BUS ORG 2 CASE ASSIGNMENT

D. Corporate Juridical Personality

e. Test in Determining Applicability

REPORTER
SUBSTITUTE

HEIRS OF RAMON
DURANO, SR. VS. UY, BAYHON PANGILINAN
344 SCRA 238 (2000)

PNB VS. RITRATTO

GROUP, INC., 362 SCRA 216 FORRO FORTUNA
(2001)

f. Application
a. Fraud Piercing Cases
 When it is proven that the corporate officers has used the corporate fiction to
defraud a third party, or that he has acted negligently, maliciously or in bad
faith, the corporate fiction may be pierced to make both the officer and the
corporation liable

Maglutac vs. NLRC, 189 SCRA 767, 1990) (INSO /ADODANG)

When one tries to evade civil liability by incorporating the properties or the
business to insulate them from judgment creditors and employing the doctrine
of limited liability

Palacio vs. Fely Transporation Co., 5 SCRA 1011, 1962 (TANJILI /

TECSON)

Inadequate capitalization as to constitute Fraud on the investing public

KUKAN INTERNATIONAL CORP. VS. REYES, 631 SCRA 596 (2010) (CAOILE /
MADULID)

Tax Fraud
b. Alter-ego Piercing Cases
 The question of whether a corporation is a mere alter ego is purely one of fact
(Concept Builders, Inc. vs. NLRC, 257 SCRA 149, 1996) (SUMUGAT /
NIRZA)

LBP VS. CA, 364 SCRA FULGERAS PABRES

375, 2001

HEIRS OF TAN UY VS. VALDERAMA RANON

INTERNATIONAL
EXCHANGE BANK, GR
NO. 166282,
FEBRURAY 13, 2013

 It is the established doctrine that control of the equity of a corporation by

one stockholder or by another corporation by itself, would not warrant
the application of the piercing doctrine

 In early alter ego cases, the fact that there was a merging of personnel,
resources, and holding of offices in the same premises, were considered
sufficient to apply the piercing doctrine to hold two (2) corporations as
one.

TAN BOON BEE & CO. PANGILINAN FORRO

VS. JARENCIO, 163
SCRA 205 (1988)

In more recent alter ego cases, however, unless there was showing that a
wrong or inequity committed by the merging of resources and interests, then
the piercing doctrine was refused application, especially when there is a
plausible business purpose for the existence of corporate fiction

DBP VS. CA, 363 SCRA 307 FORTUNA BAYHON

(2001)

E. Incorporation and Organization

1. Incorporators and Corporators (RA No. 11232, Section 10)

2. Promoters
a. Subscription Contract
b. Pre-incorporation Subscription

3. Number and Qualifications of Incorporators (RA No. 11232, Section 10)

4. Corporate Name (RA No. 11232, Section 14, 17)
a. Guidelines

PHILIPS EXPORT B.V. VS. ADODANG TANJILI

CA, 206 SCRA 457 (1992)

b. Change of Corporate Name

P.C. JAVIER & SONS, TECSON INSO

INC. VS. CA, 462 SCRA
36 (2005)

5. Corporate Term (RA No. 11232, Section 11)

6. Minimum Capital Stock and Subscription Requirements (RA No. 11232,
Section 12)

7. Articles of Incorporation (RA No. 11232, Section 13-16)

a. Nature and Function of Articles

LANUZA VS. CA, 454 SCRA MADULID VALDERAMA

54 (2005)

b. Contents
i. Purpose Clauses (RA No. 11232, Section 13.b)

GALA VS. ELLICE PABRES CAOILE

AGRO-INDUSTRIAL
CORP., 418 SCRA 431
(2003)

ii. Principal Place of Business/Residence of the Corporation (RA No. 11232,

Section 13.C)
HYATT ELEVATORS VS.
GOLDSTAR NIRZA FULGERAS
ELEVATORS, 473 SCRA
705 (2005)

c. Amendment (RA No. 11232, Section 15)

i. Procedures
ii. When Other Agency Certification Required
 Insurance Companies – Insurance Commission
 Banks, Building and Loan Association, Finance
 Companies – Bangko Sentral ng Pilipinas
 Educational Institutions – DepEd or CHED
 Public Utilities – LTFRB, CAB, NTC etc.

iii. Grounds of Rejection/Disapproval of Articles of Incorporation or Amendment

thereof (RA No. 11232, Section 16)

d. Non-Amendable Items
i. names of the incorporators,
ii. the first set of directors and subscribers,
iii. the initial treasurer,

iv. their original subscription and

v. the place and date of execution

8. Effects of Non-use of Corporate Charter and Continuous Inoperation (RA No.

11232, Section 21)

9. Registration and Issuance of Certificate of Incorporation (RA No. 11232,

Section 18)

10. Adoption of By-Laws (RA No. 11232, Section 45-47)

a. Nature and Functions of By-Laws

LOYOLA GRAND VILLAS

HOMEOWNERS VS. CA, RANON FULGERAS
276 SCRA 681 (1997)

SAN MIGUEL
CORPORATION VS. INSO VALDERAMA
MANDAUE PACKING
PRODUCTS PLANTS
UNION, 467 SCRA 107
(2005)

CHINA BANKING CORP.

VS. CA, 270 SCRA 503 ADODANG PANGILINAN
(1997)

b. Adoption of By-Laws; How adopted (RA 11232, Section 45)

c. Effectivity of By-Laws
d. Contents of By-Laws; Other matters

GRACE CHRISTIAN HIGH

SCHOOL VS. CA, 281 SCRA FORRO NIRZA
133 (1997)

THOMSON VS. CA, 298 TECSON CAOILE

SCRA 280 (1998)

SALAFRANCA VS.
PHILAMLIFE NIRZA FORTUNA
(PAMPLONA) VILLAGE
HOMEOWNERS, 300
SCRA 469 (1998)

e. Binding Effect

CHINA BANKING CORP. MADULID

VS. CA, 270 SCRA 503 (1997) FORRO

PMI COLLEGES VS. NLRC, SUMUGAT

277 SCRA 462 (1997) PABRES

f. Amendment or Revision (RA 11232, Section 47)

F. Corporate Powers

1. General Powers; Theory of General Capacity

2. Specific Powers; Theory of Specific Capacity; Express Powers of Corporations
a. Power to Extend or Shorten Corporate Term
i. Power to Temporary Cease Corporate Operations
b. Power to Increase or Decrease Capital Stock or Incur, Create, Increase
Bonded Indebtedness
c. Power to Deny Pre-Emptive Rights
d. Power to Sell or Dispose of Corporate Assets

iv. their original subscription and

v. the place and date of execution

8. Effects of Non-use of Corporate Charter and Continuous Inoperation (RA No.

11232, Section 21)

9. Registration and Issuance of Certificate of Incorporation (RA No. 11232,

Section 18)

10. Adoption of By-Laws (RA No. 11232, Section 45-47)

a. Nature and Functions of By-Laws

LOYOLA GRAND VILLAS VALDERAMA ADODANG

HOMEOWNERS VS. CA,
276 SCRA 681 (1997)

SAN MIGUEL TECSON

CORPORATION VS. BAYHON
MANDAUE PACKING
PRODUCTS PLANTS
UNION, 467 SCRA 107
(2005)

CHINA BANKING CORP. PABRES CAOILE

VS. CA, 270 SCRA 503 (1997)

b. Adoption of By-Laws; How adopted (RA 11232, Section 45)

c. Effectivity of By-Laws
d. Contents of By-Laws; Other matters
GRACE CHRISTIAN HIGH FORTUNA FORRO
SCHOOL VS. CA, 281 SCRA
133 (1997)

THOMSON VS. CA, 298

SCRA 280 (1998)
BAYHON FORTUNA

SALAFRANCA VS. FULGUERAS

PHILAMLIFE CAOILE
(PAMPLONA) VILLAGE
HOMEOWNERS, 300
SCRA 469 (1998)

e. Binding Effect

CHINA BANKING CORP. FULGERAS MADULID

VS. CA, 270 SCRA 503 (1997)

PMI COLLEGES VS. NIRZA PANGILINAN

NLRC, 277 SCRA 462
(1997)

f. Amendment or Revision (RA 11232, Section 47)

F. Corporate Powers

1. General Powers; Theory of General Capacity

REYNOSO VS. CA, 345 RANON NIRZA

SCRA 335 (2000)
2. Specific Powers; Theory of Specific Capacity; Express Powers of Corporations

a. Power to Extend or Shorten Corporate Term

 Power to Temporary Cease Corporate Operations

b. Power to Increase or Decrease Capital Stock or Incur, Create, Increase

Bonded Indebtedness

c. Power to Deny Pre-Emptive Rights

d. Power to Sell or Dispose of Corporate Assets

CALTEX (PHILS.), INC. VS.

PNOC SHIPPING, 498 SCRA SUMUGAT PANGILINAN
400 (2006)

e. Power to Acquire Own Shares

 Instances when Corporation may Buy its Own Stocks

f. Power to Invest Corporate Funds in Another Corporation or Business for Non-

Primary Purpose

g. Power to Declare Dividends

h. Power to Enter Into Management Contracts

i. Others:
1. Power to sue and be sued

UMALI VS. ASB REALTY

CORP., 625 SCRA 215 (2011) ADODANG INSO

INC. VS. CA, 352 SCRA 334 MADULID SUMUGAT

(2001)

2. Power to Sell Land

FIRME VS. BUKAL

ENTERPRISES AND DEV. PANGILINAN TANJILI
CORP., 414 SCRA 190 (2003)
AF REALTY & DEV. VS.
DIESELMAN FREIGHT FORRO TECSON
SERVICES, 373 SCRA 385
(2002)

Power to Obtain Bank Loan

CHINA BANK VS. CA, 270 INSO VALDERAMA

SCRA 503, 1997

Power to Hire Employees and Appoint Agents

YU CHUCK VS. “KONG LI TANJILI PABRES

PO”, 46 PHIL 608, 614 (1924)

Ultra Vires Acts

a. Applicability of Ultra Vires Doctrine
b. Consequences of Ultra Vires Acts

c. Court Attitude towards the Ultra Vires doctrine

ZOMER DEV. CORP. VS.

INTERNATIONAL FORTUNA VALDERAMA
EXCHANGE BANK, 581
SCRA 115 (2009)

d. Types of Ultra Vires Acts

 First type
 Second type
 Third type

e. Doctrine of Ratification

YASUMA VS. HEIRS OF FORRO TECSON

CECILIO S. DE VILLA, 499
SCRA 466 (2006)
PIROVANO VS. DELA PANGILINAN TANJILI
RAMA STEAMSHIP, 96
PHIL 335 (1954)

Doctrine of Estoppel

LIPAT VS. PACIFIC BANK VALDERAMA SUMUGAT

CORPORATION, 402 SCRA
339 (2003)

Doctrine of Apparent Authority

SOLER VS. CA, 358 SCRA BAYHON RANON

57 (2001)

WOODCHILD HOLDINGS
VS. ROXAS ELECTRIC CAOILE PANGILINAN
CONSTRUCTIONS CO., 436
SCRA 235 (2004)

PEOPLE’S AIRCARGO VS. NIRZA MADULID

CA, 297 SCRA 170 (1998)

h. How the Corporation is Bound or Not Bound by its President

KWOK VS. PHILIPPINE

CARPET RANON NIRZA
MANUFACTURING
CORPORATION, 457 SCRA
465 (2005)

Bank bound by its Manager and Officer

PREMIERE DEV. BANK VS. PABRES

CA, 427 SCRA 686 (2004) MADULID
Doctrine of Laches or "Stale Demands"

ROVELS ENTERPRISES,
INC. VS. OCAMPO, 391 SUMUGAT CAOILE
SCRA 176 (2002)

4. How (Corporate Powers) Exercised

a. By the Shareholders
b. By the Board of Directors
c. By the Officers

5. Trust Fund Doctrine

ONG YONG VS. TIU, 401 TANJILI INSO

SCRA 1 (2003)

HALLEY VS. PRINTWELL, FULGUERAS FORRO

INC., 649 SCRA 116 (2011)

G. Board of Directors and Trustees

1. Repository of Corporate Powers (RA 11232, Section 22, par 1)

BANATE VS. PHILIPPINE PABRES FORTUNA

COUNTRYSIDE RURAL
BANK, 625 SCRA 21, 2010

2. Doctrine of Centralized Management

a. The Board is the Seat of Corporate Powers

GAMBOA VS. TEVES, 652 TECSON ADODANG

SCRA 690 (2011)

HORNILLA VS.
SALUNAT, 405 SCRA
220 (2003)

i. Theory of Directly Vested Power; Board as Trustee of the

Stockholders-Beneficiaries

VALLE VERDE COUNTRY ADODANG VALDERAMA

CLUB, INC. VS. AFRICA,
598 SCRA 202 (2009)

TAN VS. SYCIP, 499 SCRA INSO SUMUGAT

216 (2006)

ii. Countervailing Theory: Delegate Powers to the Board

VALLE VERDE RANON ADODANG

COUNTRY CLUB, INC.
VS. AFRICA, 598 SCRA
202 (2009)

PNCC VS. PABION, 320 TECSON BAYHON

SCRA 188 (1999)

b. Requirement that the Board must act as a Body

AF REALTY & DEV. CORP MADULID CAOILE

VS. DIESELMAN FREIGHT
SERVICES CO.

c. Principle that the Board Power may be Delegated

FORTUNA
 PEOPLE’S AIRCARGO FORRO
VS. CA, 297 SCRA 170
(1998)

3. Business Judgment Rule; Exceptions

ONG YONG VS. TIU, 401 TANJILI FORRO
SCRA 1 (2003)

PHILIPPINE ASSN. OF INSO

STOCK TRANSFER & PABRES
REGISTRY AGENCIES
VS. CA, 536 SCRA 61
(2007

a. Consequences of "Bogus Board"

ISLAMIC DIRECTORATE INSO MADULID

OF THE PHILIPPINES
VS. CA, 272 SCRA 454
(1997)

b. Remedies in case of Mismanagement

4. Qualifications, and Disqualifications of Directors or Trustees (RA 11232,

Section 22, par 2 & Section 26)

5. Term of Office (RA 11232, Section 22, par 2)

6. Independent Directors (RA 11232, Section 22)

7. Elections (RA 11232, Section 23)

a. Required Attendance/ Quorum
b. Manner of Election
c. Time to determine Voting Right
d. Cumulative Voting/Straight Voting
e. Report of Election of Directors, Trustees and Officers (RA 11232, Section 25)

PREMIUM MARBLE CAOILE NIRZA

RESOURCES VS. CA,
264 SCRA 11 (1996)

f. No Permanent Un-Elected Seat in the Board

GRACE CHRISTIAN HIGH BAYHON PANGILINAN
SCHOOL VS. CA, 281 SCRA
133 (1997)

g. Hold-Over Principle

VALLE VERDE COUNTRY ADODANG SUMUGAT

CLUB, INC. VS. AFRICA,
598 SCRA 202 (2009)

BARAYUGA VS. SUMUGAT TANJILI

ADVENTIST
UNIVERSITY OF THE
PHILIPPINES, 655 SCRA
640 (2011)

Tenure vs. Term of Office

VALLE VERDE COUNTRY NIRZA TECSON

CLUB, INC. VS. AFRICA,
598 SCRA 202 (2009)

8. Removal (RA 11232, Section 27)

RANIEL VS. JOCHICO, 517 PANGILINAN PABRES

SCRA 221 (2007)

Filling of Vacancies (RA 11232, Section 28)

VALDERAMA
TAN VS. SYCIP, 499 FORTUNA
SCRA 216 (2006)

Compensation (RA 11232, Section 29)

WESTERN INSTITUTE OF VALDERAMA ADODANG

TECHNOLOGY VS. SALAS,
278 SCRA 216 (1997)

Rules on Fiduciaries' Duties and Liabilities (RA 11232, Section 30, par 2)
-Three-fold duty:
Duty of Obedience
Duty of Diligence

CARAG VS. NLRC, 520 PABRES FORRO

SCRA 28 (2007)

Duty of Loyalty
-Disloyalty (RA 11232, Section 33)
-Doctrine of Corporate Opportunity

GOKONGWEI JR. VS. INSO FORTUNA

SEC, G.R. No. L-45911
April 11, 1979

12. Business Judgment Rule

 ONG YONG VS. TIU, VALDERAMA CAOILE

G.R. No. 144476, April
8, 2003
-As a defense
-Legal Effects

13. Solidary liabilities for Damages (RA 11232, Section 30, par 1)

HEIRS OF TAN UY VS. MADULID

INTERNATIONAL RANON
EXCHANGE BANK,
2013, G.R. No. 166282,
February 13, 2013

14. Personal Liabilities

15. Special Fact Doctrine
-Inside Information

SEC VS. INTERPORT PABRES

RESOURCES, G.R. No. TECSON
135808, October 6,
2008

16. Responsibility for Crimes

17. Contracts (RA 11232, Section 30, par 2)

a. By Self-Dealing Directors with the Corporation (RA 11232, Section 31)
b. Between Corporations with Interlocking Directors (RA 11232, Section 32)
c. Management Contracts

18. Executive Committee (RA 11232, Section 34)

FILIPINAS PORT SERVICES NIRZA CAOILE

VS. NLRC, 177 SCRA 203
(1989)

19. Meetings
a. Regular or Special (RA 11232, Section 48)
i. When and Where (RA 11232, Section 52-par 2, par 3, par 4)
ii. Notice (RA 11232, Section 52- par 4)
b. Who Presides (RA 11232, Section 53)
c. Quorum (RA 11232, Section 52- par 1)
d. Rule on Abstention (RA 11232, Section 52- par 6)
e. Requisites of Board Meetings
 Board duly assembled
 Existence of a quorum
 Decision of the majority

f. Teleconferencing/Videoconferencing (RA 11232, Section 52- par 5)

EXPERTRAVEL & TOURS, PANGILINAN

INC. VS. CA, 459 SCRA 147 FORRO
(2005)

g. Minutes of the Board Meetings (RA 11232, Section 73.g)

PEOPLE VS. DUMLAO, 580 MADULID RANON

SCRA 409 (2009)
H. Corporate Officers (RA No. 11232, Section 24)

1. Who are Corporate Officers?

- Under the Business Judgment Power of the Board to Hire and Fire, who are
they?

GURREA VS. LEZAMA, SUMUGAT TECSON

103 PHIL. 553 (1958)

PANGILINAN
MITA PARDO DE TAVERA SUMUGAT
VS. TUBERCULOSIS
SOCIETY, 112 SCRA 243
(1982)

MATLING INDUSTRIAL FORTUNA VALDERAMA

AND COMMERCIAL
CORPORATION VS.
COROS, 633 SCRA 12
(2010)

Doctrine of the Powers of the Corporate Officers to Bind the Corporation

PABRES
BANATE VS. PHILIPPINE ADODANG
COUNTRYSIDE RURAL
BANK. 625 SCRA 21 (2010)

Corporate Officers' Privileges

KWOK VS. PHILIPPINE BAYHON TECSON

CARPET
MANUFACTURING
CORP., 457 SCRA 465
(2005)

The President

SECOSA VS. HEIRS OF FORRO

ERWIN SUAREZ CAOILE
FRANCISCO, 433 SCRA
273 (2004)

ROVELS ENTERPRISES, NIRZA

INC. VS. OCAMPO, 392 TANJILI
SCRA 176 (2002)

SAFIC ALCAN & CIE VS. PANGILINAN VALDERAMA

IMPERIAL VEGETABLE
OIL CO., 355 SCRA 559
(2001)

The Vice-President/Assistant Vice-President

ILUSORIO VS. ILUSORIO, PABRES BAYHON

540 SCRA 182 (2007)

Corporate Secretary

CIVIL SERVICE ADODANG

COMMISSION VS. JAVIER, FORRO
540 SCRA 182 (2007)

TAY VS. CA, 293 SCRA 634 SUMUGAT FORTUNA

(1998)

Corporate Treasurer/ Comptroller

SAN JUAN STRUCTURAL

VS. CA, 296 FORRO TANJILI

Manager or General Manager

BANATE VS. NIRZA

PHILIPPINE MADULID
COUNTRYSIDE RURAL
BANK, 625 SCRA 21
(2010)

RURAL BANK OF
MILAOR (CAMARINES VALDERAMA MADULID
SUR) VS. OCFEMIA, 325
SCRA 99, 100 (2000)

Duties of the (Directors, Trustees or) Officers

STRATEGIC ALLIANCE
DEVELOPMENT CORP. RANON PABRES
VS. RADSTOCK
SECURITIES LTD., 607
SCRA 413 (2009)

a. Duty of Obedience
b. Duty of Diligence

ARATEA VS. SUICO, FORTUNA FORRO

518 SCRA 501 (2007)

SANCHEZ VS. TECSON SUMUGAT

REPUBLIC, 603 SCRA
229 (2009)

c. Duty of Loyalty, (RA 11232, Section 31)

10. Rules on Liability of (Directors, Trustees or) Officers, (RA 11232, Section 30)

TRAMAT MERCANTILE NIRZA INSO

VS. CA, 238 SCRA 14
(1994)

CEBU COUNTRY CLUB VS. INSO CAOILE

ELIZAGAQUE, 542 SCRA 65
(2008)
 a. Corporate Officers’ Liability for Labor Claims

Majority School of thought: Directors and Senior Officers cannot be held

personally liable for Labor Claims

SANTOS VS. NLRC, 254 TANJILI VALDERAMA

SCRA 673 (1996)

BAYHON PANGILINAN
UICHICO VS. NLRC, 273
SCRA 35 (1997)

Minority School of thought: The Highest Officer of the Company becomes

personally liable for Labor Claims

A.C. RANSOM LABOR

UNION VS. NLRC, 142 ADODANG
SCRA 269 (1986) CAOILE

I. Stockholders and Members

1. Definition
a. Stockholders/Shareholders
b. Members
2. Fundamental Rights of Stockholders and Members
a. Doctrine of Equality of Shares

-END OF 1ST AND 2ND SET OF CASES-