ESLABAN vs ONORIO

Clarita Vda. De Onorio is the owner of the land in Barangay M. Roxas, Sto. Nino, South Cotabato. Such
land is the subject for the construction of an irrigation canal of the National Irrigation Administration
(NIA). Mr. Santiago Eslaban Jr. is the project manager of NIA. The parties agreed to the construction of
the canal provided that the government will pay for the area that has been taken. A right-of-way
agreement was entered into by the parties in which respondent was paid the amount of P4, 180.00 as
right of way damages. Subsequently, respondent executed an Affidavit of Waiver of Rights and Fees
which waives her rights for the damage to the crops due to construction of the right of way. After which,
respondent demands that petitioner pay P111, 299.55 for taking her property but the petitioner
refused. Petitioner states that the government had not consented to be sued and that the respondent is
not entitled for compensation by virtue of the homestead patent under CA no. 141. The RTC held that
the NIA should pay respondent the amount of P107, 517.60 as just compensation for the 24,660 sq
meters that have been used for the construction of the canal. The Court of Appeals also affirmed the
decision of the RTC.

Issue: Whether or Not the CA erred in affirming the decision of the RTC.

Held: The CA is correct in affirming the decision of the RTC but modifications shall be made regarding
the value of the just compensation. The following are the points to be considered in arriving in this
decision.

First, Rule 7 par 5 of the Rule of Civil Procedure provides that the certification against forum shopping
should only be executed by the plaintiff or the principal. The petition for review was filed by Mr. Eslaban
jr. while the verification or certification were signed by Mr. Cesar Gonzales, an administrator of the
agency. Neither of the two has the authority to sign such certificate for they are not the plaintiff or
principal. Such case is a sufficient ground for dismissing this petition.

LAO VS CA

The Associated Anglo-American Tobacco Corporation entered into a “Contract of Sales Agent “ with
Andres Lao. Under the contract, Lao agrees to sell cigarettes manufactured and shipped by the
corporation to his business address in Tacloban City. Lao would in turn remit the sales. Esteban Co, the
Vice president and general manager of the Corporation summoned Lao for accounting. It was then
established that there was Lao’s liability. Lao encountered difficulties in complying with these
obligations. The corporation sent Ngo Kheng to supervise Lao’s sales operation. Ngo Kheng discovered
that contrary to Lao’s allegation that he still had huge collectibles from his customers, nothing was due
the Corporation from Lao’s clients. From then on, Lao no longer received shipments. Lao brought a
complaint for accounting and damages against the corporation. During the pendency of the said civil
case, Esteban co, representing the corporation as its new vice-president filed an estafe case against Lao.
Without awaiting the termination of the criminal case, Lao lodged a complaint for malicious
prosecution. The court ruled in favor of Lao declaring that the estafa case was filed without probable
cause and with malice and orders the corporation and Esteban Co to jointly and severally pay the Laos.
ISSUE: Can petitioner Co be held solidarily liable with the Corporation for whatever damages would be
imposed upon them?

HELD: NO. A perusal of Lao’s affidavit-complaint reveals that at the time he filed the same petitioner Co
was the vice-president of the Corporation. As a corporate officer, his power to bind the Corporation as
its agent must be sought from statute, charter, by-laws, a delegation of authority to a corporate officer,
or from the acts of the board of directors formally expressed or implied from a habit or custom of doing
business. In this case, no such sources of petitioner’s authority from which to deduce whether or not he
was acting beyond the scope of his responsibilities as corporate vice-president are mentioned, much
less proven. It is thus logical to conclude that the board of directors or by-laws of the corporation vested
petitioner Co with certain executive duties one of which is a case for the Corporation.

KWOK VS PHILIPPINE CARPET MANUFACTURING CORPORATION

FACTS:

Petitioner filed a complaint against the respondent corporation for the recovery of accumulated
vacation and sick leave credits before the NLRC. Petitioner clung to the verbal contract with Mr. Lim, the
President of the respondent corporation and his father-in-law for his claims. Petitioner obtained
favorable judgment. In their appeal, respondent averred that the position the petition held was not
entitled cash conversions of vacation and sick leave credits. The decision of the Labor Arbiter was
reversed. The Court of Appeals affirmed the reversed decision.

ISSUE:

Whether or not the verbal contract in favor of petitioner is valid.

RULING:

NO. It is true that for a contract to be binding on the parties thereto, it need not be in writing unless the
law requires that such contract be in some form in order that it may be valid or enforceable or that it be
executed in a certain way, in which case that requirement is absolute and independent. (Art. 1356, NCC)
But the court disbelieved petitioner’s testimony and gave credence and probative weight to the
collective testimonies of the employees and officers of the respondent corporation, including Mr. Lim,
whom the petitioner presented as a hostile witness. Even assuming that the petitioner was entitled of
such benefits, there was no record to show the record of absences to arrive at the actual number of
leave credits. There was no conformity of such agreement with the Board and if so, such claim was
already barred by prescription under Article 291 of the Labor Code.

THE EXECUTIVE SECRETARY VS CA

FACTS:

Private respondent, in behalf of its eleven licensed and registered recruitment agencies, filed a petition
for declaratory relief before the RTC of Quezon City to declare as constitutional some provisions of the
RA No. 8042 known as the Migrant Workers and Overseas Filipinos Act of 1995, with a prayer that the
court issue a temporary restraining order and writ of preliminary injunction to enjoin the enforcement
of the assailed provisions of the law. Private respondents averred that the RA No 8042 exposed its
members to the immediate and irreparable damage of being deprived of their right to a livelihoon
without due process. Petitioners opposed the petition alleging that the assailed provisions do not violate
any provisions of the Constitution.

ISSUE:

Whether or not there was grave abuse of discretion in the issuance of the preliminary injunction.

HELD:

Yes, the trial court committed a grave abuse of its discretion amounting to excess or lack of jurisdiction
in issuing the assailed order and writ of preliminary injunction; hence, it nullified the same. To be
entitled to a preliminary injunction to enjoin the enforcement of a law assailed to be unconstitutional,
the party must establish that it will suffer irreparable harm in the absence of injunctiove relief and must
demonstrate that it is likely to succeed on the merits, or that there are sufficiently serious questions
going to the merits and the balance of hardship tips decidedly in its favor.

Rural Bank of Milaor vs. Francisca Ocfemia

FACTS: Several parcels of land were mortgaged by the respondents during the lifetime of the
respondent’s grandparents to the Rural bank of Milaor as shown by the Deed of Real Estate Mortgage
and the Promissory Note. Spouses Felicisimo Ocfemia and Juanita Ocfemia, one of the respondents,
were not able to redeem the mortgaged properties consisting of seven parcels of land and so the
mortgage was foreclosed and thereafter ownership was transferred to the petitioner bank. Out of the
seven parcels of land that were foreclosed, five of them are in the possession of the respondents
because these five parcels of land were sold by the petitioner bank to the respondents as evidenced by a
Deed of Sale. However, the five parcels of land cannot be transferred in the name of the parents of
Merife Nino, one of the respondents, because there is a need to have the document of sale registered.
The Register of deeds, however, said that the document of sale cannot be registered without the board
resolution of the petitioner bank confirming both the Deed of sale and the authority of the bank
manager, Fe S. Tena, to enter such transaction.

ISSUE: May the Board of Directors of a rural banking corporation be compelled to confirm a deed of
absolute sale of real property owned by the corporation which deed of sale was executed by the bank
manager without prior authority of the board of directors of the rural banking corporation?

HELD: YES. The bank acknowledges, by its own acts or failure to act, the authority of Fe S. Tena to enter
into binding contracts. After the execution of the Deed of Sale, respondents occupied the properties in
dispute and paid the real estate taxes. If the bank management believed that it had title to the property,
it should have taken measured to prevent the infringement and invasion of title thereto and possession
thereof. Likewise, Tena had previously transacted business on behalf of the bank, and the latter had
acknowledged her authority. A bank is liable to innocent third persons where representation is made in
the course of its normal business by an agent like Manager Tena even though such agent is abusing her
authority. Clearly, persons dealing with her could not be blamed for believing that she was authorized to
transact business for and on behalf of the bank.

Inter-Asia Investments Industries vs. Court of Appeals

[GR 125778, 10 June 2003]

Facts: On 1 September 1978, Inter-Asia Industries, Inc. (Inter-Asia), by a Stock Purchase Agreement (the
Agreement), sold to Asia Industries, Inc. (Asia Industries) for and in consideration of the sum of
P19,500,000.00 all its right, title and interest in and to all the outstanding shares of stock of FARMACOR,
INC. (FARMACOR). The Agreement was signed by Leonides P. Gonzales and Jesus J. Vergara, presidents
of Inter-Asia and Asia Industries, respectively. Under paragraph 7 of the Agreement, Inter-Asia as seller
made warranties and representations. The Agreement was later amended with respect to the "Closing
Date," originally set up at 10:00 a.m. of 30 September 1978, which was moved to 31 October 1978, and
to the mode of payment of the purchase price. The Agreement, as amended, provided that pending
submission by SGV of FARMACOR's audited financial statements as of 31 October 1978, Asia Industries
may retain the sum of P7,500,000.00 out of the stipulated purchase price of P19,500,000.00; that from
this retained amount of P7,500,000.00, Asia Industries may deduct any shortfall on the Minimum
Guaranteed Net Worth of P12,000,000.00; and that if the amount retained is not sufficient to make up
for the deficiency in the Minimum Guaranteed Net Worth, Inter-Asia shall pay the difference within 5
days from date of receipt of the audited financial statements.

Issue: Whether the 24 January 1980 letter signed by Inter-Asia’s president is valid and binding.

Held: The 24 January 1980 letter signed by Inter-Asia's president is valid and binding. As held in the case
of People's Aircargo and Warehousing Co., Inc. v. Court of Appeals, the general rule is that, in the
absence of authority from the board of directors, no person, not even its officers, can validly bind a
corporation. A corporation is a juridical person, separate and distinct from its stockholders and
members, "having . . . powers, attributes and properties expressly authorized by law or incident to its
existence." Being a juridical entity, a corporation may act through its board of directors, which exercises
almost all corporate powers, lays down all corporate business policies and is responsible for the
efficiency of management, as provided in Section 23 of the Corporation Code of the Philippines. Under
this provision, the power and responsibility to decide whether the corporation should enter into a
contract that will bind the corporation is lodged in the board, subject to the articles of incorporation,
bylaws, or relevant provisions of law. However, just as a natural person may authorize another to do
certain acts for and on his behalf, the board of directors may validly delegate some of its functions and
powers to officers, committees or agents.
BPI FAMILY SAVINGS V. FIRST METRO INVESTMENT (G.R. NO. 132390)

Facts:

Respondent FMIC an investment house, through its EVP Ong, opened a current account amounting
P100M with petitioner’s San Francisco Del Monte branch upon the request of his friend which is a close
acquaintance of said bank’s branch manager with the latter’s aim of increasing the deposit level in his
branch. Petitioner through its SFDM branch manager guaranteed the payment of deposit by the FMIC
with interest on the condition that the interest is to be paid in advance. An agreement was reached
between the parties and subsequently petitioner paid FMIC upon clearance of the latter’s check deposit.
However, on the basis of an Authority to Debit signed by the EVP and Senior Manager of FMIC,
petitioner transferred P80M from FMCI’s current account to the savings account of one Tevesteco, a
stevedoring company. FMIC denied having authorized the transfer of its funds claiming that the
signatures were falsified. In order to recover immediately its deposit, FMCI issued a check payable to
itself and drawn on its deposit but was dishonored upon upon presentation for payment. Thus, FMIC
filed a complaint with the RTC which then ruled in their favor. CA affirmed.

Issue:

Whether petitioner was remiss in its fiduciary duty.

Ruling: YES.

Petitioner maintains that respondent should have first inquired whether the deposit of P100 Million and
the fixing of the interest rate were pursuant to its (petitioner’s) internal procedures. Petitioner’s stance
is a futile attempt to evade an obligation clearly established by the intent of the parties. What transpires
in the corporate board room is entirely an internal matter. Hence, petitioner may not impute negligence
on the part of respondent’s representative in failing to find out the scope of authority of petitioner’s
Branch Manager. Indeed, the public has the right to rely on the trustworthiness of bank managers and
their acts. Obviously, confidence in the banking system, which necessarily includes reliance on bank
managers, is vital in the economic life of our society.

ONG v. CA

G.R. No. 119858; April 29, 2003

FACTS:

That on or about July 23, 1990, Benito Ong, representing ARMAGRI International Corporation, conspiring
and confederating together did then and there willfully, unlawfully and feloniously defraud the
SOLIDBANK Corporation represented by its Accountant, DEMETRIO LAZARO, in the following manner, to
wit: the said accused received in trust from said SOLIDBANK Corporation, 10,000 bags of urea valued at
P, 2,050,000 specified in a Trust Receipt Agreement and covered by a Letter of Credit No. DOM GD 90-
009 in favor of the Fertiphil Corporation.

ISSUE:

Whether ARMAGRI Corp. violated the Trust Receipts Law

HELD:

No, ARMGAGRI Corp. did not violate the Trust Receipts Law

The Supreme Court held that the Trust Receipts Law recognizes the impossibility of imposing the
penalty of imprisonment on a corporation. Hence, if the entrustee is a corporation, the law makes the
officers or employees or other persons responsible for the offense liable to suffer the penalty of
imprisonment. The reason is obvious: corporations, partnerships, associations and other juridical
entities cannot be put to jail. Hence, the criminal liability falls on the human agent responsible for the
violation of the Trust Receipts Law.

In the instant case, the Bank was the entruster while ARMAGRI was the entrustee. Being the entrustee,
ARMAGRI was the one responsible to account for the goods or its proceeds in case of sale. However, the
criminal liability for violation of the Trust Receipts Law falls on the human agent responsible for the
violation.

SAPPARI K. SAWADJAAN V. CA (G.R. NO. 141735)

Facts:

Petitioner Sawadjaan was an appraiser/investigator in the Philippine Amanah Bank (PAB) when on the
basis of his report, a credit line was granted to Compressed Air Machineries and Equipment Corporation
(CAMEC) by virtue of the two parcels of land it offered as collaterals. Meanwhile, Congress passed a law
which created Al-Amanah Investment Bank of the Philippines (AIIBP) and repealed the law creating PAB,
transferring all its assets, liabilities and capital accounts to AIIBP. Later, AIIBP discovered that the
collaterals were spurious, thus conducted an investigation and found petitioner Sawadjaan at fault.
Petitioner appealed before the SC which ruled against him. Petitioner moved for a new trial claiming he
recently discovered that AIIBP had not yet adopted its corporate by-laws and since it failed to file within
60 days from the passage of its law, it had forfeited its franchise or charter and thus has no legal
standing to initiate an administrative case. The motion was denied.

Issue:

Whether or not the failure of AIIBP to file its by-laws within the period prescribed results to a nullity of
all actions and proceedings it has initiated.

Ruling: NO.
The AIIBP was created by Rep. Act No. 6848. It has a main office where it conducts business, has
shareholders, corporate officers, a board of directors, assets, and personnel. It is, in fact, here
represented by the Office of the Government Corporate Counsel, “the principal law office of
government-owned corporations, one of which is respondent bank.” At the very least, by its failure to
submit its by-laws on time, the AIIBP may be considered a de facto corporation whose right to exercise
corporate powers may not be inquired into collaterally in any private suit to which such corporations
may be a party.

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

Hydro Resources Contractors Corporation v CTA

Facts:
National Irrigation Administration (NIA) entered into an agreement with Hydro Resources for the
construction of the Magat River Multipurpose Project in Isabela. Under their contract, Hydro was
allowed to procure new construction equipment, the payment for which will be advanced by NIA. Hydro
shall repay NIA the costs incurred and the manner of repayment shall be through deductions from each
monthly payment due to Hydro. Hydro shall repay NIA the full value of the construction before the
eventual transfer of ownership.

Upon transfer, Hydro was assessed an additional 3% ad valorem duty which it paid under protest. The
Collector of Customs then ordered for the refund of the ad valorem duty in the form of tax credit. This
was then reversed by the Deputy Minister of Finance.

Issue:

Whether or not the imposition of the 3% ad valorem tax on importations is valid.

Held:

No. EO 860 which was the basis for the imposition of the ad valorem duty took effect December 1982.
The importations were effected in 1978 and 1979 by NIA. It is a cardinal rule that laws shall have no
retroactive effect unless contrary is provided. EO 860 does not provide for its retroactivity. The Deputy
Minister of Finance even clarified that letters of credit opened prior to the effectivity of EO 860 are not
subject to its provisions.

In the case, the procurement of the equipment was not on a tax exempt basis as the import liabilities
have been secured to paid under a financial scheme. It is a matter of implementing a pre-existing
agreement, hence, the imported articles can only be subject to the rates of import duties prevailing at
the time of entry or withdrawal from the customs’ custody.
SPS. LIPAT V. PACIFIC BANKING CORPORATION (G.R. NO. 142435)

Facts:

Petitioner spouses Lipat owned Bela’s Export Trading (BET) a single proprietorship engaged in the
manufacture of garments for domestic and foreign consumption. The spouses by virtue of an SPA
appointed and authorized their daughter to obtain loan from respondent Pacific Bank. A loan was
secured and as security therefore a REM was executed over the property of the spouses. Sometime
after, BET was incorporated into a family corporation named Bela’s Export Corporation (BEC) and the
loan was restructured in its name. Subsequent loans were obtained in behalf of BEC all secured by the
previous REM. BEC defaulted in its payments which led to the foreclosure and sale of the mortgaged
property. The spouses moved to annul the sale alleging that BEC is a distinct and separate personality
from them and that the REM was executed only to secure BET’s loan. Both trial court and CA ruled to
pierce the corporate veil to hold petitioner spouses liable for BEC’s obligations.

Issue:

Whether or not the doctrine of piercing the veil of corporate fiction is applicable in this case.

Ruling: YES.

We find that the evidence on record demolishes, rather than buttresses, petitioners’ contention that
BET and BEC are separate business entities. Note that Estelita Lipat admitted that she and her husband,
Alfredo, were the owners of BET and were two of the incorporators and majority stockholders of BEC. It
is also undisputed that Estelita Lipat executed a special power of attorney in favor of her daughter,
Teresita, to obtain loans and credit lines from Pacific Bank on her behalf. Incidentally, Teresita was
designated as executive-vice president and general manager of both BET and BEC, respectively.

It could not have been coincidental that BET and BEC are so intertwined with each other in terms of
ownership, business purpose, and management. Apparently, BET and BEC are one and the same and the
latter is a conduit of and merely succeeded the former. Petitioners’ attempt to isolate themselves from
and hide behind the corporate personality of BEC so as to evade their liabilities to Pacific Bank is
precisely what the classical doctrine of piercing the veil of corporate entity seeks to prevent and
remedy.

Nacpil vs. International Broadcasting Corporation

[GR 144767, 21 March 2002]

Facts: Dily Dany Nacpil states that he was Assistant General Manager for Finance/Administration and
Comptroller of Intercontinental Broadcasting Corporation (IBC) from 1996 until April 1997. According to
Nacpil, when Emiliano Templo was appointed to replace IBC President Tomas Gomez III sometime in
March 1997, the former told the Board of Directors that as soon as he assumes the IBC presidency, he
would terminate the services of Nacpil. Apparently, Templo blamed Nacpil, along with a certain Mr.
Basilio and Mr. Gomez, for the prior mismanagement of IBC. Upon his assumption of the IBC presidency,
Templo allegedly harassed, insulted, humiliated and pressured Nacpil into resigning until the latter was
forced to retire. However, Templo refused to pay him his retirement benefits, allegedly because he had
not yet secured the clearances from the Presidential Commission on Good Government (PCGG) and the
Commission on Audit (COA). Furthermore, Templo allegedly refused to recognize Nacpil's employment,
claiming that Nacpil was not the Assistant General Manager/Comptroller of IBC but merely usurped the
powers of the Comptroller. Hence, in 1997, Nacpil filed with the Labor Arbiter a complaint for illegal
dismissal and non-payment of benefits. Instead of filing its position paper, IBC filed a motion to dismiss
alleging that the Labor Arbiter had no jurisdiction over the case.

Issue:

Whether the inclusion of money claims in Nacpil’s complaint for illegal dismissal removes the case from
the ambit of the Corporation Code.

Held:

It is of no consequence that Nacpil's complaint for illegal dismissal includes money claims, for such
claims are actually part of the perquisites of his position in, and therefore linked with his relations
with, the corporation. The inclusion of such money claims does not convert the issue into a simple
labor problem. Clearly, the issues raised by Nacpil against the IBC are matters that come within the
area of corporate affairs and management, and constitute a corporate controversy in contemplation
of the Corporation Code.

Ong Yong, et al. vs. Tiu, et al.

[GR 144476, 8 April 2003]; also Tiu, et al. vs. Ong Yong, et al. [GR 144629]

Facts: In 1994, the construction of the Masagana Citimall in Pasay City was threatened with stoppage
and incompletion when its owner, the First Landlink Asia Development Corporation (FLADC), which was
owned by David S. Tiu, Cely Y. Tiu, Moly Yu Gow, Belen See Yu, D. Terence Y. Tiu, John Yu and Lourdes C.
Tiu (the Tius), encountered dire financial difficulties. It was heavily indebted to the Philippine National
Bank (PNB) for P190 million. To stave off foreclosure of the mortgage on the two lots where the mall
was being built, the Tius invited Ong Yong, Juanita Tan Ong, Wilson T. Ong, Anna L. Ong, William T. Ong
and Julia Ong Alonzo (the Ongs), to invest in FLADC. Under the Pre-Subscription Agreement they entered
into, the Ongs and the Tius agreed to maintain equal shareholdings in FLADC: the Ongs were to
subscribe to 1,000,000 shares at a par value of P100.00 each while the Tius were to subscribe to an
additional 549,800 shares at P100.00 each in addition to their already existing subscription of 450,200
shares. Furthermore, they agreed that the Tius were entitled to nominate the Vice-President and the
Treasurer plus 5 directors while the Ongs were entitled to nominate the President, the Secretary and 6
directors (including the chairman) to the board of directors of FLADC. Moreover, the Ongs were given
the right to manage and operate the mall.
Issue:

Whether the rescission of Pre-Subscription Agreement would result in unauthorized liquidation.

Held:

The rescission of the Pre-Subscription Agreement will effectively result in the unauthorized distribution
of the capital assets and property of the corporation, thereby violating the Trust Fund Doctrine and the
Corporation Code, since rescission of a subscription agreement is not one of the instances when
distribution of capital assets and property of the corporation is allowed. Rescission will, in the final
analysis, result in the premature liquidation of the corporation without the benefit of prior dissolution in
accordance with Sections 117, 118, 119 and 120 of the Corporation Code.

INTERNATIONAL EXPRESS TRAVEL & TOUR SERVICES, INC., vs COURT OF APPEALS

FACTS:

On June 30 1989, petitioner, through its managing director, wrote a letter to the Philippine Football
Federation (Federation), through its president private respondent Henri Kahn, wherein the former
offered its services as a travel agency to the latter. The offer was accepted.

Petitioner secured the airline tickets for the trips of the athletes and officials of the Federation to the
South East Asian Games in Kuala Lumpur as well as various other trips to China and Brisbane. Petitioner
sued Henri Kahn in his personal capacity and as President of the Federation and impleaded the
Federation as an alternative defendant. Petitioner sought to hold Henri Kahn liable for the unpaid
balance for the tickets purchased by the Federation on the ground that Henri Kahn allegedly guaranteed
the said obligation.

ISSUE: WON the doctrine of corporation by estoppel applies in this case.

RULING:

It follows that private respondent Henry Kahn should be held liable for the unpaid obligations of the
unincorporated Philippine Football Federation. It is a settled principle in corporation law that any
person acting or purporting to act on behalf of a corporation which has no valid existence assumes such
privileges and becomes personally liable for contract entered into or for other acts performed as such
agent. As president of the Federation, Henri Kahn is presumed to have known about the corporate
existence or non-existence of the Federation.
PILIPINAS LOAN COMPANY VS SEC

FACTS:

On September 11, 1990, private respondent filed a complaint against petitioner with the Prosecution
and Enforcement Department (PED) of the SEC docketed as PED CASE No. 90-0737. The complaint
alleged that: (1) petitioner, contrary to the restriction set by the Commission, has been operating and
doing business as a pawnbroker, pawnshop or sanglaan in the same neighborhood where private
respondent has had its own pawnshop for 30 years in violation of its primary purpose and without the
imprimatur of the Central Bank to engage in the pawnshop business thereby causing unjust and unfair
competition with private respondent; and (2) the business name of petitioner, PILIPINAS Loan, bears
similarity in spelling and phonetics with the corporate name of private respondent, FILIPINAS Pawnshop,
creating constant confusion in the minds of the public and the customers of private respondent. In the
same complaint, private respondent urged the SEC to: (1) order petitioner to change its business name,
Pilipinas Loan, and cease from using it in the near future; (2) order Pilipinas Loan to cease and desist
from engaging in the business of pawnbroking as defined under PD No. 114; and (3) impose upon the
director, officers, employees or persons responsible such penalties as may be proper under the law.

ISSUE:

Whether or not the condition or restriction in the articles of incorporation of a corporation has been
violated.

HELD:

A corporation, under the Corporation Code, has only such powers as are expressly granted to it by law
and by its articles of incorporation,[8] those which may be incidental to such conferred powers, those
reasonably necessary to accomplish its purposes and those which may be incident to its existence.[9] In
the case at bar, the limit of the powers of petitioner as a corporation is very clear, it is categorically
prohibited from engaging in pawn broking as defined under PD 114. Hence, in determining what
constitutes pawn brokerage, the relevant law to consider is PD 114. Indispensable therefore to the
determination of whether or not petitioner had violated its articles of incorporation, was an inquiry by
the SEC if petitioner was holding out itself to the public as a pawnshop. It must be stressed that the
determination of whether petitioner violated PD 114 was merely incidental to the regulatory powers of
the SEC, to see to it that a corporation does not go beyond the powers granted to it by its articles of
incorporation.

Ang Mga Kaanib vs. Iglesia (December 12, 2001)

FACTS: Respondent Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng Katotohanan (Church of God in
Christ Jesus, the Pillar and Ground of Truth), is a non-stock religious society or corporation registered in
1936. Sometime in 1976, one Eliseo Soriano and several other members of respondent corporation
disassociated themselves from the latter and succeeded in registering on March 30, 1977 a new non-
stock religious society or corporation, named Iglesia ng Dios Kay Kristo Hesus, Haligi at Saligan ng
Katotohanan. Respondent corporation filed with the SEC a petition to compel the Iglesia ng Dios Kay
Kristo Hesus, Haligi at Saligan ng Katotohanan to change its corporate name to another name that is not
similar or identical to any name already used by a corporation, partnership or association registered
with the Commission. Petitioner is compelled to change its corporate name and be barred from using
the same or similar name on the ground that the same causes confusion among their members as well
as the public. SEC rendered a decision ordering petitioner to change its corporate name. The Court of
Appeals rendered the assailed decision affirming the decision of the SEC En Banc.

ISSUE: Whether the court of appeals failed to properly appreciate the scope of the constitutional
guarantee on religious freedom

RULING: The additional words "Ang Mga Kaanib " and "Sa Bansang Pilipinas, Inc." in petitioner's name
are, as correctly observed by the SEC, merely descriptive of and also referring to the members, or
kaanib, of respondent who are likewise residing in the Philippines. These words can hardly serve as an
effective differentiating medium necessary to avoid confusion or difficulty in distinguishing petitioner
from respondent. This is especially so, since both petitioner and respondent corporations are using the
same acronym — H.S.K.; not to mention the fact that both are espousing religious beliefs and operating
in the same place. The fact that there are other non-stock religious societies or corporations using the
names Church of the Living God, Inc., Church of God Jesus Christ the Son of God the Head, Church of
God in Christ & By the Holy Spirit, and other similar names, is of no consequence. It does not authorize
the use by petitioner of the essential and distinguishing feature of respondent's registered and
protected corporate name.

INDUSTRIAL REFRACTORIES CORPORATION OF THE PHILIPPINES vs. COURT OF APPEALS

Facts:

Respondent Refractories Corporation of the Philippines (RCP) is a corporation duly organized on October
13, 1976. On June 22, 1977, it registered its corporate and business name with the Bureau of Domestic
Trade.

Petitioner IRCP was incorporated on August 23, 1979 originally under the name "Synclaire
Manufacturing Corporation". It amended its Articles of Incorporation on August 23, 1985 to change its
corporate name to "Industrial Refractories Corp. of the Philippines". Both companies are the only local
suppliers of monolithic gunning mix. Respondent RCP then filed a petition with the Securities and
Exchange Commission to compel petitioner IRCP to change its corporate name.

Issue:

Are corporate names Refractories Corporation of the Philippines (RCP) and "Industrial Refractories Corp.
of the Philippines" confusingly and deceptively similar?
Ruling:

Yes, the petitioner and respondent RCP’s corporate names are confusingly and deceptively similar.
Further, Section 18 of the Corporation Code expressly prohibits the use of a corporate name which is
"identical or deceptively or confusingly similar to that of any existing corporation or to any other name
already protected by law or is patently deceptive, confusing or contrary to existing laws". The policy
behind said prohibition is to avoid fraud upon the public that will have occasion to deal with the entity
concerned, the evasion of legal obligations and duties, and the reduction of difficulties of administration
and supervision over corporation.

MONFORT HERMANOS AGRICULTURAL DEVELOPMENT CORPORATION v. ANTONIO B. MONFORT III,

GR No. 152542 & 155472, 2004-07-08

Facts:

Monfort Hermanos Agricultural Development Corporation, a domestic private corporation, is the

registered owner of a farm, fishpond and sugar cane plantation known as Haciendas San Antonio II,
Marapara, Pinanoag and Tinampa-an, all situated in Cadiz City.

It also owns one unit of motor vehicle and two units of tractors.[4] The same allowed Ramon H.
Monfort, its Executive Vice President, to breed and maintain fighting cocks in his personal capacity at
Hacienda San Antonio. The group of Antonio Monfort III, through force and intimidation, allegedly took
possession of the 4 Haciendas, the produce thereon and the motor vehicle and tractors, as well as the
fighting cocks of Ramon H. Monfort.

Issues:

whether or not Ma. Antonia M. Salvatierra has the legal capacity to sue on behalf of the Corporation.

Ruling:

A corporation has no power except those expressly conferred on it by the Corporation Code and those
that are implied or incidental to its existence. In turn, a corporation exercises said powers through its
board of directors and/or its duly authorized officers and... agents. Thus, it has been observed that the
power of a corporation to sue and be sued in any court is lodged with the board of directors that
exercises its corporate powers. In turn, physical acts of the corporation, like the signing of documents,
can be performed... only by natural persons duly authorized for the purpose by corporate by-laws or by
a specific act of the board of directors.
FCY CONSTRUCTION CORP vs CA

FCY Construction Group, Inc. (FCY) was awarded a contract by the Department of Public
Works and Highways to build a flyover. In 1993, FCY entered into a joint venture agreement
with Ley Construction and Development Corporation (LCDC) in order for the latter to help
FCY in carrying out the contract. Things however went sour between the two as LCDC later
claimed it’s not being paid by FCY. LCDC then filed a collection suit against FCY but it
impleaded Francis Yu, the president of FCY in the complaint.
ISSUE: Whether or not Francis Yu should be impleaded.
HELD: As a general rule, a corporate officer like Yu is shielded from the liability of the
corporation because the corporation has a personality separate and distinct from its officers.
However, this rule admits of some exception. Personal liability of a corporate director,
trustee or officer along (although not necessarily) with the corporation may so validly attach,
as a rule, only when:
1. He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith or gross
negligence in directing its affairs, or (c) for conflict of interest, resulting in damages to the
corporation, its stockholders or other persons;
2. He consents to the issuance of watered down stocks or who, having knowledge thereof,
does not forthwith file with the corporate secretary his written objection thereto;
3. He agrees to hold himself personally and solidarily liable with the corporation; or
4. He is made, by a specific provision of law, to personally answer for his corporate action.
In this case, Yu’s personal liability cannot be determined because the evidence adduced
does not show any of the above circumstances.

MALAYANG SAMAHAN NG MGA MANGGAGAWA NG MGA MANG GAGAWA SA M. GREENFIELDS VS

RAMOS

FACTS:

In February 1990, M. Greenfield, Inc. (MGI), through its officers Saul Tawil, Carlos Javelosa, and Renato
Puangco began terminating employees. The corporation closed down one of their plants and so they
said they have to retrench the number of employees. Consequently, the Malayang Samahan ng mga
Manggagawa sa M. Greenfield (MSMG-UWP) filed an illegal dismissal case against MGI. The National
Labor Relations Commission, chaired by Cresencio Ramos, ruled against the union. But on appeal, the
decision of the NLRC was reversed and the corporation was ordered, among others, to pay the
employees’ backwages. The union further appealed as they contend that the officers of the corporation
should be held solidarily liable.

ISSUE: Whether or not the officers of the corporation should be held solidarily liable.

HELD: No. A corporation is a juridical entity with legal personality separate and distinct from those
acting for and in its behalf and, in general from the people comprising it. The rule is that obligations
incurred by the corporation, acting through its directors, officers and employees are its sole liabilities.
There is no question that MGI is guilty of illegal dismissal but the officers cannot be held solidarily liable.

It’s true that there’s a plethora of illegal dismissal cases where the SC made corporate officers personally
liable but these cases usually involve corporate officers who acted in bad faith in illegally dismissing
employees. Corporate directors and officers may be solidarily liable with the corporation for the
termination of employment of corporate employees if the same is done with malice or in bad faith.

DBP VS CA

FACTS:

Spouses Piñedas are registered owners of a parcel of land in Capiz, which they mortgaged to DBP to
secure the loan (P20,000) they obtained from the latter. Piñedas eventually defaulted, prompting DBP to
extra-judicially foreclose and take possession of such property. The Ministry of Justice, then, opined
through its Opinion No. 92 (’78) that lands covered by P.D. No. 27, to which the subject property was
included, may not be the object of foreclosure proceedings. The Piñedas, then, sought to redeem such
property (with P10,000 as downpayment) but was denied as the land was allegedly tenanted. They then
sought the cancellation of the title and specific performance, stating that DBP acted in bad faith when it
took possession of the property andcaused the consolidation of its title in spite of the fact that the 5-
year redemption period expressly stated in the Sheriff’s Certificate of Sale had not yet lapsed and that
their offer to redeem was within the redemption period.

ISSUE:

Whether or not DBP acted in bad faith when it took possession of the property

RULING: NO.

DBP’s act of consolidating its title and taking possession of the property after the expiration of the
redemption period was in accordance with Sec. 6 of Act No. 3135, which states that if no redemption of
a foreclosed property is made within one year, the purchaser (DBP) is entitled as a matter of right to
consolidate and to possess the property. In addition to this, it was in consonance with Sec. 4 of the
mortgage contract between DBP and the Piñedas where they agreed the appointment of DBP as
receiver to take charge and to hold possession of the mortgaged property in case of foreclosure. In fact,
without DBP’s act of consolidating its title, the Piñedas would not be able to assert their right to
repurchase the property within 5 years, which would begin to run after the expiration of the one-year
period. Thus, its acts cannot be tainted with bad faith nor did it impair Piñedas’ right to repurchase.
SHIPSIDE INCORPORATED vs. COURT OF APPEALS

Facts: The petitioner filed a certiorari with the CA containing the requisite certification on non-forum
shopping but failed to attach proof that the person signing the certification was authorized to do so. The
CA dismissed the petition. The petitioner submits a motion for reconsideration which attached a
secretary’s certificate attesting to the signatory’s authority to sign certificates against forum shopping
on behalf of the petitioner. When the court of CA denied the motion, the petitioner sought relief with
the SC.

Issue: Whether the CA erred in dismissing the petition of Shipside Inc.

Ruling: Yes, the CA erred in the dismissal of the petition. The SC revised the decision of CA recognizing
the belated filing of the certifications against forum shopping as permitted in exceptional circumstances.
It further held that with more reason should a petition be given due course when this incorporates a
certification on non-forum shopping without evidence that the person signing the certifications was an
authorized signatory and the petitioner subsequently submits a secretary’s certificate attesting to the
signatory’s authority in its motion for consideration.

The court allows belated submission of certifications showing proof of the signatory’s authority in
signing the certification of forum shopping.

TAM WING TAK vs MAKASIAR

Sometime before November 1992, Vic Ang Siong issued a check to Concord-World Properties, Inc. The
check amounted to P83.5 million. The check however bounced. In November 1992, Tam Wing Tak filed
an affidavit-complaint for violation of the Anti-Bouncing Checks Law against Ang Siong. The fiscal did not
file a criminal information against Ang Siong because apparently Concord-World and Ang Siong are
settling out of court (in fact Ang Siong already paid P19 million); and that Tam Wing Tak was not
authorized by the Board of Directors of Concord-World to sue Ang Siong. Tam Wing Tak then filed a
petition for mandamus to compel the fiscal to file the information. Judge Ramon Makasiar dismissed the
petition.

ISSUE: Whether or not the petition should be granted.

HELD: No. The petition for mandamus shall not lie. There was no grave abuse of discretion when the
fiscal refused to file the information. Concord-World is the named payee in the check that bounced. As
payee, Concord-World is the injured party hence only Concord-World can file the criminal case against
Ang Siong but it did not do so because it chose to amicably settle the issue with Ang Siong. Where a
corporation is an injured party, its power to sue is lodged with its board of directors or trustees. This can
be delegated but Tam Wing Tak never proved that he was authorized by the Board of Concord-World.
MC ENGINEERING VS NLRC

FACTS:

Petitioner Hanil Development Co., Ltd. (hereinafter Hanil) is the overseas employer of all contract
workers deployed by petitioner MC Engineering, Inc. under a Service Contract Agreement between the
two petitioners. Contract workers deployed by MCEI for Hanil for overseas work enter into an
employment contract with MCEI in accordance with the terms and conditions set forth by Philippine
Overseas Employment Administration (hereinafter POEA) Regulations and the Service Contract
Agreement between MCEI and Hanil[4].

On 18 September 1992, private respondent Aristotle Baldameca entered into an Employment

Agreement[5] with MCEI for deployment as a plumber in Tabuk, Saudi Arabia. He commenced working
for petitioner Hanil in Saudi Arabia on September 21, 1992. The contract was for a term of twelve (12)
months. For some reason, private respondent was not able to finish the full term of his contract and he
was repatriated back to Manila on January 19, 1993.

ISSUE:

Whether or not the failure to comply with any of the requirements shall be sufficient for the dismissal
of the petition.

HELD:

In the case at bar, the petition for certiorari filed by petitioners before the Court of Appeals contains a
certification against forum shopping. However, the said certification was signed only by the corporate
secretary of petitioner MCEI. No representative of petitioner Hanil signed the said certification. As such,
the issue to be resolved is whether or not a certification signed by one but not all of the parties in a
petition constitutes substantial compliance with the requirements regarding the certification of non-
forum shopping. However, with respect to the contents of the certification, the rule of substantial
compliance may be availed of. This is because the requirement of strict compliance with the provisions
regarding the certification of non-forum shopping merely underscores its mandatory nature in that the
certification cannot be altogether dispensed with or its requirements completely disregarded. It does
not thereby interdict substantial compliance with its provisions under justifiable circumstances.

PASCUAL and SANTOS, INC. v. THE MEMBERS OF THE TRAMO WAKAS NEIGHBORHOOD ASSOCIATION,
INC.

FACTS:

The Director of the Land Managment Bureau (LMB) granted the petition of respondent, The Members of
the Tramo Wakas Neighborhood Association, Inc. (TRAMO WAKAS) which prayed for the grant of
ownership over 3 parcels of land situated in Paranaque City. The same property is being claimed by
petitioner Pascual and Santos Inc. (PSI). PSI appealed the said decision to higher adjudicatory bodies but
was denied and dismissed for lack of merit.

The Court of Appeals (CA) likewise dismissed the petition on the ground of Infirm Verification and
Certification of Non-forum Shopping for the same does not show proof that the persons who signed
therein were duly authorized by the corporation. The Court further ruled that the petition has not been
filed on time.

ISSUE:

Whether or not the persons who executed the verification and certification of non-forum shopping
attached to PSI‘s petition were authorized to do so

HELD:

Section 6 (d) of Rule 43 in relation to Section 2 of Rule 42 of the Rules of Court mandates that a petition
for review shall contain a sworn certification against forum shopping in which the Pascual and Santos
Inc. shall attest that he has not commenced any other action involving the same issues in this Court, the
Court of Appeals or different divisions thereof, or any other tribunal or agency; if there is such other
action or proceeding, he must state the status of the same; and if he should thereafter learn that a
similar action or proceeding has been filed or is pending before this Court, the Court of Appeals, or
different divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the
aforesaid courts and other tribunal or agency thereof within five days therefrom.

PNB VS CA

FACTS:

Rita Tapnio owes PNB an amount of P2,000.00. The amount is secured by her sugar crops about to be
harvested including her export quota allocation worth 1,000 piculs. The said export quota was later
dealt by Tapnio to a certain Jacobo Tuazon at P2.50 per picul or a total of P2,500. Since the subject of
the deal is mortgaged with PNB, the latter has to approve it. The branch manager of PNB recommended
that the price should be at P2.80 per picul which was the prevailing minimum amount allowable. Tapnio
and Tuazon agreed to the said amount. And so the bank manager recommended the agreement to the
vice president of PNB. The vice president in turn recommended it to the board of directors of PNB.

ISSUE: Whether or not Tapnio is correct.

HELD: Yes. In this type of transaction, time is of the essence considering that Tapnio’s sugar quota for
said year needs to be utilized ASAP otherwise her allotment may be assigned to someone else, and if she
can’t use it, she won’t be able to export her crops. It is unreasonable for PNB’s board of directors to
disallow the agreement between Tapnio and Tuazon because of the mere difference of 0.20 in the
agreed price rate. What makes it more unreasonable is the fact that the P2.80 was recommended both
by the bank manager and PNB’s VP yet it was disapproved by the board. Further, the P2.80 per picul rate
is the minimum allowable rate pursuant to prevailing market trends that time. This unreasonable stand
reflects PNB’s lack of the reasonable degree of care and vigilance in attending to the matter. PNB is
therefore negligent.

ACESITE CORP VS NLRC

FACTS:

Leo A. Gonzales (Gonzales) was hired on October 18, 1993 as Chief of Security of Manila Pavillion
Hotel.[1] On January 1, 1995, Acesite Corporation (Acesite) took over the operations of Manila Pavillion
and renamed it Holiday Inn Manila (the hotel). Acesite retained Gonzales as Chief of Security of the
hotel. Gonzales took a 4-day sick leave and took emergency leave on March 30, 1998. On April 16-29,
1998, he again took a 12-day vacation leave, thereby using up all leaves that he was entitled for the
year. Before the expiration of his 12-day vacation leave or on April 23, 1998, Gonzales filed an
application[2] for emergency leave for 10 days commencing on April 30 up to May 13, 1998. The
application was not, however, approved. By Acesites claim, he received a telegram[3] informing him of
the disapproval and asking him to report back for work on April 30, 1998 BUT Gonzales did not report
for work.

ISSUE:

Whether or not the dismissal of Gonzalez is legal.

HELD:

NO, This Court finds no reason to depart from the findings of the Court of Appeals. Indeed, there
appears to have been no just cause to dismiss Gonzales from employment. As correctly ruled by the
Court of Appeals, Gonzales cannot be considered to have willfully disobeyed his employer. Willful
disobedience entails the concurrence of at least two (2) requisites: the employees assailed conduct has
been willful or intentional, the willfulness being characterized by a wrongful and perverse attitude; and
the order violated must have been reasonable, lawful, made known to the employee and must pertain
to the duties which he had been engaged to discharge.

HEIRS OF TERESITA DE LEON VS CA

FACTS:

On 22 May 1997, Meycauayan filed a Petition for Intervention in G.R. No. 118436. Meycauayan alleged
that on 14 May 1992, it purchased three parcels of land from Maguesun which form part of the property
awarded to the heirs of Trinidad de Leon Vda. De Roxas (Roxas heirs). Meycauayan contended that since
it is a purchaser in good faith and for value, the Court should afford it the opportunity to be heard.
Meycauayan contends that the adverse decision in G.R. No. 118436 cannot impair its rights as a
purchaser in good faith and for value.

On 25 June 1997, this Court denied the Petition for Intervention. This Court also denied the Motion for
Reconsideration filed by Maguesun. Thus, on 21 August 1997, the Decision dated 21 March 1997 in G.R.
No. 118436 became final and executory.

ISSUE:

Whether Meycauayan is guilty of forum shopping.

HELD:

YES. Meycauayans act of filing a Complaint for Reconveyance, Quieting of Title and Damages raising the
same issues in its Petition for Intervention, which this Court had already denied, also constitutes forum
shopping. Forum shopping is the act of a party against whom an adverse judgment has been rendered in
one forum, seeking another and possibly favorable opinion in another forum other than by appeal or
special civil action of certiorari. There is also forum shopping when a party institutes two or more
actions based on the same cause on the expectation that one or the other court might look with favor
on the party.

GALA VS. ELLICE AGRO-INDUSTRIAL CORP. (418 SCRA 431 [2003])

FACTS:

On March 28, 1979, the spouses Manuel and Alicia Gala, their children Guia Domingo, Ofelia Gala, Raul
Gala, and Rita Benson, and their encargados Virgilio Galeon and Julian Jader formed and organized the
Ellice Agro-Industrial Corporation.

As payment for their subscriptions, the Gala spouses transferred several parcels of land located in the
provinces of Quezon and Laguna to Ellice.

Issue:

Whether or not the purposes for which Ellice and Margo were organized should be declared as illegal
and contrary to public policy?

Held:

The Court holds that petitioners’ contentions impugning the legality of the purposes for which Ellice and
Margo were organized, amount to collateral attacks which are prohibited in this jurisdiction. The best
proof of the purpose of a corporation is its articles of incorporation and by-laws. The articles of
incorporation must state the primary and secondary purposes of the corporation, while the by-laws
outline the administrative organization of the corporation, which, in turn, is supposed to insure or
facilitate the accomplishment of said purpose.
DBP VS PRUDENTIAL BANK

FACTS:

Development Bank of the Philippines (DBP) assails in this petition for review on certiorari under Rule 45
of the Rules of Court the December 14, 1999 decision[1] and the June 8, 2000 resolution of the Court of
Appeals in CA-G.R. CV No. 45783. The challenged decision dismissed DBPs appeal and affirmed the
February 12, 1991 decision of the Regional Trial Court of Makati, Branch 137 in Civil Case No. 88-931 in
toto, while the impugned resolution denied DBPs motion for reconsideration for being pro forma.

In 1973, Lirag Textile Mills, Inc. (Litex) opened an irrevocable commercial letter of credit with
respondent Prudential Bank for US$498,000. This was in connection with its importation of 5,000
spindles for spinning machinery with drawing frame, simplex fly frame, ring spinning frame and various
accessories, spare parts and tool gauge. These were released to Litex under covering trust receipts it
executed in favor of Prudential Bank. Litex installed and used the items in its textile mill located in
Montalban, Rizal.

ISSUE:

Whether or not, DBP was a trustee ex maleficio of Prudential Bank over the articles covered by the trust
receipts.

HELD:

In a trust receipt transaction, the goods are released by the entruster (who owns or holds absolute title
or security interests over the said goods) to the entrustee on the latters execution and delivery to the
entruster of a trust receipt. The trust receipt evidences the absolute title or security interest of the
entruster over the goods. As a consequence of the release of the goods and the execution of the trust
receipt, a two-fold obligation is imposed on the entrustee, namely: (1) to hold the designated goods,
documents or instruments in trust for the purpose of selling or otherwise disposing of them and (2) to
turn over to the entruster either the proceeds thereof to the extent of the amount owing to the
entruster or as appears in the trust receipt, or the goods, documents or instruments themselves if they
are unsold or not otherwise disposed of, in accordance with the terms and conditions specified in the
trust receipt.