Albert v University Publishing

13 scra 389

Salvattierra v Garlitos
103 Phil 757

Chiang Kai Shiek v CA

172 scra 389

Asia banking corp v Standard Products

46 phil 144
Facts:This action is brought to recover the sum of P24,736.47, the balance due on the
following promissory note. The court below rendered judgment in favor of the plaintiff for the
sum demanded in the complaint, with interest on the sum of P24,147.34 from November 1,
1923, at the rate of 10 per cent per annum, and the costs. From this judgment the defendant
appeals to this court.

Issue: court erred in finding that the parties were corporations with juridical personality

Held: No. The general rule is that 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. (14 C. J., 227;
Chinese Chamber of Commerce vs. Pua Te Ching, 14 Phil., 222.)

The defendant having recognized the corporate existence of the plaintiff by making a
promissory note in its favor and making partial payments on the same is therefore estopped
to deny said plaintiff's corporate existence. It is, of course, also estopped from denying its
own corporate existence. Under these circumstances it was unnecessary for the plaintiff to
present other evidence of the corporate existence of either of the parties. It may be noted
that there is no evidence showing circumstances taking the case out of the rules stated.

International Express Travel v CA

343 scra 674
Facts: On June 30, 1989, petitioner International Express Travel and Tours Services Inc.,
wrote a letter to the Philippine Football Federation, wherein the former offered its services
as a travel agency to the latter which was accepted. Petitioner secured the airline tickets for
the trips of the athletes and officials of the Federation to the South East Asian Games in
Kuala Lumpur as well as various other trips to the People’s Republic of China and Brisbane.
For the tickets received, the Federation made two partial payments. On October 4, 1989,
petitioner wrote the Federation, through the private respondent a demand letter requesting
for the amount. Henri Kahn issued a personal check in the amount of Php50,000 as partial
payment for the outstanding balance of the Federation. Thereafter, no further payments
were made despite repeated demands. Hence, this petition.

Issue: Whether or not private respondent can be made personally liable for the liabilities of
the Philippines Football Federation.

Held: Yes. A voluntary unincorporated association, like defendant Federation has no power
to enter into, or to ratify a contract. The contract entered into by its officers or agents on
behalf of such association is binding or, as enforceable against it. The officers or agents are
themselves personally liable.

Unfortunately, the same does not prove that said Federation has indeed been recognized
and accredited by either the Philippine Amateur Athletic Federation or the Department of
Youth and Sports Development.

Greorg Grothan v Isnani

235 scra 216
Facts: On March 12, 1992, she secured a loan of twenty-five thousand pesos from
petitioner. On March 26 and June 10, 1992, she made additional cash advances. Despite
demand, private respondent Romana failed to settle her obligation with petitioner.
On July 22, 1992, private respondent filed with the Arbitration Branch of the NLRC in Manila,
a Complaint for illegal suspension, dismissal and non-payment of commissions against
petitioner. On August 18, 1992, petitioner in turn filed against private respondent a
Complaint for damages amounting to one hundred twenty thousand pesos also with the
NLRC Arbitration Branch (Manila).

Issue: WON CA ERRED IN HOLDING THAT PETITIONER HAS NO CAPACITY TO SUE

AND BE SUED IN THE PHILIPPINES DESPITE THE FACT THAT PETITIONER IS DULY
LICENSED BY THE SECURITIES AND EXCHANGE COMMISSION

Held: No. In the case at bench, petitioner does not engage in commercial dealings or
activities in the country because it is precluded from doing so by P.D. No. 218, under which
it was established. Nonetheless, it has been continuously, since 1983, acting as a
supervision, communications and coordination center for its home office's affiliates in
Singapore, and in the process has named its local agent and has employed Philippine
nationals like private respondent. From this uninterrupted performance by petitioner of acts
pursuant to its primary purposes and functions as a regional/area headquarters for its home
office, it is clear that petitioner is doing business in the country. Moreover, private
respondents are estopped from assailing the personality of petitioner.
Sulo ng Bayan v Araneta
72 scra 347
Facts: Sometime in 1958, through force and intimidation ejected the members of the plaintiff
corporation from their possession of the aforementioned vast tract of land; that upon
investigation conducted by the members and officers of plaintiff corporation, they found out
for the first time that the land in question had been either fraudulently or erroneously
included by direct or constructive fraud. On September 2, 1966, defendant-appellee filed a
motion to dismiss the amended complaint on the grounds that (1) the complaint states no
cause of action; and (2) the cause of action, if any, is barred by prescription and laches.
Paradise Farms, Inc. and Hacienda Caretas, Inc. filed motions to dismiss based on the
same grounds.

Issue: Whether or not the plaintiff corporation can represent the stockholders in the
proceeding for the properties involved.

Held: No. It is a doctrine well established and obtains both at law and equity that a
corporation is a distinct legal entity to be considered as separate and apart from the
individual stockholders a members who compose it, and is not affected by the personal
rights, obligations and transactions of its stockholders or members. Thus when the notion of
legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend
crime, the law will regard the corporation as an association of persons, or in the case of two
corporations, merge them into one, the one being merely regarded as part or instrumentality
of the other.

Caram v CA
151 scra 373
Facts: The petitioners claim that this order has no support in fact and law because they had
no contract whatsoever with the private respondent regarding the above-mentioned
services. Their position is that as mere subsequent investors in the corporation that was
later created, they should not be held solidarily liable with the Filipinas Orient Airways, a
separate juridical entity, and with Barretto and Garcia, their co-defendants in the lower court,
who were the ones who requested the said services from the private respondent.

Issue: whether or not the petitioners themselves are also and personally liable for such
expenses and, if so, to what extent.

Held: No. The petitioners were merely among the financiers whose interest was to be
invited and who were in fact persuaded, on the strength of the project study, to invest in the
proposed airline. Significantly, 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
petitioners, as principal stockholders 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 officers and directors.
Rustan Pulp and Paper Mills v CA
214 scra 665
Facts: Petitioner, who is a holder of a forest products license, transmitted a letter to
petitioner Rustan for the supply of raw materials by the former to the latter. In their contract it
stated that the supply is not exclusive, Rustan shall have the option to buy supplies from
other and that buyer shall have the right to stop delivery of the materials by the seller if the
supply will be efficient, however the seller is given sufficient notice. They sought to clarify
the tenor of the notice as to whether stoppage of delivery or termination of the contract of
sale was intended, but Rustan Pulp failed to reply. This alleged ambiguity notwithstanding,
Lluch and the other suppliers resumed deliveries after a series of talks between Lluch and
Romeo Vergara, the manager of Rustan Pulp. Later, Lluch filed a complaint for breach of
contract.

ISSUE: Is the suspension of deliveries by Rustan a proper exercise of its rights under the
contract of sale?

RULING:

No. There is cogent basis for private respondent’s apprehension on the illusory resumption
of deliveries inasmuch as the prerogative suggests a condition solely dependent upon the
will of petitioners. Petitioners can stop delivery of pulp wood from private respondents if the
supply at the plant is sufficient as ascertained by petitioners, subject to re-delivery when the
need arises as determined likewise by petitioners. A purely potestative imposition of this
character must be obliterated from the face of the contract without affecting the rest of the
stipulations considering that the condition relates to the fulfillment of an already existing
obligation and not to its inception.

Cruz v Dalisay
152 scra 482
Facts: A sworn complaint was filed by Adelio Cruz charging Dalisay, with malfeasance in
office, corrupt practices and serious irregularities who allegedly attached and/or levied the
money belonging to complainant Cruz when he was not himself the judgment debtor in the
final judgment of an NLRC case sought to be enforced but rather the company known as
“Qualitrans Limousine Service, Inc.”; and also caused the service of the alias writ of
execution upon complainant who is a resident of Pasay City, despite knowledge that his
territorial jurisdiction covers Manila only and does not extend to Pasay City. Complainant
executed an affidavit of desistance stating that he is no longer interested in prosecuting the
case against respondent Dalisay and that it was just a "misunderstanding" between them.
Upon respondent's motion, the Executive Judge issued an order dated May 29, 1986
recommending the dismissal of the case.

ISSUE: Whether the personal property of Cruz (complainant) can be levied or attached
being the owner/president of the corporation.

RULING: No. The tenor of the NLRC judgment and the implementing writ is clear enough. It
directed Qualitrans Limousine Service, Inc. to reinstate the discharged employees and pay
them full backwages. Respondent, however, chose to "pierce the veil of corporate entity"
usurping a power belonging to the court and assumed improvidently that since the
complainant is the owner/president of Qualitrans Limousine Service, Inc., they are one and
the same. It is a well-settled doctrine both in law and in equity that 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.

Palay Inc v Clave

124 scra 665
Facts: On March 28, 1965, petitioner Palay, Inc., through its President, Albert Onstott
executed in favor of private respondent, Nazario Dumpit, a Contract to Sell a parcel of Land
owned by said corporation. Respondent Dumpit paid the down payment and several
installments, but failed to pay the balance. On May 10, 1973, or almost six (6) years later,
private respondent wrote petitioner offering to update all his overdue accounts with interest,
and seeking its written consent to the assignment of his rights to a certain Lourdes Dizon.
However, petitioners informed respondent that his Contract to Sell had long been rescinded
pursuant to paragraph 6 of the contract, and that the lot had already been resold.

ISSUE: Whether or not demand is necessary to rescind a contract regardless of the express
stipulation in the contract that demand is not needed.

RULING:

Well settled is the rule, as held in previous jurisprudence, that judicial action for the
rescission of a contract is not necessary where the contract provides that it may be revoked
and cancelled for violation of any of its terms and conditions. However, even in the cited
cases, there was at least a written notice sent to the defaulter informing him of the
rescission. In other words, the party who deems the contract violated may consider it
resolved or rescinded, and act accordingly, without previous court action, but it proceeds at
its own risk. For it is only the final judgment of the corresponding court that will conclusively
and finally settle whether the action taken was or was not correct in law.. Finally, it is a
matter of public policy to protect buyers of real estate on instalment payments against
onerous and oppressive conditions. Waiver of notice is one such onerous and oppressive
condition to buyers of real estate on instalment payments.

Soriano v CA
174 SCRA 195
Facts: A piece of land located in Lingayen, Pangasinan is the disputed property in this case.
Said land was originally owned by one Soriano, subsequently it was leased for a period of
15 years to the Spouses David and Consuelo with RAMON SORIANO, son of Adriano and
herein petitioner, acting as caretaker/tenant of the property during the duration of the lease.
Upon the death of Adriano the lot he owned was divided into TWO and given to his heirs.
One of the lots inherited was sold to the Spouses ABALOS, here. The other lot was also
bought by the Spouses Abalos although not completely (only ¾ of the lot). The lots in
question were subsequently registered in the name of the Spouses Abalos. The courts later
declared them to be the undisputed owners thereof. Soriano questions their ownership of
the land and so filed cases against the spouses.

ISSUE: May a winning party in a land registration case effectively eject the possessor
thereof?

RULING: No. Possession and ownership are distinct legal concepts. Possession is the
holding of a thing or the enjoyment of a right. Literally, to possess means to actually and
physically occupy a thing with or without right. A judgment of ownership does not
necessarily include possession as a necessary incident. Such declaration pertains only to
OWNERSHIP and does not automatically include possession. This is especially true in the
case at bar wherein petitioner is occupying the land allegedly in the concept of an
agricultural tenant. The court says “allegedly” due to the fact that there is still a pending case
in the DARAB on the issue. The issue of ownership of the subject land has been laid to rest
by final judgment; however the right of possession is yet to be resolved. Since the rights of
Soriano to possess the land are still pending litigation in the DARAB he is protected from
dispossession of the land until final judgment of said court unless Soriano’s occupancy is
found by the court to be unlawful.

International Academy Management and Economics v Litton

848 scra 437
Facts: Atty. Santos, a lessee to two (2) buildings owned by Litton, owed the latter rental
arrears as well as his share of the payment of realty taxes.

Consequently, Litton filed a complaint for unlawful detainer against Santos. The MeTC ruled
in Litton’s favor and ordered Santos to vacate A.I.D. Building and Litton Apartments and to
pay various sums of money. It appears however that the judgment was not executed. On 1
November 1996, the sheriff of the MeTC of Manila levied on a piece of real property and
registered in the name of International Academy of Management and Economics
Incorporated (I/AME), in order to execute the judgment against Santos. I/AME filed with Me
TC and claimed that it has a separate and distinct personality from Santos; hence, its
properties should not be made to answer for the latter's liabilities. The motion was denied in
an Order dated 29 October 2004.

Issue: WON there was denial of due process when the court pierced the corporate veil of I/
AME and its property was made to answer for the liability of Santos.

Held: No. The piercing of the corporate veil is premised on the fact that the corporation
concerned must have been properly served with summons or properly subjected to the
jurisdiction of the court a quo. Corollary thereto, it cannot be subjected to a writ of execution
meant for another in violation of its right to due process. There exists, however, an
exception to this rule: if it is 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 a fraud or like wrongdoings. This Court agrees with the
CA that Santos used I/AME as a means to defeat judicial processes and to evade his
obligation to Litton.

Palacio v Fely Transport Co.

5 scra 1011
Facts: In their complaint, the Palacio alleged that Fely hired Canillo as driver who
negligently run over a child (Mario).Fely filed a motion to dismiss on the grounds that there is
no cause of action against the company and that the cause of action is barred by prior
judgment. But the court deferred the determination of the grounds alleged in the motion to
dismiss until the trial of the case. The defendant then alleges (1) that complaint states no
cause of action against defendant, and (2) that the sale and transfer of the jeep AC-687 by
Calingasan to the Fely Transportation was made on December 24, 1955, long after the
driver Alfredo Carillo of said jeep had been convicted and had served his sentence. In view
of the evidence presented, the lower court barred the judgment in the criminal case and held
that the person subsidiarily liable to pay damages is Calingasan, the employer.

Issue: Whether Fely Transportation can be held liable for the damages.

Ruling:
The Court agrees with this contention of the plaintiffs. Calingasan and defendant Fely
Transportation may be regarded as one and the same person. It is evident that Isabelo
Calingasan's main purpose in forming the corporation was to evade his subsidiary civil
liability resulting from the conviction of his driver, Carillo. This conclusion is borne out by the
fact that the incorporators of the Fely Transportation are Isabelo Calingasan, his wife, his
son, Dr. Calingasan, and his two daughters.
Marvel Bldg v David
94 scra 376
Facts: The Articles of Incorporation of the Marvel Building Corporation is dated February 12,
1947 and according to it the capital stock is P2,000,000. In October, 1945 Maria B. Castro,
Yatco, Cristobal de Esquerra, Lopez and Cristobal organized the Maria B. Castro, Inc. with
capital stock of P100,000, of which Maria B. Castro subscribed for P99,600 and all others
for P100 each. This was increased in 1950 to P500,000 and Maria B. Castro subscribed
P76,000 and the others P1,000 each. It does not appear that the stockholders or the board
of directors of the Marvel Building Corporation have ever held a business meeting, for no
books thereof or minutes meeting were ever mentioned by the officers thereof or presented
by them at the trial. The by-laws of the corporation, if any had ever been approved, has not
been presented. Neither does it appear that any report of the affairs of the corporation has
been made, either of its transactions or accounts. From the book of accounts of the
corporation, advances to the Marvel Building Corporation of P125,000 were made by Maria
B. Castro in 1947, 1948 and in 1949.

Issue: Castro the owner of all the shares of stocks of Marvel Building Corporation and the
other stockholders mere dummies of hers?

Held: Yes. The most important evidence presented by the Collector of Internal Revenue to
prove his claim that Maria B. Castro is the sole and exclusive owner of the shares of stock of
the Marvel Building Corporation is supposed endorsement in blank of the shares of stock
issued in the name of the other incorporators, and the possession thereof by Maria B.
Castro. Next in importance among the evidence submitted by the defendant collector is the
fact that the other stockholders did not have incomes in such amounts, during the time of
the organization of the corporation in 1947, or immediately thereto, as to enable them to pay
in full for their supposed subscriptions. This fact is proved by their income tax returns, or the
absence thereof. Our consideration of the evidence submitted on both sides leads us to a
conclusion exactly opposite that arrived at by the trial court.

Yutivo and Song v CTA

1 scra 160
Facts: Yutivo, after the liberation in 1946, resumed its business and until 1946 bout a
number of cars and trucks from General Motors (GM). As importer, GM paid sales tax
prescribed by the Tax Code on the basis of its selling price to Yutivo. Yutivo paid no further
sales tax on its sales to the public In June 1946, Southern Motors (SM) organized to engage
in the business of selling cars, trucks and spare parts. One of its major subscribers is Yu
Tiong Yee, a founder of Yutivo. After the incorporation of SM and until the withdrawal of GM
from Phil, the cars and trucks were purchased by Yutivo from GM then sold by Yutivo to Sm
and then SM sold these to the public. CIR made an assessment and charged Yutivo 1.8M
as deficiency tax plus surcharge. Petitioner contested before CTA. CTA ruled that SM is a
mere subsidiary or instrumentality of Yutivo, hence, its separate corporate existence must
be disregarded.

Issue: WON Yutivo and SM are two separate entities.

Held: Yes. It is an elementary and fundamental principle of corporation law that a

corporation is an entity separate and distinct from its stockholders and from other
corporation petitions to which it may be connected. However, "when the notion of legal entity
is used to defeat public convenience, justify wrong, protect fraud, or defend crime," the law
will regard the corporation as an association of persons, or in the case of two corporations
merge them into one. From that date up to June 30, 1947, or a period of more than one
year, GM was the importer of the cars and trucks sold to Yutivo, which, in turn resold them
to SM. During that period, it is not disputed that GM as importer, was the one solely liable for
sales taxes. Neither Yutivo or SM was subject to the sales taxes on their sales of cars and
trucks. The sales tax liability of Yutivo did not arise until July 1, 1947 when it became the
importer and simply continued its practice of selling to SM. The decision, therefore, of the
Tax Court that SM was organized purposely as a tax evasion device runs counter to the fact
that there was no tax to evade.

Commissioner v Norton & Harrison

11 scra 714
Facts: Norton and Harrison is a corporation organized to buy and sell at wholesale and
retail all kinds of goods and merchandise. Jackbilt is also a corporation organized on for
producing concrete blocks. On 1948, the corporations entered into an agreement whereby
Norton was made the sole and exclusive distributor of concrete blocks manufactured by
Jackbilt. On 1949, Norton purchased all the outstanding shares of stock of Jackbilt. This
prompted the CIR to investigate and eventually asses Norton and Harrison for deficiency
sales tax and surcharges.

ISSUE: Whether Norton and Harrison is liable for the deficiency sales tax and surcharges.

RULING: YES. The Court ruled that Norton and Jackbilt should be considered as one.
Jackbilt's outstanding stocks, board of directors, finance of operations, employees, and
compensation are all controlled by Norton and Harrison. Jackbilt is merely an adjunct,
business conduit or alter ego, of Norton and Harrison and that the fiction of corporate
entities, separate and distinct from each, should be disregarded. This is a case where the
doctrine of piercing the veil of corporate fiction, should be made to apply. By being separate
entities, the corporations would have to pay lesser income tax. The combined taxable
Norton-Jackbilt income would subject Norton to a higher tax.

La Campana Coffee v Kaisahan ng manggagawa

93 phil 160
Facts: In 1950, Tan Tong and members of his family organized the family corporation. La
Campana Coffee Factory with its principal office located in Gawgaw Packing. Prior to said
information, Tan Tong entered into a CBA with the labor union of La Campana Gawgaw.
Later on, his employees formed Kaisahan ng mga Manggagawa ng La Campana with an
authorization from the DOLE to become an affiliate of the larger union. Kaisahan with 66
members presented a demand for higher wages and more privileges to La Campana Starch
and Coffee Factory. The demand was not granted and the DOLE certified the issue to the
CIR. La Campana filed a motion to dismiss alleging that the action was directed against two
different entities with distinct personalities. This was denied, hence this petition.

Issue: W/N the CIR has jurisdiction over the case.

Held: YES. La Compana Gawgaw and La Campana Factory are operating under one single
management or as one business though with two trade names. The coffee factory is a
corporation and by legal fiction, an entity separate and apart from the persons composing it
namely, Tan Tong and his family. However, the concept of separate corporate personality
cannot be extended to a point beyond reason and policy when invoked in support of an end
subversive of this policy and will be disregarded by the courts .A subsidiary company which
is created merely as an agent for the latter may sometimes be regarded as identical with the
parent corporation especially if the stockholders or officers of the two corporations are
substantially the same or their systems of operation unified. The facts showed that they had
one management, one payroll prepared by the same person, laborers were interchangeable,
there is only one entity as shown by the signboard ad in trucks, packages and delivery forms
and the same place of business.The attempt to make the two factories appear as two
separate businesses when in reality they are but one, is but a device to defeat the ends of
the law and should not be permitted to prevail.

Emilio Cano v CIR

13 scr 290

Telephone engineering v WCC

104 scr 354

Claparols v CIR 65 scra 613