TAYAG VS BENGUET

G.R. No. L-23145 November 29, 1968

Lessons Applicable: Theory of Concession (Corporate Law)

FACTS:
 March 27, 1960: Idonah Slade Perkins died in New York City
 August 12, 1960: Prospero Sanidad instituted ancillary administration proceedings appointing ancillary
administrator Lazaro A. Marquez later on substituted by Renato D. Tayag
 On January 27, 1964: CFI ordered domiciliary administrator County Trust Company of New York to
surrender to the ancillary administrator in the Philippines 33,002 shares of stock certificates owned by her in a
Philippine corporation, Benguet Consolidated, Inc., to satisfy the legitimate claims of local creditors
 When County Trust Company of New York refused the court ordered Benguet Consolidated, Inc. to
declare the stocks lost and required it to issue new certificates in lieu thereof
 Appeal was taken by Benguet Consolidated, Inc. alleging the failure to comply with its by-laws setting forth
the procedure to be followed in case of a lost, stolen or destroyed so it cannot issue new stock certs.
ISSUE: W/N Benguet Consolidated, Inc. can ignore a court order because of its by-laws

HELD: NO. CFI Affirmed

 Fear of contigent liability - obedience to a lawful order = valid defense
 Benguet Consolidated, Inc. is a Philippine corporation owing full allegiance and subject to the unrestricted
jurisdiction of local courts
 Assuming that a contrariety exists between the above by-law and the command of a court decree, the
latter is to be followed.
 corporation is an artificial being created by operation of law...."It owes its life to the state, its birth being
purely dependent on its will. Cannot ignore the source of its very existence

NDC VS PHILIPPINE VETERANS BANK (192 SCRA 257)

National Development Corporation vs Philippine Veterans Bank
192 SCRA 257 [GR No. 84132-33 December 10, 1990]
Facts: The particular enactment in question is Presidential Decree No. 1717, which ordered the rehabilitation of the
Agrix Group of Companies to be administered mainly by the National Development Company. The law outlined the
procedure for filling claims against the Agrix Companies and created a claims committee to process these claims.
Especially relevant to this case, and noted at the outset, is section 4(1) thereof providing that “all mortgages and
other liens presently attaching to any of the assets of the dissolved corporations are hereby extinguished.” Earlier,
the Agrix Marketing Inc. had executed in favor of private respondent Philippine Veterans Bank a real estate
mortgage dated July 7, 1978 over three parcels of land situated in Los Baños, Laguna. During the existence of the
mortgage, Agrix went bankrupt. It was the expressed purpose of salvaging this and the other Agrix companies that
the aforementioned decree was issued by President Marcos. A claim for the payment of its loan credit was filed by
PNB against herein petitioner, however the latter alleged and invoked that the same was extinguished by PD 1717.
Issue: Whether or not Philippine Veterans Bank as creditor of Agrix is still entitled for payment without prejudice to
PD 1717.
Held: Yes. A mortgage lien is a property right derived from contract and so comes under the protection of Bill of
rights so do interests on loans, as well s penalties and charges, which are also vested rights once they accrue.
Private property cannot simply be taken by law from one person and given to another without just compensation
and any known public purpose. This is plain arbitrariness and is not permitted under the constitution.
The court also feels that the decree impairs the obligation of the contract between Agrix and the private
respondent without justification. While it is true that the police power is superior to the impairment clause, the
principle will apply only where the contract is so related to the public welfare that it will be considered congenitally
susceptible to change by the legislature in the interest of greater number.
Our finding in sum, is that PD 1717 is an invalid exercise of the police power, not being in conformity with the
traditional requirements of a lawful subject and a lawful method. The extinction of the mortgage and other liens
and of the interest and other charges pertaining to the legitimate creditors of Agrix constitutes taking without due
process of law, and this is compounded by the reduction of the secured creditors to the category of unsecured
creditors in violation of the equal protection clause. Moreover, the new corporation being neither owned nor
controlled by the government, should have been created only by general and not special law. And in so far as the
decree also interferes with purely private agreements without any demonstrated connection with the public
interest, there is likewise an impairment of the obligation of the contract.
Manila Hotel Corporation vs National Labor Relations Commission

In May 1988, Marcelo Santos was an overseas worker in Oman. In June 1988, he was recruited by Palace Hotel in
Beijing, China. Due to higher pay and benefits, Santos agreed to the hotel’s job offer and so he started working
 there in November 1988. The employment contract between him and Palace Hotel was however without the
intervention of the Philippine Overseas Employment Administration (POEA). In August 1989, Palace Hotel notified
Santos that he will be laid off due to business reverses. In September 1989, he was officially terminated.

In February 1990, Santos filed a complaint for illegal dismissal against Manila Hotel Corporation (MHC) and Manila
Hotel International, Ltd. (MHIL). The Palace Hotel was impleaded but no summons were served upon it. MHC is a
government owned and controlled corporation. It owns 50% of MHIL, a foreign corporation (Hong Kong). MHIL
manages the affair of the Palace Hotel. The labor arbiter who handled the case ruled in favor of Santos. The
National Labor Relations Commission (NLRC) affirmed the labor arbiter.

ISSUE: Whether or not the NLRC has jurisdiction over the case.

HELD: No. The NLRC is a very inconvenient forum for the following reasons:

1. The only link that the Philippines has in this case is the fact that Santos is a Filipino;
2. However, the Palace Hotel and MHIL are foreign corporations – MHC cannot be held liable because it merely owns
50% of MHIL, it has no direct business in the affairs of the Palace Hotel. The veil of corporate fiction can’t be
pierced because it was not shown that MHC is directly managing the affairs of MHIL. Hence, they are separate
entities.
3. Santos’ contract with the Palace Hotel was not entered into in the Philippines;
4. Santos’ contract was entered into without the intervention of the POEA (had POEA intervened, NLRC still does not
have jurisdiction because it will be the POEA which will hear the case);
5. MHIL and the Palace Hotel are not doing business in the Philippines; their agents/officers are not residents of the
Philippines;
Due to the foregoing, the NLRC cannot possibly determine all the relevant facts pertaining to the case. It is not
competent to determine the facts because the acts complained of happened outside our jurisdiction. It cannot
determine which law is applicable. And in case a judgment is rendered, it cannot be enforced against the Palace
Hotel (in the first place, it was not served any summons).

The Supreme Court emphasized that under the rule of forum non conveniens, a Philippine court or agency may
assume jurisdiction over the case if it chooses to do so provided:

(1) that the Philippine court is one to which the parties may conveniently resort to;

(2) that the Philippine court is in a position to make an intelligent decision as to the law and the facts; and

(3) that the Philippine court has or is likely to have power to enforce its decision.

None of the above conditions are apparent in the case at bar.

Reynoso vs Court of Appeals

345 SCRA 335 [GR No. 116124-25 November 23, 2000]
Facts: Sometime in early 1960s, the Commercial Credit Corporation (CCC), a financing company and investment
firm, decided to organize franchise companies indifferent parts of the country, wherein it shall hold 30% equity.
Employees of the CCC were designated as resident managers of the franchise companies. Petitioner Bibiano O.
Reynoso IV was designated as the resident manager of the franchise in Quezon City, known as the Commercial
Credit Corporation of Quezon City. CCC-QC entered into an exclusive agreement management contract with CCC
whereby the latter was granted the management and full control of the business activities of the former. Under the
contract, CCC-QC shall sell, discount and/or assign its receivables to CCC. Subsequently, however, this discounting
arrangement was discontinued pursuant to the so called DOSRI rule, prohibiting the lending of funds by
corporations to its directors, officers, stockholders and other persons with related interest therein. On account of
the new restrictions imposed by the Central Bank policy by virtue of the DOSRI rule, CCC decided to form CCC
Equity Corporation, a wholly-owned subsidiary, to which CCC transferred its 30% equity in CCC-QC, together with 2
seats in the latter’s Board of Directors. A complaint for sum of money with preliminary attachment was filed by
CCC-equity against petitioner and the latter was also dismissed from employment to which the lower court’s
decision was rendered in favor of the petitioner and the same has become final and executory. CCC changed its
name to General Credit Corporation (GCC).
Issue: Whether or not the judgement in favor of the petitioner may be executed against respondent GCC.
Held: Yes. A corporation is an artificial being created by operation of law, having the right of succession and the
powers, attributes, and properties expressly authorized by law or incident to its existence. It is an artificial being
invested by law with a personality separate and distinct from those of the persons composing it as well as from that
of any other legal entity to which it may be related. It was evolved to make possible the aggregation and
assembling of huge amounts of capital upon which big business depends. It also has the advantage of non-
dependence on the lives of those who compose it even as it enjoys certain rights and conducts activities of natural
persons.
Any piercing of the corporate veil has to be done with caution. However, the court will not hesitate to use its
supervisory and adjudicative powers where the corporate fiction is used as an unfair device to achieve an
inequitable result defraud creditors, evade contracts and obligations, or to shield it from the effects of a court
decision. The corporate fiction has to be disregarded when necessary in the interest of justice.
The defense of separateness will be disregarded when the business affairs of a subsidiary corporation are so
controlled by the mother corporation to the extent that it becomes an instrument or agent of its parent. But even
when there is dominance over the affairs of the subsidiary, the doctrine of piercing the veil of corporate fiction
applies only when such fiction is used to defeat public convenience, justify wrong, protect fraud or defend crime.
The organization of subsidiary corporations as what was done here is usually resorted to for aggrupation of capital
the ability to cover more territory and population, the decentralization of activities best decentralized, and the
securing of other legitimate advantages. But when the mother corporation and its subsidiary cease to act in good
faith and honest business judgement, when the corporate device is used by the parent to avoid its liability for
legitimate obligations of the subsidiary, and when the corporate fiction is used to perpetrate fraud or promote
injustice, the law steps in to remedy the problem. When that happens, the corporate character is not necessarily
abrogated. It continuous for legitimate objectives. However, it is pursued in order to remedy injustice, such as that
inflicted in this case.

MAMBULAO LUMBER COMPANY V. PNB (G.R. NO. L-22973)

Facts:
Petitioner Mambulao Lumber applied for an industrial loan with herein respondent PNB and was approved with its
real estate, machinery and equipments as collateral. PNB released the approved loan but petitioner failed to pay
and was later discovered to have already stopped in its operation. PNB then moved for the foreclosure and sale of
the mortgaged properties. The properties were sold and petitioner sent a bank draft to PNB to settle the balance of
the obligation. PNB however alleges that a remaining balance stands and a foreclosure sale would still be held
unless petitioner remits said amount. The foreclosure sale proceeded and petitioner’s properties were taken out of
its compound. Petitioner filed actions before the court and claims among others, moral damages.
Issue:
Whether or not petitioner corporation, who has already ceased its operation, may claim for moral damages.
Ruling: NO.
Herein appellant’s claim for moral damages, however, seems to have no legal or factual basis. Obviously, an
artificial person like herein appellant corporation cannot experience physical sufferings, mental anguish, fright,
serious anxiety, wounded feelings, moral shock or social humiliation which are basis of moral damages. A
corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral
damages. The same cannot be considered under the facts of this case, however, not only because it is admitted
that herein appellant had already ceased in its business operation at the time of the foreclosure sale of the
chattels, but also for the reason that whatever adverse effects of the foreclosure sale of the chattels could have
upon its reputation or business standing would undoubtedly be the same whether the sale was conducted at Jose
Panganiban, Camarines Norte, or in Manila which is the place agreed upon by the parties in the mortgage contract.

ABSCBN BROADCASTING CORPORATION vs. HONORABLE COURT OF APPEALS,

ABSCBN BROADCASTING CORPORATION vs. HONORABLE COURT OF APPEALS, REPUBLIC BROADCASTING CORP,
VIVA PRODUCTION, INC., and VICENTE DEL ROSARIO

G.R. No. 128690 January 21, 1999

FACTS:

 1. In 1990, ABSCBN and Viva executed a Film Exhibition Agreement whereby Viva gave ABSCBN
an exclusive right to exhibit some Viva films.
 2. One of the provisions of the agreement states that ABSCBN shall have the right of first refusal
to the next twenty-four Viva films for TV telecast provided, however, that such right shall be exercised by ABSCBN
from the actual offer in writing.
 3. Viva, through defendant Del Rosario, offered ABSCBN, through its vice-president Charo Santos
Concio, a list of 3 film packages (36 title) from which ABSCBN may exercise its right of first refusal under the
aforesaid agreement
 4. ABSCBN, however through Mrs. Concio, "can tick off only ten (10) titles" (from the list) "we can
purchase" and therefore did not accept said list.
 5. On February 27, 1992, defendant Del Rosario approached ABSCBN's Ms. Concio, with a list
consisting of 52 original movie titles (i.e. not yet aired on television) including the 14 titles subject of the present
case, as well as 104 reruns (previously aired on television) from which ABSCBN may choose another 52 titles.
 6. On April 2, 1992, defendant Del Rosario and ABSCBN general manager, Eugenio Lopez III, met
at the Tamarind Grill Restaurant in Quezon City to discuss the package proposal of Viva.
 7. What transpired in that lunch meeting is the subject of conflicting versions.
 8. Mr. Lopez testified that he and Mr. Del Rosario allegedly agreed that ABSCRN was granted
exclusive film rights to 14 films for a total consideration of P36 million; that he allegedly put this agreement as to
the price and number of films in a "napkin'' and signed it and gave it to Mr. Del Rosario.
 9. On the other hand, Del Rosario denied having made any agreement with Lopez regarding the
14 Viva films; Denied the existence of a napkin in which Lopez wrote something; and insisted that what he and
Lopez discussed at the lunch meeting was Viva's film package offer of 104 films for a total price of P60 million. Mr.
Lopez promising to make a counter proposal which came in the form of a proposal contract.
 10. On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for Finance
discussed the terms and conditions of Viva's offer to sell the 104 films, after the rejection of the same package by
ABSCBN.
 11. On April 07, 1992, defendant Del Rosario received through his secretary, a handwritten note
from Ms. Concio – a draft of the counter proposal
 12. The said counter proposal was however rejected by Viva's Board of Directors in the evening of
the same day
 13. On April 29, 1992, after the rejection of ABSCBN and following several negotiations and
meetings defendant Del Rosario and Viva's President Teresita Cruz, in consideration of P60 million, signed a letter of
agreement dated April 24, 1992. granting RBS the exclusive right to air 104 Viv produced and/or acquired films
including the 14 films subject of the present case.
 14. RTC rendered a decision favoring respondents.
 15. According to the RTC, there was no meeting of minds on the price and terms of the offer.
 16. The alleged agreement between Lopez III and Del Rosario was subject to the approval of the
VIVA Board of Directors, and said agreement was disapproved during the meeting of the.
 17. Hence, there was no basis for ABSCBN's demand that VIVA signed the 1992 Film Exhibition
Agreement.
 18. Furthermore, the right of first refusal under the 1990 Film Exhibition Agreement had previously
been exercised per Ms. Concio's letter to Del Rosario ticking off ten titles acceptable to them, which would have
made the 1992 agreement an entirely new contract.


ISSUE:

Whether or not there is a perfected contract between ABSCBN and VIVA films

RULING:

A contract is a meeting of minds between two persons whereby one binds himself to give something or to
render some service to another for a consideration. There is no contract unless the following requisites concur: (1)
consent of the contracting parties; (2) object certain which is the subject of the contract; and (3) cause of the
obligation, which is established.

Once there is concurrence between the offer and the acceptance upon the subject matter, consideration,
and terms of payment a contract is produced. The offer must be certain. To convert the offer into a contract, the
acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal,
unconditional, and without variance of any sort from the proposal. A qualified acceptance, or one that involves a
new proposal, constitutes a counteroffer and is a rejection of the original offer.

ABSCBN, sent, through Ms. Concio, a counterproposal in the form of a draft contract proposing exhibition of
53 films for a consideration of P35 million. This counterproposal could be nothing less than the counteroffer of Mr.
Lopez during his conference with Del Rosario at Tamarind Grill Restaurant. Clearly, there was no acceptance of
VIVA's offer, for it was met by a counteroffer which substantially varied the terms of the offer.

In the case at bar, ABSCBN made no unqualified acceptance of VIVA's offer. Hence, they underwent a period
of bargaining. ABSCBN then formalized its counterproposals or counteroffer in a draft contract, VIVA through its
Board of Directors, rejected such counteroffer, Even if it be conceded arguendo that Del Rosario had accepted the
counteroffer, the acceptance did not bind VIVA, as there was no proof whatsoever that Del Rosario had the specific
authority to do so.

Under Corporation Code, unless otherwise provided by said Code, corporate powers, such as the power;
to enter into contracts; are exercised by the Board of Directors. However, the Board may delegate such powers to
either an executive committee or officials or contracted managers. The delegation, except for the executive
committee, must be for specific purposes.

Del Rosario did not have the authority to accept ABSCBN's counteroffer was best evidenced by his
submission of the draft contract to VIVA's Board of Directors for the latter's approval. In any event, there was
between Del Rosario and Lopez III no meeting of minds.