Republics vs Mega Pacific eSolutions

Facts: COMELEC again attempted to implement the automated election system. For this purpose, it invited
bidders to apply for the procurement of supplies, equipment, and services. Respondent MPEI, as lead
company, purportedly formed a joint venture — known as the Mega Pacific Consortium (MPC) — together
with We Solv, SK C & C, ePLDT, Election.com and Oracle. Subsequently, MPEI, on behalf of MPC,
submitted its bid proposal to COMELEC. The COMELEC evaluated various bid offers and subsequently
found MPC and another company eligible to participate in the next phase of the bidding process. The two
companies were referred to the DOST for technical evaluation. After due assessment, the Bids and Awards
Committee (recommended that the project be awarded to MPC. The COMELEC favorably acted on the
recommendation which awarded the automation project to MPC.

Despite the award to MPC, the COMELEC and MPEI executed automation contract for the aggregate
amount of P1,248,949,088. MPEI agreed to supply and deliver 1,991 units of ACMs and such other
equipment and materials necessary for the computerized electoral system in the 2004 elections. Pursuant
to the automation contract, MPEI delivered 1,991 ACMs to the COMELEC. The latter, for its part, made
partial payments to MPEI in the aggregate amount of P1.05 billion.

The full implementation of the automation contract was rendered impossible by the fact that, after a
painstaking legal battle, this Court in its 2004 Decision declared the contract null and void.

Issue: WON Mega Pacific eSolutions may invoke the doctrine of piercing the corporate veil

Held: Veil-piercing in fraud cases requires that the legal fiction of separate juridical personality is used for
fraudulent or wrongful ends. The totality of which strongly indicate that MPEI was a sham corporation
formed merely for the purpose of perpetrating a fraudulent scheme.
The red flags are as follows: (1) overly narrow specifications; (2) unjustified recommendations and
unjustified winning bidders; (3) failure to meet the terms of the contract; and (4) shell or fictitious company.

Overly Narrow Specifications

The World Bank's Fraud and Corruption Awareness Handbook: A Handbook for Civil Servants Involved in
Public Procurement, (Handbook) identifies an assortment of fraud and corruption indicators and relevant
schemes in public procurement. One of the schemes recognized by the Handbook is rigged specifications:
Scheme: Rigged specifications. In a competitive market for goods and services, any specifications that
seem to be drafted in a way that favors a particular company deserve closer scrutiny. For example,
specifications that are too narrow can be used to exclude other qualified bidders or justify improper sole
source awards. Unduly vague or broad specifications can allow an unqualified bidder to compete or justify
fraudulent change orders after the contract is awarded. Sometimes, project officials will go so far as to allow
the favored bidder to draft the specifications.

Unjustified Recommendations and Unjustified Winning Bidders

Questionable evaluation in a Bid Evaluation Report (BER) is an indicator of bid rigging. The Handbook
expounds: Questionable evaluation and unusual bid patterns may emerge in the BER. After the completion
of the evaluation process, the Bid Evaluation Committee should present to the implementing agency its
BER, which describes the results and the process by which the BEC has evaluated the bids received. The
BER may include a number of indicators of bid rigging, e.g., questionable disqualifications, and unusual bid
patterns. The Handbook lists unjustified recommendations and unjustified winning bidders as red flags of a
rigged bidding. The red flags of questionable recommendation and unjustified awards are raised in this
case. As earlier discussed, the project was awarded to MPC, which proved to be a nonentity. It was MPEI
that actually participated in the bidding process, but it was not qualified to be a bidder in the first place.
Moreover, its ACMs failed the accuracy requirement set by COMELEC. Yet, MPC — the nonentity —
obtained a favorable recommendation from the BAC, and the automation contract was awarded to the
former.

Failure to Meet Contract Terms

Failure to meet the terms of a contract is regarded as a fraud by the Handbook: Scheme: Failure to meet
contract terms. Firms may deliberately fail to comply with contract requirements. The contractor will attempt
to conceal such actions often by falsifying or forging supporting documentation and bill for the work as if it
were done in accordance with specifications. In many cases, the contractors must bribe inspection or
project personnel to accept the substandard goods or works, or supervision agents are coerced to approve
substandard work. . . .

As mentioned earlier, this Court already found the ACMs to be below the standards set by the COMELEC.
We reiterated their noncompliant status in Our 2005 and 2006 Resolutions. As early as 2005, when the
COMELEC sought permission from this Court to utilize the ACMs in the then scheduled ARMM elections,
We declared that the proposed use of the machines would expose the ARMM elections to the same dangers
of massive electoral fraud that would have been inflicted by the projected automation of the 2004 national
elections. We based this pronouncement on the fact that the COMELEC failed to show that the deficiencies
had been cured.

Shell or fictitious company

The Handbook regards a shell or fictitious company as a "serious red flag," a concept that it elaborates
upon:Fictitious companies are by definition fraudulent and may also serve as fronts for government officials.
The typical scheme involves corrupt government officials creating a fictitious company that will serve as a
"vehicle" to secure contract awards. Often, the fictitious — or ghost — company will subcontract work to
lower cost and sometimes unqualified firms. The fictitious company may also utilize designated losers as
subcontractors to deliver the work, thus indicating collusion. Shell companies have no significant assets,
staff or operational capacity. They pose a serious red flag as a bidder on public contracts, because they
often hide the interests of project or government officials, concealing a conflict of interest and opportunities
for money laundering. Also, by definition, they have no experience.

MPEI qualifies as a shell or fictitious company. It was nonexistent at the time of the invitation to bid; to be
precise, it was incorporated only 11 days before the bidding. It was a newly formed corporation and, as
such, had no track record to speak of. Further, MPEI misrepresented itself in the bidding process as "lead
company" of the supposed joint venture. The misrepresentation appears to have been an attempt to justify
its lack of experience. As a new company, it was not eligible to participate as a bidder. It could do so only
by pretending that it was acting as an agent of the putative consortium. The timing of the incorporation of
MPEI is particularly noteworthy. Its close nexus to the date of the invitation to bid and the date of the bidding
(11 days) provides a strong indicium of the intent to use the corporate vehicle for fraudulent purposes. This
proximity unmistakably indicates that the automation contract served as motivation for the formation of
MPEI: a corporation had to be organized so it could participate in the bidding by claiming to be an agent of
a pretended joint venture.

The totality of the red flags found in this case leads Us to the inevitable conclusion that MPEI was nothing
but a sham corporation formed for the purpose of defrauding petitioner. Its ultimate objective was to secure
the P1,248,949,088 automation contract. The scheme was to put up a corporation that would participate in
the bid and enter into a contract with the COMELEC, even if the former was not qualified or authorized to
do so. Without the incorporation of MPEI, the defraudation of the government would not have been possible.
The formation of MPEI paved the way for its participation in the bid, through its claim that it was an agent
of a supposed joint venture, its misrepresentations to secure the automation contract, its misrepresentation
at the time of the execution of the contract, its delivery of the defective ACMs, and ultimately its acceptance
of the benefits under the automation contract. The foregoing considered, veil-piercing is justified in this
case.

Marc II Marketing vs Joson

GR No. 184666
Date: June 27, 2016
Digested by: Javier, Therese Fatima V.
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Petitioner: Republic of the Philippines
Respondent: Mega PAcific eSolutions
Ponente: C.J. Sereno
Topic: Doctrine of Piercing the veil of Corporate Fiction
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DOCTRINE: Veil-piercing in fraud cases requires that the legal fiction of separate juridical personality is
used for fraudulent or wrongful ends. The totality of which strongly indicate that MPEI was a sham
corporation formed merely for the purpose of perpetrating a fraudulent scheme.
----------------------------------------------------------------------------------

Facts: Before petitioner corporation was officially incorporated, respondent has already been engaged by petitioner Lucila, in her
capacity as President of Marc Marketing, Inc., to work as the General Manager of petitioner corporation. It was formalized through the
execution of a Management Contract dated 16 January 1994 under the letterhead of Marc Marketing, Inc. as petitioner corporation is
yet to be incorporated at the time of its execution. It was explicitly provided therein that respondent shall be entitled to 30% of its net
income for his work as General Manager. Respondent will also be granted 30% of its net profit to compensate for the possible loss of
opportunity to work overseas. Pending incorporation of petitioner corporation, respondent was designated as the General Manager of
Marc Marketing, Inc., which was then in the process of winding up its business. For occupying the said position, respondent was
among its corporate officers by the express provision of Section 1, Article IV 10 of its by-laws.
On 15 August 1994, petitioner corporation was officially incorporated and registered with the SEC. Accordingly, Marc Marketing, Inc.
was made non-operational. Respondent continued to discharge his duties as General Manager but this time under petitioner
corporation. Pursuant to Section 1, Article IV of petitioner corporation's by-laws, its corporate officers are as follows: Chairman,
President, one or more Vice-President(s), Treasurer and Secretary. Its Board of Directors, however, may, from time to time, appoint
such other officers as it may determine to be necessary or proper.

Per an undated Secretary's Certificate, petitioner corporation's Board of Directors conducted a meeting on 29 August 1994 where
respondent was appointed as one of its corporate officers with the designation or title of General Manager to function as a managing
director with other duties and responsibilities that the Board of Directors may provide and authorized. Nevertheless, on 30 June 1997,
petitioner corporation decided to stop and cease its operations due to poor sales collection aggravated by the inefficient management
of its affairs. It formally informed respondent of the cessation of its business operation. Concomitantly, respondent was apprised of
the termination of his services as General Manager since his services as such would no longer be necessary for the winding up of its
affairs.

Issue: WON the Management Contract executed between Joson and Lucila has no binding effect on petitioner corporation for having
been executed way before its incorporation

Held: Section 19 of the Corporation Code expressly provides:

Sec. 19. Commencement of corporate existence. — A private corporation formed or organized under this Code commences to have
corporate existence and juridical personality and is deemed incorporated from the date the Securities and Exchange Commission
issues a certificate of incorporation under its official seal; and thereupon the incorporators, stockholders/members and their successors
shall constitute a body politic and corporate under the name stated in the articles of incorporation for the period of time mentioned
therein, unless said period is extended or the corporation is sooner dissolved in accordance with law.

Logically, there is no corporation to speak of prior to an entity's incorporation. And no contract entered into before incorporation can
bind the corporation.

As can be gleaned from the records, the Management Contract dated 16 January 1994 was executed between respondent and
petitioner Lucila months before petitioner corporation's incorporation on 15 August 1994. Similarly, it was done when petitioner Lucila
was still the President of Marc Marketing, Inc. Undeniably, it cannot have any binding and legal effect on petitioner corporation. Also,
there was no evidence presented to prove that petitioner corporation adopted, ratified or confirmed the Management Contract. It is for
the same reason that petitioner corporation cannot be considered estopped from questioning its binding effect now that respondent
was invoking the same against it. In no way, then, can it be enforced against petitioner corporation, much less, its provisions fixing
respondent's compensation as General Manager to 30% of petitioner corporation's net profit. Consequently, such percentage cannot
be the basis for the computation of respondent's separation pay. This finding, however, will not affect the undisputed fact that
respondent was, indeed, the General Manager of petitioner corporation from its incorporation up to the time of his dismissal.

The Board of Liquidators vs Heirs of Maximo Kalaw

GR No. 184666
Date: June 27, 2016
Digested by: Javier, Therese Fatima V.
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Petitioner: Republic of the Philippines
Respondent: Mega PAcific eSolutions
Ponente: C.J. Sereno
Topic: Doctrine of Piercing the veil of Corporate Fiction
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DOCTRINE: Veil-piercing in fraud cases requires that the legal fiction of separate juridical personality is
used for fraudulent or wrongful ends. The totality of which strongly indicate that MPEI was a sham
corporation formed merely for the purpose of perpetrating a fraudulent scheme.
----------------------------------------------------------------------------------
Facts: NACOCO was chartered as a non-profit governmental organization avowedly for the protection, preservation, and development
of the coconut industry in the Philippines. General manager and board chairman was Maximo Kalaw. An unfortunate chain of events
conspired to deter NACOCO from fulfilling some contracts intered. Four devastating typhoons visited the Philippines. Coconut trees
throughout the country suffered extensive damage. Copra production decreased. Prices spiralled. Warehouses were destroyed. Cash
requirements doubled. Deprivation of export facilities increased the time necessary to accumulate shiploads of copra. Quick turnovers
became impossible, financing a problem. Buyers threatened damaged suits. NACOCO, represented by the Board of Liquidator, seeks
to recover the above sum of P1,343,274.52 from general manager and board chairman Maximo M. Kalaw, and directors Juan Bocar,
Casimiro Garcia and Leonor Moll. It charges Kalaw with negligence under Article of the old Civil Code and defendant board members,
including Kalaw, with bad faith and/or breach trust for having approved the contracts.

Issue: WON there is an implied authority of corporate officer to enter into contacts

Held: A rule that has gained acceptance through the years is that a corporate officer "intrusted with the general management and
control of its business, has implied authority to make any contract or do any other act which is necessary or appropriate to the conduct
of the ordinary business of the corporation." As such officer, "he may, without any special authority from the Board of Directors, perform
all acts of an ordinary nature, which by usage or necessity are incident to his office, and may bind the corporation by contracts in
matters arising in the usual course of business."

Settled jurisprudence has it that where similar acts have been approved by the directors as a matter of general practice, custom, and
policy, the general manager may bind the company without formal authorization of the board of directors. 26 In varying language,
existence of such authority is established, by proof of the course of business, the usages and practices of the company and by the
knowledge which the board of directors has, or must be presumed to have, of acts and doings of its subordinates in and about the
affairs of the corporation. So also, ". . . authority to act for and bind a corporation may be presumed from acts of recognition in other
instances where the power was in fact exercised." ". . . Thus, when, in the usual course of business of a corporation, an officer has
been allowed in his official capacity to manage its affairs, his authority to represent the corporation may be implied from the manner
in which he has been permitted by the directors to manage its business."

In the case at bar, the practice of the corporation has been to allow its general manager to negotiate and execute contracts in its copra
trading activities for and in NACOCO's behalf without prior board approval. If the by-laws were to be literally followed, the board should
give its stamp of prior approval on all corporate contracts. But that board itself, by its acts and through acquiescence practically laid
aside the by-law requirement of prior approval.

Guy vs Guy
GR No. 184666
Date: June 27, 2016
Digested by: Javier, Therese Fatima V.
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Petitioner: Republic of the Philippines
Respondent: Mega PAcific eSolutions
Ponente: C.J. Sereno
Topic: Doctrine of Piercing the veil of Corporate Fiction
-----------------------------------------------------------------------------------
DOCTRINE: Veil-piercing in fraud cases requires that the legal fiction of separate juridical personality is
used for fraudulent or wrongful ends. The totality of which strongly indicate that MPEI was a sham
corporation formed merely for the purpose of perpetrating a fraudulent scheme.
----------------------------------------------------------------------------------
Facts: GCI is a family-owned corporation of the Guy family duly organized and existing under Philippine laws. Simny Guy is a
stockholder of record and member of the BOD of the corporation. Gilbert Guy, et al. are also GCI stockholders of record who were
allegedly elected as new directors by virtue of the assailed stockholders' meeting held on 7 September 2004. On 10 September 2004,
Paulino Delfin Pe and Benjamin Lim (stockholders of record of GCI) informed Simny that they had received a notice dated 31 August
2004 calling for the holding of a special stockholders' meeting on 7 September 2004 at the Manila Diamond Hotel. The said meeting
is for the purpose of the election of the BOD for the year 2004-2005. 15 days after the stockholders' meeting, Simny received the said
notice.

On 30 September 2004, Simny, for himself and on behalf of GCI and Grace Guy Cheu, filed a Complaint against respondents before
the RTC for the "Nullification of Stockholders' Meeting and Election of Directors, Nullification of Acts and Resolutions, Injunction and
Damages with Prayer for TRO and/or Writ of Preliminary Injunction." It was assailed on the following grounds: (1) there was no
previous notice to Simny and Cheu; (2) the meeting was not called by the proper person; and (3) the notices were not issued by the
person who had the legal authority to do so.Gilbert argued that the meeting on was legally called and held; that the notice of meeting
was signed by the authorized officer of GCI and sent in accordance with the by-laws of the corporation; and that Cheu was not a
stockholder of record of the corporation, a status that would have entitled her to receive a notice of the meeting.

Issue: WON the notice of the stockholder’s meeting was properly sent in compliance with law and the by-laws of the corporation

Held: Section 50 of Batas Pambansa Blg. 68 (B.P. 68) or the Corporation Code of the Philippines reads as follows:
SECTION 50. Regular and Special Meetings of Stockholders or Members. — Regular meetings of stockholders or members shall be
held annually on a date fixed in the by-laws, or if not so fixed, on any date in April of every year as determined by the board of directors
or trustees: Provided, That written notice of regular meetings shall be sent to all stockholders or members of record at least two (2)
weeks prior to the meeting, unless a different period is required by the by-laws. Special meetings of stockholders or members shall
be held at any time deemed necessary or as provided in the by-laws: Provided, however, That at least one (1) week written notice
shall be sent to all stockholders or members, unless otherwise provided in the by-laws. Notice of any meeting may be waived,
expressly or impliedly, by any stockholder or member.

For a stockholders' special meeting to be valid, certain requirements must be met with respect to notice, quorum and place. In relation
to the above provision of B.P. 68, one of the requirements is a previous written notice sent to all stockholders at least one (1) week
prior to the scheduled meeting, unless otherwise provided in the by-laws. Under the by-laws of GCI, the notice of meeting shall be
mailed not less than five (5) days prior to the date set for the special meeting. The pertinent provision reads:

Section 3. Notice of meeting written or printed for every regular or special meeting of the stockholders shall be prepared and
mailed to the registered post office address of each stockholder not less than five (5) days prior to the date set for
such meeting, and if for a special meeting, such notice shall state the object or objects of the same. No failure or irregularity
of notice of any meeting shall invalidate such meeting at which all the stockholders are present and voting without protest.

The Corporation Code itself permits the shortening (or lengthening) of the period within which to send the notice to call a special (or
regular) meeting. Thus, no irregularity exists in the mailing of the notice sent by respondent Gilbert G. Guy on 2 September 2004
calling for the special stockholders' meeting to be held on 7 September 2004, since it abides by what is stated in GCI's by-laws as
quoted above.

Petitioner avers that although the notice was sent by registered mail on 2 September 2004, the registry return card shows that he
received it only on 22 September 2004 or fifteen (15) days after the stockholders' meeting was held. He insists that actual receipt of
the notice of the stockholders' meeting prior to the date of the meeting is mandatory. Petitioner persists in his view that to achieve the
intent of the law, the notice must be actually received, and not just sent, prior to the date of the meeting. Petitioner cites the provision
on "completeness of service" under the Rules of Court, which states that service by registered mail is deemed complete upon actual
receipt by the addressee or after five (5) days from the date of receipt of the first notice of the postmaster, whichever date is earlier.
The Supreme Court is not persuaded.

The first and fundamental duty of the Court is to apply the law. Where the law speaks in clear and categorical language, there is no
room for interpretation; there is only room for application. Only when the law is ambiguous or of doubtful meaning may the court
interpret or construe its true intent.

The provisions only require the sending/mailing of the notice of a stockholders' meeting to the stockholders of the corporation.
Sending/mailing is different from filing or service under the Rules of Court. Had the lawmakers intended to include the stockholder's
receipt of the notice, they would have clearly reflected such requirement in the law. Absent that requirement, the word "send" should
be understood in its plain meaning:
"Send" means to deposit in the mail or deliver for transmission by any other usual means of communication with postage
or cost of transmission provided for and properly addressed and in the case of an instrument to an address specified thereon
or otherwise agreed, or if there be none, to any address reasonable under the circumstances. The receipt of any writing or
notice within the time at which it would have arrived if properly sent has the effect of a proper sending.

Clearly, respondents are only mandated to notify petitioner by depositing in the mail the notice of the stockholders' special meeting,
with postage or cost of transmission provided and the name and address of the stockholder properly specified. With respect to the
latter part of the definition of "send" under Black's Law Dictionary, the term "receipt" only has the effect of proper sending when a mail
matter is received in the usual course of transmission.

Ang- Abaya vs Ang

GR No. 184666
Date: June 27, 2016
Digested by: Javier, Therese Fatima V.
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Petitioner: Republic of the Philippines
Respondent: Mega PAcific eSolutions
Ponente: C.J. Sereno
Topic: Doctrine of Piercing the veil of Corporate Fiction
-----------------------------------------------------------------------------------
DOCTRINE: Veil-piercing in fraud cases requires that the legal fiction of separate juridical personality is
used for fraudulent or wrongful ends. The totality of which strongly indicate that MPEI was a sham
corporation formed merely for the purpose of perpetrating a fraudulent scheme.
----------------------------------------------------------------------------------
Facts: Vibelle Manufacturing Corporation (VMC) and Genato Investments, Inc. (Genato) are family-owned corporations, where
petitioners and private respondent Eduardo Ang are shareholders, officers and members of the board of directors. Prior to the instant
controversy, VMC, Genato, and Oriano Manufacturing Corp. filed a Civil case against Eduardo, together with Michael, and some other
persons for allegedly conniving to fraudulently wrest control/management of the corporations. During the pendency of the Civil Case,
Eduardo sought permission to inspect the corporate books of VMC and Genato on account of petitioners alleged failure to update him
on the financial and business activities of these family corporations.

Petitioners denied the request claiming that Eduardo would use the information obtained from said inspection for purposes inimical to
the corporations’ interests. Because of petitioners’ refusal to grant Eduardo’s request, the latter filed a complaint for violating his right
to inspect under Sec.74 of the Corporation Code. Petitioners denied violating Sec. 74 and reiterated the allegations contained in their
complaint in Civil Case. They alleged that Eduardo consistently pressured petitioner Flordeliza, his daughter, to improperly transfer
ownership of the corporations’ V.A.G building to him. When the proposed transfer of the V.A.G. building did not materialize, petitioners
claim that Eduardo instituted an action to compel donation of said property to him. Moreover, they claim that Eduardo attempted to
forcibly evict petitioner Jason from his office at VMC so he can occupy the same; that Eduardo and his cohorts constantly created
trouble by intervening in the daily operations of the corporations without the knowledge or consent of the board of directors.

Issue: WON petitioners violated defendant’s right to inspect books and records

Held: In Gokongwei, Jr. v. Securities and Exchange Commission, 29 this Court explained the rationale behind a stockholder's right to
inspect corporate books, to wit:
“The stockholder's right of inspection of the corporation's books and records is based upon their ownership of the assets
and property of the corporation. It is, therefore, an incident of ownership of the corporate property, whether this ownership
or interest be termed an equitable ownership, a beneficial ownership, or a quasi-ownership. This right is predicated upon
the necessity of self-protection. It is generally held by majority of the courts that where the right is granted by statute to the
stockholder, it is given to him as such and must be exercised by him with respect to his interest as a stockholder and for
some purpose germane thereto or in the interest of the corporation. In other words, the inspection has to be germane
to the petitioner's interest as a stockholder, and has to be proper and lawful in character and not inimical to the
interest of the corporation.”
In Republic v. Sandiganbayan, the Court declared that the right to inspect and/or examine the records of a corporation under Section
74 of the Corporation Code is circumscribed by the express limitation contained in the succeeding proviso, which states that:
[I]t shall be a defense to any action under this section that the person demanding to examine and copy excerpts from the
corporation's records and minutes has improperly used any information secured through any prior examination of
the records or minutes of such corporation or of any other corporation, or was not acting in good faith or for a
legitimate purpose in making his demand.
Thus, contrary to Eduardo's insistence, the stockholder's right to inspect corporate books is not without limitations. While the right of
inspection was enlarged under the Corporation Code as opposed to the old Corporation Law (Act No. 1459, as amended), It is now
expressly required as a condition for such examination that the one requesting it must not have been guilty of using improperly any
information secured through a prior examination, or that the person asking for such examination must be acting in good faith and for
a legitimate purpose in making his demand.

In order therefore for the penal provision under Section 144 of the Corporation Code to apply in a case of violation of a stockholder or
member's right to inspect the corporate books/records as provided for under Section 74 of the Corporation Code, the following
elements must be present:
First. A director, trustee, stockholder or member has made a prior demand in writing for a copy of excerpts from the
corporation's records or minutes;
Second. Any officer or agent of the concerned corporation shall refuse to allow the said director, trustee, stockholder or
member of the corporation to examine and copy said excerpts;
Third. If such refusal is made pursuant to a resolution or order of the board of directors or trustees, the liability under this
section for such action shall be imposed upon the directors or trustees who voted for such refusal; and,
Fourth. Where the officer or agent of the corporation sets up the defense that the person demanding to examine and copy
excerpts from the corporation's records and minutes has improperly used any information secured through any prior
examination of the records or minutes of such corporation or of any other corporation, or was not acting in good faith
or for a legitimate purpose in making his demand, the contrary must be shown or proved.

Thus, in a criminal complaint for violation of Section 74 of the Corporation Code, the defense of improper use or motive is in the nature
of a justifying circumstance that would exonerate those who raise and are able to prove the same. Accordingly, where the corporation
denies inspection on the ground of improper motive or purpose, the burden of proof is taken from the shareholder and placed on the
corporation. This being the case, it would be improper for the prosecutor, during preliminary investigation, to refuse or fail to address
the defense of improper use or motive, given its express statutory recognition. In the past the Supreme Court have declared that if
justifying circumstances are claimed as a defense, they should have at least been raised during preliminary investigation; which settles
the view that the consideration and determination of justifying circumstances as a defense is a relevant subject of preliminary
investigation.
Tan vs Sycip
GR No. 184666
Date: June 27, 2016
Digested by: Javier, Therese Fatima V.
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Petitioner: Republic of the Philippines
Respondent: Mega PAcific eSolutions
Ponente: C.J. Sereno
Topic: Doctrine of Piercing the veil of Corporate Fiction
-----------------------------------------------------------------------------------
DOCTRINE: Veil-piercing in fraud cases requires that the legal fiction of separate juridical personality is
used for fraudulent or wrongful ends. The totality of which strongly indicate that MPEI was a sham
corporation formed merely for the purpose of perpetrating a fraudulent scheme.
----------------------------------------------------------------------------------
Facts: Petitioner Grace Christian High School (GCHS) is a nonstock, non-profit educational corporation with fifteen (15) regular
members, who also constitute the board of trustees. During the annual members' meeting, there were only eleven (11) 5 living
member-trustees, as four (4) had already died. Out of the eleven, seven (7) attended the meeting through their respective proxies.
The meeting was convened and chaired by Atty. Sabino Padilla Jr. over the objection of Atty. Antonio C. Pacis, who argued that there
was no quorum. In the meeting, Petitioners Ernesto Tanchi, Edwin Ngo, Virginia Khoo, and Judith Tan were voted to replace the four
deceased member-trustees.

When the controversy reached the Securities and Exchange Commission (SEC), petitioners 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 Malthie G. Militar 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 of incorporation, not simply the number of
living members. She explained that the qualifying phrase "entitled to vote" in Section 24 of the Corporation Code, which provided the
basis for determining a quorum for the election of directors or trustees, should be read together with Section 89. The hearing officer
also opined that Article III (2) of the By-Laws of GCHS, insofar as it prescribed the mode of filling vacancies in the board of trustees,
must be interpreted in conjunction with Section 29 of the Corporation Code. The SEC en banc denied the appeal of petitioners and
affirmed the Decision of the hearing officer in toto. It found to be untenable their contention that the word "members,"' as used in
Section 52 of the Corporation Code, referred only to the living members of a nonstock corporation.

Issue: WON in non-stock corporations, dead members should still be counted in determination of quorum

Held: The Right to Vote in Stock Corporations

The right to vote is inherent in and incidental to the ownership of corporate stocks. It is settled that unissued stocks may not be voted
or considered in determining whether a quorum is present in a stockholders' meeting, or whether a requisite proportion of the stock of
the corporation is voted to adopt a certain measure or act. Only stock actually issued and outstanding may be voted. Under Section
6 of the Corporation Code, each share of stock is entitled to vote, unless otherwise provided in the articles of incorporation or declared
delinquent 35 under Section 67 of the Code. Neither the stockholders nor the corporation can vote or represent shares that have
never passed to the ownership of stockholders; or, having so passed, have again been purchased by the corporation. These shares
are not to be taken into consideration in. determining majorities. When the law speaks of a given proportion of the stock, it must be
construed to mean the shares that have passed from the corporation, and that may be voted. Taken in conjunction with Section 137,
the last paragraph of Section 6 shows that the intention of the lawmakers was to base the quorum mentioned in Section 52 on. the
number of outstanding voting stocks.

The Right to Vote in Nonstock Corporations

In nonstock corporations, the voting rights attach to membership. Members vote as persons, in accordance with the law and the
bylaws of the corporation. Each member shall be entitled to one vote unless so limited, broadened, or denied in the articles of
incorporation or bylaws. The Supreme Court hold that when the principle for determining the quorum for stock corporations is applied
by analogy to nonstock corporations, only those who are actual members with voting rights should 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.

The March 3, 1986 SEC Opinion cited by the hearing officer uses the phrase "majority vote of the members"; likewise Section 48 of
the Corporation Code refers to 50 percent of 94 (the number of registered members of the association mentioned therein) plus one.
The best evidence of who are the present members of the corporation is the "membership book"; in the case of stock corporations, it
is the stock and transfer book.

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.
Effect of the Death of a Member or Shareholder
In stock corporations, shareholders may generally transfer their shares. Thus, on the death of a shareholder, the executor or
administrator duly appointed by the Court is vested with the legal title to the stock and entitled to vote it. Until a settlement and division
of the estate is effected, the stocks of the decedent are held by the administrator or executor.

On the other hand, 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 the present 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.

James Ient and Maharlika Schulze vs Tullett Prebon Inc.

GR No. 189158
Date: January 11, 2017
Digested by: Therese Javier
________
Petitioner: James Ient and Maharlika Schulze
Respondent: Tullett Prebon
Ponente: J. Leonardo- De Castro
Topic: Doctrine of Piercing the veil of Corporate Fiction
_________
Doctrine: The Corporation Code was intended as a regulatory measure, not primarily as a penal statute. Sections 31 to 34 in particular
were intended to impose exacting standards of fidelity on corporate officers and directors but without unduly impeding them in the
discharge of their work with concerns of litigation. Considering the object and policy of the Corporation Code to encourage the use of
the corporate entity as a vehicle for economic growth, the Supreme Court cannot espouse a strict construction of Sections 31 and 34
as penal offenses in relation to Section 144 in the absence of unambiguous statutory language and legislative intent to that effect.
When Congress intends to criminalize certain acts it does so in plain, categorical language, otherwise such a statute would be
susceptible to constitutional attack. As earlier discussed, this can be readily seen from the text of Section 45 (j) of Republic Act No.
8189 and Section 74 of the Corporation Code. The Supreme Court stressed that had the Legislature intended to attach penal sanctions
to Sections 31 and 34 of the Corporation Code it could have expressly stated such intent in the same manner that it did for Section
74 of the same Code.
_________

Facts: Petitioner lent is a British national and the Chief Financial Officer of Tradition Asia Pacific in Singapore. Petitioner Schulze is a
Filipino-German who does application support for Traditional Financial Services in London. Tradition Asia and Tradition London are
subsidiaries of Compagnie Financiere Tradition and are part of the "Tradition Group." The Tradition Group is allegedly the third largest
group of Inter-dealer Brokers (IDB) in the world while the corporate organization, of which respondent Tullett is a part, is supposedly
the second largest. In other words, the Tradition Group and Tullett are competitors in the inter-dealer broking business. IDBs
purportedly "utilize the secondary fixed income and foreign exchange markets to execute their banks and their bank customers' orders,
trade for a profit and manage their exposure to risk, including credit, interest rate and exchange rate risks." In the Philippines, the
clientele for IDBs is mainly comprised of banks and financial institutions.

Tullett was the first to establish a business presence in the Philippines and had been engaged in the inter-dealer broking business or
voice brokerage here since 1995. Meanwhile, on the part of the Tradition Group, the needs of its Philippine clients were previously
being serviced by Tradition Asia in Singapore. The other IDBs in the Philippines are Amstel and Icap.

Sometime in August 2008, in line with Tradition Group's motive of expansion and diversification in Asia, petitioners Ient and Schulze
were tasked with the establishment of a Philippine subsidiary of Tradition Asia to be known as Tradition Financial Services Philippines,
Inc. (Tradition Philippines). Tradition Philippines was registered with the Securities and Exchange Commission (SEC) with petitioners
Ient and Schulze, among others, named as incorporators and directors in its Articles of Incorporation.

Tullett, through one of its directors, Gordon Buchan, filed a Complaint-Affidavit with the City Prosecution Office against the
officers/employees of the Tradition Group for violation of the Corporation Code. Impleaded as respondents in the Complaint-Affidavit
were petitioners Ient and Schulze, Jaime Villalon (Villalon), who was formerly President and Managing Director of Tullett, Mercedes
Chuidian (Chuidian), who was formerly a member of Tullett's Board of Directors, and other John and Jane Does. Villalon and Chuidian
were charged with using their former positions in Tullett to sabotage said company by orchestrating the mass resignation of its entire
brokering staff in order for them to join Tradition Philippines. With respect to Villalon, Tullett claimed that the former held several
meetings with members of Tullett's Spot Desk and brokering staff in order to convince them to leave the company. Villalon likewise
supposedly intentionally failed to renew the contracts of some of the brokers. A meeting was also allegedly held in Howzat Bar in
Makati City where petitioners and a lawyer of Tradition Philippines were present. At said meeting, the brokers of complainant Tullett
were purportedly induced, en masse, to sign employment contracts with Tradition Philippines and were allegedly instructed by
Tradition Philippines' lawyer as to how they should file their resignation letters.

Complainant also claimed that Villalon asked the brokers present at the meeting to call up Tullett's clients to inform them that they had
already resigned from the company and were moving to Tradition Philippines. Villalon allegedly informed Mr. Barry Dennahy, Chief
Operating Officer of Tullett Prebon in the Asia-Pacific, through electronic mail that all of Tullett's brokers had resigned.

Subsequently, in another meeting with Ient and Tradition Philippines' counsel, indemnity contracts in favor of the resigning employees
were purportedly distributed by Tradition Philippines. According to Tullett, respondents Villalon and Chuidian (who were still its
directors or officers at the times material to the Complaint-Affidavit) violated Sections 31 and 34 of the Corporation Code which made
them criminally liable under Section 144. As for petitioners Ient and Schulze, Tullett asserted that they conspired with Villalon and
Chuidian in the latter's acts of disloyalty against the company.

Issue: WON Sec. 144 of the Corporation Code applies to Sec 31 and 34, thus, making it a penal offense

Held: The Corporation Code was intended as a regulatory measure, not primarily as a penal statute. Sections 31 to 34 in particular
were intended to impose exacting standards of fidelity on corporate officers and directors but without unduly impeding them in the
discharge of their work with concerns of litigation. Considering the object and policy of the Corporation Code to encourage the use of
the corporate entity as a vehicle for economic growth, the Supreme Court cannot espouse a strict construction of Sections 31 and 34
as penal offenses in relation to Section 144 in the absence of unambiguous statutory language and legislative intent to that effect.
When Congress intends to criminalize certain acts it does so in plain, categorical language, otherwise such a statute would be
susceptible to constitutional attack. As earlier discussed, this can be readily seen from the text of Section 45 (j) of Republic Act No.
8189 and Section 74 of the Corporation Code. The Supreme Court stressed that had the Legislature intended to attach penal sanctions
to Sections 31 and 34 of the Corporation Code it could have expressly stated such intent in the same manner that it did for Section
74 of the same Code.

As additional support for its contentions, respondent cites several opinions of the SEC, applying Section 144 to various violations of
the Corporation Code in the imposition of graduated fines. In respondent's view, these opinions show a consistent administrative
interpretation on the applicability of Section 144 to the other provisions of the Corporation Code and allegedly render absurd
petitioners' concern regarding the "over-criminalization" of the Corporation Code. We find respondent's reliance on these SEC opinions
to be misplaced. As petitioners correctly point out, the fines imposed by the SEC in these instances of violations of the Corporation
Code are in the nature of administrative fines and are not penal in nature. Without ruling upon the soundness of the legal reasoning
of the SEC in these opinions, the Supreme Court note that these opinions in fact support the view that even the SEC construes
"penalty" as used in Section 144 as encompassing administrative penalties, not only criminal sanctions. In all, these SEC issuances
weaken rather than strengthen respondent's case.

Gala vs Ellice Agro-Industrial Corporation Margo Management and Development Corporation

GR No. 156819
Date: December 11, 2003
Digested by: Therese Javier
________
Petitioner: Alicia Gala
Respondent: Ellice Agro-Industrial Corporation Margo Management and Development Corporation
Ponente: J. Ynares- Santiago
Topic: Articles of Incorporation
________
Doctrine: The best proof of the purpose of a corporation is its articles of incorporation and by-laws. The articles of incorporation must
state the primary and secondary purposes of the corporation, while the by-laws outline the administrative
________

Facts: spouses Manuel and Alicia Gala, their children Guia Domingo, Ofelia Gala, Raul Gala, and Rita Benson, and their encargados
Virgilio Galeon and Julian Jader formed and organized the Ellice Agro-Industrial Corporation. As payment for their subscriptions, the
Gala spouses transferred several parcels of land located in the provinces of Quezon and Laguna to Ellice. In 1982, Manuel Gala,
Alicia Gala and Ofelia Gala subscribed to an additional 3,299 shares, 10,652.5 shares and 286.5 shares, respectively. On June 28,
1982, Manuel Gala and Alicia Gala acquired an additional 550 shares and 281 shares, respectively. Subsequently, on September 16,
1982, Guia Domingo, Ofelia Gala, Raul Gala, Virgilio Galeon and Julian Jader incorporated the Margo Management and Development
Corporation (Margo).

On November 10, 1982, Manuel Gala sold 13,314 of his shares in Ellice to Margo. Alicia Gala transferred 1,000 of her shares in Ellice
to a certain Victor de Villa on March 2, 1983. That same day, de Villa transferred said shares to Margo. A few months later, on August
28, 1983, Alicia Gala transferred 854.3 of her shares to Ofelia Gala, 500 to Guia Domingo and 500 to Raul Gala. Years later, on
February 8, 1988, Manuel Gala transferred all of his remaining holdings in Ellice, amounting to 2,164 shares, to Raul Gala. On July
20, 1988, Alicia Gala transferred 10,000 of her shares to Margo. On June 23, 1990, a special stockholders' meeting of Margo was
held, where a new board of directors was elected. 15 That same day, the newly-elected board elected a new set of officers. Raul Gala
was elected as chairman, president and general manager. During the meeting, the board approved several actions, including the
commencement of proceedings to annul certain dispositions of Margo's property made by Alicia Gala. The board also resolved to
change the name of the corporation to MRG Management and Development Corporation.
Similarly, a special stockholders' meeting of Ellice was held on August 24, 1990 to elect a new board of directors. In the ensuing
organizational meeting later that day, a new set of corporate officers was elected. Likewise, Raul Gala was elected as chairman,
president and general manager.

On March 27, 1990, respondents filed against petitioners with the Securities and Exchange Commission (SEC) a petition for the
appointment of a management committee or receiver, accounting and restitution by the directors and officers, and the dissolution of
Ellice Agro-Industrial Corporation for alleged mismanagement, diversion of funds, financial losses and the dissipation of assets,
docketed as SEC Case No. 3747. 17 The petition was amended to delete the prayer for the appointment of a management committee
or receiver and for the dissolution of Ellice. Additionally, respondents prayed that they be allowed to inspect the corporate books and
documents of Ellice.

In turn, petitioners initiated a complaint against the respondents on June 26, 1991, docketed as SEC Case No. 4027, praying for,
among others, the nullification of the elections of directors and officers of both Margo Management and Development Corporation and
Ellice Industrial Corporation; the nullification of all board resolutions issued by Margo from June 23, 1990 up to the present and all
board resolutions issued by Ellice from August 24, 1990 up to the present; and the return of all titles to real property in the name of
Margo and Ellice, as well as all corporate papers and records of both Margo and Ellice which are in the possession and control of the
respondents.

Issue: WON Ellice and Margo were organied as illegal and contrary to public policy

Held: The best proof of the purpose of a corporation is its articles of incorporation and by-laws. The articles of incorporation must state
the primary and secondary purposes of the corporation, while the by-laws outline the administrative organization of the corporation,
which, in turn, is supposed to insure or facilitate the accomplishment of said purpose.

In the case at bar, a perusal of the Articles of Incorporation of Ellice and Margo shows no sign of the allegedly illegal purposes that
petitioners are complaining of. It is well to note that, if a corporation's purpose, as stated in the Articles of Incorporation, is lawful, then
the SEC has no authority to inquire whether the corporation has purposes other than those stated, and mandamus will lie to compel
it to issue the certificate of incorporation.

Islamic Directorate of the Phils vs CA

GR No. 117897
Date: May 14, 1997
Digested by: Therese Javier
________
Petitioner: Islamic Directorate of the Philippines
Respondent: Iglesia ni Cristo
Ponente: J. Hermosisima
Topic: Power to Sell All or Substantially all of the assets
________
Doctrine: For the sale to be valid, the majority vote of the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the
bona fide members of the corporation should have been obtained
_______

Facts: Petitioner IDP-Tamano Group alleges that sometime in 1971, Islamic leaders of all Muslim major tribal groups in the Philippines
headed by Dean Cesar Adib Majul organized and incorporated the ISLAMIC DIRECTORATE OF THE PHILIPPINES (IDP), the primary
purpose of which is to establish an Islamic Center in Quezon City for, the construction of a "Mosque (prayer place, Madrasah (Arabic
School), and other religious infrastructures" so as to facilitate the effective practice of Islamic faith in the area.

Towards this end, that is, in the same year, the Libyan government donated money to the IDP to purchase land at Culiat, Tandang
Sora, Quezon City, to be used as a Center for the Islamic populace. The land, with an area of 49,652 square meters, was covered by
two titles: Transfer Certificate of Titles, both registered in the name of IDP. It appears that in 1971, the Board of Trustees of the IDP
was composed of the following per Article 6 of its Articles of Incorporation:
Senator Mamintal Tamano, Congressman Ali Dimaporo, Congressman Salipada Pendatun, Dean Cesar Adib Majul, Sultan Harun Al,
Rashid Lucman, Delegate Ahmad Alonto, Commissioner Datu Mama Sinsuat, and Mayor Aminkadra Abubakar

According to the petitioner, in 1972, after the purchase of the land by the Libyan government in the name of IDP, Martial Law was
declared by the late President Ferdinand Marcos. Most of the members of the 1971 Board of Trustees like Senators Mamintal Tamano,
Salipada Pendatun, Ahmad Alonto, and Congressman Al-Rashid Lucman flew to the Middle East to escape political persecution.
Thereafter, two Muslim groups sprung, the Carpizo Group, headed by Engineer Farouk Carpizo, and the Abbas Group, led by Mrs.
Zorayda Tamano and Atty. Firdaussi Abbas. Both groups claimed to be the legitimate IDP. Significantly, on October 3, 1986, the SEC,
in a suit between these two contending groups, came out with a Decision in SEC Case No. 2687 declaring the election of both the
Carpizo Group and the Abbas Group as IDP board members to be null and void.

Neither group, however, took the necessary steps prescribed by the SEC in its October 3, 1986 Decision, and, thus, no valid election
of the members of the Board of Trustees of IDP was ever called. Although the Carpizo Group attempted to submit a set of by-laws,
the SEC found that, aside from that Engineer Farouk Carpizo and Atty. Musib Buat, those who prepared and adopted the by-laws
were not bona fide members of the IDP, thus rendering the adoption of the by-laws likewise null and void.
On April 20, 1989, without having been properly elected as new members of the Board of Trustees of IDP, the Carpizo Group caused
to be signed an alleged Board Resolution of the IDP, authorizing the sale of the subject two parcels of land to the private respondent
INC for a consideration of P22,343,400.00, which sale was evidenced by a Deed of Absolute Sale dated April 20, 1989. On May 30,
1991, the petitioner 1971 IDP Board of Trustees headed by former Senator Mamintal Tamano, or the Tamano Group, filed a petition
before the SEC, docketed as SEC Case No 4012, seeking to declare null and void the Deed of Absolute Sale signed by the Carpizo
Group and the INC since the group of Engineer Carpizo was not the legitimate Board of Trustees of the IDP.

Issue: WON the sale was valid

Held: The Tandang Sora property, it appears from the records, constitutes the only property of the IDP. Hence, its sale to a third-party
is a sale or disposition of all the corporate property and assets of IDP falling squarely within the contemplation of the foregoing section.
For the sale to be valid, the majority vote of the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide
members of the corporation should have been obtained. These twin requirements were no met as the Carpizo Group which voted to
sell the Tandang Sora property was a fake Board of Trustees, and those whose names and signatures were affixed by the Carpizo
Group together with the sham Board Resolution authorizing the negotiation for the sale were, from all indications, not bona fide
members of the IDP as they were made to appear to be. Apparently, there are only fifteen (15) official members of the petitioner
corporation including the eight (8) members of the Board of Trustees.

All told, the disputed Deed of Absolute Sale executed by the fake Carpizo Board and private respondent INC was intrinsically void ab
initio.

Vigilla vs Philippine College of Criminology, Inc

GR No. 200094
Date: June 10, 2013
Digested by: Therese Javier
________
Petitioner: Benigno Vigilla
Respondent: Philippine College of Criminology
Ponente: J. Mendoza
Topic: Dissolution and Liquidation
________
Doctrine: The executed releases, waivers and quitclaims are valid and binding notwithstanding the revocation of MBMSI's Certificate
of Incorporation. The revocation does not result in the termination of its liabilities. Section 122 of the Corporation Code provides for a
three-year winding up period for a corporation whose charter is annulled by forfeiture or otherwise to continue as a body corporate for
the purpose, among others, of settling and closing its affairs.
_______

Facts: PCCr is a non-stock educational institution, while the petitioners were janitors, janitresses and supervisor in the Maintenance
Department of PCCr under the supervision and control of Atty. Florante A. Seril (Atty. Seril), PCCr's Senior Vice President for
Administration. The petitioners, however, were made to understand, upon application with respondent school, that they were under
MBMSI, a corporation engaged in providing janitorial services to clients. Atty. Seril is also the President and General Manager of
MBMSI.

Sometime in 2008, PCCr discovered that the Certificate of Incorporation of MBMSI had been revoked as of July 2, 2003. On March
16, 2009, PCCr, through its President, respondent Gregory Alan F. Bautista (Bautista), citing the revocation, terminated the school's
relationship with MBMSI, resulting in the dismissal of the employees or maintenance personnel under MBMSI, except Alfonso Bongot
(Bongot) who was retired.

In September, 2009, the dismissed employees, led by their supervisor, Benigno Vigilla (Vigilla), filed their respective complaints for
illegal dismissal, reinstatement, back wages, separation pay (for Bongot), underpayment of salaries, overtime pay, holiday pay, service
incentive leave, and 13th month pay against MBMSI, Atty. Seril, PCCr, and Bautista. In their complaints, they alleged that it was the
school, not MBMSI, which was their real employer because (a) MBMSI's certification had been revoked; (b) PCCr had direct control
over MBMSI's operations; (c) there was no contract between MBMSI and PCCr; and (d) the selection and hiring of employees were
undertaken by PCCr.

On the other hand, PCCr and Bautista contended that (a) PCCr could not have illegally dismissed the complainants because it was
not their direct employer; (b) MBMSI was the one who had complete and direct control over the complainants; and (c) PCCr had a
contractual agreement with MBMSI, thus, making the latter their direct employer. On September 11, 2009, PCCr submitted several
documents before LA Ronaldo Hernandez, including releases, waivers and quitclaims in favor of MBMSI executed by the complainants
to prove that they were employees of MBMSI and not PCCr. The said documents appeared to have been notarized by one Atty. Ramil
Gabao.

Issue: WON MBMSI had no legal personality to incur civil liabilities as it did not exist as a corporation on account of the fact that its
certificate of Incorporation had been revoked

Held: The executed releases, waivers and quitclaims are valid and binding notwithstanding the revocation of MBMSI's Certificate of
Incorporation. The revocation does not result in the termination of its liabilities. Section 122 of the Corporation Code provides for a
three-year winding up period for a corporation whose charter is annulled by forfeiture or otherwise to continue as a body corporate for
the purpose, among others, of settling and closing its affairs.
Even if said documents were executed in 2009, six (6) years after MBMSI's dissolution in 2003, the same are still valid and binding
upon the parties and the dissolution will not terminate the liabilities incurred by the dissolved corporation pursuant to Sections 122
and 145 28 of the Corporation Code.