1. San Juan Structural and Steel Fabricators v.

Court of Appeals
G.R. No. 129459, 29 September 1998
FACTS:

Plaintiff-appellant entered into an agreement with Motorich Sales Corporation (MSC) for the transfer to it of a parcel of land located
in Quezon City. As stipulated in the Agreement of 14 February 1989, SJSSFI paid the downpayment in the sum of P100,000.00, the
balance to be paid on or before 2 March 1989. On 1 March 1989, Mr. Andres T. Co, SJSSFI president, wrote a letter to MSC
requesting for a computation of the balance to be paid. On 2 March 1989, SJSSFI was ready with the amount corresponding to the
balance. SJSSFI and MSC were supposed to meet in the office of SJSSFI but MSC’s treasurer, Nenita Lee Gruenberg, did not appear.
MSC, despite repeated demands and in utter disregard of its commitments had refused to execute the Transfer of Rights/Deed of
Assignment which is necessary to transfer the certificate of title.

On 6 April 1989, ADC and MSC entered into a Deed of Absolute Sale whereby the former transferred to the latter the subject
property. SJSSFI filed the complaint for damages against MSC, and Nenita Lee Gruenberg, as a result of the latter’s alleged bad faith
in refusing to execute a formal Transfer of Rights/Deed of Assignment. It impleaded ADC and JNM Realty & Development Corp.
(JRDC) as necessary parties, since Transfer Certificate of Title (362909) 2876 was in the name of ADC, and that JRDC is the transferor
of right in favor of MDC. In its answer, MSC and Nenita Lee Gruenberg interposed as affirmative defense that the President and
Chairman of Motorich did not sign the agreement adverted to; that Mrs. Gruenberg’s signature on the agreement is inadequate to
bind MSC as the other signature, that of Mr. Reynaldo Gruenberg, President and Chairman of MSC, is required; that SJSSFI knew this
from the very beginning as it was presented a copy of the Transfer of Rights at the time the Agreement was signed; that SJSSFI itself
drafted the Agreement and insisted that Mrs. Gruenberg accept the P100,000.00 as earnest money; that granting, without
admitting, the enforceability of the agreement, SJSSFI nonetheless failed to pay in legal tender within the stipulated period (up to 2
March 1989); that it was the understanding between Mrs. Gruenberg and SJSSFI that the Transfer of Rights/Deed of Assignment will
be signed only upon receipt of cash payment; thus they agreed that if the payment be in check, they will meet at a bank designated
by SJSSFI where they will encash the check and sign the Transfer of Rights/Deed, but that SJSSFI informed Mrs. Gruenberg of the
alleged availability of the check, by phone, only after banking hours.

On the basis of the evidence, the Regional Trial Court of Makati, Metro Manila rendered judgment, dismissing SJSSFI’s complaint,
finding that Nenita Lee Gutenberg was not authorized by the corporation to dispose of the property as such disposition is governed
by the requirements of Section 40, Corporation Code; and that Nenita Lee Gutenberg did not in anyway misrepresent herself to be
authorized by the corporation to sell the property to SJSSFI. The Court of Appeals modified the decision of the trial court by ordering
Nenita Lee Gutenberg to refund or return to SJSSFI the downpayment of P100,000.00 which she received from the latter. SJSSFI
moved for reconsideration, which was denied. Hence this petition.

ISSUES:

1. Whether or not the corporation’s treasurer act can bind the corporation.
2. Whether or not the doctrine of piercing the veil of corporate entity is applicable.

RULING:

No. Such contract cannot bind Motorich, because it never authorized or ratified such sale.
A corporation is a juridical person separate and distinct from its stockholders or members. Accordingly, the property of the
corporation is not the property of the corporation is not the property of its stockholders or members and may not be sold by the
stockholders or members without express authorization from the corporation’s board of directors.

Section 23 of BP 68 provides the Board of Directors or Trustees – Unless otherwise provided in this code, the corporate powers of all
corporations formed under this code shall be exercised, all business conducted, and all property of such corporations controlled and
held by the board of directors or trustees to be elected from among the stockholders of stocks, or where there is no stock, from
among the members of the corporations, who shall hold office for 1 year and until their successors are elected and qualified.

As a general rule, the acts of corporate officers within the scope of their authority are binding on the corporation. But when these
officers exceed their authority, their actions, cannot bind the corporation, unless it has ratified such acts as is estopped from
disclaiming them. 0Because Motorich had never given a written authorization to respondent Gruenbeg to sell its parcel of land, we

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hold that the February 14, 1989 agreement entered into by the latter with petitioner is void under Article 1874 of the Civil Code.
Being inexistent and void from the beginning, said contract cannot be ratified.The statutorily granted privilege of a corporate veil
may be used only for legitimate purposes. On equitable consideration,the veil can be disregarded when it is utilized as a shield to
commit fraud, illegality or inequity, defeat public convenience; confuse legitimate issues; or serve as a mere alter ego or business
conduit of a person or an instrumentality, agency or adjunct of another corporation.

We stress that the corporate fiction should be set aside when it becomes a shield against liability for fraud, or an illegal act on
inequity committed on third person. The question of piercing the veil of corporate fiction is essentially, then a matter of proof. In the
present case, however, the court finds no reason to pierce the corporate veil of respondent Motorich. Petitioner utterly failed to
establish the said corporation was formed, or that it is operated for the purpose of shielding any alleged fraudulent or illegal
activities of its officers or stockholders; or that the said veil was used to conceal fraud, illegality or inequity at the expense of third
persons like petitioner.

2. JARDINE DAVIES INC., petitioner, vs. COURT OF APPEALS and FAR EAST MILLS SUPPLY CORPORATION, respondents.    GRN
128066  June 19, 2000

PURE FOODS CORPORATION, petitioner, vs. COURT OF APPEALS and FAR EAST MILLS SUPPLY CORPORATION, respondents.   GRN
128069   June 19, 2000

FACTS:

In 1992, petitioner PUREFOODS decided to install two 1500 KW generators in its food processing plant in San Roque, Marikina City. A
bidding for the supply and installation of the generators was held. Out of the 8 prospective bidders who attended the pre-bidding
conference, only 3 bidders, namely, respondent FAR EAST MILLS SUPPLY CORPORATION (FEMSCO), MONARK and ADVANCE POWER
submitted bid proposals and gave bid bonds.

In a letter dated 12 December 1992 addressed to FEMSCO President Alfonso Po, PUREFOODS confirmed the award of the contract to
FEMSCO. FEMSCO submitted the required performance bond in the amount of P1,841,187.90 and contractor’s all-risk insurance
policy in the amount of P6,137,293.00 which PUREFOODS through its VP Benedicto G. Tope acknowledged in a letter dated 18
December 1992.

However, in a letter dated 22 December 1992, PUREFOODS through its Senior VP Teodoro L. Dimayuga unilaterally canceled the
award as “significant factors were uncovered and brought to their attention which dictate the cancellation and warrant a total
review and re-bid of the project. FEMSCO protested the cancellation of the award. Before the matter could be resolved, PUREFOODS
awarded the project and entered into a contract with JARDINE NELL, a division of Jardine Davies, Inc. (JARDINE), which was not one
of the bidders.

FEMSCO sued PUREFOODS and JARDINE: PUREFOODS for reneging on its contract, and JARDINE for its unwarranted interference and
inducement.
RTC- Pasig, granted JARDINE’s Demurrer to Evidence. The RTC ordered PUREFOODS to indemnify FEMSCO. FEMSCO and PUREFOODS
appealed to CA. FEMSCO appealed the  Resolution of the trial court which granted the Demurrer to Evidence filed by JARDINE
resulting in the dismissal of the complaint against it.
CA affirmed the Decision of the trial court. It also reversed the Resolution of the lower court and ordered JARDINE to pay FEMSCO
moral damages for inducing PUREFOODS to violate the latter’s contract with FEMSCO. CA denied MR. Hence, these 2 petitions for
review.

ISSUE: WON FEMSCO should be awarded with Moral Damages.

RULING:
YES. Contracts are perfected by mere consent, upon the acceptance by the offeree of the offer made by the offeror. From that
moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage and law. The acceptance must not qualify the terms of
the offer. However, the acceptance may be express or implied. For a contract to arise, the acceptance must be made known to the
offeror. Acceptance can be withdrawn or revoked before it is made known to the offeror.

In the instant case, since PUREFOODS started the process of entering into the contract by conducting a bidding, Art. 1326 of the Civil
Code, which provides that “advertisements for bidders are simply invitations to make proposals,” applies.  
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The 12 December 1992 letter of petitioner PUREFOODS to FEMSCO constituted acceptance of respondent FEMSCO’s offer as
contemplated by law. The tenor of the letter, i.e., “This will confirm that Pure Foods has awarded to your firm (FEMSCO) the
project,” could not be more categorical. While the same letter enumerated certain “basic terms and conditions,” these conditions
were imposed on the performance of the obligation rather than on the perfection of the contract.

But even granting arguendo that the 12 December 1992 letter of petitioner PUREFOODS constituted a “conditional counter-offer,”
respondent FEMCO’s submission of the performance bond and contractor’s all-risk insurance was an implied acceptance, if not a
clear indication of its acquiescence to, the “conditional counter-offer,”

Petitioner PUREFOODS also argues that it was never in bad faith. But by the unilateral cancellation of the contract, the defendant
(petitioner PURE FOODS) has acted with bad faith and this was further aggravated by the subsequent inking of a contract between
defendant Purefoods and erstwhile co-defendant Jardine. It is very evident that Purefoods thought that by the expedient means of
merely writing a letter would automatically cancel or nullify the existing contract entered into by both parties after a process of
bidding. This, to the Court’s mind, is a flagrant violation of the express provisions of the law and is contrary to fair and just dealings
to which every man is due.

This Court has awarded in the past moral damages to a corporation whose reputation has been besmirched. In the instant case,
respondent FEMSCO has sufficiently shown that its reputation was tarnished after it immediately ordered equipment from its
suppliers on account of the urgency of the project, only to be canceled later. We thus sustain respondent appellate court’s award of
moral damages. We however reduce the award from P2Mto P1M, as moral damages are never intended to enrich the recipient.
Likewise, the award of exemplary damages by way of example for the public good is excessive and should be reduced to
P100,000.00.

Petitioner JARDINE maintains on the other hand that respondent appellate court erred in ordering it to pay moral damages to
respondent FEMSCO as it supposedly induced PUREFOODS to violate the contract with FEMSCO. We agree. While it may seem that
petitioners PUREFOODS and JARDINE connived to deceive respondent FEMSCO, we find no specific evidence on record to support
such perception. There is no showing whatsoever that petitioner JARDINE induced petitioner PUREFOODS. The similarity in the
design submitted to petitioner PUREFOODS by both petitioner JARDINE and respondent FEMSCO, and the tender of a lower offer by
petitioner JARDINE are insufficient to show that petitioner JARDINE indeed induced petitioner PUREFOODS to violate its contract
with respondent FEMSCO.

3. Silverio, Jr. v. Filipino Business Consultants, Inc.

G.R. No. 143312, 12 August 2005

FACTS:

The parties are wrangling over possession of a 62 hectare-land in Calatagan, Batangas after Esses and Tri-Star failed to redeem the
Calatagan Property from FBCI. During the pendency of the case, FBCI filed with the an Urgent Ex-Parte Motion to Suspend
Enforcement of Writ of Possession. FBCI pointed out that it is now the new owner of Esses and Tri-Star having purchased the
substantial and controlling shares of stocks of the two corporations. It claimed that since it is now the owner of the controlling
shares of stocks, the property must be awarded in its favor.

ISSUE:

Whether FBCI’s acquisition of shares of stocks of Esses and Tristar representing a controlling interest of the two corporations would
also give FBCI a proprietary right over the Calatagan Property owned by both Esses Corp. and Tristar.

RULING:

No. FBCI’s alleged controlling shareholdings in Esses and Tristar merely represent a proportionate interest in the properties of the
two corporations. Such controlling shareholdings do not vest FBCI with any legal right or title to any of Esses and Tristar’s corporate
properties.

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As a stockholder, FBCI has an interest in Esses and Tri-Star’s corporate properties that is only equitable or beneficial in nature. Even
assuming that FBCI is the controlling shareholder of Esses and Tri-Star, it does not legally make it the owner of the Calatagan
Property, which is legally owned by Esses and Tri-Star as distinct juridical persons. As such, FBCI is not entitled to the possession of
any definite portion of the Calatagan Property or any of Esses and Tri-Star’s properties or assets. FBCI is not a co-owner or tenant in
common of the Calatagan Property or any of Esses and Tri-Star’s corporate properties.

A corporation is a juridical person distinct from the members composing it. Properties registered in the name of the corporation are
owned by it as an entity separate and distinct from its members.

4. Gamboa v. Teves etal., GR No. 176579, October 9, 2012

Facts:

The issue started when petitioner Gamboa questioned the indirect sale of shares involving almost 12 million shares of the Philippine
Long Distance Telephone Company (PLDT) owned by PTIC to First Pacific. Thus, First Pacific’s common shareholdings in PLDT
increased from 30.7 percent to 37 percent, thereby increasing the total common shareholdings of foreigners in PLDT to about
81.47%. The petitioner contends that it violates the Constitutional provision on filipinazation of public utility, stated in Section 11,
Article XII of the 1987 Philippine Constitution, which limits foreign ownership of the capital of a public utility to not more than 40%.
Then, in 2011, the court ruled the case in favor of the petitioner, hence this new case, resolving the motion for reconsideration for
the 2011 decision filed by the respondents.

Issue: Whether or not the Court made an erroneous interpretation of the term ‘capital’ in its 2011 decision?

Held/Reason: The Court said that the Constitution is clear in expressing its State policy of developing an economy ‘effectively
controlled’  by Filipinos. Asserting the ideals that our Constitution’s Preamble want to achieve, that is –  to conserve and develop our
patrimony , hence, the State should fortify a Filipino-controlled economy. In the 2011 decision, the Court finds no wrong in the
construction of the term ‘capital’ which refers to the ‘shares with voting rights, as well as with full beneficial ownership’ (Art. 12, sec.
10) which implies that the right to vote in the election of directors, coupled with benefits, is tantamount to an effective
control. Therefore, the Court’s interpretation of the term ‘capital’ was not erroneous. Thus, the motion for reconsideration is
denied.

5. MAM REALTY DEVELOPMENT CORPORATION v. NLRC, GR No. 114787, 1995-06-02

Facts:

when to hold a director or officer of a corporation solidarily obligated with the latter for a corporate liability.

complaint filed with the Labor Arbiter by private respondent Celso B. Balbastro against herein petitioners, MAM Realty Development
Corporation ("MAM") and its Vice President Manuel P. Centeno, for wage differentials, "ECOLA," overtime pay, incentive... leave pay,
13th mon

Balbastro alleged that he was employed by MAM as a pump operator in 1982 and had since performed such work at its Rancho
Estate, Marikina, Metro Manila.  He earned a basic monthly... salary of P1,590.00 for seven days of work a week that started from
6:00 a.m. to up until 6:00 p.m. daily.

his services were contracted by MAM for the operation of the Rancho Estates' water pump.  He was engaged, however, not... as an
employee, but as a service contractor, at an agreed fee of P1,590.00 a month

Similar arrangements were likewise entered into by MAM with one Rodolfo Mercado and with a security guard of Rancho Estates III
Homeowners' Association.

made use of his free time by offering plumbing... services to the residents of the subdivision.  He was not at all subject to the control
or supervision of MAM for, in fact, his work could so also be done either by Mercado or by the security guard.

prior to the filing of the complaint, MAM executed a Deed... of Transfer,[1] effective 01 July 1990, in favor of the Rancho Estates
Phase III Homeowners Association, Inc., conveying to the latter all its rights and interests over the water system in the subdivision.

Labor Arbiter dismissed the complaint for lack of merit.

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On appeal to it, respondent National Labor Relations Commission ("NLRC") rendered judgment... respondents are hereby directed to
pay jointly and severally complainant the sum of P86,641.05 as above-computed."[3]

Issues:

when to hold a director or officer of a corporation solidarily obligated with the latter for a corporate liability.

Ruling:

Accordingly, the period for the computation of the money claims should only be for the period from 06 March 1988 to 01 July 1990
(when petitioner corporation could be deemed to have... ceased from the activity for which private respondent was employed), and
petitioner corporation should, instead, be made liable for the employee's separation pay equivalent to one-half (1/2) month pay for
every year of servic

NLRC erred in holding Centeno jointly and severally liable with MAM.  A corporation, being a juridical entity, may act only through its
directors, officers and employees.  Obligations incurred by them, acting as such... corporate agents, are not theirs but the direct
accountabilities of the corporation they represent.

there is nothing substantial on record that can justify, prescinding from the foregoing, petitioner Centeno's solidary liability with the
corporation.

Principles:

The power of control, the most important feature of that relationship and, here, a point... of controversy, refers merely to the
existence of the power and not to the actual exercise thereof. It is not essential for the employer to actually supervise the
performance of duties of the employee; it is enough that the former has a right to wield the power.

6. Solid Bank Corp. vs Mindanao Ferroalloy Corp.

G.R. No. 153535
July 28, 2005

Doctrine: It is axiomatic that solidary liability cannot be lightly inferred. Under Article 1207 of the Civil Code, "there is a solidary
liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity."

Facts: Private respondents herein secured a loan to the petitioner bank under the name of the respondent corporation. In the
course of the corporations operation, it was not able to pay its obligation to the petitioner and has to stop its operation. Petitioner
bank filed an action against the corporation together with its principal officers for the collection of the loan they acquired. The RTC
ruled in favor of the bank petitioner and ordering the respondent corporation to pay the amount of loan plus interest. On appeal,
the CA held the decision of the RTC and ruled also that the private respondents were not solidary liable to the petitioner.

Issue: Whether or not principal officers can be held personally liable upon signing the contract of loan under the name of the
corporation?

Ruling: Basic is the principle that a corporation is vested by law with a personality separate and distinct from that of each person
composing or representing it. Equally fundamental is the general rule that corporate officers cannot be held personally liable for the
consequences of their acts, for as long as these are for and on behalf of the corporation, within the scope of their authority and in
good faith. The separate corporate personality is a shield against the personal liability of corporate officers, whose acts are properly
attributed to the corporation. Moreover, it is axiomatic that solidary liability cannot be lightly inferred. Since solidary liability is not
clearly expressed in the Promissory Note and is not required by law or the nature of the obligation in this case, no conclusion of
solidary liability can be made. Furthermore, nothing supports the alleged joint liability of the individual petitioners because, as
correctly pointed out by the two lower courts, the evidence shows that there is only one debtor: the corporation.

7. Tupaz v. CA
G.R. No. 145578 Nov. 18, 2005 J. Carpio
petitioners Jose C. Tupaz IV and Petronila Tupaz
respondents CA, and BPI
summary Jose and Petronila, officers of El Oro, signed trust receipts in behalf of the company, and in favor of
BPI. They were not able to fulfill their obligations under the trust receipts. BPI filed estafa charges
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 against them. They were acquitted but were held solidarily liable with El Oro in the payment of the
debt to BPI.
Held: Jose and Petronilla are not liable under one trust receipt because they signed it in their
capacities as officers of the corporation. But, Jose is liable for the other trust receipt because he
signed it in his personal capacity. However, his liability is not solidary with El Oro; he is liable only as
guarantor. The solidary guaranty clause makes guarantors signing the trust receipt solidarily liable
with each other; it does not operate to make them solidarily liable with the company. But, the suit
against Jose still stands because excussion is not a pre-requisite to secure judgment against a
guarantor. In fact, excussion can be waived

facts of the case

~ Jose and Petronila Tupaz were Vice-President for Operations and Vice-President/Treasurer, respectively, of El Oro Corporation. El
Oro Corporation had a contract with the PH Army to supply the latter with “survival bolos”

~ To finance the purchases of the raw materials for the bolos, the petitioners (on behalf of El Oro) applied with BPI for 2 commercial
letters of credit. The letters of credit were in favor of El Oro’s suppliers, Tanchaoco Incorporated and Maresco Corporation. >>> BPI
granted the application and issued the letters of credit for P564,871.05 and P294,000.00 to Tanchaoco Incorporated and Maresco
Corporation respectively.

~ Simultaneous with the issuance of the letters of credit, the petitioners signed trust receipts in favor of BPI:

a) Jose signed in his personal capacity a trust receipt corresponding for the first letter of credit, binding himself to sell the
goods and to remit the proceeds to BPI, if sold, or to return the goods, if not sold, on or before 29 December 1981.
b) Both petitioners signed in their capacities as officers of El Oro a trust receipt covering the second letter of credit to
remit proceeds/return goods by 8 December 1981.
~ Tanchauco Incorporated and Maresco Corp. complied with their obligation and delivered the raw materials to El Oro. BPI then paid
the 2 corporations P564, 871.05 and P294,000 accordingly.

~ However, petitioners did not comply with their undertakings under the trust receipts. >>> BPI made several demands for
payment but El Oro made partial payments only. Final demand letters were then sent but El Oro replied that it could not fully pay its
debt because the AFP had delayed in their payment for the bolos.

~ BPI charged petitioners with estafa under Sec. 13 of the Trust Receipts Law.

RTC: petitioners acquitted based on reasonable doubt. However, they are solidarily liable with El Oro for the balance of the
principal debt under the trust receipts.

CA: affirmed RTC. The trust receipts clearly showed the terms that the petitioners signed the same as surety for the corporation and
that they bound themselves directly and immediately liable in case of default without need of demand.

issue

What is the nature of liability of petitioners?

ratio

To the Bank of the Philippine Islands

            In consideration of your releasing to ………………………………… under the terms of this Trust Receipt the goods described herein,
I/We, jointly and severally, agree and promise to pay to you, on demand, whatever sum or sums of money which you may call upon
me/us to pay to you, arising out of, pertaining to, and/or in any way connected with, this Trust Receipt, in the event of default
and/or non-fulfillment in any respect of this undertaking on the part of the said ……………………………………. I/we further agree that
my/our liability in this guarantee shall be DIRECT AND IMMEDIATE, without any need whatsoever on your part to take any steps or
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exhaust any legal remedies that you may have against the said ……………………………………………. Before making demand upon me/us.
(Underlining supplied; capitalization in the original)   

Jose is personally liable. However, not solidary as lower courts said but only as guarantor.

However, respondent bank’s suit against petitioner Jose Tupaz stands despite the Court’s finding that he is liable as guarantor only.
First, excussion is not a pre-requisite to secure judgment against a guarantor. The guarantor can still demand deferment of the
execution of the judgment against him until after the assets of the principal debtor shall have been exhausted. Second, the benefit of
excussion may be waived.

Under the trust receipt dated 30 September 1981, petitioner Jose Tupaz waived excussion when he agreed that his “liability in [the]
guaranty shall be DIRECT AND IMMEDIATE, without any need whatsoever on xxx [the] part [of respondent bank] to take any steps or
exhaust any legal remedies xxx.” The clear import of this stipulation is that petitioner Jose Tupaz waived the benefit of excussion
under his guarantee.

The solidary guaranty clause makes guarantors signing the trust receipt solidarily liable with each other; it does not operate to make
them solidarily liable with the company.

As guarantor, petitioner Jose Tupaz is liable for El Oro Corporation’s principal debt and other accessory liabilities (as stipulated in the
trust receipt and as provided by law) under the trust receipt dated 30 September 1981. That trust receipt (and the trust receipt
dated 9 October 1981) provided for payment of attorney’s fees equivalent to 10% of the total amount due and an “interest at the
rate of 7% per annum, or at such other rate as the bank may fix, from the date due until paid xxx.”

8. REPUBLIC PLANTERS BANK vs. CA and FERMIN CANLAS

G.R. No. 93073            December 21, 1992

Republic Planters Bank issued 9 promissory notes signed by Shozo Yamaguchi (President) and Fermin Canlas (Treasurer) of
Worldwide Garment Manufacturing Inc. Yamaguchi and Canlas were authorized by the corporation to apply for credit facilities with
the bank in form of export advances and letters of credit or trust receipts accommodations. Three years after, the bank filed an
action to recover the sums of money covered by the promissory notes. Worldwide Garment Manufacturing changed its name to
Pinch Manufacturing Corp. Canlas alleged he was not liable personally for the corporate acts that he performed, and that the notes
were still blank when he signed them.

Issue: Whether or not the corporate treasurer is liable for the amounts in the promissory notes.

Held: Canlas is a co-maker of the promissory notes, under the law, and cannot escape liability arising therefrom. Inasmuch as the
instrument contained the words “I promise to pay” and is signed by two or more persons, said persons are deemed to be jointly and
severally liable thereon. As the promissory notes are stereotype ones issued by the bank in printed form with blank spaces filled up
as per agreed terms of the loan, following customary procedures, leaving the debtors to do nothing but read the terms and
conditions therein and to sign as makers or co-makers. Section 14 of the Negotiable Instruments Law, therefore, does not apply.
Canlas is solidarily liable with the corporation for the amount of the 9 promissory notes.

9. Filipinas Broadcasting Network, Inc. v. Ago Medical and Educational Center-Bicol Christian College of Medicine
G.R. No. 141994, 17 January 2005
FACTS:

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Exposé is a radio documentary program hosted by Carmelo Rima and Hermogenes Alegre. Exposé is aired every morning over DZRC-
AM which is owned by Filipinas Broadcasting Network, Inc. (FBNI). Exposé is heard over Legazpi City, the Albay municipalities and
other Bicol areas.

Rima and Alegre exposed various alleged complaints from students, teachers and parents against Ago Medical and Educational
Center-Bicol Christian College of Medicine (AMEC) and its administrators. Claiming that the broadcasts were defamatory, AMEC and
the dean of AMEC’s College of Medicine, filed a complaint for damages against FBNI, Rima and Alegre.

ISSUE:

Whether AMEC is entitled to moral damages.

RULING:

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. 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.

10. FIRST PHILIPPINE INTERNATIONAL BANK VS CA (252 SCRA 259)

First Philippine International Bank vs Court of Appeals

252 SCRA 259 [GR No. 115849 January 24, 1996]

Facts: In the course of its banking operations, the defendant Producer Bank of the Philippines acquired 6 parcels of land with a total
area of 101 hectares located at Don Jose, Sta. Rosa, Laguna and covered by TCT No. T-106932 to T-106937. The property used to be
owned by BYME Investment and Development Corporation which hd them mortgaged with the bank as collateral for a loan. The
plaintiff originals, Demetrio Demetria and Jose Janolo wanted to purchase the property and thus initiated negotiations for that
purpose. In the early part of August 1987 said plaintiffs, upon the suggestion of BYME investment’s legal counsel, Fajardo met with
defendant Mercurio Rivera, manager of the property management department of the defendant bank. The meeting was held in
pursuant to plaintiffs’ plan to buy the property. After the meeting, plaintiff Janolo, following the advice of defendant Rivera made a
formal purchase offer to the Bank through a letter dated August 30,1987. Negotiations took place and an offer price was fixed at
P5.5million. During the course of the negotiations, the defendant bank was placed under conservatorship and a new conservator
was appointed to which the name has been refused to recognize. A derivative suit has been filed against Rivera for the damages
suffered from the alleged perfect contract of sale involving the 6 parcels of land.

Issue: Whether or not a derivative suit may lie involving the bank and its stockholders.

Held: No. An individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he hold stock in
order to protect or vindicate corporate rights, whenever the officials of the corporation refuse to sue, or are the ones, to be sued or
hold the control of the corporation. In such actions, the suing stockholder is regarded as a nominal party with the corporation as the
real party in interest.

In the face of the damaging admissions taken from the complaint in the second case, petitioners, quite strangely, sought to deny
that the second case was a derivative suit, reasoning that it was brought not by the minority shareholders, but by Henry Co. etal.
who not only hold or control over 80% of the outstanding capital stock, but also constitute the majority in the board of directors of
petitioners bank. That being so, then they really represent the bank, so whether they sued derivatively or directly, there is
undeniably an identity of interest/entity represented.

In addition to the many cases, where the corporate fiction has been regarded, we now add the instant case, and declare herewith
that the corporate veil cannot be used to shield an otherwise blatant violation of the prohibition against forum shopping.
Shareholders, whether suing as the majority in direct actions or as the minority in a derivative suit, cannot be allowed to trifle with
court processes particularly where, as in this case, the corporation itself has not been remiss in vigorously prosecuting or defending

8
corporate causes and in using and applying remedies available to it. To rule otherwise would be to encourage corporate litigants to
use their shareholders as fronts to circumvent the stringent rules against forum shopping.

From the facts, the official bank price, at any rte, the bank placed its official, Rivera is a position of authority to accept offers to buy
and negotiate the sale by having the offer officially acted upon by the bank. The bank cannot turn around and say, as it now does,
that what Rivera states as the bank’s action on the matter is not in fact so. It is a familiar doctrine, the doctrine of ostensible
authority, that if a corporation on knowingly permits one of its officers, or any other agent, to do acts within the scope of apparent
authority, and thus holds him out to the public as possessing power to do those acts, the corporation will, as against any one who
has in good faith dealt with the corporation through such agent, he estopped from denying his authority.

A bank is liable for wrongful acts of its officers done in the interest of the bank or in he course of dealings of the officers in their
representative capacity but not for acts outside the scope of their authority. A bank holding out its officers and agents as worthy of
confidence will not be permitted to profit by the frauds they my thus be enabled to perpetrate in the apparent scope of their
employment; nor will it be permitted to shrink its responsibility for such fraud even through no benefit may accrue to the bank
therefrom. Accordingly, a banking corporation is liable to innocent third persons where the representation is made in the course of
its business by an agent acting within the general scope of its authority even though, in the particular case, the agent is secretly
abusing his authority and attempting to perpetrate fraud upon his principal or some other person, for his own ultimate benefit.

Section 28-A of BP 68 merely gives the conservator power to revoke contracts that are, under existing law, deemed not to be
effective – i.e void, voidable, unenforceable or rescissible. Hence, the conservator merely takes the place of a bank’s board of
directors. What the said board cannot do – such as repudiating a contract validly entered into under the doctrine of implied
authority – the conservator cannot do either.