How to Answer Bar Questions or Any other Legal

Questions
Mimic the Courts procedure:
1. Identify the Parties and their rights and liabilities
2. The Issue
3. The Applicable Law, Jurisprudence and Doctrines
3a.Is the case falling under the exemptions?
4. Keywords (optional but very helpful)
THUS:

1. Corporate Separate Juridical Personality (1996) Q. NO.9(2)

E corporation sold its assets to M, Inc. after complying with complying with the requirements of
the Bulk Sales Law. Consequently one of the creditors of E corporation to collect the amount
due it, but found out E corporation had no more assets left. The creditor then sued M, Inc. on
the ground that M, Inc. is a mere alter ego of E corporation. Will the suit prosper? Explain.

1. M, Inc. a corporation as Defendant and Creditor as Plaintif

2. Whether or not M, Inc. is a mere alter ego of E Corporation?
3. Sec. 2. Corporation defined. - 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.
3a. Not falling under the Doctrine of Corporate alter ego
4. Alter Ego

Our Answer:
No, the suit will not prosper.

Under Sec. 2. Corporation defined. - 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.

In the case of Kukan Internation Corporation vs Hon. Amor Reyes:

Well-settled is the principle that the corporate mask may be removed or the
corporate veil pierced when the corporation is just an alter ego of a person or of
another corporation. For reasons of public policy and in the interest of justice, the
corporate veil will justifiably be impaled only when it becomes a shield for fraud,
illegality or inequity committed against third persons.

In the case of Rivera vs United Laboratories Inc.:

To disregard the separate juridical personality of a corporation, the wrongdoing

must be established clearly and convincingly. It cannot be presumed.

In the case at the bar there is no showing that M, Inc. is a mere alter ego of E
corporation absent such facts the suit must fail.

Suggested Answer:

The suit will not prosper. The sale by E corporation of its assets to M, Inc. does not result in the
transfer of the liabilities of the former to, nor in the assumption thereof of the latter. The facts
do not indicate that such transfer or assumption took place or was stipulated upon by the
parties in their agreement. Furthermore, the sale of the Corporation of its assets is a sale of its
property. It does not involve the sale of shares of stock of the corporation belonging to its
stockholders. There is, therefore no merger or consolidation that took place. E corporation
continued to exist and remain liable to the creditor.
 2. Corporation; Separate Juridical Personality (1996) Q. No. 8(a)
PR Co owns a beach resort with several cottages. Jaime, the President of PR, occupied one of
the cottages for residential purposes. After Jaime's term expired, PR wanted to recover
possession of the cottage. Jaime refused to surrender the cottage, contending that as a
stockholder and former President, he has a right to possess and enjoy the properties of the
corporation. Is Jaime's contention correct? Explain.

1. Jaime a stockholder and president as Defendant and PR a Corporation as

Plaintif
2. Whether or not Jaime has the right to possess and enjoy properties of the
corporation
3. Sec. 2. Corporation defined. - 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.
3a. Not falling under the Doctrine of Piercing the Corporate Veil
4. Right to possess and enjoy

Our Answer:
No, Jaimes Contention is not Correct

Under Sec. 2. Corporation defined. - 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.

In the case of Boyer-Roxas vs Court of Appeals the Supreme Court Held that:

A share of stock only typifies an aliquot part of the corporation's property, or the
right to share in its proceeds to that extent when distributed according to law and
equity but its holder is not the owner of any part of the capital of the corporation.
Nor is he entitled to the possession of any definite portion of its property or assets.
The stockholder is not a co-owner or tenant in common of the corporate property.

Thus since under Sec.2 a corporation is treated as an artificial being, or as a

juridical person by law which has a juridical personality separate and distinct from
its stockholders or members, the property it acquires belong to the corporation and
not to its stockholders or members.

SUGGESTED ANSWER:
Jaime's contention is not correct. Jaime may own shares of stock in PR Corp but such ownership
does not entitle him to the possession of any specific property of the corporation or a definite
portion thereof. Neither is he a co-owner of corporate property. Properties registered in the
name of the corporation are owned by it as an entity separate and distinct from its stockholders.

Stockholders like Jaime only own shares of stock in the corporation. Such shares of stock do
not represent specific corporate property. (Rebecca Boyer-Roxas v CA GR 100866 Jul 14,
92 211s470)
 3. Corporation; Separate Juridical Personality (1996) Q. No. 8(1) or 8b
Richard owns 90% of the shares of the capital stock of GOM Co. On one occasion, GOM
represented by Richard as President and General Manager executed a contract to sell a
subdivision lot in favor of Tomas. For failure of GOM to develop the subdivision, Tomas filed an
action for rescission and damages against GOM and Richard. Will the action prosper? Explain.

1. Richard controlling stockholder , President and General Manager as Defendant

and GOM a Corporation as Plaintif
2. Whether or not the action will prosper?
3. Sec. 2. Corporation defined. - 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.
3a. Not falling under the Doctrine of Piercing the Corporate Veil
4. The (Corporation Name) represented by (Person consider his capacity)

Our Answer:
This Requires a Qualified answer.

The action against the Corporation on the ground of non-fulfilment of its obligation shall
prosper since GOM and Tomas are the parties to the contract.

The action however against Richard must fail since he is in Good Faith acting only as the
President and General Manager of GOM or as a mere agent of the latter.

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 afected by the
personal rights, obligations and transactions of its stockholders or members and vice
versa.

Under Sec. 2. Corporation defined. - 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.

Therefore a corporation being an artificial being created by operation of law, it can enter
into a contract and incur rights and obligations and shall answerable to any liability
arising from such contracts.

SUGGESTED ANSWER:
The action may prosper against GOM but definitely not against Richard. Richard has a legal
personality separate and distinct from that of GOM. If he signed the contract to sell, he did so
as the President and General Manager of GOM and not in his personal capacity. Mere
ownership by Richard of 90% of the capital stock of GOM is not of itself sufficient ground to
disregard his separate legal personality absent a showing, for example that he acted
maliciously or in bad faith (EPG Const Co v CA GR 103372 Jn 22,92 210s230)
4. Corporation; Separate Juridical Personality (1995) Q. No.2
Ronald Sham doing business under the name of SHAMRON Machineries (Shamron) sold to
Turtle Mercantile (Turtle) a diesel farm tractor. In payment, Turtle's President and Manager
Dick Seldon issued a check for P50K in favor of Shamron. A week later, Turtle sold the tractor to
Briccio Industries (Briccio) for P60K. Briccio discovered that the engine of the tractor was
reconditioned so he refused to pay Turtle. As a result, Dick Seldon ordered Stop Payment of
the check issued to Shamron.

Shamron sued Turtle and Dick Seldon. Shamron obtained a favorable judgment holding co-
defendants Turtle and Dick
Seldon jointly and severally liable. Comment on the decision of the trial court. Discuss fully.

1. Turtle a Corporation and Dick Seldon as Corporate President as Defendant and

Shamron a Corporation as Plaintif
2. Whether or not the decision was proper?
3. Sec. 2. Corporation defined. - 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.
3a. Not falling under the Doctrine of Piercing the Corporate Veil
4. The (Corporation Name) represented by (Person consider his capacity) and
holding (party) liable (determine liability)

Our Answer:
The decision of the trial court is erroneous.

Under Sec. 2. Corporation defined. - 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.

A corporation being an artificial being created by operation of law should be

treated with a separate and distinct personality from its Directors or Trustees,
Stockholder or Members, Oficers and Employees.

In the case of Smith & Co. vs Ford:

All contracts entered into in its name by its regular appointed oficers and agents
are the contracts of the corporation and not those of the members or
stockholders.

In the case of Mcconnel vs CA it was held that:

The only instance that a President such as Dick Seldon will be held solidarily
liable with a corporation for whom the he is acting is when such act is made with
bad faith or malicious intent or any other act which are contrary to law and moral
or for a purpose that could not have been intended by the law that created that
separate personality.

Consequently absent any showing in the case at bar that Dick Seldon has acted
with bad faith or malicious intent the court must relieve him of such liability
SUGGESTED ANSWER:
The trial court erred in holding Dick Seldon, President and GM of Turtle, jointly and severally
liable with Turtle.
In issuing the check issued to Shamron and, thereafter, stopping payment thereof Seldon was
acting in his capacity as an officer of Turtle. He was not acting in his personal capacity.
Furthermore, no facts have been provided which would indicate that the action of Seldon was
dictated by an intent to defraud Shamron by himself or in collusion with Turtle. Having acted
in what he considered as his duty as an officer of the corporation, Seldon should not be held
personally liable.

Corporate Juridical Personality (1992) Q. No. 2

Retail Trade Law (1992)

A Cooperative purchased from Y Co on installments a rice mill and made a down payment
therefore. As security for the payment of the balance, the Cooperative executed a chattel
mortgage in favor of Y Corporation. Y Co in turn assigned its rights to the chattel mortgage to Z
Co a 5% foreign owned company doing business in the Philippines. The cooperative thereafter
made installment payments to Z Co.

Because the Cooperative was unable to meet its obligations in full, Z Co filed against it a court
suit for collection. The
Coop resisted contending that Z Co was illegally engaged in the retail trade business for having
sold a consumer good as opposed to a producer item. The Coop also alleged that Z had violated
the Anti-Dummy Law. Is Z guilty of violating the Retail Trade Law and the Anti-Dummy Law? Why?

1. Cooperative as Defendant and Z Co. a foreign owned company as Plaintif

2. Whether or not the Z co. is guilty of violating the Retail Trade Law and the Anti-
Dummy Law
3. Sec. 2. Corporation defined. - 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.
3a.Habitually engaged in selling to the general public consumption goods
4. The (Corporation Name) represented by (Person consider his capacity) and
holding (party) liable (determine liability)

Our Answer:
No. there is no violation of the Retail Trade Law and the Anti-Dummy Law

Under Sec. 2. Corporation defined. - 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.

Thus Z Corporation may acquire properties expressly authorized by law or incident

to its existence. Hence acquisition of property is only limited to those authorized by
law or incident to its existence.

The following are examples of such limitations:

Under the Anti-Dummy Law:

"Section 2-A. Any corporation which, having in its name or under its control, a right,
franchise, privilege, property or business, the exercise or enjoyment of, or to
corporations or associations at least sixty per centum of the capital of which is
owned by such citizens, permits or allows the use, exploitation or enjoyment thereof
by a person, corporation or association not possessing the requisites prescribed by
the Constitution or the laws of the Philippines; shall be punished by imprisonment
and forfeiture of franchise and privileges.

Under the Retail Trade Act for a corporation to held in violation of it the following
requisites must concur:
For a sale to be considered as retail, the following elements should concur:
(1) The seller should be habitually engaged in selling;
(2) The sale must be direct to the general public; and
(3) The object of the sale is limited to merchandise, commodities or goods for
consumption.

In the case at Bar Z corporation is not in violation of the Anti-Dummy Law since it did
not permit anyone the exercise or enjoyment of a right or privilege which is expressly
reserved by the Constitution or the laws to citizens of the Philippines or of any other
specific country. Neither is Z Corp. In violation of the Retail Trade act since Rice mill is
not a consumer item or goods for consumption it necessarily does not come within the
ambit of retail business as defined by Republic Act No. 1180. Hence, the suit must fail.

SUGGESTED ANSWER:
Z Co is not guilty of violating the Retail Trade Law and the Anti-Dummy Law. The term RETAIL
under the Retail Trade Act requires that the seller must be habitually engaged in selling to the
general public consumption goods. By consumption goods are meant personal, family and
household purposes. A Rice Mill does not fall under the category. Neither does it appear
that Z is habitually engaged in selling to the general public that commodity. Since there is no
violation of the Retail Trade Law, there would likewise by no violation of the Anti-Dummy Law.