G.R. No.

109272 August 10, 1994

GEORG GROTJAHN GMBH & CO., petitioner,

vs.
HON. LUCIA VIOLAGO ISNAN

Petitioner is a multinational company organized and existing under the laws of the Federal Republic of
Germany. On July 6, 1983, petitioner filed an application, dated July 2, 1983, 1 with the Securities and
Exchange Commission (SEC) for the establishment of a regional or area headquarters in the Philippines,
pursuant to Presidential Decree No. 218. The application was approved by the Board of Investments (BOI)
on September 6, 1983. Consequently, on September 20, 1983, the SEC issued a Certificate of Registration
and License to petitioner.

Romana obtain a loan from the petitioner but wasn’t able to pay. The petitioner dismissed Romana from
office. Petitioner filed a complaint for collection of money respondent moved to dismiss the case claiming
that the Certificate of Registration and License issued to the (petitioner) by the Securities and Exchange
Commission was merely "for the establishment of a regional or area headquarters in the Philippines,
pursuant to Presidential Decree No. 218 and its implementing rules and regulations." It does not include a
license to do business in the Philippines.

Issue:

PETITIONER HAS NO CAPACITY TO SUE AND BE SUED IN THE PHILIPPINES DESPITE THE FACT THAT
PETITIONER IS DULY LICENSED BY THE SECURITIES AND EXCHANGE COMMISSION TO SET UP AND OPERATE
A REGIONAL OR AREA HEADQUARTERS

Held

There is no general rule or governing principle 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. 6 In the case at bench, petitioner does not engage in commercial dealings or activities in the
country because it is precluded from doing so by P.D. No. 218, under which it was
established. 7 Nonetheless, it has been continuously, since 1983, acting as a supervision, communications
and coordination center for its home office's affiliates in Singapore, and in the process has named its local
agent and has employed Philippine nationals like private respondent Romana Lanchinebre. From this
uninterrupted performance by petitioner of acts pursuant to its primary purposes and functions as a
regional/area headquarters for its home office, it is clear that petitioner is doing business in the country.

Ramirez vs Orientalist CO

38 Phil 634

Facts:

Orientalist Company was engaged in the business of maintaining and conducting a theatre in the city of
Manila for the exhibition of cinematographic films. engaged in the business of marketing films for a
manufacturer or manufacturers, there engaged in the production or distribution of cinematographic
material. In this enterprise the plaintiff was represented in the city of Manila by his son, Jose Ramirez. The
directors of the Orientalist Company became apprised of the fact that the plaintiff in Paris had control of
the agencies for two different marks of films, namely, the “Eclair Films” and the “Milano Films;” and
negotiations were begun with said officials of the Orientalist Company by Jose Ramirez, as agent of the
plaintiff. The defendant Ramon J. Fernandez, one of the directors of the Orientalist Company and also its
treasure, was chiefly active in this matter. Ramon J. Fernandez had an informal conference with all the
members of the company’s board of directors except one, and with approval of those with whom he had
communicated, addressed a letter to Jose Ramirez, in Manila, accepting the offer contained in the
memorandum the exclusive agency of the Eclair films and Milano films. In due time the films began to
arrive in Manila, it appears that the Orientalist Company was without funds to meet these obligations.
Action was instituted by the plaintiff to Orientalist Company, and Ramon J. Fernandez for sum of money.

Issue: WON the Orientalist Co. is liable for the acts of its treasurer, Fernandez?

Held:

Yes. It will be observed that Ramon J. Fernandez was the particular officer and member of the board of
directors who was most active in the effort to secure the films for the corporation. The negotiations were
conducted by him with the knowledge and consent of other members of the board; and the contract was
made with their prior approval. In the light of all the circumstances of the case, we are of the opinion that
the contracts in question were thus inferentially approved by the company’s board of directors and that
the company is bound unless the subsequent failure of the stockholders to approve said contracts had
the effect of abrogating the liability thus created.

BARRETO et al V. LA PREVISORA FILIPINA/1932

FACTS

La Previsora is a mutual building & loan association, being sued in this action by Barreto et alwho were
directors since its incorporation up to 1929.By virtue of an amendment to the association’s by-laws, the
directors were to each receive 1%of the net profits of the association as annual gratuity as long as they
lived, upon ceasing to beits directors. Per Google Translate:

“In consideration of the valuable services for several years so far have been providing free favor of
theCompany, Messrs. Alberto Barretto, Ariston de Guzman, Miguel Romualdez, Pedro Mata, Vicente
L.Legarda, Alexander Bachrach, Jose M. of Amusategui and Jose A. Barreto and Moratinos, agrees and
hereby grants to each and every one of these gentlemen, an amount equal to one percent (1%) of all net
profits of the Company in the year and years in which they stop be a director of it. Provided, however, that
this special remuneration remains for as long such director alive, and ceased during the time when the said
gentleman again be director of the Company. It is stated by this, that this article of this Constitution is a
formal contract between the Company and each of the above directors gentlemen, and this agreement
may not be modified or amended, but by agreement between the parties

ISSUE:

WON said by-law provision is valid

HELD/RATIO:

The assailed by-law provision was beyond the lawful powers of the B&L association and, thus, does not
create an obligation owing to the plaintiffs of a life gratuity or pension out of the association’s profits. The
authority conferred upon corporations under the Corporation Law refers only to providing compensation
for the future services of directors, officers, and employees after the adoption of the by-law or other
provisions in relation thereto, and cannot in any sense be held to authorize the giving of continuous
compensation to particular directors after their employment has terminated for past services rendered
gratuitously by them to the corporation. The underlying principle of the founding of B&L associations is the
equal participation of its members in its profits (and the losses). The use/diversion of funds which are
foreign to its purpose therefore is violative of its character of mutuality and equality. Moreover, if such
obligation be alleged to be based on contract, still it is shown that no mutual consent by the parties was
had and that no valid consideration for the same was made. The Court debunked the contention of plaintiffs
who relied in the ruling of Govt v El Hogar ,saying the facts were different and did not apply squarely to this
case. Complaint dismissed.

Lee vs. Court of Appeals

[GR 93695, 4 February 1992]

Facts: On 15 November 1985, a complainant for sum of money was filed by the International Corporate
Bank, Inc. against Sacoba Manufacturing Corp., Pablo Gonzales Jr., and Tomas Gonzales who, in turn, filed
a third party complaint against Alfa Integrated Textile Mills (ALFA), Ramon C. Lee (ALFA's president) and
Antonio DM. Lacdao (ALFA's vice president) on 17 March 1986. On 17 September 1987, Lee and Lacdao
filed a motion to dismiss the third party complaint which the Regional Trial Court of Makati, Branch 58
denied in an Order dated 27 June 1988. On 18 July 1988, Lee and Lacdao filed their answer to the third
party complaint. Meanwhile, on 12 July 1988, the trial issued an order requiring the issuance of an alias
summons upon ALFA through the DBP as a consequence of Lee and Lacdao's letter informing the court that
the summons for ALFA was erroneously served upon them considering that the management of ALFA had
been transferred to the DBP. In a manifestation dated 22 July 1988, the DBP claimed that it was not
authorized to receive summons on behalf of ALFA since the DBP had not taken over the company which
has a separate and distinct corporate personality and existence. On 4 August 1988, the trial court issued an
order advising Sacoba Manufacturing, et. al. to take the appropriate steps to serve the summons to ALFA.
On 16 August 1988, Sacoba Manufacturing, et. al. filed a Manifestation and Motion for the Declaration of
Proper Service of Summons which the trial court granted on 17 August 1988.

Issue:
Whether the execution of the voting trust agreement by Lee and Lacdao whereby all their shares
to the corporation have been transferred to the trustee deprives the stockholder of their positions as
directors of the corporation.
Held:

Lee and Lacdao, by virtue of the voting trust agreement executed in 1981 disposed of all their shares
through assignment and delivery in favor of the DBP, as trustee. Consequently, Lee and Lacdao ceased
to own at least one share standing in their names on the books of ALFA as required under Section 23
of the new Corporation Code. They also ceased to have anything to do with the management of the
enterprise. Lee and Lacdao ceased to be directors. Hence, the transfer of their shares to the DBP
created vacancies in their respective positions as directors of ALFA. The transfer of shares from the
stockholders of ALFA to the DBP is the essence of the subject voting trust agreement. Considering that
the voting trust agreement between ALFA and the DBP transferred legal ownership of the stocks
covered by the agreement to the DBP as trustee, the latter because the stockholder of record with
respect to the said shares of stocks. In the absence of a showing that the DBP had caused to be
 transferred in their names one share of stock for the purpose of qualifying as directors of ALFA, Lee
and Lacdao can no longer be deemed to have retained their status as officers of ALFA which was the
case before the execution of the subject voting trust agreement. There is no dispute from the records
that DBP has taken over full control and management of the firm.

DETECTIVE & PROTECTIVE BUREAU, INC., petitioner,

vs. THE HONORABLE GAUDENCIO CLORIBEL
FACTS:
 Detective & Protective Bureau, Inc. (petitioner) was a corporation duly organized and existing
under the laws of the Philippines.
 Faustino Alberto (private respondent) was managing director of petitioner corporation from 1952
until Jan. 14, 1946.
 In June 1963, Alberto illegally seized and took control of all the assets as well as the books, records,
vouchers and receipts of the corporation from the accountant-cashier, concealed them illegally
and refused to allow any member of the corporation to see and examine the same.
 Due to this incident, the stockholders, in a meeting, removed Alberto as managing director and
elected Jose de la Rosa in his stead.
 However, Alberto refused to vacate his office and to deliver the assets and books to de la Rosa and
continued to perform unauthorized acts for and in behalf of the corporation.
 Petitioner corporation contended that Alberto had arrogated to himself the power of the Board of
Directors of the corporation because he refused to vacate the office and surrender the same to
Jose de la Rosa who has been elected managing director by the Board to succeed him.
 This assertion, however, was disputed by respondent Alberto who stated that de la Rosa could not
be elected managing director because he did not own any stock in the corporation.

ISSUE: WON Alberto could be compelled to vacate his office and cede the same to de la Rosa? NO!

HELD:

The Court ruled that there is in no showing in the record the De La Rosa owned a share of stock in
the corporation . If he did not own any share of stock, certainly he could not be a Director pursuant to the
mandatory provision of Sec. 30 of the Corp. code, which in part provides: “Every Director must own in his
own right at least one share of the capital stock corporation of which he is a Director, which stock shall
stand in his name on the books of the corporation.”

If the managing director-elect (de la Rosa) was not qualified to become managing director,
respondent Fausto Alberto could not be compelled to vacate his office and cede the same to the de la Rosa
because the by-laws of the corporation provides in Art. IV, Sec. 1 that ―Directors shall serve until the
election and qualification of their duly qualified successor.‖