TAYAG V.

BENGUET CONSOLIDATED

A corporation is an artificial being created by operation of law. According to Fletcher, “A corporation is not in
fact and in reality, a person, but the law treats it as though it were a person by process of fiction, or by regarding
it as an artificial person distinct and separate from its individual stockholders.” Dean Pound’s terse summary
that a corporation is a juristic person, resulting from an association of human beings granted legal personality
by the State, puts the matter neatly. A corporation as known to Philippine jurisprudence is a creature without
any existence until it has received the imprimatur of the State acting according to law. It is logically inconceivable
therefore that it will have rights and privileges of a higher priority than that of its creator. More than that, it cannot
legitimately refuse to yield obedience to acts of its state organs, specifically the judiciary. It is not immune from
judicial control. To assert that it can choose which court order to follow and which to disregard is to confer upon
it not autonomy which may be conceded but license which cannot be tolerated.

TORRES V. COURT OF APPEALS

The corporate secretary is the custodian of corporate records. He keeps the stock and transfer book and makes
proper and necessary entries therein. In the case at bar, contrary to the generally accepted corporate practice, the
stock and transfer book of Tormil Realty was not kept by the corporate secretary but by Judge Torres, the President
and Chairman of the Board of Directors of the corporation. It was also not kept at the principal office of the
corporation but at the place of Judge Torres. These being the obtaining circumstances, any entries made in the stock
and transfer book of an alleged transfer of nominal shares to Pabalan and Co. cannot therefore be given any valid
effect.

Contrary to the generally accepted corporate practice, the stock and transfer book of Tormil Realty was not kept by
the corporate secretary but by Judge Torres, the President and Chairman of the Board of Directors of the corporation.
It was also not kept at the principal office of the corporation but at the place of Judge Torres. These being the
obtaining circumstances, any entries made in the stock and transfer book of an alleged transfer of nominal shares to
Pabalan and Co. cannot therefore be given any valid effect. Where the entries made are not valid, Pabalan and Co.
cannot therefore be considered stockholders of record of Tormil Realty. Because they are not stockholders, they
cannot be elected as directors. To rule otherwise would not only encourage violation of clear mandate of Sec. 74 of
the Corporation Code but would likewise open the flood gates of confusion as to who has the proper custody of the
stock and transfer book and who are the real stockholders of record as any holder of the stock and transfer book,
though not the corporate secretary, at pleasure could make entries therein. It must be noted that being a simple
family corporation is not an exemption. Such corporations cannot have rules and practices other than those
established by law.

Philippine Stock Exchange, Inc. v. Court of Appeals

The SEC’s power to look into the subject ruling of the PSE, therefore, may be implied from or be considered as
necessary or incidental to the carrying out of the SEC’s express power to ensure fair dealing in securities traded upon
a stock exchange or to ensure the fair administration of such exchange. It is, likewise, observed that the principal
function of the SEC is the supervision and control over corporations, partnerships and associations with the end in
view that investment in these entities may be encouraged and protected and their activities for the promotion of
economic development.

The PSE is engaged in a business imbued with high public interest and is under the control and supervision of
the SEC, moreso due to the fact that the PSE was granted a public franchise by the government, where it is
mandated to protect the interest of the investing public. However, though under such control and supervision
by the SEC, the PSE cannot be questioned on matters of internal management, policies, and
administration in the absence of bad faith.

Excellent Quality Apparel, Inc. v. WIN Multi Rich Builders, Inc

Win admitted that the contract was executed between Multi-Rich and petitioner. It further admitted that Multi-Rich
was a sole proprietorship with a business permit issued by the Office of the Mayor of Manila. A sole proprietorship
is the oldest, simplest, and most prevalent form of business enterprise. It is an unorganized business owned by one
person. The sole proprietor is personally liable for all the debts and obligations of the business. In the case of
Mangila v. Court of Appeals, we held that:

x x x In fact, there is no law authorizing sole proprietorships to file a suit in court. A sole proprietorship does not
possess a juridical personality separate and distinct from the personality of the owner of the enterprise. The law
merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by
a single individual and requires its proprietor or owner to secure licenses and permits, register its business name,
and pay taxes to the national government. The law does not vest a separate legal personality on the sole
proprietorship or empower it to file or defend an action in court.

Petitioner had continuously contested the legal personality of Win to institute the case. Win was given ample
opportunity to adduce evidence to show that it had legal personality. It failed to do so. Corpus Juris Secundum,
notes:

x x x where an individual or sole trader organizes a corporation to take over his business and all his assets, and it
becomes in effect merely an alter ego of the incorporator, the corporation, either on the grounds of implied
assumption of the debts or on the grounds that the business is the same and is merely being conducted under a
new guise, is liable for the incorporator's preexisting debts and liabilities. Clearly, where the corporation assumes or
accepts the debt of its predecessor in business it is liable and if the transfer of assets is in fraud of creditors it will
be liable to the extent of the assets transferred. The corporation is not liable on an implied assumption of debts
from the receipt of assets where the incorporator retains sufficient assets to pay the indebtedness, or where none
of his assets are transferred to the corporation, or where, although all the assets of the incorporator have been
transferred, there is a change in the persons carrying on the business and the corporation is not merely an alter
ego of the person to whose business it succeeded.

In order for a corporation to be able to file suit and claim the receivables of its predecessor in business, in this case
a sole proprietorship, it must show proof that the corporation had acquired the assets and liabilities of the sole
proprietorship. Win could have easily presented or attached any document e.g., deed of assignment which will
show whether the assets, liabilities and receivables of Multi-Rich were acquired by Win. Having been given the
opportunity to rebut the allegations made by petitioner, Win failed to use that opportunity. Thus, we cannot presume
that Multi-Rich is the predecessor-in-business of Win and hold that the latter has standing to institute the collection
suit.

Lanuza, Jr. vs. BF Corporation

Corporate representatives may be compelled to submit to arbitration proceedings pursuant to a contract entered into
by the corporation they represent if there are allegations of bad faith or malice in their acts representing the
corporation.

Thus, in cases alleging solidary liability with the corporation or praying for the piercing of the corporate veil, parties
who are normally treated as distinct individuals should be made to participate in the arbitration proceedings in order
to determine if such distinction should indeed be disregarded and, if so, to determine the extent of their liabilities.

In this case, the Arbitral Tribunal rendered a decision, finding that BF Corporation failed to prove the existence of
circumstances that render petitioners and the other directors solidarily liable. It ruled that petitioners and Shangri-La’s
other directors were not liable for the contractual obligations of Shangri-La to BF Corporation. The Arbitral Tribunal’s
decision was made with the participation of petitioners, albeit with their continuing objection. In view of our discussion
above, we rule that petitioners are bound by such decision.

National Development Company v. Philippine Veterans Bank

A legislative act based on the police power requires the concurrence of a lawful subject and a lawful method. In more
familiar words, a) the interests of the public generally, as distinguished from those of a particular class, should justify
the interference of the state; and b) the means employed are reasonably necessary for the accomplishment of the
purpose and not unduly oppressive upon individuals.

Applying these criteria to the case at bar, the Court finds first of all that the interests of the public are not sufficiently
involved to warrant the interference of the government with the private contracts of AGRIX. The decree speaks
vaguely of the "public, particularly the small investors," who would be prejudiced if the corporation were not to be
assisted. However, the record does not state how many there are of such investors, and who they are, and why they
are being preferred to the private respondent and other creditors of AGRIX with vested property rights.

A mortgage lien is a property right derived from contract and so comes under the protection of the Bill of Rights. So
do interests on loans, as well as penalties and charges, which are also vested rights once they accrue. Private
property cannot simply be taken by law from one person and given to another without compensation and any known
public purpose. This is plain arbitrariness and is not permitted under the Constitution.

On top of all this, New Agrix, Inc. was created by special decree notwithstanding the provision of Article XIV, Section
4 of the 1973 Constitution, then in force, that:

SEC. 4. The Batasang Pambansa shall not, except by general law, provide for the formation, organization, or
regulation of private corporations, unless such corporations are owned or controlled by the Government or any
subdivision or instrumentality thereof.

The new corporation is neither owned nor controlled by the government. The National Development Corporation was
merely required to extend a loan of not more than P10,000,000.00 to New Agrix, Inc. Pending payment thereof, NDC
would undertake the management of the corporation, but with the obligation of making periodic reports to the Agrix
board of directors. After payment of the loan, the said board can then appoint its own management. The stocks of the
new corporation are to be issued to the old investors and stockholders of AGRIX upon proof of their claims against
the abolished corporation. They shall then be the owners of the new corporation. New Agrix, Inc. is entirely private
and so should have been organized under the Corporation Law in accordance with the above-cited constitutional
provision.

Feliciano v. COA

In short, Congress cannot enact a law creating a private corporation with a special charter. Such legislation would be
unconstitutional. Private corporations may exist only under a general law. If the corporation is private, it must
necessarily exist under a general law. Stated differently, only corporations created under a general law can qualify as
private corporations. Under existing laws, that general law is the Corporation Code, except that the Cooperative Code
governs the incorporation of cooperatives.

The Constitution authorizes Congress to create government-owned or controlled corporations through special
charters. Since private corporations cannot have special charters, it follows that Congress can create corporations
with special charters only if such corporations are government-owned or controlled.

Obviously, LWDs are not private corporations because they are not created under the Corporation Code. LWDs are
not registered with the Securities and Exchange Commission. Section 14 of the Corporation Code states that "[A]ll
corporations organized under this code shall file with the Securities and Exchange Commission articles of
incorporation x x x." 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 Securities and Exchange Commission. The local mayor or the provincial governor appoints the directors of LWDs
for a fixed term of office. This Court has ruled that LWDs are not created under the Corporation Code, thus:

From the foregoing pronouncement, it is clear that what has been excluded from the coverage of the CSC are those
corporations created pursuant to the Corporation Code. Significantly, petitioners are not created under the said code,
but on the contrary, they were created pursuant to a special law and are governed primarily by its provision.

Oriondo v. Commission on Audit

The Supreme Court held that Corregidor Foundation Inc is a government owned or controlled corporation under the
audit jurisdiction of the Commission on Audit.

Attributes of a GOCCs:

1. Organized as a stock or nonstock corporation

 2. Vested with functions that are public in nature
3. Owned by the government, or at the very least, controlled by the government.

In the case at bar, Corregidor Foundation Inc was organized as a non-stock corporation under the Corporation Code.
It was issued a certificate of registration by the SEC and according to its Articles of Incorporation, it was organized
and operated in the public interest. Also, it was organized primarily to maintain and preserve the war relics in
Corregidor and develop the area’s potential as an international and local tourist destination. Also, all of its
incorporators were government officials, and requires that the members of its Board of Trustees be all government
officials. The government also has substantial participation in the selection of Corregidor foundation Inc.’s governing
board. The government controls said foundation making it a government-owned or controlled corporation.

Further, it is immaterial whether a corporation is private or public for purposes of exercising the audit jurisdiction of
the COA. So long as the government owns or controls the corporation, as in this case, the COA may audit
corporation’s accounts. Indeed, the MOA executed by the Corregidor foundation and PTA indubitably show that said
foundation is funded by the government through the PTA and hence, Corregidor Foundation is required to submit its
budget for approval of the PTA and it even voluntarily submitted itself to the audit jurisdiction of the COA.

Boy Scout of the Philippines v. Commission on Audit

After looking at the legislative history of its amended charter and carefully studying the applicable laws and the
arguments of both parties, we find that the BSP is a public corporation and its funds are subject to the COA's audit
jurisdiction.

The BSP Charter (Commonwealth Act No. 111, approved on October 31, 1936), entitled "An Act to Create a Public
Corporation to be Known as the Boy Scouts of the Philippines, and to Define its Powers and Purposes" created the
BSP as a "public corporation" to serve the following public interest or purpose:

Sec. 3.The purpose of this corporation shall be to promote through organization and cooperation with other agencies,
the ability of boys to do useful things for themselves and others, to train them in scoutcraft, and to inculcate in them
patriotism, civic consciousness and responsibility, courage, self-reliance, discipline and kindred virtues, and moral
values, using the method which are in common use by boy scouts.

As presently constituted, the BSP still remains an instrumentality of the national government. It is a public corporation
created by law for a public purpose, attached to the DECS pursuant to its Charter and the Administrative Code of
1987. It is not a private corporation which is required to be owned or controlled by the government and be
economically viable to justify its existence under a special law.

Therefore, even though the amended BSP charter did away with most of the governmental presence in the BSP
Board, this was done to more strongly promote the BSP’s objectives, which were not supported under Presidential
Decree No. 460. The BSP objectives, as pointed out earlier, are consistent with the public purpose of the promotion
of the well-being of the youth, the future leaders of the country. The amendments were not done with the view of
changing the character of the BSP into a privatized corporation. The BSP remains an agency attached to a
department of the government, the DECS, and it was not at all stripped of its public character.

Liban v. Gordon

The PNRC is sui generis in nature; it is neither strictly a GOCC nor a private corporation.

It is in recognition of this sui generis character of the PNRC that R.A. No. 95 has remained valid and effective
from the time of its enactment in March 22, 1947 under the 1935 Constitution and during the effectivity of the 1973
Constitution and the 1987 Constitution. The PNRC Charter and its amendatory laws have not been questioned or
challenged on constitutional grounds, not even in this case before the Court now.
 [T]his Court [must] recognize the country’s adherence to the Geneva Convention and respect the unique
status of the PNRC in consonance with its treaty obligations. The Geneva Convention has the force and effect of law.
Under the Constitution, the Philippines adopts the generally accepted principles of international law as part of the law
of the land. This constitutional provision must be reconciled and harmonized with Article XII, Section 16 of the
Constitution, instead of using the latter to negate the former. By requiring the PNRC to organize under the Corporation
Code just like any other private corporation, the Decision of July 15, 2009 lost sight of the PNRC’s special status under
international humanitarian law and as an auxiliary of the State, designated to assist it in discharging its obligations
under the Geneva Conventions.

The PNRC, as a National Society of the International Red Cross and Red Crescent Movement, can neither
“be classified as an instrumentality of the State, so as not to lose its character of neutrality” as well as its independence,
nor strictly as a private corporation since it is regulated by international humanitarian law and is treated as an auxiliary
of the State.

Although [the PNRC] is neither a subdivision, agency, or instrumentality of the government, nor a GOCC or a
subsidiary thereof . . . so much so that respondent, under the Decision, was correctly allowed to hold his position as
Chairman thereof concurrently while he served as a Senator, such a conclusion does not ipso facto imply that the
PNRC is a “private corporation” within the contemplation of the provision of the Constitution, that must be organized
under the Corporation Code. [T]he sui generis character of PNRC requires us to approach controversies involving the
PNRC on a case-to-case basis.

In sum, the PNRC enjoys a special status as an important ally and auxiliary of the government in the
humanitarian field in accordance with its commitments under international law. This Court cannot all of a sudden refuse
to recognize its existence, especially since the issue of the constitutionality of the PNRC Charter was never raised by
the parties. It bears emphasizing that the PNRC has responded to almost all national disasters since 1947, and is
widely known to provide a substantial portion of the country’s blood requirements. Its humanitarian work is
unparalleled. The Court should not shake its existence to the core in an untimely and drastic manner that would not
only have negative consequences to those who depend on it in times of disaster and armed hostilities but also have
adverse effects on the image of the Philippines in the international community. The sections of the PNRC Charter that
were declared void must therefore stay.

Sawadjaan v. Court of Appeals

The AIIBP was created by Rep. Act No. 6848. It has a main office where it conducts business, has shareholders,
corporate officers, a board of directors, assets, and personnel. It is, in fact, here represented by the Office of the
Government Corporate Counsel, "the principal law office of government-owned corporations, one of which is
respondent bank." At the very least, by its failure to submit its by-laws on time, the AIIBP may be considered a
de facto corporation whose right to exercise corporate powers may not be inquired into collaterally in any
private suit to which such corporations may be a party.
Moreover, a corporation which has failed to file its by-laws within the prescribed period does not ipso facto
lose its powers as such. The SEC Rules on Suspension/Revocation of the Certificate of Registration of
Corporations details the procedures and remedies that may be availed of before an order of revocation can be
issued. There is no showing that such a procedure has been initiated in this case.

The Missionary Sisters of Our Lady of Fatima v. Amado V. Alzona

Jurisprudence settled that "[t]he filing of articles of incorporation and the issuance of the certificate of incorporation
are essential for the existence of a de facto corporation." In fine, it is the act of registration with SEC through the
issuance of a certificate of incorporation that marks the beginning of an entity's corporate existence.

The doctrine of corporation by estoppel is founded on principles of equity and is designed to prevent injustice and
unfairness. It applies when a non-existent corporation enters into contracts or dealings with third persons. In which
case, the person who has contracted or otherwise dealt with the non-existent corporation is estopped to deny the
latter's legal existence in any action leading out of or involving such contract or dealing. While the doctrine is
generally applied to protect the sanctity of dealings with the public, nothing prevents its application in the reverse, in
fact the very wording of the law which sets forth the doctrine of corporation by estoppel permits such interpretation.
Such that a person who has assumed an obligation in favor of a non- existent corporation, having transacted with the
latter as if it was duly incorporated, is prevented from denying the existence of the latter to avoid the enforcement of
the contract.
Jurisprudence dictates that the doctrine of corporation by estoppel applies for as long as there is no fraud and when
the existence of the association is attacked for causes attendant at the time the contract or dealing sought to be
enforced was entered into, and not thereafter.

In donations made to a person for services rendered to the donor, the donor's will is moved by acts which directly
benefit him. The motivating cause is gratitude, acknowledgment of a favor, a desire to compensate. A donation made
to one who saved the donor's life, or a lawyer who renounced his fees for services rendered to the donor, would fall
under this class of donations.

Municipality of Malabang v. Benito

The color of authority requisite to the organization of a de facto municipal corporation may be:

1. A valid law enacted by the legislature.

2. An unconstitutional law, valid on its face, which has either (a) been upheld for a time by the courts or
(b) not yet been declared void; provided that a warrant for its creation can be found in some other
valid law or in the recognition of its potential existence by the general laws or constitution of the state.

In the cases where a de facto municipal corporation was recognized as such despite the fact that the statute creating
it was later invalidated, the decisions could fairly be made to rest on the consideration that there was some other valid
law giving corporate vitality to the organization.

Operative Fact Doctrine: The actual existence of a statute, prior to such a determination, is an operative fact and may
have consequences, which cannot justly be ignored. The past cannot always be erased by a new judicial declaration.
The effect of the subsequent ruling as to invalidity may have to be considered in various aspects — with respect to
particular relations, individual and corporate, and particular conduct, private and official.

Sultan Camid v. The Office of the President

It has been opined that municipal corporations may exist by prescription where it is shown that the community has
claimed and exercised corporate functions, with the knowledge and acquiescence of the legislature, and without
interruption or objection for period long enough to afford title by prescription.

Municipal corporations have exercised their powers for a long period without objection on the part of the government
that although no charter is in existence, it is presumed that they were duly incorporated in the first place and that their
charters had been lost.

What is clearly essential is a factual demonstration of the continuous exercise by the municipal corporation of its
corporate powers, as well as the acquiescence thereto by the other instrumentalities of the state.

The case of Pelaez and its offspring cases ruled that the President has no power to create municipalities yet limited
its nullificatory effects to the particular municipalities challenged in actual cases before this Court. However, with the
promulgation of the Local Government Code in 1991, the legal cloud was lifted over the municipalities similarly
created by executive order but not judicially annulled. The de facto status of such municipalities as San Andres, Alicia
and Sinacaban was recognized by this Court, and Section 442(b) of the Local Government Code deemed curative
whatever legal defects to title these municipalities had labored under.

The power to create political subdivisions is a function of the legislature. Congress did just that when it has
incorporated Section 442(d) in the Code. Curative laws, which in essence are retrospective, and aimed at giving
"validity to acts done that would have been invalid under existing laws, as if existing laws have been complied with,"
are validly accepted in this jurisdiction, subject to the usual qualification against impairment of vested rights.
 Municipality of Andong (EO No. 107) Municipality of San Andres (EO No. 353)
Municipality of San Narciso vs Mendez
EO No. 107 was among the 33 EOs annulled in the EO No. 353 was not among the 33 EOs annulled in
Pelaez case in 1965 the Pelaez case in 1965
Not applicable in this case San Andress was existing for nearly 30 years before its
legality was challenged.
Still, acting on the premise that the said executive order
was a complete nullity, it noted peculiar circumstances
that San Andres had attained the status DE FACTO
CORPORATION

Pelaez limited its nullificatory effect ONLY TO THOSE

EOs specifically challenged in the said case despite the
fact that Court could have very well extended the
decision to invalidate San Andres

Phil. Society for the Prevention of Cruelty to Animals v. Commission on Audit

The fact that a certain juridical entity is impressed with public interest does not, by that circumstance alone, make the
entity a public corporation, inasmuch as a corporation may be private although its charter contains provisions of a
public character, incorporated solely for the public good. This class of corporations may be considered quasi-public
corporations, which are private corporations that render public service, supply public wants, or pursue other
eleemosynary objectives.

It must be stressed that a quasi-public corporation is a species of private corporations, but the qualifying
factor is the type of service the former renders to the public: if it performs a public service, then it becomes a
quasi-public corporation.

Authorities are of the view that the purpose alone of the corporation cannot be taken as a safe guide, for the
fact is that almost all corporations are nowadays created to promote the interest, good, or convenience of
the public. A bank, for example, is a private corporation; yet, it is created for a public benefit. Private schools and
universities are likewise private corporations; and yet, they are rendering public service. Private hospitals and wards
are charged with heavy social responsibilities. More so with all common carriers. On the other hand, there may exist
a public corporation even if it is endowed with gifts or donations from private individuals.

The true criterion, therefore, to determine whether a corporation is public or private is found in the totality of
the relation of the corporation to the State. If the corporation is created by the State as the latter’s own agency or
instrumentality to help it in carrying out its governmental functions, then that corporation is considered public;
otherwise, it is private. Applying the above test, provinces, chartered cities, and barangays can best exemplify public
corporations. They are created by the State as its own device and agency for the accomplishment of parts of its own
public works.

It is clear that the amendments introduced by C.A. No. 148 revoked the powers of the petitioner to arrest offenders of
animal welfare laws and the power to serve processes in connection therewith.

Bayani Fernando v. Commission on Audit

COA has jurisdiction here you under the totality test, the totality of an entity's relation with the state must be
considered.

In the instant case, the Executive Committee, having been created to assist the MMDA in the conduct of the annual
Manila Film Festival, cannot be treated separately from the legal existence and nature of the agency it is tasked to
give assistance to.
It is likewise apparent that the observance of the annual Film Festival, and entails activities which impacts some, if
not all local government units of the Metro Manila.

The link between an MBA and the executive committee is likewise evidence of a Secretariat within the MMDA.

GSIS Family Bank Employees Union v. Sec. Cesar Villanueva

There is no doubt that GSIS family bank is a government-owned or controlled Corporation since 99.55% of its
outstanding capital stock is owned and controlled by the Government Service Insurance System.

Officers and employees of government owned or controlled corporations without original charters are covered by the
Labor Code not the Civil Service Law. However non-chartered government-owned or controlled corporations or
limited by law in negotiating economic terms with their employees. This is because the law has provided the
Compensation And Position Classification System, which applies to all government-owned or controlled corporations,
chartered or non-chartered.

Dennis Funa v. Manila Economic and Cultural Orride and the COA

MECO is a non-governmental entity.

GOCCs are “stock or nonstock” corporations “vested with functions relating to public needs” that are “owned by the
government directly or through its instrumentalities.”

By definition, three attributes thus make an entity a GOCC: first, its organization as a stock or a nonstock
Corporation; second, the public character of its function; and third, government ownership over the same.

Possession of all three attributes is necessary to deem an entity a GOCC.

In this case there is not much dispute that MECO possesses the 1st and 2nd attributes. It is the third attribute, which
the MECO lacks.

Verily, MECO is organized as a nonstock Corporation.

However, the accounts of MECO pertaining to the verification fees it collects on behalf of DOLE is subject to audit
jurisdiction.

Roy v. Chairperson Herbosa

The pronouncement of the Court in the Gamboa Resolution -the constitutional requirement to "apply
uniformly and across the board to all classes of shares, regardless of nomenclature and category, comprising the
capital of a corporation - is clearly an obiter dictum that cannot override the Court's unequivocal definition of the term
"capital" in both the Gamboa Decision and Resolution.

Nowhere in the discussion of the definition of the term "capital" in Section 11, Article XII of the 1987
Constitution in the Gamboa Decision did the Court mention the 60% Filipino equity requirement to be applied to each
class of shares. The definition of "Philippine national" in the FIA and expounded in its IRR, which the Court adopted in
its interpretation of the term "capital", does not support such application. In fact, even the Final Word of the Gamboa
Resolution does not even intimate or suggest the need for a clarification or re-interpretation.

To revisit or even clarify the unequivocal definition of the term "capital" as referring "only to shares of stock
entitled to vote in the election of directors" and apply the 60% Filipino ownership requirement to each class of share is
effectively and unwarrantedly amending or changing the Gamboa Decision and Resolution. The Gamboa Decision
and Resolution Doctrine did NOT make any definitive ruling that the 60% Filipino ownership requirement was
intended to apply to each class of share.

The fallo or decretal/dispositive portions of both the Gamboa Decision and Resolution are definite, clear and
unequivocal. While there is a passage in the body of the Gamboa Resolution that might have appeared contrary to
the fallo of the Gamboa Decision – capitalized upon by petitioners to espouse a restrictive re-interpretation of "capital"
- the definiteness and clarity of the fallo of the Gamboa Decision must control over the obiter dictum in the Gamboa
Resolution regarding the application of the 60-40 Filipino-foreign ownership requirement to "each class of shares,
regardless of differences in voting rights, privileges and restrictions."

Wilson Gamboa v. Sec. Margarito Teves

Indisputably, one of the rights of a stockholder is the right to participate in the control or management of the corporation.
This is exercised through his vote in the election of directors because it is the board of directors that controls or manages
the corporation. In the absence of provisions in the articles of incorporation denying voting rights to preferred shares,
preferred shares have the same voting rights as common shares. However, preferred shareholders are often excluded
from any control, that is, deprived of the right to vote in the election of directors and on other matters, on the theory that
the preferred shareholders are merely investors in the corporation for income in the same manner as bondholders. In
fact, under the Corporation Code only preferred or redeemable shares can be deprived of the right to vote. Common
shares cannot be deprived of the right to vote in any corporate meeting, and any provision in the articles of incorporation
restricting the right of common shareholders to vote is invalid.

Considering that common shares have voting rights which translate to control, as opposed to preferred shares
which usually have no voting rights, the term "capital" in Section 11, Article XII of the Constitution refers only
to common shares. However, if the preferred shares also have the right to vote in the election of directors,
then the term "capital" shall include such preferred shares because the right to participate in the control or
management of the corporation is exercised through the right to vote in the election of directors. In short, the
term "capital" in Section 11, Article XII of the Constitution refers only to shares of stock that can vote in the election of
directors.

Narra Nickel Mining and Development Corp. v. Redmond Consolidated Mines, Corp

The second case is the Strict Rule or the Grandfather Rule Proper and pertains to the portion in said Paragraph 7 of
the 1967 SEC Rules which states, "but if the percentage of Filipino ownership in the corporation or partnership is less
than 60%, only the number of shares corresponding to such percentage shall be counted as of Philippine nationality."
Under the Strict Rule or Grandfather Rule Proper, the combined totals in the Investing Corporation and the
Investee Corporation must be traced (i.e., "grandfathered") to determine the total percentage of Filipino
ownership.

Moreover, the ultimate Filipino ownership of the shares must first be traced to the level of the Investing Corporation
and added to the shares directly owned in the Investee Corporation x.

In other words, based on the said SEC Rule and DOJ Opinion, the Grandfather Rule or the second part of the SEC
Rule applies only when the 60-40 Filipino-foreign equity ownership is in doubt (i.e., in cases where the joint venture
corporation with Filipino and foreign stockholders with less than 60% Filipino stockholdings [or 59%] invests
in other joint venture corporation which is either 60- 40% Filipino-alien or the 59% less Filipino). Stated
differently, where the 60-40 Filipino- foreign equity ownership is not in doubt, the Grandfather Rule will not
apply.

After a scrutiny of the evidence extant on record, the Court finds that this case calls for the application of the
grandfather rule since, as ruled by the POA and affirmed by the OP, doubt prevails and persists in the corporate
ownership of petitioners. Also, as found by the CA, doubt is present in the 60-40 Filipino equity ownership of
petitioners Narra, McArthur and Tesoro, since their common investor, the 100% Canadian corporation––MBMI,
funded them.

Obviously, the instant case presents a situation which exhibits a scheme employed by stockholders to circumvent the
law, creating a cloud of doubt in the Court’s mind. To determine, therefore, the actual participation, direct or indirect,
of MBMI, the grandfather rule must be used.
Filipinas Compania de Seguros v. Christern, Huenefeid & Co.

There is no question that majority of the stockholders of the respondent corporation were German subjects. This being
so, we have to rule that said respondent became an enemy corporation upon the outbreak of the war between the
United States and Germany. Since the majority of stockholders of the respondent corporation were German subjects,
the respondent became an enemy of the state upon the outbreak of the war between US and Germany. The English
and American cases relied upon by the Court of Appeals lost in force upon the latest decision of the Supreme Court of
US in which the control test has adopted.

Since World War I, the determination of enemy nationality of corporations has been discussed in many countries,
belligerent and neutral. A corporation was subject to enemy legislation when it was controlled by enemies, namely
managed under the influence of individuals or corporations themselves considered as enemies…

The Philippine Insurance Law (Act No 2427, as amended), in Section 8, provides that “anyone except a public enemy
may be insured”. It stands to reason that an insurance policy ceases to be allowable as soon as an insured becomes
a public enemy.

The respondent having an enemy corporation on December 10, 1941, the insurance policy issued in its favor on
October 1, 1941, by the petitioner had ceased to be valid and enforceable, and since the insured good were burned
during the war, the respondent was not entitled to any indemnity under said policy from the petitioner. However,
elementary rule of justice (in the absence of specific provisions in the Insurance Law) require that the premium paid by
the respondent for the period covered by its policy from December 11, 1941, should be returned by the petitioner.

Avon Insurance, Inc. v. Court of Appeals

There is no exact rule of governing principle as to what constitutes doing or engaging in or transacting business.
Indeed, such case must be judged in the light of its peculiar circumstances, upon its peculiar facts and upon the
language of the statute applicable. The true test, however, seems to be whether the foreign corporation is continuing
the body or substance of the business or enterprise for which it was organized.

Agilent Technologies Singapore (PTE) Ltd. V. Integrated Silicon Technology Phils. Corp

There is no definitive rule on what constitutes “doing”, “engaging in”, or “transacting” business in the Philippines.
Jurisprudence has it, however, that the term “implies a continuity of commercial dealings and arrangements, and
contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally
incident to or in progressive prosecution of the purpose and subject of its organization.” By and large, to constitute
“doing business”, the activity to be undertaken in the Philippines is one that is for profit-‐-making.

Far East International Import and Export Corp. v. Nankai Kogyo Co.

Thus though a Special appearance to object to the jurisdiction is not a submission, if it is followed by a motion to dismiss
or to quash the motion invokes the jurisdiction of Court to decide the issue raised by the motion; and a decision of that
issue binds the defendant. Therefore if the decision of the motion is based upon a finding of facts necessary to
jurisdiction, this finding binds the defendant and the court acquires jurisdiction to determine the merits of the case.

Undoubtedly if after his objection to the jurisdiction is wrongly overruled, a defendant files a cross complaint demanding
affirmative relief, he cannot thereafter claim that the court had no jurisdiction over him.

Not only did appellant allege non-jurisdictional grounds in its pleadings to have the complaint dismissed, but it also
went into trial on the merits and presented evidence destined to resist appellee’s claim. Verily, there could not be a
better situation of acquired jurisdiction based on consent. Consequently, the provision of the contract wherein it was
agreed that disputes should be submitted to a Board of Arbitration which may be formed in Japan (in the supposition
that it can apply to the matter in dispute – payment of the scrap), seems to have been waived with appellant’s voluntary
submission. Apart from the fact that the clause employs the word “may”.
The appellant alleges that the lower court did not acquire jurisdiction, because it was not doing business in the
Philippines and the requirement of summons had not been fulfilled. It is difficult to lay down any rule of universal
application to determine when a foreign corporation is doing business. Each case must turn upon its own peculiar facts
and upon the language of the statute applicable. But from the proven facts obtaining in this particular case, the
appellant’s defense of lack of jurisdiction appears unavailing.

In the instant case, the testimony of Atty. Pablo Ocampo that appellant was doing business in the Philippines
corroborated by no less than Nabuo Yoshida, one of appellant’s officers, that he was sent to the Philippines by his
company to look into the operation of mines, thereby revealing the defendant’s desire to continue engaging in business
here, after receiving the shipment of the iron under consideration, making the Philippines a base thereof.

Bustos v. Milllans Shoe, Inc.

To be considered a close corporation, an entity must abide by the requirements laid out in Section 96 of the
Corporation Code. The CA and the RTC deemed MSI a close corporation based on the allegation of Spouses Cruz
that it was so. However, mere allegation is not evidence and is not equivalent to proof. The CA rulings should be set
aside.

We thus apply the general doctrine of separate juridical personality, which provides that a corporation has a legal
personality separate and distinct from that of people comprising it. By that doctrine, stockholders of a corporation
enjoy the principle of limited liability: the corporate debt is not the debt of the stockholder. Thus, being an officer or a
stockholder of a corporation does not make one's property the property also of the corporation. In rehabilitation
proceedings, claims of creditors are limited to demands of whatever nature or character against a debtor or its
property, whether for money or otherwise.

Atienza v. Saluta

the burden of proof rests upon the party who asserts the affirmative of an issue. Since it is the respondent who is
claiming to be an employee of CRV Corporation, it is, thus, incumbent upon him to proffer evidence to prove the
existence of employer-employee relationship between them. He needs to show by substantial evidence that he was
indeed an employee of the company against which he claims illegal dismissal. Corollary, the burden to prove the
elements of an employer-employee relationship, viz.: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power of control, lies upon the respondent.

To ascertain the existence of an employer-employee relationship, jurisprudence has invariably adhered to the four-
fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee's conduct, or the so-called "control test."21 Although no particular
form of evidence is required to prove the existence of an employer-employee relationship, and any competent and
relevant evidence to prove the relationship may be admitted, a finding that the relationship exists must nonetheless
rest on substantial evidence, or such amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion.22 In this case, a scrutiny of the records will bear out that the respondent failed to
substantiate his claim that he was a company driver of CRV Corporation.

On the other hand, the records showed that petitioner had a say on how he performed his work. It is the petitioner
who decides when she needed the services of the respondent. As a matter of fact, the respondent had to secure
permission from the petitioner before he can take a leave of absence from work. That petitioner also enjoyed the
power of dismissal is beyond question given that respondent himself believed that the petitioner verbally terminated
him.23 Because the respondent failed to establish his employment with CRV Corporation, the Court must necessarily
agree with the Labor Arbiter that respondent was the personal/family driver of the petitioner.

Sps. Fernandez v. Smart Communications, Inc.

A judicious examination of the Amended Complaint46 shows that petitioners were impleaded in the instant action
based on the provisions of the Letter Agreement47 and EOL Undertaking,48 which purportedly bound them to be
solidarily liable with the corporation in its obligation with SMART. In effect, the Amended Complaint seeks to pierce
the veil of corporate fiction against Nolasco and Maricris in their capacities as corporate officer and director of EOL.

It is basic in corporation law that a corporation is an artificial being invested by law with a personality separate and
distinct from its stockholders and from other corporations to which it may be connected. 49 Inferred from a
corporation's separate personality is that "consent by a corporation through its representatives is not consent of the
representative, personally."50 The corporate obligations, incurred through official acts of its representatives, are its
own. Corollarily, a stockholder, director, or representative does not become a party to a contract just because a
corporation executed a contract through that stockholder, director, or representative. 51

As a general rule, a corporation's representatives are not bound by the terms of the contract executed by the
corporation. "They are not personally liable for obligations and liabilities incurred on or in behalf of the corporation. "52

There are instances, however, when the distinction between personalities of directors, officers, and representatives,
and of the corporation, are disregarded. This is piercing the veil of corporate fiction. 53 The doctrine of piercing the veil
of corporate fiction is a legal precept that allows a corporation's separate personality to be disregarded under certain
circumstances, so that a corporation and its stockholders or members, or a corporation and another related
corporation could be treated as a single entity. It is meant to apply only in situations where the separate corporate
personality of a corporation is being abused or being used for wrongful purposes. 54

The piercing of the corporate veil must be done with caution. 55 To justify the piercing of the veil 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 a fraud or like wrongdoings." 56

A corporate director, trustee, or officer is to be held solidarily liable with the corporation in the following instances:

1. When directors and trustees or, in appropriate cases, the officers of a corporation: (a) vote for or assent to
patently unlawful acts of the corporation; (b) act in bad faith or with gross negligence in directing the corporate
affairs; (c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and
other persons;
2. When a director or officer has consented to the issuance of watered stocks or who, having knowledge thereof,
did not forthwith file with the corporate secretary his written objection thereto;
3. When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and
solidarily liable with the Corporation; or
4. When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate
action. 57

These instances have not been shown in the case of petitioner Maricris. While the Amended Complaint alleged that
EOL fraudulently refused to pay the amount due, nothing in the said pleading or its annexes would show the basis of
Maricris' alleged fraudulent act that warrants piercing the corporate veil. No explanation or narration of facts was
presented pointing to the circumstances constituting fraud which must be stated with particularity, thus rendering the
allegation of fraud simply an unfounded conclusion of law. Without specific averments, "the complaint presents no
basis upon which the court should act, or for the defendant to meet it with an intelligent answer and must, perforce,
be dismissed for failure to state a cause of action." 58

Freyssinet Filipinas Corporation v. Lapuz

Moreover, it is well settled that the mere ownership by a single stockholder or by another corporation of all or nearly
all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate
personality.[61] Neither is the existence of interlocking directors, corporate officers, and shareholders enough
justification to pierce the veil of corporate fiction in the absence of fraud or other public policy considerations.[62] It
must be shown that the separate and distinct personalities of the corporations are set up to justify a wrong, protect
fraud, or perpetrate a deception.[63] Hence, the wrongdoing must be clearly and convincingly established by
substantial evidence; it cannot be presumed. Otherwise, an injustice that was never unintended may result from an
erroneous application.[64] Verily, no such evidence was submitted by respondent in this respect.
Case law states that to hold a director or officer personally liable for corporate obligations, two requisites must
concur: (1) it must be alleged in the complaint that the director or officer assented to patently unlawful acts of the
corporation or that the officer was guilty of gross negligence or bad faith; and (2) there must be proof that the officer
acted in bad faith.[70] Here, the twin requirements of allegation and proof of bad faith necessary to hold the
impleaded corporate officers liable for the monetary awards are clearly lacking.

Manila Hotel Corporation v. National Labor Relations Commission

Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the corporate fiction is used to
defeat public convenience, justify wrong, protect fraud, or defend a crime. It is done only when a corporation is a
mere alter ego or business conduit of a person or another corporation.

MHC Not Liable

• MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock.
• However, this is not enough to pierce the veil of corporate fiction between MHICL and MHC.

De Asis and Co. v. Court of Appeals

Petitioners raised the same assignments of errors presented and passed upon by the appellate court that the latter
erred (1) in declaring that the obligation sued upon was corporate loan of Francisco de Asis and Co., Inc. and not a
personal loan of Francisco de Asis with the private respondent; and (2) in holding petitioner Leocadio de Asis liable,
jointly and severally, with petitioners Francisco de Asis and Francisco de Asis & Co., Inc. under the "Joint and
Several Undertakings."

WE do not agree.

The records are negative of any evidence which would show that the corporate nature of the transaction alleged in
paragraphs 4 and 8 of the complaint which read:

4. Sometime in June of 1970, defendant, Francisco de Asis approached plaintiff, who was a good
friend, and informed her that he was in need of P200,000.00 because the stock brokerage firm
bearing his name, defendant Francisco de Asis and Co., Inc. was encountering cash flow
problems;

8. On July 2, 1970, plaintiff deposited the P200,000.00 to the bank account of defendant
corporation at the Bank of Asia, Makati Branch (pages 32-33, Rollo).

have been denied and proved to be false. Thus, We are in affirmance of the findings of respondent appellate court
that—

The necessity and urgency for the loan of P200,000.00 was not to meet the personal need of
Francisco de Asis as there is no showing that he was in financial difficulties but to resolve the cash
flow problems of Francisco de Asis and Co., Inc. for which plaintiff-appellee deposited the amount
of P200,000.00 on July 2, 1970 in the current account of defendant corporation at the Makati
Branch of the Bank of Asia. Neither would the absence of the usual documents, i.e., promissory
notes and/or real estate or chattel mortgages, negate the existence of the loan. Considering the
relationship between the parties, being very good friends, plaintiff-appellee dispensed with the
customary documentation in her desire to bail out a friend from the difficulties that his corporation is
facing, 97% of the capital stock of which he owned. But the loan of P200,000.00 is not totally
without any document. The deposit slip (Exhibit "B") of the Bank of Asia showing the deposit of
P200,000.00 on July 2, 1970, in Current Account No. 2-0017 of defendant corporation indicates the
receipt of said amount. And the record is bereft of any evidence disclosing that said funds were
used other than for corporate purposes.
 If the transaction contemplated by the parties herein is that of a personal loan to Francisco de Asis,
then plaintiff could have simply written out a check in the latter's name or deposited the amount of
the loan in his personal account. (page 33, Rollo).

The claim of the corporation that it had not authorized Francisco de Asis to obtain loan for the company from the
private respondent is belied by the fact that upon deposit of the sum of P200,000.00 in its current account, it had
retained and disbursed the said amount. And, assuming that it had not really authorized Francisco de Asis to borrow
money from private respondent, the company is still obliged to return the same under Article 2154 of the Civil Code
which provides:

If something is received when there is no right to demand it, and it was unduly delivered through
mistake, the obligation to return it arises.

Relative to the argument that Francisco and Leocadio de Asis' liability under their "Joint and Several Undertaking" is
limited to the obligation of the corporation in connection with its membership at the Makati Stock Exchange, their
liability is spelled out by Exhibit "A" as follows:

NOW, THEREFORE, for and in consideration of the foregoing premises, the Owners hereby jointly
and severally warrant the equitable payment of all valid and legitimate corporate liabilities of the
Francisco de Asis & Co., Inc. in connection with its membership at the Makati Stock Exchange
Exhibit "A" (page 33, Rollo).

The execution of the foregoing instrument is a requirement for membership in the Makati Stock Exchange.
Subdivision 2, Section 1 of Article XIII of the Constitution of the Makati Stock Exchange clearly states:

that stockholders owning at least 95% of the outstanding capital stock of the applicant corporation
shall execute a public instrument making themselves jointly and severally liable without limitation
for all the transactions and dealings of said corporation and a copy of said document shall be filed
with the Commission provided, however, that if the 95% outstanding capital stock is owned by only
one person another stockholder shall be required to execute with him the said public instrument or
guaranty. (page 34, Rollo), (Emphasis supplied).

And, as pointed out by respondent appellate court, "Leocadio and Francisco de Asis knowingly and voluntarily
executed and signed the Joint and Several Undertaking, Exhibit "A" ". More so, in the case of Leocadio de Asis who
is a lawyer and, therefore, knew the legal import and far-reaching consequences of the document he signed.

Solidbank Corporation v. Mindanao Ferroalloy Corporation

Though Hong and Cu signed above the “maker/borrower” and the printed name of the corporation, without the word
“by” preceding their signatures, the fact that they signed in their personal capacities is negated by the facts
that name and address of the corporation also appeared on the space
provided for in the “maker/borrower” and their signatures only appeared once when it should be twice if indeed
it was in their personal capacities. Further, they didn't sign on the portion allocated for the co-maker, and there
was also indicia of it being signed as authorized representatives.

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. Moreover, it is axiomatic
that solidary liability cannot be lightly inferred.

Since solidary liability is not clearly expressed in the Promissory Note and is not required by law or the nature of the
obligation in this case, no conclusion of solidary liability can be made. Furthermore, nothing supports the alleged joint
liability of the individual petitioners because, as correctly pointed out by the two lower courts, the evidence shows that
there is only one debtor: the corporation.
Yamamoto v. Nishino Leather Industries, Inc.

One of the elements determinative of the applicability of the doctrine of piercing the veil of corporate fiction is that
control must have been used by the defendant to commit fraud or wrong, to perpetuate the violation of a
statutory or other positive legal duty, or dishonest and unjust act in contravention of the plaintiff’s legal
rights.

To disregard the separate juridical personality of a corporation, the wrongdoing or unjust act in contravention of a
plaintiff’s legal rights must be clearly and convincingly established; it cannot be presumed. Without a demonstration
that any of the evils sought to be prevented by the doctrine is present, it does not apply. Estoppel may arise from the
making of a promise.

However, it bears noting that the letter was followed by a request for Yamamoto to give his “comments on all the
above, soonest.” What was thus proffered to Yamamoto was not a promise, but a mere offer, subject to his
acceptance. Without acceptance, a mere offer produces no obligation. Thus, the machineries and equipment, which
comprised Yamamoto’s investment, remained part of the capital property of the corporation.

It is settled that the property of a corporation is not the property of its stockholders or members.

Under the trust fund doctrine, 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.

The distribution of corporate assets and property cannot be made to depend on the whims and caprices of the
stockholders, officers, or directors of the corporation unless the indispensable conditions and procedures for the
protection of corporate creditors are followed.

ASJ Corporation v. Sps. Evangelista

Furthermore, although no hard and fast rule can be accurately laid down under which the juridical personality of a
corporate entity may be disregarded.

THE FOLLOWING PROBATIVE FACTORS OF IDENTITY JUSTIFY THE APPLICATION OF THE DOCTRINE OF
PIERCING THE VEIL OF CORPORATE FICTION IN THIS CASE:

(1) San Juan and his wife own the bulk of shares of ASJ Corp.;
(2) The lot where the hatchery plant is located is owned by the San Juan spouses;
(3) ASJ Corp. had no other properties or assets, except for the hatchery plant and the lot where it is located;
(4) San Juan is in complete control of the corporation;
(5) There is no bona fide intention to treat ASJ Corp. as a different entity from San Juan; and
(6) The corporate fiction of ASJ Corp. was used by San Juan to insulate himself from the legitimate claims of
respondents, defeat public convenience, justify wrong, defend crime, and evade a corporations subsidiary
liability for damages.

These findings, being purely one of fact, should be respected. We need not assess and evaluate the evidence all
over again where the findings of both courts on these matters coincide.

(Second) On the second set of issues, petitioners contend that the retention was justified and did not constitute an
abuse of rights since it was respondents who failed to comply with their obligation. Respondents, for their part, aver
that all the elements on abuse of rights were present. They further state that despite their offer to partially satisfy the
accrued service fees, and the fact that the value of the chicks and by-products was more than sufficient to cover their
unpaid obligations, petitioners still chose to withhold the delivery.

The crux of the controversy, in our considered view, is simple enough. WAS PETITIONERS RETENTION OF THE
CHICKS AND BY-PRODUCTS ON ACCOUNT OF RESPONDENTS FAILURE TO PAY THE CORRESPONDING
SERVICE FEES UNJUSTIFIED?
While the trial and appellate courts had the same decisions on the matter, suffice it to say that a modification is
proper.

Worth stressing, petitioners act of withholding the chicks and by-products is entirely different from petitioners
unjustifiable acts of threatening respondents.

THE RETENTION HAD LEGAL BASIS; THE THREATS HAD NONE.

Genuino Agro-Industrial Development Corp. v. Romano

The circumstances indubitably establish that both Genuino Ice and the petitioner are using their respective distinct
corporate personalities in bad faith and to confuse legitimate issues in the hope of evading its obligations to the
respondents.

As observed, when an affiliate company takes the cudgels for another it means that both have common interests. If
indeed there was no commonality of intertwining of an interest in frustrating the respondent's monetary claims, the
petitioner and not Genuino Ice would have posted a bond for its own appeal.

The Court cannot allow its intelligence to be insulted by Genuino Ice’s representation that it has a corporate
personality which is separate and distinct from the petitioner because both companies have pursued legal remedies
and measures for the benefit of each other and made representations that clearly defrauded the respondent. Hence,
for purposes of this litigation and for the satisfaction of the respondent's monetary claim, both Genuine Ice and the
petitioner shall be treated as one and the same entity and held liable solidarily for the same.

Ongkico v. Sguiyama

It would be the height of injustice for the court to allow Soccorro to hide behind the separate and distinct corporate
personality of New Rhia Car Services, Inc., just to evade the corporate organization which she herself bound to
personally undertake.

Cease v. CA

The theory of “merger of Forrest L. Cease and The Tiaong Milling as one personality”, or that “the company is only
the business conduit and alter ego of the deceased Forrest L. Cease and the registered properties of Tiaong Milling
are actually properties of Forrest L. Cease and should be divided equally, share and share alike among his six
children, … “, the trial court did aptly apply the familiar exception to the general rule by disregarding the legal fiction of
distinct and separate corporate personality and regarding the corporation and the individual member one and the
same.

While the records showed that originally its incorporators were aliens, friends or third-parties in relation to another, in
the course of its existence, it developed into a close family corporation. The Board of Directors and stockholders belong
to one family the head of which Forrest L. Cease always retained the majority stocks and hence the control and
management of its affairs. It must be noted that as his children increase or become of age, he continued distributing
his shares among them adding Florence, Teresa and Marion until at the time of his death only 190 were left to his
name. Definitely, only the members of his family benefited from the Corporation.

The corporation 'never' had any account with any banking institution or if any account was carried in a bank on its
behalf, it was in the name of Mr. Forrest L. Cease. There is truth in plaintiff's allegation that the corporation is only a
business conduit of his father and an extension of his personality, they are one and the same thing. Thus, the assets
of the corporation are also the estate of Forrest L. Cease, the father of the parties herein who are all legitimate children
of full blood.

A rich store of jurisprudence has established the rule known as the doctrine of disregarding or piercing the veil of
corporate fiction.
GENERAL RULE: a corporation is vested by law with a personality separate and distinct from the persons composing
it as well as any other legal entity to which it may be related. By virtue of this attribute, a corporation may not, generally,
be made to answer for acts or liabilities of its stockholders or those of the legal entities to which it may be connected,
and vice versa. This separate and distinct personality is, however, merely a fiction created by law for convenience and
to promote the ends of justice

EXCEPTIONS: Such rule may not be used or invoked for ends subversive of the policy and purpose behind its creation
or which could not have been intended by law to which it owes its being. This is particularly true where the fiction is
used to defeat public convenience, justify wrong, protect fraud, defend crime, confuse legitimate legal or judicial issues,
perpetrate deception or otherwise circumvent the law

This is likewise true where the corporate entity is being used as an alter ego, adjunct, or business conduit for the sole
benefit of the stockholders or of another corporate. In any of these cases, the notion of corporate entity will be pierced
or disregarded, and the corporation will be treated merely as an association of persons or, where there are two
corporations, they will be merged as one, the one being merely regarded as part or the instrumentality of the other.

VIRATA vs. NG WEE

Concept Builders, Inc. v. NLRC instructs that as a fundamental principle of corporation law, a corporation is an entity
separate and distinct from its stockholders and from other corporations to which it may be connected. But, this separate
and distinct personality of a corporation is merely a fiction created by law for convenience and to promote justice. Thus,
authorities discuss that when the notion of separate juridical personality is used (1) to defeat public convenience, justify
wrong, protect fraud or defend crime; (2) as a device to defeat the labor laws; or (3) when the corporation is merely an
adjunct, a business conduit or an alter ego of another corporation, this separate personality of the corporation may be
disregarded or the veil of corporate fiction pierced.

Virata used his control over the Power Merge corporation in order to fulfill his obligation under the Waiver and Quitclaim.
Impelled by the desire to settle the outstanding obligations of Hottick under the terms of the settlement agreement,
Virata effectively allowed Power Merge to be used as Wincorp's pawn in avoiding its legal duty to pay the investors
under the failed investment scheme. Pursuant to the alter ego doctrine, petitioner Virata should then be made liable for
his and Power Merge's obligations.

ABS CBN vs. CA

In the case at bar, VIVA through its Board of Directors, rejected such counter-offer. Even if it be
conceded arguendo that Del Rosario had accepted the counter-offer, the acceptance did not bind VIVA, as
there was no proof whatsoever that Del Rosario had the specific authority to do so.

Under the Corporation Code, unless otherwise provided by said Code, corporate powers, such as the
power to enter into contracts, are exercised by the Board of Directors. However, the Board may delegate such
powers to either an executive committee or officials or contracted managers. The delegation, except for the
executive committee, must be for specific purposes. Delegation to officers makes the latter agents of the
corporation; accordingly, the general rules of agency as to the binding effects of their acts would apply. For such officers
to be deemed fully clothed by the corporation to exercise a power of the Board, the latter must specially authorize them
to do so. That Del Rosario did not have the authority to accept ABS-CBN’s counter-offer was best evidenced
by his submission of the draft contract to VIVA’s Board of Directors for the latter’s approval. In any event,
there was between Del Rosario and Lopez III no meeting of minds.

The testimony of Mr. Lopez and the allegations in the complaint are clear admissions that what was supposed
to have been agreed upon at the Tamarind Grill between Mr. Lopez and Del Rosario was not a binding agreement. It
is as it should be because corporate power to enter into a contract is lodged in the Board of Directors. (Sec.
23, Corporation Code). Without such board approval by the Viva board, whatever agreement Lopez and Del
Rosario arrived at could not ripen into a valid contact binding upon Viva.
COASTAL PACIFIC TRADING, INC. V. SOUTHERN ROLLING MILLS, CO., INC.

Coastal Pacific was not acting in the same capacity as SIP. VISCO was sued by petitioner as a creditor under a
processing agreement between them; and by SIP, based on an alleged breach of their management contract. Very
clearly, because the rights of these two creditors were entirely distinct and separate from each other, in no manner
were they privies of each other.

We noted that confusion occurred in the resolution of the issue of identity of parties, because the two creditors were
assailing the same transactions of VISCO on the same grounds. Since both had presented similar legal issues, the
appellate court held that its ruling against one creditor applied with equal force against the other.

This was a common but palpable misconception of the doctrine of res judicata. Persons do not become privies by the
mere fact that they are interested in the same question or in proving the same set of facts, or that one person is
interested in the result of a litigation involving the other. Several creditors of one debtor cannot be considered as
identical parties for the purpose of assailing its acts. They have distinct credits, rights, and interests, such that the
failure of one to recover should not preclude the others from also pursuing their legal remedies.

In the present case, the right of SIP (arising from its management contract with VISCO) was totally distinct and
separate from the right of Coastal (arising from the latter’s processing contract with respondent). Both were asserting
distinct rights arising from different legal obligations of the debtor corporation. Thus, VISCO’s violation of those
separate rights gave rise to separate causes of action.

It will be recalled that 90 percent of the equity of VISCO had been acquired by respondent consortium, which then
took over the management and control of the former. Thus, 9 out of the 10 directors of the steel corporation were
officials of the consortium, which may be said to have effectively occupied and/or controlled the board.

Because they had control and guidance over the corporate affairs and property of VISCO, the officials of the
consortium were in a position of trust. As trustees, they should have managed its assets with strict regard for all the
creditors’ interests. As directors, their duty should have become more stringent when the corporation became
insolvent or without sufficient assets to meet its outstanding obligations as they arose.

These directors, who were likewise representatives of the creditor-banks, should not have permitted themselves to
secure undue advantage over the other creditors. Regrettably, the consortium miserably failed to observe its duty of
fidelity towards the debtor corporation and the latter’s other creditors.

Notably, this mortgage remained unrecorded and not legally binding on the other creditors. The consortium then
adopted a payment procedure, which entitled it to obtain DBP’s primary lien through an assignment, without incurring
additional expenses. This primary lien allowed it to foreclose the assets of VISCO, regardless of the former’s inferior
claims. This clever ruse would have worked, had it not been resorted to by creditors who -- as directors -- were
dutybound not to take clever advantage of other creditors.

The intention to defraud the other creditors was even more striking in the light of the consortium’s knowledge that the
assets of VISCO would not be enough to meet its obligations to several other creditors. Fraud is present when the
debtor knows that its actions would cause injury.

CUENCA VS. ATAS

Even without considering our factual determination in Children's Garden of the Philippines v. APT, still we arrive at
the same conclusion that LOI 1295 was indeed implemented.

First, it is undisputed that shares of stock were issued to the GFIs converting part of their outstanding loan credit to
equity with PNCC. The certificates of stock issued attest to this fact. Moreover, the administrative body below had
duly debunked any irregularity in the face of these certificates of stock.
Second, the records and accounts of PNCC duly reflected such debt-to-equity conversion as attested to by the
independent auditors from Carlos J. Valdes & Co., Certified Public Accountants, in the comparative Financial
Statements covering the years 1982 and 1983.

Third, the due issuance of the shares of stock in the names of the GFIs was corroborated by PNCC's stock transfer
agent, Caval Securities Registry, Inc.

Fourth, the Deed of Confirmation and its Supplement erased any doubt as to the implementation of LOI 1295.

Thus, based on these reasons, there can be no doubt as to the implementation of LOI 1295. Corollarily, the shares of
stock subject of the instant case issued to the GFIs were for value and thus cannot be considered as void or "watered
stocks."