CORPO DOCTRINES for Midterms

Good Earth Emporium vs Court of Appeals - SEPARATE ENTITY A corporation is a juridical

person distinct from the members composing it. Properties registered in the name of the corporation are
owned by it as an entity separate and distinct from its members, while shares of stock consitute
personal property they do not represent property of the corporation.
Cruz v. Dalisay Separate Entity PIERCING THE VEIL MISAPPLIED This case is about the
improper service of a writ of execution, regarding the judgment in a labor case involving backwages
of employees, to the complainants, who is the owner/president of Qualitrans Limousine Service , Inc.,
case deposit at the Philtrust Bank. 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. Doctrine of separate and distinct personality of the corporation
and the shareholder applies.
Bank of America vs. Court of Appeals SEPARATE ENTITY DOES NOT APPLY - the
corporations are wholly owned by the Lintonjua's and prior to the incorporation of such entities, they
were clients of petitioners which induced them to acquire loans from said petitioners to invest on the
additional ships. such a dismissal, would preclude multiplicity of suits which the law abhors, and
conduce to the definitive determination and termination of the dispute.
Avon Dale Garments vs. CA -SEPARATE ENTITY NOT APPLICABLE; - The mere filing of the
Articles of Dissolution with the Securities and Exchange Commission, without more, is not enough to
support the conclusion that actual dissolution of an entity in fact took place. two entities cannot be
deemed as separate and distinct where there is a showing that one is merely the continuation of the
other. In fact, even a change in the corporate name does not make a new corporation, whether effected
by a special act or under a general law, it has no effect on the identity of the corporation, or on its
property, rights, or liabilities. Avon Dale company is not distinct from its predecessor Avon Dale Shirt
Factory, but in fact merely continued the operations of the latter under the same owners, the same
business venture, at same address and hired same employees.
Concept builders vs NLRC - INSTRUMENTALITY RULE Where one corporation is so organized
and controlled and its affairs are conducted so that it is, in fact, a mere instrumentality or adjunct of the
other, the fiction of the "instrumentality" may be disregarded.
When the notion of separate juridical personality is used to defeat public convenience, justify a wrong,
protect fraud or defend crime, or used as a device to defeat the labor laws, the separate personality of
the corporation may be disregarded or the veil of corporate fiction may be pierced.
First Philippine Bank vs. CA SEPARATE ENTITY; IDENTIY IN INTEREST; Forum shopping
exists since there is identity of the parties, or atleast, of interests represented. There is identity of parties
even though the first case is in the name of the bank as defendant, and the second case is in the
name of Henry Co as plaintiff. Therefore there is still forum shopping here because Henry Co
essentially represents the bank.
Firstly, they are not suing in their personal capacities, for they have no direct personal interest
in the matter in controversy. They are not principally or even subsidiarily liable; much less are

they direct parties in the assailed contract of sale; and

Secondly, the allegations of the complaint in the Second Case show that the stockholders are
bringing a "derivative suit". In the caption itself, petitioners claim to have brought suit "for and in
behalf of the Producers Bank of the Philippines" Indeed, this is the very essence of a derivative
suit:
;APPARENT AUTHORITY If a corporation knowingly permits one if its officers, or any
other agent, to do acts within the scope of an apparent authority, and thus holds him out to the public as
possessing power to do those acts, the coporoation wil, as agains any one who has in good faith dealt
with the corporation through such agent, he estopped from denying his authority.
Fransisco Motors Corp vs CA PIERCE THE VEIL NOT APPLICABLE - Basic in corporation
law is the principle that a corporation has a separate personality distinct from its stockholders and from
other corporations to which it may be connected. The doctrine of piercing the corporate veil has no
relevant application. In the present case, instead of holding certain individuals or persons responsible
for an alleged corporate act, the situation has been reversed. It is the Francisco Motors Corporation
(FMC) as a corporation which is being ordered to answer for the personal liability of certain individual
directors, officers and incorporators concerned. Hence, the doctrine has been turned upside down
because of its erroneous invocation.
Bibiano Reynoso vs CA PIERCE THE VEIL WHEN PROPER Any piercing of the veil must be
done with caution. When the mother corporation and its subsidiary cease to act in good faith and
honest business judgment, when the corporate device is used by the parent to avoid its liability for
legitimate obligations of the subsidiary, and when the corporate fiction is used to perpetrate fraud or
promote injustice, the law steps in to remedy the problem.
Simeon de Leon v. NLRC- PIERCE THE VEIL - Doctrine of separate and distinct personality may
not be used to defeat public convenience, justify a wrong, protect a fraud or defend a crime, the law
will regard the corporation as an association of persons, or in case of the two corporations, merge them
into one.
PNB vs Andrada Electric & Engineering Co. - PIERCE THE VEIL; - Piercing the veil of corporate
entity may only be allowed if there is control in such a manner that (1) the corporate entity had no
separate mind, will, existence on its own, (2)that such control must have been used to commit fraud or
a wrong and said control and breach of duty must have proximately caused the injury or unjust loss
complained of. In the absence of the foregoing precludes the piercing of the corporate veil.
PNB vs Andrada CORPORATE POWER; MERGER - For a valid merger and consolidation, the
approval by the SEC of the articles of merger or consolidation is required. These articles must likewise
be duly approved by a majority of the respective stockholders of the constituent corporations.
Estelita Lipat vs. Pacific Banking Corp - SEPARATE ENTITY INSTRUMENTALITY RULE
when a corporation is the mere alter ego of or business conduit of a person, the separate personality of
the corporation may be disregarded. This is called the instrumentality rule or alter ego doctrine. The
control necessary to invole the rule is not majority or even complete stock control but such domination
of finances, polices and practices that the controlled corporation has, so to speal, no separate mind, will
or existence of its own and is but a conduit for its principal.

International Travel Express vs CA - CORPORATION BY ESTOPPEL - Any 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 such acts performed as an
agent. The application of the doctrine of corporation by estoppel 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, IETTI is not trying to escape liability from the contract but rather is
the one claiming from the contract.
Lim Tong Lim vs Phil Fishing Gear industries CORPORATION BY ESTOPPEL - Those acting
on behalf of a corporation and benefitted by I knowing it to be without valid existence are held liable as
general partners. Lim Tong reaped the benefits of the partnership with chua and yao
Lozano vs De Los Santos SEC JURISDICTION - The jurisdiction of the SEC is determined by the
concurrence of the 2 elements: (1) status or relationship of the parties; that the controversy must arise
out of intercorporate or partnership relation between and among stockholders, members, or associaties;
between any of them and the corporation, partnership, etc; and between such corporation, partnership,
etc. and the state concerning individual franchise; (2) the nature of the question that is the subject of
their contoversy; requires that the dispute amongthe parties be intrisically connected with the regulation
of the corporation, partnership, or association. There is no intra - corporate nor partnership relation
between petitioner and private respondent. This unified association was still a proposal and has not
been approved by SEC, neither has its officers and members submitted its articles of incorporation.
Lyceum of the Philippines vs. CA - CORPORATE NAME; SECONDARY MEANING Section
18 of the Corporate Code expressly prohibits the use of corporate name which is identical or deceptivey
o confusingly similar to that of any existing corporation or to any other name already protected by law
or is patently deceotive, confusing or contrary existing laws. Secondary meaning a word or phrase
originally incapable of exclusive appropriation with reference to an article on 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 come to mean that the article was his product
Industrial Refractories Corp vs CA CORPORATE NAME PROHIBITION Section 18 of the
Corporate Code expressly prohibits the use of corporate name which is identical or deceptivey oR
confusingly similar to that of any existing corporation or to any other name already protected by law or
is patently deceotive, confusing or contrary existing laws. The policy behind the foregoing prohibition
is to avoid fraud upon the public that will have occasion to deal with the entity concerned, the evasion
of legal obligations and duties and the reduction of difficulties of administration and supervision over
corporation.
Hall vs Piccio - CORPORATE EXISTENCE IN GOOD FAITH - even its stockholders may not
probably claim in good faith to be a corporation. Under the Corporation Code, it is the issuance of a
certificate of incorporation by the Director of the Bureau of Commerce and Industry which calls a
corporation into being. The immunity of collateral attack is granted to corporations claiming in good
faith to be a corporation under this act.
Seventh Day Adventist vs North Eastern Mindanao CORPORATE EXISTENCE; - Seventh Day

Adventist (Petitioners) obviously could not have claimed succession to an entity that never came to
exist. -Corporate existence begins only from the moment a certificate of incorporation is issued. No
such certificate was ever issued to petitioners or their supposed predecessor-in-interest at the time of
the donation. Neither could the principle of separate juridical personality apply since there was never
any corporation to speak of. The filing of articles of incorporation and the issuance of the certificate of
incorporation are essential for the existence of a de factocorporation There are stringent requirements
before one can qualify as a de facto corporation:
(a) the existence of a valid law under which it may be incorporated;
(b) an attempt in good faith to incorporate; and
(c) assumption of corporate powers

Grace christian vs CA MEMBERS OF CORPORATE BOARD OF DIRECTORS OR

TRUSTEES - The corporation code is clear when it provides that members of the BOARD of a
corporation must be elected by the stockholders or members. Admittedly, there are corporations who
allow some of their directors to sit in the board without being elected-but such practice cannot prevail
over the provisions of law.
Gokongwei vs SEC - DOCTRINE OF CORPORATE OPPORTUNITY - A corporation, under the
Corporation law, may prescribe in its by-laws the qualifications, duties and compensation of directors,
officers, and employees. Any person who buys stock in a corporation does so with the knowledge that
its affairs are dominated by a majority of the stockholders and he impliedly contracts that the will of the
majority shall govern in all matters within the limits of the acts of incorporation and lawfully enacted
by-laws and not forbidden by law. Doctrine of Corporate opportunity is based upon the principle
that where the director is employed in the service of a rival company, he cannot serve both, but
must betray one or the other. Corporate officers are also not permitted to use their position of
trust and confidence to further their private needs, and the act done in furtherance of private
needs is deemed to be for the benefit of the corporation.
Inter Aisa Investment vs CA - CORPORATE OFFICERS; ULTRA VIRES ACT; CORPORATE
OFFICER AUTHORIZED TO PURCHASE STOCK HAD IMPLIED POWER TO PERFORM
ALL ACTS ARISING THEREFROM; CASE AT BAR. An officer of a corporation who is
authorized to purchase the stock of another corporation has the implied power to perform all other
obligations arising therefrom, such as payment of the shares of stock. By allowing its president to sign
the Agreement on its behalf, petitioner clothed him with apparent capacity to perform all acts which are
expressly, impliedly and inherently stated therein.
NACPIL vs. Broadcasting - CORPORATE OFFICERS; OFFICERS ARE ELECTED BY THE
BOARD An office has been defined as a creation of the charter of a corporation, while an officer
as a person elected by the directors or stockholders. Since complainants appointment was approved
unanimously by the Board of Directors of the corporation, he is therefore considered a corporate officer
and his claim of illegal dismissal is a controversy that falls under the jurisdiction of the SEC. the
relationship of a person to a corporation, whether as officer or agent or employee is not
determined by the nature of the services performed, but instead by the incidents of the
relationship as they actually exist.

Santos vs NLRC CORPORATE OFFICERS WHEN LIABLE - The general rule is that
obligations incurred by the corporation, acting through its directors, officers and employees, are its sole
liabilities. However, the corporate veil may be lifted when a corporation is used to evade a just and due
obligation or to justify a wrong, to shield or perpetrate fraud, to carry out similar other unjustifiable
aims or intentions, or a subterfuge to commit injustice and so circumvent the law. There may also be
instances when personal liability may attach to a corporate director, trustee or officer without piercing
the corporate veil, but the case of Santos does not fall in any of those exceptional circumstances. It was
not even shown that petitioner has had a direct hand in the dismissal of private respondent enough to
attribute to him a patently unlawful act while acting for the corporation.
Spouses David et al vs CIAC CORPORATE OFFICERS WHEN LIABLE As a general rule, the
officers of a corporation are not personally liable for their official acts unless it is shown that they have
exceeded their authority. However, the personal liability of a corporate director, trustee or officer, along
with corporation, may so validly attach when he assents to a patently unlawful act of the corporation or
for bad faith or gross negligence in directing its affairs.
Malayang samahan vs ramos CORPORATE OFFICERS WHEN LIABLE - The rule is that
obligations incurred by the corporation, acting through its directors, officers and employees are its sole
liabilities.
Exceptional circumstances:
1. When directors/officers:
A. Vote for or assent to patently unlawful acts of the corporation;
B. Act in bad faith or with gross negligence in directing corporate affairs;
C. Guilty of conflict of interest to the prejudice of the corporation.
2. Issuance of watered stocks or knowledge thereto.
3. When the directors/officers contractually agreed or stipulated to hold himself liable
4. When provided by specific provisions of the law
Prime white Cement vs IAC - DOCTRINE OF THE SELF DEALING DIRECTOR. - SEC. 32.
Dealings of directors, trustees or officers with the corporation. - A contract of the corporation with
one or more of its directors or trustees or officers is voidable, at the option of such corporation, unless
all the following conditions are present:
1. That the presence of such director or trustee in the board meeting in which the contract was
approved was not necessary to constitute a quorum for such meeting;
2. That the vote of such director or trustee was not necessary for the approval of the contract;
3. That the contract is fair and reasonable under the circumstances; and
4. That in the case of an officer, the contract with the officer has been previously authorized by the
Board of Directors.
In this particular case, the Supreme Court focused on the fact that the contract between PWCC
and Te through Falcon and Trazo was not reasonable. Hence, Prime White Cement has all the
rights to void the contract and look for someone else, which it did. The contract is unreasonable
because of the very low selling price. The Price at that time was at least P13.00 per bag and the original
contract only stipulates P9.70. Also, the original contract was for 6 years and theres no clause in the
contract which protects PWCC from inflation. As a director, Te in this transaction should protect the
corporations interest more than his personal interest. His failure to do so is disloyalty to the
corporation.

Dee vs SEC STOCKHOLDERS; POWER TO ISSUE SHARES OF STOCKS LODGED IN

THE BOARD OF DIRECTORS. While the group of Luciano Maggay was in control of Natelco
by virtue of the restraining order issued in G.R. NO. 50885, the Maggay Board issued 113,800 shares
of stock to CSI. Petitioner said that the Maggay Board, in issuing said shares without notifying Natelco
stockholders, violated their right of preemption to the unissued shares. The questioned issuance of the
113,800 stocks is not invalid even assuming that it was made without notice to the stockholders as
claimed by the petitioner. The power to issue shares of stocks in a corporation is lodged in the board of
directors and no stockholders meeting is required to consider it because additional issuance of shares of
stocks does not need approval of the stockholders. Consequently, no preemptive right of Natelco
stockholders was violated by the issuance of the 113,800 shares.
Mcleod vs. NLRC -CORPORATE LIABILITIES OF OFFICERS - In the absence of malice, bad
faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be
made personally liable for corporate liabilities. Neither Article 212(c) nor Article 273 (now 272) of the
Labor Code expressly makes any corporate officer personally liable for the debts of the corporation.
The personal liability of corporate officers validly attaches only when (a) they assent to a patently
unlawful act of the corporation; or (b) they are guilty of bad faith or gross negligence in directing its
affairs; or (c) they incur conflict of interest, resulting in damages to the corporation, its stockholders or
other persons.
Islamic Directorate of the Philippines vs CA SECTION 40 a corporation may, by a majority
vote of its board of directors or trustees, sell, lease, exchange, mortgage, pledge or otherwise dispose
of all or substantially all of its property and assets... when authorized by the vote of the stockholders
representing at least two-thirds (2/3) of the outstanding capital stock; or in case of non-stock
corporation, by the vote of at least two-thirds (2/3) of the members, in a stockholders' or members'
meeting duly called for the purpose
Nielson vs. Lepanto Mining CONTRACT MANAGEMENT; STOCK DIVIDENDS - A
management contract is not a contract of agency. A contract of lease of service as in a lease of work is
where one parties binds himself to make acontruct for a price certain. Nielson was not acting as an
agent but one as performing material acts for an employer for a compensation.
A "stock dividend" is any dividend payable in shares of stock of the corporation declaring or
authorizing such dividend. It is, what the term itself implies, a distribution of the shares of stock of the
corporation among the stockholders as dividends. A stock dividend of a corporation is a dividend paid
in shares of stock instead of cash, and is properly payable only out of surplus profits.15 So, a stock
dividend is actually two things: (1) a dividend, and (2) the enforced use of the dividend money to
purchase additional shares of stock at par.16 When a corporation issues stock dividends, it shows that
the corporation's accumulated profits have been capitalized instead of distributed to the stockholders or
retained as surplus available for distribution, in money or kind, should opportunity offer. Stock
dividends are civil fruits of the original investment, and to the owners of the shares belong the civil
fruits.
Hydro resources contractors vs national irrigation administration - DOCTRINE OF APPARENT
AUTHORITY If a corporation knowingly permits one of its officers to act within the scope of an
apparent authority, it holds him out to the public possessing the power to do such acts, and thus, the
corporation will, against anyone who has in good faith dealt with it through such agent, be stopped

from denying the agent's authority.

Loyola Grand Villas vs. CA BY LAWS; FAILURE TO FILE - Failure to submit however does not
warrant automatic dissolution because such a consequence was never the intention of the law. The
failure is merely a ground for dissolution which may be raised in a quo warranto proceeding. It is also
worthwhile to note that failure to submit cant result to automatic dissolution because there are some
instances when a corporation does not require a by-laws. A private corporation like LGVAI commences
to have corporate existence and juridical personality from the date the Securities and Exchange
Commission (SEC) issues a certificate of incorporation under its official seal. The submission of its bylaws is a condition subsequent but although it is merely such, it is a MUST that it be submitted by the
corporation.
China Banking Corporation vs CA - CORPORATION CODE; BY-LAWS; THIRD PERSONS
ARE NOT BOUND BY THE BY-LAWS OF A CORPORATION SINCE THEY ARE NOT
PRIVY THERETO. In order to be bound, the third party must have acquired knowledge of the
pertinent by-laws at the time the transaction or agreement between said third party and the shareholder
was entered into, in this case, at the time the pledge agreement was executed. VGCCI could have easily
informed petitioner of its by-laws when it sent notice formally recognizing petitioner as pledgee of one
of its shares registered in Calapatia's name. Petitioner's belated notice of said by-laws at the time of
foreclosure will not suffice.
Salafranca vs. PHILAMLIFE (Pamplona) BY LAWS MUST NOT IMPAIR EXISTING
RIGHTS- the right to amend the by-laws lies solely in the discretion of the employer, this being in the
exercise of management prerogative or business judgment. However this right, extensive as it may be,
cannot impair the obligation of existing contracts or rights.
Republic of the Philippines (PCGG) vs Cocofed
Francis Chua vs CA and Hao - DERIVATIVE SUIT FILED THROUGH A CRIMINAL
COMPLAINT - A derivative action is a suit by a shareholder to enforce a corporate cause of action.
The corporation is a necessary party to the suit. And the relief which is granted is a judgment against a
third person in favor of the corporation. Similarly, if a corporation has a defense to an action against it
and is not asserting it, a stockholder may intervene and defend on behalf of the corporation. Under
Section 36[13] of the Corporation Code, read in relation to Section 23, where a corporation is an
injured party, its power to sue is lodged with its board of directors or trustees. An individual
stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he
holds stocks 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.
Expertravel & Tours Inc. vs CA and Korean Airlines CORPORATE MEETINGS AND
ISSUE: Whether or not teleconferencing is a valid means of holding its corporate meetings and was the
board resolution was valid.
HELD: No, hings of common knowledge of which courts take judicial matters coming to the
knowledge of men generally in the course of the ordinary experiences of life, or they may be matters

which are generally accepted by mankind as true and are capable of ready and unquestionable
determination. As the common knowledge of man ranges far and wide, a wide variety of particular
facts have been judicially noticed as being matters of common knowledge. But a court cannot take
judicial notice of any fact which, in part, is dependent on the existence or non-existence of a fact of
which the court has no constructive knowledge.
Even given the possibility that Atty. Aguinaldo and Suk Kyoo Kim participated in a teleconference
along with the respondents Board of Directors, the Court is not convinced that one was conducted;
even if there had been one, the Court is not inclined to believe that a board resolution was duly passed
specifically authorizing Atty. Aguinaldo to file the complaint and execute the required certification
against forum shopping.