CHESTER BABST, petitioner, v. COURT OF APPEALS, BANK OF THE PHILIPPINE ISLANDS, ELIZALDE STEEL CONSOLIDATED, INC.

, and PACIFIC MULTI-

COMMERCIAL CORPORATION, respondents.
G.R. No. 99398, January 26, 2001
ELIZALDE STEEL CONSOLIDATED, INC., petitioner, v. COURT OF APPEALS, BANK OF THE PHILIPPINE ISLANDS, PACIFIC MULTICOMMERCIAL
CORPORATION and CHESTER BABST, respondents.
G.R. No. 104625, January 26, 2001
J. Ynares-Santiago
It is settled that in the merger of two existing corporations, one of the corporations survives and continues the business, while the other is dissolved and all its
rights, properties and liabilities are acquired by the surviving corporation.
Facts:
Elizalde Steel Consolidated, Inc. (ELISCON) obtained from Commercial Bank and Trust Company (CBCT) a loan. It also applied for the opening of
letters of credit with the same bank using the credit facilities of Pacific Multi-Commercial Corporation (MULTI). Subsequently, Antonio Roxas Chua and
Chester Babst executed a Continuing Suretyship, whereby they bound themselves jointly and severally liable to pay any existing indebtedness of MULTI to
CBCT. ELISCON eventually defaulted in its obligations to CBCT. Meanwhile, the Bank of the Philippine Islands (BPI) and CBTC entered into a merger, with BPI
as the surviving corporation.

ELISCON encountered financial difficulties and became heavily indebted to the Development Bank of the Philippines (DBP). To settle its obligations,
ELISCON ceded all its assets and properties to DBP. For this purpose, ELISCON called its creditors to a meeting to announce DBP’s take over. Later on, DBP
formally took over the assets of ELISCON, including its indebtedness to BPI.
BPI, as successor-in-interest of CBTC, instituted with the Regional Trial Court (RTC), a complaint for sum of money against ELISCON, MULTI and Babst. One of
the issues raised against BPI was that it had no right of action, as it was not privy to the transactions between CBTC and ELISCON.
The RTC and the Court of Appeals ruled in favor of BPI. Hence, these consolidated petitions.
Issue: Whether or not BPI has a right of action.
Ruling:
Yes. There is no question that there was a valid merger between BPI and CBTC. It is settled that in the merger of two existing corporations, one of
the corporations survives and continues the business, while the other is dissolved and all its rights, properties and liabilities are acquired by the surviving
corporation. Hence, BPI has a right to institute the case a quo.
Nevertheless, the Supreme Court said that BPI should have enforced its rights against DBP, because there was a valid novation. It was held that
BPI’s failure to object to DBP’s take-over of ELISCON’s assets should be deemed as its consent thereto.

MINDANAO SAVINGS AND LOAN ASSOCIATION, INC., represented by its Liquidator, THE PHILIPPINE DEPOSIT INSURANCE CORPORATION,
Petitioner, v. EDWARD WILLKOM; GILDA GO; REMEDIOS UY; MALAYO BANTUAS, in his capacity as the Deputy Sheriff of Regional Trial Court, Branch
3, Iligan City; and the REGISTER OF DEEDS of Cagayan de Oro City, Respondent.
G.R. No. 178618, October 11, 2010, J. Nachura
A merger does not become effective upon the mere agreement of the constituent corporations.
Facts:
Two banking corporations—the First Iligan Savings and Loan Associations, Inc. (FISLAI) and the Davao Savings and Loan Association, Inc (DSLAI)—
entered into a merger, with DSLAI as the surviving corporation. However, the articles of merger were not registered with the Securities and Exchange
Commission (SEC) due to incomplete documentation. DSLAI eventually changed its corporate name to Mindanao Savings and Loan Association, Inc. (MSLAI).
Unfortunately, the business of MSLAI failed resulting in its closure and being placed under receivership.
It appears that prior to MSLAI’s closure, a certain Remedios Uy filed a collection suit against FISLAI for which the trial court ruled in favor of Uy. The decision
became final and executory, and a writ of execution was thereafter issued. The sheriff levied on six parcels of land owned by FISLAI, and, they were sold in the
public auction.
Thereafter, MSLAI, represented by the Philippine Deposit Insurance Corporation (PDIC), filed before the Regional Trial Court (RTC) a complaint for
Annulment of Sheriff’s Sale, Cancellation of Title and Reconveyance of Properties against the respondents of this case: Edward Willkom (the highest bidder in
the auction); Remedios Uy (the judgment creditor in the collection suit); and Malayo Bantuas (the sheriff). MSLAI alleged that the execution of the RTC
decision in the collection suit was illegal, not only because PDIC was not notified of the execution sale, but also because the assets of an institution placed
under receivership or liquidation such as MSLAI should be deemed in custodial egis and should be exempt from any order of garnishment, levy, attachment, or
execution.
In answer, respondents averred that MSLAI had no cause of action against them or the right to recover the subject properties because MSLAI is a
separate and distinct entity from FISLAI.
The RTC dismissed MSLAI’s case for lack of jurisdiction, and this was affirmed by the Court of Appeals. Hence, this petition for review on certiorari.
Issue:
Was the merger between FISLAI and DSLAI valid and effective? (This issue would then determine whether MSLAI has a cause of action.)
Ruling:
No. A corporate merger does not become effective upon the mere agreement of the constituent corporations. Since a merger or consolidation
involves fundamental changes in the corporation, as well as in the rights of stockholders and creditors, there must be an express provision of law authorizing
them. Under the Corporation Code, the requisites for a valid merger are the following:
1. The board of each corporation draws up a plan of merger or consolidation. Such plan must include any amendment, if necessary, to the articles of
incorporation of the surviving corporation, or in case of consolidation, all the statements required in the articles of incorporation of a corporation. 

2. Submissionofplantostockholdersormembersofeachcorporationforapproval. A meeting must be called and at least two (2) weeks’ notice must be
sent to all stockholders or members, personally or by registered mail. A summary of the plan must be attached to the notice. Vote of two-thirds of
the members or of stockholders representing two-thirds of the outstanding capital stock will be needed. Appraisal rights, when proper, must be
respected. 

3. Execution of the formal agreement, referred to as the articles of merger o[r] consolidation, by the corporate officers of each constituent corporation.
These take the place of the articles of incorporation of the consolidated corporation, or amend the articles of incorporation of the surviving
corporation. 

4. Submission of said articles of merger or consolidation to the SEC for approval. 

5. If necessary, the SEC shall set a hearing, notifying all corporations concerned at 
least two weeks before. 

6. Issuance of certificate of merger or consolidation. 
Clearly, the merger shall only be effective upon the issuance of a certificate of 

merger by the SEC, subject to its prior determination that the merger is not inconsistent with the Corporation Code or existing laws.
In this case, it is undisputed that the articles of merger between FISLAI and DSLAI were not registered with the SEC due to incomplete
documentation. Consequently, the SEC did not issue the required certificate of merger. Even if it is true that the Monetary Board of the Central Bank of the
Philippines recognized such merger, the fact remains that no certificate was issued by the SEC. Hence, such merger is still incomplete without the certification.
There being no merger between FISLAI and DSLAI, for third parties such as respondents, the two shall not be considered as one but two separate
corporations. Being separate entities, the property of one cannot be considered the property of the other. Thus, MSLAI, as the successor-in-interest of DSLAI,
has no legal standing to annul the execution sale over the properties of FISLAI. With more reason can it not cause the cancellation of the title to the subject
properties of Willkom and Go.
 Meanwhile, MSLAI also tried to anchor its right to annul the execution sale on the principle of novation, considering that MSALI assumed all the
liabilities of FISLAI. But, the same does not hold water, because it is a rule that novation by substitution of debtor must always be made with the consent of the
creditor, which does not obtain in this case.

BANK OF THE PHILIPPINE ISLANDS, PETITIONER, v. CARLITO LEE, RESPONDENT.
G.R. No. 190144, August 1, 2012, J. Perlas-Bernabe
Citytrust, therefore, upon service of the notice of garnishment and its acknowledgment that it was in possession of defendants' deposit accounts in its
letter- reply dated June 28, 1988, became a “virtual party” to or a “forced intervenor” in the civil case. As such, it became bound by the orders and processes issued
by the trial court despite not having been properly impleaded therein. Consequently, by virtue of its merger with BPI on October 4, 1996, BPI, as the surviving
corporation, effectively became the garnishee, thus the “virtual party” to the civil case.
Facts:
Carlito Lee filed a complaint for sum of money with damages against Trendline Resources & Commodities Exponent, Inc. (Trendline) and Leonarda
Buelva. Lee alleged that he was enticed to invest money with Trendline upon Buelva’s misrepresentation that she was its duly licensed consultant. Nothing
came out of it, however. The Regional Trial Court (RTC) issued a writ of preliminary attachment whereby Trendline’s accounts with Citytrust Banking
Corporation were garnished. Subsequently, the RTC rendered a decision in favor of Lee, which the Court of Appeals (CA) affirmed and later on became final
and executory. In the meantime, Citytrust and BPI merged, with the latter as the surviving corporation. The Articles of Merger provide, among others, that “all
liabilities and

obligations of Citytrust shall be transferred to and become the liabilities and obligations of BPI in the same manner as if the BPI had itself incurred such
liabilities or obligations.”
Lee then filed a Motion for Execution and/or Enforcement of Garnishment before the RTC, but the trial court denied the motion, reasoning that BPI was never
a party to the case. The matter was elevated to the CA on a petition for certiorari, and it held that BPI was a party to the case by virtue of its merger with
Citytrust. Hence, this petition.
Issue: Is BPI a party to the case by virtue of its merger with CityTrust?
Ruling:
Yes. Section 5, Rule 65 of the Revised Rules of Court requires that persons interested in sustaining the proceedings in court must be impleaded as
private respondents. Upon the merger of Citytrust and BPI, with the latter as the surviving corporation, and with all the liabilities and obligations of Citytrust
transferred to BPI as if it had incurred the same, BPI undoubtedly became a party interested in sustaining the proceedings, as it stands to be prejudiced by the
outcome of the case. It is a settled rule that upon service of the writ of garnishment, the garnishee becomes a “virtual party” or “forced intervenor” to the case
and the trial court thereby acquires jurisdiction to bind the garnishee to comply with its orders and processes.
Citytrust, therefore, upon service of the notice of garnishment and its acknowledgment that it was in possession of defendants' deposit accounts in
its letter- reply dated June 28, 1988, became a “virtual party” to or a “forced intervenor” in the civil case. As such, it became bound by the orders and processes
issued by the trial court despite not having been properly impleaded therein. Consequently, by virtue of its merger with BPI on October 4, 1996, BPI, as the
surviving corporation, effectively became the garnishee, thus the “virtual party” to the civil case.
Although Citytrust was dissolved, no winding up of its affairs or liquidation of its assets, privileges, powers and liabilities took place. As the
surviving corporation, BPI simply continued the combined businesses of the two banks and absorbed all the rights, privileges, assets, liabilities and obligations
of Citytrust, including the latter’s obligation over the garnished deposits of the defendants. This fact was also embodied in the merger agreement between BPI
and Citytrust.

COMMISSIONER OF INTERNAL REVENUE, Petitioner, v.BANK OF COMMERCE, Respondent

G.R. No. 180529 November 13, 2013 LEONARDO-DE CASTRO, J.
The term “merger” or “consolidation,” shall be understood to mean: (i) the ordinary merger or consolidation, or (ii) the acquisition by one corporation
of all or substantially all the properties of another corporation solely for stock: Provided, that for a transaction to be regarded as a merger or consolidation within
the purview of this Section, it must be undertaken for a bona fide business purpose and not solely for the purpose of escaping the burden of taxation.

Facts:
Bank of Commerce (BOC) and Traders Royal Bank (TRB) executed a Purchase and Sale Agreementwhereby it stipulated the TRB’s desire to sell and
the BOC’s desire to purchase identified recorded assets of TRB in consideration of BOC assuming identified recorded liabilities. Under the Purchase and Sale
Agreement, BOC and TRB shall continue to exist as separate corporations with distinct corporate personalities.
The Commissioner of the Bureau of Internal Revenue sent an Assessment Notice to BOC addressed to "TRADERS ROYAL BANK (now Bank of
Commerce)" for deficiency documentary stamp taxes (DST).
BOC pointed out that as stated in the Purchase and Sale Agreement, it (TRB) continued to exist as separate corporations with distinct corporate
personalities. BOC emphasized that there was no merger between it and TRB as it only acquired certain assets of TRB in return for its assumption of some of
TRB’s liabilities.
Issue:
Whether or not the purchase of assets as well as assumption of liabilities of another corporation constitutes as a merger?
Ruling:
No. One distinctive characteristic for a merger to exist under the second part of [Section 40(C)(b) of the 1997 NIRC] is that, it is not enough for a
corporation to acquire all or substantially all the properties of another corporation but it is also necessary that such acquisition is solely for stock of the
absorbing corporation. Stated differently, the acquiring corporation will issue a block of shares equal to the net asset value transferred, which stocks are in
turn distributed to the stockholders of the absorbed corporation in proportion to the respective share.
After a careful perusal of the facts presented as well as the details of the instant case, it is observed by this Office that the transaction was purely
concerning acquisition and assumption by [BOC] of the recorded liabilities of TRB. The [Purchase and Sale] Agreement did not mention with respect to the
issuance of shares of stock of [BOC] in favor of the stockholders of TRB. Such transaction is absent of the requisite of a stock transfer and same belies the
existence of a merger. As such, this Office considers the Agreement between [BOC] and TRB as one of "a sale of assets with an assumption of liabilities rather
than ‘merger’."
Since the purchase and sale of identified assets between the two companies does not constitute a merger under the foregoing definition, the Bank of
Commerce is considered an entity separate from petitioner. Thus, it cannot be held liable for the payment of the deficiency DST assessed against petitioner.
BANK OF COMMERCE, Petitioner, v.RADIO PHILIPPINES NETWORK, INC.,
INTERCONTINENTAL BROADCASTING CORPORATION, and BANAHA W BROADCASTING CORPORATION, THRU BOARD OF ADMINISTRATOR, and
SHERIFF BIENVENIDO S. REYES, JR., Sheriff, Regional Trial Court of Quezon City, Branch 98, Respondents. G.R. No. 195615 April 21, 2014 ABAD, J.

Merger is a re-organization of two or more corporations that results in their consolidating into a single corporation, which is one of the constituent
corporations, one disappearing or dissolving and the other surviving.
Facts:
Traders Royal Bank (TRB) sold to Bank of Commerce (Bancommerce) its banking business consisting of specified assets and liabilities.
Bancommerce entered into a P & A Agreement with TRB and acquired its specified assets and liabilities, excluding liabilities arising from judicial actions
which were to be covered by the BSP-mandated escrow.
Radio Philippines Network (RPN) obtained a judgment against TRB. Rather than pursue a levy in execution of the corresponding amounts on
escrow , RPN, et al. filed a Supplemental Motion for Execution where they described TRB as "now Bank of Commerce" based on the assumption that TRB had
been merged into Bancommerce.
Issues:
Whether or not there was a merger between TRB and Bancommerce.
RULING
No. The Corporation Code requires the following steps for merger or consolidation:
(1) The board of each corporation draws up a plan of merger or consolidation. Such plan must include any amendment, if necessary, to the articles
of incorporation of the surviving corporation, or in case of consolidation, all the statements required in the articles of incorporation of a corporation. (2)
Submission of plan to stockholders or members of each corporation for approval. A meeting must be called and at least two (2) weeks’ notice must be sent to
all stockholders or members, personally or by registered mail. A summary of the plan must be attached to the notice. Vote of two-thirds of the members or of
stockholders representing two thirds of the outstanding capital stock will be needed. Appraisal rights, when proper, must be respected.
(3) Execution of the formal agreement, referred to as the articles of merger o[r] consolidation, by the corporate officers of each constituent
corporation. These take the place of the articles of incorporation of the consolidated corporation, or amend the articles of incorporation of the surviving
corporation.
(4) Submission of said articles of merger or consolidation to the SEC for approval.
(5) If necessary, the SEC shall set a hearing,
notifying all corporations concerned at least two weeks before.
(6) Issuance of certificate of merger or consolidation.
Indubitably, it is clear that no merger took place between Bancommerce and TRB as the requirements and procedures for a merger were absent. A
merger does not become effective upon the mere agreement of the constituent corporations. All the requirements specified in the law must be complied with
in order for merger to take effect. Section 79 of the Corporation Code further provides that the merger shall be effective only upon the issuance by the
Securities and Exchange Commission (SEC) of a certificate of merger.
Here, Bancommerce and TRB remained separate corporations with distinct corporate personalities. What happened is that TRB sold and
Bancommerce purchased identified recorded assets of TRB in consideration of Bancommerce’s assumption of identified recorded liabilities of TRB including
booked contingent accounts. There is no law that prohibits this kind of transaction especially when it is done openly and with appropriate government
approval.
Also, it was held that there was no de facto merger. Dean Cesar Villanueva explained that under the Corporation Code, "a de facto merger can be
pursued by one corporation acquiring all or substantially all of the properties of another corporation in exchange of shares of stock of the acquiring
corporation. The acquiring corporation would end up with the business enterprise of the target corporation; whereas, the target corporation would end up
with basically its only remaining assets being the shares of stock of the acquiring corporation."
No de facto merger took place in the present case simply because the TRB owners did not get in exchange for the bank’s assets and liabilities an
equivalent value in Bancommerce shares of stock. Bancommerce and TRB agreed with BSP approval to exclude from the sale the TRB’s contingent judicial
liabilities, including those owing to RPN, et al.

BANK of COMMERCE v.HEIRS of RODOLFO DELA CRUZ G.R. No. 211519, August 14, 2017, Third Division, BERSAMIN, J.:
The terms of merger between two corporations, when determinative of their joint or respective liabilities towards third parties, cannot be assumed. The
party alleging the corporations’ joint liabilities should establish the allegation. Otherwise, the liabilities of each of them shall be separate.
FACTS:
Plaintiff Dela Cruz is the sole owner and proprietor of the Mamertha General Merchandising (Mamertha), an entity engaged in sugar trading. He
maintained a bank account with defendant Panasia in the name of Mamertha General Merchandising.
Dela Cruz discovered that Panasia allowed his son, Allan Dela Cruz to withdraw money from the said bank account without his consent. Upon
discovery, he immediately instructed Panasia not to allow his son to make any withdrawals from his bank account and even sent a letter stating therein that
his son, Allan Dela Cruz is neither authorized to make any withdrawal from his bank account nor sign any check drawn against the bank account unless with
his written/expressed consent or authority. However, Panasia still allowed Allan to withdraw from complainant’s bank account in the total amount
of₱56,223,066.07.
Dela Cruz demanded from Panasia the restoration of the said amount to his bank account, but Panasia failed to do so. He then filed a compaint for
collection of sum of money and damages with prayer for a writ of preliminary injunction and/or temporary restraining order against Panasia. Meanwhile, the
Bank of Commerce demanded payment from Dela Cruz in the amount of ₱27, 150,000.00, which is the amount of the loan Dela Cruz obtained from Panasia.
Panasia has been acquired by Bank of Commerce pursuant to a Purchase and Sale Agreement entered into between the two banks.
Dela Cruz now offers to compensate or set off his secured loan obligation with the amount of unauthorized withdrawals Panasia permitted his son.
ISSUE:
Whether or not petitioner bank is solidarily liable with Panasia for the latter’s negligence.
RULING:
NO, petitioner bank is not solidarily liable with Panasia for the latter’s negligence. The case is against petitioner is dismissed for lack of cause of
action. Section 34, Rule 132 of the Rules of Court commands that “the court shall consider no evidence which has not been formally offered,” and that “the
purpose for which the evidence is offered must be specified.”
The exclusion of the Sale and Purchase Agreement from the body of evidence for consideration in the resolution of the case caused a void in the link
between the petitioner and Panasia necessary to support the pronouncement of the personal liability of the petitioner for the negligence on the part of
Panasia. Verily, without the Sale and Purchase Agreement being admitted in evidence, implicating the petitioner in the negligence of Panasia had no factual
basis for the simple reason that there was no showing at all of the petitioner having specifically merged with Panasia and thereby assumed the latter’s
liabilities.
Dela Cruz did not establish that the petitioner had assumed Panasia’s liabilities. The allegations of his amended complaint, being averments of
ultimate facts, did not constitute proof of his cause of action against the petitioner. The merger of petitioner and Panasia cannot be taken judicial notice of by
the courts. The principal guide in determining what facts may be assumed to be judicially known is that of notoriety. It was overly presumptuous for the RTC
to thereby assume the merger because the element of notoriety as basis for taking judicial notice of the merger was loudly lacking.
 SUMIFRU (PHILIPPINES) CORPORATION (SURVIVING ENTITY IN A MERGER WITH DAVAO FRUITS CORPORATION AND OTHER
COMPANIES) v. BERNABE BAYA
G.R. No. 188269, April 17, 2017, First Division, PERLAS-BERNABE, J.:
One of the effects of a merger is that the surviving company shall inherit not only the assets, but also the liabilities of the corporation it merged with.
FACTS:
Baya has been employed by AMSFC since 1985. As a supervisor, Baya joined the union of supervisors, and eventually, formed AMS Kapalong
Agrarian Reform Beneficiaries Multipurpose Cooperative (AMSKARBEMCO), the basic agrarian reform organization of the regular employees of AMSFC. In
1999, Baya was reassigned to a series of supervisory positions in AMSFC's sister company, DFC, where he also became a member of the latter's supervisory
union while at the same time, remaining active at AMSKARBEMCO.
In October 2001, the Agrarian Reform beneficiaries held a referendum in order to choose as to which group between AMSKARBEMCO or SAFFPAI,
an association of pro- company beneficiaries, they wanted to belong; 280 went to AMSKARBEMCO while 85 joined SAFFPAI. Baya was repeatedly summoned,
and was told that he would be putting himself in a "difficult situation" if he will not shift his loyalty to SAFFPAI; this notwithstanding, Baya politely refused to
betray his cooperative. A few days later, Baya received a letter stating that his secondment with DFC has ended, thus, ordering his return to AMSFC. However,
upon Baya's return to AMSFC, he was informed that there were no supervisory positions available; thus, he was assigned to different rank-and-file positions
instead. Baya's written request to be restored to a supervisory position was denied, prompting him to file the instant complaint in 2002. In 2008, during the
pendency of the case, Sumifru Corporation (Sumifru) acquired DFC via merger. It was held that AMSFC and DFC constructively dismissed Baya.
ISSUE:
Whether or not Sumifru should be held solidarily liable with AMSFC's for Baya's monetary awards

RULING:
YES. Sumifru, as the surviving entity in its merger with DFC, must be held answerable for the latter's liabilities, including its solidary liability with
AMSFC arising herein.
Section 80 of the Corporation Code of the Philippines clearly states that one of the effects of a merger is that the surviving company shall inherit not
only the assets, but also the liabilities of the corporation it merged with, to wit:
Section 80. Effects of merger or consolidation. - The merger or consolidation shall have the following effects:
1. The constituent corporations shall become a single corporation which, in case of merger, shall be the surviving corporation designated in the plan
of merger; and, in case of consolidation, shall be the consolidated corporation designated in the plan of consolidation;
2. The separate existence of the constituent corporations shall cease, except that of the surviving or the consolidated corporation;
3. The surviving or the consolidated corporation shall possess all the rights, privileges, immunities and powers and shall be subject to all the duties
and liabilities of a corporation organized under this Code;
4. The surviving or the consolidated corporation shall thereupon and thereafter possess all the rights, privileges, immunities and franchises of each
of the constituent corporations; and all property, real or personal, and all receivables due on whatever account, including subscriptions to shares and other
choses in action, and all and every other interest of, or belonging to, or due to each constituent corporation, shall be deemed transferred to and vested in such
surviving or consolidated corporation without further act or deed; and
5. The surviving or consolidated corporation shall be responsible and liable for all the liabilities and obligations of each of the constituent
corporations in the same manner as if such surviving or consolidated corporation had itself incurred such liabilities or obligations; and any pending claim,
action or proceeding brought by or against any of such constituent corporations may be prosecuted by or against the surviving or consolidated corporation.
The rights of creditors or liens upon the property of any of such constituent corporations shall not be impaired by such merger or consolidation.
Verily, jurisprudence states that "in the merger of two existing corporations, one of the corporations survives and continues the business, while the
other is dissolved and all its rights, properties and liabilities are acquired by the surviving corporation," as in this case.

NON-STOCK CORPORATIONS:
PETRONILO J. BARAYUGA v ADVENTIST UNIVERSITY OF THE PHILIPPINES, THROUGH ITS BOARD OF TRUSTEES, REPRESENTED BY ITS
CHAIRMAN, NESTOR D. DAYSON
G.R. No. 168008, August 17, 2011, J. Bersamin
The Articles of Incorporation or by-laws of an educational institution may provide the trustee’s term in office.
Facts:
Adventist University of the Philippines (AUP), herein respondent, through its board of trustees elected Petronilyo Barayuga (Barayuga) herein
petitioner, as president of AUP on January 23, 2001. On January 28, 2003, the board of trustees after undertaking investigation for the alleged autocratic
management style of Barayuga as president which consists of making major decisions without the approval or recommendation of the proper committees
informed Barayuga that he was being relieved from the position of president of AUP. Barayuga sought reconsideration but was denied.
On February 4, 2003 Barayuga filed with the RTC a prayer for the issuance of a writ of preliminary injunction with the RTC, alleging that he still had
five (5) years term of office as president and that his removal was without valid ground. The injunction sought restraint on the part of the board of trustees to
remove Barayuga as president. The RTC granted the injunction. On appeal with the CA, the CA reversed the ruling of the RTC as regards the injunction and
held the same as invalid. It held that Barayuga was without legal right to the position of president since his term of office already expired on January 23, 2003
pursuant to the amended by-laws of AUP which provides for a term of office of two (2) years for the president of the corporation.
This prompted Barayuga to elevate the case to the SC. Barayuga argued that his five (5) year term as president which started from January 23, 2001
was without any anomaly and that his removal was without valid ground. Hence, this petition.
Issue:
Whether Barayuga had any legal right to the position of president of AUP that could be protected by the injunctive writ issued by the RTC?
Ruling:
No. Barayuga did not have any legal right over the said position at the time of the filing of the complaint by Barayuga for injunctive relief. Under its
by-laws,
members of the board of trustees were to serve a term of office of only two years; and the officers, who included the President, were to be elected
from among the members of the board of trustees during their organizational meeting, which was held during the election of the board of trustees every two
years.
Ineluctably, the Barayuga, having assumed as president of AUP on January 23, 2001, could serve for only two years, or until January 22, 2003. By
the time of his removal for cause as president on January 27, 2003, he was already occupying the office in a hold-over capacity, and could be removed at any
time, without cause, upon the election or appointment of his successor. His insistence on holding on to the office was untenable, therefore, and with more
reason when one considers that his removal was due to the loss of confidence on the part of the board of trustees.

UNIVERSITY OF MINDANAO, INC., Petitioner, v. BANGKO SENTRAL PILIPINAS, ET AL.,Respondents.
G.R. No. 194964-65, January 11, 2016, LEONEN,J.
Acts of an officer that are not authorized by the board of directors/trustees do not bind the corporation unless the corporation ratifies the acts or holds the
officer out as a person with authority to transact on its behal
Petitioner does not have the power to mortgage its properties in order to secure loans of other persons. Securing FISLAI's loans by mortgaging
petitioner's properties does not appear to have even the remotest connection to the operations of petitioner as an educational institution.
 Not having the proper board resolution to authorize Saturnino Petalcorin to execute the mortgage contracts for petitioner, the contracts he executed
are unenforceable against petitioner.
FACTS:
University of Mindanao is an educational institution. For the year 1982, its Board of Trustees was chaired by Guillermo B. Torres. His wife,
Dolores P. Torres, sat as University of Mindanao's Assistant Treasurer.
Before 1982, Guillermo B. Torres and Dolores P. Torres incorporated and operated two (2) thrift banks: (1) First Iligan Savings & Loan Association, Inc.
(FISLAI); and (2) Davao Savings and Loan Association, Inc. (DSLAI). Guillermo B. Torres chaired both thrift banks.
Upon Guillermo B. Torres' request, Bangko Sentral ng Pilipinas issued a P1.9 million standby emergency credit to FISLAI. On May 25, 1982, University of
Mindanao's Vice President for Finance, Saturnino Petalcorin, executed a deed of real estate mortgage over University of Mindanao's property in Cagayan de
Oro City in favor of Bangko Sentral ng Pilipinas. "The mortgage served as security for FISLAI's PI.9 Million loan." On October 21, 1982, Bangko Sentral ng
Pilipinas granted FISLAI an additional loan of P620,700.00. On November 5, 1982, Saturnino Petalcorin executed another deed of real estate mortgage,
allegedly on behalf of University of Mindanao, over its two properties in Iligan City. This mortgage served as additional security for FISLAI's loans.
On January 11, 1985, FISLAI, DSLAI, and Land Bank of the Philippines entered into a Memorandum of Agreement intended to rehabilitate the thrift
banks. Among the terms of the agreement was the merger of FISLAI and DSLAI, with DSLAI as the surviving corporation. DSLAI later became known as
Mindanao Savings and Loan Association, Inc. (MSLAI).
On June 18, 1999, Bangko Sentral ng Pilipinas sent a letter to University of Mindanao, informing it that the bank would foreclose its properties if MSLAI's total
outstanding obligation of P12,534,907.73 remained unpaid. In its reply to Bangko Sentral ng Pilipinas, University of Mindanao, through its Vice President for
Accounting, Gloria E. Detoya, denied that University of Mindanao's properties were mortgaged. It also denied having received any loan proceeds from Bangko
Sentral ng Pilipinas.
On July 16, 1999, University of Mindanao filed two Complaints for nullification and cancellation of mortgage. University of Mindanao also alleged
Corporate Secretary's certification was anomalous. It never authorized Saturnino Petalcorin to execute real estate mortgage contracts involving its properties
to secure FISLAI's debts. It never ratified the execution of the mortgage contracts. Moreover, as an educational institution, it cannot mortgage its properties to
secure another person's debts.
The Regional Trial Court of Cagayan de Oro City rendered a Decision in favor of University of Mindanao. The Regional Trial Court of Cagayan de Oro City found
that there was no board resolution giving Saturnino Petalcorin authority to execute mortgage contracts on behalf of University of Mindanao. Saturnino
Petalcorin testified that he had no authority to execute a mortgage contract on University of Mindanao's behalf. He merely executed the contract because of
Guillermo B. Torres' request.
The Court of Appeals issued a Decision on December 17, 2009 in favor of Bangko Sentral ng Pilipinas. The Court of Appeals ruled that "although BSP
failed to prove that the UM Board of Trustees actually passed a Board Resolution authorizing Petalcorin to mortgage the subject real properties," Corporate
Secretary's Certificate "clothed Petalcorin with apparent and ostensible authority to execute the mortgage deed on its behalf." Bangko Sentral ng Pilipinas
merely relied in good faith on the Secretary's Certificate. The Court of Appeals also ruled that since University of Mindanao's officers, Guillermo B. Torres and
his wife, Dolores P. Torres, signed the promissory notes, University of Mindanao was presumed to have knowledge of the transaction. The annotations on
University of Mindanao's certificates of title also operate as constructive notice to it that its properties were mortgaged. Its failure to disown the mortgages for
more than a decade was implied ratification.
The Court of Appeals also ruled that Bangko Sentral ng Pilipinas' action for foreclosure had not yet prescribed.
ISSUES:
1. Whether respondent Bangko Sentral ng Pilipinas' action to foreclose the mortgaged properties had already prescribed;
2. Whether petitioner University of Mindanao is bound by the real estate mortgage contracts executed by Saturnino Petalcorin.
RULING:
1. No, the action to foreclose has not yet prescribed.
The prescriptive period for actions on mortgages is ten (10) years from the day they may be brought. Actions on mortgages may be brought not
upon the execution of the mortgage contract but upon default in payment of the obligation secured by the mortgage.
As a general rule, a person defaults and prescriptive period for action runs when (1) the obligation becomes due and demandable; and (2) demand
for payment has been made subject to certain exceptions. The mortgage contracts in this case were executed by Saturnino Petalcorin in 1982. The maturity
dates of FISLAI's loans were repeatedly extended until the loans became due and demandable only in 1990. Respondent informed petitioner of its decision
to foreclose its properties and demanded payment in 1999.
Given the termination of all traces of FISLAI's existence, demand may have been rendered unnecessary under Article 1169(3) of the Civil Code.
Granting that this is the case, respondent would have had ten (10) years from due date in 1990 or until 2000 to institute an action on the mortgage contract.
However, under Article 1155 of the Civil Code, prescription of actions may be interrupted by (1) the filing of a court action; (2) a written extrajudicial demand;
and (3) the written acknowledgment of the debt by the debtor. Therefore, the running of the prescriptive period was interrupted when respondent sent its
demand letter to petitioner on June 18, 1999. This eventually led to petitioner's filing of its annulment of mortgage complaints before the Regional Trial Courts
of Iligan City and Cagayan De Oro City on July 16, 1999.
Even assuming that demand was necessary, respondent's action was within the ten (10)- year prescriptive period. Respondent demanded payment of
the loans in 1999 and filed an action in the same year.
2. No, the University of Mindanao is not bound by the real estate mortgage contracts executed by Saturnino Petalcorin.
Petitioner does not have the power to mortgage its properties in order to secure loans of other persons. Securing FISLAI's loans by mortgaging
petitioner's properties does not appear to have even the remotest connection to the operations of petitioner as an educational institution.
The respondent is not correct in arguing that petitioner's act of mortgaging its properties to guarantee FISLAI's loans was consistent with
petitioner's business interests, since petitioner was presumably a FISLAI shareholder whose officers and shareholders interlock with FISLAI. Acquiring shares
in another corporation is not a means to create new powers for the acquiring corporation. Being a shareholder of another corporation does not automatically
change the nature and purpose of a corporation's business. In attempting to show petitioner's interest in securing FISLAI's loans by adverting to their
interlocking, directors and shareholders, respondent disregards petitioner's separate personality from its officers, shareholders, and other juridical persons.
The mortgage contracts executed in favor of respondent do not bind petitioner. They were executed without authority from petitioner. Without
delegation by the board of directors or trustees, acts of a person—including those of the corporation's directors, trustees, shareholders, or officers—executed
on behalf of the corporation are generally not binding on the corporation. It was found that the Secretary's Certificate and the board resolution were either
non-existent or fictitious. The trial courts based their findings on the testimony of the Corporate Secretary, Aurora de Leon herself. She signed the Secretary's
Certificate and the excerpt of the minutes of the alleged board meeting purporting to authorize Saturnino Petalcorin to mortgage petitioner's properties.
There was no board meeting to that effect. Guillermo B. Torres ordered the issuance of the Secretary's Certificate. Hence, not having the proper board
resolution to authorize Saturnino Petalcorin to execute the mortgage contracts for petitioner, the contracts he executed are unenforceable against petitioner.
They cannot bind petitioner.
No act by petitioner can be interpreted as anything close to ratification. It was not shown that it issued a resolution ratifying the execution of the
mortgage contracts. It was not shown that it received proceeds of the loans secured by the mortgage contracts. There was also no showing that it received any
consideration for the execution of the mortgage contracts. It even appears that petitioner was unaware of the mortgage contracts until respondent notified it
of its desire to foreclose the mortgaged properties. Respondent further argues that petitioner is presumed to have knowledge of its transactions with
respondent because its officers, the Spouses Guillermo and Dolores Torres, participated in obtaining the loan. However, even though the Spouses Guillermo
and Dolores Torres were officers of both the thrift banks and petitioner, their knowledge of the mortgage
 contracts cannot be considered as knowledge of the corporation. The rule that knowledge of an officer is considered knowledge of the corporation
applies only when the officer is acting within the authority given to him or her by the corporation.
There can be no apparent authority and the corporation cannot be estopped from denying the binding affect of an act when there is no evidence
pointing to similar acts and other circumstances that can be interpreted as the corporation holding out a representative as having authority to contract on its
behalf. Saturnino Petalcorin's authority to transact on behalf of petitioner cannot be presumed based on a Secretary's Certificate and excerpt from the minutes
of the alleged board meeting that were found to have been simulated. These documents cannot be considered as the corporate acts that held out Saturnino
Petalcorin as petitioner's authorized representative for mortgage transactions. They were not supported by an actual board meeting.
According to respondent, the annotations of respondent's mortgage interests on the certificates of titles of petitioner's properties operated as
constructive notice to petitioner of the existence of such interests. Hence, petitioners are now estopped from claiming that they did not know about the
mortgage. However, annotations are merely claims of interest or claims of the legal nature and incidents of relationship between the person whose name
appears on the document and the person who caused the annotation. It does not say anything about the validity of the claim or convert a defective claim or
document into a valid one. Thus, annotations are not conclusive upon courts or upon owners who may not have reason to doubt the security of their claim as their
properties' title holders.
GABRIEL YAP, SR. duly represented by GILBERT YAP and also in his personal capacity, GABRIEL YAP, JR., and HYMAN YAP, vs. LETECIA
SIAO, L YNEL SIAO, JANELYN SIAO, ELEANOR FAYE SIAO, SHELETT SIAO and HONEYLET SIAO G.R. No. 212493
CEBU SOUTH MEMORIAL GARDEN, INC. vs. LETECIA SIAO, L YNEL SIAO, JANELYN SIAO, ELEANOR FAYE SIAO, SHELETT SIAO and
HONEYLET SIAO G.R. No. 212504, June 1, 2016, PEREZ, J.
In the leading case of Cagayan Valley Drug Corporation v. Commission on Internal Revenue, the Court, in summarizing numerous jurisprudence,
rendered a definitive rule that the following officials or employees of the company can sign the verification and certification without need of a board resolution: (1)
the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an
Employment Specialist in a labor case. The rationale behind the rule is that these officers are "in a position to verify the truthfulness and correctness of the
allegations in the petition."
FACTS:
Petitioners in G.R. No. 212493 are deceased Gabriel Yap, Sr., represented by his son and the President of Cebu South Memorial Garden, Inc., Gilbert
Yap; Gabriel Yap, Jr., in his capacity as Treasurer; and Hyman Yap, as one of the directors, while petitioner in G.R. No. 212504 is Cebu South Memorial Garden,
Inc. Respondents in both cases are Letecia Siao and her children, Lynel, Janelyn, Eleonor, Shellett and Honeylet.
These consolidated cases arose from a Complaint for Specific Performance filed by petitioners Cebu South Memorial Gardens, Inc. and Gabriel Yap,
Sr., both represented by Gilbert Yap against respondents Honeylet Siao and Letecia Siao. The petitioners alleged in a Complaint that Gabriel Yap, Sr. and
Letecia Siao entered into a Certificate of Agreement where the parties agreed, among others, on the following terms:
1. To convert the parcels of land covered by TCT Nos. 66716, 66714 and 66713, registered in the names of Spouses Sergio and Letecia Siao, into
memorial lots;
2. TogiveadvancepaymenttoLeteciaSiaointheamountofPl00,000.00permonth until Letecia Siao is financially stable to support herself and her family.
As a backgrounder, respondent Letecia Siao's husband Sergio Siao was indebted to petitioner Gabriel Yap, Sr. Petitioners claim that the titles to the subject
parcels of land were in the possession of Gabriel Yap, Sr. as collateral for the loan. In consideration of condoning the loan, Gabriel Yap, Sr. returned the titles to
Letecia Siao on the condition that the parcels of land covered by the titles would be developed into memorial lots. Petitioners claimed that respondents
refused to transfer the ownership of the three parcels of land to Cebu South Memorial Garden, Inc., causing them to be exposed to numerous lawsuits from the
buyers of the burial plots.

During the pendency of the case, respondents filed a Motion for Payment of Monthly Support5 for Leticia Siao's family and herself. Respondents relied on the
agreement made by the parties during the preliminary conference to abide by the terms of the Certificate of Agreement. The RTC granted the motion for
monthly support and ordered Gabriel Yap, Sr. to pay immediately Letecia Siao. Resultantly, petitioners filed a Motion for Summary Judgment alleging that
respondents had abandoned their defense of the nullity of the Certificate of Agreement when they agreed to implement its provisions.

Regional Trial Court (RTC) of Cebu City issued an Order denying the motion and holding that there were no existing admissions or admitted facts by
respondents to be considered. The Court of through Associate Justice Eugenio S. Labitoria, reversed the trial court's decision and ordered its judge to render
summary judgment in favor of petitioners. The appellate court ruled that by claiming benefits arising from the Certificate of Agreement, respondents had
invoked the validity and effectiveness of the Agreement. The decision became final and executor for failure of the respondednts to appeal.

In compliance with the Order that had become final, RTC Branch 13 of Cebu City rendered a Summary Judgment. Once again, respondents filed an appeal
under Rule 41 of the Rules of Court seeking to reverse and set aside the Summary Judgment rendered by the RTC.

On 9 October 2013, the Court of Appeals set aside the Summary Judgment on a technicality. The appellate court found that the certification against forum-
shopping appended to the complaint is defective because there was no board resolution and special power of attorney vesting upon Gilbert Yap the authority
to sign the certification on behalf of petitioner corporation and individual petitioners. CA reasoned that even if Gilbert Yap is the president of petitioner
corporation the same had no authority to institute the complaint unless he can produce a board resolution showing his authority.

ISSUES:

Whether the appellate court erred when it ruled that the certification against forum- shopping is defective because it was signed by Gilbert Yap without a valid
board resolution. 


Whether motion for summary judgment is proper under the circumstances

RULING:

1. The CA did not err in its decision for there was substantial compliance with the Rules.

In the leading case of Cagayan Valley Drug Corporation v. Commission on Internal Revenue,the Court, in summarizing numerous jurisprudence, rendered a
definitive rule that the following officials or employees of the company can sign the verification and certification without need of a board resolution: ( 1) the
Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, ( 4) Personnel Officer, and ( 5)
an Employment Specialist in a labor case. The rationale behind the rule is that these officers are "in a position to verify the truthfulness and correctness of the
allegations in the petition."
Bolstering the Court’s conclusion that the certification of non-forum shopping is valid is the subsequent appending of the board resolution to petitioners'
motion for reconsideration. The Board of Directors of Cebu South Memorial Garden, through a Board Resolution, not only authorized the President of the
corporation to sign the Certificate of Forum-Shopping but it ratified the action taken by Gilbert Yap in signing the forum-shopping certificate. In Swedish Match
Philippines, Inc. v. The Treasurer of the City of Manila, the Court held that the belated submission of a Secretary's certification constitutes substantial
compliance with the rules.

2. Motion for summary judgment is proper.

A summary judgment is permitted only if there is no genuine issue as to any material fact and a moving party is entitled to a judgment as a matter of law. A
summary judgment is proper if, while the pleadings on their face appear to raise issues, the affidavits, depositions, and admissions presented by the moving
party show that such issues are not genuine.

Petitioners' complaint seeks for specific performance from respondents, i.e. to transfer ownership of the subject properties to petitioner corporation based on
the Certificate of Agreement. As their defense, respondents challenge the validity of the Agreement. However, respondents filed a motion for support relying
on the same Agreement that they are impugning. In view of this admission, respondents are effectively banking on the validity of the Agreement. Thus, there
are no more issues that need to be threshed out.


BENJIE B. GEORG represented by BENJAMIN C. BELARMINO, JR. vs. HOLY TRINITY COLLEGE, INC.
G .R. No. 190408, July 20, 2016, PEREZ, J.

The existence of apparent authority may be ascertained through ( 1) the general manner in which the corporation holds out an officer or agent as having the
power to act or, in other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with
actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers. In this case, Sr. Medalle formed and organized the Group. She
had been giving financial support to the Group, in her capacity as President of Holy Trinity College. The Board of Trustees never questioned the existence and
activities of the Group. Thus, any agreement or contract entered into by Sr. Medalle as President of Holy Trinity College relating to the Group bears the consent and
approval of respondent. It is through these dynamics that we cannot fault petitioner for relying on Sr. Medalle's authority to transact with petitioner.

FACTS:

The Holy Trinity College Grand Chorale and Dance Company (the Group) was organized in 1987 by Sister Teresita Medalle (Sr. Medalle), the President of
respondent Holy Trinity College in Puerto Princesa City. The Grand Chorale and Dance Company were two separate groups but for the purpose of performing
locally or abroad, they were usually introduced as one entity. The Group was composed of students from Holy Trinity College.

In 2001, the Group was slated to perform in Greece, Italy, Spain and Germany. Edward Enriquez (Enriquez), who allegedly represented Sr. Medalle, contacted
petitioner Benjie B. Georg to seek assistance for payment of the Group's international airplane tickets. Petitioner is the Filipino wife of a German national
Heinz Georg. She owns a German travel agency named D'Travellers Reiseburo Georg. Petitioner, in tum, requested her brother, Atty. Benjamin Belarmino, Jr.
(Atty. Belarmino), to represent her in the negotiation with Enriquez. Enriquez was referred to petitioner by Leonora Dietz (Dietz), another Filipino-German
who has helped Philippine cultural groups obtain European engagements, including financial assistance.

On 24 April 2001, a Memorandum of Agreement with Deed of Assignment (MOA) was executed between petitioner, represented by Atty. Belarmino, as first
party-assignee; the Group, represented by Sr. Medalle, O.P. and/or its Attorney-in-Fact Enriquez, as second- party assignor and S.C. Roque Group of Companies
Holding Limited Corporation and S.C. Roque Foundation Incorporated, represented by Violeta P. Buenaventura, as foundation-grantor. Under the said
Agreement, petitioner, through her travel agency, will advance the payment of international airplane tickets amounting to P4,624,705.00 in favor of the Group
on the assurance of the Group represented by Sr. Medalle through Enriquez that there is a confirmed financial allocation of P4,624,705.00 from the
foundation-grantor, S.C. Roque Foundation (the Foundation). The second-party assignor assigned said amount in favor of petitioner. Petitioner paid for the
Group's domestic and international airplane tickets.

In an Amended Complaint for a Sum of Money with Damages filed before the RTC, petitioner claimed that the second-party assignor/respondent and the
foundation-grantor have not paid and refused to pay their obligation under the MOA. Petitioner prayed that they be ordered to solidarily pay the amount of
P4,624,705.00 representing the principal amount mentioned in the Agreement and damages.

RTC ruled in favor of petitioner. However, Court of Appeals relieved respondent of any liability for petitioner's monetary claims. The Court of Appeals noted
the absence of respondent's name in the MOA, thus it concluded that respondent was clearly not a party to the MOA. The Court of Appeals also pointed out
that Sr. Medalle affixed her thumbmark on the MOA under the mistaken belief that said agreement would facilitate the release of the donation from the
foundation-grantor. The Court of Appeals added that the trial court should have considered that Sr. Medalle was confined at the hospital at that time. In
addition, the Court of Appeals ruled that there was no showing that Sr. Medalle was duly authorized by respondent to enter into the subject MOA. According to
the Court of Appeals, the Group's general affiliation with respondent cannot be used by petitioner to justify her failure to exercise reasonable diligence in the
conduct of her own travel agency business. The doctrine of corporation by estoppel cannot apply to respondent in absence of any showing that it was
complicit to or had benefited from said mispresentations.

ISSUE:

The primordial issue is whether respondent is liable under the MOA. Respondent primarily argues that it is not a party to the MOA. Petitioner claims
otherwise because Sr. Medalle, in her capacity as President of Holy Trinity College, affixed her thumbmark in the MOA. Two sub-issues necessarily arise
therefrom: 1) whether Sister Medalle freely gave her full consent to the MOA by affixing her thumbmark and 2) whether she is authorized by respondent to
enter into the MOA.
RULING:

The responded is liable under the MOA.

Second, Sr. Medalle is presumed to know the import of her thumbmark in the MOA. While she was indeed confined at the UST Hospital at that time,
respondent however failed to prove that Sr. Medalle was too ill to comprehend the terms of the contract. True, Sr. Medalle suffered a stroke but
respondent did not present any evidence to show that her mental faculty was impaired by her illness. Sr. Medalle claimed that she affixed her thumbmark on
the MOA on the basis of Enriquez's representation that her signature/thumbmark is necessary to facilitate the release of the loan. As intended, the affixing of
her thumbmark in fact caused the immediate release of the loan. Petitioner's claim that the provisions of the MOA were read to Sr. Medalle was found credible
by the Court of Appeals. The Court of Appeals discussed at length how proper care and caution was taken by Atty. Belarmino to verify what the Groups's trip
was all about and the extent of the authority of Sr. Medalle regarding the project.

Respondent further claims that Sr. Medalle was not authorized by the corporation to enter into any loan agreement thus the MOA executed was null and void
for being ultra vires.

However, per records, it appears that the Holy Trinity Grand Chorale and Dance Company were actually two separate entities formed and organized by Sr.
Medalle in her capacity as President of Holy Trinity College. It was established, through the testimonies of the Group's Artistic Director, Jearold Loyola, the
Musical Director, and Vocal Coach Errol Gallespen, that they were hired and given honorarium by Sr. Medalle. The costumes of the Group were financed by
respondent. They also testified that all the performances of the group were directly under the supervision of the school administration. Effectively, respondent
has control and supervision of the Group particularly in the selection, hiring and termination of the members. The trial court was convinced that the Group
derived its existence and continuous operation from the school administration.

Sr. Medalle, as President of Holy Trinity, is clothed with sufficient authority to enter into a loan agreement. As held by the trial court, the Holy Trinity College's
Board of Trustees never contested the standing of the Dance and Chorale Group and had in fact lent its support in the form of sponsoring unifonns or freely
allowed the school premises to be used by the group for their practice sessions.

Assuming arguendo that Sr. Medalle was not authorized by the Holy Trinity College Board, the doctrine of apparent authority applies in this case.

The existence of apparent authority may be ascertained through ( 1) the general manner in which the corporation holds out an officer or agent as having the
power to act or, in other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature,
with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers. In this case, Sr. Medalle formed and organized the
Group. She had been giving financial support to the Group, in her capacity as President of Holy Trinity College. The Board of Trustees never questioned the
existence and activities of the Group. Thus, any agreement or contract entered into by Sr. Medalle as President of Holy Trinity College relating to the Group
bears the consent and approval of respondent. It is through these dynamics that we cannot fault petitioner for relying on Sr. Medalle's authority to transact
with petitioner.

LYLITH B. FAUSTO, JONATHAN FAUSTO, RICO ALVIA, ARSENIA TOCLOY, LOURDES ADOLFO and ANECITA MANCITA, Petitioners, - versus - MULTI
AGRI- FOREST AND COMMUNITY DEVELOPMENT COOPERATIVE (formerly MAF CAMARINES SUR EMPLOYEES COOPERATIVE, INC.),
Respondent.
G.R. No. 213939, THIRD DIVISION, October 12, 2016, REYES, J.

That the applicable law should be the Cooperative Code and not the Corporation Code is not sufficient to warrant a different resolution of this case. Verily, both
codes recognize the authority of the BOD, through a duly-issued board resolution, to act and represent the corporation or the cooperative, as the case maybe, in the
conduct of official business. In Section 23 of the Corporation Code, it is provided that all corporate powers of all corporations formed under the Code shall be
exercised by the BOD. All businesses are conducted and all properties of corporations are controlled and held by the same authority. In the same manner, under
Section 39 of the Cooperative Code, the BOD is given the power to direct and supervise the business, manages the property of the cooperative and may, by
resolution, exercise all such powers of the cooperative. The BOD, however, may authorize a responsible officer to act on its behalf through the issuance of a board
resolution attesting to its consent to the representation and providing for the scope of authority.

In Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue, it was noted that he following officials or employees of the company can sign the
verification and certification without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the
General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case. In this case, Nacario, being the acting
manager of the respondent, clearly falls under the enumeration above.

The lack of authority of a corporate officer to undertake an action on behalf of the corporation or cooperative may be cured by ratification through the
subsequent issuance of a board resolution, recognizing the validity of the action or the authority of the concerned officer.

The RTC correctly ruled that the stipulated interest rate of 2.3% per month on the promissory notes and 2% per month surcharge are excessive, iniquitous,
exorbitant and unconscionable, thus, rendering the same void. Since the stipulation on the interest rate is void, it is as if there was no express contract
thereon, in which case, courts may reduce the interest rate as reason and equity demand.

FACTS:

Herein petitioners are members of Multi Agri-Forest and Community Development Cooperative (respondent). Petitioner Lylith and Jonathan obtained a loan
from the respondent with an interest of 2.3% per month, with surcharge of 2% in case of default in payment of any installment due. The other petitioners
serve as co-makers to the promissory note executed by Lylith and Jonathan. Lylith and Jonathan, however, failed to pay their loans despite repeated demands.
Thus, the respondent, through its Acting Manager Ma. Lucila G. Nacario (Nacario), filed five separate complaints for Collection of Sum of Money before the
Municipal Trial Court in Cities (MTCC) of Naga City against the petitioners.
Petitioners filed a motion to dismiss by way of a demurrer to evidence on the ground of lack of authority of Nacario to file the complaints and to sign the
verification against forum shopping. Respondent filed an opposition to the demurrer averring that there was a subsequent board resolution confirming the
authority of Nacario to file the complaints on behalf of the respondent. MTCC of Naga City, Branch 1 denied the petitioners' demurrer to evidence for lack of
merit. Subsequently, the MTCC ruled in favor of the respondent and held the petitioners liable for the payment of specified amount of loans, which include
interests, penalties and surcharges. On appeal, the RTC affirmed the decision of MTCC but reduced the interest and surcharge to 12% per annum,
respectively. The decision of RTC was likewise affirmed by CA.

ISSUE:

Whether or not the MTCC correctly denied the motion to dismiss filed by petitioners on the ground that Nacario lacks authority to act on behalf of
the respondent, there being no board resolution empowering her to do so at the time she filed the complaints. 


Whether or not the RTC and CA correctly imposed interest and surcharge at 12%per annum respectively. 


RULING:
1. MTCC correctly denied the motion to dismiss.

Petitioners contend that the Corporation Code should not be applied because the applicable law is the Cooperative Code of the Philippines. That the
applicable law should be the Cooperative Code and not the Corporation Code is not sufficient to warrant a different resolution of this case. Verily, both codes
recognize the authority of the BOD, through a duly-issued board resolution, to act and represent the corporation or the cooperative, as the case maybe, in the
conduct of official business. In Section 23 of the Corporation Code, it is provided that all corporate powers of all corporations formed under the Code shall be
exercised by the BOD. All businesses are conducted and all properties of corporations are controlled and held by the same authority. In the same manner,
under Section 39 of the Cooperative Code, the BOD is given the power to direct and supervise the business, manages the property of the cooperative and may,
by resolution, exercise all such powers of the cooperative. The BOD, however, may authorize a responsible officer to act on its behalf through the issuance of a
board resolution attesting to its consent to the representation and providing for the scope of authority.

Nevertheless, there were instances when the Court recognized the authority of some officers to file a case on behalf of the corporation even without the
presentation of the board resolution. In Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue, it was noted that he following officials or
employees of the company can sign the verification and certification without need of a board resolution: (1) the Chairperson of the Board of Directors,
(2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor
case. In this case, Nacario, being the acting manager of the respondent, clearly falls under the enumeration above.

Furthermore, the lack of authority of a corporate officer to undertake an action on behalf of the corporation or cooperative may be cured by ratification
through the subsequent issuance of a board resolution, recognizing the validity of the action or the authority of the concerned officer. In this case, the
respondent expressly recognized the authority of Nacario to file the complaints in Resolution No. 47, Series of 2008, in which the BOD resolved to recognize,
ratify and affirm as if the same were fully authorized by the BOD, the filing of the complaints before the MTCC of Naga City by Nacario.

2. The RTC correctly ruled that the stipulated interest rate of 2.3% per month on the promissory notes and 2% per month surcharge are excessive, iniquitous,
exorbitant and unconscionable, thus, rendering the same void. Since the stipulation on the interest rate is void, it is as if there was no express contract
thereon, in which case, courts may reduce the interest rate as reason and equity demand. Thus, it is only just and reasonable for the RTC to reduce the
interest to the acceptable legal rate of 1 % per month or 12% per annum. This ruling was affirmed by the CA.

However, there is a need to modify the rate of legal interest imposed on the money judgment in order to conform Resolution No. 796 dated May 16, 2013
issued by the Bangko Sentral ng Pilipinas Monetary Board. Consistent with the foregoing, the Court hereby reduces the rate of interest on the principal loans
to six percent ( 6%) per annum and the surcharge imposed thereon also to the prevailing legal rate of six percent (6%) per annum.

CATHERINE CHING, LORENZO CHING, LAURENCE CHING, AND CHRISTINE CHING, Petitioners, - versus - QUEZON CITY SPORTS CLUB, INC.; MEMBERS
OF THE BOARD OF DIRECTORS, NAMELY: ANTONIO T. CHUA, MARGARET MARY A. RODAS, ALEJANDRO G. YABUT, JR., ROBERT C. GAW, EDGARDO A.
HO, ROMULO D. SALES, BIENVENIDO ALANO, AUGUSTO E. OROSA, AND THE FINANCE MANAGER, LOURDES RUTH M. LOPEZ, Respondents.
G.R. No.
200150, November 7, 2016, FIRST DIVISION, LEONARDO-DE CASTRO, J.

The Court had previously recognized in Forest Hills Golf and Country Club, Inc. v. Gardpro, lnc., that articles of incorporation and by-laws of a country club are the
fundamental documents governing the conduct of the corporate affairs of said club; they establish the norms of procedure for exercising rights, and reflected the
purposes and intentions of the incorporators. The by-laws are the self-imposed rules resulting from the agreement between the country club and its members to
conduct the corporate business in a particular way. In that sense, the by-laws are the private "statutes" by which the country club is regulated, and will function.

FACTS:

Respondent Club is a duly registered domestic corporation providing recreational activities, sports facilities, and exclusive privileges and services to its
members. Petitioner Catherine became a member and regular patron of respondent Club in 1989.

In a labor case, respondent Club was ordered to pay backwages, 13th and 14th month pay, and allowances to six illegally dismissed employees. Because
respondent Club was not in a financial position to pay the monetary awards, respondent BOD approved on September 20, 2001 Board Resolution No. 7-2001
resolving to "seek the assistance of its members by assessing each member the amount of TWO THOUSAND FIVE HUNDRED PESOS (P2,500.00) payable in five
(5) equal monthly payments.

Petitioner Catherine was duly notified of the implementation of the special assessment through a Letter dated September 25, 2001 from the Treasurer of
respondent Club. The amount of P500.00 was debited and/or charged to Catherine's account each month from September 2001 to January 2002, as reflected
in the Statements of Account issued by respondent Club. Petitioner Catherine believed that the imposition of the special assessment in Board Resolution No. 7-
2001 was unjust and/or illegal, however, she took no action against the same. Petitioner Catherine simply avoided paying the special assessment by settling
the amounts due in her Statements of Account from September 2001 to January 2002 short of P500.00. Respondent BOD then passed Board Resolution No. 3-
2002 on April 18, 2002 which suspended the privileges of the members of respondent Club who had not yet paid the special assessment. Petitioner Catherine
was not personally informed of Board Resolution No. 3-2002 nor advised that she was already deemed delinquent in the payment of any of her Statements of
Account.

Petitioners instituted before the RTC a Complaint for damages against respondents. The RTC ruled that respondents failed to comply with the ByLaws of
respondent Club when they suspended petitioner Catherine's privileges resulting to an award of moral and exemplary damages in favor of the petitioners. CA,
however, reversed and set aside the decision of RTC.

ISSUE:

Whether the manner by which respondents suspended petitioner Catherine's membership privileges at respondent Club was done in violation of petitioners'
right to due process.

RULING:

Petitioner Catherine's right to due process was clearly violated.

The Court had previously recognized in Forest Hills Golf and Country Club, Inc. v. Gardpro, lnc.,that articles of incorporation and by-laws of a country club are
the fundamental documents governing the conduct of the corporate affairs of said club; they

establish the norms of procedure for exercising rights, and reflected the purposes and intentions of the incorporators. The by-laws are the self-imposed rules
resulting from the agreement between the country club and its members to conduct the corporate business in a particular way. In that sense, the by-laws are
the private "statutes" by which the country club is regulated, and will function.

Petitioners maintain that petitioner Catherine's nonpayment of the special assessment of P2,500.00 was a violation of a resolution of the respondent Board, to
which Section 35(a) of the By-Laws of respondent Club - requiring notice and hearing prior to the member's suspension - should have applied:

SUSPENSION AND EXPULSION - Sec. 35. (a) For violating these By-Laws or rules and regulations of the Club, or resolution and orders duly promulgated at
Board or stockholders' meeting, xxxxxx the offending member may be suspended, or expelled by a two-thirds (2/3) vote of the Board of Directors upon
proper notice and hearing.

Respondents, on the other hand, invoke Section 33(a) of the By-Laws of respondent Club, which allows the suspension of a member with unpaid bills after
notice:

Sec. 33. (a) Billing of Members, Posting of Suspended Accounts – As soon as possible after the end of every month, a statement showing the account or bill of a
member for said month will be prepared and sent to them. If the bill of any regular member remains unpaid by the 20th of the month following that in which
the bill was incurred, the Treasurer shall notify him that if his bill is not paid in full by the end of the same month, his name will be posted as suspended the
following day at the Clubhouse Bulletin Board. xxxxx

Article 1370 of the Civil Code, which may be used in construing and applying the provisions of the articles of incorporation and by-laws of the country club,
provides that if the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall
control. Guided by this provision, the Court ruled that P2,500.00 special assessment was not an ordinary account or bill incurred by petitioners in respondent
Club, as contemplated in Section 33(a) of the By- Laws.

Section 33(a) of the By-Laws refers to the regular dues and ordinary accounts or bills incurred by members as they avail of the services at respondent Club,
and for which the members are charged in their monthly Statement of Account. The immediate payment or collection of the amount charged in the member's
monthly Statement of Account is essential so respondent Club can carry-on its day-to-day operations, which is why Section 33(a) allows for the automatic
suspension of a nonpaying member after a specified period and notification. The special assessment in the instant case arose from an extraordinary
circumstance, i.e., the necessity of raising payment for the monetary judgment against respondent Club in an illegal dismissal case. Thus, petitioner Catherine's
nonpayment of the special assessment was, ultimately, a violation of Board Resolution No. 7-2001, covered by Section 35(a) of the By-Laws.

Section 35(a) of the By-Laws requires notice and hearing prior to a member's suspension. Definitely, in this case, petitioner Catherine did not receive notice
specifically advising her that she could be suspended for nonpayment of the special assessment imposed by Board Resolution No. 7-2001 and affording her a
hearing prior to her suspension through Board Resolution No. 3-2002. Respondents merely relied on the general notice printed in petitioner Catherine's
Statements of Account from September 2001 to April 2002 warning of automatic suspension for accounts of over P20,000.00 which are past due for 60 days, and
accounts regardless of amount which are 75 days in arrears. While said general notice in the Statements of Account might have been sufficient for purposes of
Section 33(a) of the By-Laws, it fell short of the stricter requirement under Section 35(a) of the same By-Laws.

Nevertheless, it must be noted that petitioner Catherine herself admitted violating Board Resolution No. 7-2001 by not paying the P2,500.00 special assessment.
Consequently, there was ground for respondents to suspend petitioner Catherine's membership privileges. There being no clear and convincing evidence of
respondents' bad faith in suspending petitioner Catherine's privileges in respondent Club nor in implementing such suspension, petitioners are not entitled to
moral damages. Since the basis for moral damages has not been established, there is no basis to recover exemplary damages and attorney's fees, as well.
Even so, the Court deems it proper to award nominal damages to petitioners. Article 2221 of the Civil Code authorizes the award of nominal damages to a plaintiff
whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, not for indemnifying the plaintiff for any loss
suffered. For its failure to observe due process, as provided under Section 35(a) of the By-Laws, in the suspension of petitioner Catherine's privileges, respondent
Club is liable to pay petitioners nominal damages in the amount of P25,000.00. The Court clarifies that only respondent Club shall be liable for the nominal
damages because in the absence of malice and bad faith, officers of a corporation cannot be made personally liable for the liabilities of the corporation which, by
legal fiction, has a personality separate and distinct from its officers, stockholders, and members.

LIM vs. Moldex Land (Not in DC)

Special Corporations

Iglesia Filipina Independiente vs Heirs of taeza (Not in DC)

Dissolution

Alemar’s Sibal And Sons vs Ho. Elbinias (Not in DC)

LUIS C. CLEMENTE, LEONOR CLEMENTE DE ELEPAÑO, HEIRS OF ARCADIO C. OCHOA, represented by FE O. OCHOA-BAYBAY, CONCEPCION, MARIANO,
ARTEMIO, VICENTE, ANGELITA, ROBERTO, HERNANDO AND LOURDES, all surnamed ELEPAÑO, petitioners, vs. THE HON. COURT OF APPEALS,
ELVIRA PANDINCO-CASTRO AND VICTOR CASTRO, respondents.
G.R. No. 82407, March 27, 1995, J. Vitug

The corporation continues to be a body corporate for three (3) years after its dissolution for purposes of prosecuting and defending suits by and against it.

Facts:

In a civil action, the petitioners and respondents both sought to be declared the owners of a piece of land. During the hearing, only the plaintiffs came forward
to prove their allegations. The trial court stated that the "Sociedad Popular Calambeña" held itself out as a corporation from November, 1909, up to September
24, 1932 but it dismissed

the complaint due to insufficiency of evidence that firmly establish plaintiffs' claim of ownership but also on its thesis that, absent a corporate liquidation, it is
the corporation, not the stockholders, which can assert any title to the corporate assets. The appellate court stated that the Sociedad is the legal owner of the
land in dispute. There is also no evidence of its cancellation or monument of title presented supportive of their claim of ownership. Even assuming that their
parents were the only stockholders of Sociedad, and assuming further that Sociedad has ceased to exist, these do not ipso facto vest ownership over the
property in their hands.

Issue:

Whether or not the lower courts are correct in stating that the petitioners failed to establish their title to the property and that absent a corporate liquidation,
it is the corporation which can assert title to the corporate assets.

Ruling:

Yes. There Corporation Code provides for modes for dissolving, liquidating or winding up, and terminating the life of the corporation such as when the
corporate term has expired or when, upon a verified complaint and after notice and hearing, the Securities and Exchange Commission orders the dissolution
of a corporation for its continuous inactivity for at least five (5) years. The corporation continues to be a body corporate for three (3) years after its
dissolution for purposes of prosecuting and defending suits by and against it and for enabling it to settle and close its affairs, culminating in the disposition
and distribution of its remaining assets. It may, during the three-year term, appoint a trustee or a receiver who may act beyond that period. The termination of
the life of a juridical entity does not by itself cause the extinction or diminution of the rights and neither liabilities of such entity nor those of its owners and
creditors. If the three-year extended life has expired without a trustee or receiver having been expressly designated by the corporation within that period, the
board of directors itself may be permitted to so continue as "trustees" by legal implication to complete the corporate liquidation. Still in the absence of a board
of directors or trustees, those having any pecuniary interest in the assets, including the shareholders and the creditors of the corporation, acting for and in its
behalf, might make proper representations with the Securities and Exchange Commission for working out a final settlement of the corporate concerns.

Except in showing that they are the successors-in-interest of Elepaño and Clemente, petitioners have been unable to come up with any evidence to
substantiate their claim of ownership of the corporate asset.

PARAMOUNT INSURANCE CORP. vs. A.C. ORDOEZ CORPORATION and FRANKLIN SUSPINE,
G.R. No. 175109, August 6, 2008, YNARES-SANTIAGO, J.

Dissolution or even the expiration of the three-year liquidation period should not be a bar to a corporations enforcement of its rights as a corporation.

Facts:

As a subrogee, Paramount Insurance filed a complaint for damages against AC Ordoez Corporation. The MTC of Makati admitted the answer of Ordoez despite
the motion of Paramount to declare them in default. Paramount then filed a petition for certiorari and mandamus with prayer for preliminary injunction
before RTC. Upon appeal, the corporate existence of Ordoez is questioned.

Issue:

Whether a party without corporate existence may file an appeal.

Ruling:

There is likewise no merit in petitioners claim that respondent corporation lacks legal personality to file an appeal. Although the cancellation of a corporations
certificate of registration puts an end to its juridical personality, Sec. 122 of the Corporation Code, however provides that a corporation whose corporate
existence is terminated in any manner continues to be a body corporate for three years after its dissolution for purposes of prosecuting and defending suits by
and against it and to enable it to settle and close its affairs. Moreover, the rights of a corporation, which is dissolved pending litigation, are accorded protection
by law pursuant to Sec. 145 of the Corporation Code, to wit:

Section 145.Amendment or repeal. No right or remedy in favor of or against any corporation, its stockholders, members, directors, trustees, or officers, nor
any liability incurred by any such corporation, stockholders, members, directors, trustees, or officers, shall be removed or impaired either by the subsequent
dissolution of said corporation or by any subsequent amendment or repeal of this Code or of any part thereof.

Dissolution or even the expiration of the three-year liquidation period should not be a bar to a corporations enforcement of its rights as a corporation.

LUCIA BARRAMEDA VDA. DE BALLESTEROS v. RURAL BANK OF CANAMAN INC., REPRESENTED BY ITS LIQUIDATOR, THE PHILIPPINE DEPOSIT
INSURANCE CORPORATION
G.R. No. 176260, November 24, 2010, J. Mendoza

The jurisdiction over all claims against the insolvent bank, whether they be against the assets of the insolvent bank, for specific performance, breach of contract,
damages, or whatever is lodged with the liquidation court. Regular courts do not have jurisdiction over actions filed by claimants against an insolvent bank.To
allow a case to proceed independently of the liquidation case would not only prejudice the other creditors and depositors but would also result in the multiplicity of
actions against the insolvent bank.

Facts:

Lucia Vda. De Ballesteros filed a complaint for Annulment of Deed of Mortgage against her children and the Rural Bank of Canaman, Inc. before the RTC of
Iriga. She alleged that without her consent, her children mortgaged a parcel of land of the estate of her husband in favor of the bank. Later, the bank was closed
and placed under receivership of the PDIC. The lawyers of PDIC took over the case of RBCI, and filed a motion to dismiss on the ground that it is the liquidation
court that has jurisdiction over the subject matter. For her part, Lucia contends that her cause of action against the bank is not a simple claim arising out of a
creditor-debtor relationship, but one which involves her rights and interest over a certain property. Since she is not a creditor of the bank, and only the
creditors of the insolvent bank are allowed to file claims before the liquidator, it is the RTC which has jurisdiction over the case.

Issue:

Whether a liquidation court can take cognizance of a case wherein the main cause of action is not a simple money claim against a bank ordered closed, placed
under receivership of the PDIC, and undergoing a liquidation proceeding

Ruling:

Yes. The jurisdiction should be lodged with the liquidation court. Lucia's complaint involving annulment of deed of mortgage and damages falls within the
purview of a disputed claim in contemplation of Section 30 of R.A. 7653. "Disputed claims" refers to all claims, whether they be against the assets of the
insolvent bank, for specific performance, breach of contract, damages, or whatever. Stated otherwise, all claims against the insolvent are required to be filed
with the liquidation court to prevent multiplicity of actions against the insolvent bank and to establish due process and orderliness in the liquidation of the
bank, to obviate the proliferation of litigations and to avoid injustice and arbitrariness. Regular courts do not have jurisdiction over actions filed by claimants
against an insolvent bank.

To allow Lucia's case to proceed independently of the liquidation case, a possibility of favorable judgment and execution thereof against the assets of RBCI
would not only prejudice the other creditors and depositors but would defeat the very purpose for which a liquidation court was constituted as well.
Accordingly, the present case may be properly consolidated with the liquidation case considering that the liquidation court has jurisdiction over Lucia's
action.

BPI vs Eduardo Hong (Not in DC)

BENIGNO M. VIGILLA, ALFONSO M. BONGOT, ROBERTO CALLESA, LINDA C. CALLO, NILO B. CAMARA, ADELIA T. CAMARA, ADOLFO G. PINON, JOHN A.
FERNANDEZ, FEDERICO A. CALLO, MAXIMA P. ARELLANO, JULITO B. COSTALES, SAMSON F. BACHAR, EDWIN P. DAMO, RENATO E. FERNANDEZ,
GENARO F. CALLO, JIMMY C. ALETA, AND EUGENIO SALINAS v. PHILIPPINE COLLEGE OF CRIMINOLOGY INC. AND/OR GREGORY ALAN F. BAUTISTA
G.R. No. 200094, June 10, 2013, J. Mendoza
A corporation is allowed to settle and close its affairs even after the winding up 3 years. The time during which the corporation, through its own officers, may
conduct the liquidation of its assets and sue and be sued as a corporation is limited to three years from the time the period of dissolution commences. In other
words, what the Code

mandates is that the conveyance to the trustees must be made within the three-year period, but there is no time limit within which the trustees must complete a
liquidation placed in their hands.

Facts:

Vigilla and the other petitioners were the janitors and janitresses of Philippine College of Criminology. However, they were made to understand that they were
under MBMSI, a corporation engaged in providing janitorial services to clients. In 2008, they were dismissed by the college after it discovered that the
Certificate of Incorporation of MBMSI had been revoked as of July 2, 2003. So, they filed a complaint for illegal dismissal. They alleged that the college was
their real employer because MBMSI’s certification had been revoked. In 2009, the college submitted releases, waivers and quitclaims executed by the
complainants in favor of MBMSI to prove that they were employees of MBMSI and not PCCr.

Issue:

Whether a dissolved corporation can enter into an agreement such as releases, waivers and quitclaims beyond the 3-year winding up period

Ruling:

Yes. The executed releases, waivers and quitclaims are valid and binding notwithstanding the revocation of MBMSI’s Certificate of Incorporation. Even if said
documents were executed 6 years after MBMSI’s dissolution in 2003, the same are still valid and binding upon the parties and the dissolution will not
terminate the liabilities incurred by the dissolved corporation. A corporation is allowed to settle and close its affairs even after the winding up 3 years.

Although the time during which the corporation, through its own officers, may conduct the liquidation of its assets and sue and be sued as a corporation is
limited to three years from the time the period of dissolution commences, there is no time limit within which the trustees must complete a liquidation placed
in their hands. What is provided in Section 122 of the Corporation Code is that the conveyance to the trustees must be made within the three-year period.

ZUELLIG FREIGHT AND CARGO SYSTEMS vs. NATIONAL LABOR RELATIONS COMMISSION, et al.
G.R. No. 157900, July 23, 2013, Bersamin, J.

The corporation, upon the change of its name, is in no sense a new corporation, nor the successor of the original corporation. It is the same corporation with
different name, and its character is in no respect change.

Facts:

Ronaldo San Miguel, checker/customs representative of Zeta, brought a complaint for unfair labor practice, illegal dismissal, non-payment of salaries and
moral damages against Zuellig Freight and Cargo Systems (Zuellig), formerly known as Zeta Brokerage Corporation (Zeta). He and other employees of Zeta
were informed that Zeta would cease operations, and that all affected employees would be separated. Zeta informed him of his termination and he reluctantly
accepted his separation pay subject to the standing offer to be hired to his former position by Zuellig. Later, he was terminated, without any valid cause and
due process. San Miguel contended that the amendments of the articles of incorporation of Zeta were for the purpose of changing the corporate name,
broadening the primary functions, and increasing the capital stock and that such amendments could not mean that Zeta had been dissolved.

The Labor Arbiter held that San Miguel was illegally dismissed which the National Labor Relations Commission affirmed. The Court of Appeals dismissed the
petition for certiorari filed by Zuellig stating that closure of business operation was not validly made considering the Certificate of Filing of the Amended
Articles of Incorporation which shows that Zuellig is actually the former Zeta. The factual milieu of the case, considered in its totality, shows that there was no
closure to speak of. The termination of services allegedly due to cessation of business operations of Zeta was illegal.

Issue:

Ruling:

No, the amendments of the articles of incorporation of Zeta to change the corporate name to Zuellig Freight and Cargo Systems, Inc. did not produce the
dissolution of the former as a corporation.The effect of the change of name was not a change of the corporate being, for the changing of the name of a
corporation is no more the creation of a corporation than the changing of the name of a natural person is begetting of a natural person. The act, in both cases,
would seem to be what the language which we use to designate it imports – a change of name, and not a change of being.

The corporation, upon the change of its name, is in no sense a new corporation, nor the successor of the original corporation. It is the same corporation with
different name, and its character is in no respect change. In short, Zeta and Zuellig remained one and the same corporation. The change of name did not give
Zuellig the license to terminate employees of Zeta like San Miguel without just or authorized cause. The dismissal of San Miguel from employment on the
pretext that Zuellig, being a different corporation, had no obligation to accept him as its employee, was illegal and ineffectual.

ALABANG DEVELOPMENT CORPORATIONvs.ALABANG HILLS VILLAGE ASSOCIATION and RAFAEL TINIO
G.R. No. 187456, June 2, 2014, J. Peralta
The time during which the corporation, through its own officers, may conduct the liquidation of its assets and sue and be sued as a corporation is limited to three
years from the time the period of dissolution commences

Facts: Petitioner Alabang Development Corporation (ADC) alleged that it is the developer of the Alabang Hills Village that still owns a parcels of land that are
yet to be sold and spaces that have not been donated to the local government of Muntilupa City or Homeowner’s Association. However, ADC learned that
Alabang Hills Village Association (AHVA) started the construction of a multi-purpose hall and a swimming pool on one of the parcels of land it owns without
its consent and approval. Despite demand, AHVA failed to desist from continuing the construction at the Alabang Hills Village. AHVA however denied ADC’s
asservations and claimed that ADS has no legal capacity to sue because its existence as a corporation was revoked by SEC on May 26, 2003 and the suit was
filed on October 19, 2006.

Issue:

Whether or not ADC still has the capacity to sue despite the revocation of its corporate entity by SEC.

Ruling:

No. As provided by Sec 122 of the Corporation Law, the time during which the corporation, through its own officers, may conduct the liquidation of its assets
and sue and be sued as a corporation is limited to three years from the time the period of dissolution commences; but there is no time limit within which the
trustees must complete a liquidation placed in their hands. It is provided only that the conveyance to the trustees must be made within the three-year period.

In the instant case, there is no dispute that ADC's corporate registration was revoked on May 26, 2003. Based on the provision of law, it had three years, or
until May 26, 2006, to prosecute or defend any suit by or against it. The subject complaint, however, was filed only on October 19, 2006, more than three years
after such revocation. Thus, it is clear that at the time of the filing of the subject complaint petitioner lacks the capacity to sue as a corporation. To allow
petitioner to initiate the subject complaint and pursue it until final judgment, on the ground that such complaint was filed for the sole purpose of liquidating
its assets, would be to circumvent the provisions of Section 122 of the Corporation

SPS. AURELIO HITEROZA and CYNTHIA HITEROZA, Petitioners, - versus - CHARITO S. CRUZADA, President and Chairman, CHRIST'S ACHIEVERS
MONTESSORI, INC., and CHRIST'S ACHIEVERS MONTESSORI, INC., Respondents.
G.R. No. 203527, June 27, 2016, SECOND DIVISION, BRION J

Section 4, Rule 4 of the Interim Rules provides that a judgment before pre-trial, as in the present case, may only be rendered after the parties’
submission of their respective pre-trial briefs. Complementing Section 4 is Section 1, Rule 4 of the Interim Rules which provides for the mandatory
conduct of a pre-trial conference. Except in cases of default, Sections 1 and 4 of Rule 4 of the Interim Rules require the conduct of a pre-trial conference and
the submission of the parties’ pre-trial briefs before the court may render a judgment on intracorporate disputes.

In the case of Villamor, Jr. v. Umale, the Court recognized that Section 1, Rule 9 of the Interim Rules applies to both the appointment of a receiver and the
creation of a management committee. Further, the Court held that there must be imminent danger of both the dissipation, loss, wastage, or destruction of
assets or other properties; and paralysation of its business operations that may be prejudicial to the interest of the

minority stockholders, parties-litigants, or the general public, before allowing the appointment of a receiver or the creation of a management committee.

The Court finds that the CA correctly ruled that RTC prematurely appointed a receiver considering that (1)the RTC explicitly stated in its May 14, 2010
decision that there was yet no evidence to support the Sps. Hiteroza’s allegations on Charito’s fraud and misrepresentation to justify the appointment of a
receiver and (2)the appointment of the receiver was based on the “inability of the parties to work out an amicable settlement of their dispute, and in order to
enable the court to ascertain the veracity of the claim of the [spouses Hiteroza] that Charito has unjustifiably failed and refused to comply with the final
Decision in this case dated May 14, 2010.”

FACTS:

Christ’s Achievers Montessori Inc. is a non-stock, non-profit corporation that operates a school. The petitioner Sps. Hiteroza and the respondent Charito
Cruzada (Charito) are the incorporators, members and trustees of the School.

The Sps. Hiteroza filed a Complaint for a derivative suit with prayer for the creation of a management committee, the appointment of a receiver, and a claim
for damages against Charito, the President and Chairman of the school. The Sps. Hiteroza alleged that Charito employed schemes and acts resulting in
dissipation, loss, or wastage of the school’s assets that, if left unchecked, would likely cause paralysis of the school operations, amounting to fraud and
misrepresentation detrimental and prejudicial to the school’s interests. The Sps. Hiteroza further alleged that they were denied the right to examine corporate
and financial records of the schoold by Charito.

On May 14, 2010, the Regional Trial Court (RTC) rendered a decision (the May 14, 2010 RTC decision) directing Charito to allow the Sps. Hiteroza or their
duly authorized representative to have access to, inspect, examine, and secure copies of books of accounts and other pertinent records of the school. The RTC,
however, held that the allegations in the complaint do not amount to a derivative suit since any injury that may result from the claimed fraudulent acts of
Charito will only affect the Sps. Hiteroza and not the school. The RTC also held that the prayer for the creation of a management committee or the appointment
of a receiver was premature since there was yet no evidence in the complaint to support the Sps. Hiteroza’s allegations of fraud or misrepresentation.

On January 17, 2011, the Sps. Hiteroza filed a Report on the Inspection of Corporate Documents and reiterated their prayer for the creation of a management
committee and the appointment of a receiver for the school. The Sps. Hiteroza alleged that Charito again refused to produce the school’s main bank accounts
records. The Sps. Hiteroza also alleged that their accountants found that, based on the declared amounts in the corporate books of accounts, the total
unaccounted income of the School for the years 2000 to 2009 amounted to P27,446,989.35. books of accounts, the total unaccounted income of the School for
the years 2000 to 2009 amounted to P27,446,989.35

The RTC issued an Order, referring the dispute for mediation at the Philippine Mediation Center. The parties appeared for mediation as directed but no
settlement was reached. On March 16, 2012, the RTC issued an Order (assailed RTC order) appointing Atty. Rafael Chris F. Teston as the school’s receiver in
view of the “inability of the parties to work out an amicable settlement of their dispute, and in order to enable the court to ascertain the veracity of the claim of
the [spouses Hiteroza] that Charito has unjustifiably failed and refused to comply with the final decision in this case dated May 14, 2010.”

Charito sought to nullify the assailed RTC order and filed a Petition for Certiorari before CA. CA granted Charito’s petition and nullified the assailed RTC order
on the appointment of a receiver.

The CA explained that the May 14, 2010 RTC decision already denied the Sps. Hiteroza’s prayer for the creation of a management committee or the
appointment of a receiver for lack of evidence and for being premature. The May 14, 2010 RTC decision eventually became final and executory since no appeal
was filed.

The CA also held that there was noncompliance with the requisites for the appointment of a receiver under Section 1, Rule 9 of the Interim Rules. The CA
declared that the allegations on the school’s dissipation of assets and funds have yet to be proven and that the RTC was still in the process of ascertaining the
veracity of the Sps. Hiteroza’s claims. Further, there is no showing that the school is in imminent danger of paralysation of its business operations.

ISSUES:

1. Whether the May 14, 2010 RTC Decision is a final judgment; and

2. Whether the CA correctly nullified the assailed RTC Order which directed the

appointment of a receiver.

RULING:

1. TheMay14,2010RTCdecisionisnotafinaljudgmentsincethecaseisnotripe for decision. No pre-trial has been conducted pursuant to the Interim Rules and the
parties have not submitted their pre-trial briefs.

Section 4, Rule 4 of the Interim Rules provides that a judgment before pre-trial, as in the present case, may only be rendered after the parties’ submission of
their respective pre-trial briefs. Complementing Section 4 is Section 1, Rule 4 of the Interim Rules which provides for the mandatory conduct of a pre-trial
conference. Except in cases of default, Sections 1 and 4 of Rule 4 of the Interim Rules require the conduct of a pre-trial conference and the submission of the
parties’ pre-trial briefs before the court may render a judgment on intracorporate disputes.

Rule 7 of the Interim Rules (Inspection of Corporate Books and Records) dispenses with the need for a pre-trial conference or the submission of a pre-trial
brief before the court may render a judgment. This Rule, however, applies only to disputes exclusively involving the rights of stockholders or members to
inspect the books and records and/or to be furnished with the financial statements of a corporation.

In the present case, Rule 7 of the Interim Rules does not apply since the Sps. Hiteroza’s complaint did not exclusively involve the denial of the Sps. Hiteroza’s
right to inspect the school’s records, but also several other allegations of Charito’s fraud and misrepresentation in the School’s management. There has been
no conduct of a pre-trial conference or the submission of the parties’ respective pre-trial briefs before the issuance of the May 14, 2010 RTC decision. The
issuance of the May 14, 2010 RTC decision was, thus, premature.

2. The CA correctly nullified the assailed RTC Order which directed the appointment of a receiver.

The requirements in Section 1, Rule 9 of the Interim Rules apply to both the creation of a management committee and/or the appointment of a receiver.

Section 1, Rule 9 of the Interim Rules provides:

SECTION 1. Creation of a management committee. — As an incident to any of the cases filed under these Rules or the Interim Rules on Corporate
Rehabilitation, a party may apply for the appointment of a management committee for the corporation, partnership or association, when there is imminent
danger of:

(1) Dissipation, loss, wastage, or destruction of assets or other properties; and

(2) Paralyzation of its business operations which may be prejudicial to the interest of

the minority stockholders, parties-litigants, or the general public.

Section 2, Rule 9 of the Interim Rules, on the other hand, provides for the appointment of a receiver, to quote:

SEC. 2. Receiver. — In the event the court finds the application to be sufficient in form and substance, the court shall issue an order: (a) appointing a receiver
xxxxxxx.

While the caption of Section 1, Rule 9 states “the creation of a management committee,” the requirements stated in Section 1 apply to both the creation of a
management committee and the appointment of a receiver, as can be gleaned from Section 2, Rule 9 which refers to “the application sufficient in form and
substance.” The “application” referred to in Section 2 on Receiver is the same application referred to in Section 1 of Rule 9.

In the case of Villamor, Jr. v. Umale, the Court recognized that Section 1, Rule 9 of the Interim Rules applies to both the appointment of a receiver and the
creation of a management committee. Further, the Court held that there must be imminent danger of both the dissipation, loss, wastage, or destruction of
assets or other properties; and paralysation of its business operations that may be prejudicial to the interest of the minority stockholders, parties-litigants, or
the general public, before allowing the appointment of a receiver or the creation of a management committee.

Considering the requirements for the appointment of a receiver, the Court finds that the CA correctly attributed grave abuse of discretion on the part of the
RTC when the RTC prematurely appointed a receiver without sufficient evidence to show that there is an imminent danger of: (1) dissipation, loss, wastage, or
destruction of assets or other properties; and (2) paralysation of its business operations that may be prejudicial to the interest of the minority stockholders,
parties-litigants, or the general public. The RTC explicitly stated in its May 14, 2010 decision that there was yet no evidence to support the Sps. Hiteroza’s
allegations on Charito’s fraud and misrepresentation to justify the appointment of a receiver.

Further, the appointment of the school’s receiver was not based on the presence of the requirements of Section 1, Rule 9 of the Interim Rules, but based on the
“inability of the parties to work out an amicable settlement of their dispute, and in order to enable the court to ascertain the veracity of the claim of the
[spouses Hiteroza] that Charito has unjustifiably failed and refused to comply with the final Decision in this case dated May 14, 2010.”

METROPOLITAN BANK and TRUST COMPANY v. LIBERTY CORRUGATED BOXES MANUFACTURING CORP.
G.R. No. 184317, January 25, 2017, Second
Division, LEONEN, J.:

A bank cannot contest the filing for Rehabilitation by a corporation using as grounds the fact that the corporation’s debts have already matured.

FACTS:

Liberty Corrugated Boxes Manufacturing Corp. (Liberty) obtained various credit accommodations and loan facilities from Metropolitan Bank and Trust
Company (Metrobank) amounting to ₱19, 940,000. The loans were secured by a real estate mortgage over properties in Valenzuela City.

Liberty defaulted on the loans and on June 27, 2007 filed a Petition for Corporate Rehabilitation before the RTC. Liberty claimed it could not meet its
obligations to Metrobank because of the Asian Financial Crisis and the serious sickness of its Founder and President, Ki Kiao Koc.

Metrobank argued that Liberty can no longer file a Petition for Rehabilitation considering the phrase in Rule 4, Section 4 of the Interim rules which states
“who foresees the impossibility of meeting its debts when they respectively fall due” to be construed as meaning that an element of foresight is required.
Hence, if the debts are already due, rehabilitation would not be proper.

ISSUE:

Whether a corporation, whose debts have already matured, is qualified to file a Petition for Rehabilitation under PD No. 902-A and Rule 4 of the Interim Rules.

RULING:

YES. A corporation that may seek corporate rehabilitation is characterized not by its debt but by its capacity to pay this debt. There is no reason why
corporations with dents that may have already matured should not be given the opportunity to recover and pay their debtors in an orderly fashion. The
opportunity to rehabilitate the affairs of an economic entity, regardless of the status of its debts, redounds to the benefit of its creditors, owners, and to the
economy in general. Rehabilitation, rather than collection of debts from a company already near bankruptcy, is a better use of judicial rewards.

Thus, the condition that triggers rehabilitation is not the maturation of a corporation’s debts by the inability of the debtor to pay these debts.

LAND BANK of the PHILIPPINES v. WEST BAY COLLEGES, INC., PBR MANAGEMENT and DEVELOPMENT CORP. and BCP TRADING CO., INC. G.R. No.
211287, April 17, 2017, Third Division, REYES, J.:

A belated application of the insurance proceeds to the obligations of West Bay or PBR and BCP would violate the Stay Order dated July 10, 2002 issued by the RTC.

FACTS:

West Bay Colleges, Inc. (West Bay) applied for interim financing with Land Bank of the Philippines (Land Bank) in the amount of ₱125 Million for the
construction of a school building. PBR Management and Development Corp. (PBR) also availed of a ₱100Million term loan from Land Bank for which West Bay
acted as an accommodation mortgagor by executing a chattel mortgage over its training vessel as security for PBR’s loan.

In November 2000 the training vessel mortgaged to Land Bank sank during Typhoon Seniang and the net proceeds of the insurance coverage in the amount of
₱21,980,000.00 were released to Land Bank. In 2002 West Bay, PBR and BCP Trading Corp. (BCP) experienced financial difficulties and requested that Land
Bank restructure their loans. Under their restructuring agreements with Land Bank executed on May 10, 2002, Land Bank would reimburse West Bay with the
insurance proceeds that Land Bank previously received. However, on June 28, 2002 West Bay and PRB filed for corporate rehabilitation with the RTC-
Muntinlupa City.

While the rehabilitation proceedings were ongoing, Lank Bank was substituted by the Philippine Distressed Asset Asia Pacific (PDAAP), with the latter
objecting the applying the insurance proceeds to the loan of PBR. West Bay filed an Urgent Motion with the RTC claiming that although the RTC approved the
rehabilitation plans authorizing the application of the insurance proceeds to the obligations of West Bay, it was never implemented. The RTC decided in favor
of Land Bank due to the alleged failure of West Bay to comply with the terms of the restructuring agreement. On appeal to the Court of Appeals, the Court of
Appeals decided in favor of West Bay since Land Bank failed to apply the proceeds of the insurance in the context of the restructured loan.

ISSUE:

Whether West Bay is entitled to the reimbursement of the proceeds and if such right has been fully established so as to be compellable by Mandamus.

RULING:

The Supreme Court decided in favor of West Bay and PBR. As correctly pointed out by the Court of Appeals, despite several amendments to the rehabilitation
plan which repeatedly provided for the application of the insurance proceeds to the debts of West

Bay, then to PBR and BCP, there is no showing that Land Bank complied with the rehabilitation plan and applied the amount of the insurance proceeds to the
loans.

A belated application of the insurance proceeds to the obligations of West Bay or PBR and BCP would violate the Stay Order dated July 10, 2002 issued by the
RTC. Section 6 of Rule 4 of the 2000 Interim Rules of Procedure on Corporate Rehabilitation, which was in force at the time of the filing of the petition for
corporate rehabilitation, provides:

SEC. 6. Stay Order. — If the court finds the petition to be sufficient in form and substance, it shall, not later than five (5) days from the filing of the petition,
issue an Order (a) appointing a Rehabilitation Receiver and fixing his bond; (b) staying enforcement of all claims, whether for money or otherwise and
whether such enforcement is by court action or otherwise, against the debtor, its guarantors and sureties not solidarily liable with the debtor; (c) prohibiting
the debtor from selling, encumbering, transferring, or disposing in any manner any of its properties except in the ordinary course of business; (d) prohibiting
the debtor from making any payment of its liabilities outstanding as at the date of filing of the petition; (e) prohibiting the debtor's suppliers of goods
or services from withholding supply of goods and services in the ordinary course of business for as long as the debtor makes payments for the services and
goods supplied after the issuance of the stay order; (f) directing the payment in full of all administrative expenses incurred after the issuance of the stay order;
(g) fixing the initial hearing on the petition not earlier than forty-five (45) days but not later than sixty (60) days from the filing thereof; (h) directing the
petitioner to publish the Order in a newspaper of general circulation in the Philippines once a week for two (2) consecutive weeks; (i) directing all creditors
and all interested parties (including the Securities and Exchange Commission) to file and serve on the debtor a verified comment on or opposition to the
petition, with supporting affidavits and documents, not later than ten (10) days before the date of the initial hearing and putting them on notice that their
failure to do so will bar them from participating in the proceedings; and (j) directing the creditors and interested parties to secure from the court copies of the
petition and its annexes within such time as to enable themselves to file their comment on or opposition to the petition and to prepare for the initial hearing of
the petition.

BUREAU of INTERNAL REVENUE, ASSISTANT COMMISSIONER ALFREDO v. MISAJON, GROUP SUPERVISOR ROLANDO M. BALBIDO, and EXAMINER
REYNANTE DP. MARTIREZ v.LEPANTO CERAMICS, INC.
G.R. No. 224764, April 24, 2017, First Division, PERLAS-BERNABE, J.:

The acts of sending a notice of informal conference and a Formal Letter of Demand during the rehabilitation period are in clear defiance of the Commencement
Order.

FACTS:

Lepanto Ceramics, Inc. (LCI) filed a petition for corporate rehabilitation. Finding the same to be sufficient in form and substance, the Rehabilitation Court
issued a Commencement Order dated January 13, 2012 which, inter alia: (a) declared LCI to be under corporate rehabilitation; (b) suspended all actions or
proceedings, in court or otherwise, for the enforcement of claims against LCI; (c) prohibited LCI from making any payment of its outstanding liabilities as of
even date, except as may be provided under RA 10142; and (d) directed the BIR to file and serve on LCI its comment or opposition to the petition, or its claims
against LCI.

BIR - personally and by publication - was notified of the rehabilitation proceedings involving LCI and the issuance of the Commencement Order related
thereto. Despite the foregoing, the BIR, through Misajon, et al., still opted to send LCI: (a) a notice of informal informing the latter of its deficiency internal tax
liabilities for the Fiscal Year ending June 30, 2010; and (b) a Formal Letter of Demand requiring LCI to pay deficiency taxes in the amount of ₱567,5 l 9,348.39,
notwithstanding the written reminder coming from LCI's court-appointed receiver of the pendency of rehabilitation proceedings concerning LCI and the
issuance of a commencement order.
ISSUE:

Whether or not Misajon, et al. defied the Commencement Order, hence guilty for indirect contempt.

RULING:

YES. The acts of sending a notice of informal conference and a Formal Letter of Demand are part and parcel of the entire process for the assessment and
collection of deficiency taxes from a delinquent taxpayer, - an action or proceeding for the enforcement of a claim which should have been suspended
pursuant to the Commencement Order. Unmistakably, Misajon, et al.'s foregoing acts are in clear defiance of the Commencement Order.

Petitioners' insistence that: (a) Misajon, et al. only performed such acts to toll the prescriptive period for the collection of deficiency taxes; and (b) to cite them
in indirect contempt would unduly interfere with their function of collecting taxes due to the government, cannot be given any credence. They could have
easily tolled the running of such prescriptive period, and at the same time, perform their functions as officers of the BIR, without defying the Commencement
Order and without violating the laudable purpose of RA 10142 by simply ventilating their claim before the Rehabilitation Court. After all, they were
adequately notified of the LCI's corporate rehabilitation and the issuance of the corresponding Commencement Order. In sum, it was improper for Misajon, et
al. to collect, or even attempt to collect, deficiency taxes from LCI outside of the rehabilitation proceedings concerning the latter, and in the process, willfully
disregard the Commencement Order lawfully issued by the Rehabilitation Court. Hence, the RTC Br. 35 correctly cited them for indirect contempt.

PEOPLE of the PHILIPPINES v. ERVIN Y. MATEO, EVELYN E. MATEO, CARMELITA B. GALVEZ, ROMEO L. ESTEBAN, GALILEO J. SAPORSANTOS and
NENITA S. SAPORSANTOS, ERVIN Y. MATEO

G.R. No. 210612, October 9, 2017, Second Division, PERALTA, J.:

The prosecution of the officers of the corporation has no bearing on the pending rehabilitation of the corporation, especially since they are charged in their
individual capacities.

FACTS:

In March 2001, private complainant Herminio Alcid, Jr. Herminio Jr.) met Geraldine Alejandro (Geraldine) who introduced herself as the head of the Business
Center of MMG International Holdings Co., Ltd. (MMG). Alejandro presented a brochure showing MMG’s investments and businesses in order to encourage
Herminio Jr. to invest. The Articles of Partnership of the corporation, as evidence of its registration with the SEC was also shown. The Articles of Partnership
showed accused-appellant as a general partner who has contributed ₱49,750,000.00 to MMG while the other accused were shown to be limited partners who
have contributed ₱50,000.00 each. On April 20, 2022, Alcid decided to invest ₱50,000. Subsequently, all the interests and principal were promptly paid, which
induced him to make a bigger investment of ₱200,000 with his father, Herminio Sr. Private complainant’s sister, Melanie was also convinced to make a
₱50,000 investment with MMG.

The private complainants' investments were covered by a notarized Memorandum of Agreement (MOA), signed by accused-appellant, which stipulated,
among others, that MMG was being represented by its President, herein accused-appellant, and that the investors will be earning 2.5% monthly interest
income and commissions from the capital they have invested. Subsequently, the complainants received several post-dated checks covering their investments.
However, when they tried to deposit the checks, their banks informed them that these were dishonored because MMG's accounts in the bank from which the
checks were drawn were already closed. Their demands for payment as well as those of other investors were left unheeded.

Therefore, private complainants and other investors filed a complaint with the SEC. There, they discovered that MMG was not a registered issuer of securities.
The SEC forwarded their complaint to the City Prosecutor of Makati wherein the accused- appellant, together with Evelyn E.Mateo, Carmelita B. Galvez, Romeo
L. Esteban, Galileo J. Saporsantos and Nenita S. Saporsantos were charged with the crime of syndicated estafa. The Informations were similarly worded, except
as to the dates of the commission of the crime. Amended Informations were then made to reflect the following line “being partners, officers, employees and/or
agents of MMG, International Holdings Company, Ltd.” Similar cases for estafa and syndicated estafa, totalling 209, were also filed against the accused. Among
the accused, only accused-appellant was arrested and when arraigned on February 19, 2004, he pleaded not guilty to all the charges.

The RTC found the accused-appellant to be guilty and the CA affirmed in toto. One of the issues raised by the appellant is whether the suspension of all claims
as an incident to MMG Group of Companies’ corporate rehabilitation also contemplate the suspension of criminal charges filed against accused-appellant as an
officer of the distressed corporation.

ISSUE:

Whether or not criminal charges against corporate officers will be suspended pending rehabilitation procedure.

RULING:

NO. Citing the case of Rosario v. Co, the Court said:

There is no reason why criminal proceedings should be suspended during corporate rehabilitation, more so, since the prime purpose of the criminal action is
to punish the offender in order to deter him and others from committing the same or similar offense, to isolate him from society, reform and rehabilitate him
or, in general, to maintain social order. As correctly observed in Rosario, it would be absurd for one who has engaged in criminal conduct could escape
punishment by the mere filing of a petition for rehabilitation by the corporation of which he is an officer.

The prosecution of the officers of the corporation has no bearing on the pending rehabilitation of the corporation, especially since they are charged in their
individual capacities. Such being the case, the purpose of the law for the issuance of the stay order is not compromised, since the appointed rehabilitation
receiver can still fully discharge his functions as mandated by law. It bears to stress that the rehabilitation receiver is not charged to defend the officers of the
corporation. If there is anything that the rehabilitation receiver might be remotely interested in is whether the court also rules that petitioners are civilly
liable. Such a scenario, however, is not a reason to suspend the criminal proceedings, because as aptly discussed in Rosario, should the court prosecuting the
officers of the corporation find that an award or indemnification is warranted, such award would fall under the category of claims, the execution of which
would be subject to the stay order issued by the rehabilitation court.

CLOSE CORPORATIONS

MANUEL R. DULAY ENTERPRISES, INC., VIRGILIO E. DULAY AND NEPOMUCENO REDOVAN vs.THE HONORABLE COURT OF APPEALS, EDGARDO D.
PABALAN, MANUEL A. TORRES, JR., MARIA THERESA V. VELOSO AND CASTRENSE C. VELOSO G.R. No. 91889 August 27, 1993, J. Nocon

As a close corporation, a board resolution authorizing the sale or mortgage of the subject property is not necessary to bind the corporation for the action of its
president. At any rate, corporate action taken at a board meeting without proper call or notice in a close corporation is deemed ratified by the absent director
unless the latter promptly files his written objection with the secretary of the corporation after having knowledge of the meeting

Facts: Petitioner Manuel R. Dulay Enterprises, Inc is a domestic corporation that owns a property named as Dulay Apartment. The corporation obtained a
various loans for construction of its hotel project through its President Manuel R. Dulay and even borrowed money from petitioner Virgilio Dulay to be able to
continue the hotel project. The latter occupied one of the unit apartments as a result of the said loan. By virtue of a Board Resolution, Manuel Dulay sold the
subject property to private respondents spouses Maria Theresa and Castrense Veloso in the amount of P300,000.00 as evidenced by the Deed of Absolute Sale
with a right to repurchase the property for P200,000.00 but such agreement was not annotated in the certificate of titles issued by the parties. Subsequetly,
Maria Veloso mortgaged the property as annotated in the TCT without the knowledge of Manuel Dulay in favour of Manuel Torres for a loan of P250,000.00.
Because of failure to pay the loan, the property was sold to Torres being the highest bidder in the auction sale as a result of extrajudicial foreclosure. Veloso
assigned her right to Dulay to redeem the property however, they both failed to do so. Hence, Torres consolidated the ownership of the property and filed for
issuance of a writ of possession against Veloso and Dulay with an order from the RTC to implead the corporation as an indispensible party. RTC rendered a
decision ordering possessors of the properties to vacate the same which judgment was questioned by the corporation and Virgilio Dulay and was affirmed by
the CA. Hence, this petition questioning the sale between Veloso and Dulay as not binding to the corporation because the Board Resolution was resolved
without the approval of all the members of the board of directors.

Issue:

Whether or not the board of resolution is necessary to affect the validity of the sale between Veloso and Dulay.

Ruling:

No. In the instant case, petitioner corporation is classified as a close corporation and consequently a board resolution authorizing the sale or mortgage of the
subject property is not necessary to bind the corporation for the action of its president. At any rate, corporate action taken at a board meeting without proper
call or notice in a close corporation is deemed ratified by the absent director unless the latter promptly files his written objection with the secretary of the
corporation after having knowledge of the meeting which, in his case, petitioner Virgilio Dulay failed to do.

SERGIO F. NAGUIATvs. NATIONAL LABOR RELATIONS COMMISSION G.R. No. 116123 March 13, 1997, Panganiban, J.

In case of close corporations, stockholders shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability
insurance. Consequently, its stockholder, director or officer who was actively engaged in the management or operation of the business should be held personally
liable.

Facts:

CFTI is a close corporation engaged in the operation of taxicab services. By reason of its failure to grant separation pay to employees in case of closure or
cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the corporation together with its President
Sergio Naguiat and its Vice-President Antolin Naguiat is being made solidarily liable by its former employees.

Issue:

Whether CFTI President and Vice President should be held solidarily liable with the corporation.

Ruling:

Sergio F. Naguiat, in his capacity as president of CFTI, cannot be exonerated from joint and several liability in the payment of separation pay to individual
respondents. Sergio F. Naguiat, admittedly, was the president of CFTI who actively managed the business. He falls within the meaning of an "employer" as
contemplated by the Labor Code, who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. Petitioners
also conceded that both CFTI and Naguiat Enterprises were "close family corporations" owned by the Naguiat family. Under the Coporation Code in case of
close corporations, stockholders shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability insurance.
Nothing in the records show whether CFTI obtained "reasonably adequate liability insurance;" thus, what remains is to determine whether there was
corporate tort. Our jurisprudence is wanting as to the definite scope of "corporate tort." Essentially, "tort" consists in the violation of a right given or the
omission of a duty imposed by law.Simply stated, tort is a breach of a legal duty.Article 283 of the Labor Code mandates the employer to grant separation pay
to employees in case of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, which is the
condition obtaining at bar. CFTI failed to comply with this law- imposed duty or obligation. Consequently, its stockholder, director or officer who was actively
engaged in the management or operation of the business should be held personally liable.

Antolin Naguiat is not personally liable. He was the vice president of the CFTI. Although he carried the title of "general manager" as well, it had not been
shown that he had acted in such capacity. Furthermore, no evidence on the extent of his participation in the management or operation of the business was
preferred. In this light, he cannot be held solidarily liable for the obligations of CFTI and Sergio Naguiat to the private respondents.

FOREIGNCORPORATIONS

CARLOS GELANO and GUILLERMINA MENDOZA DE GELANO, petitioners, v. THE HONORABLE COURT OF APPEALS, and INSULAR SAWMILL, INC.,
respondents G.R. No.L-39050, February 24, 1981, De Castro, J.

A suit by a Corporation may be prosecuted even after its dissolution and beyond the three year period of winding up its affairs as provided in Section 78 of the
Corporation Code.

Facts:

Insular Sawmill, Inc. (respondent) is a corporation with a corporate life of fifty (50) years from September 17, 1945 to September 17, 1995. It filed a complaint
for collection of money against Carlos Gelano and Guillermina Gelano (petitioners). The Regional Trial Court (RTC) and the Court of Appeals (CA) ruled in
favour of respondent declaring that the petitioners should pay the respondent. When the case was still in the RTC, the respondent amended its Articles of
Incorporation shortening its term of existence, until December 31, 1960 only. When the petitioners received the CA decision on August 24, 1973, it is then that
they found out that respondent was dissolved since 1960. As a result, they sought for reconsideration contending that the case was still prosecuted despite the
respondent’s dissolution and failure to wind up its affairs within three (3) years as provided in the Corporation Code.

Issue:

Whether or not a corporation can continue prosecuting its suits after dissolution and beyond three years to wind up its affairs.

Ruling:

Yes, a corporation can still prosecute its suits after dissolution and beyond the three year period to wind up its affairs. Section 77 of the Corporation Law
provides that the corporation shall continue as a body corporate for 3 years after its dissolution for the purpose of defending and prosecuting its suits against,
or by it. Moreover, a corporation that has a pending action and which cannot be terminated within the three-year period after its dissolution is authorized
under Section 78 to convey all its property to trustees to enable it to prosecute and defend suits by or against the corporation beyond the 3 year period.
Although respondent did not appoint any trustee, yet the counsel who prosecuted and defended the interest of the corporation in the instant case and who in
fact appeared in behalf of the corporation may be considered a trustee of the corporation at least with respect to the matter in litigation only. There was a
substantial compliance with Section 78 of the Corporation Law and as such, respondent could still continue prosecuting the case even beyond the three year
period from the time of its dissolution.

ERIKS PTE. LTD. vs. COURT OF APPEALS and DELFIN F. ENRIQUEZ, JR., G.R. No. 118843. February 6, 1997, J Panganiban

A corporation doing business in the Philippines without a license cannot maintain a suit before our courts.

Facts:

Petitioner Eriks Pte., Ltd is a non-resident foreign corporation engaged in the manufacture and sale of elements used in sealing pumps, valves and pipes. It is a
corporation duly organized and existing under the laws of Singapore. In its complaint it alleged that it is not licensed to do business in the Philippines and is
suing on an isolated transaction for which it has capacity to sue. On various dates covering the period January 17-August 16 1989 private respondent Delfin
Enriquez Jr doing business under the name of Derlene EB Controls Center and/or EB Karmine Commercial, ordered and received from petitioner various
elements used in sealing pumps, valves and pipes and control equipment, PVC pipes and fittings. The transfer of goods was perfected in Singapore.

Subsequently, demands were made by petitioner upon private respondent to settle his account but the latter failed/refused to do so. Consequently, petitioner
filed a complaint with the RTC for the recovery of a sum of money against private respondent. The trial court dismissed the action on the ground that
petitioner is a foreign corporation doing business in the Philippines without a license.

On appeal, the CA affirmed the said order as it considered the series of transaction between petitioner and private respondent not to be an isolated or casual
transaction. Hence, this petition.
Issue:

Whether or not petitioner has the capacity to maintain an action against private respondent?

Ruling:

None. Section 133 of the Corporation Code prohibits, not merely absence of the prescribed license, but it also bars a foreign corporation "doing business" in
the Philippines without such license access to our courts. A foreign corporation without such license is not ipso facto incapacitated from bringing an action. A
license is necessary only if it is "transacting or doing business in the country.

It should be kept in mind that the purpose of the law is to subject the foreign corporation doing business in the Philippines to the jurisdiction of our courts. It
is not to prevent the foreign corporation from performing single or isolated acts, but to bar it from acquiring a domicile for the purpose of business without
first taking the steps necessary to render it amenable to suits in the local courts. It was never the intent of the legislature to bar court access to a foreign
corporation or entity which happens to obtain an isolated order for business in the Philippines. Neither, did it intend to shield debtors from their legitimate
liabilities or obligations. But it cannot allow foreign corporations or entities which conduct regular business any access to courts without the fulfilment by
such corporations of the necessary requisites to be subjected to our government's regulation and authority. By securing a license, the foreign entity would be
giving assurance that it will abide by the decisions of our courts, even if adverse to it. In view of the foregoing, the petition of Petitioner Corporation is denied.

TUNA PROCESSING VS. PHILIPPINE KINGFORD (NOT IN DC)

STEELCASE, INC. v. DESIGN INTERNATIONAL SELECTIONS, INC. G.R. No. 171995, April 18, 2012, J. Mendoza

The appointment of a distributor in the Philippines is not sufficient to constitute doing business unless it is under the full control of the foreign corporation.

Facts:

Petitioner Steelcase Inc. is a foreign corporation existing under the laws of Michigan, USA and engaged in the manufacture of office furniture with dealers
worldwide. Steelcase and respondent Design International Selections, Inc. (DISI) entered into a dealership agreement, whereby the former granted the latter
the right to market, sell,

distribute, install, and service its products to end-user customers within the Philippines. The business relationship continued smoothly until it was terminated
sometime in January 1999 after the agreement was breached with neither party admitting any fault. Steelcase, then, filed a complaint for sum of money
against respondent alleging that it has an unpaid account.

In its Answer with Compulsory Counterclaims, respondent alleged that the complaint failed to state a cause of action and to contain the required allegations
on Steelcase’s capacity to sue in the Philippines despite the fact that it (Steelcase) was doing business in the Philippines without the required license to do so.
Consequently, it posited that the complaint should be dismissed because of Steelcase’s lack of legal capacity to sue in Philippine courts.

The RTC dismissed the complaint concluded that Steelcase was doing business in the Philippines, as contemplated by Republic Act (R.A.) No. 7042 (The
Foreign Investments Act of 1991), and since it did not have the license to do business in the country, it was barred from seeking redress from our courts until
it obtained the requisite license to do so. On appeal, the CA affirmed the trial court’s decision. Hence, this petition for review on certiorari.

Issue:

Whether or not Steelcase has been doing business in the Philippines without a license.

Ruling:

No. Under Rule I, Section 1(f) of the Implementing Rules and Regulations of the Foreign Investments Act of 1991, the act of appointing a representative or
distributor in the Philippines which transact business in the representative’s or distributor’s own name and account shall not be deemed as doing business in
the Philippines.

The appointment of a distributor in the Philippines is not sufficient to constitute doing business unless it is under the full control of the foreign corporation.
On the other hand, if the distributor is an independent entity which buys and distributes products, other than those of the foreign corporation, for its own
name and its own account, the latter cannot be considered to be doing business in the Philippines.

Also, respondent is estopped from challenging Steelcase’s legal capacity to sue. Unquestionably, entering into a dealership agreement with Steelcase charged
DISI with the knowledge that Steelcase was not licensed to engage in business activities in the Philippines. This Court has carefully combed the records and
found no proof that, from the inception of the dealership agreement in 1986 until September 1998, DISI even brought to Steelcase’s attention that it was
improperly doing business in the Philippines without a license. By acknowledging the corporate entity of Steelcase and entering into a dealership agreement
with it and even benefiting from it, DISI is estopped from questioning Steelcase’s existence and capacity to sue. [T]his Court has time and again upheld the
principle that a foreign corporation doing business in the Philippines without a license may still sue before the Philippine courts a Filipino or a Philippine
entity that had derived some benefit from their contractual arrangement because the latter is considered to be estopped from challenging the personality of a
corporation after it had acknowledged the said corporation by entering into a contract with it.
“DOCTRINE OF DOING BUSINESS” (FIA)

THE HOME INSURANCE COMPANY v. EASTERN SHIPPING LINES and/or ANGEL JOSE TRANSPORTATION, INC. and HON. A. MELENCIO-HERRERA,
Presiding Judge of the Manila CFI Branch XVII
G.R. No. L-34382, July 20, 1983, J. Gutierrez, Jr.

THE HOME INSURANCE COMPANY v. N.V. NEDLLOYD LIJNEN; COLUMBIAN PHILIPPINES, INC., and/or GUACODS, INC., and HON. A. MELENCIO-
HERRERA, Presiding Judge of the Manila CFI Branch XVII
G.R. No. L-34383, July 20, 1983, J. Gutierrez, Jr.

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 necessary to declare the contract null and void even as against the erring foreign
corporation.

Facts.

Questioned in these consolidated petitions for review on certiorari are respondent CFI’s decision, dismissing the complaints in two civil cases on the ground
that plaintiff had failed to prove its capacity to sue. In G.R. No. L-34382, respondent Eastern Shipping Lines, the owner of SS Eastern Jupiter obtained an all-
risk insurance with petitioner The Home Insurance Company for its shipment. The cargo suffered loss/damage, petitioner thus paid the consignee under the
insurance policy. In turn, petitioner made demands for reimbursement against Eastern Shipping Lines and the transportation company but it refused to pay.
In G.R. No. L-34383, a shipment from Bremen, Germany is to be delivered in Manila in favour of the consignee, International Harvester Macleod. When the
packages were discharged some of it were found to be in bad order and upon further inspection, some items were missing. For this, petitioner paid the
consignee, thereafter petitioner demanded reimbursements from the defendants carrier and consignee but they refused to pay.

The plaintiff is a foreign insurance company duly authorized to do business in the Philippines through its agent, Mr. VICTOR H. BELLO, of legal age and with
office address at Oledan Building, Ayala Avenue, Makati, Rizal.

Issue.

Whether or not the Honorable Trial Court erred in dismissing the complaint on the finding that petitioner has no capacity to sue.

Ruling

YES. When the complaints in these two cases were filed, the petitioner had already secured the necessary license to conduct its insurance business in the
Philippines. It could already file suits. Petitioner was, therefore, telling the truth when it averred in its complaints that it was a foreign insurance company
duly authorized to do business in the Philippines through its agent Mr. Victor H. Bello. However, when the insurance contracts which formed the basis of these
cases were executed, the petitioner had not yet secured the necessary licenses and authority. The lower court, therefore, declared that pursuant to the basic
public policy reflected in the Corporation Law, the insurance contracts executed before a license was secured must be held null and void. The court ruled that
the contracts could not be validated by the subsequent procurement of the license.

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. Significantly,
Batas Pambansa Blg. 68, the Corporation Code of the Philippines has corrected the ambiguity caused by the wording of Section 69 of the old Corporation Law.

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 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 our courts and administrative bodies are sufficient from
the viewpoint of legislative policy.

ANTAM CONSOLIDATED, INC., TAMBUNTING TRADING CORPORATION and AURORA CONSOLIDATED SECURITIES AND INVESTMENT CORPORATION
v. THE COURT OF APPEALS, THE HONORABLE MAXIMIANO C. ASUNCION (CFI of Laguna, Branch II [Sta. Cruz]) and STOKELY VAN CAMP, INC.
G.R. No.
L-61523, July 31, 1986, J. Gutierrez, Jr.

It is a common ploy of defaulting local companies which are sued by unlicensed foreign companies not engaged in business in the Philippines to invoke lack of
capacity to sue. This injustice cannot prevail.

Facts:

Respondent Stokely Van Camp. Inc. filed a complaint against petitioners for collection of sum of money. In its complaint, Stokely alleged that it is a corporation
organized and existing under the laws of the state of Indiana, USA and one of its subdivisions "Capital City Product Company" (Capital City) has its office in
Columbus, Ohio, U.S.A; that Stokely and Capital City is not engaged in business in the Philippines prior to the commencement of the suit so that Stokely is not
licensed to do business in this country and is not required to secure such license. Capital City and Coconut Oil Manufacturing Phil. Inc. (Comphil) with the
latter acting through its broker Roths child Brokerage Company, entered into a contract wherein Comphil undertook to sell and deliver and Capital City agreed
to buy 500 long tons of crude coconut oil. However, Comphil failed to deliver the coconut oil. They again entered into two other contracts to allow Comphil to
make good on their obligation but Comphil failed to comply again.
Petitioners filed a motion to dismiss the complaint on the ground that Stokely, being a foreign corporation not licensed to do business in the Philippines, has
no personality to maintain the instant suit. Petitioners argue that to maintain the suit filed with the trial court, the respondent should have secured the
requisite license to do business in the Philippines because, in fact, it is doing business here. Both the trial and the appellate court denied petitioners’ motion to
dismiss.

Issue:

Whether or not the appellate court erred in denying their motion to dismiss on the ground that Stokely has no personality to sue.

Ruling:

NO, the trial court, and the appellate court did not err in denying the petitioners' motion to dismiss not only because the ground thereof does not appear to be
indubitable but because the respondent, being a foreign corporation not doing business in the Philippines, does not need to obtain a license to do business in
order to have the capacity to sue. In the case at bar, the transactions entered into by the respondent with the petitioners are not a series of commercial
dealings which signify an intent on the part of the respondent to do business in the Philippines but constitute an isolated one which does not fall under the
category of "doing business." The records show that the only reason why the respondent entered into the second and third transactions with the petitioners
was because it wanted to recover the loss it sustained from the failure of the petitioners to deliver the crude coconut oil under the first transaction and in
order to give the latter a chance to make good on their obligation.

It is a common ploy of defaulting local companies which are sued by unlicensed foreign companies not engaged in business in the Philippines to invoke lack of
capacity to sue. The respondent cites decisions from 1907 to 1957 recognizing and rejecting the improper use of this procedural tactic. The doctrine of lack of
capacity to sue based on failure to first acquire a local license is based on considerations of sound public policy. It intended to favor domestic corporations
who enter into solitary transactions with unwary foreign firms and then repudiate their obligations simply because the latter are not licensed to do business
in this country. They filed this petition on the ground that Stokely is an unlicensed foreign corporation without a bare allegation or showing that their
defense’s in the collection case are valid and meritorious. We cannot fault the two courts below for acting as they did.

MARUBENI NEDERLAND B.V. v THE HONORABLE JUDGE RICARDO P. TENSUAN, and ARTEMIO GATCHALIAN
G.R. No. 61950, September 28, 1990,J.
Fernan

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.

Facts:

In Tokyo, Japan, Marubeni Nederland B.V. (MNBV), a Dutch corporation, entered into 3 separate contracts with DBT Teodoro Development Corporation (DBT).
The first contract provides that MNBV shall supply DBT with all the necessary equipment, machinery, technical know-how and such for the construction of
DBT’s lime plant at Iloilo. The second and third contracts are in the nature of financing contracts for the construction loan agreement for the construction of
said lime plant. The obligation of DBT to pay MNBV was guaranteed by the National Investment and Development Corporation (NIDC) However before full
payment could be made by DBT, MNBV informed DBT that there would be delay in the construction of the said lime plant. This prompted DBT to demand
pecuniary indemnification and unilateral rejection of the plant. Thereafter, Artemio Gatchalian (Gatchalian) a stockholder of DBT sued MNBV for breach of
contract. Gatchalian impleaded DBT and NIDC as unwilling plaintiffs. The action also contained a prayer for injunction, enjoining DBT and NIDC from making
any indirect or direct payments to MNBV. MNBV entered a limited and special appearance and sought dismissal of the complaint on the ground that the lower
court had not acquired jurisdiction over MNBV since MNBV is a foreign corporation neither doing nor licensed to do business in the Philippines. The lower
court however, dismissed the contention of MNBV. This prompted MNBV to elevate the case directly to the SC. Hence this petition.

Issue:

Whether MNBV can be considered as “doing business” in the Philippines and therefore subject to the jurisdiction of our courts?

Ruling:

Yes, MNBV is considered as “doing business” in the Philippines and hence therefore subject to the jurisdiction of our courts.

Contrary to petitioner's allegations, the SC held that MNBV can be sued in the regular courts because it is doing business in the Philippines. The applicable law
is Republic Act No. 5455 as implemented by the following rules and regulations of the Board of Investments which took effect on February 3, 1969. Thus:

xxx xxx xxx

(f) the performance within the Philippines of any act or combination of acts enumerated in Section 1 (1) of the Act shall constitute "doing business" therein. In
particular, "doing business" includes:

1) Soliciting orders, purchases (sales) or service contracts. Concrete and specific solicitations by a foreign firm amounting to negotiation or fixing of the terms and
conditions of sales or service contracts, regardless of whether the contracts are actually reduced to writing, shall constitute doing business even if the enterprise
has no office or fixed place of business in the Philippines. . . .
2) Appointing a representative or distributor who is domiciled in the Philippines, unless said representative or distributor has an independent status, i.e., it
transacts business in its name and for its own account, and not in the name or for the account of the principal.

xxx xxx xxx

4) Opening offices whether called "liaison" offices, agencies or branches, unless proved otherwise.

xxx xxx xxx

10) Any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the
exercise of some of the functions normally incident to, or in the progressive prosecution of, commercial gain or of the purpose and objective of the business
organization.

It cannot be denied that MNBV had solicited the lime plant business from DBT through the Marubeni Manila branch. Records show that the "turn-key proposal
for the . . . 300 T/D Lime Plant" was initiated by the Manila office through its Mr. T. Hojo. In a follow- up letter dated August 3, 1976, Hojo committed the firm
to a price reduction of $200,000.00 and submitted the proposed contract forms. As reflected in the letterhead used, it was Marubeni Corporation, Tokyo, Japan
which assumed an active role in the initial stages of the negotiation. MNBV had no visible participation until the actual signing of the October 28, 1976
agreement in Tokyo and even there, in the space reserved for MNBV, it was the signature. of "S. Adachi as General Manager of Marubeni Corporation, Tokyo on
behalf of Marubeni Nederland B.V." which appeared.

Even assuming for the sake of argument that MNBV is a different and separate business entity from Marubeni Japan and its Manila branch, in this particular
transaction, at least, MNBV through the foregoing acts, had effectively solicited "orders, purchases (sales) or service contracts" as well as 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.

At this juncture it must be emphasized that 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.

PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., AND FABRIQUES OF TABAC REUNIES, S.A. v THE COURT OF APPEALS AND FORTUNE
TOBACCO CORPORATION
G.R. No. 91332, July 16, 1993, J. Melo

A corporation not engaged in business in the Philippines cannot be deemed to have suffered any damage from the use of its trademark.

Facts:

Philip Morris Inc. (PMI) herein petitioner, is a corporation duly organized under the laws of the State of Virginia in the USA and doing business in New York
City. PMI is suing on an isolated transaction as alleged registered owners of “MARK VII”, “MARK TEN”, and “LARK” per certificate of registration issued by the
Philippine Patents Office. PMI alleged that “MARK” cigarettes manufactured and distributed by Fortune Tobacco Corporation (FTC) herein private respondent
is identical and confusingly similar trademark in contravention to the right of PMI. Verily, PMI prayed for a preliminary injunction against FTC to enjoin the
latter from producing and distributing the said cigarette brand. The RTC dismissed the prayer for injunction sought by PMI. On appeal with the CA, the CA
affirmed the dismissal of the injunction. The CA opined that PMI has no capacity to sue before Philippine courts. Now, PMI assails the decision of the CA in
dismissing the issuance of the writ of injunction on the ground that PMI has a right over the trademarks and it has suffered damage because of FTC’s use of the
“MARK” trademark to the prejudice of PMI.

Issue: WON PMI has capcity to sue before PH courts

Ruling:

None. The Trademark law provides that for a right over a trademark may accrue to a certain person, there must be actual use of the said trademark in trade or
in business for a certain period of time.

PMI will not be prejudiced nor stand to suffer irreparable injury as a consequence of the denial of the injunction considering that they are not actually engaged
in the manufacture of cigarettes with the trademark in question. In view of the explicit representation of PMI in the complaint that they are not engaged in
business in the Philippines, it inevitably follows that no conceivable damage can be suffered by them not to mention the foremost consideration heretofore
discussed on the absence of their "right" to be protected. In view of the foregoing, the petition is denied. The decision of the CA is affirmed.

Alfred Hahn v. Court of Appeals and Bayerische Motoren Werke Aktiengesellschaft (BMW)

G.R. No. 113074, January 22, 1997, J. Mendoza

Doing business in the Philippines enumerated in 3(d) of the Foreign Investments Act of 1991 includes "appointing representatives or distributors in the
Philippines" but not when the representative or distributor "transacts business in its name and for its own account."
Facts:

Petitioner Alfred Hahn is a Filipino citizen doing business under the name and style "Hahn-Manila." On the other hand, private respondent Bayerische
Motoren Werke Aktiengesellschaft (BMW) is a nonresident foreign corporation existing under the laws of the former Federal Republic of Germany, with
principal office at Munich, Germany. Alfred Hahn executed in favor of private respondent a "Deed of Assignment with Special Power of Attorney," He has
agreed to transfer and consequently record said transfer of the said BMW trademark and device in favor of the private respondent BMW herein with the
Philippines Patent Office. Alfred Hahn and the BMW shall continue business relations as has been usual in the past without a formal contract, and for that
purpose, the dealership of Alfred Hahn shall cover the BMW's complete production program with the only limitation that, for the present, in view of BMW's
limited production, the latter shall not be able to supply automobiles to Alfred Hahn.

As per the agreement, the parties "continued business relations as has been usual in the past without a formal contract." But on February 16, 1993, in a
meeting with a BMW representative and the president of Columbia Motors Corporation (CMC), Jose Alvarez, petitioner was informed that BMW was arranging
to grant the exclusive dealership of BMW cars and products to CMC, which had expressed interest in acquiring the same. On February 24, 1993, petitioner
received confirmation of the information from BMW which, in a letter, expressed dissatisfaction with various aspects of petitioner's business BMW would
have no alternative but to terminate petitioner's exclusive dealership Because of Hahn's insistence on the former business relation, BMW proposed that Hahn
and CMC jointly import and distribute BMW cars and parts. Hahn found the proposal unacceptable, so he filed a complaint for specific performance and
damages against BMW to compel it to continue the exclusive dealership. BMW moved to dismiss the case, contending that the trial court did not acquire
jurisdiction over it through the service of summons on the Department of Trade and Industry, because it (BMW) was a foreign corporation and it was not
doing business in the Philippines. It contended that the execution of the Deed of Assignment was an isolated transaction; that Hahn was not its agent because
the latter undertook to assemble and sell BMW cars and products without the participation of BMW and sold other products; and that Hahn was an indentor
or middleman transacting business in his own name and for his own account.

Issue:

Whether or not BMW a foreign corporation was doing business in the Philippines through petitioner Alfred Hahn as the its agent or distributor in the
Philippines

Ruling:

Yes, BMW was doing business in the Philippines Doing business in the Philippines enumerated in 3(d) of the Foreign Investments Act of 1991 includes
"appointing representatives or distributors in the Philippines" but not when the representative or distributor "transacts business in its name and for its own
account."

The question is whether petitioner Alfred Hahn is the agent or distributor in the Philippines of private respondent BMW. If he is, BMW may be considered
doing business in the Philippines and the trial court acquired jurisdiction over it (BMW) by virtue of the service of summons on the Department of Trade and
Industry. Otherwise, if Hahn is not the agent of BMW but an independent dealer, albeit of BMW cars and products, BMW, a foreign corporation, is not
considered doing business in the Philippines within the meaning of the Foreign Investments Act of 1991 and the IRR, and the trial court did not acquire
jurisdiction over it (BMW).

There is nothing to support the appellate court's finding that Hahn solicited orders alone and for his own account and without "interference from, let alone
direction of, BMW." To the contrary, Hahn claimed he took orders for BMW cars and transmitted them to BMW. Upon receipt of the orders, BMW fixed the
down payment and pricing charges, notified Hahn of the scheduled production month for the orders, and reconfirmed the orders by signing and returning to
Hahn the acceptance sheets. Payment was made by the buyer directly to BMW. Title to cars purchased passed directly to the buyer and Hahn never paid for
the purchase price of BMW cars sold in the Philippines. Hahn was credited with a commission equal to 14% of the purchase price upon the invoicing of a
vehicle order by BMW. Upon confirmation in writing that the vehicles had been registered in the Philippines and serviced by him, Hahn received an additional
3% of the full purchase price. Hahn performed after-sale services, including, warranty services, for which he received reimbursement from BMW. All orders
were on invoices and forms of BMW. The arrangement shows an agency. An agent receives a commission upon the successful conclusion of a sale. On the other
hand, a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made.

As to the service centers and showrooms which he said he had put up at his own expense, Hahn said that he had to follow BMW specifications as exclusive
dealer of BMW in the Philippines. According to Hahn, BMW periodically inspected the service centers to see to it that BMW standards were maintained.
Indeed, it would seem from BMW's letter to Hahn that it was for Hahn's alleged failure to maintain BMW standards that BMW was terminating Hahn's
dealership. The fact that Hahn invested his own money to put up these service centers and showrooms does not necessarily prove that he is not an agent of
BMW.

In effect, BMW was holding Hahn accountable to it under the 1967 Agreement. This case fits into the mould of Communications Materials, Inc. v. Court of
Appeals, in which the foreign corporation entered into a "Representative Agreement" and a "Licensing Agreement" with a domestic corporation, by virtue of
which the latter was appointed "exclusive representative" in the Philippines for a stipulated commission. Pursuant to these contracts, the domestic
corporation sold products exported by the foreign corporation and put up a service center for the products sold locally. This Court held that these acts
constituted doing business in the Philippines. The arrangement showed that the foreign corporation's purpose was to penetrate the Philippine market and
establish its presence in the Philippines.

HUTCHISON PORTS PHILIPPINES LIMITED v. SUBIC BAY METROPOLITAN AUTHORITY, INTERNATIONAL CONTAINER TERMINAL SERVICES INC.,
ROYAL PORT SERVICES INC. and the EXECUTIVE SECRETARY
G.R. No. 131367, August 31, 2000, J. Ynares-Santiago

Participating in a bidding process constitutes doing business, because it shows the foreign corporation’s intention to engage in business here.
Facts.

The SBMA advertised an invitation offering to the private sector the opportunity to develop and operate a modern marine container terminal within the Subic
Bay Freeport Zone. Among the bidders who responded to the published invitation was petitioner Hutchison Ports Philippines Limited (HPPL). International
consultants hired by SBMA reviewed and evaluated the business plans of the bidders and unanimously concluded that HPPL’s plan is far superior than the
others. The SBMA Board issued a Resolution declaring that the best possible offer and the most advantageous to the government is that of HPPL, which was
awarded the concession for the operation and development of the Subic Bay Container Terminal. Notwithstanding the SBMA Board’s recommendations and
action awarding the project to HPPL, the Executive Secretary submitted a memorandum directing the SBMA Board to refrain from signing the Concession
Contract with HPPL and to conduct a rebidding.

HPPL, feeling aggrieved by SBMA’s failure and refusal to commence negotiations and to execute the Concession Agreement, filed a complaint against SBMA for
specific performance, mandatory injunction, and damages.

Issue.

Whether or not petitioner has the legal capacity to seek redress from the court, petitioner being a foreign corporation organized and existing under the laws of
the British Virgin Islands.

Ruling.

NO, petitioner HPPL is incapacitated to bring this petition for injunction for it is a foreign corporation doing business in the Philippines without the requisite
license. Petitioner HPPL has brought the controversy before the Court, arguing that it is suing only on an isolated transaction to evade the legal requirement
that foreign corporations must be licensed to do business in the Philippines to be able to file and prosecute an action before Philippines courts. The maelstrom
of this issue is whether participating in the bidding is a mere isolated transaction, or did it constitute engaging in or transacting business in the Philippines
such that petitioner HPPL needed a license to do business in the Philippines before it could come to court.

Participating in the bidding process constitutes doing business because it shows the foreign corporation’s intention to engage in business here. The bidding
for the concession contract is but an exercise of the corporation’s reason for creation or existence. Thus, it has been held that a foreign company invited to bid
for IBRD and ADB international projects in the Philippines will be considered as doing business in the Philippines for which a license is required. In this
regard, it is 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.

MR HOLDINGS, LTD., v. SHERIFF CARLOS P. BAJAR, SHERIFF FERDINAND M. JANDUSAY, SOLIDBANK CORPORATION, AND MARCOPPER MINING
CORPORATION
G.R. No. 138104, April 11, 2002,SANDOVAL-GUTIERREZ, J.

It is not the absence of the prescribed license but the “doing of business” in the Philippines without such license which debars the foreign corporation from access to
our courts.

Facts:

Asian Development Bank (ADB) agreed to extend to Marcopper Mining Corporation (Marcopper) a loan in the aggregate amount of US$40,000,000.00 to
finance the latter’s mining project at Sta. Cruz, Marinduque. ADB and Placer Dome, Inc., (Placer Dome), a foreign corporation which owns 40% of Marcopper,
executed a “Support and Standby Credit Agreement” whereby the latter agreed to provide Marcopper with cash flow support for the payment of its obligations
to ADB. To secure the loan, Marcopper executed in favor of ADB a “Deed of Real Estate and Chattel Mortgage”. When Marcopper defaulted in the payment of its
loan obligation, Placer Dome, in fulfillment of its undertaking under the “Support and Standby Credit Agreement,” and presumably to preserve its
international credit standing, agreed to have its subsidiary corporation, petitioner MR Holding, Ltd., assumed Marcopper’s obligation to ADB in the amount of
US$ 18,453,450.02. Consequently, in an “Assignment Agreement”, ADB assigned to petitioner all its rights, interests and obligations under the principal and
complementary loan agreements, (“Deed of Real Estate and Chattel Mortgage,” and “Support and Standby Credit Agreement”).

Marcopper likewise executed a “Deed of Assignment”in favor of petitioner. Under its provisions, Marcopper assigns, transfers, cedes and conveys to petitioner,
its assigns and/or successors-in-interest all of its (Marcopper’s) properties, mining equipment and facilities. Meanwhile, Solidbank Corporation (Solidbank)
obtained a Partial Judgmentagainst Marcopper. Upon Solidbank’s motion, the RTC of Manila issued a writ of execution pending appeal. Having learned of the
scheduled auction sale, petitioner served an “Affidavit of Third-Party Claim”upon respondent sheriffs asserting its ownership over all Marcopper’s mining
properties, equipment and facilities by virtue of the “Deed of Assignment.” Upon the denial of its “Affidavit of Third–Party Claim, the petitioner commenced
with the RTC a complaint for reivindication of properties, etc., with prayer for preliminary injunction and temporary restraining order. It was denied on the
ground that petitioner has no legal capacity to sue, it being a foreign corporation doing business in the Philippines without license. On appeal, it was affirmed
by the CA.

Issue:

Whether or not MR Holdings, Ltd has legal standing to sue for doing business in the Philippines?

Ruling:

No. The following principles are well-settled: a) if a foreign corporation does business in the Philippines without a license, it cannot sue before the Philippine
courts; b) if a foreign corporation is not doing business in the Philippines, it needs no license to sue before Philippine courts on an isolated transactionor on a
cause of action entirely independent of any business transaction;and c) if a foreign corporation does business in the Philippines with the required license, it
can sue before Philippine courts on any transaction. Apparently, it is not the absence of the prescribed license but the “doing of business” in the Philippines
without such license which debars the foreign corporation from access to our courts.

In the case at bar, the Court of Appeals categorized as “doing business” petitioner’s participation under the “Assignment Agreement” and the “Deed of
Assignment.” This is simply untenable. The expression “doing business” should not be given such a strict and literal construction as to make it apply to any
corporate dealing whatever his early stage and with petitioner’s acts or transactions limited to the assignment contracts, it cannot be said that it had
performed acts intended to continue the business for which it was organized. It may not be amiss to point out that the purpose or business for which
petitioner was organized is not discernible in the records. No effort was exerted by the Court of Appeals to establish the nexus between petitioner’s business
and the acts supposed to constitute “doing business.” Thus, whether the assignment contracts were incidental to petitioner’s business or were continuation
thereof is beyond determination. We cannot apply the case cited by the Court of Appeals, Far East Int’l Import and Export Corp. vs. Nankai Kogyo Co., Ltd.,
which held that a single act may still constitute “doing business” if “it is not merely incidental or casual, but is of such character as distinctly to indicate a
purpose on the part of the foreign corporation to do other business in the state.” In said case, there was an express admission from an official of the foreign
corporation that he was sent to the Philippines to look into the operation of mines, thereby revealing the foreign corporation’s desire to continue engaging in
business here. But in the case at bar, there is no evidence of similar desire or intent.

Significantly, a view subscribed upon by many authorities is that the mere ownership by a foreign corporation of a property in a certain state, unaccompanied
by its active use in furtherance of the business for which it was formed, is insufficient in itself to constitute doing business.

EXPERTRAVEL & TOURS, INC., v. COURT OF APPEALS AND KOREAN AIRLINES G.R. NO. 152392, May 26, 2005, CALLEJO, SR., J.

Under the law, Atty. Aguinaldo was not specifically authorized to execute a certificate of non-forum shopping as required by Section 5, Rule 7 of the Rules of Court.
This is because while a resident agent may be aware of actions filed against his principal (a foreign corporation doing business in the Philippines), such resident
may not be aware of actions initiated by its principal, whether in the Philippines against a domestic corporation or private individual, or in the country where such
corporation was organized and registered, against a Philippine registered corporation or a Filipino citizen.

Facts:

Korean Airlines (KAL) is a corporation established and registered in the Republic of South Korea and licensed to do business in the Philippines. Its general
manager in the Philippines is Suk Kyoo Kim, while its appointed counsel was Atty. Mario Aguinaldo and his law firm. KAL, through Atty. Aguinaldo, filed a
Complaint against Experttravel & Tours (ETI) with the Regional Trial Court (RTC) of Manila, for the collection of the principal amount of P260,150.00, plus
attorney's fees and exemplary damages. ETI filed a motion to dismiss the complaint on the ground that Atty. Aguinaldo was not authorized to execute the
verification and certificate of non-forum shopping as required by Section 5, Rule 7 of the Rules of Court.

KAL opposed the motion, contending that Atty. Aguinaldo was its resident agent and was registered as such with the Securities and Exchange Commission
(SEC) as required by the Corporation Code of the Philippines. It was further alleged that Atty. Aguinaldo was also the corporate secretary of KAL. KAL
submitted an Affidavitexecuted by its general manager Suk Kyoo Kim, alleging that the board of directors conducted a special teleconference. The board of
directors approved a resolution authorizing Atty. Aguinaldo to execute the certificate of non-forum shopping and to file the complaint. Suk Kyoo Kim also
alleged, however, that the corporation had no written copy of the aforesaid resolution. The trial court denied the motion to dismiss and took judicial notice of
the submitted affidavit. ETI filed a motion for the reconsideration of the Order and later on a petition for certiorari and mandamus. Court of Appeals also held
that there was sufficient compliance by Atty. Aguinaldo.

Issue:

Whether or not Atty. Aguinaldo has the authority to execute the verification and certification of non-forum shopping in behalf of KAL, a foreign corporation
doing business in the Philippines?

Ruling:

No, under Section 127, in relation to Section 128 of the Corporation Code, the authority of the resident agent of a foreign corporation with license to do
business in the Philippines is to receive, for and in behalf of the foreign corporation, services and other legal processes in all actions and other legal
proceedings against such corporation, thus:

SEC. 127. Who may be a resident agent. – A resident agent may either be an individual residing in the Philippines or a domestic corporation lawfully
transacting business in the Philippines: Provided, That in the case of an individual, he must be of good moral character and of sound financial standing.

SEC. 128. Resident agent; service of process. – The Securities and Exchange Commission shall require as a condition precedent to the issuance of the license to
transact business in the Philippines by any foreign corporation that such corporation file with the Securities and Exchange Commission a written power of
attorney designating some persons who must be a resident of the Philippines, on whom any summons and other legal processes may be served in all actions
or other legal proceedings against such corporation, and consenting that service upon such resident agent shall be admitted and held as valid as if served upon
the duly-authorized officers of the foreign corporation as its home office.

Under the law, Atty. Aguinaldo was not specifically authorized to execute a certificate of non-forum shopping as required by Section 5, Rule 7 of the Rules of
Court. This is because while a resident agent may be aware of actions filed against his principal (a foreign corporation doing business in the Philippines), such
resident may not be aware of actions initiated by its principal, whether in the Philippines against a domestic corporation or private individual, or in the
country where such corporation was organized and registered, against a Philippine registered corporation or a Filipino citizen.

CARGILL, INC. v. INTRA STRATA ASSURANCE CORPORATION G.R. No. 168266, March 15, 2010, J. Carpio

To constitute doing business, the activity undertaken in the Philippines should involve profit-making.

Facts.

Petitioner Cargill, Inc. is a corporation organized and existing under the laws of the State of Delaware. Petitioner and Northern Mindanao Corporation (NMC)
executed a contract whereby the latter agreed to sell to petitioner tons of molasses. The contract was amended three times; the third amendment required
NMC to put up a bond to guarantee NMCs performance to deliver the molasses during the prescribed shipment periods according to the terms of the amended
contract. In compliance with the terms of the third amendment, respondent Intra Strata Assurance Corporation issued a performance bond. NMC was only
able to deliver 219.551 metric tons of molasses out of

the agreed 10,500 metric tons. Thus, petitioner sent demand letters to respondent claiming payment under the performance and surety bonds. When
respondent refused to pay, petitioner filed a complaint for sum of money against NMC and respondent. The parties entered into a compromise agreement
approved by the RTC but NMC still failed to comply with its obligation hence trial proceeded.

RTC ordered Intra Strata to solidarily pay plaintiff Cargill. On appeal, the CA reversed the trial court’s decision and held that petitioner does not have the
capacity to file a suit since it is a foreign corporation doing business in the Philippines without the requisite license.

Issue.

Whether or not petitioner Cargill, Inc. is doing or transacting business in the Philippines in contemplation of the law and established jurisprudence.

Ruling.

NO, a foreign company that merely imports goods from a Philippine exporter, without opening an office or appointing an agent in the Philippines, is not doing
business in the Philippines. Under Article 123 of the Corporation Code, a foreign corporation must first obtain a license and a certificate from the appropriate
government agency before it can transact business in the Philippines. Where a foreign corporation does business in the Philippines without the proper license,
it cannot maintain any action or proceeding before Philippine courts as provided under Section 133 of the Corporation Code.

The Corporation Code provides no definition for the phrase “doing business.” Nevertheless, Section 1 of Republic Act No. 5455 (RA 5455), provides that it
implies a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the
functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization. Respondent
bears the burden of proving that petitioners business activities in the Philippines were not just casual or occasional, but so systematic and regular as to
manifest continuity and permanence of activity to constitute doing business in the Philippines. In this case, we find that respondent failed to prove that
petitioners activities in the Philippines constitute doing business as would prevent it from bringing an action. The contract between petitioner and NMC
involved the purchase of molasses by petitioner from NMC. It was NMC, the domestic corporation, which derived income from the transaction and not
petitioner. To constitute doing business, the activity undertaken in the Philippines should involve profit-making.

Other factors which support the finding that petitioner is not doing business in the Philippines are: (1) petitioner does not have an office in the Philippines; (2)
petitioner imports products from the Philippines through its non-exclusive local broker, whose authority to act on behalf of petitioner is limited to soliciting
purchases of products from suppliers engaged in the sugar trade in the Philippines; and (3) the local broker is an independent contractor and not an agent of
petitioner. In the present case, petitioner is a foreign company merely importing molasses from a Philipine exporter. A foreign company that merely imports
goods from a Philippine exporter, without opening an office or appointing an agent in the Philippines, is not doing business in the Philippines.