ANTONIO PARDO

vs.
THE HERCULES LUMBER CO., INC., and IGNACIO FERRER
G.R. No. L-22442 August 1, 1924

Facts:

Antonio Pardo, the petitioner is a stockholder of Hercules Lumber Company, Inc., one of
the respondents herein, seeks by this original proceeding in the Supreme Court to obtain a writ
of mandamus to compel the respondents to permit the plaintiff and his duly authorized agent
and representative to examine the records and business transactions of said company. To this
petition the respondents interposed an answer, in which, after admitting certain allegations of
the petition, the respondents set forth the Facts upon which they mainly rely as a defense to
the petition. To this answer the petitioner in turn interposed a demurrer.

Issue:

Whether the respondent have the right to deny inspection request by petitioner.

Held:

Yes.The general right given by the statute may not be lawfully abridged to the extent
attempted in this resolution. It may be admitted that the officials in charge of a corporation
may deny inspection when sought at unusual hours or under other improper conditions; but
neither the executive officers nor the board of directors have the power to deprive a stockholder
of the right altogether. A by-law unduly restricting the right of inspection is undoubtedly
invalid. Authorities to this effect are too numerous and direct to require extended comment.
Under a statute similar to our own it has been held that the statutory right of inspection is not
affected by the adoption by the board of directors of a resolution providing for the closing of
transfer books thirty days before an election.
It will be noted that our statute declares that the right of inspection can be exercised "at
reasonable hours." This means at reasonable hours on business days throughout the year, and
not merely during some arbitrary period of a few days chosen by the directors.
In addition to relying upon the by-law, to which reference is above made, the answer of
the respondents calls in question the motive which is supposed to prompt the petitioner to
make inspection; and in this connection it is alleged that the information which the petitioner
seeks is desired for ulterior purposes in connection with a competitive firm with which the
petitioner is alleged to be connected. It is also insisted that one of the purposes of the petitioner
is to obtain evidence preparatory to the institution of an action which he means to bring
against the corporation by reason of a contract of employment which once existed between the
corporation and himself. These suggestions are entirely apart from the Issue, as, generally
speaking, the motive of the shareholder exercising the right is immaterial.

W. G. PHILPOTTS
vs.
PHILIPPINE MANUFACTURING COMPANY and F. N. BERRY
GR. No. L-15568 November 8, 1919

Facts:

W. G. Philpotts, a stockholder of Philippine Manufacturing Company, one of the

respondents herein, seeks by this proceeding to obtain a writ of mandamus to compel the
respondents to permit the plaintiff, in person or by some authorized agent or attorney, to
inspect and examine the records of the business transacted by said company since January 1,
1918. The petition is filed originally in this court under the authority of section 515 of the Code
of Civil Procedure, which gives to this tribunal concurrent jurisdiction with the Court of First
Instance in cases, among others, where any corporation or person unlawfully excludes the
plaintiff from the use and enjoyment of some right to which he is entitled. The respondents
interposed a demurrer.

Issue:

Whether or not the right to inspect records and transactions of the corporation is
permitted.

Held:

Yes.Now it is our opinion, and we accordingly hold, that the right of inspection given to
a stockholder in the provision above quoted can be exercised either by himself or by any proper
representative or attorney in fact, and either with or without the attendance of the stockholder.
This is in conformity with the general rule that what a man may do in person he may do
through another; and we find nothing in the statute that would justify us in qualifying the right
in the manner suggested by the respondents.
This conclusion is supported by the undoubted weight of authority in the United States,
where it is generally held that the provisions of law conceding the right of inspection to
stockholders of corporations are to be liberally construed and that said right may be exercised
through any other properly authorized person. As was said in Foster vs. White (86 Ala., 467),
"The right may be regarded as personal, in the sense that only a stockholder may enjoy it; but
the inspection and examination may be made by another.
In order that the rule above stated may not be taken in too sweeping a sense, we deem it
advisable to say that there are some things which a corporation may undoubtedly keep secret,
notwithstanding the right of inspection given by law to the stockholder; as for instance, where
a corporation, engaged in the business of manufacture, has acquired a formula or process, not
generally known, which has proved of utility to it in the manufacture of its products. It is not
our intention to declare that the authorities of the corporation, and more particularly the Board
of Directors, might not adopt measures for the protection of such process form publicity. There
is, however, nothing in the petition which would indicate that the petitioner in this case is
seeking to discover anything which the corporation is entitled to keep secret; and if anything of
the sort is involved in the case it may be brought out at a more advanced stage of the
proceedings.

BANK OF COMMERCE, Petitioner,

vs.
RADIO PHILIPPINES NETWORK, INC. Respondent.

G.R. No. 195615 April 21, 2014

Facts:

In 2001 the Traders Royal Bank (TRB) proposed to sell to petitioner Bank of Commerce
(Bancommerce) its banking business. On November 8, 2001 the BSP approved that agreement
subject to the condition that Bancommerce and TRB would set up an escrow fund with another
bank to cover TRB liabilities for contingent claims that may subsequently be adjudged against
it, which liabilities were excluded from the purchase.

To comply with the BSP mandateTRB placed P50 million in escrow with Metropolitan
Bank and Trust Co. (Metrobank) to answer for those claims and liabilities that were excluded
from the P & A Agreement and remained with TRB. Accordingly, the BSP finally approved such
agreement.

On October 10, 2002, Traders Royal Bank v. Radio Philippines Network (RPN), Inc.,
this Court ordered TRB to pay respondents RPN, Intercontinental Broadcasting Corporation,
and Banahaw Broadcasting Corporation (collectively, RPN, et al.) actual damages. Based on
this decision, RPN, etal.filed a motion for execution against TRB before the Regional Trial Court
(RTC) of Quezon City. But rather than pursue a levy in execution of the corresponding amounts
on escrow with Metrobank, RPN, et al. filed a Supplemental Motion for Execution 1 where they
described TRB as "now Bank of Commerce" based on the assumption that TRB had been
merged into Bancommerce.

Issue:

Whether there was a merger that took place between Bancommerce and TRB.

Held:

No. Indubitably, it is clear that no merger took place between Bancommerce and TRB as
the requirements and procedures for a merger were absent. A merger does not become effective
upon the mere agreement of the constituent corporations. 15 All the requirements specified in
the law must be complied with in order for merger to take effect. Section 79 of the Corporation
Code further provides that the merger shall be effective only upon the issuance by the
Securities and Exchange Commission (SEC) of a certificate of merger.

Here, Bancommerce and TRB remained separate corporations with distinct corporate
personalities. What happened is that TRB sold and Bancommerce purchased identified
recorded assets of TRB in consideration of Bancommerces assumption of identified recorded
liabilities of TRB including booked contingent accounts. There is no law that prohibits this kind
of transaction especially when it is done openly and with appropriate government approval..

No de facto merger took place in the present case simply because the TRB owners did
not get in exchange for the banks assets and liabilities an equivalent value in Bancommerce
shares of stock. Bancommerce and TRB agreed with BSP approval to exclude from the sale the
TRBs contingent judicial liabilities, including those owing to RPN, et al.

The Bureau of Internal Revenue (BIR) treated the transaction between the two banks purely as
a sale of specified assets and liabilities when it rendered its opinion 2 on the tax consequences
of the transaction given that there is a difference in tax treatment between a sale and a merger
or consolidation.

Indubitably, since the transaction between TRB and Bancommerce was neither a merger nor a
de facto merger but a mere "sale of assets with assumption of liabilities.
 BANK OF THE PHILIPPINE ISLANDS
vs.
BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK
G.R. No. 164301 August 10, 2010

Facts:

The BangkoSentral ng Pilipinas approved the Articles of Merger executed by and

between BPI, herein petitioner, and FEBTC. The Securities and Exchange Commission
approved this Article and Plan of Merger. Pursuant to the Article and Plan of Merger, all the
assets and liabilities of FEBTC were transferred to and absorbed by BPI as the surviving
corporation. FEBTC employees, including those in its different branches across the country,
were hired by petitioner as its own employees, with their status and tenure recognized and
salaries and benefits maintained. Respondent BPI Employees Union-Davao Chapter -
Federation of Unions in BPI Unibank is the exclusive bargaining agent of BPIs rank and file
employees in Davao City. The former FEBTC rank-and-file employees in Davao City did not
belong to any labor union at the time of the merger. Prior to the effectivity of the merger,
respondent Union invited said FEBTC employees to a meeting regarding the Union Shop
Clause of the existing CBA between petitioner BPI and respondent Union.
After the meeting called by the Union, some of the former FEBTC employees joined the
Union, while others refused. Later, however, some of those who initially joined retracted their
membership.

Issue:
 Whether the employees were automatically absorbed by petitioner upon the merger.

Held:

No.Human beings are never embraced in the term "assets and liabilities." Moreover,
BPIs absorption of former FEBTC employees was neither by operation of law nor by legal
consequence of contract. There was no government regulation or law that compelled the merger
of the two banks or the absorption of the employees of the dissolved corporation by the
surviving corporation. Had there been such law or regulation, the absorption of employees of
the non-surviving entities of the merger would have been mandatory on the surviving
corporation. In the present case, the merger was voluntarily entered into by both banks
presumably for some mutually acceptable consideration. In fact, the Corporation Code does not
also mandate the absorption of the employees of the non-surviving corporation by the surviving
corporation in the case of a merger.
Significantly, too, the Articles of Merger and Plan of Merger did not contain any specific
stipulation with respect to the employment contracts of existing personnel of the non-surviving
entity which is FEBTC. This Court cannot uphold the reasoning that the general stipulation
regarding transfer of FEBTC assets and liabilities to BPI as set forth in the Articles of Merger
necessarily includes the transfer of all FEBTC employees into the employ of BPI and neither
BPI nor the FEBTC employees allegedly could do anything about it. Even if it is so, it does not
follow that the absorbed employees should not be subject to the terms and conditions of
employment obtaining in the surviving corporation.
CHESTER BABST
vs.
COURT OF APPEALS
G.R. No. 99398 & 104625 January 26, 2001

Facts:

The complaint was filed to enforce payment of a promissory note and three domestic
letters of credit which Elizalde Steel Consolidated, Inc. (ELISCON) executed and opened with
the Commercial Bank and Trust Company (CBTC). On June 8, 1973, ELISCON obtained from
CBTC a loan in the amount of P 8,015,900.84, with interest at the rate of 14% per annum,
evidenced by a promissory note.2 ELISCON defaulted in its payments, leaving an outstanding
indebtedness in the amount of P2,795,240.67 as of October 31, 1982.
The letters of credit, on the other hand, were opened for ELISCON by CBTC using the
credit facilities of Pacific Multi-Commercial Corporation (MULTI) with the said bank, pursuant
to the Resolution of the Board of Directors of MULTI adopted on August 31, 1977.
Subsequently, on September 26, 1978, Antonio Roxas Chua and Chester G. Babst executed a
Continuing Suretyship,5 whereby they bound themselves jointly and severally liable to pay any
existing indebtedness of MULTI to CBTC to the extent of P8,000,000.00 each.

Issue:

Whether or not BPI consent to the assumption by DBP of the obligations of ELISCON.

Held:

Yes. There exist clear indications that BPI was aware of the assumption by DBP of the
obligations of ELISCON. In fact, BPI admits that DBP, for a time, had proposed a formula for
the settlement of Eliscon's past obligations to its creditors.
The authority granted by BPI to its account officer to attend the creditors' meeting was
an authority to represent the bank, such that when he failed to object to the substitution of
debtors, he did so on behalf of and for the bank. Even granting arguendo that the said account
officer was not so empowered, BPI could have subsequently registered its objection to the
substitution, especially after it had already learned that DBP had taken over the assets and
assumed the liabilities of ELISCON. Its failure to do so can only mean an acquiescence in the
assumption by DBP of ELISCON's obligations. BPI's objection was to the proposed payment
formula, not to the substitution itself.
BPI gives no cogent reason in withholding its consent to the substitution, other than its
desire to preserve its causes of action and legal recourse against the sureties of ELISCON. It
must be remembered, however, that while a surety is solidarily liable with the principal debtor,
his obligation to pay only arises upon the principal debtor's failure or refusal to pay.
In the case at bar, there was no indication that the principal debtor will default in
payment. In fact, DBP, which had stepped into the shoes of ELISCON, was capable of payment.
Its authorized capital stock was increased by the government. More importantly, the National
Development Company took over the business of ELISCON and undertook to pay ELISCON's
creditors. The original obligation having been extinguished, the contracts of suretyship
executed separately by Babst and MULTI, being accessory obligations, are likewise
extinguished.
ASSOCIATED BANK
vs.
COURT OF APPEALS
G.R. No. 107382/G.R. No. 107612 January 31, 1996

Facts:

The Province of Tarlac maintains a current account with the Philippine National Bank
(PNB) Tarlac Branch where the provincial funds are deposited. Checks Issued by the Province
are signed by the Provincial Treasurer and countersigned by the Provincial Auditor or the
Secretary of the Sangguniang Bayan. A portion of the funds of the province is allocated to the
Concepcion Emergency Hospital. The allotment checks for said government hospital are drawn
to the order of "Concepcion Emergency Hospital, Concepcion, Tarlac" or "The Chief, Concepcion
Emergency Hospital, Concepcion, Tarlac." The checks are released by the Office of the
Provincial Treasurer and received for the hospital by its administrative officer and cashier.
In January 1981, the books of account of the Provincial Treasurer were post-audited by
the Provincial Auditor. It was then discovered that the hospital did not receive several allotment
checks drawn by the Province. On February 19, 1981, the Provincial Treasurer requested the
manager of the PNB to return all of its cleared checks which were Issued from 1977 to 1980 in
order to verify the regularity of their encashment. After the checks were examined, the
Provincial Treasurer learned that 30 checks amounting to P203,300.00 were encashed by one
Fausto Pangilinan, with the Associated Bank acting as collecting bank.
It turned out that Fausto Pangilinan, who was the administrative officer and cashier of
payee hospital until his retirement on February 28, 1978, collected the questioned checks from
the office of the Provincial Treasurer. He claimed to be assisting or helping the hospital follow
up the release of the checks and had official receipts. Pangilinan sought to encash the first
check with Associated Bank.

Issue:

Whether there is merger in this case.

Held:

Yes.Ordinarily, in the merger of two or more existing corporations, one of the combining
corporations survives and continues the combined business, while the rest are dissolved and
all their rights, properties and liabilities are acquired by the surviving corporation. Although
there is dissolution of the absorbed corporations, there is no winding up of their affairs or
liquidation of their assets, because the surviving corporation automatically acquires all their
rights, privileges and powers, as well as their liabilities.
The merger, however, does not become effective upon the mere agreement of the
constituent corporations. The procedure to be followed is prescribed under the Corporation
Code. Section 79 of said Code requires the approval by the Securities and Exchange
Commission (SEC) of the articles of merger which, in turn, must have been duly approved by a
majority of the respective stockholders of the constituent corporations. The effectivity date of
the merger is crucial for determining when the merged or absorbed corporation ceases to exist;
and when its rights, privileges, properties as well as liabilities pass on to the surviving
corporation.
Consistent with the aforementioned Section 79, the September 16, 1975 Agreement of
Merger, which Associated Banking Corporation (ABC) and Citizens Bank and Trust Company
(CBTC) entered into, provided that its effectivity "shall, for all intents and purposes, be the date
when the necessary papers to carry out this merger shall have been approved by the Securities
and Exchange Commission."

ALGER ELECTRIC, INC

 vs.
COURT OF APPEALS
G.R. No. L-34298 February 28, 1985

Facts:

Petitioner Alger Electric, Inc., was granted a legislative franchise for a period of fifty (50)
years from June 22, 1963 with the right, privilege, and authority to construct, maintain and
operate an electric light, heat, and power system for the generation and/or distribution of
electric light, heat, and/or power for sale within the municipalities of Sto. Tomas, Damortis
and Rosario, province of La Union, and in the municipality of Sison, province of Pangasinan.
Respondent Northern Cement Corporation (Northern) and the National Power
Corporation (NPC) executed a contract for NPC to directly supply electric power to Northern's
cement plant located in Labayog, Sison, Pangasinan. As a result, the petitioner filed a petition
for prohibition with preliminary injunction against Northern and NPC in the Court of First
Instance of Manila. The petition alleged that the contract was patently illegal.
The appellate court sustained the position of respondent Northern and set aside the
questioned October 24, 1969 order of the trial court. It also ordered the trial court to act on the
respondent's motion to dismiss the case. The appellate court ruled that the Court of First
Instance of Manila did not have jurisdiction over the original complaint considering that the act
sought to be enjoined was to be performed in Sison, Pangasinan which is outside of the court's
territorial jurisdiction. It, therefore, held that the original "petition" could no longer be amended
otherwise it would be in violation of the legal prohibition of a complaint not amendable in order
to confer jurisdiction on the court in which it is filed, if the cause of action originally set forth
was not within The court's jurisdiction. This decision is now challenged in this petition.

Issue:

Whether or not Northern commit illegal acts when it entered into a contract with NPC.

Held:

No.We have interpreted monopolistic claims of corporations, which want to protect

themselves through the exclusion of competitors and antagonistic parties, as necessarily
yielding to the higher claims of public interest. This interpretation is even more called for when
the exclusiveness is claimed on the basis of a public franchise.
Section 2 of Republic Act No. 3826 was obviously enacted to prevent the NPC from
distributing or selling electric power where petitioner Alger is already selling or is able to sell its
own self-generated electricity. In this case, Northern is a bulk purchaser of power. It had never
purchase's Alger's electricity before the suit was filed. It is not the usual consumer
residential or commercial for whom retail sales are Ideal. Exclusivity is given by law with the
understanding that the company enjoying it is self-sufficient and capable of supplying the
needed service or product at moderate or reasonable prices. It would be against public interest
where the firm granted a monopoly is merely ail unnecessary conduit of electric power, jacking
up prices as a superfluous middleman or an inefficient producer which cannot supply cheap
electricity to power intensive industries. It is in the public interest when industries dependent
on the heavy use of electricity are given reliable and direct power at the lowest costs thus
enabling the sale of nationally marketed products at prices within the reach of the masses.
Applying the above principles to the specific Facts of this case, Northern cannot be said to have
committed an act void ab initio when it concluded the questioned contract with NPC.
Accordingly, the respondent corporation is not liable for damages to the petitioner.
 COMMISSIONER OF INTERNAL REVENUE
vs.
VICENTE A. RUFINO, ET AL.
G.R. NOS. L-33665-68 FEBRUARY 27, 1987

Facts:

The private respondents were the majority stockholders of the Eastern Theatrical Co.,
Inc., a corporation organized for a period of twenty-five years terminating in 1959. It was
organized to engage in the business of operating theaters, opera houses, places of amusement
and other related business enterprises, more particularly the Lyric and Capitol Theaters in
Manila. The President of this corporation during the year in question was Ernesto D. Rufino.
The private respondents are also the majority and controlling stockholders of another
corporation, the Eastern Theatrical Co Inc., which was organized in 1958, for a term of 50
years. This corporation is engaged in the same kind of business as the Old Corporation. The
General-Manager of this corporation (hereinafter referred to as the New Corporation) at the
time was Vicente A. Rufino.
 In a special meeting of stockholders of the Old Corporation it provided for the
continuation of its business after the end of its corporate life, and upon the recommendation of
its board of directors, a resolution was passed authorizing the Old Corporation to merge with
the New Corporation by transferring its business, assets, goodwill, and liabilities to the latter,
which in exchange would Issue and distribute to the shareholders of the Old Corporation one
share for each share held by them in the said Corporation.
It was expressly declared that the merger of the Old Corporation with the New
Corporation was necessary to continue the exhibition of moving pictures at the Lyric and
Capitol Theaters even after the expiration of the corporate existence of the former.

Issue:

Whether or not the merger of the two corporations is valid.

Held:

Yes.The term "merger" or "consolidation," shall be understood to mean: (1) The ordinary
merger or consolidation, or (2) the acquisition by one corporation of all or substantially all the
properties of another corporation solely for stock, provided, that for a transaction to be
regarded as a merger or consolidation, it must be undertaken for a bona fide business purpose
and not solely for the purpose of escaping the burden of taxation, provided further, that in
determining whether a bona fide business purpose exists, each and every step of the
transaction shall be considered and the whole transaction or series of transactions shall be
treated as a single unit.
No taxable gain was derived by the private respondents from the questioned
transaction. Contrary to the claim of the petitioner, there was a valid merger although the
actual transfer of the properties subject of the Deed of Assignment was not made on the date of
the merger. In the nature of things, this was not possible. Obviously, it was necessary for the
Old Corporation to surrender its net assets first to the New Corporation before the latter could
Issue its own stock to the shareholders of the Old Corporation because the New Corporation
had to increase its capitalization for this purpose.
There is no impediment to the exchange of property for stock between the two
corporations being considered to have been effected on the date of the merger. That, in fact,
was the intention, and the reason why the Deed of Assignment was made retroactive to
January 1, 1959. Such retroaction provided in effect that all transactions set forth in the
merger agreement shall be deemed to be taking place simultaneously on January 1, 1959,
when the Deed of Assignment became operative.
 SOLID MANILA CORPORATION
vs.
BIO HONG TRADING., INC. AND COURT OF APPEALS
G.R. NO. 90596 APRIL 8, 1991

Facts:

The petitioner is the owner of a parcel of land. The same lies in the vicinity of another
parcel, registered in the name of the private respondent corporation. The private respondent's
title came from a prior owner, and in their deed of sale, the parties thereto reserved as an
easement of way. As a consequence, an annotation was entered in the private respondent's
title.
The petitioner claims that ever since, it had (as well as other residents of neighboring
estates) made use of the above private alley and maintained and contributed to its upkeep,
until sometime in 1983, when, and over its protests, the private respondent constructed steel
gates that precluded unhampered use. On December 6, 1984, the petitioner commenced suit
for injunction against the private respondent, to have the gates removed and to allow full
access to the easement.

Issue:

Whether the court a quo errs in holding that an easement had been extinguished by
merger.

Held:

No. There is no question that an easement, as described in the deed of sale executed
between the private respondent and the seller, had been constituted on the private
respondent's property, and has been annotated. Specifically, the same charged the private
respondent as follows, that the alley shall remain open at all times, and no obstructions
whatsoever shall be placed thereon, that the owner of the lot on which the alley has been
constructed shall allow the public to use the same, and allow the City to lay pipes for sewer
and drainage purposes, and shall not ask for any indemnity for the use thereof. Its act,
therefore, of erecting steel gates across the alley was in defiance of these conditions and a
violation of the deed of sale, and, of course, the servitude of way.
 No genuine merger took place as a consequence of the sale in favor of the private
respondent corporation. According to the Civil Code, a merger exists when ownership of the
dominant and servient estates is consolidated in the same person. Merger then, as can be
seen, requires full ownership of both estates.
However, the servitude in question is a personal servitude, that is to say, one
constituted not in favor of a particular tenement (a real servitude) but rather, for the benefit of
the general public. In a personal servitude, there is therefore no "owner of a dominant
tenement" to speak of, and the easement pertains to persons without a dominant estate, in this
case, the public at large.
Merger presupposes the existence of a prior servient-dominant owner relationship, and
the termination of that relation leaves the easement of no use. Unless the owner conveys the
property in favor of the public, if that is possible, hence, no genuine merger can take place that
would terminate a personal easement. In the case at bar, the defense of merger is, clearly, not
a valid defense, indeed, a sham one, because merger is not possible, and secondly, the sale
unequivocally preserved the existing easement. In other words, the answer does not, in reality,
tender any genuine Issue on a material fact and cannot militate against the petitioner's clear
cause of action.
CHINESE YMCA
vs.
VICTOR CHING
G.R. NO. L-36929 JUNE 18, 1976

Facts:

Respondent Victor Ching filed an action for mandamus with preliminary injunction
against the herein petitioners. He anchored his action upon the claim that the Membership
Campaign of the Chinese YMCA for 1966 held, only 175 applications for membership were
submitted, canvassed and accepted on the last day of the membership campaign. Not more
than 240 membership applications, as reported, Issue of the Chinese Commercial News, were
filed.
It is to be noted that respondent Victor Ching is a member of the Board of Directors of
the Chinese YMCA, while herein petitioners, William Golangco and Juanito K. Tan, are its
president and recording secretary, respectively. In the campaign for membership for the year
1966, a rivalry had developed between two groups in the association, one headed by
respondent Ching and the other by petitioner Golangco.
On the last day of the membership campaign, respondent Ching and herein petitioner
Golangco were in the office of the Chinese YMCA. Respondent Ching, after it was agreed upon
that there was going to be no extension of the membership campaign. After trial, a decision
was rendered annulling the 1966 annual membership campaign of the respondent. On appeal,
the appealed decision was affirmed.

Issue:

Whether or not the membership campaign is valid.

Held:

Yes.175 membership applications were undisputedly filed within the deadline (including
the 75 withdrawn by respondent) and yet the 100 remaining unquestioned memberships were
nullified by the questioned decision without the individuals concerned ever having been
impleaded or heard (except the individual petitioners president and secretary).
The appealed decision thus contravened the established principle that the courts
cannot strip a member of a non-stock non-profit corporation of his membership therein
without cause. Otherwise, that would be an unwarranted and undue interference with the well-
established right of a corporation to determine its membership. In order that membership may
be acquired in a non-stock corporation and valid by-laws must be complied with, except in so
far as they may be and are waived. But provisions in the by-laws as to formal steps to be taken
to acquire membership may be waived by the corporation, or it may be estopped to assert that
they have not been taken.
Finally, the appealed decision did not give due importance to the undisputed fact
therein stated that "at the board meeting of the association held on December 7, 1965, a list of
174 applications for membership, old and new, was submitted to the board and approved by
the latter, over the objection of the petitioner who was present at said meeting." Such action of
the petitioner association's board of directors approving the 174 membership applications of
old and new members constituting its active membership as duly processed and screened by
the authorized committee just be deemed a waiver on its part of any technicality or
requirement of form.
 THE COLLECTOR OF INTERNAL REVENUE
vs.
THE CLUB FILIPINO, INC. DE CEBU
G.R. No. L-12719 May 31, 1962

Facts:

The "Club Filipino, Inc. de Cebu," is a civic corporation organized under the laws of the
Philippines with an original authorized capital stock of P22,000.00, which was subsequently
increased to P200,000.00. Neither in the articles or by-laws is there a provision relative to
dividends and their distribution, although it is covenanted that upon its dissolution, the Club's
remaining assets, after paying debts, shall be donated to a charitable Philippine Institution in
Cebu.
The Club owns and operates a club house, a bowling alley, a golf course (on a lot leased
from the government), and a bar-restaurant where it sells wines and liquors, soft drinks, meals
and short orders to its members and their guests. The bar-restaurant was a necessary incident
to the operation of the club and its golf-course. The club is operated mainly with funds derived
from membership fees and dues. Whatever profits it had, were used to defray its overhead
expenses and to improve its golf-course. In 1951. as a result of a capital surplus, arising from
the re-valuation of its real properties, the value or price of which increased, the Club declared
stock dividends; but no actual cash dividends were distributed to the stockholders. In 1952, a
BIR agent discovered that the Club has never paid percentage tax on the gross receipts of its
bar and restaurant, although it secured B-4, B-9(a) and B-7 licenses. In a letter dated
December 22, 1852, the Collector of Internal Revenue assessed against and demanded from
the Club certain amount of tax. The Club wrote the Collector, requesting for the cancellation of
the assessment. The request having been denied, the Club filed the instant petition for review.

Issue:

Whether the respondent Club liable for the payment of percentage taxes and surcharges
prescribed in sections 182, 183 and 191 of the Tax Code in connection with the operation of its
bar and restaurant.

Held:

No. Having found as a fact that the Club was organized to develop and cultivate sports
of all class and denomination, for the healthful recreation and entertainment of its
stockholders and members; that upon its dissolution, its remaining assets, after paying debts,
shall be donated to a charitable Philippine Institution in Cebu; that it is operated mainly with
funds derived from membership fees and dues; that the Club's bar and restaurant catered only
to its members and their guests; that there was in fact no cash dividend distribution to its
stockholders and that whatever was derived on retail from its bar and restaurant was used to
defray its overall overhead expenses and to improve its golf-course, it stands to reason that the
Club is not engaged in the business of an operator of bar and restaurant.
The facr that the capital stock of the respondent Club is divided into shares, does not
detract from the finding of the trial court that it is not engaged in the business of operator of
bar and restaurant. What is determinative of whether or not the Club is engaged in such
business is its object or purpose, as stated in its articles and by-laws. It is a familiar rule that
the actual purpose is not controlled by the corporate form or by the commercial aspect of the
business prosecuted, but may be shown by extrinsic evidence, including the by-laws and the
method of operation.
 ANTONIO LITONJUA and ARNOLD LITONJUA
vs.
THE HON. COURT OF APPEALS, ET. AL.
G.R. No. 120294 February 10, 1998

Facts:

WackWack Golf and Country Club is a non-profit corporation which offers sports,
recreational and social activities to its members. Petitioner Antonio Litonjua is an Associate
Member of said corporation and his son, co-petitioner Arnold Litonjua, is a Junior Member
thereof. The individual respondents are the members of the Board of Directors and
Membership Committee of WackWack. On 10 January 1985, pursuant to its by-laws,
respondent club posted the monthly list of delinquent members on its premises. Included
therein was petitioner Antonio Litonjua.
After Antonio Litonjua discovered that his name was on the January 1985 delinquent
list, he proceeded to the Cashier's Office of the club and was informed therein that the reason
behind his delinquency was his failure to pay his November 1984 dues (which should have
been paid before the end of December 1984 as provided in the corporate by-laws). Antonio
Litonjua alleged that he was not able to pay his monthly bill on time because he has not
received his statement of account for November 1984. As proof, he presented a sealed envelope
which he allegedly presumed to be the November 1984 bill (but was actually the December
1984 statement of account) and explained that he received it only on 12 January 1985.
A check with the accounting office, however, revealed that the November 1984
statement of account had already been delivered to Antonio Litonjua's office and was received
by his employee allegedly named "Aquino." Petitioner asserted that, he did not receive said
account and had no employee by the name of "Aquino." Based on the foregoing, Antonio
Litonjua was able to convince the auxiliary clerks in the Cashier's Office to delete his name
from the list of delinquent members. Consequently, Antonio Litonjua continued to avail of the
club facilities. Later, Antonio Litonjua was advised of another outstanding balance in the
amount of P9,414.00. Again, he Issued a check in payment thereof. As a result, his name was
deleted from the February 1985 list of delinquent members.

Issue:

Whether the statement of account for November 1984 was duly delivered to and
received by Antonio Litonjua's office.

Held:

No.According to Mr. Limbo's testimony on record, the Court failed to find therein any
statement that he delivered the November 1984 account to Antonio Litonjua himself. Mr. Limbo
was consistent in his testimony to the effect that on 12 December 1984 he delivered the
November 1984 statement of account at the office of Antonio Litonjua and it was received by an
employee of the latter who signed the Special Delivery Receipt. On cross-examination, Mr.
Limbo did not waver from his testimony that Antonio Litonjua's November 1984 bill was duly
received by the latter's employee.Against the testimony of Mr. Victor Limbo, coupled with
documentary evidence in the form of the signed Special Delivery Receipt, petitioners presented
no proof other than the bare denial of Antonio Litonjua that he never received his statement of
account for November 1984 and that he has no "Aquino" in his employ.
 THE PHILIPPINE PUBLIC SCHOOL TEACHERS ASSOCIATION (PPSTA) COMMISSION ON
ELECTIONS
vs.
Honorable SERGIO A. F. APOSTOL
G.R. No. L-36966 February 28, 1974

Facts:

Private respondent Eufemia M. San Luis as a member of the Philippine Public School
Teachers Association (PPSTA), a fraternal non-stock association of public school teachers
throughout the country, filed with respondent court of first instance at Quezon City a
complaint with preliminary injunction for the annulment of the 1972 annual elections of the
PPSTA board of directors held on June 26-28, 1972 at Teachers Camp in Baguio City for
having been held outside its principal office at Quezon City against herein petitioners as
defendants.

Issue:

Whether the elections of the Board of Directors are null and void.

Held:

No.The Court finds it unnecessary to rule upon the parties' above conflicting
contentions, since it finds to be decisive petitioners' contention that respondent has no
personality and standing as a single individual member out of thousands of members of the
PPSTA to bring the action below for annulment of the PPSTA 1972 annual convention and
elections, as she was not even a chapter delegate to the said convention and she was duly
represented thereat in accordance with the PPSTA's by-laws by her duly authorized chapter
delegates who have raised no question as to the proceedings.Article IX, section 5 of the by-laws
expressly provides that "only official delegates to the representative assembly are entitled to
take part in the discussions and to vote."
Respondent's action below was in essence one of quo warranto which is governed by
Rule 66 of the Rules of Court Section 6 thereof provides that in order that an individual may
directly bring the action, he or she must claim to entitled to the public office or position
allegedly unlawfully held or usurped.Otherwise, the action must be brought by the Solicitor
General or fiscal with leave of the court upon the complaint of the realtor under section 4 of the
Rule.
The general rule is that actions for quo warranto should be brought by the Solicitor
General or a fiscal in cases of usurpation of an office established by law or by the Constitution
under color of an executive appointment, or the abuse of a public franchise under color of a
legislative grant, for these are public wrongs and not private injuries. Since, under our system
all power emanates from the people, who constitute the sovereignty, the right to inquire into
the authority by which a person assumes to exercise the functions of a public office or
franchise is regarded as inherent in the people on the right their sovereignty. Hence, the action
should be brought by the Solicitor General or the fiscal who represents the sovereign power.
Respondent manifestly lays no claim herself to the office of PPSTA director nor has the
present action been filed with leave of court by the Solicitor General or fiscal upon her relation
as a party having an interest injuriously affected, as required by the cited Rule. Her action
must therefore fail on this score and the judgment erroneously rendered by respondent court
shall be set aside.
MANUEL R. DULAY ENTERPRISES, INC
vs.
THE HONORABLE COURT OF APPEALS
G.R. No. 91889 August 27, 1993

Facts:

Manuel R. Dulay Enterprises, Inc, a domestic corporation with the following as

members of its Board of Directors: Manuel R. Dulay with 19,960 shares and designated as
president, treasurer and general manager, Atty. Virgilio E. Dulay with 10 shares and
designated as vice-president; Linda E. Dulay with 10 shares; Celia Dulay-Mendoza with 10
shares; and Atty. Plaridel C. Jose with 10 shares and designated as secretary, owned a
property covered by TCT No. 17880 and known as Dulay Apartment consisting of sixteen (16)
apartment units on a six hundred eighty-nine (689) square meters lot, more or less, located at
Seventh Street (now Buendia Extension) and F.B. Harrison Street, Pasay City.
Petitioner corporation through its president, Manuel Dulay, obtained various loans for
the construction of its hotel project, Dulay Continental Hotel (now Frederick Hotel). It even had
to borrow money from petitioner Virgilio Dulay to be able to continue the hotel project. As a
result of said loan, petitioner Virgilio Dulay occupied one of the unit apartments of the subject
property since property since 1973 while at the same time managing the Dulay Apartment at
his shareholdings in the corporation was subsequently increased by his father.
Manuel Dulay by virtue of Board Resolution petitioner corporation sold the subject
property to private respondents spouses Maria Theresa and CastrenseVeloso in the amount of
P300,000.00 as evidenced by the Deed of Absolute Sale.Subsequently, private respondent
Maria Veloso, without the knowledge of Manuel Dulay, mortgaged the subject property to
private respondent Manuel A. Torres for a loan of P250,000.00 which was duly annotated.Upon
the failure of private respondent Maria Veloso to pay private respondent Torres, the subject
property was sold on April 5, 1978 to private respondent Torres as the highest bidder in an
extrajudicial foreclosure sale as evidenced by the Certificate of Sheriff's Sale Issued on April 20,
1978.

Issue:

Whether the doctrine of piercing the veil of corporate entity is applicable.

Held:
 No.Petitioner Corporation is classified as a close corporation and consequently a board
resolution authorizing the sale or mortgage of the subject property is not necessary to bind the
corporation for the action of its president. At any rate, corporate action taken at a board
meeting without proper call or notice in a close corporation is deemed ratified by the absent
director unless the latter promptly files his written objection with the secretary of the
corporation after having knowledge of the meeting which, in his case, petitioner Virgilio Dulay
failed to do.
It is relevant to note that although a corporation is an entity which has a personality
distinct and separate from its individual stockholders or members,the veil of corporate fiction
may be pierced when it is used to defeat public convenience justify wrong, protect fraud or
defend crime. The privilege of being treated as an entity distinct and separate from its
stockholder or members is therefore confined to its legitimate uses and is subject to certain
limitations to prevent the commission of fraud or other illegal or unfair act. When the
corporation is used merely as an alter ego or business conduit of a person, the law will regard
the corporation as the act of that person.
 REPUBLIC OF THE PHILIPPINES
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT
G.R. No. L-68303 January 15, 1988

Facts:

The properties in dispute number three undivided lots and Lot No. 2410-B. They are all
located in Tiptipon, Panamao, Sulu. The title thereto stood allegedly in the name of Sultan
JamalulKiram, who died in 1936. The private respondent, a niece of the late Sultan, now
claims that the original certificate of title thereto was destroyed as a consequence of a fire that
gutted the office of the Register of Deeds of Sulu sometime in February, 1974. She likewise
alleges that the owner's copy thereof was lost on account of the same misfortune. On October
18,1979, she went to the then Court of First Instance of Sulu, Branch I, at Jolo, now Regional
Trial Court, the Honorable Jainal D. Rasul, District Judge, presiding, for reconstitution.
The Solicitor General presented in the trial court no opposition to the application, and
based on the evidence of the private respondent, the assailed order was Issued on June 4,
1980. The Solicitor General appealed to the then Intermediate Appellate Court, now Court of
Appeals, which however affirmed in toto, on May 24, 1984, the order of the trial court.

Issue:

Whether the Petition should be granted.

Held:

Yes.It is not disputed, to begin with, that the notices of hearing were not posted on the
main entrances of the provincial and municipal halls of the locality in which the lands are
located. Under Section 13, of Republic Act No. 26: The court shall cause a notice of the
petition, filed under the preceding section, to be published, at the expense of the petitioner,
twice Issues of the Official Gazette, and to be posted on the main of the municipality or city in
which the land is situated, at the provincial building and of the municipal building at least
thirty days prior to the date of hearing. The court shall likewise cause a copy of the notice to be
sent, by registered mail or otherwise, at the expense of the petitioner, to every person named
therein whose address is known, at least thirty days prior to the date of hearing. Said notice
shall state, among other things, the number of the lost or destroyed certificate of title, if
known, the name of the registered owner, the names of the occupants or persons in possession
of the property, the owners of the adjoining properties and all other interested parties, the
location, area and boundaries of the property, and the date on which all persons having any
interest therein must appear and file their claim or objections to the petition. The petitioner
shall, at the hearing, submit proof of the publication, posting and service of the notice as
directed by the court.
Such a mode of publication is a jurisdictional requirement. The failure on the part of
the applicant to comply with it confers no jurisdiction upon the court.Neither is there any
showing that the adjacent owners or other interested parties were actually notified of the
pending application. This too taints the petition with a jurisdictional defect.It is not enough
that there is publication in the Official Gazette. Publication of the notice in the Official. The
Republic cannot be faulted for nursing doubts about the private respondent's assertions. In the
first place, the private respondent claims that two deeds have been lost.
 GLESIA FILIPINA INDEPENDIENTE
vs.
HEIRS of BERNARDINO TAEZA

G.R. No. 179597 February 3, 2014

Facts:

Iglesia Filipina Independiente (IFI), a duly registered religious corporation, was the
owner of a parcel of land inTuguegarao, Cagayan. IFI, through its then Supreme Bishop Rev.
Macario Ga, sold a lot to one Bienvenido de Guzman. Other lots were likewise sold by Rev.
Macario Ga, in his capacity as the Supreme Bishop, to the defendant Bernardino Taeza,
through installment, with mortgage to secure the payment of the balance. Subsequently, the
defendant allegedly completed the payments.

A complaint for the annulment of the Deed of Sale with Mortgage was filed by the Parish
Council of Tuguegarao, Cagayan, represented by FroilanCalagui and Dante Santos, the
President and the Secretary, respectively, of the Laymen's Committee, with the then Court of
First Instance of Tuguegarao, Cagayan, against their Supreme Bishop Macario Ga and the
defendant Bernardino Taeza.The said complaint was, however, subsequently dismissed on the
ground that the plaintiffs therein lacked the personality to file the case.

After the expiration of Rev. Macario Ga's term of office as Supreme Bishop of the IFI on
May 8, 1981, Bishop Abdias dela Cruz was elected as the Supreme Bishop. Thereafter, an
action for the declaration of nullity of the elections was filed by Rev. Ga, with the Securities and
Exchange Commission (SEC).

In 1987, while the case with the SEC is (sic) still pending, the plaintiff-appellee IFI, represented
by Supreme Bishop Rev. Soliman F. Ganno, filed a complaint for annulment of the sale of the
subject parcels of land against Rev. Ga and the defendant Bernardino Taeza,. The case was
filed with the Regional Trial Court of Tuguegarao, Cagayan, Branch III, which in its order dated
December 10, 1987, dismissed the said case without prejudice, for the reason that the Issue as
to whom of the Supreme Bishops could sue for the church had not yet been resolved by the
SEC.

Issue:

Whether the contract entered into by the Supreme Bishop is valid.

Held:

No. The Court finds it erroneous for the CA to ignore the fact that the laymen's
committee objected to the sale of the lot in question. The Canons require that ALL the church
entities listed in Article IV (a) thereof should give its approval to the transaction. Thus, when
the Supreme Bishop executed the contract of sale of petitioner's lot despite the opposition
made by the laymen's committee, he acted beyond his powers.

IGLESIA EVANGELICA METODISTA EN LAS ISLAS FILIPINAS (IEMELIF) (Corporation

Sole), INC., et al
vs.
BISHOP NATHANAEL LAZARO, et al
G.R. No. 184088 July 6, 2010

Facts:

Bishop Nicolas Zamora established the petitioner IglesiaEvangelicaMetodistaEn Las

Islas Filipinas, Inc. (IEMELIF) as a corporation sole with Bishop Zamora acting as its "General
Superintendent." Thirty-nine years later in 1948, the IEMELIF enacted and registered a by-
laws that established a Supreme Consistory of Elders (the Consistory), made up of church
ministers, who were to serve for four years. The by-laws empowered the Consistory to elect a
General Superintendent, a General Secretary, a General Evangelist, and a Treasurer General
who would manage the affairs of the organization. For all intents and purposes, the Consistory
served as the IEMELIFs board of directors.
 Apparently, although the IEMELIF remained a corporation sole on paper (with all
corporate powers theoretically lodged in the hands of one member, the General
Superintendent), it had always acted like a corporation aggregate. The Consistory exercised
IEMELIFs decision-making powers without ever being challenged. Subsequently, during its
1973 General Conference, the general membership voted to put things right by changing
IEMELIFs organizational structure from a corporation sole to a corporation aggregate. On May
7, 1973 the Securities and Exchange Commission (SEC) approved the vote. For some reasons,
however, the corporate papers of the IEMELIF remained unaltered as a corporation sole. Only
in 2001, about 28 years later, did the Issue reemerge. In answer to a query from the IEMELIF,
the SEC replied on April 3, 2001 that, although the SEC Commissioner did not in 1948 object
to the conversion of the IEMELIF into a corporation aggregate, that conversion was not properly
carried out and documented.

Issue:

Whether a corporation sole be converted into a corporation aggregate by mere

amendment of its articles of incorporation.

Held:

Yes.The Corporation Code provides no specific mechanism for amending the articles of
incorporation of a corporation sole. But, as the RTC correctly held, Section 109 of the
Corporation Code allows the application to religious corporations of the general provisions
governing non-stock corporations.
Although a non-stock corporation has a personality that is distinct from those of its
members who established it, its articles of incorporation cannot be amended solely through the
action of its board of trustees. The amendment needs the concurrence of at least two-thirds of
its membership. If such approval mechanism is made to operate in a corporation sole, its one
member in whom all the powers of the corporation technically belongs, needs to get the
concurrence of two-thirds of its membership. The one member, here the General
Superintendent, is but a trustee, according to Section 110 of the Corporation Code, of its
membership. There is no point to dissolving the corporation sole of one member to enable the
corporation aggregate to emerge from it. Whether it is a non-stock corporation or a corporation
sole, the corporate being remains distinct from its members, whatever be their number. The
increase in the number of its corporate membership does not change the complexion of its
corporate responsibility to third parties. The one member, with the concurrence of two-thirds of
the membership of the organization for whom he acts as trustee, can self-will the amendment.
 IGLESIA EVANGELICA METODISTA EN LAS ISLAS FILIPINAS (IEMELIF), INC.
vs.
NATANAEL B. JUAN
G.R. No. 172447 September 18, 2009
Facts:

IEMELIF is a religious corporation existing and duly organized under Philippine laws.
Juane is a former minister or pastor of IEMELIF. He was elected as one of the members of the
Highest Consistory of Elders (or Board of Trustees) of IEMELIF in the February 2000 IEMELIF
General Conference. During the concluding Anniversary Service of said General Conference,
IEMELIF Bishop Nathanael P. Lazaro, the General Superintendent of the whole IEMELIF
Church and the General Administrator of the IEMELIF Cathedral in Tondo, Manila, during the
reading of the "IEMELIF Workers Assignment", announced the appointment and assignment of
Juane as Resident Pastor of the Cathedral Congregation in Tondo, Manila. By virtue and as a
consequence of such appointment, Defendant Rev. Juane was authorized to stay at and occupy
the Resident Pastors residence inside the Cathedral complex. By the same reason, he also took
charge of the Cathedral facilities and other property of the church in said premises.

Issue:

Whether the transformation of IEMELF from corporation sole to an aggregate one is

valid.

Held:

Yes.Juane maintains that the "IEMELIF" that filed the Complaint before the MeTC had
no personality to eject him from the subject property. The Church has remained a corporation
sole, since its transformation to a corporation aggregate was legally defective. Juane, thus,
claims that he is now the corporation sole, who is entitled to the physical possession of the
subject property as owner thereof. In fact, on the basis of these same arguments.
Even if the transformation of IEMELIF from a corporation sole to a corporation
aggregate was legally defective, its head or governing body, i.e., Bishop Lazaro, whose acts were
approved by the Highest Consistory of Elders, still did not change. A corporation sole is one
formed by the chief archbishop, bishop, priest, minister, rabbi or other presiding elder of a
religious denomination, sect, or church, for the purpose of administering or managing, as
trustee, the affairs, properties and temporalities of such religious denomination, sect or
church. As opposed to a corporation aggregate, a corporation sole consists of a single member,
while a corporation aggregate consists of two or more persons. If the transformation did not
materialize, the corporation sole would still be Bishop Lazaro, who himself performed the
questioned acts of removing Juane as Resident Pastor of the Tondo Congregation. If the
transformation did materialize, the corporation aggregate would be composed of the Highest
Consistory of Elders, which nevertheless approved the very same acts. As either Bishop Lazaro
or the Highest Consistory of Elders had the authority to appoint Juane as Resident Pastor of
the IEMELIF Tondo Congregation, it also had the power to remove him as such or transfer him
to another congregation.

TEODORO B. VESAGAS, AND WILFRED D. ASIS

vs.
THE HONORABLE COURT OF APPEALS
G.R. NO. 142924 DECEMBER 5, 2001

Facts:

The respondent spouses Delfino and HelendaRaniel are members in good standing of
the Luz Villaga Tennis Clud, Inc. (club). They alleged that petitioner Teodoro B. Vesagas, who
claims to be the club's duly elected president, in conspiracy with petitioner Wilfred D. Asis,
who, in turn, claims to be its duly elected vice-president and legal counsel, summarily stripped
them of their lawful membership, without due process of law. Thereafter, respondent spouses
filed a Complaint with the Securities and Exchange Commission (SEC) on March 26, 1997
against the petitioners. It was docketed as SEC Case No. 03-97-5598.In this case, respondents
asked the Commission to declare as illegal their expulsion from the club as it was allegedly
done in utter disregard of the provisions of its by-laws as well as the requirements of due
process. They likewise sought the annulment of the amendments to the by-laws made on
December 8, 1996, changing the annual meeting of the club from the last Sunday of January
to November and increasing the number of trustees from nine to fifteen. Finally, they prayed
for the issuance of a Temporary Restraining Order and Writ of Preliminary Injunction. The
application for TRO was denied by SEC Hearing Officer Soller in an Order dated April 29, 1997.

Issue:

Whether or not SEC has jurisdiction.

Held:

Yes.Petitioners' attempt to impress upon this court that the club has never been a
corporation is devoid of merit. It must fail in the face of the Commission's explicit finding that
the club was duly registered and a certificate of incorporation was issued in its favor. It ought
to be remembered that the question of whether the club was indeed registered and Issued a
certification or not is one which necessitates a factual inquiry. On this score, the finding of the
Commission, as the administrative agency tasked with among others the function of registering
and administering corporations, is given great weight and accorded high respect. We therefore
have no reason to disturb this factual finding relating to the club's registration and
incorporation.
Moreover, by their own admission contained in the various pleadings which they have
filed in the different stages of this case, petitioners themselves have considered the club as a
corporation. This admission, under the rules of evidence, binds them and may be taken or
used against them. Since the admission was made in the course of the proceedings in the same
case, it does not require proof, and actually may be contradicted only by showing that it was
made through palpable mistake or that no such admission was made.

AVON DALE GARMENTS, INC.

vs.
NATIONAL LABOR RELATIONS COMMISSION, ET.AL.
G.R. No. 117932 July 20, 1995

Facts:

Private respondents were employees of petitioner Avon Dale Garments, Inc. and its
predecessor-in-interest, Avon Dale Shirt Factory. Following a dispute brought about by the
rotation of workers, a compromise agreement was entered into between petitioner and private
respondents wherein the latter were terminated from service and given their corresponding
separation pay.
However, upon refusal of the petitioner to include in the computation of private
respondents' separation pay the period during which the latter were employed by Avon Dale
Shirt Factory, private respondents filed a complaint with the labor arbiter claiming a deficiency
in their separation pay. According to private respondents, their previous employment with
petitioner's predecessor-in-interest, Avon Dale Shirt Factory, should be credited in computing
their separation pay considering that Avon Dale Shirt factory was not dissolved and they were
not in turn hired as new employees by Avon Dale Garments, Inc.

Issue:

Whether the petitioner be held liable for private respondents' separation pay from Avon
Dale Shirt Factory.

Held:

Yes.Petitioner failed to establish that Avon Dale Garments, Inc., is a separate and
distinct entity from Avon Dale Shirt Factory, absent any showing that there was indeed an
actual closure and cessation of the operations of the latter. The mere filing of the Articles of
Dissolution with the Securities and Exchange Commission, without more, is not enough to
support the conclusion that actual dissolution of an entity in fact took place. On the contrary,
the prevailing circumstances in this case indicated that Petitioner Company is not distinct from
its predecessor Avon Dale Shirt Factory, but 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.
Thus, conformably with established jurisprudence, the two entities cannot be deemed
as separate and distinct where there is a showing 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 special act or under a general law; it has no effect on the identity of the
corporation, or on its property, rights, or liabilities.Respondent NLRC therefore, did not commit
any grave abuse of discretion in holding that petitioner should likewise include private
respondents' employment with Avon Dale Shirt Factory in computing private respondents'
separation pay as petitioner failed to substantiate its claim that it is a distinct entity.
 DAGUHOY ENTERPRISES, INC.
vs.
RITA L. PONCE
G.R. No. L-6515 October 18, 1954

Facts:

The Daguhoy Enterprises, Inc., a local corporation, with principal office in the City of
Manila filed in the Court of First Instance of the City Civil Case No. 15923 against Rita L. Ponce
and her husband Domingo Ponce, for the collection of a loan of P6,190 with interest at 12 per
cent per annum from June 24, 1950, plus P2,500 as attorney's fees and P34 as expenses of
litigation.
Defendant filed an answer admitting practically all the allegations of the complaint, set
up affirmative defenses, and a counterclaim asking for the cancellation of the mortgage which
secured the payment of the loan of P6,190. They also filed a petition for the inclusion of
PotencianoGapol as a third party litigant, at the same time filing a third party complaint
against him asking for damages in the amount of P25,000. The plaintiff corporation answered
the counterclaim and opposed the petition for the inclusion of a third party litigant. Thereafter,
plaintiff corporation filed a motion for judgment on the pleadings which petition was opposed
by the defendants. Then, on October 9, 1952, the trial court rendered judgment against
defendants.

Issue:

Whether the said deposit relieve the present defendants from the payment of interests
from the time of deposit, on the theory that the deposit amounted to a payment of the loan.

Held:

No.It should be remembered that Civil Case No. 13753 though in the same Court of
First Instance of Manila, is a separate and different action, for accounting not only for the
amount of the loan but for other sums. The plaintiff in that case was Gapol in behalf of the
Daguhoy Enterprises, Inc. and the defendants are Domingo Ponce and his son Buhay M.
Ponce. The parties in the present case are different. Furthermore, when the plaintiff in said
case 13753 petitioned the trial court for permission to withdraw the deposit, presumably to pay
the loan involved in the present action, his petition was denied by the court because of the
opposition of the defendants therein, one of whom is Domingo Ponce, co-defendant of Rita
Ponce in the present case. The result was that the present plaintiff corporation could not take
possession and dispose of said amount. In other words, the loan is not yet paid.

BENIGNO M. VIGILLA

v.
 PHILIPPINE COLLEGE OF CRIMINOLOGY INC.

G.R. No. 200094, June 10, 2013

Facts:

PCCr is a non-stock educational institution, while the petitioners were janitors,

janitresses and supervisor in the Maintenance Department of PCCr under the supervision and
control of Atty. Seril, PCCrs Senior Vice President for Administration. The petitioners,
however, were made to understand, upon application with respondent school, that they were
under MBMSI, a corporation engaged in providing janitorial services to clients. Atty. Seril is
also the President and General Manager of MBMSI.

Sometime in 2008, PCCr discovered that the Certificate of Incorporation of MBMSI had been
revoked as of July 2, 2003. On March 16, 2009, PCCr, through its President, respondent
Gregory Alan F. Bautista , citing the revocation, terminated the schools relationship with
MBMSI, resulting in the dismissal of the employees or maintenance personnel under MBMSI,
except Alfonso Bongot who was retired.

In September, 2009, the dismissed employees, led by their supervisor, BenignoVigilla (Vigilla),
filed their respective complaints for illegal dismissal, reinstatement, back wages, separation
pay (for Bongot), underpayment of salaries, overtime pay, holiday pay, service incentive leave,
and 13th month pay against MBMSI, Atty. Seril, PCCr, and Bautista.

Issue:

Whetherthe executed releases, waivers and quitclaims are valid and binding
notwithstanding the revocation of Certificate of Incorporation.

Held:

Yes. The executed releases, waivers and quitclaims are valid and binding
notwithstanding the revocation of MBMSIs Certificate of Incorporation. The revocation does not
result in the termination of its liabilities. Section 122 of the Corporation Code provides for a
three-year winding up period for a corporation whose charter is annulled by forfeiture or
otherwise to continue as a body corporate for the purpose, among others, of settling and
closing its affairs.

Even if said documents were executed in 2009, six (6) years after MBMSIs dissolution
in 2003, the same are still valid and binding upon the parties and the dissolution will not
terminate the liabilities incurred by the dissolved corporation pursuant to Sections 122 and
145of the Corporation Code.

Furthermore, Section 145 of the Corporation Code clearly provides that "no right or
remedy in favor of or against any corporation, its stockholders, members, directors, trustees, or
officers, nor any liability incurred by any such corporation, stockholders, members, directors,
trustees, or officers, shall be removed or impaired either by the subsequent dissolution of said
corporation." Even if no trustee is appointed or designated during the three-year period of the
liquidation of the corporation, the Court has held that the board of directors may be permitted
to complete the corporate liquidation by continuing as "trustees" by legal implication.
 PHILIPPINE NATIONAL BANK
vs.
CIF OF RIZAL
G.R. NO. 63201 MAY 27, 1992

Facts:

On March 1, 1954, private respondents entered into a contract of lease with Philippine
Blooming Mills, Co., Inc., (PBM for brevity) whereby the letter shall lease the aforementioned
parcels of land as factory site. PBM was duly organized and incorporated on January 19, 1952
with a corporate term of twenty-five (25) years. This leasehold right of PBM covering the parcels
of land was duly annotated at the back of the above stated certificates of title as Entry No.
9367/T-No. 32843. The contract of lease provides that the term of the lease is for twenty years
beginning from the date of the contract and "is extendable for another term of twenty years at
the option of the LESSEE should its term of existence be extended in accordance with law."
On October 11, 1963, PBM executed in favor of Philippine National Bank (PNB for
brevity), petitioner herein, a deed of assignment, conveying and transferring all its rights and
interests under the contract of lease which it executed with private respondents. The
assignment was for and in consideration of the loans granted by PNB to PBM. The deed of
assignment was registered and annotated at the back of the private respondents' certificates of
title as Entry No. 85215/T-No. 32843.

Issue:

Whether the cancellation of the entries on respondent's certificates of title valid and
proper.

Held:

Yes.The contract of lease expressly provides that the term of the lease shall be twenty
years from the execution of the contract but can be extended for another period of twenty years
at the option of the lessee should the corporate term be extended in accordance with law.
Clearly, the option of the lessee to extend the lease for another period of twenty years can be
exercised only if the lessee as corporation renews or extends its corporate term of existence in
accordance with the Corporation Code which is the applicable law. Thus, in the instant case,
the initial term of the contract of lease which commenced on March 1, 1954 ended on March 1,
1974. PBM as lessee continued to occupy the leased premises beyond that date with the
acquiescence and consent of the respondents as lessor. Records show however, that PBM as a
corporation had a corporate life of only twenty-five (25) years which ended an January 19,
1977. It should be noted however that PBM allowed its corporate term to expire without
complying with the requirements provided by law for the extension of its corporate term of
existence.
There is no need for the institution of a proceeding for quo warranto to determine the
time or date of the dissolution of a corporation because the period of corporate existence is
provided in the articles of incorporation. When such period expires and without any extension
having been made pursuant to law, the corporation is dissolved automatically insofar as the
continuation of its business is concerned.
Considering the foregoing in relation to the contract of lease between the parties herein,
when PBM's corporate life ended on January 19, 1977 and its 3-year period for winding up and
liquidation expired on January 19, 1980, the option of extending the lease was likewise
terminated on January 19, 1977 because PBM failed to renew or extend its corporate life in
accordance with law. From then on, the respondents can exercise their right to terminate the
lease pursuant to the stipulations in the contract.
 METROPOLITAN BANK and TRUST COMPANY
vs.
CENTRO DEVELOPMENT CORPORATION, CHONGKING KEHYENG, MANUEL CO KEHYENG
and QuirinoKehyeng
G.R. No. 180974 June 13, 2012

Facts:

On March 20, 1990, in a special meeting of the board of directors of respondent Centro
Development Corporation, its president Go EngUy was authorized to mortgage its properties
and assets to secure the medium-term loan of P 84 million of Lucky Two Corporation and
Lucky Two Repacking. The properties and assets consisted of a parcel of land with a building
and improvements located at Salcedo St., Legaspi Village, Makati City, and covered by Transfer
Certificate of Title Nos. 139880 and 139881. This authorization was subsequently approved on
the same day by the stockholders. Maria Jacinta V. Go, the corporate secretary, Issued a
Secretarys Certificate.
San Carlos failed to pay these outstanding obligations despite demand. Thus,
petitioner, as trustee of the MTI, enforced the conditions thereof and initiated foreclosure
proceedings, denominated as Foreclosure No. S-04-11, on the mortgaged properties.

Issue:

Whether the petitioner, as creditor or as trustee, had a cause of action to move for the
extrajudicial foreclosure of the subject properties mortgaged under the MTI.

Held:

No.It is the intent of the COMPANY that the BORROWERS will obtain additional loans
or credit accommodations from certain other banking or financial institutions in accordance
with arrangements made by the BORROWERS with the CREDITORS.
All obligations covered by this indenture shall be evidenced by a mortgage participation
certificate in the form of schedule ii hereof, the issuance of which by the trustee to the
participating creditor/s shall be in accordance with section 7 of this indenture, provided the
aggregate loan values of the collateral, based on the latest appraisal thereof, are not exceeded.
Moreover, it is worthy to note that respondents do not assail the previous MTI executed
with BPI. They do not question the validity of the mortgage constituted over all or substantially
all of respondent Centros assets pursuant to the 21 March 1994 MTI in the amount of P 84
million. Nor do they question the additional loans increasing the value of the mortgage to P 144
million; or the use of Centros properties as collateral for the loans of San Carlos, Lucky Two
Corporation, and Lucky Two Repacking.

METROPOLITAN BANK & TRUST COMPANY, INC.

vs.
THE BOARD OF TRUSTEES OF RIVERSIDE MILLS CORPORATION PROVIDENT AND
RETIREMENT FUND
G.R. No. 176959 September 8, 2010

Facts:

RMC established a Provident and Retirement Plan for its regular employees. Under the
Plan, RMC and its employees shall each contribute 2% of the employees current basic monthly
salary, with RMCs contribution to increase by 1% every five (5) years up to a maximum of 5%.
The contributions shall form part of the provident fund (the Fund) which shall be held, invested
and distributed by the Commercial Bank and Trust Company. On October 15, 1979, the Board
of Trustees of RMCPRF (the Board) entered into an Investment Management Agreement with
Philbank (petitioner Metropolitan Bank and Trust Company). Pursuant to the Agreement,
petitioner shall act as an agent of the Board and shall hold, manage, invest and reinvest the
Fund in Trust Account No. 1797 in its behalf. The Agreement shall be in force for one (1) year
and shall be deemed automatically renewed unless sooner terminated either by petitioner bank
or by the Board.
In 1984, RMC ceased business operations. Nonetheless, petitioner continued to render
investment services to respondent Board. In a letter dated September 27, 1995, petitioner
informed respondent Board that Philbanks Board of Directors had decided to apply the
remaining trust assets held by it in the name of RMCPRF against part of the outstanding
obligations of RMC. Subsequently, respondent RMC Unpaid Employees Association, Inc.
(Association), representing the terminated employees of RMC, learned of Trust Account No.
1797. Through counsel, they demanded payment of their share in a letter dated February 4,
1997. When such demand went unheeded, the Association, along with the individual members
of RMCPRF, filed a complaint for accounting against the Board and its officers.

Issue:

Whether the functions of the Board of Trustees ceased upon with RMCs closure.

Held:

Yes.Under Section 122 of the Corporation Code, a dissolved corporation shall

nevertheless continue as a body corporate for three (3) years for the purpose of prosecuting and
defending suits by or against it and enabling it to settle and close its affairs, to dispose and
convey its property and to distribute its assets, but not for the purpose of continuing the
business for which it was established. Within those three (3) years, the corporation may
appoint a trustee or receiver who shall carry out the said purposes beyond the three (3)-year
winding-up period. Thus, a trustee of a dissolved corporation may commence a suit which can
proceed to final judgment even beyond the three (3)-year period of liquidation.
In the same manner, during and beyond the three (3)-year winding-up period of RMC,
the Board of Trustees of RMCPRF may do no more than settle and close the affairs of the Fund.
The Board retains its authority to act on behalf of its members, albeit, in a limited capacity. It
may commence suits on behalf of its members but not continue managing the Fund for
purposes of maximizing profits. Here, the Boards act of issuing the Resolution authorizing
petitioner to release the Fund to its beneficiaries is still part of the liquidation process, which
is, satisfaction of the liabilities of the Plan, and does not amount to doing business. Hence, it
was properly within the Boards power to promulgate.

YAM
vs.
COURT OF APPEALS
GR No. 104726 11 February 1999

Facts:
 Parties entered into several loan agreements, the petitioners, Yam and Lent, being the
borrowers while the private respondent, Manphil Investment Corporaton, the lender. In said
contract, petitioners were given a loan of P500,000.00 by private respondent. The contract
provided for the payment of 12% annual interest, 2% monthly penalty, 1 1/2% monthly service
charge, and 10% attorney's fees. Denominated the first Industrial Guarantee and Loan Fund
(IGLF), the loan was secured by a chattel mortgage on the printing machinery in petitioners'
establishment.
By April 2, 1985, petitioners had paid their first loan of P500,000.00. On November 4,
1985, private respondent was placed under receivership by the Central Bank and Ricardo Lirio
and Cristina Destajo were appointed as receiver and in-house examiner, respectively.
A check was sent to respondent as partial payment of the second loan which was
marked as full payment in the vouchers. Demands were made for the balance of the same,
however, it was unheeded prompting respondent to file a case against the petitioner for
collection of the balance.
The trial court ruled in favor of respondents which the Court of Appeals affirmed.

Issue:

Whether the petitioner is liable to the penalties and service charges of the loan.

Held:

Yes.The alleged condonation of the penalties and service charges by Sobrepeas,

president of respondent, must be in writing to be binding between and among the parties.
Since it was not reduced in writing, the same is not effective. Further, the alleged
condonation happened after the respondent corporation was placed under receivership. As held
in Villanueva v. Court of Appeals the appointment of a receiver operates to suspend the
authority of a corporation and of its directors and officers over its property and effects, such
authority being reposed in the receiver. Thus, Sobrepeas had no authority to condone the
debt. Petition denied.

CHUNG KA BIO
vs.
INTERMEDIATE APPELLATE COURT
G.R. NO. 71837 JULY 26, 1988

Facts:

The Philippine Blooming Mills Company, Inc. was incorporated on January 19, 1952,
for a term of 25 years which expired on January 19,1977. On May 14, 1977, the members of
its board of directors executed a deed of assignment of all of the accounts receivables,
properties, obligations and liabilities of the old PBM in favor of Chung SiongPek in his capacity
as treasurer of the new PBM, then in the process of reincorporation. On June 14, 1977, the
new PMB was issued a certificate of incorporation by the Securities and Exchange Commission.
 On May 5, 1981, Chung Ka Bio and the other petitioners herein, all stockholders of the
old PBM, filed with the SEC a petition for liquidation (but not for dissolution) of both the old
PBM and the new PBM. The allegation was that the former had become legally non-existent for
failure to extend its corporate life and that the latter had likewise been ipso facto dissolved for
non-use of the charter and continuous failure to operate within 2 years from incorporation.

Issue:

Whether the board of directors of an already dissolved corporation have the inherent
power, without the express consent of the stockholders, to convey all its assets to a new
corporation.

Held:

Yes. While the board of directors is not normally permitted to undertake any activity
outside of the usual liquidation of the business of the dissolved corporation, there is nothing to
prevent the stockholders from conveying their respective shareholdings toward the creation of a
new corporation to continue the business of the old. Winding up is the sole activity of a
dissolved corporation that does not intend to incorporate anew. If it does, however, it is not
unlawful for the old board of directors to negotiate and transfer the assets of the dissolved
corporation to the new corporation intended to be created as long as the stockholders have
given their consent. This was not prohibited by the Corporation Act. In fact, it was expressly
allowed by Section 28-1/2.
The petitioners and the private respondents are not strangers but relatives and close
business associates. The PBM office is in the heart of Metro Manila. The new corporation, like
the old, employs as many as 2,000 persons, the same personnel who worked for the old PBM.
Additionally, one of the petitioners, Chung SiongPek was one of the directors who executed the
deed of assignment in favor of the old PBM and it was he also who received the deeded assets
on behalf and as treasurer of the new PBM. Surely, these circumstances must operate to bar
the petitioners now from questioning the deed of assignment after this long period of inaction
in the protection of the rights they are now belatedly asserting. Laches has operated against
them.

REPUBLIC OF THE PHILIPPINES

vs.
MARSMAN DEVELOPMENT COMPANY
G.R. NO. L-18956 APRIL 27, 1972

Facts:

Before October 15, 1953 an investigation was conducted on the business operation and
activities of the corporation leading to the discovery that certain taxes were due from it on logs
produced from its concession. The Bureau of Internal Revenue made three assessments, and
demanded payment thereof. Defendants however failed to pay the taxes hence the filing of
charges in court. The defendants contend that the present action is already barred under
section 77 of the Corporation Law, Act No. 1459, as amended, which allows the corporate
existence of a corporation to continue only for three years after its dissolution, for the purpose
of presenting or defending suits by or against it, and to settle and close its affairs.
They point out that inasmuch as the Marsman Development Co. was extra-judicially
dissolved on April 23, 1954, a fact admitted in the amended complaint, the filing of both the
original complaint on September 8, 1958 and the amended complaint on August 26, 1956 was
beyond the aforesaid three-year period.
Issue:

Whether the right of the government to collect the sums has already prescribed.

HELD:

No.The stress given by appellants to the extinction of the corporate and juridical
personality as such of Appellant Corporation by virtue of its extra-judicial dissolution which
admittedly took place on April 23, 1954 is misdirected.
Further, at any time during said three years said corporation is authorized and
empowered to convey all of its property to trustees for the benefit of members, stock-holders,
creditors, and others interested. From and after any such conveyance by the corporation of its
property in trust for the benefit of its members, stockholders, creditors, and others in interest,
all interest which the corporation had in the property terminates, the legal interest vests in the
trustee, and the beneficial interest in the members, stockholders, creditors, or other persons in
interest.
Thus, in whatever way the matter may be viewed, the Government became the creditor
of the corporation before the completion of its dissolution by the liquidation of its assets.
Appellant F.H. Burgess, whom it chose as liquidator, became in law the trustee of all its assets
for the benefit of all persons enumerated in Section 78, including its creditors, among whom is
the Government, for the taxes herein involved. To assume otherwise would render the extra-
judicial dissolution illegal and void, since, according to Section 62 of the Corporation Law, such
kind of dissolution is permitted only when it "does not affect the rights of any creditor having a
claim against the corporation."
It is immaterial that the present action was filed after the expiration of three years after
April 23, 1954, for at the very least, and assuming that judicial enforcement of taxes may not
be initiated after said three years despite the fact that the actual liquidation has not been
terminated and the one in charge thereof is still holding the assets of the corporation, obviously
for the benefit of all the creditors thereof, the assessment aforementioned, made within the
three years, definitely established the Government as a creditor of the corporation for whom
the liquidator is supposed to hold assets of the corporation. And since the suit at bar is only for
the collection of taxes finally assessed against the corporation within the three years invoked
by appellants, their fourth assignment of error cannot be sustained.
 TAN TIONG BIO
vs.
COMMISSION OF INTERNAL REVENUE
G.R. NO. L-15778 APRIL 23, 1962

Facts:

On October 19, 1946, the Central Syndicate, a corporation organized under the laws of
the Philippines, thru its General Manager, David Sycip, sent a letter to the Collector of Internal
Revenue advising the latter that it purchased from Dee Hong Lue the entire stock of surplus
properties which the said Dee Hong Lue had bought from the Foreign Liquidation Commission
and that as it assumed Dee Hong Lue's obligation to pay the 3-1/2% sales tax on said surplus
goods, it was remitting the sum of P43,750.00 in his behalf as deposit to answer for the
payment of said sales tax with the understanding that it would later be adjusted after the
determination of the exact consideration of the sale.
On January 31, 1948, the syndicate again wrote the Collector requesting the refund of
P1,103.28 representing alleged excess payment of sales tax due to the adjustment and
reduction of the purchase price in the amount of P31,522.18. The Collector decided after a
thorough investigation of the Facts that the Central Syndicate was the importer and original
seller of the surplus goods in question and, therefore, the one liable to pay the sales tax.
Accordingly, on January 4, 1952, the Collector assessed against the syndicate the amount of
P33,797.88 and P300.00 as deficiency sales tax, inclusive of the 25% surcharge and
compromise penalty, respectively, and on the same date, in a separate letter, he denied the
request of the syndicate for the refund of the sum of P1,103.28.

Issue:

Whether the sales tax of a dissolved corporation can be enforced against its successors-
in-interest who are the present petitioners.

Held:

Yes.The creditor of a dissolved corporation may follow its assets once they passed into
the hands of the stockholders. And it has been stated, with reference to the effect of dissolution
upon taxes due from a corporation, "that the hands of the government cannot, of course,
collect taxes from a defunct corporation, it loses thereby none of its rights to assess taxes
which had been due from the corporation, and to collect them from persons, who by reason of
transactions with the corporation, hold property against which the tax can be enforced and
that the legal death of the corporation no more prevents such action than would the physical
death of an individual prevent the government from assessing taxes against him and collecting
them from his administrator, who holds the property which the decedent had formerly
possessed". Bearing in mind that our corporation law is of American origin, the foregoing
authorities have persuasive effect in considering similar cases in this jurisdiction. This must
have been taken into account when in G.R. No. L-8800 this Court said that petitioners could
be held personally liable for the taxes in question as successors-in-interest of the defunct
corporation.
Considering that the Central Syndicate realized from the sale of the surplus goods a net
profit of P229,073.83, and that the sale of said goods was the only transaction undertaken by
said syndicate, there being no evidence to the contrary, the conclusion is that said net profit
remained intact and was distributed among the stockholders when the corporation liquidated
and distributed its assets on August 15, 1948, immediately after the sale of the said surplus
goods. Petitioners are therefore the beneficiaries of the defunct corporation and as such should
be held liable to pay the taxes in question. However, there being no express provision requiring
the stockholders of the corporation to be solidarily liable for its debts which liability must be
express and cannot be presumed.
 REYNOLDS PHILIPPINE CORPORATION
vs.
COURT OF APPEALS
G.R. NO. L-36187 JANUARY 17, 1989

Facts:

In its complaint of June 2, 1966, the petitioner sought to recover from the private
respondent Serg's Products, Inc. the sum of P32,565.62 representing the unpaid price of
aluminum foils and cores sold and delivered by it to the latter. The private respondent denied
liability for payment of the account on the ground that the aluminum foils and cores were
ordered or purchased by Serg's Chocolate Products, a partnership of Antonio Goquiolay and
Luis Sequia Mendoza, not Serg's Products, Inc., a corporation managed and controlled by
Antonio Goquiolay and his wife Conchita Goquiolay, as majority stockholders and principal
officers.

Issue:

Whether private respondents were the real debtor.

Held:

Yes.Although the commercial documents were indeed in the name of "Serg's Chocolate
Products," the following Facts proved that the true purchaser of the aluminum foils and cores
from the petitioner, was "Serg's Products, Inc." not the partnership denominated "Serg's
Chocolate Products."
The attempt to make the two factories appear as two separate businesses, when in
reality they are but one, is but a devise to defeat the ends of the law and should not be
permitted to prevail. Although the coffee factory is a corporation and, by legal fiction, an entity
existing separate and apart from persons composing it, T and his family, it is settled that this
fiction of law, which had been introduced as a matter of convenience and to subserve the ends
of justice cannot be invoked to further an end subversive of that purpose.

ALABANG DEVELOPMENT CORPORATION

vs.
ALABANG HILLS VILLAGE ASSOCIATION and RAFAEL TINIO
 G.R. No. 187456 June 2, 2014

Facts:

The case traces its roots to the Complaint for Injunction and Damages filed with the Regional
Trial Court (RTC) of Muntinlupa Cityby petitioner, Alabang Development Corporation(ADC)
against respondents, AlabangHills Village Association, Inc. AHVAI and Rafael Tinio (Tinio),
President of AHVAI. The Complaint alleged that petitioner is the developer of Alabang Hills
Village and still owns certain parcels of land therein that are yet to be sold, as well as those
considered open spaces that have not yet been donated to [the] local government of Muntinlupa
City or the Homeowner's Association. Sometime in September 2006, ADC learned that AHVAI
started the construction of a multi-purpose hall and a swimming pool on one of the parcels of
land still owned by ADC without the latter's consent and approval, and that despite demand,
AHVAI failed to desist from constructing the said improvements. ADC thus prayed that an
injunction be Issued enjoining defendants from constructing the multi-purpose hall and the
swimming pool at the Alabang Hills Village.

Issue:

Whether a corporation may still sue, even after it has been dissolved and the three-year
liquidation period provided under Section 122 of the Corporation Code has passed.

Held:

No. It is to be noted that the time during which the corporation, through its own
officers, may conduct the liquidation of its assets and sue and be sued as a corporation is
limited to three years from the time the period of dissolution commences; but there is no time
limit within which the trustees must complete a liquidation placed in their hands. It is provided
only that the conveyance to the trustees must be made within the three-year period. It may be
found impossible to complete the work of liquidation within the three-year period or to reduce
disputed claims to judgment. The authorities are to the effect that suits by or against a
corporation abate when it ceased to be an entity capable of suing or being sued; but trustees to
whom the corporate assets have been conveyed pursuant to the authority of Sec. 78 may sue
and be sued as such in all matters connected with the liquidation.

The import of this Court's Held in the cases cited by petitioner is that the trustee of a
corporation may continue to prosecute a case commenced by the corporation within three
years from its dissolution until rendition of the final judgment, even if such judgment is
rendered beyond the three-year period allowed by Section 122 of the Corporation Code.
However, there is nothing in the said cases which allows an already defunct corporation to
initiate a suit after the lapse of the said three-year period. On the contrary, the factual
circumstances in the abovecited cases would show that the corporations involved therein did
not initiate any complaint after the lapse of the three-year period. In fact, as stated above, the
actions were already pending at the time that they lost their corporate existence.

In the present case, petitioner filed its complaint not only after its corporate existence
was terminated but also beyond the three-year period allowed by Section 122 of the
Corporation Code. Thus, it is clear that at the time of the filing of the subject complaint
petitioner lacks the capacity to sue as a corporation. To allow petitioner to initiate the subject
complaint and pursue it until final judgment, on the ground that such complaint was filed for
the sole purpose of liquidating its assets, would be to circumvent the provisions of Section 122
of the Corporation Code.
 VITALIANO N. AGUIRRES II and FIDEL N. AGUIRRE
vs.
FQB+7, INC., NATHANIEL D. BOCOBO, PRISCILA BOCOBO and ANTONIO DE VILLA
G.R. No. 170770 January 9, 2013

Facts:

On October 5, 2004, Vitaliano filed, in his individual capacity and on behalf of FQB+7,
Inc., a Complaint for intra-corporate dispute, injunction, inspection of corporate books and
records, and damages, against respondents Nathaniel D. Bocobo, Priscila D. Bocobo and
Antonio De Villa. The Complaint alleged that FQB+7 was established in 1985 with the following
directors and subscribers, as reflected in its Articles of Incorporation.
The substantive changes found in the GIS, respecting the composition of directors and
subscribers of FQB+7, prompted Vitaliano to write to the "real" Board of Directors (the directors
reflected in the Articles of Incorporation), represented by Fidel N. Aguirre. In this letter dated
April 29, 2004, Vitaliano questioned the validity and truthfulness of the alleged stockholders
meeting held on September 3, 2002. He asked the "real" Board to rectify what he perceived as
erroneous entries in the GIS, and to allow him to inspect the corporate books and records. The
"real" Board allegedly ignored Vitalianos request.
Issue:

Whether a dissolved corporation may continue as a body corporate for the limited
purpose of liquidating the corporate assets and distributing them to its creditors, stockholders,
and others in interest.

Held:

Yes.A corporations board of directors is not rendered functus officio by its dissolution.
Since Section 122 allows a corporation to continue its existence for a limited purpose,
necessarily there must be a board that will continue acting for and on behalf of the dissolved
corporation for that purpose. In fact, Section 122 authorizes the dissolved corporations board
of directors to conduct its liquidation within three years from its dissolution. Jurisprudence
has even recognized the boards authority to act as trustee for persons in interest beyond the
said three-year period. Thus, the determination of which group is the bona fide or rightful
board of the dissolved corporation will still provide practical relief to the parties involved.
The same is true with regard to Vitalianos shareholdings in the dissolved corporation. A
partys stockholdings in a corporation, whether existing or dissolved, is a property right which
he may vindicate against another party who has deprived him thereof. The corporations
dissolution does not extinguish such property right.
Further, Intra-corporate disputes remain even when the corporation is dissolved.