actions in the local courts. until it complies with the law. It should not be construed to extend beyond the plain meaning of its terms. unless it shall have the license prescribed in section 68 of the law. FACTS: Marshall-Wells Company. Elser & Co. but to prevent it from acquiring a domicile for the purpose of business without taking the steps necessary to render it amenable to suit in the local courts. and.” The demurrer was sustained by the trial judge. and in connection with the spirit of the entire law. to permit persons to avoid their contracts made with such foreign corporations. The object of the statute was not to prevent the foreign corporation from performing single acts. first. it must appear from the evidence. from securing redress in the Philippine courts.660. ISSUE: W/N the obtaining of the license prescribed in section 68. The law simply means that no foreign corporation shall be permitted “to transact business in the Philippine Islands. · Section 68. Defendant isolates a portion of one sentence of section 69 of the Corporation Law and asks the court to give it a literal meaning. In the demurrer. Counsel would have the law read thus: “No foreign corporation shall be permitted to maintain by itself or assignee any suit for the recovery of any debt.1.. sold by plaintiff to defendant and for which plaintiff holds accepted drafts. on the contrary. No order for a license shall be issued except upon a statement under oath of the managing agent of the corporation. the order was allowed to become final and an appeal was perfected.. or demand whatever.

Integrated Silicon was to locally manufacture and assemble fiber optics for export to HP-Singapore. Agilent Technologies Singapore vs Integrated Silicon-TABAG Facts: Agilent Technologies Singapore (Pte. Nacilla are its former members.” and for the issuance of the license shall collect a fee fixed in accordance with the schedule established in section 8 of the Law. the Chief of the Mercantile Register “shall issue to the foreign corporation as directed in the order of license to do business in the Philippine Islands. Said statement shall contain the following: (1) The name of the corporation.). and regulations applicable to domestic corporations of the same class. 69: No foreign corporation or corporation formed. Malaysian nationals. which is engaged in the business of manufacturing and assembling electronics components.. Teoh Kiang Seng and Anthony Choo. covers the cases of foreign corporations “transacting business in the Islands at the time of the passage” of the Act. or agent of the corporation not having the license prescribed shall be punished by imprisonment for not less than six months nor more than two years or by a fine of not less than two hundred pesos nor more than one thousand pesos. Integrated Silicon Technology Philippines Corporation is a private domestic corporation. HP-Singapore. and the order of the Secretary for the issuance of a license.) Ltd. while Joanne Kate M. Singapore Components Operation (HP-Singapore). Any officer. and pay Integrated Silicon the purchase price of the finished products. · Section 72 concerns summons and legal process. On 25 May 2001. a certified copy of its charter. for its part.Mentholatum vs Mangaliman-PEREZ 3. dela Cruz. unless it shall have the license prescribed in the section immediately preceding. with a provision for annual renewal by mutual written consent. · Section 71 authorizes the Secretary of Finance or the Secretary of Commerce and Communications. or existing under any laws other that those of the Philippine Islands shall be permitted to transact business in the Philippine Islands or maintain by itself or assignee any suit for the recovery of any debt. (4) the capital stock of the corporation and the amount thereof actually subscribed and paid into the treasury. director. (2) the purpose for which it was organized. was to consign raw materials to Integrated Silicon. Upon filing in the Mercantile Register of the Bureau of Commerce and Industry the said statement. liabilities. Ltd. (3) the location of its principal or home office. in the discretion of the court. On 19 September 1999.liabilities of the corporation. or by both such imprisonment and fine. 100% foreign owned. “to revoke the license to transact business in the Philippine Islands” of any foreign corporation. and Rolando T. (5) the net assets of the corporation over and above all debts. and claims outstanding against it. as amended. Jean Kay M. · Section 73 makes a foreign corporation bound by all the laws. or demand whatever. Under the terms of the VAASA. beginning on 2 April 1996. Further evidence of the solvency and fair dealing of the corporation may be required. 2. rules. is a foreign corporation. as the case may be. entered into on 2 April 1996 between Integrated Silicon and the Hewlett-Packard Singapore (Pte. are current members of Integrated Silicon’s board of directors. The VAASA had a five-year term. organized. and (6) the name of an agent residing in the Philippine Islands authorized by the corporation to accept evidence of summons and process in all legal proceedings against the corporation and of all notices affecting the corporation. Teoh Kiang Hong. by and with the approval of the Governor-General. The juridical relation among the various parties in the case can be traced to a 5-year Value Added Assembly Services Agreement (VAASA). claim. is not licensed to do business in the Philippines. Lim . with certain exceptions. transport machinery to the plant of Integrated Silicon. by its own admission. · Section 70. with the consent of Integrated Silicon. HP-Singapore assigned all its rights and obligations in the VAASA to Agilent. obligations. which. · Sec. dela Cruz. Integrated Silicon filed a complaint for “Specific Performance and Damages” against Agilent and its officers Tan Bian Ee.

The case was re-raffled and assigned to Branch 35. al. and to pay actual. Teoh Kang Seng. dela Cruz. Nacilla. Anthony Choo. alleging that Agilent breached the parties’ oral agreement to extend the VAASA. . Integrated Silicon. et. al. Teoh Kiang Gong. and that the latter be ordered to pay actual and exemplary damages and attorney’s fees. On 12 August 2002. Held: 1. Calamba. al. who returned these processes on the claim that he was not the registered agent of Agilent. Branch 92 (Civil Case 3123-2001-C). upon motion filed by Integrated Silicon. Joanne Kate M. In the meantime. Recovery of Possession.Chin Hong. Judge Antonio S. set aside the assailed Order of the trial court dated 4 September 2001. On 2 July 2001. 2. summons and a copy of the complaint were served on Atty.Whether a foreign corporation without a license is incapacitated from bringing an action in Philippine courts. however. Agilent filed a separate complaint against Integrated Silicon. the Court of Appeals granted Integrated Silicon. or its successors or assigns. to comply with the extended VAASA. and ordered the dismissal of Civil Case 31232001-C. dela Cruz and Rolando T. Section 133 of the Corporation Code provides that "No foreign corporation transacting business in the Philippines without a license. In a number of cases. et." The aforementioned provision prevents an unlicensed foreign corporation “doing business” in the Philippines from accessing our courts. the same branch where Civil Case 3110-2001-C is pending. Ramon Quisumbing. 31232001-C. al.Whether Agilent was doing business in the Philippines. forum shopping. et. a writ of preliminary mandatory injunction. the Court held that an unlicensed foreign corporation doing business in the Philippines may bring suit in Philippine courts against a Philippine citizen or entity who had contracted with and benefited from said corporation. On 1 June 2001. Agilent prayed that a writ of replevin or. Integrated Silicon. On 4 September 2001. machineries and the materials to be used for fiber-optic components which were left in the plant of Integrated Silicon. before the Regional Trial Court. litis pendentia. the trial court denied the Motion to Dismiss and granted Agilent’s application for a writ of replevin. Issue: 1. et. for “Specific Performance. moral. suit or proceeding in any court or administrative agency of the Philippines.. et. A foreign corporation without a license is not ipso facto incapacitated from bringing an action in Philippine courts. Preliminary Mandatory Injunction. filed a petition for certiorari with the Court of Appeals. A license is necessary only if a foreign corporation is “transacting” or “doing business” in the country. he entered a special appearance to assail the court’s jurisdiction over the person of Agilent. Later. Agilent filed the petition for review. Integrated Silicon thus prayed that Agilent be ordered to execute a written extension of the VAASA for a period of five years as earlier assured and promised. filed a Motion to Dismiss in Civil Case No. in the alternative. Tey Boon Teck and Francis Khor (Civil Case 3110-01-C). al. Laguna. be issued ordering Integrated Silicon. Pozas of Branch 92 voluntarily inhibited himself in Civil Case 3123-2001-C. shall be permitted to maintain or intervene in any action.’s petition for certiorari. and Damages”. on the grounds of lack of Agilent’s legal capacity to sue. and Sum of Money with Replevin. to immediately return and deliver to Agilent its equipment. but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws. and failure to state a cause of action. exemplary damages and attorney’s fees. Without filing a motion for reconsideration. Jean Kay M.

An analysis of the relevant case law. 1955) Source: http://www.’s contention that Agilent lacks the legal capacity to file suit is therefore devoid of merit. (2) Having a nominee director or officer to represent its interest in such corporation. As a foreign corporation not doing business in the Philippines. Agilent cannot be deemed to be “doing business” in the Philippines. the activity to be undertaken in the Philippines is one that is for profit-making. 7917. and/or the exercise of rights as such investor. Herein. there is no definitive rule on what constitutes “doing”. by the clear terms of the VAASA. (6) Consignment by a foreign entity of equipment with a local company to be used in the processing of products for export. as amended by RA 8179). As such. (3) if a foreign corporation does business in the Philippines without a license. A party is estopped from challenging the personality of a corporation after having acknowledged the same by entering into a contract with it. et. 4. training domestic workers to operate it. it needed no license before it can sue before our courts. would demonstrate that the acts enumerated in the VAASA do not constitute “doing business” in the Philippines. and similar incidental services. and (4) if a foreign corporation does business in the Philippines with the required license. (2) if a foreign corporation is not doing business in the Philippines. such as installing in the Philippines machinery it has manufactured or exported to the Philippines. it needs no license to sue before Philippine courts on an isolated transaction or on a cause of action entirely independent of any business transaction. This is an action instituted by the plaintiff. the Corporation Code itself is silent as to what acts constitute doing or transacting business in the Philippines. a Philippine citizen or entity which has contracted with said corporation may be estopped from challenging the foreign corporation’s corporate personality in a suit brought before Philippine courts.Such a suit is premised on the doctrine of estoppel. and (8) Performing services auxiliary to an existing isolated contract of sale which are not on a continuing basis. The principles regarding the right of a foreign corporation to bring suit in Philippine courts may thus be condensed in four statements: (1) if a foreign corporation does business in the Philippines without a license. However. in conjunction with Section 1 of the Implementing Rules and Regulations of the Foreign Investments Act of 1991 (FIA. (3) Appointing a representative or distributor domiciled in the Philippines which transacts business in the representative’s or distributor’s own name and account. “engaging in”. it can sue before Philippine courts on any transaction. By and large. servicing the same. Agilent’s activities in the Philippines were confined to (1) maintaining a stock of goods in the Philippines solely for the purpose of having the same processed by Integrated Silicon. al. against the defendant to recover a sum of money for damages suffered by the plaintiff as a consequence of the failure of the defendant to . The challenge to Agilent’s legal capacity to file suit hinges on whether or not it is doing business in the Philippines. (5) Maintaining a stock of goods in the Philippines solely for the purpose of having the same processed by another entity in the Philippines. it cannot sue before the Philippine courts.R.scribd. April 29. (7) Collecting information in the Philippines. or “transacting” business in the Philippines. This doctrine of estoppel to deny corporate existence and capacity applies to foreign as well as domestic corporations. Integrated Silicon. The application of this principle prevents a person contracting with a foreign corporation from later taking advantage of its noncompliance with the statutes chiefly in cases where such person has received the benefits of the contract. and (2) consignment of equipment with Integrated Silicon to be used in the processing of products for export.Pacific Vegetable Oil-BISNAR (G. 2. to constitute “doing business”. a foreign corporation. (4) The publication of a general advertisement through any print or broadcast media. Section 1 of the Implementing Rules and Regulations of the FIA (as amended by RA 8179) provides that the following shall not be deemed “doing business”: (1) Mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business.

6.The contract was entered into in New York and payment was made to the consignee in theNew York branch. Defendant filed a motion to dismiss on the ground that the plaintiff failed to obtain a license to transact business in the Phil and. 68-69 of the CorporationLaw and therefore was not barred from filing the instant case although it had not secured alicense to transact insurance business in the Philippines. 5. to permit persons to avoid their contracts made with such foreign corp. Facts: The foreign corporation is Granger Associates.00. Courts. Inc. for the sale by Granger of its Model 7100/7200 Multiplex Equipment to MSI . which was organized in the United States and has no license to do business in this country.. and thus. The domestic corporation is Microwave Systems. Shalom sued Pacific Star Line (PSL).com/doc/119787821/Corpo-Rev-Bar Aetna as subrogee of I. in effect. one of the herein private respondents.30 allegedly due from it to the petitioner.deliver copra which he sold and bound himself to deliver tothe plaintiff. the herein petitioner. from securing redress in the Phil. It follows that the appellant corporation has not transacted business in the Phil in contemplation of Sec.Aetna Casualty vs Pacific Star-BOMBALES Source: http://www.Granger Associates vs Microwave Systems-FERNANDEZ Note: Granger is the principal and Microwave Systems is the agent.633. they should be considered as doing business hereand not merely having entered into an isolated transaction. which has been sued for recovery of a sum equivalent to US$900.. The lower court erred in holding that the appellant corporation has no personality to maintain the present action. PSL contends that Aetna has no license to transact insurance business in thePhilippines as gathered from the Insurance Commission and SEC . It also argues that sincesaid company has filed 13 other civil suits. Because it wasnot doing business in the Philippines. 1977. 68 and 69 which require any foreign corporation to obtain a license before it could transact business. the copra in question was actually sold by the defendant to the plaintiff in the US. the agreed price to be covered by an irrevocable letter of credit to be opened at the Bank of California. or before it could have personality to file a suit in the Phil. consequently. Moreover. It was never the purpose of the Legislature to exclude a foreign corporation which happens to obtain an isolated order of business from the Phil. Has appellant transacted business in the Philippines in contemplation of law? Contrary to the findings of the trial court. it was not subject to Sec. equipment and parts. it had no personality to file an action. principally the contract dated March 28. Aetna was not engaged in the business of insurance in thePhilippines but was merely collecting a claim assigned to it by consignee. 1979.. the Supreme Court heldthat Aetna is not transacting business in the Philippines for which it needs to have a license. the contract dated May 17.scribd. and delivery to be made at the port of destination. The claim arose from a series of agreements concluded between the two parties. the common carrier forthe loss of Linen & Cotton piece goods due to pilferage and damage amounting toUS$2..300. Based on rulings in Mentholatum and Eastboard Navigation. under which Granger licensed MSI to manufacture and sell its products in the Philippines and extended to the latter certain loans.

In such a case. The purpose of the rule requiring foreign corporations to secure a license to do business in the Philippines is to enable us to exercise jurisdiction over them for the regulation of their activities in this country. Ltd. The law invoked by the defendants was Section 133 of the Corporation Code reading as follows: No foreign corporation transacting business in the Philippines without a license. Having assailed the finding of the respondent court that the petitioner is doing business in the Philippines. The term implies a continuity of commercial dealings and arrangements. and contemplates. 10 thus: The rule stated in the preceding section that the doing of a single act does not constitute business within the meaning of statutes prescribing the conditions to be complied with by foreign corporations must be qualified to this extent. the performance of acts or works or the exercise of some of the functions normally incident to. and to make the state a base of operations for the conduct of a part of the corporations' ordinary business. but is of such character as distinctly to indicate a purpose on the part of the foreign corporation to do other business in the state. in the Regional Trial Court of Pasay City.. it is now settled that even one single transaction may be construed as transacting business in the Philippines under certain circumstances. 1984. however.. but not in this case because of technicality. Such agreements did not constitute only one isolated transaction. This was docketed as Civil Case No. Granger filed a complaint against MSI and the other private respondents on June 29. or its successors or assigns. . the purpose and object of its organization. as we observed in Far East International Import and Export Corporation v.. and moved to dismiss. seems to be whether the foreign corporation is continuing the body or substance of the business or enterprise for which it was organized or whether it has substantially retired from it and turned it over to another. Petitioner did not assail that it should be under the exception.. In its answer. RTC: sustained the defendants and granted motion to dismiss CA: affirmed Hence this petition W/N Granger has capacity to sue? Yes. as the petitioner contends.Payment of these contracts not having been made as agreed upon. The true test. We are convinced from an examination of the terms and conditions of the contracts and agreements entered into between petitioner and private respondents indicate that they established within our country a continuous business. In any event. shall be permitted to maintain or intervene in any action. Nankai Kogyo Co. 1982-P. The petitioner has not done this. but a succession of acts signifying the intent of Granger to extend its operations in the Philippines. suit or proceeding in any court or administrative agency of the Philippines. and not merely one of a temporary character. and in progressive prosecution of. that a single act may bring the corporation within the purview of the statute where it is an act of the ordinary business of the corporation. It is also the rule that the factual findings of the lower court are binding on this Court in the absence of any of those exceptional circumstances we have enumerated in many cases that warrant a different conclusion. to that extent. being an unlicensed foreign corporation. the petitioner had the burden of showing that such finding fell under the exception rather than the rule and so should be reviewed and reversed. MSI alleged the affirmative defense that the plaintiff had no capacity to sue. the single act or transaction is not merely incidental or casual. .

Western Equipment and Supply v Reyes-FORTES 8.f. U. Aurora Consolidated Securities and Investment Corporation. (6) that Comphil failed to deliver the coconut oil so Capital City notified the former that it was in default.600 liability to Capital City. Stokely Van Camp.A. (4) that the second contract states that "it is a wash out against RBS 3655" so that Comphil was supposed to repurchase the undelivered coconut oil at US $0.Antam Consolidated vs CA-KLETO Facts:  On 9 April 1981. Comphil was to have settled its US$103. price of US$0.A.30/lb.SC: Petition denied 7.2 cents/lb. entered into a contract (RBS 3655) wherein Comphil undertook to sell and deliver and Capital City agreed to buy 500 long tons of crude coconut oil to be delivered in October/November 1978 at the c.i.S. filed a complaint against Banahaw Milling Corporation.) Inc.S. Inc. that Comphil again failed to pay said amount. Tambunting Trading Corporation.00 which is the same amount of loss that Capital City sustained under the first contract.000.S.600. Ohio.3425/lb. Capital City and Coconut Oil Manufacturing (Phil. and  o o o o o o . that to settle Capital City's loss under the contract. (3) that on 21 August 1978. Indianapolis. and by delivering said quantity of coconut oil to Capital City at the discounted price. but Comphil failed to deliver the coconut oil so that Capital City covered its coconut oil needs in the open market at a price substantially in excess of the contract and sustained a loss of US$103.25 cents/lb. In its complaint. Inc. Stokely alleged: o (1) that it is a corporation organized and existing under the laws of the state of Indiana. Inc.3925 from Capital City by paying the latter the sum of US$103. U. so to settle Capital City's loss.f price of US$0. Antam Consolidated. it entered into a third contract with Comphil on 24 January 1979 wherein the latter undertook to sell and deliver and Capital City agreed to buy the same quantity of crude coconut oil to be delivered in April/May 1979 at the c.. Indiana. and one of its subdivisions "Capital City Product Company" (Capital City) has its office in Columbus. and United Coconut Oil Mills. or US$103. and has its principal office at 941 North Meridian Street.. (7) that Capital City sustained damages in the amount of US$175.600. U. (5) that the latter price was 9.i.. (Unicom) for collection of sum of money.. (Comphil) with the latter acting through its broker Rothschild Brokerage Company. (2) that Stokely and Capital City were not engaged in business in the Philippines prior to the commencement of the suit so that Stokely is not licensed to do business in this country and is not required to secure such license.f.600 for 500 long tons below the then current market price of 43.A.. the parties entered into a second contract (RBS 3738) on 3 November 1978 wherein Comphil undertook to buy and Capital City agreed to sell 500 long tons of coconut crude oil under the same terms and conditions but at an increased c.i.3925/lb. price of US$0.

Stokely alleged that: o 1) After demands were made by respondent on Comphil. et al.00 and denying the motion to dismiss by Antam. Antam. et al. the trial court ordered the issuance of a writ of attachment in favor of Stokely upon the latter's deposit of a bond in the amount of P1.  Stokely further prayed that a writ of attachment be issued against any and all the properties of Antam. Hence. Jr. on the ground that the reason cited therein does not appear to be indubitable. et al.. in an amount sufficient to satisfy any lien of judgment that Stokely may obtain in its action.     . and 5) Respondent has reasonable cause to believe and does believe that the coconut oil mill. et al. On 11 June 1981. which is the only substantial asset of Banahaw is about to be sold or removed so that unless prevented by the Court there will probably be no assets of Banahaw to satisfy its claim. 2) Unicom has taken over the entire operations and assets of Banahaw because the entire and outstanding capital stock of the latter was sold to the former. 4) All of the petitioners evaded their obligation to respondent by the devious scheme of using Tambunting employees to replace the Tambuntings in the management of Banahaw and disposing of the oil mill of Banahaw or their entire interests to Unicom. they filed the petition for certiorari and prohibition with prayer for temporary restraining order.o (8) that after repeated demands from Comphil to pay the said amount. being a foreign corporation not licensed to do business in the Philippines. Antam. On 14 June 1982. the Tambuntings ceased to be directors and officers of Comphil and were replaced by their five employees.00.  o o o o  On 10 April 1981. the latter still refuses to pay the same. Tambunting. has no personality to maintain the suit. filed a petition for certiorari before the Intermediate Appellate Court. dated 10 August 1981. et al. filed a motion to dismiss the complaint on the ground that Stokely.000. the trial court issued an order. reducing the attachment bond to P500. In support of this provisional remedy and of its cause of action against Antam. filed a motion for reconsideration but the same was denied. On 3 June 1981. et al. Antam. Antonio P. who was at that time neither a director nor officer of Banahaw to sell its oil mill. Thereafter. 3) All of the issued and outstanding capital stock of Comphil are owned by the Tambuntings who were the directors and officers of Comphil and who were the ones who benefited from the sale of Banahaw's assets or shares to Unicom.285. other than Comphil. Stokely filed a motion for reconsideration to reduce the attachment bond. who were managers of Tambunting's pawnshops and said employees caused the name of Comphil to be changed to "Banahaw Milling Corporation" and authorized one of the Tambuntings. the appellate court dismissed the petition..000.

in light of three transactions it entered into with Comphil. et al. was because it wanted to recover the loss it sustained from the failure of Comphil. being a foreign corporation not doing business in the Philippines. Antam. et al. et al.00. must pay the corresponding price for the same. Held:  The transactions entered into by Stokely with Comphil. there was only one agreement between Comphil. does not need to obtain a license to do business in order to have the capacity to sue. who in turn. are not a series of commercial dealings which signify an intent on the part of Stokely to do business in the Philippines but constitute an isolated one which does not fall under the category of "doing business. were supposed to buy back the crude coconut oil they should have delivered to the respondent in an amount which will earn the latter a profit of US$103. Antam. the total amount of such discount being US$103. prompting Stokely to file the suit below. From these facts alone. et al. were supposed to sell crude coconut oil to the respondent at a discounted rate. has the capacity to sue. Antam. etc.. failed to deliver again. Inc.00 it lost. it can be deduced that in reality. which will categorize it as a foreign corporation doing business in the Philippines.600.600. When this failed the third transaction was entered into by the parties whereby Comphil. This explains why in the second transaction.600.Issue: Whether Stokely Van Camp. Unfortunately. Stokely opted to try to push through with the transaction to recover the amount of US$103. et al. Comphil. and Stokely and that was the delivery by the former of 500 long tons of crude coconut oil to the latter. Comphil.00." The only reason why Stokely entered into the second and third transactions with Comphil. Antam. et al. Antam. The three seemingly different transactions were entered into by the parties only in an effort to fulfill the basic agreement and in no way indicate an intent on the part of Stokely to engage in a continuity of transactions with Comphil. Antam. et al. without license. Antam. Antam. Antam.     . et al. Stokely. to deliver the crude coconut oil under the first transaction and in order to give the latter a chance to make good on their obligation. Instead of making an outright demand on Comphil. et al. Antam.