1.

General Credit Corp vs Alsons Devt and Investment Corp

GR No. 154975 January 29, 2007 GARCIA, J.:

FACTS:
General Credit Corporation (GCCestablished CCC franchise companies in urban areas around
the country and secured a license to also engage in quasibanking
activities. Respondent CCC Equity Corporation (Equity) was established by GCC to take over
the operations of their franchises. Respondent Alsons Development (Alsons) and the Alcantara
family owned a total of 101,953 shares of GCC franchises and assigned its rights and interests of
its shares to Alsons, making the latter the sole owner of the total shares. Eventually, Alsons
decided to sell these shares to Equity, which the latter promised to pay.
Because of Equity's failure to pay, Alsons filed a complaint for sums of money. Equity claims
that GCC should be liable for the payment of shares since it has always been dependent on GCC
on its business operations. However, GCC claims that it has no liability on the payment of
stocks, being a separate entity from Equity.
ISSUE:
Whether or not the doctrine of piercing the veil of corporate fiction be applied to Equity
Corporation

HELD:
Yes. The Court cites three basic areas where piercing the veil of corporate fiction is allowed.
First, when it is used to defeat public convenience to evade existing operations or "equity
piercing"; second, in fraud cases where it is used to justify awrong or "fraud piercing" and third,
in alter ego cases where the corporation isorganized as to make it merely an instrumentality
agency.
In this case, the following factswere present: first, Equity is but an instrumentality of GCC and
has always been dependent on the latter for its operations, second, the commonality of directors,
stockholders and sharing of office between the two companies shows that they should clearly be
regarded merely as an aggregate of persons in a business enterprise; second, the establishment of
Equity is primarily for GCC to circumvent Central Bank rules specifically the AntiUsury Law,
using it as a conduit to its non-quasi bank affiliates; and lastly, the funds invested by Equity to
GCC franchises are from GCC funds as well. Applying the three basic areas of corporate veil
piercing, GCC clearly defeated public convenience when it established Equity to extend credit to
its investors which in turn is not allowed by the law
2. Ever Electrical Manufacturing, Inc vs Samahang Manggagawa ng Ever
Electrical GR No. 194795 June 13, 2012 MENDOZA, J.:

FACTS:
EEMI suffered business losses because of the Asian Financial Crises and Orient Bank, an entity
which it invested a lot in, closed. As a result, it was not able to pay its loan to UCPB, hence
UCPB foreclosed its properties. EEMI wanted to lease the foreclosed properties for it to continue
its operations, however, there is this policy of UCPB which prohibits leases to previous debtors.
They mutually agreed to have an affiliate entity, EGO Electrical Supply, to lease those properties
and as a result, EEMI continued operations. However, EEMI still failed to pay rentals, hence an
unlawful detainer judgment was enforced and kicked
EEMI out of the
property. Workers filed for illegal dismissal and benefits. SC said that EEMI is liable to pay
separation pay because the ground is not due to business losses but because of the enforcement
of a judgment but the officers are not solidarily liable for payment of such because there was no
evidence that bad faith or malice attended the closure of the business.

ISSUE: Whether or not the CA erred in finding Vicente Go solidarily liable with EEMI

HELD:
Yes, although as a general rule, corporate officers should not be held solidarily liable with the
corporation for separation pay for it is settled that a corporation is invested by law with separate
juridical personality but records do not warrant an application of the exception. The rule, which
requires the presence of malice or bad faith, must still prevail
Go may have acted in behalf of EEMI but the company's failure to operate cannot be equated to
bad faith. Unless it can be shown that the closure was deliberate, malicious and in bad faith, the
Court must not piece the corporate veil. As there is no evidence that Go, as EEMI's President,
acted maliciously or in bad faith in handling their business affairs and in eventually
implementing the closure of its business, he cannot be held jointly and solidarily liable with
EEMI
3. Traders Rural Bank vs CA
GR No. 93397 March 3, 1997 TORRES, JR., J.:
FACTS:
FILRITER is the registered owner of Central Bank Certificate of Indebtedness No. 1891 (CBCI)
where CBCI was then transferred to PHILFINANCE. Philfinance then transferred the same
CBCI to Traders Royal Bank (TRB) under a repurchase agreement.
Philfinance failed to buy back the note and so, TRB tried to transfer and register the CBCI under
its name. The Central Bank did not want to recognize this transfer. Hence, this petition.

ISSUE:
Whether or not the Doctrine of piercing the veil of corporate fiction is applicable

HELD:
No, The Doctrine of piercing the veil of corporate entity is an equitable remedy, and may be
awarded only in cases when the corporate fiction is used to defeat public convenience, justify
wrong, protect fraud or defend crime or where a corporation is a mere alter ego or business
conduit of a person. The fact that Philfinance owns majority shares in Filriters is not by itself a
ground to disregard the independent corporate status of Filriters. There are not enough evidences
to show that TRB was defrauded when it acquired the subject certificate of indebtedness from
Philfinance and on its face, the subject certificates states that it is registered in the name of
Filriters. TRB knew that Philfinance is not the registered owner of CBCI No. 1891.ji. and there
was no showing that it made inquiries as to the ownership of the certificate. Lastly, TRB, being a
commercial bank, cannot claim ignorance of Central Bank Circular 769, and its requirement
4. Concept Builders Inc. vs NLRC
GR No. 108734 May 29, 2006 HERMOSISIMA, JR., J.:P

FACTS:
Concept Builders, Inc. engaged in the construction business while private respondents were
employed by said company as laborers, carpenters and riggers but were illegally dismissed.
Aggrieved, they filed a complaint for illegal dismissal and was ordered to be reinstated and be
paid back wages.
However, the alias Writ of Execution cannot be enforced by the sheriff because all the
employees inside petitioner's premises at 355 Maysan Road, Valenzuela, Metro Manila, claimed
that they were employees of Hydro Pipes Philippines, Inc. (HPPI) and not by petitioner. Thus,
NLRC issued a break-open order against Concept Builders and HPPI.

ISSUE:
Whether or not the piercing the veil of corporate entity is proper.

HELD:
Yes, It is a fundamental principle of corporation law that a corporation is an entity separate and
distinct from its stockholders and from other corporations to which it may be connected. But, this
separate and distinct personality of a corporation is merely a fiction created by law for
convenience and to promote justice. So, when the notion of separate juridical personality is used
to defeat public convenience, justify wrong, protect fraud or defend crime, or is used as a device
to defeat the labor laws, this separate personality of the corporation may be disregarded or the
veil of corporate fiction pierced
Clearly, petitioner ceased its business operations in order to evade the payment to private
respondents of back wages and to bar their reinstatement to their former positions. HPPl is
obviously a business conduit of petitioner corporation and its emergence was skillfully
orchestrated to avoid the financial liability that already attached to petitioner corporation.
5. Savero vs Puyat
GR No. 186433 November 27, 2013 BRION, J.:

FACTS:
NSI allegedly owed Puyat a P460k balance from a MOA that Nuccio signed on behalf of NSI to
which the RTC and CA ruled in favor of Puyat which resulted into piercing the corporate veil.
SC held that first, the "Breakdown of Account") was not supported by the evidence Puyat
presented and that second, the corporate veil should not be pierced because Puyat failed to prove
that alter-ego elements were present.
The indicators that the RTC and CA appreciated in the case were not sufficient to pierce the
corporate veil and so, SC ruled in favor of Nuccio and NSI, and the case was remanded to the
RTC.

ISSUE:
Whether or not the decision to pierce the veil was justified.

HELD:
No, as the facts of the case do not warrant the piercing of the veil of NSI's corporate fiction.
Aside from the undisputed fact of Nuccio's 40% shareholdings with NSI, the RTC applied the
piercing the veil doctrine based on the following reasons: 1) There was no board resolution
authorizing Nuccio to enter into a contract of loan, 2) Nuccio and NSI were represented by one
and the same counsel, 3) NSI did not object to Nuccio's act of contracting the loan, 4) The
control over NSI was used to commit a wrong or fraud and lastly that 5) Nuccio's admission that
"NS" in the corporate name "NSI" means "Nuccio Saverio."
6. Sps. Violago cs BA Finance Corp.
GR No.158262 July 21 2008 VELASCO, JR., J.:

FACTS:
Avelino Violago, President of Violago Motor Sales Corporation (VMSC), offered to sell a car to
his cousin, Pedro F. Violago, and the latters wife, Florencia. Avelino explained that he needed to
sell a vehicle to increase the sales quota of VMSC, and that the spouses would just have to pay a
down payment of PhP 60,500 while the balance would be financed by respondent BA Finance.
The spouses and Avelino signed a promissory note under which they bound themselves to pay
jointly and severally to the order of VMSC 36 monthly installments. Avelino prepared a
Disclosure Statement of Loan/Credit Transportation and the sales invoice was filed with the
Land Transportation Office (LTO)-Baliwag Branch, which issued Certificate of Registration No.
0137032
However, the spouses were unaware that the same car had already been sold, and registered in
Esmeraldos name by the LTO-San Rafael Branch but despite the spouses demand for the car and
Avelinos repeated assurances, there was no delivery of the vehicle. Since VMSC failed to deliver
the car, Pedro did not pay any monthly amortization to BA Finance. As a result, BA Finance
filed with the Regional Trial Court a complaint for Replevin with Damage
Later, RTC rendered a Decision against the Violago spouses but declared that they are entitled to
be indemnified by Avelino. Petitioners-spouses and Avelino appealed to the CA.

ISSUE:
Whether or not the veil of corporate entity may be invoked

HELD:
No, as nowhere in the pleadings did Avelino refute the fact that the vehicle in this case was
already previously sold to Esmeraldo and merely insisted that he cannot be held liable because
he was not a party to the transaction.
Avelino, knowing fully well that the vehicle was already sold, and with abuse of his relationship
with the spouses, still proceeded with the sale and collected the down payment from petitioners.
Avelino clearly defrauded petitioners. His actions were the proximate cause of petitioner's loss.
He cannot now hide behind the separate corporate personality of VMSC to escape from liability
for the amount adjudged by the trial court in favor of petitioners.
7. Nisce vs Equitabe PCI Bank, Inc

GR No. 167434 February 19, 2007

CALLEJO, SR., J.:

FACTS:
Spouses Ramon and Natividad Nisce contracted loans as evidenced by promissory notes
Equitable PCI Bank, Inc which was secured by a real mortgage on the former's parcel of land. As
there was default, respondent as creditormortgagee filed a petition for extrajudicial foreclosure to
which the spouses alleged that the bank should have compensated their debt with their dollar
account which they maintain with PCI Capital Asia Ltd. (Hong Kong) which was a subsidiary of
Equitable.
The Bank contends that although the spouses' debt was restructured, they nevertheless failed to
pay and alleged that there cannot be legal compensation because PCI Capital had a separate and
distinct personality from the PCIB, and a claim against the former cannot be made against the
latter.

ISSUE:
Whether or not legal compensation may operate to extinguish the petitioner's obligation

HELD:
No because although PCI Capital is a subsidiary of respondent Bank, PCI Capital [PCI Express
Padala (HK) Ltd.] has an independent and separate juridical personality from that of the
respondent Bank, its parent company and so, any claim against the subsidiary is not a claim
against the parent company and vice
versa.
Petitioners could have spared themselves the expenses and tribulation of a litigation had they just
withdrawn their deposit from the PCI Capital and remitted the same to respondent. However,
petitioner insisted on their contention of setoff.
8. R & E Transport Inc. vs Latag

GR No. 155214 February 13, 2004 PANGANIBAN, J.:

FACTS:
Pedro Latag was a regular employee of La Mallorca Taxi to which the latter ceased from
business operations and Latag was transferred to R&E transport., Inc. as a taxi driver but got sick
and was forced to apply for partial disability with the SSS, which was granted. When he
recovered, he reported back to work, but was denied to continue working due to his old age.
Latag thus asked Felix Fabros, the administrative officer for his retirement pay but was left
unheeded and so he filed a case for payment of his retirement pay. He died later on and was
substituted by his wife, Aveling to which she was offered the amount of P38,500.00, which she
accepted and was also asked to sign an already prepared quitclaim and release and a joint motion
to dismiss the case.

ISSUE:
Whether or nof Pedro Latag is entitled to retirement benefit despite the signed quitclaim and
waiver by his wife.

HELD:
Yes for the basis of contention is the number of years that he should be credited with in
computing those benefits. As to the Quitclaim and waiver signed by Avelina Latag, the CA
committed no error when it ruled that the document was invalid and could not bar her from
demanding the benefits legally due her husband. Courts are wary of schemes that frustrate
workers' rights and benefits, and look with disfavor upon quitclaims and waivers that bargain
these away.
9. Heirs of Ramon Durano, Sr. vs Uy
344 SCRA 238 October 24, 2000 GONZAGA-REYES, J.:
FACTS:

The late Congressman Ramon Durano Sr. together with his son Ramon Durano III, and the
latter's wide Elizabeth Hotchkins-Durano, instituted an action for damages against spouses Uy.
Herein respondents are the possessors of the subject parcel of land which they are cultivating.
Said parcel of land was used to be owned by CEPCO who later sold the same to Durano & Co.
Durano & Co later sold the disputed property to petitioner Ramon Durano III, who procured the
registration of these lands in his name under ICT no. T-103 and T-104 wherein the different parts
of the entire land was bulldozed by the petitioner's company resulting to the destruction of plants
and other products that were placed by the respondents
A claim for damages was lodged against petitioner wherein the respondents presented tax
declaration covering the different areas of the parcel of land that is titled in each of them as proof
that they are entitled for the said damages.

ISSUE:
Whether or not the doctrine of piercing the veil of corporate entity can be applied in order to
make Durano & Co liable for damages.

HELD:
Yes. The court of appeals applied the well-recognized principle of piercing the corporate veil
wherein the law will regard the act of the corporation as the act of its individual stockholders,
when it is shown that the corporation was used merely as an alter ego by those persons in the
commission of fraud or other illegal acts. That the test in determining the applicability of the
doctrine of piercing the veil of corporate fiction is as follows:
1. Control, not mere majority or complete stock control, but complete
domination, not only of finances but of policy and business practice in respect to the transaction
attacked so that the corporate entity as to this transaction had at the time no separate mind, will
or existence of its own.
10. Lim vs CA
GR No. 124716 January 24, 2000 BUENA, J.:

FACTS:
Pastor Lim died intestate wherein his surviving spouse, filed a joint petition for the
administration of the estate of Pastor Lim before the RTC. Private respondent's corporations,
whose properties were included in the inventory of the estate of Pastor Lim, filed a motion for
the lifting of lis pendens and motion for exclusion of certain properties from the estate of the
decedent. RTC, as probate court, granted these 2 motions. When Petitioner filed a verified
amended petition, Probate court also issued an order denying private respondents' motion for
exclusion.
Private respondent then filed a special civil action for certiorari before the CA questioning the
orders of the Regional Trial Court, sitting as a probate court. CA ruled in favor of herein private
respondents.
ISSUE:
Whether or not he doctrine of piercing the veil of corporate entity is applicable to be able to
include in the probate proceedings the company formed by deceased Pastor Lim, which are the
respondent corporations.
HELD:
No since corporations are clothed with personality separate and distinct from that of the persons
composing it and it may not generally be held liable for that of the persons composing it. It may
not also be held liable for the personal indebtedness of its stockholders or those of the entities
connected with it.
Mere ownership by a single stockholder or by another corporation of all or nearly all of the
capital stock of a corporation is not of itself a sufficient reason for disregarding the fiction of
separate personalities. To disregard the separate juridical personality of a corporation, the wrong
doing must be clearly and convincingly established, it cannot be presumed.
11. Grace Christian High School vs CA

GR No. 108905 October 23, 1997 MENDOZA, J

FACTS: Grace Christian High School (GCHS) is an educational institution in Grace Village,
Quezon City where Grace Village Association, Inc. (GVAI) is the homeowners association in
Grace Village. GVAI which has an existing by-laws. . But in 1975, the board of directors made a
draft amending the said by-laws whereby the representative of GCHS shall have a permanent
seat in the 15-seat board. The draft however was never presented to the general membership for
approval but nevertheless, the representative of GCHS held a seat in the board for 15 years until
in 1990 when a proposal was made to the board to reconsider the practice of allowing the GCHS
representative in taking a permanent seat.
Thereafter, an election was scheduled for the 15 seats in the board. GCHS opposed the election
as it insists that the election should only be for 14 directors because it has a permanent seat.

ISSUE:
Whether or not the representative from GCHS should be allowed to have a seat in the board of
directors.

HELD:
No because the provisions of the former and present corporation law leave no room for doubt as
to their meaning that, the board of directors of corporations must be elected from among the
stockholders or members. There may be corporations in which there are unelected members in
the board but it is clear that in the examples cited by petitioner the unelected members sit as ex
officio members.
12.China Banking Corporation vs CA
GR No. 117604 March 26, 1997 KAPUNAN, J

FACTS: China Banking Corporation made a 53% equity investment in the First CBC Capital.
CBC became insolvent so China Banking wrote-off its investment as worthless and treated it as a
bad debt or as an ordinary loss deductible from its gross income.
CIR disallowed the deduction on the ground that the investment should not be classified as being
worthless. It also held that assuming that the securities were worthless, then they should be
classified as a capital loss and not as a bad debt since there was no indebtedness between China
Banking and CBC.

ISSUE:
Whether or not the investment should be classified as a capital loss.

HELD:
Yes because when securities become worthless, there is strictly no sale or exchange but the law
deems it to be a loss. These are allowed to be deducted only to the extent of capital gains and not
from any other income of the taxpayer. A similar kind of treatment is given by the NIRC on the
retirement of certificates of indebtedness with interest Coupons or in registered form, short sales
and options to buy or sell property where no sale or exchange strictly exists. In these cases, The
NIRC dispenses with the standard requirements.
There is ordinary loss when the property sold is not a capital asset. In the case, CBC as an
investee corporation, is a subsidiary corporation of China Banking whose shares in CBC are not
intended for purchase or sale but as an investment. An equity investment is a capital asset of the
investor. Unquestionably, any loss is a capital loss to the investor.
13. Lanuza vs CA
GR No. 131394 March 28, 2005 TINGA, J

FACTS: Philippine Merchant Marine School, Inc. (PMMSI) was incorporated with 700 founders'
shares and 76 common shares as its initial capital stock subscripti reflected in the articles of
incorporation. However, private respondents who were in control of PMMSI registered the
company's stock and transfer book for the first time in 1978, recording only 33 common shares
as the only issued and outstanding shares of PMMSI. A special stockholders' meeting was called
and held on the basis of what was considered as a quorum of 27 common shares, representing
more than 2/3's of the common shares issued and outstanding.
Another special stockholders' meeting was held to elect a new set of directors. Private
respondents filed a petition with the SEC questioning the validity of first stockholders' meeting,
alleging that the quorum for the said meeting should not be based on the 165 issued and
outstanding shares as per the stock and transfer book, but on the initial subscribed capital stock
of seven hundred seventy-six (776) shares, as reflected in the 1952 Articles of Incorporation.

ISSUE:
Whether or not the quorum should be based on the outstanding capital stock as indicated in the
Articles of Incorporation.

HELD:
Yes for it is the articles of incorporation has been described as one that defines the charter of the
corporation and the contractual relationships between the State and the corporation, the
stockholders and the State, and between the corporation and its stockholders while a stock and
transfer book, like other corporate books and records, is not in any sense a public record, and
thus is not exclusive evidence of the matters and things which ordinarily are or should be written
therein. The stock and transfer book of PMMSI cannot be used as the sole basis for determining
the quorum as it does not reflect the totality of shares which have been subscribed.
In this case, the articles of incorporation indicate that at the time of incorporation, the
incorporators were bona fide stockholders of 700 founders' shares and 76
14. Castillo vs Balunghasay
Gr No. 150976 October 18, 2004 QUISUMBING, J

FACTS: Petitioners and respondents are stockholders of MPCI, where the former holds class B
shares and the latter class, A shares. At the time of MCPI's incorporation, Act No. 1459, the old
Corporation Law was still in force and effect but was amended where Art. VII now stated that
"except when otherwise provided by law, only holders of Class A shares have the right to vote
and the right to be elected as directors or as corporate officers."
The shareholders of MCPI held their annual stock holders meeting and election for directors.
Respondent Rustico Jimenez, citing Art, VII, as amended, declared objections of herein
petitioners, that no Class B shareholder was qualified to run or be voted upon as director and
announced that the candidates holding Class A shares were the winners of all seats in the
corporate board. The petitioners claimed that Art. VII was null and void for depriving them, as
Class B shareholders, of their right to vote and to be voted upon in violation of the Corporation
Code.
The trial court ruled that corporations had the power to classify their shares of stocks, such as
voting and non-voting shares conformably with Sec. 6 of the Corporation Code

ISSUE:
Whether or not holders of Class B shares of the MCPI may be deprived of the right to vote and
be voted as directors of MCPI

HELD:
No, the law repealing Act. No. 1459, BP Blg. 68, retained the same grant of right of
classification of stock shares to corporations, but with a significant change where the
requirements and restrictions on voting rights were explicitly provided for, such that "no share
may be deprived of voting rights except thoseclassified and issued as "preferred" or
"redeemable" shares unless otherwise provided in this code. And that there shall always be a
class or series of shares which have complete voting rights. Sec. 6 of the Corporation Code being
deemed written into Art Vll of the Articles of Incorporation of MCPI, it necessarily follows that
unless Class B shares of MCPL stocks are clearly categorized to be preferred of redeemable
shares, the holders of the Class B shares may not be deprived of voting rights.
In this case, there was nothing in the Articles of Incorporation nor evidence on record to show
that Class B shares were categorized as either preferred or redeemable shares. It follows that the
conclusion is that Class B falls under neither category and thus under the law, are allowed to
exercise voting rights.
15.ldo vs Lao
Gr No. 170585 October 6, 2008 REYES, R.T., J.:

FACTS: Dave and Jose Lao, petitioners, filed a petition before the Securities and Exchange
Commission (SEC) against respondent Dionisio Lao who was the president of Pacific Foundry
Shop Corporation (PFSC). Petitioners prayed for their inclusion as stockholders and directors of
PFSC, the issuance of certificate of stocks, and to be allowed to examine the books of PFSC.
Petitioners based their claim in the General Information Sheet(GIS) filed with SEC, wherein
their names were shown as stockholders and directors of the corporation as well as well on the
Minutes of the Stockholders Meeting and Board of Directors Meeting but, they did not adduce
evidence that would indubitably show that there was indeed a valid transfer of stocks to them as
transferees.
Respondent denied the claim and alleged that the names of the petitioners were only
inadvertently included in the GIS and that they did not acquire any shares in PFSC by any of the
modes recognized by law.
In 2009, RIC ruled in favor of the respondent and denied the petition of the petitioners as they do
not appear to have acquired shares of stock of the corporation either as subscribers or by
purchase from a holder of outstanding shares or by purchase from the corporation of additionally
issued shares. On appeal, the appellate court declared that the petitioners have owned shares and
that they should be issued with certificate of stocks but this was later overturned and the trial
court's decision was affirmed in toto.

ISSUE:
Whether or not the petitioners are considered stockholders of PFSC.
HELD:
No because the records showed that petitioners had no certificates of shares in their name. The
mere inclusion as shareholder of petitioners in the General Information Sheet of PFSC is
insufficient proof that they are shareholders of the company.
While it may be true that petitioners were named as shareholders in the General Information
Sheet submitted to the SEC, that document alone does not conclusively prove that they are
shareholders of PFSC because it will still have to be correlated with the corporate books of
PFSC. As between the General Information Sheet and the corporate books, it is the latter that is
controlling. Mere inclusion in the General Information Sheets as stockholders and officers does
not make one a stockholder of a corporation, for this may have come to pass by mistake,
expediency or negligence.
16. Yamamoto vs Nishino Leather Industries Inc.
GR No. 150283 April 16, 2008 CARPIO MORALES, J

FACTS: Ryuichi Yamamoto (Yamamoto), a Japanese national, was organized under Wako
Enterprises Manila, Incorporated (WAKO) now known as Nishino Leather Industries, Inc.
(NLII). Yamamoto and another respondent, Ikuo Nishino (Nishino), forged a Memorandum of
Agreement under which they agreed to enter into a joint venture wherein Nishino would acquire
such number of shares of stock equivalent to 70% of the authorized capital stock of WAKO.
Eventually, Nishino
ther Yoshinobu Nishino (Yoshinobu) acquired more than 70% of the authorized capital stock of
WAKO which reduced Yamamoto's investment.
As the corporate name of WAKO was later changed to its current name NLII, negotiations
subsequently ensued and showed of a planned takeover of NlIl by Nishino who would buy-out
the shares of stock of Yamamoto. Yoshinobu and Nishino's counsel, Atty. Doce, gave an advise
to Yamamoto by letter and on the basis of such letter, Yamamoto attempted to recover the
machineries and equipment given to him because, by Yamamoto's admission, it was part of his
investment in the corporation, but was frustrated by respondents.

ISSUE:
Whether or not Yamamoto may pierce the veil of corporate fiction and retrieve the machineries.

RULING:
No, it was settled that the property of a corporation is not the property of its stockholders or
members. Under the trust fund doctrine, the capital stock, property, and other assets of a
corporation are regarded as equity in trust for the payment of corporate creditors which are
preferred over the stockholders in the distribution of corporate assets. The distribution of
corporate assets and property cannot be made to depend on the whims and caprices of the
stockholders,
ctors of the corporation unless the indispensable conditions and procedures for the protection of
corporate creditors are followed.
While the veil of separate corporate personality may be pierced when the corporation is merely
an adjunct, a business conduit, or alter ego of a person, the mere ownership by a single
stockholder of even all or nearly all of the capital stocks of a corporation is not by itself a
sufficient ground to disregard the separate corporate personality.
17. Halley vs Printwell Inc.
GR No. 157549 May 30, 2011 BERSAMIN, J

FACTS: Petitioner Halley was an incorporator and an original director of Business Media Phil.
Inc.(BMPI) while respondent was engaged in commercial and industrial printing. BMPI
commissioned respondent for the printing of magazines in the Philippines together with wrappers
and subscription card. BMPI placed several orders on credit to respondent but failed to pay the
balance thus was sued by the latter for the collection of the unpaid balance.
Printwell then amended the complaint in order to implead as defendants all the original
stockholders and incorporators to recover on the unpaid subscriptions to which Halley argued
that she had already paid her subscriptions, as evidenced by several official receipts and that
BMPI had a personality separate from its stockholders. RTC and CA pierced the veil of
corporate fiction and held the stockholders of BMPI personally liable for corporate debts up to
the extent of their unpaid subscriptions under the Trust Fund doctrine. Both courts also found
some irregularities in the issuance of official receipts.

ISSUE:
1. Whether or not the separate personalities of BMPI and its stockholders should be disregarded.
2. Whether or not the trust fund doctrine is applicable.

HELD:
1. Yes for corporate personality should not be used to foster injustice. In this case, the personal
liabilities of Halley with other stockholders remained because they were in charge of the
operations of BMPI at the time the unpaid obligation was transacted. The stockholders who were
the petitioners availed the defense of corporate fiction to evade payment of its obligation.
2.Yes for the trust fund doctrine states that subscriptions to the capital of a corporation constitute
a fund to which creditors have a right to look for satisfaction of their claims and that the assignee
in insolvency can maintain an action upon any unpaid stock subscription in order to realize assets
for the payment of its debts. The scope encompasses not only the capital stock, but also other
property and assets generally regarded in equity as a trust fund for the payment
corporate
debts.
18. Central Textile Mills vs NWPC
GR no. 104102 August 7, 1996 ROMERO, J

FACTS: Respondent Regional Tripartite Wages and Productivity Board-NCR (the Board) issued
a wage order which mandated a P12.00 increase in the minimum daily wage of all employees
and workers in the private sector in the NCR, but exempted from its application distressed
employers whose capital has been impaired by at least 25% in the preceding year. Petitioner
Central Textile Mills filed an application for exemption from compliance with the subject wage
order due to financial losses but the Board's Vice Chairman, Ernesto Gorospe, disapproved of
petitioner's application for exemption after concluding form the documents submitted that
petitioner sustained an impairment of only 22.41%. The motion for reconsideration was likewise
dismissed by the Board, which held that petitioner's total paid-up capital of P305,767, 900.00
should be the basis for determining the capital impairment of petitioner, instead of the authorized
capital stock of P128M which petitioner insists should be the basis of computation. Petitioner
then argued that its authorized capital stock, not its unauthorized paidup capital, should be used
in determining its capital impairment.

ISSUE:
Whether or not petitioner's authorized capital stock should be the basis for determining its capital
impairment.

HELD:
No for the guidelines on exemption specifically refer to paid-up capital, not authorized capital
stock, as the basis of capital impairment for exception from the subject wage order.
In this case, petitioner included in its total paid-up capital payments on advance subscriptions,
although the proposed increase in its capitalization had not yet been approved by the SEC. As
such, these payments cannot as yet be deemed part of petitioner's paid-up capital because its
capital stock has not yet been legally increased. Thus, it's authorized capital stock in the year
when exemption from the subject wage order was sought stood at P128M, which was impaired
by Of losses nearly 50%. Since the subject wage order exempts from its coverage employers
whose capital has been impaired by at least 25%, and petitioner suffered losses of nearly 50%,
petitioner qualifies for the exemption and its application for the same should be approved
19. Gokongwei vs SEC
GR No. L-45911 April 11, 1979 ANTONIO, J

FACTS: Petitioner who is president both in URC and CFC purchased shares of stock of
respondent-corporation, and thereafter, in behalf of himself, CFC and URC, "conducted
malevolent and malicious publicity campaign against SMC" to generate support from the
stockholder "in his effort to secure for himself and in representation of URC and CFC interests, a
seat in the BODs of SMC” but was rejected by the stockholders in his bid to secure a seat in the
BODs on the basic issue that petitioner was engaged in a competitive business and his securing a
seat would have subjected respondent corporation to grave disadvantages. Respondents' reason
out that petitioner is engaged in businesses competitive and antagonistic to that of respondent
SMC and that the Board realized the clear and present danger in competitors being directors
because they would have easy and direct access to SMCs business and trade secrets.

ISSUE:
Whether or not the amended by-laws of SMC disqualifying a competitor from nomination or
election to the BODs of SMC are valid and reasonable.

HELD:
Yes because the doctrine of "corporate opportunity" is precisely, a recognition by the courts that
the fiduciary standards could not be upheld where the fiduciary was acting for two entities with
competing interests. This doctrine rests fundamentally on the unfairness, in particular
circumstances, of an officer or director taking advantage of an opportunity for his own personal
profit when the interest of the corporation justly calls for protection. You cannot serve two
masters.
Where two corporations are competitive in a substantial sense, it would seem improbable, if not
impossible, for the director, if he were to discharge effectively his duty, to satisfy his loyalty to
both corporations and place the performance of his corporation duties above his personal
concerns. It is a good business sense on the part of SMC to amend its by-laws
20. Turner vs Lorenzo Shipping Corp.
GR. No. 157479 November 24, 2010 BERSAMIN, J

FACTS: The petitioners held 1,010,000 shares of stock of the respondent corporation where the
latter decided to amend its articles of incorporation to remove the stockholders' pre-emptive
rights to newly issued shares of stock. Petitioners voted against it and demanded payment of their
shares based on the book value of the shares but the respondent found the fair value of the shares
demanded by the petitioners unacceptable and so refused the demand explaining that pursuant to
the Corporation Code, the dissenting stockholders exercising their appraisal rights could be paid
only when the corporation had unrestricted retained earnings to cover the fair value of the shares
Petitioners filed a motion claiming that defendant has an accumulated unrestricted retained
earnings of 11,975,490.00 pesos as evidenced by its financial statement. The respondent
opposed, stating that the determination of the unrestricted retained earnings should be made at
the end of the fiscal year of the respondent.

ISSUE:
Whether or not respondent had unrestricted retained earnings to pay petitioners their shares?

HELD:
No, because the respondent had indisputably no unrestricted retained earnings in its books at the
time the petitioners commenced Civil Case No. 01-086 on January 22, 2001 which proved that
the respondent's legal obligation to pay the value of the petitioners' shares did not yet arise.
Neither did the subsequent existence of unrestricted retained earnings after the filing of the
complaint cure the lack of cause of action in Civil Case No. 01-086. The petitioners' right of
action could only spring from an existing cause of action.
21. Borgonia vs Abra Valley Colleges
GR No. 204089 July 29, 2015 BERSAMIN, J

FACTS: Petitioners filed a complaint and damages against Abra Valley and prayed that the latter
allow them to inspect its corporate books and records, and the minutes of meetings, and to
provide them with its financial statements. The petitioners alleged that they were bona fide
stockholders of Abra Valley while the respondents claim as an affirmative defense that the
petitioners were not Abra Valley's stockholders. RTC dismissed the complaint pertinently
holding that the documents presented are not Stock Certificates as boldly announced by the
plaintiff's counsel.

ISSUE:
Whether or not the petitioners were bona fide stockholders of Abra Valley.

HELD:

Yes, for a stock certificate is prima facie evidence that the holder is a shareholder of the
corporation, but the possession of the certificate is not the sole determining factor of one's stock
ownership. The certificate is not stock in the corporation but is merely evidence of the holder's
interest and status in the corporation, his ownership of the share represented thereby, but is not in
law the equivalent of such ownership. It expresses the contract between the corporation and the
stockholder, but it is not essential to the existence of a share in stock or the creation of the
relation of shareholder to the corporation.
22. Gamboa vs Tevez
GR.No. 176579 June 28, 2011 CARPIO, J.:

FACTS: The Philippine Legislature enacted Act No. 3436 which granted PLDT a franchise and
the right to engage in telecommunications business. The General Telephone and Electronics
Corporation (GIE), an American company and a major PLDT stockholder, sold 26 percent of the
outstanding common shares of PLDT to PTIC. Prime Holdings, Inc. (PHI) was incorporated by
several persons, including Roland Gapud and Jose Campos, Jr.
Later, PHI became the owner of 111,415 shares of stock of PTIC by virtue of three Deeds of
Assignment executed by PTIC stockholders Ramon Cojuangco and Luis Tirso Rivilla. In 1986,
the 111,415 shares of stock of PTIC held by PHI were sequestered by the Presidential
Commission on Good Government (PCGG). The 111,415 PTIC shares, which represent about
46.125 percent of the outstanding capital stock of PTIC, were later declared by this Court to be
owned by the Republic of the Philippines.
arn
Since PTIC is a stockholder of PLDT, the sale by the Philippine Government of 46.125 percent
of PTIC shares is actually an indirect sale of 12 million shares of the outstanding common shares
of PLDT. With the sale, First Pacifics common shareholdings in PLDT increased from 30.7
percent to 37 percent, thereby increasing the common shareholdings of foreigners in PLDT to
about 81.47 percent. This violates Section 11, Article XII of the 1987 Philippine Constitution
which limits foreign ownership of the capital of a public utility to not more than 40 percent.

Issue:
Whether or not the term capital in Section 11, Article XII of the Constitution refers to the
common shares of PLDT, a public utility.

Held:
Yes for Section 11, Article XII (National Economy and Patrimony) of the 1987 Constitution
mandates the Filipinization of public utilities. Any citizen or juridical entity desiring to operate a
public utility must therefore meet the minimum nationality requirement prescribed in Section 11,
Article XII of the Constitution. Hence, for a corporation to be granted authority to operate a
public utility, at least 60 percent of its capital must be owned by Filipino citizens.
The 40% foreign ownership limitation should be interpreted to apply to both the beneficial
ownership and the controlling interest. The 40% foreign equity limitation in public utilities
prescribed by the Constitution refers to ownership of shares of stock entitled to vote. The term
capital in Section 11, Article XII of the Constitution refers only to shares of stock that can vote
in the election of directors.
23. Ponce vs, Alsons Cement Corp.
GR. No. 139802 December 10, 2002 QUISUMBING, J.:

FACTS: Incorporators of Victory Cement Corporation (VCC), Vicente C. Ponce and Fausto
Gaid, executed a "Deed of Undertaking" and "Indorsement" whereby the latter acknowledges
that Ponce is the owner of the shares and he was endorsing it to Ponce. VCC was later renamed
to Floro Cement Corporation (FCC) and then to Alsons Cement Corporation (ACC)
However, up to the present, no certificates of were issued in the name of Fausto G. Gaid and/or
the Ponce where despite repeated demands, ACC refused to issue the certificates of stocks.
Ponce filed a complaint with the SEC for mandamus but CA rules that mandamus should be
dismissed for failure to state a Cause of action such as in the absence of any allegation that the
transfer of the shares was registered in the stock and transfer book

ISSUE:
Whether or not the certificate of stocks of Gaid can be transferred to Ponce

HELD:
No because pursuant to the Corporation Code, the transfer of shares of stock not recorded in the
stock and transfer book of the corporation is non-existent as far as the corporation is concerned.
Following Section 63 of the Corporation Code, between the corporation on the one hand, and its
shareholders and third persons on the other, the corporation looks only to its books for the
purpose of determining who its shareholders are. It is only when the transfer has been recorded
in the stock and transfer book that a corporation may rightfully regard the transferee as one of its
stockholders. From this time, the consequent obligation on the part of the corporation to
recognize such rights as it is mandated by law to recognize arises.
24. Rivera vs Florendo
GR. No. L-57586 October 8, 1996 PARAS, J.:

FACTS: Isamu Akasako, who was a Japanese national and co-petitioner was allegedly the real
owner of shares of stock in the name of Petitioner Rivera. Isamu sold shares of stocks to Private
Respondents Tsuchiya and Jureidini with the assurance that the former will be made President
and the latter will be made the Director of the corporation after the purchase of the shares of
stocks. Rivera also assured Tsuchiya that he would sign the stock certificates because Akasako
was the real owner of the share os stocks that was just under Rivera's name.

However, after the sale was consummated and the consideration was paid, Rivera refused to
make the indorsement and stated that he will only do so if he was also paid. Both Tsuchiya and
Jureidini attempted several times to register the stock certificates with the corporation but it was
refused which resulted to them having to file a special civil action for mandamus

ISSUE:
Whether or not mandamus was the proper remedy

HELD:
No, because mandamus is not the proper remedy in a case where the shares of stocks in question
are not even indorsed by the registered owner, Rivera, who specifically resists the registration of
the shares of stocks in the books of the corporation. Shares of stocks may only be transferred by
delivery to the transferee of the certificate properly indorsed by the registered owner.