Cases Summary

Topic
Case Title DETAILS Question/issue

Definition &
attributes LBC Express vs. CA

WON a corp may claim moral

Filipinas Broadcasting vs. Ago Medical Radio station nag libel against a damages in cases of libel or
Center school slander?

WON Club is a Nonstock Corp even

Collector vs. Club Filipino de cebu Clubhouse for sports recreation though it has shares of stock?

Classification of
Corp.

PNOC -EDC vs. NLRC labor case for unfair labor practice

National Coal Corp vs. CIR national coal

Red line transport vs. Rural Transit RURAL Transit

Universal Mills vs. Universal textile

Corporate Name

Lyceum of the Phils vs CA

 Philipps Exposrt vs CA

Principal Office
WRONG VENUE OF FILING THE
Clavecilla Radio System vs. Antillon CASE Radio station

Treasury Shares

Hindi sya treasury shares kasi ang

intention ng pg declare ng
dividends ay para maging sole taxability of the "treasury" stock
owner sila ng company. Against dividends received by the
Commissioner vs. Manning public policy respondent

whether the term "capital" in

Section 11, Article XII of the
Capital Constitution refers to the total
Requirements common shares only or to the total
outstanding capital stock
PLDT shares to be owned by 82% (combined total of common and
Heirs of Gamboa vs Teves foreign non-voting preferred shares) 

Commencement of
Corporate Existence

Cagayan Fishing vs. Sandiko

Mun of Malabang vs. Benito

de facto
Corporation

Hall vs. Piccio

Estoppel
WON there is corporation by
Jeepney companies to consolidate, estoppel placing the case within
Lozano vs. Delos Santos nag away SEC jurisdiction?

Publishing of RPC commentaries by

Albert vs. University Publishing fake corporation
 Salvattierra vs. Garlitos

Chiang Kai Shiek vs.CA Illegal dismissal case of teacher

Corporation by
Estoppel

Asia Banking Corp vs.Standard Products

International Express Travel vs. CA

Greor Grotjahn vs. Isnani

Sulo ng Bayan vs. Araneta

Caram vs.CA

Corporate entity
theory
Rustan Pulp and Paper mills vs. CA

Cruz vs. Dalisay

 Palay Inc. vs Clave

Soriano vs. CA

Palacio vs. Fely Transport Co

Marvel Bldg. vs David

Yutivo vs. CTA

Commissioner vs. Norton Harrison

La Campana Coffee vs. Kaisahan ng

manggagawa

Cano vs. CIR

Telephone Engineering vs. WCC

Claparols vs. CIR

National Fed vs. Ople

Piercing the veil of
Corporate Fiction
A.C. Ransom vs. CA

Concept Builders vs. NLRC

 McConnel vs. CA

Tan Boon Bee vs. Jarencio

Cease vs. CA

Remo vs. IAC

Del Rosario vs. NLRC

Indophil Textile Mills vs.Galica

Piercing Not
JUSTIFIED
PNB vs. Ritratto Group

Pacific Rehaus Corp vs. CA

Yu vs. NLRC

Change in Whether or not a Philippine

Corporate Name Corporation may change its name
and still retain its
originalpersonality and
PFI vs. Hartigan individuality?

Amendment in Whether or not the corporate life

Corporate term of a corporation be extended
during the period of winding up
orafter it’s charter has already
Alhambra Cigar vs. SEC expired.

WON the Orientalist Co. is liable

for the acts of its treasurer,
Ramirez vs. Orientalist Fernandez?
Powers of the BOD -
Classification
Powers of the BOD -
Classification

Barreto vs. La Previsora

transfer of ownership to DBP thru a WON the required shareholding for

Lee vs. CA voting trust agreement a director is a legal title?
Qualifications and
Disqualifications

Detective and Protective Bureau vs. WON a non holder of a share, may
Cloribel be elected managing director?

Yao Ka Sin Trading vs. CA President ang naki kontrata

Lopez Realty vs Fontecha

Validity and Binding

effects of Actions or
Corporate Affairs Pua Casim vs. Neumark
Validity and Binding
effects of Actions or
Corporate Affairs

Yu Cuck vs. Kong Li Po

Francisco vs. GSIS

Board of Liquidators vs. Kalaw NACOCO Copra trading

Buenaseda vs. Bowen & Co.

Removal and Filling WON the remaining directors of

up of vacancies the corporation's Board, still
constituting a quorum, can elect
another director to fill in a vacancy
caused by the resignation of a
Valle Verde Country Club vs. Africa hold-over director?

WON the BOD had the power to

appropriate funds for the expenses
Central Cooperative Exchange vs.Tibe claimed by respondent?

Compensation of
Directors

WON the officers are entitled of

compensation to their capacity as
Western Inst. Of Tech vs. Salas officers not as directors?

WON the courts may declared the

Govt vs. El Hogar Filipino by-law provision null and void?
 Liability of
Corporate Officers
WON Ong should be held jointly
Tramat Mercantile vs. CA and severally liable?

Llamado vs. CA

Uichico vs. NLRC

Three-fold duty of
directors
Montelibano vs. Bacolod Murcia Milling

Strong vs. Repide

Self dealing
directors
Prime White Cement vs. Iac

Mead vs. McCullough

Pascual vs. Orosco

Everette vs. Asia Banking

 Ung President appoints officers to
conceal his fraud of approving loan
Republic Bank vs. Cuaderno money to relatives

WON the appeal may be

Western Inst. Of Tech vs. Salas considered as a derivative action?

Derivative Suit

SMC vs. Khan

Chase vs. Buencamino

Reyes vs. Tan

Gamboa vs. Victorino

maling court, kasi they sued on

Evangelista vs. Santos their capacity as stockholders
 Power to Sue and
be sued not properly served with summons.
Delta Motors vs. Mangosing Binigay sa Secretarys wife

EB Villarosa &Partner vs. Benito

(ABANDONED RULE) service of summons to a manager
Certificate of Convenience whether the purpose for which
auctioned petitioner was organized and the
Luneta Motors Co vs. AD Santos transaction of itslawful business
reasonably and necessarily require
the purchase and holding by it of
acertificate of public convenience
like the one in question and thus
give it additionalauthority to
operate thereunder as a common
Power to acquire or carrier by land.
alienate property
Govt vs. El Hogar Filipino

Director of Lands vs. CA

Power to establish
pension, retirement
and other plans Post office in the campsite, WON the subject resolution is
postmaster escaped with 13k within the powers of the company
Republic vs. Acoje mining Co. money to adopt?
Building powerplant for Cement
operations and employees of WON under its articles of
Filipinas incorporation Filipinas is
authorized to operate and
Teresa Electric vs. PSC maintain an electric plant

Implied Powers

NPC doing Stevedoring and Arastre Can a corporation do acts which

NPC vs. Vera Services are not in its charter?

Issue: WON the collection of the

development fee is a valid exercise
International school development of Corporate power of the Board of
Powers vs. Marshall fee payment Trustees

Power to increase
decrease capital Philtrust vs. Rivera Rivera is an unpaid subscriber
stock, incur, create
bond indebtedness
 Power to increase
decrease capital
stock, incur, create
bond indebtedness

reduced its authorized WON the decrease in capital stock

Madrigal vs. Zamora capitalization on two occasion is valid and binding?

Power to deny pre

emptive rights

Benito is a subsciber who was not

Benito vs. SEC able to exercise pre-emptive right

IDP vs. CA fake board of trustees WON the sale is valid?

Power to
sell/dispose assets

WON Pacific Farms should answer

Edward Nell vs. Pacific Farms for the liability of Insular Farms?

Power to acquire
own shares

Steinberg vs. Velasco

Power to invest
Funds and WON investment by the
Naginvest sila sa another company defendants were NOT in violation
procedure Dela Rama vs. Ma-ao Sugar Central na sugar related din of the law.

John Gokongwei vs. SEC

Power to Declare
Dividends Nielson & co vs. Lepanto Cons Manning

Privano vs. Dela Rama

Carlos vs. Mindoro Sugar Co

Ultra Vires Acts

Ultra Vires Acts

Japanese Warnotes vs. SEC

Crisologo-Jose vs. CA

FIN

May the failure of a corporation to

file its by-laws within one month
from the date of its incorporation,
as mandatedby Section 46 of the
Corporation Code, result in its
Loyola Grand Villas vs. CA automatic dissolution?

Can a by-law prohibit the transfer

Fleisher vs. Botica Nolasco of shares?

BY-LAWS
Govt vs. El Hogar Filipino

W/N the amended by-laws of SMC

disqualifying a competitor from
nomination or election to the
Board of Directors of SMC are valid
Gokongwei vs. SEC and reasonable.

Board of Directors vs. Tan

Meetings

Ponce vs. Encarnacion

 Meetings

NIDC vs. Aquino

Stock and
Stockholders

Trillana vs. Quezon College HE WILL pay when he catches fish

whether the stipulation contained

in the subscription to the effect
that the subscription is payable
from the first dividends declaredon
the shares has the effect of
relieving the subscriber from
he will pay when the dividends are personal liability in an action to
National Exchange vs. Dexter declared recover the value of theshares

Monserrat vs. Ceron

Chua Guan vs. Samahang Magsasaka

Uson vs. Diosomito

Padgett vs. Babcock

Lambert vs. Fox

Embassy Farms vs. CA

Razon vs. IAC

Rural Bak of Salinas vs. CA

Loan contract. He pledged his

shares. He wants the corporate sec
Tay vs. CA to transfer the stocks in his name. will mandamus lie?

WON transfer of title to such

shares is ineffective until and
unless the duly indorsed certificate
Rural Bank of Lipa vs. ca May Deed of Assignment ng shares. of stock is delivered?

Tan vs. SEC

WON the officers can be compelled

Binenta ni Po kay Nava ung 20 to enter into its stock and transfer
shares na hindi pa naman fully paid book the sale even if it was not yet
Nava vs. Peers Mktg ni PO paid ?

WON plaintiff was bound to

present and register the certificate
assigned to him within any definite
Won vs. Wack wack Golf wackwack golf rehabilitation or fixed period?

DLS claims na binili nya ung

1600000 na stocks.. Pero hndi naka WON Delos santos have title over
Delos Santos vs. Mc Grath register the stocks?
 si Soco may Chinabank shares na
50% lang ang paid.. Tapos ginawa
nya collateral sa chattel mortgage ni (1) WON Chua Soco became
Fua Cun. Eh nagkautang si Soco kay entitled to 250 shares or the
Chinabank. Inattach ni Chinabank proportionate share to his partial
Fua Cun vs.Summers ung 500 shares payment?

si Poizat nag subscribe sya ng 25%..

Tapos may 1 resolution meeting na
absent sya.. Because of that ayaw WON defendant is liable for the
Velasco vs. Poizat nya na bayaran ung 75% balance?

Nag subscribe si De Silva, sabi ng

WON the BOD may declare the
corp Delinquent daw sya. DS unpaid shares delinquent or collect
contended na sa by-laws na ung or enforce payment of the same
mga unpaid na subscription will be despite the provision of the by-
De Silva vs. Aboiitiz & Co paid from the 70% of the profit laws?

Nagkaron ng call ang Corp na

release ung mga unpaid
WON the Baltazar is correct in
subscribers.. Pero unpublished.. claiming that Resolution No. 17 of
Sabi nya hindi daw sya liable kasi 1946 of the BOD released him from
magpapa release na lang sya nung the obligation to pay for his unpaid
Lingayen Gulf vs. Baltazar part na nsubscribe nya. subscription?

Enforcement and
payment of unpaid Employee si Apocada then naging
subscriptions president… may unpaid subsc sya…
nung kukunin ung sahod nya in-off WON the set-off was properly
Apocada vs. NLRC set ng corp sa unpaid subs made?

Collection ng unpaid subscription

para pambayad sa mga company WON Lumanlan is still liable to the
Lumanlan vs. Cura creditors corporation?

Nagpromise si Roxas sa mga coco

lumbers na pag nag invest sila Ph1, WON the lumber producers are
mag invest ang govt ng Ph9. Walang liable for the full value of their
PNB vs. Bitulok Sawmill appropriation para dito. subscriptions?

Distributor ni keller si COB group..

Di nakabayad ng utang si COB group WON Keller can collect the unpaid
Edward Keller vs.COB Group puro mortgage ung sale subscriptions of the stockholders
 Sinisingil sya ng unpaid subscription WON the running of period of
with interest from the time na unpayment of subscription would
Garcia vs. Suarez nagsubscribe sya start on the day he subscribed?

May the right be exercised by an

W.G. Philpotts vs. Phil Mfg Corp agent?

Corporate Books Pardo vs.Hercules Lumber

and Records

Vegaruth vs. Isabela Sugar

Gokongwei vs. SEC

he bought 1 share in order to pry

into the transactions entered by
Gonzales vs. PNB PNB

whether Associated Bank, the

surviving corporation, may enforce
the promissory note made by
private respondent in favor of
CBTC, the absorbed company, after
the mergeragreement had been
Associate Bank vs. CA signed.

Effects of Merger
and Consolidation

WON the surviving Corp can eforce

May Real Estate Mortgage na the Real Estate Mortgage
inissue for a loan na 5M. Pero 3M Forclosure if the predecent Corp
Ong vs. BPI Family Savings lang ang nirelease na loan…. did not follow the agreement?
 May the "absorbed" FEBTC
employees fall within the definition
of "new employees," under the
Union Shop Clause, such that they
be required to join respondent
union or suffer termination upon
BPI vs. BPI Union request by the union?

Chinese YMCA vs. Ching

Non-stock Corp

Elizagaque is a SH , not a member.

To avail facilities of the club, he Won the corp should admit
Cebu Country Club vs. Elizagaque applied for membership Elizabaque as member?

Close Corporations Close corp nagbenta ng property

Dulay Enterprises vs. CA apartment sa Pasay

Naguiat Ent. Vs. NLRC

Roman Catholic Church vs. LRC 60% Filipino citizen requirement

Special
Corporations

land of INC held for 40 yrs. Rule on

Director vs. CA 158 SCRA 568 30 yrs open continuous possession

WON the Roman Catholic Bishop

of Lucena, as a corporation sole, is
qualified to apply for confirmation
of its title to the four (4) parcels of
Republic vs. IAC land.

Issue: Whether or not the

corporate life of PBM was
extended by the continuance of the
lease andsubsequent registration
of the title to the improvements
PNB vs. CFI PNB tapos may contract of lease under its name
 Govt vs. Phil Sugar Estate

Govt vs. El Hogar Filipino

Dissolution
and winding Republic vs. Security Credit Corp was dissolved because of
illegal activiities, it acted as a bank WON dissolution is proper?
up

corporation falsely reconstituted its

articles of incorporation. With many
Republic vs.Visaya Land more cause of actions

Financing Corp. vs. Teodoro

Bentahan ng ice. Nag disolve na si

Camsur pero nagbenta pa din sya
Buenaflor vs. Cam Sur Industry ng ice

Effects of stevedoring services, eh kaso

Dissolution Cebu port labor Union vs. State Marine dissolved na si respondent
 Effects of
Dissolution

ung magasawa nag overpayment ng

Loan nila, eh kaso na dissolve na WON Petitioner can run after SRA
Gonzales vs. Sugar Regulatory Admin ung Corp the succesor of Philsucom?

National Abaca complained na may whether an action, commenced

within three (3) years after
advances na ginawa si Pore na hindi theabolition of plaintiff, as a
accounted. Kaso the case was filed corporation, may be continued by
after the 3 years period ng the same after the expiration of
National Abaca vs. Pore dissolution ng corp. said period;

whether an action, commenced

within three (3) years after
theabolition of plaintiff, as a
corporation, may be continued by
May utang si Valencia sa dissolved an ASSIGNEE after the expiration
Sumera vs. Valencia na corp. si Sumera nagsisingil of said period;

Board of Liquidators vs. Kalaw NACOCO Copra trading

Liquidation and whether a corporation, whose

corporate life had ceased by the
winding up expiration of itsterm of existence,
could still continue prosecuting
and defending suits after its
Nag dissolve na Corp, ung lawyer dissolution and beyond the period
Gelano vs. CA nya na mag act as trustee ofthree years provided
Liquidation and
winding up

WON the action for collection of

taxes barred by Sec. 77 of
Corporation Law (now Section 139
of the Revised Corporation Code)
where assessment was made while
(BIR) made assessments tax the corporatiom was not
Republic vs. Marsman deficiency completely dissolved?

dissolution of old and new WON, The new corporation has

not substantially complied with the
Philippine Blooming Mills. For the two-year requirement of Section
new, because of failure to operate 22 of the new Corporation Code on
within 2 yrs and not adopted by- non-user because its stockholders
Chung Ka Bio vs. IAC laws never adopted a set of by-laws.

Whether or not petitioners can be

Sociedad Popular Laguna, Cockpit held to have succeeded in
business, may mga lupa… ung heirs establishing for themselves a firm
Clemente vs. CA ng SHs gusto iclaim ung mga lupa title to the property in question

Trademark Case. Mentholatun is

Mentholatun vs. Mangaliman - RULING registered in Kansas USA filed a WON the foreign corp did business
IS NO LONGER APPLICABLE TODAY case against Mangaliman in the Philippines?

Marshallwells is registered in
Oregon it sued Elser for unpaid
balance of goods. Resp alleged lack
of capacity to sue since Marshall WON Marshall can sue in local
Marshall-wells vs. Elser doesn’t have license courts?

WON foreign Corp not engage in

business in the Phils can maintain
Bulakhidas vs. Navarro suits in our courts?
 erroneous discharge of cargo bound
for HK. Swedish seeks to recover WON foreign Corp not engage in
Swedish East Asia vs. Maila Port from a Philippine National. The business in the Phils can maintain
Services capacity to sue was the issue suits in our courts?

3 contracts . For delivery of crude

oil. It failed to deliver the sale. To
settle the contract a 2nd contract
was executed for buyback. Failed
again. 3rd contract- failed. Foreign
Antam Consolidated vs. CA Corp filed a case.

Dela Osa sought reinstatement and

backwages. Issue is - Recruitment of
Filipino workers by NON-Resident
Foreign Corporation for its own use
Facilities Management vs.Dela Osa abroad. WON there is doing business?

Parties entered into 1 single

Foreign contract for the delivery of ton steel
Corporation- doing parts. Buyer-in japan. Only 1058
business w/o license tons were delivered. Far east seeks
payment. Nankai alleges lack of
jurisdiction since it is not doing
business in the Phil. Saying that a
foreign corp not doing a business in
the Philippines and not licensed WON the single contract of the
cannot be sued in Philippine courts parties constitutes doing business
Far East Intl vs. Nankai Kogyo for lack of jurisdiction. in the Philippines?

CMDI and Itech intl entered into an

Communication Materials and Design exclusive representative agreement WON itech an unlicensed FC did
vs. CA for the sale of itech products . business in the Phil?

Western are FC selling products in

Phil under the name Western
Electric. Reyes applied for
registration of Western Electric Co.
Western Equipment vs. Reyes FC sought to enjoin.
 General Garments- local corp owns Whether or not Puritan Sportswear
trademark Puritan..There is Puritan Corporation, which is a foreign
in USA. Puritan USA filed for corporation not licensed to do
business and not doing business in
cancellation on grounds of prior the Philippines, has legal capacity
use. Puritan has never done to maintain a suit in the Philippine
business in the Philippines but is Patent Office for cancellation of a
General Garments vs. Director- known in the Ph. trademark registered therein.

PUMA Filed complaint for

infringement of Patent and
tradename from using the word
Puma Sportshufabriken vs. IAC PUMA won PUMA has capacity to sue?

Hemandas Co was issued for

Trademark Lacoste with crocodile.
French Petitioner filed cancellation
Le Chemise Lacoste vs. Fernandez of the registration.

Atlantic and continental are FC.

Atlantic Mutual Insurance vs. Cebu They sued Cebu stevedofing for
Stevedoring damage
Olympia based HK shipped
Olympia Business Machines vs. E. typewriters. Part of shipment was
Foreign Corporation Razon Inc stolen.
- capacity to sue

Libel suit filed by Former Manila

Mayor and Enrile for damages
against TIME. For an essay May time institute petition for
Time vs.Reyes corrruption in essay prohibition?

Insular Lumber is FC under NY

Foreign Corp - Laws Plaintiff is a Stockholder with less
governing 3% interest in the OCS. He sought
to inspect. He was denied by the
M.E.Grey vs. Insular Lumber Corp.
 FWCC (largest lending corp in Phil.) The
findings of the external Auditor of FWCC
in audit report which was not
questioned by RJ Jacinto , support the
conclusion that RJ unrestricted mgt of
FWCC poses an IMPENDING PERIL to
corporate assets. The funds of FWCC
were transfered to the RJ Group of Co.
Appointment of without any Board Resolution. There
Mgt Committee was a drastic reduction of FWCC
branches all over the country.
Suspension of lending operations. there
is loss, wastage...-----SEC assigned
Interim mgt commitee supplemented by
rules of court. One of them is Sec4 rule
1. decisions of Comm courts are
immediately executory unless restrained
R. J. Jacinto vs. FWCC by appellate court.

Sy Chim vs. Sy Siy Ho

Justee terms Ent. Vs. CA
China Banking vs. CA

Securities
Regulations Code

whether the contract between

complainant Dr. LeoniBailey and
Lansdale Enterprises Ltd. falls
within the term "securities"
contemplated by the Revised
People vs. Petralba Securities Act;
ses Summary

Ruling
Doctrine
Moral damages are granted in recompense for physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.
[7] A corporation, being an artificial person and having existence only in legal contemplation, has no
feelings, no emotions, no senses; therefore, it cannot experience physical suffering and mental
anguish.[8] Mental suffering can be experienced only by one having a nervous system and it flows
from real ills, sorrows, and griefs of life[9] - all of which cannot be suffered by respondent bank as an
artificial person.

AMEC's claim for moral damages falls under item 7 of Article 2219... of the Civil Code. This provision
expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of
defamation. Article 2219(7) does... not qualify whether the plaintiff is a natural or juridical person.
Therefore, a juridical person such as a corporation can validly complain for libel or any other form of
defamation and claim for moral damages.

Yes
for a stock corporation to exist, two requisites must be complied with, to wit: (1) a capital stock
divided into shares and (2) an authority to distribute to the holders of such shares, dividends or
allotments of the surplus profits on the basis of the shares held

Yes
The law that will govern the employees
of a GOCC will depend on manner of its
creation. If created by-
1. Special Law or Charter- It is
governed by Civil Service Law
2. Corporation Code- governed by
Labor Code

as a private corporation, it has no greater rights, powers or privileges than any other corporation
which might be organized for the same purpose under the Corporation Law, and certainly it was not
the intention of the Legislature to give it a preference or right or privilege over other legitimate
private corporations in the mining of coal.

The name of a corporation is therefore essential to its existence. It cannot change its name except in
the manner provided by the statute. By that name alone is it authorized to transact business. The law
gives a corporation no express or implied authority to assume another name that is unappropriated;
still less that of another corporation, which is expressly set apart for it and protected by the law. If any
corporation could assume at pleasure as an unregistered trade name the name of another
corporation, this practice would result in confusion and open the door to frauds and evasions and
difficulties of administration and supervision.

this case, the name is not identical but confusingly similar that even the test of reasonable care and
observation as the public are generally capable of using and may be expected to exercise.

“Doctrine of Secondary Meaning” a word or phrase originally incapable of exclusive appropriation with
reference to an article in the market, because geographically or otherwise descriptive, might
nevertheless have been used so long and so exclusively by one producer with reference to his article
that, in that trade and to that branch of the purchasing public, the word or phrase has become to
mean that the article was his product. The doctrine cannot be made to apply where the evidence
didn't prove that the business has continued for so long a time that it has become of consequence and
acquired good will of considerable value such that its articles and produce have acquired a well known
reputation, and confusion will result by the use of the disputed name.
EXCLUSIVITY IS REQUIRED
Lyca corporation’s right to use its corporate and trade name is a property right, a rightin rem, which it
may assert and protect against the world in the same manner as it may protect its tangible property,
real or personal, against trespass or conversion. It is regarded, to a certain extent, as a property right
and one which cannot be impaired or defeated by subsequent appropriation by another corporation in
the same field. Proof of actual confusion need not be shown. It suffices that confusion is Probably or
likely to occur

that the term "may beserved with summons" does not apply when the defendant resides in the
Philippines for, in such case, he may besued only in the municipality of his residence, regardless of the
place where he may be found and served withsummons

Treasury shares are therefore issued shares, but being in the treasury they do not have the status of
outstanding shares. Consequently, although a treasury share, not having been retired by... the
corporation re­acquiring it, may be re-issued or sold again, such share, as long as it is held by the
corporation as a treasury share, participates neither in dividends, because dividends cannot be
declared by the corporation to itself,... nor in the... meetings of the corporation as voting stock, for
otherwise equal distribution of voting powers among stockholders will be effectively lost and the
directors will be able to perpetuate their control of the corporation,... though it still represents a...
paid-for interest in the property of the corporation. A stock dividend, being one payable in capital
stock, cannot be declared out of outstanding corporate stock, but only from retained earnings: 7

The term "capital" in Section 11, Article XII of the Constitution refers only to shares of stock entitled
to vote in the election of directors, and thus in the present case only to common shares,[41] and not
to the total outstanding capital stock comprising both common and non-voting preferred shares.

Corporations are creatures of the law, and can only come into existence in the manner prescribed by
the law. That a corporation should have a full and complete organization and existence as an entity
before it can enter into a contract or transact any business, would seem to be self-evident. A
corporation, until organized, has no being, franchises or faculties. Nor do those engaged in bringing it
into being have any power to bind it by contract, unless so authorized by the charter, there is no
corporation, nr does it possess franchise or faculties for it to exercise, until it acquires complete
existence.

The mere fact that Balabagan was organized at the time when the statute had not been invalidated
cannot conceivably make it a de facto corporation, there is no other valid statute to give color of
authority to its creation
* The due incorporation of any corporation claiming in good faith to be acorporation under this Act
and its right to exercise corporate powers shall not beinquired into col laterally in any private suit to
which the corpor ation may be aparty, but such inquiry may be had at the suit of the Insular
Government oninformation of the Attorney-General.

Corporation by estoppel is founded on principles of equity and is designed to preventinjustice and

unfairness. 19 It applies when persons assume to form a corporation andexercise corporate functions
and enter into business relations with third person. Wherethere is no third person involved and the
conflict arises only among those assuming theform of a corporation, who therefore know that it has
not been registered, there is nocorporation by estoppel. 2

One who has induced another to act upon his wilful misrepresentation that a corporation was duly
organized and existing under the law, cannot, thereafter, set up against his victim the principle of
corporation by estoppel.
The rule on the separate personality of a corporation is understood to refer merely to registered
corporations and cannot be made applicable to the liability of members of an unincorporated
association. The reason behind this doctrine is obvious – since an organization which before the law is
non-existent has no personality and would be incompetent to act on its behalf; thus, those who act or
purport to act as its representatives or agent do so without authority and at their own risk. a person
acting or purporting to act on behalf of a corporation which has no valid existence assumes such
privileges and obligations and becomes personally liable for contracts entered into or for other acts
performed as such agents.

Article 1431 of the Civil Code, "through estoppel an admission or representation is rendered
conclusive upon the personmaking it and cannot be denied or disproved as against the person relying
on it."
in the absence of fraud a person who has contracted or otherwise dealt with an association in such a
way as to recognize and in effect admit its legal existence as a corporate body is thereby estopped to
deny its corporate existence in any action leading out of or involving such contract or dealing, unless
its existence is attacked for cause which have arisen since making the contract or other dealing relied
on as an estoppel and this applies to foreign as well as to domestic corporations.

The doctrine of corporation by estoppel is mistakenly applied by the respondent court to the
petitioner. The application of the doctrine applies to a third party only when he tries to escape liability
on a contract from which he has benefited on the irrelevant ground of defective incorporation. In the
case at bar, the petitioner is not trying to escape liability from the contract but rather is the one
claiming from the contrac

"The rule is that a party is estopped to challenge the personality of a corporation after having
acknowledged the same by entering into a contract with it. And the'doctrine of estoppel to deny
corporate existence applies to foreign as well as todomestic corporations;' 'one who has dealt with a
corporation of foreign origin asa corporate entity is estopped to deny its corporate existence and
capacity.' Theprinciple 'will be applied to prevent a person contracting with a foreigncorporation from
later taking advantage of its noncompliance with the statuteschiefly in cases where such person has
received the benefits of the contract, xxx

a corporation is a distinct legal entity to be considered as separate and apart from the individual
stockholders or members who compose it, and is not affected by the personal rights, obligations and
transactions of its stockholders or members. The property of a corporation is its property and not that
of the stockholders, as owners, although they have equities in it. Properties registered in the name of
the corporation are owned by it as an entity separate and distinct from its members. Conversely, a
corporation ordinarily has no interest in the individual property of it stockholders unless transferred to
the corporation, “even in the case of a one-man corporation”.

there was no showing that the Filipinas Orient Airways was a fictitious corporation and did not have a
separate juridical personality, to justify making the petitioner, as principal stockholder thereof,
responsible for its obligations. As a bona fide corporation, the Filipinas Orient Airways should alone be
liable for its corporate acts as duly authorized by its directors and officers.

The president and manager of a corporation, who entered into and signed a contract in his official
capacity, cannot be made liable thereunder in his individual capacity in the absence of stipulation to
that effect due to the personality of a corporation being separate and distinct from the person
composing it

as a legal entity, a corporation has a personality distinct and separate from its individual stockholders
or members. The mere fact that one is president of a corporation does not render the property he
owns or possesses the property of the corporation, since the president, as individual, and the
corporation are separate entities.
No sufficient proof exists on recordthat said petitioner used the corporation to defraud private
respondent. He cannot,therefore, be made personally liable just because he "appears to be the
controllingstockholder". Mere ownership by a single stockholder or by another corporation is not
ofitself sufficient ground for disregarding the separate corporate personality

It is the general rule that the protective mantle of a corporation’s separate and distinct personality
could only be pierced and liability attached directly to its officers and/or member-stockholders, when
the same is used for fraudulent, unfair or illegal purpose.

Where the main purpose in forming the corporation was to evade one’s subsidiarycivil liability for
damages in a criminal case, the corporation may not be heard to say that it has a personalityseparate
and distinct from its members, because to allow it to do so would be a shield to further an
endsubversive of justice

"when the notion of legal entity is used to defeatpublic convenience, justify wrong, protect fraud, or
defend crime," the law will regardthe corporation as an association of persons, or in the case of two
corporations mergethem into one. Another rule is that,when the corporation is the "mere alter ego or
business conduit of a person, it may bedisregarded.

that the ownership of all the stocks of a corporation by another corporation does not necessarily
breed an identity of corporate interest between the two companies and be considered as a sufficient
ground for disregarding distinct personalities. However, in the case at bar, we find sufficient grounds
to support the theory that the separate identities of the two companies should be disregarded.

But it is settled that this fiction of law, which has been introduced as a matter of convenience and to
subserve the ends of justice cannot be invoked as to further and end subversive of that purpose.

it has been held that while a corporation is a legal entity existing separate and apart from the person
composing it, that concept cannot be extended to a point beyond it reason and policy, and when
invoked in support of an end subversive of this policy it should be disregarded by the courts

In appropriate cases, the veil of corporate fiction may be pierced as when the same is made as a shield
to confuse the legitimate issues

when the veil of corporate fictions is made as a shield to perpetrate a fraud or to confuse legitimate
issues (here, the relation of employer-employee), the same should be pierced.

shield of corporate fiction should be pierced when it is deliberately and maliciously designed to evade
financial obligations to employees.
The test in determining the applicability of piercing the veil of corporate fictions is as follows:
1. Control, not mere majority or complete stock control, but complete domination, not only in
finances but of policy and business practice in respect to the transaction attacked so that the
corporate entity as to this transaction had at the time no separate mind, will or existence of its own;
2. Such control must have been used by the defendant to commit fraud or wrong, to perpetuate the
violation of a statutory or other positive legal duty or dishonest and unjust act in contravention of
plaintiff’s legal rights; and
3. The aforesaid control and breach of duty must proximately cause the injury or unjust los
complained of.
 While the mere ownership of all or nearly all of the capital stock of a corporation is a mere business
conduit of the stockholder, that conclusion is amply justified where it is shown, as in the case before
us, that the operations of the corporation were so merged with those of the stockholders as to be
practically indistinguishable from them. To hold the latter liable for the corporation's obligations is not
to ignore the corporation's separate entity, but merely to apply the established principle that such
entity can not be invoked or used for purposes that could not have been intended by the law that
created that separate personality.

The separate personality of the corporation may be disregarded, or the veil of corporate fiction
pierced, in cases where it is used as a cloak or cover for fraud or illegality, or to work an injustice, or
where necessary to achieve equity or when necessary for the protection of creditors.

apply the familiar exception to the general rule by disregarding the legal fiction of distinct and
separate corporate personality and regarding the corporation and the individual members one and
the same. In shredding the fictitious corporate veil, the trial judge narrated the undisputed factual
premise:

While it is true that he is a member of the board at the time the resolution to purchase the trucks
were adopted, it does not appear that said resolution was intended to defraud anyone

But for the separate juridical personality of a corporation to be disregarded, the wrongdoing must be
clearly and convincingly established. It cannot be presumed
“the legal corporate entity is disregarded only if its sought to hold the officers and stockholders
directly liable for a corporate debt or obligation”. In the instant case, petitioner does not seek to
impose a claim against the members of ACRILYC.
Themere fact that a corporation owns all of the stocks of another corporation, taken alone is not
sufficient to justify their being treated as one entity. If used to perform legitimate functions, a
subsidiary's separate existence may berespected, and the liability of the parent corporation as well as
the subsidiary will be confined to those arising in theirrespective business

Even control over the financial and operational concerns of a subsidiary company does not by itself
call for disregarding its corporate fiction. There must be a perpetuation of fraud behind the control or
at least a fraudulent or illegal purpose behind the control in order to justify piercing the veil of
corporate fiction.

It is basic that a corporation is invested by law with a personality separate and distinct from those of
the persons composing it as well as from that of any other legal entity to which it may be related. The
fiction of separate and distinct corporate entites cannot, in the instant case, be disregarded and
brushed aside, there being not the lease indication that the second corporation was a dummy or
servces as a client of the first corporate entity

an authorized change in the name of a corporation has no more effect upon its identity as a
corporation than a change of name of a natural person has upon his identity. It does not affect the
rights of the corporation or lessen or add to its obligations. After a corporation haseffected a change in
its name it should sue and be sued in its new name.

Yes.
an authorized change in the name of a corporation has no more effect upon its identity as a
corporation than a change of name of a natural person has upon his identity. Itdoes not affect the
rights of the corporation or lessen or add to its obligations. After a corporation haseffected a change in
its name it should sue and be sued in its new name.

No
, in a case where an officer of a corporation has made a contract in its name,that the corporation
should be required, if it denies his authority, to state such defense in itsanswer. By this means the
plaintiff is apprised of the fact that the agent's authority is contested; and he is given an opportunity
to adduce evidence showing either that theauthority existed or that the contract was ratified and
approved.

Yes.
 While such associations are expressly authorized by the Corporation Law to adopt by-laws for their
government,section 20, of that Act, as construed by this court in the case of Fleischer vs. Botica
Nolasco Co. (47 Phil., 583),expressly limits such authority to the adoption of by-laws which are not
inconsistent with the provisions of the law. that contracts between a corporation and third person
must be made by or under the authority of its board of directors and not by its stockholders. Hence,
the action of the stockholders in such matters is only advisory and not in any wise binding on the
corporation.

In order to be eligible as a director, what is material is the legal title to, not beneficial ownership, of
the stock as appearing on the books of the corporation. “In his own right” Legal right, it is sufficient
that he is in the name of the books insofar as stock ownership is concerned.

Yes.
Sec. 30. Every director must own in his own right at least one share of the capitalstock of the stock
corporation of which he is a director, which stock shall stand in his name on the books of the
corporations.... If he could not be a director, he could also not be a managing director of the
corporation,pursuant to Article V, Section 3 of the By -Laws of the Corporation which provides that:
The manager shall be elected by the Board of Directors from among its members....

No.
APPARENT AUTHORITY- Although an officer or agent acts without, or in excess of, his actual authority
if he acts within the scope of an apparent authority with which the corporation has clothed him by
holding him out or permitting him to appear as having such authority, the corporation is bound
thereby in favor of a person who deals with him in good faith in reliance on such apparent authority,
as where an officer is allowed to exercise a particular authority with respect to the business, or a
particular branch of it, continuously and publicly, for a considerable time.
Also, if a private corporation intentionally or negligently clothes its officers or agents with apparent
power to perform acts for it, the corporation will be estopped to deny that such apparent authority is
real, as to innocent third persons dealing in good faith with such officers or agents.
This apparent authority may result from (1) the general manner by which the corporation holds out an
officer or agent as having power to act or, in other words, the apparent authority with which it clothes
him to act in general, or (2) the acquiescence in his acts of a particular nature, with actual or
constructive knowledge thereof, whether within or without the scope of his ordinary powers.

Any action of the board without a meeting and

without the required voting and quorum
requirement will not bind the corporation unless
subsequently ratified, expressly or impliedly. jurisprudence tells us that an action of the board of
directors during a meeting, which was illegal for lack of notice, may be ratified either expressly,by the
action of the directors in subsequent legal meeting, or impliedly, by the corporation's subsequent
course of conduct. `Moreover, the unauthorized acts of an officer of a corporation may be ratified by
the corporation by conduct implying approval and adoption of the act inquestion. Such ratification
may be express or may be inferred from silence andinaction.'

APPARENT AUTHORITY- Thus, where a general business manager of a corporation is clothed with
apparent authority to borrow and the amount borrowed does not exceed the ordinary requirements
of the business, it has often been held that the authority is implied and that the corporation is bound.
 The general rule is that the power to bind a corporation by contract lies with its board of directors or
trustees, but this power may either expressly or impliedly be delegated to other officers or agents of
the corporation, and it is well settled that except where the authority of employing servants and agent
isexpressly vested in the board of directors or trustees, an officer or agent who has general control
and managementof the corporation's business, or a specific part thereof, may bind the corporation by
the employment of such agentand employees as are usual and necessary in the conduct of such
business. But the contracts of employment mustbe reasonable.

Silence coupled with acceptance of benefits

constitutes a binding ratification. If a private corporation intentionally or negligently clothes its officers
or agents with apparent power to perform acts for it, the corporation will be estopped to deny that
such apparent authority is real, as to innocent third persons dealing in good faith with such officers or
agents

A corporate officer entrusted with the general management and control of its business, has implied
authority to make any contract or do any other act which is necessary or appropriate to the conduct of
the ordinary business of the corporation. As such officer, he may, without any special authority from
the Board of Directors, perform all acts of an ordinary nature, which by usage or necessity are incident
to his office, and may bind the corporation by contracts in matters arising in the usual course of
business. Where similar acts have been approved by the directors as a matter of general practice,
custom, and policy, the general manager may bind the company without formal authorization of the
board of directors.

An unauthorized act, or the act of a single director, officer or agent of a corporation may be ratified
either expressly or impliedly.
1. Express ratification is made through a formal board action;
2. Implied ratification can either be (a) silence or acquiescence; (b) acceptance and/or retention of
benefits, or (c) by recognition or adoption. (SAR)

When a vacancy is created by the expiration of a term, logically, there is no more unexpired term to
speak of. Hence, Section 29 declares that it shall be the corporation’s stockholders who shall possess
the authority to fill in a vacancy caused by the expiration of a member’s term

“The law is well-settled that directors of corporations presumptively serve without compensation and
in the absence of an express agreement or a resolution thereto, no claim can be asserted therefor.
Thus it has been held that there can be no recovery of compensation, unless expressly provided for,
when director serves as president or vice-president, as secretary or treasurer or cashier, as member of
an executive committee, as chairman of a building committee, or similar offices.

This proscription, however, against granting compensation to director/trustees of a corporation is not

a sweeping rule. Worthy of note is the clear phraseology of Section 30 which state: ". . . [T]he directors
shall not receive any compensation, as such directors, . . ." The phrase as such directors is not without
significance for it delimits the scope of the prohibition to compensation given to them for services
performed purely in their capacity as directors or trustees. The unambiguous implication is that
members of the board may receive compensation, in addition to reasonable per diems, when they
render services to the corporation in a capacity other than as directors/trustees

Yes
The Corporation Law does not undertake to prescribe the rate of compensation for the directors of
corporations. The power to fixed the compensation they shall receive, if any, is left to the corporation,
to be determined in its by-laws. If a mistake has been made, or the rule adopted in the by-laws has
been found to work harmful results, the remedy is in the hands of the stockholders who have the
power at any lawful meeting to change the rule. The remedy, if any, seems to lie rather in publicity
and competition, rather than in a court proceeding.

No
 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 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;
4. He is made, by a specific provision of law, to personally answer for his corporate action.

No
The third paragraph of Section 1 of BP Blg. 22 states:
Where the check is drawn by a corporation, company or entity, the person or persons who actually
signed the check in behalf of such drawer shall be liable under this Act.

In labor cases, particularly, corporate directors and officers are solidarily liable with the corporation
for the termination of employment of corporate employees done with malice or in bad faith.

BUSINESS JUDGMENT RULE: Although directors are commonly said to be responsible both for
reasonable care and also prudence, the formula is continually repeated that they are not liable for
losses due to imprudence or honest error of judgment. The business judgment rule in effect states
that questions of policy and management are left solely to the honest decision of the board of
directors and the courts are without authority to substitute its judgment as against the former. The
directors are business managers and as long as they act in good faith, its actuations are not subject to
judicial review

Directors are liable for fraud committed by concealment of information as to the state and probable
result of the negotiations for the sale of corporate assets which may affect the price of the
corporation’s stock. (Buyer concealed his identity in order to purchase the property in a lower value)

A director of a corporation holds a position of trust and as such, he owes a duty of loyalty to his
corporation. In case his interests conflict with those of the corporation, he cannot sacrifice the latter
to his own advantage and benefit. As corporate managers, directors are committed to seek the
maximum amount of profits for the corporation. This trust relationship "is not a matter of statutory or
technical law. It springs from the fact that directors have the control and guidance of corporate affairs
and property and hence of the property interests of the stockholders.

A director or officer may in good faith and for an adequate consideration purchase from a majority of
the directors or stockholders the property even of an insolvent corporation

where corporate directors have committed a breach of trust either by their frauds, ultra vires acts, or
negligence, and the corporation is unable or unwilling to institute suit to remedy the wrong, a single
stockholder may institute that suit, suing on behalf of himself and other stockholders and for the
benefit of the corporation, to bring about a redress of the wrong done directly to the corporation and
indirectly to the stockholders.

When the board is under the complete control of the principal defendants in the case, demand upon
such board to institute action and prosecute the same is not required. The law does not require
litigants to do useless acts
 an individual stockholder is permitted to institute a derivative or representative suit on behalf of the
corporation wherein he holds stock in order to protect or vindicate corporate rights, whenever
(1) the officials of the corporation refuse to sue, or
(2) are the ones to be sued or
(3) hold the control of the corporation.
In such actions, the suing stockholder is regarded as a nominal party, with the corporation as the real
party in interest
He is neither alleging nor vindicating his own individual interest or prejudice, but the interest of the
Republic Bank and the damage caused to it

Among the basic requirements for a derivative suit to prosper is that the minority shareholder who is
suing for and on behalf of the corporation must allege in his complaint before the proper forum that
he is suing on a derivative cause of action on behalf of the corporation and all other shareholders
similarly situated who wish to join. The case should have been filed with the Securities and Exchange
Commission (SEC) which exercises original and exclusive jurisdiction over derivative suits, they being
intra-corporate disputes

No.
The requisites for a derivative suit are as follows:
a) the party bringing suit should be a shareholder as of the time of the act or transaction complained
of, the number of his shares not being material;
b) he has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of
directors for the appropriate relief but the latter has failed or refused to heed his plea; and
c) the cause of action actually devolves on the corporation, the wrongdoing or harm having been, or
being caused to the corporation and not to the particular stockholder bringing the suit.
The bona fide ownership by a stockholder of stock in his own right suffices to invest him with standing
to bring a derivative action for the benefit of the corporation. The number of his shares is immaterial
since he is not suing in his own behalf, or for the protection or vindication of his own particular right,
or the redress of a wrong committed against him, individually, but in behalf and for the benefit of the
corporation.

Yes. The evidence of defendants proves very clearly that right from the start, Chase was by them
recognized as a stockholder and initial incorporator with 600 paid up shares representing a 1/3
interest in Amparts, and that would be enough for Chase to have the correct personality to institute
this derivative suit;

Where corporate directors are guilty of breach of trust – not mere error of judgment or abuse of
discretion – and intra-corporate remedy is futile or useless, a stockholder may institute a suit in behalf
of himself and other stockholders and for the benefit of the corporation, to bring about a redress of
the wrong inflicted directly upon the corporation and indirectly upon the stockholders

An individual stockholder is permitted to institute a derivative suit on behalf of the corporation

wherein he holds stock in order to protect or vindicate corporate rights, whenever the officials of the
corporation refuse to sue, or are the ones to be sued or hold the control of the corporation. In such
actions, the suing stockholder is regarded as a nominal party, with the corporation as the real party in
interest. In the case at bar, however, the plaintiffs are alleging and vindicating their own individual
interests or prejudice, and not that of the corporation

In a derivative suit, the injury complained of is primarily to the corporation, so that the suit for the
damages claimed should be by the corporation rather than by the stockholders. The stockholders may
not directly claim those damages for themselves for that would result in the appropriation by, and the
distribution among them of part of the corporate assets before the dissolution of the corporation and
the liquidation of its debts and liabilities
 For the purpose of receiving service of summons and being bound by it, a corporation is identified
with its agent or officer who under the rule is designated to accept service of process. "The corporate
power to receive and act on such service, so far as to make it known to the corporation, is thus vested
in such officer or agent." So, where the statute required that in the case of a domestic corporation
summons should be served on "the president or head of the corporation secretary treasurer, cashier
or managing agent thereof", service of summons on the secretary's wife did not confer jurisdiction
over the corporation in the foreclosure proceeding against it.

The designation of persons or officers who are authorized to accept summons for a domestic
corporation or partnership is now limited and more clearly specified in Section 11, Rule 14 of the 1997
Rules of Civil Procedure. The rule now states "general manager" instead of only "manager"; "corporate
secretary" instead of "secretary"; and "treasurer" instead of "cashier." The phrase "agent, or any of its
directors" is conspicuously deleted in the new rule.

A corporation cannot undertake acquisition of property which would have no purpose and would have
no necessary connection with its legitimate business.

a corporations whose business may properly be conducted in a populous center may acquire an
appropriate lot and construct thereon an edifice with facilities in excess of its own immediate
requirements. The law expressly declares that corporations may acquire such real estate as is
reasonably necessary to enable them to carry out the purposes for which they were created; and

A corporation may register alienable public lands if it has been held by it, personally or through its
predecessor-in-interest, openly, continuously and publicly within the prescribed statutory period of 30
years under the Public Land Law, as amended, since it is converted into private property by mere lapse
of completion of said period.

There are certain corporate acts that may be performed outside of the scope of the powers expressly
conferred if they are necessary to promote the interest or welfare of the corporation. Thus, it has
been held that “although not expressly authorized to do so a corporation may become a surety where
the particular transaction is reasonably necessary or proper to the conduct of its business”

Yes
The articles provides that the corporation may secure form government franchises that are necessary
or related to business.

Yes
The charter creating NPC provided that they may exercise those things that may reasonably necessary
to carry out the business. For if the act is one which is lawful in itself and not otherwise prohibited,
and is done for the purpose of serving corporate ends, and reasonably contributes to the promotion of
those ends in a substantial and not in a remote and fanciful sense, it may be fairly considered within
the corporation’s charter powers

Yes.
By-laws provides that school has the right to exercise such powers and do such things as may be
lawfully exercise or perform by the corporation. The law authorizes the school to add fees provided
with approval of Secretary of DepEd
Yes

A corporation has no power to release an original subscriber to its capital stock from the obligation of
paying for his shares, without a valuable consideration for such release; and as against creditors a
reduction of the capital stock can take place only in the manner an under the conditions prescribed by
the statute or the charter or the articles of incorporation. Violative of Trust Fund Doctrine
 A reduction of capital stock may not be used as a subterfuge, a deception as it were, to camouflage
the fact that a corporation has been making profits to obviate a just sharing to labor. A corporation
which has the power to borrow or raise money, to contract for labor or services, or otherwise contract
a debt has the implied power to issue bonds in payment or as a security provided it violates no
prohibition or restriction in its charter or any other statutes.

No

Petitioner bewails the fact that in view of the lack of notice to him of such subsequent issuance, he wasnot able to
exercise his right of pre-emption over the unissued shares. However, the general rule is that pre-emptive right is
recognized only with respect to new issue of shares, and not with respect toadditional issues of originally
authorized shares. This is on the theory that when a corporation at itsinception offers its first shares, it is
presumed to have offered all of those which it is authorized to issue.An original subscriber is deemed to have taken
his shares knowing that they form a definite proportionate part of the whole number of authorized shares. When
the shares left unsubscribed arelater re-offered, he cannot therefore claim a dilution of interest. As far as
petitioner is concerned, he had not waived his pre-emptive right to subscribe as he could not have done so for the
reason that he was not present at the meeting and had not executed a waiver, thereof. Not having waived such
right and for reasons of equity, he may still be allowed to subscribe to the increased capital stock proportionate to
his present shareholdings.

The sale or other disposition of all or substantially all of the corporate property or assets must be
voted for by the legitimate board and concurred in by the bona fide 2/3 stockholders or members of
the corporation.
Generally where one corporation sells or otherwise transfers all of its assets to another corporation,
the latter is not liable for the debts and liabilities of the transferor, except:
(1) where the purchaser expressly or impliedly agrees to assume such debts;
(2) where the transaction amounts to a consolidation or merger of the corporations;
(3) where the purchasing corporation is merely a continuation of the selling corporation; and
(4)where the transaction is entered into fraudulently in order to escape liability for such debts.

No.
Corporation cannot acquire its own share if you have no unrestricted earnings. Creditors of a
corporation has the right to assume that so long as there are outstanding debts and liabilities, the
board od directors will not use the assets of the corporation to purchase its own stock, and that it will
not declare dividends to stockholders when the corporation is insolvent.

When the investment is necessary to accomplish its purpose or purposes as stated in it articles of
incorporation, the approval of the stockholders is not necessary

There is more logic in the stand that if the investment is made in a corporation whose business is
important to the investing corporation as would aid it in its purpose, to require authority of the
stockholders would be to unduly curtail the power of BOD.

An unauthorized investment which is not illegal or void ab initio or not contrary to law, morals, public
order or public policy, is merely voidable and may become binding and enforceable when ratified by
the stockholders.

a share of stock coming from stock dividends declared cannot be issued to one who is not a
stockholder of a corporation.
Mere ultra-vires acts which are not illegal per se may become binding and enforceable either by
ratification, estoppel or on equitable grounds unless the public or third parties are thereby prejudiced.

When a contract is not on its face necessarily beyond the scope of the power of the corporation by
which it was made, it will, in the absence of proof to the contrary, be presumed to be valid.
Corporations are presumed to contract within their powers. The doctrine of ultra vires, when invoked
for or against a corporation, should not be allowed to prevail where it would defeat the ends of justice
or work a legal wrong.
 Actions which are beyond the powers of the corporation as embodied in its articles of incorporation
and have absolutely no relation to the avowed purpose of the corporation are ultravires. Corporation
is a non-stock and should not be engage in a business for profit

GR: Corporate officers have no power to execute for mere accommodation a negotiable instrument of
the corporation for their individual debts or transactions arising from or in relation to matters in which
the corporation has no legitimate concern. Since such accommodation paper cannot thus be enforced
against the corporation, especially since it is not involved in any aspect of the corporate business or
operations, the signatories thereof shall be personally liable therefor, as well as for the consequences
arising from their acts in connection therewith.

XPN: If power to execute negotiable instrument is delegate to agents and officers of corporation

FINALS
Non-filing of the by-laws will not result in automatic dissolution of the corporation. Under Section 6(I)
of PD902-A, the SEC is empowered to "suspend or revoke, after proper notice and hearing, the
franchise orcertificate of registration of a corporation" on the ground inter alia of "failure to file by-
laws within the requiredperiod." It is clear from this provision that there must first of all be a hearing
to determine the existence of the ground, and secondly, assuming such finding, the penalty is not
necessarily revocation but may be only suspension of the charter. In fact, under the rules and
regulations of the SEC, failure to file the by-laws ontime may be penalized merely with the imposition
of an administrative fine without affecting the corporateexistence of the erring firm. The only restraint
that may be imposed is the need for the registration of sale or transfer in the Books of the
corporation.

No
By-laws are internal rules an cannot bind, effect or prejudice third persons without knowledge. a by-
law which prohibits a transfer of stock without the consent or approval of all the stockholders or of
the president or board of directors is illegal as constituting undue limitation on the right of ownership
and in restraint of trade
No
Incorporation of an invalid by-law provision is not a misdemeanor. It does not justify the dissolution If
a mistake has been made, or the rule adopted in the by-laws has been found to work harmful results,
the remedy is in the hands of the stockholders who have the power at any lawful meeting to change
the rule.

The validity or reasonableness of a by-law of a corporation is purely a question of law. section 22 of

the same law, the owners of the majority of the subscribed capital stock may amend or repeal any by-
law or adopt new by-laws

The by-laws provided for a 5 day notice rule which upheld its validity, nonetheless, it posted 2 days
prior to the meeting, thus the court held that the meeting and resolution passed was not valid for
want of notice. Failure to give notice in accordance therewith would render the resolution made
thereunder voidable at the option of the SH/members who was not notified.

On the showing of good cause therefor, the court may authorize a stockholder to call a meeting and to
preside threatuntil the majority stockholders representing a majority strockholders representing a
majority of the stock present andpermitted to be voted shall have chosen one among them to preside
it. And this showing of good cause thereforexists when the court is apprised of the fact that the by-
laws of the corporation require the calling of a generalmeeting of the stockholders to elect the board
of directors but call for such meeting has not been done.
 A corporation is not a party to a voting trust agreement therefore it is not a real party interest in a suit
to enforce the same. A voting trust transfers only voting and other rights pertaining to the shares
subject of the agreement or control over the stock. It does not include the assets, operation and
management of the corporation.

Indeed, the need for express acceptance on the part of the Quezon College, Inc. becomes the more
imperative, in view of the proposal of Damasa Crisostomo to pay the value of the subscription after
she has harvested fish, a condition obviously dependent upon her sole will and, therefore, facultative
in nature, rendering the obligation void, under article 1115 of the old Civil Code which provides as
follows: "If the fulfillment of the condition should depend upon the exclusive will of the debtor, the
conditional obligation shall be void. If it should depend upon chance, or upon the will of a third
person, the obligation shall produce all its effects in accordance with the provisions of this code.

as a general rule, that an agreement between a corporation and a particularsubscriber, by which the
subscription is not to be payable, or is to be payable in part only, whether it is for thepurpose of
pretending that the stock is really greater than it is, or for the purpose of preventing thepredominance
of certain stockholders, or for any other purpose, is illegal and void as in fraud of otherstockholders or
creditors, or both, and cannot be either enforced by the subcriber or interposed as a defensein an
action on the subcription.

No. Invalid
section 35 of the Corporation Law does not require the notation upon the books of a corporation of
transactions relating to its shares, except the transfer of possession and ownership thereof, as a
necessary requisite to the validity of such transfer, the notation upon the aforesaid books of the
corporation, of a chattel mortgage constituted on the shares of stock in question is not necessary to its
validity

seems to us a reasonable construction of section 4 of Act No. 1508 to hold that the property in the
shares may be deemed to be situated in the province in which the corporation has its principal office
or place of business. If this province is also the province of the owner's domicile, a single registration
sufficient. If not, the chattel mortgage should be registered both at the owner's domicile and in the
province where the corporation has its principal office or place of business. In this sense the property
mortgaged is not the certificate but the participation and share of the owner in the assets of the
corporation.

that all transfers of shares not so entered are invalid as to attaching or execution creditors of the
assignors, as well as to the corporation and to subsequent purchasers in good faith, and indeed, as to
all persons interested, except the parties to such transfers. All transfers not so entered on the books
of the corporation are absolutely void; not because they are without notice or fraudulent in law or
fact, but because they are made so void by statute.

Any restriction on a stockholder's right to dispose of his shares must be construed strictly; and any
attempt to restrain a transfer of shares is regarded as being in restraint of trade, in the absence of a
valid lien upon its shares, and except to the extent that valid restrictive regulations and agreements
exist and are applicable. Subject only to such restrictions, a stockholder cannot be controlled in or
restrained from exercising his right to transfer by the corporation or its officers or by other
stockholders, even though the sale is to a competitor of the company, or to an insolvent person, or
even though a controlling interest is sold to one purchaser
 The suspension of the power to sell has a beneficial purpose, results in the protection of the
corporation as well as of the individual parties to the contract, and is reasonable as to the length of
time of the suspension. We do not here undertake to discuss the limitations to the power to suspend
the right of alienation of stock, limiting ourselves to the statement that the suspension in this
particular case is legal and valid.

There being no delivery of the indorsed shares of stock Asuncion cannot therefore effectively transfer
to other person or his nominees the undelivered shares of stock. For an effective transfer of shares of
stock the mode and manner of transfer as prescribed by law must be 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
The duty of the corporation to transfer is a ministerial one and if it refuses to make such transaction
without good cause, it may be compelled to do so by mandamus.

In order that a writ of mandamus may issue, it is essential that the person petitioning for the same has
a clear legalright to the thing demanded and that it is the imperative duty of the respondent to
perform the act required. It neither confers powers nor imposes duties and is never issued in doubtful
cases. It is simply a command to exercise apower already possessed and to perform a duty already
imposed. petitioner has failed to establish a clear legal right. Petitioner's contention that he is the
ownerof the said shares is completely without merit. Quite the contrary and as already shown, he
does not have anyownership rights at all. At the time petitioner instituted his suit at the SEC, his
ownership claim had no prima facie leg to stand on.

No
We have uniformly held that for a valid transfer of stocks, there must be strict compliance with the
mode of transferprescribed by law. The requirements are: (a) There must be delivery of the stock
certificate: (b) The certificatemust be endorsed by the owner or his attorney-in-fact or other persons
legally authorized to make the transfer; and(c) To be valid against third parties, the transfer must be
recorded in the books of the corporation. As it is,compliance with any of these requisites has not
been clearly and sufficiently shown.

Yes
Delivery is not essential where it appears that the person sought to be held as stockholders are
officers of the corporation, and have custody of the stock books.
No shares of stock against which the corporation holds any unpaid claim shall be transferrable on the
books of the corporation

No.
After a valid transfer of share, the right to have such registered commences to exist. However, it
would not follow that said right should be exercised immediately or within a definite period.

No
Doctrine of non-negotiobility of shares of stocks. A share of stock may be transferred by
endorsement of the corresponding stock certificate, coupled with its delivery. However, the transfer
shall "not be valid, except as between the parties," until it is "entered and noted upon the books of
the corporation." Certificates of stock are not negotiable instruments. Consequently, a transferee
under a forged assignment acquires no title which can be asserted against the true owner, unless his
own negligence has been such as to create an estoppel against him. If the owner of the certificate has
endorsed it in blank, and it is stolen from him, no title is acquired by an innocent purchaser for value.
(De Los Santos vs. Republic)
 A stockholder whose subscription is not fully paid may not be issued a stock certificate for that portion
already paid.

No
Section 36 of the Corporation Law clearly recognizes that a stock subscription is subsisting liability
from the time the subscription is made, since it requires the subscriber to pay interest quarterly from
that date unless he is relieved from such liability by the by-laws of the corporation. The subscriber is
as much bound to pay the amount of the share subscribed by him as he would be to pay any other
debt, and the right of the company to demand payment is no less incontestable.

Yes
Notwithstanding the fact that the by-laws of the corporation provides for a method for the collection
of the unpaid portion of stock subscriptions, the corporation may still make use of the methods
provided by the Code. If the board of directors does not wish to make, or does not make, use of said
authority it has two other remedies for accomplishing the same purpose. As was said by this court in
the case of Velasco vs. Poizat (37 Phil., 802): “The first and most special remedy given by the statute
consists in permitting the corporation to put the unpaid stock for sale and dispose of it for the account
of the delinquent subscriber. In this case the provisions of sections 38 to 48, inclusive, of the
Corporation Law are applicable and must be followed. The other remedy is by action in court.”

Yes
that a valid and binding subscription for stock of a corporation cannot be cancelled so as to release the
subscriber from liability thereon without the consent of all the stockholders or subscribers.
Exception: 1. Bona fide compromise; 2. Set-off of a debt due from the corporation; or 3. Release
supported by consideration

No
under the circumstances of this case, the unpaid subscriptions are not due and payable until a call is
made by the corporation for payment. No doubt such set-off was without lawful basis, if not
premature. As there was no notice or call for the payment of unpaid subscriptions, the same is not yet
due and payable.

No.
It is established doctrine that subscriptions to the capital of a corporation constitute a fund to which
the creditors have a right to look for satisfaction of their claims and that the assignee in insolvency can
maintain an action upon any unpaid stock subscription in order to realize assets for the payment of its
debts. (Philippine Trust Co. vs. Rivera, 44 Phil., 469, 470.)

Yes
The President of the Philippines is devoid of the prerogative of suspending the operation of any
stature or any of its items. Thus the President cannot condone the payment of stock subscriptions in
the event that the counterpart fund to be invested by the government would not be available.
Subscriptions to the capital of a corporation constitute a fund to which creditors have a right to look
for satisfaction of their claims and that the assignee in insolvency can maintain an action upon any
unpaid stock subscription in order to realize assets for the payment of its debt

Yes
As to the liability of the stockholders, it is settled that a stockholder is personally liable for the financial
obligations of a corporation to the extent of his unpaid subscription

Yes
 The subscription to capital stock of the corporation, unless otherwise stipulated, is not payable at the
moment of the subscriptions but on a subsequent date which may be fixed by the corporation. Shares
of stock become delinquent when no payment is made on the balance of all or any portion of the
subscription on the date or dates fixed in the contract of subscription without need of call, or on the
date specified by the board of directors pursuant to a call made by it.

No
The right of inspection given to a stockholder can be exercised either by himself or by any proper
representative or attorney in fact, and either with or without the attendance of the stockholder. This is
in conformity with the general rule that what a man may do in person he may do through another;
and we find nothing in the statute that would justify us in qualifying the right in the manner suggested
by the respondents.

Yes
The corporation, or its responsible directors and officers cannot unduly restrict the right of inspection
and may not arbitrarily set a few days of the year within which the stockholder may make the
inspection
However, there is no absolute right to secure certified copies of the minutes of the corporation until
these minutes have been written up and approved by the directors.

It is a required condition for the inspection of corporate books that the one requesting it must 78 not
have been guilty of using improperly any information secured through a prior examination and that
the person asking for such examination must be acting in good faith and for a legitimate purpose in
making his demand.

Ordinarily, in the merger of two or more existing corporations, one of the combining corporations
survivesand continues the combined business, while the rest are dissolved and all their rights,
properties andliabilities are acquired by the surviving corporation. 10 Although there is a dissolution of
the absorbedcorporations, there is no winding up of their affairs or liquidation of their assets, because
the survivingcorporation automatically acquires all their rights, privileges and powers, as well as their
liabilities. The merger, however, does not become effective upon the mere agreement of the
constituent corporations.The procedure to be followed is prescribed under the Corporation Code.
Section 79 of said Code requiresthe approval by the Securities and Exchange Commission (SEC) of the
articles of merger which, in turn,must have been duly approved by a majority of the respective
stockholders of the constituent corporations.The same provision further states that the merger shall
be effective only upon the issuance by the SEC of acertificate of merger. The effectivity date of the
merger is crucial for determining when the merged orabsorbed corporation ceases to exist; and when
its rights, privileges, properties as well as liabilities passon to the surviving corporation.

The surviving or the consolidated corporation shall thereupon and thereafter possess all the right,
privileges, immunities and franchises of each of the constituent corporations; and all property, real or
personal, and all receivable due on whatever account, including subscriptions to shares and other
choses in action, and all and every other interest of, or belonging to, or due to each constituent
corporation, shall be deemed transferred to and vested in such surviving or consolidated corporation
without further act or deed. Pursuant to such merger and consolidation, BPI's right to foreclose the
mortgage on petitioner's property depends on the status of the contract and the corresponding
obligations of the parties originally involved, that is, the agreement between its predecessor BSA and
petitioner.

No
 By upholding the automatic assumption of the non-surviving corporations existing employment
contracts by the surviving corporation in a merger, the Court strengthens judicial protection of the
right to security of tenure of employees affected by a merger and avoid confusion regarding the status
of their various benefits. However, it shall be noted that nothing in the Resolution shall impair the
right of an employer to terminate the employment of the absorbed employees for a lawful or
authorized cause or the right of such an employee to resign, retire or otherwise sever his employment,
whether before or after the merger, subject to existing contractual obligations.

No
Courts cannot strip a member of a non-stock corporation of his membership therein without cause.
Otherwise, that would be an unwarranted and undue interference with the well established right of a
corporation to determine its membership.

under its Articles of Incorporation, has the right to approve or disapprove anapplication for proprietary
membership. But such right should not be exercised arbitrarily. The exercise of a right, though legal by
itself, must nonetheless be in accordance with the proper norm. When theright is exercised arbitrarily,
unjustly or excessively and results in damage to another, a legal wrong is committed forwhich the
wrongdoer must be held responsible. Section 19 of Civil code.

Yes
In a close corporation, a corporate action taken at a board meeting without proper call or notice is
deemed ratified by the absent director unless the latter promptly files his written objection with the
secretary of the corporation after having knowledge of the meeting

In case of close corporations, not all are personally liable but only those who were actively engaged in
the management or operation of the business
Roman Catholic has no nationality. In view of these peculiarities of the corporation sole, it would seem
obvious that when the specificprovision of the Constitution invoked by respondent Commissioner
(section 1, Art. XIII), was underconsideration, the framers of the same did not have in mind or
overlooked this particular form ofcorporation. If this were so, as the facts and
circulllllllllllllllllllmstances already indicated tend to prove it to be so,then the inescapable conclusion
would be that this requirement of at least 60 per cent of Filipino capitalwas never intended to apply to
corporations sole, and the existence or not a vested right becomesunquestionably immaterial.

Under the Public Land Act, alienable public land may be subject to registration by a possessor if he,
personally or through his predecessor-in-interest, had openly, continuously, exclusively and
notoriously possessed the same for 30 years. The law creates the legal fiction whereby the land, upon
completion of the requisite period ipso jure and without the need of judicial or other sanction, ceases
to be public land and becomes private property.

Sec. 113 Batas Pambansa Blg. 68 allows a corporation sole to purchase and hold real estate and
personal property for its church, charitable, benevolent or educational purposes, and may receive
bequests or gifts for such purposes. A corporation sole is a special form of corporation usually
associated with the clergy

There is no need for theinstitution of a proceeding for quo warranto to determine the time or date of
the dissolution of acorporation because the period of corporate existence is provided in the articles of
incorporation.When such period expires and without any extension having been made pursuant to
law, thecorporation is dissolved automatically insofar as the continuation of its business is concerned.
The quowarranto proceeding under Rule 66 of the Rules of Court

No
 Involuntary dissolution is a harsh remedy akin to a capital punishment. Thus, Courts proceed with
extreme caution in the proceeding which have for their object the forfeiture of corporate franchises,
and a forfeiture will not be allowed, except under express limitation, or for a plain abuse of power by
which the corporation fails to fulfill the design and purpose of its organization. But when such abuses
and violations constitute or threaten a substantial injury to the public or such as to amount to a
violation of the fundamental conditions of the contract (charter) by which the franchise were granted
and thus defeat the purpose of the grant, then dissolution will be granted.

Likewise, it has been held that relief of dissolution will be awarded only where no other adequate
remedy is available and it will not be allowed where the rights of the SHs can be, or are, protected in
some other way. The court has a discretion with respect to the infliction of capital punishment upon
corporations and there are certain misdemeanors and misusers of franchises which should not be
recognized as requiring their dissolution.

That the illegal transactions thus undertaken by defendant corporation warrant its dissolution is
apparent from the fact that the foregoing misuser of the corporate funds and franchise affects the
essence of its business, that it is willful and has been repeated 59,463 times, and that its continuance
inflicts injury upon the public, owing to the number of persons affected thereby.

Yes
According to the Court, dissolution is a serious remedy granted to the Courts against offending
corporations. Courts, as a general rule, should not resort to dissolution when the prejudice is not a
prejudice against the public or not an outright abuse of, or violation of the corporate charter. Even if
the prejudice is public in nature, the remedy is to enjoin or correct the mistake. Only when it cannot
be remedied anymore then that dissolution can come in.. It has been held that relief by dissolution
will be awarded only where no other adequate remedy is available, and is not available where the
rights of the stockholders can be, of are, protected in some other way.

general rule is that the minority stockholders of a corporation cannot sue and demand itsdissolution.
However, there are cases that hold that even minority stockholders may ask for dissolution, this,
underthe theory that such minority members, if unable to obtain redress and protection of their rights
within thecorporation, must not and should not be left without redress and remedy. We repeat that
although as a rule, minority stockholders of a corporation may not ask for its dissolution in aprivate
suit, and that such action should be brought by the Government through its legal officer in a quo
warrantocase, at their instance and request, there might be exceptional cases wherein the
intervention of the State, for one reason or another, cannot be obtained, as when the State is not
interested because the complaint is strictly a matter between the stockholders and does not involve,
in the opinion of the legal officer of the Government, any of the acts or omissions warranting quo
warranto proceedings, in which minority stockholders are entitled to have suchdissolution. When such
action or private suit is brought by them, the trial court had jurisdiction and may or may notgrant the
prayer, depending upon the facts and circumstances attending it.

After November 1953, it could only continue to exist for three years for the purpose of prosecuting
and defending suits by or against it, and of enabling itgradually to settle and close its affairs, to dispose
and convey its property and to divide its capital stock. It could not,without violating the law, continue
to sell ice. it had no juridical personality, it had ceased to exist as a corporation and could not sue nor
apply for certificate, for it was incapableof receiving a grant . It was not even a corporation de facto

The 3-year period allowed by the law is only for the purpose of liquidation or winding up of corporate
affairs. No act can be done for the purpose of continuing the business for which it was established.
Neither can it enforce a contract executed prior to its dissolution. (Cebu Port Labor Union vs. State
Marine Co.)
 The termination of the life of a juridical entitydoes not by itself imply the diminution or extinction of
rights demandable against such juridical entity. We believe and so hold that should the assets of
Philsucom remaining inPhilsucom at the time of its abolition not be adequate to pay for all lawful
claims against Philsucom, respondent SRAmust be held liable for such claims against Philsucom to the
extent of the fair value of assets actually taken over bythe SRA from Philsucom, if any. To this extent,
claimants against Philsucom do have a right to follow Philsucom'sassets in the hands of SRA or any
other agency for that matter. This result appears no more than a dictate ofelementary fairness

Yes
Our Corporation Law contains no provision authorizing a corporation, after three (3) years from the
expiration of itslifetime, to continue in its corporate name actions instituted by it within said period of
three (3) years. in fact, section77 of said law provides that the corporation shall "be continued as a
body corporate for three (3) years after the timewhen it would have been . . . dissolved,
for the purposed of prosecuting and defending suits by or against it
. . .", sothat, thereafter, it shall no longer enjoy corporate existence for such purpose. It is provided
only (Corp. Law, Sec. 78) that the conveyance to the trustees must bemade within the three-year
period. It may be found impossible to complete the work of liquidation within thethree-year period or
to reduce disputed claims to judgment

No.
when a corporation is dissolved and theliquidation o its assets is placed in the hands of a receiver or
assignee, the period of three years prescribed bysection 77 of Act No. 1459 known as the Corporation
Law is not applicable, and the assignee may institute allactions leading to the liquidation of the assets
of the corporation even after the expiration of three years

Yes.
"[t]he dissolution of a corporation ends itsexistence so that there must be statutory authority for
prolongation of its life even for purposes of pending litigation ", It will be readily observed that no time
limit has been tacked to the existence of the Board of Liquidators and its function of closing the affairs
of the various government ownedcorporations, including NACOCO

A corporation that has a pending action and which cannot be terminated within the three-year period
afterits dissolution is authorized under Section 78 to convey all its property to trustees to enable it to
prosecute anddefend suits by or against the corporation beyond the Three-year period although
private respondent (did notappoint any trustee, yet the counsel who prosecuted and defended the
interest of the corporation in the instant caseand who in fact appeared in behalf of the corporation
may be considered a trustee of the corporation at least withrespect to the matter in litigation only.
The word "trustee" as sued in the corporation statute must be understood in its general concept
which could includethe counsel to whom was entrusted in the instant case, the prosecution of the suit
filed by the corporation. The purpose in the transfer of the assets of the corporation to a trustee upon
its dissolution is more for the protection ofits creditor and stockholders. Debtors like the petitioners
herein may not take advantage of the failure of thecorporation to transfer its assets to a trustee,
assuming it has any to transfer which petitioner has failed to show, inthe first place. To sustain
petitioners' contention would be to allow them to enrich themselves at the expense ofanother, which
all enlightened legal systems condemn.

Yes
 The action for collection of tax assessments was not barred even after three years from the date of
dissolution which can be considered incomplete because Extrajudicial dissolution is permitted only
when it does not affect the rights of any creditor having a claim against the corporation. The
Government by its assessment which became final and executory before the completion of its
dissolution by the liquidation of its assets became the creditor of the corporation. While section 77 of
the Corporation Law provides for a three-year period for the continuation of the corporate existence
of the corporation for purposes of liquidation, there is nothing in said provision which bars an action
for the recovery of the debts of thecorporation against the liquidator thereof, after the lapse of the
said three-year period.

No
it is undeniable that the new PBM has in fact beenoperating all these years. With the adoption of PD
902-A.Under this decree, it is now clear that the failure to file by-laws within the required period is
only a ground forsuspension or revocation of the certificate of registration of corporations. Non-filing
of the by-laws will not result in automatic dissolution of the corporation. Under Section 6(i) of PD 902-
A,the SEC is empowered to "suspend or revoked, after proper notice and hearing, the franchise or
certificate ofregistration of a corporation" on the ground inter alia of "failure to file by-laws within the
required period." It is clearfrom this provision that there must first of all be a hearing to determine the
existence of the ground, and secondly,assuming such finding, the penalty is not necessarily revocation
but may be only suspension of the charter. In fact,under the rules and regulations of the SEC, failure to
file the by-laws on time may be penalized merely with theimposition of an administrative fine without
affecting the corporate existence of the erring firm.

No
If, indeed, the sociedad has long become defunct, it should behoove petitioners, or anyone else who
may have any interest in the corporation, to take appropriate measures before a proper forum for a
peremptory settlement of its affairs. Still in the absence of a board of directors or trustees, those
having any pecuniary interest in the assets, including not only the shareholders but likewise the
creditors of the corporation, acting for and in its behalf, might make proper representations with the
SEC for working out a final settlement of the corporate concerns.

No.
Each case must be judged in the light of its peculiar circumstances. The test is] whether the foreign
corporation is continuing the body or substance of the business or enterprise for which it was
organized or whether it has substantially retired from it and turned it over to another. The term
implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the
performance of acts or works or the exercise of some of the functions normally incident to, and in
progressive prosecution of, the purpose and object of its organization.

The object of the law is not to prevent foreign corporation from performing single act or isolated
transaction but to prevent it from acquiring domicile for the purpose of business without taking the
steps necessary to render it amenable to sue in local courts. No foreign corp shall be permitted to
transact business in the Phil unless it has obtained the requisite license. And those who do not comply
with the law shall not be permitted to sue in local courts. One single isolated transaction does not
imply continuity of commercial dealings.

Yes
License is not necessary in order that a foreign corporation may sue in Philippine courts if it is not
doing or transacting business in the Philippines. One single act or transaction or an isolated one.

Yes
 The law barring the foreign corporation to the courts will not apply to a foreign corporation
performing a single act or isolated transaction. The fact is that the bundles, the value of which is
sought to be recovered,were landed not as a result of a business transaction, "isolated" or otherwise,
but due to a mistaken belief that they were part of the shipment of forty similar bundles consigned to
persons or entities in the Philippines. There is no justification for the Foreign Corp should be barred
access to our courts.

Yes
There is no general governing rule as to what constitutes doing business in the Philippines. Each case
must be judge in the light of its peculiar circumstances. The 3 contracts do not constitute doing or
transacting business in the Philippines. They are not a series of commercial dealings nor a continuity
thereof. The only reason why they entered into the 2nd and 3rd contract was because it wanted to
recover the losses sustained by the petitioners failure to deliver the coconut oil in order to give them
chance to make good on their obligation. There is no way indication of intent in a continuing business
in the Philippines.

It applied the IRR RA 455 by the Board of investments enumerating the acts that would constitute
doing business. One of them is:(1) Soliciting orders, purchases (sales) or service contracts. 2nd.
appointing of a representative or disttributor domiciled in the Philippines unless such agent is with an
independent status.transacting business in its own name and for its own account). 3rd. opening of
offices whether they be called liason agencies or branches 4. any act implying continuity of
commercial dealings.

YES
If the single act or transaction is not merely incidental or casual but it is to such character as to
distinctly indicate a purpose and apart of the foreign corp to do other business in the country and to
make it a place of its operations. The act will constitute doing business. Nankai sent one of its officers
into the operations in the Philippines with the desire of continuing doing business in the Philippines
and making the Phils a base of its operations. This constitutes doing or transacting business in the
Philippines

Yes
In determining whether a FC is doing business or not aside from their activities in the court. Reference
has to be made to the contract arrangements entered into it by the other entities. Because if the
representative or distributor itself has an independent status the mere appointment of the distributor
will not constitute doing or transacting business.

Yes.
The FC is not here seeking to enforce any legal or contractual rights arising from any business
transaction in the Phil. The sole purpose of the action is to protect its reputation, its corporate name
or goodwill. It is a property right a right in rem which may be assert against all the world even in
jurisdictions where it has not transact business. Just the same as it may protect its tangible property
against trespass or conversion. A trademark acknowledges no territorial boundaries but it extends to
every market where the traders goods have been known or identified.
 The right to the use of the corporate or trade name is a property right, a right in rem, which it may
assert and protect in any of the courts of the world — even in jurisdictions where it does not transact
business — just the same as it may protect its tangible property, real or personal against trespass or
conversion. A foreign corporation is allowed there under to sue "whether or not it has been licensed
to do business in the Philippines" pursuant to the Corporation Law. In any event, respondent in the
present case is not suing for infringement or unfair competition under Section 21- A, but for
cancellation under Section 17, on one of the grounds enumerated in Section 4. And while a suit under
Section 21-A requires that the mark or tradename alleged to have been infringed has been "registered
or assigned" to the suing foreign corporation, a suit for cancellation of the registration of a mark or
tradename under Section 17 has no such requirement. For such mark or tradename should not have
been registered in the first place.

Yes
Treaty of Paris. Sec.8 A corporate tradename shall be protected in all countries of the union without
the obligation of filing or registration and wheter or not it forms part of the TM.

Yes
What preceded this petition for certiorari was a letter complaint filed before the NBI charging
Hemandas with a criminal offense, i.e., violation of Article 189 of the Revised Penal Code. If
prosecution follows after the completion of the preliminary investigation being conducted by the
Special Prosecutor the information shall be in the name of the People of the Philippines and no longer
the petitioner which is only an aggrieved party since a criminal offense is essentially an act against the
State. It is the latter which is principally the injured party although there is a private right violated.
Petitioner's capacity to sue would become, therefore, of not much significance in the main case. We
cannot snow a possible violator of our criminal statutes to escape prosecution upon a far-fetched
contention that the aggrieved party or victim of a crime has no standing to sue.

But where as in the present case, the law denies to a foreign corporation the right to maintain suit
unless it has previously complied with a certain requirement, then such compliance, or the fact that
the suing corporation is exempt therefrom, becomes a necessary averment in the complaint.

the defendantwas twice declared in default, and the defense of lack of capacity to sue was not raised
until after the firstdeclaration of default had been lifted

Petitioner's failure to aver its legal capacity to institute the present petition is not fatal, for A foreign
corporation may, by writ of prohibition, seek relief against the wrongful assumption of jurisdiction.
And a foreign corporation seeking a writ of prohibition against further maintenance of a suit, on the
ground of want of jurisdiction in which jurisdiction is not bound by the ruling of the court in which the
suit was brought, on a motion to quash service of summons, that it has jurisdiction.

Yes.
He cannot inspect the books and records of the Corp because it involves the rights of SHs. The NY law
will be applies. NY law states that the Stockholders must own at least 3% of the OCS. Petitioner does
not own 3%. Also under NY Law a stockholder can inspect the books and records of the corp if
In RJ Jacinto vs. First women corp- court ruled that mere disagreements among SHs will not suffice as
a ground for the appointment of a management contract. At least where there is no eminent danger
of loss of corporate property,or any injury to the SH. Mgt of corporate affairs should not be rested
away from the duly elected BOD who are prima facie entitled to administer the corp affairs and place
in the hands of a management committee. However, if the dissention between and among SHs is such
corp cannot succesfuly carry on its corp powers and functions, the appointment of Management
committee will become imperative.

it must be shown that the corporate property is endangered of being wastage or destroyed. that the
business is being diverted from the purpose it had AND there is a serious paralization of its operations
to the detriments of SHS, parties significant AND general public. In the absence of a strong showing of
eminent danger, wastage, loss, destruction of assets of corp AND paralysis of business operation, the
mere apprehension of future misconduct based on prior management will not result In the creation of
management contract.

DI KO MAKITA UNG CASE :)

the foreign exchange trading transactionthat transpired between complainant and Lansdale appears
to be an investment contract or participation in aprofit sharing agreement that falls within the
definition of the law. When the investor is relatively uninformed andturns over his money to others,
essentially depending upon their representations and their honesty and skill inmanaging it, the
transaction generally is considered to be an investment contract. The touchtone is thepresence of an
investment in a common venture premised on a reasonable expectation of profits to be derivedfrom
the entrepreneurial or managerial efforts of others. Dr. Bailey testified on this matter but no
contractwas submitted by the prosecution. The prosecution failed to prove by sufficient evidence that
indeed, the amountdelivered by Dr. Bailey to Lansdale, through appellant, is an investment
contemplated by the Revised SecuritiesAct and not a mere act of buying and selling foreign exchange.

Prepared by M.J. Itable, CPA

to remember
notice for the meeting was sent March 26, meeting is
March 28
endorsement alone without delivery is not valid

He should have foreclosed first. He has no legal right.

petitioners, as mere assignees, cannot enjoy the status of a

stockholder,cannot vote nor be voted for, and will not be
entitled to dividends

Di ko na gets?

no cert. of stock shall be issued until the full amount of subscription has been paid

no fixed period for registering transfer of shares

unauthorized transfer acquires no title.

the bylaw as to this right is invalid

nevermind (important is ung nxt 2 cases)

BPI also acquired all the liabilities and obligations of the
latter, as if the absorbed incurred the same. EMPLOYEES
WILL BE ABSORBED AUTOMATICALLY
the complete loss of plaintiff's corporate existence after the
expiration of the period of three (3) years forthe settlement
of its affairs is what impelled the President to create a
Board of Liquidators, to continue themanagement of such
matters as may then be pending.
it is a service contract

Doing business

Here there are high restrictions in the representative

contract that. Aspac is mere agent or extension of ITEC. But
petitioner is ESTOPPED to bar ITEC access of our court.A
party will be estopped to challenge the personality of a
corp by entering a transaction with it....applicable also Civil
Code Aritcle 19
applied treaty of Paris
G CASE :)

ACQUITTAL Because NO CLEAR and Convincing Evidence

 Cases Summary
Topic Case Title DIGEST Question/issue Ruling
FINALS

May the failure of a

corporation to file its
by-laws within one
month from the date of
its incorporation, as
mandatedby Section 46
of the Corporation Code,
result in its automatic
Loyola Grand Villas vs. CA dissolution? No

Can a by-law prohibit

Fleisher vs. Botica Nolasco the transfer of shares? No

Govt vs. El Hogar Filipino

W/N the amended by-

laws of SMC
disqualifying a
competitor from
nomination or election
to the Board of
Directors of SMC are
Gokongwei vs. SEC valid and reasonable.

Board of Directors vs. Tan

Meetings

Ponce vs. Encarnacion

NIDC vs. Aquino

Stock and
Stockholders

Trillana vs. Quezon College HE WILL pay when he catches fish

he will pay when the dividends are
National Exchange vs. Dexter declared

Monserrat vs. Ceron

Chua Guan vs. Samahang Magsasaka

Uson vs. Diosomito

Padgett vs. Babcock

Lambert vs. Fox

Embassy Farms vs. CA

Razon vs. IAC

Rural Bak of Salinas vs. CA

Tay vs. CA will mandamus lie? No
Rural Bank of Lipa vs. ca
Tan vs. SEC
Nava vs. Peers Mktg
Won vs. Wack wack Golf wackwack golf rehabilitation
Delos Santos vs. Mc Grath
Fua Cun vs.Summers
Velasco vs. Poizat
De Silva vs. Aboiitiz & Co
Lingayen Gulf vs. Baltazar
Apocada vs. NLRC
Lumanlan vs. Cura
PNB vs. Bitulok Sawmill
Edward Keller vs.COB Group
WONthere is presciptive
period ___ should be
Garcia vs. Suarez made? No
W.G. Philpotts vs. Phil Mfg Corp
Pardo vs.Hercules Lumber
Vegaruth vs. Isabela Sugar
Gokongwei vs. SEC
Gonzales vs. PNB
Associate Bank vs. CA
BPI vs. BPI Employees Union
Chinese YMCA vs. Ching

Cebu Country Club vs. Elizagaque

Lions Club Int vs. CA
Dulay Enterprises vs. CA
Naguiat Ent. Vs. NLRC
Roman Catholic Church vs. LRC
Director vs. CA 158 SCRA 568
Republic vs. IAC
PNB vs. CFI
Govt vs. Phil Sugar Estate
Govt vs. El Hogar Filipino
Republic vs. Security Credit
Republic vs.Visaya Land
Financing Corp. vs. Teodoro
Buenaflor vs. Cam Sur Industry

Cebu port labor Union vs. State Marine

Gonzales vs. Sugar Regulatory Admin

National Abaca vs. Pore
Sumera vs. Valencia
Board of Liquidators vs. Kalaw
Gelano vs. CA
Republic vs. Marsman
Chung Ka Bio vs. IAC
Clemente vs. CA
Mentholatun vs. Mangaliman
Marshall-wells vs. Elser
Bulakhids vs. Navarro
Swedish East Asia vs. Maila Port
Services
Antam Consolidated vs. CA

Facilities Management vs.Dels Osa

Far East Intl vs. Nankai Kogyo
Communication Materials and Design
vs. CA
Western Equipment vs. Reyes
General Garments vs. Director
Puma Sportshufabriken vs. IAC

Le Chemise Lacoste vs. Fernandez

Atlantic Mutual Insurance vs. Cebu
Stevedoring
Olympia Business Machines vs. E.
Razon Inc
Time vs.Reyes
M.E.Grey vs. Insular Lumber
R. J. Jacinto vs. FWCC
Sy Chim vs. Sy Siy Ho
Justee terms Ent. Vs. SEC
China Banking vs. CA
People vs. Petralba
ummary
Doctrine

Non-filing of the by-laws will not result in automatic dissolution of the corporation. Under Section 6(I)
of PD902-A, the SEC is empowered to "suspend or revoke, after proper notice and hearing, the
franchise orcertificate of registration of a corporation" on the ground inter alia of "failure to file by-
laws within the requiredperiod." It is clear from this provision that there must first of all be a hearing
to determine the existence of theground, and secondly, assuming such finding, the penalty is not
necessarily revocation but may be onlysuspension of the charter. In fact, under the rules and
regulations of the SEC, failure to file the by-laws ontime may be penalized merely with the imposition
of an administrative fine without affecting the corporateexistence of the erring firm. The only restraint
that may be imposed is the need for the registration of sale or transfer in the Books of the
corporation.

By-laws are internal rules an cannot bind, effect or prejudice third persons without knowledge. a by-
law which prohibits a transfer of stock without the consent or approval of all the stockholders or of
the president or board of directors is illegal as constituting undue limitation on the right of ownership
and in restraint of trade

Incorporation of an invalid by-law provision is not a misdemeanor. It does not justify the dissolution If
a mistake has been made, or the rule adopted in the by-laws has been found to work harmful results,
the remedy is in the hands of the stockholders who have the power at any lawful meeting to change
the rule.

The validity or reasonableness of a by-law of a corporation is purely a question of law. section 22 of

the same law, the owners of the majority of the subscribed capital stock may amend or repeal any by-
law or adopt new by-laws

The by-laws provided for a 5 day notice rule which upheld its validity, nonetheless, it posted 2 days
prior to the meeting, thus the court held that the meeting and resolution passed was not valid for
want of notice. Failure to give notice in accordance therewith would render the resolution made
thereunder voidable at the option of the SH/members who was not notified.

On the showing of good cause therefor, the court may authorize a stockholder to call a meeting and to
preside threatuntil the majority stockholders representing a majority strockholders representing a
majority of the stock present andpermitted to be voted shall have chosen one among them to preside
it. And this showing of good cause thereforexists when the court is apprised of the fact that the by-
laws of the corporation require the calling of a generalmeeting of the stockholders to elect the board
of directors but call for such meeting has not been done.

A corporation is not a party to a voting trust agreement therefore it is not a real party interest in a suit
to enforce the same. A voting trust transfers only voting and other rights pertaining to the shares
subject of the agreement or control over the stock. It does not include the assets, operation and
management of the corporation.
Indeed, the need for express acceptance on the part of the Quezon College, Inc. becomes the more
imperative, in view of the proposal of Damasa Crisostomo to pay the value of the subscription after
she has harvested fish, a condition obviously dependent upon her sole will and, therefore, facultative
in nature, rendering the obligation void, under article 1115 of the old Civil Code which provides as
follows: "If the fulfillment of the condition should depend upon the exclusive will of the debtor, the
conditional obligation shall be void. If it should depend upon chance, or upon the will of a third
person, the obligation shall produce all its effects in accordance with the provisions of this code.

section 35 of the Corporation Law does not require the notation upon the books of a corporation of
transactions relating to its shares, except the transfer of possession and ownership thereof, as a
necessary requisite to the validity of such transfer, the notation upon the aforesaid books of the
corporation, of a chattel mortgage constituted on the shares of stock in question is not necessary to its
validity

seems to us a reasonable construction of section 4 of Act No. 1508 to hold that the property in the
shares may be deemed to be situated in the province in which the corporation has its principal office
or place of business. If this province is also the province of the owner's domicile, a single registration
sufficient. If not, the chattel mortgage should be registered both at the owner's domicile and in the
province where the corporation has its principal office or place of business. In this sense the property
mortgaged is not the certificate but the participation and share of the owner in the assets of the
corporation.

that all transfers of shares not so entered are invalid as to attaching or execution creditors of the
assignors, as well as to the corporation and to subsequent purchasers in good faith, and indeed, as to
all persons interested, except the parties to such transfers. All transfers not so entered on the books of
the corporation are absolutely void; not because they are without notice or fraudulent in law or fact,
but because they are made so void by statute.

Any restriction on a stockholder's right to dispose of his shares must be construed strictly; and any
attempt to restrain a transfer of shares is regarded as being in restraint of trade, in the absence of a
valid lien upon its shares, and except to the extent that valid restrictive regulations and agreements
exist and are applicable. Subject only to such restrictions, a stockholder cannot be controlled in or
restrained from exercising his right to transfer by the corporation or its officers or by other
stockholders, even though the sale is to a competitor of the company, or to an insolvent person, or
even though a controlling interest is sold to one purchaser

The suspension of the power to sell has a beneficial purpose, results in the protection of the
corporation as well as of the individual parties to the contract, and is reasonable as to the length of
time of the suspension. We do not here undertake to discuss the limitations to the power to suspend
the right of alienation of stock, limiting ourselves to the statement that the suspension in this
particular case is legal and valid.

There being no delivery of the indorsed shares of stock Asuncion cannot therefore effectively transfer
to other person or his nominees the undelivered shares of stock. For an effective transfer of shares of
stock the mode and manner of transfer as prescribed by law must be 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
The duty of the corporation to transfer is a ministerial one and if it refuses to make such transaction
without good cause, it may be compelled to do so by mandamus.
Doctrine of non-negotiobility of shares of stocks.
Prepared by M.J. Itable, CPA
 to remember

notice for the meeting was sent March 26, meeting is

March 28
he will pay when the dividends are declared

endorsement alone without delivery is not valid

Mandamus is only valid if petitioner has legal right

no cert. of stock shall be issued until the full amount of subscription has been paid
no fixed period for registering transfer of shares
unauthorized transfer acquires no title.

SHs are liable to the liabilities of the Corp thru the extent of unpaid subscriptions

there is no presciptive period. If there is any, determine at the time of demand not on the time of the