8/19/2019 DIWATA_Case Doctrines for Corpo http://slidepdf.com/reader/full/diwatacase-doctrines-for-corpo 1/17 REAL CREW™ Corporation Law Case Doctrines Atty. Reinier Yebra 2015-2015 CONCEPT AND ATTRIBUTES OF A CORPORATION TITLE OF THE CASE DOCTRINE(S) 1. FELICIANO VS. COA • The Constitution reconi!es two c"asses o# corporations. The $rst re#ers to pri%ate corporations create& un&er a enera" "aw. The secon& re#ers to o%ern'ent-owne& or contro""e& corporations create& by specia" charters. The Constitution e'phatica""y prohibits the creation o# pri%ate corporations e(cept by a enera" "aw app"icab"e to a"" citi!ens. The purpose o# this constitutiona" pro%ision is to ban pri%ate corporations create& by specia" charters) which historica""y a%e certain in&i%i&ua"s) #a'i"ies or roups specia" pri%i"ees &enie& to other citi!ens. • *b%ious"y) LWDs are not pr!ate "orporatons #e"a$se t%e& are not "reate' $n'er t%e Corporaton Co'e . LWDs are not reistere& with the +ecurities an& E(chane Co''ission. • LWDs ha%e no artic"es o# incorporation) no incorporators an& no stoc,ho"&ers or 'e'bers. There are no stoc,ho"&ers or 'e'bers to e"ect the boar& &irectors o# LWDs as in the case o# a"" corporations reistere& with the +ecurities an& E(chane Co''ission. The "oca" 'ayor or the pro%incia" o%ernor appoints the &irectors o# LWDs #or a $(e& ter' o# oce. • LWDs est #& !rt$e o PD 1*+, -%"% "onstt$tes t%er spe"a "%arter.+ince un&er the Constitution on"y o%ern'ent-owne& or contro""e& corporations 'ay ha%e specia" charters) LWDs can %a"i&"y e(ist on"y i# they are o%ern'ent-owne& or contro""e&. To c"ai' that LWDs are pri%ate corporations with a specia" charter is to a&'it that their e(istence is constitutiona""y in$r'. n"i,e pri%ate corporations) which &eri%e their "ea" e(istence an& power #ro' the Corporation Co&e) LWDs &eri%e their "ea" e(istence an& power #ro' /D 1. /. 0ANILA INTERNATIONAL AIRPORT AUTHORIT VS. COURT OF APPEALS • 3AA is 4ot a o%ern'ent-*wne& or Contro""e& Corporation. A o%ern'ent-owne& or contro""e& corporation 'ust be orani!e& as a stoc, or non-stoc, corporation. 3AA is not orani!e& as a stoc, or non-stoc, corporation. 3AA is not a stoc, corporation because it has no capita" stoc, &i%i&e& into shares. 3AA has no stoc,ho"&ers or %otin shares. 0IAA s a 2o!ern3ent nstr$3entat& !este' -t% "orporate po-ers to peror3 e4"ent& ts 2o!ern3enta $n"tons. 0IAA s 5e an& ot%er 2o!ern3ent nstr$3entat&6 t%e on& '7eren"e s t%at 0IAA s !este' -t% "orporate po-ers. • When the "aw %ests in o%ern'ent instru'enta"ity corporate powers) the instru'enta"ity &oes not beco'e a corporation. n"ess the o%ern'ent instru'enta"ity is orani!e& as a stoc, or non-stoc, corporation) it re'ains a o%ern'ent instru'enta"ity e(ercisin not on"y o%ern'enta" but a"so corporate powers. Thus) 3AA e(ercises the o%ern'enta" powers o# e'inent &o'ain) po"ice authority) an& the "e%yin o# #ees an& chares. At the sa'e ti'e) 3AA e(ercises a"" the powers o# a corporation un&er the Corporation Law) inso#ar as these powers are not inconsistent with the pro%isions o# this E(ecuti%e *r&er. 8. 0A9SASA: LABRADOR VS. COURT OF APPEALS • Whi"e a share o# stoc, represents a proportionate or a"i6uot interest in the property o# the corporation) t 'oes not !est t%e o-ner t%ereo -t% an& e2a r2%t or tte to an& o t%e propert&, %s nterest n t%e "orporate propert& #en2 e;$ta#e or #ene<"a n nat$re. +hareho"&ers are 1
CONCEPT AND ATTRIBUTES OF A CORPORATIONTITLE OF THE CASE DOCTRINE(S)1. FELICIANO VS.COA
• The Constitution reconi!es two c"asses o# corporations. The$rst re#ers to pri%ate corporations create& un&er a enera""aw. The secon& re#ers to o%ern'ent-owne& or contro""e&corporations create& by specia" charters. The Constitution
e'phatica""y prohibits the creation o# pri%ate corporationse(cept by a enera" "aw app"icab"e to a"" citi!ens. The purposeo# this constitutiona" pro%ision is to ban pri%ate corporationscreate& by specia" charters) which historica""y a%e certainin&i%i&ua"s) #a'i"ies or roups specia" pri%i"ees &enie& toother citi!ens.
• *b%ious"y) LWDs are not pr!ate "orporatons #e"a$set%e& are not "reate' $n'er t%e Corporaton Co'e . LWDsare not reistere& with the +ecurities an& E(chaneCo''ission.
• LWDs ha%e no artic"es o# incorporation) no incorporators an&no stoc,ho"&ers or 'e'bers. There are no stoc,ho"&ers or'e'bers to e"ect the boar& &irectors o# LWDs as in the caseo# a"" corporations reistere& with the +ecurities an& E(chaneCo''ission. The "oca" 'ayor or the pro%incia" o%ernor
appoints the &irectors o# LWDs #or a $(e& ter' o# oce.• LWDs est #& !rt$e o PD 1*+, -%"% "onstt$tes t%er
spe"a "%arter. +ince un&er the Constitution on"yo%ern'ent-owne& or contro""e& corporations 'ay ha%especia" charters) LWDs can %a"i&"y e(ist on"y i# they areo%ern'ent-owne& or contro""e&. To c"ai' that LWDs arepri%ate corporations with a specia" charter is to a&'it thattheir e(istence is constitutiona""y in$r'. n"i,e pri%atecorporations) which &eri%e their "ea" e(istence an& power#ro' the Corporation Co&e) LWDs &eri%e their "ea" e(istencean& power #ro' /D 1.
/. 0ANILAINTERNATIONALAIRPORT
AUTHORIT VS.COURT OF APPEALS
• 3AA is 4ot a o%ern'ent-*wne& or Contro""e& Corporation. Ao%ern'ent-owne& or contro""e& corporation 'ust beorani!e& as a stoc, or non-stoc, corporation. 3AA is not
orani!e& as a stoc, or non-stoc, corporation. 3AA is not astoc, corporation because it has no capita" stoc, &i%i&e& intoshares. 3AA has no stoc,ho"&ers or %otin shares.
0IAA s a 2o!ern3ent nstr$3entat& !este' -t%"orporate po-ers to peror3 e4"ent& ts2o!ern3enta $n"tons. 0IAA s 5e an& ot%er2o!ern3ent nstr$3entat&6 t%e on& '7eren"e s t%at0IAA s !este' -t% "orporate po-ers.
• When the "aw %ests in o%ern'ent instru'enta"ity corporatepowers) the instru'enta"ity &oes not beco'e a corporation.n"ess the o%ern'ent instru'enta"ity is orani!e& as a stoc,or non-stoc, corporation) it re'ains a o%ern'entinstru'enta"ity e(ercisin not on"y o%ern'enta" but a"socorporate powers. Thus) 3AA e(ercises the o%ern'enta"
powers o# e'inent &o'ain) po"ice authority) an& the "e%yino# #ees an& chares. At the sa'e ti'e) 3AA e(ercises a"" thepowers o# a corporation un&er the Corporation Law) inso#ar asthese powers are not inconsistent with the pro%isions o# thisE(ecuti%e *r&er.
8. 0A9SASA:LABRADOR VS.COURT OF APPEALS
• Whi"e a share o# stoc, represents a proportionate or a"i6uot
interest in the property o# the corporation) t 'oes not !estt%e o-ner t%ereo -t% an& e2a r2%t or tte to an& o t%e propert&, %s nterest n t%e "orporate propert&#en2 e;$ta#e or #ene<"a n nat$re. +hareho"&ers are
in no "ea" sense the owners o# corporate property) which isowne& by the corporation as a &istinct "ea" person.
=. SULO N9 BAANVS. ARANETA
• A corporation is a &istinct "ea" entity to be consi&ere& asseparate an& apart #ro' the in&i%i&ua" stoc,ho"&ers or'e'bers who co'pose it) an& is not a7ecte& by the persona"rihts) ob"iations an& transactions o# its stoc,ho"&ers or'e'bers.
T%e propert& o t%e "orporaton s ts propert& an' nott%at o t%e sto"5%o'ers, as o-ners, at%o$2% t%e&%a!e e;$tes n t. Propertes re2stere' n t%e na3e o t%e "orporaton are o-ne' #& t as an entt& separatean' 'stn"t ro3 ts 3e3#ers.
• Absent any showin o# interest) there#ore) a corporation) hasno persona"ity to brin an action #or an& in beha"# o# itsstoc,ho"&ers or 'e'bers #or the purpose o# reco%erinproperty which be"ons to sai& stoc,ho"&ers or 'e'bers intheir persona" capacities.
>. BATAANSHIPARD VS.PC99
• 3t is e"e'entary that t%e r2%t a2anst se:n"r3naton%as no app"aton to ?$r'"a persons. 8ecause acorporation is a creature o# the +tate) it is presu'e& to beincorporate& #or the bene$t o# the pub"ic. There is a"so a
reser%e& riht in the "eis"ature to in%estiate its contractsan& $n& out whether a corporation has e(cee&e& its powersbecause it is the "eis"ature that rante& the sa'e corporatepowers) hence) it can a"so i'pose such "i'itations.
@. LUURIA HO0ESVS. COURT OFAPPEALS
• APPLICATION OF THE ALTER E9O DOCTRINE9 T%eseparate personat& o t%e "orporaton 3a& #e'sre2ar'e' on& -%en t%e "orporaton s $se' as a"oa5 or "o!er or ra$' or e2at&, or to -or5 n?$st"e, or -%ere ne"essar& or t%e prote"ton o t%e"re'tors.
• To &isrear& the separate :uri&ica" persona"ity o# a corporation)the wron&oin 'ust be c"ear"y an& con%incin"y estab"ishe&.3t cannot be presu'e&. 8ra%o) et. a". #ai"e& to show proo# that/osa&as acte& in ba& #aith) an& conse6uent"y that Lu(uria
;o'es) 3nc.) was a party to any o# the suppose& transactions)not e%en to the aree'ent to neotiate with an& re"ocate thes6uatters) it cannot be he"& "iab"e) nay :oint"y an& in so"i&u')to pay 8ra%o) et. a". ;ence) since it was /osa&as whocontracte& 8ra%o to ren&er the sub:ect ser%ices) on"y she is"iab"e to pay the a'ounts a&:u&e& by the Court.
. CONCEPTBUILDERS VS. NLRC
PROBATIVE FACTORS OF IDENTIT THAT WILL USTIF THE APPLICATION OF THE DOCTRINE OF PIERCIN9 THECORPORATE VEIL, TO WIT(1) Sto"5 o-ners%p #& one or "o33on o-ners%p o #ot% "orporatons6(/) I'entt& o 're"tors an' o4"ers6(8) T%e 3anner o 5eepn2 "orporate #oo5s an're"or's6 an'
(=) 0et%o's o "on'$"tn2 t%e #$sness
• INSTRU0ENTALIT RULE Where one corporation is soorani!e& an& contro""e& an& its a7airs are con&ucte& so thatit is) in #act) a 'ere instru'enta"ity or a&:unct o# the other)the $ction o# the corporate entity o# the <instru'enta"ity< 'aybe &isrear&e&. The contro" necessary to in%o,e the ru"e is not'a:ority or e%en co'p"ete stoc, contro" but such &o'inationo# instances) po"icies an& practices that the contro""e&corporation has) so to spea,) no separate 'in&) wi"" ore(istence o# its own) an& is but a con&uit #or its principa". 3t
'ust be ,ept in 'in& that the contro" 'ust be shown to ha%ebeen e(ercise& at the ti'e the acts co'p"aine& o# too, p"ace.oreo%er) the contro" an& breach o# &uty 'ust pro(i'ate"ycause the in:ury or un:ust "oss #or which the co'p"aint is'a&e.
• TEST IN DETER0ININ9 THE APPLICABILIT OFDOCTRINE OF PEIRCIN9 THE VEIL OF CORPORATEFICTION=1> CONTROL TEST - not 'ere 'a:ority or co'p"ete stoc,
contro") but co'p"ete &o'ination) not on"y o# $nances buto# po"icy an& business practice in respect to thetransaction attac,e& so that the corporate entity as to thistransaction ha& at the ti'e no separate 'in&) wi"" ore(istence o# its own
=2> FRAUD TEST - +uch contro" 'ust ha%e been use& by the&e#en&ant to co''it #rau& or wron) to perpetuate the%io"ation o# a statutory or other positi%e "ea" &uty or&ishonest an& un:ust act in contra%ention o# p"ainti7?s"ea" rihts
=@> HAR0 TEST - The a#oresai& contro" an& breach o# &uty
'ust pro(i'ate"y cause the in:ury or un:ust "ossco'p"aine& o#.
+. VILLARETRANSIT VS.FERRER
• The inter#erence o# i""ara'a in the co'p"e( a7airs o# thecorporation) an& particu"ar"y its $nances) are 'uch tooinconsistent with the en&s an& purposes o# the Corporation"aw) which) precise"y) see,s to separate persona"responsibi"ities #ro' corporate un&erta,ins. 3t is the %eryessence o# incorporation that the acts an& con&uct o# thecorporation be carrie& out in its own corporate na'e becauseit has its own persona"ity.
ALTER:E9O DOCTRINE W%en t%e <"ton s $r2e' as a3eans o perpetratn2 a ra$' or an e2a a"t or as a!e%"e or t%e e!ason o an estn2 o#2aton, t%e
"r"$3!enton o stat$tes, t%e a"%e!e3ent orpere"ton o a 3onopo& or 2enera& t%e perpetratono 5na!er& or "r3e, t%e !e -t% -%"% t%e a- "o!ersan' soates t%e "orporaton ro3 t%e 3e3#ers orsto"5%o'ers -%o "o3pose t - #e te' to ao- orts "ons'eraton 3ere& as an a22re2aton o n'!'$as.
• ;ence) the i""a Rey Transit) 3nc. is an a"ter eo o# Bose .i""ara'a) an& that the restricti%e c"ause in the contractentere& into by the "atter an& /antranco is a"so en#orceab"ean& bin&in aainst the sai& Corporation. or the ru"e is that ase""er or pro'isor 'ay not 'a,e use o# a corporate entity as a'eans o# e%a&in the ob"iation o# his co%enant. Where theCorporation is substantia""y the a"ter eo o# the co%enantor to
the restricti%e aree'ent) it can be en:oine& #ro' co'petinwith the co%enantee.
*. FRANCISCO0OTORS VS.COURT OF APPEALS
• ERRONEOUS APPLICATION OF THE DOCTRINE OFPEIRCIN9 THE CORPORATE VEIL The rationa"e behin&piercin a corporation?s i&entity in a i%en case is to re'o%ethe barrier between the corporation #ro' the personsco'prisin it to thwart the #rau&u"ent an& i""ea" sche'es o# those who use the corporate persona"ity as a shie"& #orun&erta,in certain proscribe& acti%ities. In t%e present"ase, nstea' o %o'n2 "ertan n'!'$as or persons
respons#e or an ae2e' "orporate a"t, t%e st$aton%as #een re!erse'. 3t is the rancisco otors Corporation=C> as a corporation) which is bein or&ere& to answer #orthe persona" "iabi"ity o# certain in&i%i&ua" &irectors) ocersan& incorporators concerne&. ;ence) the &octrine has beenturne& upsi&e &own because o# its erroneous in%ocation.
• A "o$rt s%o$' #e "are$ n assessn2 t%e 3e$ -%eret%e 'o"trne o per"n2 t%e "orporate !e 3a& #eappe'. *therwise an in:ustice) a"thouh uninten&e&) 'ayresu"t #ro' its erroneous app"ication. The persona"ity o# thecorporation an& those o# its incorporators) &irectors an&ocers in their persona" capacities ouht to be ,ept separatein this case. The c"ai' #or "ea" #ees aainst the concerne&in&i%i&ua" incorporators) ocers an& &irectors cou"& not beproper"y &irecte& aainst the corporation without %io"atinbasic princip"es o%ernin corporations
1. LIPAT, ET. ALVS. PACIFICBANIN9CORPORATION
PIERCIN9 THE CORPORATE VEIL When the corporation isthe 'ere a"ter eo or business con&uit o# a person) theseparate persona"ity o# the corporation 'ay be &isrear&e&.W%ere one "orporaton s so or2anGe' an' "ontroe'an' ts a7ars are "on'$"te' so t%at t s, n a"t, a
3ere nstr$3entat& or a'?$n"t o t%e ot%er, t%e <"tono t%e "orporate entt& o t%e nstr$3entat& 3a& #e'sre2ar'e'. The contro" necessary to in%o,e the ru"e is not'a:ority or e%en co'p"ete stoc, contro" but such &o'inationo# $nances) po"icies an& practices that the contro""e&corporation has) so to spea,) no separate 'in&) wi"" ore(istence o# its own) an& is but a con&uit #or its principa".
ESTOPPEL9 3t is a #a'i"iar &octrine that i# a corporation
,nowin"y per'its one o# its ocers or any other aent to actwithin the scope o# an apparent authority) it ho"&s hi' out tothe pub"ic as possessin the power to &o those acts Thus) thecorporation wi"") as aainst anyone who has in oo& #aith &ea"twith it throuh such aent) be estoppe& #ro' &enyin the
• PIERCIN9 THE CORPORATE VEIL (REJUISITES OFINSTRU0ENTALIT RULE) /iercin the %ei" o# corporate$ction is warrante& on"y in cases when the separate "ea"entity is use& to &e#eat pub"ic con%enience) :usti#y wron)protect #rau&) or &e#en& cri'e) such that in the case o# twocorporations) the "aw wi"" rear& the corporations as 'ere&into one.
3t 'ay be a""owe& on"y i# the oo-n2 ee3ents "on"$r9=1> ControFnot 'ere stoc, contro") but co'p"ete &o'inationFnot on"y o# $nances) but o# po"icy an& business practice inrespect to the transaction attac,e&=2> S$"% "ontro 3$st %a!e #een $se' to "o33t ara$' or a wron to perpetuate the %io"ation o# a statutory orother positi%e "ea" &uty) or a &ishonest an& an un:ust act in
contra%ention o# a "ea" riht an&=@> T%e sa' "ontro an' #rea"% o '$t& 3$st %a!epro3ate& "a$se' t%e n?$r& or $n?$st oss"o3pane' o.
1/. AO, SR. VS.PEOPLE
RI9HT A9AINST ILLE9AL SEARCH AND SEIKURE9 3t is ane"e'entary an& #un&a'enta" princip"e o# corporation "aw thata corporation is an entity separate an& &istinct #ro' itsstoc,ho"&ers) &irectors or ocers. ;owe%er) when the notiono# "ea" entity is use& to &e#eat pub"ic con%enience) :usti#ywron) protect #rau&) or &e#en& cri'e) the "aw wi"" rear& the
corporation as an association o# persons) or in the case o# twocorporations 'ere the' into one. W%ere t%e separate"orporate entt& s 'sre2ar'e', t%e "orporaton - #etreate' 3ere& as an asso"aton o persons an' t%esto"5%o'ers or 3e3#ers - #e "ons'ere' as t%e"orporaton, t%at s, a#t& - atta"% persona& or're"t& to t%e o4"ers an' sto"5%o'ers.
E%en i# the Court were to sustain the separate persona"ity o# A+AA4A #ro' that o# the petitioners) the e7ect wi"" be thesa'e. T%e a- 'oes not re;$re t%at t%e propert& to #eseGe' s%o$' #e o-ne' #& t%e person a2anst -%o3t%e sear"% -arrant s 're"te'. O-ners%p, t%ereore,s o no "onse;$en"e, an' t s s$4"ent t%at t%eperson a2anst -%o3 t%e -arrant s 're"te' %as"ontro or possesson o t%e propert& so$2%t to #eseGe'. ;ence) e%en i#) as petitioners c"ai'e&) the propertiessei!e& be"on to A+AA4A as a separate entity) their sei!urepursuant to the search warrants is sti"" %a"i&.
18. HALL VS. PICIO • DE FACTO CORPORATION An entity whose certi$cate o#
incorporation ha& not been obtaine& 'ay be ter'inate& in apri%ate suit #or its &isso"ution between stoc,ho"&ers) without
?the inter%ention o# the state. The 6uestion as to the riht o# 'inority stoc,ho"&ers to sue #or &isso"ution &oes not a7ect thecourt?s :uris&iction) an& is a 'atter #or &ecision by the :u&e)sub:ect to re%iew on appea" by the arie%e& party at theproper ti'e.
• /ersons actin as corporation 'ay not c"ai' rihts o# <&e#acto< corporation i# they ha%e not obtaine& certi$cate o# incorporation.
• REJUISITES OF A DE FACTO CORPORATION9 8e#ore onecan 6ua"i#y as a &e #acto corporation) the #o""owinre6uire'ents 'ust $rst be present9(a) T%e esten"e o a !a' a- $n'er -%"% t 3a& #en"orporate'(#) An atte3pt n 2oo' at% to n"orporate6 an'
(") Ass$3pton o "orporate po-ers.
• T%e <n2 o art"es o n"orporaton an' t%e ss$an"eo t%e "ert<"ate o n"orporaton are essenta or t%eesten"e o a 'e a"to "orporaton. An orani!ation notreistere& with the +ecurities an& E(chane Co''ission=+EC> cannot be consi&ere& a corporation in any concept) note%en as a corporation &e #acto. Corporate e(istence beinson"y #ro' the 'o'ent a certi$cate o# incorporation is issue&.4o such certi$cate was e%er issue& to petitioners or theirsuppose& pre&ecessor in interest at the ti'e o# the &onation.
• The &onation cou"& not ha%e been 'a&e in #a%or o# an entityyet ine(istent at the ti'e it was 'a&e.
1>. LI0 TON9 LI0VS. PHILIPPINEFISHIN9 9EARINDUSTRIES, INC.
• CORPORATION B ESTOPPEL Those who act or purport to
act as the representati%es or aents o# an ostensib"ecorporate entity who is pro%en to be "ea""y ine(istent &o sowithout authority an& at their own ris,.
• An $nn"orporate' asso"aton %as no personat& an'-o$' #e n"o3petent to a"t an' approprate or tse t%e po-er an' attr#$tes o a "orporaton as pro!'e'#& a- it cannot create aents or con#er authority on anotherto act in its beha"# thus) those who act or purport to act as itsrepresentati%es or aents &o so without authority an& at theirown ris,. 3t is an e"e'entary princip"e o# "aw that a personwho acts as an aent without authority or without a principa"
is hi'se"# rear&e& as the principa") possesse& o# a"" the rihtan& sub:ect to a"" the "iabi"ities o# a principa") a person actinor purportin to act on beha"# o# a corporation which has no%a"i& e(istence assu'es such pri%i"ees an& ob"iations an&beco'es persona""y "iab"e #or contracts entere& into or #orother acts per#or'e& as such aent.
T%e 'o"trne o "orporaton #& estoppe 3a& app& tot%e ae2e' "orporaton an' to a t%r' part&. An$nn"orporate' asso"aton, -%"% represents tse to#e a "orporaton, - #e estoppe' ro3 'en&n2 ts"orporate "apa"t& n a s$t a2anst t #& a t%r' person-%o rees n 2oo' at% on s$"% representaton.
A thir& party who) ,nowin an association to beunincorporate&) nonethe"ess treate& it as a corporation an&recei%e& bene$ts #ro' it) 'ay be barre& #ro' &enyin itscorporate e(istence in a suit brouht aainst the a""ee&corporation. 3n such case) a"" those who bene$te& #ro' thetransaction 'a&e by the ostensib"e corporation) &espite,now"e&e o# its "ea" &e#ects) 'ay be he"& "iab"e #or contractsthey i'p"ie&"y assente& to or too, a&%antae o#. Those actinon beha"# o# a corporation an& those bene$te& by it) ,nowin
it to be without %a"i& e(istence) are he"& "iab"e as enera"partners.
1@. INTERNATIONALEPRESS TRAVELAND TOURSERVICES VS. CA
• R.A. @1@5 an& /.D. 4o. H0G reconi!e& the :uri&ica" e(istenceo# nationa" sports associations9 Whi"e the Court arees withthe appe""ate court that nationa" sports associations 'ay beaccor&e& corporate status) such &oes not auto'atica""y ta,ep"ace by the 'ere passae o# these "aws.
• It s a #as" post$ate t%at #eore a "orporaton 3a&a";$re ?$r'"a personat&, t%e State 3$st 2!e ts"onsent et%er n t%e or3 o a spe"a a- or a 2eneraena#n2 a"t. We cannot aree with the %iew o# the appe""atecourt an& the pri%ate respon&ent that the /hi"ippine ootba""e&eration ca'e into e(istence upon the passae o# these"aws. 4owhere can it be #oun& in R.A. @1@5 or /.D. H0G any
pro%ision creatin the /hi"ippine ootba"" e&eration. These"aws 'ere"y reconi!e& the e(istence o# nationa" sportsassociations an& pro%i&e& the 'anner by which these entities'ay ac6uire :uri&ica" persona"ity.
• The statutory pro%isions re6uire that be#ore an entity 'ay beconsi&ere& as a nationa" sports association) such entity 'ustbe reconi!e& by the accre&itin orani!ation) the /hi"ippineA'ateur Ath"etic e&eration un&er R.A. @1@5 ) an& theDepart'ent o# Youth an& +ports De%e"op'ent un&er /.D. H0G.
It s a sette' prn"pe n "orporaton a- t%at an&person a"tn2 or p$rportn2 to a"t on #e%a o a"orporaton -%"% %as no !a' esten"e ass$3es s$"%pr!e2es an' o#2atons an' #e"o3es persona&a#e or "ontra"ts entere' nto or or s$"% ot%er a"tsperor3e' as s$"% a2ent.
Do"trne o Corporaton #& Estoppe (WRON9APPLICATION OF DOCTRINE) The &octrine o# corporationby estoppe" app"ies to a thir& party on"y when he tries toescape "iabi"ity on a contract #ro' which he has bene$te& onthe irre"e%ant roun& o# &e#ecti%e incorporation. The &octrineo# corporation by estoppe" is 'ista,en"y app"ie& by therespon&ent court to the petitioner. 3n the case at bar) thepetitioner is not tryin to escape "iabi"ity #ro' the contract butrather is the one c"ai'in #ro' the contract.
1. FILIPINAS • 0ORAL DA0A9ES A :uri&ica" person is enera""y not
BROADCASTIN9NETWOR INC. VS.A9O 0EDICAL ANDEDUCATIONALCENTER M BICOLCHRISTIANCOLLE9E OF
0EDICINE
entit"e& to 'ora" &a'aes because) un"i,e a natura" person) itcannot e(perience physica" su7erin or such senti'ents aswoun&e& #ee"ins) serious an(iety) 'enta" anuish or 'ora"shoc,. The Court o# Appea"s cites to :usti#y the awar& o# 'ora"&a'aes. Ho-e!er, t%e Co$rts state3ent n t%at a"orporaton 3a& %a!e a 2oo' rep$taton -%"%, #es3r"%e', 3a& aso #e a 2ro$n' or t%e a-ar' o
3ora 'a3a2es s an o#ter '"t$3.
• ECEPTION AECs c"ai' #or 'ora" &a'aes #a""s un&erite' I o# Artic"e 221 o# the Ci%i" Co&e. This pro%isione(press"y authori!es the reco%ery o# 'ora" &a'aes in caseso# "ibe") s"an&er or any other #or' o# &e#a'ation. Artic"e221=I> &oes not 6ua"i#y whether the p"ainti7 is a natura" or :uri&ica" person. There#ore) a :uri&ica" person such as acorporation can %a"i&"y co'p"ain #or "ibe" or any other #or' o# &e#a'ation an& c"ai' #or 'ora" &a'aes.
0ORAL DA0A9ES As a ru"e) a corporation is not entit"e& to'ora" &a'aes because) not bein a natura" person) it cannote(perience physica" su7erin or senti'ents "i,e woun&e&#ee"ins) serious an(iety) 'enta" anuish an& 'ora" shoc,.
The on"y e(ception to this ru"e is when the corporation has aoo& reputation that is &ebase&) resu"tin in its hu'i"iation inthe business rea"'. In t%e present "ase, t%e re"or's 'onot s%o- an& e!'en"e t%at t%e na3e or rep$taton o pettoner %as #een s$e' as a res$t o t%eConsort$3s ra$'$ent a"ts. A""or'n2&, 3ora'a3a2es are not -arrante'.
DUT OF DIRECTORS Directors owe "oya"ty an& $&e"ity to
the corporation they ser%e an& to its cre&itors. W%en t%ese're"tors st on t%e #oar' as representat!es o s%are%o'ers -%o are aso 3a?or "re'tors, t%e& "annot#e ao-e' to $se t%er o4"es to se"$re $n'$ea'!anta2e or t%ose s%are%o'ers, n ra$' o ot%er
"re'tors -%o 'o not %a!e a s3ar representaton nt%e #oar' o 're"tors.
FOR0ATION AND OR9ANIKATION OF A PRIVATE CORPORATIONTITLE OF THE CASE DOCTRINE(S)1. LCEU0 OF THEPHILIPPINES VS.COURT OF APPEALS
CORPORATE NA0E The Artic"es o# 3ncorporation o# acorporation 'ust) a'on other thins) set out the na'e o# the corporation. +ection 1 o# the Corporation Co&eestab"ishes a restricti%e ru"e inso#ar as corporate na'es areconcerne&9"Section 18. Corporate name. — No corporate name may be allowed by the Securities an Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive,confusing or contrary to existing laws. When a change in thecorporate name is approved, the Commission shall issue anamended certicate of incorporation under the amendedname.!
T%e po"& $n'er&n2 t%e pro%#ton n Se"ton 1+
a2anst t%e re2straton o a "orporate na3e -%"% s'ent"a or 'e"ept!e& or "on$sn2& s3ar to t%ato an& estn2 "orporaton or -%"% s patent&'e"ept!e or patent& "on$sn2 or "ontrar& toestn2 a-s, s t%e a!o'an"e o ra$' $pon t%ep$#" -%"% -o$' %a!e o""ason to 'ea -t% t%eentt& "on"erne', t%e e!ason o e2a o#2atons an''$tes, an' t%e re'$"ton o '4"$tes o a'3nstraton an' s$per!son o!er "orporatons.
We &o not consi&er that the corporate na'es o# pri%aterespon&ent institutions are <i&entica" with) or &ecepti%e"y orcon#usin"y si'i"ar< to that o# the petitioner institution. Trueenouh) the corporate na'es o# pri%ate respon&ent entities a""carry the wor& <Lyceu'< but con#usion an& &eception are
e7ecti%e"y prec"u&e& by the appen&in o# eoraphic na'esto the wor& <Lyceu'.< Thus) we &o not be"ie%e that the<Lyceu' o# Aparri< can be 'ista,en by the enera" pub"ic #orthe Lyceu' o# the /hi"ippines) or that the <Lyceu' o# Ca'a"aniuan< wou"& be con#use& with the Lyceu' o# the/hi"ippines.
/. AN9 09AAANIB SA I9LESIAN9 DIOS A RISTO HESUS,HS SA BANSAN9PILIPINAS INC. VS.I9LESIA N9 DIOSA CRISTO ESUS,HALI9I AT SUHA
N9 ATOTOHANAN
CORPORATE NA0E At an& rate, t%e SEC %as t%ea$t%ort& to 'e:re2ster at a t3es an' $n'er a"r"$3stan"es "orporate na3es, -%"% n ts est3atonare 5e& to spa-n "on$son. It s t%e '$t& o t%e SECto pre!ent "on$son n t%e $se o "orporate na3es noton& or t%e prote"ton o t%e "orporatons n!o!e' #$t3ore so or t%e prote"ton o t%e p$#".
• Coro""ary thereto) the pertinent portion o# the +EC ui&e"ineson Corporate 4a'es states9 =&> 3# the propose& na'e containsa wor& si'i"ar to a wor& a"rea&y use& as part o# the $r' na'eor sty"e o# a reistere& co'pany) the propose& na'e 'ustcontain two other wor&s &i7erent #ro' the na'e o# theco'pany a"rea&y reistere&J
• /arties orani!in a corporation 'ust choose a na'e at theirperi"J an& the use o# a na'e si'i"ar to one a&opte& byanother corporation) whether a business or a nonpro$torani!ation) i# 'is"ea&in or "i,e"y to in:ure in the e(ercise o# its corporate #unctions) rear&"ess o# intent) 'ay be pre%ente&by the corporation ha%in a prior riht) by a suit #or in:unction
"on$son n t%e $se o "orporate na3es not on& ort%e prote"ton o t%e "orporatons n!o!e' #$t 3ore soor t%e prote"ton o t%e p$#", an' t %as a$t%ort& to'e:re2ster at a t3es an' $n'er a "r"$3stan"es"orporate na3es -%"% n ts est3aton are 5e& to2enerate "on$son. C"ear"y there#ore) the present case #a""swithin the a'bit o# the +ECs reu"atory powers.
• Li,ewise untenab"e is petitioners aru'ent that there is nocon#usin or &ecepti%e si'i"arity between petitioner an&respon&ent RC/s corporate na'es. Se"ton 1+ o t%eCorporaton Co'e epress& pro%#ts t%e $se o a"orporate na3e, -%"% s 'ent"a or 'e"ept!e& or"on$sn2& s3ar to t%at o an& estn2 "orporatonor to an& ot%er na3e area'& prote"te' #& a- or spatent& 'e"ept!e, "on$sn2 or "ontrar& to estn2a-s. The po"icy behin& the #oreoin prohibition is to a%oi&#rau& upon the pub"ic that wi"" ha%e occasion to &ea" with theentity concerne&) the e%asion o# "ea" ob"iations an& &uties)an& the re&uction o# &icu"ties o# a&'inistration an&
super%ision o%er corporation.• /ursuant thereto) the REVISED 9UIDELINES IN THE
APPROVAL OF CORPORATE AND PARTNERSHIP NA0ESspeci$ca""y re6uires that9(1) A "orporate na3e s%a not #e 'ent"a, 3sea'n2or "on$sn2& s3ar to one area'& re2stere' #&anot%er "orporaton -t% t%e Co33sson6 an'(/) I t%e propose' na3e s s3ar to t%e na3e o are2stere' <r3, t%e propose' na3e 3$st "ontan ateast one 'stn"t!e -or' '7erent ro3 t%e na3e o t%e "o3pan& area'& re2stere'.
• As he"& in /hi"ips E(port 8.. %s. Court o# Appea"s) to #a"" withinthe prohibition o# the "aw) two re6uisites 'ust be pro%en) towit9
=1> that the co'p"ainant corporation ac6uire& a prior rihto%er the use o# such corporate na'eJ an&=2> the propose& na'e is either9=a> i&entica") or=b> &ecepti%e"y or con#usin"y si'i"ar to that o# any e(istincorporation or to any other na'e a"rea&y protecte& by "awJ or=c> patent"y &ecepti%e) con#usin or contrary to e(istin "aw.
=. 9 SU00ITHOLDIN9S VS.COURT OF APPEALS
• A pub"ic uti"ity is a business or ser%ice enae& in reu"ar"y
supp"yin the pub"ic with so'e co''o&ity or ser%ice o# pub"icconse6uence such as e"ectricity) as) water) transportation)te"ephone or te"eraph ser%ice. To constitute a pub"ic uti"ity)the #aci"ity 'ust be necessary #or the 'aintenance o# "i#e an&occupation o# the resi&ents. ;owe%er) the #act that a businesso7ers ser%ices or oo&s that pro'ote pub"ic oo& an& ser%ethe interest o# the pub"ic &oes not auto'atica""y 'a,e it a
pub"ic uti"ity. /ub"ic use is not synony'ous with pub"icinterest. As ts na3e n'"ates, t%e ter3 p$#" $tt&3pes p$#" $se an' ser!"e to t%e p$#". T%eprn"pa 'eter3nat!e "%ara"terst" o a p$#" $tt&s t%at o ser!"e to, or rea'ness to ser!e, an n'e<ntep$#" or porton o t%e p$#" as s$"% -%"% %as a e2ar2%t to 'e3an' an' re"e!e ts ser!"es or"o33o'tes. +tate& otherwise) the owner or person incontro" o# a pub"ic uti"ity 'ust ha%e &e%ote& it to such usethat the pub"ic enera""y or that part o# the pub"ic which has
been ser%e& an& has accepte& the ser%ice) has the riht to&e'an& that use or ser%ice so "on as it is continue&) withreasonab"e eciency an& un&er proper chares. Un5e apr!ate enterprse, -%"% n'epen'ent& 'eter3nes-%o3 t - ser!e, a p$#" $tt& %o's o$t 2enera&an' 3a& not re$se e2t3ate 'e3an' or ser!"e.
There can be no &isaree'ent that the shipbui"&in an& shiprepair in&ustry is i'bue& with pub"ic interest as it in%o"%es the'aintenance o# the seaworthiness o# %esse"s &e&icate& to thetransportation o# either persons or oo&s. 4e%erthe"ess) the#act that a business is a7ecte& with pub"ic interest &oes noti'p"y that it is un&er a &uty to ser%e the pub"ic. Whi"e thebusiness 'ay be reu"ate& #or pub"ic oo&) the reu"ationcannot :usti#y the c"assi$cation o# a pure"y pri%ate enterpriseas a pub"ic uti"ity. T%e e2sat$re "annot, #& ts 3ere'e"araton, 3a5e so3et%n2 a p$#" $tt& -%"% snot n a"t s$"%6 an' a pr!ate #$sness operate' $n'erpr!ate "ontra"ts -t% see"te' "$sto3ers an' not'e!ote' to p$#" $se "annot, #& e2sat!e <at or #&or'er o a p$#" ser!"e "o33sson, #e 'e"are' ap$#" $tt&, sn"e t%at -o$' #e ta5n2 pr!ate
• ARTICLE III, SECTION + OF THE 1*8> CONSTITUTION9No franchise, certicate, or any other form or authori"ation for the operation of a public utility shall be granted except tociti"ens of the #hilippines or to corporations or other entitiesorgani"ed under the laws of the #hilippines, sixty per centumof the capital of which is owned by citi"ens of the #hilippines,nor shall such franchise, certicate or authori"ation beexclusive in character or for a longer period than fty years.No franchise or right shall be granted to any individual, rm or corporation, except under the condition that it shall be sub$ect to amendment, alteration, or repeal by the National %ssembly when the public interest so re&uires.
• 3n %iew o# the #oreoin) there can be no other conc"usionthan to ho"& that a SHIPARD IS NOT A PUBLIC UTILIT . Ashipyar& has been consi&ere& a pub"ic uti"ity 'ere"y by"eis"ati%e &ec"aration. Absent this &ec"aration) there is no'ore reason why it shou"& continuous"y be rear&e& as such. The #act that the "eis"ature &i& not c"ear"y an&una'biuous"y e(press its intention to inc"u&e shipyar&s inthe "ist o# pub"ic uti"ities in&icates that that it &i& not inten& to&o so. Thus) a shipyar& re%erts bac, to its status as non-pub"icuti"ity prior to the enact'ent o# the /ub"ic +er%ice Law.
Nota#&, para2rap% 1.= o t%e VA a""or'e' t%e partest%e r2%t o <rst re$sa $n'er t%e sa3e ter3s. T%sp%rase 3pes t%at -%en et%er part& eer"ses t%er2%t o <rst re$sa $n'er para2rap% 1.=, t%e& "an on&
'o so to t%e etent ao-e' t%e3 #& para2rap%s 1./an' 1.8 o t%e VA or $n'er t%e proporton o @:=o t%e s%ares o sto"5. T%$s, s%o$' t%e NIDC opt tose ts s%ares o sto"5 to a t%r' part&, a-asa5 "o$'on& eer"se ts r2%t o <rst re$sa to t%e etent t%atts tota s%ares o sto"5 -o$' not e"ee' = o t%eentre s%ares o sto"5 o SNS or PHILSECO. T%e NIDC,on t%e ot%er %an', 3a& p$r"%ase e!en #e&on' @ o t%e tota s%ares. As a 2o!ern3ent "orporaton an'ne"essar& a 1 Fpno:o-ne' "orporaton, t%ere s
not%n2 to pre!ent ts p$r"%ase o sto"5s e!en #e&on'@ o t%e "aptaGaton as t%e Constt$ton "ear&3ts on& ore2n "aptaGaton.
>. OUN9 AUTOSUPPL VS. COURTOF APPEALS
• PRINCIPAL OFFICE9 A corporation has no resi&ence in thesa'e sense in which this ter' is app"ie& to a natura" person.8ut #or practica" purposes) a corporation is in a 'etaphysica"sense a resi&ent o# the p"ace where its principa" oce is"ocate& as state& in the artic"es o# incorporation.
• T%e Corporaton Co'e pre"se& re;$res ea"%"orporaton to spe"& n ts art"es o n"orporatont%e pa"e -%ere t%e prn"pa o4"e o t%e "orporatons to #e o"ate' -%"% 3$st #e -t%n t%e P%ppnes=+ec. 1G K@>.
T%e p$rpose o t%s re;$re3ent s to < t%e res'en"eo a "orporaton n a 'e<nte pa"e, nstea' o ao-n2t to #e a3#$ator&.
• The +upre'e Court e(p"aine& why actions cou"&nt be $"e&aainst a corporation in any p"ace where the corporation'aintains its branch oces. The Court ru"e& that to a""ow anaction to be institute& in any p"ace where the corporation hasbranch oces) wou"& create con#usion an& wor, unto"&
incon%enience to sai& entity. 8y the sa'e to,en) a corporationcannot be a""owe& to $"e persona" actions in a p"ace otherthan its principa" p"ace o# business un"ess such a p"ace is a"sothe resi&ence o# a co-p"ainti7 or a &e#en&ant.
@. REPUBLICPLANTERS BAN VS. A9ANA
ARE PREFERRED SHARES OF STOC ARE REDEE0ABLEQ4o. The &ec"aration o# &i%i&en&s is &epen&ent upon thea%ai"abi"ity o# the surp"us pro$ts or unrestricte& retaine&earnins. /re#erence rante& to pre#erre& stoc,ho"&ers &o noti%e the' a "ien upon the property o# the corporation.
• E%en i# stoc, certi$cate is a""owe& #or re&e'ption) the optionto &o so was c"ear"y %este& to the corporation an& state& onthe certi$cate. The re&e'ption in the case cannot be a""owe&as the ban, is su7erin $nancia" "osses.
• DIVIDENDS ARE PAABLE ONL WHERE THERE ARE
EISTIN9 PROFITS EARNED B THE CORPORATION ANDAS A 9ENERAL RULE, EVEN IF THERE ARE EISTIN9PROFITS, THE BOARD OF DIRECTORS HAS DISCRETIONTO DETER0INE WHETHER OR NOT DIVIDENDS ARE TOBE DECLARED. The pre#erence si'p"y 'eans that theho"&ers o# co''on stoc, 'ay recei%e &i%i&en&s on"y a#tersatis#action o# prior c"ai's or &i%i&en&s o# pre#erre&stoc,ho"&ers.
. CASTILLO VS.BALIN9HASA
DEPRIVATION OF CLASS B STOCHOLDERS RI9HT TOVOTE +ection H o# the Corporation Co&e pro%i&es that M4oshare 'ay be &epri%e& o# %otin rihts e(cept those c"assi$e&an& issue& as Mpre#erre&N or Mre&ee'ab"eN shares un"essotherwise pro%i&e& in this Co&e.N
It ne"essar& oo-s t%at $ness ot%er-se state' t%at
Cass B s%ares are "ear& "ate2orGe' as preerre' orre'ee3a#e, ts %o'ers 3a& not #e 'epr!e' o t%er!otn2 r2%ts.
• *ne o# the rihts o# a stoc,ho"&er is the riht to participate inthe contro" an& 'anae'ent o# the corporation that ise(ercise& throuh his %ote. THE RI9HT TO VOTE IS A RI9HTINHERENT IN AND INCIDENTAL TO THE OWNERSHIP OFCORPORATE STOC, AND AS SUCH IS A PROPERT RI9HT. The stoc,ho"&er cannot be &epri%e& o# the riht to%ote his stoc, nor 'ay the riht be essentia""y i'paire&)
either by the "eis"ature or by the corporation) without hisconsent) throuh a'en&in the charter) or the by-"aws.
CONTROL AND 0ANA9E0ENT OF A CORPORATIONTITLE OF THE CASE DOCTRINE(S)
1. 9RACECHRISTIAN HI9HSCHOOL VS. COURTOF APPEALS
NO PER0ANENT SEAT IN THE BOARD OF DIRECTORS+ection 2@ states MThe corporate powers... sha"" bee(ercise&... he"& by the 8oar& o# Directors or trustees T* 8EELECTED.N
This "ea%es no &oubt that the 8oar& o# corporations 'ust bee"ecte& #ro' +; or 'e'bers. A"thouh there 'ay becorporations in which there are une"ecte& 'e'bers) but it is
c"ear that they sit as e( ocio- by %irtue o& an& #or as "on asthey ho"& a particu"ar oce. 8ut in this case) there is noreason at a"" or neither is it by %irtue o# an oce he"&.
/. 9OON9WEI VS.COURT OF APPEALS
THE CORPORATION HAS A POWER TO PROVIDEADDITIONAL JUALIFICATIONS OF ITS DIRECTORS E%erycorporation has the inherent power to a&opt by-"aws #or itsinterna" o%ern'ent an& to reu"ate the con&uct an&prescribe the rihts an& &uties o# its 'e'bers towar&s itse"# an& a'on the'se"%es in re#erence to the 'anae'ent i# itsa7airs.
3t cannot be sai&) there#ore) that o,onwei has a %este& rihtto be an e"ecte& &irector because the corporate charter an&the by-"aws 'ay be sub:ect to a'en&'ent) a"teration) an&'o&i$cation.
DISJUALIFICATION OF A CO0PETITOR FRO0 BEIN9ELECTED TO THE BOARD OF DIRECTORS IS AREASONABLE EERCISE OF CORPORATE AUTHORIT Asaents entruste& with the 'anae'ent o# the corporation) #orthe co""ecti%e bene$t o# the stoc,ho"&ers) t%e& o""$p& a<'$"ar& reaton n t%s sense t%at reaton s one o tr$st. The or&inary trust re"ationship o# &irectors o# acorporation an& stoc,ho"&ers is not a 'atter o# statutory ortechnica" "aw. 3t sprins #ro' the #act that &irectors ha%econtro" an& ui&ance o# corporate a7airs an& property) an&hence) o# the property interests o# the stoc,ho"&ers.
POWERS OF A DIRECTOR IS POWER IN TRUST ;e cannotuti"i!e his insi&e in#or'ation an& strateic position #or hispre#er'ent. ;e cannot %io"ate the ru"es o# #air p"ay by &oinin&irect"y throuh the corporation what he cou"& not &o so
&irect"y. ;e cannot use #or his persona" a&%antae an& to the&etri'ent o# the stoc,ho"&ers an& cre&itors no 'atter howabso"ute in ter's that power 'ay be.
DOCTRINE OF CORPORATE OPPORTUNIT s pre"se&re"o2nton #& t%e Co$rts t%at t%e <'$"ar& stan'ar's"o$' not #e $p%e' -%ere t%e <'$"ar& -as a"tn2 ort-o enttes -t% "o3petn2 nterests. T%s 'o"trnerests $n'a3enta& on $narness, n part"$ar"r"$3stan"es, o an o4"er or 're"tor ta5n2a'!anta2e o an opport$nt& or %s o-n persona pro<t-%en t%e nterest o t%e "orporaton ?$st& "as orprote"ton.
PURPOSE OF THE A0END0ENT IN THE B:LAWS toPREVENT the creation o# an opportunity #or an ocer or&irector =o# +C>) who is a"so an ocer o# a co'petincorporation) #ro' ta,in a&%antae o# the in#or'ation that heac6uires as Director to pro'ote his in&i%i&ua" or corporateinterest to the pre:u&ice o# +C an& its stoc,ho"&ers
• o,onweis pro'ise to be absent in 'eetins withcon$&entia" 'atters wou"& be inconsistent with his pri'ary'oti%e in runnin the boar& 'e'bership O which is to protecthis in%est'ents in +C.
8. WESTERNINSTITUTE OFTECHOLO9 VS.SALAS
INCREASE IN CO0PENSATION OF DIRECTORS,CORPORATE OFFICERS +ec. @0 pro%i&es MThe &irectorssha"" not recei%e any co'pensation) A+ +C; D3RECT*R+...N This &e"i'its the scope o# the prohibition to co'pensationi%en to the' #or ser%ices per#or'e& pure"y in their capacityas &irectors or trustees. A 'e'ber o# a boar& 'ay %a"i&"yrecei%e co'pensation) in a&&ition to reasonab"e per &ie')when they ren&er ser%ices to the corporation in a capacityother than as &irectors or trustees) such as bein an ocer.
WAS ON HOW THE BOARD CAN BE 9RANTEDCO0PENSATION (PER DIE0S)1. W%ere t%ere s a pro!son n t%e #&:a-s <n2
2. W%en t%e sto"5%o'ers representn2 a 3a?ort& o t%e o$tstan'n2 "apta sto"5 at a re2$ar or spe"a3eetn2 "ae' or t%at p$rpose
=. NACPIL VS.INTERNATIONALBROADCASTIN9CORPORATION
WN BEIN9 A CO0PTROLLER, DESPITE NOT BEIN9INCLUDED IN THE B:LAWS, 0AES HI0 A CORPORATEOFFICER ;e is a corporate ocer. E%en i# the by-"aws &o notinc"u&e a co'ptro""er) an& he was appointe& on"y by theenera" anaer) such appoint'ent was subse6uent"yappro%e& by the 8oar& o# Directors an& the "atter ise'powere& un&er the by-"aws to appoint such other ocers anecessary. 8ein appro%e& unani'ous"y) he is a corporateocer an& the 'atter is c"ear"y an intra-corporate 'atter.
>. PEOPLESAIRCAR9O VS.COURT OF APPEALS
DOCTRINE OF APPARENT AUTHORIT I a "orporaton5no-n2& per3ts one o ts o4"ers, or an& ot%era2ent, to a"t -t%n t%e s"ope o an apparent a$t%ort&,t %o's %3 o$t to t%e p$#" as possessn2 t%e po-erto 'o t%ose a"ts6 an' t%$s t%e "orporaton -, asa2anst an&one -%o %as n 2oo' at% 'eat -t% tt%ro$2% s$"% a2ent, BE ESTOPPED ro3 'en&n2 t%ea2ents a$t%ort&
3n the case) /AWC3) throuh /resi&ent /unsa"an) entere& into
the irst Contract without $rst securin 8oar& appro%a".Despite such "ac, o# 8oar& appro%a") PAWCI DID NOTOBECT TO OR REPUDIATE SAID CONTRACT. Thus)Mc"othinN its /resi&ent with power to bin& the Corporation.
@. PRI0E WHITECE0ENT VS. IAC
WN THE CONTRACT OF DEALERSHIP ENTERED INTO B THE PRESIDENT AND CHAIR0AN OF THE BOARD, DUL AUTHORIKED TO ENTER INTO SUCH A TRANSACTION,WAS BINDIN9 TO THE CORPORATION DESPITE DEALIN9WITH ONE OF ITS OWN DIRECTORS 4o. 3n the absence o# e(press &e"eation) a contract entere& into by the /resi&ent)on beha"# o# the corporation) 'ay sti"" bin& the corporation IFTHE BOARD SHOULD RATIF THE SA0E EPRESSL ORI0PLIEDL. 3'p"ie& rati$cation 'ay be in %arious #or's "i,esi"ence) ac6uiescenceJ by acts o# showin appro%a" or
acceptance or retention o# the bene$ts Powin there#ro'.
A"e:an&ro Te) in this case) is a SELF:DEALIN9 DIRECTOR6-%o persona& "ontra"t -t% t%e "orporaton n -%"%t%e& are a Dre"tor, Tr$stee, or O4"er.
9ENERAL RULE SUCH CONTRACTS ARE VOIDABLE) ATTHE OPTION OF THE CORPORATION, UNLESS ALL AREPRESENT (Se"ton 8/)
(ECEPTIONS)1. The presence o# such &irectorQ trustee in the 8oar&
'eetin appro%in the contract was not necessary toconstitute 6uoru'.
2. The %ote o# such &irectorQ trustee in the 8oar& 'eetin
appro%in the contract is not necessary #or the appro%a" o# the contract@. The contract is #air an& reasonab"e un&er the
circu'stancesG. 3n case o# an ocer) the contract has been pre%ious"y
authori!e& by the 8oar& o# Directors
• ECEPTION TO THE ECEPTION The contract is sti"" %a"i¬withstan&in the absence o# the $rst two con&itions set#orth in the prece&in pararaph is absent91. 3 the case o# a contract with a &irector or trustee) such
contract 'ay be rati$e& by the %ote o# the stoc,ho"&ersrepresentin at "east two-thir&s =2Q@> o# the outstan&incapita" stoc, or o# at "east two-thir&s =2Q@> o# the 'e'bersin a 'eetin ca""e& #or the purpose9
2. u"" &isc"osure o# the a&%erse interest o# the &irectors ortrustees in%o"%e& is 'a&e at such 'eetin9
@. That the contract is #air an& reasonab"e un&er the
circu'stances.. SANTOS VS.NLRC
• SOLIDAR LIABILIT OF DIRECTORS (SECTION 81)9Directors or trustees who wi"#u""y an& ,nowin"y %ote #or orassent to patent"y un"aw#u" acts o# the corporation or who areui"ty o# ross ne"ience or ba& #aith in &irectin the a7airso# the corporation or ac6uire any persona" or pecuniaryinterest in conPict with their &uty as such &irectors or trusteessha"" be "iab"e :oint"y an& se%era""y #or a"" &a'aes resu"tinthere#ro' su7ere& by the corporation) its stoc,ho"&ers or'e'bers an& other persons.
When a &irector) trustee or ocer atte'pts to ac6uire orac6uires) in %io"ation o# his &uty) any interest a&%erse to thecorporation in respect o# any 'atter which has been repose&
in hi' in con$&ence) as to which e6uity i'poses a &isabi"ityupon hi' to &ea" in his own beha"#) he sha"" be "iab"e as atrustee #or the corporation an& 'ust account #or the pro$tswhich otherwise wou"& ha%e accrue& to the corporation.
• 9ENERAL RULE9 Directors an& ocers are not so"i&ari"y "iab"e
with the corporation.
ECEPTIONS
1. Cr3na La#t& O o# corporate ocers or e'p"oyeesthrouh whose acts) &e#au"t) or o'ission) the corporationco''its a cri'e.
- Aree or stipu"ate in a contract to ho"& hi'se"# persona""y "iab"e with the corporation- Consent to the issuance o# watere& stoc,s or ha%in
,now"e&e thereo#) #ai"s to $"e ob:ections with thecorporate secretary
- Are ui"ty o# ross ne"ience or ba& #aith in &irectinthe a7airs o# the corporation
- Ac6uire persona" or pecuniary interest in conPict withtheir &uty
- Wi""#u""y an& ,nowin"y %ote or assent to patent"yun"aw#u" acts o# the corporation
• The case o# +antos is way o# the e(ceptiona" circu'stances. It%as not #een s%o-n t%at Santos %as %a' a 're"t %an'n t%e 's3ssa o 0ena eno$2% to attr#$te to
Santos a patent& $na-$ a"t -%e a"tn2 or t%e"orporaton. 3t is un&ispute& that the ter'ination o# i""enase'p"oy'ent has) instea&) been &ue co""ecti%e"y to a nee& #ora #urther 'itiation o# "osses) an& "ac, o# #un&s to #urthersupport the 'inin operation in +orsoon.
PERSONAL LIABILIT OF CORPORATE OFFICERS As aenera" ru"e) corporate ocers are not persona""y "iab"e #ortheir ocia" acts un"ess it is shown that they ha%e e(cee&e&their authority. ;owe%er) t%e persona a#t& o a"orporate 're"tor, tr$stee, or o4"er, aon2 -t%
"orporaton, 3a& so !a'& atta"% -%en %e assents toa patent& $na-$ a"t o t%e "orporaton or or #a'at%, or 2ross ne22en"e n 're"tn2 ts a7ars.
*. 0ALAAN9SA0AHAN N90AN99A9AWA VS.RA0OS
CIRCU0STANCES WHERE CORPORATE OFFICER ISSOLIDARIL LIABLE1. When &irectors an& trustees) or in appropriate cases) the
ocers o# the corporation- ote #or or assent to patent"y un"aw#u" acts o# thecorporation- Act in ba& #aith or with ross ne"ience in &irectin thecorporate a7airs- Are ui"ty o# conPict o# interest to the pre:u&ice o# thecorporation) its stoc,ho"&ers or 'e'bers an& otherpersons
2. When a &irector or ocer has consente& to the issuanceo# watere& stoc,s or who ha%in ,now"e&e thereo#) &i¬ #orthwith $"e with the corporate secretary his writtenob:ection thereto
@. When a &irector) trustee or ocer has contractua""yaree& or stipu"ate& to ho"& hi'se"# persona""y an&so"i&ari"y "iab"e with the corporation
G. When a &irector) trustee or ocer is 'a&e) by speci$cpro%ision o# "aw) persona""y "iab"e #or his corporate action.
8a' at% 'oes not "onnote #a' ?$'23ent orne22en"e. It 3ports a 's%onest p$rpose or 3orao#;$t& an' "ons"o$s 'on2 o a -ron2. 4o recor&shows that ocers acte& in ba& #aith.
1. INTER:ASIAINVEST0ENTINDUSTRIES VS.COURT OF APPEALS
• Letter o# 3A33 /resi&ent proposin the Asia 3n&ustries? c"ai' #orre#un& be re&uce&) is %a"i& an& bin&in. An o4"er -%o sa$t%orGe' to p$r"%ase t%e sto"5 o anot%er"orporaton %as t%e 3pe' po-er to peror3 a ot%ero#2atons arsn2 t%erero3, s$"% as pa&3ent o t%es%ares o sto"5. 8y a""owin its presi&ent to sin theAree'ent on its beha"#) petitioner c"othe& hi' with apparent
capacity to per#or' a"" acts) which are e(press"y) i'p"ie&"yan& inherent"y state& therein.
11. LAPU:LAPUFOUNDATION VS.COURT OF APPEALS
DOCTRINE OF APPARENT AUTHORIT The app"ication #orcre&it acco''o&ation) the sinature car&s o# the twoaccounts in the na'e o# the #oun&ation) new current accountrecor&) a"" acco'panyin the pro'issory notes) were sine&by Tan =/resi&ent> #or an& in the na'e o# the #oun&ation.Fo$n'aton %as 2!en ts Pres'ent an ostens#e an'apparent a$t%ort& to 'ea -t% t%e #an5. Fo$n'aton sestoppe' ro3 ;$estonn2 pettoners a$t%ort& too#tan t%e oans. 3# a corporation ,nowin"y per'its one o# its ocers or any other aent) to act within the scope o# apparent authority) it ho"&s hi' out to the pub"ic aspossessin the power to &o those acts.
1/. HDRO
RESOURCES VS.NATIONALIRRI9ATIONAD0INISTRATION
• ULTRA VIRES ACT AND DOCTRINE OF APPARENT
AUTHORIT A&'inistrator) the hihest ocer o# 43A)prepare& the :oint co'putation which shows ;y&ro as entit"e&to #orein currency &i7erentia". ;y&ro ha& been &ea"in with43A thru its A&'inistrator in a"" its transactions. ;e ise'powere& by contract to rant or &eny #orein currency&i7erentia" c"ai's. NIA ne!er 'sp$te' ts A'3nstrators"apa"t& to s2n t%e ?ont "o3p$taton. E!en ass$3n2t%at %e %a' no a$t%ort& to #n' NIA, atter s estoppe'ater repeate'& representn2 H&'ro t%at t%eA'3nstrator %a' s$"% a$t%ort&. A corporation 'ay be
he"& in estoppe" #ro' &enyin aainst @r& persons theauthority o# its ocers who ha%e been c"othe& by it withapparent authority.
18. 0ONFORTCORP. VS.0ONFORT III
Se"ton /@. Report o ee"ton o 're"tors, tr$steesan' o4"ers. : Within t%rt& (8) 'a&s a#ter the e"ection o# the &irectors) trustees an& ocers o# the corporation) thesecretary) or any other ocer o# the corporation) sha"" sub'itto the +ecurities an& E(chane Co''ission) the na'es)nationa"ities an& resi&ences o# the &irectors) trustees) an&ocers e"ecte&. +hou"& a &irector) trustee or ocer &ie) resinor in any 'anner cease to ho"& oce) his heirs in case o# his&eath) the secretary) or any other ocer o# the corporation) orthe &irector) trustee or ocer hi'se"#) sha"" i''e&iate"yreport such #act to the +ecurities an& E(chane Co''ission.
• The corporation #ai"e& to &o such re6uire'ent. The a""ee&e"ection was in 1H but the +EC was in#or'e& 'ore than 2years "ater =1>. T%e a"t t%at = o @ 3e3#ers o t%eBoar' ste' n 1**@ 9enera Inor3aton S%eet arearea'& 'ea' at t%e t3e t%e 1** Boar' Reso$ton-as ss$e', 'oes not a$to3at"a& 3a5e = s2natoresas a3on2 t%e n"$3#ent 3e3#ers o t%e #oar'.
• a. Antonia +a"%atierra) ae' to pro!e that G 'e'bers o# the 8oar&) who authori!e& her to represent the corporation)were "aw#u""y e"ecte& 'e'bers o# the boar&. There#ore shehas no capacity to sue on beha"# o# the corporation.
1=. 0CLEOD VS.NLRC
OINT AND SOLIDAR LIABILIT /3 has aree& to trans#era"" its rihts) tit"e an& interests in the assets to +RTC by &ationin pay'ent. As a r$e, a "orporaton t%at p$r"%ases t%eassets o anot%er - not #e a#e or t%e 'e#ts o t%esen2 "orporaton, pro!'e' t%e or3er a"te' n 2oo'at% pa' a'e;$ate "ons'eraton, e"ept -%en an&o t%e oo-n2 are present1. Where purchaser e(press"y or i'p"ie&"y arees to assu'ethe &ebts2. Where the transaction a'ounts to conso"i&ation or 'erer
o# corporations@. Where the purchasin corporation is 'ere"y a continuationo# the se""in corporationG. Where the se""in corporation #rau&u"ent"y enters into thetransaction to escape "iabi"ity #or &ebts. 4one o# thee(ceptions are present because /3 'ere"y trans#erre& itsassets to +RT3 to sett"e its ob"iation #or /210)000)000. 4oe'p"oyer-e'p"oyee re"ationship e(ists. There#ore cLeo&?scause o# action is on"y aainst /3.
1>. CARA9 VS.NLRC
• Se" 81 3a5es a 're"tor persona& a#e or "orporate'e#ts %e -$& an' 5no-n2& !otes or or assentsto patent& $na-$ a"ts o t%e "orporaton. ;e is a"sopersona""y "iab"e i# he is ui"ty o# ross ne"ience or ba& #aithin &irectin the a7airs o# the corp. ;owe%er) neither a""eationnor e%i&ence that Cara wi""#u""y an& ,nowin"y %ote& to anypatent"y un"aw#u" act. 8a& #aith &oes not auto'atica""y arisewhen a corporation #ai"s to co'p"y with the noticere6uire'ent o# "abor "aws on co'pany c"osure an& &is'issa"o# e'p"oyees. There is on"y a %io"ation o# proce&ura" &ueprocess but it is not un"aw#u". Cara is not "iab"e.
