I.

SHORT TITLE:GSIS v CA

II. FULL TITLE: G.R. No. 183905. April 16, 2009. GOVERNMENT
SERVICEINSURANCE SYSTEM, petitioner, vs. THE HON. COURT OFAPPEALS,
(8TH DIVISION), ANTHONY V. ROSETE, MANUEL M.LOPEZ, FELIPE B.
ALFONSO, JESUS F. FRANCISCO, CHRISTIANS. MONSOD, ELPIDIO L. IBAÑEZ,
and FRANCIS GILES PUNO,respondents.

III. TOPIC: Corporation Law - Proxy solicitation and proxy validation

IV. STATEMENT OF FACTS:During the annual stockholders meeting of the Manila

Electric Company(MERALCO,) due to the resignation of the corporate secretary
Quiason, the Board ofDirectors (BoD) of MERALCO designated Vitug to act as
corporate secretary. However,the proxy validation was presided over by respondent
Rosete, assistant corporatesecretary and in-house chief legal counsel of
MERALCO.GSIS thereafter filed a complaint with the RTC of Pasay City seeking
thenullification of the proxies which were validated during the aforementioned
proceedingpresided over by respondent Rosete. On the very same day, a Cease and Desist
Order(CDO) was then issued and signed by SEC Commissioner Jesus Martinez to
restrain theuse of said proxies during the annual meeting. Nevertheless, Rosete continued
themeeting despite the foregoing.The SEC then issued a Show Cause Order (SCO)
against Rosete ordering them togive an explanation why they should not be cited in
contempt.On appeal, the CA Eighth Division held that the complaint filed by GSIS
isdismissed for lack of jurisdiction, forum shopping by splitting of causes of
action.Thereafter, three different action arose therefrom, one of which involves the
jurisdictionof the SEC over the contested petition as well as the validity of the CDO and
SCO.

V. ISSUE:1. Whether or not the SEC has jurisdiction over the petition filed by GSIS
againstprivate respondents.2. Whether or not the CDO and SCO issued by the SEC are
valid.

VI. RULING:1. No. Under Section 5(c) of Presidential Decree No. 902-A, in relation to
the SRC,the jurisdiction of the regular trial courts with respect to election-related
controversies is
specifically confined to “controversies in the election or appointment of
directors,trustees, officers or managers of corporations, partnerships, or associations.”
Evidently,the jurisdiction of the regular courts over so-called election contests or
controversiesunder Section 5(c) does not extend to every potential subject that may be
voted on byshareholders, but only to the election of directors or trustees, in which
stockholders areauthorized to participate under Section 24 of the Corporation Code. This
qualificationallows for a useful distinction that gives due effect to the statutory right of
the SEC toregulate proxy solicitation, and the statutory jurisdiction of regular courts over
electioncontests or controversies. The power of the SEC to investigate violations of its
rules onproxy solicitation is unquestioned when proxies are obtained to vote on
mattersunrelated to the cases enumerated under Section 5 of Presidential Decree No. 902-
A.However, when proxies are solicited in relation to the election of corporate directors,
theresulting controversy, even if it ostensibly raised the violation of the SEC rules on
proxysolicitation, should be properly seen as an election controversy within the original
andexclusive jurisdiction of the trial courts by virtue of Section 5.2 of the SRC in relation
toSection 5(c) of Presidential Decree No. 902-A.2. No. The lack of jurisdiction of the
SEC over the subject matter of GSIS’s petition necessarily invalidates the CDO and SCO
issued by that body. The error of theSEC in granting the CDO without stating which kind
of CDO it was issuing is moreunpardonable, as it is an act that contravenes due process
of law.The CDO bore the signature of Commissioner Jesus Martinez, identified therein
as “Officer-in-Charge,” and nobody else’s.
The SEC is a collegial body composed of aChairperson and four (4) Commissioners. In
order to constitute a quorum to conductbusiness, the presence of at least three (3)
Commissioners is required. CommissionerMartinez is not the SEC. He alone does not
speak for and in behalf of the SEC. The SECacts through a five-person body, and the five
members of the commission each has onevote to cast in every deliberation concerning a
case or any incident therein that issubject to the jurisdiction of the SEC.It is clear that
Martinez was designated as OIC because of the official travel ofonly one member,
Chairperson Fe Barin. Martinez was not commissioned to act as theSEC itself.

VII. DISPOSITIVE PORTION: WHEREFORE, the petition in G.R. No. 184275

is EXPUNGED for lack of capacityof the petitioner to bring forth the suit.The petition in
G.R. No. 183905 is DISMISSED for lack of merit except that the secondand third
paragraphs of the fallo of the assailed decision dated 23 July 2008 of the Courtof
Appeals, including subparagraphs (1), (2), 2(a), 2(b), 2(c) and 2(d) under the
secondparagraph, are hereby DELETED.No pronouncements as to costs.SO ORDERED.
I. SHORT TITLE: ORENDAIN V BF HOMES

II. FULL TITLE: G.R. No. 146313 October 31, 2006.

FLORENCIO ORENDAIN,petitioner versus

BF HOMES, INC, Respondent.

III. TOPIC: Corporation Law – Intra-Corporate Controversies

IV. STATEMENT OF FACTS: Respondent BF Homes, a domestic corporation involved

in developing and selling residential lots filed a petition for rehabilitation and suspension
of payments as it incurred liabilities in the course of its operations. SEC ordered the
appointment of a rehabilitation receiver with herein petitioner Orendain as its Chairman.
Sometime later, BF Homes represented by petitioner Orendain sold a parcel of land to the
Local Superior of the Franciscan Sisters of the Immaculate Phils. Inc (LSFSIPI). SEC
ordered a new committee of receivers and relieved petitioner of its duties. BF Homes
then filed before the court an action for reconveyance of the property sold to LSFSIPI
alleging petitioner acted in its individual capacity and therefore had no title over the
property. Petitioner argues RTC had no jurisdiction over the case since BF Homes’ suit
was instituted against him as its former receiver. The trial court and CA found for BF
Homes.
V. ISSUE:1. Whether or not the reconveyance suit involves intra-corporate dispute
cognizable by SEC.

VI. RULING: 1. NO.

Clearly, the controversy involves matters purely civil in character and is beyond the
ambit of the limited jurisdiction of the SEC.
Section 5 of PD No. 902-A does not apply in the instant case. The LSFSIPI is neither an
officer nor a stockholder of BF Homes, and this case does not involve intra-corporate
proceedings. In addition, the seller, petitioner Orendain, is being sued in his individual
capacity for the unauthorized sale of the property in controversy. Hence, we find no
cogent reason to sustain petitioner’s manifestation that the resolution of the instant
controversy depends on the ratification by the SEC of the acts of its agent or the receiver
because the act of Orendain was allegedly not within the scope of his authority as
receiver. Furthermore, the determination of the validity of the sale to LSFSIPI will
necessitate the application of the provisions of the Civil Code on obligations and
contracts, agency, and other pertinent provisions. In addition, jurisdiction over the case
for reconveyance is clearly vested in the RTC as provided in paragraph (2), Section 19,
B.P. Blg. 129.

VII. DISPOSITIVE PORTION: WHEREFORE, the August 18, 2000 Decision

and December 6, 2000 Resolution of the Court of Appeals in CA-G.R. SP No. 48263 is
hereby AFFIRMED IN TOTO.
 I. SHORT TITLE: SEC V. CA

II. FULL TITLE: G.R. No. 187702 October 22, 2014.

SECURITIES
AND EXCHANGE COMMISSION,Petitioner,vs.THE
HONORABLE COURT OF APPEALS, OMICO
CORPORATION, EMILIO S. TENG AND TOMMY
KIN HING TIA, Respondents.

III. TOPIC: Corporation Law – SRC, proxy, jurisdiction of SEC

IV. STATEMENT OF FACTS: Omico Corporation (Omico) is a company whose shares

of stock are listed and traded in the Philippine Stock Exchange, Inc. Astra Securities
Corporation (Astra) is one of the stockholders of Omico owning about 18% of the latter’s
outstanding capital stock. Omico scheduled its annual stockholders’ meeting on 3
November 2008. It set the deadline for submission of proxies on 23 October 2008 and the
validation of proxies on 25 October 2008.
Astra objected to the validation of the proxies issued in favor of Tia, representing
about 38% of the outstanding capital stock of Omico. Astra also objected to the inclusion
of the proxies issued in favor of Tia and/or Martin Buncio, representing about 2% of the
outstanding capital stock of Omico. Astra maintained that the proxy issuers, who were
brokers, did not obtain the required express written authorization of their clients when
they issued the proxies in favor of Tia. In so doing, the issuers were allegedly in violation
of SRC Rules. Furthermore, the proxies issued in favor of Tia exceeded, thereby giving
rise to the presumption of solicitation thereof under said rules. Tia did not
also comply with the rules on proxy solicitation, in violation of the SRC.
Despite the objections of Astra, Omico’s Board of Inspectors declared that the
proxies issued in favor of Tia were valid.

1. V. ISSUE:1 Whether or not SEC has jurisdiction over controversies arising from the
validation of proxies for the election of the directors of a corporation.

VI. RULING: 1. NO.

The Court held that when proxies are solicited in relation to the election of corporate
directors, the resulting controversy, even if it ostensibly raised the violation of the SEC
rules on proxy solicitation, should be properly seen as an election controversy within the
original and exclusive jurisdiction of the trial courts by virtue of Section 5.2 of the SRC.
Hence, the jurisdiction is still with the Special Commercial Courts. An election contest
covers any controversy or dispute involving the validation of proxies, in general. Thus, it
can only refer to all the beneficialpurposes that validation of proxies can bring about
when made in connection with a forthcoming election of directors. Thus, there is no point
in making distinctions between who has jurisdiction before and who has jurisdiction after
the election of directors, as all controversies related thereto – whether before, during or
after – shall be passed upon by regular courts as provided by law.

VII. DISPOSITIVE PORTION: WHEREFORE, the petition in G.R. No. 187702 is

EXPUNGED for lack of capacity of petitioner to file the suit.1âwphi1

The petition in G.R. No. 189014 is DENIED. The Court of Appeals Decision dated 18
March 2009 and Resolution dated 9 July 2009 in CA-G.R. SP No. 106006 are
AFFIRMED.
I. SHORT TITLE: HUTCHISON V. SBMA
II. FULL TITLE: G.R. No. 131367. August 31, 2000. HUTCHISON PORTS
PHILIPPINES LIMITED, petitioner, vs. SUBIC BAY METROPOLITAN
AUTHORITY, INTERNATIONAL CONTAINER TERMINAL SERVICES
INC., ROYAL PORT SERVICES INC. and the EXECUTIVE
SECRETARY, respondents.
III. TOPIC: Corporation Law – Isolated Transaction

IV. STATEMENT OF FACTS: On 12 February 1996, the Subic Bay Metropolitan

Authority (SBMA) advertised in leading national daily newspapers and in one
international publication, an invitation offering to the private sector the opportunity to
develop and operate a modern marine container terminal within the Subic Bay Freeport
Zone. Out of 7 bidders who responded to the published invitation, 3 were declared by the
SBMA as qualified bidders after passing the pre-qualification evaluation conducted by
the SBMA's Technical Evaluation Committee (SBMA-TEC) These are: (1) International
Container Terminal Services, Inc. (ICTSI); (2) a consortium consisting of Royal Port
Services, Inc. and HPC Hamburg Port Consulting GMBH (RPSI); and (3) Hutchison
Ports Philippines Limited (HPPL), representing a consortium composed of HPPL, Guoco
Holdings (Phils.), Inc. and Unicol Management Services, Inc. All 3 qualified bidders
were required to submit their respective formal bid package on or before 1 July 1996 by
the SBMA's Pre-qualification, Bids and Awards Committee (SBMA-PBAC). Thereafter,
the services of 3 international consultants recommended by the World Bank for their
expertise were hired by SBMA to evaluate the business plans submitted by each of the
bidders, and to ensure that there would be a transparent and comprehensive review of the
submitted bids.

The SBMA also hired the firm of Davis, Langdon and Seah Philippines, Inc. to assist in
the evaluation of the bids and in the negotiation process after the winning bidder is
chosen. All the consultants, after such review and evaluation unanimously concluded that
HPPL's Business Plan was "far superior to that of the two other bidders." However, even
before the sealed envelopes containing the bidders' proposed royalty fees could be opened
at the appointed time and place, RPSI formally protested that ICTSI is legally barred
from operating a second port in the Philippines based on Executive Order 212 and
Department of Transportation and Communication (DOTC) Order 95-863. RPSI thus
requested that the financial bid of ICTSI should be set aside. Nevertheless, the opening of
the sealed financial bids proceeded "under advisement" relative to the protest signified by
RPSI. The financial bids, more particularly the proposed royalty fee of each bidder, was
as follows: (1) ICTSI, US$57.80 TEU; (2) HPPL, US$20.50 TEU; and (3) RPSI,
US$15.08 TEU. The SBMA-PBAC decided to suspend the announcement of the winning
bid, however, and instead gave ICTSI 7 days within which to respond to the letter-protest
lodged by RPSI. The HPPL joined in RPSI's protest, stating that ICTSI should be
disqualified because it was already operating the Manila International Container Port
(MICP), which would give rise to inevitable conflict of interest between the MICP and
the Subic Bay Container Terminal facility. On 15 August 1996, the SBMA-PBAC issued
a resolution rejecting the bid of ICTSI because "said bid does not comply with the
requirements of the tender documents and the laws of the Philippines."

The following day, ICTSI filed a letter-appeal with SBMA's Board of Directors
requesting the nullification and reversal of the resolution rejecting ICTSI's bid while
awarding the same to HPPL. But even before the SBMA Board could act on the appeal,
ICTSI filed a similar appeal before the Office of the President. On 30 August 1996, then
Chief Presidential Legal Counsel (CPLC) Renato L. Cayetano submitted a memorandum
to then President Fidel V. Ramos, recommending that the President direct SBMA
Chairman Gordon to consider re-evaluating the financial bids submitted by the parties,
taking into consideration all the following factors: (1) Reinstate ICTSI's bid; (2)
Disregard all arguments relating to "monopoly"; (3) The re-evaluation must be limited to
the parties' financial bids. Considering that the parties' business have been accepted
(passed), strictly follow the criteria for bid evaluation provided for in pars. (c) and (d),
Part B (1) of the Tender Document; (4) In the re-evaluation, the COA should actively
participate to determine which of the financial bids is more advantageous; (5) In addition,
all the parties should be given ample opportunity to elucidate or clarify the
components/justification for their respective financial bids in order to ensure fair play and
transparency in the proceedings; and (6) The President's authority to review the final
award shall remain." The recommendation of CPLC Cayetano was approved by President
Ramos. A copy of President Ramos' handwritten approval was sent to the SBMA Board
of Directors. Accordingly, the SBMA Board, with the concurrence of representatives of
the Commission on Audit, agreed to focus the reevaluation of the bids in accordance with
the evaluation criteria and the detailed components contained in the Tender Document,
including all relevant information gleaned from the bidding documents, as well as the
reports of the three international experts and the consultancy firm hired by the SBMA.

On 19 September 1996, 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. In a letter dated 24 September 1996, the SBMA Board of Directors submitted
to the Office of the President the results of the re-evaluation of the bid proposals.
Notwithstanding the SBMA Board's recommendations and action awarding the project to
HPPL, then Executive Secretary Ruben Torres submitted a memorandum to the Office of
the President recommending that another rebidding be conducted. Consequently, the
Office of the President issued a Memorandum directing the SBMA Board of Directors to
refrain from signing the Concession Contract with HPPL and to conduct a rebidding of
the project. In the meantime, the Resident Ombudsman for the DOTC filed a complaint
against members of the SBMA-PBAC before the Office of the Ombudsman for alleged
violation of Section 3(e) of Republic Act 3019 for awarding the contract to HPPL. On 16
April 1997, the Evaluation and Preliminary Investigation Bureau of the Office of the
Ombudsman issued a Resolution absolving the members of the SBMA-PBAC of any
liability and dismissing the complaint against them.

On 7 July 1997, the HPPL, feeling aggrieved by the SBMA's failure and refusal to
commence negotiations and to execute the Concession Agreement despite its earlier
pronouncements that HPPL was the winning bidder, filed a complaint against SBMA
before the Regional Trial Court (RTC) of Olongapo City, Branch 75, for specific
performance, mandatory injunction and damages. In due time, ICTSI, RPSI and the
Office of the President filed separate Answers-in-Intervention to the complaint opposing
the reliefs sought by complainant HPPL. While the case before the trial court was
pending litigation, on 4 August 1997, the SBMA sent notices to HPPL, ICTSI and RPSI
requesting them to declare their interest in participating in a rebidding of the proposed
project. On 20 October 1997, HPPL received a copy of the minutes of the pre-bid
conference which stated that the winning bidder would be announced on 5 December
1997. Then on 4 November 1997, HPPL learned that the SBMA had accepted the bids of
ICTSI and RPSI who were the only bidders who qualified. In order to enjoin the
rebidding while the case was still pending, HPPL filed a motion for maintenance of the
status quo on 28 October 1997. The said motion was denied by the court a quo in an
Order dated 3 November 1997. HPPL filed the petition against SBMA, ICTSI, RPSI and
the Executive Secretary seeking to obtain a prohibitory injunction.

V. ISSUE:1. Whether HPPL has the legal capacity to even seek redress from the Court.

VI. RULING:1. No, legal capacity to sue.

 HPPL is a foreign corporation, organized and existing under the laws of the British
Virgin Islands. While the actual bidder was a consortium composed of HPPL, and two
other corporations, namely, Guoco Holdings (Phils.) Inc. and Unicol Management
Services, Inc., it is only HPPL that 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. There is no general rule or governing
principle laid down as to what constitutes "doing" or "engaging in" or "transacting"
business in the Philippines. Each case must be judged in the light of its peculiar
circumstances. Thus, it has often been held that a single act or transaction may be
considered as "doing business" when a corporation performs acts for which it was created
or exercises some of the functions for which it was organized. The amount or volume of
the business is of no moment, for even a singular act cannot be merely incidental or
casual if it indicates the foreign corporation's intention to do business. 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. The primary purpose of the license requirement is to
compel a foreign corporation desiring to do business within the Philippines to submit
itself to the jurisdiction of the courts of the state and to enable the government to exercise
jurisdiction over them for the regulation of their activities in this country. If a foreign
corporation operates a business in the Philippines without a license, and thus does not
submit itself to Philippine laws, it is only just that said foreign corporation be not allowed
to invoke them in our courts when the need arises. "While foreign investors are always
welcome in this land to collaborate with us for our mutual benefit, they must be prepared
as an indispensable condition to respect and be bound by Philippine law in proper cases."
The requirement of a license is not intended to put foreign corporations at a disadvantage,
for the doctrine of lack of capacity to sue is based on considerations of sound public
policy. Accordingly, HPPL must be held to be incapacitated to bring the petition for
injunction before the Supreme Court for it is a foreign corporation doing business in the
Philippines without the requisite license.

VII. DISPOSITIVE PORTION: WHEREFORE, in view of all the foregoing, the instant
petition is hereby DISMISSED for lack of merit. Further, the temporary restraining order
issued on December 3, 1997 is LIFTED and SET ASIDE. No costs.
I. SHORT TITLE:GSIS v CA

II. FULL TITLE G.R. No. 159586. July 26, 2004

EUROPEAN RESOURCES AND TECHNOLOGIES, INC. and DELFIN J.
WENCESLAO, petitioners, vs. INGENIEUBURO BIRKHAHN + NOLTE,
Ingeniurgesellschaft mbh and HEERS & BROCKSTEDT GMBH & CO., respondents.

III. TOPIC: Corporation Law – Foreign Corporation Doing Business

IV. STATEMENT OF FACTS: European Resources and Technologies Inc. (hereinafter

ERTI), a corporation organized and existing under the laws of the Republic of
the Philippines, is joined by Delfin J. Wenceslao as petitioner in this case. Ingenieuburo
Birkhan + Nolte Ingiurgesellschaft mbh and Heers & Brockstedt Gmbh & Co. are
German corporations who are respondents in this case and shall be collectively referred
to as the German Consortium. The German Consortium tendered and submitted its bid to
the Clark Development Corporation (CDC) to construct, operate and manage
the Integrated Waste Management Center at the Clark Special Economic Zone
(CSEZ). CDC accepted the German Consortiums bid and awarded the contract to
it. On October 6, 1999, CDC and the German Consortium executed the Contract for
Service which embodies the terms and conditions of their agreement. The Contract for
Services provides that the German Consortium shall be empowered to enter into a
contract or agreement for the use of the integrated waste management center by
corporations, local government units, entities, and persons not only within the CSEZ but
also outside. For waste collected within the CSEZ, the German Consortium may impose a
tipping fee per ton of waste collected from locators and residents of the CSEZ, which fees
shall be subject to the schedule agreed upon by the parties and specified in the Contract
for Services. For its operations outside of the CSEZ, the German Consortium shall pay
CDC US$1.50 per ton of non-hazardous solid waste collected. The CDC shall guarantee
that nineteen thousand eighteen hundred (19,800) tons per year of solid waste volume
shall be collected from inside and outside the CSEZ. The contract has a term of twenty-
five (25) years, during which time the German Consortium shall operate the waste
management center on a day-to-day basis.
Article VIII, Section 7 of the Contract for Services provides that the German Consortium
shall undertake to organize a local corporation as its representative for this
project. On April 18, 2000, the German Consortium entered into a Joint Venture with
D.M. Wenceslao and Associates, Inc. (DMWAI) and Ma. Elena B. Villarama (doing
business as LBV and Associates), embodied in a Memorandum of Understanding (MOU)
signed by the parties. On August 1, 2000, without the Shareholders Agreement having
been executed, the German Consortium and petitioner ERTI entered into a Memorandum
of Agreement (MOA) whereby the German Consortium ceded its rights and obligations
under the Contract for Services in favor of ERTI and assigned unto ERTI, among others,
its license from CDC to engage in the business of providing environmental services
needed in the CSEZ in connection with the waste management within the CSEZ and
other areas. On December 11, 2000, ERTI received a letter from BN Consultants
Philippines, Inc., signed by Mr. Holger Holst for and on behalf of the German
Consortium, stating that the German Consortiums contract with DMWAI, LBV&A and
ERTI has been terminated or extinguished. On February 20, 2001, petitioner ERTI,
through counsel, sent a letter to CDC requesting for the reconsideration of its disapproval
of the agreement between ERTI and the German Consortium. efore CDC could act upon
petitioner ERTIs letter, the German Consortium filed a complaint for injunction against
herein petitioners before the Regional Trial Court of Angeles City, Branch 61, docketed
as Civil Case No. 10049. The German Consortium claimed that petitioner ERTIs
continued misrepresentation as to their right to accept solid wastes from third parties for
processing at the waste management center will cause irreparable damage to the
Consortium and its exclusive right to operate the waste management center at the CSEZ.
Moreover, petitioner ERTIs acts destroy the Consortiums credibility and undermine
customer confidence in it. Hence, the German Consortium prayed that a writ of
temporary restraining order be issued against petitioner ERTI and, after hearing, a writ of
preliminary injunction be likewise issued ordering petitioner ERTI to cease and desist
from misrepresenting to third parties or the public that it has any right or interest in the
waste management center at CSEZ.

V. ISSUE:1. Whether or not the CA erred Ruling that petitioners are estopped from
assailing the capacity of the respondents to institute the suit for injunction.

VI. RULING:1. There is no general rule or governing principle laid down as to what
constitutes doing or engaging in or transacting business in the Philippines. Thus, it has
often been held that a single act or transaction may be considered as doing business when
a corporation performs acts for which it was created or exercises some of the functions
for which it was organized. We have held that the act of participating in a bidding process
constitutes doing business because it shows the foreign corporations intention to engage
in business in the Philippines. 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.
Consequently, the German Consortium is doing business in the Philippines without the
appropriate license as required by our laws. By participating in the bidding conducted by
the CDC for the operation of the waste management center, the German Consortium
exhibited its intent to transact business in the Philippines. Although the Contract for
Services provided for the establishment of a local corporation to serve as respondents
representative, it is clear from the other provisions of the Contract for Services as well as
the letter by the CDC containing the disapproval that it will be the German Consortium
which shall manage and conduct the operations of the waste management center for at
least twenty-five years. Moreover, the German Consortium was allowed to transact with
other entities outside the CSEZ for solid waste collection. Thus, it is clear that the local
corporation to be established will merely act as a conduit or extension of the German
Consortium.
As a general rule, unlicensed foreign non-resident corporations cannot file suits in
the Philippines. Section 133 of the Corporation Code specifically provides:
SECTION 133. No foreign corporation transacting business in the Philippines without a
license, or its successors or assigns, shall be permitted to maintain or intervene in any
action, suit or proceeding in any court or administrative agency of the Philippines, but
such corporation may be sued or proceeded against before Philippine courts or
administrative tribunals on any valid cause of action recognized under Philippine laws.
A corporation has legal status only within the state or territory in which it was organized.
For this reason, a corporation organized in another country has no personality to file suits
in the Philippines. In order to subject a foreign corporation doing business in the country
to the jurisdiction of our courts, it must acquire a license from the Securities and
Exchange Commission (SEC) and appoint an agent for service of process. Without such
license, it cannot institute a suit in the Philippines.
However, there are exceptions to this rule. In a number of cases, we have declared a party
estopped from challenging or questioning the capacity of an unlicensed foreign
corporation from initiating a suit in our courts. In the case of Communication Materials
and Design, Inc. v. Court of Appeals, a foreign corporation instituted an action before our
courts seeking to enjoin a local corporation, with whom it had a Representative
Agreement, from using its corporate name, letter heads, envelopes, sign boards and
business dealings as well as the foreign corporations trademark. The case arose when the
foreign corporation discovered that the local corporation has violated certain contractual
commitments as stipulated in their agreement. In said case, we held that a foreign
corporation doing business in the Philippines without license may sue in Philippine
Courts a Philippine citizen or entity that had contracted with and benefited from it.
Hence, the party is estopped from questioning the capacity of a foreign corporation to
institute an action in our courts where it had obtained benefits from its dealings with such
foreign corporation and thereafter committed a breach of or sought to renege on its
obligations.The rule relating to estoppel is deeply rooted in the axiom of commodum ex
injuria sua non habere debetno person ought to derive any advantage from his own
wrong.
In the case at bar, petitioners have clearly not received any benefit from its transactions
with the German Consortium. In fact, there is no question that petitioners were the ones
who have expended a considerable amount of money and effort preparatory to the
implementation of the MOA. Neither do petitioners seek to back out from their
obligations under both the MOU and the MOA by challenging respondents capacity to
sue. The reverse could not be any more accurate. Petitioners are insisting on the full
validity and implementation of their agreements with the German Consortium.

VII. DISPOSITIVE PORTION: WHEREFORE, the decision of the Court of Appeals in

CA-G.R. SP No. 68923 dated May 15, 2003 is REVERSED and SET ASIDE. The Orders
of the trial court dated June 28, 2001 and November 21, 2001 are ANNULLED and SET
ASIDE and Civil Case No. 10049 is DISMISSED for lack of legal capacity of
respondents to institute the action. Costs against respondents..
I. SHORT TITLE: B. VAN ZUIDEN V GTVL

II. FULL TITLE: G.R. No. 147905, B. VAN ZUIDEN BROS., LTD.Petitioner, v GTVL
MANUFACTURING INDUSTRIES, INC.,Respondent.

III. TOPIC: Corporation Law – Unlicensed Foreign Corporation

IV. STATEMENT OF FACTS: Petitioner B. Van Zuiden Bros., Ltd. (ZUIDEN) is a

Hong Kong corporation without license to do business in the Philippines. ZUIDEN filed
a complaint for a sum of money against respondent GTVL Mnfg. Industries, Inc.
(GTVL)—a domestic corporation. ZUIDEN alleged in its complaint: it is engaged in the
importation and exportation of several products, including lace products. GTVL
purchased lace products from it on several occasions. Per instructions of GTVL, the
purchased goods are delivered to Kenzar, a Hong Kong company based in Hong Kong.
Upon Kenzar’s receipt of the goods, the products were considered sold. Kenzar, in turn,
had the obligation to deliver the goods to the Philippines to GTVL. GTVL failed and
refused to pay the agreed purchase price for several deliveries. RTC dismissed the case
for ZUIDEN’s lack of capacity to sue, holding that it was doing business in the
Philippines without a license. CA affirmed. Issue. Does ZUIDEN have the legal capacity
to sue in Philippine courts? Held. Yes. ZUIDEN is not doing business in the Philippines.
Thus, it does not need a license before it can sue before our courts. To be “doing business
in the Philippines" for purposes of Sec. 133 of the Corp. Code, the foreign corporation
must actually transact business in the Philippines on a continuing basis in its own name
and for its own account.

V. ISSUE:1. Whether or not the petitioner, an unlicensed foreign corporation, has legal
capacity to sue before Philippine courts.

VI. RULING:1. No. The series of transactions between petitioner and respondent cannot
be classified as doing business in the Philippines under Section 3(d) of RA 7042. An
essential condition to be considered as doing business in the Philippines is the actual
performance of specific commercial acts within the territory of the Philippines for the
plain reason that the Philippines has no jurisdiction over commercial acts performed in
foreign territories. Here, there is no showing that petitioner performed within the
Philippine territory the specific acts of doing business mentioned in Section 3(d) of RA
7042. Petitioner did not also open an office here in the Philippines, appoint a
representative or distributor, or manage, supervise or control a local business. While
petitioner and respondent entered into a series of transactions implying a continuity of
commercial dealings, the perfection and consummation of these transactions were done
outside the Philippines. To be doing or transacting business in the Philippines for
purposes of Section 133 of the Corporation Code, the foreign corporation must actually
transact business in the Philippines, that is, perform specific business transactions within
the Philippine territory on a continuing basis in its own name and for its own
account. Actual transaction of business within the Philippine territory is an essential
requisite for the Philippines to acquire jurisdiction over a foreign corporation and thus
require the foreign corporation to secure a Philippine business license. If a foreign
corporation does not transact such kind of business in the Philippines, even if it exports
its products to the Philippines, the Philippines has no jurisdiction to require such foreign
corporation to secure a Philippine business license.
Considering that petitioner is not doing business in the Philippines, it does not need a
license in order to initiate and maintain a collection suit against respondent for the unpaid
balance of respondents purchases.

VII. DISPOSITIVE PORTION: WHEREFORE, we GRANT the

petition. We REVERSE the Decision dated 18 April 2001 of the Court of Appeals in
CA-G.R. CV No. 66236. No costs..
I. SHORT TITLE: B. COUNSELO v PDB
II. FULL TITLE: G.R. No. 152580, COUNSELO METAL
CORPORATION.Petitioner, V PLANTERS DEVELOPMENT BANK .,Respondent.

III. TOPIC: Corporation Law – Jurisdiction of Sec

IV. STATEMENT OF FACTS: CMC filed before the SEC a petition to be declared in a
state of suspension of payment, for rehabilitation and for the appointment of a
rehabilitation receiver or management committee under Sec. 5 (d) of PD No. 902-A.
SEC declared that “all actions for claims against CMC pending before any court, tribunal,
office, board or body and/or commission be deemed suspended immediately until further
order” from the SEC. SEC directed the creation of a management committee. And upon
the recommendation of the management committee’s recommendation, the SEC ordered
the dissolution and liquidation of CMC, and directed further, that “the proceedings on
and implementation of the order of liquidation be commenced at the RTC to which the
case shall be transferred. Planter’s Bank, one of the creditors of CMC, commenced the
extra-judicial foreclosure of CMC’s real estate mortgage. CMC filed a motion for the
issuance of TRO and writ of preliminary injunction with SEC to enjoin the REM.
Thereafter, the SEC issued the TRO and ordered the immediate transfer of the case
records to the trial court. The case was then transferred to the trial court.

The trial court denied CMC’s motion for the issuance of a TRO ruling that, since the SEC
had already terminated and decided on the merits, CMC’s petition for suspension of
payment, the trial court no longer had legal basis to act on CMC’s motion.CMC filed for
a motion for reconsideration, which the trial court denied. The trial court ruled that the
CMC’s petition for suspension of payment could not be converted into a petition for
dissolution and liquidation because they covered different subject matters and were
governed by different rules, stating that CMC’s remedy was to file a new petition for
dissolution and liquidation neither with SEC or the trial Court. A petition for certiorari
before the CA was filed by CMC alleging that the trial court committed grave abuse of
discretion amounting to lack of jurisdiction when it required CMC to file a new petition
for dissolution and liquidation with either the SEC or the trial court when the SEC clearly
retained jurisdiction over the case.Planters Bank extra-judicially foreclosed the real estate
mortgage.
CA dismissed the petition and upheld the decision of the trial court denying CMC’s
motion for issuance of a temporary restraining order since it was only an ancillary
remedy to the petition for suspension of payment which was already terminated. The CA
added that, under SEC. 121 of the Corporation Code the SEC has jurisdiction to hear
CMC’s petition for dissolution and liquidation. On a Motion for Reconsideration, CMC
argued that it does not have to file a new petition for dissolution and liquidation with the
SEC but that the case should just be remanded to the SEC as a continuation of its
jurisdiction over the petition for suspension of payment, and that Planters Banks’
foreclosure of the real estate mortgage be declared void.CA partially granted CMCs
motion for reconsideration and ordered that the case be remanded to the SEC. The CA
also ruled that since the SEC already ordered CMCs dissolution and liquidation, Planters
Banks foreclosure of the real estate mortgage was in order.

V. ISSUE:1. Whether the present case falls under Section 121 of the Corporation Code,
which refers to the SECs jurisdiction over CMCs dissolution and liquidation, or is only a
continuation of the SECs jurisdiction over CMCs petition for suspension of payment.

VI. RULING:1. Yes, SEC has jurisdiction.

The SEC has jurisdiction to order CMC’s dissolution but the trial court has jurisdiction
over CMC’s liquidation.
Republic Act No. 8799 (RA 8799) transferred to the appropriate regional trial courts the
SECs jurisdiction defined under Section 5(d) of Presidential Decree No. 902-A. Section
5.2 of RA 8799 provides:
The Commissions jurisdiction over all cases enumerated under Sec. 5 of
Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction
or the appropriate Regional Trial Court: Provided, That the Supreme Court in the
exercise of its authority may designate the Regional Trial Court branches that shall
exercise jurisdiction over these cases. The Commission shall retain jurisdiction over
pending cases involving intra-corporate disputes submitted for final resolution which
should be resolved within one (1) year from the enactment of this Code. The
Commission shall retain jurisdiction over pending suspension of
payments/rehabilitation cases filed as of 30 June 2000 until finally disposed.

However, the SECs jurisdiction does not extend to the liquidation of a corporation. While
the SEC has jurisdiction to order the dissolution of a corporation, jurisdiction over the
liquidation of the corporation now pertains to the appropriate regional trial courts. This is
the reason why the SEC, in its 29 November 2000 Omnibus Order, directed that the
proceedings on and implementation of the order of liquidation be commenced at the
Regional Trial Court to which this case shall be transferred. This is the correct procedure
because the liquidation of a corporation requires the settlement of claims for and against
the corporation, which clearly falls under the jurisdiction of the regular courts. The trial
court is in the best position to convene all the creditors of the corporation, ascertain their
claims, and determine their preferences.

VII. DISPOSITIVE PORTION: WHEREFORE, we DENY the

petition. We REINSTATE the 29 November 2000 Omnibus Order of the
Securities and Exchange Commission directing the Regional Trial Court, Branch
46, Manila to immediately undertake the liquidation of Consuelo Metal
Corporation. We AFFIRM the ruling of the Court of Appeals that Planters Development
Banks extra-judicial foreclosure of the real estate mortgage is valid.
I. SHORT TITLE: COMPANY REGISTRATION , SEC EN BANC V CHING BEE
II. FULL TITLE G.R. No. 205291 - COMPANY REGISTRATION A!LD MONITORING DEPARTMENT
AND SECURITIES AND EXCHANGE COMMISSION, EN BANC V. CHING BEE TRADING
CORPORATION.
III. TOPIC: Corporation Law – Corporate Term

IV. STATEMENT OF FACTS: CBTC was registered with the SEC on December 23,
1960. Its corporate existence being limited to a period of only 50 years, it was to expire
on December 23, 2010. On December 22, 2010 or one (1) day before the last day of its
corporate existence, CBTC filed with the Company Registration and Monitoring
Department (CRMD) of the SEC, an application seeking the approval of its amended
articles of incorporation extending its term for another 50 years. CRMD, however,
refused to accept the application because of CBTC's failure to state in the required
Director's Certificate that the stockholders, owning and representing at least two (2/3) of
its capital stock, voted and approved the amendment. The CRlvJD processor in the name
of Erlinda Cabatic then verbally advised CBTC to submit a letter requesting an extension
to file the requirements. On December 23, 2010, or just hours before CBTC's corporate
personality expired, such a letter was filed pursuant to the CRMD processor's suggestion.
On January 6, 2011, however, the SEC denied the request, citing SEC Resolution No.
394,5 dated November 13, 2008, as basis. The said resolution contained SEC's policy of
denying the filing of any amended articles of incorporation extending the corporate life of
a corporation, whose original term had expired. · On appeal to the SEC En Banc, the
request was likewise denied. Thus, CBTC went to the CA. The CA ordered the SEC to
admit CBTC's amended articles of incorporation. In reversing the SEC, the CA stated that
CBTC should have been given reasonable time within which to correct or modify any
portion in the articles following Section 17 of the Corporation Code (Code), which states
as follows: Sec.17. Grounds when articles of incorporation or amendment may be
refected or disapproved. - The Securities and Exchange Commission may reject the
articles of incorporation or disapprove any amendment thereto if the same is not il).
compliance with the requirements of this Code: Provided, That the Commission shall
give the incorporators a reasonable time . within which to correct or modify the
objectionable portions of the articles or amendment.

V. ISSUE:1. Whether or not the CA erred in granting CBTC's prayer for an extension to
file the amended articles of incorporation.

VI. RULING:1. The Court denies the petition of the Company Registration a!ld
Monitoring Department and Securities and Exchange Commission.

The overarching rule in this jurisdiction is that a corporation ceases to exist upon the
expiration of the corporate term indicated in its articles of incorporation. 11 Once that
occurs, all corporate acts, except those conferred by law, are considered ultra vires, if not
outright invalid. Thus, the moment a corporation's right to exist as an "artificial person"
ceases, its corporate powers are tenninated "just as the powers of a natural person to take
part in mundane affairs cease to exist upon his death." 12 Nevertheless, corporate death
may be avoided as the State practically allows the unlimited perpetuation of a corporation
by operation of Section 11 of the Code, to wit:

Section 11. Corporate term. - A corporation shall exist for a . period not exceeding fifty
(50) years from the date of incorporation unless sooner dissolved or unless said period is
extended. The corporate term as originally stated in the articles of incorporation may be
extended for periods not exceeding fifty (50) years in any single instance by an
amendment of the articles of incorporation, in accordance with this Code; Provided, That
no extension can be made earlier than five (5) years prior to the original or subsequent
expiry date(s) unless there are .iustifiable reasons for an earlier extension as · may be
determined by the Securities and Exchange Commission.
 This privilege of extending corporate term must be done within the limited period of five
(5) years prior to the original or subsequent expiry date. It is in this regard that the SEC
argues that CBTC should have done it earlier, not one day before the expiration of the
term, and that the failure to do so constitutes negligence with which the CBTC must bear
the consequences, particularly the loss of its corporate life.

Accordingly, for as long as the corporation opts to. extend its term while it is still alive
and during the period allowed by the Code, that is, the filing of the necessary
requirements, the burden shifts to the SEC to review, approve or disapprove the same
before the corporation breathes its last. If no approval is secured within that limited time,
the fault would have to be on the part of the SEC.
The problem here is the asse1iion of the SEC that nothing was even filed as the
application was rightly rejected by the CRMD. Then again, the Court believes that
despite that rightful rejection, CBTC was deprived of its right to a reasonable one ( 1 )-
day period to complete the requirements in view of the suggestion made by the processor
to instead submit a letter requesting for extension. That suggestion caused a
misunderstanding as to the proper recourse that CBTC should have taken. Had the
processor notified CBTC about the urgency of fulfilling the requirements prior to the
expiration of the corporate tenn, it would have been likely that the requirements for the
filing would have been completed.
The Court takes notice of the fact that the deficiency has been remedied by the
submission of the amended December 23,· 2010 Director's Ce1iificate. And with this
compliance, it is but fair that CBTC be considered to have sufficiently complied in good
faith with all the requirements for a valid extension, as if such was made prior to the
expiration of its corporate life or, to be precise, on December 23, 2010. This ruling runs
in accord with the doctrine of relation. Under the said principle, where the delay is due to
the neglect of the officer with whom the certificate is required to be filed, or to a
wrongful refusal on his part to receive the application, 18such as in this case, the
amendments shall take effect from the date the documents were filed.

VII. DISPOSITIVE PORTION: WHEREFORE, the petition is DENIED. The SEC is

ordered to act on the application with dispatch.