CONCEPCION MAGSAYSAY-LABRADOR, SOLEDAD MAGSAYSAY-CABRERA, LUISA MAGSAYSAY-CORPUZ, assisted be her husband, Dr. Jose Corpuz, FELICIDAD P. MAGSAYSAY, and MERCEDES MAGSAYSAY-DIAZ,petitioners,vs.THE COURT OF APPEALS and ADELAIDA RODRIGUEZ-MAGSAYSAY, Special Administratrix of the Estate of the late Genaro F. Magsaysayrespondents.G.R. No. 58168 December 19, 1989

Facts:On 9 February 1979, Adelaida Rodriguez-Magsaysay, widow and special administratix of the estate of the late Senator Genaro Magsaysay, brought before the then Court of First Instance of Olongapo an action against Artemio Panganiban, Subic Land Corporation (SUBIC), Filipinas Manufacturer's Bank (FILMANBANK)and the Register of Deeds of Zambales, for the annulment of the Deedof Assignment executed by the late Senator in favor of SUBIC (as a result of which TCT 3258was cancelled and TCT 22431 issuedin the name of SUBIC), for the annulment of the Deed of Mortgage executed by SUBIC in favor of FILMANBANK (dated 28April 1977 in the amount of P 2,700,000.00), and cancellation of TCT 22431by the Register of Deeds, and for the latter to issue a new title in herfavor. On 7 March 1979, Concepcion Magsaysay-Labrador, Soledad Magsaysay-Cabrera, Luisa Magsaysay-Corpuz, Felicidad Magsaysay, and Mercedes Magsaysay-Diaz, sisters of the late senator, filed a motion for intervention on the ground that on 20June 1978, their brother conveyed to them 1/2 of his shareholdings in SUBIC or a total of416,566.6 shares and as assignees of around 41% of the total outstanding shares of such stocks of SUBIC, they have asubstantial and legal interest in the subject matter of litigation and that they have a legal interest in the successof the suit with respect to SUBIC. On 26July 1979, the trial court denied the motion for intervention, and ruled that petitioners have no legal interest whatsoever in the matter in litigation and their being alleged assignees or transferees of certain shares in SUBIC cannot legally entitle them to intervene because SUBIC has a personality separate and distinct from its stockholders. On appeal, the Court of Appeals found no factual orlegal justification to disturb the findings of the lower court. The appellate court further stated that whatever claims the Magsaysay sisters have against the late Senator or against SUBIC for that matter can be ventilated in a separate proceeding. The motion for reconsideration of the Magsaysay sisters was denied. Hence, the petition for review on certiorari.

Issue:whether or not respondent Court of Appeals correctly denied their motion for intervention.

Held:Yes, The factual findings of the trial court are clear on this point. The petitioners cannot claim the right to intervene on the strength of the transfer of shares allegedly executed by the late Senator. The corporation did not keep books and records.Perforce, no transfer was ever recorded, much less effected as to prejudice third parties. The transfer must be registered in the books of the corporation to affect third persons. The law on corporations is explicit. Section 63 of the Corporation Code provides, thus: "No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation showing the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates and the number of shares transferred."

SULO NG BAYAN, INC. vs. GREGORIO ARANETA, INC., PARADISE FARMS, INC., NATIONAL WATERWORKS & SEWERAGE AUTHORITY, HACIENDA CARETAS, INC. and REGISTER OF DEEDS OF BULACAN (72 SCRA 247; G.R. No. L-31061. August 17, 1976)

Facts:The petitioner herein is a corporation organized and existing under the laws of the Philippines, with its principal office and place of business at San Jose del Monte, Bulacan. Its membership is composed of natural persons residing at San Jose del Monte, Bulacan, who had pioneered in the clearing of the tract of land in controversy, cultivated the same since the Spanish regime and continuously possessed the said property openly and publicly under concept of ownership adverse against the whole world. It was on April 26, 1966 when Sulo ng Bayan, Inc. filed anaccion de reivindicacionwith theCFI Bulacan against the respondent herein (Araneta, Inc. ) for the petitioners ejectment through force and intimidation from their possession of the aforementioned land. On September 2, 1966, Araneta, Inc. filed a motion to dismiss the amended complaint on the grounds that (1) the complaint states no cause of action; and (2) the cause of action, if any, is barred by prescription and laches. The other respondents, Paradise Farms, Inc. and Hacienda Caretas, Inc. did the same. But National Waterworks & Sewerage Authority (NAWASA) did not file any but pleaded in its answer as special and affirmative defenses the same grounds as the others. Sulo ng Bayan filed for a motion to transfer the case to CFI Malolos but the lower court denied such being moot and academic, the court having dismissed the amended complaint. Petitioner filed a motion to reconsider the Order of dismissal on the grounds that the court had no jurisdiction to issue the Order of dismissal, because its request for the transfer of the case and that such as approved by the DOJ. Also, thje complaint states a sufficient cause of action because the subject matter of the controversy is one of common interest to the members of the corporation who are so numerous that the present complaint should be treated as a class suit; and that the action is not barred by the statute of limitations because (a) an action for the reconveyance of property registered through fraud does not prescribe, and (b) an action to impugn a void judgment may be brought any time. This motion of the petitioner was denied by the trial court and hence, recourse was made to the CA, which later on found out that it involves questions of law and jurisdiction. CA therefore certified this case to the SC for resolution.

Issue/s: Whether or not plaintiff corporation (non-stock) may institute an action in behalf of its individual members for the recovery of certain parcels of land allegedly owned by said members

Held:The SC held that the trial court correctly dismissed the amended complaint. It is a doctrine well-established and obtains both at law and in equity that a corporation is a distinct legal entity to be considered as separate and apart from the individual stockholders or members who compose it, and is not affected by the personal rights, obligations and transactions of its stockholders or members.The property of the corporation is its property and not that of the stockholders, as owners, although they have equities in it. Properties registered in the name of the corporation are owned by it as an entity separate and distinct from its members.Conversely, a corporation ordinarily has no interest in the individual property of its stockholders unless transferred to the corporation, "even in the case of a one-man corporation".The mere fact that one is president of a corporation does not render the property which he owns or possesses the property of the corporation, since the president, as individual, and the corporation are separate entities.Similarly, stockholders in a corporation engaged in buying and dealing in real estate whose certificates of stock entitled the holder thereof to an allotment in the distribution of the land of the corporation upon surrender of their stock certificates were considered not to have such legal or equitable title or interest in the land, as would support a suit for title, especially against parties other than the corporation. It must be noted, however, that the juridical personality of the corporation, as separate and distinct from the persons composing it, is but a legal fiction introduced for the purpose of convenience and to subserve the ends of justice.This separate personality of the corporation may be disregarded, or the veil of corporate fiction pierced, in cases where it is used as a cloak or cover for fraud or illegality, or to work an injustice, or where necessary to achieve equity. It has not been claimed that the members have assigned or transferred whatever rights they may have on the land in question to the plaintiff corporation. Absent any showing of interest, therefore, a corporation, like plaintiff-appellant herein, has no personality to bring an action for and in behalf of its stockholders or members for the purpose of recovering property which belongs to said stockholders or members in their personal capacities.Thus, the essential elements of a cause of action are legal right of the plaintiff, correlative obligation of the defendant, an act or omission of the defendant in violation of the aforesaid legal right. Clearly, no right of action exists in favor of plaintiff corporation, for as shown heretofore it does not have any interest in the subject matter of the case which is material and direct so as to entitle it to file the suit as a real party in interest.

Manila International Airport Authority vs CAJuly 20, 2006

Facts: MIAA operates Ninoy Aquino International Airport Complex in Paranaque City under the MIAA Charter. In 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No. 061, opining that the Local Government Code withdrew the exemption from real estate tax granted to MIAA. In 2001, MIAA received final notices of real estate tax delinquency, totaling P624,506,725.42, from the City of Paranaque. The City Treasurer issued notices and warrants of levy on the Airport Land and buildings.MIAA filed with the Court of Appeals to restrain the City of Paraaque from imposing real estate tax on, levying against, and auctioning for public sale the Airport Lands and Buildings.MIAA argued that the owner of the Airport Land and Buildings is the Republic. Thus, they are inalienable and are not subject to tax by the local governments. Furthermore, it invoked the principle that the government cannot tax itself, being the tax creditor and tax debtor at the same time. Respondent City invoke Section 193 of the Local Government Code, whichexpressly withdrewthe tax exemption privileges of "government-owned and-controlled corporations".

Issue:Whether the Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws.Held: MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by local governments.First, MIAA is not a government-owned or controlled corporation but aninstrumentalityof the National Government and thus exempt from local taxation.A government-owned or controlled corporation must be "organized as a stock or non-stock corporation." MIAA is not organized as a stock or non-stock corporation. MIAA is not a stock corporation because it hasno capital stock divided into shares. MIAA has no stockholders or voting shares.Second, the real properties of MIAA areowned by the Republicof the Philippines and thus exempt from real estate tax. The Airport Lands and Buildings of MIAA are properties ofpublic dominion and therefore owned by the State or the Republic of the Philippines. The term "ports, mentioned in ART. 420 of the Civil Code, includes seaports and airports. The Airport Lands and Buildings are outside the commerce of man and cannot be the subject of an auction sale. Local governments are devoid of power to tax the national government, its agencies and instrumentalities.The Airport Lands and Buildings of the Manila International Airport AuthorityEXEMPTfrom the real estate tax imposed by the City of Paraaque.

Gamboa vs. Finance Secretary GR 176579 ; June 28, 2011Facts: In 1969, American-owned General Telephone and Electronics Corporation (GTE), a major shareholder of PLDT, sold 26% of PLDT's equity to Philippine Telecommunications Investment Corporation (PTIC). PTIC was incorporated on November 9, 1967 and is engaged in the business of investment holdings. It held 26,034,263 of PLDT shares, or 13.847% of the total outstanding common stocks of PLDT.In 1977, Prime Holdings, Inc. (PHI) was incorporated and 100% owned by the Cojuangco group. Subsequently, PHI became the owner of 111,415 shares or 46.125% of PTIC by virtue of three (3) Deeds of Assignment executed by Ramon Cojuangco and Luis Tirso Rivilla. On May 9, 1986, the 111,415 PTIC shares held by PHI were sequestered by the Presidential Commission on Good Government (PCGG) pursuant to Executive Order No. 1. Later, this Court declared the said shares to be owned by the Republic of the Philippines. In 1999, First Pacific Company Limited (First Pacific), a Bermuda-registered, Hong Kong-based investment firm, acquired the remaining 54% equity of PTIC. Thereafter, the government decided to sell its 46.1% stake in PTIC (equivalent to 6.4% indirect stake in PLDT), designating the Privatization Council of the Philippine Government as the disposition entity. On December 8, 2006, a public bidding was held where Singapore-based Parallax Capital Management LP (Parallax) emerged as the highest bidder with an offer of PhP25,217,556,000. On January 31, 2007, the House of Representatives Committee on Good Government conducted a public hearing on the particulars of the impending sale. In Report No. 2270, the House Committee on Good Government concluded that: (1) the auction of the government's PTIC shares bore due diligence, transparency and conformity with existing legal procedures; and (2) First Pacific's intended acquisition of the government's PTIC shares resulting in its 100% ownership in PTIC will not violate the 40% constitutional limit on foreign ownership of a public utility since PTIC held only 13.847% of the total outstanding common stocks of PLDT. Subsequently, the government informed First Pacific of the results of the bidding and gave it until February 1, 2007 to exercise its right of first refusal as provided under PTIC's Articles of Incorporation. Consequently, First Pacific announced that it would match Parallax's bid. However, First Pacific failed to raise the money for the purchase by the February 1, 2007 deadline and, instead, yielded the right to PTIC itself. The deadline was then reset to March 2, 2007. On February 14, 2007, First Pacific, through its subsidiary, Metro Pacific Assets Holdings, Inc. (MPAH), entered into a Conditional Sale and Purchase Agreement with the government for the latter's 46.1% stake in PTIC at the price of PhP25,217,556,000. The acquisition was completed on February 28, 2007. On the same date, Wilson Gamboa (Gamboa) filed the instant petition for prohibition, injunction, declaratory relief and declaration of nullity of sale of the 111,415 shares of PTIC. He argues that: (1) the consummation of the impending sale of 111,415 shares to First Pacific violates the constitutional limitation on foreign ownership of a public utility; (2) respondents committed grave abuse of discretion by allowing the sale of PTIC shares to First Pacific; (3) respondents have made a complete misrepresentation of the impending sale by saying that it does not breach the constitutional limitation on foreign ownership of a public utility; and (4) the sale of common shares to foreigners in excess of 40% of the entire subscribed common capital stock violates the 1987 Philippine Constitution. Issue: Whether the term "capital" in Section 11, Article XII of the Constitution refers to the total common shares only or to the total outstanding capital stock (combined total of common and non-voting preferred shares) of PLDT, a public utility.

Held: The court agreed with the petitioner and petitioners-in-intervention that the term "capital" in Section 11, Article XII of the Constitution refers only to shares of stock entitled to vote in the election of directors, and thus in the present case only to common shares, and not to the total outstanding capital stock comprising both common and non-voting preferred shares.

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.

BATAAN SHIPYARD & ENGINEERING CO., INC. (BASECO)vs.PRESIDENTIAL COMMISSION ON GOOD GOVERNMENTPonente: Narvasa, J.:Facts: BASECO described itself as a ship repair and ship building company, incorporated as a domestic private corporation by a consortium of Filipino ship owners and executives, where its main office is in Manila but its shipyard is located in Bataan. Herein is a case of special civil action of certiorari and prohibition. EO 1 & 2 was promulgated by Pres. Corazon Aquino which orders the sequestration, takeover and other orders in relations to the EO done by PCGG to the alleged Marcos controlled corporations. The problem arose when orders were given to 3 PCGG Commissioners for the sequestration of a list of corporation, including BASECO and for them to produce and surrender certain documents.Issues:1. Whether or not the order of production of documents would be self incriminating to BASECO2. Whether or not a corporation can avail the right against self incrimination 3. Whether or not EO 1, 2 and 14 are constitutional4. Whether or not PCGG had unduly interfered with its right of dominion and management of its business affairs.Held:Issues 1 & 2:The Court held that the right against self incrimination has no application to corporations because as quoted in Wilson v US, the corporation is a creature of the state and is presumed to be incorporated for the benefit of the public. Its power is limited by law and it would be a strange anomaly to hold that a state, having chartered a corporation to make use of certain franchises, could not, in exercise of sovereignty, inquire how these franchises had been employed, and whether they have been abused and demand the production of corporate books and papers for that purposeIssue 3:The impugned EO are avowedly meant to carry out explicit command of the Provisional Constitution, that the President shall give priority to measures to achieve the mandate of the people among others to recover ill gotten wealth amassed by the leaders and supporters of the previous regime. The institution of these provisional remedies also is premised upon the States inherent police power, therefore the Executive Orders are valid and constitutional. Issue 4:One other question remains to be disposed of, that respecting the scope and extent of the powers that may be wielded by the PCGG with regard to the properties or businesses placed under sequestration. a. PCGG may not exercise acts of ownership. They cannot exercise acts of dominion over property sequestered, frozen or provisionally taken over. The PCGG is a conservator, not an owner. b. PCGG has only powers of administration over the property or business sequestered, much like a court appointed a receiver, such as to bring and defend actions in its own name; receive rents; collect debts due; pay outstanding debts and generally do such other acts and things as may be necessary to fulfill its mission as conservator and administrator. c. In the special instance of a business enterprise shown by evidence to have been taken over by government of the Marcos Administration, the PCGG is given power and authority to provisionally take over in the public interest or to prevent disposal or dissipation, and since the term obviously employed in reference to going concerns, or business enterprise in operation, something more than physical custody connoted, the PCGG may in this case exercise some measure of control in the operation, running or management of the business itself. d. PCGG may also properly exercise the prerogative to vote sequestered stock of corporations granted to it by the President through a Memorandum but it should be construed in such a manner as to be consistent with the EO. There was adequate justification to vote the incumbent directors out of office because evidence showed prima facie that the former were just tools of President Marcos and were no longer owners of any stock in the firm.

FILIPINAS BROADCASTING NETWORK, INC.,petitioner,vs.AGO MEDICAL AND EDUCATIONAL CENTER-BICOL CHRISTIAN COLLEGE OF MEDICINE, (AMEC-BCCM) and ANGELITA F. AGO,respondents.G.R. No. 141994 January 17, 2005

Facts:Expos is a radiodocumentary program hosted by Carmelo Mel Rima(Rima) and Hermogenes Jun Alegre (Alegre). Expos is aired everymorning over DZRC-AM which is ownedby Filipinas Broadcasting Network, Inc. (FBNI). Expos is heard over LegazpiCity, the Albay municipalities andother Bicol areas. In the morning of 14 and 15December 1989, Rima and Alegre exposed various alleged complaints from students, teachers and parentsagainst Ago Medical andEducational Center-Bicol Christian College of Medicine (AMEC) and its administrators. Claiming that the broadcasts were defamatory, AMEC and Angelita Ago (Ago), as Dean of AMECs College of Medicine, filed a complaint for damages against FBNI, Rima and Alegre on 27 February1990. The complaint further alleged thatAMEC is a reputable learninginstitution. Withthe supposed exposs, FBNI, Rima and Alegre transmitted malicious imputations, and as such, destroyed plaintiffs (AMEC and Ago) reputation. AMEC and Agoincluded FBNI as defendantfor allegedly failing to exercise due diligence in the selection and supervision of its employees, particularly Rima and Alegre. On 18June 1990, FBNI, Rima and Alegre, through Atty. Rozil Lozares, filed an Answer alleging that the broadcasts against AMEC were fair and true. FBNI, Rima and Alegre claimed that they were plainly impelled by a senseof public duty to report thegoings-on in AMEC, [which is] aninstitution imbued with public interest. Thereafter, trial ensued. During the presentation of the evidence for the defense, Atty. Edmundo Cea, collaborating counsel of Atty. Lozares, filed a Motion to Dismiss on FBNIs behalf. The trial court denied themotion to dismiss. Consequently, FBNI filed a separate Answer claiming that it exercised due diligence in the selection and supervision of Rima and Alegre. FBNI claimed that before hiring a broadcaster, the broadcaster should (1)file an application; (2) be interviewed; and (3) undergo an apprenticeship and training program after passing the interview. FBNI likewise claimed that it alwaysreminds its broadcasters to observe truth, fairness and objectivity in their broadcasts andto refrain from using libelous andindecent language. Moreover, FBNI requires all broadcasters to pass the Kapisanan ng mga Brodkaster sa Pilipinas (KBP) accreditation test and to secure a KBP permit. On 14 December 1992, thetrial court rendered a Decision finding FBNI and Alegre liable for libel except Rima. The trial court held that the broadcasts are libelous per se. Thetrial court rejected the broadcasters claim that their utterances were the result of straight reporting because it had no factual basis. The broadcasters did not even verify their reports before airing them to show good faith. Inholding FBNI liable for libel, the trial court found that FBNI failed to exercise diligence in the selection and supervision of its employees. In absolving Rima from the charge, the trial court ruled that Rimas only participation was when he agreed with Alegres expos. The trial court found Rimas statement within the bounds of freedom of speech, expression, and of the press. Both parties, namely, FBNI, Rima and Alegre, on one hand, andAMEC and Ago, on the other, appealed the decision to the Court ofAppeals. The Court of Appeals affirmed the trial courtsjudgment with modification. The appellate court madeRima solidarily liable with FBNI and Alegre. The appellate court denied Agos claim for damages and attorneys fees because the broadcasts were directed against AMEC, and not against her. FBNI, Rima and Alegre filed a motion for reconsideration which the Court of Appeals denied in its 26 January2000 Resolution. Hence, FBNI filed the petition for review.

Issue:Whether AMEC is entitled to moral damages.

Held:A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. The Court of Appeals cites Mambulao Lumber Co. v. PNB, et al. tojustify the award of moral damages. However, the Courts statement in Mambulao that a corporation may have a good reputation which, if besmirched, may also be a ground for the award ofmoral damages is an obiter dictum. Nevertheless, AMECs claim for moral damages falls under item 7 of Article 2219 of the Civil Code. This provision expressly authorizes the recovery of moral damages in cases of libel, slander or anyother form of defamation. Article2219(7) does not qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical person such as a corporation can validly complain for libel or any other form of defamation and claim for moral damages. Moreover, where the broadcast is libelous per se, the law implies damages. In such acase, evidence of an honest mistake or the want of character or reputation of the party libeled goesonly in mitigation of damages.

LUXURIA HOMES INC. vs. HONORABLE COURT OF APPEALS, JAMES BUILDER CONSTRUCTION and/or JAIME T. BRAVO (G.R. No. 125986. January 28, 1999)

Facts:Petitioner Aida M. Posadas and her two minor children co-owned a 1.6 hectare property in Sucat, Muntinlupa, which was occupied by squatters. Petitioner Posadas entered into negotiations with private respondent Jaime T. Bravo regarding the development of the said property into a residential subdivision. On May 3, 1989, she authorized respondent Bravo to negotiate with the squatters to leave the said property. Seven months later, petitioner Posadas and her two children assigned the said property to petitioner Luxuria Homes, Inc. wherein respondent Bravo signed as one of the witnesses to the execution of the Deed of Assignment. However, sometime in 1992, the relationship of petitioner Posadas and respondent Bravo turned sour when the former could not accept the proposed management contracts of the latter to develop the said property into a residential subdivision. Consequently, in September 1992, private respondents James Builder Construction and Jaime T. Bravo instituted a complaint for specific performance before the trial court against petitioners Posadas and Luxuria Homes, Inc. On September 27, 1993, the trial court declared petitioner Posadas in default and allowed private respondents to present their evidence ex-parte. On March 8, 1994, it ordered petitioner Posadas, jointly and in solidum with Luxuria Homes, Inc. to pay private respondents damages and to execute the management contract. The Court of Appeals modified the decision of the trial court by deleting the award of moral damages and reducing the award on exemplary damages. Hence, this petition.

Issue/s: a.) Whether or not Posadas surreptitiously formed Luxuria Homes, Inc., and transferred the subject parcel of land to it to evade payment and defraud creditors, including private respondentsb.) Whether or not petitioner Luxuria Homes, Inc., was a party to the transaction entered into by Posadas with private respondents and thus could be held jointly and severally with Posadas

Held:a.) No. From the record, the private respondents sent demand letters on 21 August 1991 and 14 September 1991, or more than a year and a half after the execution of the Deed of Assignment on 11 December 1989, and the issuance of the Articles of Incorporation of petitioner Luxuria Homes on 26 January 1990. And, the transfer was made at the time the relationship between petitioner Posadas and private respondents was supposedly very pleasant. In fact the Deed of Assignment dated 11 December 1989 and the Articles of Incorporation of Luxuria Homes, Inc., issued 26 January 1990 were both signed by respondent Bravo himself as witness. It cannot be said then that the incorporation of petitioner Luxuria Homes and the eventual transfer of the subject property to it were in fraud of private respondents as such were done with the full knowledge of respondent Bravo himself.Besides petitioner Posadas is not the majority stockholder of petitioner Luxuria Homes, Inc., as erroneously stated by the lower court. The Articles of Incorporation of petitioner Luxuria Homes, Inc., clearly show that petitioner Posadas owns approximately 33% only of the capital stock. Hence petitioner Posadas cannot be considered as an alter ego of petitioner Luxuria Homes, Inc.SC held that, to disregard the separate juridical personality of a corporation, the wrongdoing must be clearly and convincingly established. It cannot be presumed. This is elementary. Thus inBayer-Roxas v.Court of Appeals,such disregard may only be allowed when the corporation is used as a cloak or cover for fraud or illegality, or to work injustice, or where necessary for the protection of the creditors.No. The private respondents failed to show proof that petitioner Posadas acted in bad faith. Consequently since private respondents failed to show that petitioner Luxuria Homes, Inc., was a party to any of the supposed transactions, not even to the agreement to negotiate with and relocate the squatters, it cannot be held liable, nay jointly and in solidum, to pay private respondents. In this case since it was petitioner Aida M. Posadas who contracted respondent Bravo to render the subject services, only she is liable to pay the amounts adjudged herein

Concept Builders vs NLRCMay 29, 1996

Facts:Petitioner Concept Builders is a domestic corporation engaged in construction business. Private respondents were employed by the said company as laborers, carpenters and riggers.In 1981, the respondents received notices of termination of employment, informing them that the project has been completed. Later, they found out that the project in which they were hired for was not, in fact, completed. The petitioner corporation had hired sub-contractors in place of the respondent laborers. The Labor Arbiter rendered judgment, ordering petitioner to reinstate private respondents and to pay them back wages equivalent to one year or three hundred working days. However, the writ of execution was not enforced. According to the special sheriffs report, all the employees inside petitioners premises claimed that they were employees of Hydro Pipes Philippines, Inc. (HPPI) and not by Concept Builders. Cuyegkeng filed a 3rd-party claim, alleging that the properties sought to be levied upon were owned by Hydro Pipes, of which he is the V-President.Respondents filed a Motion for Issuance of a Break-Open Order, alleging that Hydro Pipes and Concept Builders were owned by the same incorporator and stockholders. They also alleged that the petitioner temporarily suspended its operation to evade its legal obligations.NLRC issued a break-open order. It directed the sheriff to proceed with the auction sale of the properties already levied upon. The third-party claim was dismissed for lack of merit.Petitioner Concept Builders alleged that NLRC committed a grave abuse of discretion and that the doctrine of piercing the corporate veil should not have been applied in this case in the absence of any showing that it created Hydro Pipes in order to evade its liability to private respondents.

Issue:Whether the National Labor Relations Commission committed grave abuse of discretion when it issued a break-open order to the sheriff to be enforced against the personal property found in the premises of petitioners sister company.Whether the doctrine of piercing the corporate veil is applicable.

Held:Concept Builders contention is unmeritous. The separate and distinct personality of a corporation is merely a fiction created by law for convenience and to promote justice. When the notion of separate juridical personality is used to defeat public convenience, justify wrong, protect fraud or defend crime, or is used as a device to defeat the labor laws, this separate personality of the corporation may be disregarded or the veil of corporate fiction be pierced. There are some probative factors of identity that will justify the application of the doctrine of piercing the corporate veil, to wit:1. Stock ownership by one or common ownership of both corporations.2.Identity of directors and officers.3.The manner of keeping corporate books and records.4.Methods of conducting the business.While the question of whether a corporation is a mere alter ego, a mere sheet or paper corporation is purely a question of fact, clearly, the petitioner ceased its business operations to evade its legal obligations to the respondents. It is shown that the same address was indicated by Hydro Pipes and Concept Builders even as it claimed it had ceased operations. Further, both corporations had the same president, same officers and substantially the same subscribers. It is proven that the second corporation was aiming for the protective shield of a corporate fiction. The petition by corporation is dismissed and the resolutions of NLRC are affirmed.

Villarey Transit vs. Ferrer 25 SCRA 845; G.R. No. L-23893

Facts: Jose M. Villarama was the operator of a bus company under the name Villa Rey Transit, authorized to operate 32 units from Pangasinan to Manila and vice-versa, sold 2 CPCs to Pantranco. One of the conditions included in the contract of sale was that the seller (Villarama) "shall not, for a period of 10 years from the date of the sale, apply for any TPU service identical or competing with the buyer (Pantranco)."Barely 3 months after the sale, a corporation called Villa Rey Transit, Inc. was organized, with the wife of Jose M. Villarama as one of the incorporators and who was subsequently elected as treasurer of the Corporation. Barely a month after its registration with the SEC, the corporation bought 5 CPCs and 49 buses from one Valentin Fernando, and applied with the Public Service Commission (PSC) for approval of the sale. Before the PSC could take final action on the said application, however, 2 of the 5 CPCs were levied upon pursuant to a writ of execution issued by the CFI in favor of Eusebio Ferrer, judgment creditor, against Valentin Fernando, judgment debtor. During the public sale conducted, Ferrer was the highest bidder, and a certificate of sale was issued in his name. Shortly thereafter, he sold the said CPCs to Pantranco, and they jointly submitted their contract of sale to the PSC for approval.The PSC issued an order that pending resolution of the applications, Pantranco shall have the authority to provisionally operate the service under the 2 CPCS that were the subject of the contract between Ferrer and Pantranco. Villa Rey Transit took filed a complaint for annulment of the sheriff's sale of the CPCs and prayed that all the orders of the PSC relative to the dispute over the CPCs in question be annulled. Pantranco filed a third-party complaint against Jose M. Villarama, alleging that Villarama and Villa Rey Transit are one and the same, and that Villarama and/or the Corporation is disqualified from operating the CPCs by virtue of the agreement entered into between Villarama and Pantranco.Issue: Whether the stipulation, "SHALL NOT FOR A PERIOD OF 10 YEARS FROM THE DATE OF THIS SALE, APPLY FOR ANY TPU SERVICE IDENTICAL OR COMPETING WITH THE BUYER" in the contract between Villarama and Pantranco, binds the Corporation (the Villa Rey Transit, Inc.).Held: YES. The doctrine that a corporation is a legal entity distinct and separate from the members and stockholders who compose it is recognized and respected in all cases which are within reason and the law. However, when the fiction is urged as a means of perpetrating a fraud or an illegal act or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, the achievement or perfection of a monopoly or generally the perpetration of knavery or crime, the veil with which the law covers and isolates the corporation from the members or stockholders who compose it will be lifted to allow for its consideration merely as an aggregation of individuals.In the present case, the Court found that the finances of Villa-Rey, Inc. were managed as if they were the private funds of Villarama and in such a way and extent that Villarama appeared to be the actual owner of the business without regard to the rights of the stockholders. Villarama even admitted that he mingled the corporate funds with his own money. These circumstances negate Villarama's claim that he was only a part-time General Manager, and show beyond doubt that the corporation is his alter ego. Thus, the restrictive clause with Pantranco applies. A seller may not make use of a corporate entity as a means of evading the obligation of his covenant. Where the Corporation is substantially the alter ego of one of the parties to the covenant or the restrictive agreement, it can be enjoined from competing with the covenantee. Hence, the Villa Rey Transit, Inc. is an alter ego of Jose M. Villarama, and that the restrictive clause in the contract entered into by the latter and Pantranco is also enforceable and binding against the said Corporation.

Francisco Motors Corporation vs CAPonente: Quisimbing, J.Facts:On 23rd of January 1985, Francisco Motors filed a complaint against Spouses Gregorio and Librada Manuel to recover P3, 412.06, representing the balance of the jeep body purchased by the Manuels from Francisco Motors; an additional sum of P20, 454.80 representing the unpaid balance on the cost of repair of the vehicle; and P6000 for the cost of the suit and attorneys fees. To the original balance on the price of the jeep body were added the cost of the repair. In their answer, the Manuel spouses interposed a counterclaim for unpaid legal services of Gregorio Manuel in the amount of P50,000, which was not paid by the incorporators, directors and officers of Francisco Motors. The trial court decided in favor of Francisco Motors in regard to its claim for money, but also allowed the counter claim of the Manuel spouses hence an appeal was made. The CA sustained the trial courts decision hence the present petition for review on certiorari.Issue:Whether or not Francisco Motors Corporation should be liable for the legal services of Gregorio Manuel rendered in the intestate proceeding over Benita Trinidads estateHeld:It is a basic principle in corporation law, that a corporation has a personality separate and distinct from its stockholders and from other corporations to which it may be connected. However, under the doctrine of piercing the corporate veil of corporate entity, the corporations separate juridical personality may be disregarded, for example, when the corporate entity is used to defeat public convenience, justify wrong, protect fraud or defend crime. Also, where the corporation is a mere business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency or adjunct of another corporation, then its distinct personality may be ignored. In these circumstances, the court will treat the corporation as a mere aggrupation of persons and the liability will directly attach to them. The legal fiction of a separate corporate personality in those cited instances, for reasons of public policy and in the interest of justice, will be justifiably set aside. However, in the said case, the doctrine of piercing the corporate veil has no relevant application. The rationale behind piercing a corporations identity in a given case is to remove the barrier between the corporation from the persons comprising it to thwart the fraudulent and illegal schemes of those who use the corporate personality as a shield for undertaking certain proscribed activities. Here, instead of holding certain individuals or persons responsible for an alleged corporate act, the situation has been reversed. It is FMC as a corporation which is being ordered to answer for personal liability of certain individual directors and officers. These legal services did not involve any business of FMC. Manuels move to recover unpaid legal fees through a counterclaim against FMC, to offset the unpaid balance of the purchase and repair of the body of the jeep could only result from an obvious misconception that FMCs corporate assets could be used to answer for the liabilities of its individual directors, incorporators and officers. If permitted, this would prejudice the corporation, its incorporators and even the stockholders. Furthermore, considering the nature of the legal services involved, whatever obligation incurred was done in its personal capacity. The claim for legal fees against the concerned individual incorporators, officers and directors could not be properly directed against the corporation without violating the basic principles governing corporations. Every action, including a counterclaim, must be prosecuted in the name of the real party in interest .It is therefore an error to claim for the legal fees of private respondent Gregorio Manuel to FMC rather than individual members of the Francisco family.

TIMES TRANSPORTATION COMPANY, INC.,petitioner,vs.SANTOS SOTELO, CONRADO B. SALONGA, et. al, respondents.G.R. No. 163786 February 16, 2005

Facts:Times Transportation Company, Inc. (Times) is a corporation engaged in the business oflandtransportation.TimesEmployeesUnion(TEU)was formed andissuedacertificate ofunionregistration.Timeschallengedthe legitimacyofTEUbyfilingapetitionforthe cancellation of its union registration. TEU held a strike in response to Times alleged attempt to form a rival union and its dismissal of the employees identified to be active union members. TheLabor Secretary assumed jurisdiction over the case and referred the matter to the NLRC for compulsory arbitration.A return-to-work order waslikewise issued. Ina certification election,TEUwascertifiedasthesoleandexclusivecollectivebargainingagentinTimes.Consequently, TEUs president wrote the management of Times and requested for collectivebargaining.Timesrefused.TEU filed aNotice ofStrike.Another conciliation/mediation proceeding was conductedfor the purposeof settling thebrewing dispute.Times management implemented a retrenchment program and notices of retrenchment were sent to some of its employees. TEU held a strike vote on grounds of unfair labor practice on the part of Times.Foralleged participation in an illegal strike, Times terminated all the 123 striking employees. The DOLE Secretary issued the second return-to-work order certifying the dispute to the NLRC. While the strike was ended, the employees were no longer admitted back to work. Mencorp Transport Systems, Inc. (Mencorp) had acquired ownership over Times Certificates of Public Convenience and a number of its busunits byvirtue ofseveral deeds of sale.[Mencorp is controlled and operated by Mrs.Virginia Mendoza, daughter ofSantiago Rondaris, themajority stockholder ofTimes.Meanwhile,the NLRCrendered adecision declaringthe firststrike LEGAL and the second ILLEGAL. Times and TEU both appealed the decision of the NLRC, which CA affirmed. Upon denial of its motion for reconsideration, Times filed a petition forreview on certiorari. After the closure of Times, the retrenched employees filed cases for illegaldismissal,moneyclaimsandunfairlaborpracticesagainstTimesbeforetheRegionalArbitration Branch in San Fernando City, La Union.The employees withdrew their complaints with leave of court and filed a new set of cases before the National Capital Region Arbitration Branch, impleading Mencorp and the Spouses Mendoza.Times sought the dismissal of these cases on the ground of litis pendencia and forum shopping. The Labor Arbiter ruled thatthe dismissals of complainants Times, effected, participated in, authorized or ratified by Santiago Rondaris constituted the prohibited act of unfair labor practice and hence, illegal and that the sale of said respondent company to respondents Mencorp Transport Systems Company (sic),Inc. and/or Virginia Mendoza and Reynaldo Mendoza was simulated and/or effected in bad faith. Times, Mencorp and the Spouses Mendoza submitted their respective memorandum ofappeal to the NLRC. NLRC rendered its decision remanding the records of the consolidated cases to the Arbitration Branch of origin for disposition and for the conduct of appropriate proceedings. NLRC denied the Motion for Reconsideration. Thus, the employees appealed to the CA by way of a petition for certiorari, which granted the petition and set aside the decision ofthe N LRC. Times, Mencorp and the Spouses Mendoza filed Motions for Reconsideration, which were denied. Hence, this petition for review oncertiorari.

Issue:Whether or not the honourable court erred in applying the doctrine of piercing the veil of corporate fiction

Held:No, On the propriety of the piercing of the corporate veil, Times claims that "to drag Mencorp, [Spouses] Mendoza and Rondaris into the picture on the purported ground that a fictitious sale of Times assets in their favor was consummated with the end in view of frustrating the ends of justice and for purposes of evading compliance with the judgment is the height of judicial arrogance."The Court of Appeals believes otherwise and reckons that Times and Mencorp failed to adduce evidence to refute allegations of collusion between them.We have held that piercing the corporate veil is warranted only in cases when the separate legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, such that in the case of two corporations, the law will regard the corporations as merged into one.It may be allowed only if the following elements concur: (1) controlnot mere stock control, but complete dominationnot only of finances, but of policy and business practice in respect to the transaction attacked; (2) such control must have been used to commit a fraud or a wrong to perpetuate the violation of a statutory or other positive legal duty, or a dishonest and an unjust act in contravention of a legal right; and (3) the said control and breach of duty must have proximately caused the injury or unjust loss complained of.

WILLIAM C. YAO, SR., LUISA C. YAO, RICHARD C. YAO, WILLIAM C. YAO, JR., and ROGER C. YAO vs. THE PEOPLE OF THE PHILIPPINES, PETRON CORPORATION, and PILIPINAS SHELL PETROLEUM CORP. and its Principal, SHELL INT'L PETROLEUM CO. LTD (G.R. No. 168306. June 19, 2007)

Facts:Petitioners are incorporators and officers of MASAGANA GAS CORPORATION (MASAGANA), an entity engaged in the refilling, sale and distribution of LPG products. Private respondents Petron Corporation (Petron) and Pilipinas Shell Petroleum Corporation (Pilipinas Shell) are two of the largest bulk suppliers and producers of LPG in the Philippines. Such products are sold under the marks "GASUL" and "SHELLANE," respectively. Such private respondents are the sole entity in the Philippines authorized to allow refillers and distributors to refill, use, sell, and distribute GASUL and SHELLANE LPG containers, products and its trademarks. On April 3, 2003, the NBI filed two applications for search warrant with the RTC Cavite City for the petitioners violation of Section 155, in relation to Section 170 of Republic Act No. 8293, otherwise known as "The Intellectual Property Code of the Philippines."Such information alleged that petitioners are actually producing, selling, offering for sale and/or distributing LPG products using steel cylinders owned by, and bearing the tradenames, trademarks, and devices of Petron and Pilipinas Shell, without authority and in violation of the rights of the said entities. The search warrants were issued by the court but the petitioners filed a Motion to Quash and then later on, MASAGANA, as a third party complainant, filed Motion for the Return of Motor Compressor and LPG Refilling Machine. MASAGANA claimed that such items were used in the operation of its legitimate business; and that their seizure will jeopardize its business interests. RTC denied such motions hence recourse made to the CA.

Issue/s: Whether or not the Honorable Court Of Appeals erred in ruling that the complaint is directed against MASAGANA, acting through its officers And directors, hence MASAGANA may not be considered as Third Party Claimant whose rights were violated as a result of the seizure

Held:No.It is an elementary and fundamental principle of corporation law that a corporation is an entity separate and distinct from its stockholders, directors or officers. However, when the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons; or, in the case of two corporations, merge them into one.In other words, the law will not recognize the separate corporate existence if the corporation is being used pursuant to the foregoing unlawful objectives. This non-recognition is sometimes referred to as the doctrine of piercing the veil of corporate entity or disregarding the fiction of corporate entity. Where the separate corporate entity is disregarded, the corporation will be treated merely as an association of persons and the stockholders or members will be considered as the corporation, that is, liability will attach personally or directly to the officers and stockholders. The SC found that the petitioners, as directors/officers of MASAGANA, are utilizing the latter in violating the intellectual property rights of Petron and Pilipinas Shell. Thus, petitioners collectively and MASAGANA should be considered as one and the same person for liability purposes. Consequently, MASAGANA's third party claim serves no refuge for petitioners.Even if we were to sustain the separate personality of MASAGANA from that of the petitioners, the effect will be the same. The law does not require that the property to be seized should be owned by the person against whom the search warrants is directed. Ownership, therefore, is of no consequence, and it is sufficient that the person against whom the warrant is directed has control or possession of the property sought to be seized.Hence, even if, as petitioners claimed, the properties seized belong to MASAGANA as a separate entity, their seizure pursuant to the search warrants is still valid.Further, it is apparent that the motor compressor, LPG refilling machine and the GASUL and SHELL LPG cylinders seized were thecorpus delicti, the body or substance of the crime, or the evidence of the commission of trademark infringement. These were the very instruments used or intended to be used by the petitioners in trademark infringement. It is possible that, if returned to MASAGANA, these items will be used again in violating the intellectual property rights of Petron and Pilipinas Shell. Thus, the RTC was justified in denying the petitioners' motion for their return so as to prevent the petitioners and/or MASAGANA from using them again in trademark infringement.Petitioners' reliance on Section 20 of A.M. No. 02-1-06-SC,is not tenable. As correctly observed by the Solicitor General, A.M. 02-1-06-SC is not applicable in the present case because it governs only searches and seizures in civil actions for infringement of intellectual property rights.The offense complained of herein is for criminal violation of Section 155 in relation to Section 170of Republic Act No. 8293

Seventh Day Adventist vs. Northeastern Mindanao Mission July 21 2006 G.R. No. 150416Facts: On April 21, 1959, the spouses Cosio donated a parcel of land to the South Philippine Union Mission of the Seventh Day Adventist Church of Bayugan Esperanza, Agusan (SPUM-SDA Bayugan). The donation was allegedly accepted by one Liberato Rayos, an elder of the Seventh Adventist Church, on behalf of the donee.Twenty-one years later, however, on February 28, 1980, the same parcel of land was sold by the spouses Cosio to the Seventh Day Adventist Church of Northeastern Mindanao Mission (SDA-NEMM).TCT No. 4468 was thereafter issued in the name of SDA-NEMM.Claiming to be the alleged donee's successors-in-interest, petitioners asserted ownership over the property. This was opposed by respondents who argued that at the time of the donation, SPUM-SDA Bayugan could not legally be a donee because, not having been incorporated yet, it had no juridical personality. Neither were petitioners members of the local church then, hence, the donation could not have been made particularly to them.On September 28, 1987, petitioners filed a case, docketed as Civil Case No. 63 (a suit for cancellation of title, quieting of ownership and possession, declaratory relief and reconveyance with prayer for preliminary injunction and damages), in the RTC of Bayugan, Agusan del Sur. After trial, the trial court rendered a decision on November 20, 1992 upholding the sale in favor of respondents.On appeal, the CA affirmed the RTC decision but deleted the award of moral damages and attorney's fees. Petitioners' motion for reconsideration was likewise denied. Thus, this petition.Issue: Whether or not SDA-NEMM's ownership of the lot covered by TCT No. 4468 should be upheldHeld: The alleged donation to the petitioners was declared void. The deed of donation was not in favor of any informal group of SDA members but a supposed SPUM-SDA Bayugan (the local church) which, at the time, had neither juridical personality nor capacity to accept such gift.Declaring themselves a de facto corporation, petitioners allege that they should benefit from the donation.But there are stringent requirements before one can qualify as a de facto corporation:(a)the existence of a valid law under which it may be incorporated;(b)an attempt in good faith to incorporate; and(c)assumption of corporate powers. While there existed the old Corporation Law (Act 1459), a law under which SPUM-SDA Bayugan could have been organized, there is no proof that there was an attempt to incorporate at that time. The filing of articles of incorporation and the issuance of the certificate of incorporation are essential for the existence of a de facto corporation. We have held that an organization not registered with the Securities and Exchange Commission (SEC) cannot be considered a corporation in any concept, not even as a corporation de facto. Petitioners themselves admitted that at the time of the donation, they were not registered with the SEC, nor did they even attempt to organize to comply with legal requirements.

Hall vs PiccioJune 29, 1950

Facts:In May of 1947 petitioners Arnold and Bradley Hall and respondents Brown, Chapman and Abella signed and acknowledged the articles of incorporation of the Far Eastern Lumber. An affidavit of the treasurer, stating that 23,428 shares of stock had been subscribed and fully paid was attached.Thereafter, the corporation proceeded to do business, adopting its by-laws and electing its officers. It was only in December of 1947 that the said articles of incorporations were filed with the Securities and Exchange Commission. Pending the approval of SEC, the respondents filed a case against the petitioners with the CFI. They alleged that Far Eastern Lumber is unregistered, and that they wished to dissolve it due fraud and mismanagement by the managers. Judge Piccio ordered the dissolution of the company. A petition was made to set aside the proceedings and to enjoin the respondent judge on action upon the same.

Issue:Whether the court has the jurisdiction to declare the dissolution of the de facto company under Sec. 19 of the Corporation Law.

Held:Sec. 19 of the Corporation Law does not apply. Not having obtained the certificate of incorporation which calls a corporation into being, the company, even its stockholders- may not probably claim in good faith to be a corporation.The community of collateral attack is granted to corporations claiming in good faith. Furthermore, the case is a NOT a suit in which the corporation is a party. It is a litigation between stockholders of the alleged corporation for the purpose of obtaining its dissolution.The petition is denied. The petitioners have the remedy of appeal at the proper time.

LIM TONG LIM vs.PHILIPPINE FISHING GEAR INDUSTRIES, INC.,Ponente: P ANGANIBAN,J.:

Facts:On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and Peter Yao entered into a Contract dated February 7,1990, for the purchase of fishing nets of various sizes from the Philippine Fishing Gear Industries, Inc. (PFGI).They claimed that they were engaged in a business venture with Petitioner Lim Tong Lim, who however was not a signatory to the agreement. The total price of the nets amounted to P532,045. Four hundred pieces of floats worth P68,000 were also sold to the Corporation.The buyers, however, failed to pay for the fishing nets and the floats; hence, private respondents filed a collection suit against Chua, Yao and Petitioner Lim Tong Lim with a prayer for a writ of preliminary attachment. The suit was brought against the three in their capacities as general partners, on the allegation that "Ocean Quest Fishing Corporation" was a nonexistent corporation as shown by a Certification from the Securities and Exchange Commission.On September 20,1990, the lower court issued a Writ of Preliminary Attachment, which the sheriff enforced by attaching the fishing nets onboard F/B Lourdes which was then docked at the Fisheries Port, Navotas, Metro Manila. Instead of answering the complaint, Chua filed a Manifestation admitting his liability and requesting a reasonable time within which to pay. He also turned over to respondent some of the nets which were in his possession. Peter Yao filed an Answer, after which he was deemed to have waived his right to cross-examine witnesses and to present evidence on his behalf, because of his failure to appear in subsequent hearings. Lim Tong Lim, on the other hand, filed an Answer with Counterclaim and Crossclaim and moved for the lifting of the Writ of Attachment.The trial court maintained the Writ, and upon motion of private respondent, ordered the sale of the fishing nets at a public auction. Philippine Fishing Gear Industries won the bidding and deposited with the said court the sales proceeds of P900,000.On November 18, 1992, the trial court rendered its Decision, ruling that Philippine Fishing Gear Industries was entitled to the Writ of Attachment and that Chua, Yao and Lim, as general partners, were jointly liable to pay respondent. The trial court ruled that a partnership among Lim, Chua and Yao existed based on (1) the testimonies of the witnesses presented and (2) on a Compromise Agreement executed by the three. In affirming the trial court, the CA held that petitioner was a partner of Chua and Yao in a fishing business and may thus be held liable as as such for the fishing nets and floats purchased by and for the use of the partnership.

Issue:Whether or not by their acts, Lim, Chua and Yao could be deemed to have entered into a partnership.

Held:Chua, Yao and Lim had decided to engage in a fishing business, which they started by buying boats, financed by a loan secured from Jesus Lim who was Lim Tong Lims brother. In their Compromise Agreement, they subsequently revealed their intention to pay the loan with the proceeds of the sale of the boats and to divide equally among them the excess or loss. This condition fell under the term common fund under Article 1767. The partnership extended not only to the purchase of the boats but also to the nets and the floats. The fishing nets and floats, both essential to fishing, were obviously acquired for the business. It would have been inconceivable fro Lim to involve himself in buying the boat but not in the purchase of the equipment, without which the business could not have proceeded. The sale of the boats, as well as division amongst the three of the balance remaining after the payment of the loans, proves that F/B Lourdes, though registered in his name, is an asset of the partnership. It is absurd for petitioner to to sell his property to pay the debt he did not incur, if the relationship amongst the three of them was merely that of a lessor-lessee, instead of partners.As to Lims argument that under the doctrine of corporation estoppel, liability can be imputed only to Chua and Yao, and not to him; Sec 21 if the Corporation Code provides that All persons who assumes to act as a corporation knowing it to be without authority to do shall be liable as general partners for all debts, liabilities and damages incurred or arising as a result thereof; Provided however, that when such ostensible corporation is sued on any transaction entered by it as a corporation or on nay tort committed by it as such, it shall not be allowed to use as a defense its lack of corporate personality. One who assumes an obligation to an ostensible corporation as such, cannot resist performance thereof on the ground that there was in fact no corporation. Thus, even if the ostensible corporation entity is proven to be legally nonexistent, a party may be estopped from denying its corporate existent. There is no dispute that PFGI is entitled to be paid for the nets it sold. The only question is whether Lim should be held jointly liable with Chua and Yao. Lim contests such liability, insisting that only those who dealt in the name of the ostensible corporation should be held liable. Although technically it is true that Lim did not directly act on behalf of the corporation; however having reaped the benefits of the contract entered into by persons with whom he previously had an existing relationship, he is deemed to be part of said association and is covered by the scope of the doctrine of corporation by estoppel.

INTERNATIONAL EXPRESS TRAVEL & TOUR SERVICES, INC.,petitioner,vs.HON. COURT OF APPEALS, HENRI KAHN, PHILIPPINE FOOTBALL FEDERATION,respondents.G.R. No. 119002 October 19, 2000

Facts:On 30 June 1989, the International Express Travel and Tour Services, Inc. (IETTSI), through its managing director, wrote a letter tothe Philippine Football Federation (Federation), through its president, Henri Kahn, wherein the former offered its services as a travel agency to thelatter. The offer was accepted. IETTSI secured the airline tickets for the trips of the athletes and officials of the Federation to theSouth East Asian Games in Kuala Lumpur as well as various other trips to thePeople's Republic of China and Brisbane. The total cost of the tickets amounted to P449,654.83. For the tickets received, the Federation made two partial payments, both in September of 1989, in the total amount of P176,467.50. On 4October 1989, IETTSI wrote the Federation, through Kahn a demand letter requesting for the amount of P265,894.33. On 30 October 1989,the Federation, through the Project Gintong Alay, paid the amount of P31,603.00. On 27 December 1989,Henri Kahn issued a personal check in theamount of P50,000 as partial payment for the outstanding balance of the Federation. Thereafter, no further paymentswere made despite repeated demands.This prompted IETTSI to file a civil case before the Regional Trial Court of Manila. IETTSI sued Henri Kahn in hispersonal capacity and as President of the Federation and impleaded the Federation asan alternative defendant. IETTSI sought to hold Henri Kahn liable for the unpaid balance for thetickets purchased by the Federation on the ground that Henri Kahn allegedly guaranteed the said obligation. Kahn filed his answer with counterclaim, while the Federation failed to file its answer and was declared in default by thetrial court. In due course, the trial court rendered judgment and ruled in favor of IETTSI and declared Henri Kahn personally liable for the unpaid obligation of the Federation. Thecomplaint of IETTSI against the Philippine Football Federationand the counterclaims of Henri Kahn were dismissed, with costs against Kahn. Only Henri Kahn elevated the decision to the Court of Appeals. On 21 December 1994, theappellate court rendered a decision reversing the trial court. IETTSI filed a motion for reconsideration and as an alternative prayer pleaded that the Federation beheld liable for the unpaid obligation. The same was denied bythe appellate court in its resolution of 8 February1995. IETTSI filed the petition withthe Supreme Court.

Issue [1]:Whether the Philippine Football Federation has a corporate existence of its own.Held [1]:Both RA 3135 (the Revised Charter of the Philippine Amateur Athletic Federation) and PD 604recognized the juridical existence of national sports associations. This may be gleaned from the powers and functions granted to these associations (See Section 14 of RA 3135 andSection 8 of PD 604). The powers and functions granted to national sportsassociations indicate that these entities mayacquire a juridical personality. The power to purchase, sell, lease and encumber property are acts which mayonly be done by persons, whether natural or artificial, with juridical capacity. However, while national sports associations may be accorded corporate status, such does not automatically take place by the mere passageof these laws. It is a basic postulate that before a corporation may acquire juridical personality, the State must give its consent either in the form of a special law or ageneral enabling act. The Philippine Football Federation did not come into existence upon the passage of these laws.Nowhere can it be found in RA 3135or PD 604 any provision creating the Philippine Football Federation. These lawsmerely recognized the existence ofnational sports associations and provided the manner by which these entities may acquire juridical personality.

Issue [2]:Whether Kahn should be made personally liable for the unpaid obligations of the Philippine Football Federation.

Held [2]:Henry Kahn should be held liable for the unpaid obligations of theunincorporated Philippine Football Federation. It is a settled principal in corporation law that any person acting or purporting to act onbehalf of a corporation which has no valid existence assumes such privileges and becomespersonally liable for contract entered into or for other acts performed as such agent. As president of theFederation, Henri Kahn is presumed to have known about the corporate existence or non-existence of theFederation. Issue [3]: Whether the appellate court properly applied the doctrine of corporation by estoppel. Held [3]: The Court cannot subscribe to the position taken bythe appellate court that even assuming that the Federation was defectively incorporated, IETTSI cannot denythe corporate existence of theFederation because it had contracted and dealt with the Federation in sucha manner as to recognize andin effect admit its existence. The doctrine of corporation by estoppel is mistakenly applied by the appellate court toIETTSI. The application of the doctrine applies to a third party only whenhe tries to escape liabilities on a contract from which he has benefited on the irrelevant ground of defective incorporation. Herein, IETTSI is not trying to escape liability from the contract but rather is the one claiming from the contract.

LYCEUM OF THE PHILIPPINES, INC vs. COURT OF APPEALS, LYCEUM OF APARRI, LYCEUM OF CABAGAN, LYCEUM OF CAMALANIUGAN, INC., LYCEUM OF LALLO, INC., LYCEUM OF TUAO, INC., BUHI LYCEUM, CENTRAL LYCEUM OF CATANDUANES, LYCEUM OF SOUTHERN PHILIPPINES, LYCEUM OF EASTERN MINDANAO, INC. and WESTERN PANGASINAN LYCEUM, INC (G.R. No. 101897. March 5, 1993)

Facts:Petitioner is an educational institution duly registered with the Securities and Exchange Commission and it has used its corporate name, Lyceum of the Philippines, from 21 September 1950. On 1984, petitioner instituted proceedings before the SEC to compel the private respondents, which are also educational institutions, to delete the word "Lyceum" from their corporate names and permanently to enjoin them from using "Lyceum" as part of their respective names. In an Order dated 20 April 1977, Associate Commissioner Julio Sulit held that the corporate name of petitioner and that of the Lyceum of Baguio, Inc. were substantially identical because of the presence of a "dominant" word, i.e., "Lyceum," the name of the geographical location of the campus being the only word which distinguished one from the other corporate name. The SEC also ordered the respondents to change its name to another name "not similar or identical [with]" the names of previously registered entities. Such decision was assailed but the court denied the petition for review. Armed with the decision in their favour, petitioner then wrote all the educational institutions it could find using the word "Lyceum" as part of their corporate name, and advised them to discontinue such use of "Lyceum." Such move failed hence, petitioner instituted a case before the SEC to enforce what petitioner claims as its proprietary right to the word "Lyceum." The SEC hearing officer sustained petitioner's claim relying upon the SEC ruling in the Lyceum of Baguio, Inc. case. However, on appeal, the decision of the hearing officer was reversed and set aside. The SECEn Bancdid not consider the word "Lyceum" to have become so identified with petitioner as to render use thereof by other institutions as productive of confusion about the identity of the schools concerned in the mind of the general public. It found that the attaching of geographical names to the word "Lyceum" served sufficiently to distinguish the schools from one another, especially in view of the fact that the campuses of petitioner and those of the private respondents were physically quite remote from each other. The petitioner appealed to the CA, but the latter affirmed the decision of SEC En Banc. Also, the petition for reconsideration was without success.

Issue/s: Whether or not the use by the Lyceum of the Philippines of Lyceum in its corporate name has been for such length and time and with such exclusivity as to have become associated or identified with the petitioner institution in the mind of the general public (or at least that portion of the general public which has to do with schools).

Held: No. The SC affirmed the CA.The doctrine of secondary meaning originated in the field of trademark law. Its application has, however, been extended to corporate names since the right to use a corporate name to the exclusion of others is based upon the same principle which underlies the right to use a particular trademark or tradename. The doctrine provides that: " . . . a word or phrase originally incapable of exclusive appropriation with reference to an article on the market, because geographically or otherwise descriptive, might nevertheless have beenused so long and so exclusively by one producerwith reference to his article that, in that trade and to that branch of the purchasing public, the word or phrase has come to mean that the article was his product."This circumstance has been referred to as the distinctiveness into which the name or phrase has evolved through the substantial and exclusive use of the same for a considerable period of time. Consequently, the same doctrine or principle cannot be made to apply where the evidence did not prove that the business (of the plaintiff) has continued for so long a time that it has become of consequence and acquired a good will of considerable value such that its articles and produce have acquired a well-known reputation, and confusion will result by the use of the disputed name (by the defendant). SC noted that the number alone of the private respondents in the case at bar suggests strongly that petitioner's use of the word "Lyceum" has not been attended with the exclusivity essential for applicability of the doctrine of secondary meaning. It may be noted also that at least one of the private respondents, i.e., the Western Pangasinan Lyceum, Inc., used the term "Lyceum" seventeen (17) years before the petitioner registered its own corporate name with the SEC and began using the word "Lyceum."

Therefore, SC held that petitioner institution is not entitled to a legally enforceable exclusive right to use the word "Lyceum" in its corporate name and that other institutions may use "Lyceum" as part of their corporate names. To determine whether a given corporate name is "identical" or "confusingly or deceptively similar" with another entity's corporate name, it is not enough to ascertain the presence of "Lyceum" or "Liceo" in both names. One must evaluate corporate names in their entirety and when the name of petitioner is juxtaposed with the names of private respondents, they are not reasonably regarded as "identical" or "confusingly or deceptively similar" with each other.

Ang Mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus vs Iglesia ng Dios Kay Kristo JesusDecember 12, 2001

Facts:Respondent Iglesia ng Dios kay Cristo Jesus, Haligi and Saligan Katotohohanan is a non-stock religious society registered in 1936. In 1979, Soriano and other members of the respondent corporation disassociated and formed a new non-stock religious corporation with the same name. Respondent filed petition with the SEC which rendered judgment in their favor. Soriano, et al., registered Ang Mga Kaanib sa Iglesia ng Dios kay Kristo Hesus, HSK (Haligi at Saligan ng Katotohanan), sa Bansang Pilipinas. Thereafter, respondent filed, again, a petition with the SEC to compel the petitioner to change its corporate name and be barred from using the same or similar name on the ground that it creates confusion among its members and the public. SEC decided in favor of the petitioner. After the SEC en banc affirmed the decision, the petitioner filed a petition for review with the CA. The CA affirmed the decision.

Issue:Whether the CA correctly applied the rule on Corporation Name under Sec. 18 of the Corporation Code, mandating the Petitioner to change its corporation name.

Held: The petition is denied. SEC has the authority to de-register corporate names which in its estimation are likely to spawn confusion. The Petitioners claim that it complied with SEC guideline by adding not only 2 different words, but 8, to their nameAng mga kaanib and Sa bansang Pilipinas Inc., does not suffice. The additional words are merely descriptive, referring to members who are residing in the Philippines.Still, the petitioners corporate name holds the dominant words: Iglesia ng Dios kay Kristo Jesus, Haligi at Saligan ng Katotohanan. The name is strikingly similar to respondents corporate name that even under the test of reasonable care and observation confusion may arise.

Young Auto Supply vs. CAG.R. No. 104175Facts: Young Auto Supply Co. Inc. (YASCO) represented by Nemesio Garcia, its president, Nelson Garcia and Vicente Sy, sold all of their shares of stock in Consolidated Marketing & Development Corporation (CMDC) to Roxas. Immediately after the execution of the agreement, Roxas took full control of the four markets of CMDC. However, the vendors held on to the stock certificates of CMDC as security pending full payment of the balance of the purchase price.The first check of P4,000,000.00, representing the down payment, was honored by the drawee bank but the four other checks representing the balance of P4,000,000.00 were dishonored. In the meantime, Roxas sold one of the markets to a third party. Out of the proceeds of the sale, YASCO received P600,000.00, leaving a balance of P3,400,000.00 (Subsequently, Nelson Garcia and Vicente Sy assigned all their rights and title to the proceeds of the sale of the CMDC shares to Nemesio Garcia.On June 10, 1988, petitioners filed a complaint against Roxas in the Regional Trial Court, Branch 11, Cebu City, praying that Roxas be ordered to pay petitioners the sum of P3,400,000.00 or that full control of the three markets be turned over to YASCO and Garcia. The complaint also prayed for the forfeiture of the partial payment of P4,600,000.00 and the payment of attorney's fees and costs Roxas filed a motion to dismiss on the grounds that:"1.The complaint did not state a cause of action due to non-joinder of indispensable parties;2.The claim or demand set forth in the complaint had been waived, abandoned or otherwise extinguished; and3.The venue was improperly laid" The trial court in an Order dated February 8, 1991 denied Roxas' motion to dismiss. After receiving said order, Roxas filed another motion for extension of time to submit his answer. He also filed a motion for reconsideration, which the trial court denied in its Order dated April 10, 1991 for being pro-forma. Roxas was again declared in default, on the ground that his motion for reconsideration did not toll the running of the period to file his answer.On May 3, 1991, Roxas filed an unverified Motion to Lift the Order of Default which was not accompanied with the required affidavit of merit. But without waiting for the resolution of the motion, he filed a petition for certiorari with the CAThe CA sustained the findings of the trial court with regard to the first two grounds raised in the motion to dismiss but ordered the dismissal of the complaint on the ground of improper venue Issue: WON Venue was improperly laidHeld: The petition is meritorious.In holding that the venue was improperly laid in Cebu City, the CA relied on the address of YASCO, as appearing in the Deed of Sale dated October 28, 1987, which is "No. 1708 Dominga Street, Pasay City." This was the same address written on YASCO's letters and several commercial documents in the possession of Roxas In the case of Garcia, the CA said that he gave Pasay City as his address in three letters which he sent to Roxas' brothers and sisters. The appellate court held that Roxas was led by petitioners to believe that their residence is in Pasay City and that he had relied upon those representations The CA erred in holding that the venue was improperly laid in Cebu City.In the Regional Trial Courts, all personal actions are commenced and tried in the province or city where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff There are two plaintiffs in the case at bench: a natural person and a domestic corporation. Both plaintiffs aver in their complaint that they are residents of Cebu City.

Republic Planters Bank vs. AganaFacts:Private respondent Robes Francisco Realty & Devt Corp. secured a loan from petitioner in the amount of P120,000. As part of the proceeds of the loan, preferred shares of stocks were issued to private respondents corporation. In other words, instead of giving the legal tender totaling to the full amount of the loan which is P120,000.00, petitioner lent such amount partially in the form of stock certificates numbered 3204 and 3205, each for 400 shares with a par value of P10.00 per share, or for P4,000 each, for a total of P8,000.00. Said stock certificates were in the name of private respondent Adalia Robes and Carlos Robes, who, however, subsequently endorsed his shares in favor of Adalia Robes. Said certificates of stock bear the following terms and conditions:1. The right to receive a quarterly dividend of 1%, cumulative and participating.2. That such preferred shares may be redeemed, by the system of drawing lots, at any time after 2 years from the date of issue at the option of the Corporation.Private respondents proceeded against petitioner and filed a complaint anchored on private respondents alleged rights to collect dividends under the preferred shares in question and to have petitioner redeem the same under the terms and conditions of the stock certificates.The trial court ordered the petitioner to pay private respondents the face value of the stock certificates as redemption price, plus 1% quarterly interest. Hence this petition.

Issue: Whether or not respondents have the right to collect dividends and whether they can compel petitioner to redeem the preferred shares.

Held:1. A preferred share of stock is one which entitles the holder thereof to certain preferences over the holders of common stock. The preferences are designed to induce persons to subscribe for shares of a corporation. Preferred shares take a multiplicity of forms. The most common forms may be classified into two: (1) preferred shares as to assets; and (2) preferred as to dividends. The former is a share which gives the holder thereof the preference in the distribution of the assets of the corporation in case of liquidation; the latter is a share the holder of which is entitled to receive dividends on said share to the extent agreed upon before any dividends at all are paid to the holders of common stock. There is no guarantee, however, that the share will receive any dividends.2. Preferences granted to preferred stockholders do not give them a lien upon the property of the corporation nor make them creditors of the corporation, the right of the former being always subordinate to the latter. Shareholders, both common and preferred are considered risk takers who invest capital in the business arid who can look only to what is left after corporate debts and liabilities are fully paid.3. Redeemable shares are shares usually preferred, which by their terms are redeemable at a fixed date, or at the option of either issuing corporation, or the stockholder, or both at certain redemption price; redemption may not be made where the corporation is insolvent or if such redemption will cause insolvency or inability of the corporation to meet its debts as they mature.4. While the stock certificates in the case at bar does allow redemption, the option to do so was clearly vested in the petitioner bank. The redemption is therefore optional.5. The redemption of said shares cannot be allowed. The Central Bank made a finding that said petitioner has been suffering from chronic reserve deficiency, and that such finding resulted in the directive prohibiting the petitioner bank from redeeming any preferred share, on the ground that said redemption would reduce the assets of the Bank to the prejudice of its depositors and creditors. Redemption of preferred shares was prohibited for a just and valid reason.6. Interest bearing stocks, on which the corporation agrees absolutely to pay interest before dividends are paid to common stockholders, is legal only when construed as requiring payment of interest as dividends from net earnings or surplus only.

CECILIA CASTILLO, ET. AL vs. ANGELES BALINGHASAY, ET. AL (G.R. No. 150976. October 18, 2004.)Facts:Petitioners and the respondents are stockholders of Medical Center Paraaque, Inc. (MCPI), with the former holding Class "B" shares and the latter owning Class "A" shares. MCPI is a domestic corporation organized sometime in September 1977. At the time of its incorporation, Act No. 1459, the old Corporation Law was still in force and effect. Article VII of MCPI's original Articles of Incorporation, as approved by the SEC provides that authorized capital stock of the corporation is 2M PESOS, Philippine Currency, divided into 2K SHARES at a par value of P100 each share, whereby the 1K SHARES issued to, and subscribed by, the incorporating stockholders shall be classified as Class A shares while the other 1K unissued shares shall be considered as Class B shares.Only holders of Class A shares can have the right to vote and the right to be elected as directors or as corporate officers. There were two amendments regarding the voting rights after that. First, in 1981 which provides: Only holders of Class A shares have the right to vote and the right to be elected as directors or as corporate officers. Second was in 1992, which states: Except when otherwise provided by law,only holders of Class "A" shares have the right to vote and the right to be elected as directors or as corporate officers. In 2001, shareholders of MCPI held their annual stockholders' meeting and election for directors, in which respondent Jimenez declared that no Class "B" shareholder was qualified to run or be voted upon as a director and the candidates holding Class "A" shares were the winners of all seats in the corporate board. A complaint for injunction was filed by the petitioners on the grounds that they were (1) deprived of their right to vote and to be voted on as directors at the annual stockholders' meeting because respondents had erroneously relied on Article VII of the Articles of Incorporation of MCPI, despite Article VII being contrary to the Corporation Code. Also, respondents were in estoppel, because in the past, petitioners were allowed to vote and to be elected as members of the board. They further claimed that the privilege granted to the Class "A" shareholders was more in the nature of a right granted to founder's shares. The respondents however claimed that the exclusivity of the right granted to Class "A" holders cannot be defeated or impaired by any subsequent legislative enactment,e.g. the New Corporation Code, as the Articles of Incorporation is an intra-corporate contract between the corporation and its members; between the corporation and its stockholders; and among the stockholders. RTC found merit in the arguments of the respondents and ruled that corporations had the power to classify their shares of stocks, such as "voting and non-voting" shares, conformably with Section 6 of the Corporation Code. Moreover, it brushed aside the "founder's shares" theory of the petitioners for lack of factual basis. Thus, petitioners recourse to the SC pointing out that Section 6 prohibits the deprivation of voting rights except as to preferred and redeemable shares only. Hence, under the present law on corporations, all shareholders, regardless of classification, other than holders of preferred or redeemable shares, are entitled to vote and to be elected as corporate directors or officers. Since the Class "B" shareholders are not classified as holders of either preferred or redeemable shares, then it necessarily follows that they are entitled to vote and to be voted for as directors or officers..

Issue/s: Whether or not holders of Class "B" shares of the MCPI may be deprived of the right to vote and be voted for as directors in MCPI.Held: There should be no deprivation of Class Bs voting rights. When Article VII of the Articles of Incorporation of MCPI was amended in 1992, the phrase "except when otherwise provided by law" was inserted in the provision governing the grant of voting powers to Class "A" shareholders. This particular amendment is relevant for it speaks of a law providing for exceptions to the exclusive grant of voting rights to Class "A" stockholders. Which law was the amendment referring to? The determination of which law to apply is necessary. There are two laws being cited and relied upon by the parties in this case. In this instance, the law in force at the time of the 1992 amendment was the Corporation Code (B.P. Blg. 68), not the Corporation Law (Act No. 1459), which had been repealed by then. Hence, the law referred to in the amendment to Article VII refers to the Corporation Code and no other law. At the time of the incorporation of MCPI in 1977, the right of a corporation to classify its shares of stock was sanctioned by Section 5 of Act No. 1459. The law repealing Act No. 1459, B.P. Blg. 68, retained the same grant of right of classification of stock shares to corporations, but with a significant change. Under Section 6 of B.P. Blg. 68, the requirements and restrictions on voting rights were explicitly provided for, such that "no share may be deprived of voting rights except those classified and issued as "preferred" or "redeemable" shares, unless otherwise provided in this Code"and that"there shall always be a class or series of shares which have complete voting rights." Section 6 of the Corporation Code being deemed written into Article VII of the Articles of Incorporation of MCPI, it necessarily follows that unless Class "B" shares of MCPI stocks are clearly categorized to be "preferred" or "redeemable" shares, the holders of said Class "B" shares may not be deprived of their voting rights. Note that there is nothing in the Articles of Incorporation nor an iota of evidence on record to show that Class "B" shares were categorized as either "preferred" or "redeemable" shares. The only possible conclusion is that Class "B" shares fall under neither category and thus, under the law, are allowed to exercise voting rights. One of the rights of a stockholder is the right to participate in the control and management of the corporation that is exercised through his vote. The right to vote is a right inherent in and incidental to the ownership of corporate stock, and as such is a property right. The stockholder cannot be deprived of the right to vote his stock nor may the right be essentially impaired, either by the legislature or by the corporation