CORPORATION LAW CASES (SUMMARIZED RULINGS)

SET 1
1. Tayag V Benguet Consolidated
 Benguet Consolidated is a corporation who owes its existence to Philippine laws. It has been given
rights and privileges under the law. Corollary, it also has obligations under the law and one of those
is to follow valid legal court orders. It is not immune from judicial control because it is domiciled
here in the Philippines. BCI is a Philippine corporation owing full allegiance and subject to the
unrestricted jurisdiction of local courts. Its shares of stock cannot therefore be considered in any wise
as immune from lawful court orders. Further, to allow BCI’s opposition is to render the court order
against CTC-NY a mere scrap of paper. It will leave Tayag without any remedy simply because CTC-
NY, a foreign entity refuses to comply with a valid court order. The final recourse then is for our
local courts to create a legal fiction such that the stock certificates in issue be declared lost even
though in reality they exist in the hands of CTC-NY. This is valid. As held time and again, fictions
which the law may rely upon in the pursuit of legitimate ends have played in an important part its
development.

2. Torres V CA
 The assignment of the shares of stocks did not comply with procedural requirements. It did not
comply with the by laws of TRDC nor did it comply with Section 74 of the Corporation Code.
Section 74 provides that the stock and transfer book should be kept at the principal office of the
corporation. Here, it was Judge Torres who was keeping it and was bringing it with him. Further,
his excuse of not ordering the secretary to make the entries is flimsy. The proper procedure is to
order the secretary to make the entry of said assignment in the book, and if she refuses, Judge Torres
can come to court and compel her to make the entry. There are judicial remedies for this. Needless
to say, the subsequent election is invalid because the assignment of shares is invalid by reason of
procedural infirmity. The Supreme Court also emphasized: all corporations, big or small, must abide
by the provisions of the Corporation Code. Being a simple family corporation is not an exemption.
Such corporations cannot have rules and practices other than those established by law.

3. Philippine Stock Exchange V CA

 In the case at bar, the Supreme Court emphasized that the SEC may only reverse decisions issued by
the PSE if such are tainted with bad faith. In this case, there was no showing that PSE acted with bad
faith when it denied the application of PALI. Based on the multiple adverse claims against the assets
of PALI, PSE deemed that granting PALI’s application will only be contrary to the best interest of the
general public. It was reasonable for the PSE to exercise its judgment in the manner it deems
appropriate for its business identity, as long as no rights are trampled upon, and public welfare is
safeguarded.

4. Feliciano V COA
 LWD’s are not private corporations because they are not created under the Corporation Code.
LWD’s are not registered with the Securities and Exchange Commission. Section 14 of the
Corporation Code states that “all corporations organized under this code shall file with the SEC
articles of incorporation x xx.” LWDs have no articles of incorporation, no incorporators and no
stockholders or members. There are no stockholders or members to elect the board directors of
LWDs as in the case of all corporations registered with the SEC.

5. NATIONAL COAL V CIR



6. MARILAO WATER ASSOCIATION V IAC


7. SAWADJAAN V CA

8. GAMBOA V TEVES
 Capital only pertains to common shares.
In this case, it is true that at least 77.85% of the capital is owned by Filipinos (the PLDT subscribers).
But these subscribers, who hold non-voting preferred shares, have no control over the corporation.
Hence, capital should only pertain to common shares. Thus, to be compliant with the constitution,
60% of the common shares of PLDT should be Filipino owned. That is not so in this case as it
appears that 81.47% of the common shares are already foreign owned (split between First Pacific
(37%) and a Japanese corporation).

9. CEASE V CA

10. CIR V NORTON

 The doctrine of piercing the veil of corporation fiction applies to this case. The two corporations
have the same board of directors and Y Corporation owned substantially all of the stocks of X
Corporation, which facts justify the conclusion that the latter is merely an extension of the
personality of the former, and that the former controls the policies of the latter. Added to this is the
fact that Y Corporation controls the finances of X Corporation which is merely an adjunct, business
conduit or alter ego of Y Corporation.

11. MCLEOD V NLRC

 Basic is the principle that a corporation is vested by law with a personality separate and distinct
from that of each person composing or representing it. Equally fundamental is the general rule that
corporate officers cannot be held personally liable for the consequences of their acts, for as long as
these are for and on behalf of the corporation, within the scope of their authority and in good faith.
The separate corporate personality is a shield against the personal liability of corporate officers,
whose acts are properly attributed to the corporation.

12. DE ASIS V CA
 The necessity and urgency for the loan was not to meet the personal needs of Francisco de Asis but
to resolve the cash flow problem of Francisco de Asis and Co. And assuming that it had not
authorized Francisco to borrow money from private respondent, the company still obliged to return
the same.

13. MARTINEZ V CA

14. SOLIDBANK CORP V MINDANAO FERROALLOY CORP

 Corporation is vested by law with separate and distinct from that of person composing it. Corporate
Officers cannot be held personally liable for the consequence of their act as long as these are for and
in behalf of the corporation. The solidary liability is not clearly expressed in this case.

15. YAMAMOTO V NISHINO

 Doctrine of Piercing the veil of corporate fiction – To disregard the separate juridical personality of
a corporation, the wrongdoing/unjust act in contravention of a plaintiff’s legal rights must be clearly
and convincingly established. It cannot be presumed w/o a demonstration that any of the evil sought
to be prevented by the doctrine is present, does not aplly.

16. ASJ Corp V Sps. Evangelista

 ASJ Corporation must give due to the Evangelista Spouses in paying the installment, thus, it must
not delay the delivery of the chicks. Thus, under the law, they are obliged to pay damages with
each other for the breach of the obligation. Therefore, in a contract of service, each party must be
in good faith in the performance of their obligation, thus when the petitioner had detained the
hatched eggs of the respondents spouses, it is an implication of putting prejudice to the business of
the spouses due to the delay of paying installment to the petitioner.
 17. Albert V University Publishing
 On the account of non-registration it cannot be considered a corporation not even a corporation
de facto.

18. ABS CBN V CA

 Award of moral damages cannot be granted in favour of a corporation because being an artificial
person and having existence only in legal contemplation, it has no feelings, no emotions, no senses.
It cannot therefore experience physical suffering and mental anguish which can be experience only
by nervous system.

19. Coastal Pacific Trading V Southern Rolling Mills

 Corporation is not entitled to moral damages because not being a natural person, it cannot
experience physical suffering or sentiments like wounded feelings, serious anxiety, mental anguish
and moral shock. Exemption: Corporation has a good reputation that is debased, resulting in
humiliation in the business realm. However it does not apply in this case.

20. Filipinas Broadcasting Network Inc V Ago Medical

 Generally, Corporation is not entitled to moral damages. Nevertheless, AMEC’s claim for moral
damages falls under item 7 of Article 2219 of Civil Code. This provision expressly authorizes the
recovery of moral damages in case 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 corporation can validly complain libel or any other form of defamation and claim for moral
damages.

21. PNB V CA
 A corporation is liable whenever a tortious act is committed by an officer or agent under express
direction or authority from the stockholders or members acting as body, or, generally, from the
directors as the governing body.

22. Professional Services V CA

 Doctrine of Corporate Negligence/Corporate Responsibilty applies. This provides for the duties
expected (from hospitals). In this case, PSI failed to perform the duty of exercising reasonable care
to protect from harm all patients admitted into its facility for medical treatment.

SET 2

1. KUKAN INTERNATIONAL CORP V REYES

 To justify the piercing of corporate fiction, it must be shown by clear and convincing proof that the
separate and distinct personality of the corporation was purposefully employed to evade a legitimate
and binding commitment and perpetuate fraud. The ff factors must confluence:
1. A first corporation is dissolved;
2. The assets of the first corporation is transferred to a second corporation to avoid a financial liability
of the first corporation;
3. Both corporations are owned and controlled by the same persons such that the second
corporation should be considered as a continuation and successor of the first corporation.

In this case, the 2nd and 3rd factors are absent.

2. JAKA INVESTMENTS


3. ONG YONG V TIU

 Failure of the Ongs to credit shares of stock in favor of the Tius for their property contributions also
pertained to the corporation and not to the Ongs. Any contract for the acquisition of unissued stock
 in an existing corporation or a corporation still to be formed shall be deemed a subscription within
the meaning of this Title, notwithstanding the fact that the parties refer to it as a purchase or some
other contract. Allows the distribution of corporate capital only in three instances: (1) amendment
of the Articles of Incorporation to reduce the authorized capital stock,24 (2) purchase of redeemable
shares by the corporation, regardless of the existence of unrestricted retained earnings,25 and (3)
dissolution and eventual liquidation of the corporation.
4. Alhambra Cigar & Cigarette Manufacturing Company, Inc. v. SEC

 When a corporation is liquidating pursuant to the statutory period of three years to liquidate, it is
only allowed to continue for the purpose of final closure of its business and no other purposes. In
fact, within that period, the corporation is enjoined from “continuing the business for which it was
established”. Hence, Alhambra’s board cannot validly amend its articles of incorporation to extend
its lifespan. (50 YEARS EXTENDIBLE ALSO FOR 50 YEARS READ THE RULE)
5. PNB V CFI

 Section 11 of the Corporation Code provides that Corporation shall exist for a period not exceeding
fifty (50) years from the date of incorporation unless sooner dissolved or unless said period is
extended. Upon expiration of the period fixed in the articles of incorporation in the absence of
compliance with legal requisites for the extension of period, the corporation ceases to exist and is
dissolved ipso facto. Records shows that PBM had a corporate life of only 25 years which ended
already and allowed its corporation to just expire.

6. Seventh Day of Adventist V Northeastern Mindanao Mission of 7t Day Adventist

 The donation was void because the local church does not have juridical personality nor capacity to
accept such gift since it was inexistent at the time it was made. The court denied petitioner’s
contention that there exists a de facto corporation. While there existed the old Corporation Law
(Act 1459), a law under which the local church could have been organized, petitioner’s admitted
that they did not even attempt to incorporate at that time nor the organization was registered with
SEC. Since it follows that some the representatives not even the members of the local church then,
it necessarily follows that they could not even claim that the donation was particularly for them.