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#74: BA Savings Bank, petitioner vs. Sia (Roger Sia, Taciana Sia and John Doe), respondents Facts:

The instant petition for certiorari and mandamus with urgent prayer for issuance of writ of preliminary injunction and/or temporary restraining order filed by petitioner was denied due course by the CA on the ground that the certification on Anti-Forum Shopping incorporated in the petition was signed NOT by the duly authorized representative of the petitioner,as required under Supreme Court Circular No. 28-91 BUT by it Counsel, in contravention of said circular. A motion for reconsideration was subsequently filed with the attached Secretarys Certificate showing that the petitioners Board of Directors approved a resolution authorizing its lawyer to represent it in any action or proceeding before any court, tribunal or agency; and to sign, execute and deliver the Certificate of NFS, among others but was also denied. Hence, this appeal.

Issue: Whether S.C. revised Circular 28-91 allows a corporation to authorize its counsel to execute a Certificate of NFS for and on it behalf? Held: Yes. A corporation like the petitioner has NO powers except those EXPRESSLY conferred on it by the Corp. Code and those that are implied by or are incidental to its existence. A corporation exercises said powers through its BOD and or duly authorized officers or agents. Physical acts like the signing of documents can be performed only by NATURAL PERSONS duly authorized for the purpose by corporate lawyers or by a specific act of the BOD. The requirement of Circular cannot be imposed on artificial persons like corporation for the simple reason that they cannot personally do the task themselves. In the present case, the BOD issued a resolution specifically authorizing its lawyers to act as their agents in any action or proceeding before any court, other tribunal or agency; and to sign, execute and deliver the Certificate of NFS and other instruments necessary for such action or proceeding. The Resolution was sufficient to vest such persons with the authority to bind the corporation and was specific enough as to the acts they were empowered to do. 75. Madrigal & Company, Inc. vs. Zamora Facts: Petitioner and Rizal Cement Co were sister companies. Both were owned by the same stockholders. Respondent Labor Union (Madrigal Employees Union) sought for the renewal of their CBA with the petitioner which included a demand for wage increase and other economic benefits. However, petitioner requested for deferment in the negotiations. Petitioner reduced its capital stock on two occasions. Such was effected through the distribution of the marketable securities owned by the petitioner to its stockholders in exchange for their shares in an equivalent amount in the corporation.

Petitioner's failure to negotiate with the labor union regarding their CBA prompted the latter to file a complaint for ULP. Petitioner answered alleging that it has ceased operating temporarily because of the stockholders' desire to phase out the operations of Madrigal & Co due to lack of business incentives and prospects and in order to prevent further losses it has to reduce its capital stock and effect retrenchment. LA rendered a decision in favor of the labor union. NLRC affirmed the said decision. Issue: W/N petitioner's reduction of its capital stock is justified. Held: SC held that it was shown in the petitioner company's financial records that it had been making substantial profits in its operation from 1972-1975. Its act of reducing its capital stock was done to its responsibility to evade its responsibility towards the employees. The dividends received by the company are corporate earnings arising from corporate investment." The petitioner company had entered such earnings in its financial statements as profits, which it would not have done if they were not in fact profits. SC further held that it is incorrect to say that such profits in the form of dividends are beyond the reach of the petitioner's creditors since the petitioner had received them as compensation for its management services in favor of the companies it managed as a shareholder thereof. As such shareholder, the dividends paid to it were its own money, which may then be available for wage increments. It is not a case of a corporation distributing dividends in favor of its stockholders, in which case, such dividends would be the absolute property of the stockholders and hence, out of reach by creditors of the corporation. Here, the petitioner was acting as stockholder itself, and in that case, the right to a share in such dividends, by way of salary increases, may not be denied its employees. Capital reduction was nothing but a premature and plain distribution of corporate assets to obviate a just sharing to labor of the vast profits obtained by its joint efforts with capital through the years.

76. PEA VS. CA FACTS: The validity of the redemption of a foreclosed real property is the center of this controversy. The facts as found by the respondent court are not disputed. PAMBUSCO mortgaged the questioned lots to the DBP.. This mortgage was foreclosed. In the foreclosure sale the said properties were awarded to Rosita Pea as highest bidder. The certificate of sale was then issued and registered. On November 19, 1974, the board of directors of PAMBUSCO, through three) out of its five directors, resolved to assign its right of redemption over the aforesaid lots and authorized one of its members, Atty. Joaquin Briones "to execute and sign a Deed of Assignment for and in behalf of PAMBUSCO in favor of any interested party . . ." Consequently, Briones executed a Deed of Assignment of PAMBUSCO's redemption right over the subject lots in favor of Marcelino Enriquez The latter then redeemed the said properties and a certificate of redemption was issued in his favor . A day after the aforesaid certificate was issued, Enriquez executed a deed of absolute sale of the subject properties in favor of plaintiffs-appellants, the spouses Rising T. Yap and Catalina Lugue. On September 8, 1975, Pea wrote the Sheriff notifying him that the redemption was not valid as it was made under a void deed of assignment. She then requested the recall of the said redemption and a restraint on any registration or transaction regarding the lots in question. Spouses Rising T. Yap and Catalina Lugue also commenced an action for recovery of questioned lot from Pea. ISSUE:

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Whether or not the adopted resolution and Deed of Assignment made by PAMBUSCO is void or at least legally defective RULING:

IDP-Tamano Group then filed for instant petition for review in 1994 stating the Court of Appeals gravely erred in:

It is also undisputed that at the time of the passage of the questioned resolution, respondent PAMBUSCO was insolvent and its only remaining asset was its right of redemption over the subject properties. Since the disposition of said redemption right of respondent PAMBUSCO by virtue of the questioned resolution was not approved by the required number of stockholders under the law, the said resolution, as well as the subsequent assignment executed to respondent Enriquez and the said right of redemption, should be struck down as null and void. Under Section 30 of the then applicable Corporation Law, only persons who own at least one (1) share in their own right may qualify to be directors of a corporation. Further, under Section 28 1/2 of the said law, the sale or disposition of an and/or substantially all properties of the corporation requires, in addition to a proper board resolution, the affirmative votes of the stockholders holding at least two-thirds (2/3) of the voting power in the corporation in a meeting duly called for that purpose. No doubt, the questioned resolution was not confirmed at a subsequent stockholders meeting duly called for the purpose by the affirmative votes of the stockholders holding at least two-thirds (2/3) of the voting power in the corporation. The same requirement is found in Section 40 of the present Corporation Code.
CAs decision is reversed. SC affirmed in toto RTC decision. Deed of assignment is null and void. 77. ISLAMIC DIRECTORATE OF THE PHILIPPINES VS CA GR No. 117897, May 14, 1997. SCRA 272 FACTS: In 1971, Islamic leaders organized and incorporated the ISLAMIC DIRECTORATE OF THE PHILIPPINES (IDP). In the same year, IDP purchased property in Culiat, Tandang Sora, Q.C. In 1972, Martial Law was declared and most members fled to escape political prosecution. Thereafter, two Muslim groups came about, the Carpizo Group and the Abbas/Tamano group. Both claim to be the legitimate IDP. In 1986, SEC declared that neither were legitimate IDP. Both were prescribed to prepare and adopt by-laws for submission. Once approved, elections can occur but neither adhered In 1989, with no properly concluded Board of Trustees of the IDP, the Caprizo Group, sold two lands to private respondent Iglesia Ni Cristo (INC) authorizing Ms Ligon as the mortgagee. In 1991, the Tamano Group, filed a petition (SEC case No.4012) before the SEC seeking to declare null and void the sale of property by the Caprizo Group. Tamana won the case in 1993. Meanwhile, the INC filed a civil case no. Q-90-6937 against Ms. Ligon, to comply with Caprizos obligations, which was ruled in 1991 in favor of the INC despite the judge being informed of the SEC case No. 4012. Tamano Group sought to intervene in the civil case no. Q-90-6937, but was denied on grounds of lack of juridical personality of the IDP-Tamano Group. Ligon,then filed in the Court of Appeals a petition for certiorari in GRN SP-27973 which was dismissed so she further petitioned it for review before the Supreme Court docketed as GRN 107751. In 1993, INC filed a Motion of Intervention in SEC case No. 4012 but was denied because the cause had been final and executory. INC filed it in the Court of Appeals by way of certiorari docketed as CA-C.G. SP No. 33295. The petition was granted in 1993.

Not upholding the jurisdiction of the SEC to declare nullity of the sale. Encouraging multiplicity of suits Not applying the principles of estoppel and laches. While this pended, the Supreme Court rendered judgment in GRN 107751. Ms. Ligons petition denied and affirmed the 1992 decision in CA-G.R No. SP-27973. ISSUE: Whether the Tandang Sora property was legitimately sold to the INC. HELD: As far back as 3 October 1986, the SEC, in Case 2687, in a suit between the Carpizo Group and the Abbas Group, already declared the election of the Carpizo Group (as well as the Abbas Group) to the IDP Board as null and void for being violative of the Articles of Incorporation. Nothing thus becomes more settled than that the IDPCarpizo Group with whom INC contracted is a fake Board. Premises considered, all acts carried out by the Carpizo Board, particularly the sale of the Tandang Sora property, allegedly in the name of the IDP, have to be struck down for having been done without the consent of the IDP thru a legitimate Board of Trustees. Article 1318 of the New Civil Code lays down the essential requisites of contracts, and where all these elements must be present to constitute a valid contract. For, where even one is absent, the contract is void. Specifically, consent is essential for the existence of a contract, and where it is wanting, the contract is non-existent. Herein, the IDP, owner of the subject parcels of land, never gave its consent, thru a legitimate Board of Trustees, to the disputed Deed of Absolute Sale executed in favor of INC. This is, therefore, a case not only of vitiated consent, but one where consent on the part of one of the supposed contracting parties is totally wanting. Ineluctably, the subject sale is void and produces no effect whatsoever. The Carpizo Group-INC sale is further deemed null and void ab initio because of the Carpizo Group's failure to comply with Section 40 of the Corporation Code pertaining to the disposition of all or substantially all assets of the corporation. The Tandang Sora property, it appears from the records, constitutes the only property of the IDP. Hence, its sale to a third-party is a sale or disposition of all the corporate property and assets of IDP falling squarely within the contemplation of the foregoing section. For the sale to be valid, the majority vote of the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide members of the corporation should have been obtained. These twin requirements were no met as the Carpizo Group which voted to sell the Tandang Sora property was a fake Board of Trustees, and those whose names and signatures were affixed by the Carpizo Group together with the sham Board Resolution authorizing the negotiation for the sale were, from all indications, not bona fide members of the IDP as they were made to appear to be. Apparently, there are only 15 official members of the IDP including the 8 members of the Board of Trustees. All told, the disputed Deed of Absolute Sale executed by the fake Carpizo Board and INC was intrinsically void ab initio. 78. Datu Tagoranao Benito v. Securities and Exchange Commission FACTS: The Articles of Incorporation (AIC) of Jamiatul Philippine-Al Islamia, Inc. (Jamiatul) (originally Kamilol Islam Institute, Inc.) were filed with the SEC. The corporation had an authorized capital stock of P200,000 divided into 20,000 shares at a par value of P10 each. Of the authorized capital stock, 8,058 shares worth P80,580.00 were subscribed and fully paid for. Datu Tagoranao Benito subscribed to 460 shares worth P4,600. The corporation filed a

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certificate of increase of its capital stock from P200,000 to P1,000,000. Subsequently, a stockholders meeting was held were P191,560.00 worth of shares were represented. P110,980 worth of shares were subsequently issued by the corporation from the unissued portion of the authorized capital stock of P200,000. Of the increased capital stock of P1Million, P160,000 worth of shares were subscribed by Mrs. Fatima A. Ramos, Mrs. Tarhata A. Lucman and Mrs. Moki-in Alonto. Datu Tagoranao filed with SEC a petition alleging that the additional issue (worth P110,980) was made in violation of his pre-emptive right to said additional issue and that the increase in the authorized capital stock was illegal considering that the stockholders of record were not notified of the meeting wherein the proposed increase was in the agenda. The SEC ruled that:

administrative bodies will not be interfered with by the courts in the absence of grave abuse of discretion on the part of said agencies, or unless the aforementioned findings are not supported by substantial evidence. #79: G.R. No. L-19761 January 29, 1923 PHILIPPINE TRUST COMPANY, vs.MARCIANO RIVERA FACTS: PhilTrust, the assignee in bankruptcy of La Cooperativa Naval Filipina, is suingCooperativa Naval stockholder for unpaid balance of his capital stock subscription. Stockholder claims that he has been released from the obligation to pay more than 50% of his subscription by virtue of a resolution adopted by the Cooperativa Naval stockholders after its incorporation reducing the capital stock by 50%. The effect of this resolution was that fully paid certificates were issued to each stockholder for of his subscription. (watered down stocks) RULING SC held that the said resolution is without effect for being: 1. An attempted withdrawal of so much capital from the fund which the companys creditors were entitled ultimately to rely, and 2. For having been effected without compliance with the statutory requirements of 17 of the Corporation Law regarding reduction of capital stock, and 3. For failure to file a certificate with the Bureau of Commerce and Industry, showing such reduction. Thus, stockholder is still liable for the unpaid balance of his subscription. Ratio: Subscriptions to the capital of a corporation constitute a fund to which creditors have a right to look for satisfaction of their claims and that the assignee in insolvency can maintain an action upon any unpaid stock subscription in order to realize assets for the payment of its debts. A corporation has no power to release an original subscriber to its capital stock from the obligation of paying for his shares, w/o a valuable consideration for such release; and as against creditors a reduction of the capital stock can take place only in the manner and under the conditions prescribed by the statute or the charter or the AOI. Moreoever, strict compliance with statutory regulations is necessary. Note: that for reasons 2 and 3, Campos says that 17 has been replaced by 38, and now, even if all the requirements are complied with, if creditors are prejudiced by such reduction, it is most unlikely that the SEC will approve it. #80: Boman Environmental Development Corporation (BEDECO), petitioner vs. CA and Nilcar Y. Fajilan, respondents Facts:

issuance by the corporation of its unissued shares was validly made and was not subject to the pre-emptive rights of stockholders directed Jamiatul to allow petitioner to subscribe thereto, at par value, proportionate to his present shareholdings, adding thereto the 2,540 shares transferred to him by Mr. Domocao Alonto and Mrs. Moki-in Alonto Hence, this petition. ISSUES:

1. 2.

Whether the issuance of the P110,980 of authorized capital stock of P200,000 is in violation of pre-emptive right. Whether the issuance of the increase in the authorized capital stock is in violation of pre-emptive right.

HELD: Dismissed for lack of merit 1. NO GR: pre-emptive right is recognized only with respect to new issue of shares, and not with respect to additional issues of originally authorized shares Theory: when a corporation at its inception offers its first shares, it is presumed to have offered all of those which it is authorized to issue original subscriber is deemed to have taken his shares knowing that they form a definite proportionate part of the whole number of authorized shares When the shares left unsubscribed are later re-offered, he cannot therefore claim a dilution of interest.

2. NO

stockholders' meeting was held which included the increase of its capital stock from P200,000.00 to P1,000,000.00 he (Datu Benito) was not notified of said meeting and that he never attended the same as he was out of the country at the time

Respondent Fajilan was a Director/President of BEDECO. He offered to resign in writing as President and Member of the BOD of BEDECO and to sell all his company shares, rights and interests for Php 300,000 plus a transfer to him of the Companys Isuzu pick-up truck which he is using. At a meeting, the BOD accepted his resignation and approved the purchase of his total shares in the Company. A promissory note was issued and signed by BEDECOs new President to pay him over a six-month period. However, BEDECO only paid Php 100,000 and defaulted in paying the balance of Php 200,000.

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Respondent filed a complaint in the RTC for collection of the balance. The Court dismissed the complaint for lack of jurisdiction holding that the controversy arose out of intra corporate relations subject to the exclusive and original jurisdiction of the SEC. A petition for Certiorari, Mandamus with Preliminary Attachment was filed in the CA. The CA set aside the decision of RTC and directed to take cognizance of the case holding that the case is a suit for collection of sum of money on the balance of Promisory Note. Hence, this petition.

Facts: The minority stockholders (petitioners) sued defendant corporation and its directors (respondents) for investing in another corporation (Philippine Fiber). The petitioners contend that the investment was made without the requisite board resolution authorized by two-thirds (2/3) of the voting power of the stockholders, contrary to the provision of the then Corporation Law (sec. 17 ). Respondents meanwhile contended that such investment was later ratified by the board of directors in later resolutions and that, (citing legal authorities like Professor Sulpicio Guevarra) since Philippine Fiber was also engaged in the manufacture of sugar bags which defendant corporation is also engaged in, the investment is legitimate. Issue: Is the investment by a corporation in another corporation without the requisite board resolution and affirmative vote of the stockholders illegal? Ruling: No. It is not prohibited for a corporation to invest in shares of another corporation even if such investment is not authorized by two-thirds (2/3) of the voting power of the stockholders if the purpose of the investment is not foreign to the purpose of the corporation. Sec. 17 of the old Corporation Law provided that, No corporation x x x shall invest its fund in any other corporation or business, or for any other purpose other than the main purpose for which it was organized, unless its board of directors has been so authorized in a resolution by the affirmative vote of stockholders x x x two-thirds of the voting power on such proposal at a stockholders meeting called for the purpose The rule is that: if the investment is in pursuance of the corporate purpose, it does not need the approval of the stockholders. But when the purchase of shares is done solely for investment and not to accomplish the purpose of the corporation, the vote of approval of the stockholders is necessary. #82: Lopez Realty Inc. v. Fontecha Facts: Lopez Realty, Inc., is a corporation engaged in real estate business, petitioner Gonzales is one of its majority shareholders. Sometime in 1978, Lopez submitted a proposal relative to the the reduction of employees with provision for their gratuity pay. The proposal was deliberated upon and approved in a special meeting of the board of directors. It appears that petitioner corporation approved two (2) resolutions providing for the gratuity pay of its employees. Private respondents were the retained employees of the Corporation. In a letter, the private respondents requested for the full payment of their gratuity pay. Their request was granted in a special meeting held. At that, time, however, Gonzales was still abroad. Allegedly, while she was still out of the country, she sent a cablegram to the corporation, objecting to certain matters taken up by the board in her absence, such as the sale of some of the assets of the corporation. Upon her return, she filed a derivative suit with the SEC against majority shareholder Lopez. Notwithstanding the "corporate squabble" between Gonzales and Lopez, the first two (2) installments of the gratuity pay of the private respondents were paid by the corporation. Also, the corporation had prepared the cash vouchers and checks for the third installments of gratuity pay of said private respondents. For some reason, said vouchers were cancelled by Gonzales. Likewise, the first, second and third installments of gratuity pay of the rest of private respondents were prepared but cancelled by Gonzales. Despite private respondents' repeated demands for their gratuity pay, corporation refused to pay the same. Issue:

Issue: Whether a suit brought by withdrawing stockholder against the corporation to enforce payment of the balance due on the consideration for the surrender of his shares and interest involves an intra corporate dispute under the jurisdiction of SEC? Held: Yes. The case involves an intra-corporate controversy because the parties are a stockholder and the corporation. It was an intra-corporate transaction. Respondents offer to resign effective as his shares are sold and paid implied that he would remain a stockholder until his shares and interest were fully paid. Respondents suit against the corporation to enforce BEDECOs promissory note or to compel it to pay his shareholdings is cognizable by the SEC which shall determine whether such payment will not constitute a distributions of corporate assets to a stockholder in preference over creditors of the corporation. The SEC has jurisdiction to investigate whether the Corporation has unrestricted earnings (trust fund doctrine) to cover the payment of the shares, and whether the purchases is for a legitimate corporate purpose as provided in Sections 41 and 122 of the Corp. Code. which should be deemed written into the agreement between the Corporation and the stockholders even if there is no express reference to them in the promissory

note.
Sec. 41. Power to acquire own shares. - A stock corporation shall have the power to purchase or acquire its own shares for a legitimate corporate purpose or purposes, including but not limited to the following cases: Provided, That the corporation has unrestricted retained earnings in its books to cover the shares to be purchased or acquired: 1. To eliminate fractional shares arising out of stock dividends; 2. To collect or compromise an indebtedness to the corporation, arising out of unpaid subscription, in a delinquency sale, and to purchase delinquent shares sold during said sale; and 3. To pay dissenting or withdrawing stockholders entitled to payment for their shares under the provisions of this Code. (n) Trust Fund Doctrine means that the capital stock, property and other assets of a corporation are regarded as equity in trust for the payment of corporate creditors.

81. De la Rama, et al. vs Ma-ao Sugar Central, et al.

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Whether the corporation is bound to grant its employees gratuity pay despite the lack of notice to a board director during the meeting wherein the said resolution was passed Held: YES. As a general rule, a corporation through its board of directors should act in the manner and within the formalities prescribed by its charter or by the general law. Thus, directors must act as a body in a meeting called pursuant to the law or corporations by- laws, otherwise any action may be questioned by any objecting stockholder. However, an action of the board of directors during a meeting, which was illegal for lack of notice may be ratified either expressly, by the action of the directors in subsequent legal meeting or impliedly by the corporations subsequent course of conduct. Thus, a director who was not notified of a board meeting is precluded from questioning the validity of the resolution granting gratuity pay to employee approved at that meeting if she later on acquiesced to it by signing the vouchers for the payment of the gratuity pay.

There is nothing against one corporation being represented by another person, natural or juridical, in a suit in court. The contention that Gregorio Araneta Inc. cannot act as managing partner for plaintiff on the theory that it is illegal for two corporations to enter into a partnership is without merit, for the true rule is that though a corporation has no power into a partnership, it may nevertheless enter into a joint venture with another where the nature of that venture is in line with the business authorized by its charter.

84. Montelibano et al. v. Bacolod-Murcia Milling Company G.R. No. L-15092 May 18, 1962 Facts: Plaintiffs-appellants, Alfredo Montelibano, Alejandro Montelibano, and the Limited co-partnership Gonzaga and Company, had been and are sugar planters adhered to the defendant-appellee's sugar central mill under identical milling contracts. The contracts were stipulated to be in force for 30 years and that the resulting product should be divided in the ratio of 45% for the milland 55% for the planters. It was later proposed to execute amended milling contracts, increasing the planters' share to 60% of the manufactured sugar and resulting molasses, besides other concessions, but extending the operation of the milling contract from the original 30 years to 45 years. The Board of Directors of the appellee Bacolod-Murcia Milling Co., Inc., adopted a resolution granting further concessions to theplanters over and above those contained in the printed Amended Milling Contract. Appellants signed and executed the printed Amended Milling Contract but a copy of the resolution was not attached to the printed contract. In 1953, the appellants initiated the present action, contending that three Negros sugar centrals had already granted increased participation to their planters, and that under paragraph 9 of the abovementioned resolution, the appellee had become obligated to grant similar concessions to the plaintiffs (appellants herein). However, the appellee Bacolod-Murcia Milling Co., Inc., resisted the claim, and defended by urging that the stipulations contained in the resolution were made without consideration; that the resolution in question was, therefore, null and void ab initio, being in effect a donation that was ultra vires and beyond the powers of the corporate directors to adopt. After trial, the court below rendered judgment upholding the stand of the defendant Milling company, and dismissed the complaint. Thereupon, plaintiffs duly appealed to this Court. Issue: Whether or not the resolution is valid and binding between the corporation and planters. Held: The Supreme Court held in the affirmative. There can be no doubt that the directors of the appellee company had authority to modify the proposed terms of the Amended Milling Contract for the purpose of making its terms more acceptable to the other contracting parties. The rule is that It is a question, therefore, in each case of the logical relation of the act to the corporate purpose expressed in the charter. If that act is one which is lawful in itself, and not otherwise prohibited, is

83. J. M. TUASON & CO., INC., represented by it Managing PARTNER, GREGORIA ARANETA, INC., plaintiff-appellee, -versus- QUIRINO BOLAOS, defendant-appellant. FACTS: This was an action to recover possession of registered land situated in barrio Tatalon, Quezon City. The plaintiff was represented by a corporation, the law firm Araneta & Araneta. Defendant, in his answer, sets up prescription and title in himself thru "open, continuous, exclusive and public and notorious possession (of land in dispute) under claim of ownership, adverse to the entire world by defendant and his predecessor in interest" from "time in-memorial". The answer further alleges that registration of the land in dispute was obtained by plaintiff or its predecessors in interest thru "fraud or error and without knowledge (of) or interest either personal or thru publication to defendant and/or predecessors in interest." The answer therefore prays that the complaint be dismissed with costs and plaintiff required to reconvey the land to defendant or pay its value. After trial, the lower court rendered judgment for plaintiff, declaring defendant to be without any right to the land in question and ordering him to restore possession thereof to plaintiff and to pay the latter a monthly rent of P132.62 from January, 1940, until he vacates the land, and also to pay the costs. ISSUE: WON the case should be dismissed on the ground that the case was not brought by the real property in interest HELD: No.

there is nothing to the contention that the present action is not brought by the real party in interest, that is, by J. M. Tuason and Co., Inc. What the Rules of Court require is that an action be brought in the name of, but not necessarily by, the real party in interest. (Section 2, Rule 2.) The complaint is signed by the law firm of Araneta and Araneta, "counsel for plaintiff" and commences with the statement "comes now plaintiff, through its undersigned counsel." It is true that the complaint also states that the plaintiff is "represented herein by its Managing Partner Gregorio Araneta, Inc.", another corporation

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done for the purpose of serving corporate ends, and is reasonably tributary to the promotion of those ends, in a substantial, and not in a remote and fanciful sense, it may fairly be considered within charter powers. The test to be applied is whether the act in question is in direct and immediate furtherance of the corporation's business, fairly incident to the express powers and reasonably necessary to their exercise. If so, the corporation has the power to do it; otherwise, not. As the resolution in question was passed in good faith by the board of directors, it is valid and binding, and whether or not it will cause losses or decrease the profits of the central, the court has no authority to review them. It is a well-known rule of law that questions of policy or of management are left solely to the honest decision of officers and directors of a corporation, and the court is without authority tosubstitute its judgment of the board of directors; the board is thebusiness manager of the corporation, and so long as it acts in good faith its orders are not reviewable by the courts. Hence, the appellee Bacolod-Murcia Milling Company is, under the terms of its Resolution, duty bound to grant similar increases to plaintiffs-appellants herein. #85: Pirovano vs. The De La Rama Steamship Co. [G.R. No. L-5377, December 29, 1954] Facts: Enrico Pirovano was the President and General Manager of the De la Rama Steamship Company. Early in 1941 the company insured the life of said Enrico Pirovano in various Philippine andAmerican Life Insurance companies. Enrico Pirovano was largely responsible for the rapid and very successful development of the activities of the company. He was killed by the Japanese in Manila sometime in 1944 leaving as his only heirs four minor children. In view of the fact that Enrico Pirovano left practically nothing to his heirs, the current President of De la Rama Steamship proposed that it is but fit and proper that the company which owes so much to the deceased should make some provision for his children. He proposed that out of the proceeds of the insurance policies the sum of P400,000 be set aside for Pirovanos minor children, said sum of money to be convertible into 4,000 shares of the stock of the Company, at par, or 1,000 shares for each child. A resolution was adopted to carry out the proposal and submitted to the stockholders of the De la Rama company at a meeting properly convened, and on that same date the same was duly approved. Sometime in March 1950, the President of the corporation, Sergio Osmea, Jr., inquired to the Securities and Exchange Commissionasking for opinion regarding the validity of the donation of the proceeds of the insurance policies to the Pirovano children. SEC rendered its opinion that the donation was void because the corporation could not dispose of its assets by gift and therefore the corporation acted beyond the scope of its corporate powers. In 1951, in view of the failure of compliance with the conditions to which the above donation was made subject, and in view of the opinion of the SEC Commissioner, the majority of the stockholders' voted to revoke the resolution approving the donation to the Pirovano children. The minor children of the late Enrico Pirovano, represented by their mother and guardian, Estefania demanded the payment of the credit due them, amounting to P564,980.89, but the company refused to pay. Thus, they instituted an action in the Court of First Instance of Rizal. Issue: Can defendant corporation give by way of donation the proceeds of said insurance policies to the minor children of the late Enrico Pirovano under the law or its articles of corporation, or is that donation an ultra vires act? Held: After a careful perusal of the provisions of the articles of incorporation of the De la Rama company, we find that the corporation was given broad and almost unlimited powers to carry out the purposes for which it was organized among them, (1) "Toinvest and deal with the moneys of the company not immediately required, in such manner as from time to time may be determined" and, (2) "to aid in any other manner any person, association, or

corporation of which any obligation or in which any interest is held by this corporation or in the affairs or prosperity of which this corporation has a lawful interest." The world deal is broad enough to include any manner of disposition, and refers to moneys not immediately required by the corporation, and such disposition may be made in such manner as from time to time may be determined by the corporations. The donation in question undoubtedly comes within the scope of this broad power for it is a fact appearing in the evidence that the insurance proceeds were not immediately required when they were given away. Granting arguendo that the donation given by Pirovano children is outside the scope of the powers of the defendant corporation, or the scope of the powers that it may exercise under the law, or it is anultra vires act, still it may said that the same can not be invalidated, or declared legally ineffective for the reason alone, it appearing that the donation represents not only the act of the Board of Directors but of the stockholders themselves as shown by the fact that the same has been expressly ratified in a resolution duly approved by the latter. By this ratification, the infirmity of the corporate act, it may has been obliterated thereby making the act perfectly valid and enforceable. This is specially so if the donation is not merely executory but executed and consummated and no creditors are prejudice, or if there are creditors affected, the latter has expressly given their confirmity. A distinction should be made between corporate acts or contracts which are illegal and those which are merely ultra vires. The former contemplates the doing of an act which is contrary to law, morals, or public policy or public duty, and are, like similar transactions between the individuals void. They cannot serve as basis of a court action, nor require validity. ultra vires acts on the other hand, or those which are not illegal and void ab initio, but are merely within are not illegal and void ab initio, but are not merely within the scope of the articles of incorporation, are merely voidable and may become binding and enforceable when ratified by the stockholders. Said donation, even if ultra vires in the supposition we have adverted to, is not void, and if voidable its infirmity has been cured by ratification and subsequent acts of the defendant corporation. The defendant corporation, therefore, is now prevented or estopped from contesting the validity of the donation.

#86 LUNETA MOTOR COMPANY vs. A.D. SANTOS, INC., ET AL

FACTS:
Concepcion obtained a loan and made his certificate of public convenience (to operate a taxicab service of 27 unit). And subsequently contracted another loan with RFC(with the same certificate as security) to secure the payment of the first. The certificate was later sold to Benitez who resold it to Rodi Taxicab Company. Both sales were made with assumption of the mortgage in favor of the RFC, and were also approved provisionally by the Commission, subject to petitioner's lien. Petitioner filed an action to foreclose the chattel mortgage by failure to pay the loan While the above case was pending, the RFC also instituted foreclosure proceedings on its second chattel mortgage, and as a result of the decision in its favor therein rendered, the certificate of public convenience was sold at public auction in favor of Amador D. Santos. Santos immediately applied with the Commission for the approval of the sale, and the same was approved. On June 9, 1958 the Court of First Instance of Manila rendered judgment and ordered that the certificate of public convenience be sold at public. Accordingly, said certificate was sold at public auction to petitioner, and six days

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Corporation Law

07.25.2012 CFI Ruled in favor of the plaintiff. ISSUE:

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thereafter the Sheriff of the City of Manila issued in its favor the corresponding certificate of sale. Thereupon petitioner filed the application mentioned heretofore for the approval of the sale. In the meantime and before his death, Amador D. Santos sold and transferred all his rights and interests in the certificate of public convenience in question in favor of the now respondent A.D. Santos, Inc., who opposed petitioner's application. The respondent Commission, after considering the memoranda submitted by the parties, rendered the appealed decision sustaining the first ground that under petitioner's articles of incorporation it had no authority to engage in the taxicab business or operate as a common carrier, and that, is a result, it could not acquire by purchase the certificate of public convenience referred to above. ISSUE: W Petitioner can engage into taxicab business where its AOI purpose is to engage in transportation in waters only? It is not denied that under Section 13 (5) of the Corporation Law, a corporation created thereunder may purchase, hold, etc., and otherwise deal in such real and personal property is the purpose for which the corporation was formed may permit, and the transaction of its lawful business may reasonably and necessarily require. SCfinds nothing in the legal provision and the provisions of petitioner's articles of incorporation relied upon that could justify petitioner's contention in this case. To the contrary, they are precisely the best evidence that it has no authority at all to engage in the business of land transportation and operate a taxicab service. That it may operate and otherwise deal in automobiles and automobile accessories; that it may engage in the transportation of persons by water does not mean that it may engage in the business of land transportation an entirely different line of business. If it could not thus engage in the line of business, it follows that it may not acquire an certificate of public convenience to operate a taxicab service, such as the one in question, because such acquisition would be without purpose and would have no necessary connection with petitioner's legitimate business.

Whether or not the adopted resolution is ultra vires which may render the company liable as a guarantor only?

RULING:

87. Republic vs. Acoje Mining Company FACTS: Acoje Mining Company, Inc. wrote the Director of Posts requesting the opening of a post, telegraph and money order offices at its mining camp at Sta. Cruz, Zambales, to service its employees and their families that were living in said camp. Acting on the request, the Director of Posts replied that said request will be granted on the following conditions: that the company will provide free quarters, essential equipment and will assign a responsible employee to perform the duties of a postmaster without compensation from Director of Posts and that "In cases where a post office will be opened under circumstances similar to the present, it is the policy of this office to have the company assume direct responsibility for whatever pecuniary loss may be suffered by the Bureau of Posts by reason of any act of dishonesty, carelessness or negligence on the part of the employee of the company who is assigned to take charge of the post office." The Board of Director pass a resolution in compliance with the requirements set by the Director of Posts thus a post office branch was opened in the camp, with Sanchez, employee of Acoje as postmaster. Five years after, the postmaster went on three-day leave and never returned. When accounts were checked, a shortange of Php13,867 was found. The government filed the an action to recover the shortage fund from the company. However, the company denied liability for said amount contending that the resolution of the board of directors wherein it assumed responsibility for the act of the postmaster is ultra vires, and in any event its liability under said resolution is only that of a guarantor who answers only after the exhaustion of the properties of the principal, aside from the fact that the loss claimed by the plaintiff is not supported by the office record.

The contention that the resolution adopted by the company dated August 31, 1949 is ultra vires in the sense that it has no authority to act on a matter which may render the company liable as a guarantor has no factual or legal basis. it should be noted that the opening of a post office branch at the mining camp of appellant corporation was undertaken because of a request submitted by it to promote the convenience and benefit of its employees. it is evident that the company cannot now be heard to complain that it is not liable for the irregularity committed by its employee upon the technical plea that the resolution approved by its board of directors is ultra vires. The least that can be said is that it cannot now go back on its plighted word on the ground of estoppel. The claim that the resolution adopted by the board of directors of appellant company is an ultra vires act cannot also be entertained it appearing that the same covers a subject which concerns the benefit, convenience and welfare of its employees and their families. While as a rule an ultra vires act is one committed outside the object for which a corporation is created as defined by the law of its organization and therefore beyond the powers conferred upon it by law there are however certain corporate acts that may be performed outside of the scope of the powers expressly conferred if they are necessary to promote the interest or welfare of the corporation. Thus, it has been held that "although not expressly authorized to do so a corporation may become a surety where the particular transaction is reasonably necessary or proper to the conduct of its business,"and here it is undisputed that the establishment of the local post office is a reasonable and proper adjunct to the conduct of the business of appellant company. .. Even assuming arguendo that the resolution in question constitutes an ultra vires act, the same however is not void for it was approved not in contravention of law, customs, public order or public policy. The term ultra vires should be distinguished from an illegal act for the former is merely voidable which may be enforced by performance, ratification, or estoppel, while the latter is void and cannot be validated. It being merely voidable, an ultra vires act can be enforced or validated if there are equitable grounds for taking such action. Here it is fair that the resolution be upheld at least on the ground of estoppel.: The weight of authority in the state courts is to the effect that a transaction which is merely ultra vires and not malum in se or malum prohibitum, is, if performed by one party, not void as between the parties to all intents and purposes, and that an action may be brought directly on the transaction and relief had according to its terms. This rule is based on the consideration that as between private corporations, one party cannot receive the benefits which are embraced in total performance of a contract made with it by another party and then set up the invalidity of the transaction as a defense." where the ultra vires transaction has been executed by the other party and the corporation has received the benefit of it, the law interposes an estoppel, and will not permit the validity of the

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Corporation Law

07.25.2012 89. HARDEN v BENGUET CONSOLIDATED MINING COMPANY G.R. No. L-37331, March 18, 1933

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transaction or contract to be questioned, and this is especially true where there is nothing in the circumstances to put the other party to the transaction on notice that the corporation has exceeded its powers in entering into it and has in so doing overstepped the line of corporate privileges.

The decision appealed from is affirmed. 88. CRISOLOGO-JOSE VS. CA FACTS: The president of Movers Enterprises, to accommodate its clients Spouses Ong, issued a check in favor of petitioner Crisologo-Jose. This was in consideration of a quitclaim by petitioner over a parcel of land, which the GSIS agreed to sell to spouses Ong, with the understanding that upon approval of the compromise agreement, the check will be encashed accordingly. As the compromise agreement wasn't approved during the expected period of time, the aforesaid check was replaced with another one for the same value. Upon deposit though of the checks by petitioner, it was dishonored. This prompted the petitioner to file a case against Atty. Bernares and Santos for violation of BP22. Meanwhile, during the preliminary investigation, Santos tried to tender a cashiers check for the value of the dishonored check but petitioner refused to accept such. This was consigned by Santos with the clerk of court and he instituted charges against petitioner. The trial court held that consignation wasn't applicable to the case at bar but was reversed by the CA. ISSUE: Whether or not the accommodation party is the Mover Enterprises Inc., thus, the corporation is liable?

FACTS: Benguet Consolidated Mining Co. was organized in June, 1903, as a sociedad anonima in conformity with the provisions of Spanish law. Balatoc Mining Co. was organized in December 1925, as a corporation, in conformity with the provisions of the Corporation Law (Act No. 1459). Both were organized for mining of gold and their respective properties are located only a few miles apart in Benguet. Balatoc capital stock consists of one million shares of the par value of one peso (P1) each. When the Balatoc was first organized, its properties were largely undeveloped. To improve its operations, the companys committee approached A. W. Beam, then president and general manager of the Benguet Company, to secure the capital necessary to the development of the Balatoc property. A contract was entered into wherein Benguet will (1) construct a milling plant for the Balatoc mine, of a capacity of 100 tons of ore per day, and with an extraction of at least 85 per cent of the gold content; (2) erect an appropriate power plant. In return, Benguet will receive from Balatoc shares of a par value of P600,000. The total cost incurred by Benguet in developing Balatoc was P1,417,952.15. A certificate for 600,000 shares of the stock of the Balatoc Company was given to Benguet and the excess value was paid to Benguet by Balatoc in cash. Due to the improvements made by Benguet, the value of shares of Balatoc increased in the market (from P1 to more than P11) and dividends enriched its stockholders. Harden, the owner of thousands of shares of Balatoc, questioned the transfer of 600,000 shares to Benguet with the success of the development. ISSUE: WON it is unlawful for Benguet Company to hold any interest in a mining corporation. RULING: The defendant Benguet Company has committed no civil wrong against the plaintiffs, and if a public wrong has been committed, the directors of the Balatoc Company, and the plaintiff Harden himself, were the active inducers of the commission of that wrong. The contract, supposing it to have been unlawful in fact, has been performed on both sides, by the building of the Balatoc plant by the Benguet Company and the delivery to the latter of the certificate of 600,000 shares of the Balatoc Company. There is no possibility of really undoing what has been done. Nobody would suggest the demolition of the mill. The Balatoc Company is secure in the possession of that improvement, and talk about putting the parties in status quo ante by restoring the consideration with interest, while the Balatoc Company remains in possession of what it obtained by the use of that money, does not quite meet the case. Also, to mulct the Benguet Company in many millions of dollars in favor of individuals who have not the slightest equitable right to that money in a proposition to which no court can give a ready assent. Inasmuch as the Corporation Law contains, in section 190 (A), provisions fully penalizing the violation of subsection 5 of section 13 of Act No. 1459, - which prohibits the acquisition by one mining corporation of any interest in another, - and inasmuch as these provisions have been enacted in the exercise of the general police powers of the Government, it results that, where one mining corporation acquires a prohibited interest in another such corporation, the shareholders of the latter cannot maintain an action to annul the contract by which such interest was acquired. The remedy must be sought in a criminal proceeding or quo warranto action, under section 190 (A), instituted by the Government. Until thus assailed in a direct proceeding the contract by which the interest was acquired will be treated as valid, as between the parties. 90. Carlos v. Mindoro Sugar

RULING: Petitioner averred that it is not Santos who is the accommodation party to the instrument but the corporation itself. But assuming arguendo that the corporation is the accommodation party, it cannot be held liable to the check issued in favor of petitioner. The rule on accommodation party doesn't include or apply to corporations which are accommodation parties. This is because the issue or indorsement of another is ultra vires. Hence, one who has taken the instrument with knowledge of the accommodation nature thereof cannot recover against a corporation where it is only an accommodation party. If the form of the instrument, or the nature of the transaction, is such as to charge the indorsee with the knowledge that the issue or indorsement of the instrument by the corporation is for the accommodation of another, he cannot recover against the corporation thereon.

By way of exception, an officer or agent of a corporation shall have the power to execute or indorse a negotiable paper in the name of the corporation for the accommodation of a third party only is specifically authorized to do so. Corollarily, corporate officers have no power to execute for mere accommodation a negotiable instrument of the corporation for their individual debts and transactions arising from or in relation to matters in which the corporation has no legitimate concern. Since such accommodation paper cannot be enforced against the corporation, the signatories thereof shall be personally liable therefore, as well as the consequences arising from their acts in connection therewith.

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FACTS: This is an action to recover the value of 4 bonds issued by Mindanao Sugar Company and placed in trust with the Philippine Trust Company. Mindoro Sugar Co. is a corporation incorporated here in the Philippines. On the other hand, Phil. Trust Company is another domestic corporation, the principal purpose of which is to engage in the trust business. The Board of Directors of Phil. Trust adopted a resolution authorizing its president, among others, to purchase at par and in the name and for the use of the trust corporation all or such part as he may deem expedient, of the bonds in the value of P3,000,000 that Mindoro was about to issue, and to resell them, with or without the guarantee of said trust corporation, at a price not less than par, and to guarantee to the PNB the payment of the indebtedness to said bank by Mindoro up to P2,000,000. Pursuant to this, Mindoro executed in favor of Phil. Trust Co. the deed of trust, transferring all of its property to it in consideration of the bonds it had issued to the value of P3,000,000. Phil. Trust sold 13 bonds to a certain Ramon Diaz at a net profit of P100 per bond. The four bonds in dispute are included here. Phil. Trust paid appellant upon presentation of the coupons the stipulated interest until when it stopped payments when it alleged that it did not deem itself bound to pay such interest or to redeem the obligation because the guarantee given for the bonds was illegal and void. Hence this appeal by the appellant. ISSUE: Whether the lower court erred in saying that the Phil. Trust Co. has no power to guarantee the obligation of another juridical personality, for value received. RULING: Yes. Phil. Trust although secondarily engaged in banking, was primarily organized as a trust corporation with full power to acquire personal property such as the bonds in question according to the Corporation Law. Thus, being authorized to acquire the bonds, it was given implied power to guarantee them in order to place them upon the market under better, more advantageous conditions, and thereby secure the profit derived from their sale. A corporation which has power by its charter to issue its own bonds has power to guarantee the bonds of another corporation, which has been taken in payment of its own debt, the guaranty being given to enable it to dispose of the bond to better advantage. And so, guarantee of payment of bonds taken by a loan and trust company in the ordinary course of its business, made in connection with their sale, are not ultra vires, and are binding. Also, although it is not clear that Mindoro transferred the bonds to Phil. Trust, nevertheless, the president of Phil. Trust was expressly authorized to purchase all or some of the bonds and to guarantee them. There are other considerations leading to the same conclusion that Phil. Trust didn't acquire the bonds but just guaranteed them. In such a case, the guarantee would be valid and Phil. Trust would be bound to pay the Carlos their value with the accrued interest. It is not, however ultra-vires for a corporation to enter into contracts of guaranty or suretyship where it does so in the legitimate furtherance of its purposes and business. And it is well settled that where a corporation acquires commercial paper or bonds in the legitimate transaction of its business it may sell them, and in furtherance of such a sale it may, in order to make them the more readily marketable indorse or guarantee their payment. When a contract is not on its face necessarily beyond the scope of the power of the corporation by which it was made, it will, in the absence of proof to the contrary, be presumed valid. Corporations are presumed to contract within their

powers. The doctrine of ultra vires, when invoked for or against a corporation, should not be allowed to prevail where it would defeat the ends of justice or work as a legal wrong. 91. PNB vs CA G.R. No. L-27155 May 18, 1978 PHILIPPINE NATIONAL BANK, petitioner, vs. THE COURT OF APPEALS, RITA GUECO TAPNIO, CECILIO GUECO and THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC., respondents. ANTONIO, J.: Facts: plaintiff, Philam gen as surety, issued a bond in favor of Tapnio, to secure the latters obligation to PNB 2371.79 plus 12% interest. Philamgen paid the said amount to PNB and seek indemnity from Tapnio. Tapnio refused to pay alleging that he was not liable to the bank because due to the negligence of the latter the contract of lease w/ Tuazon was rescind which amounts to 2800. Tapnio mortgage his standing crops and sugar quota to PNB. Tapnio agreed to leased the sugar quota, in excess of his need to Tuazon which was approved by the branch and vice president of the PNB in the amount of P2.80 per picul. However, the banks board of directors disapproved the lease, stating that the amount should be P3.00 per picul, its market value. Tuazon ask for reconsideration to the board which was not acted by the board, so the lease was not consummated resulting to the loss of P2,800, which could have been earned by Tapnio. The Trial court and CA ruled that the bank was liable to Tapnio. Thus this petition Issue : WON PNB is liable to tapnio Held:Yes pnb is liable to Tapnio. PNB argue that it has a right both under its own Charter and under the Corporation Law, to approve or disapprove the said lease of sugar quota and in the exercise of that authority. The SC said that time is of the essence in the approval of the lease of sugar quota allotments, since the same must be utilized during the milling season. There was no proof that there was any other person at that time willing to lease the sugar quota allotment of private respondents for a price higher than P2.80 per picul. Also, Considering that all the accounts of Rita Gueco Tapnio with the Bank were secured by chattel mortgage on standing crops, assignment of leasehold rights and interests on her properties, and surety bonds and that she had apparently "the means to pay her obligation to the Bank, there was NO REASONABLE BASIS for the Board of Directors of petitioner to have rejected the lease agreement. While petitioner had the ultimate authority of approving or disapproving the proposed lease since the quota was mortgaged to the Bank, the latter certainly cannot escape its responsibility of observing, for the protection of the interest of private respondents. The law makes it imperative that every person "must in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Certainly, it knew that the agricultural year was about to expire, that by its disapproval of the lease private respondents would be unable to utilize the sugar quota in question.

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Under Article 21 of the New Civil Code, "any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage." This grants adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to specifically provide in the statutes. #92 G.R. No. L-35262 March 15, 1930 PEOPLE VS TAN BOON KONG FACTS: FACTS:

Issue: Whether petitioner Jose O. Sia, having only acted for and in behalf of the Metal Manufacturing Company of the Philippines as President thereof in dealing with the complainant, the Continental Bank, he may be liable for the crime charged. 94. ABS-CBN vs CA G.R. No. 128690 January 21, 1999 FACTS: In 1990, ABS-CBN and Viva executed a Film Exhibition Agreement whereby ABS-CBN was given the right of first refusal to the next twenty-four (24) Viva films for TV telecast under such terms as may be agreed upon by the parties hereto, provided, however, that such right shall be exercised by ABS-CBN from the actual offer in writing. Consequently, Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president Charo SantosConcio, a list of three(3) film packages (36 titles) from which ABS-CBN may exercise its right of first refusal under the afore-said agreement. ABS CBN rejected said list. On February 27, 1992, Del Rosario approached Ms. Concio, with a list consisting of 52 original movie titles, as well as 104 re-runs from which ABS-CBN may choose another 52 titles, or a total of 156 titles, proposing to sell to ABS-CBN airing rights over this package of 52 originals and 52 reruns for P60,000,000.00. The package was rejected by ABS-CBN. On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS discussed the terms and conditions of Vivas offer to sell the 104 films. On April 07, 1992, defendant Del Rosario received through his secretary, a handwritten note from Ms. Concio which reads: Heres the draft of the contract. I hope you find everything in order, to which was attached a draft exhibition agreement, a counter-proposal covering 53 films for a consideration of P35 million. The said counterproposal was however rejected by Vivas Board of Directors. On April 29, 1992, Viva granted RBS the exclusive right to air 104 Viva-produced and/or acquired films including the fourteen (14) films subject of the present case. ABS-CBN then filed a a complaint for specific performance. RTC rendered a decision in favor of RBS and VIVA and against ABS-CBN, ruling that there was no meeting of minds on the price and terms of the offer. Furthermore, the right of first refusal under the 1990 Film Exhibition Agreement had previously been exercised per Ms. Concios letter to Del Rosario ticking off ten titles acceptable to them, which would have made the 1992 agreement an entirely new contract. Aggrieved by the RTC's decision, ABS-CBN appealed to the Court of Appeals claiming that there was a perfected contract between ABS-CBN and VIVA granting ABS-CBN the exclusive right to exhibit the subject films. Private respondents VIVA and Del Rosario also appealed seeking moral and exemplary damages and additional attorney's fees.

Tan Boon Kong, manager of the Visayan Gen. Supply Co. Inc, engaged in the purchase and sale of sugar "bayon:, copra and other native projects voluntarily made a false (tax)return stating gross sales of only 2,352,761.94 when the true amount is 2,543,303. 44 with a difference of 190,541.50 (1 1/2 sales) resulting to a tax difference of 2,960.12. The question is whether he is liable under Secs. 1458 and 2723 of ACT 2711 (seem to mention only about corporations) the lower decided the offense charged must be regarded as committed by the corporation and not by its officials or agents. ISSUE: W Tan Boon Kong is criminally liable. HELD: YES. A corporation can act only through its officers and agents, and where the business itself involves a violation of the law, the correct rule is that all who participate in it are liable. 93. JOSE O. SIA, petitioner, vs. THE PEOPLE OF THE PHILIPPINES, respondent. Facts: Petitioner was the president and general manager of the Metal Manufacturing of the Philippines, Inc. (MEMAP). His company was in need of raw materials to be imported from abroad, so he applied for a letter of credit to import steel sheets from Mitsui Bussan Kaisha, Ltd. of Tokyo, Japan, the application being directed to the Continental Bank, herein complainant. He obtained delivery of 150 M/T Cold Rolled Steel Sheets valued at P 71,023.60 under a trust receipt agreement under L/C No. 63/109, which cold rolled steel sheets were consigned to the Continental Bank, under the express obligation on the part of the Petitioner that the said steel sheets in trust and selling them and turning over the proceeds of the sale to the Continental Bank. He failed to return the said cold rolled sheets or settled his unpaid accounts thereof despite demands. He was convicted of estafa for defrauding the Continental Bank, a banking institution duly organized and doing business in the City of Manila, hence, this appeal. Petitioner seeks to avoid liability on his theory that the Bank knew all along that he was dealing with him only as an officer of the Metal Company which was the true and actual applicant for the letter of credit and which, accordingly, assumed sole obligation under the trust receipt. The trial court, Solicitor General and Court of Appeals disputed the theory of the Petitioner following the general principle enunciated by the SC in People vs. Tan Boon Kong, 54 Phil. 607, that for crimes committed by a corporation, the responsible officers thereof would personally bear the criminal liability.

CA awarded Moral damages to RBS which was questioned by ABS

ISSUE: Whether moral damages could be granted? HELD: No. 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 call be experienced only by one having a nervous system. The statement in People v. Manero and Mambulao Lumber Co. v. PNB 67 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.

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95. Filipinas Broadcasting Network Inc. vs. Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC-BCCM) [GR 141994, 17 January 2005]

Held: 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. The Court of Appeals cites Mambulao Lumber Co. v. PNB, et al. to justify the award of moral damages. However, the Courts 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, AMECs 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. However, the Court found the award of P300,000 moral damages unreasonable. The record shows that even though the broadcasts were libelous per se, AMEC has not suffered any substantial or material damage to its reputation. Therefore, the Court reduced the award of moral damages from P300,000 to P150,000.

Facts: Expos is a radio documentary program hosted by Carmelo Mel Rima (Rima) and Hermogenes Jun
Alegre (Alegre). Expos is aired every morning over DZRC-AM which is owned by Filipinas Broadcasting Network, Inc. (FBNI). Expos is heard over Legazpi City, the Albay municipalities and other Bicol areas. In the morning of 14 and 15 December 1989, 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 Angelita Ago (Ago), as Dean of AMECs College of Medicine, filed a complaint for damages against FBNI, Rima and Alegre on 27 February 1990. The complaint further alleged that AMEC is a reputable learning institution. With the supposed exposs, FBNI, Rima and Alegre transmitted malicious imputations, and as such, destroyed plaintiffs (AMEC and Ago) reputation. AMEC and Ago included FBNI as defendant for allegedly failing to exercise due diligence in the selection and supervision of its employees, particularly Rima and Alegre. On 18 June 1990, FBNI, Rima and Alegre, through Atty. Rozil Lozares, filed an Answer alleging that the broadcasts against AMEC were fair and true. FBNI, Rima and Alegre claimed that they were plainly impelled by a sense of public duty to report the goings-on in AMEC, [which is] an institution imbued with public interest. Thereafter, trial ensued. During the presentation of the evidence for the defense, Atty. Edmundo Cea, collaborating counsel of Atty. Lozares, filed a Motion to Dismiss on FBNIs behalf. The trial court denied the motion to dismiss. Consequently, FBNI filed a separate Answer claiming that it exercised due diligence in the selection and supervision of Rima and Alegre. FBNI claimed that before hiring a broadcaster, the broadcaster should (1) file an application; (2) be interviewed; and (3) undergo an apprenticeship and training program after passing the interview. FBNI likewise claimed that it always reminds its broadcasters to observe truth, fairness and objectivity in their broadcasts and to refrain from using libelous and indecent language. Moreover, FBNI requires all broadcasters to pass the Kapisanan ng mga Brodkaster sa Pilipinas (KBP) accreditation test and to secure a KBP permit. On 14 December 1992, the trial court rendered a Decision finding FBNI and Alegre liable for libel except Rima. The trial court held that the broadcasts are libelous per se. The trial court rejected the broadcasters claim that their utterances were the result of straight reporting because it had no factual basis. The broadcasters did not even verify their reports before airing them to show good faith. In holding FBNI liable for libel, the trial court found that FBNI failed to exercise diligence in the selection and supervision of its employees. In absolving Rima from the charge, the trial court ruled that Rimas only participation was when he agreed with Alegres expos. The trial court found Rimas statement within the bounds of freedom of speech, expression, and of the press. Both parties, namely, FBNI, Rima and Alegre, on one hand, and AMEC and Ago, on the other, appealed the decision to the Court of Appeals. The Court of Appeals affirmed the trial courts judgment with modification. The appellate court made Rima solidarily liable with FBNI and Alegre. The appellate court denied Agos claim for damages and attorneys fees because the broadcasts were directed against AMEC, and not against her. FBNI, Rima and Alegre filed a motion for reconsideration which the Court of Appeals denied in its 26 January 2000 Resolution. Hence, FBNI filed the petition for review.

Issue: Whether AMEC is entitled to moral damages.