COMMREV SET 1

RISSIENNE M. GAMMAD

JOSIE BERIN and MERLY ALORRO, complainants, vs. JUDGE FELIXBERTO P. BARTE, Municipal
Circuit Trial Court, Hamtic, Antique, respondent.
FACTS:
This is a complaint for grave and serious misconduct filed by Josie Berin and Merly Alorro against Judge
Felixberto P. Barte.
Complainants Josie Berin and Merly Alorro are real estate agents. They allege that sometime during the
last week of January 2001, respondent judge invited them to his office and asked them to look for a
vendor of a lot for sale in Antique because the Manila Mission of the Church of Jesus Christ of Latter Day
Saints, Inc. wanted to buy a site for its church in Antique. Complainants claim that they found a vendor,
Eleanor M. Checa-Santos, who owned a lot consisting of 4,000 square meters, known as Lot 5555-B,
Psd-06-000304 and located in Barrio Caridad, Municipality of Now, Hamtic, Antique, which she was
willing to sell; that they told respondent judge about the lot; that respondent judge informed them
three days later that the Church was willing to pay P2.3 million for the lot; that respondent judge
agreed that complainants would each receive a commission of P100,000.00 in case the sale took place;
and that respondent judge would receive the money from the vendee and then deliver the share of
each of the complainants. Complainants said they wanted to have the agreement in writing, but
respondent judge refused, saying, Do you have no trust in your Judge Barte? This is the reason there is
no written agreement of the transaction between them.
Complainants alleged that the sale was consummated and respondent judge received the purchase
price, but, despite demands made by them for the payment of their commission, respondent judge
gave them only P10,000.00 each, telling them to take it or leave it. Hence, this complaint.
Respondent judge denied the charges against him. He denied that he ever invited the complainants to
his office in January 2001 and told them of the desire of the Church to buy a lot in Antique. According to
him, as early as January 25, 2001, the Church had already purchased the same land described in the
complaint and the vendee had already paid 50% of the sale price to the vendor, as evidenced by a
Closing Certificate showing that the payment took place at the Metrobank, San Jose, Antique Branch on
said date. Complainants said the Deed of Sale was notarized on February 12, 2001.
Respondent judge likewise denied that he agreed to pay complainants P100,000.00 each as
commission for the sale. But he said that, sometime in November 1999, complainant Merly Alorro,
whom he considered his friend, learned from complainant Josie Berin that the lot in question was up for
sale, and Alorro told him about it. Based on such information, respondent judge said he was able to
facilitate the sale of the land after almost two (2) years of hard work. Since he was able to realize some
amount from the sale, he decided to give complainants a share for the information they gave him,
although they never contributed to the success of the transaction. He gave complainant Berin
P7,000.00 and Merly Alorro P12,000.00.
The Office of the Court Administrator (OCA) agrees that respondent judge cannot be held liable for
refusing to honor his obligation under the alleged contract on the ground that the same has no relation
to his official duties as a judge and does not amount either to maladministration or willful intentional
neglect and failure to discharge the duties of a judge. However, it believes that respondent is liable for
violation of Canon 5, Rule 5.02 of the Code of Judicial Conduct and recommends accordingly that he be
fined P5,000.00.
The peoples confidence in the judicial system is founded not only on the competence and diligence of
the members of the bench, but also on their integrity and moral uprightness. He must not only be
honest but also appear to be so. He must not only be a good judge, he must also appear to be a good
person.

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ISSUE: WON the respondent judge committed an impropriety in acting as a broker in the sale of a real
estate, for which he admits receiving a commission.
After the decision in Macariola v. Asuncion, this Court adopted the Code of Judicial Conduct, which took
effect on October 20, 1989, the pertinent provision of which states:
Rule 5.02. A judge shall refrain from financial and business
dealings that tend to reflect adversely on the courts impartiality,
interfere with the proper performance of judicial activities, or
increase involvement with lawyers or persons likely to come
before the court. A judge should so manage investments and
other financial interests as to minimize the number of cases
giving grounds for disqualification.
Subject to the provisions of the preceding rule, a judge may hold and manage investments but should
not serve as an officer, director, manager, advisor, or employee of any business except as director of a
family business of the judge.
As the OCA observed:
By allowing himself to act as agent in the sale of the subject property, respondent judge has increased
the possibility of his disqualification to act as an impartial judge in the event that a dispute involving
the said contract of sale arises. Also, the possibility that the parties to the sale might plead before his
court is not remote and his business dealings with them might [not only] create suspicion as to his
fairness but also to [his ability to] render it in a manner that is free from any suspicion as to its fairness
and impartiality, and also as to the judges integrity (Martinez vs. Gironella, 65 SCRA 245). One who
occupies an exalted position in the administration of justice must pay a high price for the honor
bestowed upon him, for his private as well as his official conduct must at all times be free from the
appearance of impropriety (Jugueta vs. Boncaros, 60 SCRA 27).
WHEREFORE, respondent Judge Felixberto P. Barte is found GUILTY of violation of Canon 5.02 of the
Code of Judicial Conduct and, considering this to be his first offense, is hereby FINED in the amount of
P2,000.00, with the ADMONITION to him to be more discreet and prudent in his private dealings as in
his judicial duties. A repetition of a similar infraction will be sanctioned more severely.

Ching v. Secretary of Justice

G. R. No. 164317, February 6, 2006

FACTS:

Sept-Oct 1980: PBMI, through Ching, Senior VP of Philippine Blooming Mills, Inc. (PBMI), applied
with the Rizal Commercial Banking Corporation (RCBC) for the issuance of commercial Letters of
Credit to finance its importation of assorted goods
RCBC approved the application, and irrevocable Letters of Credit were issued in favor of Ching.
The goods were purchased and DELIVERED in trust to PBMI.
Ching signed 13 trust receipts AS SURETY, acknowledging delivery of the goods, under which,
Ching agreed to hold the goods in trust for RCBC, with authority to sell but not by way of
conditional sale, pledge or otherwise
o In case such goods were sold, to turn over the proceeds thereof as soon as received, to
apply against the relative acceptances and payment of other indebtedness to respondent
bank.

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In case the goods remained unsold within the specified period, the goods were to be
returned to RCBC without any need of demand.
When the trust receipts matured, Ching failed to return the goods to RCBC, or to return their
value amounting to P6,940,280.66 despite demands.
RCBC filed a criminal complaint for ESTAFA against petitioner in the Office of the City Prosecutor
of Manila in relation to Trust Receipts Law (PD 115).
13 Informations were filed against Ching with the RTC Manila
Ching appealed the City Prosecutors resolution finding probable cause to Minister of Justice but
was dismissed
Ching filed an MR which was granted, reversing the resolution and ordering the withdrawal of
the Informations
RCBC file an MR but was denied
RTC granted Chings Motion to Quash Information on the ground that material allegations did not
amount to estafa
In the meantime, the Court rendered judgment in Allied Banking Corporation v. Ordoez, holding
that the penal provision of PD 115 encompasses any act violative of an obligation covered by
the trust receipt; it is not limited to transactions involving goods which are to be sold (retailed),
reshipped, stored or processed as a component of a product ultimately sold. The Court also
ruled that "the non-payment of the amount covered by a trust receipt is an act violative of the
obligation of the entrustee to pay."
Feb 1995: RCBC re-filed the criminal complaint for estafa against petitioner before the Office of
the City Prosecutor of Manila
December 8, 1995: City Prosecutor found NO probable cause to charge petitioner with violating
P.D. No. 115, as petitioners liability was only civil, not criminal, having signed the trust receipts
as surety
RCBC appealed the resolution to the Department of Justice (DOJ) via petition for review
On July 13, 1999: DOJ reversed the assailed resolution of the City Prosecutor, holding that:
o execution of said receipts by Ching is enough to indict him as the official responsible for
violation of P.D. No. 115
o Ching could not contend that P.D. No. 115 covers only goods ULTIMATELY DESTINED FOR
SALE, as this issue had already been settled in Allied Banking Corporation v. Ordoez
o The Justice Secretary further stated that Ching bound himself under the terms of the
trust receipts not only as a corporate official of PBMI but also as its surety; hence, he
could be proceeded against in two (2) ways: first, as surety as determined by the
Supreme Court in its decision in Rizal Commercial Banking Corporation v. Court of
Appeals; and second, as the corporate official responsible for the offense under P.D. No.
115, via criminal prosecution. Moreover, P.D. No. 115 explicitly allows the prosecution of
corporate officers "without prejudice to the civil liabilities arising from the criminal
offense." Thus, according to the Justice Secretary, following Rizal Commercial Banking
Corporation, the civil liability imposed is clearly separate and distinct from the criminal
liability of the accused under P.D. No. 115.
City Prosecutor filed 13 Informations against Ching for violation of Trust Receipts Law
Ching filed an MR to the DOJ Secretary but was denied
Ching filed a petition for certiorari, prohibition and mandamus with the CA
April 22, 2004: CA dismissed the petition for lack of merit and on procedural grounds. On the
merits of the petition, the CA ruled that the assailed resolutions of the Secretary of Justice were
correctly issued for the following reasons:
o petitioner, being the Senior Vice-President of PBMI and the signatory to the trust receipts,
is criminally liable for violation of P.D. No. 115;
o the issue raised by the petitioner, on whether he violated P.D. No. 115 by his actuations,
had already been resolved and laid to rest in Allied Bank Corporation v. Ordoez; and,
o petitioner was estopped from raising the City Prosecutors delay in the final disposition of
the preliminary investigation because he failed to raise it in the DOJ.
Ching filed a petition for certiorari to the Supreme Court, insisting that appellate courts ruling is
erroneous because:
o

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RISSIENNE M. GAMMAD

o
o
o
o

the transaction between PBMI and respondent bank is NOT a trust receipt transaction;
he entered into the transaction and was sued in his capacity as PBMI Senior VicePresident;
he NEVER RECEIVED the goods as an entrustee for PBMI; hence, could not have
committed any dishonesty or abused the confidence of respondent bank; and,
PBMI acquired the goods and used the same in operating its machineries and equipment
and not for resale.

ISSUE: WON Ching can be held criminally liable?

RULING:
YES, Ching can be held criminally liable for violation of the Trust Receipts Law and estafa, although
petitioner signed the trust receipts merely as Senior Vice-President of PBMI and had no physical
possession of the goods.

Piercing the Veil of Separate Corporate Personality, Ching can be held criminally liable while the
corporation is exculpated from criminal liability, as an exception to the Doctrine of Limited
Capacity/Liability
The penalty clause of the law, Section 13 of P.D. No. 115 reads:
Section 13. Penalty Clause. The failure of an entrustee to turn over the proceeds
of the sale of the goods, documents or instruments covered by a trust receipt to the
extent of the amount owing to the entruster or as appears in the trust receipt or to return
said goods, documents or instruments if they were not sold or disposed of in accordance
with the terms of the trust receipt shall constitute the crime of estafa, under Art. 315(1)
(b) of the Revised Penal Code. If the violation or offense is committed by a corporation,
partnership, association or other juridical entities, the penalty provided for in this Decree
shall be imposed upon the directors, officers, employees or other officials or persons
therein responsible for the offense, without prejudice to the civil liabilities arising from
the criminal offense.
The crime defined in the Trust Receipts Law is malum prohibitum but is classified as estafa with
abuse of confidence. It may be committed by a corporation or other juridical entity or by natural
persons. However, the penalty for the crime is IMPRISONMENT for the periods provided in said Article
315. Why is this highlighted?
As a rule, a CORPORATION CANNOT BE ARRESTED and imprisoned because it is an invisible and
artificial being; hence, CANNOT BE PENALIZED for a crime punishable BY IMPRISONMENT. Thus, since a
corporation CANNOT be proceeded against criminally because it CANNOT commit crime in which
personal violence or malicious intent is required, criminal action is limited to the corporate agents guilty
of an act amounting to a crime and never against the corporation itself. This is even embodied in the
Penalty Clause of the Trust Receipts Law. The rationale is that such officers or employees are vested
with the authority and responsibility to devise means necessary to ensure compliance with the law and,
if they fail to do so, are held criminally accountable; thus, they have a responsible share in the
violations of the law.
As an EXCEPTION to the rule, however, a corporation may be charged and prosecuted for a
crime IF THE IMPOSABLE PENALTY IS FINE. Even if the statute prescribes both fine and imprisonment as
penalty, a corporation may be prosecuted and, if found guilty, may be FINED.
When a criminal statute designates an act of a corporation a crime and prescribes punishment
therefor, it creates a criminal offense which can be committed only by the corporation. But when a

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penal statute does not expressly apply to corporations, it does not create an offense for which a
corporation may be punished.
On the other hand, if the State, by statute, defines a crime that may be committed by a
corporation but prescribes the penalty therefor to be suffered by the officers, directors, or employees of
such corporation or other persons responsible for the offense, such as the Trust Receipts Law in its
Penalty Claus, only such individuals will suffer such penalty. Corporate officers or employees, through
whose act, default or omission the corporation commits a crime, are themselves individually guilty of
the crime. The principle applies to:

those corporate agents who themselves commit the crime and

to those, who, by virtue of their managerial positions or other similar relation to the
corporation, could be deemed responsible for its commission, if by virtue of their
relationship to the corporation, they had the power to prevent the act. Benefit is not an
operative fact.

In this case, Ching signed the trust receipts in question. The fact that he did not receive the
goods is immaterial; execution of such receipts would suffice. He cannot, thus, hide behind the cloak of
the separate corporate personality of PBMI. In the words of Chief Justice Earl Warren, a corporate officer
cannot protect himself behind a corporation where he is the actual, present and efficient actor.

The transaction between PBMI, through Ching, and RCBC is a trust receipt transaction
Trust Receipts Law defines a trust receipt transaction as any transaction by and between a the
entruster and entrustee, whereby the entruster, who owns or holds absolute title or security interests
over certain specified goods, documents or instruments, releases the same to the possession of the
entrustee upon the latters execution and delivery to the entruster of a signed document called a "trust
receipt" wherein the entrustee binds himself to hold the designated goods, documents or instruments
in trust for the entruster and to sell or otherwise dispose of the goods, documents or instruments with
the obligation to turn over to the entruster the proceeds thereof to the extent of the amount owing to
the entruster or as appears in the trust receipt or the goods, documents or instruments themselves if
they are unsold or not otherwise disposed of, in accordance with the terms and conditions specified in
the trust receipt
The transaction between Ching and RCBC falls under the trust receipt transactions envisaged in
PD 115. RCBC imported the goods and entrusted the same to PBMI under the trust receipts signed by
Ching, as entrustee, with RCBC as entruster.
The Court likewise ruled on Chings contention that PD 115 covers only goods ULTIMATELY
DESTINED FOR SALE. In Allied Banking Corporation v. Ordoez, the Court held that the law also applies
to goods used by the entrustee in the operation of its machineries and equipment. The non-payment of
the amount covered by the trust receipts or the non-return of the goods covered by the receipts, if not
sold or otherwise not disposed of, violate the entrustees obligation to pay the amount or to return the
goods to the entruster.

G.R. No. 141994. January 17, 2005

FILIPINAS BROADCASTING NETWORK, INC., petitioner, vs. AGO MEDICAL AND EDUCATIONAL
CENTER-BICOL CHRISTIAN COLLEGE OF MEDICINE, (AMEC-BCCM) and ANGELITA F.
AGO, respondents.
Facts:

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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
expose, 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 14 December 1992, the trial court rendered a Decision ] finding FBNI and Alegre liable for libel
except Rima. In holding FBNI liable for libel, the trial court found that FBNI failed to exercise diligence in
the selection and supervision of its employees.
The Court of Appeals affirmed the trial courts judgment with modification. The appellate court
made Rima solidarily liable with FBNI and Alegre.
Issues:
1. Whether or not the broadcasts are libelous.
2. Whether or not AMEC is entitled to moral damages.
3. Whether or not the award of attorneys fees is proper.
Ruling:
1. A libel is a public and malicious imputation of a crime, or of a vice or defect, real or imaginary, or any
act or omission, condition, status, or circumstance tending to cause the dishonor, discredit, or contempt
of a natural or juridical person, or to blacken the memory of one who is dead.
Every defamatory imputation is presumed malicious. Rima and Alegre failed to show adequately
their good intention and justifiable motive in airing the supposed gripes of the students. As hosts of a
documentary or public affairs program, Rima and Alegre should have presented the public issues free
from inaccurate and misleading information. Hearing the students alleged complaints a month before
the expos, they had sufficient time to verify their sources and information. However, Rima and Alegre
hardly made a thorough investigation of the students alleged gripes. Neither did they inquire about nor
confirm the purported irregularities in AMEC from the Department of Education, Culture and Sports.
Alegre testified that he merely went to AMEC to verify his report from an alleged AMEC official who
refused to disclose any information. Alegre simply relied on the words of the students because they
were many and not because there is proof that what they are saying is true. This plainly shows Rima
and Alegres reckless disregard of whether their report was true or not.
Had the comments been an expression of opinion based on established facts, it is immaterial that
the opinion happens to be mistaken, as long as it might reasonably be inferred from the facts. However,
the comments of Rima and Alegre were not backed up by facts. Therefore, the broadcasts are not
privileged and remain libelous per se.
The broadcasts also violate the Radio Code of the Kapisanan ng mga Brodkaster sa Pilipinas,
Ink. (Radio Code). Item I(B) of the Radio Code provides:
B. PUBLIC AFFAIRS, PUBLIC ISSUES AND COMMENTARIES

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1. x x x
4. Public affairs program shall present public issues free from personal bias, prejudice
and inaccurate and misleading information. x x x Furthermore, the station shall strive to
present balanced discussion of issues. x x x.
xxx
7. The station shall be responsible at all times in the supervision of public affairs, public issues
and commentary programs so that they conform to the provisions and standards of this
code.
8. It shall be the responsibility of the newscaster, commentator, host and announcer to protect
public interest, general welfare and good order in the presentation of public affairs and
public issues.[36]
The broadcasts fail to meet the standards prescribed in the Radio Code, which lays down the code
of ethical conduct governing practitioners in the radio broadcast industry. The Radio Code is a voluntary
code of conduct imposed by the radio broadcast industry on its own members. The Radio Code is a
public warranty by the radio broadcast industry that radio broadcast practitioners are subject to a code
by which their conduct are measured for lapses, liability and sanctions.
The public has a right to expect and demand that radio broadcast practitioners live up to the code
of conduct of their profession, just like other professionals. A professional code of conduct provides the
standards for determining whether a person has acted justly, honestly and with good faith in the
exercise of his rights and performance of his duties as required by Article 19 of the Civil Code. A
professional code of conduct also provides the standards for determining whether a person who willfully
causes loss or injury to another has acted in a manner contrary to morals or good customs under Article
21 of the Civil Code.

2. FBNI contends that AMEC is not entitled to moral damages because it is a corporation.
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.[46] 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
libelousper se. Thus, AMEC is entitled to moral damages.
However, we find 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, we reduce the award of moral damages from P300,000 to P150,000.
3.

The award of attorneys fees is not proper.

AMEC failed to justify satisfactorily its claim for attorneys fees. AMEC did not adduce evidence to
warrant the award of attorneys fees. Moreover, both the trial and appellate courts failed to explicitly
state in their respective decisions the rationale for the award of attorneys fees.

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In Inter-Asia Investment Industries, Inc. v. Court of Appeals, we held that:

[I]t is an accepted doctrine that the award thereof as an item of damages is the exception rather than
the rule, and counsels fees are not to be awarded every time a party wins a suit. The power of the court
to award attorneys fees under Article 2208 of the Civil Code demands factual, legal and equitable
justification, without which the award is a conclusion without a premise, its basis being improperly left
to speculation and conjecture. In all events, the court must explicitly state in the text of the decision,
and not only in the decretal portion thereof, the legal reason for the award of attorneys fees.
[51]
(Emphasis supplied)
Petition denied.

BANK OF AMERICA, NT & SA vs.

COURT OF APPEALS, INTER-RESIN INDUSTRIAL CORPORATION, FRANCISCO TRAJANO, JOHN
DOE AND JANE DOE

Petitioner Bank of America received by registered mail an Irrevocable Letter of Credit

purportedly issued by Bank of Ayudhya, Samyaek Branch, for the account of General Chemicals, Ltd., of
Thailand in the amount of US$2,782,000.00 to cover the sale of plastic ropes and "agricultural files,"
with the petitioner as advising bank and private respondent Inter-Resin Industrial Corporation as
beneficiary.
Bank of America wrote Inter-Resin informing the latter of the foregoing and transmitting, along
with the bank's communication, the latter of credit. Upon receipt of the letter-advice with the letter of
credit, Inter-Resin sent Atty. Emiliano Tanay to Bank of America to have the letter of credit confirmed.
The bank did not. Reynaldo Dueas, bank employee in charge of letters of credit, however, explained to
Atty. Tanay that there was no need for confirmation because the letter of credit would not have been
transmitted if it were not genuine.
Inter-Resin sought to make a partial availment under the letter of credit by submitting to Bank
of America invoices, covering the shipment of 24,000 bales of polyethylene rope to General Chemicals
valued at US$1,320,600.00, the corresponding packing list, export declaration and bill of lading. Finally,
after being satisfied that Inter-Resin's documents conformed with the conditions expressed in the letter
of credit, Bank of America issued in favor of Inter-Resin a Cashier's Check for P10,219,093.20, "the Peso
equivalent of the draft (for) US$1,320,600.00 drawn by Inter-Resin, after deducting the costs for
documentary stamps, postage and mail issuance." The check was picked up by Inter-Resin's Executive
Vice-President Barcelina Tio., Bank of America wrote Bank of Ayudhya advising the latter of the
availment under the letter of credit and sought the corresponding reimbursement therefor.
Inter-Resin, through Ms. Tio, presented to Bank of America the documents for the second
availment under the same letter of credit consisting of a packing list, bill of lading, invoices, export
declaration and bills in set, evidencing the second shipment of goods. Immediately upon receipt of a
telex from the Bank of Ayudhya declaring the letter of credit fraudulent, Bank of America stopped the
processing of Inter-Resin's documents and sent a telex to its branch office in Bangkok, Thailand,
requesting assistance in determining the authenticity of the letter of credit. Bank of America kept InterResin informed of the developments.
Sensing a fraud, Bank of America sought the assistance of the National Bureau of Investigation
(NBI). With the help of the staff of the Philippine Embassy at Bangkok, as well as the police and customs
personnel of Thailand, the NBI agents, who were sent to Thailand, discovered that the vans exported by
Inter-Resin did not contain ropes but plastic strips, wrappers, rags and waste materials. Here at home,

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the NBI also investigated Inter-Resin's President Francisco Trajano and Executive Vice President
Barcelina Tio, who, thereafter, were criminally charged for estafa through falsification of commercial
documents. The case, however, was eventually dismissed by the Rizal Provincial Fiscal who found
no prima facie evidence to warrant prosecution.
Bank of America sued Inter-Resin for the recovery of P10,219,093.20, the peso equivalent of the
draft for US$1,320,600.00 on the partial availment of the now disowned letter of credit. On the other
hand, Inter-Resin claimed that not only was it entitled to retain P10,219,093.20 on its first shipment but
also to the balance US$1,461,400.00 covering the second shipment.
Issue:
Whether under the "letter of credit," Bank of America has incurred any liability to the "beneficiary"
thereof.
Held:
As a mere advising or notifying bank, it would not be liable, but as a confirming bank, had this
been the case, it could be considered as having incurred that liability.
It cannot seriously be disputed, looking at this case, that Bank of America has, in fact, only been
an advising, not confirming, bank, and this much is clearly evident, among other things, by the
provisions of the letter of credit itself, the petitioner bank's letter of advice, its request for payment of
advising fee, and the admission of Inter-Resin that it has paid the same. That Bank of America has
asked Inter-Resin to submit documents required by the letter of credit and eventually has paid the
proceeds thereof, did not obviously make it a confirming bank. The fact, too, that the draft required by
the letter of credit is to be drawn under the account of General Chemicals (buyer) only means the same
had to be presented to Bank of Ayudhya (issuing bank) for payment. It may be significant to recall that
the letter of credit is an engagement of the issuing bank, not the advising bank, to pay the draft.
As an advising or notifying bank, Bank of America did not incur any obligation more than just
notifying Inter-Resin of the letter of credit issued in its favor, let alone to confirm the letter of
credit. 25 The bare statement of the bank employees, aforementioned, in responding to the inquiry
made by Atty. Tanay, Inter-Resin's representative, on the authenticity of the letter of credit certainly did
not have the effect of novating the letter of credit and Bank of America's letter of advise, 26 nor can it
justify the conclusion that the bank must now assume total liability on the letter of credit. Indeed, InterResin itself cannot claim to have been all that free from fault. As the seller, the issuance of the letter of
credit should have obviously been a great concern to it. 27 It would have, in fact, been strange if it did
not, prior to the letter of credit, enter into a contract, or negotiated at the every least, with General
Chemicals. 28 In the ordinary course of business, the perfection of contract precedes the issuance of a
letter of credit.

BANK OF AMERICA, NT & SA vs.

COURT OF APPEALS, INTER-RESIN INDUSTRIAL CORPORATION, FRANCISCO TRAJANO, JOHN
DOE AND JANE DOE
Petitioner Bank of America received by registered mail an Irrevocable Letter of Credit
purportedly issued by Bank of Ayudhya, Samyaek Branch, for the account of General Chemicals, Ltd., of
Thailand in the amount of US$2,782,000.00 to cover the sale of plastic ropes and "agricultural files,"
with the petitioner as advising bank and private respondent Inter-Resin Industrial Corporation as
beneficiary.

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Bank of America wrote Inter-Resin informing the latter of the foregoing and transmitting, along
with the bank's communication, the latter of credit. Upon receipt of the letter-advice with the letter of
credit, Inter-Resin sent Atty. Emiliano Tanay to Bank of America to have the letter of credit confirmed.
The bank did not. Reynaldo Dueas, bank employee in charge of letters of credit, however, explained to
Atty. Tanay that there was no need for confirmation because the letter of credit would not have been
transmitted if it were not genuine.
Inter-Resin sought to make a partial availment under the letter of credit by submitting to Bank
of America invoices, covering the shipment of 24,000 bales of polyethylene rope to General Chemicals
valued at US$1,320,600.00, the corresponding packing list, export declaration and bill of lading. Finally,
after being satisfied that Inter-Resin's documents conformed with the conditions expressed in the letter
of credit, Bank of America issued in favor of Inter-Resin a Cashier's Check for P10,219,093.20, "the Peso
equivalent of the draft (for) US$1,320,600.00 drawn by Inter-Resin, after deducting the costs for
documentary stamps, postage and mail issuance." The check was picked up by Inter-Resin's Executive
Vice-President Barcelina Tio., Bank of America wrote Bank of Ayudhya advising the latter of the
availment under the letter of credit and sought the corresponding reimbursement therefor.
Inter-Resin, through Ms. Tio, presented to Bank of America the documents for the second
availment under the same letter of credit consisting of a packing list, bill of lading, invoices, export
declaration and bills in set, evidencing the second shipment of goods. Immediately upon receipt of a
telex from the Bank of Ayudhya declaring the letter of credit fraudulent, Bank of America stopped the
processing of Inter-Resin's documents and sent a telex to its branch office in Bangkok, Thailand,
requesting assistance in determining the authenticity of the letter of credit. Bank of America kept InterResin informed of the developments.
Sensing a fraud, Bank of America sought the assistance of the National Bureau of Investigation
(NBI). With the help of the staff of the Philippine Embassy at Bangkok, as well as the police and customs
personnel of Thailand, the NBI agents, who were sent to Thailand, discovered that the vans exported by
Inter-Resin did not contain ropes but plastic strips, wrappers, rags and waste materials. Here at home,
the NBI also investigated Inter-Resin's President Francisco Trajano and Executive Vice President
Barcelina Tio, who, thereafter, were criminally charged for estafa through falsification of commercial
documents. The case, however, was eventually dismissed by the Rizal Provincial Fiscal who found
no prima facie evidence to warrant prosecution.
Bank of America sued Inter-Resin for the recovery of P10,219,093.20, the peso equivalent of the
draft for US$1,320,600.00 on the partial availment of the now disowned letter of credit. On the other
hand, Inter-Resin claimed that not only was it entitled to retain P10,219,093.20 on its first shipment but
also to the balance US$1,461,400.00 covering the second shipment.
Issue:
Whether under the "letter of credit," Bank of America has incurred any liability to the "beneficiary"
thereof.
Held:
As a mere advising or notifying bank, it would not be liable, but as a confirming bank, had this
been the case, it could be considered as having incurred that liability.
It cannot seriously be disputed, looking at this case, that Bank of America has, in fact, only been
an advising, not confirming, bank, and this much is clearly evident, among other things, by the
provisions of the letter of credit itself, the petitioner bank's letter of advice, its request for payment of
advising fee, and the admission of Inter-Resin that it has paid the same. That Bank of America has
asked Inter-Resin to submit documents required by the letter of credit and eventually has paid the
proceeds thereof, did not obviously make it a confirming bank. The fact, too, that the draft required by

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the letter of credit is to be drawn under the account of General Chemicals (buyer) only means the same
had to be presented to Bank of Ayudhya (issuing bank) for payment. It may be significant to recall that
the letter of credit is an engagement of the issuing bank, not the advising bank, to pay the draft.
As an advising or notifying bank, Bank of America did not incur any obligation more than just
notifying Inter-Resin of the letter of credit issued in its favor, let alone to confirm the letter of
credit. 25 The bare statement of the bank employees, aforementioned, in responding to the inquiry
made by Atty. Tanay, Inter-Resin's representative, on the authenticity of the letter of credit certainly did
not have the effect of novating the letter of credit and Bank of America's letter of advise, 26 nor can it
justify the conclusion that the bank must now assume total liability on the letter of credit. Indeed, InterResin itself cannot claim to have been all that free from fault. As the seller, the issuance of the letter of
credit should have obviously been a great concern to it. 27 It would have, in fact, been strange if it did
not, prior to the letter of credit, enter into a contract, or negotiated at the every least, with General
Chemicals. 28 In the ordinary course of business, the perfection of contract precedes the issuance of a
letter of credit.

G.R. No. 141994. January 17, 2005

FILIPINAS BROADCASTING NETWORK, INC., petitioner, vs. AGO MEDICAL AND EDUCATIONAL
CENTER-BICOL CHRISTIAN COLLEGE OF MEDICINE, (AMEC-BCCM) and ANGELITA F.
AGO, respondents.
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
expose, 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 14 December 1992, the trial court rendered a Decision ] finding FBNI and Alegre liable for libel
except Rima. In holding FBNI liable for libel, the trial court found that FBNI failed to exercise diligence in
the selection and supervision of its employees.
The Court of Appeals affirmed the trial courts judgment with modification. The appellate court
made Rima solidarily liable with FBNI and Alegre.
Issues:
4. Whether or not the broadcasts are libelous.
5. Whether or not AMEC is entitled to moral damages.
6. Whether or not the award of attorneys fees is proper.
Ruling:

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4. A libel is a public and malicious imputation of a crime, or of a vice or defect, real or imaginary, or any
act or omission, condition, status, or circumstance tending to cause the dishonor, discredit, or contempt
of a natural or juridical person, or to blacken the memory of one who is dead.
Every defamatory imputation is presumed malicious. Rima and Alegre failed to show adequately
their good intention and justifiable motive in airing the supposed gripes of the students. As hosts of a
documentary or public affairs program, Rima and Alegre should have presented the public issues free
from inaccurate and misleading information. Hearing the students alleged complaints a month before
the expos, they had sufficient time to verify their sources and information. However, Rima and Alegre
hardly made a thorough investigation of the students alleged gripes. Neither did they inquire about nor
confirm the purported irregularities in AMEC from the Department of Education, Culture and Sports.
Alegre testified that he merely went to AMEC to verify his report from an alleged AMEC official who
refused to disclose any information. Alegre simply relied on the words of the students because they
were many and not because there is proof that what they are saying is true. This plainly shows Rima
and Alegres reckless disregard of whether their report was true or not.
Had the comments been an expression of opinion based on established facts, it is immaterial that
the opinion happens to be mistaken, as long as it might reasonably be inferred from the facts. However,
the comments of Rima and Alegre were not backed up by facts. Therefore, the broadcasts are not
privileged and remain libelous per se.
The broadcasts also violate the Radio Code of the Kapisanan ng mga Brodkaster sa Pilipinas,
Ink. (Radio Code). Item I(B) of the Radio Code provides:
B. PUBLIC AFFAIRS, PUBLIC ISSUES AND COMMENTARIES
1. x x x
4. Public affairs program shall present public issues free from personal bias, prejudice
and inaccurate and misleading information. x x x Furthermore, the station shall strive to
present balanced discussion of issues. x x x.
xxx
7. The station shall be responsible at all times in the supervision of public affairs, public issues
and commentary programs so that they conform to the provisions and standards of this
code.
8. It shall be the responsibility of the newscaster, commentator, host and announcer to protect
public interest, general welfare and good order in the presentation of public affairs and
public issues.[36]
The broadcasts fail to meet the standards prescribed in the Radio Code, which lays down the code
of ethical conduct governing practitioners in the radio broadcast industry. The Radio Code is a voluntary
code of conduct imposed by the radio broadcast industry on its own members. The Radio Code is a
public warranty by the radio broadcast industry that radio broadcast practitioners are subject to a code
by which their conduct are measured for lapses, liability and sanctions.
The public has a right to expect and demand that radio broadcast practitioners live up to the code
of conduct of their profession, just like other professionals. A professional code of conduct provides the
standards for determining whether a person has acted justly, honestly and with good faith in the
exercise of his rights and performance of his duties as required by Article 19 of the Civil Code. A
professional code of conduct also provides the standards for determining whether a person who willfully
causes loss or injury to another has acted in a manner contrary to morals or good customs under Article
21 of the Civil Code.

5. FBNI contends that AMEC is not entitled to moral damages because it is a corporation.

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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.[46] 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
libelousper se. Thus, AMEC is entitled to moral damages.
However, we find 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, we reduce the award of moral damages from P300,000 to P150,000.
6.

The award of attorneys fees is not proper.

AMEC failed to justify satisfactorily its claim for attorneys fees. AMEC did not adduce evidence to
warrant the award of attorneys fees. Moreover, both the trial and appellate courts failed to explicitly
state in their respective decisions the rationale for the award of attorneys fees.
In Inter-Asia Investment Industries, Inc. v. Court of Appeals, we held that:
[I]t is an accepted doctrine that the award thereof as an item of damages is the exception rather than
the rule, and counsels fees are not to be awarded every time a party wins a suit. The power of the court
to award attorneys fees under Article 2208 of the Civil Code demands factual, legal and equitable
justification, without which the award is a conclusion without a premise, its basis being improperly left
to speculation and conjecture. In all events, the court must explicitly state in the text of the decision,
and not only in the decretal portion thereof, the legal reason for the award of attorneys fees.
[51]
(Emphasis supplied)
Petition denied.

FRANCISCO VS MEJIA CASE DIGEST

Adalia Francisco was the Treasurer of Cardale Financing and Realty Corporation (Cardale). Cardale,
through Francisco, contracted with Andrea Gutierrez for the latter to execute a deed of sale over certain
parcels of land in favor of Cardale. It was agreed that Gutierrez shall hand over the titles to Cardale but
Cardale shall only give a downpayment, and later on full payment in installment. As security, Gutierrez
shall retain a lien over the properties by way of mortgage. Nonetheless, Cardale defaulted in its
payment. Gutierrez then filed a petition with the trial court to have the Deed rescinded.
While the case was pending, Gutierrez died, and Rita Mejia, being the executrix of the will of Gutierrez
took over the affairs of the estate.
The case dragged on for 14 years because Francisco lost interest in presenting evidence. And while the
case was pending, Cardale failed to pay real estate taxes over the properties in litigation hence, the
local government subjected said properties to an auction sale to satisfy the tax arrears. The highest
bidder in the auction sale was Merryland Development Corporation (Merryland).

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Apparently, Merryland is a corporation in which Francisco was the President and majority stockholder.
Mejia then sought to nullify the auction sale on the ground that Francisco used the two corporations as
dummies to defraud the estate of Gutierrez especially so that these circumstances are present:
1.

Francisco did not inform the lower court that the properties were delinquent in taxes;

2.

That there was notice for an auction sale and Francisco did not inform the Gutierrez estate and
as such, the estate was not able to perform appropriate acts to remedy the same;

3.

That without knowledge of the auction, the Gutierrez estate cannot exercise their right of
redemption;

4.

That Francisco failed to inform the court that the highest bidder in the auction sale was
Merryland, her other company;

5.

That thereafter, Cardale was dissolved and the subject properties were divided and sold to other
people.
ISSUE: Whether or not Merryland and Francisco shall be held solidarily liable.
HELD: No. Only Francisco shall be held liable to pay the indebtedness to the Gutierrez estate. What
was only proven was that Francisco defrauded the Gutierrez estate as clearly shown by the dubious
circumstances which caused the encumbered properties to be auctioned. By not disclosing the tax
delinquency, Francisco left Gutierrez in the dark. She obviously acted in bad faith. Franciscos elaborate
act of defaulting payment, disregarding the case, not paying realty taxes (since as treasurer of Cardale,
shes responsible for paying the real estate taxes for Cardale), and failure to advise Gutierrez of the tax
delinquencies all constitute bad faith. The attendant fraud and bad faith on the part of Francisco
necessitates the piercing of the veil of corporate fiction in so far as Cardale and Francisco are
concerned. Cardale and Francisco cannot escape liability now that Cardale has been dissolved.
Francisco shall then pay Guttierez estate the outstanding balance with interest (total of P4.3 + million).
As regards Merryland however, there was no proof that it is merely an alter ego or a business conduit of
Francisco. Merryland merely bought the properties from the auction sale and such per se is not a
wrongful act or a fraudulent act. Time and again it has been reiterated that mere ownership by a single
stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of
itself sufficient ground for disregarding the separate corporate personality. Hence, Merryland cant be
held solidarily liable with Francisco.