Yutivo Sons Hardware Co. vs.

CTA
Facts: Yutivo, a domestic corporation incorporated in 1916 under
Philippine laws, was engaged in the importation and sale of hardware
supplies and equipment. After the rst world war, it resumed its
business and bought a number of cars and trucks from General
Motors(GM), an American Corporation licensed to do business in the
Philippines.
On June 13, 1946, the Southern Motors Inc,(SM) was organized to
engage in the business of selling cars, trucks and spare parts. One of
the subscribers of stocks during its incorporation was Yu Khe Thai, Yu
Khe Siong and Hu Kho Jin, who are sons of Yu Tiong Yee, one of
Yutivo’s founders.
After SM’s incorporation and until the withdrawal of GM from the
Philippines, the cars and trucks purchased by Yutivo from GM were sold
by Yutivo to SM which the latter sold to the public.
Yutivo was appointed importer for Visayas and Mindanao by the US
manufacturer of cars and trucks sold by GM. Yutivo paid the sales tax
prescribed on the basis of selling price to SM. SM paid no sales tax on
its sales to the public.
An assessment was made upon Yutivo for de ciency sales tax. The
Collector of Internal Revenue, contends that the taxable sales were the
retail sales by SM to the public and not the sales at wholesale made by
Yutivo to the latter inasmuch as SM and Yutivo were one and the same
corporation, the former being a subsidiary of the latter.
The assessment was disputed by petitioner. After reinvestigation, a
second assessment was made, sustaining the validity of the rst
assessment. Yutivo contested the second assessment, alleging that
there is no valid ground to disregard the corporate personality of SM
and to hold that it is an adjunct of petitioner.
Issue: Whether or not the corporate personality of SM could be
disregarded.
Held:Yes. A corporation is an entity separate and distinct from its
stockholders and from other corporations to which it may be
connected. However, when the notion of legal entity is used to defeat
public convenience, justify wrong, protect fraud, or defend crime, the
law will regard the corporation as an association of persons, or, in the
case of two
corporations, merge them into one. When the corporation is a mere
alter ego or business conduit of a person, it may be disregarded.
SC ruled that CTA was not justi ed in nding that SM was organized to
defraud the Government. SM was organized in June 1946, from that
date until June 30, 1947, GM was the importer of the cars and trucks
sold to Yutivo, which in turn was sold to SM. GM, as importer was the
one solely liable for sales taxes. Neither Yutivo nor SM was subject to
the sales taxes. Yutivo’s liability arose only until July 1, 1947 when it
became the importer. Hence, there was no tax to evade.
However, SC agreed with the respondent court that SM was actually
owned and controlled by petitioner. Consideration of various
circumstances indicate that Yutivo treated SM merely as its
department or adjunct:
a. The founders of the corporation are closely related to each other by
blood and a nity.
b. The object and purpose of the business is the same; both are
engaged in sale of vehicles, spare parts, hardware supplies and
equipment.
c. The accounting system maintained by Yutivo shows that it
maintained high degree of control over SM accounts.
d. Several correspondences have reference to Yutivo as the head o ce
of SM. SM may even freely use forms or stationery of Yutivo.
e. All cash collections of SM’s branches are remitted directly to Yutivo.
f. The controlling majority of the Board of Directors of Yutivo is also the
controlling majority of SM.
g. The principal o cers of both corporations are identical. Both
corporations have a common comptroller in the person of Simeon Sy,
who is a brother-in- law of Yutivo’s president, Yu Khe Thai.
h. Yutivo, nanced principally the business of SM and actually extended
all the credit to the latter not only in the form of starting capital but
also in the form of credits extended for the cars and vehicles allegedly
sold by Yutivo to SM.
ABS-CBN vs. CA (1999)
Posted on 2020-10-25
ABS-CBN BROADCASTING CORP. v. CA, REPUBLIC BROADCASTING CORP.,
VIVA PRODUCTIONS, INC., and VICENTE DEL ROSARIO

301 SCRA 589

January 21, 1999

Ponente: C.J. Davide, Jr.

Facts:
In 1990, ABS-CBN and VIVA executed a Film Exhibition Agreement whereby VIVA
gave ABS-CBN an exclusive right to exhibit some VIVA films. According to the
agreement, ABS-CBN shall have the right of first refusal to the next 24 VIVA films for
TV telecast under such terms as may be agreed upon by the parties, however, such right
shall be exercised by ABS-CBN from the actual offer in writing.

Sometime in December 1991, VIVA, through Vicente Del Rosario (Executive Producer), offered ABS-
CBN through VP Charo Santos-Concio, a list of 3 film packages from which ABS-CBN may exercise its
right of first refusal. ABS-CBN, however through Mrs. Concio, tick off only 10 titles they can purchase
among which is the film “Maging Sino Ka Man” which is one of the subjects of the present case, therefore,
it did not accept the said list as per the rejection letter authored by Mrs. Concio sent to Del Rosario.
Subsequently, Del Rosario approached Mrs. Concio with another list consisting of 52 original movie titles
and 104 re-runs, proposing to sell to ABS-CBN airing rights for P60M (P30M in cash and P30M worth of
television spots). Del Rosario and ABS-CBN’s General Manager, Eugenio Lopez III, met at the Tamarind
Grill Restaurant in QC to discuss the package proposal but to no avail. Four days later, Del Rosario and Mr.
Graciano Gozon, Senior VP of Finance of Republic Broadcasting Corporation (RBS/Channel 7) discussed
the terms and conditions of VIVA’s offer. A day after that, Mrs. Concio sent the draft of the contract
between ABS-CBN and VIVA which contained a counter-proposal covering 53 films for P35M. VIVA’s
Board of Directors rejected the counter-proposal as it would not sell anything less than the package of 104
films for P60M. After said rejection, ABS-CBN closed a deal with RBS including the 14 films previously
ticked off by ABS-CBN. Consequently, ABS-CBN filed a complaint for specific performance with prayer
for a writ of preliminary injunction and/or TRO against RBS, VIVA and Del Rosario. RTC then enjoined
the latter from airing the subject films. RBS posted a P30M counterbond to dissolve the injunction. Later
on, the trial court as well as the CA dismissed the complaint holding that there was no meeting of minds
between ABS-CBN and VIVA, hence, there was no basis for ABS-CBN’s demand, furthermore, the right
of first refusal had previously been exercised. Hence, the present petition, ABS-CBN argued that an
agreement was made during the meeting of Mr. Lopez and Del Rosario jotted down on a “napkin” (this was
never produced in court). Moreover, it had yet to fully exercise its right of first refusal since only 10 titles
were chosen from the first list. As to actual, moral and exemplary damages, there was no clear basis in
awarding the same.
Issue:

WON a contract was perfected between ABS-CBN and VIVA

WON moral damages may be awarded to a corporation

Held:

Both NO.

Ratio:

Contracts that are consensual in nature are perfected upon mere meeting of the minds.
Once there is concurrence between the offer and the acceptance upon the subject matter,
consideration, and terms of payment a contract is produced. The offer must be certain. To
convert the offer into a contract, the acceptance must be absolute and must not qualify the
terms of the offer; it must be plain, unequivocal, unconditional, and without variance of
any sort from the proposal. A qualified acceptance, or one that involves a new proposal,
constitutes a counter-offer and is a rejection of the original offer. Consequently, when
something is desired which is not exactly what is proposed in the offer, such acceptance
is not sufficient to generate consent because any modification or variation from the terms
of the offer annuls the offer.

After Mr. Del Rosario of Viva met Mr. Lopez of ABS-CBN to discuss the package of
films, ABS-CBN, sent through Ms. Concio, counter-proposal in the form a draft contract.
This counter-proposal could be nothing less than the counter-offer of Mr. Lopez during
his conference with Del Rosario. Clearly, there was no acceptance of VIVA’s offer, for it
was met by a counter-offer which substantially varied the terms of the offer.

In the case at bar, VIVA through its Board of Directors, rejected such counter-offer. Even
if it be conceded arguendo that Del Rosario had accepted the counter-offer, the
acceptance did not bind VIVA, as there was no proof whatsoever that Del Rosario had
the specific authority to do so.
Under the Corporation Code, unless otherwise provided by said Code, corporate powers,
such as the power to enter into contracts, are exercised by the Board of Directors.
However, the Board may delegate such powers to either an executive committee or
officials or contracted managers. The delegation, except for the executive committee,
must be for specific purposes. Delegation to officers makes the latter agents of the
corporation; accordingly, the general rules of agency as to the binding effects of their acts
would apply. For such officers to be deemed fully clothed by the corporation to exercise a
power of the Board, the latter must specially authorize them to do so. That Del Rosario
did not have the authority to accept ABS-CBN’s counter-offer was best evidenced by his
submission of the draft contract to VIVA’s Board of Directors for the latter’s approval. In
any event, there was between Del Rosario and Lopez III no meeting of minds.
The testimony of Mr. Lopez and the allegations in the complaint are clear admissions that
what was supposed to have been agreed upon at the Tamarind Grill between Mr. Lopez
and Del Rosario was not a binding agreement. It is as it should be because corporate
power to enter into a contract is lodged in the Board of Directors. (Sec. 23, Corporation
Code). Without such board approval by the Viva board, whatever agreement Lopez and
Del Rosario arrived at could not ripen into a valid contact binding upon Viva.

However, the Court finds for ABS-CBN on the issue of damages. Moral damages are in
the category of an award designed to compensate the claimant for actual injury suffered
and not to impose a penalty on the wrongdoer. The award of moral damages cannot be
granted in favor of a corporation because, being an artificial person and having existence
only in legal contemplation, it has no feelings, no emotions, no senses. It cannot,
therefore, experience physical suffering and mental anguish, which can be experienced
only by one having a nervous system. The statement that a corporation may recover
moral damages if it “has a good reputation that is debased, resulting in social
humiliation” is an obiter dictum. On this score alone the award for damages must be set
aside, since RBS is a corporation.

Filipinas broadcasting network vs ago medical

Fact: Petitioner’s broadcasters Rima ang Alegre broadcast in two

separated dates malicious and libelous remarks against the respondent
and its owner. Respondent filed an action against the petitioner for
damages for the libelous remarks. The RTC ruled in favor of the
Respondent and award Moral damages to the Respondent only and not
its owners. Petitioner and Respondent went to the CA to appeal the
case. CA rendered in favor of the Respondent awarding moral damages
to it but not its owners. Petitioner went to SC raising the issue that the
respondent is Corporation and not entitled to Moral Damages.
Issue: Whether the Respondent, a Corporation is entitled to Moral
damages?

Held: Yes, A juridical person is generally not entitled to moral

damages because, unlike a natural person, it cannot experience physical
suffering or such sentiments as wounded feelings, serious anxiety,
mental anguish or moral shock. However, the Court’s statement in
Mambulao that “a corporation may have a good reputation which, if
besmirched, may also be a ground for the award of moral damages” is
an obiter dictum. Nevertheless, AMEC’s claim for moral damages falls
under item 7 of Article 2219 of the Civil Code. This provision
expressly authorizes the recovery of moral damages in cases of libel,
slander or any other form of defamation. Article 2219(7) does not
qualify whether the plaintiff is a natural or juridical person. Therefore,
a juridical person such as a corporation can validly complain for libel
or any other form of defamation and claim for moral damages.
Moreover, where the broadcast is libelous per se, the law implies
damages. In such a case, evidence of an honest mistake or the want of
character or reputation of the party libeled goes only in mitigation of
damages. 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. In this case, the broadcasts are libelous per se. Thus,
AMEC is entitled to moral damages.

REN TRANSPORT CORP. V.

NATIONAL LABOR RELATIONS
COMMISSION, G.R. NOS. 188020
& 188252, [JUNE 27, 2016]
FACTS: Samahan ng Manggagawa sa Ren Transport (SMART) is a registered
union, which had a five-year collective bargaining agreement (CBA) with Ren
Transport Corp. (Ren Transport) set to expire on 31 December 2004. The 60-
day freedom period of the CBA passed without a challenge to SMART’s
majority status as bargaining agent. SMART thereafter conveyed its
willingness to bargain with Ren Transport, to which it sent bargaining
proposals. Ren Transport, however, failed to reply to the demand.

Subsequently, two members of SMART wrote to the Department of Labor and

Employment — National Capital Region (DOLE-NCR). The office was
informed that a majority of the members of SMART had decided to disaffiliate
from their mother federation to form another union, Ren Transport Employees
Association (RTEA). SMART contested the alleged disaffiliation through a
letter dated 4 April 2005.

During the pendency of the disaffiliation dispute at the DOLE-NCR, Ren

Transport stopped the remittance to SMART of the union dues that had been
checked off from the salaries of union workers as provided under the CBA.
Further, on 19 April 2005, Ren Transport voluntarily recognized RTEA as the
sole and exclusive bargaining agent of the rank-and-file employees of their
company.

On 6 July 2005, SMART filed with the labor arbiter a complaint for unfair
labor practice against Ren Transport.

HELD:

Ren Transport violated its duty to

bargain collectively with SMART.

Ren Transport concedes that it refused to bargain collectively with SMART. It

claims, though, that the latter ceased to be the exclusive bargaining agent of the
rank-and-file employees because of the disaffiliation of the majority obits
members.

The argument deserves no consideration.

Violation of the duty to bargain collectively is an unfair labor practice under

Article 258 (g) of the Labor Code. An instance of this practice is the refusal to
bargain collectively as held in General Milling Corp. v. CA. In that case, the
employer anchored its refusal to bargain with and recognize the union on
several letters received by the former regarding the withdrawal of the workers’
membership from the union. We rejected the defense, saying that the employer
had devised a flimsy excuse by attacking the existence of the union and the
status of the union’s membership to prevent any negotiation. It bears stressing
that Ren Transport had a duty to bargain collectively with SMART. Under
Article 263 in relation to Article 267 of the Labor Code, it is during the
freedom period — or the last 60 days before the expiration of the CBA —
when another union may challenge the majority status of the bargaining agent
through the filing of a petition for a certification election. If there is no such
petition filed during the freedom period, then the employer “shall continue to
recognize the majority status of the incumbent bargaining agent where no
petition for certification election is filed.”

In the present case, the facts are not up for debate. No petition for certification
election challenging the majority status of SMART was filed during the
freedom period, which was from November 1 to December 31, 2004 — the 60-
day period prior to the expiration of the five-year CBA. SMART therefore
remained the exclusive bargaining agent of the rank-and-file employees.

Given that SMART continued to be the workers’ exclusive bargaining agent,

Ren Transport had the corresponding duty to bargain collectively with the
former. Ren Transport’s refusal to do so constitutes an unfair labor practice.

Consequently, Ren Transport cannot avail itself of the defense that SMART no
longer represents the majority of the workers. The fact that no petition for
certification election was filed within the freedom period prevented Ren
Transport from challenging SMART’s existence and membership.

Moreover, it must be stressed that, according to the labor arbiter, the purported
disaffiliation from SMART was nothing but a convenient, self-serving excuse.
This factual finding, having been affirmed by both the CA and the NLRC, is
now conclusive upon the Court. We do not see any patent error that would take
the instant case out of the general rule.

Ren Transport interfered with the

exercise of the employees’ right to self-

organize.

Interference with the employees’ right to self-organization is considered an

unfair labor practice under Article 258 (a) of the Labor Code. In this case, the
labor arbiter found that the failure to remit the union dues to SMART and the
voluntary recognition of RTEA were clear indications of interference with the
employees’ right to self-organization. It must be stressed that this finding was
affirmed by the NLRC and the CA; as such, it is binding on the Court,
especially when we consider that it is not tainted with any blatant error. As
aptly pointed out by the labor arbiter, these acts were ill-timed in view of the
existence of a labor controversy over membership in the union.

Ren Transport also uses the supposed disaffiliation from SMART to justify the
failure to remit union dues to the latter and the voluntary recognition of RTEA.
However, for reasons already discussed, this claim is considered a lame excuse
that cannot validate those acts.

SMART is not entitled to an award of moral damages.

We hold that the CA correctly dropped the NLRC’s award of moral damages to
SMART. Indeed, a corporation is not, as a general rule, entitled to moral
damages. Being a mere artificial being, it is incapable of experiencing physical
suffering or sentiments like wounded feelings, serious anxiety, mental anguish
or moral shock. Although this Court has allowed the grant of moral damages to
corporations in certain situations. it must be remembered that the grant is not
automatic. The claimant must still prove the factual basis of the damage and the
causal relation to the defendant’s acts. In this case, while there is a showing of
bad faith on the part of the employer in the commission of acts of unfair labor
practice, there is no evidence establishing the factual basis of the damage on the
part of SMART.
Ching vs Sec of Justice
February 6, 2006
Lessons Applicable: Corp. Officers or employees, through whose act, default or omission the corp.
commits a crime, are themselves individually guilty of the crime (Corporate Law)

FACTS:

 Sept-Oct 1980: PBMI, through Ching, Senior VP of Philippine Blooming Mills, Inc.
(PBMI), applied with the Rizal Commercial Banking Corporation (RCBC) for the issuance of
commercial letters of credit to finance its importation of assorted goods
 RCBC approved the application, and irrevocable letters of credit were issued in favor of
Ching.
 The goods were purchased and delivered in trust to PBMI.
o Ching signed 13 trust receipts as surety, acknowledging delivery of the goods
o Under the receipts, Ching agreed to hold the goods in trust for RCBC, with authority
to sell but not by way of conditional sale, pledge or otherwise
 In case such goods were sold, to turn over the proceeds thereof as soon as
received, to apply against the relative acceptances and payment of other indebtedness to
respondent bank.
 In case the goods remained unsold within the specified period, the goods
were to be returned to RCBC without any need of demand.
 goods, manufactured products or proceeds thereof, whether in the form of
money or bills, receivables, or accounts separate and capable of identification - RCBC’s property
 When the trust receipts matured, Ching failed to return the goods to RCBC, or to return their
value amounting toP6,940,280.66 despite demands.
o RCBC filed a criminal complaint for estafa against petitioner in the Office of the City
Prosecutor of Manila.
 December 8, 1995: no probable cause to charge petitioner with violating
P.D. No. 115, as petitioner’s liability was only civil, not criminal, having signed the trust receipts
as surety
 RCBC appealed the resolution to the Department of Justice (DOJ) via petition for review
o On July 13, 1999: reversed the assailed resolution of the City Prosecutor
o execution of said receipts is enough to indict the Ching as the official responsible for
violation of P.D. No. 115
 April 22, 2004: CA dismissed the petition for lack of merit and on procedural grounds
 Ching filed a petition for certiorari, prohibition and mandamus with the CA
ISSUE: W/N Ching should be held criminally liable.
HELD: YES. DENIED for lack of merit
 There is no dispute that it was the Ching executed the 13 trust receipts.
o law points to him as the official responsible for the offense
o Since a corporation CANNOT be proceeded against criminally because it CANNOT
commit crime in which personal violence or malicious intent is required, criminal action is limited
to the corporate agents guilty of an act amounting to a crime and never against the corporation
itself
o execution by Ching of receipts is enough to indict him as the official responsible for
violation of PD 115
o RCBC is estopped to still contend that PD 115 covers only goods which are
ultimately destined for sale and not goods, like those imported by PBM, for use in manufacture.
o Moreover, PD 115 explicitly allows the prosecution of corporate officers ‘without
prejudice to the civil liabilities arising from the criminal offense’ thus, the civil liability imposed
on respondent in RCBC vs. Court of Appeals case is clearly separate and distinct from his
criminal liability under PD 115
 Ching’s being a Senior Vice-President of the Philippine Blooming Mills does not exculpate
him from any liability
 The crime defined in P.D. No. 115 is malum prohibitum but is classified as estafa under
paragraph 1(b), Article 315 of the Revised Penal Code, or estafa with abuse of confidence. It may
be committed by a corporation or other juridical entity or by natural persons. However, the
penalty for the crime is imprisonment for the periods provided in said Article 315.
 law specifically makes the officers, employees or other officers or persons responsible for the
offense, without prejudice to the civil liabilities of such corporation and/or board of directors,
officers, or other officials or employees responsible for the offense
o rationale: officers or employees are vested with the authority and responsibility to
devise means necessary to ensure compliance with the law and, if they fail to do so, are held
criminally accountable; thus, they have a responsible share in the violations of the law
 If the crime is committed by a corporation or other juridical entity, the directors, officers,
employees or other officers thereof responsible for the offense shall be charged and penalized for
the crime, precisely because of the nature of the crime and the penalty therefor. A corporation
cannot be arrested and imprisoned; hence, cannot be penalized for a crime punishable by
imprisonment. However, a corporation may be charged and prosecuted for a crime if the
imposable penalty is fine. Even if the statute prescribes both fine and imprisonment as penalty, a
corporation may be prosecuted and, if found guilty, may be fined
 When a criminal statute designates an act of a corporation or a crime and prescribes
punishment therefor, it creates a criminal offense which, otherwise, would not exist and such can
be committed only by the corporation. But when a penal statute does not expressly apply to
corporations, it does not create an offense for which a corporation may be punished. On the other
hand, if the State, by statute, defines a crime that may be committed by a corporation but
prescribes the penalty therefor to be suffered by the officers, directors, or employees of such
corporation or other persons responsible for the offense, only such individuals will suffer such
penalty. Corporate officers or employees, through whose act, default or omission the corporation
commits a crime, are themselves individually guilty of the crime. The principle applies whether
or not the crime requires the consciousness of wrongdoing. It applies to those corporate agents
who themselves commit the crime and to those, who, by virtue of their managerial positions or
other similar relation to the corporation, could be deemed responsible for its commission, if by
virtue of their relationship to the corporation, they had the power to prevent the act. Benefit is not
an operative fact.