1

CORPORATION LAW CASES

Theory of concession
1.
Tayag vs Benguet
Theory of
concession

2.

International
Express Travel Vs.
CA

GENOSSENCHAFT NOT APPLIED. A

CORPORATION owes its life from its
creator which is the state, it cannot
have rights and privileges higher than
that of the state. Hence, the bylaws of
the corporation cannot defeat the
state. Accordingly, it cannot refuse to
yield obedience to the order of the CFI
to release a new stock certificate to
the creditors in lieu of those which
remained in the custody of the foreign
corporation
2.

International Express travel

Rule: before a corporation may

acquire a juridical ersonality,THE
STATE MUST CONSENT either
through a law or through a
general enabling act, and the
conditions set forth by the said
law must be duly complied with.
Although the statutory grant to to
a corporation to sell can be
construed a grant of juricdicla
personality, nevertheless, the
failure to comply with the
statutory procedures to
incorporate does not warrant a
finding that it has acquired a
separate juridical personality even
when it adopts sets of constitution
and by laws.

In this case, the basis of CA in

applying RA 3135 and PD 604 that
recognizs the juridical existence
of the National sports associations
is not correct. These laws require

2
that in order to be recognized as
NSA, it must be recognized the
accrediting organization: the PAAF
under RA 3135and the
Department of youth and sports
development under pd 604.
However, this fact of
accreditation, Khan failed to
substantiate. He just proved by
presenting the consti and by laws
of the corporation . Unfortunately,
the by laws does not prove that
the said federation has indeed
been recognized and accredited

What binds the corporation

3
Benny Hung vs
BPI Finance
Corporation
ISSUE: W/N the
petitioner

Benny Hung is the proper

defendant because his sole
proprietorship has no juridical
personality apart from him.
The SC did not agree that only
Band R Footwear
Distributor/Guess is the only
contracting party.
Band R Sportswear Enterprise is
also a real contracting pary
Petitioner signed the second
agreement himself indicating that
Guess footwear is also referred to
as Band R sportswear enterprise.
In fact he used as a directive the
payment in the bank under the
letterhead B and R Distributor Inc.
to transfer the fund belonging to
his sole proprietorship B and R
enterprise as a partial payment to
the overpayment made by Guess.

Rebecca-Boyer
Roxas and

The commitment by the former

corporate officer allowing parties

5,

Guillermo Roxas V
CA and heirs of
Eugenio Roxas

to remain in possession of
properties registered in the name
of the corporation, without Board
approval or contract entered into
in the name of the corporation,
does not bind the corp to such
commitment.
The CVF cannot be pierced .
The property owned by the
corporation are owned by it as an
entity separate and distinct from
its members.
Shares of Stocks do not represent
the property of the corporation

PSE vs CA

Business judgment rule

SEC has no power to overturn the
decision of PSE Board to deny the
listig of Securities. It is true that
SEC is the agency with the
primamry say as to w/n the
securities, including SOS of the
corp, may be traded or not in the
stock Exchange. Nevertheless,
questions of policy and
management are left to the
honest decision of the officers and
directors of a cop, and the court
are without authority to
substitute their judgment for the
judgment of the BOD. The Board is
the cusienss manager of the corp
and so long as it acts in good
faith, its orders are not reviewable
by the court.

The listing of
Palis securities

LIABILITY FOR TORTS

6
Naguiat vs NLRC
Liability for
torts for
close
corporation

Tort is a breach of legal duty.

Article 283 of the Labor Code
mandates the employer to grant
the employees separation pay in
case of disclosureor cessation of
business due to serious busines
losses or financial reverses, which

4
is the condition obtaining at bar.
CFTI failed to comply with this
law-imposed duty. Consequently,
stockholder who was actively
engaged in the management and
operation of the business should
be held personally liable
5th Parag of Sec 100 of the Corp
Code also specifically imposes
personal liability upon the
stockholder personally liable
actively managing or operating
the business and affairs of the
close corporation .
Infact, it was Sergio Nagiat alone
who, in his individual and personal
capacity, posted a bond required
by the court in the issuance of the
TRO.
The court, in this case held that,
theres NO APPLICATION TO THE
RULE that a corporate officer
cannot be held solidarily liable
with the corporation absent bad
faith and malice.
In the present case, Sergio
Naguait is held SOLIDARILY LIABLE
FOR corporate tort.

7.
Has Ford the
right to
recover from
both Citibank
and PCIB?

PCI bank vs. CA

Fraudulently
negotiated check

Both checks were crossed checks

and contain diagonal lines on its
upper left corner between which
were written the words payable to
payees only
General ledger Accountant of Ford
prepared the check for the
payment to BIR. Instead of
delivering to the payee, he passed
on the check to the co-conspirator
castro, who thereafter opened a

5
checckign account in the name of
the fictitious person.
After an initial deposit of 100,
Castro then deposited a worthless
Bank of America check I the same
amount as the Ford Check, while
this worthless check was coursed
through PCIB for clearing,
replaced it with Fords Exh A and
accordingly tampered the
accompanying documents to cover
the replacement.
As a result, Exh A was cleared by
defendant Citibank and the
fictitious deposit account was
credit to the Meralco Branch with
the total amount of the ford check
exh A.
PCIB:
As a general rule, banking
corporation is liable to the
wrongful tortuous acts and
declarations of its officers or
agents within the scope of their
employment.
A bank will be held liable for the
negligence of its officers or agents
when acting within the scope of
their employment.
In this case, PCIB is a victim of the
scheme hatched by the syndicate
to which its own management
participated.
COMPARATIVE negligence: both
Citibank and PCIB are liable
becase:
PCIB filed to verify the auithority
of Rivera to negotiate the check ,
lack of care in verifying the letter
request to replace the check, as

6
an authorized agent of BIR failed
to consent regarding unwarranted
instructions by the payee to its
agent.It is duty-bound to
scrutinize the check and know its
depositors before it could make
the clearing indorsement.
Citibank- drawee bank:
Faield to establish that its
payment was made in due course
Should have scrutinized the check
before paying it to BIR
Faield to verify clearing
stamps( do nto bear initial
Faield to seasonably discover the
irregularity
Both also failed in their respective
obligation and also both are
negligent in selecting and
supervising their employees
resulting into the encashmentof
Fords check.

ESTAFA
Ching vs Sec of Juctice

Edward Ong vs CA

By signing the TR, you bind

yourself solidarily liable w/ Corp.
Because Ching signed the TR ,
though the entrustee is the corp,
nevertheless the law makes the
officers or emplyees of the corp
liable for the offense without
prejudice to the civil liabilities of
such corp
Sec 13 of PD 115, recognizes the
impossibility of imposing the
penalty of imprisonment. For this
reason, it is the officials,
employees or officers that are
made liable by the law.

TR law is violated when there is

failure to remit proceeds and
return good unsold. The MERE
FAILURE TO ACCOUNT/RETURN/
gives rise to crime. No need to
prove intent.
In this case, Armagri is te
entrustee responsible to account
or retur, hwoever the criminal
liability for the violation of the TR
lw falls on the corporation nto the
corporation. Hence, the liability is
with Ong who signed the TR. By
signing he becomes the
participant of the crime

10 w/n RBS is
entitles to
damages( mo
ral and
exemplary)

11

ENTITLEMENT TO DAMAGES
Abs Cbn Vs CA
No for both.
As to mOral damages,it cannot be
granted to Corporation except if
there is a debased reputation. In
this case, there appear no
reputation debased.
No exemplary because there was
no adequate proof that ABS Cbn
was inspired by malice or Bad
faith.

Filipinas Broadcasting
Network v. Ago
medical and
educational Center ,

Furthermore, in this case the

claim of RBS is not based on
contract, quasi, delict and quasi, it
can only then be based on art.
19,20,21 of the NCC which to
these articles, BaD faith is the
core.
Since,theres no proven BF on the
part of ABS, then there can be no
award exemplary
IsAMEC entitled to moral
damages?
AMEC is entitled to MD because its

8
Bicol Christian
College of Medicine
If they fail any
subject, they will
repreat all the year
levelaking up subjects
including those they
already passed

12

Manila Electric
Company vs TEAM
electric company
M(TEC)
Disconnecting the
electricity of TEC
without prior notice

claim falls under art 2219(43) of

the NCC which expressly
authorizes the recovery of MD in
case of slander or any defamation
cas. It does not qualify whether
the plaintiff is a juridical or a
natural person.
Furthermore, where the
broadcasts are libelous per se te
law implies damages. In such a
case, no need to introduce
evidence of actual damages as a
condition precedent to the
recovery of some damages. Since,
the broadcast is libelous per se ,
AmEC is entitled to damages.
ISSUE: w/n TEC is entitled to
Moral and exemplary damages.
Yes, that before disconnection the
requisites of law must be
complied with.
No to moral damages. Exception
not availing in this case because
the record does not show that the
name or reputation of TEC is
debased due to MEralcos act.

PLACE OF INCORPORATION TEST corporation is the

national of the country under whose laws it was
incorporated.
Marissa Unchuan vs
ISSUE:
Antonio Lozada, Anita The subject lot: being claimed as
Lozada and the
donated to Marissa Unchuan.
Register of Deeds
W/N the siblings Anita and
Cebu
Perigrina violated public policy
prohibiting aliens from working
abroad.
No, there was no violation on the
prohibition of alien owning land in
the Philippines because the said
lot was not in Dr. Lozadas name.

9
Not also under Dr. Lozadas
control for they are included in
Damaso Corp as capital to which
Antion holds 60% and Dr.
Lozadas 40%
JG Summit Holdings
vs. CA
If the foregn
shareholding in a
landholding exceeds
40%,it is not the
foreign stockholders
ownership that is
adversely affected by
the capacity of the
corporation to own
land- that is, the
corporation becomes
disqualified to own
land.
The prohibition in the
constitution applies
only to ownership of
land; it does not
extend to immovable
or real property as
defined under art 415
of the Civil Code

Yes, the Joint venture entered by

NDIC and Kawasaki falls within the
purview of association pursuant
to section 11 of art XII of the
constitution.
COnsequently, a JV that would
engage in the business of public
Utility should observe the 60%40% Filipino capitalization
Furthermore, under the JVA, the
ROFR can under the same
terms means refusal only to the
extent allowed in the JVA OR
UNDER THE 60-40 RULE OF THE
SOS
Hence, the right of Kawasakito
exercise ROFR shall not exceed
40% of the entire shares of
Philseco
NIDC may purchase even more
than 60 since it is a filipno citizen

CONTROL TEST, determined by the nationality of the

controlling stockholders or members. This applied in times
of war.
Wilson P. Gamboa v
Capital refers only to the shares
Finance Secretary
entitled to vote in the election of
directors, and thus in this case
only refereed to the common
shares and not the Total
outstanding capital stock
comprising both common and nonvoting preferred
Exploitation of the natural
resources- only Filipinos or

10
Corporaitons whose capital stock
is 60% owned by Filipinos
Ownership of land- only
corporation with atleast 60%
Filipino equity can own land.
Therefore, the Constitution allows
foreign equity into corporations
owning land up to the extent of
40% of the OCS
Wilson Gamboa vs.
Finance Secretary
Margarita Teves

Pet claimed that capital refers to

OCS with voting and non-voting
SC: MLRC is deemed a Philippine
National because 60% of its OCS
entitled to vote is owned by
Philippine national
Use vote control test

GRANDFATHER RULE- nationality is attributed to the

percentage of equity in the corporation used in nationalizd
or partly nationalized area. ( looks at the citizenship of the
individuals who own and control the SOS of the
corporation
Shares belonging to corporation/partnerships 60% the
capital of which is owned by Filipinos= considered Phili
nationality
If the shares capital of which is less than 60%,only the
number of shares corresponding to such percentage shall
be counted as Phillipine nationality
Shares (60% capital) to FILIPINOS= PHIL NATIONALITY
SHARES( CAPITAL LESS THAN 60%) - only the number of
shares correspmndign to the percentage shall be counted
as hil. Nationality
NARA Nickel Mining vs
Redmont 2014
Redmont with interest

w/ CAs ruling that MNT are

foreign corp based on GF ruel is
contrary to law.

11
to explore Palawan
for mining, upon
finding that pet.
Already had MPSA on
the same area filed
before DENR
nullification of MPSA.
CA found that theres
doubt as to the
nationality of the
petitioner when it
found that MNT had
common investor:
MBMI
Hence, they used the
GFR and discovered
that MBMI owned the
majority of the
common stocks of
petitioners and that
60% of the equity
interest of other
majority shareholder
through JVA

No. 2 acknowledged test in

determining the nationality of the
corporation are as follows:
1. Control test
2. grandfather rule test
Under the constitution, GFR does
not find basis. CT shall govern
first.CT is the first priority in
application. Ct is enshrined in RA
8179 (FIA) sec 3 .
Philippine national means
corporation organized under the
Philippine laws with atleast 60%
of the capital stock outstanding
and entitled to vote is owned and
held by Philippine national

GFR was intended to look into the

citizennshio of individuals who
owned and controlled the shares
of stock of corps.
As a rule, even if the 60-40 % rule
is met, a resort to GFR is
necessary if doubts exists as to
the locus of the benficial
ownership and control.
GFR- applies only in cases where
there is corporatelayering

NARA Nickel Mining,

Macarthut, TESORO vs
Redmont

Although petitioners MNT

complied with control test, factual
circumstances raised doubts to
their nationality( hence, the GFR
applies)
1. The three corps: Mcarthur,
nara Nickel, Tesoro, had the
same 100% Canadian
investor

12
2. Similar corporate structure
and shareholder composition
3. Major fil shareholder did not
pay any amount with respect
to its subscription
4. Dubious act of foreign
investor in converting its
interest in mining corp to
another domestic corp
demonstrates the fact of
corporate layering was
utilized to allow a foreign
corp to gain control to the
mining corps in the
Philippines

GFR; was intended to look into

the citizenship of individuas who
owned and controlled the shares
of stocks of the corporation.

SEPARATE JURIDICAL ENTITY: MAIN DOCTRINE

Rules:
1. general presumption is that corp is a bona fide corporation and
should alone be liable for its corporate liabilities and acts.
2. Stockholders are in no legal sense owner of corporate property.
3. The corporate debt or credit is not the debt of the individual
stockholder
4. Gr: the stockholder are not liable for the corporate acts done by
tehm for and in behalf of the corporation
5. The rpesident cannot be held liable for the mere bearch of contract
of corporation because he has a separate juridical personality
6. The separate personality is a shield of te corporate officers against
personal liability
7. Mere ownership of all or nearly all f the capital stock of te
corporation is nto sufficeient ground for disregarding the Corporate
separate personality ( SUNIO DOCTRINE)
8. Corps authority to act is vested in the BOARD and its liability are
separate from the stockholders
9. IF used for legitimate functions, a subsidiary;s separate personality
is respected and the liability of the parent corporation as well as the
sub is confined to their respective business.

13
10.

etc

Where the real

properties included
in the inventory in
the estate of the
decedent are in
possession of and
are registered in the
name of the
corporaitons, in the
absence of any
cogency to shred te
VCF, the
presumption of
conclusiveness of
said titles in favor of
said corporation
should stand
undisturbed.

RUFINA Lim Vs
CA
Administration
of the estate
of the
deceases
husband.
Auto truicks
corps
( respondent
herein) is
included in the
inventory of
the estate for
administration
RTC ruled in
favor of LIM
and included
the properties
in the
administration
.
CA also
favored the
respondents
PNB vs
RITRRATO
group

May a corporation in its

universality be the proper subject
of and be included in theinventory
of the estate of a deceased
person.
Held:
No, the rule is that if the property
covered by a torrens title is
involved, the presumptive
conclusiveness of such title should
be given due weight, absent
contrary evidence. The holder
thereof shall be considered as the
owner until his title is nullified as
in the case at bar, the title was
with the private respondent

CAUSE: complaint for injunction w/

prayer for WPI and TRO when
Ritratto failed to pay its loan to
PNB.
Respondent: even if PNB and PNBIFl are 2 separate entities.
Petitioner is still a party in
interest because it is tasked to
commits acts foreclosing
respondent property .
RTC ruled that since PNB-IFL is a
wholy-owner subsidiary of te
defendants PNB, the suit sagainst
PNB IFL is a suit against PNB \
Issue: w/n PNB is an alter ego of

14
PNB-IFL
No. the mere fact that a
corporation owns all of the stocks
of another corporation, taken
alone is not sufficient to justify
their being treated as one entity.
If used to perform legitimate
functions and a subsidiary\s
separate existence may be
respected and the liability of the
subsidiary as well as the parent as
well, will be confined to those
arising from those arising in their
respective business.

Ryuichi
Yamamoto vs
Nishino(2008)
Held:
No. the
corporate
powers are
excercised by
the BOD, not
Nishino alone.
The mere
ownership of a
single person
of the entire
stock is not
sufficient to
disregard the
separate
personality
The three
element to
pierce the VCF
not present:
Absent here is
that the fraud
must be
clearly and
convincingly
shown, it

CA:
Letter of Yoshinobu and Nishinos
counsel: the machines you may
take them out with you provided
the value of such machine shall be
deducted from your and Wakos
capital contribution, which will be
paid to you.
IS
On the basis of such
letter,Yamamoto attempted to
recover such machines but
respondent Nishino frustrated
this. Thus, he filed an action for
replevin
Respondent: such property is a
corporate property
And that the above letter of Dolce
to Yamamato was just a letter
proposal conditioned on
yamamotos sell out of his entire
equity to Nishino. SUCH PROPOSAl
has to be approved by the BOArd
and the STOCKHOLDERS of the
NLII( Nishino Leather industries
and Ikuo Nishino( respondents)
ISSUE: w/not the advice in the
letter of Atty. Doce that Yama may

15
cannot be
presumed.
Without
showing that
the evil sought
to be
prevented is
present, the
doctrine of
PCVF does not
apply.

retrieve the machinery where par

of his investment, bound the
corporation NLII

In this case,
tehres no
showing that
Nishino used
the separate
personality of
NLII to unjustly
act or do
wrong to
yamamato in
contravention
of his legal
right.
The subsidiary has a
separate and distinct
personality from its
parent company ,
hence any claim or
suit against the
latter does not bind
the subsidiary./

Mel Velarde vs
Lopez Inc.

Cause: theupaid loan of Velarde to

Lopez. Inc, thus used his
retirement pay in skyvision as
partial payment.
Issue: w. PCVF is applicable on
this case making subsidiary a
subsidiary liable for the act of the
parent.
Held: No. Under the law,there
must be a showing of control and
that the control is used to commit
fraud to justify the Piercing of
CVF. In this case,there is none
because Lopez Inc. has
nocomplete control of skyvision.
The interlocking of orporate
officers and directors is not
sufficient to pierce vcf.

16

The letter cearly shows that to

affect a set-off, it Is conditional
that is, to obtain the apprioval of
the Skyvision which then follows
that Lopez inc has no control of
the management of the skyvision.

Held:
Alter-ego does not
apply.
The three requisites
are not present in
this case.
1. Control. None
because
nothing in the
record shows
that the
corporate
finances and
business
practices of
the NMIC are
controlled by
DBP and PNB.
Various billing
reports:
evidenced that
no control
2. Fraud not
cionvincingly
and clearly
shown, not
shown that
there was
control which it
can use to
commit fraud
against NMIC

PNB vs Hydro
Resources
w/n theres
sufficient
gorund to
pierce the
CVF?
Facts: PNB and
DBp acquired
substantially
the assts of
the MMIC as a
result of
foreclosure.
Resumed the
business of
such by
organizing
NMIC, except
for 5 qualifyign
shares, all
others are
owned by both
banks
Consequently,
DBP and PNB
engaged the
services of
HERCON which
was
subsequently
acquired by

Contention of DBP: HRCC has no

cause of action because DBP was
not privy to HRCCs contract with
NMIC AND THAT nmicS
PERSONALITY IS SEPARATE FROM
THAT OF DBP
RTC: pierced the veil of the NMIC
Petitiners contention
1. Separate personality of DBP
and PNB
2. Majority ownership is not
sufficient ground to separate
the corporate personality
3. Appli of the PCVF because
no fraud, nor illegality or
injustice was proven.
Hrccs
Parent may be held liable for the
contracts of the subsidiary if it is
a mere agency, instrumentality
conduit of the parent corp

17
3. Absent fraud,
there can be
no injury

Held:
No. The separate
personality can be
pierced and the law
will regard the act of
the corporaiton as
the act of the
stockholders if
shown that the corp
was used by these
stockholders as mere
alter-ego, conduit or
instrumentality for
the commission of
the illegal acts,
fraud.
The absence of any
of the three
elements will
prevent the
application of the
piercing of the VCF.
1.control
2. fraud
3. proximate cause

HRCC in
merger which
continued the
complaint of
Hercon on the
unpaid balance
of DBOP and
PNB.
Heirs of Ramon
Durano vs.
Uy(2000)
Laid in this
case is the
requisites of
the control
test, to wit,
are as follows:
1. Control
Not mere
majority but
complete stock
control.
2. Such
control
must
have
been
used by
the
defendan
t to
commit
fraud,
wrong or
illegality
in
contrave
ntion iof
the
plaintiffs
legal
right

W/n the petitioners should no be

held ersonally liable for the
damages because of the doctrine
of separate corporate personality
In this case, it was shown that
Durano and Co., was merely used
by petitioners as instrumentality
to appropriate the disputed
property for themselves.
The fact shows that shortly after
the sale of the property by Cepco
to Durano and Co., the latter
immediately sold the same to
Ramon Durano III, who
immediately procured the
registration of the property in his
name

18
3.
The control
and breach of
duty must
proximately
cause the
injury beign
complained of.
w/n equity is a mere
instrumentality of
GCC?
Held: held in this
case are the three
grounds set by the
authoritieson which
the separate
personality may be
pierced, to wit, as
follows:
1. To defeat PC
2. To commit
fraud, or
illegality
3. As a mere
conduit
In this case, many
instances from the
facts show that
EQUITY is used as a
mere alter-ego of the
GCC.
There were less than
20 documented
circumstances.
1. Certain
financing and
management
agreement
between GCC
and equity
allowing GCC
to manage the

General credit
Corp vs.
Alsons
development
and Inc.
AUTHORITIES
agreed on
three grounds
that can pierce
the VCF

CA: ALSONS action against

Equity and GCCC because it could
not collect on the said bearer note
it bought form the Alcantara
Family.
Equitys claim: that it acted
merely as an intermediary or
bridge for loan transaction and
other dealings of GCCto its
franchise and the investigating
public
GCC: claims that it is separate
from EQUITY and alleging that the
essence of the business relations
w/ each other were always at
arms length.

19

2.

3.

4.

5.

6.

funds of equity
Virtual
domination, if
not control by
GCC of the
policy,
practices and
business of
Equity
Common
directors and
officers
GCC finances
equity and it
isa wholly
owned
subsidiary
That equity
was organized
by GCC to
circumvent the
law
Never acted
independentky
but took orders
from GCC

DOCTRINE OF PIERCING THE SEPARATE JURIDICAL PERSONALITY:

INSTANCES THAT applied the piercing:
1. Means to evade liability
2. Used as a cloak or cover for fraud or injustice
3. To work illegality
4. To shield unfair objectives to cover up an otherwise blatant violation
of the prohibition against FORUM SHOPPING
5. TO AVOID judgment credit\
PIERCING NOT AVAILABLE :
1.ONE not a victim of the fraud or wrong
2. in case where no claim was made against officer or members of the
corporation
3. when personal obligations of an individual are sought to be enforced
against the corporation.

20
Who can invoke the piercing doctrine?
1. Members of the corps internally
2. Even non-stockholders can be arties to the case to pierce, when they
acquire properties to be reconveyed
3.
Effects of the application of the doctrine:
1. To hold the stockholders, officers directly liable for a corporate
obligation
2. In case of two corporation, the law will regard the two corps as
one
CLASSESS OF CORPORATION
CIR is a civic
corporation
PUBLIC
CORPORATION:
while public welfare,
particularly, the
promotion of
economic and social
development of
Luzonmay be
attributable to the
operationof Bases
conversion and
development
authority(BCDA) yet,
its certain that its
functions are
proprietary in
nature. The function
aforementioned does
not BCDA equivalent
to government.
BCDA is nOT a mere
government agency
but a corporate body
performing
PROPRIETARY
FUNCTIONS.
Therefore the rule
that prescription
does not run against

CIR VS CLUB
FILIPINO
SHIPSIDE vs
CA

BCDA
Issue:revival of judgment
governed by art. 1144(3) of the
NCC, and sec 6 rule 39 of the 1997
Rules on procedure
Action for revival of a judgment
must be brought within 10 years
from the time such judgment
becomes final
Argument of Solicitor General:
that the state cause of action in
the cancellation of the land title
issued to petitioners predecessor
in interest is imprescriptible
because it is included in CAMP
WALLACE, which belongs to the
government,
Main issue related to this topic:
Whetehr or not the states cause
of action is imprescriptible
because BCDA (formerly Wallace)
belongs to the government, hence
one with the government and not
a separate entity.
Held: no. BCDA is a separate
entity. Hence, it has the power,

21
the state does not
apply to BCDA , it
being said that when
the title of REPUBLIC
has been divested,
its grantee, although
artificial bodies of its
own creation, are in
the same category
as an ordinary
person.
BCDA HAS the
capacity to sue and
be sued being a
separate entity.
Corporation sole: is
it qualified to
acquire private
agricultural lands in
the Philippines
pursuant to the
provision of article
XIII of the
Constitution

not the republic, to cancel the

title vested to the petitioner
herein
Petition GRANTED

ROMAN
CATHOLIC
APOSTOLIC, VS
rod DAVAO

Issue: is a corporation sole

qualified to acquire private agri
land in the Philippines?
Held: yes. Corp law section 159.
CORPORATION SOLE may purchase
and hold real estate and personal
property for the church . CBE9
charitable, benevolent or
educational purposes and may
receive gifts/ bequests for such
purposes

BY TEMPORALITIES,
is meant estate and
properties not
exclusively used for
religious worship

Moreover, RCAC has no nationality

for the corporation did not have in
mind the religious corp. Hence,
the 60% requirement was never
intended for the corporation sole
It is registered mainly t o
administer the property belonging
to the faithful of said church.

REPUBLIC

22

GOCC with charterPD 198 cannot

prevail over the
constitution.
Sec 3, article 9 C of
the constitution
outlaws any scheme
ordevice to escape
the jurisdiction of
COA
Sec 3: no laws shall
be passed exempting
any entity of the
government or its
entity in any guise
whatsoever or any
investment of public
fund from the
jurisdiction of COA

PLANTERS
BANK v
AGANA
Feliciano vs
COA
Sec 16, article
12. Congress,
may nto
provide for the
formation,
organization
and regulation
of the private
corporation
except by
general law.
GOCC may be
created or
established by
special
charters in the
interest of the
common good
and subject to
the economic
viability

Cause of action: action for refund

of all the auditing fees previously
paid to COA by LMWD on the basis
of PD 198 sec 6 and 20.
Petitioner maintains that LWDs
are not GOCC with original
charters as they are private
corporations. PD 198 is not an
original charter that would place
LWDs within the audit jurisdiction
of CO as it does direct the creation
of such entities but only provides
for their formation on an optional
or voluntary basis
The operative act that creates the
LWD is the approval of the
Sanggunian resolution as
specified in PD 198
Issue: W/N LWDs GOCC with
original charters.
HELD:
YES.

Sec 18 of ra
6758 does not
prohibit COA
fromm
charging
auditing fees
Exceptions:
those
compensation
paid directly
by COA out of
its
appropriations
and
contributions

LWDs are not private corps

because they are nto created
under the corporation code. It has
no AOI, no incorporators and no
stockholders.
As to SB resolution, the SB does
not have power to create corpo.
SB reso is not the special charter
of the LWD
Gocc with original charter means
created by special laws and not
under the corpo code
Goccs with original charter are
subject to the audit of COA.

23

Preferred stocks
entitles the holder
thereof of certain
preferences over the
hodler of the
common stock.
Preferences
designed o induce a
person to invest in a
corp
Multiple forms of
preferred shares:
1. Preferred as to
assets:
preferences in
the distribution
of assets in
case of
liquidation
2. Preferred
shares as to
dividends
Entitles to receive
dividends as agreed
upon before any
dividends are given

Rep planters
bank vs
AGANA
IN this case,
the defendant
( respondent)
can compel the
petitioner to
redeem the
shares
because it is
provided
expressly in
the stock
certificate.
The rule is
that:
Except as
otherwise
provided in the
stock
certificate, the
corporation

COAs audit jurisdiction depends

on the government ownership or
control of the corporation.
Ownership and control is a more
important issue than the original
charter
THE GOVERNMENT clearly owns
and controls the LWDs. The
government recognizes LWDs
thru special law PD 198, noprivate
party is involved in the creation of
the LWD. Just prior to the creation
of LWDs, the national or local
government owns and controls all
their assets. The BOD and other
personnels of LWD are emloyees
of the government subj to civil
service and anti graft laws
Subject:
Respondent loan granted partly in
money and partly in stock
certificate
Action: respondent proceeded
against petitioner and alleged his
right
1. to collect dividends under
the preferred shares in
question
2. Redeem the same shares
under the terms and
conditions of the stock
certificates
1. To collect dividends
DIVIDENDS are only payable when
there are profits earned
( unrestricted retained earning
also called surplus profits)
sec 16 and 43 of the corp Law
provides that nos tock dividends
may be issued without the
approval of the stockholders
representing not less than 2/3 of
the OCS at a reg or special

24
to the common sock
holders
Preferences given
does not give the
holder of preferred
shares lien upon the
property of the
corporations or make
it a creditor of the
corporation assets.

may not be
compelled by
stockholders
to redeem as
such right is
merely
OPTIONAL
In this case,
redemption
may not be
allowed.
Reasons:
The RPB was
prohibited by
the then
governor of
the central
bank as it
would result
into reduction
of the assets
of the bak that
would
prejudice the
creditors and
its
stockholders.
( a valid
reason for the
prohibition not
to issue the
shares)
The directive
in limiting the
right given to
corporate
entity is
considered an
exercise of
police power
hence
overrides the
non

meeting called for that purpose.

Hence, the payment of dividends
to stockholders is NOT A MATTER
OF RIGHT BUT OF CONSENSUS.
INTEREST BEARING STOCKS
( corporation agrees to pay
interest before dividends are
issued to common stock holders is
legal only when construed as
requiring payment of interest as
dividends from net earnings or
surplus profits only.

2. Redemable shares are

shares usually preferred,
and which by their terms are
redeemable at a fixed date,
or at the option of either the
issuing corps or the
stockholder or both.
Redemption by the corporation OF
ITS STOCK is in a way a
REPURCHASE of it for
cancellation.
The present Code allows for the
redemption of shares even if
theres no URE ( surplus profit) an
exception to the rule that a cor
cannot purchase its own shares
except out of the URE.
However though it can redeem
without URE, it is subject to the
condition that the corp has after
such redemption assets in its
books to cover debts and
liabilities inclusive of capital
stock.
Therefore, redemption cannot be
made where the corporation is

25

The creation of
PNRC: created by the
Philippines adhering
to the Geneva
convention for the
purpose

impairment of
contract.

INSOLVENT OR IF SUCH
REDEMPTION WILL CAUSE
INSOLVENCY OR INABILITY TO
MEET ITS DEBTS AS THEY MATURE.

Dante LIBAN
vs. Gordon

Issue: is the office of the

chairman of the PNRC a
Government office for the purpose
of the prohibition of sec 13 article
6 of the constitution
Np.the office of the PNRC
chairman is not a government or a
GOCC office for the purpose of the
prohibition under section 13 art 6
of the constitution. It is a sui
generis. Hence, respondent
Gordon is allowed to hold office as
chairman of the PNRC while also a
Senator