Digests

In preparation for the Philippine Centennial Celebration in 1998, the National Centennial Commission (NCC) was created by Executive Order No. 128 to oversee nationwide preparations. The NCC, together with the Bases Conversion Development Authority (BCDA), organized the Philippine Centennial Expo '98 Corporation (Expocorp) to manage the Centennial International Exposition. Following allegations of anomalies in the project, including the lack of public biddings, the Senate Blue Ribbon Committee and the Ad Hoc and Independent Citizen's Committee investigated and recommended further action. This led to the Ombudsman filing criminal charges against Morales, then acting president of Expocorp, for allegedly selling a government vehicle without public bidding and failing to remit the proceeds.

A corporation organized under the general Corporation Code, in which the Government does not own a majority of the capital stock, is a private corporation despite being organized by government agencies to implement public projects; consequently, its officers are not public officers subject to the jurisdiction of the Sandiganbayan.

Business Media Philippines, Inc. (BMPI) was incorporated in 1987 with the petitioner as an incorporator and original director. BMPI engaged in publishing and commissioned Printwell, Inc. for printing services on credit. When BMPI defaulted on its payment obligations, Printwell sued the corporation and subsequently impleaded the stockholders to recover on their unpaid subscriptions after discovering the corporation's insufficiency of assets.

Stockholders are personally liable for corporate debts up to the extent of their unpaid subscriptions under the Trust Fund Doctrine; the separate juridical personality of a corporation, being an artificial being and legal fiction created for convenience, may be pierced when used to perpetrate fraud or evade just obligations; and defendants who plead payment of subscriptions bear the burden of proving actual payment, which requires proof that checks tendered were encashed, not merely receipt issuance.

RA 9009 amended the Local Government Code of 1991, increasing the income requirement for conversion of municipalities to cities from P20 million to P100 million in locally generated revenue. During the 11th Congress (1998-2001), several municipalities had pending conversion bills. When RA 9009 took effect on June 30, 2001, these municipalities were caught by the new requirement. The House attempted to exempt them through Joint Resolution No. 29 (later re-adopted as Joint Resolution No. 1), but the Senate failed to act. Subsequently, during the 12th and 13th Congresses, individual Cityhood Laws were enacted for 16 municipalities, each containing an exemption clause effectively reverting to the P20 million requirement or explicitly exempting them from RA 9009. The LCP challenged these laws as unconstitutional, leading to multiple rounds of litigation and shifting majorities in the SC.

The Cityhood Laws are constitutional because the exemption clauses therein constitute valid amendments to the Local Government Code, exempting the respondent municipalities from the P100 million income requirement under RA 9009 in recognition of their distinct class and proven viability as centers of trade and commerce.

The case stems from a petition seeking to declare Sen. Richard J. Gordon as having forfeited his Senate seat for concurrently serving as Chairman of the PNRC Board of Governors. In its July 15, 2009 Decision, the SC held that the PNRC Chairman is not a government office (thus no forfeiture), but declared void the provisions of R.A. No. 95 creating the PNRC as a "private corporation," ruling that the PNRC must incorporate under the Corporation Code. Gordon and the PNRC filed Motions for Reconsideration, arguing the issue of constitutionality was not raised by the parties and that the PNRC possesses a unique status under international law.

The PNRC is a sui generis entity with a status that is neither strictly private nor governmental; its creation by special law (R.A. No. 95, as amended) to comply with the Geneva Conventions is constitutional, and the office of PNRC Chairman is not a government office or an office in a GOCC for purposes of the prohibition on dual office-holding under Section 13, Article VI of the 1987 Constitution.

The dispute arose from a family feud involving respondent Ramon K. Ilusorio and his siblings who controlled the Baguio Country Club Corporation (BCCC). Ilusorio, a club member and owner of an assigned penthouse unit, was barred from using the unit and threatened with expulsion from membership following the escalation of the family conflict in 1998. BCCC subsequently sent demand letters to Ilusorio for alleged unpaid guest charges and rectification works dating back to 1995, totaling over P2.9 million. Viewing these demands as harassment designed to pressure him in the family dispute, Ilusorio filed a separate action for damages, while BCCC had already initiated a collection suit in another venue.

The act of sending demand letters by a creditor to enforce payment of contractual obligations, standing alone, does not constitute a cause of action for damages; a cause of action requires an act or omission that violates the right of another, and the exercise of a legal right to collect debts or threaten sanctions under club rules does not violate Article 19 of the Civil Code unless exercised in a manner that lacks justice, honesty, or good faith.

Lorenzo Shipping Corporation, a domestic corporation engaged primarily in cargo shipping activities, decided to amend its Articles of Incorporation to remove stockholders' pre-emptive rights to newly issued shares. Philip and Elnora Turner, stockholders holding 1,010,000 shares, voted against this amendment and exercised their appraisal right under the Corporation Code, demanding payment for their shares based on book value. A dispute arose regarding the valuation of the shares and the corporation's obligation to pay, leading to the constitution of an appraisal committee and subsequent litigation.

A dissenting stockholder's cause of action to enforce the appraisal right and demand payment for shares under Section 82 of the Corporation Code only accrues when the corporation possesses unrestricted retained earnings sufficient to cover the payment at the time of demand; the absence of such earnings at the time of filing the complaint renders the action prematurely brought and dismissible, and the subsequent existence of earnings during the pendency of the case cannot cure this defect.

A surviving corporation in a merger is estopped from questioning the capacity to sue of a foreign corporation with which the dissolved corporation had contracted, because the surviving corporation assumes all rights, liabilities, and obligations of the dissolved corporation as if it had itself incurred them, and cannot later take advantage of the foreign corporation's lack of license to do business in the Philippines to escape contractual liability.

The case arises from the termination of Ricardo R. Coros from his position as Vice President for Finance and Administration at Matling Industrial and Commercial Corporation after 33 years of service. The dispute centers on whether his dismissal constituted an intra-corporate controversy (jurisdiction of the Regional Trial Court) or a labor dispute (jurisdiction of the Labor Arbiter), hinging on whether Coros was a corporate officer or a regular employee.

A corporate office must be expressly provided for in the Articles of Incorporation or By-Laws, or specifically designated by the Corporation Code. The creation of a position pursuant to a By-Law provision authorizing the President to create new offices does not make such position a corporate office; rather, it remains an ordinary office occupied by an employee. Thus, the power to create corporate offices is non-delegable and must be exercised by the Board of Directors.

The case arose from a contractual dispute where Romeo M. Morales secured a final and executory judgment against Kukan, Inc. for unpaid supplies and services. When Morales sought execution, the sheriff levied on properties located at the office address of Kukan, Inc. Kukan International Corporation (KIC), which was incorporated shortly after Kukan, Inc. ceased participating in the trial, filed a third-party claim asserting ownership over the levied properties and its separate juridical personality from Kukan, Inc. Despite KIC never being impleaded in the original case, the RTC pierced the veil of corporate fiction to declare KIC and Kukan, Inc. as one and the same entity, thereby holding KIC liable for the judgment debt.

The doctrine of piercing the veil of corporate fiction applies only to determine established liability and cannot be invoked to confer jurisdiction over a corporation not impleaded in the original suit; it must be raised during a full-blown trial where the court has acquired jurisdiction over the parties through proper service of summons or voluntary submission, not through a mere motion filed after the principal judgment has become final and executory. Moreover, execution of a final judgment must strictly conform to its dispositive portion and cannot extend to the properties of a corporation not named as a judgment debtor.

The case involves the compensation structure of directors in government-owned and controlled corporations (GOCCs), specifically the interplay between the Corporation Code, corporate by-laws, and constitutional provisions prohibiting double compensation. It addresses whether Representation and Transportation Allowance (RATA) constitutes "compensation" subject to by-law limitations, the applicability of National Compensation Circular (NCC) No. 67 to GOCC directors, and the application of the good faith doctrine in audit disallowance cases.

When corporate by-laws expressly limit director compensation to per diems, directors cannot receive additional compensation such as RATA unless the by-laws are properly amended in accordance with Section 48 of the Corporation Code; however, public officers who receive disallowed benefits in good faith and under an honest belief of entitlement, without indicia of bad faith, are not required to refund the same.

A bank branch manager does not possess apparent authority to verbally modify, novate, or waive the terms of a written mortgage contract, particularly a cross-collateral (dragnet) clause; apparent authority must be established by acts of the principal (the bank) demonstrating that the agent is clothed with such power, and not merely by the agent's acts or assertions.

The case stems from a long-standing organizational dispute within the Iglesia Evangelica Metodista En Las Islas Filipinas (IEMELIF), a religious organization established in 1909. Although incorporated as a corporation sole, IEMELIF had functioned practically as a corporation aggregate since 1948 through its Supreme Consistory of Elders. In 1973, the membership voted to formalize this structure, but the corporate papers were never amended. When the issue resurfaced in 2001, the SEC advised that proper amendment of articles was necessary, leading to a factional dispute between those supporting the conversion and those opposing it.

A corporation sole may be converted into a corporation aggregate by mere amendment of its articles of incorporation without prior dissolution, applying by analogy the provisions on non-stock corporations regarding amendments, provided the amendment is approved by the corporation sole acting as trustee with the concurrence of at least two-thirds of the religious organization's membership.

The case arises from a dispute among incorporators of Megatel Factors, Inc. (MFI), a close corporation engaged in the hotel business. The petitioner and the private complainant, Cesar Masangkay, are brothers and were both incorporators and directors of the company. The conflict centered on a property exchange transaction involving the petitioner's minor son and the alleged fraudulent conduct of the other directors in approving the transaction. The petitioner sought the involuntary dissolution of MFI under Section 105 of the Corporation Code, alleging fraudulent and oppressive acts by the respondents, which led to the filing of the perjury charge against him.

In a prosecution for perjury based on statements in a verified petition for involuntary dissolution of a corporation, the prosecution must prove by evidence aliunde (independent evidence) that the accused deliberately asserted a falsehood regarding a material fact; mere contradiction between two sworn statements, without proof of which is false, is insufficient to sustain a conviction. Furthermore, statements constituting legal conclusions or opinions, as opposed to factual assertions, are not susceptible to a charge of perjury.

The case involves the interpretation of "doing business" under Philippine corporate law, specifically regarding foreign corporations that enter into purchase contracts with domestic suppliers. The dispute arose when a surety company (respondent) sought to avoid liability on performance and surety bonds by claiming that the beneficiary foreign corporation (petitioner) was doing business in the Philippines without a license, and thus lacked capacity to sue.

A foreign corporation that merely imports goods from Philippine exporters without performing specific commercial acts within Philippine territory on a continuing basis in its own name and for its own account is not "doing business" in the Philippines under Section 133 of the Corporation Code, and therefore does not require a license to maintain an action in Philippine courts.

Philippine Racing Club, Inc. (PRCI), a publicly listed corporation holding a franchise to operate a horse racetrack, sought to diversify its business by converting its 21.2-hectare Makati property (Sta. Ana Racetrack) into urban residential and commercial use, while transferring its racing operations to its Cavite property. To facilitate the development of the Makati property without diverting from its core business, PRCI's board resolved to acquire JTH Davies Holdings, Inc. (JTH), a listed holding company, and subsequently approved an exchange of the Makati property for shares of JTH. Minority stockholders opposed these transactions, alleging lack of disclosure, fraud, and breach of fiduciary duty, leading to the filing of derivative suits and the issuance of injunctive relief by the trial court.

A derivative suit is dismissible for lack of cause of action when the plaintiff-stockholders fail to allege that no appraisal rights are available for the acts complained of, particularly when the transaction constitutes a sale, lease, or exchange of substantially all corporate assets under Section 81 of the Corporation Code. Additionally, a derivative suit challenging a board resolution becomes moot and academic when the stockholders subsequently ratify the challenged act, and the majority stockholders constitute indispensable parties to such suit.

The dispute arose during the privatization of government-owned oil corporations. Petitioner Gomez, formerly a manager at Petron Corporation, was engaged by Filoil Refinery Corporation (later reorganized as FDMC and eventually renamed respondent PDMC) to facilitate asset documentation and transition management. The controversy centered on whether her subsequent appointment as administrator created a corporate officer relationship subject to intra-corporate dispute resolution, or a regular employment relationship cognizable by labor tribunals.

The determination of whether a person is a corporate officer or a regular employee depends on the actual incidents of the relationship as they exist, not merely on the nature of services performed. Where an administrator is appointed solely by the corporate president, receives compensation determined by the president, is not designated as a corporate officer in the company by-laws, and is enrolled in SSS, Medicare, Pag-Ibig, and other employee benefit programs, such person is a regular employee under the jurisdiction of the National Labor Relations Commission, notwithstanding the performance of high-level managerial functions.

The dispute arose from competitive practices in the liquefied petroleum gas (LPG) distribution industry in Sorsogon, where distributors occasionally acquired "captured cylinders"—tanks belonging to other distributors. Respondent Petron Corporation owned the registered trademark "Gasul" for its LPG products, while petitioner Bicol Gas Refilling Plant Corporation distributed LPG under the mark "Bicol Savers Gas." The case addresses the legal consequences of refilling registered tanks of one manufacturer with the product of another, and the extent of criminal liability of corporate stockholders and directors for such acts.

Stockholders of a corporation are distinct from the corporate entity and cannot be held criminally liable for acts committed by the corporation unless there is specific evidence showing they had knowledge of the criminal act and participated in or consented to its commission; furthermore, the management of corporate business is vested in the board of directors, not the stockholders, who are merely investors and do not participate in day-to-day operations unless they simultaneously serve as directors or officers.

During the Marcos regime, the government-owned Human Settlements Development Corporation (HSDC) built the St. Martin Technical Institute Complex (later known as the University of Life Complex) in Pasig City using public funds. In 1980, the government granted management of the Complex to the University of Life Foundation, Inc. (ULFI), a private non-stock, non-profit corporation organized by First Lady Imelda Marcos and others. Following the change of government in 1986, the Complex was transferred to the Department of Education, Culture and Sports (DECS). After ULFI's management authority expired at the end of 1991 and it refused to vacate, the DECS successfully ejected ULFI through an unlawful detainer suit but was unable to collect the adjudged rentals from the corporation, prompting the present action against ULFI's officers for personal liability under Section 31 of the Corporation Code.

Directors and officers of a corporation may be held jointly and severally liable under Section 31 of the Corporation Code for damages resulting from gross negligence or bad faith in directing corporate affairs, and this liability is distinct from and operates independently of the doctrine of piercing the corporate veil.

The case arose from a housing project dispute where an association of urban poor dwellers sought to compel the City of Mandaluyong and a contractor to complete construction of row houses under a government land program. When construction stalled, the association initiated legal action, leading to procedural disputes regarding the proper representation of the local government unit and the validity of the association's subsequent certiorari petition before the Court of Appeals.

A board resolution authorizing a corporate officer to file a complaint for specific performance does not constitute authority to file a subsequent petition for certiorari assailing interlocutory orders in that case, as certiorari is a special civil action that is separate and distinct from the original proceedings; consequently, a corporate officer signing a certification against forum shopping for such petition must be specifically authorized by the board to file that particular action, and subsequent ratification of authority after filing does not cure the defect absent special circumstances or compelling reasons.

Carlos L. Puno, who died on June 25, 1963, was an incorporator of respondent Puno Enterprises, Inc. Decades after his death, Joselito Musni Puno claimed to be Carlos L. Puno's illegitimate son with his common-law wife, Amelia Puno, and sought to assert stockholder rights including the inspection of corporate books and the receipt of dividends. This raised issues regarding the proper mode of proving filiation, the automatic succession of heirs to stockholder status, and the proper venue for adjudicating claims of heirship against a corporation.

Upon the death of a stockholder, the heirs do not automatically become stockholders of the corporation and acquire the rights and privileges of the deceased; the stocks must first be distributed to the heirs in estate proceedings and the transfer recorded in the corporate books before they can exercise such rights. Additionally, the determination of whether a person is an heir to a decedent's estate must be ventilated in a special proceeding for the settlement of the estate, not in an ordinary civil action for specific performance.

The case arises from a corporate governance dispute in Valle Verde Country Club, Inc. (VVCC), where directors elected in 1996 continued to serve in hold-over capacity for several years due to the corporation's failure to obtain quorum in annual stockholders' meetings. When two hold-over directors resigned in 1998, the remaining board members elected replacements. A club member questioned these elections, arguing that the directors' terms had already expired and that the vacancies should have been filled by the stockholders, not by the board.

The hold-over period is not part of a director's term of office; it merely constitutes part of his tenure. When a hold-over director resigns, the vacancy is deemed caused by the expiration of his term (which occurred one year after his election), not by his resignation. Therefore, the remaining directors cannot fill the vacancy; the authority lies exclusively with the stockholders.

The Supreme Court held that the doctrine of piercing the veil of corporate fiction was properly applied to disregard the separate juridical personalities of petitioner Siain Enterprises, Inc., its affiliate corporations (Yuyek Manufacturing Corp. and Siain Transport, Inc.), and their common president Cua Le Leng, thereby validating the amended real estate mortgage and the extrajudicial foreclosure despite petitioner's claim of non-receipt of the loan proceeds, where the affiliates and president were proven to be mere alter egos receiving the loan consideration.

The dispute stems from allegations by Ana Maria A. Koruga, a minority stockholder of Banco Filipino Savings and Mortgage Bank, that the bank's directors engaged in unsafe, unsound, and fraudulent banking practices, including self-dealing, conflicts of interest, and misappropriation of funds. Koruga sought the appointment of a receiver and the creation of a management committee. The case presents a conflict between the general jurisdiction of regular courts over intra-corporate controversies under the Corporation Code and the specialized regulatory jurisdiction of the BSP over banking institutions under the New Central Bank Act and the General Banking Law of 2000.

The Monetary Board of the Bangko Sentral ng Pilipinas has exclusive jurisdiction to appoint a receiver for a bank and to determine whether a bank is conducting business in an unsafe or unsound manner; the Regional Trial Court has no jurisdiction to entertain complaints for receivership of banks or to adjudicate matters involving the examination and supervision of banking activities, as these powers are vested exclusively by law in the BSP.

The case arose from the Commissioner of Internal Revenue's attempt to collect deficiency taxes from First Express Pawnshop Company, Inc. for taxable year 1998, specifically questioning whether a deposit on subscription amounting to P800,000 constituted a taxable original issue of shares subject to DST.

Deposit on stock subscription, representing advances made by stockholders for possible future subscription without an existing subscription agreement or issuance of shares, is not subject to Documentary Stamp Tax under Section 175 of the National Internal Revenue Code; the DST attaches only upon the original issue of shares when a subscription contract exists and the corporation issues shares entitling the holder to attributes of ownership.

The case involves the interpretation of retirement benefits under a company retirement plan and the Retirement Pay Law (R.A. No. 7641), specifically addressing whether an employee's continued work after compulsory retirement extends the original employment relationship for purposes of computing retirement benefits under amended plan terms, and whether affiliated corporations may be treated as one entity to establish continuous employment.

The doctrine of piercing the veil of corporate fiction applies only when the corporate entity is used as a cloak for fraud or illegality, to defeat public convenience, justify wrong, protect fraud, defend crime, or as a shield to confuse legitimate issues; mere interlocking directorates and common corporate officers between affiliated companies, without clear and convincing evidence of wrongdoing, are insufficient grounds to disregard separate juridical personality. Additionally, an employee who has been compulsorily retired under a company plan and who subsequently continues working either as a rehired employee or independent consultant is not entitled to have prior service years recomputed under amended plan terms unless expressly covered.

Internal leadership dispute within Buhay Hayaan Yumabong (BUHAY), a registered party-list organization, regarding the authority to nominate representatives for the May 2007 elections and the validity of the party president's continued tenure beyond his constitutional term limit.

Once winning party-list nominees have been proclaimed, taken their oath, and assumed office as Members of the House of Representatives, the COMELEC's jurisdiction over election-related disputes ends, and the HRET acquires sole and exclusive jurisdiction over contests relating to their election, returns, and qualifications; consequently, a petition for certiorari before the SC is improper where the proper remedy is a petition for quo warranto before the HRET.

Calatagan Golf Club, Inc. is a non-stock corporation operating a golf club. Its Articles of Incorporation and By-Laws provide that monthly dues assessed on members constitute a first lien on their shares of stock, and that delinquent shares may be ordered sold by the Board of Directors at public auction to satisfy such debts.

Section 69 of the Corporation Code applies exclusively to the sale of delinquent stock for unpaid subscriptions under Section 68, and not to the sale of fully-paid shares to satisfy ancillary obligations such as membership dues; furthermore, a corporation and its officers must exercise good faith and due diligence in complying with notice requirements regarding the place, time, and manner of foreclosure sales, and failure to do so—by ignoring known alternative contact information—constitutes bad faith warranting damages under Articles 19, 20, 21, and 32 of the Civil Code.

The dispute arose from the scheduled annual stockholders' meeting of Manila Electric Company (Meralco) on May 27, 2008, where directors were to be elected. The Government Service Insurance System (GSIS), a major shareholder, challenged the proxy validation process conducted by Meralco's assistant corporate secretary instead of the designated corporate secretary. GSIS initially filed a complaint with the Regional Trial Court (RTC) but withdrew it, subsequently filing an urgent petition with the SEC to invalidate proxies and restrain their use. The SEC issued a Cease and Desist Order (CDO) on the same day of filing (May 26, 2008) without notice or hearing, signed only by the Officer-in-Charge Commissioner. The Meralco management proceeded with the meeting despite the CDO, leading to a Show Cause Order from the SEC. The Court of Appeals subsequently annulled the SEC orders for lack of jurisdiction, prompting these petitions.

The SEC lacks jurisdiction over controversies involving the validation of proxies when such proxies are solicited for the election of corporate directors, as these fall within the definition of "election contests" under Section 5(c) of P.D. No. 902-A (now within the jurisdiction of regular courts under R.A. No. 8799). Furthermore, a Cease and Desist Order issued by a single SEC Commissioner, without clearly identifying the specific statutory basis for its issuance and mixing the requisites of different provisions, violates the collegial nature of the SEC and the constitutional guarantee of due process.

The case involves an intra-corporate dispute among members of the Lao family regarding the ownership of shares in Pacific Foundry Shop Corporation (PFSC), a domestic corporation. Following the enactment of Republic Act No. 8799 (the Securities Regulation Code), jurisdiction over intra-corporate disputes was transferred from the Securities and Exchange Commission to the Regional Trial Courts, leading to the consolidation of this case with other related disputes before the RTC of Cebu City.

Mere inclusion of a person's name in a corporation's General Information Sheet filed with the Securities and Exchange Commission is insufficient proof of stock ownership; such claim must be supported by evidence of valid transfer (endorsement, delivery, and registration in the Stock and Transfer Book) or possession of stock certificates, and the corporate books prevail over the GIS in determining stockholder status.

IRC entered into a Memorandum of Agreement with Ganda Holdings Berhad (GHB) involving the acquisition of Ganda Energy Holdings, Inc. (GEHI) and Philippine Racing Club, Inc. (PRCI). The SEC initiated investigation into IRC's disclosure practices and alleged insider trading by directors who traded IRC shares while possessing material non-public information about these negotiations.

Statutes do not require implementing rules to be binding and effective where they are clear and complete by themselves; the absence of implementing rules cannot render ineffective an act of Congress, and administrative bodies cannot defeat legislative will by delaying promulgation of such rules.

The case arose from PNB's privatization program wherein the bank decided to sell its stockholdings in PNB-Madecor, a wholly-owned subsidiary engaged in property development. The sale was part of PNB's strategy to dispose of non-banking assets and investments in subsidiary corporations, executed on an "as is where is" basis with a "clean balance sheet" condition.

A seller's breach of warranty regarding the transfer of property titles entitles the buyer to a proportionate reduction of the purchase price under Articles 1547 and 1561 of the Civil Code; mere ownership by a parent corporation of all stocks of its subsidiary is insufficient to pierce the veil of corporate fiction without showing that the subsidiary is a mere instrumentality or alter ego of the parent.

The case arose from a financial investment made by Peter Ong with Termo Loans and Credit Corporation, a lending company engaged in money placements. When the corporation became insolvent and defaulted on its obligations, the investor sought to recover not only from the corporate entity but also from its President and controlling stockholder, Reynaldo Magaling, and his spouse, alleging that the corporate veil should be pierced due to the manner in which the corporation was managed into bankruptcy.

A corporate director or officer may be held personally and solidarily liable for the debts of the corporation when he acts with gross negligence—defined as the want of even slight care and conscious indifference to consequences—in directing the corporate affairs, constituting a valid exception to the rule of separate corporate personality under Section 31 of the Corporation Code.

The case arose from the transshipment of wooden work tools and workbenches from Hamburg, Germany to Cebu, Philippines, insured under an open marine policy issued by ICNA UK Limited. During the domestic leg of the journey handled by Aboitiz Shipping Corporation from Manila to Cebu, the cargo allegedly sustained water damage while stored outside a warehouse during heavy rains. ICNA Philippines, acting as the local agent and subrogee of the consignee after paying the insurance claim, sought reimbursement from Aboitiz, which refused to pay, leading to litigation regarding the capacity of the foreign insurer to sue and the liability of the common carrier.

A foreign corporation not licensed to do business in the Philippines is not absolutely incapacitated from filing suits in local courts; it may bring actions on isolated business transactions, such as marine insurance policies issued abroad covering international-bound cargoes shipped by Philippine carriers, without obtaining a license. Furthermore, the right of subrogation under Article 2207 of the Civil Code vests simply upon payment by the insurer to the assured, enabling the insurer to step into the shoes of the assured and sue the common carrier for damages sustained during transit.

The dispute originated from a construction contract executed on May 1, 1991, between BF Corporation (contractor) and Edsa Shangri-La Hotel and Resort, Inc. (ESHRI) for the construction of the EDSA Shangri-La Hotel. The contract provided for monthly progress payments based on accomplished work certified by ESHRI. After ESHRI failed to pay progress billings Nos. 14 to 19 despite BF Corporation's continuous work, BF filed suit for collection of sum of money and damages. The trial court ruled in favor of BF Corporation and held ESHRI and its individual directors jointly and severally liable, leading to these consolidated appeals.

Corporate directors and officers are not personally liable for obligations incurred by the corporation acting through them; solidary liability may attach only under exceptional circumstances, such as when directors act with malice or bad faith, or when the separate corporate personality is abused to commit fraud or evade obligations. Furthermore, a court decision imposing personal liability on a corporate director must clearly and distinctly express the facts and law on which such liability is based, as required by the Constitution and rules of procedure.

The case arises from the SEC's regulatory oversight of network marketing schemes in the real estate sector. Power Homes Unlimited Corporation presented itself as a marketing company promoting real estate properties through network marketing, but investigations revealed a business model resembling a pyramid scheme where returns were generated from recruitment fees rather than legitimate real estate transactions.

A business scheme requiring investors to pay money to participate in a common enterprise with the expectation of earning profits primarily from the recruitment efforts of others, rather than from the sale of actual products or services, constitutes an "investment contract" that qualifies as a security under the Securities Regulation Code, requiring registration with the SEC before public offering.

The case involves the regulatory framework governing the sale of securities, specifically timeshare interests in real estate, under the Revised Securities Act (Batas Pambansa Blg. 178). The law mandates strict registration requirements to protect the investing public from fraudulent or unauthorized securities transactions, establishing that no securities shall be sold or offered for sale to the public unless properly registered with the Securities and Exchange Commission (SEC).

The registration of securities with the Securities and Exchange Commission is a mandatory prerequisite for their sale to the public under Section 4 of the Revised Securities Act; corporate registration alone does not constitute authority to sell unregistered securities, and subsequent registration does not retroactively ratify prior unregistered transactions or remove the purchasers' statutory right to rescind under Section 8(c)(36).

The case arose from an intra-corporate dispute within the Ilusorio family involving control over Lakeridge Corporation, the registered owner of Penthouse Unit 43-C at the Pacific Plaza Condominium in Makati City. The conflict centered on conflicting claims of authority over the condominium unit between different factions of the family, specifically regarding who had the legal right to occupy, secure, and control access to the corporate property.

Corporate officers, by virtue of their positions, possess the authority to enter and perform maintenance on properties owned by the corporation; a letter of authority issued by a corporate President to a third party, without a supporting board resolution, is ultra vires and insufficient to establish lawful possession or control over corporate property; findings of probable cause by prosecutors are entitled to great weight and are not subject to judicial interference in the absence of grave abuse of discretion.

The dispute arose from the National Telecommunications Commission's (NTC) authority to collect annual Supervision and Regulation Fees (SRF) from public telecommunications companies based on their "capital stock subscribed or paid." A prior Supreme Court decision (G.R. No. 127937) had clarified that SRF assessments should be based on the actual amount received by the corporation for the original issuance of shares (including premiums), not merely par value or market value. Following this decision, the NTC issued new assessments to Philippine Long Distance Telephone Company (PLDT) that included stock dividends in the computation, prompting PLDT to challenge the assessments as violative of the prior ruling.

Stock dividends are included in the "capital stock subscribed or paid" for purposes of assessing Supervision and Regulation Fees under Section 40(e) of the Public Service Act, as the amount transferred from the corporation's unrestricted retained earnings to its capital account represents the actual consideration received for the original issuance of such shares.

The SEC has the authority under Section 40 (general regulatory power) and Section 47 (cease and desist power) of the Revised Securities Act to regulate stock transfer fees charged by securities-related organizations and to issue ex parte cease-and-desist orders when fee increases threaten to cause grave or irreparable injury to the investing public, notwithstanding claims that such fee-setting constitutes a management prerogative of the board of directors.

During the 1997 Asian Financial Crisis, Primetown suffered substantial losses in its real estate business. Despite these losses, it paid quarterly corporate income taxes and creditable withholding taxes totaling P26,318,398.32 for taxable year 1997. Primetown sought to recover these payments, contending that losses rendered it not liable for income tax.

Under Section 31, Chapter VIII, Book I of the Administrative Code of 1987 (EO 292), a "year" for purposes of computing legal periods consists of 12 calendar months, not 365 days; therefore, the two-year prescriptive period for tax refunds under Section 229 of the NIRC is properly computed as 24 calendar months reckoned from the filing of the final adjusted return, rendering irrelevant whether the period includes a leap year.

The case involves the interpretation of the Mandatory Tender Offer Rule under the Securities Regulation Code (SRC), specifically whether the rule applies only to direct purchases of shares in a listed company or extends to indirect acquisitions through the purchase of a non-listed holding company's shares. The dispute arose from Cemco's acquisition of control over UCHC, which effectively transferred control of UCC to Cemco, raising concerns about the protection of minority shareholders of UCC.

The Mandatory Tender Offer Rule under Section 19 of RA 8799 applies to any acquisition of control over a publicly-listed company, whether direct or indirect, and the SEC has the implied adjudicative authority under Section 5.1(n) of the same Code to nullify acquisitions made in violation thereof and direct the holding of a tender offer.

The case arises from the closure of Mariveles Apparel Corporation (MAC), a garment manufacturing company in Bataan. In July 1993, MAC ceased operations without prior notice to its employees or the Department of Labor and Employment (DOLE). The National Federation of Labor Unions (NAFLU) and the Mariveles Apparel Corporation Labor Union (MACLU), representing rank-and-file employees, filed a complaint for illegal dismissal and illegal closure. Fearing that MAC, having ceased operations, would be unable to satisfy any judgment award, the unions moved to implead MAC's Chairman of the Board (petitioner Antonio Carag) and President (Armando David) in their individual capacities to hold them solidarily liable for the corporation's obligations. The case addresses the intersection of corporate law principles regarding separate juridical personality and labor law protections for employees, specifically the procedural requirements for impleading corporate officers and the substantive legal basis for their personal liability.

Corporate directors and officers are not personally liable for the debts and obligations of the corporation, which possesses a separate juridical personality. Personal liability attaches only under the exceptions provided in Section 31 of the Corporation Code: (a) when they wilfully and knowingly vote for or assent to patently unlawful acts of the corporation; (b) when they are guilty of gross negligence or bad faith in directing the affairs of the corporation; or (c) when there is a conflict of interest resulting in damages. Article 212(e) of the Labor Code, which defines "employer" to include persons acting in the interest of an employer, does not by itself create a statutory basis for personal liability of corporate officers for the corporation's monetary obligations to employees.

The case stems from an intra-corporate dispute within Filipinas Port Services, Inc., a domestic corporation engaged in stevedoring services in Davao City. The conflict arose after petitioner Eliodoro C. Cruz, who served as the corporation's president from 1968 until his defeat in the 1991 elections, questioned certain organizational decisions made by the new Board of Directors, including the creation of an executive committee and various executive positions occupied by board members with significant monthly compensation. The dispute escalated into a derivative suit that underwent prolonged adjudication, initially filed with the Securities and Exchange Commission (SEC) in 1993, then transferred to the Regional Trial Court (RTC) of Manila pursuant to Republic Act No. 8799 (the Securities Regulation Code), and subsequently to the RTC of Davao City.

The Board of Directors has the sole authority to manage the business affairs of a corporation, including the creation of corporate offices and positions not expressly provided for in the by-laws (provided they are for the regular business operations), and the determination of reasonable compensation therefor; such management decisions constitute business judgments that are not reviewable by courts in the absence of proof that the board acted in bad faith, with malice, or with moral obliquity.

The case involves an intra-corporate dispute among the incorporators and directors of Nephro Systems Dialysis Center regarding control of the corporation. The conflict originated when petitioners questioned respondents' plan to enter into a joint venture with Butuan Doctors' Hospital and College, Inc., leading to a breakdown in the working relationship and the subsequent removal of petitioners from their positions as directors and corporate officers through board and stockholders' resolutions.

The removal of corporate officers falls within the inherent power of the Board of Directors under Section 23 of the Corporation Code and may be exercised with or without cause provided due process is observed, while the removal of directors requires a vote of at least two-thirds of the outstanding capital stock at a regular or special meeting called for the purpose after previous notice, as mandated by Section 28 of the Corporation Code.

Standard Chartered Bank-Philippines (SCB), a foreign banking corporation licensed to operate in the Philippines, engaged in the sale of unregistered foreign securities known as "Global Third Party Mutual Funds" (GTPMF) to local residents despite regulatory prohibitions and cease and desist orders from the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP). Petitioner Manuel Baviera, a former SCB employee who invested in these securities and suffered substantial losses, filed criminal complaints for syndicated estafa and violation of the Securities Regulation Code against SCB officers and board members before the Department of Justice.

Criminal complaints for violations of the Securities Regulation Code must first be filed with the Securities and Exchange Commission, which shall then refer the complaint to the Department of Justice for preliminary investigation and prosecution only after determining the existence of probable cause; furthermore, courts may not interfere with a public prosecutor's determination of probable cause in preliminary investigations unless the prosecutor committed grave abuse of discretion as defined by jurisprudence.

General Credit Corporation (GCC), formerly Commercial Credit Corporation, was a finance company incorporated in 1957 and licensed to engage in quasi-banking activities. It established various franchise companies and later organized CCC Equity Corporation (EQUITY) to manage these franchises. In December 1980, respondent Alsons Development and Investment Corporation (ALSONS) and the Alcantara family sold their shareholdings in the GCC franchise companies to EQUITY for P2,000,000.00, evidenced by a promissory note. When EQUITY defaulted on its obligation, ALSONS filed a collection suit against both EQUITY and GCC, alleging that EQUITY was a mere conduit and tool of GCC established to evade regulatory limitations.

When a subsidiary corporation is so organized and controlled by a parent corporation—through common directors and officers, shared offices, financial dependence, and complete domination of business policies—to the extent that the subsidiary becomes a mere instrumentality, alter ego, or conduit, and was established specifically to circumvent banking regulations, the doctrine of piercing the veil of corporate fiction applies to hold the parent corporation jointly and severally liable for the subsidiary's obligations.

John F. McLeod was a British national employed by Peggy Mills, Inc. (PMI) as Vice President and Plant Manager from 1980 until the company's closure in 1992 due to irreversible business losses resulting from a prolonged strike. In 1992, PMI transferred its assets to Sta. Rosa Textiles, Inc. (SRTI) via a "Dation in Payment with Lease" to settle PMI's P210 million obligation to SRTI. McLeod claimed retirement benefits and other monetary claims from PMI and alleged that Filipinas Synthetic Fiber Corporation (Filsyn), Far Eastern Textile Mills, Inc. (FETMI), and SRTI were alter egos of PMI or that a merger had occurred, making them solidarily liable. He also sought to hold PMI's President, Patricio Lim, personally liable for allegedly refusing to pay his benefits.

A corporation that purchases the assets of another corporation is not liable for the debts of the selling corporation unless: (a) the purchaser expressly or impliedly agrees to assume the debts; (b) the transaction amounts to a consolidation or merger of the corporations; (c) the purchasing corporation is merely a continuation of the selling corporation; or (d) the selling corporation fraudulently enters into the transaction to escape liability for those debts; none of which exceptions were present in the dation in payment with lease arrangement between PMI and SRTI.

A corporation cannot be held liable for loans obtained by its president where the promissory notes indicate only the personal liability of the officer, absent any showing of express, implied, or apparent authority to borrow on behalf of the corporation, or subsequent ratification with full knowledge of the material facts; additionally, a mortgage over corporate real property executed by a corporate officer without a special power of attorney is void ab initio and cannot be ratified.

The case arises from a dispute between a former treasurer of a credit union and the credit union itself, involving a promissory note executed by the union's president allegedly to settle obligations, alongside cross-allegations of fund misappropriation and the subsequent filing of criminal complaints between the parties.

Corporate officers, including the President and Chairman of the Board, cannot validly bind a corporation in a borrowing transaction or in executing a promissory note without specific authorization from the Board of Directors; the power to borrow money is not inherent in the office of the president and requires express authority through by-laws or board resolution.

Grace Christian High School (GCHS) is a nonstock, nonprofit educational corporation organized under Philippine law. Under its Amended By-Laws, the corporation has fifteen regular members who simultaneously constitute the board of trustees. The dispute arose when four members died, reducing the actual living membership to eleven. During the annual members' meeting held on April 6, 1998, the remaining members attempted to elect replacements for the deceased trustees, leading to conflicting claims regarding the existence of a quorum and the proper procedure for filling vacancies in nonstock corporations.

In nonstock corporations, the quorum for members' meetings is based on the actual number of living members entitled to vote, not the numerical constant specified in the articles of incorporation. Dead members, whose membership and rights are extinguished upon death under Section 91 of the Corporation Code, shall not be counted. Furthermore, vacancies in the board of trustees must be filled by the remaining trustees acting as a body in a lawful board meeting, not by the members in an annual members' meeting.

A corporation that expressly assumes the obligations of another corporation in an Agreement of Assumption of Obligations, executed in connection with the transfer of substantially all assets under Section 40 of the Corporation Code, is bound by such assumption and cannot escape liability by claiming lack of privity with the creditors of the assignor; moreover, a creditor of the assignor is a real party in interest to enforce such agreement because it has a real interest affected by the performance or non-performance of the assumption of obligations.

The controversy arises from conflicting claims over a parcel of land in Bayugan, Agusan del Sur involving two transfers executed by the original owners, the spouses Felix Cosio and Felisa Cuysona: first, a 1959 donation to a local unincorporated Seventh Day Adventist church group, and second, a 1980 sale to the Northeastern Mindanao Mission of the Seventh Day Adventist Church, raising fundamental issues regarding corporate existence, capacity to acquire property, and the validity of transfers involving unincorporated religious organizations.

A donation made in favor of an unincorporated religious association that has not been registered with the Securities and Exchange Commission and was not created by special law or charter is void for lack of donee capacity; the doctrine of de facto corporation does not apply where there was no good faith attempt to comply with incorporation requirements, and a subsequent sale to a duly incorporated entity effectively transfers ownership upon constructive delivery.

The case arises from the security services industry where employers historically operated as single proprietorships before incorporating. When Enriquez Security and Investigation Agency (ESIA) transitioned into Enriquez Security Services, Inc. (ESSI), the new corporate entity attempted to treat the employment relationship as commencing only upon incorporation to minimize liability for retirement benefits under Republic Act No. 7641, effectively seeking to disregard the employee's prior years of service with the predecessor entity.

The veil of corporate fiction may be pierced when the corporate form is used as a device to defeat the law, perpetrate social injustice, or evade legal obligations, such as when a successor corporation is merely a continuation of a predecessor entity with the same owners, same business operations, same office location, and continuous employment of the same workers, thereby making the successor liable for retirement benefits covering the entire period of continuous service from the predecessor employment.

The case arises from the City of Parañaque's attempt to collect real property taxes on the NAIA Complex operated by MIAA. The dispute centers on whether the enactment of the Local Government Code of 1991 withdrew the tax exemption previously enjoyed by MIAA under its charter (Executive Order No. 903), and whether MIAA's status as a corporate entity created by special charter subjects it to local taxation. The case involves significant questions regarding the scope of local fiscal autonomy under the Constitution, the nature of properties of public dominion, and the distinction between government instrumentalities and GOCCs.

Government instrumentalities vested with corporate powers but not organized as stock or non-stock corporations are distinct from government-owned or controlled corporations (GOCCs) and are exempt from all forms of local taxation under Section 133(o) of the Local Government Code of 1991. Furthermore, real properties of public dominion, such as airports and ports constructed by the State for public use, are owned by the Republic of the Philippines and are exempt from real property taxes under Section 234(a) of the same Code, unless the beneficial use thereof has been granted for consideration to a taxable private person.

The case arises from a feud between two warring groups of stockholders vying for control and management of Rico Philippines Industrial Corporation (RPIC), a domestic corporation engaged in the seaweeds export business. The corporate by-laws mandate the holding of regular annual stockholders' meetings on the first Friday of May each year for the election of directors who serve one-year terms. From the time RPIC started business operations following its incorporation on November 15, 1990, the family of Lee Hiong Wee had been managing and exercising control of the firm, with Lee Hiong Wee serving as president and chairman of the board.

Directors and officers of a corporation serve at the pleasure of stockholders and cannot claim their offices in perpetuity; they must submit themselves to yearly elections as mandated by law and the corporate by-laws. Consequently, change in corporate management through regular elections does not constitute irreparable injury warranting preliminary mandatory injunction, and election contests should be resolved under Rule 6 of the Interim Rules Governing Intra-Corporate Controversies rather than through injunctive relief that disrupts the democratic process of corporate governance and corporate operations.

The Lutheran Church in the Philippines (LCP) is a non-stock religious corporation registered with the Securities and Exchange Commission (SEC). Its governing body, the national board of directors, was originally composed of seven members elected through a district-based system: six members elected in district conferences (two per district, representing clergy and laity) and a National President elected at large. Through resolutions passed in 1976 and 1984, the number of districts increased from three to five, expanding the board to eleven members without corresponding amendments to the Articles of Incorporation. A controversy arose regarding the termination of the LCP business manager, sparking multiple intracorporate disputes and raising questions about the validity of the board's composition and the district-based election procedure.

In non-stock corporations, the by-laws may validly provide for the election of directors by districts or zones, limiting the voting rights of members to their respective districts, pursuant to Section 89 of the Corporation Code; such provision is not invalidated by Section 24's requirement that a majority of members entitled to vote (present either in person or by representative acting through written proxy) be present at the meeting held for the election, which applies only to elections by members at large and not to elections conducted by districts as authorized by the by-laws.

The case arises from unpaid promissory notes executed by Dynetics, Inc. and Elpidio O. Lim in favor of China Banking Corporation totaling P8,939,000. After Dynetics closed down and could not be served summons in the collection suit filed by petitioner, petitioner sought to implead Dyne-Sem Electronics Corporation—a corporation engaged in the same line of business and operating from the same location—as the alter ego of Dynetics to satisfy the outstanding obligations.

To disregard the separate juridical personality of a corporation and pierce the veil of corporate fiction, the wrongdoing must be proven clearly and convincingly; mere similarity of business, acquisition of assets from foreclosing banks (rather than directly from the debtor corporation), or hiring of former employees of a defunct corporation does not automatically establish an alter ego relationship warranting the piercing of the corporate veil, absent proof that the corporation was organized to defraud creditors.

In 1986, due to political instability in the Philippines, Eteroutremer S.A. (ESAC), a Belgian corporation owning 90% of Eternit Corporation (EC), a Philippine manufacturing company, decided to dispose of EC's eight parcels of land in Mandaluyong City. ESAC's Committee for Asia instructed Michael Adams, an EC board member, to sell the properties. Adams engaged realtor Lauro Marquez to find buyers. Marquez offered the properties to petitioners Litonjua siblings for P27 million, leading to negotiations that spanned several months and involved EC's President and ESAC's Regional Director for Asia.

A corporation may only sell or convey its real properties through officers or agents duly authorized by corporate by-laws or specific board resolution; absent such written authority, any sale negotiated by a real estate broker or corporate officer is void and unenforceable against the corporation. Mere ownership by a parent company of majority shares in a subsidiary does not authorize the parent or its representatives to bind the subsidiary to a sale of its assets.

The case arises from the regulation of securities trading to protect the national economy from excessive speculation. The Revised Securities Act imposes margin requirements and restrictions on borrowing (the "mandatory close-out rule") requiring brokers to ensure payment for cash account transactions within three business days (T+3) or liquidate the position promptly, thereby preventing the undue extension of credit that could divert resources from productive economic uses and destabilize the market.

The pari delicto rule bars recovery only for transactions entered into after both parties have violated the law; initial trades conducted before any statutory violation remain valid and enforceable, and brokers may recover for these initial advances under Article 1236 of the Civil Code despite their subsequent failure to comply with mandatory close-out rules under Sections 23 and 25 of the Revised Securities Act.

The case involves a dispute over the termination of Edward King from his position as Vice President for Nationwide Expansion at Easycall Communications Phils., Inc., a domestic corporation engaged in message handling. The central controversy revolves around whether King's dismissal should be characterized as an intra-corporate dispute cognizable by the Securities and Exchange Commission (SEC) under PD 902-A, or a labor dispute within the exclusive jurisdiction of the NLRC under the Labor Code. The case also addresses the substantive validity of the dismissal based on alleged loss of confidence and compliance with procedural due process requirements.

For purposes of determining jurisdiction under PD 902-A (now RA 8799), a "corporate officer" is strictly limited to those officers provided for in the Corporation Code (Section 25) or the corporate by-laws who are elected or appointed by the board of directors; persons appointed by managing officers who occupy positions not found in the by-laws are mere employees subject to the jurisdiction of the NLRC. Furthermore, loss of confidence as a ground for dismissal must be based on a willful breach (intentional, knowing, and purposeful, as distinguished from mere carelessness) founded on clearly established facts, and the twin requirements of notice and hearing are mandatory elements of due process in termination proceedings.

The dispute arose from a loan transaction where Technica Video, Inc. (TVI) obtained financial accommodation from Banco Real Development Bank secured by a chattel mortgage over video equipment. When TVI defaulted on its obligation, the bank attempted to foreclose on the collateral but discovered that the corporate officers had organized a new corporation, transferred the mortgaged assets to it, and concealed their location, effectively rendering the security unavailable to the creditor and necessitating judicial intervention to prevent the perpetration of fraud through the corporate form.

The Supreme Court held that the veil of corporate fiction may be pierced and corporate officers held personally liable for corporate obligations when the corporation is used as a cloak or cover for fraud or illegality, particularly when corporate officers transfer mortgaged assets to another entity they control without the mortgagee's consent and deliberately conceal the collateral to prevent foreclosure and defraud the creditor.

The case arose from a business dispute between relatives involving the financing and administration of lanzones orchards in Nagcarlan, Laguna. The Angeles spouses, who resided in Manila, entered into a financial arrangement with Mercado, their brother-in-law, for the acquisition of antichresis rights over agricultural land. The dispute centered on the nature of their relationship—whether as simple financiers victimized by estafa or as industrial partners in a business venture—and the legal consequences of Mercado's administration of the funds and execution of contracts in his own name.

A partnership may exist even in the absence of a formal written contract or SEC registration, provided there is contribution to a common fund and division of profits among the parties; consequently, where money is delivered by a partner to a co-partner for the business of their partnership, any misapplication or conversion of such funds gives rise to civil liability only, not criminal liability for estafa.

The case addresses the extent of liability of a parent company for the obligations of its subsidiary corporation, specifically regarding the circumstances under which courts may disregard the separate juridical personality of corporations to prevent fraud or injustice. It clarifies that stock ownership and control alone do not automatically justify piercing the corporate veil.

The doctrine of piercing the veil of corporate fiction applies only when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime; to warrant this extraordinary remedy, there must be proof that the corporation is being used as a cloak or cover for fraud or illegality, or to work injustice, and the wrongdoing must be clearly and convincingly established, not merely presumed from the parent-subsidiary relationship or interlocking directorships.

The case arose from an Industrial Guarantee Loan Fund (IGLF) loan obtained by P.C. Javier & Sons, Inc. from a banking institution that underwent a corporate name change. The dispute centers on whether the change in corporate name affects the enforceability of loan obligations and whether the bank properly applied a portion of the loan proceeds as additional collateral due to insufficient original security.

A change in corporate name, effected in accordance with law, does not create a new corporation nor affect the identity, property, rights, or liabilities of the corporation; the corporation remains the same entity with merely a different name, and debtors cannot withhold payment on the ground that they were not formally notified of such change, especially when they had actual knowledge thereof.

Petitioner Sappari K. Sawadjaan was a long-time employee of the Philippine Amanah Bank (PAB), which was restructured into the Al-Amanah Islamic Investment Bank of the Philippines (AIIBP) under Republic Act No. 6848. In 1988, while serving as appraiser/investigator, he processed a loan application for Compressed Air Machineries and Equipment Corporation (CAMEC) without verifying the authenticity of the collateral titles, resulting in substantial financial loss to the bank when the titles were discovered to be spurious. Following an administrative investigation, he was dismissed from service. He subsequently challenged the dismissal, arguing, among other things, that AIIBP had lost its juridical personality for failure to file its by-laws on time.

A corporation that fails to file its by-laws within the period prescribed by law does not automatically forfeit its corporate franchise or lose its powers as such; instead, it becomes a de facto corporation whose existence and right to exercise corporate powers may not be collaterally attacked in any private suit to which it is a party. Consequently, an employer's authority to dismiss employees is not invalidated by such organizational defects.

This case involves the intersection of corporate governance, specifically the conduct of special board meetings via teleconference, and procedural requirements for initiating suits in Philippine courts. Korean Airlines, a foreign corporation licensed to do business in the Philippines, filed a collection suit against a domestic travel agency. The dispute centers on the statutory limitations of a resident agent's authority under the Corporation Code and the mandatory nature of the certification against forum shopping under the Rules of Court, raising questions about the validity of teleconferenced board meetings and the proof required to establish authorization for corporate legal actions.

A resident agent of a foreign corporation is authorized under the Corporation Code only to receive service of process and legal actions against the corporation, and is not inherently empowered to execute a certification against forum shopping or initiate legal proceedings without specific board authorization; while teleconferencing is judicially noticeable as a valid modern means of conducting special board meetings, the specific occurrence of such a meeting and the passage of a resolution thereat must be proven by credible evidence and cannot be established through inconsistent, belated, and self-serving allegations.

The case involves a labor dispute concerning the scope of authority of corporate officers, specifically the president and chairman of the board, to bind the corporation through verbal agreements regarding employment benefits. It examines the limitations on presidential authority in corporate governance, the evidentiary standards for proving unwritten employment agreements, and the distinction between personal acts of officers and corporate acts requiring board approval.

A corporate president's verbal promise to grant monetary benefits to an employee is not binding on the corporation unless such promise was made within the scope of the president's authority or subsequently ratified by the board of directors; absent such authority, no corporate officer can validly bind the corporation.

The dispute arose from a long-standing conflict over control of the Philippine Merchant Marine School, Inc. (PMMSI), a corporation incorporated in 1952. The central issue concerned the ability of heirs of original incorporators to participate in stockholders' meetings based on shares recorded in the Articles of Incorporation but omitted from the corporation's Stock and Transfer Book, which was registered only in 1978 and showed significantly fewer shares than those originally subscribed in 1952. The case presented a novel question of statutory interpretation regarding the hierarchy of corporate documents in determining shareholder voting rights.

The quorum for stockholders' meetings must be computed based on the outstanding capital stock as indicated in the Articles of Incorporation, which represents the total shares subscribed by the incorporators, rather than solely on the entries contained in the Stock and Transfer Book, which is merely prima facie evidence of share ownership and may be contradicted by the Articles of Incorporation.

The case arose from radio broadcasts aired by DZRC-AM, owned by Filipinas Broadcasting Network, Inc. (FBNI), on its morning program "Exposé" hosted by broadcasters Carmelo "Mel" Rima and Hermogenes "Jun" Alegre. The broadcasts alleged various irregularities and unethical practices by Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC), a private medical institution, including claims that it was a "dumping ground" for morally and physically unfit teachers, imposed unreasonable financial burdens on students, and employed unqualified administrators.

A juridical person, though generally incapable of recovering moral damages because it cannot suffer physical or emotional distress, may nevertheless recover moral damages in cases of libel, slander, or defamation under Article 2219(7) of the Civil Code, which authorizes such recovery without distinguishing between natural and juridical persons. Furthermore, an employer is solidarily liable with its employees for defamatory acts committed in the course of employment unless the employer proves due diligence in both the selection and supervision of the employees.

Medical Center Parañaque, Inc. (MCPI) was incorporated in September 1977 under Act No. 1459, the Old Corporation Law. Its original Articles of Incorporation classified shares into Class A (with exclusive voting rights) and Class B (without voting rights). When the Corporation Code (B.P. Blg. 68) took effect in 1980, it repealed Act No. 1459 and introduced Section 6, which restricted the deprivation of voting rights exclusively to preferred or redeemable shares. Despite this legislative change, MCPI amended its Articles of Incorporation in 1992 to maintain the voting restrictions on Class B shares, but inserted the qualifying phrase "except when otherwise provided by law," which became the focal point of the dispute regarding the applicable legal regime.

A corporation cannot deprive holders of common shares of voting rights and the right to be elected as directors unless such shares are classified and issued as "preferred" or "redeemable" shares pursuant to Section 6 of the Corporation Code. The right to vote is a property right inherent in stock ownership that cannot be impaired by charter amendment without the stockholder's consent, and the Corporation Code applies to corporations organized under prior laws by virtue of Section 148.

Monfort Hermanos Agricultural Development Corporation is a domestic private corporation and registered owner of several haciendas, fishponds, sugar cane plantations, vehicles, and tractors in Cadiz City. The corporation allowed Ramon H. Monfort, its Executive Vice President, to breed fighting cocks on the property in his personal capacity. In 1997, a dispute arose between the corporation and a group consisting of the children, nephews, and nieces of the original incorporators (the Antonio Monfort III group), who allegedly took possession of the corporate properties by force and intimidation. This led to the filing of separate actions for forcible entry and replevin, raising the fundamental issue of whether the corporate representative had valid authority to institute the suits.

A corporate officer lacks legal capacity to sue on behalf of the corporation when the board resolution authorizing such representation was issued by persons who were not validly elected as directors, as evidenced by the failure to report their election to the SEC within the 30-day period mandated by Section 26 of the Corporation Code and the absence of their names in the General Information Sheet filed with the SEC.

The case arose from a fatal vehicular accident on June 27, 1996, involving a corporate vehicle owned by Dassad Warehousing and Port Services, Inc. The incident raised issues regarding the extent of an employer's liability for the tortious acts of its employees and the liability of corporate officers for damages caused by the corporation's negligence.

A corporation is an artificial being invested by law with a personality separate and distinct from its stockholders, members, and officers; consequently, corporate officers cannot be held solidarily liable for corporate torts unless the corporate veil is pierced based on clear and convincing evidence of fraud or misuse of the corporate entity. Furthermore, to avoid vicarious liability under Article 2180 of the Civil Code for the negligent acts of employees, an employer must prove the diligence of a good father of a family with concrete documentary evidence, not merely self-serving testimonial evidence.

The Lung Center of the Philippines was established on January 16, 1981 under Presidential Decree No. 1823 as a non-stock, non-profit corporation administered by the Office of the President with the Ministry of Health and Ministry of Human Settlements to combat the high incidence of lung and pulmonary diseases in the Philippines. It operates a hospital on a 121,463-square meter property at Quezon Avenue corner Elliptical Road, Quezon City, providing medical services to both paying and non-paying patients while receiving annual government subsidies. The dispute arose when the City Assessor assessed real property taxes on the entire property, leading the LCP to claim tax exemption as a charitable institution, which was denied by the Local Board of Assessment Appeals, affirmed by the Central Board of Assessment Appeals, and subsequently affirmed by the Court of Appeals.

A charitable institution does not lose its character or tax-exempt status merely because it derives income from paying patients or receives government subsidies, provided such income is devoted entirely to charitable purposes and no profit inures to private benefit; however, to qualify for real property tax exemption under Section 28(3), Article VI of the 1987 Constitution and Section 234(b) of the Local Government Code, the lands, buildings, and improvements must be actually, directly, and exclusively used for charitable purposes, meaning the direct and immediate application of the property itself to charitable objectives, excluding portions diverted to commercial leasing or other profit-making activities.

The case stems from a dispute over a Value Added Assembly Services Agreement (VAASA) between Integrated Silicon Technology Philippines Corporation (a domestic corporation) and Agilent Technologies Singapore (Pte.) Ltd. (a foreign corporation), which was assigned the rights of the original contracting party, Hewlett-Packard Singapore (Pte.) Ltd. The VAASA involved the local manufacture and assembly of fiber optics for export. When the agreement expired, Integrated Silicon alleged an oral promise to extend it and filed suit for specific performance. Agilent, in turn, filed a separate action for replevin to recover equipment and materials left in Integrated Silicon's plant, leading to conflicting claims and procedural maneuvering between the parties.

A foreign corporation without a license to do business in the Philippines is not per se incapacitated from maintaining a suit; incapacity attaches only when the foreign corporation is actually "doing business" in the country, which requires a continuity of commercial dealings and arrangements for profit-making purposes. Acts such as consigning equipment to a local company for processing products for export, and maintaining a stock of goods solely for such processing, do not constitute "doing business" under Section 3(d) of the Foreign Investments Act of 1991 and its Implementing Rules.

The concept of close corporations organized for managing family businesses and properties has historically served as a backbone of Philippine commerce, allowing families to consolidate assets and provide financial security. This case arises from the dissolution of familial unity within the Gala family, where the use of corporate structures to manage agricultural lands became a flashpoint for dispute, with some family members alleging that these structures were employed to defeat public policy objectives under land reform legislation and to minimize estate tax liabilities upon the death of the family patriarch.

The legal right of a taxpayer to reduce or altogether avoid taxes by means which the law permits cannot be doubted; consequently, organizing corporations for legitimate estate planning and tax avoidance purposes does not justify piercing the corporate veil absent proof that the corporation is being used as a cloak or cover for fraud, illegality, or injustice to work public harm, and collateral attacks on the legality of corporate purposes stated in the articles of incorporation are prohibited, with matters involving agrarian reform compliance falling under the primary jurisdiction of the Department of Agrarian Reform Adjudication Board (DARAB).

The case arises from a corporate acquisition transaction involving the sale of shares with accompanying warranties of financial condition, where the seller corporation attempted to disavow the settlement acts of its president by claiming such acts were ultra vires, raising the doctrine of apparent authority as the central issue in determining corporate liability.

A corporate president who is authorized to enter into a principal contract on behalf of the corporation possesses apparent authority to perform all other obligations arising therefrom, including executing settlement proposals and making admissions regarding the transaction, even in the absence of specific board authorization for such subsequent acts; the award of attorney's fees requires explicit justification in the text of the decision, not merely in the dispositive portion.

The case arises from a dispute between Twin Towers Condominium Corporation (TTC), the management body of Twin Towers Condominium, and ALS Management & Development Corporation (ALS), a unit owner and member of TTC. The dispute centers on ALS's failure to pay condominium assessments and TTC's subsequent denial of facility access to ALS under House Rule 26.3, raising fundamental questions regarding the extent of a condominium corporation's regulatory powers under the Condominium Act and the Corporation Code.

A condominium corporation's House Rule denying delinquent members the use of common facilities is not ultra vires when it is expressly authorized by the Condominium Act, the Master Deed, and the By-Laws, and is reasonably necessary to enforce the collection of assessments essential for maintaining common areas; furthermore, a member's obligation to pay assessments is unconditional and cannot be offset by the value of services withheld due to the member's own delinquency.

The case arose from a complex financial restructuring involving Marcopper Mining Corporation (Marcopper), which had obtained loans from the Asian Development Bank (ADB) secured by a real estate and chattel mortgage over substantially all its properties. When Marcopper defaulted, Placer Dome, Inc. (a 40% shareholder of Marcopper and parent of petitioner MR Holdings, Ltd.), caused MR Holdings to assume Marcopper's indebtedness to ADB. This resulted in assignment agreements transferring ADB's rights and Marcopper's assets to MR Holdings. Meanwhile, Solidbank Corporation had obtained a partial judgment against Marcopper and sought to execute upon the same properties, leading to a conflict between the rights of a judgment creditor and an assignee of a prior registered mortgage.

A foreign corporation that merely assumes a debt and accepts assignment of mortgaged properties and equipment as security, without performing acts indicating a continuity of commercial dealings or the exercise of functions normally incident to the progressive prosecution of its business purpose, is engaged only in isolated transactions and does not constitute "doing business" in the Philippines under Section 133 of the Corporation Code; consequently, it may maintain an action in Philippine courts without a license.

A corporate name that is identical or confusingly similar to an existing registered corporate name must be changed, and the addition of merely descriptive words referring to the members of the corporation and their location does not create sufficient distinction where the dominant words remain substantially identical, the acronyms used are the same, and the only difference is between synonymous terms; furthermore, the SEC maintains continuous authority to de-register confusing corporate names regardless of prescription, and ordering such change does not violate religious freedom.

Marinduque Mining Industrial Corporation (Marinduque Mining) engaged in mining operations obtained substantial loans from government financial institutions Philippine National Bank (PNB) and Development Bank of the Philippines (DBP). When Marinduque Mining defaulted on these loans and failed to pay suppliers, including Remington Industrial Sales Corporation, the banks foreclosed on their mortgages. The banks then transferred the foreclosed assets to newly created corporations (Nonoc Mining, Maricalum Mining, Island Cement) to continue operations and prevent asset deterioration. Remington sought to hold the banks and these successor corporations liable for Marinduque Mining's unpaid debts by piercing the corporate veil and asserting a vendor's lien.

The doctrine of piercing the corporate veil applies only when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime, and requires clear and convincing evidence of wrongdoing; mere foreclosure by government financial institutions complying with mandatory foreclosure laws (PD 385) and subsequent transfer of assets to newly created management corporations do not constitute fraud warranting veil-piercing. Additionally, claims for unpaid price of movables under Article 2241 of the Civil Code constitute preferred credits that can only be enforced in liquidation proceedings (insolvency, settlement of estate, etc.), not in individual foreclosure actions.

The dispute arose from business transactions between a travel agency and a national sports association regarding the procurement of airline tickets for athletes participating in international competitions. The case presented critical questions regarding the legal status of national sports associations under Philippine law, specifically whether such entities automatically acquire juridical personality upon the enactment of special laws or only after compliance with specific accreditation requirements, and the extent of personal liability of officers acting on behalf of defectively incorporated or unincorporated associations.

A person acting or purporting to act on behalf of a corporation or association that has no valid existence assumes such privileges and becomes personally liable for contracts entered into or for other acts performed as such agent; furthermore, the doctrine of corporation by estoppel applies only when the party invoking it seeks to avoid liability on a contract by claiming defective incorporation, not when the party is the one claiming benefits or enforcing rights under the contract.

The case involves the Coconut Industry Investment Fund (CIIF) companies, which were acquired using coconut levy funds established under various presidential decrees. These funds were raised through the State's police and taxing powers and have been declared public funds by prior jurisprudence. The controversy arose when the CIIF companies terminated a shipping contract with International Towage and Transport Corporation (ITTC) and engaged another vessel, prompting allegations of corrupt practices by the petitioner against the officers of the CIIF companies.

A corporation organized under the Corporation Code, even if majority-owned by the government through public funds such as coconut levy funds, is not a government-owned or controlled corporation (GOCC) under Section 2(13) of the Administrative Code of 1987 unless it is vested with functions relating to public needs whether governmental or proprietary in nature; mere government ownership of majority shares without such functional vesting does not confer GOCC status or subject private corporate officers to the jurisdiction of the Ombudsman.

The spouses Felicisimo and Juanita Ocfemia mortgaged seven parcels of land to the Rural Bank of Milaor. Upon their default, the mortgage was foreclosed, and ownership of the properties was transferred to the bank. In the normal course of business, bank managers routinely handle the disposition of acquired assets. In January 1988, the bank manager executed a deed of sale covering five of these parcels in favor of the spouses' son, Renato Ocfemia. The buyers took possession and paid real estate taxes, but years later, when the heirs sought to register the sale, the bank refused to issue the required board resolution, claiming the manager lacked express authority and that no records of the sale existed.

When a corporation knowingly permits its officer or agent to act within the scope of apparent authority, thereby holding him out to the public as possessing power to perform such acts, the corporation is estopped from denying the agent's authority as against any person who has in good faith dealt with it through such agent; consequently, the corporation may be compelled by mandamus to perform necessary ministerial acts, such as issuing a board resolution, to confirm the transaction and enable the buyers to register the property.

The case arose from a commercial fishing venture involving three individuals who agreed to engage in the fishing business. They borrowed substantial sums to acquire fishing vessels and equipment. Two of the individuals entered into a contract for the purchase of fishing nets and floats on behalf of a purported corporation that was later discovered to be non-existent. When the sellers sought payment, the third individual disclaimed liability, asserting he was merely a lessor and not a partner, and that he never directly transacted with the seller.

Under the doctrine of corporation by estoppel, a person who knowingly benefits from a contract entered into by others on behalf of an ostensible corporation without valid existence may be held liable as a general partner, even if he did not directly participate in the transaction or represent himself as a corporate agent. Additionally, a partnership is deemed to exist among parties who agree to borrow money to pursue a business and divide the profits or losses, regardless of whether they contributed cash or fixed assets to a "common fund," as contribution may be in the form of credit or industry.

The case involves A. Soriano Corporation (ANSCOR), a closely held family corporation originally owned and controlled by non-resident aliens, which engaged in corporate restructuring transactions following the death of its founder, Don Andres Soriano. The transactions included the redemption of a substantial number of shares from the estate of Don Andres and the exchange of common shares for preferred shares by the estate and his surviving spouse. The Commissioner of Internal Revenue assessed deficiency withholding taxes against ANSCOR, treating the redemption as a constructive distribution of taxable dividends, while ANSCOR contested the assessments claiming entitlement to tax amnesty and asserting that the transactions were motivated by legitimate business purposes of reducing foreign exchange remittances and implementing a "filipinization" program.

The redemption of stock dividends is deemed essentially equivalent to the distribution of taxable dividends, and thus taxable to the stockholder as income, when the transaction results in a realized gain or flow of wealth, regardless of the existence of legitimate business purposes for the redemption; moreover, a withholding agent is merely a tax collector and not a "taxpayer" under the law, and consequently cannot avail of tax amnesty provisions intended for persons with previously untaxed income.

The case involves a homeowners association's attempt to terminate a long-serving administrative officer who had worked continuously for over eleven years. The employer sought to justify the termination by invoking a 1987 amendment to its by-laws—made six years after the employee started and after he had already attained regular status—providing that the administrative officer holds office at the pleasure of the Board of Directors. The dispute raises fundamental issues regarding the limits of management prerogative, the sanctity of employment contracts, and the constitutional guarantee of security of tenure.

An amendment to corporate by-laws that converts a regular employee's position into one co-terminus with the Board of Directors cannot be applied retroactively to defeat the employee's vested right to security of tenure acquired prior to such amendment; any dismissal must comply with substantive grounds under Articles 282 and 283 of the Labor Code and the procedural due process requirements of notice and hearing.

The dispute arose from the business operations of People's Aircargo and Warehousing Co., Inc., a domestic corporation established in 1986 to operate a customs bonded warehouse at the old Manila International Airport in Pasay City. To secure a license from the Bureau of Customs, the corporation required the preparation of a feasibility study and an operations manual, leading to two separate service agreements with private respondent Stefani Saño.

Contracts entered into by a corporate president without express prior board approval bind the corporation when: (1) the corporation has clothed such officer with apparent authority through prior acts of recognition or acquiescence in similar transactions; and (2) the corporation ratifies the contract by accepting the benefits flowing therefrom.

The dispute arose from an attempted purchase of a 414-square meter residential lot in Acropolis Greens Subdivision, Quezon City, owned by Motorich Sales Corporation. Petitioner San Juan Structural and Steel Fabricators, Inc., represented by its experienced corporate president, dealt with Motorich's treasurer and paid earnest money, believing she had authority to sell. When Motorich refused to execute the transfer documents, litigation ensued regarding the validity of the contract, the applicability of the close corporation doctrine, and the liability for damages.

A corporate treasurer, acting without express authorization from the board of directors, cannot validly bind the corporation in the sale of its real property; furthermore, concentrated ownership of shares (even 99.866%) does not per se establish a "close corporation" status that would eliminate the requirement for board authorization, nor is it sufficient ground for piercing the corporate veil in the absence of fraud, illegality, or inequity.

The dispute arose from the ownership structure of Mr. & Ms. Publishing Co., Inc., originally established in 1976 by JAKA Investments Corporation (owned by the Enrile family), the Apostol spouses, and other investors. Nora Bitong served as Treasurer and Board Member from 1976 to 1989. In 1989, Bitong filed a derivative suit alleging that Eugenia D. Apostol, as President, committed fraud and mismanagement from 1983 to 1987 by making unauthorized cash advances to the Philippine Daily Inquirer (PDI) and using corporate funds to acquire PDI shares for herself and her allies. The central controversy focused on whether Bitong was a bona fide stockholder with standing to sue, or merely a nominee/trustee for JAKA.

To have standing to file a derivative suit, a plaintiff must be a bona fide owner of shares in his or her own right at the time of the transaction complained of. A certificate of stock is not validly issued unless it complies with the formal requisites under Section 63 of The Corporation Code: it must be signed by the president or vice-president, countersigned by the secretary or assistant secretary, sealed with the corporate seal, and delivered to the stockholder. Entries in the stock and transfer book are merely prima facie evidence of ownership and may be overcome by parol evidence showing fraud, mistake, or irregularity in the keeping of records.

The case arises from the intersection of corporate securities regulation and the Philippine government's efforts to recover ill-gotten wealth. PALI, a real estate corporation, sought to raise capital through a public offering of its shares. To facilitate trading, it applied for listing with the PSE. However, the application became entangled with claims that PALI's assets were derived from corporations sequestered by the PCGG as part of the Marcos estate, and allegations that certain properties formed part of naval/military reservations. This raised fundamental questions about the respective powers of the SEC and the PSE in determining the suitability of securities for public trading, and the appropriate balance between administrative disclosure requirements and substantive statutory protections for investors.

The Securities and Exchange Commission has the authority to supervise and regulate stock exchanges, including the power to review listing decisions; however, this authority is limited by the business judgment rule and does not extend to overriding the good faith decisions of a stock exchange regarding the suitability of a security for listing. Furthermore, the administrative policy of "full disclosure" does not eliminate the statutory grounds for rejection of securities registration under the Revised Securities Act, which require substantive review of the merits of the securities and the issuer.

Grace Village Association, Inc. is a non-stock corporation organized for the benefit of lot owners, lessees, and residents of Grace Village in Quezon City. The Association is governed by by-laws adopted in 1968 which provided for the election of eleven (11) directors by the members. In 1975, a committee prepared a draft amendment to increase the number of directors to fifteen (15) and to designate the representative of Grace Christian High School as a "permanent Director." This draft was implemented for fifteen years despite never being formally presented to or approved by the general membership.

A provision in corporate by-laws granting a permanent seat in the board of directors to a specific entity without election is invalid if it contravenes statutory requirements that directors must be elected from among the stockholders or members; long-standing practice cannot create a vested right in an illegal provision, and proposed amendments to by-laws do not become effective without ratification by the majority of members at a meeting duly called for the purpose.

The case involves a claim for unpaid wages by a contractual instructor against an educational institution offering basic seaman's training and marine-related courses. The dispute centered on whether an employer-employee relationship existed, the validity of claims for services rendered during on-the-job training and shipyard visits, and whether procedural due process was observed when the Labor Arbiter decided the case without conducting a formal trial.

Certiorari under Rule 65 of the Rules of Court is confined to correcting errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction, and cannot be invoked to review the correctness of a tribunal's evaluation of evidence or factual findings; corporate by-laws operate only as internal rules among stockholders and cannot affect third persons who deal with the corporation unless they have actual knowledge of such by-laws; and the absence of a formal trial before a Labor Arbiter does not constitute denial of due process where the parties were given reasonable opportunity to present their evidence through position papers and supporting documents.

The case arose from a conflict between competing homeowners' associations in the Loyola Grand Villas subdivision in Quezon City and Marikina City. The original association, organized by the developer in 1983, failed to file its by-laws within the statutory period. Two subsequent associations were later registered, leading to a dispute over which entity held valid corporate existence and the right to represent the subdivision's homeowners.

Failure to file by-laws within the period required by Section 46 of the Corporation Code does not automatically dissolve a corporation; instead, it is merely a ground for suspension or revocation of the corporate franchise or certificate of registration, which requires proper notice and hearing under Section 6(I) of P.D. No. 902-A.

The case arose from the application of Monomer Sugar Central, Inc. for exemption from Wage Order No. RO VI-01 on the ground that it was a distressed employer. The dispute centered on the proper computation of MSCI's paid-up capital to determine whether its accumulated losses met the 25% impairment threshold required for exemption under NWPC Guidelines No. 01, Series of 1992. The resolution of the case required interpreting the technical meaning of "paid-up capital" under the Corporation Code and its distinction from assets acquired through assignment or loans treated as liabilities.

Paid-up capital, as defined under Section 13 of the Corporation Code (BP Blg. 68), refers strictly to that portion of the authorized capital stock which has been both subscribed and actually paid. Assets transferred from a predecessor company and loans advanced by a parent corporation cannot be treated as paid-up capital unless they form part of the authorized capital stock, are subscribed and paid for, and comply with the procedural requirements for increasing capital stock under Section 38 of the Corporation Code, including approval by the board of directors and stockholders representing two-thirds of the outstanding capital stock.

Redeemable preferred shares issued under terms providing that they "may" be redeemed at the option of the corporation grant a discretionary, not mandatory, right of redemption to the issuing corporation; consequently, stockholders cannot compel redemption, and such redemption is subject to statutory solvency requirements and regulatory restrictions imposed by the Central Bank in the exercise of its police power.

A foreign corporation that enters into a series of transactions involving the sale of its ordinary products over several months, with extended credit terms indicating an intention to maintain a continuing business relationship, is deemed to be "doing business" in the Philippines without the required license and is barred from maintaining an action in Philippine courts under Section 133 of the Corporation Code.

The dispute arises from the termination of a medical professional who occupied dual roles in a non-stock, non-profit medical foundation: as a member of the Board of Trustees (and corporate secretary) and as an executive officer (Medical Director and Hospital Administrator). The case clarifies the jurisdictional boundaries between labor tribunals and the SEC regarding the removal of corporate officers, particularly when the officer is also a director or trustee, and establishes the criteria for distinguishing between corporate officers (whose removal is an intra-corporate matter) and ordinary employees (whose dismissal falls under labor laws).

The dismissal or removal of a corporate officer, who is also a member of the Board of Trustees, by the Board of Directors or Trustees constitutes an intra-corporate controversy within the exclusive original jurisdiction of the Securities and Exchange Commission (SEC) under Section 5(c) of Presidential Decree No. 902-A, and not a labor dispute subject to the jurisdiction of the Labor Arbiter or NLRC, even if accompanied by claims for unpaid salaries or other monetary benefits.

The case arises from the implementation of Wage Order No. NCR-02, which took effect on January 9, 1991, mandating a P12.00 daily wage increase for private sector employees in the National Capital Region. The Order exempted distressed employers whose capital had been impaired by at least 25% in the preceding year. The Regional Tripartite Wages and Productivity Board issued guidelines defining "capital" as the "paid-up capital at the end of the last full accounting period," creating a dispute over whether this definition included advance subscriptions for capital increases pending SEC approval.

A corporation's capital stock stands increased only from and after approval by the SEC and the issuance of a certificate of filing; consequently, payments received from subscribers for a proposed but unapproved increase in capital stock do not form part of the paid-up capital but constitute trust funds held for the subscribers. For purposes of determining capital impairment under wage exemption guidelines, the authorized capital stock—or legally paid-up capital excluding unauthorized subscriptions—serves as the basis of computation, not the aggregate funds held including advance subscriptions for unapproved capital increases.

Concept Builders, Inc., a domestic corporation engaged in the construction business, employed private respondents as laborers, carpenters, and riggers. In November 1981, petitioner terminated their employment allegedly due to the completion of the project, but the project was actually ongoing and petitioner hired subcontractors to continue the work. The Labor Arbiter found the dismissal illegal and ordered reinstatement and back wages. During execution proceedings, petitioner claimed it ceased operations and could not satisfy the judgment, while a sister corporation, HPPI, occupied the same premises with identical corporate control.

The corporate veil may be pierced and the separate juridical personality of a corporation disregarded when it is merely an alter ego, instrumentality, or conduit of another corporation, particularly where there is complete domination of finances, policy, and business practices, identity of officers and directors, common stock ownership, and shared premises, and where such corporate fiction is used as a device to evade statutory labor obligations and perpetrate fraud against employees.

The case involves a corporate dispute among shareholders of Lopez Realty, Inc., particularly between majority stockholder Asuncion Lopez Gonzales and fellow majority stockholder Arturo F. Lopez, which led to a derivative suit before the Securities and Exchange Commission. Amidst this internal power struggle, the board of directors passed resolutions granting gratuity pay to retained employees, which the corporation later refused to fully honor, leading to a labor dispute.

A corporation's board of directors has the express power under Section 36(10) of the Corporation Code to establish gratuity pay plans for employees, and such resolutions are not ultra vires even if passed without notice to all directors, provided the corporation ratifies such actions through subsequent conduct or acquiescence; furthermore, issues not raised in lower administrative proceedings cannot be raised for the first time on appeal.