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TUASON VS. BOLANOSGR. No. L4935. May 28, 195495 Phil.

106
CASE DIGEST
Facts:
Plaintiffs complaint against defendant
was to recover possession of a
registered land. In
the complaint, the plaintiff is
represented by its Managing Partner,
Gregorio Araneta, Inc.,another
corporation. Defendant, in his answer,
sets up prescription and title in himself
thru"open, continuous, exclusive and
public and notorious possession under
claim of ownership,adverse to the
entire world by defendant and his
predecessors in interest" from
"timeimmemorial". After trial, the lower
court rendered judgment for plaintiff,
declaring defendant tobe without any
right to the land in question and
ordering him to restore possession
thereof toplaintiff and to pay the latter a
monthly rent. Defendant appealed
directly to the Supreme Courtand
contended, among others, that
Gregorio Araneta, Inc. can not act as
managing partner for plaintiff on the
theory that it is illegal for two
corporations to enter into a partnership
FACTS: This was an action to recover
possession of a parcel of land where
theplaintiff was represented by
a corporation.
Issue:
Whether or not a corporation may enter
into a joint venture with another
corporation.
Ruling:
It is true that the complaint states that
the plaintiff is "represented herein by its
ManagingPartner Gregorio Araneta,
Inc.", another corporation, but there is
nothing against onecorporation being
represented by another person, natural
or juridical, in a suit in court.
Thecontention that Gregorio Araneta,
Inc. cannot act as managing partner for
plaintiff on the theorythat it is illegal for
two corporations to enter into a
partnership is without merit, for the true
rule isthat
"though a corporation has no power to
enter into a partnership, it may
nevertheless enter into a joint venture
with another where the nature of that
venture is in line with the
businessauthorized by its charter."
(Wyoming-Indiana Oil Gas Co. vs.
Weston, 80 A. L. R., 1043, citing
2.Fletcher Cyc. of Corp., 1082.). There
is nothing in the record to indicate that
the venture inwhich plaintiff is
represented by Gregorio Araneta, Inc.
as "its managing partner" is not in
linewith the corporate business of
either of them.
TUASON & CO. v.
BOLANOSFacts: JM Tuason & Co. Inc.
represented by its managing partner
Gregorio Araneta Inc. filed a complaint
inthe CFI for recovery of possession of

registered land situated in Tatalon, QC


against Quirino
Bolanos.Defendant in his
answer claims
through prescription and that the
registration of said land wasobtained
through fraud. The CFI ruled in favor of
the plaintiff and declared that defendant
had noright to the land. Hence, this
appeal.Issue: WON the case should
have been dismissed on the ground
that it was not brought by the realparty
in interest?Held:No, the rules of court
require that an action be brought in the
name of but not necessarily by the
realparty in interest. In fact,the practice
really is for the attorney-at-law to bring
the action and file thecomplaint in
plaintiffs name which was done her.
And while it is true that the complaint
also statesthat the plaintiff is
represented herein by its managing
partner G. Araneta Inc. another
corporation,there is nothing against one
corporation being represented by
another person, natural or juridical ina
suit in court.

court. The trial court rendered judgment


ordering Solid Homes to pay remaining
amount with P250,000 attorneys fees.
Upon appeal to the Court of Appeals, it
modified the lower courts judgment by
lowering the attorneys fees to P50,000.
In the instant petition for review,
petitioner Solid Homes argues (a) that
the Court of Appeals should not have
awarded attorneys fees, there being an
absence of any special finding of fact to
justify such award. The Supreme Court
required private respondents to
comment. Atty. Alejandro Barin
withdrew as counsel for respondents
Investco, Inc., Staley and Perez. They
required private respondents to submit
the name and address of their new
counsel but no compliance has been
made. Pending the judgment of the trial
court for the collection of sums of
money, Investco sold the same parcels
of land involved to Armed Forces of the
Philippines Mutual Benefit Association.
Solid Homes filed two civil cases
against AFPMBA and private
respondents for nullification of second
deed of sale. Trial court of Quezon City
Revised Bagtas Reviewer by Ve and
ruled in favor of Solid Homes in the first
Ocfe 2A The contention that G. Araneta case. Upon appeal with the Court of
Inc. cannot act as managing partner on Appeals, the decision was reversed.
the theory that it is illegal fortwo
The case was elevated to the Supreme
corporations to enetr into a partnership Court. For the second case, the trial
is without merit for
court of Pasig City ruled in favor of
the true rule is that though acorporation Solid Homes which was then affirmed
has no power to enter into a
by Court of Appeals upon appeal. The
partnership, it may nevertheless enter
Court has yet to hear from private
into a joint venturewith another where
respondents.
the nature of the venture is inline with
the business authorized by is
ISSUES:
charter. There is nothing in the
1. Was there enough bases to support
record to show that the venture which
courts award for attorneys fees?
plaintiff is represented by G. Araneta
2. Whether or not the payment
isnot inline with the corporate business schedule should be adjusted
of either corporation.
HELD:

1. No. Article 2208 of the Civil Code


The SEC rule provides in an Opinion, allows attorneys fees to be awarded by
that the right of the corporation to
a court when its claimant is compelled
engage as a limitedpartner (not a
to litigate with third persons or to incur
general partner, meaning that its
expenses to protect his interest by
liability is limited to the amount of
reason of an unjustified act or omission
investment itpours into the partnership). of the party from whom it is sought.
But such a power to engage in a
While judicial discretion is here extant,
partnership must be
an award thereof demands,
specificallyprovided for in the
nevertheless, a factual, legal or
corporations charter.
equitable justification. The Supreme
Court held that the records do not show
Solid homes
enough basis for sustaining the award
FACTS: Investco Inc., Perez and
for attorneys fees and to adjudge its
Staley, private respondents contended payment by petitioner. On the contrary,
that, on September of 1976, they
the appellate court itself has found that
entered into a contract with Solid
petitioners act of withholding payment
Homes, selling six (6) parcels of land in could not be said to be all that
Quezon City and Marikina for
unjustified.
P10,211,075.00. Private respondents
2. Yes. It is undisputed that appellant
furthered that Solid Homes violated the Solid Homes had made a total payment
terms of the agreement by refusing to
of P6,126,645.00 leaving a balance of
pay the balance of P4,800,282.91 and P4,800,282.91, which refers to the 6th
by failing to negotiate a settlement with to the 10th installments. . Of the 5th
the tenants and squatters of the
installment due on July 22, 1980, the
property despite its receipt from
following payments were made by
Investco of P350,000.00 for that
appellant:
specific purpose. Private respondents
Oct. 30, 1980 to Nov. 10, 1980
filed collection of sums of money,
P150,000.00
damages and attorneys fees with trial

Nov. 18, 1980 to Dec. 10, 1980


270,000.00
Dec. 18, 1980 to Jan. 14, 1981
101,853.12
Jan. 20 to Feb. 12, 1981 95,000.00
Feb. 16 to Feb. 19, 1981 115,000.00
The Facts
The facts of the case as narrated by
the trial court and reproduced in the
assailed Decision of the Court of
Appeals are undisputed by the
parties. These are the relevant
portions:
It appears that on June 4, 1979, Solid
Homes executed in favor of State
Financing (Center, Inc.) a Real Estate
Mortgage (Exhibit 3) on its properties
embraced in Transfer Certificate of Title
No. 9633 (Exhibit 9) and Transfer
Certificate of Title No. (492194) -11938
(Exhibit 8) of the Registry of Deeds in
Pasig, Metro Manila, in order to secure
the payment of a loan
of P10,000,000.00 which the former
obtained from the latter. A year after,
Solid Homes applied for and was
granted an additional loan
of P1,511,270.03 by State Financing,
and to secure its payment, Solid
Homes executed the Amendment to
Real Estate Mortgage dated June 4,
1980 (Exhibit 4) whereby the credits
secured by the first mortgage on the
abovementioned properties were
increased from P10,000,000.00
to P11,511,270.03. Sometime
thereafter, Solid Homes obtained
additional credits and financing facilities
from State Financing in the sum
of P1,499,811,97, and to secure its
payment, Solid Homes executed in
favor of State Financing the
Amendment to Real Estate Mortgage
dated March 5, 1982 (Exhibit 5)
whereby the mortgage executed on its
properties on June 4, 1979 was again
amended so that the loans or credits
secured thereby were further increased
from P11,511,270.03
to P13,011,082.00.
When the loan obligations
abovementioned became due and
payable, State Financing made
repeated demands upon Solid Homes
for the payment thereof, but the latter
failed to do so. So, on December 16,
1982, State Financing filed a petition
for extrajudicial foreclosure of the
mortgages abovementioned with the
Provincial Sheriff of Rizal, who, in
pursuance of the petition, issued a
Notice of Sheriffs Sale dated February
4, 1983 (Exhibit 6), whereby the
mortgaged properties of Solid Homes
and the improvements existing thereon,
including the V.V. Soliven Towers II
Building, were set for public auction
sale on March 7, 1983 in order to
satisfy the full amount of Solid Homes
mortgage indebtedness, the interest
thereon, and the fees and expenses
incidental to the foreclosure
proceedings.
Before the scheduled public auction
sale x x x, the mortgagor Solid Homes

made representations and induced


State Financing to forego with the
foreclosure of the real estate
mortgages referred to above. By
reason thereof, State Financing agreed
to suspend the foreclosure of the
mortgaged properties, subject to the
terms and conditions they agreed upon,
and in pursuance of their said
agreement, they executed a document
entitledMEMORANDUM OF
AGREEMENT/DACION EN
PAGO (Memorandum) dated February
28, 1983 (Exhibits C and 7) x x
x. Among the terms and conditions
that said parties agreed upon were x x
x:
1.
(Solid Homes) acknowledges
that it has an outstanding obligation
due and payable to (State Financing)
and binds and obligates to pay (State
Financing) the totality of its outstanding
obligation in the amount
of P14,225,178.40, within one hundred
eighty (180) days from date of signing
of this instrument. However, it is
understood and agreed that the
principal obligation of P14,225,178.40
shall earn interest at the rate of 14%
per annum and penalty of 16% per
annum counted from March 01, 1983
until fully paid.
2.
The parties agree that should
(Solid Homes) be able to pay (State
Financing) an amount equivalent to
sixty per centum (60%) of the principal
obligation, or the amount
of P8,535,107.04, within the first one
hundred eighty (180) days, (State
Financing) shall allow the remaining
obligation of (Solid Homes) to be
restructured at a rate of interest to be
mutually agreed between the parties.
3.
It is hereby understood and
agreed that in the event (Solid Homes)
fails to comply with the provisions of
the preceding paragraphs, within the
said period of one hundred eighty (180)
days, this document shall automatically
operate to be an instrument of dacion
en pago without the need of executing
any document to such an effect and
(Solid Homes) hereby obligates and
binds itself to transfer, convey and
assign to (State Financing), by way of
dacion en pago, its heirs, successors
and assigns, and (State Financing)
does hereby accept the conveyance
and transfer of the above-described
real properties, including all the
improvements thereon, free from all
liens and encumbrances, in full
payment of the outstanding
indebtedness of (Solid Homes) to
(State Financing) x x x.
xxx
xx
x
xxx
6.
(State Financing) hereby grants
(Solid Homes) the right to repurchase
the aforesaid real properties, including
the condominium units and other
improvements thereon, within ten (10)
months counted from and after the one
hundred eighty (180) days from date of
signing hereof at an agreed price

of P14,225,178.40, or as reduced
pursuant to par. 5 (d), plus all cost of
money equivalent to 30% per annum,
registration fees, real estate and
documentary stamp taxes and other
incidental expenses incurred by (State
Financing) in the transfer and
registration of its ownership via dacion
en pago x x x.
xxx
xxx
xxx
Subsequently, Solid Homes failed to
pay State Financing an amount
equivalent to 60% (or P8,535,107.04)
of the principal obligation
of P14,225,178.40 within 180 days
from the signing of the (Memorandum)
on February 28, 1983, as provided
under paragraph 2 of the said
document. Hence, and in pursuance of
paragraph 3 thereof which provided
that this document shall automatically
operate to be an instrument of dacion
en pago without the need of executing
any document to such an effect x x x(,)
State Financing registered the said
(Memorandum) with the Register of
Deeds in Pasig, Metro Manila on
September 15, 1983. Consequently,
the said Register of Deeds cancelled
TCT No. 9633 and TCT No. (492194)
11938 in the name of Solid Homes
which were the subject matter of the
(Memorandum) abovementioned, and
in lieu thereof, the said office issued
Transfer Certificate of Title No. 40533
(Exhibits J and 11) and Transfer
Certificate of Title No. 40534 (Exhibits
K and 12) in the name of State
Financing. x x x
In a letter dated October 11, 1983
(Exhibit 16), State Financing informed
Solid Homes of the transfer in its name
of the titles to all the properties subject
matter of the (Memorandum) and
demanded among other things, that
Solid Homes turn over to State
Financing the possession of the V.V.
Soliven Towers II Building erected on
two of the said properties. Solid
Homes replied with a letter dated
October 14, 1983, (Exhibit 20) asking
for a period of ten (10) days within
which to categorize its position on the
matter; and in a subsequent letter
dated October 24, 1983, Solid Homes
made known to State Financing its
position that the (Memorandum) is null
and void because the essence thereof
is that State Financing, as mortgagee
creditor, would be able to appropriate
unto itself the properties mortgaged by
Solid Homes which is in contravention
of Article 2088 of the Civil Code. State
Financing then sent to Solid Homes
another letter dated November 3, 1983
(Exhibit 17), whereby it pointed out
that Art. 2088 of the Civil Code is not
applicable to the (Memorandum) they
have executed, and also reiterated its
previous demand that Solid Homes turn
over to it the possession of the V.V.
Soliven Towers II Building within five (5)
days, but Solid Homes did not comply
with the said demand.

x x x and within that period of


repurchase, Solid Homes wrote to
State Financing a letter dated April 30,
1984 containing its proposal for
repayment schemes under terms and
conditions indicated therein for the
repurchase of the properties referred
to. In reply to said letter, State
Financing sent a letter dated May 17,
1984 (Exhibit 18) advising Solid
Homes that State Financings
management was not amenable to its
proposal, and that by way of granting it
some concessions, said management
made a counter-proposal requiring
Solid Homes to make an initial payment
of P10 million until 22 May 1984 and
the balance payable within the
remaining period to repurchase the
properties as provided for under the
(Memorandum) x x x. Thereafter, a
number of conferences were held
among the corporate officers of both
companies wherein they discussed the
payment arrangement of Solid Homes
outstanding obligation, x x x. In a letter
dated June 7, 1984 (Exhibit 19), State
Financing reiterated the counterproposal in its previous letter dated
May 17, 1984 to Solid Homes as a way
of making good its account, and at the
same time reminded Solid Homes that
it has until 27 June 1984 to exercise its
right to repurchase the properties
pursuant to the terms and conditions of
the (Memorandum), otherwise, it will
have to vacate and turn over the
possession of said properties to State
Financing. In return, Solid Homes sent
to State Financing a letter dated June
18, 1984 (Exhibits N and 22)
containing a copy of the written offer
made by C.L. Alma Jose & Sons, Inc.
(Exhibits M and 22-A) to avail of Solid
Homes right to repurchase the V.V.
Soliven Towers II pursuant to the terms
of the Dacion En Pago. The letter also
contained a request that the
repurchase period under said Dacion
En Pago which will expire on June 27,
1984 be extended by sixty (60) days to
enable Solid Homes to comply with the
conditions in the offer of Alma Jose &
Sons, Inc. referred to, and thereafter, to
avail of the one year period to pay the
balance based on the verbal
commitment of State Financings
President. x x x
However, on June 26, 1984, a day
before the expiry date of its right to
repurchase the properties involved in
the (Memorandum) on June 27, 1984,
Solid Homes filed the present action
against defendants State Financing
and the Register of Deeds for Metro
Manila District II (Pasig), seeking the
annulment of said (Memorandum) and
the consequent reinstatement of the
mortgages over the same properties; x
x x[5]
As earlier stated, the trial court held
that the Memorandum of
Agreement/Dacion En Pago executed
by the parties was valid and binding,
and that the registration of said

instrument in the Register of Deeds


was in accordance with law and the
agreement of the parties. It disposed
of the case thus:
WHEREFORE, this Court hereby
renders judgment, as follows:
1.
Declaring that the
Memorandum of Agreement/Dacion En
Pago entered into by and between
plaintiff Solid Homes and defendant
State Financing on February 28, 1983
is a valid and binding document which
does not violate the prohibition against
pactum commisorium under Art. 2088
of the Civil Code;
2.
Declaring that the said
Memorandum of Agreement/Dacion En
Pago is a true sale with right of
repurchase, and not an equitable
mortgage;
3.
Declaring that the
registration of the said Memorandum of
Agreement/Dacion En Pago with the
defendant Register of Deeds in Pasig,
Metro Manila by defendant State
Financing on September 15, 1983 is in
accordance with law and the
agreement of the parties in the said
document; but the annotation of the
said document by the said Register of
Deeds on the certificates of title over
the properties subject of the
Memorandum of Agreement/Dacion En
Pago without any mention of the right
of repurchase and the period thereof, is
improper, and said Register of Deeds
cancellation of the certificates of title in
the name of Solid Homes over the
properties referred to and issuance of
new titles in lieu thereof in the name of
State Financing - during the period of
repurchase and without any judicial
order - is in violation of Art. 1607 of the
Civil Code, which renders said titles
null and void;
4.
Ordering the defendant State
Financing to surrender to the defendant
Register of Deeds in Pasig, Metro
Manila for the cancellation thereof, all
the certificates of title issued in its
name over the properties subject of the
Memorandum of Agreement/Dacion En
Pago, including those titles covering
the fully paid condominium units and
the substitute collateral submitted in
exchange for said condominium units;
5.
Ordering the said defendant
Register of Deeds to cancel all the titles
in the name of State Financing referred
to and to reinstate the former titles over
the same properties in the name of
Solid Homes, with the proper
annotation thereon of the Memorandum
of Agreement/Dacion En Pago together
with the right of repurchase and the
period thereof - as provided in said
document - and to return the said
reinstated former titles (owners copies)
in the name of Solid Homes to State
Financing;
6.
Ordering the defendant State
Financing to release to plaintiff Solid
Homes all the certificates of title over
the fully paid condominium units in the
name of Solid Homes, free from all

liens and encumbrances by releasing


the mortgage thereon;
7.
Granting the plaintiff Solid
Homes the opportunity to exercise its
right to repurchase the properties
subject of the Memorandum of
Agreement/Dacion En Pago within
thirty (30) days from the finality of this
Decision, by paying to defendant State
Financing the agreed price
of P14,225,178.40 plus all cost of
money equivalent to 30% (interest of
14% and penalty of 16% from March 1,
1983) per annum, registration fees, real
estate and documentary stamp taxes
and other incidental expenses incurred
by State Financing in the transfer and
registration of its ownership via the
Dacion En Pago, as provided in the
said document and in pursuance of
Articles 1606 and 1616 of the Civil
Code; and
8.
Ordering the defendant
Register of Deeds in Pasig, Metro
Manila - should plaintiff Solid Homes
fail to exercise the abovementioned
right to repurchase within 30 days from
the finality of this judgment - to record
the consolidation of ownership in State
Financing over the properties subject of
the Memorandum of Agreement/Dacion
En Pago in the Registry of Property, in
pursuance of this Order, but excluding
therefrom the fully paid condominium
units and their corresponding titles to
be released by State Financing.
For lack of merit, the respective claims
of both parties for damages, attorneys
fees, expenses of litigation and costs of
suit are hereby denied.[6]
Both parties appealed from the trial
courts decision. Solid Homes raised a
lone question contesting the denial of
its claim for damages. Such damages
allegedly resulted from the bad faith
and malice of State Financing in
deliberately failing to annotate Solid
Homes right to repurchase the subject
properties in the formers consolidated
titles thereto. As a result of the nonannotation, Solid Homes claimed to
have been prevented from generating
funds from prospective buyers to
enable it to comply with the Agreement
and to redeem the subject properties.
State Financing, on the other hand,
assigned three errors against the RTC
decision: (1) granting Solid Homes a
period of thirty (30) days from finality of
the judgment within which to exercise
its right of repurchase; (2) ordering
Solid Homes to pay only 30% per
annum as interest and penalty on the
principal obligation, rather than
reasonable rental value from the time
possession of the properties was
illegally withheld from State Financing;
and (3) failing to order the immediate
turnover of the possession of the
properties to State Financing as the
purchaser a retro from whom no
repurchase has been made.
As to the lone issue raised by Solid
Homes, the Court of Appeals agreed
with the trial court that the failure to

annotate the right of repurchase of the


vendor a retro is not by itself an
indication of bad faith or malice. State
Financing was not legally bound to
cause its annotation, and Solid Homes
could have taken steps to protect its
own interests. The evidence shows
that after such registration and transfer
of titles, State Financing willingly
negotiated with Solid Homes to enable
the latter to exercise its right to
repurchase the subject properties,
[7] an act that negates bad faith.
Anent the first error assigned by State
Financing, Respondent Court likewise
upheld the trial court in applying Article
1606, paragraph 3[8] of the Civil
Code. Solid Homes was not in bad
faith in filing the complaint for the
declaration of nullity of the
Memorandum of Agreement/Dacion En
Pago. There is statutory basis for
petitioners claim that an equitable
mortgage existed since it believed that
(1) the price of P14 million was grossly
inadequate, considering that the
building alone was allegedly built at a
cost of P60 million in 1979 and the lot
was valued at P5,000.00 per square
meter and (2) it remained in possession
of the subject properties.
[9] Furthermore, Article 1607[10] of the
Civil Code abolished automatic
consolidation of ownership in the
vendee a retroupon expiration of the
redemption period by requiring the
vendee to institute an action for
consolidation where the vendor a
retro may be duly heard. If the vendee
succeeds in proving that the
transaction was indeed a pacto de
retro, the vendor is still given a period
of thirty days from the finality of the
judgment within which to repurchase
the property.[11]
Respondent Court also affirmed the
trial courts imposition of the 30%
interest per annum on top of the
redemption price in accordance with
paragraph 6 of the parties
Memorandum of Agreement.[12]
However, Respondent Court of Appeals
ruled favorably on State Financings
last assigned error by ordering Solid
Homes to deliver possession of the
subject properties to the private
respondent, citing jurisprudence that in
a sale with pacto de retro, the vendee
shall immediately acquire title over and
possession of the real property sold,
subject only to the vendors right of
redemption.[13] The full text of the
dispositive portion of the assailed
Decision is as follows:
WHEREFORE, the judgment appealed
from is affirmed with the modification
that plaintiff Solid Homes is further
ordered to deliver the possession of the
subject property to State
Financing.[14]
The two opposing parties filed their
respective motions for reconsideration
of the assailed Decision. Both were
denied by said Court for lack of
merit. Both parties thereafter filed

separate petitions for review before this


Court. In a minute
Resolution[15] dated December 5,
1994, this Court (Third Division) denied
State Financing Centers petition
because of its failure to show that a
reversible error was committed by the
appellate court. Its motion for
reconsideration of said resolution was
likewise denied for lack of merit. This
case disposes only of the petition filed
by Solid Homes, Inc.
Issues
In its petition, Solid Homes repeats its
arguments before the Court of
Appeals. It claims damages allegedly
arising from the non-annotation of its
right of repurchase in the consolidated
titles issued to private
respondent. Petitioner reiterates its
attack against the inclusion of 30%
interest per annum as part of the
redemption price. It asserts that Article
1616 of the Civil Code authorizes only
the return of the (1) price of the sale,
(2) expenses of the contract and any
other legitimate payments by reason of
the sale and (3) necessary and useful
expenses made on the thing
sold. Considering that the transfer of
titles was null and void, it was thus
erroneous to charge petitioner the
registration fees, documentary stamp
taxes and other incidental expenses
incurred by State Financing in the
transfer and registration of the subject
properties via the dacion en
pago. Lastly, petitioner argues that
there is no need for the immediate
turnover of the properties to State
Financing since the same was not
stipulated under their Agreement, and
the latters rights were amply protected
by the issuance of new certificates of
title in its name.
The Courts Ruling
First Issue: Damages
To resolve the issue of damages, an
examination of factual circumstances
would be necessary, a task that is
clearly beyond this Courts dominion. It
is elementary that in petitions for review
on certiorari, only questions of law may
be brought by the parties and passed
upon by this Court. Findings of fact of
lower courts are deemed conclusive
and binding upon the Supreme Court
except when the findings are grounded
on speculation, surmises or
conjectures; when the inference made
is manifestly mistaken, absurd or
impossible; when there is grave abuse
of discretion in the appreciation of
facts; when the factual findings of the
trial and appellate courts are
conflicting; when the Court of Appeals,
in making its findings, has gone beyond
the issues of the case and such
findings are contrary to the admissions
of both appellant and appellee;
[16] when the judgment of the appellate
court is premised on a
misapprehension of facts or when it
has failed to notice certain relevant
facts which, if properly considered, will

justify a different conclusion; when the


findings of fact are conclusions without
citation of specific evidence upon which
they are based; and when findings of
fact of the Court of Appeals are
premised on the absence of evidence
but are contradicted by the evidence on
record.[17]
The petitioner has not shown any -and indeed the Court finds none -- of
the above-mentioned exceptions to
warrant a departure from the general
rule.
In fact, petitioner has not even
bothered to support with evidence its
claim for actual, moral and
punitive/nominal damages as well as
exemplary damages and attorneys
fees. It is basic that the claim for
these damages must each be
independently identified and justified;
such claims cannot be dealt with in the
aggregate, since they are neither
kindred or analogous terms
nor governed by a coincident set of
rules.[18]
The trial court found, and the Court of
Appeals affirmed, that petitioners claim
for actual damages was
baseless. Solid Homes utterly failed to
prove that respondent corporation had
maliciously and in bad faith caused the
non-annotation of petitioners right of
repurchase so as to prevent the latter
from exercising such right. On the
contrary, it is admitted by both parties
that State Financing informed petitioner
of the registration with the Register of
Deeds of Pasig of their Memorandum
of Agreement/Dacion en Pago and the
issuance of new certificates of title in
the name of the respondent
corporation. Petitioner exchanged
communications and held conferences
with private respondent in order to draw
a mutually acceptable payment
arrangement for the formers
repurchase of the subject properties. A
written offer from another corporation
alleging willingness to avail itself of
petitioners right of repurchase was
even attached to one of these
communications. Clearly, petitioner
was not prejudiced by the nonannotation of such right in the
certificates of titles issued in the name
of State Financing. Besides, as the
Court of Appeals noted, it was not the
function of respondent corporation to
cause said annotation. It was equally
the responsibility of petitioner to protect
its own rights by making sure that its
right of repurchase was indeed
annotated in the consolidated titles of
private respondent.
The only legal transgression of State
Financing was its failure to observe the
proper procedure in effecting the
consolidation of the titles in its
name. But this does not automatically
entitle the petitioner to damages absent
convincing proof of malice and bad
faith[19] on the part of private
respondent and actual damages
suffered by petitioner as a direct and

probable consequence thereof. In fact,


the evidence proffered by petitioner
consist of mere conjectures and
speculations with no factual
moorings. Furthermore, such
transgression was addressed by the
lower courts when they nullified the
consolidation of ownership over the
subject properties in the name of
respondent corporation, because it had
been effected in contravention of the
provisions of Article 1607[20] of the
Civil Code. Such rulings are consistent
with law and jurisprudence.
Neither can moral damages be
awarded to petitioner. Time and again,
we have held that a corporation -being an artificial person which has no
feelings, emotions or senses, and
which cannot experience physical
suffering or mental anguish -- is not
entitled to moral damages.[21]
While the amount of exemplary
damages need not be proved,
petitioner must show that he is entitled
to moral or actual damages;[22] but the
converse obtains in the instant
case. Award of attorneys fees is
likewise not warranted when moral and
exemplary damages are eliminated and
entitlement thereto is not demonstrated
by the claimant.[23]
Lastly, (n)ominal damages are
adjudicated in order that a right of the
plaintiff, which has been violated or
invaded by the defendant, may be
vindicated or recognized, and not for
the purpose of indemnifying the plaintiff
for any loss suffered by him.[24] As
elaborated above and in the decisions
of the two lower courts, no right of
petitioner was violated or invaded by
respondent corporation.
Second Issue: Redemption Price
Another fundamental principle of
procedural law precludes higher courts
from entertaining matters neither
alleged in the pleadings nor raised
during the proceedings below, but
ventilated for the first time only in a
motion for reconsideration or on
appeal.[25] On appeal, only errors
specifically assigned and properly
argued in the brief will be considered,
with the exception of those affecting
jurisdiction over the subject matter as
well as plain and clerical errors.[26]
As stated earlier, the single issue
raised by petitioner in its appeal of the
RTC decision to the Court of Appeals
concerned only the denial of its claim
for damages. Petitioner succinctly
stated such issue in its brief as follows:
I. LONE ASSIGNMENT OF ERROR
The trial court erred in that after having
found that the registration of the
Memorandum of Agreement/Dacion en
Pago on September 15, 1983 [and the
consequent cancellation of the titles of
plaintiff-appellant Solid Homes, Inc.
and issuance in lieu thereof of titles to
defendant-appellant State Financing
Center, Inc. (SFCI)] was null and void
because of failure to duly annotate the
right to repurchase granted to plaintiff-

appellant Solid Homes, Inc. under par.


6 thereof still then subsisting up to June
28, 1984 and the failure to comply with
the provisions of Art. 1607, Civil Code x
xx
I[t] nonetheless did not rule that such
irregular registration unduly deprived
plaintiff-appellant Solid Homes, Inc. of
its right of repurchase and that it further
erred in not having declared that
defendant-appellant SFCI liable in favor
of said plaintiff-appellant for
damages.[27]
Petitioner is thus barred from raising a
new issue in its appeal before this
Court. Nevertheless, in the interest of
substantial justice, we now resolve the
additional question posed with respect
to the composition of the redemption
price prescribed by the trial court and
affirmed by the Court of Appeals, as
follows:
7.
Granting the plaintiff Solid
Homes the opportunity to exercise its
right to repurchase the properties x x x
by paying to defendant State Financing
the agreed price of P14,225,178.40
plus all cost of money equivalent to
30% (interest of 14% and penalty of
16% from March 1, 1983) per annum,
registration fees, real estate and
documentary stamp taxes and other
incidental expenses incurred by State
Financing in the transfer and
registration of its ownership via the
Dacion En Pago, as provided in the
said document and in pursuance of
Articles 1606 and 1616 of the Civil
Code;[28]
Petitioner argues that such total
redemption price is in contravention of
Art. 1616 of the Civil Code. We do not,
however, find said legal provision to be
restrictive or exclusive, barring
additional amounts that the parties may
agree upon. Said provision should be
construed together with Art. 1601 of the
same Code which provides as follows:
Art. 1601. Conventional redemption
shall take place when the vendor
reserves the right to repurchase the
thing sold, with the obligation to comply
with the provisions of article 1616 and
other stipulations which may have been
agreed upon. (emphasis supplied)
It is clear, therefore, that the provisions
of Art. 1601 require petitioner to
comply with x x x the other
stipulations of the Memorandum of
Agreement/Dacion en Pago it freely
entered into with private
respondent. The said Memorandums
provision on redemption states:
6.
The FIRST PARTY (State
Financing) hereby grants the SECOND
PARTY (Solid Homes) the right to
repurchase the aforesaid real
properties, including the condominium
units and other improvements thereon,
within ten (10) months counted from
and after the one hundred eighty (180)
days from date of signing hereof at an
agreed price of P14,225,178.40, or as
reduced pursuant to par. 5 (d), plus all
cost of money equivalent to 30% per

annum, registration fees, real estate


and documentary stamp taxes and
other incidental expenses incurred by
the FIRST PARTY (State Financing) in
the transfer and registration of its
ownership via dacion en pago x x
x[29] (underscoring supplied)
Contracts have the force of law
between the contracting parties who
may establish such stipulations,
clauses, terms and conditions as they
may want, subject only to the limitation
that their agreements are not contrary
to law, morals, customs, public policy or
public order[30] -- and the abovequoted provision of the Memorandum
does not appear to be so.
Petitioner, however, is right in its
observation that the Court of Appeals
inclusion of registration fees, real
estate and documentary stamp taxes
and other incidental expenses incurred
by State Financing in the transfer and
registration of its ownership (of the
subject properties) via dacion en pago
was vague, if not erroneous,
considering that such transfer and
issuance of the new titles were null and
void. Thus, the redemption price shall
include only those expenses relating to
the registration of the dacion en pago,
but not the registration and other
expenses incurred in the issuance of
new certificates of title in the name of
State Financing.
Possession of the Subject
Properties During the Redemption
Period
The Court of Appeals Decision modified
that of the trial court only insofar as it
ordered petitioner to deliver possession
of the subject properties to State
Financing, the vendee a retro. We find
no legal error in this holding. In a
contract of sale with pacto de retro, the
vendee has a right to the immediate
possession of the property sold, unless
otherwise agreed upon. It is basic that
in a pacto de retro sale, the title and
ownership of the property sold are
immediately vested in the vendee a
retro, subject only to the resolutory
condition of repurchase by the vendor a
retro within the stipulated period.[31]
WHEREFORE, the assailed Decision
of the Court of Appeals is
hereby AFFIRMED with
the MODIFICATION that the
redemption price shall not include the
registration and other expenses
incurred by State Financing Center, Inc.
in the issuance of new certificates of
title in its name, as this was done
without the proper judicial order
required under Article 1607 of the Civil
Code.
SO ORDERED.
Narvasa, C.J. (Chairman), Davide,
Jr., and Francisco, JJ., concur.
Melo, J., on leave.
MAMBULAO LUMBER COMPANY,
plaintiff-appellant, vs.

PHILIPPINE NATIONAL BANK and


ANACLETOHERALDO Deputy
Provincial Sheriff of Camarines Norte,
defendants-appellees.
G.R. No. L-22973,January 30,
1968 ANGELES,
J.:
FACTS:
On May 5, 1956 the plaintiff applied for
an industrial loan of P155,000
(approved for a loan of P100,000 only)
with the Naga Branch of defendant
PNB. To secure payment, the plaintiff
mortgaged aparcel of land, together
with the buildings and improvements
existing thereon, situated in the
poblacion of Jose Panganiban
(formerly Mambulao), province of
Camarines Norte. The PNB released
from the approvedloan the sum of
P27,500, and another release of
P15,500.The plaintiff failed to pay the
amortization on the amounts released
to and received by it. It was found
that the plaintiff had already stopped
operation about the end of 1957 or
early part of 1958.The unpaid
obligation of the plaintiff as of
September 22, 1961, amounted to
P57,646.59, excludingattorney's fees. A
foreclosure sale of the parcel of land,
together with the buildings and
improvementsthereon was, held on
November 21, 1961, and the said
property was sold to the PNB for the
sum of P56,908.00, subject to the right
of the plaintiff to redeem the same
within a period of one year.The plaintiff
sent a letter reiterating its request that
the foreclosure sale of the mortgaged
chattels bediscontinued on the grounds
that the mortgaged indebtedness had
been fully paid and that it could not
belegally effected at a place other than
the City of Manila.The trial court
sentenced the Mambulao Lumber
Company to pay to the defendant PNB
the sum of P3,582.52 with interest
thereon at the rate of 6% per
annum. The plaintiff on appeal
advanced that its totalindebtedness to
the PNB as of November 21, 1961, was
only P56,485.87 and not P58,213.51 as
concludedby the court a quo; hence,
the proceeds of the foreclosure sale of
its real property alone in the amount
of P56,908.00 on that date, added to
the sum of P738.59 it remitted to the
PNB thereafter was more thansufficient
to liquidate its obligation, thereby
rendering the subsequent foreclosure
sale of its chattelsunlawful;That for the
acts of the PNB in proceeding with the
sale of the chattels, in utter disregard of
plaintiff'svigorous opposition thereto,
and in taking possession thereof after
the sale thru force,
intimidation,coercion, and by detaining
its "man-in-charge" of said properties,
the PNB is liable to plaintiff fordamages
and attorney's fees.
ISSUE:
Whether or not PNB may be held l

iable to plaintiff Corporation


for damages and attorneys fees.
HELD:
Herein appellant's claim for moral
damages, seems to have no legal or
factual basis. Obviously,
anartificial person like herein appellant
corporation cannot experience physical
sufferings, mentalanguish, fright,
serious anxiety, wounded feelings,
moral shock or social humiliation which
arebasis of moral damages
. A corporation may have a good
reputation which, if besmirched, may
also be aground for the award of moral
damages. The same cannot be
considered under the facts of this
case,however, not only because it is
admitted that herein appellant had
already ceased in its business
operationat the time of the foreclosure
sale of the chattels, but also for the
reason that whatever adverse effects
of the foreclosure sale of the chattels
could have upon its reputation or
business standing would
undoubtedlybe the same whether the
sale was conducted at
Jose Panganiban, Camarines Norte, or
in Manila which is theplace agreed
upon by the parties in the mortgage
contract.
But for the wrongful acts of herein
appellee bank and the deputy sheriff of
Camarines Norte in proceedingwith the
sale in utter disregard of the agreement
to have the chattels sold in Manila as
provided for in themortgage contract, to
which their attentions were timely
called by herein appellant, and in
disposing of thechattels in gross for the
miserable amount of P4,200.00, herein
appellant should be awarded
exemplarydamages in the sum of
P10,000.00. The circumstances of the
case also warrant the award of
P3,000.00 asattorney's fees for herein
appellant.
Bache and Co., vs. Ruiz
On 24 Feb 1970, Commissioner Vera
of Internal Revenue, wrote a letter
addressed to J Ruiz requesting the
issuance of a search warrant against
petitioners for violation of Sec 46(a) of
the NIRC, in relation to all other
pertinent provisions thereof, particularly
Sects 53, 72, 73, 208 and 209, and
authorizing Revenue Examiner de Leon
make and file the application for search
warrant which was attached to the
letter. The next day, de Leon and his
witnesses went to CFI Rizal to obtain
the search warrant. At that time J Ruiz
was hearing a certain case; so, by
means of a note, he instructed his
Deputy Clerk of Court to take the
depositions of De Leon and Logronio.
After the session had adjourned, J Ruiz
was informed that the depositions had
already been taken. The stenographer
read to him her stenographic notes;
and thereafter, J Ruiz asked
respondent Logronio to take the oath

and warned him that if his deposition


was found to be false and without legal
basis, he could be charged for perjury.
J Ruiz signed de Leons application for
search warrant and Logronios
deposition. The search was
subsequently conducted.
ISSUE: Whether or not there had been
a valid search warrant.
HELD: The SC ruled in favor of Bache
on three grounds.
1. J Ruiz failed to personally examine
the complainant and his witness.
Personal examination by the judge of
the complainant and his witnesses is
necessary to enable him to determine
the existence or non-existence of a
probable cause.
2. The search warrant was issued for
more than one specific offense.
The search warrant in question was
issued for at least four distinct offenses
under the Tax Code. As ruled
inStonehill Such is the seriousness of
the irregularities committed in
connection with the disputed search
warrants, that this Court deemed it fit to
amend Section 3 of Rule 122 of the
former Rules of Court that a search
warrant shall not issue but upon
probable cause in connection with one
specific offense. Not satisfied with this
qualification, the Court added thereto a
paragraph, directing that no search
warrant shall issue for more than one
specific offense.
3. The search warrant does not
particularly describe the things to be
seized.
The documents, papers and effects
sought to be seized are described in
the Search Warrant
Unregistered and private books of
accounts (ledgers, journals, columnars,
receipts and disbursements books,
customers ledgers); receipts for
payments received; certificates of
stocks and securities; contracts,
promissory notes and deeds of sale;
telex and coded messages; business
communications, accounting and
business records; checks and check
stubs; records of bank deposits and
withdrawals; and records of foreign
remittances, covering the years 1966 to
1970.
The description does not meet the
requirement in Art III, Sec. 1, of the
Constitution, and of Sec. 3, Rule 126 of
the Revised Rules of Court, that the
warrant should particularly describe the
things to be seized.
A search warrant may be said to
particularly describe the things to be
seized when the description therein is
as specific as the circumstances will
ordinarily allow or when the description
expresses a conclusion of fact not of
law by which the warrant officer may be
guided in making the search and
seizure or when the things described
are limited to those which bear direct
relation to the offense for which the
warrant is being issued.

Bataan Shipyard Engineering Co., Inc.


vs. PCGG (G.R. No. 75885 May 27,
1987)
Facts:Challenged in this special civil
action of certiorari and prohibition by a
privatecorporation known as the
Bataan Shipyard and Engineering Co.,
Inc. are: (1) ExecutiveOrders
Numbered 1 and 2, promulgated by
President Corazon C. Aquino on
February 28,1986 and March 12, 1986,
respectively, and (2) the sequestration,
takeover, and otherorders issued, and
acts done, in accordance with said
executive orders by the
PresidentialCommission on Good
Government and/or its Commissioners
and agents, affecting saidcorporation.
The sequestration order issued on April
14, 1986 was addressed to three of the
agents of the Commission, ordering
them to sequester several companies
amongwhich is Bataan Shipyard and
Engineering Co., Inc. On the strength
of the abovesequestration order,
several letters were sent to BASECO
among which is that from Mr.Jose M.
Balde, acting for the PCGG, addressed
a letter dated April 18, 1986 to the
Presidentand other officers of petitioner
firm, reiterating an earlier request for
the production of certain documents.
The letter closed with the warning that
if the documents were notsubmitted
within five days, the officers would be
cited for "contempt in pursuance
withPresidential Executive Order Nos.
1 and 2." BASECO contends that its
right against self incrimination and
unreasonable searches and seizures
had been transgressed by the Orderof
April 18, 1986 which required it "to
produce corporate records from 1973
to 1986 underpain of contempt of the
Commission if it fails to do so."
BASECO prays that the Court
1)declare unconstitutional and void
Executive Orders Numbered 1 and 2;
2) annul thesequestration order dated
April- 14, 1986, and all other orders
subsequently issued andacts done on
the basis thereof, inclusive of the
takeover order of July 14, 1986 and
thetermination of the services of the
BASECO executives.
Issue: Whether or not BASECOs right
against self
-incrimination and unreasonable
searchesand seizures was violated.

incriminating questions unless


protectedby an immunity statute, it
does not follow that a corporation,
vested with special privilegesand
franchises, may refuse to show its hand
when charged with an abuse of
suchprivileges. Corporations are not
entitled to all of the constitutional
protections, whichprivate individuals
have.
They are not at all within the privilege
against self-incrimination;
although this court more than once has
said that the privilege runs very closely
with the4th Amendment's Search and
Seizure provisions.
It is also settled that an officer of
thecompany cannot refuse to produce
its records in its possession upon the
plea that they will either incriminate him
or may incriminate it."
The corporation is a creature of the
state. Itis presumed to be incorporated
for the benefit of the public. It received
certain specialprivileges and
franchises, and holds them subject to
the laws of the state and the
limitations of its charter. Its powers are
limited by law. It can make no contract
not
authorized by its charter. Its rights to
act as a corporation are only preserved
to it so longas it obeys the laws of its
creation. There is a reserve right in the
legislature to investigateits contracts
and find out whether it has exceeded
its powers. It would be a
strangeanomaly to hold that a state,
having chartered a corporation to make
use of certainfranchises, could not, in
the exercise of sovereignty, inquire how
these franchises had beenemployed,
and whether they had been abused,
and demand the production of
thecorporate books and papers for that
purpose. The defense amounts to this,
that an officerof the corporation which
is charged with a criminal violation of
the statute may plead thecriminality of
such corporation as a refusal to
produce its books. To state
this proposition isto answer it.
While an individual may lawfully refuse
to answer incriminating
questionsunless protected by an
immunity statute, it does not follow that
a corporation, vested withspecial
privileges and franchises may refuse to
show its hand when charged with an
abuseof such privileges.
(Wilson v. United States, 55 Law Ed.,
771, 780 [emphasis, the
SolicitorGeneral's]) The constitutional
safeguard against unreasonable
searches and seizures findsno
application to the case at bar either.
There has been no search undertaken
by any agentor representative of the
PCGG, and of course no seizure on the
occasion thereof.

Ruling:
No. The order to produce documents
was issued upon the authority of
Section 3 (e)of Executive Order No. 1,
treating of the PCGG's power to "issue
subpoenas requiring * *the production
of such books, papers, contracts,
records, statements of accounts and
otherdocuments as may be material to
the investigation conducted by the
Commission. It iselementary that the
Stonehill v. Diokno
right against self-incrimination has no
20 SCRA 283 (1967)
application to juridical persons.While an Concepcion, CJ
individual may lawfully refuse to answer

Facts:1. Respondent (prosecution)


made possible the issuance of 42
search warrants against the petitioner
and the corporation to search persons
and premises of several personal
properties due to an alleged violation of
Central Bank Laws, Tariff and Custom
Laws, Internal Revenue Code and the
Revised Penal Code of the Philippines.
As a results, search and seizures were
conducted in the both the residence of
the petitioner and in the corporation's
premises.
2. The petitioner contended that the
search warrants are null and void as
their issuance violated the Constitution
and the Rules of Court for being
general warrants. Thus, he filed a
petition with the Supreme Court
for certiorari, prohibition, mandamus
and injunction to prevent the seized
effects from being introduced as
evidence in the deportation cases
against the petitioner. The court issued
the writ only for those effects found in
the petitioner's residence.
Issue: Whether or not the petitioner can
validly assail the legality of the search
and seizure in both premises
RULING: No, he can only assail the
search conducted in the residences but
not those done in the corporation's
premises. The petitioner has no cause
of action in the second situation since a
corporation has a personality separate
and distinct from the personality of its
officers or herein petitioner regardless
of the amount of shares of stock or
interest of each in the said corporation,
and whatever office they hold therein.
Only the party whose rights has been
impaired can validly object the legality
of a seizure--a purely personal right
which cannot be exercised by a third
party. The right to object belongs to the
corporation ( for the 1st group of
documents, papers, and things seized
from the offices and the premises).
Stonehill Vs. Diokno
20 SCRA 383
L-19550
June 19, 1967
Facts: Upon application of the officers
of the government named on the
margin hereinafter referred to as
Respondents-Prosecutors several
judges hereinafter referred to as
Respondents-Judges issued, on
different dates, a total of 42 search
warrants against petitioners herein
and/or the corporations of which they
were officers, directed to the any peace
officer, to search the persons abovenamed and/or the premises of their
offices, warehouses and/or residences,
and to seize and take possession of the
following personal property to wit:
Books of accounts, financial
records, vouchers, correspondence,
receipts, ledgers, journals, portfolios,
credit journals, typewriters, and other

documents and/or papers showing all


business transactions including
disbursements receipts, balance sheets
and profit and loss statements and
Bobbins (cigarette wrappers).

the party whose rights have been


impaired thereby, and that the objection
to an unlawful search and seizure is
purely personal and cannot be availed
of by third parties.
With respect to the documents, papers
as "the subject of the offense; stolen or and things seized in the residences of
embezzled and proceeds or fruits of the petitioners herein, the aforementioned
offense," or "used or intended to be
resolution of June 29, 1962, lifted the
used as the means of committing the
writ of preliminary injunction previously
offense," which is described in the
issued by this Court, thereby, in effect,
applications adverted to above as
restraining herein Respondents"violation of Central Bank Laws, Tariff
Prosecutors from using them in
and Customs Laws, Internal Revenue
evidence against petitioners herein.
(Code) and the Revised Penal Code."
Two points must be stressed in
connection with this constitutional
Petitioners contentions are:
mandate, namely: (1) that no warrant
(1) they do not describe with
shall issue but upon probable cause, to
particularity the documents, books and be determined by the judge in the
things to be seized;
manner set forth in said provision; and
(2) cash money, not mentioned in the
(2) that the warrant shall particularly
warrants, were actually seized;
describe the things to be seized.
(3) the warrants were issued to fish
evidence against the aforementioned
None of these requirements has been
petitioners in deportation cases filed
complied with in the contested
against them;
warrants. Indeed, the same were
(4) the searches and seizures were
issued upon applications stating that
made in an illegal manner; and
the natural and juridical person therein
(5) the documents, papers and cash
named had committed a "violation of
money seized were not delivered to the Central Ban Laws, Tariff and Customs
courts that issued the warrants, to be
Laws, Internal Revenue (Code) and
disposed of in accordance with law
Revised Penal Code." In other words,
Respondents-prosecutors contentions no specific offense had been alleged in
(1) that the contested search warrants said applications. The averments
are valid and have been issued in
thereof with respect to the offense
accordance with law;
committed were abstract. As a
(2) that the defects of said warrants, if
consequence, it was impossible for the
any, were cured by petitioners' consent; judges who issued the warrants to have
and
found the existence of probable cause,
(3) that, in any event, the effects seized for the same presupposes the
are admissible in evidence against
introduction of competent proof that the
herein petitioners, regardless of the
party against whom it is sought has
alleged illegality of the aforementioned performed particular acts, or committed
searches and seizures.
specific omissions, violating a given
provision of our criminal laws. As a
The documents, papers, and things
matter of fact, the applications involved
seized under the alleged authority of
in this case do not allege any specific
the warrants in question may be split
acts performed by herein petitioners. It
into two (2) major groups, namely: (a)
would be the legal heresy, of the
those found and seized in the offices of highest order, to convict anybody of a
the aforementioned corporations, and
"violation of Central Bank Laws, Tariff
(b) those found and seized in the
and Customs Laws, Internal Revenue
residences of petitioners herein.
(Code) and Revised Penal Code,"
as alleged in the aforementioned
Issue: Whether or not those found and applications without reference to any
seized in the offices of the
determinate provision of said laws.
aforementioned corporations are
obtained legally.
PNB vs. CA
Whether or not those found and seized FACTS
in the residences of petitioners herein
One Augusto Lim deposited in his
are obtained legally.
current account with PCI Bank (Padre
Held: The petitioners have no cause of Faura Branch) a GSIS check drawn
action to assail the legality of the
against PNB. The signatures of the
contested warrants and of the seizures General Manager and Auditor of GSIS
made in pursuance thereof, for the
were forged. PCIBank stamped at the
simple reason that said corporations
back of the check All prior
have their respective personalities,
indorsements or lack of indorsements
separate and distinct from the
guaranteed, PCI Bank. PCIBank sent
personality of herein petitioners,
the check to PNB through the Central
regardless of the amount of shares of
Bank. PNB did not return the check to
stock or of the interest of each of them PCIBank; and thus PCIBank credited
in said corporations, and whatever the Lims account. As GSIS has informed
offices they hold therein may be.
PNB that the check was lost two
Indeed, it is well settled that the legality months before said transaction, its
of a seizure can be contested only by
account was recredited by PNB upon

its demand (due to the forged check).


PNB requested for refund with PCI
Bank. The latter refused.
ISSUE
Who shall bear the loss resulting from
the forged check.
HELD
The collecting bank is not liable as the
forgery existing are those of the
drawers and not of the indorsers. The
indorsement of the intermediate bank
does not guarantee the signature of the
drawer. PNBs failure to return the
check to the collecting bank implied
that the check was good. In fact, PNB
even honored the check even if GSIS
has reported two months earlier that
the check was stolen and the bank thus
should stop payment. PNBs
negligence was the main and
proximate cause for the corresponding
loss. PNB thus should bear such loss.
Upon payment by PNB, as drawee, the
check ceased to be a negotiable
instrument, and became a mere
voucher or proof of payment.
Wise and co., vs. man sun lung
Berman vs. CA
Sulo ng Bayan vs. Araneta
[GR L-31061, 17 August 1976]
Facts: On 26 April 1966, Sulo ng
Bayan, Inc. filed an accion de
revindicacion with the Court of First
Instance of Bulacan, Fifth Judicial
District, Valenzuela, Bulacan, against
Gregorio Araneta Inc. (GAI), Paradise
Farms Inc., National Waterworks &
Sewerage Authority (NAWASA),
Hacienda Caretas Inc., and the
Register of Deeds of Bulacan to
recover the ownership and possession
of a large tract of land in San Jose del
Monte, Bulacan, containing an area of
27,982,250 sq. ms., more or less,
registered under the Torrens System in
the name of GAI, et. al.'s
predecessors-in-interest (who are
members of the corporation). On 2
September 1966, GAI filed a motion to
dismiss the amended complaint on the
grounds that (1) the complaint states
no cause of action; and (2) the cause of
action, if any, is barred by prescription
and laches. Paradise Farms, Inc. and
Hacienda Caretas, Inc. filed motions to
dismiss based on the same grounds.
NAWASA did not file any motion to
dismiss. However, it pleaded in its
answer as special and affirmative
defenses lack of cause of action by
Sulo ng Bayan Inc. and the barring of
such action by prescription and laches.
On 24 January 1967, the trial court
issued an Order dismissing the
(amended) complaint. On 14 February
1967, Sulo ng Bayan filed a motion to
reconsider the Order of dismissal,
arguing among others that the
complaint states a sufficient cause of
action because the subject matter of
the controversy in one of common
interest to the members of the

corporation who are so numerous that


the present complaint should be treated
as a class suit. The motion was denied
by the trial court in its Order dated 22
February 1967.
Sulo ng Bayan appealed to the Court of
Appeals. On 3 September 1969, the
Court of Appeals, upon finding that no
question of fact was involved in the
appeal but only questions of law and
jurisdiction, certified the case to the
Supreme Court for resolution of the
legal issues involved in the
controversy.
Issue:
Whether the corporation (non-stock)
may institute an action in behalf of its
individual members for the recovery of
certain parcels of land allegedly owned
by said members, among others.
Whether the complaint filed by the
corporation in behalf of its members
may be treated as a class suit
Held:1. It is a doctrine well-established
and obtains both at law and in equity
that a corporation is a distinct legal
entity to be considered as separate and
apart from the individual stockholders
or members who compose it, and is not
affected by the personal rights,
obligations and transactions of its
stockholders or members. The property
of the corporation is its property and
not that of the stockholders, as owners,
although they have equities in it.
Properties registered in the name of the
corporation are owned by it as an entity
separate and distinct from its members.
Conversely, a corporation ordinarily has
no interest in the individual property of
its stockholders unless transferred to
the corporation, "even in the case of a
one-man corporation." The mere fact
that one is president of a corporation
does not render the property which he
owns or possesses the property of the
corporation, since the president, as
individual, and the corporation are
separate similarities. Similarly,
stockholders in a corporation engaged
in buying and dealing in real estate
whose certificates of stock entitled the
holder thereof to an allotment in the
distribution of the land of the
corporation upon surrender of their
stock certificates were considered not
to have such legal or equitable title or
interest in the land, as would support a
suit for title, especially against parties
other than the corporation. It must be
noted, however, that the juridical
personality of the corporation, as
separate and distinct from the persons
composing it, is but a legal fiction
introduced for the purpose of
convenience and to subserve the ends
of justice. This separate personality of
the corporation may be disregarded, or
the veil of corporate fiction pierced, in
cases where it is used as a cloak or
cover for fraud or illegality, or to work
-an injustice, or where necessary to
achieve equity. It has not been claimed
that the members have assigned or
transferred whatever rights they may

have on the land in question to the


corporation. Absent any showing of
interest, therefore, a corporation, has
no personality to bring an action for and
in behalf of its stockholders or
members for the purpose of recovering
property which belongs to said
stockholders or members in their
personal capacities.
2. In order that a class suit may
prosper, the following requisites must
be present: (1) that the subject matter
of the controversy is one of common or
general interest to many persons; and
(2) that the parties are so numerous
that it is impracticable to bring them all
before the court. Here, there is only
one party plaintiff, and the corporation
does not even have an interest in the
subject matter of the controversy, and
cannot, therefore, represent its
members or stockholders who claim to
own in their individual capacities
ownership of the said property.
Moreover, a class suit does not lie in
actions for the recovery of property
where several persons claim
partnership of their respective portions
of the property, as each one could
alleged and prove his respective right
in a different way for each portion of the
land, so that they cannot all be held to
have identical title through
acquisition/prescription.
Saw vs. CA
A collection suit with preliminary
attachment was filed by Equitable
Banking Corporation against Freeman,
Inc. and Saw Chiao Lian, its President
and General Manager. The petitioners
moved to intervene, alleging that (1)
the loan transactions between Saw
Chiao Lian and Equitable Banking
Corp. were not approved by the
stockholders representing at least 2/3
of corporate capital; (2) Saw Chiao Lian
had no authority to contract such loans;
and (3) there was collusion between
the officials of Freeman, Inc. and
Equitable Banking Corp. in securing the
loans. The motion to intervene was
denied, and the petitioners appealed to
the Court of Appeals.
Meanwhile, Equitable and Saw Chiao
Lian entered into a compromise
agreement which they submitted to and
was approved by the lower court. But
because it was not complied with,
Equitable secured a writ of execution,
and two lots owned by Freeman, Inc.
were levied upon and sold at public
auction to Freeman Management and
Development Corp.
The Court of Appeals 1 sustained the
denial of the petitioners' motion for
intervention, holding that "the
compromise agreement between
Freeman, Inc., through its President,
and Equitable Banking Corp. will not
necessarily prejudice petitioners whose
rights to corporate assets are at most
inchoate, prior to the dissolution of
Freeman, Inc. . . . And intervention
under Sec. 2, Rule 12 of the Revised

Rules of Court is proper only when


one's right is actual, material, direct
and immediate and not simply
contingent or expectant."
It also ruled against the petitioners'
argument that because they had
already filed a notice of appeal, the trial
judge had lost jurisdiction over the case
and could no longer issue the writ of
execution.
The petitioners are now before this
Court, contending that:
1. The Honorable Court of Appeals
erred in holding that the petitioners
cannot intervene in Civil Case No. 8844404 because their rights as
stockholders of Freeman are merely
inchoate and not actual, material, direct
and immediate prior to the dissolution
of the corporation;
2. The Honorable Court of Appeals
erred in holding that the appeal of the
petitioners in said Civil Case No. 8844404 was confined only to the order
denying their motion to intervene and
did not divest the trial court of its
jurisdiction over the whole case.
The petitioners base their right to
intervene for the protection of their
interests as stockholders on Everett
v. Asia Banking Corp. 2 where it was
held:
The well-known rule that shareholders
cannot ordinarily sue in equity to
redress wrongs done to the
corporation, but that the action must be
brought by the Board of Directors, . . .
has its exceptions. (If the corporation
[were] under the complete control of
the principal defendants, . . . it is
obvious that a demand upon the Board
of Directors to institute action and
prosecute the same effectively would
have been useless, and the law does
not require litigants to perform useless
acts.
Equitable demurs, contending that the
collection suit against Freeman, Inc,
and Saw Chiao Lian is essentially in
personam and, as an action against
defendants in their personal capacities,
will not prejudice the petitioners as
stockholders of the corporation. The
Everett case is not applicable because
it involved an action filed by the
minority stockholders where the board
of directors refused to bring an action in
behalf of the corporation. In the case at
bar, it was Freeman, Inc. that was
being sued by the creditor bank.
Equitable also argues that the subject
matter of the intervention falls properly
within the original and exclusive
jurisdiction of the Securities and
Exchange Commission under P.D. No.
902-A. In fact, at the time the motion for
intervention was filed, there was
pending between Freeman, Inc. and
the petitioners SEC Case No. 03577
entitled "Dissolution, Accounting,
Cancellation of Certificate of
Registration with Restraining Order or
Preliminary Injunction and Appointment
of Receiver." It also avers in its
Comment that the intervention of the

petitioners could have only caused


delay and prejudice to the principal
parties.
On the second assignment of error,
Equitable maintains that the petitioners'
appeal could only apply to the denial of
their motion for intervention and not to
the main case because their
personality as party litigants had not
been recognized by the trial court.
After examining the issues and
arguments of the parties, the Court
finds that the respondent court
committed no reversible error in
sustaining the denial by the trial court
of the petitioners' motion for
intervention.
In the case of Magsaysay-Labrador
v. Court of Appeals, 3 we ruled as
follows:
Viewed in the light of Section 2, Rule
12 of the Revised Rules of Court, this
Court affirms the respondent court's
holding that petitioners herein have no
legal interest in the subject matter in
litigation so as to entitle them to
intervene in the proceedings below. In
the case of Batama Farmers'
Cooperative Marketing Association, Inc.
v. Rosal, we held: "As clearly stated in
Section 2 of Rule 12 of the Rules of
Court, to be permitted to intervene in a
pending action, the party must have a
legal interest in the matter in litigation,
or in the success of either of the parties
or an interest against both, or he must
be so situated as to be adversely
affected by a distribution or other
disposition of the property in the
custody of the court or an officer
thereof."
To allow intervention, [a] it must be
shown that the movant has legal
interest in the matter in litigation, or
otherwise qualified; and [b]
consideration must be given as to
whether the adjudication of the rights of
the original parties may be delayed or
prejudiced, or whether the intervenor's
rights may be protected in a separate
proceeding or not. Both requirements
must concur as the first is not more
important than the second.
The interest which entitles a person to
intervene in a suit between other
parties must be in the matter in
litigation and of such direct and
immediate character that the intervenor
will either gain or lose by the direct
legal operation and effect of the
judgment. Otherwise, if persons not
parties of the action could be allowed to
intervene, proceedings will become
unnecessarily complicated, expensive
and interminable. And this is not the
policy of the law.
The words "an interest in the subject"
mean a direct interest in the cause of
action as pleaded, and which would put
the intervenor in a legal position to
litigate a fact alleged in the complaint,
without the establishment of which
plaintiff could not recover.
Here, the interest, if it exists at all, of
petitioners-movants is indirect,

contingent, remote, conjectural,


consequential and collateral. At the
very least, their interest is purely
inchoate, or in sheer expectancy of a
right in the management of the
corporation and to share in the profits
thereof and in the properties and
assets thereof on dissolution, after
payment of the corporate debts and
obligations.
While a share of stock represents a
proportionate or aliquot interest in the
property of the corporation, it does not
vest the owner thereof with any legal
right or title to any of the property, his
interest in the corporate property being
equitable or beneficial in nature.
Shareholders are in no legal sense the
owners of corporate property, which is
owned by the corporation as a distinct
legal person.
On the second assignment of error, the
respondent court correctly noted that
the notice of appeal was filed by the
petitioners on October 24, 1988, upon
the denial of their motion to intervene,
and the writ of execution was issued by
the lower court on January 30, 1989.
The petitioners' appeal could not have
concerned the "whole" case (referring
to the decision) because the petitioners
"did not appeal the decision as indeed
they cannot because they are not
parties to the case despite their being
stockholders of respondent Freeman,
Inc." They could only appeal the denial
of their motion for intervention as they
were never recognized by the trial court
as party litigants in the main case.
Intervention is "an act or proceeding by
which a third person is permitted to
become a party to an action or
proceeding between other persons,
and which results merely in the addition
of a new party or parties to an original
action, for the purpose of hearing and
determining at the same time all
conflicting claims which may be made
to the subject matter in litigation. 4 It is
not an independent proceeding, but an
ancillary and supplemental one which,
in the nature of things, unless
otherwise provided for by the statute or
Rules of Court, must be in
subordination to the main
proceeding. 5 It may be laid down as a
general rule that an intervenor is limited
to the field of litigation open to the
original parties. 6
In the case at bar, there is no more
principal action to be resolved as a writ
of execution had already been issued
by the lower court and the claim of
Equitable had already been satisfied.
The decision of the lower court had
already become final and in fact had
already been enforced. There is
therefore no more principal proceeding
in which the petitioners may intervene.
As we held in the case of Barangay
Matictic v. Elbinias: 7
An intervention has been regarded, as
merely "collateral or accessory or
ancillary to the principal action and not
an independent proceedings; and

interlocutory proceeding dependent on


and subsidiary to, the case between
the original parties." (Fransisco, Rules
of Court, Vol. 1, p. 721). With the final
dismissal of the original action, the
complaint in intervention can no longer
be acted upon. In the case of Clareza
v. Resales, 2 SCRA 455, 457-458, it
was stated that:
That right of the intervenor should
merely be in aid of the right of the
original party, like the plaintiffs in this
case. As this right of the plaintiffs had
ceased to exist, there is nothing to aid
or fight for. So the right of intervention
has ceased to exist.
Consequently, it will be illogical and of
no useful purpose to grant or even
consider further herein petitioner's
prayer for the issuance of a writ
of mandamus to compel the lower court
to allow and admit the petitioner's
complaint in intervention. The dismissal
of the expropriation case has no less
the inherent effect of also dismissing
the motion for intervention which is but
the unavoidable consequence.
The Court observes that even with the
denial of the petitioners' motion to
intervene, nothing is really lost to them.
The denial did not necessarily prejudice
them as their rights are being litigated
in the case now before the Securities
and Exchange Commission and may
be fully asserted and protected in that
separate proceeding.
WHEREFORE, the petition is DENIED,
with costs against the petitioners. It is
so ordered.
Narvasa, Gancayco, Grio-Aquino and
Medialdea, JJ., concur.
Boyer-Roxas vs. CA
G.R.No.100866;July14,1992
FACTS: The corporation, Heirs of Euge
nia Roxas Inc, wasestablished to enga
ge in agriculture to develop theproperti
es inherited from Eugenia Roxas and E
ufroncioRoxas, which includes the
land upon which the HiddenValley Spri
ngs Resort was put up, including variou
simprovements thereon, using
corporate funds. The AOI of Heirs Inc.
was amended for this purpose. Heirs
Inc. claimsthat BoyerRoxas and Guillermo Roxas had been i
npossession of the various properties
and improvements inthe resort and only
upon the tolerance of the corporation.
Itwas
alleged that they committed acts that i
mpeded thecorporations expansion
and normal operation of the
resort. They also did not comply with c
ourt and regulatory orders,and thus the
corporation adopted a resolution
authorizingthe ejectment of the
defendants. TC grants. CA affirms.Boy
er and Roxas contend that, being
stockholders,
theirpossession of the properties
of the corporation must berespected in
view of their ownership of an aliquot
portion of all properties of the
corporation.

ISSUE:
WON the possession of the properties
in question must be respected in view
of being a stockholder.
HELD: NO. Regarding properties
owned by the corporation, under the
doctrine of corporate entity properties
registered in the name of the
corporation are owned by it as an entity
separate and distinct from its
members. While shares of stock
constitute personal property, they do
not represent property of the
corporation. A share of stock only
typifies an aliquot part
of the corporations property, or the
right toshare in its proceeds to that exte
nt when distributedaccording to law and
equity, but its holder is not the owner of
any part of the capital of
the corporation, nor is he
entitled to the possession of any definit
e portion of its property or assets. The
stockholder is not a co-owner or tenant
in common of the corporate property.
The corporation has a personality distin
ct andseparate from its members and tr
ansacts business onlythrough its officer
s or agents. Whatever authority theseof
ficers or agents may have is derived
from the board or other governing body,
unless conferred by the charter of
thecorporation itself. An officer's power
as an agent of thecorporation must be
sought from the statute, charter, thebylaws or in a delegation of authority to
such officer, from the acts of the board
of directors, formally expressed or
implied from a habit or custom of doing
business.
In this case the elder Roxas who then
controlled
themanagement of the corporation, bei
ng the majoritystockholder, consented t
o the petitioners use and staywithin the
properties. The Board did not object
and were allowed to stay until it
adopted a resolution to the effect
of authorizing to eject them. Since their
stay was merely
bytolerance, in deference to the wishes
of the majoritystockholder
who controlled the corporation, when
Roxasdied his actions cannot bind the
company forever. There
isno provision in the by-laws or any oth
er resolutionauthorizing their continued
stay.

In 1992, Bravo finished the


architectural design so he proposed
that he and his company manage the
development of the property. But
Posadas turned down the proposal and
thereafter the business relationship
between the two went sour. Bravo then
demanded Posadas to pay them the
balance of their agreement as regards
the architectural design (P425k). Bravo
also demanded payment for some
other expenses and fees he incurred
i.e., negotiating and relocating the
informal settlers then occupying the
land of Posadas. Posadas refused to
make payment. Bravo then filed a
complaint for specific performance
against Posadas but he included
Luxuria Homes as a co-defendant as
he alleged that Luxuria Homes was a
mere conduit of Posadas; that the said
corporation was created in order to
defraud Bravo and avoid the payment
of debt.
ISSUE: Whether or not Luxuria Homes
should be impleaded.
HELD: No. It was Posadas who
entered into a contract with Bravo in
her personal capacity. Bravo was not
able to prove that Luxuria Homes was
a mere conduit of Posadas. Posadas
owns just 33% of Luxuria Homes.
Further, when Luxuria Homes was
created, Bravo was there as a witness.
So how can he claim that the creation
of said corporation was to defraud him.
The eventual transfer of Posadas
property to Luxuria was with the full
knowledge of Bravo. The agreement
between Posadas and Bravo was
entered into even before Luxuria
existed hence Luxuria was never a
party thereto. Whatever liability
Posadas incurred arising from said
agreement must be borne by her solely
and not in solidum with Luxuria. To
disregard the separate juridical
personality of a corporation, the
wrongdoing must be clearly and
convincingly established. It cannot be
presumed.

WON the judgment rendered against


Emilio and Rodolfo, being the officials
of thecorporation, be made effective
against the properties of Emilio Cano
Enterprises, Inc.
Held: Yes, the answer must be in the
affirmative.While the corporation has a separate
and distinct personality from its
membersor stockholders, it must be
taken into consideration that Emilio
CanoEnterprises, Inc. is a family
corporation where the incorporators
and directors belong to one single
family.Here is the instance where the
corporation and its members can
beconsidered as one.
- And to hold such entity liable for the
acts of its members is not to ignore the
legalfiction but merely to give meaning
to the principle that
such fiction cannot beinvoked if its
purpose is to use as a shield to further
an end subversiveof justice
-That concept cannot be extended to
appoint beyond its reason and policy.
-Having been sued officially , Emilio
and Rodolfo, in their connection with
thecase must be deemed to be
impressed with the representation of
the corporation.

25. (not complete)


Lidell Co. v. Collector of Internal
Revenue
Facts:
The case is an appeal from the
decision of the Court of Tax Appeals
imposing a tax deficiencyliability of
P1,317,629.61 on Liddell & Co.,
Inc.The petitioner, Liddell & Co. Inc.,
(Liddell & Co. for short) is a domestic
corporation establish inthe Philippines
on February 1, 1946. From 1946 until
November 22, 1948 when the purpose
clause of the Articles of Incorporation of
Liddell & Co. Inc., was amended so as
to limit its business activities
toimportations of automobiles and
trucks, Liddell & Co. was engaged
24. EMILIO CANO ENTERPRISES INC in business as an importer and at
VS COURT OF INDUSTRIAL
thesame time retailer of Oldsmobile
RELATIONS
and Chevrolet passenger cars and
GR No. L-20502, 26 February 1965
GMC and Chevrolet trucks.On
Facts:
December 20, 1948, the Liddell Motors,
-Emilio, Ariston and Rodolfo, all
Inc. was organized and registered with
surnamed Cano, were the respondents the Securitiesand Exchange
Cebu fil veneer corp. vs. NLRC
in acomplaint for an unfair labor
Commission with an authorized capital
SUNIO vs. NLRC
practice in their capacity as the
stock of P100,000 of which P20,000
Luxuria homes, inc. vs. CA
president, fieldsupervisor and manager, wassubscribed and paid for as follows:
Aida Posadas was the owner of a 1.6
respectively.Irene Liddell wife of Frank Liddell
hectare land in Sucat, Muntinlupa. In
19,996 shares and Messrs. MarcialP.
1989, she entered into an agreement
Judge Bautista found Emilio
Lichauco, E. K. Bromwell, V. E. del
with Jaime Bravo for the latter to draft a and Rodolfo guilty of unfair
Rosario and Esmenia Silva, 1 share
development and architectural design
labor practice andordered the
each.Beginning January, 1949, Liddell
for the said property. The contract price reinstatement of Honorata Cruz with
& Co. stopped retailing cars and trucks;
was P450,000.00. Posadas gave a
backwages.it conveyed theminstead to Liddell
down payment of P25,000.00. Later,
Motors, Inc. which in turn sold the
Posadas assigned her property to
However, the order of execution was
vehicles to the public with a steep
Luxuria Homes, Inc. One of the
directed against the properties of
mark-up. Sincethen, Liddell & Co. paid
witnesses to the deed of assignment
EmilioCano Enterprises, Inc.
sales taxes on the basis of its sales to
and articles of incorporation was Jaime Issue:
Liddell Motors Inc. considering said
Bravo.
sales asits original sales.The Collector

of Internal Revenue argued that the


Lidell Motors, Inc. was but an alter ego
of Liddell & Co. and concluded that for
sales tax purposes, those sales made
by Liddell Motors, Inc. to thepublic were
considered as the original sales of
Liddell & Co. hence the imposition of
tax deficiency.
Issue:
Whether or not Lidell Motors, Inc. is an
alter ego of Lidell& Co. making it liable
for the said taxdeficiency?
Held:
The Court held that Lidell Motors, Inc.
is an alter ego of Lidell& Co. hence
makin it liable for taxdeficiency based
on the principle that to allow a taxpayer
to deny tax liability on the ground that
thesales were made through an other
and distinct corporation when it is
proved that the latter is virtuallyowned
by the former or that they are
practically one and the same is to
sanction a circumvention of ourtax laws
which is consistent with the view of the
US Supreme Court stating in one case
that "a taxpayermay gain advantage of
doing business thru a corporation if he
pleases, but the revenue officers
inproper cases, may disregard the
separate corporate entity where it
serves but as a shield for tax
evasionand treat the person who
actually may take the benefits of the
transactions as the person
accordinglytaxable."The bulk of the
business of Liddell & Co. was
channeled through Liddell Motors, Inc.
On theother hand, Liddell Motors, Inc.
pursued no activities except to secure
cars, trucks, and spare parts
fromLiddell & Co. Inc. and then sell
them to the general public. These sales
of vehicles by Liddell & Co. toLiddell
Motors, Inc. for the most part were
shown to have taken place on the
same day that LiddellMotors, Inc. sold
such vehicles to the public. We may
even say that the cars and trucks
merely touchedthe hands of Liddell
Motors, Inc. as a matter of formality.

of properties and enjoined CIR from


selling the same. CIR appealed.
Issue: Whether or not Maria B. Castro
is the owner of the share of stock of
Marvel Building Corp.
Held: Yes. The CIR presented evidence
to prove his claim that Maria B. Castro
the sole and true owner of the share of
stock Marvel Building Corp., this was
the supposed endorsement in blank of
the shares of stock in the name of other
incorporators. This evidence was
testified by Aquino, Internal Revenue
examiner, Mariano, examiner and
Crispin Llamado, undersecretary of
Finance. Julio Llamado who was at that
time the bookkeeper of Marvel Building
Corp also testified that he was the one
who had prepared the original
certificates which was given by Maria
for comparison with the Articles of
Incorporation and that he also prepared
a stock certificates which was copied in
the Photostat presented in evidence.
CIR was also able to submit an
evidence, is the fact that the other
stockholder did not have incomes in
such amounts during the time of the
organization of the corporation in 1947
or immediately thereto, as to enable
them to pay full for their supposed
subscription and that this supposed
subscribers fail to come to court to
assert that they actually paid for their
subscription and are not mere
dummies.

deceasedhusband was an employee of


TESCO, and that he died of liver
cirrhosis. On August 9,1967, and Office
wrote petitioner transmitting the Notice
and for Compensation, andrequiring it
to submit an Employer's Report of
Accident or Sickness pursuant to
Section37 of the Workmen's
Compensation Act (Act No. 3428). An
"Employer's Report ofAccident or
Sickness" was thus submitted with
UMACOR indicated as the employer
ofthe deceased. The Report was
signed by Jose Luis Santiago. In
answer, the employerstated that it
would not controvert the claim for
compensation, and admitted that
thedeceased employee contracted
illness "in regular occupation." On
the basis of thisReport, the Acting
Referee awarded death benefits plus
burial expenses in favor of theheirs of
Gatus.TESCO filed its "Motion for
Reconsideration and/or Petition to Set
Aside Award"alleging as grounds
therefor, that the admission made in the
"Employer's Report ofAccident or
Sickness" was due to honest mistake
and/or excusable negligence on itspart,
and that the illness for which
compensation is sought is not an
occupationaldisease, hence, not
compensable under the law. The
Motion for Reconsideration wasdenied.
Meanwhile, the Provincial Sheriff of
Rizal levied on and attached the
propertiesof TESCO and scheduled the
sale of the same at public auction.
Thus petition for"Certiorari with
Preliminary Injunction" seeking to annul
the award and to enjoin theSheriff from
levying and selling its properties at
public auction

27.
G.R. No. L-28694 May 13,
1981TELEPHONE ENGINEERING &
SERVICE COMPANY, INC
., petitioner,vs.
ISSUE: Whether or not TESCO is liable
WORKMEN'S COMPENSATION
for the death claim of the deceased.
COMMISSION, PROVINCIAL
SHERIFF OF RIZALand LEONILA
SANTOS GATUS, for herself and in
behalf of her minor children,Teresita,
Antonina and Reynaldo, all surnamed
GATUS,
26. Marvel vs. david
respondents.
Facts: Upon consideration of the report MELENCIO-HERRERA,J.
with regards to the war profit tax case
of Maria B. Castro, the Secretary of
FACTS: Petitioner is a domestic
Finance recommended the collection of corporation engaged in the business of
war profit taxes from the latter.
manufacturingtelephone equipment. It
Pursuant thereto, various properties
has a sister company, the Utilities
including the Aguinaldo Building, Wise Management Corporation(UMACOR),
Building and Dewey Boulevard Padre
with offices in the same location.
Faura Mansion were seized by the CIR. UMACOR is also under the
An action was filed by the plaintiffs
managementof Jose Luis
enjoining the defendant CIR from
Santiago.UMACOR employed the late
selling at public auction the three
Pacifica L. Gatus as Purchasing Agent.
properties since it belong to Marvel
Then was detailedwith petitioner
Corporation and not to Maria B. Castro. company. He reported back to
Defendant claims that Maria B. Castro UMACOR and after 2 years he
is the sole and true owner of all the
contractedillness and died of "liver
subscribed stocks of the Marvel
cirrhosis with malignant
Corporation including those appearing degeneration."Respondent Leonila S.
to have been subscribed and paid for
Gatus, filed a "Notice and Claim for
by other members. CFI of Manila
Compensation" withWorkmen's
rendered judgment ordering the release Compensation Commission sub-office,
alleging therein that her