Saint Louis University

SCHOOL OF LAW

ANALYTIC MEMO INDEX

PART 4
LAW 321A - CORPORATION LAW

SUBMITTED BY:

AGUILA, John Louis

ANDRION, Al Adrian
APOSTOL, Winchister
FAMULERAS, Nel John
ADOLFO, Jane Ling
AGUSTIN, Jireh
AQUINO, Ma. Delmar
BARRIENTOS, Claudine Vic-Vic
BUYUCCAN, Hearthel Kate
CORTEZ, Nenita
DUMO, Warlyn
JUDAN, Jyszl
MARAWIS, Korina Mae
MAURICIO, Edilyn
MENDITA, Paula
PAGUEL, Val Mollyn
SIGNEY, Lorraine Joy
UGAY, Angelique

JD 3 BLOCK A

SUBMITTED TO:

ATTY. MARIA LULU REYES

 LEGAL WHY IS THIS THE
CASE TITLE
QUESTION PROBLEM?
NON-STOCK CORPORATION
Respondent Victor Ching filed
an action for mandamus with
preliminary injunction against
the herein petitioners. He
anchored his action upon the
claim that the Membership
Campaign of the Chinese
YMCA for 1966 held, only 175
applications for membership
were submitted, canvassed and
accepted on the last day of the
membership campaign. Not
more than 240 membership
applications, as reported, issue
Whether or not the of the Chinese Commercial
CHINESE YMCA V.
trial court is justified in News, were filed.
CHING, G.R. NO. L-
stripping members of It is to be noted that
36929,
their membership in a respondent Victor Ching is a
18 JUNE 1976
non-stock corporation. member of the Board of
Directors of the Chinese
YMCA, while herein
petitioners, William Golangco
and Juanito K. Tan, are its
president and recording
secretary, respectively. In the
campaign for membership for
the year 1966, a rivalry had
developed between two groups
in the association, one headed
by respondent Ching and the
other by petitioner Golangco.
On the last day of the
membership campaign,
LEGAL PROVISION/
CONCLUSION
PRINCIPLE/ RULE
Yes.
175 membership applications
were undisputedly filed within
the deadline (including the 75
There is a established principle
withdrawn by respondent) and
that the courts cannot strip a
yet the 100 remaining
member of a non-stock non-
unquestioned memberships
profit corporation of his
were nullified by the questioned
membership therein without
decision without the individuals
cause. Otherwise, that would
concerned ever having been
be an unwarranted and undue
impleaded or heard (except the
interference with the well-
individual petitioners president
established right of a
and secretary).
corporation to determine its
membership.
Finally, the appealed decision
did not give due importance to
In order that membership may
the undisputed fact therein
be acquired in a non-stock
stated that "at the board meeting
corporation and valid by-laws
of the association held on
must be complied with, except
December 7, 1965, a list of 174
in so far as they may be and are
applications for membership,
waived. But provisions in the
old and new, was submitted to
by-laws as to formal steps to be
the board and approved by the
taken to acquire membership
latter, over the objection of the
may be waived by the
petitioner who was present at
corporation, or it may be
said meeting." Such action of
estopped to assert that they
the petitioner association's
have not been taken.
board of directors approving the
174 membership applications of
old and new members
constituting its active
membership as duly processed
 respondent Ching and herein and screened by the authorized
petitioner Golangco were in the committee just be deemed a
office of the Chinese YMCA. waiver on its part of any
Respondent Ching, after it was technicality or requirement of
agreed upon that there was form.
going to be no extension of the
membership campaign. After
trial, a decision was rendered
annulling the 1966 annual
membership campaign of the
respondent. On appeal, the
appealed decision was
affirmed.
Respondent is a civic
corporation organized under
the laws of the Philippines with
an original authorized capital
stock of P22,000.00, which was
subsequently increased to
P200,000.00, civic corporation
organized under the laws of the No.
Philippines with an original
A stock Corporation has two
authorized capital stock of In this case, nowhere in its
requisites that must be
P22,000.00, which was articles of incorporation or by-
complied with, to wit: (1) a
subsequently increased to laws could be found an authority
THE COLLECTOR capital stock divided into shares
P200,000.00. Neither in the for the distribution of its
OF INTERNAL and (2) an authority to
articles or by-laws is there a dividends or surplus profits.
REVENUE V. THE Whether or not the distribute to the holders of such
provision relative to dividends Strictly speaking, it cannot,
CLUB FILIPINO, respondent is a stock shares, dividends or allotments
and their distribution, although therefore, be considered a stock
INC. DE CEBU, G.R. corporation. of the surplus profits on the
it is covenanted that upon its corporation, within the
NO. L-12719, 31, MAY basis of the shares held.
dissolution, the Club’s contemplation of the
1962
remaining assets, after paying corporation law.
debts, shall be donated to a
charitable Philippine
Institution in Cebu. The
Respondent owns and operates
a club house, a bowling alley, a
golf course (on a lot leased
from the government), and a
 bar-restaurant where it sells
wines and liquors, soft drinks,
meals and short orders to its
members and their guests. The
bar-restaurant was a necessary
incident to the operation of the
club and its golf-course. The
club is operated mainly with
funds derived from
membership fees and dues.
Whatever profits it had, were
used to defray its overhead
expenses and to improve its
golf-course. the Collector of
Internal Revenue assessed
against and demanded from the
Respondent. The Respondent
wrote the Collector, requesting
for the cancellation of the
assessment. The request having
been denied, the Club filed the
instant petition for review.

Wack Wack Golf and Country No.

Club is a non-profit
corporation which offers According to Mr. Limbo's
Shopworn is the rule on
sports, recreational and social testimony on record, the Court
abandonment that the
Whether or not the activities to its members. failed to find therein any
immediate filing of a case for
statement of account Petitioner Antonio Litonjua is statement that he delivered the
illegal dismissal negates the
ANTONIO for November 1984 an Associate Member of said November 1984 account to
same. Mark that Vigan
LITONJUA V. CA, was duly delivered to corporation and his son, co- Antonio Litonjua himself. Mr.
promptly filed this suit for
G.R. NO. 120294, and received by petitioner Arnold Litonjua, is a Limbo was consistent in his
illegal dismissal when her
10 FEBRUARY 1998 Antonio Litonjua's Junior Member thereof. The testimony to the effect that on
attempts to enter the premises
office on 12 December individual respondents are the 12 December 1984 he delivered
of her workplace became futile
1984. members of the Board of the November 1984 statement
and the efforts to bar and eject
Directors and Membership of account at the office of
her became unmistakable.
Committee of Wack Wack. On Antonio Litonjua and it was
10 January 1985, pursuant to its received by an employee of the
by-laws, respondent club latter who signed the Special
posted the monthly list of
delinquent members on its
premises. Included therein was
petitioner Antonio Litonjua.
After Antonio Litonjua
discovered that his name was
on the January 1985 delinquent
list, he proceeded to the
Cashier's Office of the club and
was informed therein that the
reason behind his delinquency
was his failure to pay his
November 1984 dues (which
should have been paid before
the end of December 1984 as
provided in the corporate by-
laws). Antonio Litonjua alleged
that he was not able to pay his
monthly bill on time because he
has not received his statement
of account for November 1984.
As proof, he presented a sealed
envelope which he allegedly
presumed to be the November
1984 bill (but was actually the
December 1984 statement of
account) and explained that he
received it only on 12 January
1985.
A check with the accounting
office, however, revealed that
the November 1984 statement
of account had already been
delivered to Antonio Litonjua's
office and was received by his
employee allegedly named
"Aquino." Petitioner asserted
that, he did not receive said
account and had no employee
Delivery Receipt. On cross-
examination, Mr. Limbo did not
waver from his testimony that
Antonio Litonjua's November
1984 bill was duly received by
the latter's employee. Against
the testimony of Mr. Victor
Limbo, coupled with
documentary evidence in the
form of the signed Special
Delivery Receipt, petitioners
presented no proof other than
the bare denial of Antonio
Litonjua that he never received
his statement of account for
November 1984 and that he has
no "Aquino" in his employ.
Petitioners could have readily
offered in evidence a record or
list of Antonio Litonjua's
employees to prove that he has
no employee by the name of
"Aquino" but, strangely, beyond
his mere say-so no such
evidence was adduced.
 by the name of "Aquino."
Based on the foregoing,
Antonio Litonjua was able to
convince the auxiliary clerks in
the Cashier's Office to delete
his name from the list of
delinquent members.
Consequently, Antonio
Litonjua continued to avail of
the club facilities. Later,
Antonio Litonjua was advised
of another outstanding balance
in the amount of P9,414.00.
Again, he issued a check in
payment thereof. As a result,
his name was deleted from the
February 1985 list of
delinquent members.
The general rule is that actions No.
On July 20, 1972, private
for quo warranto should be
respondent Eufemia M. San
brought by the Solicitor The Court finds it unnecessary
Luis as a member of the
General or a fiscal in cases of to rule upon the parties' above
Philippine Public School
usurpation of an office conflicting contentions, since it
Teachers Association (PPSTA),
established by law or by the finds to be decisive petitioners'
a fraternal non-stock
Constitution under color of an contention that respondent has
association of public school
executive appointment, or the no personality and standing as a
teachers throughout the
abuse of a public franchise single individual member out of
PPSTA V. APOSTOL, Whether or not the country, filed with respondent
under color of a legislative thousands of members of the
G.R. NO. L- elections of the Board court of first instance at
grant, for these are public PPSTA to bring the action
36966, of Directors are null Quezon City a complaint with
wrongs and not private below for annulment of the
FEBRUARY 28, 1974 and void. preliminary injunction for the
injuries. PPSTA 1972 annual convention
annulment of the 1972 annual
and elections, as she was not
elections of the PPSTA board
Since, under our system all even a chapter delegate to the
of directors held on June 26-28,
power emanates from the said convention and she was
1972 at Teachers Camp in
people, who constitute the duly represented thereat in
Baguio City for having been
sovereignty, the right to inquire accordance with the PPSTA's
held outside its principal office
into the authority by which a by-laws by her duly authorized
at Quezon City against herein
person assumes to exercise the chapter delegates who have
petitioners as defendants.
functions of a public office or raised no question as to the

RELIGIOUS CORPORATION
Bitong alleged that she was the
treasurer and member of the
BoD of Mr. & Mrs.
Corporation. She filed a
complaint with the SEC to hold
respondent spouses Apostol
Whether or not
RCAAD, INC. V. LRC, liable for fraud,
petitioner validly
10 DEC. 1957 misrepresentation, disloyalty,
declared dividends.
evident bad faith, conflict of
interest and mismanagement in
directing the affairs of the
corporation to the prejudice of
the stockholders.
franchise is regarded as
inherent in the people on the
right their sovereignty. Hence,
the action should be brought by
the Solicitor General or the
fiscal who represents the
sovereign power.
Under Section 122 of the
Corporation Code, a dissolved
corporation shall nevertheless
continue as a body corporate
for three (3) years for the
purpose of prosecuting and
defending suits by or against it
and enabling it to settle and
close its affairs, to dispose and
convey its property and to
distribute its assets, but not for
the purpose of continuing the
business for which it was
established.
proceedings. Article IX, section
5 of the by-laws expressly
provides that "only official
delegates to the representative
assembly are entitled to take part
in the discussions and to vote."
Respondent's action below was
in essence one of quo warranto
which is governed by Rule 66 of
the Rules of Court Section 6
thereof provides that in order
that an individual may directly
bring the action, he or she must
claim to entitled to the public
office or position allegedly
unlawfully held or usurped.
Otherwise, the action must be
brought by the Solicitor General
or fiscal with leave of the court
upon the complaint of the
realtor under section 4 of the
Rule.
No.
As provided, during and beyond
the three (3)-year winding-up
period of RMC, the Board of
Trustees of RMCPRF may do
no more than settle and close
the affairs of the Fund. The
Board retains its authority to act
on behalf of its members, albeit,
in a limited capacity. It may
commence suits on behalf of its
members but not continue
managing the Fund for
 She alleges that certain purposes of maximizing profits.
transactions entered into by the Within those three (3) years, the Here, the Board’s act of issuing
corporation were not corporation may appoint a the Resolution authorizing
supported by any stockholder’s trustee or receiver who shall petitioner to release the Fund to
resolution. The complaint carry out the said purposes its beneficiaries is still part of the
sought to enjoin Apostol from beyond the three (3)-year liquidation process, which is,
further acting as president- winding-up period. Thus, a satisfaction of the liabilities of
director of the corporation and trustee of a dissolved the Plan, and does not amount
from disbursing any money or corporation may commence a to doing business. Hence, it was
funds. suit which can proceed to final properly within the Board’s
judgment even beyond the power to promulgate.
Apostol contends that Bitong three (3)-year period of
was merely a holder-in-trust of liquidation.
the JAKA shares of the
corporation, hence, not entitled
to the relief she prays for. SEC
Hearing Panel issued a writ
enjoining Apostol. After
hearing the evidence, SEC
Hearing Panel dissolved the
writ and dismissed the
complaint filed by Bitong.
Bitong appealed to the SEC en
banc which reversed SEC
Hearing Panel decision.
Apostol filed petition for
review with the CA. CA
reversed SEC en banc ruling
holding that Bitong was not the
owner of any share of stock in
the corporation and therefore,
not a real party in interest to
prosecute the complaint.
The parties herein entered into No.
Can a corporation The appointment of a receiver
a Loan Agreement with
YAM V. CA, GR NO. placed under operates to suspend the
Assumption of Solidary As held in Villanueva v. Court of
104726 receivership enter into authority of a corporation and
Liability. Petitioner Appeals "the appointment of a
11 FEBRUARY 1999 an agreement to of its directors and officers
subsequently obtained a second receiver operates to suspend the
condone a debt? over its property and effects,
Industrial Guarantee and Loan authority of a [corporation] and
 Fund. The petitioner had paid such authority being reposed in of its directors and officers over
the first debt, it so happened the receiver. its property and effects, such
that the private respondent was authority being reposed in the
placed under receivership. The receiver:" Thus, Sobrepeñas had
petitioner made a partial no authority to condone the
payment to the second loan and debt.
the private respondent sent an
answer letter to the petitioner Mrs. Yam herself testified that
that their penalty charges will when she and her husband
decreased provided that they sought the release of the chattel
can pay on or before July 30, mortgage over their property,
1986. they were told that only the
Central Bank would authorize
Because of the failure of the the same "because [the CB] the
petitioner to pay the specific receiver."
amount totaled private
respondent filed a complaint
against the petitioner. The
petitioner now contending that
they had fully paid their
obligation where before July 2,
1986, Yam and his wife the
president of the respondent’s
corporation agreed to waive the
penalties and services charge
provided petitioners paid the
principal and interest.
A corporation cannot extend No.
By its corporate articles,
its life by amendment of its
Alhambra Cigar and Cigarette
articles of incorporation From July 15 to October 28,
Manufacturing Company, Inc
effected during the three-year 1963, when Alhambra made its
Can a corporation still was to exist for fifty (50) years
period for liquidation when its attempt to extend its corporate
extend its corporate from incorporation. Its term of
RP V. IAC, 15 original term of existence had existence, its original term of
term within the three- existence expired on January
JANUARY 1988 already expired. Since the fifty years had already expired
year statutory period 15, 1962. On that date, it ceased
privilege of extension is purely (January 15, 1962); it was in the
for liquidation? transacting business, entered
statutory, all of the statutory midst of the three-year grace
into a state of liquidation.
conditions precedent must be period statutorily fixed in
Thereafter, a new corporation,
complied with in order that the Section 77 of the Corporation
Alhambra Industries, Inc. was
extension may be effectuated. Law.
 formed to carry on the business
of Alhambra. And, generally these conditions The authority to prolong
must be complied with, and the corporate life was inserted by
On June 20, 1963 within steps necessary to effect the Republic Act 3531 into a section
Alhambra's three-year statutory extension must be taken, of the law that deals with the
period for liquidation - during the life of the power of a corporation to
Republic Act 3531 was enacted corporation, and before the amend its articles of
into law. It amended Section 18 expiration of the term of incorporation. And it should be
of the Corporation Law; it existence as original fixed by its clearly evident that under
empowered domestic private charter or the general law, Section 77 no corporation in a
corporations to extend their since, as a rule, the corporation state of liquidation can act in any
corporate life beyond the is ipso facto dissolved as soon way, much less amend its
period fixed by the articles of as that time expires. So where articles, “for the purpose of
incorporation for a term not to the extension is by amendment continuing the business for
exceed fifty years in any one of the articles of incorporation, which it was established”.
instance. Previous to Republic the amendment must be
Act 3531, the maximum non- adopted before that time.
extendible term of such
corporations was fifty years.

On July 15, 1963, at a special

meeting, Alhambra's board of
directors resolved to amend
paragraph "Fourth" of its
articles of incorporation to
extend its corporate life for an
additional fifty years, or a total
of 100 years from its
incorporation. On October 28,
1963, Alhambra's articles of
incorporation as so amended
certified correct by its president
and secretary and a majority of
its board of directors, were filed
with respondent Securities and
Exchange Commission (SEC).
Whether or not the On November 28, 1973, Section 19 of the Corporation
THE DIRECTOR OF No.
petition should be private respondent Iglesia ni Law, part of which is now
LANDS V. CA,
granted? Cristo filed an application with Section 22 of the Corporation
GR NO. L-56613, 14 the then Court of First Instance
MARCH, 1988 of Cavite for registration in its
name of a parcel of land with an
area of 379 square meters
located at Poblacion,
Municipality of Amadeo,
Cavite. In said application,
private respondent alleged inter
alia that it was the owner in fee
simple of the land afore-
described, having acquired title
thereto by virtue of a Deed of
Absolute Sale executed in 1947
by Aquelina de la Cruz in its
favor and that applicant and its
predecessors-in-interest had
been in actual, continuous,
public, peaceful and adverse
possession and occupation of
said land in the concept of
owner for more than thirty [30]
years. Private respondent
prayed that should the Land
Registration Act not be
applicable, the provisions of
Chapter VIII of
Commonwealth Act No. 141,
as amended by Republic Act
No. 6236 be applied as
applicant and its predecessors-
in-interest had been in
possession of the land for more
than thirty [30] years and had
introduced improvements
thereon, including the fencing
thereof on all sides.
The Republic of the
Philippines, represented by the
Director of Lands, opposed the
Code, provided that the powers
of the corporation would cease
if it did not formally organize
and commence the transaction
of its business or the
continuation of its works
within two years from date of
its incorporation. Section 20,
which has been reproduced
with some modifications in
Section 46 of the Corporation
Code, expressly declared that
“every corporation formed
under this Act, must within one
month after the filing of the
articles of incorporation with
the Securities and Exchange
Commission, adopt a code of
by-laws.” Whether this
provision should be given
mandatory or only directory
effect remained a controversial
question until it became
academic with the adoption of
PD 902-A. Under this decree, it
is now clear that the failure to
file by-laws within the required
period is only a ground for
suspension or revocation of the
certificate of registration of
corporations.
Petitioner's heavy reliance on
the case of Director of lands v.
Reyes, 68 SCRA 177, is
misplaced. The original tracing
cloth plan was deemed essential
in that case as the lands involved
were vast tracts of uncultivated,
mountainous and thickly
forested lands which were
necessarily difficult to Identify,
unlike the land subject matter of
the instant registration case
which is more readily
Identifiable by reason of its
location, its comparatively
smaller size of 379 square
meters as well as the chapel
constructed thereon by private
respondent in 1968. Moreover,
the documentary evidence
presented therein consisting in
the blue-prints of two [2] survey
plans were not approved by the
Director of Lands unlike
Exhibit "O" which bore the
approval of the Land
Registration Commission at the
time it was empowered by law to
approve original survey plans
and which was re- verified and
approved by the Bureau of
Lands when the authority to
approve original survey plans
was withdrawn from the Land
Registration Commission by
P.D. No. 239.
 application on the following
grounds: 1] the applicant and its
predecessors-in-interest did not
possess sufficient title to
acquire ownership in fee simple
of the parcel of land applied
for; 2] neither the applicant nor
its predecessors-in-interest
have been in open, continuous,
exclusive and notorious
possession and occupation of
the land in question; and, 3] the
subject parcel of land is a
portion of the public domain
belonging to the Republic of
the Philippines not subject to
private appropriation.
Spouses Fernando and Amelia A close corporation, within the Yes.
Cruz owned a 464-square- meaning of this Code, is one
meter lot covered by Transfer whose articles of incorporation Yes.In finding the subject
Certificate of Title (TCT) No. provide that: (1) All the property answerable for the
N-126668. On 6 January 2004, corporation's issued stock of all obligations of MSI, the CA
the City Government of classes, exclusive of treasury characterized respondent
Marikina levied the property shares, shall be held of record spouses as stockholders of a
for non-payment of real estate by not more than a specified close corporation who, as such,
Whether or not the taxes. Petitioner then applied number of persons, not are liable for its debts.To be
BUSTOS V. CA correctly for the cancellation of TCT of exceeding twenty (20); (2) all considered a close corporation,
MILLIONS SHOES, considered the the property. Marikina City the issued stock of all classes an entity must abide by the
GR NO. 185024, 4 properties of Spouses RTC, rendered a final and shall be subject to one or more requirements laid out in Section
APRIL 2017 Cruz answerable for executory Decision ordering specified restrictions on 96 of the Corporation Code,
the obligations of MSI. the cancellation of the previous transfer permitted by this Title; which reads: Sec. 96. Definition
title and the issuance of a new and (3) The corporation shall and applicability of Title.
one under the name of not list in any stock exchange
petitioner. or make any public offering of Furthermore, we find that the
any of its stock ofany class. CA seriously erred in portraying
On 26 September 2006, Notwithstanding the foregoing, the import of Section 97 of the
petitioner moved for the a corporation shall not be Corporation Code. Citing that
exclusion of the subject deemed a close corporation provision, the CA concluded
property from the Stay Order. when at least twothirds (2/3) of that "in a close corporation, the
 He claimed that the lot its voting stock or voting rights stockholders and/or officers
belonged to Spouses Cruz who is owned or controlled by usually manage the business of
were mere stockholders and another corporation which is the corporation and are subject
officers of MSL He further not a close corporation within to all liabilities of directors, i.e.
argued that since he had won the meaning of this Code. personally liable for corporate
the bidding of the property debts and obligations."
before the annotation of the
title, the auctioned property However, Section 97 of the
could no longer be part of the Corporation Code only specifies
Stay Order. The RTC denied that "the stockholders of the
the entreaty of petitioner. It corporation shall be subject to
ruled that because the period of all liabilities of directors."
redemption hadnot yet lapsed Nowhere in that provision do
at the time of the issuance of we find any inference that
the Stay Order, the ownership stockholders of a close
thereof had not yet been corporation are automatically
transferred to petitioner. liable for corporate debts and
obligations.
The said parcel of land which
secured several mortgage liens
for the account of MSI remains
to be an asset of the Cruz
Spouses, who are the
stockholders and officers of
MSI, a close corporation.
Rather, respondents assert that
as stockholders and officers of
a close corporation, they are
personally liable for its debts
and obligations. Furthermore,
they argue that since the
Rehabilitation Plan of MSI has
been approved, petitioner can
no longer assail the same.
The Central Syndicate, a The creditor of a dissolved Yes.
IGLESIA FILIPINA Can sales tax of a
corporation organized under corporation may follow its
INDEPENDENTE V. dissolved corporation
the laws of the Philippines, thru assets once they passed into the Considering that the Central
HEIRS OF TAEZA, 3 be enforced against its
its General Manager, David hands of the stockholders. And Syndicate realized from the sale
FEBRUARY 2014 successors-in-interest
Sycip, sent a letter to the it has been stated, with of the surplus goods a net profit
 who are the present Collector of Internal Revenue
petitioners? advising the latter that it
purchased from Dee Hong Lue
the entire stock of surplus
properties which the said Dee
Hong Lue had bought from the
Foreign Liquidation
Commission and that as it
assumed Dee Hong Lue's
obligation to pay the 3-1/2%
sales tax on said surplus goods,
it was remitting the sum of
P43,750.00 in his behalf as
deposit to answer for the
payment of said sales tax with
the understanding that it would
later be adjusted after the
determination of the exact
consideration of the sale. The
Syndicate again wrote the
Collector requesting the refund
representing alleged excess
payment of sales tax due to the
adjustment and reduction of
the purchase price.
Juane is a former minister or
pastor of IEMELIF. IEMELIF
Whether or not the
Bishop Nathanael P. Lazaro
transformation of
announced the appointment
IEMELIF from a
and assignment of Juane as
IEMELIF, INC., ET corporation sole to a
Resident Pastor of the
AL. V. JUANE corporation aggregate
Cathedral Congregation in
was legally defective
Tondo, Manila. By virtue and as
and, therefore,
18 SEPTEMBER 2009 a consequence of such
IEMELIF had no
appointment, Defendant Rev.
personality to eject
Juane was authorized to stay at
Juane from the subject
and occupy the Resident
property.
Pastor’s residence inside the
Cathedral complex. By the
reference to the effect of
dissolution upon taxes due
from a corporation, "that the
hands of the government
cannot, of course, collect taxes
from a defunct corporation, it
loses thereby none of its rights
to assess taxes which had been
due from the corporation, and
to collect them from persons,
who by reason of transactions
with the corporation, hold
property against which the tax
can be enforced and that the
legal death of the corporation
no more prevents such action
than would the physical death
of an individual prevent the
government from assessing
taxes against him and collecting
them from his administrator,
who holds the property which
the decedent had formerly
possessed".
As opposed to a corporation
aggregate, a corporation sole
consists of a single member,
while a corporation aggregate
consists of two or more
persons.
of P229,073.83, and that the sale
of said goods was the only
transaction undertaken by said
syndicate, there being no
evidence to the contrary, the
conclusion is that said net profit
remained intact and was
distributed among the
stockholders when the
corporation liquidated and
distributed its assets on August
15, 1948, immediately after the
sale of the said surplus goods.
Petitioners are therefore the
beneficiaries of the defunct
corporation and as such should
be held liable to pay the taxes in
question. However, there being
no express provision requiring
the stockholders of the
corporation to be solidarily
liable for its debts which liability
must be express and cannot be
presumed.
The Court of Appeals reasoned
that even assuming arguendo,
that the transformation of
IEMELIF from a corporation
sole to a corporation aggregate
was legally defective, its head or
governing body, i.e., Bishop
Lazaro, whose acts were
approved by the Highest
Consistory of Elders, still did
not change. As Bishop Lazaro
and the Highest Consistory of
Elders had the authority to
appoint Juane as Resident
same reason, he also took Pastor of the IEMELIF Tondo
charge of the Cathedral Congregation, they also had the
facilities and other property of power to remove him as such or
the church in said premises. transfer him to another
One year thereafter, during the congregation.
traditional concluding
IEMELIF Anniversary Service
of the February 2001 General
Conference, Juane was re-
assigned and re-appointed by
Bishop Lazaro to the same
position. Bishop Lazaro, acting
in his capacity as the General
Superintendent of IEMELIF
Church as well as the General
Administrator of the IEMELIF
Cathedral in Tondo, removed
Juane as Resident Pastor of the
Tondo Cathedral Congregation
and assigned him as Resident
Pastor of the Sta. Mesa (Banal
na Hapag) Congregation. In
view of this re-assignment,
Juane’s authority to occupy and
to take charge and possession
of the premises of the
IEMELIF Cathedral in Tondo
ceased and expired. However,
Juane defied said re-assignment
and continued to arrogate upon
himself the position of
Resident Pastor of the
Cathedral. To date, he
continues to defy the Church
authorities and still has physical
possession and occupation of
the Cathedral premises despite
the expiration of his authority
to do so and illegally depriving
 herein Plaintiff [IEMELIF]
physical possession thereof.
CLOSE CORPORATION
On December 23, 1976,
Manuel Dulay by virtue of
Board Resolution No 186 of
petitioner corporation sold the
subject property to private
respondents spouses Maria
Theresa and Castrense Veloso
in the amount of P300,000.00
Whether or not the
as evidenced by the Deed of
sale of the subject
Absolute Sale. Thereafter, TCT
property has binding
No. 17880 was cancelled and
effect on petitioner
TCT No. 23225 was issued to
corporation as Board
private respondent Maria
Resolution No. 18
Theresa Veloso. Subsequently,
which authorized the
Manuel Dulay and private
sale of the subject
DULAY respondents spouses Veloso
property was resolved
ENTERPRISES V. executed a Memorandum to
without the approval
CA, 225 S 658 the Deed of Absolute Sale of
of all the members of
December 23, 1976 dated
the board of directors
December 9, 1977 giving
and said Board
Manuel Dulay within (2) years
Resolution was
prepared by a person
or until December 9, 1979 to
not designated by the
repurchase the subject property
corporation to be its
for P200,000.00 which was,
secretary?
however, not annotated either
in TCT No. 17880 or TCT No.
23225. On December 24, 1976,
private respondent Maria
Veloso, without the knowledge
of Manuel Dulay, mortgaged
the subject property to private
respondent Manuel A. Torres
for a loan of P250,000.00 which
Sec. 101. When board meeting
is unnecessary or improperly
held. Unless the by-laws
provide otherwise, any action
by the directors of a close Yes.
corporation without a meeting
shall nevertheless be deemed
In the instant case, petitioner
valid if:
corporation is classified as a
close corporation and
1. Before or after such action is consequently a board resolution
taken, written consent thereto authorizing the sale or mortgage
is signed by all the directors, of the subject property is not
necessary to bind the
corporation for the action of its
2. All the stockholders have president. At any rate, corporate
actual or implied knowledge of action taken at a board meeting
the action and make no prompt without proper call or notice in
objection thereto in writing; a close corporation is deemed
ratified by the absent director
3. The directors are unless the latter promptly files
accustomed to take informal his written objection with the
action with the express or secretary of the corporation
implied acquiesce of all the after having knowledge of the
stockholders, meeting which, in his case,
petitioner Virgilio Dulay failed
to do.
4. All the directors have express
or implied knowledge of the
action in question and none of
them makes prompt objection
thereto in
was duly annotated. Upon the
failure of private respondent
Maria Veloso to pay private If a directors' meeting is held
respondent Torres, the subject without call or notice, an action
property was sold on April 5, taken therein within the
1978 to private respondent corporate powers is deemed
Torres as the highest bidder in ratified by a director who failed
an extrajudicial foreclosure to attend, unless he promptly
sale. On July 20, 1978, private files his written objection with
respondent Maria Veloso the secretary of the corporation
executed a Deed of Absolute after having knowledge thereof.
Assignment of the Right to
Redeem in favor of Manuel
Dulay assigning her right to
repurchase the subject
property.

As neither private respondent

Maria Veloso nor her assignee
Manuel Dulay was able to
redeem the subject property
within the one year statutory
period for redemption, private
respondent Torres filed an
Affidavit of Consolidation of
Ownership with the Registry of
Deeds of Pasay City. On
October 1, 1979, private
respondent Torres filed a
petition for the issuance of a
writ of possession against
private respondents spouses
Veloso and Manuel Dulay.

On July 21, 1980, petitioner

corporation filed an action
against private respondents
spouses Veloso and Torres for
 the cancellation of the
Certificate of Sheriff’s Sale and
TCT No. 24799 in Civil Case
No. 8278-P with the then
Court of First Instance of Rizal.

Plaintiff-appellant entered into No.

an agreement with Motorich
Sales Corporation (MSC) for
the transfer to it of a parcel of Such contract cannot bind
land located in Quezon City. As Motorich, it never authorized or
stipulated in the Agreement of ratified such sale.
14 February 1989, SJSSFI paid A corporation is a juridical
the downpayment in the sum of person separate and distinct
P100,000.00, the balance to be from its stockholders or
paid on or before 2 March members. Accordingly, the
1989. On 1 March 1989, Mr. A corporation is a juridical property of the corporation is
Andres T. Co, SJSSFI person separate and distinct not the property of the
from its stockholders or
president, wrote a letter to MSC corporation is not the property
members. Accordingly, the
requesting for a computation of of its stockholders or members
property of the corporation is
the balance to be paid. On 2 and may not be sold by the
SAN JUAN Whether or not the
not the property of the
March 1989, SJSSFI was ready stockholders or members
STRUCTURAL corporation’s treasurer
corporation is not the property
with the amount corresponding without express authorization
STEEL V. CA, 296 S act can bind the
to the balance. SJSSFI and of its stockholders or members from the corporation’s board of
63 corporation.
and may not be sold by the
MSC were supposed to meet in directors.
stockholders or members
the office of SJSSFI but MSC’s
treasurer, Nenita without express authorization
Lee
Gruenberg, did not appear. from the corporation’s board As a general rule, the acts of
of directors corporate officers within the
MSC, despite repeated
scope of their authority are
demands and in utter disregard
binding on the corporation. But
of its commitments had refused
when these officers exceed their
to execute the Transfer of
authority, their actions, cannot
Rights/Deed of Assignment
bind the corporation, unless it
which is necessary to transfer
has ratified such acts as is
the certificate of title.
estopped from disclaiming
them. 0Because Motorich had
On 6 April 1989, ADC and never given a written
MSC entered into a Deed of authorization to respondent
 Absolute Sale whereby the Gruenbeg to sell its parcel of
former transferred to the latter land, we hold that the February
the subject property. SJSSFI 14, 1989 agreement entered into
filed the complaint for damages by the latter with petitioner is
against MSC, and Nenita Lee void under Article 1874 of the
Gruenberg, as a result of the Civil Code. Being inexistent and
latter’s alleged bad faith in void from the beginning, said
refusing to execute a formal contract cannot be ratified. The
Transfer of Rights/Deed of statutorily granted privilege of a
Assignment. corporate veil may be used only
for legitimate purposes. On
equitable consideration, the veil
can be disregarded when it is
utilized as a shield to commit
fraud, illegality or inequity,
defeat public convenience;
confuse legitimate issues; or
serve as a mere alter ego or
business conduit of a person or
an instrumentality, agency or
adjunct of another corporation.
Said stockholders shall be
Petitioner CFTI held a
personally liable for corporate
concessionaire's contract with
In case of close corporations, torts unless the corporation had
the Army Air Force Exchange not all are personally liable but obtained reasonably adequate
Services ("AAFES") for the only those who were actively liability insurance. Therefore,
operation of taxi services engaged in the management or
Are officers of the President who had actively
within Clark Air Base. Sergio F.
operation of the business.
corporations ipso engaged in the management and
Naguiat was CFTI's president,
Section 100 paragraph 5 of the
facto liable jointly and operation of CFTI is held
while Antolin T. Naguiat wasCorporation Code states that
NAGUIAT V. NLRC, severally with the solidarily liable however, the
its vice-president. Like Sergio
the stockholders shall be held
269 S 54 companies they Vice-President in the absence of
F. Naguiat Enterprises,
to strict fiduciary duties to each
represent for the evidence on the extent of his
Incorporated, a trading firm, it
other and among themselves to
settlement of its participation in the operation of
was a family-owned
the extent that the stockholders
corporate obligations? the business cannot be held
corporation. are actively engaged in the solidarily liable.
management or operation of
Individual respondents were the business and affairs of a
The rule that a corporate officer
previously employed by CFTI close corporation.
cannot be held solidarily with a
as taxicab drivers.
corporation in the absence of
 evidence that he had acted in
bad faith or with malice is not
Due to the phase-out of the US applicable in this case.
military bases in the
Philippines, from which Clark
Air Base was not spared, the
AAFES was dissolved, and the
services of individual
respondents were officially
terminated on November 26,
1991.

The AAFES Taxi Drivers

Association ("drivers' union"),
through its local president,
Eduardo Castillo, and CFTI
held negotiations as regards
separation benefits that should
be awarded in favor of the
drivers. They arrived at an
agreement that the separated
drivers will be given P500.00
for every year of service as
severance pay. Most of the
drivers accepted said amount in
December 1991 and January
1992. However, individual
respondents herein refused to
accept theirs.
Whether the CA erred On October 7, 1966, Marsal & Under the AOI, the No.
in ruling that the sale Co., Inc. (Marsal) was stockholder seller must notify
of Teresita's 3,464 organized as a close in writing the Board of
Marsal shares of stocks corporation. The corporation’s Directors of his intention to Under the AOI, the stockholder
FLORETE V. seller must notify in writing the
made by petitioner AOI, specifically in paragraph sell, who, in turn, must notify
FLORETE, G.R.NO. Board of Directors of his
estate of Teresita to 7, contains the procedure in the all the stockholders of records
223321, 2 APRIL 2018 intention to sell, who, in turn,
petitioner Rogelio was sale of shares of stocks of a within 5 days upon receipt of
in violation of stockholder. The procedure such letter, and the stockholder must notify all the stockholders
paragraph 7 of gave the stockholders of record must exercise the preemptive of records within 5 days upon
Marsal's Article of a preemptive right to buy any right within ten days from receipt of such letter, and the
 Incorporation and shares offered for sale for a notice of the Board, otherwise, stockholder must exercise the
hence null and void given period after notice. the sale shall be null and void. preemptive right within ten days
and must be annulled Teresita, one of the from notice of the Board,
or rescinded. stockholders, died in 1989 otherwise, the sale shall be null
leaving behind 3,464 shares. and void. Here, Teresita's 3,464
Her husband filed a Petition for Marsal shares were sold by the
Issuance of Letters of estate to Rogelio in a
Administration, which was Compromise Agreement and
opposed by Rogelio Sr and Deed of Assignment they
Marsal, represented by Rogelio entered into which was
Sr as President with Atty. Raul approved by the Probate Court.
Muyco, the husband of Ma.
Elena, as counsel, on the
ground of incompetency.
The husband was granted
letters of administration but
subsequently entered into a
Compromise Agreement and
Deed of Assignment with
Rogelio Sr ceding all the
shareholdings of Teresita in
various corporations owned
and controlled by the Florete
family, which included the
3,464 shares in Marsal
corporation, as well as her
shares, interests and
participation as heir in all the
real and personal properties of
her parents. A motion to
approve the CA and DoA was
filed by the husband, through
the latter’s counsel and with the
approval of Atty. Muyco.

FOREIGN CORPORATION

Respondent Yupangco Cotton
Mills filed a complaint against
several foreign reinsurance
companies (among which are
petitioners) to collect their
alleged percentage liability
under contract treaties between
the foreign insurance
companies and the
international... insurance
broker C.J. Boatright, acting as
agent for respondent
Worldwide Surety and
Insurance Company.
Whether or not the
petitioners were Inasmuch as petitioners are not
AVON V. CA, 29
determined to be engaged in business in the
AUGUST 1997
"doing business in the Philippines with no offices,
Philippines" or not. places of business or agents in
the Philippines, the reinsurance
treaties having been rendered
abroad, service of summons
upon motion of respondent
Yupangco, was made upon
petitioners through the office
of the Insurance
Commissioner.
Petitioners, by counsel on
special appearance, seasonably
filed motions to dismiss
disputing the jurisdiction of
respondent Court.
SAN JOSE Whether or not On September 7, 1956, SAN As
PETROLEUM V. CA, petitioner Pedro R. JOSE PETROLEUM filed administrative office entrusted
18 S 591 Palting, as a with the Philippine Securities with the enforcement of the
Jurisdiction over the person of
the defendant is acquired either
by his voluntary appearance in
court and his submission to its
authority or by service of
summons.
construed by the
The petitioners from the time
they filed their motions to
dismiss, their submissions have
been consistently and unfailingly
to object to the trial court’s
assumption of jurisdiction,
anchored on the fact that they
are all foreign corporations not
doing business in the
Philippines.
As we have consistently held, if
the appearance of a party in a
suit is precisely to question the
jurisdiction of the said tribunal
over the person of the
defendant, then this appearance
is not equivalent to service of
summons, nor does it constitute
an acquiescence to the court’s
jurisdiction. Thus, it cannot be
argued that the petitioners had
abandoned their objections to
the jurisdiction of the court, as
their motions to dismiss in the
trial court, and all their
subsequent posturings, were all
in protest of the private
respondent’s insistence on
holding them to answer a charge
in a forum where they believe
they are not subject to. Clearly,
to continue the proceedings in a
case such as those before Us
would just "be useless and a
waste of time."
Under the New Rules of Court,
such a party can appeal from a
final order, ruling or decision of
"prospective investor" and Exchange Commission a Securities Act, any person (who the Securities and Exchange
in respondent's sworn registration statement, may not be "aggrieved" or Commission. This new Rule
securities, has for the registration and "interested" within the legal eliminating the word
personality to file the licensing for sale in the acceptation of the word) is "aggrieved" appearing in the old
present petition for Philippines Voting Trust allowed or permitted to file an Rule, being procedural in nature,
review of the order of Certificates representing opposition to the registration and in view of the express
the Securities and 2,000,000 shares of its capital of securities for sale in the provision of Rule 144 that the
Exchange stock of a par value of $0.35 a Philippines. And this is in new rules made effective on
Commission. share, at P1.00 per share. It was consonance with the generally January 1, 1964 shall govern not
alleged that the entire proceeds accepted principle that Blue only cases brought after they
of the sale of said securities will Sky Laws are enacted to protect took effect but all further
be devoted or used exclusively investors and prospective proceedings in cases then
to finance the operations of San purchasers and to prevent pending, except to the extent
Jose Oil Company, Inc. Pedro fraud and preclude the sale of that in the opinion of the Court
R. Palting and others, allegedly securities which are in fact their application would not be
prospective investors in the worthless or worth feasible or would work injustice,
shares of SAN JOSE substantially less than the in which event the former
PETROLEUM, filed with the asking price. procedure shall apply, we hold
Securities and Exchange that the present appeal is
Commission an opposition to properly within the appellate
registration and licensing of the jurisdiction of this Court.
securities on the grounds that
(1) the tie-up between the
issuer, SAN JOSE
PETROLEUM, a Panamanian
corporation and SAN JOSE
OIL, a domestic corporation,
violates the Constitution of the
Philippines, the Corporation
Law and the Petroleum Act of
1949; (2) the issuer has not
been licensed to transact
business in the Philippines; (3)
the sale of the shares of the
issuer is fraudulent, and works
or tends to work a fraud upon
Philippine purchasers; and (4)
the issuer as an enterprise, as
well as its business, is based
 upon unsound business
principles.
The records show that
petitioner is a multinational
company organized and
existing under the laws of the
Federal Republic of Germany.
On July 6, 1983, petitioner filed
an application, dated July 2,
1983, 1 with the Securities and
Exchange Commission (SEC)
for the establishment of a
Whether the trial court regional or area headquarters in
gravely erred in the Philippines, pursuant to
holding that petitioner Presidential Decree No. 218.
has no capacity to sue The application was approved
and be sued in the by the Board of Investments
philippines despite the (BOI) on September 6, 1983.
fact that petitioner is Consequently, on September
duly licensed by the 20, 1983, the SEC issued a
GMBH AND CO. V.
securities and Certificate of Registration and
ISNANI, 235 S 216
exchange commission License to petitioner. 2
to set up and operate a
regional or area
headquarters in the Private respondent Romana R.
country and that it has Lanchinebre was a sales
continuously operated representative of petitioner
as such for the last from 1983 to mid-1992. On
nine (9) years. March 12, 1992, she secured a
loan of twenty-five thousand
pesos (P25,000.00) from
petitioner. On March 26 and
June 10, 1992, she made
additional cash advances in the
sum of ten thousand pesos
(P10,000.00). Of the total
amount, twelve thousand one
hundred seventy pesos and
thirty-seven centavos
Law defines "doing business," Yes.
as follows:
. . . shall include soliciting
orders, purchases, service
contracts, opening offices,
whether called "liaison" offices
or branches; appointing
representatives or distributors
who are domiciled in the
Philippines or who in any
calendar year stay in the
Philippines for a period or
periods totalling 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 continuity 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.
It is clear that petitioner is a
foreign corporation doing
business in the Philippines. In
the case at bench, petitioner
does not engage in commercial
dealings or activities in the
country because it is precluded
from doing so by P.D. No. 218,
under which it was established.
7 Nonetheless, it has been
continuously, since 1983, acting
as a supervision,
communications and
coordination center for its home
office's affiliates in Singapore,
and in the process has named its
local agent and has employed
Philippine nationals like private
respondent Romana
Lanchinebre. From this
uninterrupted performance by
petitioner of acts pursuant to its
primary purposes and functions
as a regional/area headquarters
for its home office, it is clear
that petitioner is doing business
in the country. Moreover,
private respondents are
estopped from assailing the
personality of petitioner.
 (P12,170.37) remained unpaid.
Despite demand, private
respondent Romana failed to
settle her obligation with
petitioner.
On July 22, 1992, private
respondent Romana
Lanchinebre filed with the
Arbitration Branch of the
National Labor Relations
Commission (NLRC)
Manila, a Complaint for illegal
suspension, dismissal and non-
payment of commissions
against petitioner..
NEW YORK MARINE
MANAGERS, INC., a foreign
corporation organized under
the laws of the United States,
seeks in this special civil action
for certiorari under Rule 65 of
the Rules of Court1 the
annulment of the decision of
the Court of Appeals which
reversed the ruling of the trial
NEW YORK
Whether or not the court denying the motion to
MARINE
lawyer was authorized. dismiss of private respondent
MANAGERS V. CA,
Vlasons Shipping Company,
249 S 417
Inc.
On 25 July 1990 American
Natural Soda Ash Corporation
(ANSAC) loaded in Portland,
U.S.A., a shipment of soda ash
on board the vessel "MS Abu
Hanna" for delivery to Manila.
The supplier/shipper insured
in
A lawyer is generally presumed
to be properly authorized to
represent any cause in which he
appears, and no written power
of attorney is required to
authorize him to appear in
court for his client.
No.
A lawyer is generally presumed
to be properly authorized to
represent any cause in which he
appears, and no written power
of attorney is required to
authorize him to appear in court
for his client. But this
presumption is disputable.
Where said authority has been
challenged or attacked by the
adverse party the lawyer is
required to show proof of such
authority or representation in
order to bind his client. The
requirement of the production
of authority is essential because
the client will be bound by his
acquiescence resulting from his
knowledge that he was being
represented by said attorney.9 In
 the shipment with petitioner.
Upon arrival in Manila the
shipment was unloaded and
transferred to the vessel "MV
Biyayang Ginto" owned by
private respondent. Since the
shipment allegedly sustained
wettage, hardening and
contamination, it was rejected
as total loss by the consignees.
When the supplier sought to
recover the value of the cargo
loss from petitioner the latter
paid the claim in the amount of
US$58,323.96.
On February 11, 1963, Smith
Bell & Co. (Philippines), Inc.
and Aetna Surety Casualty &
Surety Co. Inc., as subrogee,
instituted Civil Case No. 53074
in the Court of First Instance of
Manila against Pacific Star Line,
The Bradman Co. Inc., Manila
Port Service and/or Manila
Whether or not the Railroad Company, Inc. to
appellant, Aetna recover the amount of US
AETNA CASUALTY
Casualty & Surety $2,300.00 representing the
V. PACIFIC STAR, 29
Company, has been value of the stolen and
DECEMBER 1977
doing business in the damaged cargo plus litigation
Philippines. expenses and exemplary
damages in the amounts of
P1,000.00 and P2,000.00,
respectively, with legal interest
thereon from the filing of the
suit and costs.
The complaint stated that
during the time material to the
action, the defendant Pacific
Star Line, as a common carrier,
Section 68 of the Corporation
Law provides that "No foreign
corporation or corporation
formed, organized, or existing
under any laws other than those
of the Philippines shall be
permitted to transact business
in the Philippines until after it
shall have obtained a license for
that purpose from the
Securities and Exchange
Commissioners . . . ." And
according to Section 69 of said
Corporation Law "No foreign
corporation or corporation
formed, organized, or existing
under any laws other than those
of the Philippines shall be
permitted to transact business
in the Philippines or maintain
by itself or assignee any suit for
the recovery of any debt, claim,
or demand whatever, unless it
shall have the license
the instant case, the extent of
authority of counsel for
petitioner has been expressly
and continuously assailed but he
has failed to show competent
proof that he was indeed duly
authorized to represent
petitioner.
It cannot be said that the Aetna
Casualty & Surety Company is
transacting business of
insurance in the P ' Philippines
for which it must have a license.
The contract of insurance was
entered into in New York,
U.S.A., and payment was made
to the consignee in its New York
branch. It appears from the list
of cases issued by the Clerk of
Court of the Court of First
Instance of Manila that all the
actions, except two (2) cases
filed by Smith, Bell & Co., Inc.
against the Aetna Casualty &
Surety Company, are claims
against the shipper and the
arrastre operators just like the
case at bar.
 was operating the vessel SS
Ampal on a commercial run
between United States and
Philippine Ports including
Manila; that the defendant, The
Bradman Co. Inc., was the ship
agent in the Philippines for the
SS Ampal and/or Pacific Star
Line; that the Manila Railroad
Co. Inc. and Manila Port
Service were the arrastre
operators in the port of Manila
and were authorized to delivery
cargoes discharged into their
custody on presentation of
release papers from the Bureau
of Customs and the steamship
carrier and/or its agents
Petitioner, a foreign
partnership, filed a complaint
against a domestic corporation,
Diamond Shipping
Corporation, before the Court
of First Instance of Rizal for
the recovery of damages
Can a foreign
allegedly caused by the failure
corporation not
of the said shipping
BULAKHIDAS V. engaged in business in
corporation to deliver the
NAVARRO the Philippines
goods shipped to it by
GR. NO L-49695 institute an action
petitioner to their proper
APRIL 7, 1986 before our courts is
destination. Paragraph 1 of said
already well settled in
complaint alleged that plaintiff
this jurisdiction?
is "a foreign partnership firm
not doing business in the
Philippines" and that it is
"suing under an isolated
transaction." Defendant filed a
motion to dismiss the
complaint on the ground that
prescribed in the section Consequently, since the
immediately preceding ..." appellant Aetna Casualty &
chanrobles virtual law library Surety Company is not engaged
in the business of insurance in
the Philippines but is merely
It is settled that if a foreign collecting a claim assigned to it
corporation is not engaged in by the consignee, it is not barred
business in the Philippines, it from filing the instant case
may not be denied the right to although it has not secured a
file an action in Philippine license to transact insurance
courts for isolated transactions. business in the Philippines.
In Mentholatum Co. Inc. Et. Yes.
Al. v. Mangaliman, Et Al., this
Court ruled that:chanrob1es The case of Atlantic Mutual
virtual 1aw library Insurance Co. v. Cebu
Stevedoring Co., 17 SCRA 1037,
‘No general rule or governing cited by respondent finds no
principle can be laid down as to application to the case at bar. It
what constitutes doing’ or must be observed in the Atlantic
‘engaging in’ or ‘transacting’ case that there was no allegation
business. Indeed, each case in the complaint that the two
must be judged in the light of foreign corporations involved
its peculiar environmental therein were not engaged in
circumstances. The true test, business in the Philippines. All
however, seems to be whether that was averred in the
the foreign corporation is complaint was that they were
continuing the body or both foreign corporations
substance of the business or existing under the laws of the
enterprise for which it was United States. Thus, the
organized or whether it has qualifying circumstance of the
substantially retired from it and said foreign corporations’
turned it over to another. capacity to sue is wanting.
 plaintiff has no capacity to sue
and that the complaint does not
state a valid cause of action
against defendant.
RJL Martinez Fishing
Corporation is engaged in
deep-sea fishing. In the course
of its business, it needed
electrical generators for the
operation of its business.
Schmid and Oberly sells
electrical generators with the
brand of “Nagata”, a Japanese
product. D. Nagata Co. Ltd. of
Is Schmid considered
Japan was Schmid’s supplier.
as a mere agent of
Schmid advertised the 12
NAGATA CO., a
Nagata generators for sale and
foreign corporation
RJL purchased 12 brand new
SCHMID AND not licensed to do
generators. Through an
OBERLY V. RJL business in the
irrevocable line of credit,
18 OCTOBER 1988 Philippines, then the
Nagata shipped to the Schmid
GR. NO. officers and employees
the generators and RJL paid the
of the former may be
amount of the purchase price.
penalized for violation
(First sale = 3 generators;
of the old Corporation
Second sale = 12 generators).
Law?
Later, the generators were
found to be factory defective.
RJL informed the Schmid that
it shall return the 12 generators.
3 were returned. Schmid
replaced the 3 generators
subject of the first sale with
generators of a different brand.
As to the second sale, 3 were
shipped to Japan and the
Contrary to the Atlantic case,
the complaint filed by petitioner
herein sufficiently alleged that it
is a foreign partnership (or
corporation) not engaged in
business in the Philippines and
that it was suing under an
isolated transaction.
Even as SCHMID was merely
an indentor, there was nothing
to prevent it from voluntarily
warranting that twelve (12)
generators subject of the second
transaction are free from any
Old Corporation Code Sec. 69.
hidden defects. In other words,
Any officer or agent of the
SCHMID may be held
corporation or any person
answerable for some other
transacting business for any
contractual obligation, if indeed
foreign corporation not having
it had so bound itself. As stated
the license prescribed shall be
above, an indentor is to some
punished by imprisonment for
extent an agent of both the
not less than six months nor
vendor and the vendee. As such
more than two years or by a
agent, therefore, he may
fine of not less than two
expressly obligate himself to
hundred pesos nor more than
undertake the obligations of his
one thousand pesos or both
principal
such imprisonment and fine, in
the discretion of the Court.
The Court’s inquiry, therefore,
shifts to a determination of
whether or not SCHMID
expressly bound itself to warrant
that the twelve (12) generators
are free of any hidden defects.
 remaining 9 were not replaced.
RJL sued the defendant on the
warranty, asking for rescission
of the contract and that Schmid
be ordered to accept the
generators and be ordered to
pay back the purchase money
as well as be liable for damages.
Schmid opposes such liability
averring that it was merely the
indentor in the sale between
Nagata Co., the exporter and
RJL Martinez, the importer. As
mere indentor, it avers that is
not liable for the seller’s
implied warranty against
hidden defects, Schmid not
having personally assumed any
such warranty.

Petitioner Steelcase, Inc. is a No.

foreign corporation existing
under the laws of Michigan,
United States of America, and
engaged in the manufacture of
office furniture with dealers
worldwide. Respondent Design
STEELCASE, INC. V.
Is Steelcase doing International Selections, Inc. is
DESIGN
business in the a corporation existing under
INTERNATIONAL
Philippines without a Philippine Laws and engaged in
G.R. NO. 171995,
license? the furniture business,
18 APRIL 2012
including the distribution of
furniture. Sometime in 1986 or
1987, Steelcase and DISI orally
entered into a dealership
agreement whereby Steelcase
granted DISI the right to
market, sell, distribute, install,
A foreign corporation doing
business in the Philippines may
Section 3(d) of R.A. No. 7042
sue in Philippine Courts
or the Foreign Investments Act
although not authorized to do
of 1991 (FIA) expressly states
business here against a
that the phrase “doing
Philippine citizen or entity who
business” excludes the
had contracted with and
appointment by a foreign
benefited by said corporation.
corporation of a local
To put it in another way, a party
distributor domiciled in the
is estopped to challenge the
Philippines which transacts
personality of a corporation
business in its own name and
after having acknowledged the
for its own account.
same by entering into a contract
with it. And the doctrine of
estoppel to deny corporate
existence applies to a foreign as
 and service its products to end- well as to domestic
user customers within the corporations. One who has dealt
Philippines. The business with a corporation of foreign
relationship continued origin as a corporate entity is
smoothly until it was estopped to deny its corporate
terminated sometime in existence and capacity: The
January 1999 after the principle will be applied to
agreement was breached with prevent a person contracting
neither party admitting any with a foreign corporation from
fault. later taking advantage of its
noncompliance with the statutes
chiefly in cases where such
person has received the benefits
of the contract.
The rule is deeply rooted in the
time-honored axiom of
Commodum ex injuria sua non
habere debet — no person
ought to derive any advantage of
his own wrong. This is as it
should be for as mandated by
law, “every person must in the
exercise of his rights and in the
performance of his duties, act
with justice, give everyone his
due, and observe honesty and
good faith.”
Petitioner Philippine Deposit Republic Act No. 8791: A branch has no separate legal
Are the funds placed
Insurance Sec. 75. Head Office personality.
in the Philippine
Corporation (PDIC) is a Guarantee. – In order to
branch by the head
government instrumentality provide effective protection of It may choose to incorporate its
office and foreign
PDIC V. CITIBANK, created by virtue of Republic the interests of the depositors own subsidiary as a domestic
branches of Citibank
G.R. NO. Act (R.A.) No. 3591, as and other creditors of corporation, in which case such
and BA insurable
170290 APRIL amended by R.A. No. 9302. Philippine branches of a subsidiary would have its own
deposits under the
11, 2012 Respondent Citibank, foreign bank, the head office of separate and independent legal
PDIC Charter and, as
N.A. (Citibank) is a banking such branches shall fully personality to conduct business
such, subject to
corporation while respondent guarantee the prompt payment in the country. It is apparent
assessment for
Bank of America, S.T. & of all liabilities of its Philippine that they both did not
insurance premiums?
N.A. (BA) is a national banking branch. incorporate a separate domestic
 association, both of which are
duly organized and existing
under the laws of the United
States of America and duly
licensed to do business in the
Philippines, with offices in
Makati City.
PDIC conducted an
examination of the books of
account of Citibank. It
discovered that Citibank, in the
course of its banking business,
from September 30, 1974 to
June 30, 1977, received from its
head office and other foreign
branches a total of
₱11,923,163,908.00 in dollars,
covered by Certificates of
Dollar Time Deposit that were
interest-bearing with
corresponding maturity dates.
These funds, which were
lodged in the books of Citibank
under the account "Their
Account-Head
Office/Branches-Foreign
Currency," were not reported
to PDIC as deposit liabilities
that were subject to assessment
for insurance.
Cargil is a corporation
organized and existing under
Does the petitioner, an the laws of the State of
CARGILL V. INTRA
unlicensed foreign Delaware. Cargill executed a
STRATA
corporation, has legal contract with Northern
G.R. NO. 168266
capacity to sue before Mindanao Corporation,
15 MARCH 2010
Philippine courts? whereby NMC agreed to sell to
petitioner 20,000 to 24,000
metrictons of molasses to be
Residents and citizens of the
Philippines who are creditors
of a branch in the Philippines
of foreign bank shall have
preferential rights to the assets
of such branch in accordance
with the existing laws.
Republic Act No. 7721:
Sec. 5. Head Office Guarantee.
– The head office of foreign
bank branches shall guarantee
prompt payment of all liabilities
of its Philippine branches.
Section 1 of R.A. No. 3591
(The PDIC Charter) which
provides:
Section 1. There is hereby
created a Philippine Deposit
Insurance Corporation
hereinafter referred to as the
"Corporation" which shall
insure, as herein provided, the
deposits of all banks which are
entitled to the benefits of
insurance under this Act, and
which shall have the powers
hereinafter granted.
Sec. 133. Doing business
without a license. – No foreign
corporation transacting
business in the Philippines
without a license, or its
successors or assigns, shall be
permitted to maintain or
intervene in any action, suit or
proceeding in any court or
corporation to represent its
business interests in the
Philippines. Their Philippine
branches are, as the name
implies, merely branches,
without a separate legal
personality from their parent
company, Citibank and
BA. Thus, being one and the
same entity, the funds placed by
the respondents in their
respective branches in the
Philippines should not be
treated as deposits made by
third parties subject to deposit
insurance under the PDIC
Charter.
NO. The determination of
whether a foreign corporation is
doing business in the
Philippines must be based on
the facts of each case. In the
case at bar, the transactions
entered into by the respondent
with the petitioners are not a
series of commercial dealings
 delivered from Jan 1 to 30 1990
for $44 per metric ton. The
contract provided that
CARGILL was to open a Letter
of Credit with theBPI. NMC
was permitted to draw up
500,000 representing the
minimum priceof the contract.
The contract was amended 3
times (in relation to the amount
and the price).But the third
amendment required NMC to
put up a performance bond
whichwas intended to
guarantee NMC’s performance
to deliver the molasses
duringthe prescribed shipment
periods.
Respondent IN-N-OUT
Burger, Inc., a foreign
Does Respondent corporation, and not doing
SEHWANI V. IN have the legal capacity business in the Philippines,
AND OUT BURGER to sue for the filed before the Bureau of Legal
GR. NO. 171053 protection of its Affairs of the IPO, an
OCTOBER 15, 2007 trademarks albeit it is administrative complaint
not doing business in against petitioners Sehwani,
the Philippines? Inc. and Benita’s Frites, Inc. for
violation of intellectual
property rights, attorney’s fees
administrative agency of the
Philippines; 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.
Section 160 RA No. 8293
provides for the right of foreign
corporations to sue in
trademark or service mark
enforcement action, provided
that it meets the requirements
under Section 3 thereof, which
are a) Any convention, treaty or
agreement relation to
intellectual property right or
the repression of unfair
which signify an intent on the
part of the respondent to do
business in the Philippines but
constitute an isolated one which
does not fall under the category
of “doing business.” The
records show that the only
reason why the respondent
entered into the second and
third transactions with the
petitioners was because it
wanted to recover the loss it
sustained from the failure of the
petitioners 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.
In the present case, petitioner is
a foreign company merely
importing molasses from a
Philippine exporter. A foreign
company that merely imports
goods from a Philippine
exporter, without opening an
office or appointing an agent in
the Philippines, is not doing
business in the Philippines.
Yes. The essential requirement
therein is that the trademark
must be well-known in the
country where protection is
sought. In this case, Director
Beltran-Abelardo found that In-
n-out Burger and Arrow Design
is an internationally well-known
mark as evidenced by its
trademark registrations around
 and damages with prayer for
the issuance of a restraining
order or writ of preliminary
injunction.
Respondent, alleges that it is
the owner of the
tradename “IN-N-OUT” and
trademarks “IN-N-
OUT,” “IN-N-OUT Burger &
Arrow Design” and “IN-N-
OUT Burger Logo” which are
used in its business since 1948
up to the present. These
tradename and trademarks
were registered in the United
States as well as in other parts
of the world. Petitioner
Sehwani allegedly had obtained
a trademark registration for the
mark “IN N OUT” (with the
inside letter O formed like a
star) without its authority.
Mayer Steel Pipe Corp. loaded
581 bundles of ERW black
steel pipes on board the vessel
M/V Lorcon IV, owned by
Lorenzo Shipping, for
LORENZO Does the respondent shipment to Davao City.
SHIPPING V. Chubb and Sons has Lorenzo Shipping issued a
CHUBB, GR. NO. capacity to sue before clean bill of lading designated
147724 the Philippine Courts? as Bill of Lading No. T-3 for
JUNE 8, 2004 the account of the consignee,
Sumitomo Corp. of San
Francisco, California, USA,
which in turn, insured the
goods with Chubb and Sons,
Inc. M/V Lorcon IV arrived at
competition wherein the world and its comprehensive
Philippines is also a party; advertisements therein.
and b) An extension therein of
reciprocal rights.
Article 6 of The Paris
Convention, which governs the
protection of well-known
trademarks, is a self-executing
provision and does not require
legislative enactment to give it
effect in the member country.
Yes. Lorenzo Shipping failed to
raise the defense that Sumitomo
is a foreign corporation doing
business in the Philippines
Rule 3, Section 2 of the 1997 without a license. It is therefore
Rules of Civil Procedure estopped from litigating the
defines a real party in interest as issue on appeal. Secondly,
one who is entitled to the avails assuming arguendo that
of any judgment rendered in a Sumitomo cannot sue in the
suit, or who stands to be Philippines, it does not follow
benefited or injured by it. that Chubb and Sons, as
subrogee, has also no capacity to
sue in our jurisdiction. The
rights to which the subrogee
succeeds are the same as, but
the Sasa Wharf in Davao City. not greater than, those of the
Transmarine Carriers received person for whom he is
the subject shipment. It substituted – he cannot acquire
discovered seawater in the any claim, security, or remedy
hatch of M/V Lorcon IV, and the subrogor did not have. In
found the steel pipes other words, a subrogee cannot
submerged in it. Sumitomo succeed to a right not possessed
then hired the services of a by the subrogor. A subrogee in
surveyor to inspect the effect steps into the shoes of the
shipment prior to and insured and can recover only if
subsequent to discharge. The insured likewise could have
report showed that the subject recovered. However, when the
shipment was no longer in insurer succeeds to the rights of
good condition, as in fact, the the insured, he does so only in
pipes were found with rust relation to the debt.
formation on top and/or at the
sides. After the survey,
Gearbulk loaded the shipment
on board its vessel M/V San
Mateo Victory, for carriage to
the US. All bills of lading it
issued were marked “ALL
UNITS HEAVILY
RUSTED.” M/V San Mateo
Victory arrived at the U.S.A.,
where it unloaded the subject
steel pipes. The steel pipes were
surveyed, and it was discovered
that they are heavily rusted.
Due to its condition,
Sumitomo rejected the
damaged steel pipes and
declared them unfit for the
purpose they were intended. It
then filed a marine insurance
claim with respondent Chubb
and Sons, Inc. which the latter
settled in the amount of
US$104,151.00. Chubb and
 Sons, Inc. filed a complaint for
collection of a sum of money,
against Lorenzo Shipping,
Gearbulk, and Transmarine.
ADB extended a loan to
Marcopper under a Principal
Loan Agreement and
Complementary Loan
Agreement. A Support and
Standby Credit Agreement was
also executed between ADB
and Placer Dome (owner of
40% of Marcopper), whereby
the latter agreed to provide
with a cash flow support for the
MR HOLDINGS
payment of its obligations to
VS. Is the Petitioner doing
ADB. Marcopper also executed
BAJAR business in the
a Deed of Real Estate and
G.R. NO. 138104 Philippines?
Chattel Mortgage in favor of
APRIL 11, 2002
ADB covering all its assets in
Marinduque. Marcopper
defaulted in its payment. Thus,
MR Holding, LTD (placer
Dome’s subsidiary
corporation) assumed
Marcopper’s obligation to
ADB. Marcopper likewise
executed a Deed of assignment
in favor of petitioner.
Republic Act No. 7042,
NO.
otherwise known as the
There are other statutes defining
Foreign Investment Act of
the term “doing business” in the
1991, defines doing business as
same tenor as those above-
follows:
quoted, and as may be observed,
d) The phrase doing business
one common denominator
shall include soliciting orders,
among them all is the concept of
service contracts, opening
“continuity.”
offices, whether called liaison
The expression “doing
offices or branches; appointing
business” should not be given
representatives or distributors
such a strict and literal
domiciled in the Philippines or
construction as to make it apply
who in any calendar year stay in
to any corporate dealing
the country for a period or
whatever. At this early stage and
periods totalling one hundred
with petitioner’s acts or
eight(y) (180) days or more;
transactions limited to the
participating in the
assignment contracts, it cannot
management, supervision or
be said that it had performed
control of any domestic
acts intended to continue the
business, firm, entity, or
business for which it was
corporation in the
organized. It may not be amiss
Philippines; and any other act
to point out that the purpose or
or acts that imply a continuity
business for which petitioner
of commercial dealings or
was organized is not discernible
arrangements, and contemplate
in the records. No effort was
to that extent the performance
exerted by the Court of Appeals
of acts or works; or the exercise
to establish the nexus between
of some of the functions
petitioner’s business and the
normally incident to, and in
acts supposed to constitute
progressive prosecution of,
“doing business.” Thus,
commercial gain or of the
whether the assignment
purpose and object of the
contracts were incidental to
business organization;
petitioner’s business or were

Two (2) containers loaded with
103 cartons of merchandise
covered by eleven (11) airway
bills of several supposedly
Singapore-based consignees
arrived at the Manila
International Airport on board
Philippine Air Lines (PAL)
Flight PR 311 from Hongkong.
The cargoes were consigned to
these different entities: K.M.K
Gani (hereafter referred to as
K.M.K.) and Indrapal and
Company (hereafter referred to
as INDRAPAL), the private
COMMISSIONERS
respondents in the petition
OF CUSTOMS Can private
before us; and Sin Hong Lee
VS. respondents sue within
Trading Co., Ltd., AAR TEE
KMK GANI Philippine jurisdiction
Enterprises, and C. Ratilal, all
G.R. NO. 73722 under the “isolated
purportedly based in
FEBRUARY 26, 1990 transaction rule”?
Singapore.
While the cargoes were at the
Manila International Airport, a
"reliable source" tipped off the
Bureau of Customs that the
said cargoes were going to be
unloaded in Manila. Forthwith,
the Bureau’s agency on such
matters, the Suspected Cargo
and Anti-Narcotics (SCAN),
dispatched an agent to verify
the information. Upon arriving
at the airport, the SCAN agent
saw an empty PAL van parked
directly alongside the plane’s
continuation thereof is beyond
determination.
No. The fact that a foreign
Corporation Code of the
corporation is not doing
Philippines, Sec. 133. No
business in the Philippines must
foreign corporation transacting
be disclosed if it desires to sue in
in the Philippines without a
the Philippine courts under the
license, or its successors or
“isolated transaction rule.”
assigns, shall be permitted to
Without this disclosure, the
maintain or intervene in any
court may choose to deny it the
action, suit or proceeding in
right to sue.
any court or administrative
In the case at bar, the private
agency of the Philippines; but
respondents KMK Gani and
such corporation may be sued
Indrapal aver that they are
or proceeded against before
“suing upon a singular and
Philippine courts or
isolated transaction.” But they
administrative tribunals on any
failed to prove their legal
valid cause of action recognized
existence or juridical personality
under Philippine laws.
as foreign corporations.
 belly from which cargoes were
being unloaded. When the
SCAN agent asked the van’s
driver why he was at the site,
the driver drove away in his
vehicle. The SCAN agent then
sequestered the unloaded
cargoes.
Petitioners are both domestic YES; We are persuaded to
corporations. Private conclude that ITEC had been
Respondents ITEC, INC. “engaged in” or “doing
and/or ITEC, business” in the Philippines for
INTERNATIONAL, INC. some time now. This is the
(ITEC) are corporations duly inevitable result after a scrutiny
organized and existing under of the different contracts and
the laws of the State of agreements entered into by
Alabama, USA. There is no ITEC with its various business
dispute that ITEC is a foreign contacts in the country. Its
corporation not licensed to do arrangements, with these
In “Antam Consolidated Inc.
Did the Philippine business in the Philippines. entities indicate convincingly
vs. CA et al.” we expressed our
court acquire ITEC entered into a contract that ITEC is actively engaging in
chagrin over this commonly
COMMUNICATIONS jurisdiction over the with ASPAC referred to as business in the country.
used scheme of defaulting local
AND MATERIAL person of the “Representative Agreement”. A foreign corporation doing
companies which are being
DESIGNS V. CA petitioner corporation, Pursuant to the contract, ITEC business in the Philippines may
sued by unlicensed foreign
GR. NO. 102223 despite allegations of engaged ASPAC as its sue in Philippine Courts
companies not engaged in
AUGUST 22, 1996 lack of capacity to sue “exclusive representative” in although not authorized to do
business in the Philippines to
because of non- the Philippines for the sale of business here against a
invoke the lack of capacity to
registration? ITEC’s products, in Philippine citizen or entity who
sue of such foreign companies.
consideration of which, had contracted with and
ASPAC was paid a stipulated benefited by said corporation.
commission. Through a To put it in another way, a party
“License Agreement” entered is estopped to challenge the
into by the same parties later personality of a corporation
on, ASPAC was able to after having acknowledged the
incorporate and use the name same by entering into a contract
“ITEC” in its own name. Thus, with it. And the doctrine of
ASPAC Multi-Trade, Inc. estoppel to deny corporate
became legally and publicly existence applies to a foreign as
known as ASPAC-ITEC well as to domestic
 (Philippines). corporations. One who has dealt
with a corporation of foreign
origin as a corporate entity is
One year into the second term estopped to deny its corporate
of the parties’ Representative existence and capacity.
Agreement, ITEC decided to
terminate the same, because
petitioner ASPAC allegedly
violated its contractual
commitment as stipulated in
their agreements. ITEC
charges the petitioners and
another Philippine
Corporation, DIGITAL BASE
COMMUNICATIONS, INC.
(DIGITAL), the President of
which is likewise petitioner
Aguirre, of using knowledge
and information of ITEC’s
products specifications to
develop their own line of
equipment and product
support, which are similar, if
not identical to ITEC’s own,
and offering them to ITEC’s
former customer.

Complainants lodged a formal
complaint with the NBI for
violation of PD No. 49 and
Whether or not sought its assistance in their
COLUMBIA Columbia Pictures has anti-film piracy drive. Agents of
PICTURES V. CA 261 a legal standing the NBI and private
S 144 maintain a suit in researchers made discreet
AUGUST 28, 1996 Philippine Courts. surveillance on various video
establishments in Metro Manila
including Sunshine. Senior
Agent Lauro C. Reyes applied
for a search warrant with the
Sec. 125. Application for a
license. - A foreign corporation
applying for a license to
transact business in the
Philippines shall submit to the
Securities and Exchange
Commission a copy of its
articles of incorporation and
by-laws, certified in accordance
with law, and their translation
to an official language of the
Philippines, if necessary.
The obtainment of a license
prescribed by Section 125 of the
Corporation Code is not a
condition precedent to the
maintenance of any kind of
action in Philippine courts by a
foreign corporation, However,
under the aforequoted
provision, no foreign
corporation shall be permitted
to transact business in the
Philippines, as this phrase is
 court a quo against Sunshine understood under the
seeking the seizure, among Corporation Code, unless it
others, of pirated video tapes of shall have the license required by
copyrighted films. law, and until it complies with
the law in transacting business
A”Motion To Lift the Order of here, it shall not be permitted to
Search Warrant” was filed but maintain any suit in local courts.
was later denied for lack of
merit. A Motion for In other words, although a
reconsideration of the Order of foreign corporation is without
denial was filed. Petitioners license to transact business in
appealed to the CA but it was the Philippines, it does not
dismissed as well as the MR was follow that it has no capacity to
denied. bring an action. Such license is
not necessary if it is not engaged
in business in the Philippines.

The series of transactions in

question could not have been
Sec. 133. Doing business isolated or casual transactions.
without a license. — No What is determinative of “doing
On August 28, 1991, petitioner
foreign corporation transacting business” is not really the
corporation filed with the
Whether or not business in the Philippines number or the quantity of the
Regional Trial Court of Makati,
petitioner corporation without a license, or its transactions, but more
Branch 138,4 Civil Case No.
may maintain an action successors or assigns, shall be importantly, the intention of an
91-2373 entitled “Eriks Pte.
in Philippine courts permitted to maintain or entity to continue the body of its
ERIKS PTE LTD. V. Ltd. vs. Delfin Enriquez, Jr.”
considering that it has intervene in any action, suit or business in the country.
CA for the recovery of S$41,939.63
no license to do proceeding in any court or
276 S 567 or its equivalent in Philippine
business in the country administrative agency of the Petitioner must be held to be
6 FEBRUARY 1997 currency, plus interest thereon
based on its claim that Philippines; but such incapacitated to maintain the
and damages. Private
its business with corporation may be sued or action a quo against private
respondent responded with a
private respondent are proceeded against before respondent. It was never the
Motion to Dismiss, contending
isolated transactions? Philippine courts or intent of the legislature to bar
that petitioner corporation had
administrative tribunals on any court access to a foreign
no legal capacity to sue.
valid cause of action recognized corporation or entity which
under Philippine laws. happens to obtain an isolated
order for business in the
Philippines.
 The defendant entered a
Special Appearance, wherein it
contested the jurisdiction of the
Philippines Courts to take
cognizance of the case on
grounds contained in the
Whether or not the
FAR EAST various pleadings presented by
trial court acquired
INTERNATIONAL it. The motion to dismiss on
jurisdiction over the
V. NANKAI KOGYO the ground of lack of
subject matter and
6 S 725 jurisdiction had been overruled
over the person of the
NOVEMBER 30, 1962 because it did not appear
defendant-appellant.
indubitable. Subsequently,
however, the defendant filed its
Answer and invoked defenses
and grounds for dismissal of
complaint other than lack of
jurisdiction
The Contract of insurance was
entered into in New York,
U.S.A., and payment was made
to the consignee in its New
York branch. It appears from
FACILITIES
the list of cases issued by the
MANAGEMENT V. Whether or not the
Clerk of Court of the Court of
DELA OSA plaintiff appellant has
First Instance of Manila that all
89 S 131 been doing business in
the actions, except two (2)
MARCH 26, 1979 the Philippines.
cases filed by Smith, Beer &
Co., Inc. against the Aetna
Casualty & Surety Company,
are claims against the shipper
and the arrastre operators just
like the case at bar.
SEC. 14, Rule 7: Service upon
private foreign corporations. Even though the defendant
— If the defendant is a foreign objects to the jurisdiction of the
corporation, or a non-resident court, if at the same time he
joint stock company or alleges any non-jurisdictional
association, doing business in ground for dismissing the
the Philippines, service may be action, the Court acquires
made on its resident agent jurisdiction over him. Even
designated in accordance with though he does not intend to
law for that purpose, or, if there confer jurisdiction upon the
be no such agent, on the court, his appearance for some
government official designated other purpose than to object to
by law to that effect, or on any the jurisdiction subjects him to
officer or agent within the jurisdiction of the court.
Philipines.
The object of Sections 68 and 69
of the Corporation Law was not
to prevent the foreign
Sec. 133. Doing business
corporation from performing
without a license. — No
single acts, but to prevent it
foreign corporation transacting
from acquiring a domicile for
business in the Philippines
the purpose of business without
without a license, or its
taking the steps necessary to
successors or assigns, shall be
render it amenable to suit in the
permitted to maintain or
local courts. It was never the
intervene in any action, suit or
purpose of the Legislature to
proceeding in any court or
exclude a foreign corporation
administrative agency of the
which happens to obtain an
Philippines; but such
isolated order for business from
corporation may be sued or
the Philippines, from securing
proceeded against before
redress in the Philippine courts.
Philippine courts or
administrative tribunals on any
Based on the rulings laid down
valid cause of action recognized
in the foregoing cases, it cannot
under Philippine laws.
be said that the Aetna Casualty
& Surety Company is
transacting business of

The enforcement of the
preliminary attachment on 27
March 1990 was
simultaneously sought with the
HB ZACHRAY AND Was the summon
service of the summons and a
CO. V. CA 232 S 29 properly served?
copy of the complaint.
MAY 10, 1994
However, the summons were
not served to the designated
person of the foreign
corporation.
Petitioner won the public
bidding held by SBMA for the
construction of marine
container terminal in Subic Bay
Freeport zone. SBMA Board of
Whether or not
HUTCHISON Directors already declared
petitioner HPPL has
PORTS V. SBMA HPPL as the winning bidder.
the legal capacity to
G.R. NO. 131367 However, the Office of the
even seek redress from
31 AUGUST 2000 President reversed the decision
the Court.
of the Board and ordered the
rebidding. With this, HPPL
becomes unqualified to bid.
HPPL file an injunction case
against SBMA.
insurance in the Philippines for
which it must have a license.
When the sheriff or other
proper officer commences
implementation of the writ of
attachment, it is essential that When a foreign corporation has
he serve on the defendant not designated a person to receive
only a copy of the applicant's service of summons pursuant to
affidavit and attachment bond, the Corporation Code, that
and of the order of attachment, designation is exclusive and
as explicitly required by Section service of summons on any
5 of Rule 57, but also the other person is inefficacious.
summons addressed to said
defendant as well as a copy of Thus, the summon was not
the complaint and order for properly served but it may be
appointment of guardian ad served anew.
litem, if any, as also explicitly
directed by Section 3, Rule 14
of the Rules of Court.
No. HPPL cannot sue in the
Philippines because it is a
foreign corporation registered
Sec. 133. Doing business
under the laws of the British
without a license. — No
Virgin Islands. It did not register
foreign corporation transacting
here in the Philippines.
business in the Philippines
without a license, or its
No. HPPL cannot sue in the
successors or assigns, shall be
Philippines because it is a
permitted to maintain or
foreign corporation registered
intervene in any action, suit or
under the laws of the British
proceeding in any court or
Virgin Islands. It did not register
administrative agency of the
here in the Philippines.
Philippines; but such
corporation may be sued or
Participating in the bidding
proceeded against before
process constitutes “doing
Philippine courts
business” because it shows the
foreign corporation’s intention
to engage in business here.
 Petitioner La Chemise Lacoste
is a foreign corporation and the
actual owner of the trademarks
In upholding the right of the
‘Lacoste,’ ‘Chemise Lacoste,’
petitioner to maintain the
and ‘Crocodile Device’ used on
present suit before our courts
clothing and other goods that
for unfair competition or
are sold in many parts of the
infringement of trademarks of a
world. Herein respondent
foreign corporation, we are
Hemadas & Co., a domestic
moreover recognizing our
firm, applied and was granted
duties and the rights of foreign
registration of the mark
states under the Paris
‘Chemise Lacoste and
Convention for the Protection
Crocodile Device’ for its
of Industrial Property to which
garment products. Sometime The duties and the rights of
LA CHEMISE Does Lacoste have a the Philippines and France are
later, petitioner applied for the foreign states under the Paris
LACOSTE V. legal standing to file parties.
registration of its mark Convention for the Protection
FERNANDEZ and maintain the
‘Crocodile Device’ and of Industrial Property to which
129 S 373 action in the In upholding the right of the
‘Lacoste’ but was opposed by the Philippines and France are
MAY 2, 1984 Philippines? petitioner to maintain the
herein respondent. Later, parties.
present suit before our courts
petitioner filed a letter-
for unfair competition or
complaint of unfair
infringement of trademarks of a
competition before the NBI
foreign corporation, we are
which led to the issuance of
moreover recognizing our
search warrants and the seizure
duties and the rights of foreign
of goods of respondent
states under the Paris
Hemadas. Respondent moved
Convention for the Protection
to quash the warrants alleging
of Industrial Property to which
that its trademark was different
the Philippines and France are
from petitioner’s trademark.
parties.
Respondent court ruled to set
aside the warrants and to return
the seized goods.
MARUBENI Petitioner Marubeni entered a Sec. 133. Doing business Yes. Marubeni Nederland B.V.
NEDERLANDS V. Whether petitioner limited and special appearance without a license. — No through the foregoing acts, had
TENSUAN Marubeni Nederland and sought the dismissal of the foreign corporation transacting effectively solicited “orders,
G.R. NO. 61950 B.V. can be considered complaint on the ground that business in the Philippines purchases (sales) or service
28 SEPTEMBER 1990 as “doing business” in the court a quo had no without a license, or its contracts” as well as constituted
the Philippines jurisdiction over the person of successors or assigns, shall be Marubeni Corporation, Tokyo,
AND petitioner since it is a foreign permitted to maintain or Japan and its Manila Branch as
 and therefore subject corporation neither doing nor intervene in any action, suit or its representative in the
PHIL. COLUMBIA V. to the jurisdiction of licensed to do business in the proceeding in any court or Philippines to transact business
LANTIN our courts? Philippines. administrative agency of the for its account as principal.
39 S 376 Philippines; but such These circumstances, taken
JUNE 7, 1971 corporation may be sued or singly or in combination,
proceeded against before constitute “doing business in the
Philippine courts Philippines” within the
contemplation of the law.

A foreign corporation doing

business in the Philippines with
or without license is subject to
process and jurisdiction of the
local courts. it shall not be
allowed, under any
circumstances, to invoke its lack
of license to impugn the
jurisdiction of our courts.
True, the Philippines’ adherence
G.R. No. 91332
to the Paris Convention
RECIPROCITY
effectively obligates the country
REQUIREMENT:
to honor and enforce its
Registration of a trademark
provisions as regards the
gives the registrant (petitioners)
protection of industrial property
advantages denied
of foreign nationals in this
nonregistrants or ordinary
Maintaining to have the country.
users (respondent); validity of
PHILIP MORRIS V. Does the petitioner standing to sue in the local
the registration; ownership and
FORTUNE have a legal standing forum and that respondent has However, any protection
the exclusive right to use the
TOBACCO to file and maintain an committed trademark accorded has to be made subject
registered marks. They may not
493 S 333 action in the infringement, petitioners went to the limitations of Philippine
successfully sue on the basis
JUNE 27, 2006 Philippines? on appeal to the CA. laws.
alone of their respective
certificates of registration of
Hence, foreign nationals must
trademarks.
still observe and comply with
the conditions imposed by
On top of Philippine
Philippine law on its nationals.
registration, their country
grants substantially similar
Considering that R.A. No. 166,
rights and privileges to Filipino
as amended, specifically
 citizens pursuant to Section Sections 228 and 2-A29 thereof,
21A20 of R.A. No. 166. mandates actual use of the
marks and/or emblems in local
commerce and trade before they
may be registered and
ownership thereof acquired, the
petitioners cannot, therefore,
dispense with the element of
actual use. Their being nationals
of member-countries of the
Paris Union does not alter the
legal situation.
In Western Equipment and Supply A foreign corporation not doing
Co. v. Reyes, this Court held that business in the Philippines
a foreign corporation which needs no license to site before
has never done any business in Philippine courts for
PUMA SPORTS, a German the Philippines and which is infringement of trademark and
Corporation, filed a complaint unlicensed and unregistered to unfair competition the law of
for infringement of patent or do business here, but is widely the land, our courts are bound
trademark against Mil-Oro and favorably known in the to take judicial notice of such a
Manufacturing Corp. before Philippines through the use treaty, and, consequently, this
the RTC of Makati. therein of its products bearing fact need not be averred in the
its corporate and tradename, complaint.
has a legal right to maintain an
action in the Philippines to
Whether or not the a restrain the residents and
PUMA V. IAC foreign corporation inhabitants thereof from
not doing business in organizing a corporation
G.R. NO. 75067 the Philippines has therein bearing the same name
FEBRUARY 26, 1988 the legal capacity to as the foreign corporation,
sue in the Philippines when it appears that they have
personal knowledge of the
existence of such a foreign
corporation, and it is apparent
that the purpose of the
proposed domestic corporation
is to deal and trade in the same
goods as those of the foreign
corporation."
 A ‘Lease and Development As a general rule, unlicensed As an exception to the general
Agreement’ was executed by foreign non-resident rule: A corporation has legal
respondent UIG and petitioner corporations cannot file suits in status only within the state or
SBMA. Petitioner SBMA sent a the Philippines. Section 133 of territory in which it was
letter to private respondent the Corporation Code organized--- the licensing
UIG calling its attention to its specifically provides: requirement was “never
alleged several contractual intended to favor domestic
SBMA violations. Private respondents corporations who enter into
paid the rental arrearages but "Sec. 133. No foreign solitary transactions with
V.
the other obligations remained corporation transacting unwary foreign firms and then
UNIVERSAL
unsatisfied. business in the Philippines repudiate their obligations
INTERNATIONAL
without a license, or its simply because the latter are not
GROUP OF TAIWAN
successors or assigns, shall be licensed to do business in this
Petitioner Zuiden, is a permitted to maintain or country.” After contracting with
GR. NO. 131680 Whether or not corporation, incorporated intervene in any action, suit or a foreign corporation, a
SEPTEMBER 14, unlicensed foreign under the laws of Hong Kong. proceeding in any court or domestic firm is estopped from
2000; non-resident Zuiden is not engaged in administrative agency of the denying the former’s capacity to
AND corporations has the business in the Philippines, but Philippines, but such sue.
capacity to sue and is suing before the Philippine corporation may be sued or
possess material Courts, for the reasons proceeded against before
VAN ZUIDEN interest to institute an hereinafter stated. It is engaged Philippine courts or Moreover, an unlicensed foreign
BROS., LTD. action against a in the importation and administrative tribunals on any corporation not doing business
V. Philippine Corporation exportation of several valid cause of action recognized in the Philippines can sue before
GTVL INDUSTRIES, products, including lace under Philippine laws." Philippine courts. An essential
INC. products. On several occasions, condition to be considered as
GTVL purchased lace products "doing business" in the
from petitioner. Philippines is the actual
G.R. NO. 147905 MAY
performance of specific
28, 2007
commercial acts within the
territory of the Philippines for
the plain reason that the
Philippines has no jurisdiction
over commercial acts performed
in foreign territories.
The petitioner time, Inc., is an 'While it is true that action on a A foreign corporation may, by
American Corporation with motion to dismiss may be writ of prohibition, seek relief
principal offices at Rockefeller deferred until the trial and an against the wrongful assumption
TIME, INC. Whether or not an Center, New York City, N.Y., order to that effect is of jurisdiction. And a foreign
V. erroneous assumption and is the publisher of “Time”, interlocutory, still where it corporation seeking a writ of
REYES of jurisdiction may be a weekly magazine; the petition, clearly appears that the trial prohibition against further
 challenged by a foreign however, does not alleged the
corporation by writ of petitioner’s legal capacity to sue
G.R. NO.L-28882 certiorari or in the courts of the Philippines.
MAY 31, 1971 prohibition In said civil case, plaintiffs
Antonio J. Villegas and Juan
Ponce Enrile seek to recover
from the therein petitioner
damages upon an alleged of
libel arising from a publication
of time(Asia Edition)
magazine, in its issue of 18
August 1967, of an essay,
entitled “Corruption in Asia”
Respondent Universal Rubber,
a company registered under US
Law, , applied for the
registration of the trademark
“Universal Converse and
Device” used on its rubber
shoes and rubber slippers.
Petitioner Converse filed its
opposition on grounds that the
trademark sought to be
UNIVERSAL registered is confusingly similar
RUBBER to the word “Converse” which
is part of its corporate name
PRODUCTS, INC. V. Whether or not a
“Converse Rubber
COURT OF foreign corporation
Corporation” and will likely
APPEALS not licensed to do
deceive purchasers and cause
business and is not
actually doing business irreparable injury to its
G.R. NO.L-30266 reputation and goodwill in the
on its own may
JUNE 29, 1984
maintain an action, suit Philippines.
or proceeding.
judge or court is proceeding in
excess or outside of its
jurisdiction, the remedy of
prohibition would lie since it
would be useless and a waste of
time to go ahead with the
proceedings. (Philippine
International Fair, Inc., et al. vs.
Ibañez, et al.; Enrique v.
Macadaeg, et al..)
In La Chemise Lacoste, S.A. vs.
Fernandez, this Court,
reiterating Western Equipment
and Supply Co. vs. Reyes,
stated that:
… a foreign corporation which
has never done any business in
the Philippines and which is
unlicensed and unregistered to
do business here, but is widely
and favorably known in the
Philippines through the use
therein of its products bearing
its corporate and tradename,
has a legal right to maintain an
action in the Philippines to
restrain the residents and
inhabitants thereof from
organizing a corporation
therein bearing the same name
as the foreign corporation,
when it appears that they have
personal knowledge of the
existence of such a foreign
corporation, and it is apparent
that the purpose of the
maintenance of a suit, on the
ground of want of jurisdiction in
which jurisdiction is not bound
by the ruling of the court in
which the suit was brought, on a
motion to quash service of
summons, that it has
jurisdiction.
Where the purpose of the suit is
“to protect its reputation, its
corporate name, its goodwill,
whenever that reputation, its
corporate name or goodwill
have, through the natural
development of its trade,
established themselves”, an
unlicensed foreign corporation
may sue in the Philippines.
Hence, it is clear that Section 29
of the Corporation Law does
not disqualify plaintiff- appellee
Converse Rubber, which does
not have a branch office in any
part of the Philippines and is
not” doing business” in the
Philippines, from filing and
prosecuting this action of unfair
competition.
proposed domestic corporation
is to deal and trade in the same
goods as those of the foreign
corporation.