In the case of Union Glass & Container
Corporation versus the Securities and Exchange
Commission (SEC), the dispute revolved around
the legality of the transfer of assets from Pioneer
Glass Manufacturing Corporation to Union
Glass through a dacion en pago agreement. Here
are the key details:
1. Background:
o Pioneer Glass was a domestic
corporation engaged in silica mining
and glass manufacturing.
o It obtained loans from
the Development Bank of the
Philippines (DBP), which were
secured by mortgaging its assets.
o The DBP eventually gained control
of Pioneer Glass by converting
unpaid interests into equity.
o In 1978, due to liquidity problems,
Pioneer Glass transferred its assets
to DBP through a dacion en
pago agreement, including a glass
plant in Rosario, Cavite.
o The DBP later leased and sold this
glass plant to Union Glass and
Container Corporation.
2. Legal Challenge:
o Carolina Hofileña, a stockholder of
Pioneer Glass, filed a complaint with
the SEC (SEC Case No. 2035).
o She alleged that the dacion en pago
was illegal due to:
 Undervaluation of Pioneer
Glass assets.
 Self-dealing by DBP (acting
as both stockholder/director
and secured creditor).
 Inclusion of a converted
equity amount in DBP’s
statement of account.
3. SEC Jurisdiction:
o Initially, the SEC dismissed the case
for lack of jurisdiction.
o However, it later reversed its
decision and upheld its jurisdiction
over the case
Facts:
 The case involves a jurisdictional dispute
between the Securities and Exchange
Commission (SEC) and the regular court.
 The case was decided on November 28,
1983, by the En Banc of the Supreme Court
of the Philippines, with Justice Escolin as
the ponente.
 The complaint was filed by Carolina Hofile
a, a stockholder, against the Development
Bank of the Philippines (DBP), Union Glass
& Container Corporation (Union Glass), and
Pioneer Glass Manufacturing Corporation
(Pioneer Glass).
 Hofile a alleges illegal acts and gross bad
faith in a dacion en pago agreement, which
is a form of payment in which the debtor
transfers ownership of a property to the
creditor to satisfy a debt.
Issue:
 Which court has jurisdiction over the
dispute?
Ruling:
 The Supreme Court ruled in favor of Union
Glass, stating that the SEC does not have
jurisdiction over the case.
Ratio:
 The SEC's jurisdiction is limited to matters
intrinsically connected with the regulation of
corporations, partnerships, and
associations, as well as those dealing with
the internal affairs of such entities.
 Since Union Glass has no intra-corporate
relationship with Hofile a or the DBP, the
case falls outside the SEC's jurisdiction and
should be tried in the regular court.
Additional Ruling on Joinder of Parties:
 While the Rules of Court allow the joinder of
causes of action in one complaint, this
procedure is subject to the rules regarding
jurisdiction, venue, and joinder of parties.
  Since Union Glass has no intra-corporate
relationship with Hofile a, it cannot be joined
as a party-defendant in the SEC case.
 However, Hofile a's complaint against Union
Glass can only prosper if the SEC case,
which involves the validity of the dacion en
pago, is resolved in her favor.
Conclusion:
 The Supreme Court grants the petition and
sets aside the SEC's orders, ruling that the
case should be tried in the regular court.
 The Court orders the SEC to drop Union
Glass from the case, without prejudice to
Hofile a filing a separate suit in the regular
court for the recovery and cancellation of
the sale of the glass plant.
DULAY ENTERPRISER VS Court of appeals
Facts:
 Manuel R. Dulay Enterprises, Inc., a close
corporation, owned a property known as
Dulay Apartment.
 The president of the corporation, Manuel
Dulay, sold the property to private
respondents spouses Maria Theresa and
Castrense Veloso without the knowledge
and consent of the other members of the
board of directors.
 The sale was authorized by a board
resolution, but it was passed without proper
notice and without the approval of all the
board members.
 The property was subsequently mortgaged
by private respondent Maria Veloso to
private respondent Manuel A. Torres.
 Private respondent Torres eventually
acquired ownership of the property through
an extrajudicial foreclosure sale.
 Torres filed an action to the corporation and
other tenants of the apartment.
Issue:
 Whether the sale of the property by Manuel
Dulay is valid and binding.
Ruling:
 The sale of the property is valid and binding.
Ratio:
 In a close corporation, a board resolution
authorizing the sale or mortgage of a
property is not necessary to bind the
corporation.
 A corporate action taken at a board meeting
without proper notice is deemed ratified by
the absent director unless they promptly file
a written objection.
 Petitioner Virgilio Dulay failed to file a
written objection, therefore ratifying the sale.
 The doctrine of piercing the veil of corporate
entity is only applied when the corporation is
used to defeat public convenience, justify
wrong, protect fraud, or defend crime.
 There was no evidence that the corporation
was being used for any of these purposes.
 The execution of the deed of sale in a public
document is equivalent to the delivery of the
property, so prior physical delivery or
possession is not legally required.
 The respondent appellate court did not err
in denying petitioner's motion for
reconsideration, despite the failure of the
private respondents to submit their
comment.
FACTS: The Club owns and operates a club house,
a bowling alley, a golf course (on a lot leased from
the government), and a bar-restaurant where it
sells wines and liquors, soft drinks, meals and short
orders to its members and their guests. The bar-
restaurant was a necessary incident to the
operation of the club and its golf-course. The club is
operated mainly with funds derived from
membership fees and dues. Whatever profits it had,
were used to defray its overhead expenses and to
improve its golf-course. In 1951. as a result of a
capital surplus, arising from the re-valuation of its
real properties, the value or price of which
increased, the Club declared stock dividends; but
no actual cash dividends were distributed to the
stockholders. In 1952, a BIR agent discovered that
the Club has never paid percentage tax on the
gross receipts of its bar and restaurant. CIR
assessed against and demanded from the Club
taxes allegedly due.
ISSUE: WON Club Filipino is liable for the taxes
(WON it is a stock corporation)
HELD: No (it is non-stock)
The Club was organized to develop and cultivate
sports of all class and denomination for the
healthful recreation and entertainment of its
stockholders and members. There was in fact, no
cash dividend distribution to its stockholders and
whatever was derived on retail from its bar and
restaurants used were to defray its overhead
expenses and to improve its golf course.
For a stock corporation to exist, 2
requisites must be complied with:
(1) A capital stock divided into shares
(2) An authority to distribute to the holders of such
shares, dividends or allotments of the surplus
profits on the basis of shares held.
In the case at bar, nowhere in the AOI or by-laws of
Club Filipino could be found an authority for the
distribution of its dividends or surplus
profits. Strictly speaking, it cannot, therefore, be
considered a stock corporation, within the
contemplation of the corporation law.
The fact that the capital stock of the respondent
Club is divided into shares, does not detract from
the finding of the trial court that it is not engaged in
the business of operator of bar and restaurant.
What is determinative of whether or not the Club is
engaged in such business is its object or purpose,
as stated in its articles and by-laws. It is a familiar
rule that the actual purpose is not controlled by the
corporate form or by the commercial aspect of the
business prosecuted, but may be shown by
extrinsic evidence, including the by-laws and the
method of operation.
It is conceded that the Club derived profit from the
operation of its bar and restaurant, but such fact
does not necessarily convert it into a profit-making
enterprise. The bar and restaurant are necessary
adjuncts of the Club to foster its purposes and the
profits derived therefrom are necessarily incidental
to the primary object of developing and cultivating
sports for the healthful recreation and
entertainment of the stockholders and members.
That a Club makes some profit, does not make it a
profit-making Club. As has been remarked a club
should always strive, whenever possible, to have
surplus
1. Background:
o The Club Filipino, Inc. de
Cebu (referred to as the “Club”) is a
civic corporation organized under
Philippine laws. Initially, its
authorized capital stock
was P22,000.00, which was later
increased to P200,000.00. The
Club’s primary purpose is to develop
and cultivate sports for the healthful
recreation and entertainment of its
members.
o The Collector of Internal Revenue
assessed and demanded payment
from the Club for fixed and
percentage taxes, surcharge, and
compromise penalty related to its
operation of a bar and restaurant.
2. Issue:
o The central question is whether the
Club is liable for taxes and penalties
based on its operation of a bar and
restaurant.
3. Court’s Ruling:
 The Court of Tax Appeals found
that the Club, despite deriving
profits from its bar and
restaurant, primarily operated for
sports development and member
recreation.
 The Court emphasized that
liability for fixed and percentage
taxes on bar and restaurant
operations does not
automatically apply. The operator
must genuinely engage in the
business as a barkeeper and
restaurateur.
 The term “business” should be
interpreted in its plain and
ordinary sense, restricted to
activities for profit or livelihood.
 o The purpose and object of the
organization, as stated in its articles
and by-laws, determine whether it is
genuinely engaged in the business
of operating a bar and restaurant.
4. Doctrine:
o Liability for taxes and penalties
related to bar and restaurant
operations hinges on the genuine
business intent. Mere profit from
such operations does not suffice; the
operator must actively function as a
barkeeper and restaurateur.
In the case of National Development Company
(NDC) and New Agrix, Inc. versus the Philippine
Veterans Bank, decided on December 10, 1990,
the Philippine Supreme Court grappled with the
constitutionality of a presidential decree issued
during the regime of President Marcos1.
The specific enactment in question
was Presidential Decree No. 1717, which aimed
to rehabilitate the Agrix Group of Companies,
with the National Development Company playing a
central role in its administration. The law outlined
procedures for filing claims against the Agrix
companies and established a Claims Committee to
process these claims. Importantly, Section 4 (1) of
the decree declared that “all mortgages and other
liens presently attaching to any of the assets of the
dissolved corporations are hereby extinguished.”
Here are the key facts of the case:
1. Background:
o Agrix Marketing, Inc. (AGRIX) had
executed a real estate mortgage in
favor of the Philippine Veterans
Bank over three parcels of land in
Los Baños, Laguna.
o During the existence of the
mortgage, AGRIX went bankrupt.
o President Marcos
issued Presidential Decree No.
1717 to salvage the Agrix
companies, including AGRIX.
2. Legal Dispute:
o The Philippine Veterans Bank filed a
claim with the AGRIX Claims
Committee for payment of its loan
credit.
o Meanwhile, the New Agrix, Inc. and
the National Development
Company (petitioners) sought the
cancellation of the mortgage lien in
favor of the bank, citing Section 4
(1) of the decree.
o The bank also attempted to
extrajudicially foreclose the
mortgage, prompting the petitioners
to file a second case to stop the
foreclosure.
3. Court Decision:
o The trial court ruled in favor of the
bank, upholding the validity of the
mortgage lien.
o The court held that the
extinguishment provision in the
decree did not apply retroactively to
existing mortgages.
o The decree could not impair existing
contractual rights without violating
the Constitution.
o The court emphasized that even
presidential decrees were subject to
constitutional limitations.
Valderama vs NLRC
Facts:
 Maria Andrea Saavedra filed a complaint
against COMMODEX (Phils.), Inc.,
Consuelo Valderrama (owner), Tranquilino
Valderrama (executive vice president), and
Jose Ma. Togle (vice president and general
manager) for illegal dismissal.
 The Labor Arbiter ruled in favor of
Saavedra, ordering COMMODEX to
reinstate her with full backwages, pay moral
and exemplary damages, and attorney's
fees.
 However, the company ceased operations
and the individual officers argued that the
 writ of execution could not be enforced
against them since the dispositive portion of
the decision only mentioned COMMODEX.
Issue:
Can the owner of a company be held personally
liable for the illegal dismissal of an employee,
despite the dispositive portion of the decision only
mentioning the company?
Ruling:
 The court ruled in favor of Saavedra and
held Consuelo Valderrama personally liable
for the monetary awards.
 The court cited the rule that once a
judgment becomes final, it can no longer be
disturbed, but also recognized exceptions
when circumstances render its execution
impossible or unjust.
 Since the company was no longer in
operation and there was no showing of
bankruptcy proceedings, the court found it
appropriate to modify the judgment to hold
the owner personally liable.
 The court also relied on the principle that an
employer includes any person acting in the
interest of the employer, directly or
indirectly.
 A corporation can only act through its
officers and agents, and any decision
against the company can be enforced
against the officers in their personal
capacities if the corporation fails to satisfy
the judgment.
Ratio:
The court's decision was based on the following
legal principles:
The rule on finality of judgments admits of
exceptions when circumstances render its
execution impossible or unjust.
An employer includes any person acting in the
interest of the employer, directly or indirectly.
A corporation can only act through its officers and
agents, and any decision against the company can
be enforced against the officers in their personal
capacities if the corporation fails to satisfy the
judgment.
Technical rules of procedure may be disregarded in
labor cases for the protection of labor.
CARMELCRAFT VS NLRC
Facts:
 Carmelcraft Corporation, represented by
Carmen V. Yulo, announced the cessation
of operations on August 13, 1987, due to
financial losses.
 Carmelcraft Employees Union filed a
petition for certification election in June
1987 after not receiving recognition from the
company.
 The union filed a complaint against the
company for illegal lockout, unfair labor
practice, damages, and unpaid wages and
benefits.
Issue:
 Whether the company's decision to cease
operations was justified or motivated by a
desire to avoid dealing with the labor union.
Ruling:
 The company's justification for the cessation
of operations was not credible.
 The company's decision was motivated by a
desire to avoid dealing with the labor union.
 The company's actions constituted unfair
labor practice.
 Quitclaims or waivers of benefits signed by
employees were invalid.
 Carmen Yulo, as the president, general
manager, and owner of the company, was
solidarily liable for the illegal acts of the
corporation.
Ratio:
 The company claimed to have sustained
losses of only P1,603.88, which was
deemed small considering its substantial
capitalization of P3 million.
 The establishment of the Carmelcraft
Employees Union was the real reason for
the company's decision to cease operations.
  The company suggested that it might not
close the business if the employees
affiliated with another union preferred by the
management.
 The company's actions constituted unfair
labor practice.
 Quitclaims or waivers of benefits signed by
employees were invalid because they were
contrary to public policy.
 The protection of labor is a constitutional
policy, and employees cannot be barred
from demanding benefits they are legally
entitled to.
 Carmen Yulo, as the president, general
manager, and owner of the company, was
solidarily liable for the illegal acts of the
corporation.
 Carmen Yulo's argument that she was only
an agent of the company was rejected, as
she was considered the corporation itself.
Conclusion:
 The petition was dismissed, and the
decision of the National Labor Relations
Commission was affirmed.
 The company was ordered to pay unpaid
benefits and separation pay to the
employees.
 The court condemned the company's
treatment of its employees and emphasized
the importance of recognizing and
protecting the rights of labor.
In the case of Jaime Pabalan and Eduardo
Lagdameo vs. National Labor Relations
Commission (NLRC), the issue revolves around
the liability of corporate officers for unpaid wages
and other employee claims when the corporation
has a separate legal personality1.
Here are the key points from the case:
Facts:
1. Background:
o Philippine Inter-Fashion, Inc. (PIF)
faced a complaint from 84 workers
for illegal transfer and simultaneous
illegal dismissal without justifiable
cause.
o The complainants demanded
reinstatement with full backwages,
living allowance, 13th-month pay,
and other benefits.
o The case involved violations of the
Labor Code on security of tenure
and provisions of Batas Pambansa
Blg. 130.
2. Legal Proceedings:
o The labor arbiter conducted hearings
and proceedings.
o Despite multiple opportunities, the
respondents (PIF officers) failed to
appear consistently.
o Complainants filed a supplemental
position paper, implicating the
petitioners (Jaime Pabalan and
Eduardo Lagdameo) as officers of
PIF.
3. Decision:
o The labor arbiter rendered a
decision ordering the following:
 Reinstatement of 62
complainants to their former
or equivalent positions
without loss of seniority rights
and privileges.
 Joint and several payment of
backwages and other
benefits from the time of
dismissal until actual
reinstatement.
 The computation based on
the latest minimum wage law
at the time of dismissal1.
 The case involves a dispute between 84
workers and Philippine Inter-Fashion, Inc.
(PIF) regarding illegal transfer and
dismissal.
  The workers filed a complaint against PIF
for illegal transfer and simultaneous illegal
dismissal without justifiable cause.
 The labor arbiter rendered a decision
ordering PIF and its officers, Jaime Pabalan
and Eduardo Lagdameo, to reinstate the
complainants and pay their backwages and
other benefits.
 The decision was affirmed by the National
Labor Relations Commission (NLRC) in a
resolution.
Issue:
 Whether the labor arbiter and NLRC
acquired jurisdiction over the petitioners and
if due process was violated.
 Whether the officers of a corporation can be
held jointly and severally liable with the
corporation for its liability.
Ruling:
 The labor arbiter and NLRC acquired
jurisdiction over the petitioners as they were
properly served with summons and were not
deprived of due process.
 The officers of a corporation, including
Pabalan and Lagdameo, are not personally
liable for the corporation's liability unless
they have exceeded their authority.
 The separate corporate personality of a
corporation should not be disregarded
unless it is deliberately and maliciously
designed to evade financial obligations or
perpetrate fraud.
 In this case, the complainants did not show
that the officers of PIF deliberately and
maliciously designed to evade the financial
obligation of the corporation or used the
transfer of employees to perpetrate an
illegal act.
 Therefore, the court relieved the officers of
any liability and held that the liability shall be
solely that of the corporation.
Ratio:
 The labor arbiter and NLRC acquired
jurisdiction over the petitioners as they were
properly served with summons and were not
deprived of due process.
 The officers of a corporation, including
Pabalan and Lagdameo, are not personally
liable for the corporation's liability unless
they have exceeded their authority.
 The separate corporate personality of a
corporation should not be disregarded
unless it is deliberately and maliciously
designed to evade financial obligations or
perpetrate fraud.
 In this case, the complainants did not show
that the officers of PIF deliberately and
maliciously designed to evade the financial
obligation of the corporation or used the
transfer of employees to perpetrate an
illegal act.
 Therefore, the court relieved the officers of
any liability and held that the liability shall be
solely that of the corporation.
PCIB vs custodio
Facts:
 Dennis Custodio, a dollar remittance
business owner, and Wilfredo D. Gliane, his
agent, filed a case against Philippine
Commercial and International Bank (PCIB)
for failure to deliver remitted funds and
wrongful application of funds.
 Custodio and Gliane used PCIB's Express
Padala desk at its affiliate bank, Al Rahji
Bank in Saudi Arabia, to remit dollars to
beneficiaries in the Philippines.
 They coursed the remittances through
regular clients of PCIB who enjoyed special
foreign exchange rates, one of which was
Rolando Francisco.
 Francisco entered into a Foreign Bills
Purchase Line Agreement (FBPLA) with
PCIB-Greenhills bank and deposited four
dollar checks totaling US$651,000 in his
joint account with Erlinda Chua.
 The checks were cleared and paid by
Chase Manhattan Bank but were
 subsequently dishonored for insufficient
funds.
 PCIB-Greenhills debited US$85,000 from
Francisco and Erlinda's joint account as
partial payment of the dishonored checks.
 Gliane remitted US$42,300 to Francisco's
joint account at PCIB-Greenhills, but
Francisco had asked Custodio to desist
from remitting dollars to him.
 Custodio instructed Gliane to request a
change of beneficiary from Francisco to
Belarmino Cortez and/or Rhodora Cruz, but
PCIB-Greenhills had already set off the
remittance against Francisco's outstanding
obligation under the FBPLA.
 Custodio and Gliane filed a complaint
against PCIB, Marilyn (PCIB employee),
and Francisco for specific performance and
damages.
Issue:
1. Whether PCIB was negligent in carrying out
its obligations under the Express Padala
facility.
2. Whether Francisco should be held liable for
the US$42,300 remittance.
Ruling:
The Supreme Court ruled in favor of PCIB and held
that:
 PCIB was not negligent in carrying out its
obligations.
 Francisco should be held liable for the
US$42,300 remittance.
Ratio:
 Custodio and Gliane failed to prove that the
request for amendment of beneficiary was
communicated to PCIB within a reasonable
time.
 PCIB was not negligent in applying the
remittance to Francisco's outstanding loan
obligation under the FBPLA.
 Francisco should be held liable for the
remittance as he admitted in his pleadings
that the loan to which the remittance was
applied was his.
 Francisco deposited the checks in his joint
account with Erlinda, not in ROL-ED's
account.
Conclusion:
The Supreme Court reversed the Court of Appeals'
decision and reinstated the trial court's decision,
holding Francisco liable to reimburse PCIB for the
US$42,300 remittance. The Court also dismissed
the award of exemplary damages, attorney's fees,
and costs.
LIM VS CA
In the case of Lim v. Court of Appeals (323 SCRA
102, 2000), the central issue revolved around
whether a corporation, in its entirety, could be
considered a proper subject for inclusion in the
inventory of a deceased person’s estate. The
petitioner, Rufina Luy Lim, contested the decision of
the Court of Appeals, which nullified and set aside
certain orders of the Regional Trial Court of Quezon
City acting as a probate court1.
Here’s a summary of the case:
1. Background:
o Pastor Y. Lim passed away intestate
(without a will) on June 11, 1994.
o His surviving spouse, Rufina Luy
Lim, filed a joint petition for the
administration of his estate.
o Private respondent corporations
(Auto Truck TBA Corporation,
Alliance Marketing Corporation,
Speed Distributing, Inc., Active
Distributors, Inc., and Action
Company) owned real properties
registered under the Torrens system.
2. Legal Question:
o Could the properties owned by these
corporations be included in the
inventory of Pastor Y. Lim’s estate?
3. Court Ruling:
o The Regional Trial Court initially
included the properties in the
estate’s inventory.
 o However, the Court of Appeals later
granted the private respondents’
motions to lift the lis pendens (a
notice of pending litigation) and
exclude certain properties from the
2. Background:
estate.
o The Court of Appeals held that the
determination of whether these
properties should be included was
provisional and subject to final
determination in a separate action
regarding title1.
In essence, the case highlighted the complex
interplay between corporate entities and individual
estates, emphasizing that the probate court’s
decisions regarding property inclusion were not
necessarily conclusive1.
3. Legal Dispute:
Please note that this summary is for informational
purposes only and does not constitute legal advice.
For precise legal details, consult the full court
o Ruben Martinez: President of RJL
Martinez Fishing Corporation (RJL),
a tuna fishing outfit in the
Philippines.
o CLL obtained a letter of credit from
BPI International Finance for
US$3,000,000.
o CLL purchased molasses from Mar
Tierra Corporation and resold it
internationally.
o Wilfrido Martinez and Blamar
Gonzales managed the business
operations of both CLL and Mar
Tierra Corporation.
o CLL defaulted on its obligations to
BPI International Finance.

decisions1. 📜🔍 o BPI International Finance sought

payment from CLL and its
shareholders, including Wilfrido
Martinez.
MARTINEZ VS CA
o The trial court held CLL liable but
In the case of Martinez vs. Court of Appeals, absolved Wilfrido Martinez.
decided on September 10, 2004, the Second
Division of the Supreme Court rendered a decision o The Court of Appeals modified the
regarding a dispute involving BPI International decision, declaring Wilfrido Martinez
Finance and Cintas Largas, Ltd. (CLL)1. Here are and Miguel J. Lacson jointly and
the key points: severally liable to pay BPI
International Finance.
1. Parties Involved:
4. Decision:
o BPI International Finance: A
foreign corporation not doing o CLL was found liable to pay BPI
business in the Philippines, engaged International Finance.
in investment banking operations in
o Wilfrido Martinez and Miguel J.
Hong Kong.
Lacson were held jointly and
o Cintas Largas, Ltd. (CLL): Another severally liable for US$340,000 with
foreign corporation established in interests.
Hong Kong, primarily involved in
This case highlights the complexities of
importing molasses from the
international business transactions and the legal
Philippines and reselling it in the
responsibilities of corporate entities and their
international market.
officers1.
o Wilfrido C. Martinez: President of
Mar Tierra Corporation, which sold
molasses to CLL.