Recoletos aw Center
“HOME OF THE NATION'S TOP BAR REVIEWERS”
PERALTA, Tulien F.
LEONARDO - DE CASTRO DOCTRINES
COMMERCIAL LAW
CORPORATION LAW
The following are juridical persons: (1) The State and its political subdivisions; (2) Other
corporations, institutions and entities for public interest or purpose created by law; their
Personality begins as soon as they have been constituted according to law; (3) Corporations,
Partnerships and associations for private interest or purpose to which the law grants a juridical
Personality, separate and distinct from that of each shareholder, partner or member. Evidently,
the BSP, which was created by a special law (RA 7278) to serve a public purpose in pursuit of a
constitutional mandate, comes within the class of “public corporations” defined by paragraph 2,
Article 44 of the Civil Code and governed by the law which creates it, pursuant to Article 45 of
the same Code. The BSP is a public corporation or a government agency or instrumentality with
juridical personality, which does not fall within the constitutional prohibition in Article XII,
Section 16, notwith-standing the amendments to its charter. Not all corporations, which are not
government owned or controlled, are ipso facto to be considered private corporations as there
exists another distinct class of corporations or chartered institutions which are otherwise known
as “public corporations.” These corporations are treated by law as agencies or instrumentalities
of the government which are not subject to the tests of ownership or control and economic
viability but to different criteria relating to their public purposes/interests or constitutional
policies and objectives and their administrative relationship to the government or any of its
Departments or Offices [Boy Scouts of the Philippines vs. Commission on Audit, 651 SCRA
146(2011)).
Corporation Law; Principle of Limited Liability. A corporation is an artificial entity created by
operation of law. It possesses the right of succession and such powers, attributes, and properties
expressly authorized by law or incident to its existence. It has a personality separate and
distinct from that of its stockholders and from that of other corporations to which it may be
connected. As a consequence of its status as a distinct legal entity and as a result of a conscious
policy decision to promote capital formation, a corporation incurs its own liabilities and is
legally responsible for payment of its obligations. In other words, by virtue of the separate
juridical personality of a corporation, the corporate debt or credit is not the debt or credit of the
stockholder. This protection from liability for shareholders is the principle of limited liability
[Philippines National Bank vs. Hydro Resources Contractors Corporation, 693 SCRA 294(2013)].
Corporation Law;Corporate officers. As a general rule, a corporate officer cannot be held liable
for acts done in his official capacity because a corporation, by legal fiction, has a personality
separate and distinct from its officers, stockholders, and members. To pierce this fictional veil, it
must be shown that the corporate personality was used to perpetuate fraud or an illegal act, or
to evade an existing obligation, or to confuse a legitimate issue. In illegal dismissal cases,
corporate officers may be held solidarily liable with the corporation if the termination was done
with malice or bad faith {Culili vs, Eastern Telecommunications Philippines, Inc. 642 SCRA
338(2011)].
Page 2 of 5determine the
it to
Alter Ego Theory; Instrumentality Theory. There are anaes theory, namely:
application of the alter ego theory, which is also known as the instru ee
(1) Control, not mere majority or complete stock control, but complete « sce : a rie
finances but of policy and business practice in respect to the transaction attacl : ae
corporate entity as to this transaction had at the time no separate mind, will or existence
own; (2) Such control must have been used by the defendant to commit fraud or vo S
Perpetuate the violation of a statutory or other positive legal duty, or dishonest and unjust act
in contravention of plaintiff's legal right; and (3) The aforesaid control and breach of duty must
have proximately caused the injury or unjust loss complained of.
While ownership by one corporation of all or a great majority of stocks of another corporation
and their interlocking directorates may serve as indicia of control, by themselves and without
more, however, these circumstances are insufficient to establish an alter ego relationship that
will justify the puncturing of the latter's corporate cover. The mere ‘ownership by a single
stockholder or by another corporation of all or nearly all of the capital stock of a corporation is
’ot of itself sufficient ground for disregarding the separate corporate personality.” Also the
“existence of interlocking directors, corporate officers and shareholders is not enough
Corporation Law; Interim Rules of Procedure for Intra-Corporate Controversies (A.M. No, 01-
20-04-SC); Appeals; Inspection of Corporate Books; Civil cases involving the inspection of
conporate books are governed by the rules of procedure set forth in AM. No. 01-2-04-Sc,
Republic Act No. 8799 (Interim Rules). Section 4, Rule 1 of the Interim Rules defines the nature
of the judgments rendered thereunder as follows: “SEC. 4. Executory nature of decisions and
orders.—All decisions and orders issued under these Rules shall immediately be executory,
except the awards for moral damages, exemplary damages and attorney's fees, if any. No
appeal or petition taken therefrom shall stay the enforcement or implementation of the decision
or order, unless restrained by an appellate court. Interlocutory orders shall not be subject to
appeal.” Verily, the first part of Section 4, Rule 1 of the Interim Rules is categorical. Save for the
exceptions clearly stated therein, the provision enunciates that a decision and order issued
under the Interim Rules shall be enforceable immediately after the rendition thereof. In order to
assail the decision or order, however, the second part of the provision speaks of an appeal or
petition that needs to be filed by the party concerned. In this appeal or petition, a restraining,
order must be sought from the appellate court to enjoin the enforcement or implementation of
the decision or order. Unless a restraining order is so issued, the decision or order rendered
under the Interim Rules shall remain to be immediately executory [Dee Ping Wee vs. Lee Hiong
Wee, 629 SCRA 145(2010)].Recoletos Maw Center
“HOME OF THE NATION'S TOP BAR REVIEWERS"
Banking Laws
Mercantile ; .
oe aes and Banking. It is settled that banks, their business being impressed
hilar re expected to exercise more care and prudence than private individuals
Seer ne Sven those involving registered lands. The rule that persons dealing, with
ie lands can rely solely on the certificate of title does not apply to banks [Philippine Trust
‘ompany vs. Court of Appeals, 635 SCRA 518(2010)]. :
Doctrine of Last Clear Chance; The Court has consistently applied the doctrine of last clear
chance in order to assign liability. In Westmont Bank v. Ong, 375 SCRA 212 (2002), the court
ruled: ...[I]t is petitioner [bank] which had the last clear chance to stop the fraudulent
encashment of the subject checks had it exercised due diligence and followed the proper and
regular banking procedures in clearing checks. As earlier ruled, the one who had a last clear
opportunity to avoid the impending harm but failed to do so is chargeable with the
consequences thereof [Bank of America NT & SA vs. Philippine Racing Club, 594 SCRA 301(2009)).
NEGOTIABLE INSTRUMENTS,
Once the drawee accepts, he becomes an acceptor. As acceptor, he engages to pay the bill of
exchange according to the tenor of his acceptance.—Under the lawwhat is accepted is a bill of
‘exchange, and the acceptance of a bill of exchange is both the manifestation of the drawee's
consent to the drawer’s order to pay money and the expression of the drawee’s promise to pay.
Itis “the act by which the drawee manifests his consent to comply with the request contained in
the bill of exchange directed to him and it contemplates an engagement or promise to pay.”
‘Once the drawee accepts, he becomes an acceptor. As acceptor, he engages to pay the bill of
exchange according to the tenor of his acceptance. Acceptance is made upon presentment of the
bill of exchange, or within 24 hours after such presentment. Presentment for acceptance is the
production or exhibition of the bill of exchange to the drawee for the purpose of obtaining his
acceptance. Presentment for acceptance is necessary only in the instances where the law
requires it. In the instances where presentment for acceptance is not necessary, the holder of the
bill of exchange can proceed directly to presentment for payment (Hongkong and Shanghai
Banking Corporation Limited-Philippine Branches vs. Commissioner of Internal Revenue).
Presentment for Payment. Presentment for payment is the presentation of the instrument to the
person primarily liable for the purpose of demanding and obtaining payment thereof. Thus,
whether it be presentment for acceptance or presentment for payment, the negotiable
instrument has to be produced and shown to the drawee for acceptance or to the acceptor for
payment (Ibid).
Material Alteration. A material alteration is defined in Section 125 of the NIL to be one which
changes the date, the sum payable, the time or place of payment, the number or relations of the
parties, the currency in which payment is to be made or one which adds a place of payment
where no place of payment is specified, or any other change or addition which alters the effect
Page 40f 5coletus Daw Center
“HOME OF THE NATION'S TOP BAR REVIEWERS” ‘
of the instrument in any respect [Bank of America NT & SA vs. Philippine Racing Club, 59.
SCRA 301(2009)].
TRANSPORTATION LAW
Common Carriers; Negligence; Damages; The court holds that the carrier had the
responsibility to inform itself of the prevailing weather conditions in the areas where its vessel
was set to sail. The carrier cannot merely rely on other vessels for weather updates and
warnings on approaching storms, as what apparently happened in this case. Common sense
and reason dictates this. To do so would be to gamble with the safety of its own vessel, putting
the lives of its crew under the mercy of the sea, as well as running the risk of causing damage to
the property of third parties for which it would necessarily be liable (Sealoader Shipping
Corporation vs. GrandCement Manufacturing Corporation , 638 SCRA 488(2010)],