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Xavier Henry Lopez Zamora Private International Law M.E GRAY V. INSULAR LUMBER CO. No.

45144 April 3, 1939 Philippine corporation laws were basically patterned after American corporation and enterprise laws. Consequently, it is no wonder that when unique situations confront Philippine courts, resort to American laws and jurisprudence is made to resolve them. FACTS: Insular Lumber Company is a corporation organized and existing under the laws of the State of New York, licensed to engage in business in the Philippines, with offices in the City of Manila, in Fabrica, Occidental Negros, in New York and in Philadelphia. M. E Gray is the owner and possessor of 6, shares of the capital stock of the defendant corporation. The dispute arises when he asked the offices of insular lumber in Manila and in Fabrica to permit him to examine the books and records of the business of said defendant, but he was not allowed to do so. According to Insular Lumber, applying the law of New York, the rights of a stockholder to examine the books and records of a corporation organized under the laws of that State, have been, during the entire period material to this action, only those provided in section 77 of the Stock Corporation Law which substantially provides that only stockholder owning at least three percent of the capital stock has the right to examine the books and records of the corporation. M.E Gray, not being a stockholder owning at least three percent of the capital stock has not right to examine. M.E Gray, contends that under our Corporation code, under which insular lumber company was registered to do business in the Philippines, he is entitled, as stockholder, to inspect the record of the transactions of the defendant corporation (sec. 51, Act No. 1459), and this right, which is recognized in the common law, has not been altered by section 77 of the Stock Corporation Law of New. Lower Courts Decision: The petition for mandamus compelling the company to allow him examine the books and records was denied. ISSUE: 1. Whether the M.E Gray is entitled, as stockholder of the Insular Lumber Company, to inspect and examine the books and records of the transactions of said company. HELD: No. The decision of the CFI was affirmed denying the mandamus against the company and absolving it from the complaint. 1. The stipulation of facts is binding upon both parties and cannot be altered by either of them> On the strength of that principle M.E Gray is bound to adhere to the agreement made by him with the Insular Lumber Co. in paragraph four of the stipulation of facts, to the effect that the rights of a stockholder, under the law of New York, to examine the books and records of a corporation organized under the laws of said State, and during the entire period material to this action, are only those provided in section 77 of the Stock Corporation Law of New York. Under this law, plaintiff has the right to be furnished by the treasurer or other fiscal officer of the corporation with a statement of its affairs embracing a particular account of all its assets and liabilities. The right under the common law cannot be granted by insular lumber in the present case, since the same can only be granted at the discretion of the court, under certain conditions, to wit:

Xavier Henry Lopez Zamora Private International Law (a) That the stockholder of a corporation in New York has the right to inspect its books and records if it can be shown that he seeks information for an honest purpose (b) That said right to examine and inspect the books of the corporation must be exercised in good faith, for a specific and honest purpose, and not to gratify curiosity, or for speculative or vexatious purposes. The M.E Gray has made no effort to prove or even allege that the information he desired to obtain through the examination and inspection of defendants books was necessary to protect his interests as stockholder of the corporation, or that it was for a specific and honest purpose, and not to gratify curiosity, nor for speculative or vexatious purposes. PALTING V. SAN JOSE PETROLEUM, INC. No. L-14441 December 17, 1966
The privilege to utilize, exploit and develop the natural resources of the Philippines was granted by Article XIII of the Constitution, to Filipino citizens or to corporations or associations 60% of the capital of which is owned by such citizens. With the Parity Amendment to the Constitution, the same right was extended to citizens of the United States and business enterprise owned or controlled, directly or indirectly, by citizens of the United States. There can be no serious doubt as to the meaning of the word "citizens" used in the aforementioned provisions of the Constitution. The right was granted to two types of persons; natural persons (Filipino or American citizen) and juridical persons (corporations 60% of which capital is owned by Filipinos and business enterprises owned or controlled directly or indirectly by citizens of the United States).

FACTS: In 1956, San Jose Petroleum, Inc. (SJP), a mining corporation organized under the laws of Panama, was allowed by the Securities and Exchange Commission (SEC) to sell its shares of stocks in the Philippines. Apparently, the proceeds of such sale shall be invested in San Jose Oil Company, Inc. (SJO), a domestic mining corporation. Pedro Palting opposed the authorization granted to SJP because said tie up between SJP and SJO is violative of the constitution; that SJO is 90% owned by SJP; that the other 10% is owned by another foreign corporation; that a mining corporation cannot be interested in another mining corporation. SJP on the other hand invoked that under the parity rights agreement (Laurel-Langley Agreement), SJP, a foreign corporation, is allowed to invest in a domestic corporation. ISSUE: 1. Whether or not the "tie-up" between the respondent SAN JOSE PETROLEUM, a foreign corporation, and SAN JOSE OIL COMPANY, INC., a domestic mining corporation, is violative of the Constitution, the Laurel-Langley Agreement, the Petroleum Act of 1949, and the Corporation Law. HELD: Yes The case is remanded to the Securities and Exchange Commission for appropriate action in consonance with this decision allowing the registration of the respondents securities and licensing their sale in the Philippines. 1. The parity rights agreement is not applicable to SJP. The parity rights are only granted to American business enterprises or enterprises directly or indirectly controlled by US citizens. SJP is a Panamanian corporate citizen. The other owners of SJO are Venezuelan corporations, not Americans. SJP was not able to show contrary evidence. Further, the Supreme Court emphasized that the stocks of these corporations are being traded in stocks exchanges abroad 2

Xavier Henry Lopez Zamora Private International Law which renders their foreign ownership subject to change from time to time. This fact renders a practical impossibility to meet the requirements under the parity rights. Hence, the tie up between SJP and SJO is illegal, SJP not being a domestic corporation or an American business enterprise contemplated under the Laurel-Langley Agreement. STATE INVESTMENT HOUSE, INC. V. CITIBANK NOS. 79926-27 October 17, 1991 Foreign Corporations doing business in the Philippines is a Resident FACTS: Consolidated Mines, Inc. (CMI) obtained loans from Citibank, Bank of America and HSBC, all foreign corporations but with branches in the Philippines. Meanwhile, State Investment House, Inc. (SIHI) and State Financing Center, Inc. (SFCI), also creditors of CMI, filed collection suits against the latter with writs of preliminary attachment. Subsequently, the three banks jointly filed with the court a petition for involuntary insolvency of CMI. SHI and SFCI opposed the petition on the ground that the petitioners are not resident creditors in contemplation of the Insolvency Law. ISSUE: 1. Whether or not a foreign corporation with a branch in the Philippines and doing business therein can be considered a resident. HELD: Yes. 1. Foreign corporations duly licensed to do business in the Philippines are considered residents of the Philippines, as the word is understood in Sec. 20 of the Insolvency Law, authorizing at least three resident creditors of the Philippines to file a petition to declare a corporation insolvent. The Tax Code declares that the term resident foreign corporation applies to foreign corporation engaged in trade or business within the Philippines as distinguished from a non-resident foreign corporation which is not engaged in trade or business within the Philippines. The Offshore Banking Law states that: Branches, subsidiaries, affiliates, extension offices or any other units of corporation or juridical person organized under the laws of any foreign country operating in the Philippines shall be considered residents of the Philippines. The General Banking Act places branches and agencies in the Philippines of foreign banks in the category as commercial banks, rural banks, stock savings and loan association making no distinction between the former ad the latter in so far as the terms banking institutions and banks are used in said Act. HOME INSURANCE COMPANY V. EASTERN SHIPPING LINES No. L-34382 July 20, 1983 The primary purpose of our statute is to compel a foreign corporation desiring to do business within the state to submit itself to the jurisdiction of the courts of this state. The statute was not intended to exclude foreign corporations from the state. FACTS: On or about January 13, 1967, S. Kajikita & Co. on board the SS Eastern Jupiter, which is owned by the respondent, from Osaka, Japan coils of Black Hot Rolled Copper Wires Rods. The shipment was covered by Bill of Lading with arrival notice to the Phelps Dodge Copper Products Corporation, the consignee. It was also insured with the plaintiff against all risks in the amount of P1,580,105.06.The coils discharged from the vessel were in bad order, 3

Xavier Henry Lopez Zamora Private International Law consisting of loose and partly cut coils which had to be considered scrap. The plaintiff paid the consignee under insurance the amount of P3,260.44 for the loss/damage suffered by the cargo. Plaintiff, a foreign insurance company duly authorized to do business in the Philippines, made demands for payment of the aforesaid amount against the carrier and transportation company for reimbursement of the aforesaid amount, but each refused to pay the same. The Eastern Shipping Lines filed its answer and denied the allegations which refer to the plaintiffs capacity to sue for lack of knowledge or information sufficient to form a belief as to the truth thereof. Angel Jose Transportation, on the other hand, admitted the jurisdictional averments 3 of the heading parties. Lower Courts Decision: The complaint was dismissed on the ground that the Home Insurance had failed to prove its capacity to sue. ISSUE: 1. Whether or not Home Insurance, a foreign corporation licensed to do business in the Philippines, at the time of filing of the case, has the capacity to sue for claims on contracts made when it has no license yet to do business in the Philippines. HELD: Yes. The decision of the lower court was reversed. As early as 1924, the Supreme Court ruled in the leading case of Marshall Wells Co. v. Henry W. Elser & Co. (46 Phil. 70) that the object of Sections 68 and 69 of the Corporation Law was to subject the foreign corporation doing business in the Philippines to the jurisdiction of Philippine courts. The Corporation Law must be given a reasonable, not an unduly harsh, interpretation which does not hamper the development of trade relations and which fosters friendly commercial intercourse among countries. The objectives enunciated in the 1924 decision are even more relevant today when we commercial relations are viewed in terms of a world economy, when the tendency is to re-examine the political boundaries separating one nation from another insofar as they define business requirements or restrict marketing conditions. The court distinguished between the denial of the right to take remedial action and the penal sanction for non-registration. Insofar as transacting business without a license is concerned, Section 69 of the Corporation Law imposed a penal sanction imprisonment for not less than 6 months nor more than 2 years or payment of a fine not less than P200.00 nor more than P1,000.00 or both in the discretion of the court. There is a penalty for transacting business without registration. And insofar as litigation is concerned, the foreign corporation or its assignee may not maintain any suit for the recovery of any debt, claim, or demand whatever. The Corporation Law is silent on whether or not the contract executed by a foreign corporation with no capacity to sue is null and void ab initio. Still, there is no question that the contracts are enforceable. The requirement of registration affects only the remedy. Significantly, Batas Pambansa 68, the Corporation Code of the Philippines has corrected the ambiguity caused by the wording of Section 69 of the old Corporation Law. Section 133 of the present Corporation Code provides that "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 in 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." The old Section 69 has been reworded in terms of non-access to courts and administrative agencies in order to maintain or intervene in any action or proceeding. The prohibition against doing business without first securing a license is now given penal sanction which is also applicable to other violations of the Corporation Code under the general provisions of Section 144 of the Code. It is, therefore, not

Xavier Henry Lopez Zamora Private International Law necessary to declare the contract null and void even as against the erring foreign corporation. The penal sanction for the violation and the denial of access to Philippine courts and administrative bodies are sufficient from the viewpoint of legislative policy. Herein, the lack of capacity at the time of the execution of the contracts was cured by the subsequent registration is also strengthened by the procedural aspects of these cases. Home Insurance averred in its complaints that it is a foreign insurance company, that it is authorized to do business in the Philippines, that its agent is Mr. Victor H. Bello, and that its office address is the Oledan Building at Ayala Avenue, Makati. These are all the averments required by Section 4, Rule 8 of the Rules of Court. Home Insurance sufficiently alleged its capacity to sue. LEVITON INDUSTRIES V. SALVADOR G.R. No. L-40163. June 19, 1982 Old Rule: If suing for unfair competition, foreign corp should still allege in its complaint the condition precedent in RA 166 (owner/user of TM + comity) New Rule: The IP Code does not require that the foreign corporation is a registered TM holder in RP. Why we allow it now: To protect its name, property rightgoodwill protected Ratio: Policy of stabilizing commercial transactions (hehe ) FACTS: Leviton Manufacturing Co. Inc. filed a complaint for unfair competition against Leviton Industries before the CFI of Rizal, presided by respondent Judge Serafin Salvador. The complaint substantially alleges that plaintiff (Leviton Manufacturing) is a foreign corporation organized and existing under the laws of the State of New York, United States of America. Leviton Industries is a partnership organized and existing under the laws of the Philippines. The plaintiff, founded in 1906 by Isidor Leviton, is the largest manufacturer of electrical wiring devices in the United States under the trademark Leviton, which various electrical wiring devices bearing the trademark Leviton and trade name Leviton Manufacturing Co., Inc. had been exported to the Philippines since 1954; that due to the superior quality and widespread use of its products by the public, the same are well known to Filipino consumers under the trade name Leviton Manufacturing Co., Inc. and trademark Leviton; that long subsequent to the use of plaintiffs trademark and trade name in the Philippines, defendants (Leviton Industries) began manufacturing and selling electrical ballast, fuse and oval buzzer under the trademark Leviton and trade name Leviton Industries Co. The dispute arises when the partner and general manager of partnership, had registered with the Philippine Patent Office the trademarks Leviton Label and Leviton with respect to ballast and fuse which registration was contrary to paragraphs (d) and (e) of Section 4 of RA 166, as amended, and violative of plaintiffs right over the trademark Leviton; the defendants not only used the trademark Leviton but likewise copied the design used by plaintiff in distinguishing its trademark; and the use thereof by defendants of its products would cause confusion in the minds of the consumers and likely to deceive them as to the source of origin, thereby enabling defendants to pass off their products as those of plaintiffs. Invoking the provisions of Section 21-A of Republic Act No. 166, plaintiff prayed for damages. It also sought the issuance of a writ of injunction to prohibit defendants from using the trade name

Xavier Henry Lopez Zamora Private International Law Leviton Industries, Co. and the trademark Leviton. Defendants moved to dismiss the complaint for failure to state a cause of action, drawing attention to the plaintiffs failure to allege therein its capacity to sue under Section 21-A of Republic Act No. 166, as amended. After the filing of the plaintiffs opposition and the defendants reply, the respondent judge denied the motion on the ground that the same did not appear to be indubitable. Lower Courts Decision: The motion and supplemental motion of petitioners to dismiss the complaint as well as their motion for reconsideration was denied. It sustained the legal capacity of Leviton manufacturing. ISSUE: 1. Whether or Not Leviton manufacturing has capacity to sue before Philippine Courts. HELD: No. 1. Leviton Manufacturing failed to allege the essential facts bearing upon its capacity to sue before Philippine courts. Leviton Manufacturing has chosen to anchor its action under the Trademark Law of the Philippines, a law which, as pointed out, explicitly sets down the conditions precedent for the successful prosecution thereof. It is therefore incumbent upon private respondent to comply with these requirements or aver its exemption therefrom, if such be the case. It may be that private respondent has the right to sue before Philippine courts, but our rules on pleadings require that the necessary qualifying circumstances which clothe it with such right be affirmatively pleaded. And the reason therefor, as enunciated in Atlantic Mutual Insurance Co., et al. versus Cebu Stevedoring Co., Inc. is that these are matters peculiarly within the knowledge of appellants alone, and it would be unfair to impose upon appellees the burden of asserting and proving the contrary. It is enough that foreign corporations are allowed by law to seek redress in our courts under certain conditions: the interpretation of the law should not go so far as to include, in effect, an inference that those conditions had been met from the mere fact that the party sued is a foreign corporation. It was indeed in the light of this and other considerations that this Court has seen fit to amend the former rule by requiring in the revised rules (Section 4, Rule 8) that facts showing the capacity of a party to sue or be sued or the authority of a party to sue or be sued in a representative capacity or the legal existence of an organized association of persons that is made a party, must be averred, EASTBOARD NAVIGATION V. JUAN YSMAEL CO., INC. No. L-9090 September 1, 1957 The law of the forum governs procedural matters (such as notice requirements). The law of the state where a foreign judgment is sought to be enforced cannot be invoked to impugn the validity of the proceedings where the foreign judgment was made. FACTS: Juan Ysmael Co., Inc (defendant), through K. H. Hemady (its president and general manager), chartered Eastboard Navigations (plaintiff) vessel to load a cargo of scrap iron in the Philippines for Buenos Aires. The charter party agreement contained, besides the regular charter party printed form, a typewritten clause providing for compulsory arbitration in the state of New York, U.S. in case of any disputes that may arise of said agreement. Juan Ysmael, 6

Xavier Henry Lopez Zamora Private International Law through K.H. Hemady, signed not only the printed portion of the charter party but the typewritten portion. It appears that after the dispute as to the liability of Juan Ysmael (for the payment freight and demurrage) arose, K.H. Hemady appointed New York Attys. Manning, Harnisch, and Hollinger to represent Juan Ysmael in the arbitration proceedings to be held in New York. On May 23, 1959, Messrs. Manning, Harnisch, and Hollinger, acting as attorneys for Juan Ysmael executed with the attorney for Eastboard Navigation an arbitration agreement. The arbitration agreement was presented by Eastboard Navigation to the U.S. District Court, Southern District, Southern District of New York, for confirmation and said Court (acting as an admiralty court) confirmed the said arbitration decision in its Order and Final Decree of August 15, 1950 (Order and Final Decree). Eastboard Navigation brought this action to enforce the aforesaid Order and Final Decree pursuant to Section 48, Rule 39 of the Rules of Court which provides that in case of a judgment against a person, the judgment Is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title; but the judgment may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. Juan Ysmael sets up the defense that the judgment cannot be enforced in the Philippines because when the New York District Court acted on the case, it did not have jurisdiction over the person of the defendant. Lower Court Ruling: Decision of the New York District Court affirmed and that the Order and Final Decree should be enforced. Appellate Court Ruling: Not applicable. ISSUE: 1. Whether or not the lower court erred in enforcing the Order and Final Decree issued by the New York District Court.

HELD: No. CFI affirmed. 1. As to whether Juan Ysmael agreed to submit to compulsory arbitration its dispute with Eastboard Navigation in the charter party agreement executed between them, the Court held that it intended to submit its dispute with Eastboard Navigation to arbitration. Otherwise, the logical step that Juan Ysmael should have taken would be to repudiate the act of its president and general manager. Far from doing so, Juan Ysmael ratified it by subsequent acts which clearly indicate that it was agreeable to said arbitration. Consequently, said arbitration proceedings as well as the arbitration decision rendered pursuant thereof, as confirmed by the District Court of New York, are valid; hence, enforceable in this jurisdiction. 2. As to whether the decision rendered by the U.S. District court of New York sitting as an Admiralty Court, which ratified the award made by the arbitrators, has no binding effect on defendant corporation or whether it can be enforced in this jurisdiction as the U.S. District court did not acquire jurisdiction over Juan Ysmael, the Court held that such contention was unmeritorious. The claim is predicated on the alleged fact that defendant was never served with notice, summons, or process relative to the submission of the award of the arbitrators to said court, invoking U.S. Arbitration Act of February 12, 1925 under which the New York District court confirmed the arbitrators award. The law invoked, however, does not sustain defendants pretense since the Arbitration Act does not necessarily require that service of notice of the application for confirmation be made on the adverse party himself (in case of a non-resident), it being sufficient that it be made upon his attorney. In this case, a copy of notice of submission 7

Xavier Henry Lopez Zamora Private International Law of the award to the District Court of New York was served upon defendants counsel who in due time made of record their appearance and actually appeared when the case was heard. It is also significant that defendants counsel never impugned the jurisdiction of the court over defendant nor did they ever plead before it that they were bereft of authority to represent defendant. Defendant cannot therefore in this distance defeat the effect of this decision by alleging want of jurisdiction, or want of notice, as provided for in Sec. 48, Rule 39 of the Philippine Rules of Court. HANG LUNG BANK V. SAULOG G.R. No. 73765 August 26, 1991 General Rule Foreign Corporation should first obtain license in RP to sue; Exception If the transaction based on was transacted "wholly or fully" outside RP Ratio Growth and development of business relations between Filipinos and foreign nationals. .or else, we would be allowing law to serve as a protective shield for unscrupulous Filipinos FACTS: Hang Lung Bank, which was not doing business in the Philippines, entered into two continuing guarantee agreements with Cordova Chin San in Hongkong whereby the latter agreed to pay on demand all sums of money which may be due the bank from Worlder Enterprises to the extent of the total amount of two hundred fifty thousand Hongkong dollars. Worlder Enterprises having defaulted in its payment, petitioner filed in the Supreme Court of Hongkong a collection suit against Worlder Enterprises and Chin San. Summonses were allegedly served upon Worlder Enterprises and Chin San at their addresses in Hongkong but they failed to respond thereto. Consequently, the Supreme Court of Hongkong ruled that Worlder Enterprises and Cordova Chin san liable. A demand letter to Chin San at his Philippine address was sent but no response was made thereto triggering the petitioner to institute in the Philippine court an action seeking "the enforcement of its just and valid claims against private respondent, who is a local resident, for a sum of money based on a transaction which was perfected, executed and consummated abroad." In his answer to the complaint, Chin San raised as affirmative defenses: lack of cause of action, incapacity to sue and improper venue. Lower Courts Decision: The case was dismissed for lack of jurisdiction. Court of Appeals Decision: The MR was denied for lack of merit. ISSUE: 1. Whether or not the foreign banking corporation has the capacity to file action. HELD: Yes. A foreign corporation may sue in this jurisdiction for infringement of trademark and unfair competition although it is not doing business in the Philippines 13 because the Philippines was a party to the Convention of the Union of Paris for the Protection of Industrial Property. We even went further to say that a foreign corporation not licensed to do business in the Philippines may not be denied the right to file an action in our courts for an isolated transaction in this country. Since petitioner Foreign Banking Corporation was not doing business in the Philippines, it may not be denied the privilege of pursuing its claims against private respondent for a contract 8

Xavier Henry Lopez Zamora Private International Law which was entered into and consummated outside the Philippines. Otherwise we will be hampering the growth and development of business relations between Filipino citizens and foreign nationals. Worse, we will be allowing the law to serve as a protective shield for unscrupulous Filipino citizens who have business relationships abroad. MARSHALL WELLS CO. VS ELSER CO. No. 22015 September 1, 1924 The object of the statute was to subject the foreign corporation doing business in the Philippines to the jurisdiction of its courts. 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 FACTS: Marshall-Wells Company (an Oregon Corporation) sued henry W. Elser & Co., Inc. (a Domestic Corporation) in CFI Manila for the unpaid balance on a bill of goods sold by plaintiff to defendant. Henry W. Elser & Co. demurred to the complaint on the statutory ground that Marshall Wells Co. has no legal capacity to sue since its complaint does not show that it has complied with the laws of the Philippine Island, neither does it show that it was authorized to do business in the Philippine Island. Section 69 of the Corporation Law provides that foreign corporations are not 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 prescribe in the same law. Pasensya na po tinamad na ako :-D ISSUE: 1. Whether or not the license required under the Corporation Law is a condition precedent to the maintaining of any kind of action in the courts of the Philippine Island by Foreign Corporation. HELD: No. 1. The implication of the law is that it was never the purpose of the Legislature to exclude a foreign corporation which happens to obtain an isolated order for business from the Philippines, from securing redress in the Philippine courts, and thus, in effect, to permit persons to avoid their contracts made with such foreign corporations. The effect of the statute 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. It should not be construed to extend beyond the plain meaning of its terms, considered in connection with its object, and in connection with the spirit of the entire law.