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1ST SET
GOOD EARTH V CA Distinct and separate

Stockholder
Debt
A corporation has a personality distinct and separate from its individua
l stockholders or members. Being an officer or stockholder of a corporation does
not make one's property also of the corporation, and vice-versa, for they are s
eparate entities.
Shareowners are in no legal sense the owners of corporate property (or credits)
which is owned by the corporation as a distinct legal person.
As a consequence of the separate juridical personality of a corporation, the cor
porate debt or credit is not the debt or credit of the stockholder, nor is the s
tockholder's debt or credit that of the corporation
CRUZ V DALISAY Distinct and separate
President
Sheriff Respondent, however, chose to "pierce the veil of corporate entity" usur
ping a power belonging to the court and assumed improvidently that since the com
plainant is the owner/president corporation, they are one and the same.
It is a well-settled doctrine both in law and in equity that as a legal entity,
a corporation has a personality distinct and separate from its individual stockh
olders or members. The mere fact that one is president of a corporation does not
render the property he owns or possesses the property of the corporation, since
the president, as individual, and the corporation are separate entities.
BANK OF AMERICA V CA
Stockholders of corporate borrowers
While the compla
int was filed only by the stockholders of the corporate borrowers, the latter ar
e wholly-owned by the private respondents who are Filipinos and therefore under
Philippine laws, aside from the said corporate borrowers being but their alter-e
gos, they have interests of their own in the vessels.
Private respondents maintain that the corporations are wholly owned by them and
prior to the incorporation of such entities, they were clients of petitioners wh
ich induced them to acquire loans from said petitioners to invest on the additio
nal ships.
AVON DALE V CA Continuation
Same lahat
In the absence of any provision in the by-laws fixing their comp
ensation, the directors shall not receive any compensation, as such directors:Pe
titioner company is not distinct from its predecessor Avon Dale Shirt Factory, b
ut in fact merely continued the operations of the latter under the same owners,
the same BUSINESS venture, at same address, and even continued to hire the same
employees.
The two entities cannot be deemed as separate and distinct where there is a show
ing that one is merely the continuation of the other. In fact, even a change in
the corporate name does not make a new corporation, whether effected by a specia
l act or under a general law, it has no effect on the identity of the corporatio
n, or on its property, rights, or liabilities.
EXC for reasonable per diems:
LIPAT V PACIFIC Instrumentality doctrine
Continuation
Petitioners attempt to isolate themselves from and hide behind t
he corporate personality of BEC so as to evade their liabilities to Pacific Bank
is precisely what the classical doctrine of piercing the veil of corporate enti
ty seeks to prevent and remedy. In our view, BEC is a mere continuation and succ
essor of BET, and petitioners cannot evade their obligations in the mortgage con
tract secured under the name of BEC on the pretext that it was signed for the be
nefit and under the name of BET. We are thus constrained to rule that the Court
of Appeals did not err when it applied the instrumentality doctrine in piercing
the corporate veil of BEC.
BIBIANO V CA
Identity rule
Mother The defense of separateness will be disregarded where the business affai
rs of a subsidiary corporation are so controlled by the mother corporation to th
e extent that it becomes an instrument or agent of its parent. But even when the
re is dominance over the affairs of the subsidiary, the doctrine of piercing the
veil of corporate fiction applies only when such fiction is used to defeat publ
ic convenience, justify wrong, protect fraud or defend crime.
The organization of subsidiary corporations as what was done here is usually res
orted to for the aggrupation of capital, the ability to cover more territory and
population, the decentralization of activities best decentralized, and the secu
ring of other legitimate advantages. But when the mother corporation and its sub
sidiary cease to act in good faith and honest business judgment, when the corpor
ate device is used by the parent to avoid its liability for legitimate obligatio
ns of the subsidiary, and when the corporate fiction is used to perpetrate fraud
or promote injustice, the law steps in to remedy the problem. When that happens
, the corporate character is not necessarily abrogated. It continues for legitim
ate objectives. However, it is pierced in order to remedy injustice, such as tha
t inflicted in this case.
FIRST PHIL V IBANK
Shield
Forum shopping The corporate veil cannot be used to shield an otherwise blatant
violation of the prohibition against forum shopping.
FRANCISCO MOTORS V CA Liability of DTO and Corporaiton
The personal lia
bility of directors, trustees, or officers will not be considered as corporation s
liability. However, the liability of the corporation will become the liability
of the persons composing it.
CONCEPT BUILDERS V NLRC Test to pierce veil
Alter ego
The test in determining the applicability of the doctrine of pie
rcing the veil of corporate fiction is as follows:
1. Control, not mere majority or complete stock control, but complete domination
, not only of finances but of policy and BUSINESS practice in respect to the tra
nsaction attacked so that the corporate entity as to this transaction had at the
time no separate mind, will or existence of its own;
2. Such control must have been used by the defendant to commit fraud or wrong, t
o perpetuate the violation of a statutory or other positive legal duty, or disho
nest and unjust act in contravention of plaintiff's legal rights; and
3. The aforesaid control and breach of duty must proximately cause the injury or
unjust loss complained of:
The absence of any one of these elements prevents 'piercing the corporate veil'.
In applying the 'instrumentality' or 'alter ego' doctrine, the courts are conce
rned with reality and not form, with how the corporation operated and the indivi
dual defendant's relationship to that operation."
DE LEON V CA
Pierce veil
Alter ego
Labor We find that the Labor Arbiter correctly applied the doctrine of piercin
g the corporate veil to hold all respondents liable for unfair labor practice an
d illegal termination of petitioners' employment. It is a fundamental principle
in corporation law that a corporation is an entity separate and distinct from it
s stockholders and from other corporations to which it is connected. However, wh
en the concept of separate legal entity is used to defeat public convenience, ju
stify wrong, protect fraud or defend crime, the law will regard the corporation
as an association of persons, or in case of two corporations, merge them into on
e. The separate juridical personality of a corporation may also be disregarded w
hen such corporation is a mere alter ego or business conduit of another person.
PNB V ANDRADA
2ND SET
INTERNATIONAL TRAVEL V CA
Doctrine of corporate estoppel X apply
Claim not evade liability
The doctrine of corporation by estoppel is mista
kenly applied by the respondent court to the petitioner. The application of the
doctrine applies to a third party only when he tries to escape liabilities on a
contract from which he has benefited on the irrelevant ground of defective incor
poration. In the case at bar, the petitioner is not trying to escape liability f
rom the contract but rather is the one claiming from the contract.
LOZANO V DELOS SANTOS Estoppel X apply
X 3rd P
The doctrine is founded on principles of equity and is designed
to prevent injustice and unfairness. it applies when persons assume to form a co
rporation and exercise corporate functions and enter into business relations wit
h third persons. Where there is no third person involved and the conflict arises
only among those assuming the form of the corporation, who therefore know that
it has not been registered, there is no corporation by estoppel.
LIM V PHIL FISHING
Estoppel apply
Reap benefits Under the law on estoppel, those acting on behalf of a corporati
on and those benefited by it, knowing it to be without valid existence, are held
liable as general partners. Technically, it is true that petitioner did not dir
ectly act on behalf of the corporation. However, having reaped the benefits of t
he contract entered into by persons with whom he previously had an existing rela
tionship, he is deemed to be part of said association and is covered by the scop
e of the doctrine of corporation by estoppel.
LYCEUM V CA
Doctrine of secondary meaning
No evidence of confusion
Under the doctrine of secondary meaning, a word
or phrase originally incapable of exclusive appropriation with reference to an a
rticle in the market, because geographical or otherwise descriptive might nevert
heless have been used so long and so exclusively by one producer with reference
to this article that, in that trade and to that group of the purchasing public,
the word or phrase has come to mean that the article was his produce.
While the appellant may have proved that it had been using the word 'Lyceum' for
a long period of time, this fact alone did not amount to mean that the said wor
d had acquired secondary meaning in its favor because the appellant failed to pr
ove that it had been using the same word all by itself to the exclusion of other
s. More so, there was no evidence presented to prove that confusion will surely
arise if the same word were to be used by other educational institutions.
INDUSTRIAL REFRACTORIES V CA
Identical and confusingly similar name requisite
s
To fall within the prohibition of the law, two requisites must be proven
, to wit;
that the complainant corporation acquired a prior right over the use of such cor
porate name; and
the proposed name is either:
o
identical, or
o
deceptively or confusingly similar to that of any existing corporation o
r to any other name already protected by law; or
o
patently deceptive, confusing or contrary to existing law
Being the prior registrant, RCP has acquired the right to use the word "Refracto
ries" as part of its corporate name. Moreover, in determining the existence of c
onfusing similarity in corporate names, the test is whether the similarity is su
ch as to mislead a person using ordinary care and discrimination. Here, even wit
hout such proof of actual confusion between the two corporate names, it suffices
that confusion is probable or likely to occur
HALL V PICCO
X defacto
No certificate of incorporation Not having obtained the certificate of incorpora
tion, FLCC. - even its stockholders - may not probably claim "in good faith" to
be a corporation. "Under the Corporation Law, the issuance of a certificate of i
ncorporation by the Director of the Bureau of Commerce and Industry calls a corp
oration into being. The immunity of collateral attack is granted to corporations
'claiming in good faith to be a corporation under this act.' Unless there has b
een an evident attempt to comply with the law the claim to be a corporation 'und
er this act' could not be made 'in good faith.' "
7TH DAY ADVENTIST
X filing of AOI The corporation failed to establish that
it is a de facto corporation. Having failed to file its articles of incorporati
on with SEC, it loses its corporate existence. In fact it admitted that there wa
s no attempt to file such with the SEC.
3RD SET
GRACE CHRISTIAN V CA
Election
Permanent seat No member of the board is entitled to a permanent seat. Here, th
e BOD of GCHS allows a member to have an automatic seat. The law which provides
that there shall be an election for the board must be respected. Thus, they must
go through the election process.

GOKONWEI V SEC Doctrine of corporate opportunity
Where a director, by vir
tue of his office, acquires for himself a business opportunity which should belo
ng to the corporation, thereby obtaining profits to the prejudice of such corpor
ation
He must account to the latter for all such profits by refunding the same UNL his
act has been ratified by a vote of the stockholders owning or representing at l
east (2/3) of the OCS.
NACPIL V IB
Comptroller
Corporate officer
As petitioner's appointment as comptroller required the
approval and formal action of the IBC's Board of Directors to become valid, it i
s clear therefore holds that petitioner is a corporate officer whose dismissal m
ay be the subject of a controversy cognizable by the SEC under Section 5(c) of P
.D. 902-A which includes controversies involving both election and appointment o
f corporate directors, trustees, officers, and managers. Had petitioner been an
ordinary employee, such board action would not have been required.
WESTERN V SALAS Compensation
Generally, directors and trustees do not receive
compensation other than their daily allowance or reasonable per diems. However,
they may receive compesation if such is stated in the by-laws or approved in th
e stockholder s meeting.
SANTOS V NLRC 6 shits to make DTO liable
A - UBC
W
A
S
Without necessarily piercing the veil of corporate fiction, personal civ
il liability can also be said to lawfully attach to a corporate director, truste
e or officer; to wit: When
"
(1) He assents
(a) to a patently unlawful act of the corporation, or
(b) for bad faith or gross negligence in directing its affairs, or
(c) for conflict of interest, resulting in damages to the corporation, its stock
holders or other persons;
(2) He consents to the issuance of watered stocks or who, having knowledge there
of, does not forthwith file with the corporate secretary his written objection t
hereto;
(3) He agrees to hold himself personally and solidarily liable with the corporat
ion; or
(4) He is made, by a specific provision of law, to personally answer for his cor
porate action."
SPS DAVID V CIAC
6 shits
MALAYANG SAMAHAN V RAMOS
6 shits
INTERASIA V CA Doctrine of Apparent Authority
President sign A]pparent authority is derived not merely from practice. Its exi
stence may be ascertained through (1) the general manner in which the corporatio
n holds out an officer or agent as having the power to act or, in other words th
e apparent authority to act in general, with which it clothes him; or
(2) the acquiescence in his acts of a particular nature, with actual or construc
tive knowledge thereof, within or beyond the scope of his ordinary powers. It re
quires presentation of evidence of similar acts executed either in its favor or
in favor of other parties. It is not the quantity of similar acts which establis
hes apparent authority, but the vesting of a corporate officer with the power to
bind the corporation."
Hence, an officer of a corporation who is authorized to purchase the stock of an
other corporation has the implied power to perform all other obligations arising
therefrom, such as payment of the shares of stock. By allowing its president to
sign the Agreement on its behalf, Inter-Asia clothed him with apparent capacity
to perform all acts which are expressly, impliedly and inherently stated therei
n.
PRIME WHITE V IAC

Self-dealing
President
Ratify A director's contract with his corporation is not in all instances void
or voidable. If the contract is fair and reasonable under the circumstances, it
may be ratified by the stockholders provided a full disclosure of his adverse in
terest is made as provided in Section 32 of the Corporation Code.
4TH SET
DEE V SEC
Pre-emptive right
Pre-emptive right is recognized only wit
h respect to new issues of shares, and not with respect to additional issues of
originally authorized shares.
MCLEOD V NLRC Buying and selling corporation
4 shits: CAME A corporation that purchases the assets of another will not be l
iable for the debts of the selling corporation, provided the former acted in goo
d faith and paid adequate consideration for such assets
EXC:
Where the purchaser expressly or impliedly agrees to assume the debts,
Where the transaction amounts to a consolidation or merger of the corporations
Where the purchasing corporation is merely a continuation of the selling corpora
tion
Where the transaction is fraudulently entered into in order to escape liability
for those debts.
PNB V ANDRADA Buying and selling corporation
4 shits: CAME
ISLAMIC V CA
Sec 40
Sale disposition
In the disposition of all or substantially all of the as
sets of the corporation, Section 40 of the Corporation Code must be complied wit
h. It provides that:
xxx A corporation may, by a majority vote of its board of directors or trustees, se
ll, lease, exchange, mortgage, pledge or otherwise dispose of all or substantial
ly all of its property and assets, including its goodwill, upon terms and condit
ions and for such consideration, which may be money, stocks, bonds or other inst
ruments for the payment of money or other property or consideration, as its boar
d of directors or trustees may deem expedient, when authorized by the vote of th
e stockholders representing at least two-third (2/3) of the outstanding capital
stock; or in case of non-stock corporation, by the vote of at least two-thirds (
2/3) of the members, in a stockholders' or members' meeting duly called for the
purpose.xxx
NIELSON V LEPANTO
Dividends
Dividends are payable to stockholders. N
ot being a stockholder, he is not entitled to any share in the stock dividends.
HYDRO V NIA
Doctrine of Apparent Authority
Administrator A corporation may be held in estoppel from denying as against th
ird persons the authority of its officers or agents who have been clothed by it
with ostensible or apparent authority. The rule is settled that although an offic
er or agent acts without, or in excess of, his actual authority if he acts withi
n the scope of apparent authority with which the corporation has clothed him by
holding him out or permitting him to appear as having such authority, the corpor
ation is bound thereby in favor of a person who deals with him in good faith in
reliance on such apparent authority, as where an officer is allowed to exercise
a particular authority with respect to the business, or a particular branch of i
t, continuously and publicly, for a considerable time
5TH SET
LOYOLA V CA
X filing of bylaws
Hearing
Suspension
Admin fine
Non-filing of the by-laws will not result in automatic dissoluti
on of the corporation. Under PD 902-A, the SEC is empowered to suspend or revoke
, after proper notice and hearing, the franchise or certificate of registration
of a corporation on the ground inter alia of failure to file by-laws within the
required period. It is clear from this provision that there must first of all be
a hearing to determine the existence of the ground, and secondly, assuming such
finding, the penalty is not necessarily revocation but may be only suspension o
f the charter. In fact, under the rules and regulations of the SEC, failure to f
ile the by-laws on time may be penalized merely with the imposition of an admini
strative fine without affecting the corporate existence of the erring firm.
CHINA BANK V CA 3rd P
By-laws 3rd P are not bound by by-laws, except when they have knowledge of the p
rovisions either actually or constructively.
For the exception to the general accepted rule that third persons are not bound
by by-laws to be applicable and binding upon the pledgee, knowledge of the provi
sions of the VGCCI By-laws must be acquired at the time the pledge agreement was
contracted. Knowledge of said provisions, either actual or constructive, at the
time of foreclosure will not affect pledgee's right over the pledged share.
SALAFRANCA V PHILAM
Amend Admittedly, the right to amend the by-laws lies
solely in the discretion of the employer, this being in the exercise of manageme
nt prerogative or business judgment. However this right, extensive as it may be,
cannot impair the obligation of existing contracts or rights
REPUB V COCOFED Registered owner
Vote rights
Sequestrated
The registered owner of the shares of a corporation exercises th
e right and the privilege of voting. This principle applies even to shares that
are sequestered by the government, over which the PCGG as a mere conservator can
not, as a general rule, exercise acts of dominion.
CHUA V CA
Derivative suit
2 requisites
2 requisites to file a derivative suit:
The minority SH filing a suit must allege that the suit is in the form of a deri
vative suit
The corporation must be impleaded as a party to the case as such is an indispen
sable party
EXPERT TRAVEL V CA
Tele conferencing
In the Philippines, teleconferen
cing and videoconferencing of members of board of directors of private corporati
ons is a reality, in light of Republic Act No. 8792. The Securities and Exchange
Commission issued SEC Memorandum Circular No. 15, on November 30, 2001, providi
ng the guidelines to be complied with related to such conferences. Thus, the Cou
rt agrees with the RTC that persons in the Philippines may have a teleconference
with a group of persons in South Korea relating to business transactions or cor
porate governance.
Even given the possibility that Atty. Aguinaldo and Suk Kyoo Kim participated in
a teleconference along with the respondent s Board of Directors, the Court is not
convinced that one was conducted; even if there had been one, the Court is not
inclined to believe that a board resolution was duly passed specifically authori
zing Atty. Aguinaldo to file the complaint and execute the required certificatio
n against forum shopping.
LEE V CA
Voting trust agreement
3 requisites
A voting trust agreement results in the separation of the voting
rights of a stockholder from his other rights such as the right to receive divi
dends, the right to inspect the books of the corporation, the right to sell cert
ain interests in the assets of the corporation and other rights to which a stock
holder may be entitled until the liquidation of the corporation.
However in order to distinguish a voting trust agreement from proxies and other
voting pools and agreements, it must pass 3 criteria or tests
1.
Voting rights of the stock are separated from the other attributes of ow
nership
2.
Voting rights granted are intended to be irrevocable for a definite peri
od of time
3.
Principal purpose of the grant of voting rights is to acquire voting con
trol of the corporation
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1ST SET

GOOD EARTH V CA Distinct and separate

go through the election process.

PRIME WHITE V IAC

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