#1 PHILIPPINE NATIONAL BANK v.

HYDRO
RESOURCES CONTRACTORS CORPORATION G.R. No.
167530, March 13, 2013

FACTS:

In 1984, petitioners DBP and PNB foreclosed on certain mortgages

made on the properties of Marinduque Mining and Industrial Corporation
(MMIC). As a result of the foreclosure, DBP and PNB acquired substantially
all the assets of MMIC and resumed the business operations of the defunct
MMIC by organizing NMIC.7 DBP and PNB owned 57% and 43% of the
shares of NMIC, respectively, except for five qualifying shares. As of
September 1984, the members of the Board of Directors of NMIC, namely,
Jose Tengco, Jr., Rolando Zosa, Ruben Ancheta, Geraldo Agulto, and
Faustino Agbada, were either from DBP or PNB.

NMIC engaged the services of Hercon, Inc., for NMIC’s Mine

Stripping and Road Construction Program in 1985 for a total contract price of
P35,770,120. After computing the payments already made by NMIC under
the program and crediting the NMIC’s receivables from Hercon, Inc., the
latter found that NMIC still has an unpaid balance of P8,370,934.74.10
Hercon, Inc. made several demands on NMIC, including a letter of final
demand dated August 12, 1986, and when these were not heeded, a complaint
for sum of money was filed in the RTC of Makati, Branch 136 seeking to
hold petitioners NMIC, DBP, and PNB solidarily liable for the amount owing
Hercon, Inc.

Subsequent to the filing of the complaint, Hercon, Inc. was acquired by

HRCC in a merger.

Thereafter, on December 8, 1986, then President Corazon C. Aquino

issued Proclamation No. 50 creating the APT for the expeditious disposition
and privatization of certain government corporations and/or the assets
thereof. Pursuant to the said Proclamation, on February 27, 1987, DBP and
PNB executed their respective deeds of transfer in favor of the National
Government assigning, transferring and conveying certain assets and
liabilities, including their respective stakes in NMIC. In turn and on even
date, the National Government transferred the said assets and liabilities to the
APT as trustee under a Trust Agreement.
ISSUE:

Whether or not there is sufficient ground to pierce the veil of corporate

fiction of NMIC and held DBP and PNB solidarily liable with NMIC?

RULING:

No.

From all indications, it appears that NMIC is a mere adjunct, business

conduit or alter ego of both DBP and PNB. Thus, the DBP and PNB are
jointly and severally liable with NMIC for the latter’s unpaid obligations to
plaintiff.

Then concluded that, "in keeping with the concept of justice and fair
play," the corporate veil of NMIC should be pierced.

For to treat NMIC as a separate legal entity from DBP and PNB for the
purpose of securing beneficial contracts, and then using such separate entity
to evade the payment of a just debt, would be the height of injustice and
iniquity. Surely that could not have been the intendment of the law with
respect to corporations.

The doctrine of piercing the corporate veil applies only in three (3)
basic areas, namely: 1) defeat of public convenience as when the corporate
fiction is used as a vehicle for the evasion of an existing obligation; 2) fraud
cases or when the corporate entity is used to justify a wrong, protect fraud, or
defend a crime; or 3) alter ego cases, where a corporation is merely a farce
since it is a mere alter ego or business conduit of a person, or where the
corporation is so organized and controlled and its affairs are so conducted as
to make it merely an instrumentality, agency, conduit or adjunct of another
corporation.
 #2 MARUBENI CORPORATION VS. LIRAG, 362 SCRA
620 (2001)
G.R.NO. 130998

FACTS:

Petitioner Marubeni Corporation is a foreign corporation organized and

existing under the laws of Japan. It was doing business in the Philippines
through its duly licensed, wholly owned subsidiary companies.

On January 27, 1989, respondent Felix Lirag filed with the Regional
Trial Court, Makati a complaint for specific performance and damages
claiming that petitioners owed him the sum of P6, 000,000.00 representing
commission pursuant to an oral consultancy agreement with Marubeni.

The consultancy agreement was not reduced into writing because of the
mutual trust between Marubeni and the Lirag family. Their close business and
personal relationship dates back to 1960, when respondent’s family was
engaged in the textile fabric manufacturing business, in which Marubeni
supplied the needed machinery, equipment, spare parts and raw materials.

In compliance with the agreement, respondent Lirag made

representations with various government officials, arranged for meetings and
conferences, relayed pertinent information as well as submitted feasibility
studies and project proposals, including pertinent documents required by
petitioners. As petitioners had been impressed with respondent’s
performance, six (6) additional projects were given to his group under the
same undertaking.
 One of the projects handled by respondent Lirag, the Bureau of Post
project, amounting to P100, 000,000.00 was awarded to the “Marubeni-
Sanritsu tandem.” Despite respondent’s repeated formal verbal demands for
payment of the agreed consultancy fee, petitioners did not pay. In response to
the first demand letter, petitioners promised to reply within fifteen (15) days,
but they did not do so.
On April 29, 1993, the trial court promulgated a decision and ruled that
respondent is entitled to a commission. Respondent was led to believe that
there existed an oral consultancy agreement. Hence, he performed his part of
the agreement and helped petitioners get the project.

The Court of Appeals relied on the doctrine of admission by silence in

upholding the existence of a consultancy agreement, noting that petitioner
Tanaka’s reaction to respondent’s September 26, 1988 demand letter was not
consistent with their claim that there was no consultancy agreement. On the
contrary, it lent credence to respondent’s claim that they had an existing
consultancy agreement.

The Court of Appeals observed that if indeed there were no consultancy

agreement, it would have been easy for petitioners to simply deny
respondent’s claim. Yet, they did not do so. The conglomeration of these
circumstances bolstered the existence of the oral consultancy agreement.

ISSUE:

In this appeal, petitioners raise the following issues: (1) whether or not
there was a consultancy agreement between petitioners and respondent; and
corollary to this, (2) whether or not respondent is entitled to receive a
commission if there was, in fact, a consultancy agreement

RULING:

Wherefore, the petition is granted. The decision of the court of appeals

is hereby set aside. Civil Case No. 89-3037 filed before the Regional Trial
Court, Branch 143, Makati City is hereby dismissed.

No costs. An assiduous scrutiny of the testimonial and documentary

evidence extant leads us to the conclusion that the evidence could not support
a solid conclusion that a consultancy agreement, oral or written, was agreed
between petitioners and respondent. Respondent attempted to fortify his own
testimony by presenting several corroborative witnesses. However, what was
apparent in the testimonies of these witnesses was the fact that they learned
about the existence of the consultancy agreement only because that was what
respondent told them. In civil cases, he who alleges a fact has the burden of
proving it; a mere allegation is not evidence. He must establish his cause by a
preponderance of evidence, which respondent failed to establish in the instant
case. Any agreement entered into because of the actual or supposed influence
which the party has, engaging him to influence executive officials in the
discharge of their duties, which contemplates the use of personal influence
and solicitation rather than an appeal to the judgment of the official on the
merits of the object sought is contrary to public policy. Consequently, the
agreement, assuming that the parties agreed to the consultancy, is null and
void as against public policy. Therefore, it is unenforceable before a court of
justice. In light of the foregoing, we rule that the preponderance of evidence
established no consultancy agreement between petitioners and respondent
from which the latter could anchor his claim for a six percent (6%)
consultancy fee on a project that was not awarded to petitioners.

# 3 PRISMA Construction and Development Corporation

and Rogelio S. Pantaleon vs Arthur F. Menchavez
G.R. No. 160545

FACTS:
• Rogelio S. Pantaleon, the President and Chairman of the Board of
PRISMA, obtained a loan from the respondent in the amount of P1M
with a monthly interest of P40,000.00 payable in six months. To secure
the payment of the loan, Pantaleon issued a promissory note.
•As of January 4, 1997, the petitioners had already paid a total of
P1,108,772.00. However, the respondent found that the petitioner still
had an outstanding balance of P1,364,151.00, to which it applied a 4%
monthly interest. Thus, the respondent filed a complaint for the sum of
money with the RTC to enforce unpaid balance, monthly interest,
attorney’s fees and costs of suit.
 •The RTC rendered a decision ordering the petitioners to jointly and
severally pay the respondent the amount of P3,526,117.00 plus 4%
monthly interest from February 11, 1999 until fully paid.
•The petitioners elevated the case to the CA insisting that there was no
express stipulation on the 4% monthly interest. The CA affirmed the
RTC’s decision with modifications imposing a 12% per annum interest,
computed from the filing of the complaint until finality of judgment,
and thereafter 12% from finality until fully paid. The petitioners filed a
motion for reconsideration but was denied by the appellate court.

ISSUE:
Whether or not the 4% monthly interest on the loan applies to the
payment period only or until full payment of the loan.

HELD:
The court finds the petition meritorious.

Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. When the
terms of a contract are clear and leave no doubt as to the intention of the
contracting parties, the literal meaning of its stipulations governs. In such
cases, courts have no authority to alter the contract by construction or to make
a new contract for the parties; a court's duty is confined to the interpretation
of the contract the parties made for themselves without regard to its wisdom
or folly, as the court cannot supply material stipulations or read into the
contract words the contract does not contain. It is only when the contract is
vague and ambiguous that courts are permitted to resort to the interpretation
of its terms to determine the parties’ intent.

Article 1956 of the Civil Code specifically mandates that “no interest
shall be due unless it has been expressly stipulated in writing.” Under this
provision, the payment of interest in loans or forbearance of money is
allowed only if: (1) there was an express stipulation for the payment of
interest; and (2) the agreement for the payment of interest was reduced in
writing. The concurrence of the two conditions is required for the payment of
interest at a stipulated rate. Applying this provision, we find that the interest
of P40,000.00 per month corresponds only to the six (6)-month period of the
loan, or from January 8, 1994 to June 8, 1994, as agreed upon by the parties
in the promissory note. Thereafter, the interest on the loan should be at the
legal interest rate of 12% per annum, , consistent with our ruling in Eastern
Shipping Lines, Inc. v. Court of Appeals. The court reversed and set aside
the decision of the Court of Appeals and remanded the case to the RTC
for proper computation of the amount due.

#4 Tupaz IV & Tupaz v CA & BPI

Petitioner: Jose C. Tupaz IV (VP for Operations) and Petronila C. Tupaz

(VP/Treasurer) of El Oro Engraver Corporation
Respondent: Court Of Appeals and Bank of the Philippine Islands
The Case: Petition for review of the CA Decision (7 September 2000) and
Resolution (18 October 2000). The CA Decision affirmed the ruling of the
Regional Trial Court, Makati, Branch 144 in a case for estafa under Section
13, Presidential Decree No. 115. The Resolution denied petitioners motion
for reconsideration.
FACTS:
El Oro Corporation had a contract with the Philippine Army to supply the
latter with survival bolos. To finance the purchase of the raw materials for the
survival bolos, petitioners, on behalf of El Oro Corporation, applied with
respondent Bank of the Philippine Islands for 2 commercial letters of credit
in favor of El Oro Corporations suppliers, Tanchaoco Manufacturing
Incorporated and Maresco Rubber and Retreading Corporation. Respondent
BPI granted application and issued Letter of Credit No. 2008963 for
P564,871.05 to Tanchaoco Incorporated and Letter of Credit No. 2009145 for
P294,000 to Maresco Corporation.
Simultaneous with the issuance of the letters of credit, petitioners signed trust
receipts in favor of respondent BPI. On 30 September 1981, petitioner Jose
C. Tupaz IV signed, in his personal capacity, a trust receipt corresponding to
Letter of Credit No. 2008963 (for P564,871.05). On 9 October 1981,
petitioners signed, in their capacities as officers of El Oro Corporation, a trust
receipt corresponding to Letter of Credit No. 2009145 (for P294,000).
Petitioners (Jose Tupaz - for the trust receipt corresponding to LoC No.
2008963 and Both Petitioners - for the trust receipt corresponding to LoC No.
2009145) bound themselves to sell the goods covered by the letter of credit
and to remit the proceeds to respondent BPI, if sold, or to return the goods, if
not sold, on or before 29 December 1981 and 8 December 1981 respectively.
After Tanchaoco Incorporated and Maresco Corporation delivered the raw
materials to El Oro Corporation, respondent bank paid the former
P564,871.05 and P294,000, respectively.
Petitioners did not comply with their undertaking under the trust receipts.
Respondent BPI made several demands for payments but El Oro Corporation
made partial payments only. On 27 June 1983 and 28 June 1983, respondent
banks counsel and its representative respectively sent final demand letters to
El Oro Corporation. El Oro Corporation replied that it could not fully pay its
debt because the Armed Forces of the Philippines had delayed paying for the
survival bolos.
Respondent bank charged petitioners with estafa under Section 13,
Presidential Decree No. 115 (Section 13) or Trust Receipts Law (PD 115).
After preliminary investigation, the then Makati Fiscals Office found
probable cause to indict petitioners. The Makati Fiscals Office filed the
corresponding Informations (docketed as Criminal Case Nos. 8848 and 8849)
with the Regional Trial Court, Makati, on 17 January 1984 and the cases were
raffled to Branch 144 (trial court) on 20 January 1984. Petitioners pleaded not
guilty to the charges and trial ensued. During the trial, respondent bank
presented evidence on the civil aspect of the cases.
RTC Ruling: On 16 July 1992, the trial court rendered judgment acquitting
petitioners of estafa on reasonable doubt. However, the trial court found
petitioners solidarily liable with El Oro Corporation for the balance of El Oro
Corporations principal debt under the trust receipts.
Petitioners appealed to the Court of Appeals. Petitioners contended that: (1)
their acquittal operates to extinguish [their] civil liability and (2) at any rate,
they are not personally liable for El Oro Corporations debts.
CA Ruling: On 7 September 2000, the Court of Appeals affirmed the trial
courts ruling.
Hence, this petition.
ISSUES:
(1) Whether or not the petitioners bound themselves personally liable for El
Oro Corporations debts under the trust receipts (PARTIAL)
(2) If so
(a) whether or not the petitioners liability is solidary with El Oro Corporation
(NO)
(b) whether or not the petitioners acquittal of estafa under Section 13, PD 115
extinguished their civil liability (NO)

HELD:
The petition is partly meritorious. We affirm the Court of Appeals ruling
with the modification that petitioner Jose Tupaz is liable as guarantor of El
Oro Corporations debt under the trust receipt dated 30 September 1981.
PARTIAL. A corporation, being a juridical entity, may act only through its
directors, officers, and employees. Debts incurred by these individuals,
acting as such corporate agents, are not theirs but the direct liability of
the corporation they represent. As an exception, directors or officers are
personally liable for the corporations debts only if they so contractually
agree or stipulate.
In the trust receipt dated 9 October 1981, petitioners signed below this clause
as officers of El Oro Corporation. Thus, under petitioner Petronila Tupazs
signature are the words VicePresTreasurer and under petitioner Jose Tupazs
signature are the words VicePresOperations. By so signing that trust receipt,
petitioners did not bind themselves personally liable for El Oro Corporations
obligation.
Hence, for the trust receipt dated 9 October 1981, we sustain petitioners
claim that they are not personally liable for El Oro Corporations
obligation.
For the trust receipt dated 30 September 1981, the dorsal portion of
which petitioner Jose Tupaz signed alone, we find that he did so in his
personal capacity. Petitioner Jose Tupaz did not indicate that he was signing
as El Oro Corporations VicePresident for Operations. Hence, petitioner Jose
Tupaz bound himself personally liable for El Oro Corporations debts. Not
being a party to the trust receipt dated 30 September 1981, petitioner
Petronila Tupaz is not liable under such trust receipt.
NO. Respondent banks suit against petitioner Jose Tupaz stands despite the
Courts finding that he is liable as guarantor only. First, excussion is not a
prerequisite to secure judgment against a guarantor. The guarantor can
still demand deferment of the execution of the judgment against him
until after the assets of the principal debtor shall have been exhausted.
Second, the benefit of excussion may be waived.
Under the trust receipt dated 30 September 1981, petitioner Jose Tupaz
waived excussion when he agreed that his liability in [the] guaranty shall be
DIRECT AND IMMEDIATE, without any need whatsoever on xxx [the] part
[of respondent bank] to take any steps or exhaust any legal remedies xxx. The
clear import of this stipulation is that petitioner Jose Tupaz waived the benefit
of excussion under his guarantee.
As guarantor, petitioner Jose Tupaz is liable for El Oro Corporations principal
debt and other accessory liabilities (as stipulated in the trust receipt and as
provided by law) under the trust receipt dated 30 September 1981. That trust
receipt (and the trust receipt dated 9 October 1981) provided for payment of
attorneys fees equivalent to 10% of the total amount due and an interest at the
rate of 7% per annum, or at such other rate as the bank may fix, from the date
due until paid xxx.
NO. The rule is that where the civil action is impliedly instituted with the
criminal action, the civil liability is not extinguished by acquittal. As the
Court of Appeals correctly held, his liability arose not from the criminal act
of which he was acquitted (ex delito) but from the trust receipt contract (ex
contractu) of 30 September 1981. Petitioner Jose Tupaz signed the trust
receipt of 30 September1981 in his personal capacity.

#5 PCGG v. Sandiganbayan
 365 SCRA 538 (2001)

Facts:

PCGG directed Victor Africa who was the corporate secretary of

Oceanic Wireless Network, Inc. (OWNI) to send notices to its stockholders
about a special stockholders’ meeting. Failure to comply within five (5) days
from receipt thereof, Assistant Solicitor General Ramon S. Desuasido would
be designated as acting corporate secretary.

During the meeting, a new set of board of directors were elected

(Commissioners Maximo A. Maceren, Cesar O. V. Parlade and Melquiades
C. Gutierrez representing the Class A shares and Colin Brooker and Terry
Miller representing Class B and C shares. The new board of directors then
elected Commissioner Maximo A. Maceren as Chairman of the Board,
Melquiades C. Gutierrez as President, Assistant Solicitor General Ramon S.
Desuasido as Acting Corporate Secretary and Almario P. Velasco as Acting
Treasurer). None of the registered shareholders of Class “A” shares were
present in the meeting.

Thereafter, PCGG sequestered the Class “A” shareholding in OWNI

covering the shares of Jose Africa, Benedicto, Andres Africa, Victor Africa,
and Manual Nieto (Africa group). Victor Africa questioned the election of the
new board of directors stating that they were not stockholders of OWNI,
hence, they scheduled another meeting wherein another election of board of
directors was held and a new set of officers were elected and the Africa group
were the officers (Manuel H. Nieto, Jr., Jose L. Africa+ and Andres L. Africa
were elected as directors for Class A shares for 1991 until their successors are
elected and qualified. Class B and C shareholders did not attend the meeting.
No new directors for them were elected).

Manuel H. Nieto, Jr., in his capacity as OWNI president, wrote the

National Telecommunications Commission (NTC), requesting the NTC to
hold in abeyance the application, or if granted, to withdraw and recall
OWNIs permit and frequency allocations as the same were made by an
unauthorized board.
On July 10, 1991, Manuel H. Nieto, Jr. wrote Melquiades C. Gutierrez
informing him of the new set of directors and requested for the turnover of
the management of OWNI, including all corporate records to the new set of
directors.
 PCGG filed a complaint with the Sandiganbayan praying that the
Africa group be enjoined from interfering with its control of OWNI. The
Africa group filed a separate petition for certiorari and prohibition with TRO
against PCGG. The Sandiganbayan decided in favor of the Africa group.

PCGG argued that the Sandiganbayan should not have nullified the
sequestration order because there was no need to file separate actions against
OWNI, Polygon, Aerocom and Silangan because these were included in the
list of ill-gotten wealth of Jose Africa.

Issue:

Whether the writ of sequestration issued against Nieto and Africa as

shareholders is valid.

Held:

No because the suit filed against Nieto and Africa as shareholders of

OWNI is not a suit against OWNI. This Court has held that "failure to
implead these corporations as defendants and merely annexing a list of such
corporations to the complaints is a violation of their right to due process for it
would in effect be disregarding their distinct and separate personality without
a hearing.’’

WHEREFORE, the petitions are hereby DENIED. The decision and

resolution of the Sandiganbayan are hereby AFFIRMED.
 #6 ASIONICS PHILIPPINES, INC. vs. NLRC
G.R. No. 124950

FACTS OF THE CASE

API is a domestic corporation engaged in the business of assembling

semi-conductor chips and other electronic products mainly for
export. Yolanda Boaquina and Juana Gayola are working as material control
clerk and as production operator. API commenced negotiations with the duly
recognized bargaining agent of its employees, the Federation of Free Workers
("FFW"), for a Collective Bargaining Agreement ("CBA"). A deadlock,
however, ensued and the union decided to file a notice of
strike. This event prompted the two customers of API, Indala and CP Clare
Theta J, to thereupon refrain from sending to API additional kits or materials
for assembly. API, given the circumstance that its assembly line had to
thereby grind to a halt, was forced to suspend operations pursuant to Article
286 of the Labor Code. Private respondents Boaquina and Gayola were
among the employees asked to take a leave from work.

Dissatisfied with their union (FFW), Boaquina and Gayola, together

with some of other co-employees, joined the Lakas ng Manggagawa sa
Pilipinas Labor Union ("Lakas Union") where they eventually became
members of its Board of Directors. Lakas Union filed a notice of strike
against API on the ground of unfair labor practice.API filed for a petition for
declaration of illegality of the strike.
 Lakas Union countered that their strike was valid and staged as a
measure of self-preservation and as self-defense against the illegal dismissal
of petitioners aimed at union busting in the guise of a retrenchment program.

ISSUE

Whether a stockholder/director/officer of a corporation can be held

liable for the obligation of the corporation absent any proof and finding of
bad faith.

RULING

No, API’s president and main stockholder Frank Yih cannot be held
liable for the obligation of the corporation to its employees. A corporation is a
juridical entity with legal personality separate and distinct from those acting
for and in its behalf and, in general, from the people comprising it. The rule
is that obligations incurred by the corporation, acting through its directors,
officers and employees, are its sole liabilities. Nevertheless, being a mere
fiction of law, peculiar situations or valid grounds can exist
to warrant, albeit done sparingly, the disregard of its independent being and
the lifting of the corporate veil. As a rule, this situation might arise when a
corporation is used to evade a just and due obligation or to justify a wrong, to
shield or perpetrate fraud, to carry out similar unjustifiable aims or intentions,
or as a subterfuge to commit injustice and so circumvent the law.
 #7 Woodchild Holdings v. Roxas Electric
G.R. No. 140667, August 12, 2004

FACTS:

The respondent Roxas Electric and Construction Company, Inc.

(RECCI), formerly the Roxas Electric and Construction Company, was the
owner of two parcels of land. A portion of one Lot which abutted the other
Lot was a dirt road accessing to the Sumulong Highway, Antipolo, Rizal.

At a special meeting on May 17, 1991, the respondent's Board of

Directors approved a resolution authorizing the corporation, through its
president, Roberto B. Roxas, to sell the Lots, at a price and under such terms
and conditions which he deemed most reasonable and advantageous to the
corporation; and to execute, sign and deliver the pertinent sales documents
and receive the proceeds of the sale for and on behalf of the company.
 Petitioner Woodchild Holdings, Inc. (WHI) wanted to buy the Lot on
which it planned to construct its warehouse building, and a portion of the
adjoining lot, so that its 45-foot container van would be able to readily enter
or leave the property.

On September 5, 1991, a Deed of Absolute Sale in favor of WHI was

issued, under which the Lot was sold for P5,000,000, receipt of which was
acknowledged by Roxas under the following terms and conditions:

The Vendor agree (sic), as it hereby agrees and binds itself to give
Vendee the beneficial use of and a right of way from Sumulong Highway to
the property herein conveyed consists of 25 square meters wide to be used as
the latter's egress from and ingress to and an additional 25 square meters in
the corner of Lot No. 491-A-3-B-1, as turning and/or maneuvering area for
Vendee's vehicles.

The Vendor agrees that in the event that the right of way is insufficient
for the Vendee's use (ex entry of a 45-foot container) the Vendor agrees to sell
additional square meters from its current adjacent property to allow the
Vendee full access and full use of the property.

The respondent posits that Roxas was not so authorized under the May
17, 1991 Resolution of its Board of Directors to impose a burden or to grant a
right of way in favor of the petitioner on Lot No. 491-A-3-B-1, much less
convey a portion thereof to the petitioner. Hence, the respondent was not
bound by such provisions contained in the deed of absolute sale.

ISSUE:

Whether or not the respondent is bound by the provisions in the deed of

absolute sale granting to the petitioner beneficial use and a right of way over
a portion of Lot accessing to the Sumulong Highway and granting the option
to the petitioner to buy a portion thereof, and, if so, whether such agreement
is enforceable against the respondent?

HELD:
No.

Generally, the acts of the corporate officers within the scope of their
authority are binding on the corporation. However, under Article 1910 of the
New Civil Code, acts done by such officers beyond the scope of their
authority cannot bind the corporation unless it has ratified such acts expressly
or tacitly, or is estopped from denying them.

Thus, contracts entered into by corporate officers beyond the scope of

authority are unenforceable against the corporation unless ratified by the
corporation.

Evidently, Roxas was not specifically authorized under the said

resolution to grant a right of way in favor of the petitioner on a portion of Lot
No. 491-A-3-B-1 or to agree to sell to the petitioner a portion thereof. The
authority of Roxas, under the resolution, to sell Lot No. 491-A-3-B-2 covered
by TCT No. 78086 did not include the authority to sell a portion of the
adjacent lot, Lot No. 491-A-3-B-1, or to create or convey real rights thereon.
Neither may such authority be implied from the authority granted to Roxas to
sell Lot No. 491-A-3-B-2 to the petitioner "on such terms and conditions
which he deems most reasonable and advantageous."

The general rule is that the power of attorney must be pursued within
legal strictures, and the agent can neither go beyond it; nor beside it. The act
done must be legally identical with that authorized to be done.30 In sum,
then, the consent of the respondent to the assailed provisions in the deed of
absolute sale was not obtained; hence, the assailed provisions are not binding
on it.

There can be no apparent authority of an agent without acts or conduct

on the part of the principal and such acts or conduct of the principal must
have been known and relied upon in good faith and as a result of the exercise
of reasonable prudence by a third person as claimant and such must have
produced a change of position to its detriment.

The apparent power of an agent is to be determined by the acts of the

principal and not by the acts of the agent.
 #8 Sulo Ng Bayan Inc. vs Gregorio Araneta Inc.
72 SCRA 347 [GR No. L-31061 August 17, 1976]
Facts:

On April 26, 1966, plaintiff-appellant Sulo ng Bayan Inc., filed an

action de revindicacion with the Court of First Instance of Bulacan, fifth
judicial district, Valenzuela, Bulacan, against defendant-appellees to recover
the ownership and possession of large tract of land in San Jose del Monte,
Bulacan, containing an area of 27,982,250 square meters, more or less,
registered under the Torrens system in the name of defendants-appellees’
predecessors-in-interest. The complaint as amended on June 13, 1966,
specifically alleged that plaintiff is a corporation organized and existing
under the laws of the Philippines, with its principal office and place of
business at San Jose del Monter, Bulacan; that its membership is composed
of natural persons resident at San Jose del Monte, Bulacan; that the members
of the plaintiff corporation through themselves and their predecessor-in-
interest, had pioneered in the clearing of the forementioned tract of land,
activated the same since the spanish regime and continuously possessed the
said property openly and public under concept of ownership adverse against
the whole world; that the defendant-appellee Gregorio Araneta Inc. sometime
in the year 1958, through force and intimidation ejected the members of the
plaintiff corporation from their possession of the aforementioned vast tract of
land; that upon investigation conducted by the members and officers of
plaintiff corporation, they found out for the first time in the year 1961 that the
land in question had been either fraudulently or erroneously included by
direct or constructive fraud in original certificate of title no. 466 of the land
of records of the province of Bulacan issued on May 11, 1916 which title is
fictitious non-existent and devoid of legal efficacy due to the fact that no
original survey nor plan whatsoever appears to have been submitted as basis
thereof and that the Court of First Instance of Bulacan which issued the
decree of registration did not acquire jurisdiction over the land registration
case because no such notice proceeding was given to the members of the
plaintiff corporation who were then in actual possession of said properties;
that as consequence of the nullity of the original title, all subsequent titles
derived therefrom such as TCT no. 7573 in the name of Gregorio Araneta
Inc. TCT No. 4988 issued in the name of the National Waterworks &
Sewerage System TCT No. 4986 issued in the name of Hacienda Caretas Inc.
and another transfer certificate of title in the name of Paradise Farms Inc. are
therefore void.
Issue:

Whether or not the plaintiff corporation can represent the stockholders

in the proceeding for the properties involved.

Held:

No. It is a doctrine well established and obtains both at law and equity
that a corporation is a distinct legal entity to be considered as separate and
apart from the individual stockholders a members who compose it, and is not
affected by the personal rights, obligations and transactions of its
stockholders or members. The property of the corporation is its property and
not that of the stockholders as owners although they have equities in it.
Properties registered in the name of the corporation are owned by it as an
entity separate and distinct from its members. Conversely, a corporation
ordinarily has no interest in the individual property of its stockholders unless
transferred to the corporation, even in the case of a one-man corporation. The
mere fact that one is president of a corporation does not render the property
which he owns or possesses the property of the corporation, since the
president as individual, and the corporation are separate similarities.
Sincerely, stockholders in a corporation engaged in buying and dealing in real
estate whose certificates of stock entitled the holder thereof, to an allotment
in the distribution of the land of the corporation upon surrender of their stock
certificates were considered not to have such legal or equitable title or
interest in the land, as would support a suit for title, especially against parties
other than corporation.

It must be noted, however, that the juridical personality of the

corporation,as separate and distinct from the persons composing it, is but a
legal fiction introduced for the purpose of convenience and to subserve the
ends of justice. This separate personality of the corporation may be
disregarded, or the veil of corporate fiction pierced, in cases where it is used
as a cloak for fraud or illegality, or to work an injustice, or where necessary
to achieve equity.

Thus when the notion of legal entity is used to defeat public

convenience, justify wrong, protect fraud, or defend crime, the law will
regard the corporation as an association of persons, or in the case of two
corporations, merge them into one, the one being merely regarded as part or
instrumentality of the other. The same is true where a corporation is a dummy
and serves no business purpose and is intended only as blind, or an alter ego
or business conduct for the sole benefit of the stockholders. This doctrine of
disregarding the distinct personality of the corporation has been applied by
the courts in those cases when the corporate entity is used for the evasion of
taxes. Or when the veil of corporate fiction is used to confuse legitimate issue
of employer-employee relationship or when necessary for the protection of
creditors, in which case the veil of corporate fiction may be pierced and the
funds of the corporation may be garnished to satisfy the debts of a principal
stockholder. The aforecited principle is resorted to by the courts as a measure
protection for third parties to prevent fraud illegality or injustice.

10# SOLID HOMES VS. COURT OF APPEALS

275 SCRA 267 (1997)
EFFECT WHEN NO REDEMPTION MADE;
CONSOLIDATION (ART. 1607)

FACTS:
Solid Homes and State Financing executed a Memorandum of
Agreement in which the former promised to pay the latter 60% of the loan
obligation within 180 days from signing thereof. On the other hand, said
Memorandum grants Solid Homes the right to repurchase the subject
properties. Solid Homes failed to pay 60% of the loan obligation as stipulated
in the Memorandum. Before the expiration of the period within which to
repurchase the subject property, Solid Homes sought the annulment of the
memorandum, alleging among others that the same violates the prohibition
against pactum commisorium under Art. 2088 of the Civil Code. The trial
court, however, ruled against Solid homes and declared that the said
memorandum is valid and binding. Both parties appealed to the CA which
rendered judgment in favour of State Financing. The appellate court ordered
Solid Homes to deliver possession of the subject properties to State
Financing.
ISSUE:
Whether Solid Homes is entitled to the subject properties.
HELD:
The Supreme Court says YES.
RATIO:
 The only legal transgression of State Financing was its failure to
observe the proper procedure in effecting the consolidation of the titles in its
name. But this does not automatically entitle the petitioner to damages
absent convincing proof of malice and bad faith on the part of private
respondent and actual damages suffered by petitioner as a direct and probable
consequence thereof. In fact, the evidence proffered by petitioner consistS of
mere conjectures and speculations with no factual moorings. Furthermore,
such transgression was addressed by the lower courts when they nullified the
consolidation of ownership over the subject properties in the name of
respondent corporation, because it had been effected in contravention of the
provisions of Article 1607 of the Civil Code. Such rulings are consistent with
law and jurisprudence.