JPD

ACTIVE CASES

BATCH 1

1. Dutch Movers, Inc. vs. Lequin, 824 SCRA 310, G.R. No. 210032 April 25, 2017
FACTS: Respondent filed illegal dismissal against DMI and/or Sps. Lee. NLRC ruled against
petitioners; the decision became final and executory. During the execution stage, respondent filed a
motion to implead Sps.Lee. Sps. Lee invokes doctrine of separate corporate personality.

RULING: Piercing the veil of corporate fiction is allowed, and responsible persons may be
impleaded, and be held solidarily liable even after final judgment and on execution,
provided that such persons deliberately used the corporate vehicle to unjustly evade the
judgment obligation, or resorted to fraud, bad faith, or malice in evading their obligation.
In this case, petitioners were impleaded from the inception of this case. They had ample opportunity
to debunk the claim that they illegally dismissed respondents, and that they should be held personally
liable for having controlled DMI and actively participated in its management, and for having used it
to evade legal obligations to respondents. Clearly, petitioners should be held liable for the judgment
awards as they resorted to such scheme to countermand labor laws by causing the incorporation of
DMI but without any indication that they were part thereof.

2. Calubad vs. Ricarcen Development Corporation, G.R. No. 202364, 30 Aug 2017
FACTS: Marilyn, acting for Ricarcen’s behalf, took a P4M loan from Calubad and mortgaged Ricarcen’s
QC property. The loan was subsequently increased twice through the amendments of Deed of
Mortgage. Marilyn showed a board resolution and a secretary’s certificate to prove her authotrity.
Caluban foreclosed the REM and was the highest bidder. Ricarcen sought to annul the mortgage and
the foreclosure, claiming that it never authorized Marilyn.

RULING: An agent's apparent authority from the principal may also be ascertained through: (1) the
general manner by which the corporation holds out an officer or agent as having power to
act or, in other words, the apparent authority with which it clothes him to act in general,
or (2) the acquiescence in his acts of a particular nature, with actual or constructive
knowledge thereof, whether within or without the scope of his ordinary powers.

The doctrine of apparent authority provides that even if no actual authority has been conferred on
an agent, his or her acts, as long as they are within his or her apparent scope of authority, bind the
principal. However, the principal's liability is limited to third persons who are reasonably led to believe
that the agent was authorized to act for the principal due to the principal's conduct.

As the former president of Ricarcen, it was within Marilyn's scope of authority to act for and enter
into contracts in Ricarcen's behalf. Her broad authority from Ricarcen can be seen with how the
corporate secretary entrusted her with blank yet signed sheets of paper to be used at her discretion.
She also had possession of the owner's duplicate copy of the land title covering the property
mortgaged to Calubad, further proving her authority from Ricarcen. Calubad could not be faulted for
continuing to transact with Marilyn, even agreeing to give out additional loans, because Ricarcen
clearly clothed her with apparent authority. Likewise, it reasonably appeared that Ricarcen's officers
knew of the mortgage contracts entered into by Marilyn in Ricarcen's behalf as proven by the issued
Banco De Oro checks as payments for the monthly interest and the principal loan.

3. Lim vs. Moldex Land, Inc., 815 SCRA 619, G.R. No. 206038 January 25, 2017
FACTS: Lim is an owner of unit in Golden Empire Tower, a condominium project of Moldex. Condocor
is the condominium corporation of Golden Empire Tower. Lim, as a unit owner, became a member
of Condocor. Moldex became a member on the basis of its 220 unsold units. During the annual
general membership meeting, quorum was declared even though only 29 of the 108 unit buyers were
present, which was based on the majority of the voting rights held by Moldex through its
representatives. Hence, Lim filed an election protest. Lim claimed that respndents (Moldex’s
representatives) are not entitled to become directors because they are not unit -buyers.

RULING: First, Lim has legal standing to file the action. Section 90 of the Corporation Code states
that membership in a non-stock corporation and all rights arising therefrom are personal and non-
transferable, unless the articles of incorporation or the by-laws otherwise provide. Nothing
in the records showed that the alleged transfer made by Lim was registered with the Register of
Deeds of the City of Manila or was reported to the corporation (as required in Condocor’s By-Laws).
Logically, until and unless the registration is effected, Lim remains to be the registered owner of the
condominium unit and thus, continues to be a member of Condocor.
 Second, there was no quorum. A stockholders' or members' meeting must comply with the
following requisites to be valid: [DNCPQ]

1. The meeting must be held on the date fixed in the By-Laws or in accordance with law;
2. Prior written notice of such meeting must be sent to all stockholders/members of record;
3. It must be called by the proper party;
4. It must be held at the proper place; and
5. Quorum and voting requirements must be met.

For stock corporations, the quorum is based on the number of outstanding voting stocks while for
non-stock corporations, only those who are actual, living members with voting rights shall
be counted in determining the existence of a quorum.

To be clear, the basis in determining the presence of quorum in non-stock corporations is

the numerical equivalent of all members who are entitled to vote, unless some other basis
is provided by the By-Laws of the corporation. The qualification "with voting rights" simply
recognizes the power of a non-stock corporation to limit or deny the right to vote of any of its
members. To include these members without voting rights in the total number of members for
purposes of quorum would be superfluous for although they may attend a particular meeting, they
cannot cast their vote on any matter discussed therein.

It must be emphasized that insofar as Condocor is concerned, quorum is different from voting rights.
Applying the law and Condocor's By-Laws, if there are 100 members in a non-stock corporation, 60
of which are members in good standing, then the presence of 50% plus 1 of those members in good
standing will constitute a quorum. Thus, 31 members in good standing will suffice in order to consider
a meeting valid as regards the presence of quorum. The 31 members will naturally have to exercise
their voting rights. It is in this instance when the number of voting rights each member is entitled to
become significant. If 29 out of the 31 members are entitled to 1 vote each, another member (known
as A) is entitled to 20 votes and the remaining member (known as B) is entitled to 15 votes, then
the total number of voting rights of all 31 members is 64. Thus, majority of the 64 total voting rights,
which is 33 (50% plus 1), is necessary to pass a valid act. Assuming that only A and B concurred in
approving a specific undertaking, then their 35 combined votes are more than sufficient to authorize
such act. Accordingly, there was no quorum during the July 21, 2012 meeting considering that only
29 of the 108 unit buyers were present.

Third, Moldex is a member of Condocor. Membership in a condominium corporation is limited

only to the unit owners of the condominium project. This is provided in Section 10 of the
Condominium Act which reads: Membership in a condominium corporation, regardless of whether it
is a stock or non-stock corporation, shall not be transferable separately from the condominium unit
of which it is an appurtenance. When a member or stockholder ceases to own a unit in the
project in which the condominium corporation owns or holds the common areas, he shall
automatically cease to be a member or stockholder of the condominium corporation.

Law and jurisprudence dictate that ownership of a unit entitles one to become a member
of a condominium corporation. The Condominium Act does not provide a specific mode of
acquiring ownership. Thus, whether one becomes an owner of a condominium unit by virtue of sale
or donation is of no moment.

Lastly. Respondents who are non-members cannot be elected as directors of Condocor. While
Moldex may rightfully designate proxies or representatives, the latter, however, cannot be
elected as directors or trustees of Condocor. First, the Corporation Code clearly provides that a
director or trustee must be a member of record of the corporation. Further, the power of the proxy
is merely to vote. If said proxy is not a member in his own right, he cannot be elected as a director
or proxy.

4. Jose A. Bernas v. Jovencio F. Cinco G.R. Nos. 163356-57/163368-69; July 10, 2015
FACTS: Bernas et. Al were among the members of the board of MSC. Cinco et. al are stockholders
of the corporation. MSCOC, alarmed with anomalies in handling of corporated funds , called for the
resignation of Bernas Group. MSOC called for a special meeting to remove the Bernas Group. The
latter was replaced by the Cinco Group. The 1997 meeting was ratified in the 1998, 1999 and 2000
ASM.

RULING: Nowhere in the Corporation Code or in the MSC by-laws can it be gathered that
the Oversight Committee is authorized to step in wherever there is breach of fiduciary duty
and call a special meeting for the purpose of removing the existing officers and electing
their replacements even if such call was made upon the request of shareholders. Needless
to say, the MSCOC is neither empowered by law nor the MSC by-laws to call a meeting and the
subsequent ratification made by the stockholders did not cure the substantive infirmity, the defect
having set in at the time the void act was done. The defect goes into the very authority of the persons
who made the call for the meeting. It is apt to recall that illegal acts of a corporation which
 contemplate the doing of an act which is contrary to law, morals or public order, or contravenes
some rules of public policy or public duty, are, like similar transactions between individuals, void.
They cannot serve as basis for a court action, nor acquire validity by performance, ratification or
estoppel. The void election of 17 December 1997 cannot be ratified by the subsequent Annual
Stockholders' Meeting.

A distinction should be made between corporate acts or contracts which are illegal and those which
are merely ultra vires. The former contemplates the doing of an act which are contrary to law, morals
or public policy or public duty, and are, like similar transactions between individuals, void. They
cannot serve as basis of a court action nor acquire validity by performance, ratification or estoppel.
Mere ultra vires acts, on the other hand, or those which are not illegal or void ab initio, but are not
merely within the scope of the articles of incorporation, are merely voidable and may become binding
and enforceable when ratified by the stockholders.

5. Spouses Tio vs. BPI, G.R. No. 193534, January 30, 2019
FACTS: Goldstar together with spouses Tio, majority stockholders, obtained several loans from
FEBTC now BPI by real estate mortgages over several properties. BPI instituted foreclosure
proceedings. Goldstar and/or spouses Tio filed a Complaint for Annulment of Promissory Notes, Real
Estate Mortgage, Notice of Sheriff's Sale, Certificate of Sale. Meanwhile, BPI filed a Petition for the
Issuance of a Writ of Possession. Sps. Tio won in the first case, while BPI won in the latter case.
These 2 case now reached the SC. BPI filed a Manifestation, Submission and/or Motion for Judgment
based on a Compromise Agreement entered into by the parties on February 15, 2013.

RULING: Spouses Tio affirmed and confirmed the execution of the said Compromise Agreement in
their Omnibus Comment. In compliance with the Court's February 26, 2014 Resolution, copies of:
(1) the Board Resolution 3-14 of Goldstar authorizing Manuel Tio to represent the said corporation
and to sign the Compromise Agreement; and (2) the Corporate Secretary's Certificate of BPI,
authorizing Maureen Therese C. Santos to enter into a compromise agreement, were submitted by
the parties. After reviewing the Compromise Agreement, the Court finds the same to be proper and
in order.
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6. Carolina Que Villongco, et al., v. Cecilia Que Yabut, et al., G.R. No. 225022, February 05,
2018
FACTS: Phil-Ville is a family corporation founded by Geronima Que. Geronima owned 3,140 shares
out of the 200,000 shares, while the remaining 196,860 shares were equally distributed among
Geronima’s six children, namely, Carolina, Ana Maria, Angelica, Cecilia, Ma. Corazon and Maria Luisa
Que Camara (32,810 each).

By virtue of the Sale of Shares of Stock, purportedly executed by Cecilia, attorney in fact of Geronima,
Cecilia allegedly effected an inequitable distribution of the shares of Geronima to her grandchildren.
Cecila, et al proceeded with the scheduled annual stockholder’s meeting, despite having been
postponed, participated only by few stockholders. Cecilia et. al were elected new members of the
Board of Directors and officers of Phil-Ville.

Carolina, et al. filed an election case against Cecilia, et al, praying that the election be declared void
considering the invalidity of the holding of the meeting for lack of quorum therein. Petitioner claimed
that the basis for determining quorum should have been the total number of undisputed shares of
stocks of Phil-Ville due to the exceptional nature of the case since the 3,140 shares of the late
Geronima is the subject of another dispute filed before the RTC.

RULING: It is settled that unissued stocks may not be voted or considered in determining whether a
quorum is present in a stockholders' meeting. Only stocks actually issued and outstanding may
be voted. Thus, for stock corporations, the quorum is based on the number of outstanding
voting stocks. The distinction of undisputed or disputed shares of stocks is not provided
for in the law or the jurisprudence. Ubi lex non distinguit nec nos distinguere debemus — when
the law does not distinguish we should not distinguish. Thus, the 200,000 outstanding capital stocks
of Phil-Ville should be the basis for determining the presence of a quorum, without any distinction.

Therefore, to constitute a quorum, the presence of 100,001 shares of stocks in Phil-Ville is necessary.
Here, only 98,430 shares of stocks were present during the January 25, 2014 stockholders meeting
at Max's Restaurant, therefore, no quorum had been established. There is also no evidence that the
3,140 shares of the late Geronima were recorded in the stocks and transfer book of Phil-Ville. Thus,
insofar as Phil-Ville is concerned, the 3,140 shares of the late Geronima allegedly transferred to
several persons is non-existent. Therefore, the transferees of the said shares cannot exercise the
rights granted unto stockholders of a corporation, including the right to vote and to be voted upon.
7. F&S Velasco vs. Madrid, G.R. No. 2018844, November 10, 2015
FACTS: Angela owned 70.82% of F&S’s total shares of stock, while her husband owned 4.16%.
Angela died intestate and without issue. Madrid, as Angela’s spouse executed an Affidavit of Self
Adjudication covering the latter’s estate which includes her 70.82% ownership of F&S’s total shares
of stock. Believing that he is already the controlling stockholder of F&S by virtue of the self-
adjudication, he called for a Special Stockholders’ and Re-Organizational Meeting. During November
18, 2009 meeting, the current members of the BoD save for Madrid was ousted and replaced by the
Madrid Group among others. The Saturnino Group filed a petition for Declaration of Nullity of
Corporate Election.

RULING: The meeting was not valid. Madrid's inheritance of Angela's shares of stock does not
ipso facto afford him the rights accorded to such majority ownership of FSVCI's shares of
stock. All transfers of shares of stock must be registered in the corporate books in order to be
binding on the corporation.

An owner of shares of stock cannot be accorded the rights pertaining to a stockholder —

such as the right to call for a meeting and the right to vote, or be voted for — if his
ownership of such shares is not recorded in the Stock and Transfer Book. The purpose of
registration, therefore, is two-fold: to enable the transferee to exercise all the rights of a stockholder,
including the right to vote and to be voted for, and to inform the corporation of any change in share
ownership so that it can ascertain the persons entitled to the rights and subject to the liabilities of a
stockholder.

Here, at the time Madrid called for the November 18, 2009 Meeting, as well as the actual conduct
thereof, he was already the owner of 74.98% shares of stock of FSVCI as a result of his inheritance
of Angela's 70.82% ownership thereof. However, records are bereft of any showing that the transfer
of Angela's shares of stock to Madrid had been registered in FSVCI's Stock and Transfer Book when
he made such call and when the November 18, 2009 Meeting was held. Hence, Madrid could not
have made a valid call as his stock ownership of FSVCI as registered in the Stock and Transfer Book
is only 4.16%.

Batch 2

8. Wesleyan University-Philippines vs. Maglaya, Sr., 815 SCRA 171, G.R. No. 212774 January
23, 2017
FACTS: Maglaya was elected president of WUP for 5 years. However, during his term, his membership
expired and was not renewed. Palomo was elected new chairman of the board and informed Maglaya
of the termination of his services as president. Maglaya filed an illegal dismissal case against WUP.
WUP that the removal was an intra-corporate controversy, under the RTC’s jurisdiction.

RULING: Maglaya is a corporate officer, hence the dispute is intra-corporate. That the creation of
the position is under the corporation's charter or by-laws, and that the election of the
officer is by the directors or stockholders must concur in order for an individual to be
considered a corporate officer, as against an ordinary employee or officer. It is only when
the officer claiming to have been illegally dismissed is classified as such corporate officer that the
issue is deemed an intra-corporate dispute which falls within the jurisdiction of the trial courts.

It is apparent from the By-laws of WUP that the president was one of the officers of the corporation,
and was an honorary member of the Board. He was appointed by the Board and not by a managing
officer of the corporation. The alleged "appointment" of Maglaya instead of "election" as
provided by the by-laws neither convert the president of university as a mere employee,
nor amend its nature as a corporate officer.

9. Belo Medical Group, Inc. vs. Santos, 838 SCRA 142, G.R. No. 185894 August 30, 2017
FACTS: Belo Medical Group received a request from Jose Santos for the inspection of corporate
records. Santos, in this case, made three (3) attempts of the same and were all denied. Santos
claimed that he was a registered shareholder and a co-owner of Belo's shares, as these were acquired
while they cohabited as husband and wife. Belo objected to this request and claiming that the 25
shares in his name were merely in trust for her, as she, and not Santos, paid for these shares. Belo
Medical Group filed a Complaint for interpleader against Belo and Santos. It also filed a Supplemental
Complaint for declaratory relief relying on Sec. 74 of the Corporation Code to deny Santos' request
for inspection due to his business interest in a competitor. Santos filed a Motion to Dismiss. RTC
declared the case as an intra-corporate controversy but dismissed the Complaints.

RULING: Applying the relationship test, this Court notes that both Belo and Santos are named
shareholders in Belo Medical Group's Articles of Incorporation and General Information Sheet for
 2007. The conflict is clearly intra-corporate as it involves two (2) shareholders, although
the ownership of stocks of one stockholder is questioned. Unless Santos is adjudged as a
stranger to the corporation because he holds his shares only in trust for Belo, then both he and Belo,
based on official records, are stockholders of the corporation.

Applying the nature of the controversy test, this is still an intra-corporate dispute. The Complaint for
interpleader seeks a determination of the true owner of the shares of stock registered in Santos'
name. Ultimately, however, the goal is to stop Santos from inspecting corporate books. This
goal is so apparent that, even if Santos is declared the true owner of the shares of stock upon
completion of the interpleader case, Belo Medical Group still seeks his disqualification from inspecting
the corporate books based on bad faith. Therefore, the controversy shifts from a mere question of
ownership over movable property to the exercise of a registered stockholder's proprietary right to
inspect corporate books.

Belo Medical Group wants the trial court not to prematurely characterize the dispute as intra-
corporate when, in the same breath, it prospectively seeks Santos' perpetual disqualification from
inspecting its books. This case was never about putting into light the ownership of the shares of stock
in Santos' name. If that was a concern at all, it was merely secondary. The primary aim of Belo and
Belo Medical Group was to defeat his right to inspect the corporate books, as can be seen by the
filing of a Supplemental Complaint for declaratory relief.

As an intra-corporate dispute, Santos should not have been allowed to file a Motion to Dismiss. The
trial court should have continued on with the case as an intra-corporate dispute considering that it
called for the judgments on the relationship between a corporation and its two warring stockholders
and the relationship of these two stockholders with each other.

10. Dr. Gil Rich v. Guillermo Paloma III, G.R. No. 210538, March 07, 2018
FACTS: Petitioner Dr. Gil Rich lent P1M to his brother, Estanislao, which was secured by a real estate
mortgage over a parcel of residential land. Petitioner foreclosed on the subject property. The
petitioner was declared the highest bidder. Unbeknownst to petitioner and prior foreclosure,
Estanislao mortgaged the same property with MLTC. Respondent Servacio, as president of MTLC,
exercised equitable redemption after the foreclosure proceedings. A complaint for Annulment of Deed
of Redemption was filed by the petitioner against respondent Servacio, on the ground that MTLC no
longer has juridical personality to effect the equitable redemption as it has already been dissolved
as early as September 2003.

RULING: Redemption was not valid. In addition, and as expressly mentioned by the
Corporation Code, this extended authority necessarily excludes the purpose of continuing
the business for which it was established. The reason for this is simple: the dissolution of the
corporation carries with it the termination of the corporation's juridical personality. Any new
business in which the dissolved corporation would engage in, other than those for the
purpose of liquidation, "will be a void transaction because of the non-existence of the
corporate party."

Two things must be said of the foregoing in relation to the facts of this case. First, if MTLC entered
into the real estate mortgage agreement with Estanislao after its dissolution, then resultantly, such
real estate mortgage agreement would be void ab initio because of the non-existence of MTLC's
juridical personality.

Second, if, however, MTLC entered into the real estate mortgage agreement prior to its dissolution,
then MTLC's redemption of the subject property, even if already after its dissolution (as long as it
would not exceed three years thereafter), would still be valid because of the liquidation/winding up
powers accorded by Section 122 of the Corporation Code to MTLC.

Here, by the time MTLC executed the real estate mortgage agreement, its juridical personality has
already ceased to exist. The agreement is void as MTLC could not have been a corporate party to the
same. To be sure, a real estate mortgage is not part of the liquidation powers that could have been
extended to MTLC. It could not have been for the purposes of "prosecuting and defending suits by
or against it and enabling it to settle and close its affairs, to dispose of and convey its property and
to distribute its assets." It is, in fact, a new business in which MTLC no longer has any business
pursuing.

11. The Phil. Geothermal Employees Union vs. Unocal Phils, G.R. No. 190187, September 28,
2016
FACTS: Unocal Phils is a subsidiary of Unocal California, which in turn is a subsidiary of Unocal Corp.
Unocal Corp merged with Blue Merger, a subsidiary of Chevron. Petitioner Union is the bargaining
 agent of the rank and file employees of Unocal Phils. Petitioner sought for separation benefits from
Unocal Phils because of the implied dismissal of the employees as a result of the merger. Unocal Phils
contends that employees were not terminated and that merger did not result to its closure.

RULING: Whether or not respondent is a party to the Merger Agreement, there is no implied
dismissal of its employees as a consequence of the merger. If respondent is a subsidiary of
Unocal California, which, in turn, is a subsidiary of Unocal Corporation, then the merger of Unocal
Corporation with Blue Merger and Chevron does not affect respondent or any of its employees.
Respondent has a separate and distinct personality from its parent corporation.

Although Section 80 does not explicitly state the merger's effect on the employees of the absorbed
corporation, Bank of the Philippine Islands v. BPI Employees Union-Davao Chapter-Federation of
Unions in BPI Unibank has ruled that the surviving corporation automatically assumes the
employment contracts of the absorbed corporation, such that the absorbed corporation's
employees become part of the manpower complement of the surviving corporation. It is
more in keeping with the dictates of social justice and the State policy of according full protection to
labor to deem employment contracts as automatically assumed by the surviving corporation in a
merger, even in the absence of an express stipulation in the articles of merger or the merger plan.

This acquisition of all assets, interests, and liabilities of the absorbed corporation
necessarily includes the rights and obligations of the absorbed corporation under its
employment contracts. Consequently, the surviving corporation becomes bound by the
employment contracts entered into by the absorbed corporation. These employment contracts are
not terminated. They subsist unless their termination is allowed by law.

12. Tan vs. Sycip 17 August 2006

FACTS: Petitioner Grace Christian High School (GCHS) is a nonstock corporation with 15 regular
members, who also constitute the board of trustees. During the annual members' meeting, there
were only 11 living member-trustees, as 4 had already died. Out of the eleven, 7 attended the
meeting through their respective proxies. The meeting was convened and chaired by Atty. Padilla Jr.
over the objection of Atty. Pacis, who argued that there was no quorum. Petitioners argued before
the SEC, maintained that the deceased member-trustees should not be counted in the computation
of the quorum because, upon their death, members automatically lost all their rights (including the
right to vote) and interests in the corporation. SEC Hearing Officer declared the meeting null and
void for lack of quorum. She held that the basis for determining the quorum in a meeting of members
should be their number as specified in the articles.

RULING: There was quorum. For stock corporations, the "quorum" referred to in Section 52 of the
Corporation Code is based on the number of outstanding voting stocks. For nonstock corporations,
only those who are actual, living members with voting rights shall be counted in
determining the existence of a quorum during members' meetings. Dead members shall
not be counted.

Under Section 52 of the Corporation Code, the majority of the members representing the
actual number of voting rights, not the number or numerical constant that may originally
be specified in the articles of incorporation, constitutes the quorum.

Section 25 of the Code specifically provides that a majority of the directors or trustees, as fixed in
the articles of incorporation, shall constitute a quorum for the transaction of corporate business
(unless the articles of incorporation or the bylaws provide for a greater majority). If the intention
of the lawmakers was to base the quorum in the meetings of stockholders or members on
their absolute number as fixed in the articles of incorporation, it would have expressly
specified so. Otherwise, the only logical conclusion is that the legislature did not have that
intention.

Membership in and all rights arising from a nonstock corporation are personal and non-transferable,
unless the articles of incorporation or the bylaws of the corporation provide otherwise. In other
words, the determination of whether or not "dead members" are entitled to exercise their
voting rights (through their executor or administrator), depends on those articles of
incorporation or bylaws. Under the By-Laws of GCHS, membership in the corporation shall, among
others, be terminated by the death of the member. Section 91 of the Corporation Code further
provides that termination extinguishes all the rights of a member of the corporation,
unless otherwise provided in the articles of incorporation or the bylaws.

Applying Section 91 to this case, we hold that dead members who are dropped from the membership
roster in the manner and for the cause provided for in the By-Laws of GCHS are not to be counted
in determining the requisite vote in corporate matters or the requisite quorum for the annual
members' meeting. With 11 remaining members, the quorum in the present case should be 6.
 Therefore, there being a quorum, the annual members' meeting, conducted with six members
present, was valid.

13. Air Canada vs. Commissioner of Internal Revenue, 778 SCRA 131, G.R. No. 169507 January
11, 2016
FACTS: Air Canada engaged the services of Aerotel as its general sales agent in the Philippines. Air
Canada, through Aerotel, filed income tax returns and paid the income tax on Gross Philippine Billing.
found that Air Canada was engaged in business in the Philippines through a local agent that sells
airline tickets on its behalf. As such, it should be taxed as a resident foreign corporation at the regular
rate of 32%. Petitioner argues that the fact that it is no longer subject to GSB tax as ruled in the
assailed CTA Decision does not render it ipso facto subject to 32% income tax on taxable income as
a RFC because it would violate the Philippine government's covenant under Article VIII of the Republic
of the Philippines-Canada Tax Treaty. Respondent maintains that the petitioner is subject to the 32%
corporate income tax as a RFC doing business in the Philippines

RULING: Petitioner, an offline carrier, is a resident foreign corporation for income tax
purposes. Under the NIRC, a resident foreign corporation is one that is organized, authorized, or
existing under the laws of any foreign country, engaged in trade or business within the Philippines.

The IRRs of Republic Act No. 7042 clarifies that "doing business" includes "appointing
representatives or distributors, operating under full control of the foreign corporation,
domiciled in the Philippines or who in any calendar year stay in the country for a period or
periods totaling one hundred eighty (180) days or more." An offline carrier is "any foreign air
carrier not certificated by the Civil Aeronautics Board, but who maintains office or who has designated
or appointed agents or employees in the Philippines, who sells or offers for sale any air transportation
in behalf of said foreign air carrier and/or others, or negotiate for, or holds itself out by solicitation,
advertisement, or otherwise sells, provides, furnishes, contracts, or arranges for such
transportation."

Petitioner is undoubtedly "doing business" or "engaged in trade or business" in the

Philippines. Aerotel performs acts or works or exercises functions that are incidental and beneficial
to the purpose of petitioner's business. The activities of Aerotel bring direct receipts or profits to
petitioner. There is nothing on record to show that Aerotel solicited orders alone and for its own
account and without interference from, let alone direction of, petitioner. On the contrary, Aerotel
cannot "enter into any contract on behalf of petitioner Air Canada without the express written consent
of the latter," and it must perform its functions according to the standards required by petitioner.
Through Aerotel, petitioner is able to engage in an economic activity in the Philippines.

14. Eriks vs. Court of Appeals, 267 SCRA 567

FACTS: Petitioner Eriks Pte. Ltd. is a non-resident foreign corporation (Singapore). From 17 January
to 16 August 1989, private respondent Delfin Enriquez, Jr. ordered and received from petitioner
various elements used in sealing pumps, valves, pipes and control equipment, PVC pipes and fittings.
The transfers of goods were perfected in Singapore, for private respondent’s account, F.O.B.
Singapore, with a 90-day credit term. Demands were made by petitioner upon private respondent to
settle his account, but the latter failed/refused to do so. Eriks filed an action for collection against
private respondent. RTC dismissed complaint and ruled that petitioner is not licensed to do business
in the Philippines and has no legal capacity to sue. CA affirmed. Petitioner contends that it is suing
only on an isolated transaction for which it has capacity to sue.

RULING: Petitioner is doing business in the Philippines. Section 133 prohibits, not merely absence of
the prescribed license, but it also bars a foreign corporation "doing business" in the Philippines
without such license access to our courts. A foreign corporation without such license is not
ipso facto incapacitated from bringing an action. A license is necessary only if it is
"transacting or doing business" in the country.

More than the sheer number of transactions entered into, a clear and unmistakable intention on the
part of petitioner to continue the body of its business in the Philippines is more than apparent. It is
engaged in the manufacture and sale of elements used in sealing pumps, valves, and pipes for
industrial purposes, valves and control equipment used for industrial fluid control and PVC pipes and
fittings for industrial use. Thus, the sale by petitioner of the items covered by the receipts,
which are part and parcel of its main product line, was actually carried out in the
progressive prosecution of commercial gain and the pursuit of the purpose and object of
its business, pure and simple. Further, its grant and extension of 90-day credit terms to private
respondent for every purchase made, unarguably shows an intention to continue transacting with
private respondent, since in the usual course of commercial transactions, credit is extended only to
customers in good standing or to those on whom there is an intention to maintain long-term
relationship.
 The series of transactions in question could not have been isolated or casual transactions. What is
determinative of "doing business" is not really the number or the quantity of the
transactions, but more importantly, the intention of an entity to continue the body of its
business in the country. The number and quantity are merely evidence of such intention. The
phrase "isolated transaction" has a definite and fixed meaning, i.e. a transaction or series
of transactions set apart from the common business of a foreign enterprise in the sense
that there is no intention to engage in a progressive pursuit of the purpose and object of
the business organization. Whether a foreign corporation is "doing business" does not necessarily
depend upon the frequency of its transactions, but more upon the nature and character of the
transactions.

15. Global Business Holdings, Inc. v. SureComp Software, B.V., G.R. No. 173463, October 13,
2010
FACTS: Surecomp, a foreign corporation (Netherlands), entered into a software license agreement
with Asian Bank Corporation (ABC), to be used in the bank’s computer system for a period of 20
years. ABC merged with petitioner Global, with Global as the surviving corporation. When Global took
over the operations of ABC, it found the System unworkable for its operations, and informed
Surecomp of its decision to discontinue with the agreement. Surecomp filed a complaint for breach
of contract with damages. Global filed a motion to dismiss on the ground that Surecomp had no
capacity to sue because it was doing business in the Philippines without a license.

RULING: Global is estopped from challenging Surecomp's capacity to sue. A foreign

corporation doing business in the Philippines without license may sue in Philippine courts a Filipino
citizen or a Philippine entity that had contracted with and benefited from it.

Due to Global's merger with ABC and because it is the surviving corporation, it is as if it was the one
which entered into contract with Surecomp. In the merger of two existing corporations, one of the
corporations survives and continues the business, while the other is dissolved, and all its rights,
properties, and liabilities are acquired by the surviving corporation. This is particularly true in this
case. Under the terms of the merger or consolidation, Global assumed all the liabilities and obligations
of ABC as if it had incurred such liabilities or obligations itself. In the same way, Global also has the
right to exercise all defenses, rights, privileges, and counter-claims of every kind and nature which
ABC may have or invoke under the law.

16. Anna Teng v. Securities Exchange Commission and Ting Ping Lay G.R. No. 184332,
February 17, 2016
FACTS: Ting Ping purchased in TCL Corp, by acquiring shares from Chiu, Teng Ching, and Maluto.
When Teng Ching died, Ting Ping requested TCL Corporate Secretary Anna Teng to register his
acquisition. He also demanded the issuance of new certificates of stock in his favor. TCL and Anna
Teng refused. Hence, Ting Ping filed a petition for mandamus with SEC. Anne Teng contends that
prior to registration of stocks in the corporate books, it is mandatory that the stock certificates are
first surrendered because a corporation will be liable to a bona fide holder of the old certificate if,
without demanding the said certificate, it issues a new one. Ting Ping contends that for as long as
the shares of stock are validly transferred, the corporate secretary has the ministerial duty to register
the transfer of such shares in the books of the corporation.

RULING: The delivery contemplated in Section 63 pertains to the delivery of the certificate
of shares by the transferor to the transferee, that is, from the original stockholder named in the
certificate to the person or entity the stockholder was transferring the shares to, whether by sale or
some other valid form of absolute conveyance of ownership.

Teng's position — that Ting Ping must first surrender Chiu's and Maluto's respective certificates of
stock before the transfer to Ting Ping may be registered in the books of the corporation — does not
have legal basis. The delivery or surrender adverted to by Teng, i.e., from Ting Ping to TCL,
is not a requisite before the conveyance may be recorded in its books. To compel Ting Ping
to deliver to the corporation the certificates as a condition for the registration of the
transfer would amount to a restriction on the right of Ting Ping to have the stocks
transferred to his name, which is not sanctioned by law. The only limitation imposed by Section
63 is when the corporation holds any unpaid claim against the shares intended to be transferred.

A corporation, either by its board, its by-laws, or the act of its officers, cannot create
restrictions in stock transfers. In transferring stock, the secretary of a corporation acts in
purely ministerial capacity, and does not try to decide the question of ownership. If a
corporation refuses to make such transfer without good cause, it may, in fact, even be compelled to
do so by mandamus.
 The surrender of the original certificate of stock is necessary before the issuance of a new
one so that the old certificate may be cancelled. A corporation is not bound and cannot be
required to issue a new certificate unless the original certificate is produced and
surrendered. Surrender and cancellation of the old certificates serve to protect not only the
corporation but the legitimate shareholder and the public as well, as it ensures that there is only one
document covering a particular share of stock.

17. Aguirre II vs. FQB+7, Inc., 688 SCRA 242, G.R. No. 170770 January 9, 2013
FACTS: Petitioner Vitaliano (as subscriber) filed, in his individual capacity and on behalf of FQB+7,
Inc. a complaint for intra-corporate dispute, injunction and inspection of corporate books and records
against respondents, Nathaniel Bocobo, Priscila Bocobo, and Antonio De Villa. The complaint alleges
that in April 2004, Vitaliano discovered a new GIS of FQB+7 Inc., in the SEC, which stated that an
annual stockholders’ meeting was held in 2002, where a new set of BOD was elected, naming
Nathaniel and Priscila as Directors. Questioning the validity of the alleged stockholders meeting,
Vitaliano wrote a letter to the "real" BOD (the directors reflected in the AOI) and asked for the
rectification of the erroneous entries in the GIS, and for the inspection of corporate books and
records. The RTC issued writ of PI. Aggrieved, Respondents filed a petition for certiorari in the CA
questioning the jurisdiction of the RTC. They contended that FQB+7's Certificate of Registration was
already revoked by SEC on September 29, 2003 for failure to comply with the reportorial
requirements; and that, the corporation’s dissolution affected the trial court’s jurisdiction to hear the
intra-corporate dispute. The CA held that the trial court does not have jurisdiction to entertain an
intra-corporate dispute when the corporation is already dissolved.

RULING: Intra-corporate disputes remain even after the corporation is dissolved, thus RTC has
jurisdiction. A corporation's board of directors is not rendered functus officio by its
dissolution. Since Section 122 allows a corporation to continue its existence for a limited
purpose, necessarily there must be a board that will continue acting for and on behalf of
the dissolved corporation for that purpose. In fact, Section 122 authorizes the dissolved
corporation's board of directors to conduct its liquidation within three years from its dissolution.
Jurisprudence has even recognized the board's authority to act as trustee for persons in interest
beyond the said three-year period. Thus, the determination of which group is the bona fide or
rightful board of the dissolved corporation will still provide practical relief to the parties
involved.

The same is true with regard to Vitaliano's shareholdings in the dissolved corporation. A party's
stockholdings in a corporation, whether existing or dissolved, is a property right which he
may vindicate against another party who has deprived him thereof. The corporation's
dissolution does not extinguish such property right. Section 145 of the Corporation Code
ensures the protection of this right.

18. Andaya vs. Rural Bank of Cabadbaran, Inc., 799 SCRA 325, G.R. No. 188769 August 3, 2016
FACTS: Andaya bought from Chute 2,200 shares of stock in the Rural Bank of Cabadbaran. Chute
duly endorsed and delivered the certificates of stock to Andaya and, subsequently, requested the
bank to register the transfer and issue new stock certificates in favor of the latter. Andaya also
communicated with the bank's corporate secretary Oraiz, reiterating Chute's request for the issuance
of new stock certificates in petitioner's favor. Oraiz inform Chute that he could not register the
transfer, because under a previous stockholders' Resolution, existing stockholders were given priority
to buy the shares of others in the event that the latter offered those shares for sale. The bank
eventually denied the request of Andaya. Consequently, Andaya instituted an action for mandamus
and damages against the Rural Bank of Cabadbaran to compel them to record the transfer in the
bank's stock and transfer book and to issue new certificates of stock in his name. The RTC issued a
Decision dismissing the complaint, relying on Ponce v. Alsonz. It ruled that "without the sale first
registered or an authority from the transferor, it was therefore unmistakably clear that Andaya had
no cause of action for mandamus against the bank."

RULING: It is already settled jurisprudence that the registration of a transfer of shares of

stock is a ministerial duty on the part of the corporation. Aggrieved parties may then resort
to the remedy of mandamus to compel corporations that wrongfully or unjustifiably refuse to record
the transfer or to issue new certificates of stock. This remedy is available even upon the instance
of a bona fide transferee who is able to establish a clear legal right to the registration of
the transfer. This legal right inherently flows from the transferee's established ownership of the
stocks.

Consequently, transferees of shares of stock are real parties in interest having a cause of action for
mandamus to compel the registration of the transfer and the corresponding issuance of stock
certificates.
 The reliance of the RTC on Ponce in finding that petitioner had no cause of action for mandamus
against the defendant bank was misplaced. In Ponce, the issue resolved by this Court was
whether the petitioner therein had a cause of action for mandamus to compel the issuance
of stock certificates, not the registration of the transfer.

19. Cargill vs. Intra Strata Assurance, G.R. No. 168266, March 15, 2010
FACTS: Cargill, a foreign corporation organized under Delaware laws, executed a contract with
Northern Mindanao Corporation (NMC) wherein the NMC agreed to sell molasses to Cargill. The
dispute arose when NMC failed to deliver the agreed 10,500 metric tons of molasses, and thus
prompting Cargill to file a complaint for sum of money against NMC. The lower court ruled that Cargill
had no legal capacity to sue because it was doing business in the PH without a license.

RULING: Cargill is not doing business in the PH. To constitute "doing business," the activity
undertaken in the Philippines should involve profit-making. Besides, under Section 3 (d) of RA
7042, "soliciting purchases" has been deleted from the enumeration of acts or activities
which constitute "doing business."

Other factors which support the finding that petitioner is not doing business in the Philippines are:
(1) petitioner does not have an office in the Philippines; (2) petitioner imports products from the
Philippines through its non-exclusive local broker, whose authority to act on behalf of petitioner is
limited to soliciting purchases of products from suppliers engaged in the sugar trade in the
Philippines; and (3) the local broker is an independent contractor and not an agent of petitioner.

To be doing or "transacting business in the Philippines" for purposes of Section 133 of the
Corporation Code, the foreign corporation must actually transact business in the
Philippines, that is, perform specific business transactions within the Philippine territory
on a continuing basis in its own name and for its own account. Actual transaction of business
within the Philippine territory is an essential requisite for the Philippines to acquire jurisdiction over
a foreign corporation and thus require the foreign corporation to secure a Philippine business license.

In this case, petitioner is a foreign company merely importing molasses from a Philippine exporter.
A foreign company that merely imports goods from a Philippine exporter, without opening
an office or appointing an agent in the Philippines, is not doing business in the Philippines.

20. Y-I Leisure Philippines, Inc., Yats International Ltd. and Y-I Clubs and Resorts, Inc. v.
James Yu G.R. No. 207161, September 08, 2015
FACTS: MADCI offered for sale shares of a gold and country club. Yu bought 500 golf and 150 country
club shares, but subsequently discovered when he visited the site that it was non-existent. Yu filed
an action against MADCI and also impleaded petitioners (Y-I Leisure). Yu alleged that substantially
all of the assets of MADCI were sold to petitioners and that it was in fraud of creditors. Petitioners
contend that it was not undertaken to defraud MADCI’s creditor and it was done in accordance with
the MOA.

RULING:

The Nell Doctrine. Generally, where one corporation sells or otherwise transfers all of its assets to
another corporation, the latter is not liable for the debts and liabilities of the transferor, except:

1. Where the purchaser expressly or impliedly agrees to assume such debts;

2. Where the transaction amounts to a consolidation or merger of the corporations;
3. Where the purchasing corporation is merely a continuation of the selling corporation; and
4. Where the transaction is entered into fraudulently in order to escape liability for such debts.

The exception of the Nell doctrine, which finds its legal basis under Section 40, provides that the
transferee corporation assumes the debts and liabilities of the transferor corporation because it is
merely a continuation of the latter's business. A cursory reading of the exception shows that it does
not require the existence of fraud against the creditors before it takes full force and effect. Indeed,
under the Nell Doctrine, the transferee corporation may inherit the liabilities of the
transferor despite the lack of fraud due to the continuity of the latter's business.

Synthesizing Section 40 and the previous rulings of this Court, it is apparent that the business-
enterprise transfer rule applies when two requisites concur: (a) the transferor corporation
sells all or substantially all of its assets to another entity; and (b) the transferee
corporation continues the business of the transferor corporation. Both requisites are present
in this case.