Corpo Digests 1

7/24/2019 Corpo Digests 1

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Bataan Shipyard Engineering Co., Inc. vs. PCGG (G.R. No. 75885

ay !7, "#87$

%acts&Challenged in this special civil action of certiorari and prohibition

by a private corporation known as the Bataan Shipyard and Engineering

Co., Inc. are: (1 E!ec"tive #rders $"%bered 1 and &, pro%"lgated by

'resident Coraon C. )*"ino on +ebr"ary &, 1- and /arch 1&, 1-,

respectively, and (& the se*"estration, takeover, and other ordersiss"ed, and acts done, in accordance with said e!ec"tive orders by the

'residential Co%%ission on 0ood 0overn%ent andor its Co%%issioners

and agents, a2ecting said corporation. 3he se*"estration order iss"ed on

)pril 14, 1- was addressed to three of the agents of the Co%%ission,

ordering the% to se*"ester several co%panies a%ong which is Bataan

Shipyard and Engineering Co., Inc. #n the strength of the above

se*"estration order, several letters were sent to B)SEC# a%ong which is

that fro% /r. 5ose /. Balde, acting for the 'C00, addressed a letter dated

)pril 1, 1- to the 'resident and other o6cers of petitioner 7r%,

reiterating an earlier re*"est for the prod"ction of certain doc"%ents.

3he letter closed with the warning that if the doc"%ents were not

s"b%itted within 7ve days, the o6cers wo"ld be cited for 8conte%pt inp"rs"ance with 'residential E!ec"tive #rder $os. 1 and &.8 B)SEC#

contends that its right against self incri%ination and "nreasonable

searches and sei"res had been transgressed by the #rder of )pril 1,

1- which re*"ired it 8to prod"ce corporate records fro% 1-9 to 1-

"nder pain of conte%pt of the Co%%ission if it fails to do so.8 B)SEC#

prays that the Co"rt 1 declare "nconstit"tional and void E!ec"tive

#rders $"%bered 1 and &; & ann"l the se*"estration order dated )prils insistence. )viles showed the Spo"ses

+ir%e a copy of a draft deed of sale (83hird raft8 which )viles prepared.

Spo"ses +ir%e did not accept the 3hird raft beca"se they fo"nd its

provisions ones ref"sal

to sell the 'roperty reinforces r. +ir%e>s testi%ony that he and his wife

never consented to sell the 'roperty. -he essence o consent is the

conor)ity o the parties on the ter)s o the contract, the

acceptance /y one o the o0er )ade /y the other.3he contract to

sell is a bilateral contract. =here there is %erely an o2er by one party,

witho"t the acceptance of the other, there is no consent. )ss"%ing there

is a valid sale, there was no approval fro% the Board of irectors of B"kal

Enterprises as wo"ld 7nalie any transaction with the Spo"ses +ir%e.)viles did not have the proper a"thority to negotiate for B"kal

Enterprises. )viles testi7ed that his friend, e Castro, had asked hi% to

negotiate with the Spo"ses +ir%e to b"y the 'roperty. Lowever, there is

no Board Hesol"tion a"thoriing )viles to negotiate and p"rchase the

'roperty on behalf of B"kal Enterprises. It is the board of directors or

tr"stees which e!ercises al%ost all the corporate powers in a corporation.

3he Corporation Code provides :

SEC. &. -he /oard o directors or tr'stees. N nless otherwise

provided in this Code, the corporate powers of all corporations for%ed


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"nder this Code shall be e!ercised, all b"siness cond"cted and all

property of s"ch corporations controlled and held by the board of

directors or tr"stees to be elected fro% a%ong the holders of stock, or

where there is no stock, fro% a%ong the %e%bers of the corporation,

who shall hold o6ce for one (1 year and "ntil their s"ccessors are

elected and *"ali7ed.

SEC. . Corporate po1ers and capacity. N Every corporation

incorporated "nder this Code has the power and capacity:

! ! !

3o p"rchase, receive, take or grant, hold, convey, sell, lease, pledge,

%ortgage and otherwise deal with s"ch real and personal property,

incl"ding sec"rities and bonds of other corporations, as the transaction of

a lawf"l b"siness of the corporation %ay reasonably and necessarily

re*"ire, s"bAect to the li%itations prescribed by the law and the

Constit"tion.

nder these provisions, the power to p"rchase real property is vested in

the board of directors or tr"stees. =hile a corporation %ay appoint

agents to negotiate for the p"rchase of real property needed by the

corporation, the 7nal say will have to be with the board, whose approval

will 7nalie the transaction. ) corporation can only e!ercise its powers

and transact its b"siness thro"gh its board of directors and thro"gh its

o6cers and agents when a"thoried by a board resol"tion or its by


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allowed to conf"se the facts relating to e%ployer


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RING 3he S"pre%e Co"rt +ENIE+ the 'etition for Certiorari and

'rohibition. It r"led that Da Ca%apana contin"ed to e!ist despite the

death of Ha%on 3antongco. It f"rther r"led that the octrine of 'iercing

the Jeil of Corporate E!istence is not applicable in the present case.

+inally, it allowed the CIH to proceed with the conte%pt hearing.

1 and &

3he death of Ha%on 3antongco did not end the e!istence of Da

Ca%pana. 3he S"pre%e Co"rt applied the octrine of 'iercing the Jeil of

Corporate E!istence in 0H no. D


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fro% 5"ne 1 to )"g"st 1, 1-9. Coprada again asked for another grace

period stating as well that he is e!pecting the approval of his loan

application fro% a certain 7nancing co%pany, and that ten (1 tr"cks

have been ret"rned to Bagbag, $ovaliches.

In d"e ti%e, private respondent 7led a co%pliant for the recovery of

'&,. or the ret"rn of the 1 tr"cks with da%ages against )kron

and its o6cers and directors with the then Co"rt of +irst Instance of Hial.#nly petitioner answered the co%plaint denying any participation in the

transaction and alleging that )kron has a distinct corporate personality.

Le was, however, declared in defa"lt for his fail"re to attend the pre


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H E S # D 3 I # $

PN3, ;.&

I. +acts

;an'ary !7, "##7&$ational Invest%ent and evelop%ent Corporation

($IC, a govern%ent corporation, entered into a 5oint Jent"re

)gree%ent (5J) with Qawasaki Leavy Ind"stries, Dtd. of Qobe, 5apan

(Q)=)S)QI for the constr"ction, operation and %anage%ent of the S"bic

$ational Shipyard, Inc. (S$S which s"bse*"ently beca%e the 'hilippine

Shipyard and Engineering Corporation ('LIDSEC#. nder the 5J), the

$IC and Q)=)S)QI will contrib"te ' %illion for the capitaliation of

'LIDSEC# in the proportion of T


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virt"al transfer of land to a non


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s"bscribed and paid by +rank Diddell while the other fo"r shares were in

the na%e of Charles Q"r, E.5. arras, )ngel /anano and 5"lian Serrano

at one shares each. Its p"rpose was to engage in the b"siness of

i%porting and retailing #lds%obile and Chevrolet passenger cars and

0/C and Chevrolet tr"cks. )fter its incorporation, Didell O Co. was able to

declare stock dividends, thereby increasing the iss"ed capital stock of

the said corporation, which were d"ly approved by the Sec"rities and

E!change Co%%ission. 3here has also been an agree%ent e!ec"ted by+rank Didell on one hand, and /essrs. Q"r, arras, /anano and Serrano

on the other, which was f"rther s"pple%ented by two other

agree%ents wherein +rank Diddell transferred to vario"s e%ployees of

Diddell O Co. shares of stock. #n the basis of the agree%ent, 84T8 of the

earnings available for dividends accr"ed to +rank Diddell altho"gh at the

ti%e of the e!ec"tion of said instr"%ent, +rank Diddell owned all of the

shares in said corporation. +ro% 1-4 "ntil $ove%ber &&, 1-4, when the

p"rpose cla"se of the )rticles of Incorporation of Diddell O Co. Inc., was

a%ended so as to li%it its b"siness activities to i%portations of

a"to%obiles and tr"cks, Diddell O Co. was engaged in b"siness as an

i%porter and at the sa%e ti%e retailer of #lds%obile and Chevrolet

passenger cars and 0/C and Chevrolet tr"cks. #n ece%ber &, 1-4,the Diddell /otors, Inc. was organied and registered with the Sec"rities

and E!change Co%%ission with an a"thoried capital stock of '1,

of which '&, was s"bscribed and paid for as follows: Irene Diddell

wife of +rank Diddell 1-,-- shares and /essrs. /arcial '. Dicha"co, E. Q.

Bro%well, J. E. del Hosario and Es%enia Silva, 1 share each. )t abo"t the

end of the year 1-4, /essrs. /anano, Q"r and Qernot resigned fro%

their respective positions in the Hetail ept. of Diddell O Co. and they

were taken in and e%ployed by Diddell /otors, Inc. Beginning 5an"ary,

1-4-, Diddell O Co. stopped retailing cars and tr"cks; it conveyed the%

instead to Diddell /otors, Inc. which in t"rn sold the vehicles to the p"blic

with a steep %ark


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it did not e!ceed ', and 1T of the price if %ore than ' b"t not

%ore than '9, etc. 3his progressive rate of the sales ta! nat"rally

wo"ld te%pt the ta!payer to e%ploy a way of red"cing the price of the

7rst sale. )nd Diddell /otors, Inc. was the %edi"% created by Diddell O

Co. to red"ce the price and the ta! liability.

)s opined in the case of 0regory v. Lelvering, 8the legal right of a

ta!payer to decrease the a%o"nt of what otherwise wo"ld be his ta!es,or altogether avoid the% by %eans which the law per%its, cannot be

do"bted.8 B"t, as held in another case, 8where a corporation is a d"%%y,

is "nreal or a sha% and serves no b"siness p"rpose and is intended only

as a blind, the corporate for% %ay be ignored for the law cannot

co"ntenance a for% that is bald and a %ischievo"s 7ction.8 Consistently

with this view, the nited States S"pre%e Co"rt held that 8a ta!payer

%ay gain advantage of doing b"siness thr" a corporation if he pleases,

b"t the reven"e o6cers in proper cases, %ay disregard the separate

corporate entity where it serves b"t as a shield for ta! evasion and treat

the person who act"ally %ay take the bene7ts of the transactions as the

person accordingly ta!able.8

3h"s, we repeat: to allow a ta!payer to deny ta! liability on the gro"nd

that the sales were %ade thro"gh another and distinct corporation when

it is proved that the latter is virt"ally owned by the for%er or that they

are practically one and the sa%e is to sanction a circ"%vention of o"r ta!

laws.

I$3EH$)3I#$)D EV'HESS 3H)JED O 3#H SEHJICES, I$C. vs. C#H3 #+

)''E)DS, LE$HI Q)L$, 'LIDI''I$E +##3B)DD +EEH)3I#$.

F0.H. $o. 11-&. #ctober 1-, &G

Q)'$)$, 5.:

%acts& #n 5"ne 1--, International E!press 3ravel and 3o"r Services,

Inc., wrote a letter to the 'hilippine +ootball +ederation>s (+ederation

president Lenri Qahn, o2ering its services as a travel agency to the

latter. 3he +ederation sec"red the airline tickets for the trips to the So"th

East )sian 0a%es in Q"ala D"%p"r as well as trips to the 'eople?s

Hep"blic of China and Brisbane. 3he total cost of the tickets a%o"nted to

'44-,4.. +or the tickets received, the +ederation %ade two partial

pay%ents, both in Septe%ber of 1--, in the total a%o"nt of

'19,49..

#n 4 #ctober 1--, petitioner wrote the +ederation, thro"gh the

private respondent a de%and letter re*"esting for the a%o"nt of

'&,-4.. #n #ctober 1--, the +ederation, thro"gh the 'roAect

0intong )lay, paid the a%o"nt of '1,.. #n &9 ece%ber 1--,

Lenri Qahn iss"ed a personal check in the a%o"nt of ', as partial

pay%ent for the o"tstanding balance. $o f"rther pay%ents were %adedespite repeated de%ands pro%pting the 3ravel )gency to 7le a civil

case before the Hegional 3rial Co"rt of /anila. 3he 3ravel )gency s"ed

Lenri Qahn in his personal capacity and as 'resident of the +ederation

and i%pleaded the +ederation as an alternative defendant. 3he 3ravel

)gency so"ght to hold Lenri Qahn liable on the gro"nd that he allegedly

g"aranteed the said obligation.

=hile not denying the allegation that the +ederation owed the "npaid

balance in the a%o"nt of '&9,&4.&, Qahn averred that there was no

ca"se of action against hi% either in his personal capacity or in his

o6cial capacity as president of the +ederation. Le %aintained that he didnot g"arantee pay%ent b"t %erely acted as an agent of the +ederation

which has a separate and distinct A"ridical personality. 3he +ederation

was declared in defa"lt for failing to 7le an answer.

3he trial co"rt r"led in favor of the travel agency and held Qahn

personally liable for the +ederation>s obligation. It reasoned that Qahn

failed to add"ce proof of the corporate e!istence of the +ederation, which

was a %ere sports association. 3h"s, a vol"ntary "nincorporated

association, like the +ederation has no power to enter into, or to ratify, a

contract. 3he contract entered into by its o6cers or agents on behalf of

s"ch association is not binding on, or enforceable against it. 3he o6cers

or agents are the%selves personally liable.

#nly Lenri Qahn elevated the above decision to the Co"rt of )ppeals. #n

&1 ece%ber 1--4, the respondent co"rt rendered a decision reversing

the trial co"rt. 3he Co"rt of )ppeals recognied the A"ridical e!istence of

the +ederation and absolved Qahn fro% personal liability. It rationalied

that since petitioner failed to prove that Lenri Qahn g"aranteed the

obligation of the +ederation, he sho"ld not be held liable for the sa%e as

said entity has a separate and distinct personality fro% its o6cers.


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'etitioner 7led a %otion for reconsideration and as an alternative prayer

pleaded that the +ederation be held liable for the "npaid obligation. 3he

sa%e was denied by the appellate co"rt on the gro"nds that the trial

co"rt dis%issed the co%plaint against the federation, which was not

appealed. 3h"s, the federation was not a party to this appeal.

Iss'e& =hether the Co"rt of )ppeal erred in 7nding that the +ederation

was a A"ridical entityM

ed& Ues. 3he Co"rt of )ppeals cited Hep"blic )ct 1, Hevised

Charter of the 'hilippine )%ate"r )thletic +ederation, and 'residential

ecree $o. 4 as the laws fro% which said +ederation derives its

e!istence. )bove stated laws indicate that sports associations, s"ch as

the +ederation, %ay ac*"ire a A"ridical personality. Lowever, national

sports associations %ay be accorded corporate stat"s, s"ch does not

a"to%atically take place by the %ere passage of these laws.

Beore a corporation )ay acJ'ire K'ridica personaity, the

State )'st give its consent either in the or) o a specia a1 ora genera ena/ing act.=e do not agree with the appellate co"rt that

the 'hilippine +ootball +ederation ca%e into e!istence "pon the passage

of these laws. $owhere can it be fo"nd in H.). 1 or '.. 4 any

provision creating the 'hilippine +ootball +ederation.

)bove stated laws re*"ire that before an entity %ay be considered as a

national sports association, s"ch entity %"st be recognied by the

accrediting organiation, the 'hilippine )%ate"r )thletic +ederation

"nder H.). 1, and the epart%ent of Uo"th and Sports evelop%ent

"nder '.. 4. 3his fact of recognition, however, Lenri Qahn failed to

s"bstantiate. Le atte%pted to by attaching with %otion for

reconsideration before the trial co"rt a copy of the constit"tion and by


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SERGI3 %. N2GI2-, doing /'siness 'nder the na)e and stye

SERGI3 %. N2GI2- EN-., INC., C2R4 %IE+ -2LI, INC.,

petitioners, vs. N2-I3N2 2B3R RE2-I3NS C3ISSI3N (-IR+

+IISI3N$, N2-I3N2 3RG2NI2-I3N 3% 63R4INGEN and its

)e)/ers, E3N2R+3 -. G22NG, et a., respondents.

$at"re: Special Civil )ction for Certiorari "nder H"le of the H"les of

Co"rt

+acts: 'etitioner Clark +ield 3a!i, Inc. (C+3I, the president of who% was

Sergio $ag"iat, held a concessionaire?s contract to operate a ta!i service

within Clark )ir Base with )r%y )ir +orce E!change Services ())+ES.

C+3I, like Sergio +. $ag"iat Enterprises, was a fa%ily corporation. +or this

p"rpose, petitioners hired private respondents as ta!i drivers, working for

at least or 4 ti%es in a week.

"e to the phase


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efendants ene%ies, it was also incorporated "nder the laws of a co"ntry

with which 5apan was at war.


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Proessiona Services Inc v 2gana

3hese are three consolidated petitions for review on certiorari fro% the

decision of the Co"rt of )ppeals.

%acts&

#n )pril 4, 1-4, $atividad )gana was r"shed to the /edical City

Lospital beca"se of di6c"lty of bowel %ove%ent and bloody anal

discharge. )fter a series of %edical e!a%inations, r. /ig"el )%pil,

diagnosed her to be s"2ering fro% 8cancer of the sig%oid.8

#n )pril 11, 1-4, r. )%pil, assisted by the %edical sta24 of the /edical

City Lospital, perfor%ed an anterior resection s"rgery on $atividad. Le

fo"nd that the %alignancy in her sig%oid area had spread on her left

ovary, necessitating the re%oval of certain portions of it. 3h"s, r. )%pil

obtained the consent of $atividad>s h"sband, Enri*"e )gana, to per%itr. 5"an +"entes, to perfor% hysterecto%y on her. )fter r. +"entes had

co%pleted the hysterecto%y, r. )%pil took over, co%pleted the

operation and closed the incision. Lowever, the operation appeared to be

Xawed. 3he records show that the n"rse infor%ed r. )%pil of & %issing

sponge b"t the doctor contin"ed in closing the operation.

)fter a co"ple of days, $atividad co%plained of e!cr"ciating pain in her

anal region. She cons"lted both r. )%pil and r. +"entes abo"t it. 3hey

told her that the pain was the nat"ral conse*"ence of the s"rgery.

$atividadthen went to the nited States to seek f"rther treat%ent.

$atividad Xew back to the 'hilippines, still s"2ering fro% pains. 3wo

weeks thereafter, her da"ghter fo"nd a piece of ga"e protr"ding fro%her vagina. pon being infor%ed abo"t it, r. )%pil proceeded to her

ho"se where he %anaged to e!tract by hand a piece of ga"e %eas"ring

1. inches in width. Le then ass"red her that the pains wo"ld soon

vanish.

3he pains intensi7ed, pro%pting $atividad to seek treat%ent at the

'oly%edic 0eneral Lospital. =hile con7ned there, r. Ha%on 0"tierre

detected the presence of another foreign obAect in her vagina s body and %alpractice for

concealing their acts of negligence.

#n +ebr"ary 1, 1-, pending the o"tco%e of the above cases,$atividad died and was d"ly s"bstit"ted by her above work after he was done and contin"ed theoperation hi%selfa(r )%pil.

=#$ 'SI %ay be held solidarily liable for the negligence of r. )%pil.

Cai)s o the parties&

'SI alleged in its petition that the Co"rt of )ppeals erred in holding that:

(1 it is estopped fro% raising the defense that r. )%pil is not its

e%ployee; (& it is solidarily liable with r. )%pil; and ( it is not entitled


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to its co"nterclai% against the )ganas. 'SI contends that r. )%pil is not

its e%ployee, b"t a %ere cons"ltant or independent contractor. )s s"ch,

he alone sho"ld answer for his negligence.

3he )ganas %aintain that the Co"rt of )ppeals erred in 7nding that r.

+"entes is not g"ilty of negligence or %edical %alpractice, invoking the

doctrine of res ipsa lo*"it"r. 3hey contend that the pieces of ga"e are

pri%a facie proofs that the operating s"rgeons have been negligent.

r. )%pil asserts that the Co"rt of )ppeals erred in 7nding hi% liable for

negligence and %alpractice sans evidence that he left the two pieces of

ga"e in $atividad>s vagina. Le pointed to other probable ca"ses, s"ch

as: (1 it was r. +"entes who "sed ga"es in perfor%ing the

hysterecto%y; (& the attending n"rses> fail"re to properly co"nt the

ga"es "sed d"ring s"rgery; and ( the %edical intervention of the

)%erican doctors who e!a%ined $atividad in the nited States of

)%erica.

R'ing&

2s to +r. 2)pi

Hecords show that he did not present any evidence to prove that the

)%erican doctors were the ones who p"t or left the ga"es in $atividad>s

body. $either did he s"b%it evidence to reb"t the correctness of the

record of operation, partic"larly the n"%ber of ga"es "sed. )s to the

alleged negligence of r. +"entes, we are %indf"l that r. )%pil

e!a%ined r. +"entes> work and fo"nd it in order.

r. )%pil did not infor% $atividad abo"t the %issing two pieces of ga"e.

=orse, he even %isled her that the pain she was e!periencing was the

ordinary conse*"ence of her operation. 3o o"r %ind, what was initially an

act of negligence by r. )%pil has ripened into a deliberate wrongf"l act

of deceiving his patient.

2s to PSI

3here is e%ployers act is tanta%o"nt to holding o"t to the p"blic

that /edical City Lospital, thro"gh its accredited physicians, o2ers

*"ality health care services. By accrediting r. )%pil and r. +"entes and

p"blicly advertising their *"ali7cations, the hospital created the

i%pression that they were its agents, a"thoried to perfor% %edical or

s"rgical services for its patients. )s e!pected, these patients, $atividad

being one of the%, accepted the services on the reasonable belief that

s"ch were being rendered by the hospital or its e%ployees, agents, or

servants.

Corporate entities, like 'SI, are capable of acting only thro"gh other

individ"als, s"ch as physicians. If these accredited physicians do their Aob

well, the hospital s"cceeds in its %ission of o2ering *"ality %edical

services and th"s pro7ts 7nancially. Dogically, where negligence %ars the

*"ality of its services, the hospital sho"ld not be allowed to escape

liability for the acts of its ostensible agents.

=e now proceed to the doctrine of corporate negligence or corporate

responsibility.


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#ne allegation in the co%plaint is that 'SI as owner, operator and

%anager of /edical City Lospital, 8did not perfor% the necessary

s"pervision nor e!ercise diligent e2orts in the s"pervision of rs. )%pil

and +"entes and its n"rsing sta2, resident doctors, and %edical interns

who assisted rs. )%pil and +"entes in the perfor%ance of their d"ties as

s"rgeons.8 're%ised on the doctrine of corporate negligence, the trial

co"rt held that 'SI is directly liable for s"ch breach of d"ty.

=e agree with the trial co"rt.

In the present case, it was d"ly established that 'SI operates the /edical

City Lospital for the p"rpose and "nder the concept of providing

co%prehensive %edical services to the p"blic. )ccordingly, it has the

d"ty to e!ercise reasonable care to protect fro% har% all patients

ad%itted into its facility for %edical treat%ent. nfort"nately, 'SI failed

to perfor% s"ch d"ty.

It is worthy to note that r. )%pil and r. +"entes operated on $atividad

with the assistance of the /edical City Lospital>s sta2, co%posed of

resident doctors, n"rses, and interns. )s s"ch, it is reasonable to

concl"de that 'SI, as the operator of the hospital, has act"al orconstr"ctive knowledge of the proced"res carried o"t, partic"larly the

report of the attending n"rses that the two pieces of ga"e were %issing.

3he fail"re of 'SI, despite the attending n"rses> report, to investigate and

infor% $atividad regarding the %issing ga"es a%o"nts to callo"s

negligence. $ot only did 'SI breach its d"ties to oversee or s"pervise all

persons who practice %edicine within its walls, it also failed to take an

active step in 7!ing the negligence co%%itted. 3his renders 'SI, not only

vicario"sly liable for the negligence of r. )%pil "nder )rticle &1 of the

Civil Code, b"t also directly liable for its own negligence "nder )rticle

&19.

)nent the corollary iss"e of whether 'SI is solidarily liable with r. )%pilfor da%ages, let it be e%phasied that 'SI, apart fro% a general denial of

its responsibility, failed to add"ce evidence showing that it e!ercised the

diligence of a good father of a fa%ily in the accreditation and s"pervision

of the latter. In neglecting to o2er s"ch proof, 'SI failed to discharge its

b"rden "nder the last paragraph of )rticle &1 cited earlier, and,

therefore, %"st be adA"dged solidarily liable with r. )%pil. /oreover, as

we have disc"ssed, 'SI is also directly liable to the )ganas.

=LEHE+#HE, we E$U all the petitions and )++IH/ the challenged

ecision of the Co"rt of )ppeals.

B2CE C3. (PI.$, INC. and %RE+ERIC4 E. SEGGER2N,petitioners, vs. 3N. ;+GE IENCI3 . RI, IS2E P. ER2,

in his capacity as Co))issioner o Interna Reven'e, 2R-R3

3GR3NI3, R3+3%3 +E E3N, G2IN3 E2SME, IIR

+E3S2, NIC2N3R 2C3R+3, ;3

(G.R. No. 9?!>@#, !7 %e/r'ary "#7"$

3his is an original action of certiorari, prohibition and %anda%"s, with

prayer for a writ of preli%inary %andatory and prohibitory inA"nction.

%2C-S& #n &4 +ebr"ary 1-9, /isael '. Jera, Co%%issioner of Internal

Heven"e, wrote a letter addressed to 5"dge Jivencio /. H"i re*"esting

the iss"ance of a search warrant against Bache O Co. ('hil., Inc. and

+rederick E. Segger%an for violation of Section 4(a of the $ational

Internal Heven"e Code ($IHC, in relation to all other pertinent provisions

thereof, partic"larly Sections , 9&, 9, & and &-, and a"thoriing

Heven"e E!a%iner Hodolfo de Deon to %ake and 7le the application for

search warrant which was attached to the letter. In the afternoon of the

following day, e Deon and his witness, )rt"ro Dogronio, went to the

Co"rt of +irst Instance (C+I of Hial. 3hey bro"ght with the% the

following papers: Jera>s letter


19/45

warrant and Dogronio>s deposition. Search =arrant &


20/45

2CE S3E, RBBER P2S-IC C3RP3R2-I3N and C2 P2C,

petitioners,

vs.

3N. C3R- 3% 2PPE2S, PR3+CERS B2N4 3% -E

PIIPPINES and

REGI3N2 SERI%% 3% C233C2N CI-s decision which dis%issed the co%plaint

for da%ages 7led by the petitioner corporation and ordered the e!tras state%ent in the said

case, that Ra corporation %ay have a good rep"tation which, if

bes%irched, %ay also be a gro"nd for the award of %oral da%ages, is

an obiter dict"%.

)/EC>s clai% for %oral da%ages was gro"nded "nder ite% 9 of )rticle

&&1- of the Civil Code which a"thories the sa%e in cases of libel,

slander, or any other for% of defa%ation. 3he provision does not *"alify

whether the plainti2 seeking s"ch award is a nat"ral or A"ridical person.

3herefore, a A"ridical person s"ch as a corporation can validly co%plain of

libel or any other for% of defa%ation and clai% for %oral da%ages as a

res"lt thereof. /oreover, evidence of an honest %istake or the want of

character or rep"tation of the party libelled serves only to %itigate the

a%o"nt of da%ages. Since the broadcasts are libello"s per se, )/EC is

entitled to %oral da%ages. 3he a%o"nt is red"ced to 'hp 1,

beca"se )/EC has not s"2ered any s"bstantial or %aterial da%age to its

rep"tation.

G.R. No. "">!!! 2pri :, "##5

%R2NCISC3 S. -2-2+, ;3N . 3SEN2 and R3+3%3 G. BI23N,

petitioners,

vs.

3N. ;ESS B. G2RCI2, ;R., in his capacity as the Secretary o the

+epart)ent o -ransportation and Co))'nications, and E+S2

R- C3RP3R2-I3N, -+., respondents.

MI2S3N, ;.&

#C3HI$E:

3his is a petition "nder H"le of the Hevised H"les of Co"rt to prohibit

respondents fro% f"rther i%ple%enting the RHevised and Hestated

)gree%ent to B"ild, Dease and 3ransfer a Dight Hail 3ransit Syste% for

ES) and the S"pple%ental )gree%ent to the sa%e proAect.

+acts:

'etitioners +rancisco 3atad, 5ohn #s%ena and Hodolfo Biaon are

%e%bers of the 'hilippine Senate and are s"ing in their capacities as

Senators and as ta!payers. Hespondent 5es"s 0arcia was then Secretaryof the #3C, while private respondent ES) DH3 C#H'#H)3I#$, Dtd. is a

private corporation organied "nder the laws of Longkong.

In 1--, #3C planned to constr"ct a light railway transit line along

ES), which shall traverse the cities of 'asay, K"eon, /andal"yong and

/akati. 3he obAective is to provide a %ass transit syste% along ES) and

to alleviate the congestion in the %etropolis.

#n /arch 1, 1--, then #3C Secretary #scar #rbos, acting "pon a

proposal to constr"ct the ES) DH3 III on a B"ild


23/45

#f the applicants, only the ES) DH3 Consorti"%, co%posed of CQ

3atra of the Cech and Slovak +ederal Hep"blics, 3C0I Engineering )ll

)sia Capital and Deasing Corporation, 3he Sali% 0ro"p of 5akarta, E. D.

Enterprises, Inc., )./. #reta O Co. Capitol Ind"strial Constr"ction 0ro"p,

Inc, and +. +. Cr" O co., Inc, R%et the re*"ire%ents of garnering at least

&1 points per criteria, e!cept for Degal aspects, and obtaining an over


24/45

Constit"tion to +ilipino citiens and do%estic corporations, not foreign

corporations like private respondent.

Iss"e:

=hether or not the ES) DH3 III (foreign corporations is a co%%on

carrier and owns the p"blic "tility violating Sec 11, )rt VII 1-9 'hilippine

constit"tionM

Leld:

$o.

=hat private respondent owns are the rail tracks, rolling stocks like the

coaches, rail stations, ter%inals and the power plant, not a p"blic "tility.

=hile a franchise is needed to operate these facilities to serve the p"blic,

they do not by the%selves constit"te a p"blic "tility. =hat constit"tes a

p"blic "tility is not their ownership b"t their "se to serve the p"blic.

Section 11 of )rticle VII of the Constit"tion provides:

$o franchise, certi7cate or any other for% of a"thoriation for the

operation of a p"blic "tility shall be granted e!cept to citiens of the

'hilippines or to corporations or associations organied "nder the laws ofthe 'hilippines at least si!ty per cent"% of whose capital is owned by

s"ch citiens, nor shall s"ch franchise, certi7cate or a"thoriation be

e!cl"sive character or for a longer period than years.

3he right to operate a p"blic "tility %ay e!ist independently and

separately fro% the ownership of the facilities thereof. #ne can own said

facilities witho"t operating the% as a p"blic "tility, or conversely, one

%ay operate a p"blic "tility witho"t owning the facilities "sed to serve

the p"blic. 3he devotion of property to serve the p"blic %ay be done by

the owner or by the person in control thereof who %ay not necessarily be

the owner thereof.

=hile private respondent is the owner of the facilities necessary to

operate the ES) DH3 III, it ad%its that it is not enfranchised to operate a

p"blic "tility. In view of this incapacity, private respondent and #3C

agreed that on co%pletion date, private respondent will i%%ediately

deliver possession of the DH3 syste% by of lease for & years, d"ring

which period #3C shall operate the sa%e as a co%%on carrier and

private respondent shall provide technical %aintenance and repair

services to #3C.

In s"%, private respondent will not r"n the light rail vehicles and collect

fees fro% the riding p"blic. It will have no dealings with the p"blic and

the p"blic will have no right to de%and any services fro% it.

Since #3C shall operate the ES) DH3 III, it shall ass"%e all the

obligations and liabilities of a co%%on carrier. +or this p"rpose, #3C

shall inde%nify and hold har%less private respondent fro% any losses,da%ages, inA"ries or death which %ay be clai%ed in the operation or

i%ple%entation of the syste%, e!cept losses, da%ages, inA"ry or death

d"e to defects in the ES) DH3 III on acco"nt of the defective condition of

e*"ip%ent or facilities or the defective %aintenance of s"ch e*"ip%ent

facilities.

=herefore, the petition is IS/ISSE.


25/45

ead v. cC'o'gh agsaysay v. C2

ByCher )lcantarain C#H'# (Jean S )U11


26/45

the co%pany to /cC"llo"gh for val"e, who later also assigned the sa%e

for val"e to other people who with /cC"llo"gh s"bse*"ently for%ed the

/anila Salvage )ssociation.

3he plainti2 insists that he was received as general %anager of the 7rst

co%pany a salary, pro7ts %ade before the assign%ent and the val"e of

the personal property which he have left and sold to the defendants;

while /cC"llo"gh contends that the plainti2 was to receive only his

necessary e!penses.

ISSE&=hether or not the re%aining directors have the power to sell or

transfer to one of its %e%bers the assets of the corporation.

RING&


27/45

%aAority of stockholders. If a %aAority of the stockholders have a clear

and a better right to sell the corporate property than a %aAority of the

directors, then it can be said that a %aAority of the stockholders %ade

this sale or transfer to the defendant /cC"llo"gh.

3he corporation had been going fro% bad to worse. 3he work of trying to

raise the s"nken Spanish Xeet had been for several %onths abandoned.

3he corporation "nder the %anage%ent of the plainti2 had entirely failed

in this "ndertaking. It had broken its contract with the naval a"thorities

and the Y1, /e!ican c"rrency deposited had been con7scated. It

had no %oney. It was considerably in debt. It was a losing concern and a

7nancial fail"re. 3o contin"e its operation %eant %ore losses. S"ccess

was i%possible. 3he corporation was civilly dead and had passed into the

li%bo of "tter insolvency. 3he %aAority of the stockholders or directors

sold the assets of this corporation, thereby relieving the%selves and the

plainti2 of all responsibility. 3his was only the wise and sensible thing for

the% to do. 3hey acted in perfectly good faith and for the best interests

of all the stockholders. 8It wo"ld be a harsh r"le that wo"ld per%it one

stockholder, or any %inority of stockholders to hold a %aAority to theirinvest%ent where a contin"ation of the b"siness wo"ld be at a loss and

where there was no prospect or hope that the enterprise wo"ld be

pro7table.8

G.R. No. 58":8 +ece)/er "#, "#8#

C3NCEPCI3N 2GS2


28/45

&,9,. e!ec"ted by SBIC in favor of +ID/)$B)$Q; that the

foregoing acts were void and done in an atte%pt to defra"d the conA"gal

partnership considering that the land is conA"gal, her %arital consent to

the annotation on 3C3 $o. & was not obtained, the change %ade by

the Hegister of eeds of the titleholders was e2ected witho"t the

approval of the Co%%issioner of Dand Hegistration and that the late

Senator did not e!ec"te the p"rported eed of )ssign%ent or his consent

thereto, if obtained, was sec"red by %istake, violence and inti%idation.

She f"rther alleged that the assign%ent in favor of SBIC was witho"t

consideration and conse*"ently n"ll and void. She prayed that the eed

of )ssign%ent and the eed of /ortgage be ann"lled and that the

Hegister of eeds be ordered to cancel 3C3 $o. &&41 and to iss"e a new

title in her favor.

#n /arch 9, 1-9-, herein petitioners, sisters of the late senator, 7led a

%otion for intervention on the gro"nd that on 5"ne &, 1-9, their brother

conveyed to the% ones clai%s can be ventilated in a

separate proceeding. 'etitioner>s %otion for reconsideration was denied.

Lence this instant reco"rse. 'etitioners arg"e that 41.T of the entire

o"tstanding capital stock of SBIC entitles the% to a signi7cant vote on

corporate a2airs that they are a2ected by the action of the widow of their

late brother for it concerns the only tangible asset of the corporation andthat it appears that they are %ore vitally interested in the o"tco%e of the

case than SBIC.

ISSE& 6hether or not petitioners have a ega interest in the

s'/Kect )atter in itigation to entite the) to intervene in the

proceedings.

E+& No.

". . In the case of Bata%a +ar%ers? Cooperative /arketing )ssociation,

Inc. v. Hosal, we held: 8)s clearly stated in Section & of H"le 1& of the

H"les of Co"rt, to be per%itted to intervene in a pending action, the party

%"st have a legal interest in the %atter in litigation, or in the s"ccess of

either of the parties or an interest against both, or he %"st be so sit"ated

as to be adversely a2ected by a distrib"tion or other disposition of the

property in the c"stody of the co"rt or an o6cer thereof .8

3o allow intervention, FaG it %"st be shown that the %ovant has legal

interest in the %atter in litigation, or otherwise *"ali7ed; and FbG

consideration %"st be given as to whether the adA"dication of the rights

of the original parties %ay be delayed or preA"diced, or whether the

intervenor?s rights %ay be protected in a separate proceeding or not.

Both re*"ire%ents %"st conc"r as the 7rst is not %ore i%portant than

the second.

3he interest which entitles a person to intervene in a s"it between other

parties %"st be in the %atter in litigation and of s"ch direct and

i%%ediate character that the intervenor will either gain or lose by the

direct legal operation and e2ect of the A"dg%ent. #therwise, if persons

not parties of the action co"ld be allowed to intervene, proceedings willbeco%e "nnecessarily co%plicated, e!pensive and inter%inable. )nd this

is not the policy of the law.

3he words 8an interest in the s"bAect8 %ean a direct interest in the ca"se

of action as pleaded, and which wo"ld p"t the intervenor in a legal

position to litigate a fact alleged in the co%plaint, witho"t the

establish%ent of which plainti2 co"ld not recover.

Lere, the interest, if it e!ists at all, of petitioners


29/45

&. 3he petitioners cannot clai% the right to intervene on the strength of

the transfer of shares allegedly e!ec"ted by the late Senator. 3he

corporation did not keep books and records. ""'erforce, no transfer was

ever recorded, %"ch less e2ected as to preA"dice third parties. 3he

transfer %"st be registered in the books of the corporation to a2ect third

persons. 3he law on corporations is e!plicit. Section of the Corporation

Code provides, th"s: 8$o transfer, however, shall be valid, e!cept as

between the parties, "ntil the transfer is recorded in the books of the

corporation showing the na%es of the parties to the transaction, the date

of the transfer, the n"%ber of the certi7cate or certi7cates and the

n"%ber of shares transferred.8

)nd even ass"%ing arg"endo that there was a valid transfer, petitioners

are nonetheless barred fro% intervening inas%"ch as their rights can be

ventilated and a%ply protected in another proceeding.

!n the topic of corporate criminal liability

SI2 v. PE3PE 3% -E PIIPPINES

GR No. 9?@8#:

2pri !8, "#8?

+e Castro, ;.&

%acts&

3his case involves a petition for review of the decision of the Co"rt of

)ppeals a6r%ing the C+I of /anila convicting the appellant of estafa.

3he facts reveal that in 1-, the acc"sed 5ose Sia was the

general %anager of /etal /an"fact"ring Co%pany of the

'hilippines engaged in the %an"fact"ring of steel o6ce

e*"ip%ent. =hen the co%pany was in need of raw %aterials to be

i%ported fro% abroad, Sia applied for a letter of credit to i%port

steel sheets fro% 3okyo, 5apan, the application being directed to

Continental Bank and was opened in the a%o"nt of Y1,.

)ccording to the Continental Bank, the delivery of the steel sheets was

only per%itted "pon the e!ec"tion of the tr"st receipt. =hile according

to Sia, the steel sheets were already delivered and were even

converted to e*"ip%ent before the tr"st receipt was signed by

hi%. Lowever, there is no *"estion that when the bill of e!change

beca%e d"e, neither the acc"sed nor his co%pany %ade pay%ents,

despite de%ands of the bank. #n appeal, Sia contends that he sho"ld

not be held liable.

Iss'e&=#$ petitioner Sia %ay be liable for the cri%e charged, having

acted only for and in behalf of his co%pany.

ed&

$#. 3he Co"rt disp"ted the reliance of the lower co"rt and the C) on the

general principle that for a cri%e co%%itted by a corporation, the

responsible o6cers thereof wo"ld personally bear the cri%inal liability, as

en"nciated in 3an Boon Qong. 3he latter provides that: RFtGhe corporation

was directly re*"ired by law to do an act in a given %anner and the sa%e

law %akes the person who fails to perfor% the act in the prescribed

%anner e!pressly liable cri%inally. 3he perfor%ance of an act is anobligation directly i%posed by the law on the corporation. Since it is a

responsible o6cer or o6cers of the corporations who act"ally perfor%

the act for the corporation, they %"st of necessity be the ones to ass"%e

the cri%inal liability; otherwise this liability as created by the law wo"ld

be ill"sory, and the deterrent e2ect of the law, negated.

3he Co"rt concl"ded that the cited case does not fall s*"arely

with the circ"%stances s"rro"nding Sia since the act alleged to be a

cri%e is not in the perfor%ance of an act directly ordained by law to be

perfor%ed by the corporation. 3he act is i%posed by the agree%ent of

the parties in p"rs"it of the b"siness. 3he intention of the parties is

therefore a factor deter%inant of whether a cri%e or a civil obligation

alone is co%%itted. 3he absence of a provision of the law even in the

H'C %aking Sia cri%inally liable as the president of his co%pany created

a do"bt that %"st be r"led in his favor according to the %a!i%, that all

do"bts %"st be resolved in favor of the acc"sed.


30/45

%iipinas Broadcasting v. 2go edica and Ed'cationa Center9

Bico Christian Coege o edicine G.R. No. ">"##>.

;an'ary "7, !@@5

%2C-S& 'etitioner +ilipinas Broadcasting $etwork, Inc (+B$I assails the

Hesol"tion of the C) which %odi7ed the ece%ber 14, 1--& decision of

the H3C of Degapi City (as to the a%o"nt of %oral da%ages, and fo"nd

petitioner and its broadcasters Ler%ogenes )legre and Car%elo Hi%a

liable for libel. 3he lower co"rt ordered +B$I, )legre and Hi%a tosolidarily pay %oral da%ages, attorney>s fees and the costs of the s"it to

)go /edical and Ed"cational Center< Bicol Christian College of /edicine

()/EC.

3he co%plaint alleged that )legre and Hi%a had %ade R%alicio"s

i%p"tations and as s"ch destroyed plainti2s> ()/EC and )ngelita )go,

ean of the College of /edicine rep"tation by citing the alleged

co%plaints of st"dents, parents and teachers. 3he co%plaint cited that

defendants had %ade the 2 libello"s i%p"tations with no fact"al basis:

(1 3hat )/ECs ad%inistration and; ( 3hat

)/EC is a d"%ping gro"nd of %oral and physical %is7ts beca"se it

contin"ed to accept RreAects in order to %ini%ie salary e!penses. +B$I

was i%pleaded as a defendant for Rfailing to e!ercise d"e diligence in the

selection and s"pervision of its e%ployees ()legre and Hi%a. ) /otion to

is%iss was 7led in behalf of +B$I which the H3C denied. 3he lower co"rt

held that the broadcasts were liable per se and were not the res"lt of

straight reporting beca"se it had no fact"al basis beca"se the

broadcasters failed to verify their reports. +B$I failed to e!ercise the d"ediligence as re*"ired by law. Lence, the A"dg%ent re*"iring +B$I, )legre

and Hi%a to pay %oral da%ages ('hp ,, pl"s rei%b"rse%ent of

attorney>s fees ('hp , and the costs of the s"it. C) lowered the

a%o"nt of %oral da%ages to 'hp 1,.

ISSE& =hether or not )/ECs clai% for %oral da%ages was gro"nded "nder ite% 9 of )rticle

&&1- of the Civil Code which a"thories the sa%e in cases of libel,

slander, or any other for% of defa%ation. 3he provision does not *"alify

whether the plainti2 seeking s"ch award is a nat"ral or A"ridical person.

3herefore, a A"ridical person s"ch as a corporation can validly co%plain of

libel or any other for% of defa%ation and clai% for %oral da%ages as a

res"lt thereof. /oreover, evidence of an honest %istake or the want of

character or rep"tation of the party libelled serves only to %itigate the

a%o"nt of da%ages. Since the broadcasts are libello"s per se, )/EC isentitled to %oral da%ages. 3he a%o"nt is red"ced to 'hp 1,

beca"se )/EC has not s"2ered any s"bstantial or %aterial da%age to its

rep"tation.

2--


31/45

it within the a%bit of the stat"tory prohibitions against the

advertise%ents which it has ca"sed to be p"blished and are now assailed

in this proceeding.

F'E3I3I#$ 3# 3LE SC 3# ISSE CE)SE O ESIS3 #HEH #+

HES'#$E$3>S )JEH3ISE/E$3SG

%2C-S&

1. 'etitioner /a"ricio lep prays for the SC to iss"e a cease O desist

order to the respondent, 3he Degal Clinic, Inc., to perpet"ally refrain the%

fro% advertising their services, tagged as )nne! ) O B, to wit:

(nne) (

*+$,+T (,,I(+ %/01.11 for a valid marriage.

Info on 2I3!,$+. ('*+&$+. (&&4#+&T. 3I*(.T5+ %lease call6 /78-1909 #+(# /7897:7 /77718 $#I&I$ I&$.

lr. 3ictoria 'ldg. 4& (ve. la.

(nne) '

4( 2I3!,$+. 2!& %(,?I&*!&

an (ttorney in uam is giving >,++ '!!?* on uam 2ivorce through

The #egal $linic beginning onday to >riday during oce hours.

uam divorce. (nnulment of arriage. Immigration %roblems 3isa +)t.

@uotaA&on-quota ,es. B *pecial ,etireeCs 3isa. 2eclaration of (bsence.

,emarriage to >ilipina >iancees. (doption. Investment in the %hil.

4*A>oreign 3isa for >ilipina *pouseA$hildren. $all arivic. T5+ 9> 3ictoria

'ldg. 7D 4& (ve. #+(# +rmita anila nr. 4* +mbassy $#I&I$ I&$."

Tel. /78-97:7; /78-97/8; /77-718; /78-1909

&. 'etitioner contends that the advertise%ents are cha%perto"s,

"nethical, de%eaning of the law profession, and destr"ctive of the

con7dence of the co%%"nity in the integrity of the %e%bers of the bar

and that, to which as a %e%ber of the legal profession, he is asha%ed

and o2ended.

. Hespondent clai%s it is not engaged in the practice of law, b"t in

rendering Rlegal s"pport services thro"gh paralegals with the "se of

%odern co%p"ters and electronic %achines. +"rther, they aver that

ass"%ing the services advertised are legal services, the act ofadvertising the% sho"ld be allowed by decided A"rispr"dence (5ohn Bates

O Jan #>Steen vs State Bar of )riona.

ISSE& =hether respondent corporation < 3he Degal Clinic < is engaged in

the "na"thoried practice of law to %erit the iss"ance of the cease O

desist order.

RING&


32/45

'"blic policy re*"ires that the practice of law be li%ited to those

individ"als fo"nd d"ly *"ali7ed in ed"cation and character. 3he p"rpose

is to protect the p"blic, the co"rt, the client and the bar fro% the

inco%petence or dishonesty of those "nlicensed to practice law and not

s"bAect to the disciplinary control of the co"rt.

It is apt to recall that only natural personscan engage in the practice oflaw, and s"ch li%itation cannot be evaded by a corporation e%ploying

co%petent lawyers to practice for it. #bvio"sly, this is the sche%e or

device by which respondent 83he Degal Clinic, Inc.8 holds o"t itself to the

p"blic and solicits e%ploy%ent of its legal services. It is an odious

vehiclefor deception, especially so when the p"blic cannot ventilate any

grievance for malpracticeagainst the b"siness cond"it. 'recisely, the

li%itation of practice of law to persons who have been d"ly ad%itted as

%e%bers of the Bar (Sec. 1, H"le 1, Hevised H"les of Co"rt is to

s"bAect the %e%bers to the disciplineof the S"pre%e Co"rt. )ltho"gh

respondent "ses its business name, the persons and the lawyers who act

for it are s"bAect to co"rt discipline. 3he practice of law is not a

profession open to all who wish to engage in it nor can it be assigned toanother (See )%. 5"r. &9. It is apersonal rightli%ited to persons who

have *"ali7ed the%selves "nder the law. It follows that not only

respondent b"t also all the persons who are acting for respondent are the

persons engaged in "nethical law practice.

G.R. No. "557> Septe)/er "7, "#"#

SI-, BE C3P2N< (-+.$,petitioner,

vs.

;32MIN N2-II+2+, Coector o C'sto)s o the port o

Ce/',respondent.

) writ of mandamus is prayed for by S%ith, Bell O Co. (Dtd., against

5oa*"in $atividad, Collector of C"sto%s of the port of Ceb", 'hilippine

Islands, to co%pel hi% to iss"e a certi7cate of 'hilippine registry to the

petitioner for its %otor vessel 'ato. 3he )ttorneys %erchandise between ports in the

islands. )pplication for registration was %ade at Ceb" at the Collector ofC"sto%s


33/45

Leld:

$o. (A"dg%ent a6r%edNplainti2 can>t be granted registry. =hile S%ith,

Bell O Co. Dtd., a corporation having alien stockholders, is entitled to the

protection a2orded by the d"es fee.

ISSE&3he only iss"e to be resolved is whether, "pon the facts fo"nd by

the trial co"rt, +rancisco Sycip %ay be held liable, Aointly and severally

with his co


34/45

part, of the fact that )SS#CI)3E who% he represented and over whose

b"siness and a2airs he had absol"te control, was in no position to co%ply

with the obligation it had ass"%ed. Conse*"ently, he cannot now seek

ref"ge behind the general principle that a corporation has a personality

distinct and separate fro% that of its stockholders and that the latter are

not personally liable for the corporate obligations. 3o the contrary, "pon

the proven facts, we feel perfectly A"sti7ed in Rpiercing the veil of

corporate 7ction and in holding Sycip personally liable, Aointly andseverally with his cos sale was void, that the Corporation was the lawf"l owner

of the certi7cates and ordering +errer and 'antranco to pay attorney>s


35/45

fees. It also held that Jillara%a and the corporation were separate and

distinct entities.

Iss'es&(1 =hether the agree%ent that Jillara%a 8SL)DD $#3 +#H )

'EHI# #+ 1 UE)HS +H#/ 3LE )3E #+ 3LIS S)DE, )''DU +#H )$U 3'

SEHJICE IE$3IC)D #H C#/'E3I$0 =I3L 3LE BUEH,8 apply to new lines

only or does it incl"de e!isting linesM;

(& )ss"%ing that said stip"lation covers all kinds of lines, is s"chstip"lation valid and enforceableM;

( In the a6r%ative, that said stip"lation is valid, did it bind the

CorporationM

ed& )ltho"gh Jillara%a was not a stockholder or an incorporator, his

wife was an incorporator and also the treas"rer of the Corporation. 3he

evidence proved that Jillara%a had act"al control of the f"nds of the

Corporation and appeared as the act"al owner and treas"rer. In fact the

f"nds of the Corporation were deposited in his personal acco"nt. 3he

initial cash capitaliation of '1, was %ostly 7nanced by Jillara%

thro"gh an ', personal check he iss"ed hi%self. 3he tr"cks of the

Corporation were also p"rchased with his personal checks. 0asoline

p"rchases were %ade in his na%e. Lis personal acco"nts were also paid

by the Corporation. Jillara%a hi%self ad%itted that he %ingled the

corporate f"nds with his own %oney.

3he foregoing circ"%stances are strong pers"asive evidence

showing that Jillara%a has been too %"ch involved in the a2airs of the

Corporation to altogether negative the clai% that he was only a part


36/45

+ernando, A"dg%ent debtor, had in the certi7cates of p"blic convenience

on the day of the sale.

2+EI3 C. CR, co)painant vs MI-ERI3 . +2IS2s act"ation in enforcing a A"dg%ent against

co%plainant who is not the A"dg%ent in the case calls for disciplinary

action. Considering the %inisterial nat"re of his d"ty in enforcing writs of

e!ec"tion, what is inc"%bent "pon hi% is to ens"re that only that portion

of a decision ordained or decreed in the dispositive part sho"ld be the

s"bAect of e!ec"tion. $o %ore, no less.

-he tenor o the NRC K'dg)ent and the i)pe)enting 1rit is

cear eno'gh. It directed M'aitrans i)o'sine Service Inc to

reinstate the discharged e)poyees and pay the) '

/ac*1ages. Respondent ho1ever, chose to pierce the vei o

corporate entityQ 's'rping a po1er /eonging to the co'rt andass')ed i)providenty that since the co)painant is the

o1nerpresident o M'aitrans i)o'sine Service, Inc. they are

one and the sa)e.

It is a 1e9setted doctrine /oth in a1 and in eJ'ity that as a

ega entity, a corporation has a personaity distinct and

separate ro) its individ'a stoc*hoders or )e)/ers. -he )ere

act that one is president o a corporation does not render the

property he o1ns or possesses the property o the corporation,

since the president, as individ'a, and the corporation are

separate entities.

)CC#HI$0DU, we 7nd Hespondent ep"ty Sheri2 alisay $E0DI0E$3 in

the enforce%ent of the writ of e!ec"tion in $DHC Case no.


37/45

G.R. No. "@@8:: ;'y ">, "##!

REBECC2 B3


38/45

chieXy of real estate ($elson v. #wen, 11 )la., 9&, &1 So. 9; /orrow v.

0o"ld14 Iowa 1, 1& $.=. 94. ) share of stock only typi7es an

ali*"ot part of the corporation?s property, or the right to share in its

proceeds to that e!tent when distrib"ted according to law and e*"ity

(Lall O +aley v. )laba%a 3er%inal, 19 )la., -, So. &, b"t its

holder is not the owner of any part of the capital of the corporation

(Bradley v. Ba"der, #hio St., &. $or is he entitled to the possession

of any de7nite portion of its property or assets (0ottfried J. /iller, 14.S., &1; 5ones v. avis, #hio St., 494. 3he stockholder is not a co

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Corpo Digests 1