(1) TOP-WELD MANUFACTURING INC VS.

ECED
GR No. L-44944, August 9, 1985
Gutierrez Jr. J

FACTS:

Petitioner is engaged in manufacturing and selling welding supplies and equipment and entered
into separate contract with two different entities: IRTI of Switzerland by virtue of which the petitioner
was constituted to manufacture welding products and ECED of Panama wherein the petitioner was
contracted to distribute certain welding products.

Upon learning that the two foreign entities were negotiating with another group to replace the
petitioner as their licensee and distributor, the petitioner sought to restrain the corporations from
negotiating with third persons. It also asked the court to prohibit the defendants from terminating their
contracts with the petitioner, and if said termination had already been accomplished, from putting into
effect and carrying out the terms and the consequences of said termination until after good faith
negotiations on existing contracts between them had been carried out and completed.

ISSUE:

Whether or not respondent corporations can be considered as “doing business” in the

Philippines and, therefore, subject to the provisions of R.A No. 5455.

HELD:

YES, respondent corporations can be considered as “doing business” in the Philippines and,
therefore, subject to the provisions of R.A No. 5455. There is no dispute that respondents are foreign
corporations not licensed to do business in the Philippines. More important, however, there is no
serious objection interposed by the respondents as to their amenability to the jurisdiction of our courts.

As between the parties themselves, R.A. No. 5455 does not declare as void or invalid the
contracts entered without first securing a license or certificate to do business in the Philippines. Neither
does it appear to intend to prevent the courts from enforcing contracts made in contravention of its
licensing provisions. There is no denying, though, that an "illegal situation," as the appellate court has
put it, was created when the parties voluntarily contracted without such license.

The parties are charged with knowledge of the existing law at the time they enter into the
contract and at the time it is to become operative. Moreover, a person is presumed to be more
knowledgeable about his own state law than his alien or foreign contemporary. In this case, the record
shows that, at least, petitioner had actual knowledge of the applicability of R.A. No. 5455 at the time the
contract was executed and at all times thereafter.
(2) Roy III vs. Herbosa
823 SCRA 133
GR 207246

FACTS:

The SEC through respondent Chairperson Herbosa, issued SEC-MC No. 8 entitled “Guidelines on
Compliance with the Filipino-Foreign Ownership Requirements Prescribed in the Constitution and/or
Existing Laws by Corporations Engaged in Nationalized and Party Nationalized Activities” which provides
that the required percentage of Filipino Ownership shall be applied to BOTH (a) the total number of
outstanding shares of stock entitled to vote in the election of directors; AND (b) the total number of
outstanding shares of stock, whether or not entitled to vote in the election of directors. Corporations
covered by special laws which provide specific citizenship requirements shall comply with the provisions
of said law.

Petitioner Roy seeks to apply the 60-40 Filipino ownership requirement separately to each class
of shares of a public utility corporation, whether common, preferred nonvoting, preferred voting or any
other class of shares.

ISSUE:

Whether or not the SEC-MC No. 8 is in conformity with the Gamboa Decision and Gamboa
Resolution.

HELD:

The court finds SEC-MC No. 8 to have been issued in conformity to the Gamboa Decision and
Resolution.

The Court, in the Gamboa Decision and Gamboa Resolution, defined the term “capital in Section
11, Article XII of the Constitution refers only to shares of stock that can vote in the election of directors.

The pronouncement of the Court in the Gamboa Resolution -the constitutional requirement to
"apply uniformly and across the board to all classes of shares, regardless of nomenclature and category,
comprising the capital of a corporation - is clearly an obiter dictum that cannot override the Court's
unequivocal definition of the term "capital" in both the Gamboa Decision and Resolution.

To revisit or even clarify the unequivocal definition of the term "capital" as referring "only to
shares of stock entitled to vote in the election of directors" and apply the 60% Filipino ownership
requirement to each class of share is effectively and unwarrantedly amending or changing the Gamboa
Decision and Resolution. The Gamboa Decision and Resolution Doctrine did NOT make any definitive
ruling that the 60% Filipino ownership requirement was intended to apply to each class of share.
(3) Gamboa v. Teves
652 SCRA 690
June 28, 2011
J. Carpio

FACTS:

The petitioner, Gamboa was a stockholder of PLDT. According to him, Act No. 3436 was
enacted on 1928 granting PLDT a franchise and the right to engage in telecommunications business. In
1969, GTE sold 26% of the outstanding common shares of PLDT to PTIC. In 1977, PHI became the owner
of 111,415 shares which represent about 46.125% of the outstanding capital stock of PTIC by virtue of
three Deeds of Assignment executed by PTIC stockholders, Cojuangco and Rivilla. In 1986, the said
shares of stock of PTIC held by PHI were sequestered by the PCGG and were later declared by this Court
to be owned by the Republic of the Philippines.

First Pacific, a Bermuda-registered, Hong Kong-based investment firm, acquired the remaining
54% of the outstanding capital stock of PITC. Since PITC was a stockholder of PLDT, the sale by the
Philippine Government of the 46.125% of PITC shares was actually an indirect sale of 12 million shares or
about 6.3% of the outstanding common shares of PLDT.

ISSUE:

Whether or not the term capital in Section 11, Article XII of the Constitution refers to the total
common shares only of PLDT, a public utility.

HELD:

Yes. The term “capital” in Section 11, Article XII of the Constitution refers only to shares of
stock entitled to vote in election of directors, and thus in the present case only to common shares, and
not to the total outstanding capital stock comprising both common and non-voting preferred shares.

Considering that common shares have voting rights which translate to control, as opposed to
preferred shares which usually have no voting rights, the term "capital" in Section 11, Article XII of the
Constitution refers only to common shares. However, if the preferred shares also have the right to vote
in the election of directors, then the term "capital" shall include such preferred shares because the right
to participate in the control or management of the corporation is exercised through the right to vote in
the election of directors. In short, the term "capital" in Section 11, Article XII of the Constitution refers
only to shares of stock that can vote in the election of directors.

(4) California Manufacturing Company, Inc. vs. Advanced technology System, Inc.,
824 SCRA 295
25 April 2017
Sereno, C.J.
FACTS:

CMCI leased from ATSI a Prodopak machine which was used to pack products in 20-ml.
pouches. Upon receipt of an open purchase order on 06 August 2001, ATSI delivered the machine to
CMCI’s plant at Gateway Industrial Park, General Trias, Cavite on 08 August 2001.

In November 2003, ATSI filed a com

ISSUE:

Whether or not the PPPC had a separate legal personality from its individual stockholders, the
Spouses Celones, and ATSI.

HELD:

YES.

CMCI 's alter ego theory rests on the alleged interlocking boards of directors and stock ownership of the
two corporations. The CA, however, rejected this theory based on the settled rule that mere ownership
by a single stockholder of even all or nearly all of the capital stocks of a corporation, by itself, is not
sufficient ground to disregard the corporate veil. We can only sustain the CA's ruling. The
instrumentality or control test of the alter ego doctrine requires not mere majority or complete stock
control, but complete domination of finances, policy and business practice with respect to the
transaction in question. The corporate entity must be shown to have no separate mind, will, or existence
of its own at the time of the transaction.

(5) International Academy of Management & Economics vs. Litton and Company, Inc., 848 SCRA 437

(6) Jardine Davies vs JRB Realty , G.R. No. 151438, 2005

(7) Zambrano vs. Philippine Carpet Manufacturing Corporation, 828 SCRA 144
(8) Zaragoza vs. Tan, 847 SCRA 437