Chung Ka Bio vs Intermediate Appellate Court (1988)
For unknown reasons, however, LGVHAI did not file
Facts: Philippine Blooming Mills Company, Inc. was incorporated for a
term of 25 years. The members of its board of directors executed a
deed of assignment of all of the accounts receivables, properties,
obligations and liabilities of the old PBM in favor of Chung Siong Pek in
his capacity as treasurer of the new PBM, then in the process of
reincorporation. The new PMB was issued a certificate of incorporation
by the Securities and Exchange Commission. Chung Ka Bio and the
other petitioners herein, all stockholders of the old PBM, filed with the
SEC a petition for liquidation of both the old PBM and the new PBM. The
allegation was that the former had become legally non-existent for
failure to extend its corporate life and that the latter had likewise
beenipso facto dissolved for non-use of the charter and continuous
failure to operate within 2 years from incorporation.
Issue: WON, The new corporation has not substantially
complied with the two-year requirement of Section 22 of the
new Corporation Code on non-user because its stockholders
never adopted a set of by-laws.
Held: No. Non-filing of the by-laws will not result in automatic
dissolution of the corporation. Under Section 6(i) of PD 902-A,
the SEC is empowered to suspend or revoked, after proper
notice and hearing, the franchise or certificate of registration of
a corporation on the ground inter alia of failure to file by-laws
within the required period. It is clear from this provision that
there must first of all be a hearing to determine the existence
of the ground, and secondly, assuming such finding, the
penalty is not necessarily revocation but may be only
suspension of the charter. In fact, under the rules and
regulations of the SEC, failure to file the by-laws on time may
be penalized merely with the imposition of an administrative
fine without affecting the corporate existence of the erring firm
Loyola Grand Villas Homeowners (South) Association vs
Court of Appeals (1997)
Facts: LGVHAI was organized as the association of
homeowners and residents of the Loyola Grand Villas. It was
organized by the developer of the subdivision and its first
president was Victorio V. Soliven, himself the owner of the
developer.
its corporate by-laws. The officers of the LGVHAI tried to
register its by-laws. They failed to do so. To the officers
consternation, they discovered that there were two other
organizations within the subdivision the North Association
and the South Association. When one of the officers inquired
about the status of LGVHAI, the head of the legal department
of the HIGC, informed him that LGVHAI had been automatically
dissolved for two reasons. First, it did not submit its by-laws
within the period required by the Corporation Code and,
second, there was non-user of corporate charter because HIGC
had not received any report on the associations activities.
Issue: WON the LGVHAIs failure to file its by-laws within the
period prescribed by Section 46 of the Corporation Code had
the effect of automatically dissolving the said corporation?
Held: No. There can be no automatic corporate
dissolution simply because the incorporators failed to abide by
the required filing of by-laws embodied in Section 46 of the
Corporation Code. There is no outright demise of corporate
existence. Proper notice and hearing are cardinal components
of due process in any democratic institution, agency or society.
In other words, the incorporators must be given the chance to
explain their neglect or omission and remedy the same. Non-
filing of the by-laws will not result in automatic dissolution of
the corporation. In fact, under the rules and regulations of the
SEC, failure to file the by-laws on time may be penalized
merely with the imposition of an administrative fine without
affecting the corporate existence of the erring firm.
Crisologo-Jose vs Court of Appeals (1989)
Facts: Plaintiff Ricardo S. Santos, Jr. was the vice-president of
Mover Enterprises, Inc. in-charge of marketing and sales; and
the president of the said corporation was Atty. Oscar Z.
Benares. Atty. Benares, in accommodation of his clients, the
spouses Jaime and Clarita Ong, issued check against Traders
Royal Bank, payable to defendant Ernestina Crisologo-Jose.
Since the check was under the account of Mover Enterprises,
Inc., the same was to be signed by its president, Atty. Oscar Z.
Benares, and the treasurer of the said corporation. However,
since at that time, the treasurer of Mover Enterprises was not
 available, Atty. Benares prevailed upon the plaintiff, Ricardo S.
Santos, Jr., to sign the aforesaid check. The check was issued
to defendant Ernestina Crisologo-Jose in consideration of the
waiver or quitclaim by said defendant over a certain property
which the Government Service Insurance System (GSIS) agreed
to sell to the spouses Jaime and Clarita Ong, with the
understanding that upon approval by the GSIS of the
compromise agreement with the spouses Ong, the check will
be encashed accordingly. Since the compromise agreement
was not approved within the expected period of time, the
aforesaid check was replaced by Atty. Benares. This
replacement check was also signed by Atty. Oscar Z. Benares
and by the plaintiff Ricardo S. Santos, Jr. When defendant
deposited this replacement check with her account at Family
Savings Bank, Mayon Branch, it was dishonored for
insufficiency of funds. The petitioner filed an action against the
corporation for accommodation party.
Issue: WON the corporation can be held liable as
accommodation party?
Held: No. Accommodation party liable on the instrument to a holder for
value, although such holder at the time of taking the instrument knew
him to be only an accommodation party, does not include nor apply to
corporations which are accommodation parties. This is because the
issue or indorsement of negotiable paper by a corporation without
consideration and for the accommodation of another is ultra
vires. Hence, one who has taken the instrument with knowledge of the
accommodation nature thereof cannot recover against a corporation
where it is only an accommodation party. If the form of the instrument,
or the nature of the transaction, is such as to charge the indorsee with
knowledge that the issue or indorsement of the instrument by the
corporation is for the accommodation of another, he cannot recover
against the corporation thereon. By way of exception, an officer or
agent of a corporation shall have the power to execute or indorse a
negotiable paper in the name of the corporation for the
accommodation of a third person only if specifically authorized to do
so. Corollarily, corporate officers, such as the president and vice-
president, have no power to execute for mere accommodation a
negotiable instrument of the corporation for their individual debts or
transactions arising from or in relation to matters in which the
corporation has no legitimate concern. Since such accommodation
paper cannot thus be enforced against the corporation, especially
since it is not involved in any aspect of the corporate business or
operations, the inescapable conclusion in law and in logic is that the
signatories thereof shall be personally liable therefor, as well as the
consequences arising from their acts in connection therewith.
Ramirez vs Orientalist Co. (1918)
Facts: Orientalist Company was engaged in the business of
maintaining and conducting a theatre in the city of Manila for
the exhibition of cinematographic films. engaged in the
business of marketing films for a manufacturer or
manufacturers, there engaged in the production or distribution
of cinematographic material. In this enterprise the plaintiff was
represented in the city of Manila by his son, Jose Ramirez. The
directors of the Orientalist Company became apprised of the
fact that the plaintiff in Paris had control of the agencies for
two different marks of films, namely, the Eclair Films and the
Milano Films; and negotiations were begun with said officials
of the Orientalist Company by Jose Ramirez, as agent of the
plaintiff. The defendant Ramon J. Fernandez, one of the
directors of the Orientalist Company and also its treasure, was
chiefly active in this matter. Ramon J. Fernandez had an
informal conference with all the members of the companys
board of directors except one, and with approval of those with
whom he had communicated, addressed a letter to Jose
Ramirez, in Manila, accepting the offer contained in the
memorandum the exclusive agency of the Eclair films and
Milano films. In due time the films began to arrive in Manila, it
appears that the Orientalist Company was without funds to
meet these obligations. Action was instituted by the plaintiff to
Orientalist Company, and Ramon J. Fernandez for sum of
money.
Issue: WON the Orientalist Co. is liable for the acts of its
treasurer, Fernandez?
Held: Yes. It will be observed that Ramon J. Fernandez was the
particular officer and member of the board of directors who
was most active in the effort to secure the films for the
corporation. The negotiations were conducted by him with the
knowledge and consent of other members of the board; and
the contract was made with their prior approval. In the light of
all the circumstances of the case, we are of the opinion that
the contracts in question were thus inferentially approved by
the companys board of directors and that the company is
bound unless the subsequent failure of the stockholders to
approve said contracts had the effect of abrogating the liability
thus created.