11) Crisostomo vs.

SEC

FACTS: Sixto Crisostomo, Felipe Crisostomo, Juanito Crisostomo and others, were the original
stockholders of the United Doctors Medical Center (UDMC), which was organized in 1968 with an
authorized capital stock of P1 million which was later increased to P15 million in 1972. They owned 40%
of the outstanding stock while the majority belonged to the members of United Medical Staff Association
(UMSA). Despite their minority status, the Crisostomo Group has managed UDMC from its inception,
with Juannito Crisostomo as the president and Sixto Crisostomo as the director and legal counsel. In
1988, UDMC defaulted in its obligation to pay P55 million to DBP. In the last quarter of 1987, UDMC’s
assets and those of the Crisostomos which had been given to DBP as collateral, faced foreclosure by the
Asset Privatization Trust (APT), which had taken over UDMC’s loan. As such, UDMC, through Ricardo
Alfonso and Juanito Crisostomo, persuaded Yamada and Enatsu (Japanese doctors) to invest fresh capital
in UDMC. They invested P57 million in UDMC. The investment was effected by means of stock
purchase agreement and an amended memorandum of agreement whereby the private respondents
subscribed 82.09% of the outstanding shares of UDMC. Both transactions were authorized by the BOD
and stockholders of UDMC, and approved by BSP and SEC. The said capital not only saved UDMC’s
assets but also freed Crisostomo group from their individual and solidary liabilities as sureties for the
DBP loan. However, petitioner Sixto Crisostomo filed an SEC case against Juanito Crisostomo, Yamada
and Enatsu to stop the holding of the stockholder’s and BOD meeting and to disqualify the Japanese
investors from holding a controlling interest in UDMC. Subsequently, petitioner filed a case with RTC
Makati seeking preliminary injunction and reliefs prayed for by him in the SEC Case. Petitioner further
alleged that Yamada and Enatsu violated the constitutional prohibition against foreigners practicing a
profession in the Philippines (Art XII Section 14 of 1987 Philippine Constitution).

ISSUE: Whether or not the investment made by Yamada and Enatsu constitute illegal practice of
profession by foreigners in the Philippines.

HELD: NO.

The investment made by Yamada and Enatsu do not constitute illegal practice of profession by foreigners
in the Philippines. The Japanese investors do not violate the constitutional prohibition against foreigners
practicing a profession in the Philippines (Art XII Section 14 of 1987 Philippine Constitution), for they do
not practice their profession as doctor in the Philippines, neither have they applied for a license to do so.
They only own shares of stock in a corporation that operates a hospital. No law limits the sale of hospital
stocks to doctors only. The ownership of such shares does not amount to illegally engaging in the practice
of medicine, or nursing.