1. Yes. Candida Santos may be held solidary liable with Arco Pulp and Paper.

As a general rule, a corporation is a juridical entity with legal personality separate and
distinct from the people comprising it. However, when there is apparent or manifest bad
faith or negligence on the part of the officer in the conduct of the business or
transactions related thereto and such bad faith or negligence was clearly and
convincingly proven then piercing the veil of corporate fiction can then be applied and
the officer can be held liable for such act.

In this case, Arco Pulp and Paper as represented by Candida Santos unreasonably
disregarded their obligation to Dan T. Lim despite his repeated demands. Further,
Santos issued a check as partial payment and even gave an assurance to Lim that it will
not bounce but then the check was dishonored for being drawn in a closed account.
Clearly, there is bad faith on the part of Santos and the corporate fiction cannot be used
as a shield to such inequitable acts.

Hence, Candida Santos may be held solidary liable with Arco Pulp and Paper.

2. No. The act of De Guzman in procuring Aboitiz One's services in outsourcing mail
deliveries in Luzon in not considered ultra vires.

Ultra vires acts refer to acts which are outside or beyond the express, implied and
incidental corporate powers and these acts are voidable unless it is ratified by the
directors or stockholders.

In this case, it can be gleaned from the facts that, the Board of Directors did not
repudiate the contract of outsourcing Aboitiz One for mail deliveries. In fact, even in the
special board meeting where De Guzman endorsed approval on the Central Mail
Exchange Center’s outsourcing recommendation there was neither an act of questioning
or rejecting the said approval. Further, Postmaster General, upon returning, even
approved the payments made to Aboitiz One. The act of the Board of Directors in
remaining silent and the Postmaster General’s continued approval of the payments to
Aboitiz One presupposes that they have substantially ratified respondent's unauthorized
acts.

Hence, De Guzman’s act is not considered ultra vires.

3. (A) Splitting of deposits occurs when a deposit account of more than P500,000 under
the name of a person is broken down and transferred into two or more accounts in the
names of person or entities with no beneficial ownership on the transferred deposits
within 120 days immediately preceding or during a bank-declared bank holiday, or a
closure order issued by the Monetary Board of the BSP for the purpose of availing of the
maximum deposit insurance coverage.
 (B) The trust fund doctrine provides that the capital stock, property, and other assets of
a corporation are regarded as equity in trust for the payment of corporate creditors
which are preferred over the stockholders in the distribution of corporate assets.

(C) Doctrine of Corporate Opportunity provides that if a director, by virtue of such office,
seizes a business opportunity which should belong to the corporation, thereby obtaining
profits to the prejudice of such corporation, the director must account for and refund to
the latter all such profits except if the act has been ratified by a vote of the stockholders
owning or representing at least two-thirds of the outstanding capital stock.

(D) Fit and Proper Rule, as provided under the General Banking Law, posits that the
Monetary Board shall prescribe, pass upon and review the qualifications and
disqualifications of individuals elected or appointed bank directors or officers and
disqualify those found unfit to maintain the quality of bank management and afford
better protection to depositors and the public in general.

(E) The cram-down rule states that the rehabilitation court may approve a rehabilitation
plan over the opposition of the creditors, if in its judgment, the rehabilitation of the
debtor is feasible and the opposition of the creditors is manifestly unreasonable. This
rule is laid down to address the greater interest of the public.

4. (A) No, the law does not require substantial shareholding before a stockholder can
exercise her right of inspection of the books of the corporation.

The Revised Corporation Code has granted the right to all of the stockholders to inspect
the corporate books and records of the corporation. It does not require a substantial
shareholding, and as beneficial owners of the business, the stockholders have the right
to know the financial condition and management of corporate affairs.

(B) Yes, Cecilia Yulo has a just and sufficient ground to inspect the corporate records of
the corporation to be fully informed of TERELAY's financial condition and the
management of its corporate affairs upon showing that there is legitimate purpose
which is genuine to the interests of the stockholders as such and not contrary to the
interests of the corporation.

A stockholder’s right of inspection is based on his ownership of the assets and property
of the corporation. Such right is predicated upon the necessity of self-protection. The
inspection may be refused by the officer or agent if predicated by bad faith, and in the
absence of legitimate purpose, or when the person is a competitor, director, officer,
controlling stockholder or otherwise represents the interests of the competitor.

5. (A) Derivative suit is a suit brought by a stockholder for and on behalf of the corporation
for its protection from the wrongful acts committed by the directors/trustees of the
 corporation, when the stockholder finds that he had no redress because the
directors/trustees, are the ones vested by law to decide whether to sue or not to be
sued. It is a remedy designed by equity and had been the defense of minority
shareholders against abuses by the majority.

The following are the requisites of a Derivative Suit:

a. That the person instituting the action be a stockholder or member at the time the
acts or transactions subject of the action occurred and the time the action was filed;

b. That the stockholder or member exerted all reasonable efforts, and alleges the same
with particularity in the complaint, to exhaust all remedies available under the AOI, by-
laws, laws or rules governing the corporation or partnership to obtain the relief he
desires;

c. That there is no appraisal right available for the acts complained of;

d. That the suit is not a nuisance or harassment suit; Rule 8, Interim Rules of Procedure
for Intra-Corporate Controversies

e. The action brought by the stockholder/member must be “in the name of the
corporation or association”.

(B) No, the action of Balmores does not constitute a derivative suit.

A derivative suit is a suit by one or more stockholders/members in the name and on

behalf of the corporation to redress wrongs committed against it, or protect/vindicate
corporate rights whenever officials of the corporation refuse to sue, or the ones to be
sued, or has control of the corporation. All the requisites for a valid derivative suit must
be present.

In this case, there was no showing that Balmores exhausted all the possible remedies
available under the Articles of Incorporation, by-laws, or rules governing PPC. He did not
act on behalf of the minority of the corporation, nor impleaded the corporation as a
party and served with a process to enforce a corporate cause of action.

6.
A. In Board of Directors’ meeting, the meeting may be held anywhere in or outside the
Philippines unless the by-laws provide otherwise. Whereas, in Stockholders meeting, the
general rule is that the meeting must be held in the principal office of the corporation as
set forth in the Articles of Incorporation.
 In Board of Director’s meeting, the regular meeting shall be held monthly, unless the by-
laws provide otherwise. Whereas, in the Stockholders meeting, the regular meeting shall
be held annually on a date fixed by the by-laws.

In Board of Director’s meeting, the notice stating the date, time, place of the meeting
must be sent to every director or trustee at least two days prior to the scheduled
meeting. Whereas in Stockholders meeting, the notice must be sent 21 days prior to the
regular meeting or at least 1 week prior to the special meeting.

B. The shorten period of notice as provided in the by-laws do not prevail over the period of
notice provided in the corporation code.

The by-laws are regulations, ordinances, rules or laws adopted by an association or

corporation for its internal governance, including rules for routine matters such as calling
meetings. Thus, it is a product of agreement of the stockholders or members.

Under Article 52 of the Revised Corporation Code, Notice of regular or special meetings
stating the date, time, and place of the meeting must be sent to every director or
trustee at least 2 days unless a longer period time is provided in the by-laws. Therefore,
if the by-laws provide for a shorter period of notice to the BOD, then the corporation
code will prevail.

C. MONDAY 7.

(A.) Yes.Mandamus as a remedy is available even upon the instance of a bona fide transferee
who is able to establish a clear legal right to the registration of the transfer.

The duty of the corporation to transfer is a ministerial one and if it refuses to make such
transaction without good cause, it may be compelled to do so by mandamus.Indeed Andaya
has been able to establish that he is a bona fide transferee of the shares of stock of Chute in
the present case. (ANDAYA v. RURAL BANK OF CABADBARAN)

(B). As regards its nature: Shares of Stock refer to unit of interest in a corporation while a
Certificate of Stock is merely an evidence of the holder's ownership of the stock and of his right
as a shareholder and up to the extent specified therein.

As to the nature of property, Shares of Stock are incorporeal while Certificate of Stock is
tangible.
As to its issuance: Shares of Stock may be issued by the corporation even if the subscription is
not fully paid. On the other hand a Certificate of Stock may be issued only if the subscription is
100% paid.

D. MONDAY 8.

(A)

DISI is estopped from challenging Steelcase’s legal capacity to sue.Indeed By acknowledging

the corporate entity of Steelcase and entering into a dealership agreement with it and even
benefiting from it, DISI is estopped from questioning Steelcase’s existence and capacity to
sue.The principle that a foreign corporation doing business in the Philippines without a license
may still sue before the Philippine courts a Filipino or a Philippine entity that had derived some
benefit from their contractual arrangement because the latter is considered to be estopped
from challenging the personality of a corporation after it had acknowledged the said corporation
by entering into a contract with it. (STEELCASE, INC., Petitioner vs.DESIGN INTERNATIONAL
SELECTIONS, INC.)

(B)

According to Section 3(d) of R.A. No. 7042 (Foreign Investments Act of 1991)Doing business"
shall include soliciting orders, service contracts, opening offices, whether liaison offices or
branches; appointing representatives or distributors, operating under full control of the foreign
corporation, domiciled in the Philippines or who in any calendar year stay in the country for a
period totalling one hundred eighty [180] days or more; participating in the management,
supervision or control of any domestic business, firm, entity or corporation in the Philippines;
and any other act or acts that imply a continuity of commercial dealings or arrangements, and
contemplate to that extent the performance of acts or works, or the exercise of some of the
functions normally incident to and in progressive prosecution of commercial gain or of the
purpose and object of the business organization.

E. MONDAY 9.

NO. As noted by the Supreme Court human resources are never embraced in the term
“assets and liabilities.” Moreover, BPI’s absorption of former FEBTC employees was
neither by operation of law nor by legal consequence of contract.
 There was no government regulation or law that compelled the merger of the two banks
or the absorption of the employees of the dissolved corporation by the surviving
corporation.

In the present case, the merger was voluntarily entered into by both banks presumably
for some mutually acceptable consideration. It can also be observed in Section 80 of
the Corporation it does not provide for the absorption of the employees of the non-
surviving corporation by the surviving corporation in the case of a merger.(BPIs v. BPI
Employees Union)

F. (A) No. The merger of Unocal Corporation with Blue Merger and Chevron does not
result in an implied termination of the employment of petitioner's members.

A merger is a consolidation of two or more corporations, which results in one or more

corporations being absorbed into one surviving corporation. The separate existence of
the absorbed corporation ceases, and the surviving corporation retains its identity and
takes over the rights, privileges, franchises, properties, claims, liabilities and obligations
of the absorbed corporation. If Unocal is a subsidiary, then the merger of Unocal
Corporation with Blue Merger and Chevron does not affect respondent or any of its
employees. Unocal has a separate and distinct personality from its parent corporation.
Assuming Unocal is a party to the merger, its employment contracts are deemed to
subsist and continue by the combined operation of the Corporation Code and the Labor
Code under the backdrop of the labor and social justice provisions of the Constitution.

(B) The distinctions between Merger and Consolidation are as follows:

As to their definition, Merger is one where a corporation absorbs another corporation

and remains in existence while others are dissolved. Whereas, Consolidation is one
where a new corporation is created and consolidating corporations are extinguished.

As to the consequent dissolution of the corporation, in Merger, all of the constituent

corporations involved are dissolved except one. Whereas, in Consolidation, all
consolidated corporations are dissolved without exception.

As to the consequent creation of a new corporation, in Merger, no new corporation is

created. Whereas, in Consolidation, a new corporation emerges.

As to the acquisition of Assets, liabilities, and capital Stock, in Merger, the surviving
corporation acquires all the assets liabilities, and capital stock of all constituent
corporations. Whereas, in Consolidation, all assets, liabilities, and capital stock of all
consolidated corporations are transferred to the new corporation.

11. Yes. BPI Family Savings Bank may be held liable for damages caused by Bank of
Southeast Asia to the petitioners.
Under the Revised Corporation Code, one of the effects of merger or consolidation is
that the surviving or consolidated corporation shall be responsible and liable for all the
liabilities and obligations of each of the constituent corporations in the same manner as
if such surviving or consolidated corporation had itself incurred such liabilities or
obligations; and any pending claim, action, or proceeding brought by or against any of
such constituent corporations may be prosecuted by or against the surviving or
consolidated corporation.

In the case at bar, as a result of the merger between BPI and BSA, BPI acquire all the
liabilities and obligations of the latter as if BPI itself incurred it.

Therefore, BPI is liable for damages.

12. (A) The distinctions between Money Laundering and Terrorist Financing are as
follows:

As to the source of funding, Terrorist financing uses funds for an illegal political purpose,
but the money is not necessarily derived from illicit proceeds. On the other hand, Money
laundering always involves the proceeds of illegal activity. The purpose of laundering is
to enable the money to be used legally.

As to the intention, Money Laundering is to clean ill-gotten wealth or dirty money so

that they appear to be proceeds of legal activities. On the other hand, in Terrorist
Financing, it is to intimidate a population or to compel a government or an international
organization to do or abstain from doing any specific act through the threat of violence.

(B) The distinctions between a Conservatorship and a Receivership are as follows:

As to the grounds, in Conservatorship, it is the corporation’s continuing inability or

unwillingness to maintain condition of liquidity. On the other hand, in a Receivership, it
is the inability to pay liabilities as they fall due; Assets are less than its liabilities;
Corporation cannot continue business without causing damage; Violation of a cease and
desist order; or “Bank holiday” for more than 30 days.

As to its effects, in Conservatorship, the corporation’s juridical personality is retained

and perfected transactions cannot be repudiated. While, in a Receivership, juridical
personality is also retained. However, there is a suspension of operation or stoppage of
business and all assets are deemed in custodia legis.

As to the period of termination, Conservatorship is terminated after 1 year. While,

Receivership is terminated within 90 days if liquidation is decided upon or until the bank
is viable again, if rehabilitation is decided upon.