SPECIAL RULES PERTAINING TO ACTIONS ON CORPORATE NAMES, TRADE NAMES AND TRADEMARKS

1. Pre-Statutory Jurisprudence
Justice Moran’s dissenting opinion in Mentholatum:
- That the provisions of Sec. 69 of the then Corporation Law do not apply to suits brought by foreign corporations
for infringement of trademarks and unfair competition
o The theory being “the right to use of the corporate name and trade name of a foreign corporation is a
property right, a right in rem, which it may assert and protect in any of the courts of the world even in
countries where it does not personally transact any businesses”

2. Under the Trademark Law

Sec. 21-A of the Trademark Law which provides: that foreign corporation, whether or not licensed to do business
in the Philippines, with a mark or trade name registered in the Philippines, MAY BRING AN ACTION before
Philippine courts for:
o Infringement
o Unfair competition
o False designation of origin and
o false description
if the country of which the foreign corporation is a citizen, or in which it is domiciled, by treaty, convention, or law,
grants a similar privilege to corporations or juridical persons of the Philippines.

3. Under the Intellectual Property Code

Sec. 160 of the IP Code effectively replaced Sec. 21-A of the Trademark Law which provides:
Any foreign national or judicial person who meets the requirements of Sec 3 of this Act and DOES NOT ENGAGE IN
BUSINESS IN THE PHILIPPINES MAY BRING A CIVIL OR ADMINISTRATIVE ACTION for
o opposition,
o cancellation,
o infringement,
o unfair competition, or
o false designation of origin and
o false description,
whether or not it is licensed to do business in the Philippines under existing laws.

FOREIGN CORPORATIONS AS PETITIONERS/ PLAINTIFFFS

Marshall-Wells laid down this procedural doctrine:

That the non-compliance of a foreign corporation doing business in the Philippines of the requirement for it to obtain
a license,
o may be pleaded as an affirmative defense,
and the BURDEN OF PROOF is on the party relying on such defense to show that:
- the plaintiff is a foreign corporation
- that it is doing business in the Philippines,
- that it has not obtained the licensed as required by law

BUT, this was formally REVERSED in Atlantic Mutual Ins. Co. vs. Stevedoring Co.:
That the requirement for allegation of licensed being obtained is required only if:
- the plaintiff foreign corporation is engaged in business in the Philippines

FOREIGN CORPORATIONS AS RESPONDENT/ DEFENDANTS

When a foreign corporation engages in business in the Philippines

- it has “presence” in the country, therefore, may be sued before local courts or administrative tribunals

Sec. 133 of the Corporation Code:

“when a foreign corporation engages in business in the Philippines without the proper license to do so, it may be sued.”

When a foreign corporation merely enters into an ISOLATED TRANSACTION in the country,
- it is NOT deemed present within the Philippine territory

SERVICE OF SUMMONS UNDER THE RULES OF COURT HINGED UPON DOING BUSINESS IN THE PHILIPPINES

If the foreign private juridical entity is NOT REGISTERED in the Philippines or has NO RESIDENT AGENT,
- the Rules allow SERVICE OF SUMMONS to be served WITH LEAVE OF COURT, be effected out of the
Philippines through any of the following means:

1. By PERSONAL SERVICE coursed through the appropriate court in the foreign country with assistance of the DFA
 2. By PUBLICATION once in a NEWSPAPER of general circulation in the country where the defendant may be found
and by SERVING A COPY of the summons and the court order by REGISTERED MAIL at the LAST KNOW ADDRESS
of the defendant
3. By FASCIMILE or any recognized electronic means that could generate proof of service
4. By such OTHER MEANS as the court may in its discretion direct

NEXUS of DOING BUSINESS IN THE PHILIPPINES

Sec. 14, Rule 14 of the Rules of Court:
“in order that services may be effected in the manner above stated, said section also requires that the foreign corporation be
one which is DOING BUSINESS IN THE PHILIPPINES.
- This is a sine qua non requirement
- This fact must first be established in order that summons can be made and jurisdiction acquired.

a. Valid Service of Summons Premised upon “DOING BUSINESS”

As long as a foreign private corporation does or engages in business in this jurisdiction,

- It should and will be amenable to process and the jurisdiction of the local courts,
o This for the protection of the citizens and
- And service upon any agent of said foreign corporation
o Constitutes personal service upon the corporation
- And accordingly, judgment may be rendered against said foreign corporation

b. Service of Summons on Counsel

When a foreign corporation does business in the Philippines, and has entered into certain contracts through its counsel
and benefited from such contracts,
- A suit in local court against such foreign corporation would justify the service of summons upon such counsel
o even when said counsel has not been expressly authorized by the foreign corporation to receive
summons

c. Designation of Local Agents Conclusive on Service of Summons

Where a foreign corporation has SPECIFICALLY DESIGNATED a person to receive service of summons in judicial
proceedings affecting the corporation
o That designation is EXCLUSIVE
o and service of summons is WITHOUT FORCE and EFFECT unless made on him

d. Allegations on “Doing Business” merely preliminary

That “doing business” must first be established in order that summons can be made and jurisdiction acquired
- Does not require that evidence must first be adduced to prove doing business before summons can be served
upon the foreign corporation

CONSENT TO LOCAL JURISDICTION

Although doing business is the nexus by which local courts are granted the right to obtain jurisdiction over the “person” of the
foreign corporation,
- CONSENT may also authorize local courts and administrative agencies to exercise jurisdiction over foreign
corporations
o Even when they are NOT DOING BUSINESS in the Philippines

THE FACILITIES MANAGEMENT STRAIN

Obiter dictum in Facilities Management Corp. vs De La Osa:
“if a foreign corporation, not engaged in business in the Philippines, is NOT BARRED from seeking redress from courts in the
Philippines a fortiori, that same corporation cannot claim exemption from being sued in the Philippine courts for acts done
against a person or person in the Philippines.

a. Suppletory Application of the Contract Test

For the application of the Facilities Management rule, “Contract Test” must be included as a requisite element
- That for a foreign corporation not doing business in the Philippines can be sued in local court provided it is BASED
ON A CONTRACT OR TRANSACTION which is wholly or partially executed or fulfilled within Philippine territory.

b. The Signetics Clarification

“… it would not be impossible for court processes to reach the foreign corporation, a matter can later be consequential in
the proper execution of judgment. Verily, a State may not exercise jurisdiction in the absence of some good basis for
effectively exercising it, whether the proceedings are in rem, quasi in rem, or in personam.”

c. The Latest Word on the Matter

Avon Insurance PLC vs. CA seems to have discounted the absolute suability rule under Facilities Management case:
 “The Court made no prescription as the absolute suability of foreign corporations not doing business in the country,
but merely DISCOUNTS THE ABSOLUTE EXEMPTION of such foreign corporations from liabilities particularly arising
from acts done against a person or persons in the Philippines.

CONTRACTUAL STIPULATION ON VENUE

When a contract between a local and a foreign corporation stipulates venue to be within the proper courts in the Philippines,
- The SC has recognized the same to be a CONSENT to being sued in the Philippines
o Even when the foreign corporation does not engage in business in the Philippines

DOMICILE and RESIDENCE OF FOREIGN CORPORATION

The DOMICILE of a corporation belongs to the State where it was incorporated, and in a strict technical sense,
- Such domicile as a corporation may have is single in its essence and a corporation can have only one domicile
which is the STATE OF ITS CREATION.

The RESIDENCE of a corporation is necessarily where it EXERCISES CORPORATE FUNCTIONS or the PLACE WHERE
ITS BUSINESS IS DONE

LAWS APPLICABLE TO FOREIGN CORPORATIONS

Any foreign corporation lawfully doing business in the Philippines shall be bound by
- All laws, rules and regulations applicable to DOMESTIC CORPORATIONS of the same class,

Save and except such only those that provide for the creation, formation, organization, or dissolution of
corporations OR

Such as those that fix the relations, liabilities, responsibilities, or duties of stockholders, members or officers of
corporations to each other or to the corporation.

AMENDMENT OF ARTICLES OF INCORPORATION

Whenever the articles of incorporation are amended
- The foreign corporation shall, within 60 days after such amendment, file with the SEC a duly authenticated copy
of the amended of articles
o Indicated clearly in capital letters or by underscoring the change or changes made, duly certified by the
authorized official/s of the country or state of incorporation

MERGER AND CONSOLIDATION

- May be permitted under the Philippine law and the law of its incorporation
- Requirements as provided in the Corporation Code must be complied with

- The foreign corporation shall, within 60 days after such amendment, file with the SEC a duly authenticated copy
of the articles of merger or consolidation

REVOCATION OF LICENSE TO DO BUSINESS

Upon proper hearing, the SEC may revoke or suspend the license of a foreign corporation upon any of the following grounds:
1. Failure of the foreign corporation to:
a. to file its annual report or pay any fees as required by this Code;
b. to appoint and maintain a resident agent in the Philippines as required by this Title;
c. after change of its resident agent or of his address, to submit to the Securities and Exchange Commission a
statement of such change as required by this Title
d. to submit to the Securities and Exchange Commission an authenticated copy of any amendment to its articles of
incorporation or by-laws or of any articles of merger or consolidation within the time prescribed.
e. to pay any and all taxes, imposts, assessments or penalties, if any, lawfully due to the Philippine Government or
any of its agencies or political subdivisions;

2. A misrepresentation of any material matter in any application, report, affidavit or other document submitted by such
corporation
3. Transacting business in the Philippines:
a. outside of the purpose or purposes for which such corporation is authorized under its license;
b. as agent of or acting for and in behalf of any foreign corporation or entity not duly licensed to do business in the
Philippines; or

4. Any other ground as would render it unfit to transact business in the Philippines.
Upon revocation, the SEC shall issue a corresponding CERTIFICATE OF REVOCATION, furnishing a copy thereof to the
appropriate government agency in the proper cases.

The SEC shall also mail to the corporation at its registered office in the Philippine a notice of such revocation accompanied by
a copy of the certificate of revocation.

WITHDRAWAL OF FOREIGN CORPORATION

- By filing a PETITION FOR WITHDRAWAL OF LICENSE
- The petition has to be PUBLISHED once a week for three (3) consecutive weeks in a newspaper of general
circulation

The SEC shall NOT ISSUE the certificate of withdrawal UNLESS

- All claims which have accrued in the Philippines have been paid, compromised or settled,
- All taxes, imposts, assessments and penalties, if any, lawfully due to the Philippine government have been paid.

THE CASE FOR THE NON-STOCK AND NON-PROFIT FOREIGN CORPORATIONS

Although the definition of Foreign Corporation DOES NOT EXCLUDE those which are non-stock and non-profit, nonetheless,
The operative provisions on reciprocity and on the obtaining of license to do business have NO APPLICATION to NON-STOCK
and NON-PROFIT foreign corporations.

1. The Issue on Reciprocity

The Reciprocity rule that is applicable to for-profit foreign corporations CAN BE EXPECTED TO APPLY ALSO to non-
stock and non-profit corporation, i.e.:
- As a condition for standing of non-stock and non-profit corporations to engage in their eleemosynary activities in
the country

2. License to Engage in Eleemosynary Activities

When domestic non-stock and non-profit corporations have to obtain necessary permits to engage in eleemosynary
activities
- It is expected that non-stock and non-profit foreign corporations should also comply with the same requirements

3. The Issue of Presence

When it is the non-stock and non-profit foreign corporation that files a suit before local courts, there is no doubt that
the act of filing the complaint or petition
- Constitutes a VOLUNTARY SURRENDER of “Personal Jurisdiction” before the hearing tribunal

CHAPTER 19
SPECIAL PROVISIONS AND PENALTIES

SEC POWER AND SUPERVISION

SEC shall have the power and authority
- To implement the provisions of the Corporation Code
- To promulgate rules and regulations reasonable necessary to enable it to perform its duties under the Code
o Particularly in the prevention of fraud, abuses on the part of the controlling stockholders, members,
directors, trustees or officers.

Sec. 141 of the Corporation Code:

Annual report or corporations. - Every corporation, domestic or foreign, lawfully doing business in the Philippines shall SUBMIT
TO THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL REPORT OF ITS OPERATIONS,
- together with a financial statement of its assets and liabilities, certified by any independent certified public
accountant in appropriate cases, covering the preceding fiscal year
- and such other requirements as the Securities and Exchange Commission may require. Such report shall be
submitted within such period as may be prescribed by the Securities and Exchange Commission

Under the present SEC rules, the following are the REPORTORIAL REQUIREMENTS OF REGISTERED CORPORATIONS:
a. registration and stamping of the stock and transfer book
b. filing of the General Information Sheet within 30 days from the date of actual meeting of the stockholders
c. filing of two (2) copies of the financial statements duly stamped “received” by the BIR within 105 days after the end of
the fiscal year
d. filing of an Affidavit of Non-operation or Board Resolution or Affidavit of Cessation of Business Operations, with 105
days after the end of the fiscal year
e. filing of the notice of postponement of annual meeting, at the least 10 days before the date of the annual meeting
f. filing of the Affidavit of Non-Holding of Annual Meeting, together with the General Information Sheet, within 30days
before the date of the annual meeting

CONFIDENTIAL NATURE OF THE SEC EXAMINATION

All interrogatories propounded by the SEC and answers thereto,
as well as Results of Examination made by the SEC
- shall be kept STRICTLY CONFIDENTIAL
o except insofar as the law may require the same to be made public
o or where such interrogatories, answers or results are necessary to be presented as evidence before any
court

APPLICABILITY OF THE CODE TO SPECIAL CORPORATIONS

Sec. 147 of the Corporation Code:
Corporations created by special laws or charters. - Corporations created by special laws or charters shall be governed primarily
by the provisions of the special law or charter creating them or applicable to them, supplemented by the provisions of this Code,
insofar as they are applicable.

APPLICABILITY OF NEW REQUIREMENT ON EXISTING CORPORATIONS

Section 148 of the Corporation Code:
Applicability to existing corporations. - All corporations lawfully existing and doing business in the Philippines on the date
of the effectivity of this Code and heretofore authorized, licensed or registered by the Securities and Exchange Commission,
shall be deemed to have been authorized, licensed or registered under the provisions of this Code, subject to the terms and
conditions of its license, and shall be governed by the provisions hereof: Provided, That if any such corporation is affected by
the new requirements of this Code, said corporation shall, unless otherwise herein provided, be given a period of not more than
two (2) years from the effectivity of this Code within which to comply with the same.

EFFECT OF DISSOLUTION OF THE CORPORATION OR AMENDMENT OR REPEAL OF THE CORPORATION CODE

Sec. 145 of the Corporation Code provides for two (2) important aspects:
a. that established rights in favor of or against any corporation, its stockholders, members, directors, trustees, or
officers are NOT AFFECTED by the amendment or repeal of the Corporation Code
b. such established rights or remedies are also unaffected by the dissolution of the corporation

REPEALING CLAUSE OF THE CORPORATION CODE

Sec. 146 of the Corporation Code:
Except as expressly provided by this Code, all laws or parts thereof inconsistent with any provision of this Code shall be deemed
repealed.

- Does not provide for a direct repeal of the old Corporation Law, but an IMPLIED REPEAL thereof

PENAL PROVISIONS OF THE CORPORATION CODE

Section 144. Violations of the Code.
Violations of any of the provisions of this Code or its amendments not otherwise specifically penalized therein shall be punished
by a fine of not less than one thousand (P1,000.00) pesos but not more than ten thousand (P10,000.00) pesos or by
imprisonment for not less than thirty (30) days but not more than five (5) years, or both, in the discretion of the court. If the
violation is committed by a corporation, the same may, after notice and hearing, be dissolved in appropriate proceedings before
the Securities and Exchange Commission: Provided, That such dissolution shall not preclude the institution of appropriate
action against the director, trustee or officer of the corporation responsible for said violation: Provided, further, That nothing in
this section shall be construed to repeal the other causes for dissolution of a corporation provided in this Code.

Section 27. Disqualification of directors, trustees or officers.

No person convicted by final judgment of an offense punishable by imprisonment for a period exceeding six (6) years, or a
violation of this Code committed within five (5) years prior to the date of his election or appointment, shall qualify as a director,
trustee or officer of any corporation.

Meaning of VIOLATION under Sec. 144

- Covers only those provisions of the Corporation Code which are expressly mandatory in nature to show the true
intent of the Legislature to impose a penal sanction for non-compliance therwith