COMM 1:44:01 1:46:30

NOV 17 COMM JIMENEZ

Tin
0:00:00
0:06:03
Libelous statements were made assailing the reputation of a
Corporation moral damages. Now, the separate juridical
entity can be pierced in certain cases. First if it has been used
for the convenience to conduct fraud, justify wrong or commit a
crime. Remember that case of Motors refused to sell cars to
the public but a law was passed imposing a percentage tax
based on the selling price so it stopped selling cars to the
public and the wife of the person controlling the corporation
put up another company. Now they will sell cars to that
company at a very low price then it will turn around and sell
the car to the public at a high price. And the court said this was
organized for the purpose of committing fraud. Then corporate
fiction was disregarded. In this case of an operator of a
jeepney who was sued for damages, he formed a corporation
with his family as stockholders and transferred the motor
vehicles to that corporation. When the writ of execution was
issued, the Corporation said this is a 3 party claim. The court
said No. There was a bus company whose employees had a
labor union and went on strike and filed a case against the bus
company for unfair labor practice. The majority of the
stockholders made a new corporation and all assets were
transferred to that Corporation. Again, it was organized to
commit fraud. Now the court has said that if a Holding
company and it has a subsidiary, you cannot pierce the veil
simply because it has control. Control is not a sufficient basis.
It must be control plus something else. If it is a majority
stockholder and it also controls the operations, the finances,
the policies and the business of the corporation, then they are
using control to commit fraud. And 3 , the party whos using
this was enjoined because of the exercise of the power of
control to commit fraud. Now and if the corporation is a mere

alter ego. There was a couple who built furniture and they
were abroad marketing furniture built by their single
proprietorship. The daughter here was managing the business
and they executed a power-of-attorney authorizing her to
mortgage their conjugal properties to obtain a loan from the
bank. They decided to incorporate so the stockholders were
the couple, the daughter and other relatives and then they
transferred the factory to the corporation. The corporation now
obtained a loan and the daughter executed a mortgage for the
conjugal properties and it was not paid and so the bank
foreclosed. The parents jumped the gun. They filed a case to
enjoin the foreclosure by claiming that the authority was given
for the daughter to contract loans for the single proprietorship.
The authority was not for loan for the corporation. The court
said that you have transferred the factory to that corporation.
You are also the owners. It is merely alter ego. In the internal
operations of the company, the stockholders and the
corporation have separate legal personality. It is a basic
principle in accounting separate business entity. The
corporation vs. the controlling stockholder.

rd

rd

Arianna
0:06:03
0:12:06
Portia
0:12:06
0:18:09
stipulate that a director should have a certain number of
shares of stock not only one share. Like San Miguel
Corporation one needs 50, 000 shares of stock to qualify to be
a director or likewise when Gokongwei was trying to run for
board of of San Miguel Corp, the amended by-laws was
allowed, well, a stockholder of San Miguel Corporation who is
a stockholder of a competing corporation and this is qualified
to run for the board. And they said Gokongwei engaged in full
business in industry business and now Court said, by-laws do
not bind third parties who has no actual knowledge. Somebody
who obtained a loan and pledged his share as collateral, he
was not able to pay so the bank foreclosed and was the buyer

in the auction. It now owns Valley Golf Club. And Valley Golf
Club said that playing member owes a lot of money and he
does not pay for the dues. And under our by-laws we have a
lien over the proprietary share. And the Court said you cannot
invoke that because it does not bind the bank. The by-laws do
not bind third parties. There was a faculty member of maritime
school, who was dismissed and filed a case for illegal
dismissal. The defense of the school is that his appointment is
not valid because under the by-laws only the chairman of the
board can appoint. It was not the chairman who appointed
him. Again the Court said, that cannot bind the parties who ahs
no knowledge of the by-laws. Now in case of conflict between
bylaws and the articles, the articles will prevail. That is a
contract among the parties.
Now, the right of preemption well of course as a rule,
stockholders have a right to preemption to all issuances. In the
old corporation law, the right to preemption is given only if the
authorized increase of the stockholder, right to increase, but
now the present code says no, all issuances so that if the
Board will offer for a subscription all shares of the authorized
but unissued shares there will be a right of preemption. Or
treasury shares. 15:46-15:50 inaudible to maintain his equity.
Otherwise he can be overcome by the majority.
Now, when can, how can the right of preemption be denied?
First when provided in the provision in the articles. There was
a time, this, mining corporation sent a notice to stockholders to
consider the amendment of the articles of incorporation. What
was the proposed amendment, its in the Philex Mining, to
abolish the right of preemption. 16:36-16:42 inaudible. And
then, if the issuance is in compliance with the law requiring
public offering. Like for example, the banks they become
universal banks, they must make a public offering. So the right
will not apply to the initial public offering. So the BOI when it
grants benefits, they will not require that there be a public
offering. So the right will not apply to that. And then the next, if
the shares are from somebody in exchange of the property

given by the corporation and it was approved by the

stockholders. And then someone said, there are three things
crucial to hotel- location, location, location. And that is also
true of restaurants. Remember what happened with hotel of
late commissioner Yabut? Makati Hotel
Jane

0:18:09

0:24:12

Ina Ongsiako 0:24:12

0:30:15
So they said okay. Why not? Now, back letter (INAUDIBLE
24:29-24:31).
Now, my joining fee of the (INAUDIBLE 25:31) sufficient, it
would invest in property for a primary purpose. For example,
San Miguel Corporation bought a brewery in Hong Kong and
Gokongwei questioned that. He said that should have been
approved by the stockholders because it was a brewery. It was
related, like this case of (INAUDIBLE 26:06-26:07) who bought
a corporation that manufactures sugar bonds. And that was
questioned. But the Court said that is connected with the
primary purpose. Because actually, when you sell the sugar,
you have to put it in bags so that majority of the work is
sufficient. Now, the Presidential Decree introduced this change
that the corporation will be required to declare dividends and
that was retained in the Corporation Code. So, if the retained
earnings exceeds 100% of the pay-in capital, that's why meron
tong mga, they will exclaim, "Oh, your Honor, their earnings
more than 100% of your capital." Pagpapananta kayo ng BIR.
You better declare your dividends. They're not doing you a
favor, because then they will make a long report for that, and
of course, they will charge you for the long court order report.
However, there are exceptions. First, if the money is needed
for expansion. In all these exceptions, you have to document
that. The SEC will ask, "well, give us the minutes of the board
meeting where that was approved." So, like where the client

they manufacture mixed blends for manufactures of food

products and then the management said our plan is too small
for our volume of business, we have to expand. They have to
transfer. In the meantime, they have to stop paying dividends.
They will need the money, I think more than P150 million to put
up the new venue of the factory. And then, the corporation
acquired a loan and the bank required that before you declare
the dividends you must get our approval first. Then they have
not yet gotten that approval. Lastly, there's a need to put up
reserves or contingencies like there was a strike in the
company. The management says they're being accused of
unfair labor practice. Now, we will have to pay back wages.
That's a hefty amount. We will now put up reserves. There was
a corporation that burnt in the course of the recklessness of
the employees there. Everybody spread out in the
neighborhood. And the neighborhood also burned. They said
we will be sued. So we better put up reserves. Now, as you
know, a corporation is an artificial person. That's why it's
different from a human being. A human being can perform any
act except what is prohibited by law. But the corporation, it's a
creation of the State, it can only exercise the acts authorized
Cara
0:30:15
0:36:18
exercise the acts authorized by the creator. Now, if entered
into acts which are (inaudible 30:36-38) then that can be
ratified by the stockholders. For example they are engaged in
manufacture of furniture and then they bought a restaurant
that can be ratified, binding if the business is not contrary to
public policy. For example they said let's just go into the hotel
business and then they'll say (inaudible 31:32-31:33)
prostitution. Now, what is the effect? If the act is ultra vires but
not illegal, if it has not been performed by both parties, then
that can be invoked as a defense. But if it has been performed
by both parties it cannot anymore or by one of the parties you
cannot invoke the defense also. Why? Because the other party
will be prejudiced. There was a case, there were 2 companies

over subsidiaries holding mother company, one of them (hold?

33:00) financial statement to pay a loan, to be able to get a
loan, the sister company mortgaged its real properties and
because of that the bank approved the loan. The loan was not
paid, the bank was now going to foreclose, now the sister
company while the case to enjoy foreclose said that's ultra
vires. But the court said the bank to whom their mortgage was
given approved the loan because of that basis, you cannot
repudiate that. Now, (inaudible 33:50-51) the assets, the
capital stock and assets and corporate trust fund to pay the
creditors and why a stockholder who is invoking its appraiser
rights cannot compel the court to file him out if there are no
sufficient retained earnings to pay him.
Now, who are the officers of a corporation. The court said, first,
those mentioned in Corporation Code like president, treasurer,
secretary. Then other officers mentioned in the Articles of
Incorporation they may provide there we will observe the
general manager. Now, and positions of officers, which are not
mentioned in the Corporation Code or the Articles but created
by Board of Directors. For example, the Articles mentioned the
general manager, they can create as long as provided the bylaws containing provisions saying that directors can create
additional positions for officers and it must be specified what
positions can be created -those two are the requirements.
Even if the by-laws said the Board can create additional
positions for officers but if they did not indicate the positions
that
is
not
valid.
The director must must own at least one share of the stock.
Now, question, when must the director own the share? During
the election or
Neener

0:36:18

0:42:21

bianca
alex

0:42:21
0:48:24

0:48:24
0:54:27

... Enforced payment and more than 10 years have lapsed, the
officers elected this Board of CBCP which is now owned by
the government, passed a resolution saying that they
recognized the validity of the loan contracted by Mitsubishi.
And then what happened? They assigned that loan to Red
Stock. Red Stock now sued CBCP for payment. They
assigned a stock compromise dacion en pago of all assets and
properties of CBCP. Justice Carpio said: this is out and out
fraud, the event had already prescribed when they passed the
resolution still valid and subsisting and when a case was filed,
a compromise, and the compromise is dacion en pago of all
the assets and the government will be left with nothing. These
people should be prosecuted for conflict of interest.

Den
0:54:27
1:00:30
I second the motion (inaudible) is there an objection? The
chairs approve. Hindi yan pwede dito. There must be __
disclosure. You know we have this vacant lot which we own
and our director is offering to buy and these are the terms and
conditions of the sale. Now, but even with disapproval, it must
__ and reasonable. So if one stockholder dissented during ht
evoting even if that was approved, can question that. There
was this case prime white cement, this director was able to get
the contract appointing distributor for the next five years and
the price was fixed and then he went around going to lumber
companies offering to sell white cement to them but he did not
fix the price. (inaudible) then the price tend to go up and after
one year, the price increased by 150% and now he was __ to
all of the contract. The court said no. you know very well that

the price of cement is very volatile. They tend to go up. __ the

company for a fixed price for the next five years. 1 year
palang tumaas na yung price.
Now, if the contract defective. Only the corporation can have
the contract annulled. The officer cannot. Now there was a
case there was a supplier of materials, Remington. They filed
a case to annul the contract based on this. The SC said no,
you have no standing as you are an outside creditor. The only
person authorized by law to have the contract annulled is the
corporation. You have no standing. And also well the
corporation there is interlocking directors. The requirements
when the one buying is director will apply. So if he owns more
than 20% in one corporation, and all there is a one share __ to
qualify to the other corporation. Actually he can pay more in
the corporation where he owns the 20%. Because he will get
more of the profits while the corporation owns only 1 percent
will get very minimal amount. In that case he can. You apply
the sme requirements which have to be approved by the
members of the board this 2/3 both blah blah blah and that it
was fair and reasonable. Now, stockholders. There was a
case, there was a corporation and it invited another
corporation to __ and put additional __. They agreed and said
in the memorandum of agreement that this group will
subscribe to 51% of the shares and the existing stockholders
will increase their holdings and they will pay with real
properties. And there is a stipulation stating that the
stockholders will be given positions as officers (inaudible).
They are making a lot of money, the minority became
ungrateful now they want to kickout the majority. They said that
the majority did not honor the contract. They did not recognize
the validity of the subscriptions they entered into. They did not
appoint some of them as officers. Now the SC said you are
asking for annulment of the contract. This group paid money to
become stockholders. This is a subscription agreement the
contract is between the corporation and these new
stockholders. NOT YOU. You cannot have the contract
st

annulled because if you will have that you will have to get the
money they put in the corporation and return it to them that will
violate the trust fund..
Owdy
1:00:30
1:06:33
Because if you will annul that you will get the money you put in
the corporation and return it, that will violate the trust fund
doctrine. Now lets presume all shares are equal, unless the
articles of incorporation will write otherwise. And if a
stockholder as not fully paid for his subscription, he paid only
25%. so long as he is NOT delinquent, he can exercise all the
rights of a stockholder, he can get involved and receive
dividends. Now, but even shares which are NOT voting are
entitled to vote on matters requiring stockholder approval.
Amendment of the articles, amendment of the by-laws. [NO
SOUND 01:01:26 - 01:01:49]
A case now, this is Merchant Valley School, they called a
stockholders meeting. Then elected officers. Some
stockholders questioned that they said we are stockholders,
we were not notified, we were not able to attend. And he said
No no no, it was, what you call this. Mahigpit sec about, stock
and transfer book eh. Its only now that they require when you
incorporate the stock and transfer you register it. So this
corporation did not have a stock and transfer book for many
many years, I think after more than 20 years they got a stock
and transfer book and then those who elected argued. No,
there was a quorum where we relied on the stock and transfer
book. Then these complaining stockholders were not named in
the stock and transfer book. But they were saying we appear
in the articles of incorporation. So the question is, Which
should prevail? Now the court said, the stock and transfer
book is maintained for the convenience. Youve seen the
typical stock and transfer book. They listed in the stock
market, computerized na yan. The typical stock and transfer
book every page for every stockholder. Yan ang ledger niya.
On the left side, youll write how many shared youve obtained

and the date. On the right, how many shares were sold and
the date. The court said, this is maintained for convenience so
that at one glance you can tell right away how many shares a
stockholder owns. The contract is the articles of incorporation.
So the stock and transfer book CANNOT prevail over the
articles of incorporation as to WHOM are the actual
stockholders [NO SOUND 01:03:43 - 01:04:00]
So somebody who acquired shares but is not yet listed in the
stock and transfer book, the sale will only be valid between
parties. It will not bind the corporation so he cannot attend the
stockholders meetings, he cannot vote. The sale of shares
requires endorsement and delivery of stock certificates. And
the old decisions, the court said, you apply the civil code. This
call it delivery. The situation of a contract by which a public
document notarized is equivalent to delivery. Before the
Supreme Court said that, that is valid. Even if you do not
endorse the stock certificate. Why? You get the tax clearance.
The sale of the shares of stock. Cannot have just registered
unless there is a tax clearance with the BIR. The BIR will
require a notarized Deed of Sale. [NO SOUND 01:05:30 01:05:37]
Now a subscription agreement is an indivisible contract, mali
na yun old case of Baltazar. Could there be a trouble, the
Supreme Court always said, Rarely will there be a justice
expert in commercial law. Justice Sanchez will be a justice
expert in commercial law or Justice Vitug. Justice Carpos,
Justice Theo. There was a time Justice Paredes said if a
stockholder subscribed, lets say to 1000 shares, paid 25%
there are two options. You can say okay spread out my money
as partial payment of of the subscription or concentrate
them to 250 shares fully paid. Give me a stock certificate for
250
shares
Chelsea
1:06:33
1:12:36
That is the goodwill law, because in the recent case of
indivisible contract why the sec said you cannot sell a portion

of the shares, that is your contract, it is indivisible, it must be

all or nothing. You need to get the approval of the board
because you have not fully paid your subscription. You will get
paid for the subscriptions and you are substituting buyer. Like
in the civil code, in substituting debtor, you need the approval
of the creditor.

you cannot file for derivative suit. There was one case, they
were deciphering the money of the corporation, a breach of
trust for unlawful acts. Thats why the Court said, there was a
case where a corporation, then the SC issued a TRO
prohibiting the filing of a derivative suit.

When the payment of the debt due? First if it is in the

stipulation when it must be paid, second, if there was a call of
the board of directors, third, a creditor sued the corporation
and the assets of the corporation are not enough to pay the
share. If he sues the corporation first, then he cannot collect,
then he will file a case to collect from creditors who did not pay
their subscriptions. But if the case was filed, the corporation
already is insolvent, they can no longer pay. We can already
include as defendants as stockholders. So the articles of
incorporation will be the action document against the
stockholders. Depends if they fully paid subscriptions and
presented receipts. Before you pay receipts you need to ask
the BIR to approve. And when the give the receipts the date
when they gave approval will be indicated and it will be given.
The receipts dated in February and BIR approval was dated
June. The Court ruled against those stockholders. Once the
stockholders delivered and the call was paid. If they ask to pay
only 25%, the entire balance would be due. For his rights will
be suspended, he cannot go. The dividend will not apply in
payment of his debt. They will conduct meeting in detached
method. They will say, the amount to be paid is fixed. Some
will say okay P100,000, how many shares can I have for
P100,000? Some will say 600, you will accept the least
number of shares. And the remaining shares will now be paid.
And the delinquent stockholder will be given the remaining
shares.

Ivy
1:12:36
1:18:39
One of the stockholders was a lawyer and he rendered
services to the corporation. He told the corporation okay,
instead of paying me cash, i will accept shares of stock of the
corporation. And that was approved, then another stock
holder questioned that, now the lawyer went to the SC and
said, the Court enjoined filing of the writ of suits, and this
stockholder violated the order, the Court said no. He claimed
that he should be given the right of first refusal. What he was
assessing is his own right, thats what a derivative suit if there
was no violation.

Derivative suits. First, requirements: There must be cause of

action which calls for this kind of relief. If business judgments,

There was a family, the children were stockholders of the

corporation at the time. In the settlement of the estate, the one
stockholder claim that his co-heir fraudulently got the shares of
stock and transferred it. He filed a derivative suit, the Court
said no, you are asserting your hereditary rights. That is not
proper to a derivative suit. Or like the face of the stock and
transfer book, who are these stockholders. Those stockholders
who are appealing were saying we are not allowed to vote, the
Court said no, what you are trying to invoke is your voting right
as a stockholder. Then the stockholder, when they asked
occurred, they continued until when he became stockholder,
that is the problem for a derivative suit. Then the stockholder
must have been a stockholder already when they asked,
complaint occurred or they continue until when he became a
stockholder. Like in the case of Inquirer, Juan Ponce Enrile, as
a stockholder filed a writ of suit, then the Court said the
stockholder who filed a complaint became a stockholder after

the complaint, who committed, and antedated. The court said

you cannot file a suit, you are just a dummy of Juan Ponce
Enrile, you are not the real owner.
Then, in one case, the stockholder filed a derivative suit and
included himself a co-plaintiff because he said the majority are
ciphering the money of the corporation, they want to print
down the book for the value of the shares, then they will offer
to buy it at a very low price. Now the record say, you cannot
file a derivative suit, because you cannot join, Court said NO.
The allegation, both the stockholder and the corporation is in
prejudice if the file as co-plaintiff, NO.
The late delos Angeles, was a stockholder in San Miguel Corp,
he filed a derivative suit, they got the money of SMC and used
the money to buy 2 corporations for themselves, so they filed a
derivative suit but then they said, they only own 10,000 worth
of shares, that is a minimal premium that they have to proceed
the case. Court said no, in a derivative suit you are enforcing a
right that belong to a corporation not to a stockholder, so that
is irrelevant.

given to protect the interest of a stockholder, here you are not

invested but you want to inspect. There was a case when a
stockholder his inspection rights. His share was .001%. This
was minimial shareholdings. The court said that this right is
available to everybody irrespective of their share.
Appraisal rights. A dissenting stockholder can ask to opt out if
there are amendments that will affect his rights as stockholder
such as when there is disposition of all or substantially all of
the properties, entering into dissolution or consolidation or they
would invest in a different line of business or they would
extend or decrease the corporate life. A stockholder can at any
time ask for this right. For a stockholder, he must have
attended the meeting wherein the action he is contesting was
approved. He must be present at the meeting in order to be
able to exercise his right of appraisal. Then he must make a
written demand within 30 days from the time it was approved.
There must be stated the retained earnings available.
Otherwise, you will be violating the trust fund doctrine.

The another requirement, the stockholder must have

exhausted all the corporate remedies, unless the law so
excused. Example, the cause of actions directors are ciphering
the money. There is no point in appealing for like in the case of
derivative suit filed by the late delos Angeles, SMC has
thousands of stockholders spread all over the world.

In merger and consolidation, merger the 2 corporations join

together but 1 will survive and1 will absorbed. Like pcibank. In
consolidation, a new corp will be absorbed and will absorb 2 or
more considerations. There are what you call articles of
merger or consolidation which shall be approved by at least
of the stockholders of each corporation and majority of
directors. The surviving corp will acquire all the powers,
liabilities of the absorbed corporation.

Gly
1:18:39
1:24:42
Czar Paguio 1:24:42
1:30:45
.... you cannot ask for a disclosure of trade secrets. You have
this case against Gonzalez who filed a taxpayers suit against
Philippine National Bank. This was about approval of loans.
The court said you cannot file a case as a taxpayer. This is

Dissolution. It may be voluntary. Same reqt as merger. of

stockholders and majority of directors. If there are no creditors
affected, you go to the SEC and show the resolution regarding
the number of people who agreed. If the creeditors are
affected, then what you will file is a petition asking the SEC to
approve the dissolution. The SEC will schedule that for
hearing, pulish the order in a newspaper. The SEC will

approve then you can proceed. The third one which is the
fastest is shortening the corporate life. Like when the corp
decided that they were closing their business here, you just
amend the articles...
Bea

1:30:45

1:36:48

Until dec 31,1978. involuntary, if the term already expired for

under the law, if it failed to commence business within 2 years
of the corporation or continued to suspend operations for at
least 5 years. I am often consulted, the problem with people
are, lets go to business, lets form a corporation You must
always think first, do you really need a corporation? Forming a
corporation has a lot of paperwork and katakot takot na
requirements. Then, they say, we want to dissolve the
corporation sabihin ko magastos yan because there is a, in
accordance to a revenue code of BIR, the SEC and the BIR
had an agreement, the SEC will not approve voluntary
dissolution without tax clearance from the BIR; and they will
take their sweet time with this because this is the last time that
they will assess you. So magastos yan. So I said, you are
required to file every year the information 10 days after your
board meeting and if you have not done that for 5 years, the
SEC will treat you as inactive for 5 years and dissolve you,
ganun na lang, wag na lang kayo mag submit and information
for 5 years and the SEC will dissolve you.
For legislative dissolution, or dissolution by the SEC in
accordance with existing laws. now, the legislature did not
specify the laws when the dissolution of the corporations are
now handled by the SEC and not by the courts anymore. If you
look at quo warranto in the rules of court, there is no more
provision there about dissolution of corporations. What the
lawmakers did, they did not specify the grounds under which

dissolution can be made under the law because there can be

so many laws that could apply and they are not sure if they
can list all of them. For example anti-dummy law, that is a
ground for dissolving. Now, what happens if the corporation
ceases, it will only continue to be exist for purposes of winding
up. That was asked in the bar exam. There is a corporation
undergoing dissolution and it extended its contract of lease for
its business, no you are no longer allowed. Who will take care
of the winding up? 3 people
1. Board of directors - they can appoint a trustee; like one of
the corporations, the board of directors passed a resolution
appointing Atty. Romulo as trustee
2. Management committee
3. Rehabilitation receiver is appointed
The law says that to corporation continue to exist for 3 year for
the purposes of winding up. Because of that, the rule was that,
all pending cases which were not terminated will be dismissed,
but that has been cured by the SC. The SC said that:
First, if the corporation appointed a trustee, you do not apply
the 3 year life. What will apply is the applicable prescriptive
period. Like if there are written contracts, 10 years. The three
year deadline does not apply if there is a trustee. And then the
court also said, the Board of Directors or lawyer handling the
case may be deemed as trustee who continue the liquidation
of the corporation. Kaya nawala na yung 3 year deadline.
A foreign corporation needs a license to do business here.
Why? Because a corporation is an artificial person. It got its
personality from the law where

Nadine
Patch Luna

1:36:48
1:42:51

1:42:51
1:48:54

Mere investment does not constitute doing business, even if

the foreign corp will elect a member of the board because it
still has to vote to protect his investment. For publication of
advertisements, maintaining goods here for processing, for the
purpose of like our electronic business. They will be
processed electronically, then they send it back to California.
Now we are in our Garden Industry, the Garden companies will
send in textiles, and will process it into finished tresses.
Now, the Court has said, and thats also new, for example, a
foreign corp sold a machine here, it sent its engineers here so
it installed the machine in the factory. And then they also
trained the employees how to use the machine. Thats an
isolated transaction. The sending here of the engineers and
training is only incidental, an isolated transaction. And then in
the Carreon case, finally the Supreme Court said, through
Justice Carpio, buying something from (1:44:45 inaudible] is
not doing business. In that [1:44:48 inaudible] case, they were
making these jerseys, baseball hats, and then for those foreign
[inaudible 1:45:06] they sued and the court said foreign
corp can be sued when theyre doing business here. SC said
no. Justice Carpio said, you dont make money from buying,
you make money from selling! If you will treat that as doing
business, wala nang bibili sa Pilipinas. Youll have to get a
license to buy something from the Philippines.
Now, there was one corporation who had a contract with
somebody. There was a breach of contract. It now applied for
a license. It said, now we can sue, and said that the contract
was void because it had no license. The Court said no, defined
what are the penalties for doing business without a license:
criminal prosecution of the officers, denial of access to the
courts. Congress has put sufficient sanctions that you cannot
invoke that defense.

General Rule: if you are not doing business, you can sue. You
do not have to get a license.
But, you cannot be sued because our courts cannot acquire
jurisdiction.
In one case, nag obiter dictum yung Supreme Court.
Corporations not doing business here can sue, but the right to
be sued does not follow. The Courts cannot acquire jurisdiction
over you. Now, your remedy here if he has properties here,
attach the properties then the case becomes an action in
personam. But you can only seek for the properties attached.
If theres a deficiency, you cannot run after the foreign
corporation. But if it has a license, you cannot sue, but you can
be sued because the courts can acquire jurisdiction.
Now, in one case, a foreign insurance company paid for good
that were lost here in the piers. Its a corporation organized in
Delaware. The court issued an order, asking the lawyer to
amend their complaint and tell the court if the plaintiff is not
doing business here or is doing business but has a license.
The lawyer said, no, no, no that is correct. So he didnt comply.
The Court dismissed the case, Rule 70, failure to comply with
an order of the court. They appealed to the Supreme Court,
the SC told the parties, you know our duty is to protect the
interest of our client, not to show off that we are brighter than
the judge. Why should you get stubborn. The case was
dismissed.
I had a student before...
Joyce Raboca 1:48:54

1:54:33