In the Matter of the Application for the Registration of Legal Care System Phils., Inc.

[SEC-EB NO. 219. January 22, 1990.] IN THE MATTER OF THE APPLICATION FOR THE REGISTRATION OF LEGAL CARE SYSTEM PHILIPPINES, INC. D E C I S I O N Before this Commission en banc is an appeal from the August 30, 1989 decision of the Securities and Exchange Commission denying the application for the registration of Legal Care System Philippines, Inc. on the ground that a corporation cannot, directly or indirectly, engage in the practice of a profession. Records on file with this Commission show that the Articles of Incorporation of Legal Care System Philippines, Inc. was presented for registration on June 11, 1987. The primary purpose of the said corporation provides as follows: "To design, formulate or pattern after the European and American models, and register for intellectual proprietary rights, protection, own and operate, or franchise a system of effective delivery of highly professional and specialized legal services to the general public, including and more specifically but not necessarily limited to individuals, small and medium scale business enterprises, to be rendered directly and independently in their professional capacities by legal practitioners, attorneys, and law offices, at reasonably low, broadly distributed cost and thereby make certain the availability of justice to those who have less in life by providing them more in law. . . ." On August 7, 1987, the Commission, through then Associate Commissioner Rosario N. Lopez indorsed the Articles of Incorporation for comments to the Judicial Administrator of the Supreme Court. The same was subsequently referred to the Department of Justice for appropriate action. On the basis of an opinion rendered by the Department of Justice citing American jurisprudence, the Commission denied the application for the registration of Legal Care System Philippines, Inc. because the practice of law cannot, directly or indirectly be undertaken by a corporation. On October 18, 1989, the applicant filed this appeal. It is advanced by the appellant that the proposed corporation is not being organized to engage in the practice of law. It will only formulate and operate a system whereby effective legal and para-legal services will be made available to its members and said services will be rendered directly and independently by those authorized to practice the legal profession in the same manner as in health care system where medical services are rendered by doctors and medical centers. Hence, a "pre-paid professional service corporation" where services are rendered personally, directly and independently by the concerned professionals and who are not, in any manner, connected with the corporation their creation as such having been earlier sanctioned by this Commission. Appellant further argues that under the Corporation Law, a corporation may be formed for any lawful purpose or purposes and its registration may be denied only for any patent violation of the constitution, the law or any rule or regulation of duly constituted authorities. The proposed corporation's purpose not being unlawful, should therefore be allowed to be registered as such. The arguments advanced by the applicant-appellant deserve scant consideration. llcd While it is true that a corporation can have as many lawful purposes as it may wish, it is a bedrock rule in corporation law that "a statute authorizing the formation of corporations to carry on any lawful business does not include the work of learned professionals, except in those jurisdiction where there is legislation authorizing corporations or professional associations." Under Philippine jurisprudence, there is no such statute or law authorizing the formation of said corporation. "The reason lies deeper than lack of statutory sanction for it. Human qualifications for such professions cannot be possessed by a corporation. They would inhere in the members as distinct from the corporation, and it could not have the power to do illegally an act requiring a license which only they could obtain." (see Fletcher 1A, Sec. 97, Ch. 5, 1983 Revised Edition) Corollary to this is the principle that the "practice of law" is not a lawful business except for members of the bar who have complied with all the conditions required by statute and the rules of the courts. As the conditions cannot be performed by a corporation, it follows that the practice of law is not a lawful business for a corporation to engage in. As it cannot practice law directly, it cannot indirectly, by employing competent lawyers to practice for it as that would be an evasion which the law will not tolerate . (see Opinion No. 144, S. 1989 of the Department of Justice , citing Re: Co-operative Law Company, 198 N.Y. 479, 92 N.E. 15, 32 L.R.A. [N.S.] 55) LLjur In the case now before us, the proposed corporation, though not to perform or render legal services directly to its clientele, would in itself, and necessarily be employing the services of qualified professionals in order to carry out the purpose for which it is being organized, an act which would run counter to the rule enunciated above. WHEREFORE, premises considered, this instant appeal should be, as it is HEREBY DENIED. No pronouncement as to cost. SO ORDERED. (SGD.) ROSARIO N. LOPEZ Chairman (SGD.) GONZALO T. SANTOS, JR. (SGD.) RODOLFO L. SAMARISTA Associate Commissioner Associate Commissioner (SGD.) ARMANDO Z. GONZALES (SGD.) MERLE O. MANUEL Associate Commissioner Associate Commissioner