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Disclaimer : The information provided herein is of a general nature and may not apply to any particular set of facts or circumstances. It should not be construed as legal advice and does not constitute nor establish an attorney-client relationship.

 

What is the purpose of a Secretary's certificate?

Being regular on its face, a Secretary's certificate is sufficient for a third party to rely on-it does not have to investigate the truth of the facts contained in such certification, otherwise business 
transaction of corporations would become tortuously slow and unnecessarily hampered.

What is the essence of a cashier's check?

It is a well-known and accepted practice in the business sector that a cashier's check is deemed as cash. Moreover, since the said check had been certified by the drawee bank, by the certification, the funds represented by the check are transferred from the credit of the maker to that of the payee or holder, and for all intents and purposes, the latter becomes the depositor of the drawee bank, with rights and duties of one in such situation. Where a check is certified by the bank on which it is drawn, the certification is equivalent to acceptance. Said certification "implies that the check is drawn upon sufficient funds in the hands of the drawee, that they have been set apart for its satisfaction, and that they shall be so applied whenever the check is presented for payment. It is an understanding that the check is good then, and shall continue good, and this agreement is as binding on the bank as its notes in circulation, a certificate of deposit payable to the order of the depositor, or any other obligation it can assume. 

When is an airline liable for damages despite force majeure?

Assuming arguendo that airline passengers have no vested right to amenities in case a flight is cancelled due to force majeure, what makes an airline liable for damages in the instant case is its blatant refusal to accord the so-called amenities equally to all its stranded passengers who were similarly situated.

Does the delivery of a check extinguish an obligation?

Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment.  A check, whether a manager's check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditor. Mere delivery of checks does not discharge the obligation under a judgment. The obligation is not extinguished and remains suspended until the payment by commercial document is actually realized.

Can a corporate officer bind himself to the payment of the corporate debts?

There is no law that prohibits a corporate officer from binding himself personally to answer for a corporate debt. While the limited liability doctrine is intended to protect the stockholder by immunizing him from personal liability for the corporate debts, he may nevertheless divest himself of this protection by voluntarily binding himself to the payment of the corporate debts. The petitioner cannot therefore take refuge in this doctrine that he has by his own acts effectively waived.

What is the responsibility of common carriers when death or injury to a passenger occurs?

Owing to the nature of their business and for reasons of public policy, common carriers are tasked to observe extraordinary diligence in the vigilance over the goods and for the safety of its passengers. Further, they are bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. Whenever death or injury to a passenger occurs, common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as prescribed by Articles 1733 and 1755.

What is Compulsory Motor Vehicle Liability Insurance?

Compulsory Motor Vehicle Liability Insurance (third party liability, or TPL) is primarily intended to provide compensation for the death or bodily injuries suffered by innocent third parties or passengers as a result of a negligent operation and use of motor vehicles. The victims and or their dependents are assured of immediate financial assistance, regardless of the financial capacity of the motor vehicle owners.  The insurer's liability accrues immediately upon the occurrence of the injury or event upon which the liability depends, and does not depend on the recovery of judgment by the injured party against the insured.

Can an injured party sue the insurer directly?

The injured for whom the contract of insurance is intended can sue directly the insurer. The general purpose of statutes enabling an injured person to proceed directly against the insurer is to protect injured persons against the insolvency of the insured who causes such injury, and to give such injured person a certain beneficial interest in the proceeds of the policy, and statutes are to be liberally construed so that their intended purpose may be accomplished. It has even been held that such a provision creates a contractual relation which inures to the benefit of any and every person who may be negligently injured by the named insured as if such injured person were specifically named in the policy.

What is the nature of certificates of stocks?

Certificates of stocks are considered as "quasi-negotiable" instruments. When the owner or shareholder of these certificates signs the printed form of sale or assignment at the back of every stock certificate without filing in the blanks provided for the name of the transferee as well as for the name of the attorney-in-fact, the said owner or shareholder, in effect, confers on another all the indicia of ownership of the said stock certificates.

What is the liability of an accomodation party?

An accommodation party is one who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder, at the time of taking the instrument, knew him to be only an accommodation party. 

What is the distinction between shares of stocks and franchise?

A distinction should be made between shares of stock, which are owned by stockholders, the sale of which requires only NTC approval, and the franchise itself which is owned by the corporation as the grantee thereof, the sale or transfer of which requires Congressional sanction. Since stockholders own the shares of stock, they may dispose of the same as they see fit. They may not, however, transfer or assign the property of a corporation, like its franchise. In other words, even if the original stockholders had transferred their shares to another group of shareholders, the franchise granted to the corporation subsists as long as the corporation, as an entity, continues to exist. The franchise is not thereby invalidated by the transfer of the shares. 

What is the nature of a bill of lading?

In Macondray and Company Inc. v. Acting Commissioner of Customs, it was held that a bill of lading is ordinarily merely a convenient commercial instrument designed to protect the importer or consignee. And in Phoenix Assurance Co., Ltd. v. United States Lines, it was held that as a receipt, a bill of lading recites the place and date of shipment, describes the goods as to quantity, weight, dimensions, identification marks, condition, quality and value.

What is the test in determining the business of a foreign corporation?

The true test, however, seems to be whether the foreign corporation is continuing the body or substance of the business or enterprise for which it was organized or whether it has substantially retired from it and turned it over to another. The term implies a continuity of commercial dealings and arrangements, and contemplates, to the extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in progressive prosecution of, the purpose and object of its organization.

When is a foreign corporation deemed as "doing business" in the Philippines?

There is no general rule or governing principle laid down as to what constitutes "doing" or "engaging in" or "transacting" business in the Philippines. Each case must be judged in the light of its peculiar circumstances. The acts of foreign corporations should be distinguished from a single or isolated business transaction or occasional, incidental and casual transactions which do not come within the meaning of the law. Where a single act or transaction, however, is not merely incidental or casual but indicates the foreign corporation's intention to do other business in the Philippines, said single act or transaction constitutes "doing" or "engaging in" or "transacting" business in the Philippines.

Can a single act of a foreign corporation be considered as doing business in the Philippines?

A single act may bring the corporation within the purview of the statute where it is an act of the ordinary business of the corporation. In such a case, the single act or transaction is not merely incidental or casual, but is of such character as distinctly to indicate a purpose on the part of the foreign corporation to do other business in the state, and to make the state a base of operations for the conduct of a part of the corporations' ordinary business.

Why is a foreign corporation required to obtain a license to do business in the Philippines?

The purpose of the rule requiring foreign corporations to secure a license to do business in the Philippines is to enable us to exercise jurisdiction over them for the regulation of their activities in this country. If a foreign corporation operates in the Philippines without submitting to our laws, it is only just that it not be allowed to invoke them in our courts when it should need them later for its own protection. While foreign investors are always welcome in this land to collaborate with us for our mutual benefit, they must be prepared as an indispensable condition to respect and be bound by Philippine law in proper cases.

Can title be vested in the transferree by the delivery of the duly indorsed certificate of stock?

As provided under Section 3 of Batas Pambansa Bilang 68, otherwise known as the Corporation Code of the Philippines, shares of stock may be transferred by delivery to the transferree of the certificate properly indorsed. Title may be vested in the transferree by the delivery of the duly indorsed certificate of stock.  However, no transfer shall be valid, except as between the parties until the transfer is properly recorded in the books of the corporation.

When is there a limit of liability for breaches of contract of a common carrier?

It should be deemed a limit of liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to or attended by any wilful misconduct, bad faith, recklessness, or otherwise improper conduct on the part of any official or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form of resulting injury. 

How does the law define a corporation?

A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.

What are the classes of corporations?

Corporations formed or organized under this Code may be stock or non-stock corporations. Corporations which have capital stock divided into shares and are authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the shares held are stock corporations. All other corporations are non-stock corporations.

What are treasury shares?

Treasury shares are shares of stock which have been issued and fully paid for, but subsequently reacquired by the issuing corporation by purchase, redemption, donation or through some other lawful means. Such shares may again be disposed of for a reasonable price fixed by the board of directors.

How long does a corporation exist and how can the term be extended?

A corporation shall exist for a period not exceeding fifty (50) years from the date of incorporation unless sooner dissolved or unless said period is extended. The corporate term as originally stated in the articles of incorporation may be extended for periods not exceeding fifty (50) years in any single instance by an amendment of the articles of incorporation, in accordance with this Code; Provided, That no extension can be made earlier than five (5) years prior to the original or subsequent expiry date(s) unless there are justifiable reasons for an earlier extension as may be determined by the Securities and Exchange Commission.

When does a corporation commence its 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.

What are the effects of the non-use of a corporate charter and continuous inoperation of a corporation?

If a corporation does not formally organize and commence the transaction of its business or the construction of its works within two (2) years from the date of its incorporation, its corporate powers cease and the corporation shall be deemed dissolved. However, if a corporation has commenced the transaction of its business but subsequently becomes continuously inoperative for a period of at least five (5) years, the same shall be a ground for the suspension or revocation of its corporate franchise or certificate of incorporation.

Who exercises corporate powers, conducts all business and holds the property of a corporation?

Unless otherwise provided in the Corporation Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stocks, or where there is no stock, from among the members of the corporation, who shall hold office for one (1) year until their successors are elected and qualified.

What is the minimum requirement to become a director or trustee of a corporation?

Every director must own at least one (1) share of the capital stock of the corporation of which he is a director, which share shall stand in his name on the books of the corporation. Any director who ceases to be the owner of at least one (1) share of the capital stock of the corporation of which he is a director shall thereby cease to be a director. Trustees of non-stock corporations must be members thereof. a majority of the directors or trustees of all corporations organized under this Code must be residents of the Philippines.

Who are the officers of a corporation and what are the residency requirements?

Immediately after their election, the directors of a corporation must formally organize by the election of a president, who shall be a director, a treasurer who may or may not be a director, a secretary who shall be a resident and citizen of the Philippines, and such other officers as may be provided for in the by-laws. Any two (2) or more positions may be held concurrently by the same person, except that no one shall act as president and secretary or as president and treasurer at the same time.

Is it only the Central Bank that has jurisdiction over violations of PD 114?

Basic is the rule that it is the allegations in the complaint that vests jurisdiction.A case in point is Philippine Woman’s Christian Temperance Union, Inc. vs. Abiertas House of Friendship, Inc. wherein we held that when the thrust of a complaint is on the ultra vires act of a corporation, that is the complained act of a corporation is contrary to its declared corporate purposes, the SEC has jurisdiction to entertain the complaint before it.

Does the SEC have jurisdiction over violations by a corporation of its franchise?

Yes. By law, the SEC has absolute jurisdiction, supervision and control over all corporations that are enfranchised to act as corporate entities. Consequently, a violation by a corporation of its franchise is properly within the jurisdiction of the SEC.

What gives juridical personality to a corporation and places it within SEC jurisdiction?

Jurisprudence has laid down the principle that it is the certificate of incorporation that gives juridical personality to a corporation and places it within SEC jurisdiction. The case of Orosa, Jr. vs. Court of Appeals teaches that this jurisdiction of the SEC is not affected even if the authority to operate a certain specialized activity is withdrawn by the appropriate regulatory body other than the SEC.

Does a corporation have a personality separate and distinct from those of the persons composing it?

It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related.  Mere ownership by a single stockholder or by another corporation of all or  nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality.

When is a transaction a simple loan and not a trust receipt agreement?

If the debtor received the goods subject of the trust receipt before the trust receipt itself is entered into, the transaction in question is a simple loan and not a trust receipt agreement.  This is especially true if prior to the date of execution of the trust receipt, ownership over the goods is already transferred to the debtor.  This situation is inconsistent with what normally obtains in a pure trust receipt transaction, wherein the goods belong in ownership to the bank and are only released to the importer in trust after the loan is granted.

What is the nature of the Trust Receipts Law?

The Trust Receipts Law does not seek to enforce payment of the loan, rather it punishes the dishonesty and abuse of confidence in the handling of money or goods to the prejudice of another regardless of whether the latter is the owner.

Is the practice of banks in making borrowers sign trust receipts to facilitate collection of loans a valid act?

The practice of banks of making borrowers sign trust receipts to facilitate collection of loans and place them under the threats of criminal prosecution should they be unable to pay it may be unjust and inequitable, if not reprehensible.  Such agreements are contracts of adhesion which borrowers have no option but to sign lest their loan be disapproved.  The resort to this scheme leaves poor and hapless borrowers at the mercy of banks, and is prone to misinterpretation, as had happened in this case.

When is a corporation estopped from denying the authority of its agent?

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 denying the agent’s authority.

What is a contract of surety?

A:  A contract of surety is an agreement where a party called the surety guarantees the performance by another party called the principal or obligor of an obligation or undertaking in favor of a third person called the obligee. Specifically, suretyship is a contractual relation resulting from an agreement whereby one person, the surety, engages to be answerable for the debt, default or miscarriage of another, known as the principal.

What is the power of eminent domain?

A: The power of eminent domain is “the right of a government to take and appropriate private property to public use, whenever the public exigency requires it, which can be done only on condition of providing a reasonable compensation therefor.”  It has also been described as the power of the State or its instrumentalities to take private property for public use and is inseparable from sovereignty and inherent in government. (Masikip vs. The City of Pasig, et al., G.R. No. 136349, January 23, 2006)

What is the amount of diligence required of common carriers and what are their liabilities as to loss of goods? 

A: From the nature of their business and for reasons of public policy, common carriers are bound to observe extraordinary diligence over the goods they transport according to the circumstances of each case. In the event of loss of the goods, common carriers are responsible, unless they can prove that this was brought about by the causes specified in Article 1734 of the Civil Code. In all other cases, common carriers are presumed to be at fault or to have acted negligently, unless they prove that they observed extraordinary diligence.