1. Mentholatum v.

Mangaliman, on substance test and continuity test, cannot prosecute for trademark and unfair
competition

Doctrine:
No general rule or governing principle can be laid down as to what constitutes "doing" or "engaging in" or
"transacting" business. Indeed, each case must be judged in the light of its peculiar environmental circumstances.
The true test, however, seems to be whether the foreign corporation is continuing the body or substance of the
business or enterprise for which it was organized or whether it has substantially retired from it and turned it over to
another.

Facts:
Mentholatum is a Kansas Corporation without a license to do business in the Philippines which manufactures
Mentholatum. Philippine-American Drug Co. is its exclusive distributor in the Philippines. Mentholatum was
registered with the Bureau of Commerce as the trade mark of its products. Mentholatum alleges that it suffered
damages because of the diminution of their sales due to a medicament and salve named "Mentholiman" which the
Mangaliman brothers sold to the public packed in a container of the same size, color and shape. Mentholatum then
filed a civil action against the brothers and the Director of the Bureau of Commerce for infringement of trade mark
and unfair competition. The Supreme Court said that Mentholatums activities were business transactions in the
Philippines, and that, by section 69 of the Corporation Law, it may not maintain the present suit.

Issue:
Whether or not the petitioners could prosecute the instant action for trademark infringement and unfair competition
without having secured the license required in section 69 of the Corporation Law? No, cannot prosecute

Ruling:
No general rule or governing principle can be laid down as to what constitutes "doing" or "engaging in" or
"transacting" business. Indeed, each case must be judged in the light of its peculiar environmental circumstances.
The true test, however, seems to be whether the foreign corporation is continuing the body or substance of the
business or enterprise for which it was organized or whether it has substantially retired from it and turned it over to
another. Furthermore, Sec. 69 provides that no foreign corporation or corporation formed, organized, or
existing under any laws other than those of the Philippine Islands shall be permitted to transact business in the
Philippine Islands or maintain by itself or assignee any suit for the recovery of any debt, claim, or demand
whatever, unless it shall have the license prescribed in the section immediately preceding. In this case, the
Philippine-American Drug Co., Inc., is the exclusive distributing agent in the Philippine Islands of the Mentholatum
Co., Inc., in the sale and distribution of its product known as the Mentholatum. It follows that whatever transactions
the Philippine-American Drug Co., Inc., had executed in view of the law, the Mentholatum Co., Inc., did it itself. As
it is established that Mentholatum is doing business in the Philippines, it cannot now maintain the present action
against the respondents without the license required, by virtue of Sec. 69.

2. When can a foreign corporation be sued or when can it sue in the Philippines?
A: Avon Insurance v. CA, both on foreign corporations, suability and cannot be sued

Doctrine:
If a foreign corporation engages in business activities without the necessary
requirements, it opens itself to court actions against it, but it shall not be allowed
maintain or intervene in an action, suit or proceeding for its own account in any court or
tribunal or agency in the Philippines. The purpose of the law in requiring that foreign
corporations doing business in the country be licensed to do so, is to subject such
corporations to the jurisdiction of the courts, otherwise, a foreign corporation illegally
doing business here because of its refusal or neglect to obtain the required license and
authority to do business may successfully though unfairly plead such neglect or illegal
act so as to avoid service and thereby impugn the jurisdiction of the local courts. The
same danger does not exist among foreign corporations that are indubitably not doing
business in the Philippines. Indeed, if a foreign corporation does not do business here,
there would be no reason for it to be subject to the States regulation.

Facts:
Respondent Yupangco Cotton Mills engaged to secure with Worldwide
Security and Insurance Co. several of its properties which were then covered
by reinsurance treaties between Worldwide Security and several foreign
reinsurance companies, including herein petitioners. These reinsurance
agreements had been made through an international broker acting for
Worldwide Security. While the policies are in effect, Yupangcos properties
were razed in fire giving rise to their indemnification. Worldwide
acknowledged a remaining balance and assigned to Yupangco all reinsurance
proceeds still collectible from all the reinsurance companies. Thus, as
assignee and original insured, Yupangco instituted a collection suit against
petitioners. Petitioners averred that they are foreign corporations not doing
business in the Philippines therefore cannot be subject to the jurisdiction of
its courts.

Issue:
Whether or not petitioners can be subject to the jurisdiction of the Philippine
courts? No, as they are not doing business in the Philippines

Ruling:
If a foreign corporation engages in business activities without the necessary
requirements, it opens itself to court actions against it, but it shall not be allowed maintain
or intervene in an action, suit or proceeding for its own account in any court or tribunal or
agency in the Philippines. The purpose of the law in requiring that foreign corporations
doing business in the country be licensed to do so, is to subject such corporations to the
jurisdiction of the courts, otherwise, a foreign corporation illegally doing business here
because of its refusal or neglect to obtain the required license and authority to do business
may successfully though unfairly plead such neglect or illegal act so as to avoid service
and thereby impugn the jurisdiction of the local courts. The same danger does not exist
among foreign corporations that are indubitably not doing business in the
Philippines. Indeed, if a foreign corporation does not do business here, there would be no
reason for it to be subject to the States regulation. As we observed, in so far as State is
concerned, such foreign corporation has no legal existence. Therefore, to subject such
corporation to the courts jurisdiction would violate the essence of sovereignty. The
reinsurance treaties between the petitioners and Worldwide Surety and Insurance were
made through an international insurance brokers, and not through any entity of means
remotely connected with the Philippines, and hence, petitioner corporations are not doing
business in the Philippines and not subject to its jurisdiction.

3. If a person benefitted from the service of a foreign corporation, can the corporation sue that
person?
A: Merrill Lynch v. CA, foreign Corp can sue if individual knew and benefitted (look into the
tests, you can see it in boss ada's reviewer or CLV's corp book, there's a specific discussion on
this)

Doctrine:
The rule is that a party is estopped to challenge the personality of a corporation after having
acknowledged the same by entering into a contract with it. And the "doctrine of estoppel to deny
corporate existence applies to foreign as well as to domestic corporations;" "one who has dealt with
a corporation of foreign origin as a corporate entity is estopped to deny its corporate existence and
capacity." The principle "will be applied to prevent a person contracting with a foreign corporation
from later taking advantage of its noncompliance with the statutes, chiefly in cases where such
person has received the benefits of the contract.

Facts:

Issue: whether or not ML FUTURES may sue in Philippine Courts to establish and enforce its rights
against said spouses, in light of the undeniable fact that it had transacted business in this country
without being licensed to do so Yes

Ruling:
The rule is that a party is estopped to challenge the personality of a corporation after having
acknowledged the same by entering into a contract with it. And the "doctrine of estoppel to deny
corporate existence applies to foreign as well as to domestic corporations;" "one who has dealt with
a corporation of foreign origin as a corporate entity is estopped to deny its corporate existence and
capacity." The principle "will be applied to prevent a person contracting with a foreign corporation
from later taking advantage of its noncompliance with the statutes, chiefly in cases where such
person has received the benefits of the contract.
In this case, the Lara spouses have been receiving benefits and profits from ML Futures for a
period of 7 years, and they were aware at the outset of the corporations lack of license to do
business in the Philippines. As such, ML Futures may sue the Lara spouses.

4. Are the board of members required to sign the minutes of the meeting and does the non-
signature equate to disapproval?
A: Lopez realty v. Sps. Tanjanco, minutes of meeting not required to be signed by the board
members. Non signing is not equivalent to disapproval.

Doctrine:
The proper custodian of the books, minutes and official records of a corporation is usually the
corporate secretary. Being the custodian of corporate records, the corporate secretary has the duty
to record and prepare the minutes of the meeting. The signature of the corporate secretary gives the
minutes of the meeting probative value and credibilit
Facts:

Issue:
Ruling:

The proper custodian of the books, minutes and official records of a corporation is usually the
corporate secretary. Being the custodian of corporate records, the corporate secretary has the duty
to record and prepare the minutes of the meeting. The signature of the corporate secretary gives the
minutes of the meeting probative value and credibility. Thus, without the certification of the corporate
secretary, it is incumbent upon the other directors or stockholders as the case may be, to submit
proof that the minutes of the meeting is accurate and reflective of what transpired during the
meeting. Conformably to the foregoing, in the absence of Asuncions certification, only Juanito,
Benjamin and Rosendo, whose signatures appeared on the minutes, could be considered as to have
ratified the sale to the spouses Tanjangco.

5. When can the piercing of the corporate veil be valid?

A: Comish of customs v. Oilink, piercing the veil

Doctrine:

Facts:

Issues

Ruling:
A corporation, upon coming into existence, is invested by law with a personality separate and distinct
from those of the persons composing it as well as from any other legal entity to which it may be
related. For this reason, a stockholder is generally not made to answer for the acts or liabilities of the
corporation, and viceversa. The separate and distinct personality of the corporation is, however, a
mere fiction established by law for convenience and to promote the ends of justice. It may not be
used or invoked for ends that subvert the policy and purpose behind its establishment, or intended
by law to which the corporation owes its being. This is true particularly when the fiction is used to
defeat public convenience, to justify wrong, to protect fraud, to defend crime, to confuse legitimate
legal or judicial issues, to perpetrate deception or otherwise to circumvent the law. This is likewise
true where the corporate entity is being used as an alter ego, adjunct, or business conduit for the
sole benefit of the stockholders or of another corporate entity. In such instances, the veil of corporate
entity will be pierced or disregarded with reference to the particular transaction involved.
The doctrine of piercing the corporate veil has no application here because the Commissioner of
Customs did not establish that Oilink had been set up to avoid the payment of taxes or duties, or for
purposes that would defeat public convenience, justify wrong, protect fraud, defend crime, confuse
legitimate legal or judicial issues, perpetrate deception or otherwise circumvent the law.

Circumstances that are useful in the determination of whether a subsidiary is a mere instrumentality
of the parent-corporation, viz:

1. Control, not mere majority or complete control, but complete domination, not only of finances butof
policy and business practice in respect to the transaction attacked so that the corporate entity as to
this transaction had at the time no separatemind, will or existence of its own;
2. Such control must have been used by the defendant to commit fraud or wrong, to perpetrate the
violation of a statutory or other positive legal duty, or dishonest and, unjust act incontravention of
plaintiff's legal rights; and

3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss
complained of.

In applying the "instrumentality" or "alter ego" doctrine, the courts are concerned with reality, not
form, and with how the corporation operated and the individual defendant's relationship to the
operation. Consequently, the absence of any one of the foregoing elements disauthorizes the
piercing of the corporate veil.

[Nego]
6. What is the rule on the 24-hour clearing rule, the general rule and the exceptions?
Areza v. Express Savings Bank, on the non applicability of the 24-hour clearing rule for altered
checks or forged endorsements, (check also samsung construction v. FEBTC)

As the rule now stands, the 24-hour rule is still in force, that is, any check which should be refused
by the drawee bank in accordance with long standing and accepted banking practices shall be
returned through the PCHC/local clearing office, as the case may be, not later than the next regular
clearing (24-hour). The modification, however, is that items which have been the subject of material
alteration or bearing forged endorsement may be returned even beyond 24 hours so long that the
same is returned within the prescriptive period fixed by law. The consensus among lawyers is that
the prescriptive period is ten (10)years because a check or the endorsement thereon is a written
contract. Moreover, the item need not be returned through the clearing house but by direct
presentation to the presenting bank. In short, the 24-hour clearing ruledoes not apply to altered
banks.

The general rule is to the effect that a forged signature is wholly inoperative, and
payment made through or under such signature is ineffectual or does not discharge the
instrument.[21] If payment is made, the drawee cannot charge it to the drawers account.
The traditional justification for the result is that the drawee is in a superior position to
detect a forgery because he has the makers signature and is expected to know and
compare it.[22] The rule has a healthy cautionary effect on banks by encouraging care in
the comparison of the signatures against those on the signature cards they have on file.
Moreover, the very opportunity of the drawee to insure and to distribute the cost among
its customers who use checks makes the drawee an ideal party to spread the risk to
insurance.[23]