Buenaflor vs camarines sur industry

doctrine: automatic cessation upon expiration of corporate life. 3 year period given to wind up affairs, corporation
may not apply for any transfer of certificate.

Buenaflor applied for application to install a 5 ton ice plant but was rejected by public service commission. Even if it
allowed camarines sur industry to be built.

Meetings were set between camarines sur and buenaflor regarding the establishment of the ice plant. But it was
contested by buenaflor during the meeting that the life of camarines sur corporation had already expired.

Camarines corporation registered new AOI and assigned the certificate of public convenience to new Camarines
corporation. They petitioned to approve the said transfer of certificate/

Buenaflor argued that he was the first to apply, camarines corporation ceased to be juridicial entity.
Commission only granted 1 ton of ice plant to buenaflor. Buenaflor appealed (5ton)

issue:
WON corporation may continue and transfer business when its life expired?

Ruling:
No , a corporation once it life expires cannot lawfully conduct their business further. It could only continue for 3
more years for purpose of prosecuting affairs as well as winding up business and assets . When they applied for the
transfer of certificate they have no juridicial personality. It had ceased operation and cannot sue nor apply for any
certificate.
National Abaca vs Pore

National Abaca = filed a complaint for recovery of sum of money against Pore
= advanced to her for the purchase of hemp for the account

Pore moved to dismiss the complaint upon the ground:

1. that National Abaca has no legal capacity to sue
2. Already Abolished by EO. 372

National Abaca objected on the ground that pursuant to said executive order (November 24,1950):
1. They shall continued as a body corporate for a period of 3 years from the effective date
2. gradually to settle and close its affairs
3. this case was begun on November 14, 1953 or before the expiration of the period aforementioned.

Issue:
WON an action commenced 3 years after the abolition of National Abaca may continued after the expiration of the 3
year period?

Held: NO
In the absence of statutory provision to the contrary, pending actions by or against a corporation are abated upon
expiration of the period allowed by law for the liquidation of its affairs
 RULE: where a statute continues the existence of a corporation for a certain period after its dissolution for the
purpose of prosecuting and defending suits:
GR: the corporation becomes defunct upon the expiration of such period
Exception: there is provision to the contrary
 THEREFORE = no action can afterwards be brought by or against it, and must be dismissed. Actions pending by or
against the corporation when the period allowed by the statute expires, ordinarily abate

The Corporation Law contains no provision authorizing a corporation, after three (3) years from the expiration of its
lifetime, to continue in its corporate name actions instituted by it within said period of three (3) years
 Section 77 = AFTER 3 YEARS it shall no longer enjoy corporate existence for such purpose
 Section 78 = authorizes the corporation ="at any time during said three years . . . to convey all of its property to
trustees for the benefit of members, stockholders, creditors and other interested"
 PURPOSE = enabling said trustees to prosecute and defend suits by or against thecorporation begun before the
expiration of said period.

Supplementary Notes:
 The authorities are to the effect that suits by or against a corporation abate when it ceased to be an entity
capable of suing or being sued = but trustees to whom the corporate assets have been conveyed pursuant to
the authority of section 78 may used and be sued as such in all matters connected with the liquidation.
Tan tiong bio vs CIR

Doctrine: The dissolution of a corporation does not extinguish the debts due or owing to it. A creditor of a dissolved
corporation may follow its assets, as in the nature of a trust fund, into the hands of its stockholders. An indebtedness
of a corporation to the federal government for income and excess profit taxes is not extinguished by the dissolution of
the corporation

Successors-in-interest or SH are only liable for the proportion of their benefit according to their share

a corporation may still be sued even 3 years after their dissolution , existence is not a bar to their liability.

CENTRAL SYNDICATE (the corporation) liquidated and distributed its assets immediately after the sale of the said surplus
goods.

the Collector assessed against the syndicate deficiency sales tax(GTA: after the 3-year period)

Collector instituted the present action( after 3 years of dissolution)

Petitioners argue that considering that the Collector instituted the present action 3 years after dissolution. when he filed
his answer to the appeal of petitioners,said action was already barred by prescription pursuant to Sections 77and 78 of
the Corporation Law which allows corporations to continue as a body corporate only for three years from its dissolution;
and that assuming that petitioners are liable to pay the tax, their liability is not solidary, but only limited to the benefits
derived by them from the corporation.

ISSUE:
WON the corporation having already been dissolved and has tax liabilities can it be imposed to its successors-in-interest
(SH)?

HELD:

Yes it may but only to the portion where they were benefited from the sale as SH. They can be held personally liable for
the taxes as successors-in-interest of the defunct corporation

The corporation having obtained benefits from the sale, even if no evidence was presented, it immediately distributed
the said profit from the sale. SH are beneficiaries however there being no express provision requiring the SH of the
corporation to be solidarily liable for its debts which liability must be express and cannot be presumed. They shall be
liable in tax according to the protion of their shares in distribution of assets of defunct corporation.
Gelano v. CA

Insular filed a suit for collection against the spouses Gelano for the following:
1. Refusal to return cash advances made
2. Credit purchases of Lumber
3. Payment made in accommodation of their loan with China Bank

During Pendency of the Case:

** the stockholders amended its AOI by shortening the term of its existence
** approved by the Securities and Exchange Commission.

Issue:
Whether a corporation, whose corporate life had ceased by the expiration of its term of existence, could still continue
prosecuting and defending suits after its dissolution and beyond the period of three years even without having
undertaken any step to transfer its assets to a trustee or assignee?

Held: YES
the counsel who prosecuted and defended the interest of the corporation and appeared in behalf of the corporation
may be considered a trustee of the corporation at least with respect to the matter in litigation only.
 Said counsel had been handling the case when the same was pending before the trial court until it was appealed
before the Court of Appeals and finally to this Court.
 there was a substantial compliance with Section 78
 THEREFORE Insular Sawmill, Inc. could still continue prosecuting the present case even beyond the period of
three (3) years from the time of its dissolution.

Supplementary Notes:
 "trustee" as used in the corporation statute must be understood in its general concept which could include the
counsel to whom was entrusted in the instant case, the prosecution of the suit filed by the corporation

 The purpose in the transfer of the assets of the corporation to a trustee upon its dissolution is more for the
protection of its creditor and stockholders. Debtors like the Spouses may not take advantage of the failure of
the corporation to transfer its assets to a trustee.
BOARD OF LIQUIDATORS VS KALAW,ESTATE

Maximo Kalaw = GM and Chairman of NACOCO

4 typhoons that hit the country = NACOCO was unable to fulfill its obligations

Louis Dreyfus ltd = filed a suit against NACOCO

NACOCOC was subsequently abolished by EO 372 = giving the Board of Liquidators the function of settling and closing its
affairs

BOL now seeks to recover from GM Kalaw and the other two directors = Grounds:
1. Negligence for having approved and entered into the aforementioned unprofitable contracts
2. by-laws required prior approval of the board
3. Kalaw entered into the contracts alone as general manager and without the board’s prior approval

Issue:
WON Kalaw and the rest of the board were guilty negligence and bad faith and/or breach of trustfor having entered into
the unprofitable contracts?

Held: NO
Kalaw’s acts were valid corporate acts.
 GR: laws required that a general manager first procure approval of the board members before entering into
contracts that would bind the corporation
Exception: contrary practice ratified by the Board
 Evidence = it was the practice of the corporation to allow its general manager to negotiate contracts
 copra trading for and in NACOCO’s behalf = without prior board approval

Supplementary Notes:
 It is possible for an express provision of the by-laws to be violated and the Board may, in certain corporate
actions, bind the corporation in spite of the fact that it is contrary to the by-law provision

 There are 2 ways by which corporate actions may come about through its Board of Directors:
a) The board may empower or authorize the act or contract
b) Ratification from the board
 As long as there is approval by the board, express or implied, it is valid to bind the corporation.
China Banking vs Michelin

George O’Farrell & Cie Inc. = is a domestic corporation acting as agent and representative of the Michelin & Cie

Michelin decided to discontinue their business relations = Ground: they discovered that O’Farrell
1. failed to account for the price of tires sold by the them
2. used the money for its own use and benefit and without the authority or consent of Michelin

Gaston O’Farrell executed a mortgage on the his house and shares = to guarantee payment ( ONLY PARTIALLY PAID )

BOD of O’Farrell filed a petition for its dissolution and that Gaston be appointed as Receiver = was granted by TC.

Michelin prayed that he may considered a preferred creditor = TC grants motion of Michelin

China Bank intervened and moved that:

1. Michelin’s claim be allowed as an ordinary one under the Insolvency Law
2. sought the nullification of the TC orders

Issue:
WON the Michelin should be preferred?

Held: NO
during the winding-up proceedings after dissolution = no creditor will be permitted by legal process or otherwise to
acquire priority, or to enforce his claim against the property held for distribution as against the rights of other
creditors.
 The appointment of a receiver by the court = (X) empowers it to hear and pass on the claims of the creditors of
the corporation at first hand.
 Since "liquidation" as applied to the settlement of the affairs of a corporation consists of:
1. adjusting the debts and claims
2. collecting all that is due the corporation
3. the settlement and adjustment of claims against it
4. the payment of its just debts
 all claims must be presented = during the winding-up proceedings within the 3 years
 RULE = if a claim is disputed = the receiver cannot safely allow the same
= it should be transferred to the proper court for trial and allowance, and the amount so allowed then
presented to the receiver or trustee for payment.
= The rulings of the receiver on the validity of claims submitted are subject to review by the court
appointing such receiver though no appeal is taken to the latter ruling, and

Supplementary Notes:
 Under the Corporation Code, it is the SEC which may appoint the receiver
republic vs marsman

doctrine Corporation cannot raise the defence that the government is barred from filing a collection case against them
because it was filed after the 3 year period following their dissolution

facts
Marsmen a timer licensee has unpaid taxes, the BIR demanded for payment but the BIR filed a case against them 4 years
after they had been extra-judicially dissolved. The defense of the corporation is that it is beyond the 3 year period were
they may be sued.

Issue:
WON BIR may still recover from corporation?

ruling
Yes, the assessment was done before the corporation was dissolved while the other assesments were done not
later than 6 months after dissolution. Thus the government became a creditor of the corporation before the
completion of its dissolution by the liquidation of its assets. (kailangan pasok within 3 years para maging creditor kahit
government?).

The liquidator became the trustee of all its assets for the benefit of interested parties, including the Government, which
is one of its creditors.

To assume otherwise would render the extra-judicial dissolution illegal and void since acc. To § 62 of the Corporation
Law, such dissolution is permitted only when it does not affect the rights of any creditor with a claim against the
corporation.

Supplementary Notes:
 Please READ = Sec 94 and 95of Corporation Code = Distribution of Assets of Non-Stock Corporations
Alhambra cigar and cigarette vs SEC

Alhambra Inc’s term already expired = the company commenced its liquidation

Alhambra Industries, Inc., was formed to carry on the business of Alhambra.

RA 3531 was passed = w/in Alhambra’s three-year statutory period for liquidation
= empowering domestic private corporations to extend their corporate life beyond the period
fixed by the AOI for a term not to exceed fifty (50) years in any one instance.

Alhambra’s BOD amended their AOI to extend its corporate life for an additional fifty years = SH approved

(SEC) rejected the same as it = Grounds:

1. they cannot avail since its term of existence had already expired when the law took effect
2. The law had no retroactive effect.

Issue
WON corporation may extend life even if it is under statutory dissolution?

Held: NO.
Section 77 = continuance of a “dissolved” corporation as a body corporate for three years has for its purpose the final
closure of its affairs, and no other; the corporation is specifically enjoined from “continuing the business for which it
was established.”
 Liquidation of the corporation’s affairs had become necessary precisely because its life had ended
 The moment a corporation’s right to exist as an “artificial person” ceases = its corporate powers are terminated
“just as the powers of a natural person to take part in mundane affairs cease to exist upon his death”; there is
nothing left but to conduct, as it were, the settlement of the estate of a deceased juridical person.
 Alhambra’s corporate life had already expired = no life there is to prolong
 TO EXTEND = overstepped the limits of its limited existence
Avon insurance plc vs CA

doctrine: True test: whether the foreign corporation is continuing the body or substance of the business or enterprise
for which it was organized

Yupangco Cotton Mills engaged to secure with WorldwideSecurity and Insurance Co. Inc., several of its properties

These contracts were covered by reinsurance treaties between WorldwideSurety and Insurance, and several foreign
reinsurance companies including the petitioners through CJ Boatrwright acting as agent of Worldwide Suretyand
Insurance

a fire razed the properties insured. Reinsurance proceeds are still collectible from all foreign insurance companies. A
collection suit was filed, summons were sent through office of insurance commissioner, but it was questioned by
reinsurers as well as the jurisdiction of the said court.

Issue:
WON the international reinsurers are “doing business in the Philippines”.

Ruling
No international reinsurers are not “doing business in the Philippines” and the Philippine court has not acquired
jurisdiction over them.

The reinsurance treaties between the petitioners and Worldwide Surety andInsurance were made through an
international insurance broker and NOT through any entity or means remotely connected with the Philippines

Reinsurance company is not doing business in a certain state even if the property or lives which are insured by the
original insurer company are located in that state.Reinsurance Contract is generally separate and distinct arrangement
from the original contract of insurance.
-
Doing business in the Philippines – must be judged in the light of its peculiar circumstances upon its peculiar facts and
upon the language of the statute applicable.True test: whether the foreign corporation is continuing the body or
substance of the business or enterprise for which it was organized
-If there exist a domestic agent of the foreign corporation it can be served with summons through that agent without
proving that such corporation is doing business in the phils or not.

NO allegation or demonstration of the existence of petitioners’ domestic agent but avers simply that they are doing
business not only abroad but in the Phils. Petitioners had not performed any act which would give the general public
the impression that it had been engaging or intends to engage in its ordinary and usual business undertaking in the
country.
-
The purpose of the law in requiring that foreign corporations doing business in the country be licensed to do so, is to
subject the foreign corporations doing business in the Philippines 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 maysuccessfully though unfairly plead such neglect or illegal act so as to avoid service and thereby impugn
the jurisdiction of the local courts.

Supplementary Notes:
Voluntary appearance before the lower court to question the jurisdiction isnot equivalent to submission to jurisdiction
The SC disposed the case in favor of the international insurers (petitioners’)declaring that the lower court has not
acquired and cannot acquire jurisdiction overthem and was ordered to desist from maintaining further proceeding
against them.
COLUMBIA PICTURES, INC vs CA

Petitioners filed a complaint for violation of Protection of intellectual Property against Sunshine Home Video Inc.

NBI Senior Agent Reyes applied for a search warrant against Sunshine Home Video Inc

Search warrant was issued = pirated video tapes and other equipments were seized.

Pelindario filed a Motion to Lift the Order of the Search Warrant but was denied.

Upon MR -- REVERSED = Grounds: NOT licensed to do Business in The Philippines

Issue:
WON the petitioners have the capacity to sue?

Held: YES
It is not the absence of the prescribed license but “doing business” in the Philippines without such license which
debars the foreign corporation from access to our courts.
 Lack of Capacity to sue should not be confused with Lack of personality to sue
 Lack of CAPACITY to Sue = refers to a plaintiff’s general disability to sue
= lack of legal capacity to sue
 Lack of PERSONALITY to Sue = refers to the fact that the plaintiff is not the real party- in-interest
= HENCE no cause of action
 THEREFORE the ground available for barring recourse to our courts by an unlicensed foreign corporation doing
or transacting business in the Philippines should properly be lack of capacity to sue, not lack of personality to
sue.
 RULE = The doctrine of lack of capacity to sue based on failure to first acquire a local license is based on
considerations of public policy.
** It was never intended to favor nor insulate from suit unscrupulous establishments or nationals in case of
breach of valid obligations or violation of legal rights of unsuspecting foreign firms or entities simply
because they are not licensed to do business in the country.
GRANGER associate vs microwave systems ( Magulo daw to? Sabi ni jaime? )

Granger a US company licensed Microwave a local company to sell its product in the philippines. After extending certain
loans granger is suing microwave for collection of sum of money.

MSI stated that Granger not being licensed to engaged into business in the phil had no capacity to sue them. It invoked
sec 133 of the Corporation code “No foreign corporation transacting business in the Philippines without a license, or its
successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or
administrative agency of the Philippines”
Trial court favored Microwave and dismissed the case.

MSI contends that its various transactions with the private respondent were mere facets of the basic agreement
licensing MSI to manufacture and sell Granger's products in the Philippines. It also states that MSI is somewhat
extending its personality through MSI by exclusive distribution and assembly of its product, as well as customer support,
warranty obligations. Furthermore it entered series of agreements not just one item transactions. It would also receive
orders from MSI for offshore manufacturing.Furthermore MSI also stated that through the supplemented
ammendment, that it was assured of one seat in the board of MSI , granger even purchased shares of MSI.

Issue
WON Granger is doing business in the philippines even if it has no license or agent?
WON a foreign corporation must be shown to have dealt in public for it to be considered as transacting In the
philippines ?

Ruling: academically speaking it may be considered doing business in the philippines, cases like this should be seen on a
case to case basis

even if the law says that mere investment cannot constitute doing business in the philippines , the investment of
granger is quite substantial enabling it to participate in the actual management and control of MSI In fact, it appointed a
representative in the board of directors to protect its interests, and this director was so influential that, at his request,
the regular board meeting was converted into an annual stockholder's meeting to take advantage of his presence.

2ND ISSUE = the performance by a foreign corporation of the acts for which it was created, regardless of volume of
business, that determines whether a foreign corporation needs a license or not. the case at bar shows continuity in
business and not just one transaction.
Marubeni vs Tensuan

Marubeni = agreed to supply and assist DBT in the construction of DBT's lime plant
= NIDC guaranteed the payment of the loan

DBT rejected the lime plant= ground: not been constructed in accordance with their agreement
= demanded indemnification
= SUED MARUBENI for CONTRACTUAL BREACH

Marubeni move for the dismissal of the case = GROUNDS:

** the court a quo had no jurisdiction over the person of petitioner since it is a foreign corporation neither doing nor
licensed to do business in the Philippines.

Issue:
WON Marubeni can be considered as "doing business" in the Philippines and therefore subject to the jurisdiction of our
courts?

Held: YES
there is no general rule or principle that can be laid down to determine what constitutes doing or engaging in
business. Each case must be judged in the light of its peculiar factual milieu and upon the language of the statute
applicable
 applicable law is Republic Act No. 5455 = Rules of Board of Investments
1. had effectively solicited "orders, purchases (sales) or service contracts"
2. constituted Marubeni Corporation, Tokyo, Japan and its Manila Branch as its representative in the
Philippines to transact business for its account as principal
 These circumstances, taken singly or in combination, constitute "doing business in the Philippines" within the
contemplation of the law.

Doctrine = a foreign corporation doing business in the Philippines with or without license is subject to process and
jurisdiction of the local courts. If such corporation is properly licensed, well and good. But it shall not be allowed,
under any circumstances, to invoke its lack of license to impugn the jurisdiction of our courts.
Facilities management vs Dela Osa

doctrine: if a corporation has a local agent or office or representative they may be charged and receive summons
through them

Facilities Management Corporation and J. S. Dreyer are domiciled in Wake Island whileJ. V. Catuira is an employee of
FMC stationed in Manila. Leonardo dela Osa was employed byFMC in Manila, but rendered work in Wake Island, He was
not paid his overtime and night shift pays. FMC demanded payment from FMC. FMC stated that it has no jurisdiction
over them. Court ordered FMC to pay de la osa.

issue:
WON FMC is doing business in phils? As such are the summons valid?

Ruling:
YES , fmc may be considered doing business in the philippines.

"If the defendant is a foreign corporation, or a non-resident joint stock company or association, doing business in the
Philippines, service may be made on its resident agent designated in accordance with law for that purpose or, if there be
no such agent, on the government official designated by law to that effect, or on any of its officers or agents within
thePhilippines."

Indeed, FMC, in compliance with Act 2486 as implemented by Department of Labor Order IV dated 20 May 1968 had to
appoint Jaime V. Catuira, 1322 A. Mabini, Ermita,Manila "as agent for FMC with authority to execute Employment
Contracts and receive, in behalf of that corporation, legal services from and be bound by processes of the
PhilippineCourts of Justice, for as long as he remains an employee of FMC. In effect, Mr. Catuira was alleged to be a
liaison officer representing FMC in the Philippines.
TOP-WELD MANUFACTURING, INC. vs ECER

Top-Weld = entered a “license and technical assistance” w/ IRTI

= constituted a licensee of IRTI to manufacture welding products

Top-Weld = entered a “Distributor Agreement” w/ ECED

Discoverd that IRTI and ECED were negotiating with another group to replace the petitioner = sought court intervention
to restrain the corporations

Top-Weld = invoked the provisions of No. 9. Section 4 of Republic Act 5455 on alien firms doing business in the
Philippines

ECED and IRTI = Since no written certificate was applied for nor obtained by defendant entities from the Board of
Investments = (X) legally require of them compliance with No. 9, Section 4, R.A. No, 5455

Issue:
WON TOP-WELD may rightfully invoke the provisions of Sec. 4, Republic Act No. 5455 to enjoin petitioner corporations
from terminating the subject licensing and distributorship contracts they have with TOP-WELD?

Held: NO
The corporations are not bound by the requirement on termination, and TOP-WELD cannot invoke the same against
the former
 R.A. No. 5455 does not:
a) declare as void or invalid the contracts entered into without first securing a license or certificate to do
business in the Philippines
b) to intend to prevent the courts from enforcing contracts made in contravention of its licensing provisions

it was incumbent upon TOP-WELD to know whether or not IRTI and ECED were properly authorized to engage in
business in the Philippines when they entered into the agreements
 The very purpose of the law was circumvented and evaded when the petitioner entered into said agreements
despite the prohibition of R.A. No. 5455.
 DOCTRINE = The parties in this case being equally guilty of violating R.A, No. 5455, they are in pari delicto, in
which case it follows as a consequence that petitioner is not entitled to the relief prayed for in this case.
 The law will not aid either party to an illegal agreement. It leaves the parties where it finds them.

Supplementary Notes:
Section 4. Licenses to do business.-No alien, and no firm, association, partnership, corporation, or any other form of
business organization formed, organized, chartered or existing under any laws other than those of the Philippines, or
which is not a Philippine National, or more than thirty per cent of the outstanding capital of which is owned or
controlled by aliens shall do business or engage in any economic activity in alien the Philippines, or be registered,
licensed, or permitted by the Securities and Exchange Commission, or by any other bureau, office, agency, political
subdivision, or instrumentality of the government, to do business, or engage in an economic activity in the Philippines
without first securing a written certificate from the Board of Investments to the effect

Board shall impose the following requirements on the alien or the firm
(9) Not to terminate any franchise, licensing or other agreement that applicant may have with a resident of the
Philippines, authorizing the latter to assemble, manufacture or sell within the Philippines the products of the applicant,
except for violation thereof or other just cause and upon payment of compensation and reimbursement and other
expenses xxxx
Schmid vs Oberly
MENTHOLATUM CO. vs MANGALIMAN

Mentholatum Co.= has Philippine-American Drug Co. as is its exclusive distributing agent in the Philippines
= registered "Mentholatum" as trade mark for its products

Mangaliman = made a salved named "Mentholiman"

= sold to the public packed in a container of the same size, color and shape as "Mentholatum."

Philippine-American Drug, Co. instituted an action against Mangaliman = Damages

Court ruled in favor of Mentholatum, etc.

Upon Appeal = CA reversed = Grounds:

1. the activities of the Mentholatum Co were business transactions in the Philippines
2. Failed to secure license under section 69 of Corp Law = it may not maintain the suit.

Mentholatum filed the petition for certiorari

Issue:
WON Mentholatum prosecute without having secured the license required in section 69 of the Corporation Law?

Held: YES
true test = 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
 implies = a continuity of commercial dealings and arrangements
 Contemplates = the performance of acts or functions normally incident to the purpose and object of its
organization.

Facts show that:

1. Mentholatum Co has been doing business in the Philippines through its agent the Philippine-American Drug
2. Whatever transactions the Philippine-American Drug Co., Inc. = can be attributed to Mentholatum Co.
3. Acts Done is being made by a foreign corporation doing business in the Philippines without the license required
by section 68 of the Corporation Law
4. THEREFORE it may not prosecute this action for violation of trade mark and unfair competition
5. Neither may the Philippine-American Drug Co maintain the action = distinguishing features of the agent being his
representative character and derivative authority, it cannot now, to the advantage of its principal, claim an
independent standing in court.

Therefore The right of Mentholatum conditioned upon compliance with the requirement of section 69 of the
Corporation Law to protect its rights, is reserved.
Aetna casualty vs pacific star line

Doctrine: Even if a foreign corporation is not engaged in business in the Philippines, it may not be denied the right to
file an action in Philippine courts for isolated transactions.

Facts

Pacific star line is a common carrier and was asked to deliver cotton and linen. However some goods were lost and
stolen as well as damaged by seawater. I shalom Inc. the one who consigned pacific star obtained insurance payment
from aetna casualty, aetna casualty demanded payment from Pacific star line, of which pacific star line refused.

A claim was filed by aetna casualty but Pacific starline stated that it may not be sued by a foreign corporation not
engaged in the business here in the philippines during trial they presented evidence that aetna has 12 other civil actions
in the philippines, as well as SEC has not issued any license for aetna to conduct business here.

TC dismissed the case because it is not an isolated transaction but they filed through numerous transaction.

Issue:
WON Aetna is doing business in phil?

Ruling

No it is not because it is only one isolated transaction.

contract and payment made in the US such claims are against shipper and arrastre operator.

Aetna Casualty & Surety Company is not engaged in the business of insurance in the Philippines but is merely collecting a
claim assigned to it by the consignee, it is not barred from filing the instant case although it has not secured a license to
transact insurance business in the Philippines.
Agilent Technologies Singapore vs. Integrated Silicon Techngology Philippines Corp.

Integrated Silicon and the Hewlett-Packard entered into Value Added Assembly Services Agreement (VAASA)
1. Integrated Silicon was to locally manufacture and assemble fiber optics for export to HP-Singapore.
2. HP was to to consign raw materials and other supplies to Integrated Silicon pay them purchase price of the
finished product

HP-Singapore assigned all its rights and obligations in the VAASA to Agilent.

Integrated filed a complaint for Specific Performance against Agilent for breach of oral agreement

Summons and a copy of the complaint were served on Atty. Quisumbing = returned he was not the registered agent
of Agilent

Later, he entered a special appearance to assail the court’s jurisdiction over the person of Agilent.

Agilent filed a separate complaint against Integrated Silicon

Integrated filed a Motion to Dismiss = Grounds: of lack of Agilent’s legal capacity to sue and failure to state a cause of
action.

Trial court denied the Motion to Dismiss and granted Agilent’s application for a writ of replevin.

CA reversed the decision of TC = HENCE Agilent filed the petition for review

Issue:
WON a foreign corporation without a license is incapacitated from bringing an action in Philippine courts?

Held:
A foreign corporation without a license is not ipso facto incapacitated from bringing an action in Philippine courts.
 A license is necessary only if a foreign corporation is “transacting” or “doing business” in the country.
 GR: unlicensed foreign corporation doing business´ in the Philippines cannot access our courts.
Exception: against a Philippine citizen or entity who had contracted with and benefited from said corporation
 premised on the doctrine of estoppel ( applies to foreign as well as domestic corporations )
 RULE: A party is estopped from challenging the personality of a corporation after having acknowledged the
same by entering into a contract with it.
 Purpose = The application of this principle prevents a person contracting with a foreign corporation from later
taking advantage of its noncompliance with the statutes chiefly in cases where such person has received the
benefits of the contract.

Supplementary Notes:
The principles regarding the right of a foreign corporation to bring suit in Philippine courts may thus be condensed in
four statements
1. does business in the Philippines without a license = (X) sue before the Phil courts
Exception: Philippine citizen or entity which has contracted with said corporation may be estopped from
challenging the foreign corporation’s corporate personality in a suit brought before Philippine courts
2. not doing business in the Philippines = (X) Requires license to sue
a) on an isolated transaction
b) on a cause of action entirely independent of any business transaction
3. with the required license = it can sue before Philippine courts on any transaction.
Commisioner vs KMK

Doctrine: the isolated transaction rule can only be invoked by foreign corporations, and for it to be invoked it must
first be proven that the said corporation is foreign, of which it needs to be disclosed as such.

FACTS:

2 cargos arrived in MIA but a tip came to the bureau of customs that the said cargos contained narcotics. It was seized
and forfeiture proceedings for technical smuggling. Collector of customs rules for forfeiture , while the commisioner
affirmed it. The lawyers of KMK stated that these goods were only for transhipment and never inteded to fall under the
philippine market. The court of tax appeals reversed the decision.

ISSUE:
WON it is doing business or merely entered into an isolated transaction in the Philippines.

HELD:
as a rule No foreign corporation transacting in the Philippines without a license, or its successors or assigns, shall be
permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the
Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals
on any valid cause of action recognized under Philippine laws. (Section 133, Corporation Code of the Philippines)

However, a foreign corporation not engaged in the in business in the Philippines may not be denied the right to file an
action in the Philippine courts for an isolated transaction.

The fact that a foreign corporation is not doing business in the Philippines must be disclosed if it desires to sue in the
Philippine courts under the “isolated transaction rule.” Without this disclosure, the court may choose to deny it the right
to sue.

In the case at bar, the private respondents KMK Gani and Indrapal aver that they are “suing upon a singular and isolated
transaction.” But they failed to prove their legal existence or juridical personality as foreign corporations.

Lawyer failed to establish that it is an isolated transaction, stated that it is only a single proprietor. They were not
presented as a corporation in the first place thus cannot invoke the isolated transaction rule which is reserved for
foreign corporations.

*** The “isolated transaction rule” refers only to foreign corporations. Here the petitioners are not foreign corporations.
They do not even pretend to be so. The first paragraph of their petition, containing the allegation of their identities,
does not even aver their corporate character. On the contrary, KMK alleges that it is a “single proprietorship” while
Indrapal hides under the vague identification as a “firm”, although both describe themselves. With the phrase “Doing
business in accordance with the laws of Singapore.”
MARSHALL-WELLS CO.v. HENRY W. ELSER & CO

Marshall-Wells (Oregon corporation) sued Elser Co (domestic corporation) = for the unpaid balance on a bill of goods
sold by plaintiff to defendant

ELSER filed for demurrer of evidence = Grounds:

1. no legal capacity to sue since its complaint does not show that it has complied with the laws required of foreign
corporations desiring to do business in the Philippine Islands
2. it does not show that it was authorized to do business in the Philippine Islands
3. Under Sec 69 = No foreign corporation shall be permitted to 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 section 68 of the
law

ISSUE:
WON license prescribed in the Law a condition precedent to the maintaining of any kind of action in the courts of the
Philippine Islands by a foreign corporation?

Held: NO
The purpose of the law never intended to exclude a foreign corporation which happens to obtain an isolated order for
business from the Philippines from securing redress in the Philippine courts
 The obtaining of the license = (X) condition precedent
 Allowing this shall in effect = permit persons to avoid their contracts made with such foreign corporations
 Preventing foreign corporations from doing business and from bringing actions in the local courts, except on
compliance with elaborate requirements, must not be unduly extended or improperly applied.

Doctrine: The object of the statute was not to prevent the foreign corporation from performing single acts, but to
prevent it from acquiring a domicile for the purpose of business without taking the steps necessary to render it
amenable to suit in the local courts.

Supplementary Notes:
 By virtue of STATE COMITY = a corporation created by the laws of one state is usually allowed to transact business
in other states and to sue in the courts of the forum.

 The object of the statute was to subject the foreign corporation doing business in the Philippines to the
jurisdiction of its courts.
Western Equipment vs. Reyes

Facts:
Western Equipment and Supply Co. applied for the issuance of a license to engage in business in the Philippines. On the
other hand, Western Electric Co. has never been licensed to engage in business, nor has it ever engaged in business in
the Philippines.

Western Equipment, since the issuance of its license,engaged in the importation and sale of electrical and telephone
apparatus and supplies manufactured byWestern Electric. A local corporation, Electric Supply Co. Inc. has been
importing the same products in the Philippines.

Electric Supply’s president, Henry Herman, along with other persons sought to organize a corporation to be known as
Western Electric Co. Inc. Western Equipment, et al. filed against Herman to prevent them from organizing said
corporation. TC ruled in favor of Western Equipment, holding that the purpose of the incorporation of the proposed
corporation is illegal or void.

Issue:
WON the foreign corporation Western Electric Co. Inc. has right of action to prevent an officer of the government from
issuing a certificate of incorporation to Philippine residents who attempt to pirate the corporate name of the foreign
corporation and engage in the same business.

Held:
Yes. A trademark acknowledges no territorial boundaries of municipalities, states or nations, butextends to every
market where the trader’s goods have become known and identified by the use of the mark.

Rights to the use of its corporate name or trade name is a property right, a right in rem, which it may assert and protect
against the whole world, in any of the courts in the world – even in jurisdictions where it does not transact business –
just the same as it may protect its tangible property, real or personal, against trespass or conversion.

The trial court was correct in holding that the purpose of the proposed corporation by Herman, et. al. asfraudulent and
contrary to law, as it attempts to unjustly compete with the real Western Electric Co. Inc. anddeceive Filipinos into
thinking that the goods they propose to sell are goods of manufacture of the real Western Electric Co.
Applications and Effect of Local Laws on the Right of a Foreign Corporation to Sue (SCRA Annotation 114 SCRA 429)

Foreign corporation, right to sue:

Whether a foreign corporation is possessed of the right to sue in the Philippines is determined as follows
1. If the foreign corporation is transacting or doing business in the Philippineswith a license, it has the right to sue
within the jurisdiction of the Philippines;
2. If it is transacting or doing business without a license, it cannot sue;
3. If it is not transacting or doing business in the Philippines, it can sue even if it isnot possessed of any license.

Foreign corporation, right to be sued = A foreign corporation may be sued in the Philippines:
1. If it is transacting or doing business in the Philippines with a license;
2. If it is transacting or doing business in the Philippines without a license;
 However, if it is not transacting or doing business in the Philippines and does not have any license to so transact or
do business in the Philippines, it cannot be sued in
Grey vs Insular life (ala tungkol sa topic natin ngayon ang case)

doctrine To examine the books it must be in good faith, for a specific and honest purpose, and not to gratify curiosity
or for speculative or vexatious purpose.

Facts

Insular life is a corporation organized in new york licensed to enter into business in Negros. Under the laws of newyork
only SH with at least3% except moneyed corporation may inspect the books, as well as court orders. Petitioner grey
asked the courts that under our law SH may examine such books and records.

issue:
WON grey as a SH of insular lumber has a right to inspect and examine books and records of defendant.

Ruling;

it is clear that the plaintiff failed to adhere to the requirements of sec 77 of the New york corporation law, he failed to
ask for written permission from the corporation, also even if such right to inspect in common law is accepted he only
raised it during appeal. As such it cannot be questioned .