CORPO CASES

Albert vs. University Publishing Company, Inc., 13 SCRA 84 (1965)

Where a corporation, through its president, entered into a contract with another
for the exclusive right to publish his book but the corporation failed to pay the
contract price, the judgment rendered against the corporation may be enforced
against the president who participated all through out the hearings when it
turned out that the corporation is not duly registered with the Securities and
Exchange Commission. The real defendant in a suit against a corporation with no
valid existence is the person who has control of its proceedings
Benny Hung vs BPI Finance Corporation . G.R. No. 182398, 20 July 2010
When the corporation ( BB Sportswear, Inc. ) which the plaintiff erroneously
impleaded in a collection case was not the party to the actionable agreement and
turned out to be not registered with the Securities and Exchange Commission,
the judgment may still be enforced against the corporation ( BB Footwear, Inc. )
which filed the answer and participated in the proceedings, as well as its
controlling shareholder who signed the actionable agreement in his personal
capacity and as a single proprietorship doing business under the trade name and
style of BB Sportswear Enterprises.
International Express Travel & Tours vs. Court of Appeals, 373 SCRA 474
(2002)
The President of a sports association which is registered with the Securities and
Exchange Commission but which did not comply with the statutory requirements
under related laws to be able to acquire a legal personality is personally liable for
the airline tickets he purchased from a travel agency even though it is for the
benefit of the athletes who are members of the sports association. Any person
acting or purporting to act on behalf of a corporation which has no valid
existence becomes personally liable for contract entered into and for other acts
performed as such agent.
Boyer Roxas vs. Court of Appeals, 211 SCRA 470 (1992)
Properties registered in the name of the corporation are owned by it as an entity
separate and distinct from its members. While shares of stock constitute personal
property, they do not represent property of the corporation. The corporation has
property of its own. A share of stock only typifies an aliquot part of the
corporations property, or the right to share in its proceeds to that extent when
distributed according to law and equity but its holder is not the owner of any part
of the capital of the corporation. A corporation can therefore sue to recover real
property being occupied by its former president (who was also a significant
stockholder) for it has a juridical personality separate and distinct from its
stockholders even though in the past the corporation allowed the president to
enjoy the possession of the property.
Ryuichi Yamamoto vs. Nishino Leather Industries, Inc. and Ikuo Nishino
551 SCRA 447 (2008)
Where the lawyer of the controlling stockholder of the corporation advised
another stockholder that he could obtain possession of certain corporate
properties by way of return for his equity investment but the lawyer acted

without board approval, the advice is not binding on the corporation even though
it had the approval of the controlling stockholder. The doctrine of piercing the veil
of corporate fiction can not be invoked on the sole ground that the presence of
other stockholders in the corporation was only for the purpose of complying with
the statutory minimum requirements on number of directors.
Silverio vs. Filipino Business Consultants, Inc. 466 SCRA 584 (2005)
The acquisition by a corporation of the substantial and controlling shares of
stocks in two other corporations merely represents a proportionate or aliquot
interest in the properties of the two corporations and does not make it the owner
of the property which is legally owned by the two corporations as distinct
juridical persons. As such, the acquirer corporation is not entitled to the
possession of any definite portion of the property or any of the assets of the other
corporations. The representative designated by the corporations is authorized to
continue the possession of corporate properties despite change in share
ownership unless otherwise replaced by the corporations.
Lim vs. CA, 323 SCRA 102 (2000)
In as much as the real properties included in the inventory of the estate of a
deceased stockholders are in the possession o4f and registered in the name of
the corporations, which under the law has a personality separate and distinct
from their stockholders, and in the absence of any basis to shred the veil of
corporate fiction, the presumption of conclusiveness of said titles in favor of said
corporations should stand undisturbed. Thus, the inclusion in the estate of the
deceased stockholder properties under the name of various corporations was
erroneous even though the corporations were owned and controlled by the
deceased stockholder during his lifetime.

Land Bank of the Philippines vs. Court of Appeals, 364 SCRA 375 (2001)
The mere fact that Oate owned the majority of the shares of ECO is not a ground
to conclude that Oate and ECO are one and the same. Mere ownership by a
single stockholder of all or nearly all of the capital stock of a corporation is not by
itself sufficient reason for disregarding the fiction of separate corporate
personalities. Neither is the fact that the name ECO represents the first 3
letters of Oates name a sufficient reason to pierce the veil. A corporation may
assume a name provided it is lawful. There is nothing illegal in a corporation
acquiring the name or as in this case, the initials of one of its shareholders.

PNB vs. Ritratto Group, Inc., 362 SCRA 216 (2001)

If used to perform legitimate functions, a subsidiarys separate existence may be
respected and the liability of the parent corporation as well as the subsidiary will
be confined to those arising in their respective businesses. When a borrower
failed to pay credit accommodations granted by a subsidiary of a banking
corporation, the suit against the parent company to direct it to re-compute the
rescheduling of the interest to be paid and to enjoin the foreclosure initiated by
the parent company as attorney-in-fact of the subsidiary will not prosper because
the two corporations are separate and distinct from each other. Aside from the
fact that the lender is a wholly-owned subsidiary, there is no showing that it is a

mere instrumentality of the parent company. The parent-subsidiary relationship

between the two corporations is not the significant relationship involved in this
case since the parent company was not sued because it is the parent company of
the lender. Rather, it was sued because it acted as attorney-in-fact of the lender
in initiating the foreclosure proceedings. A suit against an agent cannot without
compelling reasons, be considered a suit against the principal.
Spouses Ramon Nisce vs. Equitable PCI Bank 516 SCRA 231 (2007)
When an investor has a claim against a subsidiary of another corporation which
subsequently became the acquired corporation in a merger, the claim against the
subsidiary can not be enforced against the surviving corporation even though the
latter corporation by virtue of the merger acquired all the shares of the absorbed
corporation. This is because the fact that a corporation owns almost all of the
stocks of another corporation, taken alone, is not sufficient to justify their being
treated as one entity.
Indophil Textile Mill Workers Union PTGWO vs. Calica, 205 SCRA 697
(1992)
The fact that the businesses of two corporations are related, as one manufactures
yarns while the other sells the same product; some employees of one are the
same persons manning and providing for auxiliary services to the other, and the
physical plants, offices and facilities are situated in the same compound, are not
sufficient to justify the piercing of the corporate veil of either corporation. The
legal corporate entity is disregarded only if it is sought to hold the officers and
stockholders directly liable for a corporate debt or obligation and not when the
only issue is whether or not the rank and file employees working at the second
corporation should be recognized as a part of and/ or within the scope of the
bargaining unit of the first corporation.
Filipinas Broadcasting Network vs. Ago Medical and Educational Center
448 SCRA 413 (2005)
A juridical person is generally not entitled to moral damages because unlike
natural persons it can not experience physical suffering or such sentiments as
wounded feeling, serious anxiety, mental anguish and mental shock.
Nevertheless, if a corporations claim for moral damages falls under section 7
Article 2219 of the Civil Code which authorizes recovery of moral damages in
cases of libel, slander or any form of defamation, then moral damages may be
awarded. This is because. Article 2219 does not qualify whether the plaintiff is a
natural or juridical person. Therefore, a juridical person such as a corporation can
validly complain for libel or any other form of defamation and claim for moral
damages.

Meralco v. TEAM Electronics Corp. 540 SCRA 62 (2007)

As a rule, a corporation is not entitled to moral damages because, not being a
natural person, it cannot experience physical suffering or sentiments like
wounded feelings, serious anxiety, mental anguish and moral shock. The only
exception to this rule is when the corporation has a reputation that is debased,
resulting in its humiliation in the business realm. But in such a case, it is

imperative for the claimant to present proof to justify the award. Thus, where the
records are bereft of any evidence that the name or reputation of a corporation
has been debased as a result of Meralcos act, which in this case is the
disconnection of the electricity supply to the building of the corporation ( without
written notice ) due to non-payment of differential billing representing
unregistered consumption for alleged tampering with the electric meter, the
corporation is not entitled to moral damages.

Kukan International Corporation vs. Hon. Judge Amor Reyes, G.R. No.
182729, 29 September 2010
The court must first acquire jurisdiction over the corporation or corporations
involved before its or their separate personalities are disregarded; and the
doctrine of piercing the veil of corporate entity can only be raised during a fullblown trial over a cause of action duly commenced involving parties duly brought
under the authority of the court by way of service of summons or what passes as
such service.

Gold Line Tours vs. Heirs of Maria Concepcion Lacsa, GR No. 159108, 18
June 2012
However, in one case , Supreme Court ruled that if the RTC had sufficient factual
basis to conclude that the two corporations are one and the same entity as when
they have the same President and controlling shareholder and it is generally
known in the place where they do business that they are one, the third party
claim filed by the other corporation was set aside and the levy on its property
held valid even though the latter was not made a party to the case . The
judgment may be enforced against the other corporation to prevent multiplicity
of suits and save the parties unnecessary expenses and delay.

Villa Rey Transit vs. Ferrer, 25 SCRA 845 (1968)

Where an operator of a bus transportation sold certificates of public convenience
under which he was authorized to operate certain number of buses with a
condition that he shall not for a period of ten years from date of the sale apply for
any TPU service identical or competing with the buyer, the legal personality of
the corporation which he organized and controlled through his wife and brotherin-law whose business competes with the buyer may be disregarded, for clearly
the legal fiction was being used to evade the contractual restriction.
A.C. Ransom Labor UnionCCLU vs. National Labor Relations
Commission, 150 SCRA 498 (1987)
Sale of corporate assets to another corporation organized previously by the same
officers of the vendor and engaged in the same line of business, using the
machineries of the vendor in the same factory, is an instance where corporate
veil should be pierced, vis--vis, claim of laborers for backwages.

Times Transportation Co., Inc., vs. Sotelo, 451 SCRA 587 (2005)
Piercing the corporate veil is warranted if in the middle of a labor dispute, a
corporation sold its franchise as well as most of its bus units to a company
controlled by the daughter of the controlling shareholder of the assignor
corporation where daughter is also a director. It is evident that the transaction
was made in order to remove the corporations remaining assets from the reach
of any judgment that may be rendered in the unfair labor practice case filed
against it.
Reynoso vs. Court of Appeals, 345 SCRA 335 (2000)
The defense of separateness will be disregarded where the business affairs of a
subsidiary corporation are so controlled by the mother corporation to the extent
that it becomes an instrument or agent of its parent. A subsidiary is considered a
mere instrumentality of the parent company if the latter determines the
personnel, administrative and finance policies, hires the employees, and funds
the operations of the former. The manager of the subsidiary could therefore
enforce his claim against the parent company even though his employment is
with the subsidiary.

Concept Builders, Inc. vs. National Labor relations Commission, 257

SCRA 149 (1996)
(1) Control, not mere majority or complete stock control, but complete
domination, not only of finances but of policy and business practice in respect to
the transaction attacked such that the corporate entity as to this transaction had
at that time no separate mind, will or existence of its own; (2) Such control must
have been used by the defendant to commit fraud or wrong, to perpetuate the
violation of a statutory or other positive legal duty, or dishonest or unjust act in
contravention of plaintiffs legal right; and (3) the aforesaid control and breach of
duty must proximately cause the injury or unjust loss complained of.

Heirs of Fe Tan Uy vs. International Exchange Bank, February 13, 2013

While a third party mortgagor is liable only up to the extent of the value of the
mortgaged property, such third party mortgagor may be required to pay the
deficiency between the loan obligation and the proceeds of the sale if it is only
an instrumentality or alter ego of the borrower corporation. The two corporations
were treated as one entity because of the following factors : a ) both corporations
are family corporations of the same controlling shareholder; b) the two
corporation share the same office and practically transact their business from the
same place; c ) they had a common President; d ) the promissory notes were
signed by the same person as President of the borrower corporation and
President of the mortgagor corporation; and, e ) the assets of the two
corporations are co-mingled.
Sawadjaan vs. Court Of Appeals 459 SCRA 516 (2005)
In case the corporation fails to submit its by-laws on time, the same may be
considered a de facto corporation whose right to exercise corporate powers may

not be inquired into collaterally in any private suit to which such corporation may
be a party.
Moreover, a corporation which has failed to file its by-laws within the prescribed
period does not ipso facto lose its powers as such. The SEC Rules on
Suspension/Revocation of the Certificate of Registration of Corporations, details
the procedures and remedies that may be availed of before an order of
revocation can be issued. The revocation can not be ordered if there is no
showing that such a procedure has been initiated.

Pioneer Surety & Insurance Corporation vs. Court of Appeal, 175 SCRA
668 (1989)
Where someone convinced other parties to contribute funds for the formation of
a corporation which was never formed, there is no partnership among them, and
the latter cannot be held liable to share in the losses of the proposed corporation.
In dispute between the presidents of the two associations which agreed to
consolidate but were not actually consolidated, the proposed consolidated
corporation cannot be considered a corporation by estoppel, since there is no
third person involved and the two presidents knew the consolidated corporation
had not been registered. Corporation by estoppel is founded on principles of
equity and is designed to prevent injustice and unfairness, and where there is no
third party involved and the conflict arises only among those assuming the form
of a corporation, who know that it has not been registered, there is no
corporation by estoppel Lozano vs. Delos Santos, 272 SCRA 452 (1997)
Lim Tong Lim vs. Philippine Fishing Gear Industries, Inc., 317 SCRA 728
(1999)
A person who has reaped the benefits of a contract entered into by others with
whom he previously had an existing relationship is deemed to be part of said
association and is covered by the scope of the doctrine of corporation by
estoppel.
People vs. Garcia, 271 SCRA 621 (1997)
The persons who illegally recruited workers for overseas employment by
representing themselves to be officers of a corporation which they knew had not
been incorporated are liable as general partners for all debts, liabilities and
damages incurred or arising as a result thereof.
Feliciano vs. Commission on Audit, 464 Philippine Reports 439 ( 2004 )
Congress can not enact a law creating a private corporation with a special
charter. Such legislation would be unconstitutional. Private corporations may
exist only under a general law. If the corporation is private, it must necessarily
exist under a general law.

Liban vs. Gordon, GR No. 175352, January 10, 2011

Although the Philippine National Red Cross was created by a special charter, it
can not be considered a government-owned and controlled corporation in the

absence of the essential elements of ownership and control by the government. It

does not have government assets and does not receive any appropriation from
the Philippine Congress. It is a non-profit, donor-funded, voluntary organization,
whose mission is to bring timely, effective and compassionate humanitarian
assistance for the most vulnerable without consideration of nationality, race,
religion, gender, social status or political affiliation. This does not mean however
that the charter of PNRC is unconstitutional. PNRC has a sui generis status.
Although it is neither a subdivision, agency, or instrumentality of the
government, nor a government-owned or -controlled corporation or a subsidiary
thereof, so much so that Gordon was correctly allowed to hold his position as
Chairman thereof concurrently while he served as a Senator, such a conclusion
does not ipso facto imply that the PNRC is a private corporation within the
contemplation of the provision of the Constitution, that must be organized under
the Corporation Code. The PNRC enjoys a special status as an important ally and
auxiliary of the government in the humanitarian field in accordance with its
commitments under international law. This Court cannot all of a sudden refuse to
recognize its existence, especially since the issue of the constitutionality of the
PNRC Charter was never raised by the parties.

Carandang vs. Desierto, GR No. 148076, January 12, 2011

A governmentowned or controlled corporation refers to any agency organized as
a stock or non-stock corporation vested with functions relating to public needs
whether governmental or proprietary in nature and owned by the government
through its instrumentalities either wholly or where applicable as in the case of
stock corporation to the extent of at least 51% of its capital stock. When a
stockholder ceded to the government shares representing 72.4 % of the voting
stock of the corporation but subsequently clarified that it should be reduced to
32.4%, the corporation shall not be considered government owned and controlled
until the quantification of shares is resolved with finality.
Samahan ng Optometrists vs. Acebedo International Corporation, 270
SCRA 298 (1997); Acebedo Optical Company, Inc. 381 SCRA 293 (2002)
A corporation engaged in the business of selling optical lenses or eyeglasses and
which hires optometrists is not engaged in the practice of optometry because the
determination of the proper lenses to sell to its clientele entails the employment
of optometrists who have been trained precisely for this purpose.

P.C. Javier & Sons, Inc., v. Court of Appeals 462 SCRA 36 (2005)
The Court cannot impose on a bank that changes its corporate name the
obligation to notify a debtor of such change absent any law, circular or regulation
requiring it. Such act would be judicial legislation. The formal notification is,
therefore, discretionary on the bank. Unless there is a law, regulation or circular
from the SEC or BSP requiring the formal notification of all debtors of banks of
any change in corporate name, such notification remains to be a mere internal
policy that banks may or may not adopt. Consequently, the defense that debtors
should first be formally notified of the change of corporate name before they will
continue paying their loan obligations to the bank is untenable.

Industrial Refractories Corporation of the Philippines vs. Court of

Appeals, 390 SCRA 252 (2002)
To fall within the prohibition of the law regarding the use of corporate name under
Article 18 of the Corporation Code, two requisites must be proven, to wit:
that the complainant corporation acquired a prior right over the use of
such corporate name; and
the proposed name is either: (a) identical, or (b) deceptively or
confusingly similar to that of any existing corporation or to any other
name already protected by law, or (c) patently deceptive, confusing or
contrary to existing law.
Refractories Corporation of the Philippines (RCP) is confusingly similar with
Industrial Refractories Corporation of the Philippines. Being the prior registrant,
RCP has acquired the right to use the word Refractories as part of its corporate
name.

MISCI-NACUSIP Local Chapter vs. National Wages and Productivity

Commission, 269 SCRA 173 (1997)
Since the paid-up capital is the portion of the capital which has been subscribed
and paid, the assets transferred to and the loans extended to a corporation
should not be considered in computing the paid-up capital of the corporation. Not
all funds or assets received by the corporation can be considered paid-up capital
for this term has a technical signification in Corporation Law. Such must form part
of the authorized capital stock of the corporation, subscribed and then actually
paid up. The same test should also be applied in determining if the paid-up
capital of the Corporation has been impaired so as to qualify it for exemption
from the increase in the minimum wage.

Gamboa v. Teves, et al.,G.R. No. 176579, June 28, 2011

Considering that common shares have voting rights which translate to control, as
opposed to preferred shares which usually have no voting rights, the term
"capital" in Section 11, Article XII of the Constitution refers only to common
shares. However, if the preferred shares also have the right to vote in the election
of directors, then the term "capital" shall include such preferred shares because
the right to participate in the control or management of the corporation is
exercised through the right to vote in the election of directors. In short, the term
"capital" in Section 11, Article XII of the Constitution refers only to shares of stock
that can vote in the election of directors. To construe broadly the term capital
as the total outstanding capital stock, including both common and nonvoting preferred shares, grossly contravenes the intent and letter of the
Constitution that the State shall develop a self-reliant and independent national
economy effectively controlled by Filipinos. A broad definition unjustifiably
disregards who owns the all-important voting stock, which necessarily equates to
control of the public utility.

Heirs of Wilson P. Gamboa vs. Teves, 682 SCRA 397(2012)

If a corporation is engaged in a partially nationalized industry, issues a mixture of
common and preferred non-voting shares, at least 60 percent of the common
shares and at least 60 percent of the preferred non-voting shares must be owned
by Filipinos. Of course, if a corporation issues only a single class of shares, at
least 60 percent of such shares must necessarily be owned by Filipinos. In short,
the 60-40 ownership requirement in favor of Filipino citizens must apply
separately to each class of shares, whether common, preferred non-voting,
preferred voting or any other class of shares.

Hyatt Elevators and Escalators Corporation vs. Goldstar Elevators

Philippines 473 SCRA 705 ( 2005 )
The residence of the corporation is the place where the principal office is located
as stated in the articles of incorporation even though the corporation has closed
its office therein and relocated to another place.
A board resolution appointing an attorney-in-fact to represent the corporation in
the pre-trial is not necessary where the by-laws authorizes an officer of the
corporation to make such appointment xxx. Section 46 of the Corporation Code
which provides that no by-laws shall be valid without SEC approval applies only to
domestic corporations. Where the SEC granted a license to a foreign corporation
it is deemed to have approved its foreign enacted by-laws.

PMI College vs. National Labor Relations Commission, 277 SCRA 462
(1997)
Since by-laws operate merely as internal rules among the stockholders, they
cannot affect or prejudice third persons who deal with the corporation, unless
they have knowledge of the same. Thus, a provision in the by-laws authorizing
the chairman of the board of directors only to sign contracts will not affect the
validity of the contract of a teacher who had no knowledge of it.

Loyola Grand Villas Homeowners Association (South) Association, Inc.

vs. Court of Appeals, 276 SCRA 681 (1997)
The legislative deliberations demonstrate that corporate dissolution for failure to
file the by-laws on time was never the intention of the legislature. There can be
no automatic corporate dissolution simply because the incorporators failed to
abide by the required filing of by-laws. The incorporators must be given the
chance to explain their neglect or omission and to remedy the same.

China Banking Corporation vs. Court of Appeals, 270 SCRA 503 (1997)
In order to be bound, a third party must have acquired knowledge of the
pertinent by-laws at the time the transaction or agreement was entered into.
Thus, a provision in the by-laws of a country club granting it a preferred lien over
the share of stock of a member for unpaid dues is not binding on the pledgee of
the same share of stock if the latter had no actual knowledge of it.

Filipinas Port Services, Inc., v. Go et al. 518 SCRA 453 (2007)

The determination of the necessity for additional offices and/or positions in a
corporation, if authorized under the by-laws, is a management prerogative which
courts are wont to review in the absence of any proof that such prerogative was
exercised in bad faith or with malice. Similarly, the Board of Directors may create
an executive committee or other board committees as part of its management
prerogative provided that such committees do not function as an executive
committee as contemplated by Section 35 of the Corporation Code, in which
case, authority in the by-laws is required. Questions of policy or of management
are left solely to the honest decision of the board as the business manager of the
corporation, and the court is without authority to substitute its judgment for that
of the board, and as long as it acts in good faith and in the exercise of honest
judgment in the interest of the corporation, its orders are not reviewable by the
courts.

Matling Industrial and Commercial Corporation vs. Coros , G.R. No.

157802, 13 October 2010
The Board of Directors of a corporation can not validly delegate the power to
create a corporate office to the President, in the light of Section 25 of the
Corporation Code requiring the Board of Directors itself to elect the corporate
officers. Verily, the power to elect the corporate officers is a discretionary power
that the law exclusively vested in the Board of Directors, and can not be
delegated to subordinate officers or agents. The Office of Vice President for
Finance and Administration created by the President of the Corporation pursuant
to the pertinent provision in the by-laws of the corporation was an ordinary, not a
corporate, office.

Gokongwei vs. Securities Exchange Commission, 89 SCRA 336 (1979)

A corporation is authorized to prescribe the qualifications of its directors. A
provision in the by-laws of the corporation that no person shall qualify or be
eligible for nomination for elections to the board of directors if he is engaged in
any business which competes with that of the Corporation is valid, provided,
however, that before such nominee is disqualified, he should be given due
process to show that he is not covered by the disqualification. A director stands
in fiduciary relation to the corporation and its stockholders. The disqualification of
a competition from being elected to the board of directors is a reasonable
exercise of corporate authority. Sound principles of corporate management
counsel against sharing sensitive information with a director whose fiduciary duty
to loyalty may well require that he discloses this information to a competitive
rival.

Grace Christian High School vs. Court of Appeals, 281 SCRA 133 (1997)
The board of directors of corporations (in this case, homeowners association)
must be elected from among the stockholders or members of the corporation.

Thus, a provision in the amended by-laws of the corporation stating that of the
fifteen members of its board of directors, only 14 members would be elected
while the remaining member would be the representative of an educational
institution located in the village of which the lot and home owners are member
thereof, is invalid. Since the provision is contrary to law, the fact that for 15 years
it has not been questioned cannot forestall a later challenge to its validity. The
concept of permanent board representation violates the one-year term limit of
the directors.

Lee vs. Court of Appeals, 205 SCRA 752 (1992)

Any director who ceases to be the owner of least one (1) share of the capital
stock of the corporation of which he is a director shall thereby cease to be a
director. Since a director who executes a voting trust agreement over all his
shares ceases to be a stockholder of record in the books of the corporation and
ceases to be a director, he cannot be served with summons intended for the
corporation.
Jesus V. Lanuza, et al. vs. Court of Appeals 454 SCRA 54 (2005)
Quorum is based on the totality of the shares which have been subscribed and
issued, whether it be founders' shares or common shares. To base the
computation of quorum solely on the obviously deficient, if not inaccurate stock
and transfer book, and completely disregarding the issued and outstanding
shares as indicated in the articles of incorporation would work injustice to the
owners and/or successors in interest of the said shares. The stock and transfer
book cannot be used as the sole basis for determining the quorum as it does not
reflect the totality of shares which have been subscribed, more so when the
articles of incorporation shows a significantly larger amount of shares issued and
outstanding as compared to that listed in the stock and transfer book.

Valle Verde Country Club v. Africa, September 4, 2009

The stockholders, and not the directors, shall elect those who will fill in the
vacancy created by the resignation of the hold-over board members. This is
because in this case the ground for the vacancy is expiration of term of the holdover directors and not resignation.

Western Institute of Technology, Inc. Vs. Salas, 278 SCRA 216 (1997)
Members of the board of directors may receive compensation in addition to
reasonable per diems in the following cases : 1. When there is a provision in the
by-laws fixing their compensation; 2. When the stockholders representing at least
a majority of the outstanding capital stock at a regular or special stockholders
meeting agree to give it to them; and 3. When they render services to the
corporation in any capacity other than as directors

Heirs of Fe Tan Uy vs. International Exchange Bank Feb 13, 2013

Solidary liability will attach to the directors, officers or employees of the
corporation in certain circumstances, such as:
1. When directors and trustees or, in appropriate cases, the officers of a
corporation: (a) vote for or assent to patently unlawful acts of the corporation; (b)
act in bad faith or with gross negligence in directing the corporate affairs; and (c)
are guilty of conflict of interest to the prejudice of the corporation, its
stockholders or members, and other persons;
2. When a director or officer has consented to the issuance of watered stocks or
who, having knowledge thereof, did not forthwith file with the corporate secretary
his written objection
3. When a director, trustee or officer has contractually agreed or stipulated to
hold himself personally and solidarily liable with the corporation; or
4. When a director, trustee or officer is made, by specific provision of law,
personally liable for his corporate action.
Before a director or officer of a corporation can be held personally liable for
corporate obligations, however, the following requisites must concur:
(1) the complainant must allege in the complaint that the director or officer
assented to patently unlawful acts of the corporation, or that the officer was
guilty of gross negligence or bad faith; and
(2) the complainant must clearly and convincingly prove such unlawful acts,
negligence or bad faith.
Thus, the President of the corporation can not be held personally liable if the
complaint merely averred that he signed as a surety to secure the obligation of
the corporation and which surety turned out to be spurious.

Alert Security and Investigation Agency, Inc. vs. Balmaceda , G .R. No.
182397 September 14, 2011
In the absence of malice, bad faith, or a specific provision of law making a
corporate officer liable, such corporate officer cannot be made personally liable
for corporate liabilities.
Furthermore, Article 212(e) of the Labor Code, by itself, does not make a
corporate officer personally liable for the debts of the corporation. The governing
law on personal liability of directors for debts of the corporation is still Section 31
of the Corporation Code.

Carag v. NLRC 520 SCRA 28 (2007)

Article 212(e) does not state that corporate officers are personally liable for the
unpaid salaries or separation pay of employees of the corporation. The liability
of corporate officers for corporate debts remains governed by Section 31 of the
Corporation Code. A director is not personally liable for the debts of the
corporation, which has a separate legal personality of its own. A director is
personally liable for corporate debts only if he wilfully and knowingly votes for or
assents to patently unlawful acts of the corporation or he is guilty of gross

negligence or bad faith in directing the affairs of the corporation. However, to

hold a director personally liable for debts of the corporation, and thus pierce the
veil of corporate fiction, the bad faith or wrongdoing of the director must be
established clearly and convincingly. Bad faith is never presumed. Moreover, bad
faith does not automatically arise just because a corporation fails to comply with
the notice requirement of labor laws on company closure or dismissal of
employees. The failure to give notice is not an unlawful act because the law does
not define such failure as unlawful. Such failure to give notice is a violation of
procedural due process but does not amount to an unlawful or criminal act.
Patently unlawful acts are those declared unlawful by law which imposes
penalties for commission of such unlawful acts. There must be a law declaring
the act unlawful and penalizing the act.

Maranaw Hotels and Resort Corporation v. Court of Appeals, 576 SCRA

463 (2009)
The lawyer who signed the pleading, verification and certification against nonforum shopping must be specifically authorized by the Board of Directors of the
Corporation to make his actions binding on his principal..

Mid Pasig Land and Development Corporation v. Tablante, G.R. No.

162924, February 4, 2010
The following officers may sign the verification and certification against nonforum shopping on behalf of the corporation even in the absence of board
resolution, a ) Chairperson of the Board of Directors; b ) President, c ) General
Manager, d ) Personnel Officer, e ) Employment Specialist in labor case. These
officers are in the position to verify the truthfulness and correctness of the
allegations in the petition.

United Coconut Planters Bank vs. Planters Products Inc. GR No. 179015,
13 June 2012
The execution of a document by a bank manager called pagares which
guaranteed purchases on credit by a client is contrary to the General Banking law
which prohibits bank officers from guaranteeing loans of bank clients.

Development Bank of the Philippines vs. Court of Appeals, 363 SCRA

307 (2001)
The rule pertaining to transactions between corporations with interlocking
directors resulting in prejudice to one of the corporations does not apply where
the corporation allegedly prejudiced is a third party, not one of the corporations
with interlocking directors. Thus, when a mortgagee bank foreclosed the
mortgage on the real and personal property of the debtor and thereafter assigned
the properties to a corporation it formed to manage the foreclosed assets, the
unpaid seller of the debtor can not complain that the assignment is invalid simply
because the mortgagee and the assignee have interlocking directors.

Rural Bank of Milaor vs. Ocfemia, 325 SCRA 99

When a bank, by its acts and omission, has clearly clothed its manager with
apparent authority to sell an acquired asset in the normal course of business, it is
legally obliged to confirm the transaction by issuing a board resolution to enable
the buyers to register the property in their names. It has a duty to perform
necessary and lawful acts to enable the other parties to enjoy all the benefits of
the contract which it had authorized.

Westmont Bank vs. Inland Construction and Development Corporation

582 SCRA 230 (2009)
The general rule remains that, in the absence of authority from the board of
directors, no person, not even its officers, can validly bind a corporation. If a
corporation, however, consciously lets one of its officers, or any other agent, to
act within the scope of an apparent authority, it will be estopped from denying
such officer's authority. Where the Bank conducted business through its Account
Officer, it is presumed that the latter had authority to sign for the bank in the
Deed of Assignment. In this case, it is incumbent upon the Bank to show that its
account officer is not authorized to transact for the corporation.

Associated Bank vs. Sps. Rafael and Monaliza Pronstroller 558 SCRA 113
(2008).
The doctrine of apparent authority, had long been recognized in this
jurisdiction. Apparent authority is derived not merely from practice. Its existence
may be ascertained through 1) the general manner in which the corporation
holds out an officer or agent as having the power to act, or in other words, the
apparent authority to act in general, with which it clothes him; or 2) the
acquiescence in his acts of a particular nature, with actual or constructive
knowledge thereof, within or beyond the scope of his ordinary powers.
Accordingly, the authority to act for and to bind a corporation may be presumed
from acts of recognition in other instances, wherein the power was exercised
without any objection from its board or shareholders. Undoubtedly, the bank had
previously allowed its in-house counsel to enter into the first agreement without
a board resolution expressly authorizing him; to sell corporate property thus and
it had clothed him with apparent authority to modify the same via the second
letter-agreement. Thus, the corporation is bound by the acts entered into by its
in-house counsel even though he was subsequently relieved of the position. It is
not the quantity of similar acts which establishes apparent authority, but the
vesting of a corporate officer with the power to bind the corporation. Naturally,
the third person has little or no information as to what occurs in corporate
meetings; and he must necessarily rely upon the external manifestations of
corporate consent. The integrity of commercial transactions can only be
maintained by holding the corporation strictly to the liability fixed upon it by its
agents in accordance with law. What transpires in the corporate board room is
entirely an internal matter.

Banate vs. Philippine Countryside Rural Bank (Liloan, Cebu), Inc., G.R.
No. 163825, July 13, 2010
There would be an undue stretching of the doctrine of apparent authority were
we to consider the power to undo or nullify solemn agreements validly entered
into as within the doctrines ambit. Although a branch manager, within his field
and as to third persons, is the general agent and is in general charge of the
corporation, with apparent authority commensurate with the ordinary business
entrusted him and the usual course and conduct thereof, yet the power to modify
or nullify corporate contracts remains generally in the board of directors. Being a
mere branch manager alone is insufficient to support the conclusion that he has
been clothed with apparent authority to verbally alter terms of written
contracts, especially when viewed against the telling circumstances of this case:
the unequivocal provision in the mortgage contract; the corporations vigorous
denial that any agreement to release the mortgage was ever entered into by it;
and, the fact that the purported agreement was not even reduced into writing
considering its legal effects on the parties interests.

National power Corporations vs. Vera, 170 SCRA 721 (1989)

A corporation is not restricted to the exercise of powers expressly conferred upon
it by its charter but has the power to do what is reasonably necessary or proper
to promote the interest or welfare of the corporation. A corporation (NAPOCOR)
formed for the purpose of generating electrical power can undertake stevedoring
services to unload coal into its pier to be brought to and fuel its power plant,
since this is reasonably necessary for the operation and maintenance of its power
plant.

Aurbach vs. Sanitary Wares Manufacturing Corporation, 180 SCRA 130

(1989)
A corporation cannot enter into a partnership contract but my engage in a joint
venture with other.

Pilipinas Loan Company, Inc. vs. Securities and Exchange Commission,

356 SCRA 193 (2001)
When the thrust of a complaint in on the ultra vires act of a corporation, that is,
that the complained act of a corporation is contrary to its declared corporate
purposes, the SEC has jurisdiction to entertain the complaint before it. Thus,
when the corporation engaged in pawnbroking even though its articles if
incorporation does not allow it, the complaint should be treated as a violation of
the corporate franchise. The jurisdiction of the SEC is not affected even if the
authority to operate a certain specialized activity is withdrawn by the appropriate
regulatory body other than the SEC. With more reason that we cannot sustain the
submission of the petitioner that a declaration by the Central Bank that it violated
PD 114 (law on pawnshop) is a condition precedent before the SEC can take
cognizance of the complaint against the petitioner.

Pena vs. Court of Appeals, 193 SCRA 717 (1991)

Where the remaining asset of a corporation was right to redeem parcels of land
that were foreclosed, the assignment of the right to redeem requires, in addition
to a proper board resolution, the affirmative votes of the stockholders
representing at least 2/3s of the outstanding capital stock. There having been no
stockholders approval, the redemption made by the assignee is invalid.
Three out of five directors of the board of directors present in a special meeting
do not constitute a quorum to validly transact business when its by-laws requires
at least four members to constitute a quorum. Under Section 25 of the
Corporation Code, the articled of incorporation or by-laws may fix a greater
number than the majority of the number of directors to constitute a quorum. Any
number less than the number provided in the articles or by-laws cannot
constitute a quorum; any act therein would not bind the corporation; all that the
attending directors could do is to adjourn.

People of the Philippines vs. Hermenegildo Dumlao and Emilio Lao 580
SCRA (2009).
In a criminal case involving a lease-purchase agreement allegedly
disadvantageous to the government, the Sandiganbayan erred in concluding that
there was no such agreement entered into and thus negating criminal liability
since only three members out of seven signed the minutes of the meeting. The
non-signing by the majority of the members of the Board of Trustees of the said
minutes does not necessarily mean that the supposed resolution was not
approved by the Board. The signing of the minutes by all the members of the
board is not required. There is no provision in the Corporation Code of the
Philippines that requires that the minutes of the meeting should be signed by all
the members of the board. The proper custodian of the books, minutes and
official records of a corporation is usually the corporate secretary. Being the
custodian of corporate records, the corporate secretary has the duty to record
and prepare the minutes of the meeting. The signature of the corporate
secretary gives the minutes of the meeting probative value and credibility.
Moreover, the entries contained in the minutes are prima facie evidence of what
actually took place during the meeting,

Turner vs. Lorenzo Shipping Corporation, G.R. No. 157479, November

24, 2010
In order to give rise to any obligation to pay on the part of the corporation, the
dissenting stockholder should first make a valid demand that the corporation
refused to pay despite having unrestricted retained earnings. Otherwise, the
corporation could not be said to be guilty of any actionable omission that could
sustain the action to collect. The collection suit filed by the dissenting stockholder
to enforce payment of the fair value of his shares is premature if at the time of
demand for payment, the corporation had no surplus profit. The fact that the
Corporation subsequent to the demand for payment and during the pendency of
the collection case posted surplus profit did not cure the prematurity of the
cause of action.

Gokongwei vs. Securities and Exchange Commission 89 SCRA 386 ( 1979

)
It would be more in accord with equity, good faith and fair dealing to construe the
statutory right of the stockholder to inspect the books and records of the
corporation as extending to books and records of its wholly-owned subsidiary
which are in the formers possession and control.

Lim vs. Lim Y, 352 SCRA 216 ( 2001 )

A suit to enforce pre-emptive right in a corporation is not a derivative suit
because it was not filed for the benefit of the corporation.

Goachan vs. Young, 354 SCRA 207 ( 2001 )

Personal injury suffered by the stockholders can not disqualify them from filing a
derivative suit on behalf of the corporation. It merely gives rise to an additional
cause of action for damages against the erring directors.

Reyes vs. Hon. RTC of Makati Branch 142, 561 SCRA 593 ( 2008 )
The bare claim that the complaint is a derivative suit will not suffice to confer
jurisdiction on the RTC as a special commercial court if the stockholder can not
comply with the requisites for the existence of a derivative suit which are : a ) the
party bringing suit should be a stockholder during the act or transaction
complained of, the number of shares not being material; b ) the party has tried to
exhaust intra-corporate remedies; and c ) the cause of action devolves upon the
corporation; the wrongdoing or harm having been caused to the corporation and
not to the particular stockholder bringing the suit.

Yu vs. Yukayguan, 588 SCRA 589 ( 2009 )

The stockholder filing a derivative suit should have exerted all reasonable efforts
to exhaust all remedies available under the articles of incorporation, by-laws,
laws or rules governing the corporation to obtain the relief he desires and to
allege such fact with particularity in the complaint. The allegation that the suing
stockholder talked to the other stockholder regarding the dispute hardly
constitutes all reasonable efforts to exhaust all remedies available . The
complaint should also allege the fact that there was no appraisal right available
under for the acts complained of and that the suit was not a nuisance or
harassment suit. The fact that the corporation involved is a family corporation
should not in any way exempt the suing stockholder from the requirements and
formalities for filing a derivative suit.

Legaspi Towers 300, vs. Muer, G.R. No. 170783, June 18, 2012

Petitioners seek the nullification of the election of the Board of Directors for the
years 2004-2005, composed of herein respondents, who pushed through with
the election even if petitioners had adjourned the meeting allegedly due to lack
of quorum. Petitioners are the injured party, whose rights to vote and to be voted
upon were directly affected by the election of the new set of board of directors.
The party-in-interest are the petitioners as stockholders, who wield such right to
vote. The cause of action devolves on petitioners, not the condominium
corporation, which did not have the right to vote. Hence, the complaint for
nullification of the election is a direct action by petitioners, who were the
members of the Board of Directors of the corporation before the election, against
respondents, who are the newly-elected Board of Directors. Under the
circumstances, the derivative suit filed by petitioners in behalf of the
condominium corporation in the Second Amended Complaint is improper.
Ong vs Tiu 401 SCRA 1 ( 2003 )
The trust fund doctrine provides that subscriptions to the capital stock of a
corporation constitute a fund to which the creditors have a right to look for the
satisfaction of their claims. This doctrine is the underlying principle in the
procedure for the distribution of corporate capital only in three instances : 1 )
amendment of articles of incorporation to reduce the authorized capital stock, 2 )
purchase of redeemable shares by the corporation regardless of the existence of
unrestricted retained earnings, and 3 ) dissolution and eventual liquidation of the
corporation. Furthermore, the doctrine is articulated in Section 41 of the
Corporation Code on the power of the corporation to acquire its own shares and
in Section 122 on the prohibition against the distribution of corporate assets and
property unless the stringent requirements are complied with.
When a subscriber assigned properties and infused capital to the corporation
upon invitation of a majority stockholder and in exchange for shares of stock
under a pre-subscription agreement, the agreement cannot be rescinded since
subject matter of the contract was the unissued shares of the Corporation
allocated to the subscriber. Since these were unissued shares, the PreSubscription Agreement was in fact a subscription contract as defined under
Section 60, Title VII of the Corporation Code: Any contract for the acquisition of
unissued stock in an existing corporation or a corporation still to be formed shall
be deemed a subscription within the meaning of this Title, notwithstanding the
fact the parties refer to it as a purchase or some other contract.
A subscription contract necessarily involves the corporation as one of the
contracting parties since the subject matter of the transaction is property owned
by the corporation its shares of shock. Thus, the subscription contract was one
between the subscriber and the corporation and not between the stockholders.
Also, although one subscriber was adversely affected by the actions of the other
shareholder, rescission due to breach of contract is the wrong remedy for
personal grievances. The Corporation Code, SEC rules and even the Rules of
Court provide for appropriate and adequate intra-corporate remedies, other than
rescission. Rescission is certainly not one of them, especially if the party asking
for it has no legal personality to do so and the requirements of the law have not
been met. A contrary doctrine will tread on dangerous ground because it will
allow just any stockholder, for just about any real or imaged offense, to demand
rescission of his subscription and call for the distribution of some part of the

corporate assets to him without complying with the requirements of the

Corporation Code.
Rescission cannot also be deemed as a petition to decrease capital stock because
such action never complied with the formal requirements for decrease of capital
stock under Section 38 of the Corporation Code. No majority vote of the board of
directors was ever taken. Neither was there any stockholders meeting at which
the approval of stockholders owning at least two-thirds of the outstanding capital
stock was secured.

Republic Planters Bank vs. Agana, 296 SCRA 1 (1998)

Dividends cannot be declared for preferred shares which were guaranteed a
quarterly dividend if there are no unrestricted retained earnings. xxx Interest
bearing stocks, on which the corporation agrees absolutely to pay interest
before dividends are paid to common stockholders, is legal only when construed
as requiring payment of interest as dividends from net earnings or surplus only.

Razon vs. Intermediate Appellate Court, 207 SCRA 234 (1992)

In order for a transfer of stock certificate to be effective, the certificate must be
properly indorsed and that title to such certificate of stock is vested in the
transferee by the delivery of the duly indorsed certificate of stock. Thus, where
an incorporator organized a corporation and certain number of shares was issued
to a stockholder but the certificate of stock covering said shares was in the
possession of the incorporator who refused to deliver the same to the heir of the
stockholder after the latter died, the stockholder of record should be considered
the owner of the shares since he did not indorse the certificate in favor of the
incorporator. The allegation that it was delivered to him by the stockholder
because he was the one who paid for it does not hold.
Garcia vs. Jomouad, 323 SCRA 424 (2000)
Section 63 of the Corporation Code provides that no transfer shall be valid except
as between the parties, until the transfer is recorded in the books of the
corporation showing the names of the parties to the transaction, the date of the
transfer, the number of certificate or certificates and the number of shares
transferred. Said provision of law strictly requires the recording of the transfer in
the books of the corporation and not elsewhere, to be valid as against third
parties. The unrecorded transfer of a propriety ownership certificate is not valid
as against the judgment creditor of the transferor who can therefore levy the
shares pursuant to a judgment despite the unrecorded transfer.

Ponce vs. Alsons Cement Corporation, 393, SCRA 602 (2002)

Pursuant to Section 63 of the Corporation Code, a transfer of shares of stocks not
recorded in the stock and transfer book of the corporation is non-existent as far
as the corporation is concerned. Without such recording, the transferee may not

be regarded by the corporation as one among its stockholders and the

corporation may legally refuse the issuance of stock certificates in the name of
the transferee even when there has been compliance with the requirements of
Section 64 of the Corporation Code. The situation would be different if the
petitioner was himself the registered owner of the stock which he sought to
transfer to a third party, for then he would be entitled to the remedy of
mandamus. It has been made clear that before a transferee may ask for the
issuance of stock certificates, he must first cause the registration of the transfer
and thereby enjoy the status of a stockholder insofar as the corporation is
concerned. A corporate secretary may not be compelled to register transfer of
shares on the basis merely of an indorsement of stock certificates. With more
reason a corporate secretary may not be compelled to issue stock certificates
without such registration.

Puno v. Puno Enterprises, September 11, 2009

Upon the death of the stockholder, his heirs do not automatically become the
stockholders of the corporation. The heirs acquire standing in the corporation
only upon registration of the transfer of the ownership of the shares in the books
of the corporation.

Torres vs. Court of Appeals, 278 SCRA 793 ( 1997 )

It is the corporate secretarys duty and obligation to register valid transfers of
stocks and if said corporate officer refuses to comply, the transferor-stockholder
may rightfully bring suit to compel performance. But the transferor, even though
he may be the controlling stockholder of the corporation can not take the law into
his own hands and cause himself the recording of the transfers of the qualifying
shares to his nominee-directors in the stock and transfer book of the corporation.

Mindanao Savings and Loan Association vs. Willkom, G.R. No. 178618,
11 October 2010
Even if it is true that the Monetary Board of the Central Bank of the Philippines
recognized the merger of two banks, the merger is still incomplete without the
certificate of merger duly issued by the SEC. The issuance of the certificate of
merger is crucial because not only does it bear out SECs approval but it also
marks the moment when the consequences of a merger take place. By operation
of law, upon the effectivity of the merger, the absorbed corporation ceases to
exist but its rights and properties, as well as liabilities, shall be taken and deemed
transferred to and vested in the surviving corporation.

Bank of the Philippine Islands v. BPI Employees Union Davao Chapter,

G.R. No. 164301, October 19, 2011
It is contrary to public policy to declare the former employees of the absorbed
corporation as forming part of its assets or liabilities that were transferred to and
absorbed by the surviving corporation in the Articles of Merger. Assets and
liabilities, in this instance, should be deemed to refer only to property rights and
obligations and do not include the employment contracts of its personnel. A
corporation cannot unilaterally transfer its employees to another employer like
chattel. Certainly, if the surviving corporation as an employer had the right to
choose who to retain among the employees of the absorbed corporation, the
latter employees had the concomitant right to choose not to be absorbed by the
corporation. Even though the employees of the absorbed corporation had no
choice or control over the merger of their employer, they had a choice whether or
not they would allow themselves to be absorbed by the surviving corporation.
Certainly nothing prevented the employees of the absorbed corporation from
resigning or retiring and seeking employment elsewhere instead of going along
with the proposed absorption.
NB On motion for reconsideration, the SC held that it is more in keeping with
social justice to consider the employees of the absorbed corporation the
employees of the surviving corporation even in the absence of a provision in the
articles of merger.

Associated Bank vs. Court of Appeals, 291 SCRA 511

In the merger of two or more existing corporations, one of the combining
corporations survives and continues the business while the rest are dissolved and
all their rights, properties and liabilities are acquired by the surviving corporation.
Although there is dissolution of the absorbed corporations, there is no winding up
of their affairs or liquidation of their assets because the surviving corporation
automatically acquires all their rights, privileges and powers, as well as their
liabilities. All contracts of the absorbed corporations, regardless of the date of
execution, shall pertain to the surviving corporation.
San Juan Steel Fabricators vs. Court of Appeals, 296 SCRA 63
A corporation does not become a close corporation just because a man and his
wife own 98.86% of its subscribed capital stock; So too, a narrow distribution of
ownership does not , by itself, make a close corporation. The features of a close
corporation under the Corporation Code must be embodied in the articles of
incorporation.

Naguiat vs. National Labor Relations Commission, 269 SCRA 564 ( 1997 )
Stockholders who are actively involved in the management or operation of the
business and affairs of a close corporation shall be personally liable for corporate

torts ( such as failure to pay separation benefits of employees terminated for

authorized causes ) unless the corporation has obtained adequate liability
insurance coverage.

Barayuga v. Adventist University of the Philippines,G.R. No. 168008,

August 17, 2011
Although Sec. 108 of the Corporation Code, second paragraph thereof sets the
term of the members of the Board of Trustees of non-stock educational
corporation at five years, it likewise contains a proviso expressly subjecting the
duration to what is otherwise provided in the articles of incorporation or by-laws
of the corporation. That contrary provision controls on the term of office. Thus, at
the time of petitioners removal, he was already occupying the office in a holdover capacity, and could be removed at any time, without cause, upon the
election or appointment of his successor.

Aguirre vs. FQB +7, Inc, GR No. 170770, January 9 2013.

An action to correct Pursuant to Section 145 of the Corporation Code, an existing
intra-corporate dispute, which does not constitute a continuation of corporate
business, is not affected by the subsequent dissolution of the corporation. The
dissolution of the corporation simply prohibits it from continuing its business.
However, despite such dissolution, the parties involved in the litigation are still
corporate actors. The dissolution does not automatically convert the parties into
total strangers or change their intra-corporate relationships. Neither does it
change or terminate existing causes of action, which arose because of the
corporate ties between the parties. Thus, a cause of action involving an intracorporate controversy remains and must be filed as an intra-corporate dispute
despite the subsequent dissolution of the corporation.
Paramount Insurance Corp. vs. A.C. Ordonez Corp, 561 SCRA 327 (2008)
Although the cancellation of a corporations certificate of registration puts an end
to its juridical personality, Sec. 122 of the Corporation Code, however provides
that a corporation whose corporate existence is terminated in any manner
continues to be a body corporate for three years after its dissolution for purposes
of prosecuting and defending suits by and against it and to enable it to settle and
close its affairs. Moreover, the rights of a corporation, which is dissolved pending
litigation, are accorded protection by law pursuant to Sec. 145 of the Corporation
Code. Thus, corporations whose certificate of registration was revoked by the
SEC may still maintain actions in court for the protection of its rights which
includes the right to appeal. Dissolution or even the expiration of the three-year
liquidation period should not be a bar to a corporations enforcement of its rights
as a corporation.
Barrameda v. Rural Bank of Canaman , Inc., G.R. No. 176260, 24
November 2010
To allow a creditors case to proceed independently of the liquidation case, a
possibility of favorable judgment and execution thereof against the assets of the

distressed corporation would not only prejudice the other creditors and
depositors but would defeat the very purpose for which a liquidation court was
constituted as well.
Cargill, Inc. vs. Intra Strata Assurance Corporation, G.R. No. 168266,
March 15, 2010
A foreign company that merely imports goods from a Philippine exporter, without
opening an office or appointing an agent in the Philippines, is not doing business
in the Philippines.

Global Business Holdings, Inc. Vs. Surecomp Software B.V., G.R. No.
173463, October 13, 2010
A foreign corporation doing business in the Philippines without license may sue
in Philippine courts a Filipino citizen or a Philippine entity that had contracted
with and benefited from it. A party is estopped from challenging the personality
of a corporation after having acknowledged the same by entering into a contract
with it. The principle is applied to prevent a person contracting with a foreign
corporation from later taking advantage of its noncompliance with the statutes,
chiefly in cases where such person has received the benefits of the contract.

SteelCase vs. Design International Selections, GR no. 171995, April 18,

2012
The appointment of a distributor in the Philippine is not sufficient to constitute
doing business unless it is under the full control of the foreign corporation. If the
distributor is an independent entity which buys and distributes products, other
than those of the foreign corporation, for its own name and its own account, the
latter can not be considered doing business.

II. Securities Regulation Code (R.A.No. 8799)

Gabioza vs. Court of Appeals 565 SCRA 38 ( 2008 )

While the issuance of checks for the purpose of securing a loan to finance the
activities of the corporation is well within the ambit of a valid corporate act, it is
one thing for the corporation to issue checks to satisfy isolated obligations and
another for a corporation to execute an elaborate scheme where it would
comport itself to the public as a pseudo-investment house and issue post-dated
checks instead of stocks or traditional securities to evidence the investments of
its patrons.

Timeshare Realty Corporation vs Cesar Lao 544 SCRA 254 ( 2008 )

A corporation is absolutely proscribed in selling and distributing unregistered
timeshare certificates unless it complies with the registration requirements under
the Securities Regulation Code.

Securities and Exchange Commission vs. Prosperity.Com, Inc., 664 SCRA

28(2012)
For an investment contract to exist, the following elements, referred to as the
Howey test must concur: (1) a contract, transaction, or scheme; (2) an
investment of money; (3) investment is made in a common enterprise; (4)
expectation of profits; and (5) profits arising primarily from the efforts of others.
Thus, to sustain the SEC position in this case, PCIs scheme or contract with its
buyers must have all these elements.

An example that comes to mind would be the long-term commercial papers that
large companies, like San Miguel Corporation (SMC), offer to the public for raising
funds that it needs for expansion. When an investor buys these papers or
securities, he invests his money, together with others, in SMC with an
expectation of profits arising from the efforts of those who manage and operate
that company. SMC has to register these commercial papers with the SEC before
offering them to investors.

Network marketing, a scheme adopted by companies for getting people to buy

their products outside the usual retail system where products are bought from
the stores shelf and where the buyer can become a down-line seller, earning
commissions from purchases made by new buyers whom he refers to the person
who sold the product to him, is not an investment contract. The commissions,
interest in real estate, and insurance coverage worth P50,000.00 are incentives

to down-line sellers to bring in other customers. These can hardly be regarded as

profits from investment of money under the Howey test.

Cemco Holdings vs. National Life Insurance Company , 529 SCRA 355
( 2007 )
The coverage of the tender offer rule covers not only direct acquisition but also
indirect acquisition or any type of acquisition. Whatever may be the method by
which control of a public company is obtained either through the direct purchase
of its stocks or through indirect means, mandatory tender offer rule applies.

GSIS vs. Court of Appeals, 585 SCRA 679

The solicitation of proxies must be in accordance with rules and regulations
issued by the SEC. The power of the SEC to investigate violations of its rules on
proxy solicitation is unquestioned when proxies are obtained to voted on matters
unrelated to the cases enumerated under Section 5 of PD 902-A. However, when
proxies are solicited in relation to the election of corporate directors, the resulting
controversy, even if it ostensibly raised the violation of the SEC rules on proxy
solicitation, should be properly seen as an election controversy within the
jurisdiction of the RTC special commercial court.

Provident International Resources Corporation vs Venus, 544 SCRA 540 (

2008 )
The SEC has the power to recall and cancel a stock and transfer book which was
erroneously registered.

Philippine Veterans Bank v. Callangan, in her capacity Director of the

Corporation Finance Department of the Securities and Exchange
Commission and/or the Securities and Exchange Commission, G.R. No.
191995, August 3, 2011
A public company, as contemplated by the SRC is not limited to a company
whose shares of stock are publicly listed; even companies whose shares are
offered only to a specific group of people, are considered a public company,
provided they meet the requirements provided for under Subsec. 17.2 of the SRC,
that is: any corporation with a class of equity securities listed on an Exchange or
with assets in excess of Fifty Million Pesos (P50,000,000.00) and having two
hundred (200) or more holders, at least two hundred (200) of which are holding
at least one hundred (100) shares of a class of its equity securities.

Bank of the Philippine Islands , as successor-in-interest of Far East Bank

and Trust Company, v. Eduardo Hong, doing business under the name
and style "SUPER LINE PRINTING PRESS," G.R. No. 161771, February 15,
2012
The RTC may take cognizance of the injunction suit. SECs jurisdiction does not
extend to the liquidation of a corporation. While the SEC has jurisdiction to order
the dissolution of a corporation, jurisdiction over the liquidation of the corporation
now pertains to the appropriate regional trial courts. This is the correct procedure
because the liquidation of a corporation requires the settlement of claims for and
against the corporation, which clearly falls under the jurisdiction of the regular
courts. The trial court is in the best position to convene all the creditors of the
corporation, ascertain their claims, and determine their preferences.
GSIS vs. Court of Appeals 585 SCRA 679 (2009 )
There are three distinct bases for the issuance by the SEC of the cease and desist
order ( CDO ). The first, allocated by Section 5(i) of the SRC, is predicated on a
necessity to prevent fraud or injury to the investing public. No other requisite or
detail is tied to this CDO authorized under Section 5(i).
The second basis, found in Section 53.3, involves a determination by the SEC that
any person has engaged or is about to engage in any act or practice constituting
a violation of any provision of this Code, any rule, regulation or order thereunder,
or any rule of an Exchange, registered securities association, clearing agency or
other self-regulatory organization. The provision additionally requires a finding
that there is a reasonable likelihood of continuing [or engaging in] further or
future violations by such person. The maximum duration of the CDO issued
under Section 53.3 is ten (10) days.
The third basis for the issuance of a CDO is Section 64. This CDO is founded on a
determination of an act or practice, which unless restrained, will operate as a
fraud on investors or is otherwise likely to cause grave or irreparable injury or
prejudice to the investing public. Section 64.1 plainly provides three segregate
instances upon which the SEC may issue the CDO under this provision: (1) after
proper investigation or verification, (2) motu proprio, or (3) upon verified
complaint by any aggrieved party. While no lifetime is expressly specified for the
CDO under Section 64, the respondent to the CDO may file a formal request for
the lifting thereof, which the SEC must hear within fifteen (15) days from filing
and decide within ten (10) days from the hearing.

It appears that the CDO under Section 5(i) is similar to the CDO under Section
64.1. Both require a common finding of a need to prevent fraud or injury to the
investing public. At the same time, no mention is made whether the CDO defined
under Section 5(i) may be issued ex-parte, while the CDO under Section 64.1
requires grave and irreparable injury, language absent in Section 5(i).
Notwithstanding the similarities between Section 5(i) and Section 64.1, it remains

clear that the CDO issued under Section 53.3 is a distinct creation from that
under Section 64.

The CDO as contemplated in Section 53.3 or in Section 64, may be issued

ex-parte (under Section 53.3) or without necessity of hearing (under Section
64.1). Nothing in these provisions impose a requisite hearing before the CDO may
be issued thereunder. Nonetheless, there are identifiable requisite actions on the
part of the SEC that must be undertaken before the CDO may be issued either
under Section 53.3 or Section 64. In the case of Section 53.3, the SEC must make
two findings: (1) that such person has engaged in any such act or practice, and
(2) that there is a reasonable likelihood of continuing, (or engaging in) further or
future violations by such person. In the case of Section 64, the SEC must adjudge
that the act, unless restrained, will operate as a fraud on investors or is otherwise
likely to cause grave or irreparable injury or prejudice to the investing public.

A singular CDO could not be founded on Section 5.1, Section 53.3 and Section 64
collectively. At the very least, the CDO under Section 53.3 and under Section 64
have their respective requisites and terms. It is an error on the part of the SEC in
granting the CDO without stating which kind of CDO as it is an act that
contravenes due process of law.

Also, the fact that the CDO was signed, much less apparently deliberated upon,
by only by one commissioner likewise renders the order fatally infirm.The SEC is a
collegial body composed of a Chairperson and four (4) Commissioners. In order to
constitute a quorum to conduct business, the presence of at least three (3)
Commissioners is required.

Matling Industrial and Commercial Corporation vs. Coros , G.R. No.

157802, 13 October 2010
The Board of Directors of a corporation can not validly delegate the power to
create a corporate office to the President, in the light of Section 25 of the
Corporation Code requiring the Board of Directors itself to elect the corporate
officers. Verily, the power to elect the corporate officers is a discretionary power
that the law exclusively vested in the Board of Directors, and can not be
delegated to subordinate officers or agents. The office of Vice President for
Finance and Administration created by the President of the Corporation pursuant
to the pertinent provision in the by-laws of the corporation was an ordinary, not a
corporate, office.

Yu vs. Yukayguan, 588 SCRA 589 ( 2009 )

The stockholder filing a derivative suit should have exerted all reasonable efforts
to exhaust all remedies available under the articles of incorporation, by-laws,

laws or rules governing the corporation to obtain the relief he desires and to
allege such fact with particularity in the complaint. The allegation that the suing
stockholder talked to the other stockholder regarding the dispute hardly
constitutes all reasonable efforts to exhaust all remedies available . The
complaint should also allege the fact that there was no appraisal right available
under for the acts complained of and that the suit was not a nuisance or
harassment suit. The fact that the corporation involved is a family corporation
should not in any way exempt the suing stockholder from the requirements and
formalities for filing a derivative suit.

Legaspi Towers 300, Inc.,vs. Muer, et. al.. G.R. No. 170783, June 18,
2012.
Petitioners seek the nullification of the election of the Board of Directors for the
years 2004-2005, composed of herein respondents, who pushed through with
the election even if petitioners had adjourned the meeting allegedly due to lack
of quorum. Petitioners are the injured party, whose rights to vote and to be voted
upon were directly affected by the election of the new set of board of directors.
The party-in-interest are the petitioners as stockholders, who wield such right to
vote. The cause of action devolves on petitioners, not the condominium
corporation, which did not have the right to vote. Hence, the complaint for
nullification of the election is a direct action by petitioners, who were the
members of the Board of Directors of the corporation before the election, against
respondents, who are the newly-elected Board of Directors. Under the
circumstances, the derivative suit filed by petitioners in behalf of the
condominium corporation in the Second Amended Complaint is improper.

Lisam Enterprises vs. Banco De Oro G.R. No. 143264, April 23, 2012.
The Court held that the complaint for annulment of sale was properly filed with
the regular court, because the buyer of the property had no intra-corporate
relationship with the stockholders, hence, the buyer could not be joined as partydefendant in the SEC case. To include said buyer as a party-defendant in the case
pending with the SEC would violate the then existing rule on jurisdiction over
intra-corporate disputes.

Chateau De Baie Condominium Corporation vs. Spouses Moreno, GR No.

186271, February 23, 2011
Although the extrajudicial sale of the condominium unit ( for non-payment of
condominium dues and assessment ) has been fully effected and that the petition
of the owner questioning the sale has been dismissed with finality, the
completion of the sale does not bar the condominium unit owner from
questioning the amount of the unpaid dues that gave rise to the foreclosure and
to the subsequent sale of the property. The propriety and legality of the sale of
the condominium unit is different from the propriety and legality of the unpaid
assessment dues. The latter partakes of the nature of an intra-corporate dispute.

SECOND SALE is different case and may proceed despite the finality of decision
affirming legality of sale.
Condominuium may be sold against non payment as long master deed of
restriction allows. Vs valley golf and clemente, shares cannot be sold even bylaws alllwe. must partake pledge and chattle mortgage
March II Marketing vs Joson, GR No. 171993, December 12, 2011
Respondent was not a corporate officer of the corporation because his position as
General Manager was not specifically mentioned in the roster of corporate
officers in its corporate by-laws. The enabling clause in the corporations by-laws
empowering its Board of Directors to create additional officers, i.e., General
Manager and the alleged subsequent passage of a board resolution to that effect
can not make such position a corporate office. The Board of Directors has no
power to create other corporate offices without first amending the corporate bylaws so as to include therein the newly created corporate office. Though the
Board may create appointive positions other than the positions of corporate
officers, the persons occupying such positions can not be viewed as corporate
officers under Section 25 of the Corporation Code.

Go vs. Distinction Properties Development Corporation, GR no. 194024,

April 25, 2012
A complaint filed by condominium unit owners against the developer of the
condominium for unsound business practice and violation of the Master Deed and
Declaration of Restrictions in that the developer committed misrepresentations in
its circulated flyers and brochures as to the facilities and amenities that would be
available in the corporation is an intra-corporate controversy.

Guy vs. Guy, G.R. No. 189486.September 5, 2012

In ordinary cases, the failure to specifically allege the fraudulent acts does not
constitute a ground for dismissal since such a defect can be cured by a bill of
particulars. The above-stated rule, however, does not apply to intra-corporate
controversies. In cases governed by the Interim Rules of Procedure on IntraCorporate Controversies a bill of particulars is a prohibited pleading. It is
essential, therefore, for the complaint to show on its face what are claimed to be
the fraudulent corporate acts if the complainant wishes to invoke the courts
special commercial jurisdiction. This is because fraud in intra-corporate
controversies must be based on devises and schemes employed by, or any act
of, the board of directors, business associates, officers or partners, amounting to
fraud or misrepresentation which may be detrimental to the interest of the public
and/or of the stockholders, partners, or members of any corporation, partnership,
or association. The act of fraud or misrepresentation complained of becomes a
criterion in determining whether the complaint on its face has merits, or within
the jurisdiction of special commercial court, or merely a nuisance suit. Thus, the
mere averment of fraud in the transfer of shares of stock but without indicating in
the complaint the specific acts constituting of fraud is not sufficient to make the
complaint within the ambit of intra-corporate controversy.

Gulfo v. Ancheta, G.R. No. 175301, August 15, 2012

Under the Relationship Test, no doubt exists that the parties were members of the
same association, but this conclusion must still be supplemented by the
controversy test before it may be considered as an intra-corporate dispute.
Relationship alone does not ipso facto make the dispute intra-corporate; the mere
existence of an intra-corporate relationship does not always give rise to an intracorporate controversy. The incidents of that relationship must be considered to
ascertain whether the controversy itself is intra-corporate. This is where the
Controversy Test becomes material.
Under the controversy test, the dispute must be rooted in the existence of an
intra-corporate relationship, and must refer to the enforcement of the parties'
correlative rights and obligations under the Corporation Code, as well as the
internal and intra-corporate regulatory rules of the corporation, in order to be an
intra-corporate dispute. These are essentially determined through the allegations
in the complaint which determine the nature of the action.

Baviera vs. Standard Chartered Bank 515 SCRA 170

Under the doctrine of primary jurisdiction, courts will not determine a controversy
involving a question within the jurisdiction of the administrative tribunal, where
the question demands the exercise of sound administrative discretion requiring
the specialized knowledge and expertise of said administrative tribunal. The
Securities Regulation Code is a special law. Its enforcement is particularly vested
in the SEC. Hence, all complaints for any violation of the Code and its
implementing rules and regulations should be filed with SEC. Where the
complaint is criminal in nature, SEC shall indorse the complaint to the DOJ for
preliminary investigation and prosecution.