Yutivo Sons Hardware c.

CTA
Facts:
 Yutivo Sons is a company engaged in the importation and sale of hardware supplies and equipment
 Yutivo bought a number of cars from General Motors Overseas Corporation (GM)
 As an importer, GM paid sales tax prescribed in Secs. 184, 185 and 186 of the Tax Code on the basis
of its selling price to Yutivo
o The tax being collected only once on original sales, Yutivo paid no further sales tax on its sales
to the public
 Yutivo then sold exclusively to Southern Motors, which was organized to engage in the business of
selling cars, trucks and spare parts to the public
 GM decided to withdraw from the Philippines
o GM decided to appoint Yutivo as importer for the Visayas and Mindanao regions
o Yutivo continued its previous arrangement of selling exclusively to Southern Motors
 Yutivo, now as an importer, paid sales tax on its importation on the basis of its selling price to Southern
Motors
o Since the sales tax was imposed only once, Southern Motors paid no sales tax on its sale to the
public
 CIR then made an assessment on Yutivo and demanded from the latter P1.8M as deficiency sales tax
o CIR claimed that the taxable sales were the retail sales by Southern Motor to the public and
NOT the wholesale made by Yutivo to Southern Motor
o CIR claimed that Southern Motor and Yutivo being, in fact, one and the same corporation, the
former being the subsidiary of the latter—Yutivo is liable for the deficiency sales tax

Issue: Whether Southern Motors was a mere adjunct of Yutivo—Yes

Held:
 Yutivo financed principally, if not wholly, the business of Southern Motors
o Yutivo actually extended all the credit to Southern not only in the form of starting capital, but
also in the form of credits extended for the cars and vehicles allegedly sold by Yutivo to
Southern Motors
o Yutivo also gave advances or loans for the expenses of Southern when its capital had been
exhausted
 The funds of Southern were all merged in the cash fund of Yutivo
 At all times, Yutivo, through its officers and directors common to it and Southern Motors, exercised full
control over the cash funds, policies, expenditures and obligations of the latter
 Southern Motors, being a mere instrumentality, or adjunct of Yutivo, the CTA correctly disregarded the
technical defense of separate corporate entity in order to arrive at the true tax liability of Yutivo

Padilla v CA
Facts:
 Susana Realty Inc. (SRI) sold to Light Rail Transit Authority (LRTA) several parcels of land along Taft
Avenue
o SRI had a right of first refusal in case LRTA decided to develop the land
 LRTA decided to develop the land.
o LRTA contracted Phoenix-Omega (Phoenix) to develop the land
o SRI agreed on the condition that all plans must be approved by it
 Phoenix then assigned its rights to PKA Development and Management Corporation (PKA) whose
president and general manager is Padilla
o Padilla is also the chairman of Phoenix-Omega
 Therefore, PKA was now in charge of developing the properties
o PKA, however, continuously failed to develop said land and eventually had its building permit
revoked for defects in construction
 PKA then moved for the rescission of the contract
 o PKA alleged that SRI maliciously withheld approval of the plans, which led to PKA being unable
to comply with its obligations
o Judgment, however, was rendered in favor of SRI
 The contract was rescinded, and PKA was ordered to indemnify SRI for damages
o The property was returned to SRI, but PKA failed to pay monetary awards
 SRI then filed a motion for the issuance of an alias writ against Padilla and Phoenix, saying that they
were one and the same entity with PKA
o Padilla and Phoenix claimed that they were denied due process because Phoenix was not given
his its days in Court

Issue: Whether Padilla’s participation in the proceedings as PKA’s president and general manager could be
construed as the opportunity to be heard in court of Padilla and Phoenix-Omega—No

Held:
 Padilla and Phoenix were not given their day in court
 Clearly, Padilla participated in the proceedings as General Manager of PKA and not in any other
capacity
 The fact that he was the chairman of the board of Phoenix cannot equate to participation by
Phoenix in the same proceedings
o Phoenix was never a party to the case and so could not have participated therein
o PKA and Phoenix are admittedly sister companies, and may be sharing personnel and
resources, but there was no allegation, much less positive proof, that their separate corporate
personalities were being used to defeat public convenience, justify wrong, protect fraud, or
defend crime
 For separate juridical personality of a corporation to be disregarded, the wrongdoing must be
clearly and convincingly established. It cannot be presumed. In the case at bar, there was no
reason to justify piercing the corporate veil

Paz v. New International Environmental Universality

Facts:
 Petitioner, the officer in charge of the Aircraft Hangar at the Davao International Airport, Davao
International Airport entered into a MOA with Captain Allan Clarke (Capt. Clarke), president of
International Environmental University
o The MOA involved lease on aircraft hangar space at the said airport for 4 years (with 6 months
prior notice in termination) for the use of such space “exclusively for company
aircraft/helicopters”
 Petitioner sent several letters of complaint to Capt. Clarke asking it to abide by the MOA to use the
hangar for company aircrafts and helicopters and stop using it for parking vehicles and as a site for
fabrication works
o The final letter was sent as a consequence of an incident involving an Isuzu truck was driven by
an employee of the respondent and bumped the left wing of an aircraft
o Petitioner now thus demands for the respondent to immediately vacate the hangar
 Respondent filed a complaint for breach of a contract before the RTC claiming that
o Petitioner had disconnected its electric and telephone lines
o Security guards prevented them from entering the premises
o Petitioners violated the terms of the MOA (6 months prior notice)
 Petitioners allege, on the other hand, that respondent had no cause of action against him as MOA was
executed between him and Captain Clarke in the latter’s personal capacity
 RTC ruled in favor of respondent
o Liable for indirect contempt (refusal to follow TRO) and breach of contract for illegally
terminating the MOA before the expiration of the term thereof
o On the challenge of judicial personality, RTC quoted the order of the SEC: (feel ko ito yung
relevant)
  Respondent was issued a Certificate of Incorporation as New International Universality,
but that, subsequently, when it amended its AOI the SEC Extension Office in Davao
erroneously used the name New International Environmental UNIVERSITY, Inc.
 The latter name was used by respondent when it filed its amended complaint and
the petition for indirect contempt believing that it was allowed to do so, as it was
only after the filing of the complaints that the SEC directed it to revert to its
correct name
 CA affirmed the RTC
o CA ruled that while there no corporate entity at the time of the execution of the MOA, petitioner
is nonetheless estopped from sating that he had contracted with respondent as a corporation,
having recognized the latter as the Second Party to the MOA that will use the hangar space
exclusively for company aircraft/helicopter
o Petitioner was also found to have issued checks to respondent which belied his claim of
contracting with Capt. Clarke in the latter’s personal capacity

Issues: Whether Capt. Clarke is an indispensible party to the case—No; Whether respondent lacked legal
capacity and personality in the suit—No

Held:
 Capt. Clarke was merely an agent of respondent
o His participation was limited to being a representative of respondent; as a mere representative,
Capt. Clarke acquired no rights whatsoever, nor did he incur any liabilities, arising from the
contract between petitioner and respondent
o Therefore, he was not an indispensible party to the case
 CA also correctly pointed out that from the very language itself of the MOA entered into by the
petitioner, whereby he obligated himself to allow the use of the hangar space for company
aircraft/helicopter, petitioner cannot deny that he contracted with respondent
o In petitioner’s final letter to respondent, he reiterated and strongly demanded the respondent to
immediately vacate the hangar space “his company is occupying/utilizing”
 Sec. 21 of the Corporation Code:
o One who assumes an obligation to an ostensible corporation, as such, cannot resist
performance thereon on the ground that there was in fact no corporation
o In the case at bar…
 Petitioner is bound by his obligation under the MOA not only on estoppel, but by express
provision of law
 It is futile to insist that petitioner issued receipts for rental payments in respondent’s
name and not with Capt. Clarke’s, whom petitioner allegedly contracted in the latter’s
personal capacity, only because it was upon the instruction of an employee

People v. Garcia
Facts:
 In 1993, Carlos Garcia, Patricio Botero and Luisa Miraples were accused of illegal recruitment
 It was alleged that they represented themselves as the incorporators and officers of Ricorn Philippine
International Shipping Lines, Inc.
o That they represented Ricorn is a recruitment agency for seamen
o That they represented Garcia as the president, Botero as vice president, and Miraples as the
treasurer
 It was later discovered that Ricorn was never registered with the SEC and that it was never authorized
to recruit by the POEA
 Thereafter, Botero and Garcia were convicted. Botero appealed
o Botero avers that he was not an incorporator, but he was a mere employee of Ricorn in charge
of following up on their documents

Issue: Whether or not Botero is a mere employee of Ricorn—No

Held:
 It was proven by evidence that he was introduced to applicant’s as the vice president of Ricorn
o When he was receiving applicants he was receiving them behind a desk which has a nameplate
representing his name and his position as VP of Ricorn
 Relevant Issue: In light of Ricorn not being incorporated, how will this affect his liability in the crime of
illegal recruitment?
o Under the law, if the offender is a corporation, partnership, association or entity, the
penalty shall be imposed upon the officer or officers of the corporation, partnership, or
entity responsible for such violation
o In the case at bar…
 Even if Ricorn was not incorporated, Botero and his cohorts are estopped from
denying liability as corporate officers of Ricorn
 Sec. 25 of the Corporation Code: all persons who assume to act as a corporation
knowing it to be without authority to do so shall be liable as a GENERAL
PARTNERS for all the debts, liabilities and damages incurred or arising as a result
thereof: Provided, however, that when any such ostensible corporation is sued on
any transaction entered by it as a corporation or any tort committed by it as such,
it shall not be allowed to used as a defense its lack of corporate personality

International Express Travel and Tour Services v. CA

Facts:
 International Express Travel and Tour Services, Inc. (IETTI) offered to the Philippine Football
Federation (PFF) its travel services for the South East Asian Games. PFF, through Henri Kahn, its
president, agreed. IETTI then delivered plane tickets to PFF, PFF in turn made a down payment
 However, PFF was not able to complete the full payment in subsequent installments despite repeated
demands from IETTI
 IETTI then sued PFF and Kahn was impleaded as a co-defendant
 Kahn averred that he should not be impleaded because he merely acted as an agent of PFF,
which he averred is a corporation with separate and distinct personality from him
 The trial court ruled against Kahn and held him personally liable for the said obligation
o It ruled that Kahn failed to prove that PFF is a corporation
 The CA reversed the decision
o The CA took judicial notice of the existence of PFF as a national sports association and as
such, PFF is empowered to enter into contracts through its agents
o PFF is therefore liable for the contract entered into by its agent Kahn
o The CA further ruled that IETTI is in estoppel; that it cannot now deny the corporate existence of
PFF in such a manner as to recognize and in effect admit its existence

Issue: Whether PFF is a corporation—NO

Held:
 PFF, upon its creation, is not automatically considered a national sports association
o It must first be recognized and accredited by the Philippine Amateur Athletic Federation and the
Department of Youth and Sports Development
o This fact was never proved by Kahn
 Therefore, PFF is considered as an unincorporated sports association
o Under the law, any person acting or purporting to act on behalf of a corporation which has no
valid existence assumes such privileges and becomes personally liable for the contract entered
into or for other acts performed as such agent
o Kahn is therefore personally liable for the contract entered into by PFF with IETTI
 There is also no merit on finding IETTI is in estoppel
o 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
o In the case at bar, IETTI is not trying to escape liability from the contract but rather is the one
claiming from the contract
Pioneer Insurance v CA
Facts:
 Jacob Lim was the owner of Southern Air Lines, a single proprietorship
 1965—Lim convinced Constancio Maglana, Modesto Cervantes, Francisco Cervantes, and Border
Machinery and Heavy Equipment Company (BORMACHECO) to contribute funds to buy two aircrafts
which would form part of a corporation which will be the expansion of Southern Air Lines
 Magalana et al then contributed money to Lim
 But instead of using the money given to him to pay in full the aircrafts, Lim, without knowledge of
Magalana et al, made an agreement with Pioneer Insurance for the latter to insure the 2 aircrafts which
were bought in installment from Japan Domestic Airlines (JDA) using said aircrafts as security
 Lim defaulted from paying JDA, hence the 2 aircrafts were foreclosed by Pioneer Insurance
 During the proceedings in court, it was established that no corporation was formally formed between
Lim and Magalana et al

Issue: Whether Magalana et al must share in the loss as general partners—No

Held:
 There was no de facto partnership
o Ordinarily, when co-investors agreed to do business through a corporation but failed to
incorporate, a de facto partnership would have been formed, and as such, all must share in the
losses and/or gains of the venture in proportion to their contribution
o HOWEVER in the case at bar…
 It was shown that Lim did not have the intent to form a corporation with Magalana et al
 This was shown from the acts of unilaterally taking out a surety from Pioneer
Insurance and not using the funds he got from Magalana et al
 The records show that Lim was acting on his own and not in behalf of his other
would-be incorporators in transacting the sale of the airplanes and spare parts