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#74: BA Savings Bank, petitioner vs. Sia (Roger Sia, Taciana Sia and John Doe), respondents Facts:
The instant petition for certiorari and mandamus with urgent prayer for issuance of writ of preliminary injunction and/or temporary restraining order filed by petitioner was denied due course by the CA on the ground that ―the certification on Anti-Forum Shopping incorporated in the petition was signed NOT by the duly authorized representative of the petitioner,as required under Supreme Court Circular No. 28-91 BUT by it Counsel, in contravention of said circular‖. A motion for reconsideration was subsequently filed with the attached Secretary‘s Certificate showing that the petitioner‘s Board of Directors approved a resolution authorizing its lawyer to represent it in any action or proceeding before any court, tribunal or agency; and to sign, execute and deliver the Certificate of NFS, among others but was also denied. Hence, this appeal.
Issue: Whether S.C. revised Circular 28-91 allows a corporation to authorize its counsel to execute a Certificate of NFS for and on it behalf? Held: Yes. A corporation like the petitioner has NO powers except those EXPRESSLY conferred on it by the Corp. Code and those that are implied by or are incidental to its existence. A corporation exercises said powers through its BOD and or duly authorized officers or agents. Physical acts like the signing of documents can be performed only by NATURAL PERSONS duly authorized for the purpose by corporate lawyers or by a specific act of the BOD. The requirement of Circular cannot be imposed on artificial persons like corporation for the simple reason that they cannot personally do the task themselves. In the present case, the BOD issued a resolution specifically authorizing its lawyers ―to act as their agents in any action or proceeding before any court, other tribunal or agency; and to sign, execute and deliver the Certificate of NFS and other instruments necessary for such action or proceeding. The Resolution was sufficient to vest such persons with the authority to bind the corporation and was specific enough as to the acts they were empowered to do. 75. Madrigal & Company, Inc. vs. Zamora Facts: Petitioner and Rizal Cement Co were sister companies. Both were owned by the same stockholders. Respondent Labor Union (Madrigal Employees Union) sought for the renewal of their CBA with the petitioner which included a demand for wage increase and other economic benefits. However, petitioner requested for deferment in the negotiations. Petitioner reduced its capital stock on two occasions. Such was effected through the distribution of the marketable securities owned by the petitioner to its stockholders in exchange for their shares in an equivalent amount in the corporation.
Petitioner's failure to negotiate with the labor union regarding their CBA prompted the latter to file a complaint for ULP. Petitioner answered alleging that it has ceased operating temporarily because of the stockholders' desire to phase out the operations of Madrigal & Co due to lack of business incentives and prospects and in order to prevent further losses it has to reduce its capital stock and effect retrenchment. LA rendered a decision in favor of the labor union. NLRC affirmed the said decision. Issue: W/N petitioner's reduction of its capital stock is justified. Held: SC held that it was shown in the petitioner company's financial records that it had been making substantial profits in its operation from 1972-1975. Its act of reducing its capital stock was done to its responsibility to evade its responsibility towards the employees. The dividends received by the company are corporate earnings arising from corporate investment." The petitioner company had entered such earnings in its financial statements as profits, which it would not have done if they were not in fact profits. SC further held that it is incorrect to say that such profits — in the form of dividends — are beyond the reach of the petitioner's creditors since the petitioner had received them as compensation for its management services in favor of the companies it managed as a shareholder thereof. As such shareholder, the dividends paid to it were its own money, which may then be available for wage increments. It is not a case of a corporation distributing dividends in favor of its stockholders, in which case, such dividends would be the absolute property of the stockholders and hence, out of reach by creditors of the corporation. Here, the petitioner was acting as stockholder itself, and in that case, the right to a share in such dividends, by way of salary increases, may not be denied its employees. Capital reduction was nothing but a premature and plain distribution of corporate assets to obviate a just sharing to labor of the vast profits obtained by its joint efforts with capital through the years.
76. PEÑA VS. CA FACTS: The validity of the redemption of a foreclosed real property is the center of this controversy. The facts as found by the respondent court are not disputed. PAMBUSCO mortgaged the questioned lots to the DBP.. This mortgage was foreclosed. In the foreclosure sale the said properties were awarded to Rosita Peña as highest bidder. The certificate of sale was then issued and registered. On November 19, 1974, the board of directors of PAMBUSCO, through three) out of its five directors, resolved to assign its right of redemption over the aforesaid lots and authorized one of its members, Atty. Joaquin Briones "to execute and sign a Deed of Assignment for and in behalf of PAMBUSCO in favor of any interested party . . ." Consequently, Briones executed a Deed of Assignment of PAMBUSCO's redemption right over the subject lots in favor of Marcelino Enriquez The latter then redeemed the said properties and a certificate of redemption was issued in his favor . A day after the aforesaid certificate was issued, Enriquez executed a deed of absolute sale of the subject properties in favor of plaintiffs-appellants, the spouses Rising T. Yap and Catalina Lugue. On September 8, 1975, Peña wrote the Sheriff notifying him that the redemption was not valid as it was made under a void deed of assignment. She then requested the recall of the said redemption and a restraint on any registration or transaction regarding the lots in question. Spouses Rising T. Yap and Catalina Lugue also commenced an action for recovery of questioned lot from Peña. ISSUE:
In 1993. 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. the IDP. Specifically. 33295. Both were prescribed to prepare and adopt by-laws for submission. Ligon. the disputed Deed of Absolute Sale executed by the fake Carpizo Board and INC was intrinsically void ab initio. Under Section 30 of the then applicable Corporation Law. Islamic leaders organized and incorporated the ISLAMIC DIRECTORATE OF THE PHILIPPINES (IDP). Securities and Exchange Commission FACTS: The Articles of Incorporation (AIC) of Jamiatul Philippine-Al Islamia.then filed in the Court of Appeals a petition for certiorari in GRN SP-27973 which was dismissed so she further petitioned it for review before the Supreme Court docketed as GRN 107751.G. the Carpizo Group and the Abbas/Tamano group.25. two Muslim groups came about. constitutes the only property of the IDP. not bona fide members of the IDP as they were made to appear to be. and where all these elements must be present to constitute a valid contract. from all indications. SP No. Ineluctably. The Tandang Sora property. Datu Tagoranao Benito v.000 shares at a par value of P10 each.4012) before the SEC seeking to declare null and void the sale of property by the Caprizo Group. In 1972. Q-90-6937. The corporation had an authorized capital stock of P200. elections can occur but neither adhered In 1989. Tandang Sora. the Supreme Court rendered judgment in GRN 107751. Premises considered. but was denied on grounds of lack of juridical personality of the IDP-Tamano Group. it appears from the records. in a suit between the Carpizo Group and the Abbas Group. Inc. in Case 2687. Of the authorized capital stock. Nothing thus becomes more settled than that the IDPCarpizo Group with whom INC contracted is a fake Board. No doubt. This is. a case not only of vitiated consent. Tamano Group sought to intervene in the civil case no. 4012 but was denied because the cause had been final and executory. In the same year.580. there are only 15 official members of the IDP including the 8 members of the Board of Trustees. owner of the subject parcels of land.000 divided into 20. 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. Ligon. as well as the subsequent assignment executed to respondent Enriquez and the said right of redemption. May 14. IDP purchased property in Culiat. which was ruled in 1991 in favor of the INC despite the judge being informed of the SEC case No. thru a legitimate Board of Trustees. therefore. particularly the sale of the Tandang Sora property. (Jamiatul) (originally Kamilol Islam Institute. the Tamano Group.2012 P a g e |2 Whether or not the adopted resolution and Deed of Assignment made by PAMBUSCO is void or at least legally defective RULING: IDP-Tamano Group then filed for instant petition for review in 1994 stating the Court of Appeals gravely erred in: It is also undisputed that at the time of the passage of the questioned resolution. SC affirmed in toto RTC decision. ISLAMIC DIRECTORATE OF THE PHILIPPINES VS CA GR No. in addition to a proper board resolution. INC filed it in the Court of Appeals by way of certiorari docketed as CA-C. have to be struck down for having been done without the consent of the IDP thru a legitimate Board of Trustees. SEC declared that neither were legitimate IDP. The same requirement is found in Section 40 of the present Corporation Code. 77. the questioned resolution was not confirmed at a subsequent stockholders meeting duly called for the purpose by the affirmative votes of the stockholders holding at least two-thirds (2/3) of the voting power in the corporation. Deed of assignment is null and void. the said resolution. While this pended. filed a petition (SEC case No. Siñel Corporation Law 07. Datu Tagoranao Benito subscribed to 460 shares worth P4. Not upholding the jurisdiction of the SEC to declare nullity of the sale. 1997. In 1991.) were filed with the SEC. 4012. the Caprizo Group. Tamana won the case in 1993. to comply with Caprizo‘s obligations.R No. concurred in by the vote of at least 2/3 of the bona fide members of the corporation should have been obtained. The corporation filed a . allegedly in the name of the IDP. Further. Apparently. already declared the election of the Carpizo Group (as well as the Abbas Group) to the IDP Board as null and void for being violative of the Articles of Incorporation. 78. These twin requirements were no met as the Carpizo Group which voted to sell the Tandang Sora property was a fake Board of Trustees. to the disputed Deed of Absolute Sale executed in favor of INC. Ligon‘s petition denied and affirmed the 1992 decision in CA-G. CA‘s decision is reversed. SP-27973. the INC filed a civil case no. Herein. 117897. with no properly concluded Board of Trustees of the IDP. only persons who own at least one (1) share in their own right may qualify to be directors of a corporation. 8. but one where consent on the part of one of the supposed contracting parties is totally wanting. where even one is absent. The petition was granted in 1993. consent is essential for the existence of a contract. the affirmative votes of the stockholders holding at least two-thirds (2/3) of the voting power in the corporation in a meeting duly called for that purpose. Inc. should be struck down as null and void. Once approved. all acts carried out by the Carpizo Board. The Carpizo Group-INC sale is further deemed null and void ab initio because of the Carpizo Group's failure to comply with Section 40 of the Corporation Code pertaining to the disposition of all or substantially all assets of the corporation.600. Article 1318 of the New Civil Code lays down the essential requisites of contracts. never gave its consent.00 were subscribed and fully paid for. Since the disposition of said redemption right of respondent PAMBUSCO by virtue of the questioned resolution was not approved by the required number of stockholders under the law. the sale or disposition of an and/or substantially all properties of the corporation requires. All told. ISSUE: Whether the Tandang Sora property was legitimately sold to the INC. Encouraging multiplicity of suits Not applying the principles of estoppel and laches. the SEC. the contract is non-existent. under Section 28 1/2 of the said law. respondent PAMBUSCO was insolvent and its only remaining asset was its right of redemption over the subject properties. Q-90-6937 against Ms. Hence. sold two lands to private respondent Iglesia Ni Cristo (INC) authorizing Ms Ligon as the mortgagee.Rachel Ann A.C. Both claim to be the legitimate IDP. HELD: As far back as 3 October 1986. the majority vote of the legitimate Board of Trustees.058 shares worth P80. For the sale to be valid. In 1986. SCRA 272 FACTS: In 1971. the contract is void. INC filed a Motion of Intervention in SEC case No. Martial Law was declared and most members fled to escape political prosecution. Q. and where it is wanting. Thereafter. For. the subject sale is void and produces no effect whatsoever. Meanwhile. Ms.
it is presumed to have offered all of those which it is authorized to issue original subscriber is deemed to have taken his shares knowing that they form a definite proportionate part of the whole number of authorized shares When the shares left unsubscribed are later re-offered.MARCIANO RIVERA FACTS: PhilTrust. Note: that for reasons 2 and 3.560. w/o a valuable consideration for such release. Datu Tagoranao filed with SEC a petition alleging that the additional issue (worth P110. For failure to file a certificate with the Bureau of Commerce and Industry.2012 P a g e |3 certificate of increase of its capital stock from P200. NO stockholders' meeting was held which included the increase of its capital stock from P200.000.25.000 is in violation of pre-emptive right.000. even if all the requirements are complied with.00 he (Datu Benito) was not notified of said meeting and that he never attended the same as he was out of the country at the time Respondent Fajilan was a Director/President of BEDECO. Campos says that § 17 has been replaced by § 38. at par value. Moreoever. Of the increased capital stock of P1Million.00 to P1.540 shares transferred to him by Mr. #79: G. and as against creditors a reduction of the capital stock can take place only in the manner and under the conditions prescribed by the statute or the charter or the AOI. Moki-in Alonto. Siñel Corporation Law 07. Tarhata A.000 to P1. L-19761 January 29. Ramos. showing such reduction. Fajilan. vs. (watered down stocks) RULING SC held that the said resolution is without effect for being: 1. Domocao Alonto and Mrs.000. Lucman and Mrs.R. and 3. P110. 2. Thus.980 worth of shares were subsequently issued by the corporation from the unissued portion of the authorized capital stock of P200. For having been effected without compliance with the statutory requirements of § 17 of the Corporation Law regarding reduction of capital stock. Fatima A.000. stockholder is still liable for the unpaid balance of his subscription. Whether the issuance of the increase in the authorized capital stock is in violation of pre-emptive right. The effect of this resolution was that fully paid certificates were issued to each stockholder for ½ of his subscription.980) was made in violation of his pre-emptive right to said additional issue and that the increase in the authorized capital stock was illegal considering that the stockholders of record were not notified of the meeting wherein the proposed increase was in the agenda. NO GR: pre-emptive right is recognized only with respect to new issue of shares. it is most unlikely that the SEC will approve it.000. if creditors are prejudiced by such reduction. No. #80: Boman Environmental Development Corporation (BEDECO). However. Moki-in Alonto Hence.000 worth of shares were subscribed by Mrs. A promissory note was issued and signed by BEDECO‘s new President to pay him over a six-month period. respondents Facts: issuance by the corporation of its unissued shares was validly made and was not subject to the pre-emptive rights of stockholders directed Jamiatul to allow petitioner to subscribe thereto. the assignee in bankruptcy of La Cooperativa Naval Filipina. P160. and not with respect to additional issues of originally authorized shares Theory: when a corporation at its inception offers its first shares.980 of authorized capital stock of P200. petitioner vs. he cannot therefore claim a dilution of interest. and now.000 plus a transfer to him of the Company‘s Isuzu pick-up truck which he is using. Stockholder claims that he has been released from the obligation to pay more than 50% of his subscription by virtue of a resolution adopted by the Cooperativa Naval stockholders after its incorporation reducing the capital stock by 50%. CA and Nilcar Y. proportionate to his present shareholdings.000. Whether the issuance of the P110. and 2. or unless the aforementioned findings are not supported by substantial evidence. adding thereto the 2.000. 1923 PHILIPPINE TRUST COMPANY. 2. Ratio: Subscriptions to the capital of a corporation constitute a fund to which creditors have a right to look for satisfaction of their claims and that the assignee in insolvency can maintain an action upon any unpaid stock subscription in order to realize assets for the payment of its debts. strict compliance with statutory regulations is necessary. An attempted withdrawal of so much capital from the fund which the company‘s creditors were entitled ultimately to rely. The SEC ruled that: administrative bodies will not be interfered with by the courts in the absence of grave abuse of discretion on the part of said agencies. this petition. Mrs. HELD: Dismissed for lack of merit 1. A corporation has no power to release an original subscriber to its capital stock from the obligation of paying for his shares. the BOD accepted his resignation and approved the purchase of his total shares in the Company.Rachel Ann A. . Subsequently. a stockholders meeting was held were P191. rights and interests for Php 300. ISSUES: 1.00 worth of shares were represented. At a meeting.000 and defaulted in paying the balance of Php 200. BEDECO only paid Php 100. is suingCooperativa Naval stockholder for unpaid balance of his capital stock subscription. He offered to resign in writing as President and Member of the BOD of BEDECO and to sell all his company shares.
The SEC has jurisdiction to investigate whether the Corporation has unrestricted earnings (trust fund doctrine) to cover the payment of the shares. in a delinquency sale. she sent a cablegram to the corporation. ―No corporation x x x shall invest its fund in any other corporation or business. is a corporation engaged in real estate business. The petitioners contend that the investment was made without the requisite board resolution authorized by two-thirds (2/3) of the voting power of the stockholders. said vouchers were cancelled by Gonzales. while she was still out of the country. time. (citing legal authorities like Professor Sulpicio Guevarra) since Philippine Fiber was also engaged in the manufacture of sugar bags which defendant corporation is also engaged in. The CA set aside the decision of RTC and directed to take cognizance of the case holding that the case is a suit for collection of sum of money on the balance of Promisory Note. unless its board of directors has been so authorized in a resolution by the affirmative vote of stockholders x x x two-thirds of the voting power on such proposal at a stockholders‘ meeting called for the purpose…‖ The rule is that: if the investment is in pursuance of the corporate purpose. Facts: The minority stockholders (petitioners) sued defendant corporation and its directors (respondents) for investing in another corporation (Philippine Fiber). Respondent‘s suit against the corporation to enforce BEDECO‘s promissory note or to compel it to pay his shareholdings is cognizable by the SEC which shall determine whether such payment will not constitute a distributions of corporate assets to a stockholder in preference over creditors of the corporation. Upon her return. A petition for Certiorari. including but not limited to the following cases: Provided. et al. Mandamus with Preliminary Attachment was filed in the CA. Sec. which should be deemed written into the agreement between the Corporation and the stockholders even if there is no express reference to them in the promissory note. Siñel Corporation Law 07. the investment is legitimate. the first. or for any other purpose other than the main purpose for which it was organized. objecting to certain matters taken up by the board in her absence. petitioner Gonzales is one of its majority shareholders. Power to acquire own shares. Fontecha Facts: Lopez Realty.Rachel Ann A. Also. Issue: Issue: Whether a suit brought by withdrawing stockholder against the corporation to enforce payment of the balance due on the consideration for the surrender of his shares and interest involves an intra corporate dispute under the jurisdiction of SEC? Held: Yes. arising out of unpaid subscription. and to purchase delinquent shares sold during said sale.2012 P a g e |4 Respondent filed a complaint in the RTC for collection of the balance. The Court dismissed the complaint for lack of jurisdiction holding that the controversy arose out of intra corporate relations subject to the exclusive and original jurisdiction of the SEC. the first two (2) installments of the gratuity pay of the private respondents were paid by the corporation. Respondent‘s offer to resign ―effective as his shares are sold and paid‖ implied that he would remain a stockholder until his shares and interest were fully paid. it does not need the approval of the stockholders. Notwithstanding the "corporate squabble" between Gonzales and Lopez. Hence. At that. Gonzales was still abroad. Respondents meanwhile contended that such investment was later ratified by the board of directors in later resolutions and that. #82: Lopez Realty Inc. The case involves an intra-corporate controversy because the parties are a stockholder and the corporation. 17 ½ of the old Corporation Law provided that. and whether the purchases is for a legitimate corporate purpose as provided in Sections 41 and 122 of the Corp. The proposal was deliberated upon and approved in a special meeting of the board of directors. To pay dissenting or withdrawing stockholders entitled to payment for their shares under the provisions of this Code. To eliminate fractional shares arising out of stock dividends. et al. It was an intra-corporate transaction. vs Ma-ao Sugar Central. second and third installments of gratuity pay of the rest of private respondents were prepared but cancelled by Gonzales. (n) Trust Fund Doctrine – means that the capital stock. De la Rama. this petition. For some reason. contrary to the provision of the then Corporation Law (sec. and 3. corporation refused to pay the same. 41. the vote of approval of the stockholders is necessary. however. It appears that petitioner corporation approved two (2) resolutions providing for the gratuity pay of its employees. . But when the purchase of shares is done solely for investment and not to accomplish the purpose of the corporation. Sec. Private respondents were the retained employees of the Corporation. 17 ½). Despite private respondents' repeated demands for their gratuity pay. property and other assets of a corporation are regarded as equity in trust for the payment of corporate creditors. It is not prohibited for a corporation to invest in shares of another corporation even if such investment is not authorized by two-thirds (2/3) of the voting power of the stockholders if the purpose of the investment is not foreign to the purpose of the corporation.. Lopez submitted a proposal relative to the the reduction of employees with provision for their gratuity pay. she filed a derivative suit with the SEC against majority shareholder Lopez. Allegedly. In a letter. 2. v. Their request was granted in a special meeting held. . That the corporation has unrestricted retained earnings in its books to cover the shares to be purchased or acquired: 1. such as the sale of some of the assets of the corporation. the corporation had prepared the cash vouchers and checks for the third installments of gratuity pay of said private respondents. Code. To collect or compromise an indebtedness to the corporation. Issue: Is the investment by a corporation in another corporation without the requisite board resolution and affirmative vote of the stockholders illegal? Ruling: No. 81. Likewise.25. Inc. Sometime in 1978. the private respondents requested for the full payment of their gratuity pay.A stock corporation shall have the power to purchase or acquire its own shares for a legitimate corporate purpose or purposes.
null and void ab initio. the lower court rendered judgment for plaintiff. INC.25. -versus. that is. Siñel Corporation Law 07.". FACTS: This was an action to recover possession of registered land situated in barrio Tatalon.laws. "counsel for plaintiff" and commences with the statement "comes now plaintiff. therefore.62 from January. INC. v. by the action of the directors in subsequent legal meeting or impliedly by the corporation‘s subsequent course of conduct. The Board of Directors of the appellee Bacolod-Murcia Milling Co. exclusive and public and notorious possession (of land in dispute) under claim of ownership. Tuason and Co. the appellants initiated the present action. defendant-appellant.. and also to pay the costs. ISSUE: WON the case should be dismissed on the ground that the case was not brought by the real property in interest HELD: No. and defended by urging that the stipulations contained in the resolution were made without consideration. 84. being in effect a donation that was ultra vires and beyond the powers of the corporate directors to adopt. Rule 2... in his answer." The answer therefore prays that the complaint be dismissed with costs and plaintiff required to reconvey the land to defendant or pay its value. Alejandro Montelibano. Inc. Inc. declaring defendant to be without any right to the land in question and ordering him to restore possession thereof to plaintiff and to pay the latter a monthly rent of P132. Bacolod-Murcia Milling Company G. 1962 Facts: Plaintiffs-appellants.R. No. TUASON & CO.2012 P a g e |5 Whether the corporation is bound to grant its employees gratuity pay despite the lack of notice to a board director during the meeting wherein the said resolution was passed Held: YES.. What the Rules of Court require is that an action be brought in the name of. It was later proposed to execute amended milling contracts. therefore. The plaintiff was represented by a corporation. M. cannot act as managing partner for plaintiff on the theory that it is illegal for two corporations to enter into a partnership is without merit. Inc. (Section 2. Thereupon. through its undersigned counsel. the law firm Araneta & Araneta..) The complaint is signed by the law firm of Araneta and Araneta. is 83. for the true rule is that though a corporation has no power into a partnership. Issue: Whether or not the resolution is valid and binding between the corporation and planters. the real party in interest. There can be no doubt that the directors of the appellee company had authority to modify the proposed terms of the Amended Milling Contract for the purpose of making its terms more acceptable to the other contracting parties. until he vacates the land." It is true that the complaint also states that the plaintiff is "represented herein by its Managing Partner Gregorio Araneta. besides other concessions. However. After trial. in each case of the logical relation of the act to the corporate purpose expressed in the charter. Montelibano et al. M. J. increasing the planters' share to 60% of the manufactured sugar and resulting molasses. it may nevertheless enter into a joint venture with another where the nature of that venture is in line with the business authorized by its charter. a director who was not notified of a board meeting is precluded from questioning the validity of the resolution granting gratuity pay to employee approved at that meeting if she later on acquiesced to it by signing the vouchers for the payment of the gratuity pay.Rachel Ann A. Alfredo Montelibano. contending that three Negros sugar centrals had already granted increased participation to their planters. Defendant. the appellee had become obligated to grant similar concessions to the plaintiffs (appellants herein). Thus. Quezon City. Thus. The contention that Gregorio Araneta Inc. In 1953. resisted the claim. and that under paragraph 9 of the abovementioned resolution. GREGORIA ARANETA.. Inc. The answer further alleges that registration of the land in dispute was obtained by plaintiff or its predecessors in interest thru "fraud or error and without knowledge (of) or interest either personal or thru publication to defendant and/or predecessors in interest. However. The rule is that — It is a question. another corporation . represented by it Managing PARTNER. an action of the board of directors during a meeting. otherwise any action may be questioned by any objecting stockholder. the appellee Bacolod-Murcia Milling Co. There is nothing against one corporation being represented by another person. and the Limited co-partnership Gonzaga and Company. had been and are sugar planters adhered to the defendant-appellee's sugar central mill under identical milling contracts. Held: The Supreme Court held in the affirmative. the court below rendered judgment upholding the stand of the defendant Milling company. 1940. that the resolution in question was. by J.QUIRINO BOLAÑOS. and dismissed the complaint. directors must act as a body in a meeting called pursuant to the law or corporations by. continuous. After trial.. which was illegal for lack of notice may be ratified either expressly. adverse to the entire world by defendant and his predecessor in interest" from "time in-memorial". L-15092 May 18.. plaintiff-appellee. As a general rule. but not necessarily by. there is nothing to the contention that the present action is not brought by the real party in interest. sets up prescription and title in himself thru "open. adopted a resolution granting further concessions to theplanters over and above those contained in the printed Amended Milling Contract. Appellants signed and executed the printed Amended Milling Contract but a copy of the resolution was not attached to the printed contract. The contracts were stipulated to be in force for 30 years and that the resulting product should be divided in the ratio of 45% for the milland 55% for the planters. plaintiffs duly appealed to this Court. but extending the operation of the milling contract from the original 30 years to 45 years. in a suit in court. and not otherwise prohibited. If that act is one which is lawful in itself. a corporation through its board of directors should act in the manner and within the formalities prescribed by its charter or by the general law. natural or juridical.
and whether or not it will cause losses or decrease the profits of the central. or if there are creditors affected. And subsequently contracted another loan with RFC(with the same certificate as security) to secure the payment of the first. The defendant corporation. the RFC also instituted foreclosure proceedings on its second chattel mortgage. the infirmity of the corporate act. (1) "Toinvest and deal with the moneys of the company not immediately required. On June 9. SANTOS. inquired to the Securities and Exchange Commissionasking for opinion regarding the validity of the donation of the proceeds of the insurance policies to the Pirovano children. SEC rendered its opinion that the donation was void because the corporation could not dispose of its assets by gift and therefore the corporation acted beyond the scope of its corporate powers. and if voidable its infirmity has been cured by ratification and subsequent acts of the defendant corporation. or public policy or public duty." The world deal is broad enough to include any manner of disposition. and were also approved provisionally by the Commission. said certificate was sold at public auction to petitioner.Rachel Ann A.000 shares for each child. By this ratification. under the terms of its Resolution. the certificate of public convenience was sold at public auction in favor of Amador D. He proposed that out of the proceeds of the insurance policies the sum of P400. [G. said sum of money to be convertible into 4. Said donation. association. fairly incident to the express powers and reasonably necessary to their exercise. Early in 1941 the company insured the life of said Enrico Pirovano in various Philippine andAmerican Life Insurance companies. and on that same date the same was duly approved. Petitioner filed an action to foreclose the chattel mortgage by failure to pay the loan While the above case was pending. 1958 the Court of First Instance of Manila rendered judgment and ordered that the certificate of public convenience be sold at public.000 shares of the stock of the Company. The De La Rama Steamship Co. the corporation has the power to do it. or declared legally ineffective for the reason alone. Siñel Corporation Law 07. A.. the latter has expressly given their confirmity. is now prevented or estopped from contesting the validity of the donation. and refers to moneys not immediately required by the corporation. or it is anultra vires act. Thus. #85: Pirovano vs. are merely voidable and may become binding and enforceable when ratified by the stockholders. the current President of De la Rama Steamship proposed that it is but fit and proper that the company which owes so much to the deceased should make some provision for his children. and are. and is reasonably tributary to the promotion of those ends. even if ultra vires in the supposition we have adverted to. and such disposition may be made in such manner as from time to time may be determined by the corporations.. The former contemplates the doing of an act which is contrary to law. they instituted an action in the Court of First Instance of Rizal. If so.89. the President of the corporation. duty bound to grant similar increases to plaintiffs-appellants herein. it appearing that the donation represents not only the act of the Board of Directors but of the stockholders themselves as shown by the fact that the same has been expressly ratified in a resolution duly approved by the latter. Santos. (2) "to aid in any other manner any person. As the resolution in question was passed in good faith by the board of directors. or corporation of which any obligation or in which any interest is held by this corporation or in the affairs or prosperity of which this corporation has a lawful interest. Both sales were made with assumption of the mortgage in favor of the RFC.980. the appellee Bacolod-Murcia Milling Company is. He was killed by the Japanese in Manila sometime in 1944 leaving as his only heirs four minor children. still it may said that the same can not be invalidated. Estefania demanded the payment of the credit due them. No. at par. Sometime in March 1950. the majority of the stockholders' voted to revoke the resolution approving the donation to the Pirovano children.2012 P a g e |6 done for the purpose of serving corporate ends. Issue: Can defendant corporation give by way of donation the proceeds of said insurance policies to the minor children of the late Enrico Pirovano under the law or its articles of corporation. Sergio Osmeña. In view of the fact that Enrico Pirovano left practically nothing to his heirs. The minor children of the late Enrico Pirovano. and six days . Hence.000 be set aside for Pirovano‘s minor children. like similar transactions between the individuals void. otherwise. The certificate was later sold to Benitez who resold it to Rodi Taxicab Company.D. is not void. ultra vires acts on the other hand.25. Jr. and the court is without authority tosubstitute its judgment of the board of directors. therefore. A resolution was adopted to carry out the proposal and submitted to the stockholders of the De la Rama company at a meeting properly convened. but the company refused to pay. INC. nor require validity.R. ET AL FACTS: Concepcion obtained a loan and made his certificate of public convenience (to operate a taxicab service of 27 unit). or the scope of the powers that it may exercise under the law. the board is thebusiness manager of the corporation. and the same was approved. They cannot serve as basis of a court action. it is valid and binding. The donation in question undoubtedly comes within the scope of this broad power for it is a fact appearing in the evidence that the insurance proceeds were not immediately required when they were given away. and so long as it acts in good faith its orders are not reviewable by the courts. we find that the corporation was given broad and almost unlimited powers to carry out the purposes for which it was organized among them. Granting arguendo that the donation given by Pirovano children is outside the scope of the powers of the defendant corporation. or 1. The test to be applied is whether the act in question is in direct and immediate furtherance of the corporation's business. and not in a remote and fanciful sense. morals. It is a well-known rule of law that questions of policy or of management are left solely to the honest decision of officers and directors of a corporation. and as a result of the decision in its favor therein rendered. amounting to P564. in such manner as from time to time may be determined" and. the court has no authority to review them. Santos immediately applied with the Commission for the approval of the sale. or those which are not illegal and void ab initio. subject to petitioner's lien. it may has been obliterated thereby making the act perfectly valid and enforceable. but are not merely within the scope of the articles of incorporation. #86 LUNETA MOTOR COMPANY vs. but are merely within are not illegal and void ab initio. it may fairly be considered within charter powers. December 29. and in view of the opinion of the SEC Commissioner. Accordingly. not. L-5377. A distinction should be made between corporate acts or contracts which are illegal and those which are merely ultra vires. in a substantial. represented by their mother and guardian. In 1951. This is specially so if the donation is not merely executory but executed and consummated and no creditors are prejudice. in view of the failure of compliance with the conditions to which the above donation was made subject. or is that donation an ultra vires act? Held: After a careful perusal of the provisions of the articles of incorporation of the De la Rama company. 1954] Facts: Enrico Pirovano was the President and General Manager of the De la Rama Steamship Company. Enrico Pirovano was largely responsible for the rapid and very successful development of the activities of the company.
. and otherwise deal in such real and personal property is the purpose for which the corporation was formed may permit. To the contrary. The contention that the resolution adopted by the company dated August 31. it could not acquire by purchase the certificate of public convenience referred to above. The term ultra vires should be distinguished from an illegal act for the former is merely voidable which may be enforced by performance. hold. that it may engage in the transportation of persons by water does not mean that it may engage in the business of land transportation — an entirely different line of business. Acoje Mining Company FACTS: Acoje Mining Company. Whether or not the adopted resolution is ultra vires which may render the company liable as a guarantor only? RULING: 87. Santos. who opposed petitioner's application.867 was found. while the latter is void and cannot be validated.. the same however is not void for it was approved not in contravention of law. It being merely voidable. carelessness or negligence on the part of the employee of the company who is assigned to take charge of the post office. not void as between the parties to all intents and purposes. Acting on the request. it has been held that "although not expressly authorized to do so a corporation may become a surety where the particular transaction is reasonably necessary or proper to the conduct of its business. and will not permit the validity of the . Even assuming arguendo that the resolution in question constitutes an ultra vires act. While as a rule an ultra vires act is one committed outside the object for which a corporation is created as defined by the law of its organization and therefore beyond the powers conferred upon it by law there are however certain corporate acts that may be performed outside of the scope of the powers expressly conferred if they are necessary to promote the interest or welfare of the corporation. The least that can be said is that it cannot now go back on its plighted word on the ground of estoppel. The claim that the resolution adopted by the board of directors of appellant company is an ultra vires act cannot also be entertained it appearing that the same covers a subject which concerns the benefit. Santos sold and transferred all his rights and interests in the certificate of public convenience in question in favor of the now respondent A. Inc. an ultra vires act can be enforced or validated if there are equitable grounds for taking such action. and that. ISSUE: W Petitioner can engage into taxicab business where its AOI purpose is to engage in transportation in waters only? It is not denied that under Section 13 (5) of the Corporation Law. if performed by one party." where the ultra vires transaction has been executed by the other party and the corporation has received the benefit of it. such as the one in question. is. the postmaster went on three-day leave and never returned. the Director of Posts replied that said request will be granted on the following conditions: that the company will provide free quarters. a shortange of Php13.D.: The weight of authority in the state courts is to the effect that a transaction which is merely ultra vires and not malum in se or malum prohibitum. and in any event its liability under said resolution is only that of a guarantor who answers only after the exhaustion of the properties of the principal. they are precisely the best evidence that it has no authority at all to engage in the business of land transportation and operate a taxicab service. a corporation created thereunder may purchase. When accounts were checked.25. SCfinds nothing in the legal provision and the provisions of petitioner's articles of incorporation relied upon that could justify petitioner's contention in this case. etc. it follows that it may not acquire an certificate of public convenience to operate a taxicab service. telegraph and money order offices at its mining camp at Sta. ISSUE: P a g e |7 thereafter the Sheriff of the City of Manila issued in its favor the corresponding certificate of sale. public order or public policy.. and the transaction of its lawful business may reasonably and necessarily require. rendered the appealed decision sustaining the first ground that under petitioner's articles of incorporation it had no authority to engage in the taxicab business or operate as a common carrier. one party cannot receive the benefits which are embraced in total performance of a contract made with it by another party and then set up the invalidity of the transaction as a defense. Five years after. essential equipment and will assign a responsible employee to perform the duties of a postmaster without compensation from Director of Posts and that "In cases where a post office will be opened under circumstances similar to the present. is a result. The respondent Commission. employee of Acoje as postmaster. with Sanchez. Inc. it is the policy of this office to have the company assume direct responsibility for whatever pecuniary loss may be suffered by the Bureau of Posts by reason of any act of dishonesty. Siñel Corporation Law 07. The government filed the an action to recover the shortage fund from the company. Zambales. it is evident that the company cannot now be heard to complain that it is not liable for the irregularity committed by its employee upon the technical plea that the resolution approved by its board of directors is ultra vires. ."and here it is undisputed that the establishment of the local post office is a reasonable and proper adjunct to the conduct of the business of appellant company. That it may operate and otherwise deal in automobiles and automobile accessories. However. customs. because such acquisition would be without purpose and would have no necessary connection with petitioner's legitimate business. convenience and welfare of its employees and their families. after considering the memoranda submitted by the parties. Republic vs. Amador D. it should be noted that the opening of a post office branch at the mining camp of appellant corporation was undertaken because of a request submitted by it to promote the convenience and benefit of its employees. the law interposes an estoppel. ratification.2012 CFI Ruled in favor of the plaintiff. to service its employees and their families that were living in said camp. 1949 is ultra vires in the sense that it has no authority to act on a matter which may render the company liable as a guarantor has no factual or legal basis. Here it is fair that the resolution be upheld at least on the ground of estoppel. If it could not thus engage in the line of business. This rule is based on the consideration that as between private corporations. or estoppel. Thereupon petitioner filed the application mentioned heretofore for the approval of the sale. and that an action may be brought directly on the transaction and relief had according to its terms. wrote the Director of Posts requesting the opening of a post.Rachel Ann A. Thus. aside from the fact that the loss claimed by the plaintiff is not supported by the office record." The Board of Director pass a resolution in compliance with the requirements set by the Director of Posts thus a post office branch was opened in the camp. the company denied liability for said amount contending that the resolution of the board of directors wherein it assumed responsibility for the act of the postmaster is ultra vires. In the meantime and before his death. Cruz.
and talk about putting the parties in status quo ante by restoring the consideration with interest. Balatoc Mining Co. In return. The rule on accommodation party doesn't include or apply to corporations which are accommodation parties.000. Hence. (2) erect an appropriate power plant. Bernares and Santos for violation of BP22. As the compromise agreement wasn't approved during the expected period of time. provisions fully penalizing the violation of subsection 5 of section 13 of Act No. while the Balatoc Company remains in possession of what it obtained by the use of that money. The decision appealed from is affirmed. was organized in June. Since such accommodation paper cannot be enforced against the corporation.and inasmuch as these provisions have been enacted in the exercise of the general police powers of the Government. This prompted the petitioner to file a case against Atty. The total cost incurred by Benguet in developing Balatoc was P1. to mulct the Benguet Company in many millions of dollars in favor of individuals who have not the slightest equitable right to that money in a proposition to which no court can give a ready assent. as a corporation.which prohibits the acquisition by one mining corporation of any interest in another. the company‘s committee approached A. The remedy must be sought in a criminal proceeding or quo warranto action. the value of shares of Balatoc increased in the market (from P1 to more than P11) and dividends enriched its stockholders. Harden. Benguet will receive from Balatoc shares of a par value of P600. ISSUE: Whether or not the accommodation party is the Mover Enterprises Inc. Both were organized for mining of gold and their respective properties are located only a few miles apart in Benguet. instituted by the Government. of a capacity of 100 tons of ore per day. Nobody would suggest the demolition of the mill. No. This was in consideration of a quitclaim by petitioner over a parcel of land. ISSUE: WON it is unlawful for Benguet Company to hold any interest in a mining corporation. . Also. does not quite meet the case. This was consigned by Santos with the clerk of court and he instituted charges against petitioner. A certificate for 600. 1933 P a g e |8 transaction or contract to be questioned. 1903. and this is especially true where there is nothing in the circumstances to put the other party to the transaction on notice that the corporation has exceeded its powers in entering into it and has in so doing overstepped the line of corporate privileges. issued a check in favor of petitioner Crisologo-Jose. were the active inducers of the commission of that wrong.000 shares of the stock of the Balatoc Company was given to Benguet and the excess value was paid to Benguet by Balatoc in cash. one who has taken the instrument with knowledge of the accommodation nature thereof cannot recover against a corporation where it is only an accommodation party. and the plaintiff Harden himself. and with an extraction of at least 85 per cent of the gold content. Corollarily. . the signatories thereof shall be personally liable therefore. Inasmuch as the Corporation Law contains. But assuming arguendo that the corporation is the accommodation party.25. then president and general manager of the Benguet Company.. 1459). W. or the nature of the transaction. This is because the issue or indorsement of another is ultra vires.417. to accommodate its clients Spouses Ong. thus. L-37331. the directors of the Balatoc Company.000 shares to Benguet with the success of the development. the shareholders of the latter cannot maintain an action to annul the contract by which such interest was acquired. Balatoc capital stock consists of one million shares of the par value of one peso (P1) each. it was dishonored. When the Balatoc was first organized. CA FACTS: The president of Movers Enterprises. There is no possibility of really undoing what has been done. he cannot recover against the corporation thereon. which the GSIS agreed to sell to spouses Ong. Beam. it cannot be held liable to the check issued in favor of petitioner. . its properties were largely undeveloped. was organized in December 1925. To improve its operations. questioned the transfer of 600. If the form of the instrument. in section 190 (A). is such as to charge the indorsee with the knowledge that the issue or indorsement of the instrument by the corporation is for the accommodation of another. A contract was entered into wherein Benguet will (1) construct a milling plant for the Balatoc mine. RULING: The defendant Benguet Company has committed no civil wrong against the plaintiffs. CRISOLOGO-JOSE VS. The trial court held that consignation wasn't applicable to the case at bar but was reversed by the CA. and if a public wrong has been committed.2012 89. The contract. as well as the consequences arising from their acts in connection therewith.Rachel Ann A. 90. has been performed on both sides. 88. Upon deposit though of the checks by petitioner. The Balatoc Company is secure in the possession of that improvement. the aforesaid check was replaced with another one for the same value. 1459. as between the parties. with the understanding that upon approval of the compromise agreement. the check will be encashed accordingly. Meanwhile. Mindoro Sugar RULING: Petitioner averred that it is not Santos who is the accommodation party to the instrument but the corporation itself. Siñel Corporation Law 07. the corporation is liable? FACTS: Benguet Consolidated Mining Co. corporate officers have no power to execute for mere accommodation a negotiable instrument of the corporation for their individual debts and transactions arising from or in relation to matters in which the corporation has no legitimate concern. By way of exception. Due to the improvements made by Benguet. where one mining corporation acquires a prohibited interest in another such corporation. Santos tried to tender a cashier‘s check for the value of the dishonored check but petitioner refused to accept such. an officer or agent of a corporation shall have the power to execute or indorse a negotiable paper in the name of the corporation for the accommodation of a third party only is specifically authorized to do so. supposing it to have been unlawful in fact. Carlos v. during the preliminary investigation. to secure the capital necessary to the development of the Balatoc property. it results that. as a sociedad anonima in conformity with the provisions of Spanish law.000 shares of the Balatoc Company. in conformity with the provisions of the Corporation Law (Act No.15.952. under section 190 (A). March 18. by the building of the Balatoc plant by the Benguet Company and the delivery to the latter of the certificate of 600. the owner of thousands of shares of Balatoc. HARDEN v BENGUET CONSOLIDATED MINING COMPANY G.R. Until thus assailed in a direct proceeding the contract by which the interest was acquired will be treated as valid.
The Trial court and CA ruled that the bank was liable to Tapnio. issued a bond in favor of Tapnio.000. RITA GUECO TAPNIO. CECILIO GUECO and THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY. While petitioner had the ultimate authority of approving or disapproving the proposed lease since the quota was mortgaged to the Bank. and observe honesty and good faith. which could have been earned by Tapnio. The doctrine of ultra vires. ISSUE: Whether the lower court erred in saying that the Phil. was primarily organized as a trust corporation with full power to acquire personal property such as the bonds in question according to the Corporation Law. more advantageous conditions. And so.2012 P a g e |9 FACTS: This is an action to recover the value of 4 bonds issued by Mindanao Sugar Company and placed in trust with the Philippine Trust Company. Also. although it is not clear that Mindoro transferred the bonds to Phil. PNB argue that it has a right both under its own Charter and under the Corporation Law. Mindoro Sugar Co. of the bonds in the value of P3. for value received. and to resell them. should not be allowed to prevail where it would defeat the ends of justice or work as a legal wrong. In such a case. the deed of trust. Certainly. Pursuant to this.: Facts: plaintiff. it was given implied power to guarantee them in order to place them upon the market under better. PNB vs CA G. Trust would be bound to pay the Carlos their value with the accrued interest. There was no proof that there was any other person at that time willing to lease the sugar quota allotment of private respondents for a price higher than P2. Trust was expressly authorized to purchase all or some of the bonds and to guarantee them. ―It is not. No. for the protection of the interest of private respondents.000. There are other considerations leading to the same conclusion that Phil. J. petitioner. the bank‘s board of directors disapproved the lease. Mindoro executed in favor of Phil. RULING: Yes. Thus. Considering that all the accounts of Rita Gueco Tapnio with the Bank were secured by chattel mortgage on standing crops. ―When a contract is not on its face necessarily beyond the scope of the power of the corporation by which it was made. Trust. vs. assignment of leasehold rights and interests on her properties. act with justice. Trust didn't acquire the bonds but just guaranteed them.R. Phil. that by its disapproval of the lease private respondents would be unable to utilize the sugar quota in question. Tapnio mortgage his standing crops and sugar quota to PNB. The Board of Directors of Phil. has no power to guarantee the obligation of another juridical personality. since the same must be utilized during the milling season. Corporations are presumed to contract within their powers. Also. and surety bonds and that she had apparently "the means to pay her obligation to the Bank. On the other hand. in the absence of proof to the contrary. its market value. to approve or disapprove the said lease of sugar quota and in the exercise of that authority. among others. the guaranty being given to enable it to dispose of the bond to better advantage. . THE COURT OF APPEALS. there was NO REASONABLE BASIS for the Board of Directors of petitioner to have rejected the lease agreement. A corporation which has power by its charter to issue its own bonds has power to guarantee the bonds of another corporation. The law makes it imperative that every person "must in the exercise of his rights and in the performance of his duties. the guarantee would be valid and Phil. however ultra-vires for a corporation to enter into contracts of guaranty or suretyship where it does so in the legitimate furtherance of its purposes and business. give everyone his due. Siñel Corporation Law 07. and are binding. are not ultra vires. Trust Company is another domestic corporation. made in connection with their sale. The four bonds in dispute are included here. to secure the latter‘s obligation to PNB 2371.000 that Mindoro was about to issue. Trust sold 13 bonds to a certain Ramon Diaz at a net profit of P100 per bond. being authorized to acquire the bonds. Trust paid appellant upon presentation of the coupons the stipulated interest until when it stopped payments when it alleged that it did not deem itself bound to pay such interest or to redeem the obligation because the guarantee given for the bonds was illegal and void. transferring all of its property to it in consideration of the bonds it had issued to the value of P3.79 plus 12% interest. L-27155 May 18. INC. Thus this petition Issue : WON PNB is liable to tapnio Held:Yes pnb is liable to Tapnio.000. Phil. it knew that the agricultural year was about to expire. to purchase at par and in the name and for the use of the trust corporation all or such part as he may deem expedient. nevertheless. Phil. Philamgen paid the said amount to PNB and seek indemnity from Tapnio.00 per picul. guarantee of payment of bonds taken by a loan and trust company in the ordinary course of its business. and thereby secure the profit derived from their sale. However.‖ 91. stating that the amount should be P3. Trust Co. when invoked for or against a corporation. Phil. and in furtherance of such a sale it may.000. which has been taken in payment of its own debt. is a corporation incorporated here in the Philippines.. so the lease was not consummated resulting to the loss of P2. the president of Phil. the latter certainly cannot escape its responsibility of observing. Tapnio agreed to leased the sugar quota. And it is well settled that where a corporation acquires commercial paper or bonds in the legitimate transaction of its business it may sell them.80 per picul.800. and to guarantee to the PNB the payment of the indebtedness to said bank by Mindoro up to P2. Trust although secondarily engaged in banking.80 per picul.000. Tuazon ask for reconsideration to the board which was not acted by the board. The SC said that time is of the essence in the approval of the lease of sugar quota allotments. Hence this appeal by the appellant. the principal purpose of which is to engage in the trust business. 1978 PHILIPPINE NATIONAL BANK. ANTONIO.25. in order to make them the more readily marketable indorse or guarantee their payment. at a price not less than par. be presumed valid. it will. Trust adopted a resolution authorizing its president. Philam gen as surety. in excess of his need to Tuazon which was approved by the branch and vice president of the PNB in the amount of P2. respondents. with or without the guarantee of said trust corporation. Tapnio refused to pay alleging that he was not liable to the bank because due to the negligence of the latter the contract of lease w/ Tuazon was rescind which amounts to 2800.Rachel Ann A. Trust Co.
54 Phil. Concio. Manero and Mambulao Lumber Co. Solicitor General and Court of Appeals disputed the theory of the Petitioner following the general principle enunciated by the SC in People vs. L-35262 March 15. Tan Boon Kong. 1992. he may be liable for the crime charged. Aggrieved by the RTC's decision. On April 06. On February 27. Viva granted RBS the exclusive right to air 104 Viva-produced and/or acquired films including the fourteen (14) films subject of the present case. Siñel Corporation Law 07. Concio‘s letter to Del Rosario ticking off ten titles acceptable to them.543. copra and other native projects voluntarily made a false (tax)return stating gross sales of only 2. No. which would have made the 1992 agreement an entirely new contract. The award of moral damages cannot be granted in favor of a corporation because. The trial court. it has no feelings.50 (1 1/2 sales) resulting to a tax difference of 2. which cold rolled steel sheets were consigned to the Continental Bank. ABS CBN rejected said list. ABS-CBN then filed a a complaint for specific performance. 607. 1992.00. I hope you find everything in order. Private respondents VIVA and Del Rosario also appealed seeking moral and exemplary damages and additional attorney's fees. . Consequently. The said counterproposal was however rejected by Viva‘s Board of Directors. the right of first refusal under the 1990 Film Exhibition Agreement had previously been exercised per Ms. assumed sole obligation under the trust receipt. Graciano Gozon of RBS discussed the terms and conditions of Viva‘s offer to sell the 104 films. having only acted for and in behalf of the Metal Manufacturing Company of the Philippines as President thereof in dealing with the complainant. His company was in need of raw materials to be imported from abroad. through defendant Del Rosario. of Tokyo. 63/109. petitioner.12. Ltd. No. On April 29.60 under a trust receipt agreement under L/C No. a handwritten note from Ms.94 when the true amount is 2. vs. herein complainant. Facts: Petitioner was the president and general manager of the Metal Manufacturing of the Philippines. RTC rendered a decision in favor of RBS and VIVA and against ABS-CBN. proposing to sell to ABS-CBN airing rights over this package of 52 originals and 52 reruns for P60. Japan. On this score alone the award for damages must be set aside. defendant Del Rosario received through his secretary. however. 1999 FACTS: In 1990. The question is whether he is liable under Secs. Concio which reads: ―Here‘s the draft of the contract.2012 P a g e | 10 Under Article 21 of the New Civil Code. v. a list of three(3) film packages (36 titles) from which ABS-CBN may exercise its right of first refusal under the afore-said agreement. accordingly. It cannot. Furthermore. A corporation can act only through its officers and agents. Del Rosario approached Ms. that such right shall be exercised by ABS-CBN from the actual offer in writing. "any person who wilfully causes loss or injury to another in a manner that is contrary to morals. the responsible officers thereof would personally bear the criminal liability. ABS-CBN appealed to the Court of Appeals claiming that there was a perfected contract between ABS-CBN and VIVA granting ABS-CBN the exclusive right to exhibit the subject films. Tan Boon Kong. #92 G. The statement in People v. 128690 January 21. a banking institution duly organized and doing business in the City of Manila.‖ to which was attached a draft exhibition agreement. HELD: YES. He obtained delivery of 150 M/T Cold Rolled Steel Sheets valued at P 71. good customs or public policy shall compensate the latter for the damage. being an artificial person and having existence only in legal contemplation.960. PNB 67 that a corporation may recover moral damages if it "has a good reputation that is debased. Supply Co.000.R. experience physical suffering and mental anguish. Sia. 1930 PEOPLE VS TAN BOON KONG FACTS: FACTS: Issue: Whether petitioner Jose O. therefore. He failed to return the said cold rolled sheets or settled his unpaid accounts thereof despite demands. and where the business itself involves a violation of the law. 1458 and 2723 of ACT 2711 (seem to mention only about corporations) the lower decided the offense charged must be regarded as committed by the corporation and not by its officials or agents. the application being directed to the Continental Bank. since RBS is a corporation. 1992. through its vice-president Charo SantosConcio. 94. Petitioner seeks to avoid liability on his theory that the Bank knew all along that he was dealing with him only as an officer of the Metal Company which was the true and actual applicant for the letter of credit and which." This grants adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to specifically provide in the statutes.541. no senses. offered ABS-CBN. so he applied for a letter of credit to import steel sheets from Mitsui Bussan Kaisha. Viva. provided. ISSUE: W Tan Boon Kong is criminally liable. Inc. Inc. this appeal. JOSE O. 44 with a difference of 190. as well as 104 re-runs from which ABS-CBN may choose another 52 titles. respondent. with a list consisting of 52 original movie titles. Del Rosario and Mr. The package was rejected by ABS-CBN. ABS-CBN vs CA G. SIA.000. hence.Rachel Ann A. He was convicted of estafa for defrauding the Continental Bank.352. the Continental Bank. the correct rule is that all who participate in it are liable. (MEMAP). CA awarded Moral damages to RBS which was questioned by ABS ISSUE: Whether moral damages could be granted? HELD: No. 1992. ABS-CBN and Viva executed a Film Exhibition Agreement whereby ABS-CBN was given the right of first refusal to the next twenty-four (24) Viva films for TV telecast under such terms as may be agreed upon by the parties hereto.25. which call be experienced only by one having a nervous system. under the express obligation on the part of the Petitioner that the said steel sheets in trust and selling them and turning over the proceeds of the sale to the Continental Bank. no emotions. manager of the Visayan Gen. THE PEOPLE OF THE PHILIPPINES. or a total of 156 titles.303. ruling that there was no meeting of minds on the price and terms of the offer. engaged in the purchase and sale of sugar "bayon:. resulting in social humiliation" is an obiter dictum. 93. that for crimes committed by a corporation. On April 07.023.761.R. a counter-proposal covering 53 films for a consideration of P35 million.
2012 P a g e | 11 95.000. On 18 June 1990. However. et al. Facts: ―Exposé‖ is a radio documentary program hosted by Carmelo ‗Mel‘ Rima (―Rima‖) and Hermogenes ‗Jun‘ Alegre (―Alegre‖). FBNI claimed that before hiring a broadcaster. With the supposed exposés. filed a complaint for damages against FBNI. Neither in such a case is the plaintiff required to introduce evidence of actual damages as a condition precedent to the recovery of some damages. and AMEC and Ago. FBNI.‖ Both parties. Inc. (―FBNI‖). if besmirched. filed a Motion to Dismiss on FBNI‘s behalf. Rozil Lozares. AMEC is entitled to moral damages. collaborating counsel of Atty. Moreover.‖ AMEC and Ago included FBNI as defendant for allegedly failing to exercise due diligence in the selection and supervision of its employees. FBNI. The trial court denied the motion to dismiss. 17 January 2005] Held: A juridical person is generally not entitled to moral damages because. unlike a natural person. AMEC and Angelita Ago (―Ago‖). and as such. expression. the trial court found that FBNI failed to exercise diligence in the selection and supervision of its employees. (2) be interviewed. namely. . the broadcaster should (1) file an application. The Court of Appeals affirmed the trial court‘s judgment with modification.000 to P150. Filipinas Broadcasting Network Inc. The trial court found Rima‘s statement within the ―bounds of freedom of speech.25. FBNI. In absolving Rima from the charge. The appellate court denied Ago‘s claim for damages and attorney‘s fees because the broadcasts were directed against AMEC. Rima and Alegre filed a motion for reconsideration which the Court of Appeals denied in its 26 January 2000 Resolution. Article 2219(7) does not qualify whether the plaintiff is a natural or juridical person.‖ Moreover. Issue: Whether AMEC is entitled to moral damages. Claiming that the broadcasts were defamatory. In this case. the trial court ruled that Rima‘s only participation was when he agreed with Alegre‘s exposé. However. Rima and Alegre claimed that they were plainly impelled by a sense of public duty to report the ―goings-on in AMEC. Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC-BCCM) [GR 141994. mental anguish or moral shock. Rima and Alegre. Rima and Alegre on 27 February 1990. FBNI. a juridical person such as a corporation can validly complain for libel or any other form of defamation and claim for moral damages. and not against her. Edmundo Cea. v. fairness and objectivity in their broadcasts and to refrain from using libelous and indecent language. particularly Rima and Alegre. filed an Answer alleging that the broadcasts against AMEC were fair and true. The trial court held that the broadcasts are libelous per se. AMEC‘s claim for moral damages falls under item 7 of Article 2219 of the Civil Code. [which is] an institution imbued with public interest. evidence of an honest mistake or the want of character or reputation of the party libeled goes only in mitigation of damages. Rima and Alegre exposed various alleged complaints from students. Therefore. ―Exposé‖ is heard over Legazpi City. FBNI requires all broadcasters to pass the Kapisanan ng mga Brodkaster sa Pilipinas (―KBP‖) accreditation test and to secure a KBP permit. slander or any other form of defamation. and (3) undergo an apprenticeship and training program after passing the interview. the Court reduced the award of moral damages from P300. AMEC has not suffered any substantial or material damage to its reputation. Rima and Alegre ―transmitted malicious imputations. Atty. teachers and parents against Ago Medical and Educational Center-Bicol Christian College of Medicine (―AMEC‖) and its administrators. appealed the decision to the Court of Appeals.Rachel Ann A. may also be a ground for the award of moral damages‖ is an obiter dictum. During the presentation of the evidence for the defense. the Court‘s statement in Mambulao that ―a corporation may have a good reputation which. the law implies damages. In such a case. FBNI filed the petition for review. destroyed plaintiffs‘ (AMEC and Ago) reputation. The complaint further alleged that AMEC is a reputable learning institution. Rima and Alegre. Consequently. the Court found the award of P300. The Court of Appeals cites Mambulao Lumber Co. The appellate court made Rima solidarily liable with FBNI and Alegre. Nevertheless. PNB. Hence. The broadcasters did not even verify their reports before airing them to show good faith.000 moral damages unreasonable. FBNI filed a separate Answer claiming that it exercised due diligence in the selection and supervision of Rima and Alegre. On 14 December 1992. as Dean of AMEC‘s College of Medicine. and of the press. The trial court rejected the broadcasters‘ claim that their utterances were the result of straight reporting because it had no factual basis. where the broadcast is libelous per se. FBNI. In the morning of 14 and 15 December 1989. trial ensued. Therefore. Thus. This provision expressly authorizes the recovery of moral damages in cases of libel. to justify the award of moral damages. vs. serious anxiety. Lozares. In holding FBNI liable for libel. The record shows that even though the broadcasts were libelous per se. on one hand. the Albay municipalities and other Bicol areas. it cannot experience physical suffering or such sentiments as wounded feelings. the broadcasts are libelous per se. Exposé is aired every morning over DZRC-AM which is owned by Filipinas Broadcasting Network. the trial court rendered a Decision finding FBNI and Alegre liable for libel except Rima. FBNI likewise claimed that it always reminds its broadcasters to ―observe truth. Siñel Corporation Law 07. on the other.‖ Thereafter. through Atty.
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