 Revocation and withdrawal of license

o Sulo ng Bayan v. Araneta

Facts: Sulo ng Bayan, Inc. filed an accion de revindicacion with the Court of First Instance of Bulacan,
Fifth Judicial District, Valenzuela, Bulacan, against defendants-appellees to recover the ownership and
possession of a large tract of land in San Jose del Monte, Bulacan. It was alleged that   members of the
plaintiff corporation, through themselves and their predecessors-in-interest, had pioneered in the
clearing of the fore-mentioned tract of land, cultivated the same. Gregorio Araneta, Inc. filed a motion
to dismiss the amended complaint on the grounds that the complaint states no cause of action and (2)
the cause of action, if any, is barred by prescription and laches. The other party was able to amend its
complaint but was later denied by the Court.

In dismissing the amended complaint, the court a quo said: The issue of lack of cause of action raised in
the motions to dismiss refer to the lack of personality of plaintiff to file the instant action. In the
amended complaint, the people whose rights were alleged to have been violated by being deprived and
dispossessed of their land are the members of the corporation and not the corporation itself.

Whether the trial court correctly dismissed the amended complaint?

Held: There is no allegation that the members have assigned their rights to the corporation or any
showing that the corporation has in any way or manner succeeded to such rights. The corporation
evidently did not have any rights violated by the defendants for which it could seek redress. Clearly, no
right of action exists in favor of plaintiff corporation, for as shown heretofore it does not have any
interest in the subject matter of the case which is material and, direct so as to entitle it to file the suit as
a real party in interest.

Notes:

 It is a doctrine well-established and obtains both at law and in equity that a

corporation is a distinct legal entity to be considered as separate and apart from
the individual stockholders or 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.

 Similarly, 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
the corporation.

o Concept Builders v. NLRC

Private respondents were served individual written notices of termination of employment by Concept
Builders. It was stated in the individual notices that their contracts of employment had expired and the
project in which they were hired had been completed.

Public respondent found it to be, the fact, however, that at the time of the termination of employment,
the project in which they were hired had not yet been finished and completed. Petitioner had to engage
the services of sub-contractors whose workers performed the functions of private respondents.
Aggrieved, they filed a complaint for illegal dismissal, unfair labor practice and non-payment of their
legal holiday pay, overtime pay and thirteenth-month pay against petitioner. The Labor Arbiter decided
in favor of the respondents. Consequently, it ordered to collect from petitioners. When a break-open
order is issued, a certain Dennis Cuyegkeng filed a third-party claim with the Labor Arbiter alleging that
the properties sought to be levied upon by the sheriff were owned by Hydro (Phils.), Inc. (HPPI) of which
he is the Vice-President. private respondents filed a "Motion for Issuance of a Break-Open Order,"
alleging that HPPI and petitioner corporation were owned by the same incorporator/stockholders. They
also alleged that petitioner temporarily suspended its business operations in order to evade its legal
obligations to them and that private respondents were willing to post an indemnity bond to answer for
any damages which petitioner and HPPI may suffer because of the issuance of the break-open order.

Held:
Here, 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. HPPI 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.

The corporate mask may be lifted and the corporate veil may be pierced when a corporation is just but
the alter ego of a person or of another corporation. Where badges of fraud exist; where public
convenience is defeated; where a wrong is sought to be justified thereby, the corporate fiction or the
notion of legal entity should come to naught. The law in these instances will regard the corporation as a
mere association of persons and, in case of two corporations, merge them into one.

Thus, where a sister corporation is used as a shield to evade a corporation's subsidiary liability for
damages, the corporation may not be heard to say that it has a personality separate and distinct from
the other corporation. The piercing of the corporate veil comes into play.

xxx

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;

2. Such control must have been used by the defendant to commit fraud or wrong,
to perpetuate the violation of a statutory or other positive legal duty or
dishonest and unjust act in contravention of plaintiff's legal rights; and

3. The aforesaid control and breach of duty must proximately cause the injury or
unjust loss complained of.

The absence of any one of these elements prevents "piercing the corporate veil." In applying the
"instrumentality" or "alter ego" doctrine, the courts are concerned with reality and not form, with how
the corporation operated and the individual defendant's relationship to that operation.

o Republic v. Sandiganbayan

Notes:
In Republic vs. Sandiganbayan, this Court ruled that impleading the firms which are the res of the action
was unnecessary:

"And as to corporations organized with ill-gotten wealth, but are not themselves guilty of
misappropriation, fraud or other illicit conduct – in other words, the companies themselves are not the
object or thing involved in the action, the res thereof – there is no need to implead them either. Indeed,
their impleading is not proper on the strength alone of their having been formed with ill-gotten funds,
absent any other particular wrongdoing on their part…

Such showing of having been formed with, or having received ill-gotten funds, however strong or
convincing, does not, without more, warrant identifying the corporations in question with the person
who formed or made use of them to give the color or appearance of lawful, innocent acquisition to
illegally amassed wealth – at the least, not so as place on the Government the onus of impleading the
former with the latter in actions to recover such wealth. Distinguished in terms of juridical personality
and legal culpability from their erring members or stockholders, said corporations are not themselves
guilty of the sins of the latter, of the embezzlement, asportation, etc., that gave rise to the
Government's cause of action for recovery; their creation or organization was merely the result of their
members' (or stockholders') manipulations and maneuvers to conceal the illegal origins of the assets or
monies invested therein. In this light, they are simply the res in the actions for the recovery of illegally
acquired wealth, and there is, in principle, no cause of action against them and no ground to implead
them as defendants in said actions."

o Lim Tong Lim v. CA

Notes:

Petitioner argues that under the doctrine of corporation by estoppel, liability can be imputed only to
Chua and Yao, and not to him. Again, we disagree.

Sec. 21. Corporation by estoppel. — All persons who assume to act as a corporation knowing it to be
without authority to do so shall be liable as general partners for all debts, liabilities and damages
incurred or arising as a result thereof: Provided however, That when any such ostensible corporation is
sued on any transaction entered by it as a corporation or on any tort committed by it as such, it shall not
be allowed to use as a defense its lack of corporate personality.
One who assumes an obligation to an ostensible corporation as such, cannot resist performance thereof
on the ground that there was in fact no corporation.

There is no dispute that the respondent, Philippine Fishing Gear Industries, is entitled to be paid for the
nets it sold. The only question here is whether petitioner should be held jointly liable with Chua and Yao.
Petitioner contests such liability, insisting that only those who dealt in the name of the ostensible
corporation should be held liable. Since his name does not appear on any of the contracts and since he
never directly transacted with the respondent corporation, ergo, he cannot be held liable.

Unquestionably, petitioner benefited from the use of the nets found inside F/B Lourdes, the boat which
has earlier been proven to be an asset of the partnership. He in fact questions the attachment of the
nets, because the Writ has effectively stopped his use of the fishing vessel.

It is difficult to disagree with the RTC and the CA that Lim, Chua and Yao decided to form a corporation.
Although it was never legally formed for unknown reasons, this fact alone does not preclude the
liabilities of the three as contracting parties in representation of it. Clearly, under the law on estoppel,
those acting on behalf of a corporation and those benefited by it, knowing it to be without valid
existence, are held liable as general partners.

Technically, it is true that petitioner did not directly act on behalf of the corporation. However, having
reaped the benefits of the contract entered into by persons with whom he previously had an existing
relationship, he is deemed to be part of said association and is covered by the scope of the doctrine of
corporation by estoppel.

o Nacpil v. Intl Broadcasting Corp

Petitioner argues that he is not a corporate officer of the IBC but an employee thereof since he had not
been elected nor appointed as Comptroller and Assistant Manager by the IBC's Board of Directors. He
points out that he had actually been appointed as such on January 11, 1995 by the IBC's General
Manager, Ceferino Basilio. In support of his argument, petitioner underscores the fact that the IBC's By-
Laws does not even include the position of comptroller in its roster of corporate officers. He therefore
contends that his dismissal is a controversy falling within the jurisdiction of the labor courts.

Held: Petitioner's argument is untenable. Even assuming that he was in fact appointed by the General
Manager, such appointment was subsequently approved by the Board of Directors of the IBC. That the
position of Comptroller is not expressly mentioned among the officers of the IBC in the By-Laws is of no
moment, because the IBC's Board of Directors is empowered under Section 25 of the Corporation
Code and under the corporation's By-Laws to appoint such other officers as it may deem necessary. 
As petitioner's appointment as comptroller required the approval and formal action of the IBC's Board of
Directors to become valid, it is clear therefore holds that petitioner is a corporate officer whose
dismissal may be the subject of a controversy cognizable by the SEC under Section 5(c) of P.D. 902-A
which includes controversies involving both election and appointment  of corporate directors, trustees,
officers, and managers.

o People’s Aircargo v. CA

Petitioner argues that the disputed contract is unenforceable, because Punsalan, its president, was not
authorized by its board of directors to enter into said contract. The general rule is that, in the absence of
authority from the board of directors, no person, not even its officers, can validly bind a corporation.

Petitioner's argument is not persuasive. Apparent authority is derived not merely from practice. Its
existence may be ascertained through (1) the general manner in which the corporation holds out an
officer or agent as having the power to act or, in other words, the apparent authority to act in general,
with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with actual or
constructive knowledge thereof, whether within or beyond the scope of his ordinary powers. It requires
presentation of evidence of similar act(s) executed either in its favor or in favor of other parties.  It is not
the quantity of similar acts which establishes apparent authority, but the vesting of a corporale officer
with the power to bind the corporation.

In the case at bar, petitioner, through its president Antonio Punsalan Jr., entered into the First Contract
without first securing board approval. Despite such lack of board approval, petitioner did not object to
or repudiate said contract, thus "clothing" its president with the power to bind the corporation. The
grant of apparent authority to Punsalan is evident in the testimony of Yong — senior vice president,
treasurer and major stockholder of petitioner. 

Hence, private respondent should not be faulted for believing that Punsalan's conformity to the contract
in dispute was also binding on petitioner. It is familiar doctrine that if a corporation knowingly permits
one of its officers, or any other agent, to act within the scope of an apparent authority, it holds him out
to the public as possessing the power to do those acts; and thus, the corporation will, as against anyone
who has in good faith dealt with it through such agent, be estopped from deny