STOCKHOLDERS AND MEMBERS

PHILIPPINE ASSOCIATED SMELTING and REFINING CORP.

vs PABLITO LIM
GR No. 172948

FACTS:

Petitioners were former senior officers and presently shareholders of PASAR. An amended Petition for
Injunction and Damages with prayer for Preliminary Injunction and TRO was filed by PASAR seeking to restraint
petitioners from demanding inspection of its confidential and inexistent records.

ISSUE:

Whether or not an action for injunction be filed to restrict the right to inspection of stockholders

RULING:

No.

An action for injunction filed by the corporation generally does not lie to prevent the enforcement of a
stockholder of his right to inspection; the provision of Section 74 of the Corporation Code sufficiently so provides.

Specifically, stockholders cannot be prevented from gaining access to the:

1. Records of all the business transactions of the corporation;

2. Minutes of any meeting of stockholders or the board of directors, including the various committees and
subcommittees.

NESTOR CHING and ANDREW WELLINGTON

vs. SUBIC BAY GOLF AND COUNTRY CLUB

GR No. 174353
FACTS:

Petitioners claimed in the Complaint that defendant corporation did not disclose to them the amendment in
their Articles of Incorporation which allegedly makes the share non-proprietary, as it takes awar the rights of the
shareholders to participate in the pro-rata distribution of the assets of the corporation after its dissolution.

According to petitioners, this is in fraud.

ISSUE:

Whether or not the complaint is a derivative suit

RULING:

Derivative suit if not a statutory right, there being no provision in the Corporation Code or the related statutes
authorizing the same, but is instead a product of jurisprudence based on equity.

Minority stockholders do not have any statutory rights to override the business judgments of the officers and
Boards of Directors. It is settles that a stockholder’s right to institute a derivative suit is not based on any statutory
rights or even the SEC, but is impliedly recognized when the said laws make corporate directors or officers liable for
damages suffered by the corporation and its stockholders for violation of their fiduciary duties.
 ALFREDO VILLAMOR vs JOHN UMALE

GR No. 172843

FACTS:

Pasig Printing Corporation entered into a MOA with the MC Home Depot. MC Home Depot issued 20 post-dated
checks representing rental payments. The checks were given to Villamor who did not turn the equivalent amount to
PPC, upon encashment.

Hernando Balmores, a stockholder, wrote a letter to the PPC directors and informed them that Villamor should
be made to deliver the equivalent value. Due to the inaction of the Directors, Balmores filed with the RTC an intra-
corporate controversy complaint under Rule 1, Section 1 of the Interim Rules for their alleged devices or schemes
amounting to fraud is detrimental to the interest of the corporation and its stockholders.

ISSUE:

Whether or not the action is a derivative suit

RULINGS:

No.

Rule 8 Section 1 of the Interim Rules provides the following requisites for filing derivative suits:

1. He was a stockholder at the time of the transactions subject of the action occurred and at the time the acton
was filed;
2. He exerted all reasonable efforts, and alleges the same with particularity in the complaint, to exhaust all
remedies in the Articles of Incorporation, by-laws, laws or rules governing the corporation or partnership to
obtain the reliefs he desires;
3. No appraisal rights are available for the act or acts complained of; and
4. The suit is not a nuisance or harassment suit.

In the case, respondent’s action in the trial court failed to satisfy all the requisites of a derivative suit.

Stockholder’s suit based on fraudulent or wrongful acts of directors may also be individual suits or class suits.
Individual suits are filed when the cause of action belongs to the individual stockholder personally and not to the
stockholders as a group or to the corporation.

In this case, respondent filed an individual suit. His intent was very clear from the manner of describing the
nature of his action. He was alleging that the acts of PPC’s directors, specifically the waiver fo rights in favor of
Villamor’s law firm and their failure to take back the MS Home Depot checks from Villamor, were detrimental to his
individual interest as a stockholder.

FOREIGN CORPORATIONS

MR HOLDINGS vs. SHERIFF CARLOS BAJAR

GR No.
FACTS:

Marcopper Mining Corporation was unable to pay its loans from the Asian Development Bank (ADB). Later, ADB
transferred all its rights to collect from Marcopper to MR Holdings, Ltd. In order to pay MR Holdings, Marcopper
assigned all its assets to MR Holdings and executed therefor a Deed of Assignment in MR Holdings favor.
Meanwhile, another creditor of Marcopper, Solidbank Corporation, won a case against Marcopper. The court then
issued a writ of execution directing Sheriff Carlos Bajar to levy Marcopper’s assets.
MR Holdings then filed an opposition asserting that it is now the owner of Marcopper’s assets hence, Bajar cannot levy
them. The lower court denied MR Holdings on the ground that the Deed of Assignment was made in bad faith and that
MR Holdings was a foreign corporation doing business without a license in the Philippines (by virtue of the Deed of
Assignment) and as such cannot sue in the Philippines.

ISSUE:

Whether or not MR Holdings may sue on this particular transaction.

RULING:
Yes. The Supreme Court emphasized the following rules when it comes to foreign corporations doing business
here in the Philippines:

1. if a foreign corporation does business in the Philippines without a license, it cannot sue before the Philippine
courts;
2. if a foreign corporation is not doing business in the Philippines, it needs no license to sue before Philippine
courts on an isolated transaction or on a cause of action entirely independent of any business transaction;
3. if a foreign corporation does business in the Philippines with the required license, it can sue before Philippine
courts on any transaction.

Being a mere assignee does not constitute “doing business” in the Philippines. MR Holdings, a foreign corporation,
cannot be said to be doing business simply because it became an assignee of Marcopper. MR Holdings was not doing
anything else other than being a mere assignee. The only time that MR Holdings is considered to be doing business here
is that if it continues the business of Marcopper – which it did not.
Therefore, since it is not doing business here, pursuant to the rules above, it can sue without any license before
Philippine courts on an isolated transaction or on a cause of action entirely independent of any business transaction.
Anent the issue of bad faith, the same was not proven. It appears that the deed of assignment was an earlier
agreement incidental to the loan agreement between ADB and Marcopper which precedes the action brought by
Solidbank against Marcopper.
CONTINENTAL MICRONESIA vs BASSO
GR No. 178382-83
FACTS:

Petitioner Continental Micronesia is a foreign corporation organized and existing under the laws of and
domiciled in the United States of America. It is licensed to do business in the Philippines. Respondent, a US citizen
residing in the Philippines, accepted an offer to be a General Manager position by Mr. Braden, Managing Director-Asia of
Continental Airlines. On November 7, 1992, CMI took over the Philippine operations of Continental, with respondent
retaining his position as General Manager. Thereafter, respondent received a letter from Mr. Schulz, who was then
CMI’s Vice President of Marketing and Sales, informing him that he has agreed to work in CMI as a consultant on an “as
needed basis.” Respondent wrote a counter-proposal that was rejected by CMI.

Respondent then filed a complaint for illegal dismissal against the petitioner corporation. Alleging the presence
of foreign elements, CMI filed a Motion to Dismiss on the ground of lack of jurisdiction over the person of CMI and the
subject matter of the controversy.

The Labor Arbiter agreed with CMI that the employment contract was executed in the US “since the letter-offer
was under the Texas letterhead and the acceptance of Complainant was returned there.” Thus, applying the doctrine
of lex loci celebrationis, US laws apply. Also, applying lex loci contractus, the Labor Arbiter ruled that the parties did not
intend to apply Philippine laws.

The NLRC ruled that the Labor Arbiter acquired jurisdiction over the case when CMI voluntarily submitted to his
office’s jurisdiction by presenting evidence, advancing arguments in support of the legality of its acts, and praying for
reliefs on the merits of the case.

The Court of Appeals ruled that the Labor Arbiter and the NLRC had jurisdiction over the subject matter of the
case and over the parties.

ISSUE:

Whether labor tribunals have jurisdiction over the case.

RULING:
 Yes.

The Court ruled that the labor tribunals had jurisdiction over the parties and the subject matter of the case. The
employment contract of Basso was replete with references to US laws, and that it originated from and was returned to
the US, do not automatically preclude our labor tribunals from exercising jurisdiction to hear and try this case.

On the other hand, jurisdiction over the person of CMI was acquired through the coercive process of service of
summons. CMI never denied that it was served with summons. CMI has, in fact, voluntarily appeared and participated in
the proceedings before the courts. Though a foreign corporation, CMI is licensed to do business in the Philippines and
has a local business address here. 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 to the jurisdiction of our courts.

Where the facts establish the existence of foreign elements, the case presents a conflicts-of-laws issue. Under
the doctrine of forum non conveniens, a Philippine court in a conflict-of-laws case may assume jurisdiction if it chooses
to do so, provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may
conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the
facts; and (3) that the Philippine Court has or is likely to have power to enforce its decision. All these requisites are
present here.

In Saudi Arabian Airlines v. Court of Appeals, we emphasized that an essential element of conflict rules is the
indication of a "test" or "connecting factor" or "point of contact". Choice-of-law rules invariably consist of a factual
relationship (such as property right, contract claim) and a connecting fact or point of contact, such as the situs of the res,
the place of celebration, the place of performance, or the place of wrongdoing. Pursuant to Saudi Arabian Airlines, we
hold that the "test factors," "points of contact" or "connecting factors" in this case are the following:
(1) The nationality, domicile or residence of Basso;
(2) The seat of CMI;
(3) The place where the employment contract has been made, the locus actus;
(4) The place where the act is intended to come into effect, e.g., the place of performance of contractual duties;
(5) The intention of the contracting parties as to the law that should govern their agreement, the lex loci
intentionis; and
(6) The place where judicial or administrative proceedings are instituted or done.
Applying the foregoing in this case, we conclude that Philippine law the applicable law. Basso, though a US
citizen, was a resident here from the time he was hired by CMI until his death during the pendency of the case. CMI,
while a foreign corporation, has a license to do business in the Philippines and maintains a branch here, where Basso
was hired to work. The contract of employment was negotiated in the Philippines. A purely consensual contract, it was
also perfected in the Philippines when Basso accepted the terms and conditions of his employment as offered by CMI.
The place of performance relative to Biasso's contractual duties was in the Philippines. The alleged prohibited acts of
Basso that warranted his dismissal were committed in the Philippines. Clearly, the Philippines is the state with the most
significant relationship to the problem.
Thus, we hold that CMI and Basso intended Philippine law to govern, notwithstanding some references made to
US laws and the fact that this intention was not expressly stated in the contract. If the foreign law is not properly
pleaded or proved, the presumption of identity or similarity of the foreign law to our own laws, otherwise known
as processual presumption, applies. Here, US law may have been properly pleaded but it was not proved in the labor
tribunals.

EXPERTRAVEL & TOURS Inc. vs. COURT Of APPEALS, etc.

G.R. No. 152392, 26 May 2005

FACTS:

Korean Airlines (KAL) is a corporation established and registered in the Republic of South Korea and has been
granted license to do business in the Philippines. On 6 September 1999, KAL, through its legal counsel, Atty. Mario
Aguinaldo filed a complaint against ETI with the Regional Trial Court (RTC) of Manila, for the collection of sum of money
totaling PhP260,150.00 plus attorney's fees and exemplary damages. The complaint was attached with verification and
certificate of non-forum shopping wherein indicated that Atty. Aguinaldo is the agent and legal counsel of KAL and had
caused the preparation of the said complaint.

ETI filed a motion to dismiss the complaint on the ground that Atty. Aguinaldo was not authorized to execute
the above-mentioned verification and non-forum shopping as required by Section 5, Rule 7 of the Rules of Court. KAL,
thereafter, opposed the motion contending that Atty. Aguinaldo was its resident agent and was registered as such with
the Securities and Exchange Commission (SEC). It was also alleged that Atty. Aguinaldo also served as the company's
corporate secretary.

During the hearing, Atty Aguinaldo claimed that he had been authorized to file the complaint through the
resolution approved by the KAL Board of Directors during a special meeting held on June 25, 1999. Thereafter. KAL
submitted an Affidavit executed by its General Manager Suk Kyoo Kim, alleging that the board of directors conducted a
special teleconference which he and Atty. Aguinaldo attended. It was also averred that in that Teleconference, the board
of directors approved a resolution authorizing Atty. Aguinaldo to execute the certificate of non-forum shopping and to
file the said complaint. Furthermore, Su Kyoo Kim alleged that the corporation had no written copy of the aforesaid
resolution.

Trial Court issued an order denying the motion to dismiss, giving credence to the claims of Atty. Aguinaldo and
Su Kyoo Kim. ETI filed a motion for reconsideration of the said order alleging that it is inappropriate for the court to take
judicial notice of the said teleconference without any prior hearing.

CA rendered judgment dismissing the petition and ruling that the verification and certificate of non-forum
shopping executed by Atty. Aguinaldo was sufficient compliance with the Rules of Court.

HENCE, THIS PETITION.

ISSUE:

Is the petitioner correct in assailing that until and after teleconferencing is recognized as a legitimate means of
conducting meetings, gathering quorum of board of directors, such cannot be taken judicial notice of by the court.

HELD:
The petition is meritorious.

It is settled that the requirement to file a certificate of non-forum shopping is mandatory and that the failure to
comply with this requirement cannot be excused. The certification is a peculiar and personal responsibility of the party,
an assurance given to the court or other tribunal that there are no other pending cases involving basically the same
parties, issues and causes of action. Hence, the certification must be accomplished by the party himself because he has
actual knowledge of whether or not he has initiated similar actions or proceedings in different courts or tribunals. Even
his counsel may be unaware of such facts. Hence, the requisite certification executed by the plaintiff’s counsel will not
suffice.

In a case where the plaintiff is a private corporation, the certification may be signed, for and on behalf of the
said corporation, by a specifically authorized person, including its retained counsel, who has personal knowledge of the
facts required to be established by the documents.

Generally speaking, matters of judicial notice have three material requisites:

(1) the matter must be one of common and general knowledge;

(2) it must be well and authoritatively settled and not doubtful or uncertain; and
(3) it must be known to be within the limits of the jurisdiction of the court.

The principal guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence,
it can be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety. Moreover,
a judicially noticed fact must be one not subject to a reasonable dispute in that it is either:

(1) generally known within the territorial jurisdiction of the trial court; or
(2) capable of accurate and ready determination by resorting to sources whose accuracy cannot reasonably be
questionable.

In this age of modern technology, the courts may take judicial notice that business transactions may be made by
individuals through teleconferencing. Teleconferencing is interactive group communication (three or more people in
two or more locations) through an electronic medium. In general terms, teleconferencing can bring people together
under one roof even though they are separated by hundreds of miles.

This type of group communication may be used in a number of ways, and have three basic types:

(1) video conferencing - television-like communication augmented with sound;

(2) computer conferencing - printed communication through keyboard terminals, and
(3) audio-conferencing-verbal communication via the telephone with optional capacity for telewriting or
telecopying.

The Court agrees with the RTC that persons in the Philippines may have a teleconference with a group of
persons in South Korea relating to business transactions or corporate governance.
Even given the possibility that Atty. Aguinaldo and Suk Kyoo Kim participated in a teleconference along with the
respondent’s Board of Directors, the Court is not convinced that one was conducted; even if there had been one, the
Court is not inclined to believe that a board resolution was duly passed specifically authorizing Atty. Aguinaldo to file the
complaint and execute the required certification against forum shopping.

The Court is, thus, more inclined to believe that the alleged teleconference on June 25, 1999 never took place,
and that the resolution allegedly approved by the respondent’s Board of Directors during the said teleconference was a
mere concoction purposefully foisted on the RTC, the CA and this Court, to avert the dismissal of its complaint against
the petitioner.
Petition granted.