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The exclusive distribution in the philippines of

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the exclusive distribution in the Philippines of movies produced in the USA byYelp Pictures Inc. Yehey Movies is currently owned 85% by Yavic Yamson, andthe balance, by the public in the Philippines.For purposes of entering into thecontract, suing for breach of such contract, and prosecuting unauthorized showingof movies produced by Yelp Pictures, it appointed Atty. Yson, a local lawyer, as itsattorney-in-fact.Simultaneously with the execution of the film distribution agreement, YeheyMovies also granted Yelp Pictures an option to acquire up to 40% of the totaloutstanding capital stock in Yehey Movies post-exercise of the option, at the optionprice of PhP .01 per number of shares covered by the option, exercisable within aperiod of one year from the date of the grant, at the exercise price of PhP 100 pershare.Once exercised, Yelp Pictures was granted the right to nominate two (2)directors to the Board of Yehey Movies, and Yavic Yamson agreed to vote all hisshares for the election of directors to be nominated by Yelp Pictures.(a)May the acts of entering into the film distribution contract, thesubsequent execution and performance of the terms of the contract inthe Philippines, and the appointment of Atty. Yson, be considered asact of “doing business” in the Philippines that will require YelpPictures to register as a foreign corporation and obtain a license to dobusiness in the Philippines? (2.5%)SUGGESTED ANSWER:(a)A foreign Corporation which owns the Copyright to foreign filmsand exclusive distribution rights in the Philippines and appointedan attorney in-fact to file criminal cases on behalf of thecorporation is not doing business in the Philippines, because thecontract was executed abroad and the hiring of the attorney-in-fact is merely for the protection of its property rights[ColumbiaPictures vs Court of Appeals (261 SCRA 144 (1996)].
11(b)Will your answer in (a) be the same if Yelp Picture exercises theoption, becomes a substantial shareholder, and is able to elect two (2)directors in the Board of Directors of Yehey Movies? (2.5%)SUGGESTED ANSWER:(b)It will be the same. Mere passive investment in equity and votingthe equity shares of the corporation to elect its director in theboard of a domestic corporation is not tantamount to doingbusiness.(c)Must the option granted to Yelp Pictures be registered under the SRC?(2.5%)SUGGESTED ANSWER:(c)(c)While options are securities, the option was granted only to YelpPictures and not to the public. As a consequence, the option neednot be registered with the SEC.VIIIYenkell Cement Corporation (YCC) is a public corporation whose shares arelisted at the PSE.It is 60% owned by Yenkell Holdings Corporation (YHC) and20% by Yengco Exploration Inc. (YEI).The remaining 20% is held by the public.

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