Professional Documents
Culture Documents
PILIPINAS SHELL Respondent is a corporation duly organized Whether or not Petition for Yes. The Petition for Insolvency was
PETROLEUM and existing under the Philippine Law. Insolvency was properly filed. properly filed before the RTC of Manila.
CORPORATION V. ROYAL According to its Articles of Incorporation, Section 14 of the Insolvency Law specifies
FERRY SERVICES, INC., Royal Ferry’s principal place of business is that the proper venue for a petition for
G.R. No. 188146, February 1, located at Makati City. However, it currently voluntary insolvency is the RTC of the
2017 holds office at Intramuros, Manila. In 2005, province or city where the insolvent debtor
Royal Ferry filed a verified Petition for has resided in for six (6) months before the
Voluntary Insolvency before the RTC of filing of the petition. To determine the venue
Manila. It alleged that in 2000, it suffered of an insolvency proceeding, the residence
serious business losses that led to heavy of a corporation should be the actual place
debts. Royal Ferry ceased its operations in where its principal office has been located for
2002. The RTC declared Royal Ferry six (6) months before the filing of the petition.
insolvent in its order. On December 2005, If there is a conflict between the place stated
petitioner filed before the RTC of Manila a in the articles of incorporation and the
Formal Notice of Claim and a Motion to physical location of the corporation's main
Dismiss. In its Motion to Dismiss, Petitioner office, the actual place of business should
alleged that the Petition was filed in the control. Requiring a corporation to go back
wrong venue. It argued that the Insolvency to a place it has abandoned just to file a case
Law provides that a petition for insolvency is the very definition of inconvenience. There
should be filed before the court with territorial is no reason why an insolvent corporation
jurisdiction over the corporation's residence. should be forced to exert whatever meager
Since Royal Ferry's Articles of Incorporation resources it has to litigate in a city it has
stated that the corporation's principal office already left. In any case, the creditors deal
is located Makati City, the Petition should with the corporation's agents, officers, and
have been filed before the RTC of Makati employees in the actual place of business.
and not before the RTC of Manila. To compel a corporation to litigate in a city it
has already abandoned would create more
confusion. Moreover, the six (6)-month
qualification of the law's requirement of
residence shows intent to find the most
accurate location of the debtor's activities. If
the address in a corporation's articles of
incorporation is proven to be no longer
accurate, then legal fiction should give way
to fact. PETITION DENIED.
PEÑA V. CA, G.R. No. 91478, In 1962, the Pampanga Bus Company Whether or not the board No, the board resolution is void.
February 7, 1991 (PAMBUSCO) took out a loan from the resolution is valid. The by-laws are the laws of the corporation.
Development Bank of the Philippines (DBP). PAMBUSCO’s by-laws provide that a
PAMBUSCO used the parcels of land it quorum consists of at least four directors.
owned to secure the loan. In October 1974, The meeting was attended by only three
due to PAMBUSCO’s nonpayment, DBP directors did not comply with the required
foreclosed the parcels of land. Rosita Peña quorum. Thus, the three directors were not
was the highest bidder. Meanwhile, in able to come up with a valid resolution which
November 1974, the Board of Directors of could bind the corporation. Anent the issue
PAMBUSCO had a meeting. The meeting of Peña being a third person, she can
was attended by only 3 out of the 5 Directors. question the board resolution. The resolution
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In the said meeting, the Board, through a here is likened to a contract. Under the law,
resolution, authorized one of the directors, a person who is not a party obliged
Atty. Joaquin Briones, to assign the principally or subsidiarity in a contract may
properties of PAMBUSCO. Pursuant to the exercise an action for nullity of the contract if
resolution, Briones assigned PAMBUSCO’s he or she is prejudiced in his or her rights
assets to Marcelino Enriquez. Enriquez, with respect to one of the contracting parties,
knowing that the properties were previously and can show the detriment which would
mortgaged and foreclosed, exercised positively result to him or her from the
PAMBUSCO’s right to redeem. So in August contract in which he or she had no
1975, he redeemed the said properties and intervention.
thereafter he sold them to Rising Yap. Yap
then registered the properties under his Other findings: Furthermore, the sale of the
name. He then demanded Peña to vacate properties of PAMBUSCO did not comply
the properties. Peña refused to do and so with the procedure laid down by the
Yap filed a complaint. Corporation Law. Under the law, the sale or
disposition of an and/or substantially all
In her defense, Peña averred that Yap properties of the corporation requires, in
acquired no legal title over the property addition to a proper board resolution, the
because the board resolution issued by affirmative votes of the stockholders holding
PAMBUSCO in November 1974 was void at least two-thirds (2/3) of the voting power
because the resolution was issued without a in the corporation in a meeting duly called for
quorum; that there was no quorum because that purpose. No doubt, the questioned
under the by-laws of PAMBUSCO, a quorum resolution was not confirmed at a
requires the presence of 4 out of 5 directors subsequent stockholders meeting duly
and yet the meeting was only attended by called for the purpose by the affirmative
three directors. Thus, the authority granted votes of the stockholders holding at least
to Briones to assign the properties was void; two-thirds (2/3) of the voting power in the
that the subsequent assignment by Briones corporation. Further still, the Supreme Court
to Enriquez was void; that Enriquez acquired discovers a few other anomalies with
no title and hence thus Yap acquired no title. PAMBUSCO. One is that PAMBUSCO has
Yap insisted that Peña has no legal standing been inactive since 1949 as per the records
to question the board resolution because provided by the Securities and Exchange
she was not a stockholder. Commission. Its general information sheet
with the SEC has not been updated regularly
even. And the three directors present were
not even listed as current directors of
PAMBUSCO.
CARAG V. NLRC, G.R. No. National Federation of Labor Unions Whether or not Antonio Carag be The Supreme Court held that the rule is that
147590, April 2, 2007 (NAFLU) and Mariveles Apparel Corporation held solidarily liable for the a director is not personally liable for the
Labor Union (MACLU), on behalf of all of payment of the illegally dismissed debts of the corporation, which has a
MAC’s rank and file employees, filed a employees. separate legal personality of its own. Section
complaint against MAC for illegal dismissal 31 of the Corporation Code lays down the
brought about by its illegal closure of exceptions to the rule, as follows:
business. They included in their complaint
Mariveles Apparel Corporation’s Chairman Liability of directors, trustees or officers. -
of the Board Antonio Carag in order to be Directors or trustees who wilfully and
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solidarily liable for the illegal dismissal and knowingly vote for or assent to patently
illegal closure of business. According to the unlawful acts of the corporation or who are
Labor Union of MAC, the Corporation guilty of gross negligence or bad faith in
suddenly closed its business without directing the affairs of the corporation or
following the notice as laid down in the Labor acquire any personal or pecuniary interest in
Law of the Philippines. The Labor Arbiter conflict with their duty as such directors or
decided in favor of the Labor Union and held trustees shall be liable jointly and severally
that Antonio Carag being the owner of the for all damages resulting therefrom suffered
corporation be solidarily liable for the by the corporation, its stockholders or
payment of separation pay and backwages members and other persons.
of the rank and file employees. Antonio xxxx
Carag questioned the decision of the Labor Section 31 makes a director personally liable
Arbiter and alleged that the Corporation and for corporate debts if he wilfully and
its officers have separate and distinct knowingly votes for or assents to patently
personality and the latter cannot be held unlawful acts of the corporation. Section 31
liable solidarily in cases of payment of also makes a director personally liable if he
damages. is guilty of gross negligence or bad faith in
directing the affairs of the corporation.
of ₱84M of Lucky Two Corporation and previously executed and amended MTI.
Lucky Two Repacking. Centro and BPI Going through the original and the revised
amended the MTI to allow an additional loan MTI, the Court find no substantial
of ₱36M and to include San Carlos Milling amendments to the provisions of the
Company, Inc. (San Carlos) as a borrower. contract. The Court agree with petitioner that
Centro and BPI again amended the MTI for the act of appointing a new trustee of the MTI
another loan of ₱24M, bringing the total was a regular business transaction. The
obligation to ₱144M. Meanwhile, respondent appointment necessitated only a decision of
Centro, represented by Go Eng Uy, at least a majority of the directors present at
approached petitioner Metrobank and the meeting in which there was a quorum,
proposed that the latter assume the role of pursuant to Section 25 of the Corporation
successor-trustee of the existing MTI. After Code. The second paragraph of the directors
petitioner Metrobank agreed to the proposal, Resolution No. 005, s. 1994, which
the board of directors of respondent Centro empowered Go Eng Uy to sign the Real
allegedly resolved to constitute petitioner as Estate Mortgage and all
successor-trustee of BPI. During the period documents/instruments with Metrobank, for
April 1998 to December 1998, San Carlos and in behalf of the Company which are
obtained loans in the total principal amount necessary and pertinent thereto, must be
of ₱812,793,513.23 from petitioner construed to mean that such power was
Metrobank. San Carlos failed to pay these limited by the conditions of the existing
outstanding obligations hence Metrobank as mortgage, and not that a new mortgage was
the successor trustee initiated foreclosure of thereby constituted, thus, Section 40 of the
the mortgaged executed for the loan. Before Corporation Code finds no application in the
the scheduled foreclosure date, respondents present case. Nevertheless, while the Court
herein filed a Complaint for the annulment of uphold the validity of the stockholders
the MTI with a prayer for a temporary Resolution appointing Metrobank as
restraining order (TRO) and preliminary successor-trustee, this is not to say that we
injunction. The bone of contention in Civil uphold the validity of the extrajudicial
Case No. 00-942 was that since the foreclosure of the mortgage.
mortgaged properties constituted all or
substantially all of the corporate assets, the
amendment of the MTI failed to meet the
requirements of Section 40 of the
Corporation Code on notice and voting
requirements. Under this provision, in order
for a corporation to mortgage all or
substantially all of its properties and assets,
it should be authorized by the vote of its
stockholders representing at least 2/3 of the
outstanding capital stock in a meeting held
for that purpose. Furthermore, there must be
a written notice of the proposed action and
of the time and place of the meeting. Thus,
respondents alleged, the representation of
Go Eng Uy that he was authorized by the
board of directors and/or stockholders of
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notice of postponement prior to that, a total group in this case, cannot vote nor be voted
of 286 stockholders arrived and attended the for.
meeting. The majority of the stockholders
present rejected the postponement and
voted to proceed with the meeting. The
Potenciano group was re-elected to the
Board of Directors, however, the Bitanga
group refused to relinquish their positions
and continued to act as directors and officers
of BLTB. The Bitanga group filed with the
SEC a complaint for Damages which,
however, was denied. Likewise, the
Potenciano group filed a Complaint for
Injunction and Damages with Preliminary
Injunction and TRO with the SEC which
issued a TRO enjoining the Bitanga group
from acting as officers and directors of BLTB.
The Bitanga group filed another complaint
which was granted. It declared that the
stockholders’ meeting was void on the
grounds that, first, Michael Potenciano had
himself asked for its postponement due to
improper notice; and, second, there was no
quorum, since BMB Holdings, Inc.,
represented by the Bitanga group, which
then owned 50.26% of BLTB’s shares
having purchased the same from the
Potenciano group, was not present at the
said meeting. The Potenciano group filed a
petition for certiorari with the SEC En Banc.
The SEC En Banc set aside the Order of the
Hearing Panel and issued the writ of
preliminary injunction prayed for. The
Bitanga group immediately filed a a petition
for certiorari with the Court of Appeals which
reversed the assailed Orders of the SEC En
Banc and reinstating the Order of the
Hearing Panel. The Court of Appeals denied
petitioner’s Motion for Reconsideration.
Hence, this petition.
Villanueva v. Adre, G.R. No. The employees of South Cotabato W/N Velayo may be held Yes, he may be held liable had there been
80863, April 27, 1989 Integrated Port Services, Inc. (SCIPSI), Inc personally liable using the no off-court settlement rendering the petition
filed a case against SCIPSI and it's Doctrine of Piercing the Veil of moot and academic. In the case of A.C.
president, Velayo for the unpaid 13th month Corporate Fiction despite his Ransom Labor Union-CCLU v. NLRC it was
pays. The employees garnered a favorable contention that he is just the held that it is the president of the corporation
judgement. As a result, two lands owned by who responds personally for violation of the
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Velayo were levied upon by the sheriff. president and that he was never a labor pay laws. Art. 273 of the Labor Code
Velayo assailed the decision contending that party to the case provides that: "Any person violating any of
he was never a party to the labor case and the provisions of Art. 265 of this Code shall
that a corporation has a separate and distinct be punished by ... imprisonment". To apply
personality from its incorporators, this provision Art. 212. It states that
stockholders and officers. He also contends “Employer” includes any person acting in the
that he was never mentioned in the interest of an employer, directly or indirectly.
pleadings before the petitioner-labor arbiter In this case, just like RANSOM, SCIPSI is an
and therefore is a stranger to the case. Soon artificial being that acts through its officers.
After, the parties agreed to an off court RA 602 states that criminal responsibility is
settlement. with the "Manager or in his default, the
person acting as such", in this case, it would
be the president. Velayo cannot be excused
from payment of SCIPSI's liability by mere
reason of SCIPSI's separate corporate
existence. The theory of corporate entity, in
the first place, was not meant to promote
unfair objectives or otherwise, to shield
them. This Court has not hesitated in
penetrating the veil of corporate fiction when
it would defeat the ends envisaged by law,
not to mention the clear decree of the Labor
Code.
Ching v. CA, et al., G.R. No. Ching signed 13 trust receipts (granted by 1) Whether or not mere corporate 1) Yes. Section 13 of PD 115 states that, “If
164317, February 6, 2006 RCBC), as a surety for PBMI, covering the officers should be held liable for the violation or offense is committed by a
goods for importation by the latter. Ching the violation of PD No. 115 by the corporation, partnership, association or
was given the authority to sell but not by way corporation despite the principle other judicial entities, the penalty provided
of conditional sale, pledge or otherwise; and of separate corporate personality for in this Decree shall be imposed upon the
in case such goods were sold, to turn over 2) If they may be made liable, directors, officers, employees or other
the proceeds thereof as soon as received, to whether or not Ching is the proper officials or persons therein responsible for
apply against the relative acceptances and corporate officer to stand as a the offense, without prejudice to the civil
payment of other indebtedness to RCBC. defendant liabilities arising from the criminal offense.”
When the trust receipts matured, Ching A corporation cannot be proceeded against
failed to return the goods to RCBC, or to criminally because it cannot commit crime in
return their value. RCBC filed a criminal which personal violence or malicious intent
complaint for estafa against Ching. is required, criminal action is limited to the
He could be proceeded against in two ways: corporate agents guilty of an act amounting
as surety as determined by the Supreme to a crime and never against the corporation
Court or as the corporate official responsible itself.
for the offense under P.D. No. 115.
2) Yes, Ching is the proper corporate officer
to stand as defendant for the crime. Ching,
having participated in the negotiations for the
trust receipts and having received the goods
for PBMI, it was inevitable that he is the
proper corporate officer to be proceeded
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the course of its business, BMPI still has unpaid subscriptions claim the doctrine of corporate fiction
commissioned PRINTWELL to print should be made liable for the otherwise (to deny creditors to collect from
Philippines, Inc. (a magazine published and debts of the corporation by SH) it would create an injustice because
distributed by BMPI). PRINTWELL extended piercing the veil of corporate creditors would be at a loss (limbo) against
30-day credit accommodation in favor of fiction whom it would assert the right to collect.
BMPI and in a period of 9 mos. BMPI placed
several orders amounting to 316,000. On Piercing the Veil:
However, only 25,000 was paid hence a Although the corporation has a personality
balance of 291,000. separate and distinct from its SH, such
personality is merely a legal fiction (for the
PRINTWELL sued BMPI for collection of the convenience and to promote the ends of
unpaid balance and later on impleaded justice) which may be disregarded by the
BMPI’s original stockholders and courts if it is used as a cloak or cover for
incorporators to recover on their unpaid fraud, justification of a wrong, or an alter ego
subscriptions. It appears that BMPI has an for the sole benefit of the SH.
authorized capital stock of 3M divided into
300,000 shares with P10 par value. Only As to the Trust Fund Doctrine:
75,000 shares worth P750,000 were The RTC and CA correctly applied the Trust
originally subscribed of which P187,500 Fund Doctrine. Under which, corporate
were paid up capital. Halley subscribed to debtors might look to the unpaid
35,000 shares worth P350,000 but only paid subscriptions for the satisfaction of unpaid
P87,500. corporate debts. Subscriptions to the capital
of a corporation constitutes a trust fund for
Halley contends that they all had already the payment of the creditors (by mere
paid their subscriptions in full by presenting analogy) In reality, corporation is a simple
official receipts (O.R.), BMPI had a separate debtor. Moreover, the corporation has no
and distinct personality and BOD and SH legal capacity to release an original
had resolved to dissolve BMPI. subscriber to its capital stock from the
obligation of paying for his shares, in whole
RTC and CA both ruled that BMPI merely or in part, without valuable consideration, or
used the corporate fiction as a cloak/cover to fraudulently, to the prejudice of the creditors.
create an injustice (against PRINTWELL). The creditor is allowed to maintain an action
They also rejected the allegations of full upon any unpaid subscriptions and thereby
payment in view of irregularity in the steps into the shoes of the corporation for the
issuance of O.R.s (Payment made on a later satisfaction of its debt. The trust fund
date was covered by an O.R. with a lower doctrine is not limited to reaching the SH’s
serial number than payment made on an unpaid subscriptions. The scope of the
earlier date. doctrine when the corporation is insolvent
encompasses not only the capital stock but
also other property and assets generally
regarded in equity as a trust fund for the
payment of corporate debts.
HEIRS OF FE TAN UY vs. Respondent iBank granted loans to Hammer 1. Whether Uy can be held liable 1. No, Uy is not liable. Considering that the
INTERNATIONAL Garments, covered by PNs and deeds of 2. Whether Goldkey can be held only basis for holding Uy liable for the
EXCHANGE BANK (G.R. No. assignments pursuant to the letter- liable payment of the loan was proven to be a
166282) February 13, 2013 agreement between iBank and Hammer, falsified document, there was no sufficient
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represented by its President and General justification for the RTC to have ruled that Uy
Manager, Chua, granting Hammer a P25M should be held jointly and severally liable to
credit line. The loans were secured by a iBank for the unpaid loan of Hammer. At
REM executed by Goldkey Dev’t Corp over most, Uy could have been charged with
several of its properties and a peso surety negligence in the performance of her duties
agreement signed by Chua and his wife (FE as treasurer of Hammer by allowing the
TAN UY). company to contract a loan despite its
precarious financial position. Uy’s
Hammer defaulted, iBank foreclosed shortcomings are not sufficient to justify the
Goldkey’s third party REM. The mortgaged piercing of the corporate veil, which requires
properties were sold for P12M, leaving a that the negligence of the officer must be so
balance of P13M. Hammer failed to pay the gross that it could amount to bad faith.
deficiency, iBank filed a complaint for sum of
money against Hammer, Chua, Uy and 2. Yes. It was apparent that Goldkey was
Goldkey. merely an adjunct of Hammer, and as such,
the legal fiction that it has a separate
Uy claimed she was not liable to iBank personality from that of Hammer should be
because she never executed a surety brushed aside as they are, undeniably, one
agreement in favor of iBank as her signature and the same.
was forged.Goldkey denies liability averring
that it acted only as a third party mortgagor
and that it was a corporation separate and
distinct from Hammer.
ESGUERRA, ET AL. V. Esguerra filed an action to annul the Free Whether or not the Court of NO, The general rule is that a corporation
HOLCIM PHILIPPINES, INC Patent in the name of de Guzman alleging Appeals gravely erred in not can only exercise its powers and transact its
G.R. No. 182571, September himself to be the owner over the disputed lot dismissing Holcim’s petition for business through its board of directors and
2, 2013 in Matiktik, Norzagaray, Bulacan. De certiorari on the ground of lack of through its officers and agents when
Guzman sold the lot to herein respondents board resolution authorizing the authorized by a board resolution or its
who utilized the land extracted limestones filing of the petition bylaws. Absent the said board resolution, a
from it. The Court granted such action and petition may not be given due course.
remanded the case to the Trial Court for However, this admits to exceptions such as
execution. The RTC denied HOLCIM’s in the case at bar when the corporation
motion for reconsideration and motion for performed acts in substantial compliance to
ocular inspection. It held that the petitioners such requirement. While the board
proved their entitlement to the royalties resolution may not have been attached,
totaling to ₱91,872,576.72. CA, on the other HOLCIM complied just the same when it
hand, granted the petition which prompted attached the Secretary’s Certificate dated
petitioners to filed the case before the July 17, 2006, thus proving that O’Callaghan
Supreme Court. One of the claims of the had the authority from the board of directors
petitioner is that HOLCIM’s petition for to appoint the counsel to represent them in
certiorari in the CA failed to comply with the Civil Case No. 725-M-89.
rules on Verification and Certification of Non-
Forum Shopping because the latter did not
secure and/or attach a certified true copy of
a board resolution authorizing any of its
officers to file said petition. Thus, the CA
should have dismissed outright HOLCIM’s
petition before it.
RURAL BANK OF LIPA CITY Reynaldo Villanueva, Sr., a stockholder of Whether or not there was valid NO. For a valid transfer of stocks, there must
V. COURT OF APPEALS G.R. the Rural Bank of Lipa City assigned his transfer of the shares to the Bank be strict compliance with the mode of
No. 124535. September 28, shares, as well as those of 8 other that would deprive the Villanueva transfer prescribed by law. The requirements
2001 shareholders under his control with a total of spouses to exercise their rights as are: (a) There must be delivery of the stock
10,467 shares, in favor of the stockholders stockholders. certificate: (b) The certificate must be
of the Bank. Sometime thereafter, Reynaldo endorsed by the owner or his attorney-in-fact
Villanueva, Sr. and his wife, Avelina, or other persons legally authorized to make
executed an Agreement wherein they the transfer; and (c) To be valid against third
stipulated that said debt will be paid out of parties, the transfer must be recorded in the
the proceeds of the sale of their real property books of the corporation. As it is, compliance
described in the Agreement. The Villanueva with any of these requisites has not been
spouses also assured the Board on a clearly and sufficiently shown. Still, while the
subsequent meeting that their debt would be assignment may be valid and binding on the
paid on or before December 31 of that same bank, et al. and the Villanuevas, it does not
year; otherwise, the Bank would be entitled necessarily make the transfer effective.
to liquidate their shareholdings, including Consequently, the Villanuevas cannot, as
those under their control and any deficiency yet, be deprived of their rights as
shall be secured by other collateral sufficient stockholders, until and unless the issue of
therefor. The Villanuevas failed to make ownership and transfer of the shares in
good their obligation, thereafter their shares question is resolved with finality.
of stock were converted into Treasury
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Yamamoto offering to the latter the return of b. Such domination or control was used by
equipment which were his capital the defendant to commit fraud or wrong, to
contributions to Wako. perpetuate the violation of a right of positive
legal duty
Yamamoto attempted to recover the said c. Said breach of duty was the proximate
equipment however, this attempt was cause of the injury complained of.
frustrated. This forced Yamamoto to file a The absence of either one of these elements
complaint for replevin against the prevents the application of the doctrine. It is
respondents on January 15, 1992, before not the form which the courts consider, but
the Regional Trial Court of Makati. rather, how the corporation operated and the
individual defendant’s relationship to that
The RTC ruled in favor of Yamamoto and operation.
declared him as the rightful owner and
possessor of the equipment. In this case, Yamamoto failed to show by
clear and convincing evidence the presence
On appeal, the Court of Appeals reversed of any of the elements aforementioned.
the RTC decision holding that the equipment There is no showing that Nishino used the
are corporate property of NLII and could not separate personality of NLII to unjustly act or
be retrieved without the authority of the NLII do wrong in contravention of Yamamoto’s
Board of Directors. It also held that the rights.
doctrine of piercing the veil of corporate
fiction does not apply. Finally, that
Yamamoto’s invocation of the doctrine of
promissory estoppel does not apply.
Following AmCham's policy and practice, go with the position, including use of the
there was a yearly renewal of employment MPC share, also ceased to exist. It now
contract between Thomson and AmCham. behooves Thomson to surrender said share
Separate letters of employment advice in to AmCham's next nominee, another natural
various dates mentioned the MPC share. But person. Obviously this arrangement of trust
Thomson never acknowledged that and confidence cannot be defeated by
AmCham is the beneficial owner of the Thomson's citation of the MPC rules to
share. shield his untenable position, without doing
When Thomson's contract of employment violence to basic tenets of justice and fair
was up for renewal, he notified AmCham that dealing.
he would no longer be available as EVP. Petition for Review on Certiorari is DENIED
Still, AmCham asked Thomson to stay on for and AFFIRMED CA’s decision.
another 6 months. Thomson indicated his
acceptance of the consultancy arrangement
with a counter-proposal in his letter:
“Retention of the MPC share, subject to
reimbursing the purchase price to the
Chamber.” However, AmCham rejected
Thomson's counter-proposal. Pending the
negotiation for the consultancy arrangement,
AmCham executed a Release and
Quitclaim. The quitclaim, expressed in
general terms, did not mention specifically
the MPC share. AmCham, sent a letter to
Thomson demanding the return and delivery
of the MPC share which "AmCham owns and
placed in Thomson's name. Am Cham filed
a complaint against Thomson with RTC
Makati, which render judgment stating that:
(1) The ownership of the contested MPC
share is adjudicated in favor of Thomson;
and; (2) Thomson shall pay AmCham the
sum of P300k. RTC awarded the MPC share
to Thomson on the ground that the AOI and
By-laws of MPC prohibit artificial persons,
such as corporations, to be club members. It
was the intention of the parties that a
membership to MPC was to be secured by
AmCham for Thomson’s use. The latter was
to execute the necessary documents to
acknowledge ownership of the Polo
membership in favor of Thomson. However,
Thomson had second thoughts and decided
to keep the membership for himself.
AmCham appealed to CA. The latter
reversed RTC’s decsision and ordered
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Teng filed a petition for certiorari and It is clear that Teng's position does not have
prohibition under Rule 65 ROC. SEC, legal basis. The delivery or surrender
through the OSG, filed a Comment which adverted to by Teng, i.e., from Ting Ping to
Teng moved to expunge. CA dismissed the TCL, is not a requisite before the
petition and denying the motion to expunge conveyance may be recorded in its books.
SEC's comment. To compel Ting Ping to deliver to the
corporation the certificates as a condition for
the registration of the transfer would amount
to a restriction on the right of Ting Ping to
have the stocks transferred to his name,
which is not sanctioned by law. The only
limitation imposed by Sec. 63 is when the
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mere business conduit or alter ego of Export relationship or connection between the two
Bank, the dominant parent corporation, corporations, which will justify the setting
which justifies piercing of the veil of aside of the veil of corporate fiction.
corporate fiction, and issued an alias writ of
summons directing defendant EIB N.B. Control Test
Securities, Inc., and/or Export and Industry 1. Control, not mere majority or complete
Bank, Inc., to fully comply therewith. It stock control, but complete domination, not
ratiocinated that being one and the same only of finances but of policy and business
entity in the eyes of the law, the service of practice in respect to the transaction
summons upon E–Securities has bestowed attacked so that the corporate entity as to
jurisdiction over both the parent and wholly– this transaction had at the time no separate
owned subsidiary.Export Bank filed before mind, will or existence of its own;
the Court of Appeals (CA) a petition for 2. Such control must have been used by the
certiorari with prayer for the issuance of a defendant to commit fraud or wrong, to
temporary restraining order (TRO) seeking perpetuate the violation of a statutory or
the nullification of the RTC Order for having other positive legal duty, or dishonest and
been made with grave abuse of discretion unjust act in contravention of plaintiff’s legal
amounting to lack or excess jurisdiction. The right; and
CA reversed the RTC Order and explained 3. The aforesaid control and breach of duty
that the alter ego theory cannot be sustained must [have] proximately caused the injury or
because ownership of a subsidiary by the unjust loss complained of.
parent company is not enough justification to
pierce the veil of corporate fiction. There
must be proof, apart from mere ownership,
that Export Bank exploited or misused the
corporate fiction of E–Securities. The
existence of interlocking incorporators,
directors and officers between the two
corporations is not a conclusive indication
that they are one and the same. The records
also do not show that Export Bank has
complete control over the business policies,
affairs and/or transactions of E–Securities. It
was solely E–Securities that contracted the
obligation in furtherance of its legitimate
corporate purpose; thus, any fall out must be
confined within its limited liability.
ELCEE FARMS INC. V. Private respondents were regular farm Whether or not Saguemuller is No. A corporation has a personality separate
NLRC, ET AL., G.R. No. workers in Hacienda Trinidad, owned and subsidiarily liable with Elcee and distinct from those of the persons
126428, January 25, 2007 operated by Elcee Farms. According to Farms for the payment of composing it as well as from that of any other
them, Corazon Saguemuller was the separation pay and damages. legal entity to which it may be related. In
president of Elcee Farms, but it was actually Santos v. NLRC, a corporate officer was not
her son, Konrad, who was the president held liable for the obligations incurred by the
thereof. Elcee Farms later entered into a corporation, where the corporate officer was
lease agreement with Garnele but most of not even shown to have had a direct hand in
the private respondents continued to work in the dismissal of the employee enough to
28
Hacienda Trinidad. Garnele then sub-leased attribute to him an unlawful act. No evidence
Hacienda Trinidad to Hilado, who operated was presented to prove that Saguemuller
HILLA. Private respondents were allowed to was truly the president of Elcee Farms. Nor
continue working in Hacienda Trinidad under was there even proof that she was in active
HILLA’s management. Afterwards, Hilado management of the corporation and had
and the United Sugar Farmers’ Organization dictated policies for implementation by the
(USFO) entered into a CBA, which contained corporation. There is also no evidence on
a closed shop provision. Due to their refusal record that she had acted maliciously or in
to join the labor union, private respondents bad faith in terminating the services of the
were terminated by HILLA. Private private respondents; nor has it been shown
respondents, filed against Elcee Farms, that she has in any way consented to the
Saguemuller, HILLA and two of its officers a simulated lease contract which effectively
complaint for illegal dismissal with terminated the services of the private
reinstatement with back wages and respondents.
separation pay with damages.
FEDERATED LPG DEALERS The CIDG-AFCCD of the PNP acting on the Whether or not respondents, as No. Section 4 of BP 33, as amended, states
ASSOCIATION V. DEL request for assistance of petitioner, members of the Board of that: "When the offender is a corporation,
ROSARIO, ET AL., G.R. No. conducted surveillance and investigation of Directors of ACCS, must be partnership, or other juridical person, the
202639, November 9, 2016 ACCS Ideal Gas Corporation (ACCS) for criminally prosecuted for the president, the general manager, managing
allegedly committing the acts of illegal latter's alleged violation/s of BP 33 partner, or such other officer charged with
trading of petroleum products and as amended. the management of the business affairs
underfilling of LPG cylinders in violation of thereof, or employee responsible for the
BP 33, as amended by PD 1865. A test-buy violation shall be criminally liable. " Neither
operation was done and the inspection and of the respondents was the President,
evaluation of the refilled LPG cylinders General Manager, or Managing Partner of
revealed that they were underfilled. Search ACCS. Respondents who were mere
warrants were issued against the officers of members of the Board of Directors are not
ACCS and a search and seizure operation also shown to be charged with the
was conducted. Again, inspection and management of the business affairs.
evaluation of the said filled LPG cylinders
showed that they were underfilled.
Complaints were filed against respondents,
as members of the BOD of ACCS, for illegal
trading of petroleum products and for
underfilling of LPG cylinders under BP 33, as
amended.
Associated Bank versus Spouses Vaca executed a REM in favor of Whether Associated Bank is Yes, AB is bound by the 2nd letter-
Spouses Rafael and Monaliza Associated Bank (AB) covering land in bound by the 2nd letter- agreement. The general rule is that, in the
Pronstroller – G.R. No. Quezon City. The Vacas’ defaulted which led agreement signed by Atty. Soluta absence of authority from the board of
148444, July 14, 2008 to the property’s foreclosure and auction under the doctrine of apparent directors, no person, not even its officers,
where AB was the highest bidder. Spouses authority. can validly bind a corporation. The power
Vaca, however, filed an action for the and responsibility to decide whether the
nullification of the REM and the foreclosure corporation should enter into a contract that
sale. On the other hand, AB filed for a writ of will bind the corporation is lodged in the
possession which was denied by the RTC. board of directors. However, just as a natural
On appeal, the CA granted said writ which person may authorize another to do certain
29
caused Spouses Vaca to appeal the CA acts for and on his behalf, the board may
decision. validly delegate some of its functions and
During the pendency of said cases, AB powers to officers, committees and agents.
advertised the property for sale to which
Respondents Pronstroller responded AB had previously allowed Atty. Soluta to
favorably through Atty. Soluta, AB’s VP, enter into the first agreement without a board
CorSec and Board member. The spouses resolution expressly authorizing him; thus, it
then paid the downpayment. AB, through had clothed him with apparent authority to
Atty. Soluta and respondents’, executed a modify the same via the second letter-
letter-agreement requiring that the balance agreement. Further, the two (2) letter-
of the purchase price be deposited under agreements were written on a paper with
escrow agreement within 90 days from date AB’s letterhead. It is not the quantity of
of the agreement. Prior to end of 90day similar acts which establishes apparent
period, respondents proposed that the authority, but the vesting of a corporate
balance be due only upon service of a final officer with the power to bind the corporation.
decision of the SC affirming AB’s right to By holding Atty. Soluta to possess the
possess the property. Atty. Soluta referred authority to enter into the agreement which
this to the bank’s ARRMC which merely led respondents to deal with him, AB is now
deferred action. A month after such estopped from denying such authority.
proposal, Atty. Soluta, acting for AB, and
respondents executed a 2nd letter-
agreement adopting the proposal of
respondents.
election (manifestation) and even the The holdover doctrine accords validity to
certificates of nomination of representatives what would otherwise be deemed as
(CoN) for those years carried Robles’ dubious corporate acts and gives continuity
signature as its president. to a corporate enterprise in its relation to
outsiders. The voting members of BUHAY
For the May 2007 elections, BUHAY duly elected Robles as party President in
submitted its manifestation and CoN bearing October 1999 and although his regular term
Robles’ signature again. However, two (2) as such President expired in October 2002,
days prior to Robles’ submission of his no election was held to replace him and the
nominations, Dr. Hans Christian Señeres other original set of officers. Further,
(Señeres), holding himself as the acting BUHAY’s constitution and by-laws do not
president and secretary-general of BUHAY, expressly or impliedly prohibit a hold-over
also filed a CoN with the COMELEC. situation. As such, since no successor was
Señeres then filed a petition to deny due ever elected or qualified, Robles remained
course to Robles’ CoN with the COMELEC the President of BUHAY in a hold-over
contending that said nominations were null capacity.
and void for they were made without
authority for Robles’ term already expired. The view is that one who continues with the
BUHAY expelled Señeres as party member discharge of the functions of an office after
for his act of submitting a CoN for the party the expiration of his or her legal term, having
without authority and nominating no successor appointed or chosen in the
representatives not even members of the meantime, is commonly regarded as a de
party. facto officer, even where no provision is
made by law for his holding over and there is
nothing to indicate the contrary. By fiction of
law, the acts of such de facto officer are
considered valid and effective. Hence,
Robles merely acted as a hold-over
president for BUHAY and his acts of causing
the submission of the manifestation and the
CoN is, therefore, valid and effective.
PIONEER vs. CA G.R. No. Lim entered into a contract of sale to Japan Whether or not the failure of Lim, No, there was no de facto partnership that
84197 July 28, 1989 Domestic Airlines (JDA) regarding aircrafts Cervantes, Bormacheco and was created. It was held that persons who
and spare parts. Pioneer Insurance Maglana to incorporate attempt but fail to form a corporation and
executed and issued a surety bond in favor automatically result to a de facto who carry on business under the corporate
of JDA on behalf of Lim. Lim convinced partnership name occupy the position of partners inter se
Bormacheco, Cervantes Brothers and and their rights as members of the company
Maglana to contribute funds to buy the two to the property acquired by the company will
aircrafts and spare parts which would form be recognized. However, such a relation
part of a new corporation that would expand does not necessarily exist, for ordinarily
his airline business. Lim then executed in persons cannot be made to assume the
favor of Pioneer a chattel mortgage relation of partners when their purpose is
stipulating that Lim transfers the two aircrafts that no partnership shall exist and it should
and spareparts to Pioneer as a security for be implied only when necessary to do justice
the suretyship. Lim defaulted on his between the parties
payment. Lim signing and executing the chattel
31
of P200,000.00 divided into 20,000 shares at absence of consideration, is null the stockholders as claimed by petitioner.
a par value of P10.00 each. Petitioner Datu and void. The power to issue shares of stocks in a
Tagoranao Benito subscribed to 460 shares 2. Whether or not the increase in corporation is lodged in the board of
worth P4,600.00. the authorized capital stock from directors and no stockholders' meeting is
P200,000.00 to P1,000,000.00 necessary to consider it because additional
Respondent corporation filed a certificate of without the consent or express issuance of shares of stocks does not need
increase of its capital stock from waiver of the stockholders, is null approval of the stockholders. The by-laws of
P200,000.00 to P1,000,000.00. It was and void. the corporation itself states that 'the Board of
shown in said certificate that P191,560.00 Trustees shall, in accordance with law,
worth of shares were represented in the provide for the issue and transfer of shares
stockholders' meeting held on November 25, of stock of the Institute and shall prescribe
1975 at which time the increase was the form of the certificate of stock of the
approved. Thus, P110,980.00 worth of Institute. The general rule is that pre-emptive
shares were subsequently issued by the right is recognized only with respect to new
corporation from the unissued portion of the issue of shares, and not with respect to
authorized capital stock of P200,000.00. Of additional issues of originally authorized
the increased capital stock of shares.
P1,000,000.00, P160,000.00 worth of
shares were subscribed. 2.No. With respect to the claim that the
increase in the authorized capital stock was
Petitioner Datu Tagoranao filed with without the consent, expressed or implied, of
respondent SEC a petition alleging that the the stockholders, it was the finding of the
additional issue of previously subscribed Securities and Exchange Commission that a
shares of the corporation was made in stockholders' meeting was held on
violation of his pre-emptive right to said November 25,1975 and among the many
additional issue and that the increase in the items taken up then were the change of
authorized capital stock of the corporation name of the corporation, the increase of its
from P200,000.00 to P1,000,000.00 was capital stock from P200,000.00 to
illegal considering that the stockholders of P1,000,000.00, and the increase of the
record were not notified of the meeting number of its Board of Trustees from five to
wherein the proposed increase was in the nine. "Despite the insistence of petitioner,
agenda. this Commission is inclined to believe that
there was a stockholders' meeting on
Petitioner prayed that the additional issue of November 25, 1975 which approved the
shares of previously authorized capital stock increase. The petitioner had not sufficiently
and the shares issued from the increase in overcome the evidence of respondents that
capital stock of respondent corporation be such meeting was in fact held. What
cancelled and that the corporation be petitioner successfully proved, however, was
ordered to render an accounting of funds to the fact that he was not notified of said
the stockholders. The SEC rendered a meeting and that he never attended the
decision as follows: same. Another thing that petitioner was able
(a) That the issuance by the corporation of to disprove was the allegation in the
its unissued shares was validly made and certificate of increase that all stockholders
was not subject to the pre-emptive rights of who did not subscribe to the increase of
stockholders capital stock have waived their pre-emptive
right to do so. As far as the petitioner is
36
(b) That there is no sufficient legal basis to concerned, he had not waived his pre-
set aside the certificate issued by this emptive right to subscribe as he could not
Commission authorizing the increase in have done so for the reason that he was not
capital stock of respondent corporation from present at the meeting and had not executed
P200,000.00 to Pl,000,000.00. Considering, a waiver, thereof. Not having waived such
that petitioner has not waived his pre- right and for reasons of equity, he may still
emptive right to subscribe to the increased be allowed to subscribe to the increased
capitalization, respondent corporation is capital stock proportionate to his present
directed to allow petitioner to subscribe shareholdings.
thereto, at par value, proportionate to his
present shareholdings.
(c) To direct respondent corporation to
comply with the requirement of filing annual
financial statements under pain of a more
drastic action.
MAJORITY STOCK In 1983, Ruby Corporation is already Whether or not the extension of No. Among the requirements for extension of
HOLDERS OF RUBY experiencing severe financial losses. It filed the corporate term was valid. corporate term is a vote of 2/3 of the
INDUSTRIAL CORP v. a petition for suspension of payments with Outstanding Capital Stock. The ratification
LIM. G.R. No. 165887, June 6, the Securities and Exchange Commission by the majority stockholders of the board
2011. which granted it. A management committee resolution for the extension was seriously
was formed to manage and control Ruby disputed by the minority stockholders (The
Corp. and study and evaluate a rehabilitation 2/3 OCS was obtained by the majority only
plan. 2 rehabilitation plans were submitted, because of their wrongful increase of
one from Benhar (by the majority subscription, in other words, under the
stockholders), and another is the Alternative invalid additional subscriptions). The notice
(by the minority). and quorum requirement were insufficient
and doubtful. No extension was validly
The Benhar plan was denied, and upon its made. The term has expired, which calls for
revision, was executed/implemented by the the liquidation of the corporation.
majority despite the contention of the
minority stockholders and the creditors of the
corporation. The validity of it was made an
issue in the courts. Meanwhile, the majority
stockholders increased the subscription
without notifying the minority, so the majority
got a 2/3 of the OCS. Using that, they
extended the corporate term in 1996 for
another 25 years. The term was supposed to
end in 1997. In 1998, the Benhar plan's
validity was finally adjudicated and was
declared null and void.
PNCC SKYWAY WORKERS PNCC Workers Organization (The Whether or not the verification The union president has the authority file the
ORGANIZATION v. PNCC Union/Petitioner) and the PNCC Skyway and certification against forum remedies with the courts. The late board
SKYWAY. G.R. No. 171231, (The employer/respondent) entered into shopping is defective, having resolution of June 2006 was only a
February 17, 2010. their collective bargaining agreement. Under signed by the Union President reiteration of the October 2005 resolution
the said agreement, the employer shall authorizing the president to do so. The
37
schedule the vacation leaves for the who had no authority via board purpose of certification
employees, taking into consideration their resolution. against forum shopping is that the party
preferences of schedule. Also in the litigant shall not be allowed to pursue
agreement was that the employees shall simultaneous remedies in different fora. The
bear the expenses of the renewal of their union president has authority because of the
license as security personnel. following reasons: 1. It was granted via
board resolution, 2. He is in the position to
A labor dispute involving the validity of the know the truthfulness and correctness of the
provisions of the CBA arose. When the case action, and 3. Assuming that there was no
was already in the CA, the union authorized board resolution of Oct. 2005, the authority
the Union President to represent the was ratified in June 2006, thus curing the
petitioner union (to sign the verification and defects of the certification against forum
certification against forum shopping). The shopping made in Feb. 2006.
ruled against the petitioner in Jan. 2006. The
union elevated it to the SC in Feb. 2006.
A.C. RANSOM LABOR CIR held respondent RANSOM guilty of Whether or not piercing of the veil Piercing the veil of the corporate fiction is
UNION-CCLU V. NLRC unfair labor practice of interference and of corporate fiction of the proper. The finding of this Court holding the
G.R. No. L-69464, May 29, discrimination and ordered said corporation RANSOM corporation is proper in officers and agents of RANSOM jointly and
1987 the payment of backwages. Successive the case at bar? severally liable for the payment of
motions for execution were filed by the backwages does not ignore the legal fiction
prevailing Petitioner-UNION but RANSOM that a corporation has a personality separate
opposed contending that it was suffering and distinct from its stockholders and
from financial difficulties and has no members, for, as this Court had held “where
necessary funds for the payment of the the incorporators and directors belong to a
backwages. Subsequently, respondent single family, the corporation and its
RANSOM filed before the Sec. of labor to members can be considered as one in order
cease operation and terminate employment, to avoid its being used as an instrument to
which was then granted by the latter. commit injustice,". When the notion of legal
Another motion for executions were filed by entity is used as a means to perpetrate fraud
the UNION alleging that although RANSOM or an illegal act or as a vehicle for the
had assumed a posture of suffering from evasion of an existing obligation, the
business reverse, its officers and principal circumvention of statutes, and or confuse
stockholders had organized a new legitimate issues the veil which protects the
corporation namely the Rosario Industrial corporation will be lifted
Corporation (ROSARIO) using the same
equipment, personnel, business stocks and
the same place of business. RANSOM
declared that ROSARIO is a distinct and
separate corporation which was organized
long before the cases were decided
adversely against RANSOM.
capitalization divided into 10,000 common dividend, making the proceeds corporation cancels or redeems stock issued
shares at par value of 100 per share. Don taxable. as a dividend at such time and in such
Andres subscribed to 4,963 shares of the manner as to make the distribution and
5,000 shares originally issued. Eventually, cancellation or redemption, in whole or in
ANSCOR’s authorized capital stock was part, essentially equivalent to the distribution
increased to which Don Andres subscribed of a taxable dividend, the amount so
after the other stockholders waived in favor distributed in redemption or cancellation of
of the former their pre-emptive rights to the stock shall be considered as taxable
subscribe to the new issues. ANSCOR income to the extent it represents.
declared stock dividends. For exempting clause to apply Sec. 83 a)
Later on, Don Andres died. The record there is redemption or cancellation b)
reveals that he has 185,154 shares, 50,495 transaction involves stock dividends c) time
of which are original issues and the balance and manner of the transaction makes it
of 134,659 shares as stock dividend equivalent to a distribution of taxable
declaration.One –half of the shareholdings dividends.
92,577 were transferred to his wife Doa
Carmen Soriano as her conjugal share. The In the case at bar, it is undisputed that at the
other formed part of his estate. time of the last redemption, the original
common shares owned by the estate were
Doa Carmen exchanged her whole common only 25,247.5. This means that from the total
shares into preferred shares. As well as the of 108,000 shares redeemed from the
estate of Don Andres, thus, reducing his estate, the balance of 82,725.5 must have
estate common shares to 127,727. come from stock dividends hence, proceeds
of the redemption is additional wealth, for it
A board resolution was passed redeeming is not merely a return of capital but a gain.
the common shares from the estate of Don
Andres twice. The purpose for both The purposes invoked by ANSCOR to justify
redemptions as stated is to partially retire redemptions are no excuse for its tax liability.
stocks as treasury shares in order to reduce
the company’s foreign exchange
remittances in case cash dividends are
declared.
several measures to correct the irregularities the Board of Directors cannot escape liability
found by the COA. Because of this, the because they were guilty of gross
Board Members of BENECO adopted negligence and bad faith in directing the
several resolutions depriving Cosalan of his affairs of the corporation by dismissing
salary and other benefits and suspending Cosalan without cause and due process. As
him indefinitely. Later on, he was dismissed such, they shall be solidarily liable, as
without being informed. He discovered it only provided in Section 31 of the Corporation
later when he demanded for his salary. Code.
to enjoin VULCAN from voting the shares. A between any or all of them and the
Notice of Call was published, calling for the corporation, partnership or association of
payment of (20%) of unpaid subscriptions in which they are stockholders members or
Sipalay Mining. Sec issued a resolution associates, respectively; and between such
ordering the Board of Directors and officers corporation, partnership or association and
of the corporation to call and hold said the state insofar as it concerns their
regular meeting and a Committee composed individual franchise or right to exist as such
of one representative of the Securities and entity and (2) Controversies in the election or
Exchange Commission, as Chairman, and appointments of directors, trustees, officers
one representatives each from the or managers of such corporations,
respondents and the petitioners, as partnerships or associations.
members, is hereby formed to supervise and
control the conduct of the proceedings and As correctly pointed out by the Solicitor
perform the functions of the Corporate General, the case before the SEC involves a
Secretary. controversy regarding the election of
directors of a corporation. It is apparent from
the foregoing that a controversy in the
election of directors of Sipalay Mining came
about because it was petitioners themselves
who had asked the Commission not to allow
the disputed 198,500,000 shares to be voted
on at the July 18, 1979 annual stockholders'
meeting of the corporation. . Respondent
Commission had to address itself to the
controversy by issuing its questioned order
dated June 13, 1980, directing the holding of
the annual stockholders' meeting of Sipalay
Mining for the year 1980 as mandated in its
by-laws, and creating a committee to
supervise and control the conduct of the
proceedings to insure an orderly
stockholders meeting and forestall possible
controversy in the sending of notices,
processing and validation of proxies and
closing of the stock and transfer book.
Certainly, the Commission cannot be
faulted, much less can it be said that it
exceeded its jurisdiction, for having taken all
proper measures to insure that an orderly
meeting and election are held in Sipalay
Mining in the light of the issues raised in SEC
Case No. 1751 pending before the
Commission.
Fil-Estate Golf and FEGDI was the developer of the Forest Hills Whether or not the delay in the Yes. The Court cited Raquel-Santos v. Court
Development, Inc. v. Vertex Golf and Country Club and, in consideration issuance of a stock certificate can of Appeals where it held that in “a sale of
for its financing support and construction be considered a substantial shares of stock, physical delivery of a stock
43
Sales and Trading, Inc., G.R. efforts, was issued several shares of stock of breach as to warrant rescission of certificate is one of the essential requisites
No.202079, June 10, 2013 Forest Hills. the contract of sale? for the transfer of ownership of the stocks
purchased.”
Sometime in August 1997, FEGDI sold, on
installment, to RS Asuncion Construction In this case, Vertex fully paid the purchase
Corporation one Class “C” Common Share price by February 11, 1999 but the stock
of Forest Hills for P1,100,000.00. Prior to the certificate was only delivered on January 23,
full payment of the purchase price, RSACC 2002 after Vertex filed an action for
sold, on February 11, 1999, the Class “C” rescission against FEGDI.
Common Share to respondent Vertex Sales
and Trading, Inc.. RSACC advised FEGDI of Under these facts, considered in relation to
the sale to Vertex and FEGDI, in turn, the governing law, FEGDI clearly failed to
instructed Forest Hills to recognize Vertex as deliver the stock certificates, representing
a shareholder. For this reason, Vertex the shares of stock purchased by Vertex,
enjoyed membership privileges in Forest within a reasonable time from the point the
Hills. shares should have been delivered. This
was a substantial breach of their contract
Despite Vertex’s full payment, the share that entitles Vertex the right to rescind the
remained in the name of FEGDI. Seventeen sale under Article 1191 of the Civil Code.
(17) months after the sale (or on July 28,
2000), Vertex wrote FEDGI a letter
demanding the issuance of a stock
certificate in its name. FELI replied, initially
requested Vertex to first pay the necessary
fees for the transfer. Although Vertex
complied with the request, no certificate was
issued. This prompted Vertex to make a final
demand on March 17, 2001.
Erquiaga v. CA, G.R. No. Santiago de Erquiaga was the owner of Whether or not the Court of No. The Court found no reversible error in
47206, September 27, 1989 100% or 3,100 paid-up shares of stock of the Appeals erred in annulling the trial the Court of Appeals' decision in annulling
Erquiaga Development Corporation which court's order allowing Erquiaga to the trial court's order: (1) allowing Erquiaga
owns the Hacienda San Jose in Irosin, vote the 3,100 shares of Erquiaga to vote the 3,100 shares of Erquiaga
Sorsogon. On November 4,1968, he entered Development Corporation without Development Corporation without having
into an Agreement with Jose L. Reynoso to having effected the transfer of effected the transfer of those shares in his
sell to the latter his 3,100 shares (or 100%) those shares in his name in the name in the corporate books; and (2)
of Erquiaga Development Corporation for corporate books? authorizing Erquiaga to call a special
P900,000 payable in installments on definite meeting of the stockholders of the Erquiaga
dates fixed in the contract but not later than Development Corporation and to vote the
November 30, 1968. Because Reynoso 3,100 shares, without the pre-requisite
failed to pay the second and third registration of the shares in his name. It is a
installments on time, the total price of the fundamental rule in Corporation Law
sale was later increased to P971,371.70 (Section 35) that a stockholder acquires
payable on or before December 17, 1969. voting rights only when the shares of stock
The difference of P71,371.70 represented to be voted are registered in his name in the
brokers' commission and interest. corporate books.
44
Rural Bank of Salinas v. CA Clemente Guerrero executed a special WON SEC was correct to grant Yes, Sec. 63 provides that “shares of stock
(G.R. No. 96674, June 26, power of attorney in favor of his wife, Melania the writ of mandamus. issued are personal property and may be
1992) Guerrero, granting her the full power to sell transferred by delivery of the certificate
473 shares of Rural Bank of Salinas. indorsed by the owner, attorney-in-fact, or
Melania, as attorney in fact, executed two other leaglly authorized person to make the
Deeds of Assignment for the 473 shares and transfer.” The court interpreted Sec. 63 that
subsequently presented the said deeds for the owner is at liberty to dispose shares
registration to the bank with a request for (1) without restrictions or limitations except
the transfer in the Bank’s stock and transfer when the corporation holds any unpaid
book, (2) cancellation of the certificates of claims. The right of a transferee to have
stock under the name of Clemente, and (3) stocks transferred flows from his ownership,
issuance of new certificates in the name of thus, whenever a corporation refuses to
the petitioners. However, the bank denied transfer and register stocks, which duty is
said request. ministerial on its part, mandamus may lie.
law that should govern the said proceedings. agreement entered into by the corporation.
The trial court ordered the parties to conduct However, there are instances when the
the proceedings in accordance with The distinction between personalities of
Arbitration Law (R.A. 876). SPI filed and directors, officers, representatives and of the
omnibus motion, while BF filed an urgent corporation are disregarded.
motion for clarification, both parties seeking
to clarify the term "parties" and whether SPI's When corporate veil is pierced, the
directors should be included in the arbitration corporation and persons who are normally
proceedings. treated as distinct from the corporation are
treated as one person, such that when the
The trial court issued the order directing corporation is adjudged liable, these
service of demands upon all defendants in persons, too become liable as if they were
BF's complaint. Accordingly, SPI's directors the corporation. When there are allegations
were interested parties who must also be of bad faith or malice against corporate
included in arbitration proceedings to give directors or representatives, it becomes the
them the opportunity to ventilate their side of duty of courts or tribunals to determine if
the controversy, safeguard their interest and these persons and the corporation should be
fend off their respective positions. treated as one. Without a trial, courts and
Petitioners' motion for reconsideration was tribunals have no basis determining whether
denied. Thus, they filed a petition for the veil of corporate fiction should be
certiorari with the Court of Appeals. pierced.
However, their petition and subsequent
motion for reconsideration was both When the courts disregard the corporation’s
dismissed. distinct and separate personality from its
directors or officers, the courts do not say
that the corporation, in all instances and for
all purposes, is the same as its directors,
stockholders, officers and agents. Courts
merely discount the distinction and treat
them as one, in relation to a specific act, in
order to extend the terms of the contract and
the liabilities for all damages to erring
corporate officials who participated in the
corporation’s illegal acts.
project in which they were hired. It was convenience, justify wrong, protect fraud or
however found that at the time of the defend crime, or is used as a device to
termination that the project had not yet been defeat the labor laws, or as an adjunct, a
completed. business conduit or an alter ego of another
corporation.
Private respondents then filed a complaint
for illegal dismissal against petitioner. The The test in determining the applicability of
Labor Arbiter (LA) ruled in favor of the private the doctrine of piercing the veil of corporate
respondents which decision became final fiction is as follows: (1) Control which is the
and executory. A writ of execution was then complete domination of policy and business
issued, but service of the writ failed since the practice in respect to the transaction
petitioner no longer occupies its premises. attacked in such a manner that the
Also, the employees in the premises claimed corporation had at the time no separate
Hydro Pipes Philippines, Inc. (HPPI) as their mind, will or existence of its own; (2) Such
employer and not petitioner. Subsequently, a control must have been used by the
certain Dennis Cuyegkeng filed a third-party defendant to commit fraud or wrong in
claim with the LA alleging that the properties contravention of plaintiff’s legal rights; and
sought to be levied in the premises are (3) the aforesaid control and breach of duty
owned by HPPI of which he is the Vice- must proximately cause the injury or unjust
President. loss complained of.
Private respondents then filed a "Motion for In this case, both the petitioner and HPPI
Issuance of a Break-Open Order," alleging submitted on the same day their respective
that HPPI and petitioner are one and the Information Sheets with SEC bearing the
same. HPPI opposed contending that HPPI same address and filed by the same person
is separate and distinct from petitioner. HPPI who represents himself as the corporate
also argued that it is engaged in secretary of both corporations. Also, both
manufacturing business while petitioner was corporations had the same president, the
then engaged in construction. LA denied the same board of directors, the same corporate
motion. On appeal, the NLRC reversed. officers, and substantially the same
subscribers. Clearly, petitioner ceased its
business operations in order to evade
payment to private respondents of
backwages and to bar their reinstatement to
their former positions. HPPI is obviously a
business conduit of petitioner and its
emergence was skillfully orchestrated to
avoid the financial liability that already
attached to petitioner corporation. From the
foregoing, the application of the doctrine of
piercing the veil of corporate fiction is
warranted. SC then upheld the break-open
order.
CRYSTAL V. BPI G.R. No. Sps. Raymundo and Desamparados Crystal Whether or not CA correctly No. A juridical person is generally not entitled
172428, November 28, 2008 (Sps. Crystal) bound themselves as sureties awarded moral damages to BPI to moral damages because, unlike a natural
for the loans obtained by Cebu Contractors person, it cannot experience physical
50
Consortium Co. (CCCC) from the Bank of suffering or such sentiments as wounded
the Philippine Islands-Butuan branch (BPI- feelings, serious anxiety, mental anguish or
Butuan) and BPI - Cebu City branch (BPI- moral shock. In the case of People v. Manero
Cebu). and Mamulao Lumber v. PNB, the SC ruled
that it is only when a juridical person has a
CCCC failed to pay its loans to both BPI- good reputation that is debased, resulting in
Butuan and BPI-Cebu when they became social humiliation, that moral damages may
due. Thus, BPI resorted to the foreclosure of be awarded. It is for this reason that CA
the chattel mortgage and the real estate awarded moral damages to BPI after
mortgage. To recover the deficiency, BPI recognizing the latter’s famliarity not only in
filed a complaint for sum of money against the Philippines but also in the whole world.
the Sps.Crystal. RTC ruled in favor of BPI
and ordered the foreclosure of Sps. Crystal’s However, in the more recent cases of ABS-
properties. CBN Corp. v. Court of Appeals, et al. and
Filipinas Broadcasting Network, Inc. v. Ago
Sps. Crystal then filed an action for Medical and Educational Center-Bicol
Injunction with Damages arguing that they Christian College of Medicine (AMEC-
are mere guarantors of CCCC and that BPI BCCM), the Court held that the statements
failed to first exhaust all the properties of in Manero and Mambulao were mere obiter
CCCC. RTC ruled in favor of BPI and dicta, implying that the award of moral
ordered Sps. Crystal to pay moral and damages to corporations is not a hard and
exemplary damages. CA affirmed. fast rule. Indeed, while the Court may allow
the grant of moral damages to corporations,
it is not automatically granted; there must still
be proof of the existence of the factual basis
of the damage and its causal relation to the
defendant's acts. This is so because moral
damages, though incapable of pecuniary
estimation, are in the category of an award
designed to compensate the claimant for
actual injury suffered and not to impose a
penalty on the wrongdoer.
incorporators to some friends, among them parties until the transfer is properly recorded
the late Juan T. Chuidian to whom he gave in the books of the corporation. In the instant
1,500 shares of stock. The shares of stock case, there is no dispute that the questioned
were registered in the name of Chuidian only 1,500 shares of stock of E. Razon, Inc. are
as nominal stockholder and with the in the name of the late Juan Chuidian in the
agreement that the said shares of stock were books of the corporation. From the point of
owned and held by the petitioner but view of the corporation, therefore, Chuidian
Chuidian was given the option to buy the was the owner of the 1,500 shares of stock.
same. In such a case, the petitioner who claims
The petitioner maintains that his aforesaid ownership over the questioned shares of
oral testimony as regards the true nature of stock must show that the same were
his agreement with the late Juan Chuidian on transferred to him by proving that all the
the 1,500 shares of stock of E. Razon, Inc. is requirements for the effective transfer of
sufficient to prove his ownership over the shares of stock in accordance with the
said 1,500 shares of stock. corporation's by laws, if any, were followed.
The law is clear that 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. Since the
certificate of stock covering the questioned
1,500 shares of stock registered in the name
of the late Juan Chuidian was never indorsed
to the petitioner, the inevitable conclusion is
that the questioned shares of stock belong to
Chuidian.
Westmond Bank v. Inland Respondent incurred loan obligations from WON Calo was clothed with Yes. It was shown that Calo was the one
Construction (March 23, 2009 petitioner secured by a Real Estage apparent authority to transact for assigned to transact on petitioner bank's
- G.R. 123650) Mortgage and Promissory Notes. The the petitioner bank. behalf respecting loan transactions of Inland,
president of Inland, Aranda, executed a as well as those of Hanil-Gonzales and
deed of assignment in favor of Abrantes, Abrantes. As such, there's a presumption
executive vice president and general that Calo had authority to sign the deed. It
manager of Hanil-Gonzales Corporation. was also found that Abrantes notified the
Abrantes assumed other obligations of petitioner bank of his assumption of Inland's
Inland and Aranda including the Promissory obligation and petitioner sent a reply
Notes executed by Inland in favor of approving the same. Petitioner did not prove
petitioner. Respondent received a notice of by clear and convincing evidence that it
sheriff's sale foreclosing the REM, so didn't cloth Calo with apparent authority
respondent filed an injunction suit against neither it did present any resolution from the
petitioner. Petitioner bank alleged that it had board confirming Calo's lack of authority.
no knowledge nor it did give its conformity to
the alleged assignment of obligation covered
by the promissory note. RTC found that
petitioner bank ratified the acts of its
accounting officer, Calo, when its executive
53
P95,439.93. The number P95,439.93 First, the set off or deduction was pre mature
represented the unpaid balance for the since there was no call for payment of the
shares of stock he previously subscribed to. unpaid subscribed shares of stock from the
respondent corporation.
Second, the set off or deduction was
unlawful since Article 113 of the Labor Code
does not allow such a deduction from the
wages of the employees by the employer.
PEOPLE V. DUMLAO AND Respondent Dumlao, a member of the GSIS Whether or not the motion to No, the motion to dismiss is not valid. The
GONZALES Board of Trustees, executed a lease- dismiss is valid. lease-purchase agreement was deemed
G.R. No. 168918, March 2, purchase agreement with respondent La'o executed. There's a difference between
2009 over GSIS properties consisting of three minutes of the meeting and a board
parcels of land and their associated resolution. A board resolution is a company
improvements. The Office of the act, approving a transaction of the
Ombudsman determined that the lease- corporation by its members. The non-signing
purchase agreement was grossly by the majority of the members of the GSIS
advantageous to the government and so Board of Trustees of the said minutes does
charged Dumlao, La'o and the rest of the not necessarily mean that the supposed
people involved in the lease-purchase resolution was not approved by the board. A
agreement with violation of the Anti-Graft board resolution affirming the lease-
and Corrupt Practices act. Dumlao in his purchase agreement exists and is valid
defense averred that the lease-purchase without a complete signing of the minutes of
was non existent since only 3 out of 7 of the the meeting for the lease-purchase
Board of Trustees of the GSIS signed the agreement.
minutes of the meeting for the lease-
purchase agreement. 4 out of 7 must sign
the minutes of the meeting according to
Dumlao before the lease-purchase can be
deemed executed. Dumlao then filed a
motion to dismiss grounded on the above as
basis.
Maria Clara Pirovana Et Al Vs. Enrico Pirovano was the President and Whether or not the defendant YES. The donation is valid and binding.
The De La Rama Steamship General Manager of the De la Rama corporation may give by way of The provisions second article (g) (j) of the
Co., Steamship Company. Early in 1941 the donation the proceeds of said articles of incorporation of the Dela Rama
G.R. No. L-5377, December company insured the life of said Enrico insurance policies to the minor Co. gives the corporation broad and almost
29, 1954 Pirovano in various Philippine and American children of the late Enrico unlimited powers to carry out the purposes
Life Insurance companies.He was killed by Pirovano under the law or its for which it was organized among them.
the Japanese. the current President of De la articles of corporation, or is that Granting arguendo that the donation given
Rama Steamship proposed that it is but fit donation an ultra vires act? by Pirovano children is outside the scope of
and proper that the company which owes so the powers of the defendant corporation, or
much to the deceased should make some the scope of the powers that it may exercise
provision for his children. He proposed that under the law, or it is an ultra vires act, still it
out of the proceeds of the insurance policies may said that the same cannot be
the sum of P400,000 be set aside for invalidated, for the reason alone, it
Pirovano’s minor children, said sum of appearing that the donation represents not
money to be convertible into 4,000 shares of only the act of the Board of Directors but of
56
the stock of the Company, at par, or 1,000 the stockholders by ratifying the resolution
shares for each child. A resolution was duly approved by the board. Such ratification
adopted to carry out the proposal and made the act perfectly valid and enforceable.
submitted to the stockholders of the De la
Rama company at a meeting properly
convened, and on that same date the same
was duly approved. SEC rendered its
opinion that the donation was void because
the corporation could not dispose of its
assets by gift and therefore the corporation
acted beyond the scope of its corporate
powers.
In 1951, in view of the failure of compliance
with the conditions to which the above
donation was made subject, and in view of
the opinion of the SEC Commissioner, the
majority of the stockholders' voted to revoke
the resolution approving the donation to the
Pirovano children.
BARBA V. LICEO DE Petitioner was hired as medical Whether or not her appointment is NO. In respondent’s by-laws, there are four
CAGAYAN UNIVERSITY, officer/school physician by Respondent. a corporate office which divest officers specifically mentioned, namely, a
G.R. No. 193857, November Later on, she was chosen by respondent to jurisdiction from LA and NLRC. president, a vice president, a secretary and
28, 2012 be the recipient of a scholarship grant to a treasurer. In addition, it is provided that
pursue a three-year residency training in there shall be other appointive officials, a
VMMC. Thereafter, she was appointed College Director and heads of departments
Acting Dean and eventually appointed as whose appointments, compensations,
Dean of the College of Physical Therapy by powers and duties shall be determined by
respondent’s President, Dr. Golez. Because the board of directors. A College Dean is not
of drastic decreased of number of student among the corporate officers mentioned in
enrollees in her department during her respondent’s by-laws. Petitioner, being an
tenure, she was informed that her deanship academic dean, also held an administrative
will terminate upon the end of school year. post in the university but not a corporate
Thereafter, the college ceased operations office as contemplated by law. Petitioner
and petitioner went on leave. A letter was was not directly elected nor appointed by the
sent to petitioner informing her to return to board of directors to any corporate office but
work as full-time faculty professor/member her appointment was merely approved by
as also indicated in the grant of scholarship the board together with the other academic
as an agreement. Petitioner however claims deans of respondent university in
for separation pay as there exists a demotion accordance with the procedure prescribed in
which constitutes dismissal. LA decided in respondent’s Administrative Manual.
favor of respondent finding no constructive Moreover, the CA, in its amended decision
dismissal. NLRC reversed the decision. erroneously equated the position of a
Respondent filed an appeal before CA which College Director to that of a College Dean
decided that there was no constructive thereby concluding that petitioner is an
dismissal but did not touch upon the officer of respondent.
petitioner's issue on jurisdiction of LA and
57
Focus. Allegedly, Uniline chartered MV Asia alter ego of Uniline, or that the two
Property from its owner Focus. Uniline was corporations’ separate personalities were
not able to settle the said amount. In short, being used as a means to perpetrate fraud
Seaoil claims that the real transaction is that or wrongdoing. It is settled that a corporation
Uniline, through Rodriguez, owed money to has a personality separate and distinct from
Focus. In lieu of payment, Uniline instead its individual stockholders or members, and
agreed to convey the excavator to Focus. is not affected by the personal rights,
This was to be paid by checks issued by obligations and transactions of the latter.
Seaoil but which in turn were to be funded by The corporation may not be held liable for
checks issued by Uniline. Autocorp filed a the obligations of the persons composing it,
complaint for recovery of personal property and neither can its stockholders be held
with damages and replevin in the Regional liable for its obligation. This Court has
Trial Court. The trial court ruled in favor of recognized instances when the corporation’s
Autocorp Group stating that the transaction separate personality may be disregarded.
between Autocorp and Seaoil was a simple However, we have also held that the same
contract of sale payable in installments. It may only be done in cases where the
also held that the obligation to pay plaintiff corporate vehicle is being used to defeat
the remainder of the purchase price of the public convenience, justify wrong, protect
excavator solely devolves on Seaoil. Paul fraud, or defend crime. Moreover, the
Rodriguez, not being a party to the sale of wrongdoing must be clearly and convincingly
the excavator, could not be held liable. established.
Security Bank and Trust Sta. Ines Melale Corporation (‘Sta. Ines’) is WON the 1989 Loan Agreement Yes. There is novation; indemnity agreement
Company, Inc.vs Rodolfo M. in logging operations & a holder of a Timber novated the original credit by Cuenca is extinguished. Several
Cuenca, G.R. No. 138544, License Agreement. Security Bank granted accommodation and Cuenca’s incompatibilities between the 1989
October 3, 2000 Sta. Ines a credit line in the amount of 8M liability under the Indemnity Agreement and the 1980 original obligation
until November 30, 1981 to meet Agreement. demonstrate that the two cannot
capitalization requirements. To secure coexist(amount, purpose, and term).
payment, it executed a 1)chattel mortgage Since Cuenca did not impliedly waive his
over some of its machineries and its consent for the novated credit
President Rodolfo Cuenca 2)executed an accommodation, such clause should be
Indemnity agreement in favor of SecBank understood in the context of the ₱8 million
whereby he bound himself jointly and limit and the November 30, 1981 term. It did
severally with Sta. Ines. When Cuenca not give the bank or Sta. Ines any license to
resigned, Sta Ines availed of its credit line modify the nature and scope of the original
however encountered difficulty in making the credit accommodation.
payments; so they requested SecBank for a
complete restructuring of its credit line. It was
then approved but without notice to or the
prior consent of Cuenca (being surety of
previous credit line).
PONCE VS. ALSONS Fausto Gaid was an incorporator of ACC Whether or not the transfer of A transfer of shares of stock not recorded in
CEMENT CORPORATION having subscribed to and fully paid 239,500 shares of stock not recorded in the stock and transfer book of the
G.R. No. 105774 December shares. Vicente Ponce and Fausto Gaid the stock and transfer book of the corporation is non-existent as far as the
10, 2002 executed a “Deed of Undertaking” and corporation is nonexistent insofar corporation is concerned. As between the
“Indorsement” whereby the latter as the corporation is concerned corporation on the one hand, and its
acknowledges that the former is the owner of and no certificate of stock can be shareholders and third persons on the other,
61
said shares and he was therefore issued in the name of the the corporation looks only to its books for the
assigning/endorsing the same to Ponce. No transferee purpose of determining who its shareholders
certificates of stock corresponding to the are. It is only when the transfer has been
239,500 subscribed and fully paid shares of recorded in the stock and transfer book that
Gaid were issued in the name of Fausto G. a corporation may rightfully regard the
Gaid and/or Ponce. Despite repeated transferee as one of its stockholders.
demands, the defendants refused and
continue to refuse without any justifiable
reason to issue to Ponce the certificates of
stocks corresponding to the 239,500 shares
of Gaid, in violation of Ponce’s right to secure
the corresponding certificate of stock in his
name.
PHILIPPINE RACE HORSE V. PRHTAI, through its president, Rogelio J. Whether or not Catajan exceeded Contracts entered into by a corporate officer
PIEDRAS NEGRAS G.R. No. Catajan, entered into a contract (first his authority when it agreed to pay or obligations assumed by such officer for
192659 December 2, 2015 contract) with Fil-Estate involving the PNCDC an increased contract and in behalf of the corporation are binding
construction of housing units for price in the amount of on said corporation, if such officer has acted
P67,453,000.00. Fil-Estate then later P101,150,000.00 within the scope of his authority, or even if
assigned its rights and obligations under the such officer has exceeded the limits of his
project to PNCDC, its subcontractor. A authority, the corporation still ratifies such
second contract was forged between contracts or obligations. The doctrine of
PRHTAI and PNCDC for P80,324,788.00. apparent authority provides that a
Then PRHTAI and PNCDC signed the third corporation will be estopped from denying
contract for the construction of the same the agent’s authority if it knowingly permits
housing units, but this time for the revised one of its officers or any other agent to act
amount of P101,150,000.00 within the scope of an apparent authority,
and it holds him out to the public as
possessing the power to do those acts.
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, whether within or beyond
the scope of his ordinary powers.
Premium Marble Resources In 1982, Ayala Investment and Development WON the filing of the case for NO. By the express mandate of the
Inc. versus CA and Corporation (Ayala) issued 3 checks in the damages against ICB was Corporation Code (Section 26), all
International Corporate Bank - aggregate amount P31,663.88 payable to authorized by a duly constituted corporations duly organized pursuant
G.R. No. 96551, November 4, Premium Marble Resources, Inc. (Premium) Board of Directors of Premium. thereto are required to submit within the
1996, and drawn against Citibank. In 1982, former period therein stated (30 days) to the
officers of the Premium headed by Belen, Securities and Exchange Commission the
without any authority whatsoever from names, nationalities and residences of the
62
entitled to the benefit. Her employment there is no need to pierce the corporate veil.
under Hacienda Cataywa could not be Respondent failed to substantiate her claim
confirmed as well because Manuel that Mancy and Sons Enterprises, Inc. and
Villanueva was permanently residing in Manuel and Jose Marie Villanueva are one
Manila and Joemarie Villanueva denied and the same. She based her claim on the
having managed the farm. She was also SSS form wherein Manuel Villanueva
advised of her options: continue paying appeared as employer. However, this does
contributions as voluntary member; request not prove, in any way, that the corporation is
for refund; leave her contributions in-trust used to defeat public convenience, justify
with the System or file a petition before the wrong, protect fraud, or defend crime, or
Social Security Commission (SSC) so that when it is made as a shield to confuse the
liabilities, if any, of her employer may be legitimate issues, warranting that its
determined. separate and distinct personality be set
aside. Also, it was not alleged nor proven
Rosario Lorezo was informed by the Social that Mancy and Sons Enterprises, Inc.
Security System (SSS) Western Visayas functions only for the benefit of Manuel
Group that she cannot avail the retirement Villanueva, thus, one cannot be an alter ego
benefits since she has only paid for 16 of the other.
months, which is 104 months short of the
minimum requirement of 120 months to be While a corporation may exist for any lawful
entitled to the benefit. Her employment purpose, the law will regard it as an
under Hacienda Cataywa could not be association of persons or, in case of two
confirmed as well because Manuel corporations, merge them into one, when its
Villanueva was permanently residing in corporate legal entity is used as a cloak for
Manila and Joemarie Villanueva denied fraud or illegality. This is the doctrine of
having managed the farm. She was also piercing the veil of corporate fiction. The
advised of her options: continue paying doctrine applies only when such corporate
contributions as voluntary member; request fiction is used to defeat public convenience,
for refund; leave her contributions in-trust justify wrong, protect fraud, or defend crime,
with the System or file a petition before the or when it is made as a shield to confuse the
Social Security Commission (SSC) so that legitimate issues, or where a corporation is
liabilities, if any, of her employer may be the mere alter ego or business conduit of a
determined. person, or where the corporation is so
organized and controlled and its affairs are
so conducted as to make it merely an
instrumentality, agency, conduit or adjunct of
another corporation. To disregard the
separate juridical personality of a
corporation, the wrongdoing must be
established clearly and convincingly. It
cannot be presumed.