B Group 2 Analytic Memo Index 4

TABLE OF CONTENTS
NON-STOCK CORPORATIONS.................................................................................................................................................................................................................................................................................................. 1
A. Definition and Purposes (Secs. 86 and 87) ................................................................................................................................................................................................................................................................... 1
Chinese Young Men's Christian Association of the Philippine Islands, et al. v, Victor Ching and Court of Appeals ........................................................................................................................................ 1
The Collector of Internal Revenue v. The Club Filipino, Inc. De Cebu ................................................................................................................................................................................................................... 1
D. Voting (Sec. 88) ............................................................................................................................................................................................................................................................................................................... 2
Antonio Litonjua and Arnold Litonjua v. The Honorable Court of Appeals, et al. ................................................................................................................................................................................................ 2
The Philippine Public School Teachers Association, et al. v. Honorable Sergio Apostol, et al. ........................................................................................................................................................................... 2
CLOSE CORPORATIONS............................................................................................................................................................................................................................................................................................................ 3
A. Requirements for formation (Sec. 95)............................................................................................................................................................................................................................................................................ 3
Manuel Dulay Enterprises, Inc., et.al. v. Court of Appeals, et.al. ........................................................................................................................................................................................................................... 3
San Juan Structural and Steel Fabricators, Inc. v. Court of Appeals, et.al. .......................................................................................................................................................................................................... 3
Sergio F. Naguiat doing business under the name Sergio F. Naguiat Ent., Inc. et.al. v. National Labor Relations Commission, et.al. .......................................................................................................... 3
B. Restrictions on formation of close corporations (Secs. 96-98) .................................................................................................................................................................................................................................... 4
Marcelino M. Florete, et.al. v. Rogelio M. Florete, et,al, .......................................................................................................................................................................................................................................... 4
EDUCATIONAL AND RELIGIOUS CORPORATIONS ................................................................................................................................................................................................................................................................... 4
B. Religious corporations (Sec. 107)................................................................................................................................................................................................................................................................................... 4
1. Art. IV, Sec. 28 (3) and Art. 29 (2), 1987 Constitution ............................................................................................................................................................................................................................................... 4
The Roman Catholic Apostolic Administrator of Davao, Inc. v. The Land Registration Commission and The Register of Deeds of Davao City .......................................................................................... 4
Republic of the Philippines v. The Honorable Intermediate Appellate Court and Princess Emme Atik Kiram .................................................................................................................................................. 4
Director of Lands v. Court of Appeals and Iglesia Ni Cristo .................................................................................................................................................................................................................................... 4
2. Corporation sole (secs. 108-113) ............................................................................................................................................................................................................................................................................... 5
Joselito Hernand Bustos v. Millions Shoes Inc., et al. ................................................................................................................................................................................................................................................ 5
Iglesia Filipina Independiente v. Heirs of Taeza ....................................................................................................................................................................................................................................................... 6
3. Corporation aggregate/Religious Society (Sec. 114) ............................................................................................................................................................................................................................................. 6
IEMELIF, Inc., et al. v. Bishop Lazaro, et al. ................................................................................................................................................................................................................................................................ 6
IEMELIF, Inc. v. Natanael Juane ................................................................................................................................................................................................................................................................................. 7
FOREIGN CORPORATIONS ....................................................................................................................................................................................................................................................................................................... 8
A. Definition and Rights (Sec. 140) ..................................................................................................................................................................................................................................................................................... 8
Avon Insurance Plc, et.al. v. Court of Appeals, et.al. ............................................................................................................................................................................................................................................. 8
Pedro R. Palting v. San Jose Petroleum, Inc. ............................................................................................................................................................................................................................................................ 8
B. Requirements for the establishment of a branch / License to Do Business in the Philippines (Sec. 142) ............................................................................................................................................................... 9
1. Documentary (Sec. 142) ............................................................................................................................................................................................................................................................................................. 9
Georg Grotjahn GMBH & Co. v. Hon. Lucia Violago Isnani, et.al. ......................................................................................................................................................................................................................... 9
3. Appointment of a resident agent (Secs. 144-145) ................................................................................................................................................................................................................................................... 9
New York Marine Managers, Inc. v. Court of Appeals, et.al. ................................................................................................................................................................................................................................. 9
E. Amendment of License (Sec. 148) ............................................................................................................................................................................................................................................................................... 10
Aetna Casualty & Surety Company v. Pacific Star Line, The Bradman, Co., Inc., et.al. ....................................................................................................................................................................................10
Hathibhai Bulakhidas v. The Honorable Pedro L. Navarro, et.al. ..........................................................................................................................................................................................................................10
Schmid & Oberly, Inc. v. Rjl Martinez Fishing Corporation .....................................................................................................................................................................................................................................10
G. “Doing business” with or without a license (Sec. 150 in rel. to Sec. 3 [d], R.A. No. 7042 or the Foreign Investments Act of 1991): Suits By or Against Foreign Corporation ............................................... 11
Air Canada v. Commissioner of Internal Revenue .................................................................................................................................................................................................................................................11
i
Steelcase, Inc. v. Design International Selections, Inc. ..........................................................................................................................................................................................................................................11
Philippine Deposit Insurance Corporation v. Citibank, N.A. and Bank of America, S.T. & N.A. .........................................................................................................................................................................12
Cargill, Inc. v. Intra Strata Assurance Corporation .................................................................................................................................................................................................................................................12
Sehwani, Incorporated And/Or Benitas Frites, Inc. v. In-N-Out Burger, Inc. .........................................................................................................................................................................................................12
Lorenzo Shipping Corp. v. Chubb and Sons, Inc. et.al. .........................................................................................................................................................................................................................................13
MR Holdings, Ltd. v. Sheriff Carlos P. Bajar, et.al. ....................................................................................................................................................................................................................................................13
Communication Materials and Design, Inc. (formerly Aspac-Itec Philippines, Inc.) and Francisco S. Aguirre v. The Court of Appeals, et.al. ............................................................................................13
Columbia Pictures, Inc., et.al. v. Court of Appeals, et.al. ......................................................................................................................................................................................................................................14
Eriks Pte. Ltd. v. Court of Appeals and Delfin F. Enriquez, Jr. .................................................................................................................................................................................................................................14
Far East International Import and Export Corporation v. Nankai Kogyo Co. Ltd. et.al. and Nankai Kogyo Co., Ltd. .....................................................................................................................................14
Facilities Management Corporation, et al. v. Leonardo De La Rosa, et al. ........................................................................................................................................................................................................14
H.B. Zachry Company International v. Hon. Court of Appeals and Vinnel-Belvoir Corporation .......................................................................................................................................................................15
Hutchison Ports Philippines Limited v. Subic Bay Metropolitan Authority, et al. ...................................................................................................................................................................................................15
La Chemise Lacoste, S.A. v. Hon. Oscar Fernandez, et al. ....................................................................................................................................................................................................................................16
Marubeni Nederland B.V. v. The Honorable Judge Ricardo Tensuan, et al. .......................................................................................................................................................................................................16
Philippine Columbia Enterprises Co., et al. v. Hon. Gregorio Lantin, et al. ..........................................................................................................................................................................................................17
Philip Morris, Inc., et al. v. Fortune Tobacco Corporation ......................................................................................................................................................................................................................................17
Puma Sportschuhfabriken Rudolf Dassler, K.G. v. The Intermediate Appellate Court and Mil-Oro Manufacturing Corporation .................................................................................................................17
Subic Bay Metropolitan Authority, et.al. v. .............................................................................................................................................................................................................................................................18
Universal International Group of Taiwan, et.al. .......................................................................................................................................................................................................................................................18
Time, Inc. v. Hon. Andres Reyes, et.al. .....................................................................................................................................................................................................................................................................18
Universal Rubber Products, Inc. v. Hon. Court of Appeals, et.al. ..........................................................................................................................................................................................................................18
B. Van Zuiden Bros., Ltd. v. ........................................................................................................................................................................................................................................................................................19
GTVL Manufacturing Industries, Inc. .........................................................................................................................................................................................................................................................................19
ii
Legal Question/ Problem/Issue Legal Provision/Legal Principles or
Case Title(s) and citation Why is this a Problem? Conclusion
Presented by the Case(s) Rules Involved, Applied or Interpreted
NON-STOCK CORPORATIONS
A. Definition and Purposes (Secs. 86 and 87)
Chinese Young Men's Christian Whether the courts can strip a Victor Ching filed an action for mandamus Purposes of Non-stock Corporation The courts cannot strip a member of a
Association of the Philippine member of a non-stock non- with preliminary injunction against Chinese Corporation By-laws non-stock non-profit corporation of his
Islands, et al. v, Victor Ching profit corporation of his YMCA on the claim that the Membership membership therein without cause.
and Court of Appeals membership therein without Campaign of the Chinese YMCA for 1966 held Otherwise, that would be an
cause. from September 27, 1965, up to November 26, unwarranted and undue interference
G.R. No. L-36929 1965, only 175 applications for membership with the well-established right of a
June 18, 1976 were submitted, canvassed and accepted on corporation to determine its
the last day of the membership campaign. membership, as announced by
YMCA alleged that 249 membership Fletcher, as follows:
applications, including the 106 submitted Compliance with provisions of charter,
through Ching, were filed during the constitution or by-laws. —In order that
campaign period. Petitioners also denied that membership may be acquired in a
there was any counting and/or approval of non-stock corporation and valid by-
membership applications that took place on laws must be complied with, except in
November 26, 1965, for membership so far as they may be and are waived.
applications had to be screened by its But provisions in the by-laws as to
Membership Committee, endorsed favorably formal steps to be taken to acquire
to its Board of Directors and approved by the membership may be waived by the
latter body by two-thirds majority vote. corporation, or it may be estopped to
The CFI ruled annulling the 1966 annual assert that they have not been taken.
membership campaign of the YMCA which The SC ruled that the annual
was affirmed by the CA membership was valid.
The Collector of Internal Whether a corporation which Club Filipino, Inc. de Cebu is a civic Requisites of a stock corporation Under Sec. 3, Act No. 1459, for a stock
Revenue v. The Club Filipino, derives profit from its operation corporation organized under the laws of the (Sec. 3, Act No. 1459) corporation to exist, two requisites must
Inc. De Cebu necessarily convert it into a Philippines. Neither in its articles or by-laws is a be complied with, to wit: (1) a capital
profit-making enterprise. provision relative to dividends and their stock divided into shares and (2) an
G.R. No. L-12719 distribution, although it is covenanted that authority to distribute to the holders of
May 31, 1962 upon its dissolution, the Club's remaining such shares, dividends or allotments of
assets, after paying debts, shall be donated to the surplus profits on the basis of the
a charitable Philippine Institution in Cebu shares held In the case at bar, nowhere
in its articles of incorporation or by-laws
The Club owns a club house, a bowling alley, could be found an authority for the
a golf course and a bar-restaurant. The bar- distribution of its dividends or surplus
restaurant was a necessary incident to the profits. Strictly speaking, it cannot,
operation of the club and its golf-course. The therefore, be considered a stock
club is operated mainly with funds derived corporation, within the contemplation
from membership fees and dues. Profits were of the corporation law.
used to defray its overhead expenses and to
improve its golf-course. In 1951, as a result of a
capital surplus, the Club declared stock
dividends; but no actual cash dividends were
distributed to the stockholders.
1
D. Voting (Sec. 88)
Antonio Litonjua and Arnold Whether the suspension is Wack Wack Golf and Country Club is a non- Voting (Sec. 88) Company by-laws provides that a
Litonjua v. The Honorable Court valid? profit corporation. Petitioner Antonio Litonjua is Corporate by-laws Junior member is the son or daughter of
of Appeals, et al. an Associate Member and his son, Arnold a Proprietary or an Associate member
Litonjua, is a Junior Member. Both are in good standing whose age is
G.R. No. 120294 members of the Board of Directors. Pursuant to between 10 to 22, single, and is elected
February 10, 1998 its by-laws, a monthly list of delinquent as such by the Board. Provided,
members was posted in the premises. Antonio however, that when parents cease to
was included for his failure to pay his be members the Junior membership of
November 1984 dues. Antonio denied having their children is likewise terminated.
received his statement of account for Junior members may play on the East
November 1984 and he was able to convince or West Course depending on Board
the Cashier's Office to delete his name from regulations. A Junior member shall not
the list of delinquent members. Consequently, pay an entrance fee but he shall pay
Antonio Litonjua continued to avail of the club monthly dues in advance as may be
facilities. Later, the GM informed him of the prescribed by the Board of Directors,
Membership Committee's decision to suspend and his account shall be guaranteed in
him for a period of sixty (60) days, effective 3 writing by his parent or guardian.
February 1985 for violating Sec. 34(d) of the
club's by-laws when he availed of club The Suspension is valid.
privileges while listed as a delinquent member.
The suspension included his son Arnold.
The Philippine Public School Whether meetings or elections On July 20, 1972, private respondent Eufemia Voting (Sec. 88) Section 24 of the Corporation Law is not
Teachers Association, et al. v. of non-stock corporations held M. San Luis as a member of the Philippine Corporate by-laws applicable to non-stock or fraternal
Honorable Sergio Apostol, et al. outside the principal office of Public School Teachers Association (PPSTA), a Quo warranto (Rule 66 of the ROC) associations like the PPSTA, which in the
the corporation is valid fraternal non-stock association of public Sec 24, Corporation Law past has held its annual conventions
G.R. No. L-36966 school teachers throughout the country, filed and elections outside of its principal
February 28, 1974 with respondent court of first instance at office in Quezon City since such
Quezon City a complaint with preliminary outside meetings are deemed best
injunction for the annulment of the 1972 adapted to the purposes for which the
annual elections of the PPSTA board of association was created and
directors held on June 26-28, 1972 at Teachers conducive to the furtherance of its
Camp in Baguio City for having been held objectives by holding the annual
outside its principal office at Quezon City representative assemblies as near to
against herein petitioners as defendants. the membership in the different regions
of the country, and assuming that the
convention was improperly held or
called, it could be deemed validly held
under the provisions of section 25 of the
Corporation Law.
2
CLOSE CORPORATIONS
A. Requirements for formation (Sec. 95)
Manuel Dulay Enterprises, Inc., Whether the corporation is a Manuel R. Dulay Enterprises, Inc, a domestic Requirements for formation Petitioner Corporation is classified as a
et.al. v. Court of Appeals, et.al. close corporation corporation with the following as members of (Sec. 95) close corporation and consequently a
its Board of Directors: Manuel R. Dulay, Close Corporation board resolution authorizing the sale or
G.R. No. 91889 designated as president, treasurer and Sec 101 Corporation Code mortgage of the subject property is not
August 27, 1993 general manager; Atty. Virgilio E. Dulay, necessary to bind the corporation for
designated as vice-president; Linda E. Dulay, the action of its president.
Celia Dulay-Mendoza and Atty. Plaridel,
designated as secretary, owned the Dulay
Apartments.
The corporation Manuel Dulay, obtained
various loans for the construction of Dulay
Continental Hotel. Manuel Dulay by virtue of
Board Resolution sold the subject property to
private respondents spouses Maria Theresa
and Castrense Veloso in the amount of
P300,000.00 with the right to repurchase within
2 years. Maria Veloso, without the knowledge
of Manuel Dulay, mortgaged the subject
property to Manuel A. Torres for a loan of
P250,000.00. Upon Maria’s failure to pay Torres,
the subject property was sold on April 5, 1978
to private respondent Torres as the highest
bidder in an extrajudicial foreclosure sale.
San Juan Structural and Steel Whether or not the Plaintiff entered into an agreement with Acts of corporate officers within the Because Motorich had never given a
Fabricators, Inc. v. Court of corporation’s treasurer act defendant Motorich Sales Corporation for the scope of their authority are binding on written authorization to respondent
Appeals, et.al. can bind the corporation. transfer to it of a parcel of land. Nenita Lee the corporation. But when these Gruenbeg to sell its parcel of land, we
Gruenberg and Motorich's committed bad officers exceed their authority, their hold that the agreement entered into
G.R. 129459 faith in refusing to execute a formal Transfer of actions "cannot bind the corporation, by the latter with petitioner is void.
September 29, 1998 Rights/Deed of Assignment, San Juan suffered unless it has ratified such acts or is Being inexistent and void from the
damages. estopped from disclaiming them beginning, said contract cannot be
ratified.
Sergio F. Naguiat doing business Whether or not Sergio Naguiat Due to the phase-out of the US military bases Section 100 of the Corporation Code Sergio Naguiat is held solidarily liable
under the name Sergio F. may be held liable for the in the Philippines, the AAFES was dissolved, imposes personal liability upon the for corporate tort because he had
Naguiat Ent., Inc. et.al. v. claims instituted by the taxi and the services of respondents were stockholder actively managing or actively engaged in the management
National Labor Relations drivers against his company. terminated and negotiations was held as operating the business and affairs of and operation of CFTI, a close
Commission, et.al. [YES] regards separation benefits. Most of the drivers the close corporation. corporation.
accepted, however, individual respondents
GR 116123 herein refused to accept and filed a
March 13, 1997 complaint against "Sergio F. Naguiat doing
business under the name and style Sergio F.
Naguiat Enterprises, Inc.
3
B. Restrictions on formation of close corporations (Secs. 96-98)
Marcelino M. Florete, et.al. v. Whether or not the shares The sale of Teresita's Marsal shares of stocks to Under Sec. 99 of the Corporation There was already substantial
Rogelio M. Florete, et,al, were validly sold by the Estate petitioner Rogelio, being one of the Code, the provisions of subsection (4) compliance with paragraph 7 of the
of Teresita to Rogelio? [YES] incorporators and stockholders of Marsal at of the same section shall not AOI when respondents obtained
G.R. No. 174909 the time of sale, was alleged to be not a sale applicable if the transfer of stock, actual knowledge of the sale of
January 20, 2016 to a third party or outsider as would justify the though contrary to subsections (1), (2) Teresita's 3,464 Marsal shares to
restriction on transfer of shares in the AOI. It of (3), has been consented to by all the petitioner Rogelio as early as 1995. In
also found that laches and estoppel had stockholders of the close corporation, fact, respondents had already given
already set in as respondents' inaction for 17 or if the close corporation has their consent and conformity to such
years constituted a neglect for an amended its articles of incorporation in sale by their inaction for 17 years
unreasonable time to question the same. It accordance with this Title. despite knowledge of the sale.
held that respondents could not feign
ignorance of the transactions as they knew of
the same and yet they did not do anything at
that time.
EDUCATIONAL AND RELIGIOUS CORPORATIONS
B. Religious corporations (Sec. 107)
1. Art. IV, Sec. 28 (3) and Art. 29 (2), 1987 Constitution
The Roman Catholic Apostolic Is the Roman Catholic The Roman Catholic Apostolic Administrator of The Constitution demands that in the The members of the Roman Catholic
Administrator of Davao, Inc. v. Apostolic Administrator of Davao Inc., sought to register in favor of their absence of capital stock, the Apostolic faith within the territory of
The Land Registration Davao Inc qualified to acquire congregation by deed of donation of a parcel controlling membership should be Davao are predominantly Filipino
Commission and The Register of private agricultural lands in the of land. The Register of the Land Registration composed of Filipino citizens. citizens.
Deeds of Davao City Philippines pursuant to the Commissioner (LRC), Deeds has some doubts
provisions of Article XIII of the as to the registrability, the matter was referred
G.R. No. L-8451 Constitution? [YES] to the Land Registration Commissioner en
December 20, 1957 consulta for resolution.
Republic of the Philippines v. Whether or not the publication The Republic appeals from the decision of the A mode of publication is a jurisdictional The notices of hearing were not posted
The Honorable Intermediate of the certificate in the Official Intermediate Appellate Court of Appeals (CFI) requirement, the failure on the part of on the main entrances of the provincial
Appellate Court and Princess Gazette complies with the in ordering the reconstitution of title in favor of the applicant to comply to comply and municipal halls of the locality in
Emme Atik Kiram publication required by the private respondents. with it confers no jurisdiction upon the which the lands are located.
proceedings after registration court. Neither is there any showing that
G.R. No. L-68303 of the certificate. [NO] the adjacent owners or other
January 15, 1988 interested parties were actually
notified of the pending application.
Director of Lands v. Court of Is the respondent prohibited Iglesia ni Cristo filed an application for The correct rule is that alienable public Yes. Taking the year 1936 as the
Appeals and Iglesia Ni Cristo from acquiring private land as registration in its name of a parcel of land with land held by a possessor, personally or reckoning point, the 30-year period of
provided under the an area of 379 square meters located at through his predecessors-in-interest, open, continuous, exclusive and
G.R. No. L-56613 Constitution? Poblacion, Municipality of Amadeo, Cavite. In openly, continuously and exclusively notorious possession and occupation
March 14, 1988 its application, private respondent alleged for the prescribed statutory period [30 required by law was completed in
inter alia that it was the owner in fee simple of years under the Public Land Act, as 1966. The completion by private
the land afore-described, having acquired amended] is converted to private respondent of this statutory 30-year
title thereto by virtue of a Deed of Absolute property by mere lapse or completion period has dual significance in the light
Sale executed in 1947 by Aquelina de la Cruz of said period, ipso jure. of Section 48[b] of Commonwealth Act
in its favor and that applicant. Private No. 141, as amended and prevailing
respondent prayed that should the Land jurisprudence: at this point, the land in
4
Registration Act not be applicable, the question ceased by operation of law to
provisions of Chapter VIII of Commonwealth be part of the public domain; and
Act No. 141, as amended by Republic Act private respondent could have
No. 6236 be applied as applicant and its its title thereto confirmed through the
predecessors-in-interest had been in appropriate proceedings as under the
possession of the land for more than thirty [30] Constitution then in force, private
years and had introduced improvements corporations or associations were not
thereon. The Republic of the Philippines, prohibited from acquiring public lands,
represented by the Director of Lands, opposed but merely prohibited from acquiring,
the application on the following grounds: the holding or leasing such type of land in
applicant and its predecessors-in interest did excess of 1,024 hectares. If in 1966, the
not possess sufficient title to acquire ownership land in question was converted ipso
in fee simple of the parcel of land applied for; jure into private land, it remained so in
neither the applicant nor its predecessors-in- 1974 when the registration
interest have been in open, continuous, proceedings were commenced. This
exclusive and notorious possession and being the case, the prohibition under
occupation of the land in question; and, the the 1973 Constitution would have no
subject parcel of land is a portion of the public application. Otherwise construed, if in
domain not subject to private appropriation. 1966, private respondent could have its
title to the land confirmed, then it had
acquired a vested right thereto, which
the 1973 Constitution can neither
impair nor defeat.
2. Corporation sole (secs. 108-113)
Joselito Hernand Bustos v. Can Spouses Cruz be Spouses Fernando and Amelia Cruz owned a Section 97 of the Corporation Code Yes. No inference can be taken that
Millions Shoes Inc., et al. considered as stockholders of parcel of land. The City Government of only specifies that “the stockholders of stockholders of a close corporation are
a close corporation and thus Marikina levied the property for nonpayment the corporation shall be subject to all automatically liable for corporate
G.R. No. 185024 not liable for the debts of MSI? of real estate taxes. The City Treasurer of liabilities of directors.” debts and obligations. Parenthetically,
April 24, 2017 Marikina auctioned off the property, with Sec. 100 provides that to the extent only Section 100, paragraph 5, of the
Joselito Hernand M. Bustos as the winning that the stockholders are actively Corporation Code explicitly provides
bidder. engaged in the management or for personal liability of stockholders of
Meanwhile, notices of lis pendens were operation of the business and affairs of close corporation. As can be read in
annotated. These markings indicated that SEC a close corporation, the stockholders that provision, several requisites must
Corp. Case No. 036-04, which was filed before shall be held to strict fiduciary duties to be present for its applicability. None of
the RTC and involved the rehabilitation each other and among themselves. these were alleged in the case of
proceedings for MSI, covered the subject Said stockholders shall be personally Spouses Cruz. Neither did the RTC or the
property and included it in the Stay Order liable for corporate torts unless the CA explain the factual circumstances
issued by the RTC. corporation has obtained reasonably for this Court to discuss the personal
Petitioner moved for the exclusion of the adequate liability insurance. liability of respondents to their creditors
subject property from the Stay Order. He because of “corporate torts.” With this
claimed that the lot belonged to Spouses Cruz in mind, the general doctrine of
who were mere stockholders and officers of separate juridical personality shall
MSL. He further argued that since he had won be applied, which provides that a
the bidding of the property, the auctioned corporation has a legal personality
property could no longer be part of the Stay separate and distinct from that of
Order. people comprising it. By virtue of that
5
doctrine, stockholders of a corporation
enjoy the principle of limited liability:
the corporate debt is not the debt of
the stockholder. Being an officer or a
stockholder of a corporation does not
make one’s property the property also
of the corporation. Hence, the import
of Section 97 of the Corporation Code
Iglesia Filipina Independiente v. Was the then Supreme Bishop Iglesia Filipina Independiente (IFI) was the Section 113 (now Section 111) provides No. The Laymen’s Committee made its
Heirs of Taeza Rev. Ga authorized to execute owner of a parcel of land. Supreme Bishop that in cases where the rules, objection to the sale known to the
the deed of sale? Rev. Macario Ga sold two lots to Bernardino regulations, and discipline of the Supreme Bishop. Since the Canons
G.R. No. 179597 Taeza. The latter registered the parcels of land. religious denomination, sect or church, require that all the church entities listed
February 3, 2014 In January 1990, IFI filed for annulment of sale religious society, or order concerned in Article IV (a) of the Canons should
on the ground that Rev. Ga was not represented by such corporation sole give its approval to the transaction, in
authorized to sell. The RTC decided in favor of regulate the method of acquiring, executing
IFI. However, the CA reversed and ruled that holding, selling, and mortgaging real the sale, Supreme Bishop Rev. Ga had
IFI, being a corporation sole, validly transferred estate and personal property, such acted beyond his powers making the
ownership over the land in question through its rules, regulations and discipline shall contract of sale with mortgage
Supreme Bishop, who was at the time the govern. unenforceable.
administrator of all properties and the official Article IV (a) of their Canons provides
representative of the church. that “All real properties of the Church
located or situated in such parish can
be disposed of only with the approval
and conformity of the laymen’s
committee, the parish priest, the
Diocesan Bishop, with sanction of the
Supreme Council, and finally with the
approval of the Supreme Bishop, as
administrator of all the temporalities of
the Church.”
3. Corporation aggregate/Religious Society (Sec. 114)
IEMELIF, Inc., et al. v. Bishop May a corporation sole be Bishop Nicolas Zamora established the The Corporation Code provides no Yes. Although a non-stock corporation
Lazaro, et al. converted into a corporation petitioner Iglesia Evangelica Metodista specific mechanism for has a personality that is distinct
aggregate by mere En Las Islas Filipinas, Inc. (IEMELIF) as a amending the articles of incorporation from those of its members who
G.R. No. 184088 amendment of its Articles of corporation sole with Bishop Zamora acting as of a corporation sole. But, as the RTC established it, its articles of
July 6, 2010 Incorporation? its "General Superintendent." Thirty-nine years correctly held, Section 109 of the incorporation cannot be amended
later in 1948, the IEMELIF enacted and Corporation Code allows the solely through the action of its board of
registered a set of by-laws that established a application to religious corporations of trustees. The amendment needs the
Supreme Consistory of Elders (the Consistory), the general provisions governing non- concurrence of at least two-thirds of its
made up of church ministers, who were to stock corporations. membership. Whether it is a non-stock
serve for four years. corporation or a corporation sole, the
Apparently, although the IEMELIF remained a corporate being remains distinct from
corporation sole on paper, with all corporate its members, whatever be their
powers theoretically lodged in the hands of number. The increase in the number of
one member, the General Superintendent, it its corporate membership does not
change the complexion of its
6
had always acted like a corporation corporate responsibility to third parties.
aggregate. The one member, with the
Such conversion was questioned and the SEC concurrence of two-thirds of the
held that although the SEC Commissioner did membership of the organization for
not in 1948 object to the conversion of the whom he acts as trustee, can self-will
IEMELIF into a corporation aggregate, that the amendment.
conversion was not properly carried out and
documented.
IEMELIF, Inc. v. Natanael Juane Was the transformation of IEMELIF is a religious corporation existing and A corporation sole is one formed by the Yes. Juane maintains that the "IEMELIF"
IEMELF from corporation sole duly organized under Philippine laws. Juane is chief archbishop, bishop, priest, that filed the Complaint before the
G.R. No. 172447 to an aggregate corporation a former minister or pastor of IEMELIF. He was minister, rabbi or other presiding elder MeTC had no personality to eject him
September 18, 2009 valid? later appointment and assignment Juane as of a religious denomination, sect, or from the subject property. The Church
Resident Pastor of the Cathedral church, for the purpose of has remained a corporation sole, since
Congregation in Tondo, Manila. By virtue and administering or managing, as trustee, its transformation to a corporation
as a consequence of such appointment, the affairs, properties and temporalities aggregate was legally defective.
Defendant Rev. Juane was authorized to stay of such religious denomination, sect or Juane, thus, claims that he is now the
at and occupy the Resident Pastor‘s residence church. As opposed to a corporation corporation sole, who is entitled to the
inside the Cathedral complex. By the same aggregate, a corporation sole consists physical possession of the subject
reason, he also took charge of the Cathedral of a single member, while a property as owner thereof. In fact, on
facilities and other property of the church in corporation aggregate consists of two the basis of these same arguments.
said premises. or more persons. Even if the transformation of IEMELIF
However, he was being ejected from the from a corporation sole to a
property. 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. If the transformation did
materialize, the corporation
aggregate would be composed of the
Highest Consistory of Elders, which
nevertheless approved the very same
acts. As either Bishop Lazaro or the
Highest Consistory of Elders had the
authority to appoint Juane as Resident
Pastor of the IEMELIF Tondo
Congregation, it also had the power to
remove him as such or transfer him to
another congregation.
7
FOREIGN CORPORATIONS
A. Definition and Rights (Sec. 140)
Avon Insurance Plc, et.al. v. Whether or not the foreign Yupangco Cotton Mills filed a complaint Article 44 of the Omnibus Investments No. No allegation or demonstration of
Court of Appeals, et.al. corporation is doing business against several foreign reinsurance Code of 1987 defines the phrase the existence of petitioners’ domestic
in the Philippines. companies to collect their alleged “doing business”: agent, but avers simply that they are
G.R. No. 97642, percentage liability under contract treaties “soliciting orders, purchases, service doing business not only abroad but in
August 29, 1997 between the foreign insurance companies. contracts, opening offices, whether the Philippines as well. It does not
Inasmuch as Avon Insurance are not engaged called ‘liaison’ offices or branches; appear at all that the petitioners had
in business in the Philippines with no offices, appointing representatives or performed any act which would give
places of business or agents in the Philippines, distributors who are domiciled in the the general public the impression that
the reinsurance treaties having been entered Philippines or who in any calendar year it had been engaging, or intends to
abroad, service of summons upon motion of stay in the Philippines for a period or engage in its ordinary and usual
Yupangco, was made upon petitioners periods totaling one hundred eighty business undertakings in the country.
through the Office of the Insurance (180) days or more; participating in the The reinsurance treaties between the
Commissioner. management, supervision or control of petitioners and Worldwide Surety and
any domestic business firm, entity or Insurance were made through an
corporation in the Philippines, and any international insurance broker, and not
other act or acts that imply a continuity through any entity or means remotely
or commercial dealings or connected with the Philippines.
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.”
Pedro R. Palting v. San Jose San Jose Petroleum filed with the Philippine Laurel-Langley Agreement also states No. There was no indication if they are
Petroleum, Inc. Securities and Exchange Commission a sworn that with respect to natural resources in all citizens of America, how much
registration statement, for the registration and the public domain in the Philippines, percentage do they occupy as
G.R. No. L-14441, licensing for sale in the Philippines Voting Trust only through the medium of a stockholders, and if they have the
December 17, 1966 Certificates. Pedro R. Palting and others, corporation organized under the laws same rules that apply to the conditions
allegedly prospective investors in the shares of of the Philippines and at least 60% of mentioned. In the circumstances, the
San Jose Petroleum, filed with the Securities the capital stock of which is owned or Court ruled that San Jose Petroleum, as
and Exchange Commission an opposition to controlled by citizens of the United presently constituted, is not a business
registration and licensing of the securities on States. enterprise that is authorized to exercise
the grounds that the issuer has not been the parity privileges under the Parity
licensed to transact business in the Philippines. Ordinance, the Laurel-Langley
Agreement and the Petroleum Law. Its
tie-up with San Jose Oil is,
consequently, illegal.
8
B. Requirements for the establishment of a branch / License to Do Business in the Philippines (Sec. 142)
1. Documentary (Sec. 142)
Georg Grotjahn GMBH & Co. v. Whether or not the George Grotjahn GMBH & Co is a Omnibus Investment Code of 1987 Yes. It has been continuously, since
Hon. Lucia Violago Isnani, et.al. corporation is doing business multinational corporation. Lanchinebre defines "doing business," as follows: 1983, acting as a supervision,
in the Philippines. worked as its sales representative from 1983 to shall include soliciting orders, communications and coordination
G.R. No. 109272 mid-1992. Employee filed an illegal suspension purchases, service contracts, opening center for its home office's affiliates in
August 10, 1994 case with the NLRC. Employer, on the other offices, whether called "liaison" offices Singapore, and in the process has
hand, filed a case for collection of Sum of or branches; appointing named its local agent and has
Money at the RTC. The RTC ruled that the representatives or distributors who are employed Philippine nationals like
corporation has no capacity to sue in the domiciled in the Philippines or who in private respondent Romana
Philippines. any calendar year stay in the Lanchinebre. From this uninterrupted
Philippines for a period or periods performance by petitioner of acts
totaling one hundred eighty days or pursuant to its primary purposes and
more; participating in the functions as a regional/area
management, supervision or control of headquarters for its home office, it is
any domestic business firm, entity or clear that petitioner is doing business in
corporation in the Philippines, and any the country.
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.
3. Appointment of a resident agent (Secs. 144-145)
New York Marine Managers, Whether a foreign corporation New York Marine Managers, Inc. is a foreign Isolated Transaction Rule. Petitioner's complaint is fatally
Inc. v. Court of Appeals, et.al. can seek the aid of Philippine corporation organized under the laws of the defective for failing to allege its duly
courts for relief. United States. American Natural Soda Ash authorized representative or resident
G.R. No. 111837 Corporation (ANSAC) loaded in Portland, agent in this jurisdiction. The pleadings
October 24, 1995 U.S.A., a shipment of soda ash on board the filed by counsel for petitioner do not
vessel for delivery to Manila. The suffice. The extent of authority of
supplier/shipper insured the shipment with counsel for petitioner has been
petitioner. Upon arrival in Manila the shipment expressly and continuously assailed but
was unloaded and transferred.Since the he has failed to show competent proof
shipment allegedly sustained wettage, that he was indeed duly authorized to
hardening and contamination, it was rejected represent petitioner.
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.
9
E. Amendment of License (Sec. 148)
Aetna Casualty & Surety Whether or not Aetna Smith Bell & Co., Inc. and Aetna Surety Section 68 of the Corporation Law The contract of insurance was entered
Company v. Pacific Star Line, Casualty & Surety Company Casualty & Surety Co. Inc., as subrogee, provides that "No foreign corporation into in New York, U.S.A., and payment
The Bradman, Co., Inc., et.al. must have instituted a case against Pacific Star Line, The or corporation formed, organized, or was made to the consignee in its New
amended its license to Bradman Co. Inc., Manila Port Service and/or existing under any laws other than York branch. Since Aetna Casualty &
G.R. No. L-26809 transact business of insurance Manila Railroad Company, Inc. to recover the those of the Philippines shall be Surety Company is not engaged in the
December 29, 1977 in the amount representing the value of the stolen permitted to transact business in the business of insurance in the Philippines
Philippines. and damaged cargo plus litigation expenses Philippines until after it shall have but is merely collecting a claim
and exemplary damages with legal interest obtained a license for that purpose assigned to it by the consignee, it is not
thereon from the filing of the suit and costs. from the Securities and Exchange barred from filing
Pacific Star Line, as a common carrier, was Commissioners.." Section 69 of said the instant case although it has not
operating the vessel on a commercial run Corporation Law "No foreign secured a license to transact insurance
between United States and Philippine Ports corporation or corporation formed, business in the Philippines.
including Manila; that the defendant, The organized, or existing under any laws
Bradman Co. Inc., was the ship agent in the other than those of the Philippines shall
Philippines for the SS Ampal and/or Pacific Star be permitted to transact business in the
Line; that the Manila Railroad Co. Inc. and Philippines or maintain by itself or
Manila Port Service were the arrastre operators assignee any suit for the recovery of
in the port of Manila. any debt, claim, or demand whatever,
unless it shall have the license
prescribed in the section immediately
preceding..”
Hathibhai Bulakhidas v. The Whether or not a foreign Hathibai Bulakidas (petitioner), a foreign The object of Sections 68 and 69 of the the complaint filed by petitioner herein
Honorable Pedro L. Navarro, corporation not engaged in partnership filed a complaint against a Corporation Law was not to prevent sufficiently alleged that it is a foreign
et.al. business in the Philippines can domestic corporation, Diamond Shipping the foreign corporation from partnership (or corporation) not
institute an action before our Corporation for damages caused by the performing single acts, but to prevent it engaged in business in the Philippines
G.R. No. L-49695. Court. failure of the shipping corporation to deliver to from acquiring a domicile for the and that it was suing under an isolated
April 7, 1986. the proper destination. Complaint states that purpose of business without taking the transaction. Hence, the court allowed
petitioner is a foreign partnership firm not steps necessary to render it amenable the filing of the case
doing business in the Philippines" and that it is to suit in the local courts. It is settled
"suing under an isolated transaction. that if a foreign corporation is not
Defendant filed a motion to dismiss the engaged in business in the Philippines,
complaint on the ground that plaintiff has no it may not be denied the right to file an
capacity to sue. action in Philippine courts for isolated
transactions.
Schmid & Oberly, Inc. v. Rjl Whether the second RJL Martinez Fishing Corp (RJL Martinez) is Sec. 69 of the old Corporation Law SCHMID was merely an indentor, not a
Martinez Fishing Corporation transaction between the engaged in deep-sea fishing, and in the which penalizes any office or agent of vendor in the second transaction. The
parties was a sale or an indent course of its business needed electrical a corporation or any person above transaction is significantly
G.R. No. 75198 transaction. SCHMID maintains generators for the operation of its business.It transacting business for any foreign different from the first transaction
October 18, 1988. that it was the latter then negotiated with Schmid & Oberly corporation not licensed to do business wherein SCHMID delivered the goods
(Schmid) who is engaged in the business of in the Philippines, finds no application from its own stock (which it had itself
selling electric generators of different brands. to SCHMID and its officers and imported from NAGATA CO.), issued its
The two parties had two different transactions.
employees relative to the transactions own invoice, and collected payment
The first transaction resulted in the sale of 3
in the instant case. An indentor, acting directly from the purchaser. The
Nagata generators which came from
in his own name, is not, however, evidences show that RJL Martinez
Schmid’s stockroom. Schmid invoiced the said
sale. The second transaction involves 12 admitted that Schmid was merely an
10
Nagata generators which give rise to the covered by the above-quoted indent for the purchase of the 12
controversy. As RJL Martinez was canvassing provision. generators.
for generators, Schmid gave the former a
quotation for 12 Nagata generators. The
parties agreed that the mode of payment
would be through an irrevocable letter of
credit in favor of Nagata, Co. (the
manufacturer of the generators).
G. “Doing business” with or without a license (Sec. 150 in rel. to Sec. 3 [d], R.A. No. 7042 or the Foreign Investments Act of 1991): Suits By or Against Foreign Corporation
Air Canada v. Commissioner of whether petitioner Air Air Canada is an offline air carrier selling Republic Act No. 7042 or the Foreign Yes, Air Canada is a resident foreign
Internal Revenue Canada, as an offline passage tickets in the Philippines, through a Investments Act of 1991 also provides corporation. Although there is no one
international carrier selling general sales agent, Aerotel. As an off-line guidance with its definition of "doing rule in determining what "doing
G.R. No. 169507 passage documents through carrier, Air Canada does not have flights business" with regard to foreign business in the Philippines" means, the
January 11, 2016 a general sales agent in the originating from or coming to the Philippines corporations. Section 3(d) of the law appointment of an agent or an
Philippines, is-a resident and does not operate any airplane in the enumerates the activities that employee is a good indicator. This is
foreign corporation within the Philippines. It argues that, as an international constitute doing business: any other especially true when there is effective
meaning of Section 28(A)(1) of carrier doing business in the Philippines, it is not act or acts that imply a continuity of control, similar to that of employer-
the 1997 National Internal subject to tax at the regular rate of 32%. commercial dealings or arrangements, employee relationship. This is true
Revenue Code However, the CTA ruled that Air Canada was and contemplate to that extent the between Air Canada and Aerotel.
engaged in business in the Philippines through performance of acts or works, or the Hence, Air Canada is a RFC.
a local agent that sells airline tickets on its exercise of some of the functions
behalf. As such, it should be taxed as a normally incident to, and in progressive
resident foreign corporation at the regular rate prosecution of, commercial gain or of
of 32%. the purpose and object of the business
organization:
Steelcase, Inc. v. Design Whether or not Steelcase is Steelcase, Inc. (Steelcase) granted Design Section 133 of the Corporation Code of Steelcase is an unlicensed foreign
International Selections, Inc. doing business in the International Selections, Inc. (DISI) the right to the Philippines explicitly states: corporation NOT doing business in the
Philippines without a license market, sell, distribute, install, and service its Sec. 133. Doing business without a Philippines. T]he appointment of a
G.R. No. 171995 products to end-user customers within the license. - No foreign corporation distributor in the Philippines is not
April 18, 2012 Philippines.Steelcase argues that Section 3(d) transacting business in the Philippines sufficient to constitute doing business
of R.A. No. 7042 or the Foreign Investments Act without a license, or its successors or unless it is under the full control of the
of 1991 (FIA) expressly states that the phrase assigns, shall be permitted to maintain foreign corporation. On the other
doing business excludes the appointment by a or intervene in any action, suit or hand, if the distributor is an
foreign corporation of a local distributor proceeding in any court or independent entity which buys and
domiciled in the Philippines which transacts administrative agency of the distributes products, other than those of
business in its own name and for its own Philippines; but such corporation may the foreign corporation, for its own
account. On the other hand, DISI argues that be sued or proceeded against before name and its own account, the latter
it was appointed by Steelcase as the latter’s Philippine courts or administrative cannot be considered to be doing
exclusive distributor of Steelcase products. The tribunals on any valid cause of action business in the Philippines. Here, DISI
dealership agreement between Steelcase recognized under Philippine laws. was an independent contractor which
and DISI had been described by the owner sold Steelcase products in its own
himself as basically a buy and sell name and for its own account. As a
arrangement. result, Steelcase cannot be considered
to be doing business in the Philippines
by its act of appointing a distributor as
it falls under one of the exceptions
under R.A. No. 7042.
11
Philippine Deposit Insurance Whether or not the funds In 1977 and 1979, in an examination Section 3(b) of R.A. No. 3591, which In the case of Citibank and BA, it is
Corporation v. Citibank, N.A. placed in the Philippine conducted by the PDIC, it discovered that defines the terms "bank" and "banking apparent that they both did not
and Bank of America, S.T. & N.A. branch by the head office both respondents received funds from their institutions," PDIC contends that the law incorporate a separate domestic
and foreign branches of respective head offices and their foreign treats a branch of a foreign bank as a corporation to represent its business
G.R. No. 170290 Citibank and BA are insurable branches. These funds were covered by separate and independent banking interests in the Philippines. Their
April 11, 2012 deposits under the PDIC Certificates of Dollar Time Deposit that were unit. Philippine branches are, as the name
Charter and, as such, are interest-bearing with corresponding maturity implies, merely branches, without a
subject to assessment for dates and lodged in their books under the separate legal personality from their
insurance premiums. accounts “Their Account-Head parent company, Citibank and BA.
Office/Branches-Foreign Currency” and“ Due Thus, being one and the same entity,
to Head Office/Branches” respectively. PDIC the funds placed by the respondents in
assessed both banks deficiency of sum. the irrespective branches in the
Respondents filed a petition for declaratory Philippines should not be treated as
relief before the RTC in which the latter deposits made by third parties subject
favored reasoning out that the money to deposit insurance under the PDIC
placements subject of the petitions were not Charter
assessable for insurance purposes under the
PDIC Charter because said placements were
deposits made outside of the Philippines and
that there was no depositor-depository
relationship between the respondents and
their head office or other branches.
Cargill, Inc. v. Intra Strata Whether petitioner is doing or Petitioner and Northern Mindanao Article 123 of the Corporation Code Where a foreign corporation does
Assurance Corporation transacting business in the Corporation (NMC) executed a contract requires that a foreign corporation business in the Philippines without the
Philippines in contemplation of whereby NMC agreed to sell to petitioner must first obtain a license and a proper license, it cannot maintain any
G.R. No. 168266 the law and established 20,000 to 24,000 metric tons of molasses, to be certificate from the appropriate action or proceeding before Philippine
March 15, 2010 jurisprudence delivered from at the price of $44 per metric government agency before it can Courts as provided under section 133 of
ton. In compliance with contract, respondent transact business in the Philippines. the Corporation Code
issued a performance bond in the sum of
P11,287,500 to guarantee NMC’s delivery of
the 10,500 tons of molasses, and a surety bond
in the sum of P9,978,125 to guarantee the
repayment of down payment as provided in
the contract. NMC was only able to deliver
219. 551 metric tons of molasses out of the
agreed 10,500 metric tons. Thus, petitioner sent
demand letters to respondent claiming
payment under the performance and surety
bonds. When respondent refused to pay,
petitioner filed on 12 April 1991 a complaint for
sum of money against NMC and respondent.
Sehwani, Incorporated And/Or Whether or not respondent Respondent IN-N-OUT Burger, Inc., a foreign SECTION 160. Right of Foreign The Court is inclined to favor the
Benitas Frites, Inc. v. In-N-Out has the legal capacity to sue corporation organized under the laws of Corporation to Sue in Trademark or declaration of the mark "IN-N-OUT" as
Burger, Inc. for the protection of its California, U.S.A., and not doing business in the Service Mark Enforcement Action. — an internationally well-known mark on
trademarks, albeit it is not Philippines, filed before the Bureau of Legal Any foreign national or juridical person the basis of "registrations in various
Affairs of the IPO (BLA-IPO), an administrative who meets the requirements of Section countries around the world and its
12
G.R. No. 171053 doing business in the complaint against petitioners Sehwani, Inc. 3 of this Act and does not engage in comprehensive advertisements
October 15, 2007 Philippines. and Benita’s Frites, Inc. for violation of business in the Philippines may bring a therein." Thus, its right over such
intellectual property rights, attorney’s fees and civil or administrative action hereunder trademark including its right to sue for
damages with prayer for the issuance of a for opposition, cancellation, protection of such right must be upheld
restraining order or writ of preliminary infringement, unfair competition, or by the Court.
injunction. false designation of origin and false
description, whether or not it is licensed
to do business in the Philippines under
existing laws.
Lorenzo Shipping Corp. v. Whether Chubb and Sons has Lorenzo Shipping issued a clean bill of lading Art. 133 of the Corporation Code: Lorenzo Shipping failed to raise the
Chubb and Sons, Inc. et.al. capacity to sue before the for the account of the consignee, Sumitomo Doing business without a license. defense that Sumitomo is a foreign
Philippine courts. Corporation of San Francisco, California, USA, corporation doing business in the
G.R. No. 147724 which in turn, insured the goods with Chubb Philippines without a license. As such, it
June 8, 2004 and Sons, Inc. The consignee Sumitomo is estopped from litigating the issue on
rejected the goods on account of it being appeal. But assuming arguendo that
damaged and declared them unfit for the Sumitomo cannot sue in the Philippines,
purpose they were intended. Chubb and Sons, it does not follow that Chubb and Sons,
Inc. filed a complaint for collection of a sum of as subrogee, has also no capacity to
money against Lorenzo Shipping, Gearbulk, sue in our jurisdiction.
and Transmarine. Chubb and Sons, Inc.
alleged that it is not doing business in the
Philippines, and that it is suing under an
isolated transaction.
MR Holdings, Ltd. v. Sheriff Whether or not Petitioner has Petitioner contends that it has the legal If a foreign corporation does business in It is not the absence of the prescribed
Carlos P. Bajar, et.al. legal capacity to sue and capacity to sue and seek redress from the Philippines without a license, it license but the doing (of) business in
seek redress from Philippine Philippine courts as it is a non-resident foreign cannot sue before the Philippine the Philippines without such license
G.R. No. 138104 Courts? corporation not doing business in the courts; which debars the foreign corporation
April 11, 2002 Philippines and suing on isolated transactions. from access to our courts.
But the appellate court ruled otherwise, it If a foreign corporation is not doing
stressed that while petitioner may just be an business in the Philippines, it needs no
assignee to the Deeds of Assignment, it may license to sue before Philippine courts
still fall within the meaning of doing business. on an isolated transaction or on a
Where a single act or transaction however is cause of action entirely independent
not merely incidental or casual but indicates of any business transaction; and,
the foreign corporations intention to do other
business in the Philippines, said single act or If a foreign corporation does business in
transaction constitutes doing or engaging in or the Philippines with the required
transacting business in the Philippines. license, it can sue before Philippine
courts on any transaction.
Communication Materials and 1. Does an unlicensed foreign The following cases involve foreign General Rule: By entering into the "Representative
Design, Inc. (formerly Aspac- corporation found to be doing corporations suing domestic corporations in No foreign corporation, transacting Agreement" with ITEC, ASPAC is
Itec Philippines, Inc.) and business in the Philippines lack Philippine courts. The respondents domestic business in the Philippines without a charged with knowledge that ITEC was
Francisco S. Aguirre v. The Court the legal capacity to sue or corporations are raising the defense that the license, or its successors or assigns, shall not licensed to engage in business
of Appeals, et.al. maintain an action in foreign corporations lack the personality to sue be permitted to maintain or intervene activities in the country, and is thus
Philippine courts? or maintain an action in Philippine courts, and in any action, suit or proceeding in any estopped from raising in defense such
thus are seeking the dismissal of the case. court or administrative agency of the incapacity of ITEC, having chosen to
13
G.R. No. 102223 2. May Philippine courts Philippines; but such corporation may ignore or even presumptively take
August 22, 1996 acquire jurisdiction over 1. ITEC is suing ASPAC for the alleged breach be sued or proceeded against before advantage of the same.
Columbia Pictures, Inc., et.al. v. foreign corporations not doing of the “Representative Agreement” the parties Philippine Courts or administrative Columbia Pictures, Inc. et al is not
Court of Appeals, et.al. business in the Philippines? entered into. tribunals on any valid cause of action transacting or doing business in the
recognized under Philippine laws. Philippines, hence, it need not obtain a
G.R. No. 110318 2. Columbia Pictures et. al. is suing Sunshine license. Consequently, it is not barred
August 28, 1996 Home Video for copyright infringement. Jurisprudence: from maintaining a suit for copyright
A foreign corporation without such infringement against the Sunshine
3. Eriks Pte. Ltd. is suing Delfin F. Enriquez doing license is not ipso facto incapacitated Home Video, Inc.
Eriks Pte. Ltd. v. Court of business under the name and style of Delrene from bringing an action. A license is Eriks Pte. Ltd sold its products sixteen
Appeals and Delfin F. Enriquez, EB Controls Center and/or EB Karmine necessary only if it is transacting or times over a five-month period to
Jr. Commercial for recovery of sum of money. doing business in the country. Enriquez without first obtaining a
license to do business in the Philippines,
G.R. No. 118843 Exceptions: and hence, prohibited from
February 6, 1997 1. Doctrine of Estoppel: maintaining an action to collect
One who has dealt with a corporation payment therefore in Philippine courts.
Far East International Import A domestic corporation is suing a foreign of foreign origin as a corporate entity is Nankai Kogyo Co. Ltd filed its Answer
and Export Corporation v. corporation for specific performance. estopped to deny its corporate and invoked defenses and grounds for
Nankai Kogyo Co. Ltd. et.al. existence and capacity. dismissal of complaint other than lack
and Nankai Kogyo Co., Ltd. Far East Import and Export Corporation is suing of jurisdiction, which circumstance
Nakai Kogyo for Specific Performance and 2. Philippine courts acquire jurisdiction vested upon the Court jurisdiction to
G.R. No. L-13525 Damages. over the person of the foreign take cognizance of the case. Hence,
November 30, 1962 corporation although not doing though it does not intend to confer
business in the Philippines when the jurisdiction upon the court, its
foreign corporation invoked defenses appearance for some other purpose
and grounds for dismissal of the than to object to the jurisdiction
complaint other than lack of subjected it to jurisdiction of the court.
jurisdiction.
Facilities Management Is the petitioner doing business Leonardo dela Osa filed a petition seeking his If a foreign corporation, not engaged Yes. While it is true the site of work is
Corporation, et al. v. Leonardo in the Philippines so that the reinstatement with full backwages, recovery in business in the Philippines, is not identified as Wake Island, it is equally
De La Rosa, et al. service of summons upon its of his overtime compensation, swing shift and banned from seeking redress from true the place of hire is established in
agent in the Philippines vested graveyard shift differentials. courts in the Philippines, a fortiori, that Manila. Moreover, what is important is
G.R. No. L-38649 the Court of First Instance of Facilities Management Corporation and J. S. same corporation cannot claim the fact that the contract of
March 26, 1979 Manila with jurisdiction? Dreyer contended that they are domiciled in exemption from being sued in employment between the parties
Wake Island which is beyond the territorial Philippine courts for acts done against litigant was shown to have been
jurisdiction of the Philippine Government; that a person or persons in the Philippines. originally executed and subsequently
respondent J. V. Catuira, though an employee renewed in Manila, as asserted by
of respondent corporation presently stationed petitioner and not denied by
in Manila, is without power and authority of respondents. Hence, any dispute
legal representation; and that the arising therefrom should necessarily be
employment contract between petitioner and determined in the place or venue
respondent corporation carries -the approval where it was contracted. Furthermore,
of the Department of Labor of the Philippines. petitioner appointed Jaime V. Catuira
as agent for FMC with authority to
execute Employment Contracts and
receive, in behalf of that corporation,
14
legal services from and be bound by
processes of the Philippine Courts of
Justice. When the summons for the
petitioner was served on Jaime V.
Catuira, he was still in the employ of the
FMC.
H.B. Zachry Company May a writ of preliminary VBC entered into a written Subcontract When a foreign corporation has Yes. The writ was issued and served,
International v. Hon. Court of attachment be issued ex Agreement with Zachry, a foreign corporation, designated a person to receive service together with the summons, copy of
Appeals and Vinnel-Belvoir parte against a defendant in which VBC was to perform all the of summons pursuant to the the complaint and the bond, on Zachry
Corporation before acquisition of construction work on the housing project. Corporation Code, that designation is at its field office in Subic Bay, Zambales,
jurisdiction of the latter's Subsequently, VBC filed a complaint against exclusive and service of summons on through one Ruby Apostol.
G.R. No. 106989 person by service of summons Zachry for the collection of the payments due any other person is inefficacious. However, the
May 10, 1994 or his voluntary submission to it with a prayer for a writ of preliminary enforcement of the preliminary
the Court's authority? attachment over Zachry's bank account in attachment, although simultaneous
Vinnel-Belvoir Corporation v. Subic Base and over the remaining thirty-one with the service of the summons and a
The Court of Appeals and H.B. undelivered housing units which were to be copy of the complaint, did not bind
Zachry Company International turned over to the US Navy by Zachry. Zachry because the service of the
summons was not validly made. The
G.R. No. 107124 valid service of summons and a copy
May 10, 1994 of the amended complaint was only
made upon it on 24 April 1990, and it
was only then that the trial court
acquired jurisdiction over Zachry's
person. Accordingly, the levy on
attachment made by the sheriff on 27
April 1990 was invalid. However, the writ
of preliminary attachment may be
validly served anew.
Hutchison Ports Philippines Can HPPL sue SBMA? Petitioner won the public bidding held by The primary purpose of the license No. HPPL cannot sue in the Philippines
Limited v. Subic Bay SBMA for the construction of marine container requirement is to compel a foreign because it is a foreign corporation
Metropolitan Authority, et al. terminal in Subic Bay Freeport zone. SBMA corporation desiring to do business registered under the laws of the British
Board of Directors already declared HPPL as within the Philippines to submit itself to Virgin Islands. It did not register and
G.R. No. 131367 the winning bidder. However, the Office of the the jurisdiction of the courts of the state obtained a license to do business in the
August 31, 2000 President reversed the decision of the Board and to enable the government to Philippines. Participating in the bidding
and ordered the rebidding. With this, HPPL exercise jurisdiction over them for the process constitutes “doing business”
becomes unqualified to bid. HPPL filed an regulation of their activities in this because it shows the foreign
injunction case against SBMA. country. corporation’s intention to engage in
business here. Therefore, HPPL has
done business here without license. It
cannot now sue in the Philippines
without license because its
participation in the bidding is not
merely an isolated transaction.
15
La Chemise Lacoste, S.A. v. Does La Chemise Lacoste, S.A. The petitioner is a foreign corporation, A foreign corporation not doing Yes. A foreign corporation which has
Hon. Oscar Fernandez, et al. have the capacity to sue? organized and existing under the laws of business in the Philippines needs no never done any business in the
France and not doing business in the license to sue before Philippine courts Philippines and which is unlicensed and
G.R. No. L-65659 Philippines. It is the actual owner of the for infringement of trademark and unregistered to do business here, but is
May 2l, 1984 trademarks used on clothings and other goods unfair competition. widely and favorably known in the
sold in many parts of the world and which Philippines through the use therein of its
Gobindram Hemandas, have been marketed in the Philippines since products bearing its corporate name
Sujanani vs.Hon. Roberto v. 1964. The main basis of the private has a legal right to maintain an
Ongpin, in his capacity as respondent's case is its claim of alleged prior action in the Philippines
Minister of Trade and Industry registration. In 1975, Hemandas & Co., a duly
and Hon. Cesar San Diego, in licensed domestic firm applied for and was To restrain the residents and inhabitants
his capacity as Director of issued Reg. No. SR-2225 (SR stands for thereof from organizing a corporation
Patents Supplemental Register) for the trademark therein bearing the same name as the
"CHEMISE LACOSTE & CROCODILE DEVICE" by foreign corporation, when it appears
G.R No. L- 63796- 97 the Philippine Patent Office for use on T- shirts, that they have personal knowledge of
May 2, 1984 sportswear and other garment products of the the existence of such a foreign
company. Two years later, it applied for the corporation, and it is apparent that the
registration of the same trademark under the purpose of the proposed domestic
Principal Register. The Patent Office eventually corporation is to deal and trade in the
issued an order which granted the same goods as those of the foreign
application. Thereafter, Hemandas & Co. corporation.
assigned to respondent Gobindram
Hemandas all rights, title, and interest in the
trademark "CHEMISE LACOSTE & DEVICE". The
petitioner filed its application for registration of
the trademark "Crocodile Device" and
"Lacoste". The former was approved for
publication while the latter was opposed by
Games and Garments. The petitioner filed with
the National Bureau of Investigation (NBI) a
letter- complaint alleging therein the acts of
unfair competition being committed by
Hemandas and requesting their assistance in
his apprehension and prosecution.
Marubeni Nederland B.V. v. The Can Marubeni Nederland B.V. Marubeni Nederland B.V. and D.B. Teodoro A foreign corporation doing business in Yes. Marubeni Nederland B.V. through
Honorable Judge Ricardo be considered as "doing Development Corporation entered into a the Philippines with or without license is the foregoing acts, had effectively
Tensuan, et al. business" in the Philippines and contract whereby petitioner agreed to supply subject to process and jurisdiction of solicited "orders, purchases (sales) or
therefore subject to the all the necessary equipment, machinery, the local courts. If such corporation is service contracts" as well as
G.R. No. 61950 jurisdiction of our courts? materials, technical know-how and the properly licensed, well and good. But it constituted Marubeni Corporation,
September 28, 1990 general design of the construction of DBT's lime shall not be allowed, under any Tokyo, Japan and its Manila Branch as
plant at the Guimaras, Iloilo on a deferred circumstances, to invoke its lack of its representative in the Philippines to
payment basis. Simultaneously, the parties license to impugn the jurisdiction of our transact business for its account as
entered into two financing contracts. The loan courts. principal. These circumstances, taken
amortizations of DBT fell due. But before the first singly or in combination, constitute
installment became due, DBT wrote a letter to "doing business in the Philippines" within
the NIDC interposing certain claims against the contemplation of the law.
16
the petitioner and at the same time requesting
NIDC for a revision of the repayment schedule
and of the amounts due under the contracts.
Philippine Columbia Enterprises Is the plaintiff's allegations in its Katoh & Co.,Ltd, alleged in its complaint that it Actions by foreign corporations are No. An examination of complaint will
Co., et al. v. Hon. Gregorio complaint, particularly in its is a corporation duly organized under the laws governed by rules different from those show that the same expressly avers that
Lantin, et al. ten causes of action, of Japan, with head office in Tokyo, Japan. in actions against them. the transactions upon which
constitute by themselves an The complaint alleged ten causes of action respondent plaintiff is suing were‖
G.R. No. L-29072 admission that it is transacting against Philippines Columbia Enterprises Co., consummated in Tokyo‖ and hence,
June 7, 1971 business in the Philippines? with principal place of business in Manila, and not in the Philippines. Petitioners-
the general partners, thereof, Rufino Dy Chin defendant’s assertion that the
and Fermin Sy, who reside in Manila. These ten contracts were made in the Philippines
causes of action are for the collection of squarely contradicts the averments in
payment of ten different shipments of angle the complaint. And the basic and well-
bars, mild steel bars, and cold rolled steel known rule is that whether a cause of
sheets allegedly ordered in May, July, October action is pleaded or not must be
and November, 1966 by the defendants from ascertained solely upon the face of the
the plaintiff which plaintiff complaint.
Philip Morris, Inc., et al. v. Does petitioner corporation Petitioner Philip Morris, Inc., a corporation A foreign corporation may have the As already found herein, while
Fortune Tobacco Corporation have the legal capacity to sue organized under the laws of the State of capacity to sue for infringement but petitioners have registered the
for alleged infringement Virginia, U.S. and the registered owner of the the question of whether they have an trademarks "MARK VII," "MARK TEN" and
G.R. No. 158589 despite being a foreign trademark MARK VII cigarettes. Petitioner exclusive right over their symbol as to "LARK" for cigarettes in the Philippines,
June 27, 2006 corporation not doing business Benson & Hedges (Canada), Inc., a subsidiary justify issuance of the controversial writ prior actual commercial use thereof
in the Philippines? of Philip Morris, Inc., is the registered owner of will depend on actual use of their had not been proven. In fact,
the trademark MARK TEN. Then, another trademarks in the Philippines in line with petitioners’ judicial admission of not
subsidiary of Philip Morris, Inc., the Swiss Sections 2 and 2-A of RA No. 116. doing business in this country
company Fabriques de Tabac Reunies, S.A., is effectively belies any pretension to the
the assignee of the trademark LARK. On the contrary. Therefore, it may be stated
other hand, respondent Fortune Tobacco right off that the registration of a
Corporation, a company organized in the trademark unaccompanied by actual
Philippines, manufactures and sells cigarettes use thereof in the country accords the
using the trademark MARK. Petitioners filed a registrant only the standing to sue for
complaint for infringement against Fortune infringement in Philippine courts.
Tobacco by averring that the countries in Entitlement to protection of such
which they are domiciled grant to corporate trademark in the country is entirely a
persons of the Philippines the privilege to bring different matter.
action for infringement, without need of a
license to do business in those countries.
Puma Sportschuhfabriken Rudolf Did the Court of Appeals err in Petitioner Puma Sports, a German corporation Section 21-A of Republic Act (RA) No. The Convention of the Union of Paris for
Dassler, K.G. v. The Intermediate holding that the petitioner manufacturing Puma Products filed a 166: the country of which the said the Protection of Industrial Property to
Appellate Court and Mil-Oro foreign corporation had no complaint for infringement of patent or corporation or juristic person is a citizen, which the Philippines became a party
Manufacturing Corporation legal capacity to sue? trademark against Mil-Oro Manufacturing or in which it is domiciled, by treaty, on September 27, 1965 provides in its
Corp. The trial court issued a temporary convention or law, grants a similar Article 8 thereof that a trade name
G.R. No. 75067 restraining order, restraining the Mil-Oro and privilege to corporate or juristic persons (corporation name) shall be protected
February 26, 1988 the Director of Patents from using the of the Philippines. in all the countries of the Union without
trademark PUMA or any reproduction, the obligation of filing or registration,
counterfeit copy or colorable imitation whether or not it forms part of the
17
thereof, and to withdraw from the market all trademark. Thus, petitioner had the
products bearing the same trademark. legal capacity to file the action.
According to Puma Sports, its complaint
specifically alleged that it is not doing business
in the Philippines and is suing under the said
R.A. 166. Further, petitioner maintains that R.A.
166 does not mandatorily require that the
reciprocity between the Federal Republic of
Germany and the Philippines be pleaded.
Subic Bay Metropolitan Does Universal International Lease and Development Agreement (LDA) As a general rule, unlicensed foreign The case is an exception to the general
Authority, et.al. v. Group of Taiwan (UIG) have was executed by UIG and SBMA for a Golf non-resident corporations cannot file rule of requiring a license to sure. In
Universal International Group of the capacity to sue? Course. SBMA alleged that UIG has committed suits in the Philippines. A corporation entering into the LDA with UIG, SBMA
Taiwan, et.al.
contractual violations. It was argued that UIG, has legal status only within the state or effectively recognized its personality
did not have the capacity to sue territory in which it was organized. For and capacity to institute the suit before
G.R. No. 131680
this reason, a corporation organized in the trial court.
September 14, 2000
another country has no personality to
file suits in the Philippines.
In order to subject a foreign

corporation doing business in the
country to the jurisdiction of our courts,
it must acquire a license from the SEC
and appoint an agent for service of
process. Without such license, it cannot
institute a suit in the Philippines.
Time, Inc. v. Hon. Andres Reyes, Can libel be brought against a Time Inc., an American Corporation was sued It is a fundamental rule of international This was a case of libel and the Court
et.al. foreign corporation or non- for libel arising from a publication of Time (Asia jurisdiction that no state can by its laws, sustained the territoriality principle of
resident defendant? Edition) magazine entitled “Corruption in Asia” and no court which is only a creature criminal law and the rule that
G.R. No. L-28882 which named the Mayor of the City of Manila of the state, can by its judgments or corporations generally cannot be
May 31, 1971 and Undersecretary of Finance. decrees, directly bind or affect charged for a criminal offense.
property or persons beyond the limits of However, the Court said this was
that state. Not only this, but if the instead a Civil Case for damages but
accused is a corporation, no criminal the CFI was without jurisdiction
action can lie against it, whether such because it did not rule on a motion to
corporation be resident or non- dismiss not held that is had jurisdiction.
resident.
Universal Rubber Products, Inc. Is the issuance of the Converse rubber Corporation and Edwardson The disability of a foreign corporation The Court upheld the subpoena duces
v. Hon. Court of Appeals, et.al. "subpoena duces tecum" is Manufacturing Co., Inc sued Universal Rubber from suing in the Philippines is limited to tecum. One of the arguments raised by
proper in a suit for unfair for unfair competition. A subpoena duces suits to enforce any legal of contract Universal is that Converse, a foreign
G.R. No. L-30266 competition? tecum was issued against Universal Rubber rights arising from, or growing out, of corporation, is not licensed in the
June 29, 1984 any business which it has transacted in Philippines with no goodwill and
the Philippine Islands ... On the other without any registrable right over its
18
hand, where the purpose of the suit is own name. The Court made distinction
"to protect its reputation, its corporate as to enforcement of a legal contract
name, its goodwill, whenever that rights against a suit for protection of
reputation, corporate name or reputation or goodwill. In the case of
goodwill have, through the natural the latter, a corporation may sue for
development of its trade, established unfair competition to protect its
themselves", an unlicensed foreign goodwill in the Philippines even if not
corporation may sue in the Philippines. registered.
B. Van Zuiden Bros., Ltd. v. Is Van Zuiden, an unlicensed B. Van Zuiden Bros. (BVZB) filed a complaint for Section 3(d) of Republic Act No. 7042 It was ruled that the transactions
GTVL Manufacturing Industries, foreign corporation, with legal sum of money against GTVL. GTVL filed motion (RA 7042) or "The Foreign Investments between the parties is not considered
Inc. capacity to sue in the to dismiss on the ground BVZB has no legal Act of 1991”, on the phrase "doing as doing business in the Philippines.
Philippines? capacity alleging they are doing business in business" There is no showing that Van Zuiden
G.R. No. 147905 the Philippines without a license. was performing specific commercial
May 28, 2007 acts within the Philippines. They did not
open an office, appoint a
representative for any local business
and the perfection and consummation
of the transaction were performed
outside the Philippines in Hong Kong. In
short, since it is not doing business, it
does not need a license before it can
sue.
19

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