corpo digests

7/21/2019 Corpo Digests

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NATIONAL ABACA v PORE

Plaintif National Abaca led a complaint against Pore or the recovery o a sum o

money that was allegedly advanced to her or the purchase o hemp or the account

o National Abaca and or which she had allegedly ailed to account. Pore alleged

that she accounted or all the cash advances already. Lower court ound that

deendant had not accounted or the cash advance being claimed and sentencedher to pay. However, she appealed and argued that the plaintif has no legal

capacity to sue since it was abolished by the Presidents !". Plaintif countered that

the !" provided that they shall still e#ist or $ more years to enable the board o

li%uidators to settle its afairs. &he issue raised on appeal is whether an action

commenced within $ years ater the dissolution o a corporation may be continued

by the same ater the e#piration o the period. 'ourt ruled that in the absence o a

statutory provision to the contrary, pending actions by or against a corporation are

abated upon e#piration o the period allowed by law or li%uidation. 'orporation Law

contains no provision authori(ing a corporation to continue in its corporate name

actions instituted by it within the period ater the e#piration o the same. &his mean

that during the period, the corporation may convey all its property to trustees or

interested parties and these trustees are authori(ed to prosecute and deend suits

by or against the corporation begun beore the e#piration o the period. &his is why

the President created the board o li%uidators to continue the management o such

matters as may then be pending.

CHINA BANKING v MICHELIN

'hina )an*ing is a claimant against the +eorge, "arrell, - 'ie corporation as the

holder o a note or a sum o money signed ointly by the corporation and the

appellant, /ahn. &he corporation is in the business o acting as the agent o oreign

rms or the sale o their products in the Philippines. Prior to its dissolution, it wasthe representative o 0ichelin, a rench company, or the sale o its tires. 0ichelin

decided to discontinue its business relations with the corporation when it ound that

the corporation ailed to account or a sum o money which they claimed the

corporation used or its own use without the authority or consent o 0ichelin. A

petition or the corporations dissolution was led by its general manager, "arrell,

and or his appointment as receiver. 0ichelin led its claim against the corporation

and a notice was sent to the corporations attorney but no notice was given to

anyone else. &he court allowed the claim o 0ichelin to be a preerred claim and

directed the receiver to pay the amount being sought. 'hina )an*ing then led a

motion to declare the orders o the lower court to be null and void and to ma*e0ichelins claim an ordinary claim since it was not notied as a creditor o such

development. 0ichelin argues that there was constructive notice o its claim and o

the orders o the court granting it. 'ourt ruled that claims against a corporation in

the hands o a receiver that are approved must provide or a reasonable opportunity

or its in%uiry given to all parties in interest to present obections. 'ourt ruled that

the law provides or a permissive directive in cases o voluntary dissolution in the

appointment o a receiver because normally, the directors and e#ecutive o1cers are



in charge o its winding up but an alternative is to assign the property to trustees or

the benet o creditors and shareholders. &hese statues authori(ing voluntary

dissolutions are generally applied only to a dissolution brought about by the

stoc*holders themselves and the appointment o a receiver by the court upon a

petition or voluntary dissolution does not empower the court to hear on the claims

o creditors at rst hand. Li%uidation consists o the adusting o debts and claimsand the collection o all that is due or the payment o debts. 2 a claim is disputed,

the receiver cannot allow the same and should transer urisdiction to the court or

trial.

TAN TIONG v CIR

&he 'entral 3yndicate sent a letter to the '24 advising them o its purchase rom

5ee Hong Lue o the entire stoc* o its surplus properties and that it has assumed

5ee Hongs obligation to pay the sales ta# on the said goods. &he 3yndicate then

wrote the '24 re%uesting or the reund o the alleged e#cess payment o sales ta#

due to the reduction o the purchase price. &he '24 agent reported that 5ee Hong

purchased the goods as a trustee or the 3yndicate when it was still in the process

o organi(ation. &he '24 thus decided that the 3yndicate was actually the seller o

the goods and thereore liable or the sales ta# in ull. &he 3yndicate then elevated

its contention to the &a# Appeals but the '24 led a motion re%uiring them to le a

bond rst to guarantee the payment o the ta# assessed. &he '&A denied the

motion since it appears that the 3yndicate is already non6e#isting due to the

e#piration o its corporate e#istence. 'ourt ruled against such dismissal and granted

the motion o the 3yndicates o1cers to be substituted in place o the deunct

3yndicate as appellants based on the premise that they may be held personally

liable or the unpaid assessments. Petitioners argue however that they cannot be

held liable or the sales ta# since it is not the importer o the goods and that theyonly purchased them rom 5ee Hong. 'ourt ruled that the evidence shows that 5ee

Hong purchased the goods or the 3yndicate when it was still in the process o

incorporation. 2t also ruled that since it was petitioners themselves who caused their

substitution as parties, they being the successors6in6interest o the 3yndicate, they

cannot now complain that they are being made responsible or the liability.

7urisprudence also shows that a creditor may ollow the assets o a dissolved

corporation once they pass into the hands o the stoc*holders since dissolution does

not e#tinguish the debts due or owing to it.

REYES v BLOUSE

Plaintifs, minority stoc*holders o Laguna &ayabas )us 'o., instituted an action to

restrain its board, composed o the deendants, rom carrying out a resolution that

authori(ed them to ta*e the necessary steps or consolidation o its properties and

ranchises with the )atangas &ransport 'o. &hey argued that the purpose o the

resolution was to efect a merger or consolidation that was not authori(ed by any

law. &he deendants argued that it was merely an e#change o properties and even



i it was a consolidation, it was allowed by the Public 3ervice Law. &he resolution

indicated that the )oard was authori(ed to ta*e the necessary steps to consolidate

its properties and ranchises under a new corporation but it was not authori(ed to

dissolve the corporation and cease operations. 'ourt ruled that the resolution

indeed did not mean to dissolve but merely to transer its assets to the new

corporation in e#change or corporation stoc*. 2t is not a consolidation or mergerbecause it means that a termination or cessation must occur but since the

corporations will still continue to e#ist even ater the consolidation, it was not a

merger.

EDWARD J. NELL v PACIFIC FARMS

!dward Nell 'o. secured against 2nsular arms udgment or a sum o money

representing the unpaid balance or the price o a pump sold by !dward to 2nsular.

!dward then led against Pacic arms or the collection on the theory that it was

the alter ego o 2nsular based on the act that Pacic purchased all o the shares as

well as the properties o 2nsular. 'ourt ruled however that it does not prove that

Pacic was the alter ego o 2nsular nor is it liable or its debts since generally where

one corporation sells or transers all o its assets to another, it is not liable or its

debts unless it agreed to assume the debts, it was a consolidation or merger, the

purchasing corporation was merely a continuation o the selling corporation, or

when the transaction was done raudulently to escape liability or debts. )esides, it

being an alter ego negates the claim o its consolidation or merger.

MARSHALL WELLS v ELSER

0arshall 8ells, a company rom "regon, sued !lser, a domestic company, or the

unpaid balance on a bill o goods sold by 0arshall to !lser. !lser argued that0arshall does not have the capacity to sue since it has not complied with Philippine

law re%uiring them to obtain a license to do business in the country. &rial court

sustained this argument. 'ourt ruled that the law provides that no oreign

corporation shall be permitted to transact business in the Philippines until it

obtained a license to do so. However, it was not the purpose o the law to e#clude a

oreign corporation that happens to obtain an isolated order or business rom the

Philippines rom see*ing redress in the courts and to permit persons to avoid their

contracts made with such oreign corporations.

LA CHEMISE LACOSTE v FERNANDEZLa 'hemise Lacoste is a rench manuacturer o clothes and sporting apparel not

doing business in the Philippines. Hemandas - 'o. is a domestic corporation that

applied or and was issued a register or the trademar* o Lacoste and 'rocodile

5evice or use on shirts, sportswear, and other garment products. Hemandas then

assigned all the rights o this trademar* to the respondent +obindram Hemandas.

&he petitioner then led with the N)2 a complaint alleging the unair competition

being committed by Hemandas. &he N)2 conducted an investigation and was given



a search warrant that they e#ecuted and this resulted in the search and sei(ure o

various gods and articles. Hemandas led a motion to %uash alleging that the

trademar* he used was diferent rom the petitioners trademar*. &rial court was

convinced that no probable cause e#isted to ustiy the search warrants so ordered

the sei(ed items to be returned. Petitioner led an appeal. Hemandas argues that

the petitioner does not have the capacity to sue being a oreign corporation notdoing business in the Philippines nor is it licensed to do so. 'ourt ruled that

petitioner is a oreign corporation not doing business in the Philippines because the

mar*eting o its products in the country is being done through an e#clusive

distributor, the 4ustan 'ommercial 'orporation, an independent entity that buys

and sells not only petitioners products but many other products as well ma*ing it

not ust an agent o petitioner. &his is specically included in the "mnibus

2nvestment 'ode wherein it is not deemed to be doing business when it is being

done through a middleman acting in their own name. &hus, petitioner has the

capacity to maintain the suit since it is not doing business and does not need a

license to sue or trademar* inringement and unair competition 9 an action that is

simply to protect its property right.

STEELCASE v DESIGN INTERNATIONAL

3teelcase, a company rom 0ichigan, is engaged in the manuacture o o1ce

urniture. 5esign 2nternational is a domestic company engaged in the distribution o

urniture. 3teelcase and 5232 orally entered into a dealership agreement whereby

3teelcase granted 5232 the right to mar*et its products. &he business relationship

was eventually terminated when the agreement was breached but with neither

party admitting ault. 3teelcase then led a complaint or a sum o money against

5232. 5232 led a counterclaim alleging that 3teelcase does not have the capacity to

sue despite the act that it was doing business in the Philippines without a license. &rial court dismissed 3teelcases complaint because it was revealed that it

participated in the operations o 5232 by re%uiring it to meet a certain 5ealer

Perormance !#pectation that re%uired it to ollow a certain standard in business

planning, organi(ation, and operation thus actually doing business in the country

without a license. 'A a1rmed. 'ourt ruled, however, that 5232 is an independent

distributor o 3teelcase products and not a mere agent or conduit. 5232, even i it

was the e#clusive distributor o 3teelcase, did not ma*e it an agent thus resulting in

3teelcase doing business in the Philippines. &he law specically states that it is not

doing business when there is an appointed representative or distributor domiciled in

the Philippines that transacts business in its own name. )esides, 5232 was also thedistributor o other companies. As or the 5ealer Perormance !#pectation, it was

only logical that 3teelcase have this re%uirement or its dealers in order to ensure

ma#imum prots and these re%uirements did not impinge on 5232s independence in

conducting its business. Also, assuming 3teelcase was doing business without a

license, 5232 would be estopped rom asserting it as an issue resulting in 3teelcases

lac* o capacity to sue because it had been in an agreement and had proted rom



it or :; years thus charging 5232 with *nowledge about 3teelcase and its lac* o a

license.

AGILENT v INTEGRATED SILICON

Agilent &echnologies, a 3ingaporean corporation, is not licensed to do business in

the Philippines. 2ntegrated 3ilicon is a domestic corporation that is :<<= oreignowned and engaged in the business o manuacturing and assembling electronics

components. >nder a ?6year @alue Added Assembly 3ervices Agreement between

2ntegrated 3ilicon and Hewlett6Pac*ard, 2ntegrated 3ilicon was to manuacture and

assemble ber optics or e#port to HP and HP would consign raw materials to

2ntegrated as well as provide the machinery needed and pay the purchase price or

the nished products. HP then assigned all its rights to Agilent. 2ntegrated then led

or specic perormance against Agilent alleging that they breached the oral

agreement to e#tend the @AA3A. Agilent also led a complaint against 2ntegrated

or specic perormance with replevin in order to have the machinery and

e%uipment returned to them. 2ntegrated countered that Agilent does not have the

capacity to sue. &rial court granted Agilents motion or replevin. 'A reversed.

2ntegrated argued that Agilent is an unlicensed oreign corporation doing business

in the Philippines or entering into the @AA3A and appointing its agents within

2ntegrateds acilities in order to inspect the goods being made as well as

participating in the management and control o 2ntegrated itsel. 'ourt ruled,

however, that an unlicensed oreign corporation is not necessarily incapacitated to

sue since a license is only necessary to conduct business. Also, the doctrine o

estoppel prevents a citi(en or entity who transacted with an unlicensed oreign

corporation rom denying its capacity to sue ater beneting rom such relationship.

&he instances o a oreign corporation to sue in the Philippines is the ollowing :B

doing business without a license C cannot sueD ;B not doing business C no need ora license to sueD $B unlicensed but doing business C contracting citi(en or entity is

estoppedD EB doing business with license C can sue. 5oing business has also been

dened as a continuity o commercial transactions or the e#ercise o some o the

unctions incident or in progressive prosecution o the purpose and subect o its

organi(ation. &he ; tests to determine whether it is doing business :B substance

test 9 i the oreign corporation is continuing the body o business or which it was

organi(edD ;B continuity test 9 continuity o commercial dealings. &he acts in the

@AA3A do not constitute doing business because they were conned to maintaining

a stoc* o goods in the Philippines or the processing by 2ntegrated and in

consigning e%uipment with 2ntegrated or use in such processing.

MERRILL LYNCH v CA

0errill Lynch led a complaint against 3pouses Lara or the recovery o debt. 0L

utures is a 5elaware corporation not doing business in the Philippines who entered

into a utures 'ustomer Agreement with the spouses who agreed to be the bro*er

o utures contracts Fcommitment to buy and sell a standardi(ed %uantity o a

particular item at a specied uture settlement date e#ecuted on a utures



e#changeB in the >3. Pursuant to this contract, the orders to buy and sell were

transmitted to 0L utures by the spouses through the acilities o 0errill Lynch Phil.,

a Phil. corporation and a company servicing 0L utures customers. &he spouses

*new that 0LP2 was not a bro*er in utures contracts and it was not licensed to

operate as a commodity trading advisor. &hen, because o a loss, the spouses

became indebted to 0L utures but the spouses reused to pay alleging that thetransactions were null and void because 0LP2 did not have a license as a bro*er. &he

spouses led a motion to dismiss and argued that even i 0L utures was

unlicensed, it had been doing business or E years in the Philippines and they never

inormed the spouses that 0LP2 was not licensed. )esides, their transactions were

with 0errill Lynch Pierce enner and 3mith not 0L utures. &rial court sustained the

motion to dismiss. 'A a1rmed given that plaintif had no capacity to sue because

the spouses were transacting with 0errill Lynch Pierce not 0L utures. 'ourt ruled

that 0L utures was in act doing business through 0LP2 and that the spouses dealt

with them on several occasions wherein they received account documents and

money in connection with the transactions or G years thus, they are estopped.

TOP WELD v ECED

Petitioner &op 8eld is in the business o manuacturing and selling welding supplies

and e%uipment.

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