1. Tayag v.
Benguet Consolidated c) in the event of a contest or the pendency of an ac
No. L-23145. | Nov. 29, 1968 | Fernando, J.
Digest by: AVILLON
: Testate Estate of Idonah Slade Perkins, Renato Tayag
nts: Benguet Consolidated, Inc.
corporation as known to Philippine jurisprudence is a creature
existence until it has received the imprimatur of the state
o law. It is logically inconceivable therefore that it will have
rivileges of a higher priority than that of its creator. More than
not legitimately refuse to yield obedience to acts of its state
tainly not excluding the judiciary, whenever called upon to do
nah Slade Perkins died in NY City and left two stock certificates
ering 33,002 shares of Benguet Consolidated Inc.
certificates were in the possession of County Trust Company of
w York, which is the domiciliary administrator of the estate of the
eased.
illary administration proceedings were instituted in the CFI Manila
Renato Tayag was appointed the ancillary administrator.
spute arose between the domiciliary administrator in New York
unty Trust) and the ancillary administrator in the Philippines
yag) as to which of them was entitled to the possession of the
ck certificates.
CFI ordered County Trust to produce and deposit the certificates
Tayag.
unty Trust refused to comply, which moved Tayag to pray that the
issue an order declaring the certificates as lost.
CFI declared the certificates as lost and cancelled and directed
guet Consolidated to issue new certificates to Tayag or to the
rt.
guet Consolidated argued that:
a) the certificates are not actually lost since they are with
County Trust
b) the issuing of new certificates would violate its by-laws
regarding ownership of such certificate or certifica
stock allegedly lost, stolen or destroyed, the issua
new certificate would await the final decision by a
regarding the ownership thereof.
Issue/s:
● W/N Benguet Consolidated should issue the certificates -
Ratio:
● The Constitution overrides a statute, to which, however, th
must yield deference, when appropriately invoked and de
applicable. It would be most highly unorthodox, however,
corporate by-law would be accorded such a high estate in
order that a court must not only take note of it but yield to
controlling force.
● A corporation as known to Philippine jurisprudence is
without any existence until it has received the imprimatur
according to law. It is logically inconceivable therefore tha
rights and privileges of a higher priority than that of its cr
than that, it cannot legitimately refuse to yield obedience
state organs, certainly not excluding the judiciary, when
upon to do so.
● A corporation once it comes into being comes more ofte
ken of the judiciary. It institutes the appropriate cou
enforce its rights. It is not immune from judicial contr
instances, where a duty under the law as ascerta
appropriate legal proceeding is cast upon it.
Dispositive:
WHEREFORE, the appealed order of the Honorable Arsenio
Judge of the Court of First Instance, dated May 18, 1964, is aff
costs against oppositor-appelant Benguet Consolidated, Inc.
CORP 2-D
 2. Villa Rey Transit, Inc. v. Ferrer
G.R. No. L-23893 | October 29, 1968 | Angeles, J.
Digest by: BALAGTAS
: VILLA REY TRANSIT, INC.
nts: EUSEBIO E. FERRER, PANGASINAN
RTATION CO., INC., and PUBLIC SERVICE COMMISSION
ction is urged as a means of perpetrating a fraud or an illegal
a vehicle for the evasion of an existing obligation, the
on of statutes, the achievement or perfection of a monopoly or
e perpetration of knavery or crime, the veil with which the law
isolates the corporation from the members or stockholders who
will be lifted to allow for its consideration merely as an
of individuals.
ercing of the corporate veil)
CLAIMER: Ang dami talagang facts guys sorry)
e M. Villarama was an operator of a bus transportation, under the
iness name Villa Rey Transit.
a) Pursuant to 2 Certificates of Public Convenience (CPC)
granted by the Public Service Commission (PSC), he was
authorized to operate 32 units.
arama then sold the 2 CPCs to Pangasinan Transportation
mpany, Inc (Pantranco).
a) With the condition that Villarama shall not apply for any TPU
service identical or competing with Pantranco within 10
years.
months after, a corporation called Villa Rey Transit, Inc. (VRTI)
organized.
a) The incorporators were all family members of Jose
Villarama.
TI was then registered in the SEC.
a) Then bought 5 CPCs and 49 buses from a certain Valentin
Fernando.
5) VRTI and Fernando then applied with the PSC for its app
a) The PSC provisionally approved the CPCs.
i) Subject to the condition that "it may be
revoked by the Commission at any tim
subject to whatever action that may be t
basic application and shall be valid only
pendency of said application."
6) The Sheriff of Manila then levied on 2 of the 5 CPCs.
a) Pursuant to a writ of execution issued by the
CFI in favor of Eusebio Ferrer against Valentin Fe
7) Ferrer then sold the 2 CPCs to Pantranco.
a) Ferrer and Pantranco then applied for approval in
8) PSC then jointly heard the applications of VRTI and Pa
the 2 CPCs.
a) PSC provisionally awarded it to Pantranco.
b) VRTI appealed to the SC
i) Ruled that ownership of the 2 CPC
properly settled first in the proper cour
then, VRTI should be the one to operate
provisionally.
9) VRTI then filed in the CFI a complaint for annulment of
sale of the 2 CPCs to Ferrer, and the sale of the latter to P
10) Ferrer and Pantranco said that VRTI had no valid title to t
a) Because the contract pursuant to which VRTI ac
from Fernando was subject to a suspensive cond
i) Which was the approval of the PSC
which has not yet been fulfilled.
11) Pantranco also filed a third-party complaint against Jose V
a) Alleging that Villarama and VRTI is one and the s
b) That Villarama and VRTI was disqualified from o
2 CPCs due to the prior agreement between Vi
Pantranco.
i) that Villarama "shall not for a period of 10
the date of this sale, apply for any T
identical or competing with the buyer."
12) The CFI then declared VRTI to be the lawful owner of the
a) Also held that VRTI is a distinct and separate
Jose Villarama .
CORP 2-D
 b) Also held that the restriction against Villarama was void for
being an invalid restraint against trade.
N VRTI is a distinct and separate entity from Jose Villarama - NO. vouchers liquidating the sum.
evidence has disclosed that:
a) Villarama, albeit was not an incorporator or stockholder of
the Corporation, alleging that he did not become such,
because he did not have sufficient funds to invest, his wife,
however, was an incorporator with the least subscribed
number of shares, and was elected treasurer of the
Corporation.
b) The finances of the Corporation which, under all concepts in
the law, are supposed to be under the control and
administration of the treasurer keeping them as trust fund for
the Corporation, were, nonetheless, manipulated and
disbursed as if they were the private funds of Villarama, in
such a way and extent that Villarama appeared to be the
actual owner-treasurer of the business without regard to
the rights of the stockholders.
c) The evidence further show that the initial cash capitalization
of the corporation of P105,000.00 was mostly financed by
Villarama.
i) Of the P105,000.00 deposited in the First National
City Bank of New York, representing the initial paid-
up capital of the Corporation, P85,000.00 was
covered by Villarama's personal check.
ii) The deposit slip for the said amount of P105,000.00
shows that P20,000.00 was paid in cash and
P85,000.00 thereof was covered by a Check from
the First National City Bank of New York.
(1) The testimonies of 2 employees of said
bank, have proved that the drawer of the
check was Jose Villarama himself.
d) Another witness, the accountant of the Corporation, testified
that while in the books of the corporation there appears an
entry that the treasurer received P95,000.00 as second
installment of the paid-in subscriptions, and, su
also P100,000.00 as the first installment of th
second subscriptions worth P200,000.00 from
subscribers, yet Villarama directed him (accounta
i) Thus, it was made to appear that the
was delivered to Villarama in payment fo
purchased from him, and the P100,0
loaned as advances to the stockholders.
ii) The said accountant, however, testified
not aware of any amount of money that
passed hands among the parties inv
actually the only money of the corporat
P105,000.00 covered by the deposit sli
mentioned above, P85,000.00 was
Villarama's personal check.
e) Further, the evidence show that when the Corpor
its initial months of operation, Villarama purchas
with his personal checks Ford trucks for the Corp
f) Photostatic copies of ledger entries and vouche
that Villarama had co-mingled his personal
transactions with those made in the name of the C
are also very illuminating evidence.
2) Taking account of the foregoing evidence, it would appea
a) Villarama supplied the organization expenses and
of the Corporation, such as trucks and equipment
b) there was no actual payment by the original su
the amounts of P95,000.00 and P100,000.00 as a
the books;
c) Villarama made use of the money of the Corp
deposited them to his private accounts;
d) and the Corporation paid his personal accounts.
3) The foregoing circumstances are strong persuasive
showing that Villarama has been too much involved in t
the Corporation to altogether negative the claim that he
part-time general manager.
a) They show beyond doubt that the Corporation
ego.
CORP 2-D
 b) It is significant that not a single one of the acts enumerated ego of the covenantor to the restrictive agreeme
above as proof of Villarama's oneness with the Corporation enjoined from competing with the covenantee.
has been denied by him.
i) On the contrary, he has admitted them with offered
excuses. Dispositive:
c) Villarama's explanation on the matter of his involvement with
the corporate affairs of the Corporation only renders more PREMISES CONSIDERED, the judgment appealed from is here
credible Pantranco's claim that his control over the as follows:
corporation, especially in the management and disposition of
its funds, was so extensive and intimate that it is impossible 1. The sale of the two certificates of public convenience in
to segregate and identify which money belonged to whom. Valentin Fernando to Villa Rey Transit, Inc. is declared preferre
interference of Villarama in the complex affairs of the made by the Sheriff at public auction of the aforesaid certifica
poration, and particularly its finances, are much too inconsistent convenience in favor of Eusebio Ferrer;
the ends and purposes of the Corporation Law, which, precisely,
ks to separate personal responsibilities from corporate 2. Reversed, insofar as it dismisses the third-party compla
ertakings. Pangasinan Transportation Co. against Jose M. Villarama, holdi
a) It is the very essence of incorporation that the acts and Rey Transit, Inc. is an entity distinct and separate from the pe
conduct of the corporation be carried out in its own corporate Jose M. Villarama, and insofar as it awards the sum of P5
name because it has its own personality. attorney's fees in favor of Villa Rey Transit, Inc.;
doctrine that a corporation is a legal entity distinct and separate
m the members and stockholders who compose it is recognized 3. The case is remanded to the trial court for the reception of
respected in all cases which are within reason and the law. consonance with the above findings as regards the amount o
a) When the fiction is urged as a means of perpetrating a fraud suffered by Pantranco; and
or an illegal act or as a vehicle for the evasion of an existing
obligation, the circumvention of statutes, the achievement or 4. On equitable considerations, without costs.
perfection of a monopoly or generally the perpetration of
knavery or crime, the veil with which the law covers and So ordered.
isolates the corporation from the members or stockholders
who compose it will be lifted to allow for its consideration
merely as an aggregation of individuals.
preponderance of evidence have shown that the Villa Rey
nsit, Inc. is an alter ego of Jose M. Villarama, and that the
rictive clause in the contract entered into by Villarama and
tranco is also enforceable and binding against the said
poration.
a) For the rule is that a seller or promissor may not make use of
a corporate entity as a means of evading the obligation of his
covenant. Where the Corporation is substantially the alter

CORP 2-D
Employees Union of Bayer Phils. V. Bayer Phils., Inc.
R. No. 162943 | December 6, 2010 | VILLARAMA, JR., J.
Digest by: BULATAO
: EMPLOYEES UNION OF BAYER PHILS., FFW and
. FACUNDO, in his capacity as President
nts: BAYER PHILIPPINES, INC., DIETER J. LONISHEN
ASUNCION AMISTOSO (HRD Manager), AVELINA REMIGIO
TACIA VILLAREAL
ion dispute refers to any conflict between and among union
ncluding grievances arising from any violation of the rights and
of membership, violation of or disagreement over any provision
’s constitution and by-laws, or disputes arising from chartering
on of the union.
e Bargaining Agreement (CBA) is entered into in order to
ty and mutual cooperation between labor and capital.
r should not be allowed to rescind unilaterally its CBA with the
ed bargaining agent it had previously contracted with, and
argain anew with a different group if there is no legitimate
oing so and without first following the proper procedure.
avior would be tolerated, bargaining and negotiations between
er and the union will never be truthful and meaningful, and no
after arduous negotiations will ever be honored or be relied
tioner Employees Union of Bayer Philippines (EUBP) is the
usive bargaining agent of all rank-and-file employees of Bayer
ippines, and is an affiliate of the Federation of Free Workers
W). 13) Consequently, EUBP lodged a complaint against Rem
1997, EUBP, headed by its president Facundo, negotiated with
er for the signing of a Collective Bargaining Agreement (CBA).
3) During the negotiations, the Union rejected Bayer’s 9
increase proposal resulting in a bargaining deadlock.
4) EUBP staged a strike, prompting the Secretary of DOLE
jurisdiction over the dispute.
5) Pending the resolution of the dispute, respondent Rem
other union members, without any authority from their un
accepted Bayer’s wage-increase proposal.
6) The DOLE Secretary issued an arbitral award ordering
Bayer to execute a CBA.
7) Meanwhile, the rift between Facundo’s leadership and
group broadened.
8) Six (6) months from the signing of the new CBA, Remi
signatures from union members in support of a resolution
the decision of the signatories to:
1. Disaffiliate from FFW,
2. Rename the union as Reformed Employees Uni
Philippines (Reformed Union),
3. Adopt a new constitution and by-laws for the unio
4. Abolish all existing officer positions in the union
new set of interim officers, and
5. Authorize Reformed Union to administer the CB
the Union and Bayer. The said resolution was sig
of the 257 local union members.
9) Both groups sought recognition from Bayer and
remittance of the union dues collected from its r
members.
10) Bayer responded by deciding not to deal with either
groups, and by placing the union dues collected in a tr
until the conflict between the two groups is resolved.
11) EUBP filed a complaint for unfair labor practice (first u
practice case) against Bayer for non-remittance of union
12) While the case was still pending and despite EUBP
request for a grievance conference, Bayer decided to tu
collected union dues to Reformed Union.
before the Industrial Relations Division of the DOLE pray
CORP 2-D
 ulsion from the Union for commission of "acts that threaten the ● The issue raised pertain only to the validity of t
of the union." management.
Labor Arbiter (LA) dismissed this complaint for lack of
sdiction. YES, the acts of the company constituted an unfair labor prac
BP filed the second unfair labor practice complaint against the ● When an employer proceeds to negotiate with a sp
pondents. despite the existence of its valid CBA with the duly c
BP complained that Bayer refused to remit the collected union exclusive bargaining agent, the former indubitably ab
s to them despite several demands sent to the management and recognition of the latter and terminates the entire CBA.
the latter opted to negotiate instead with Remigio’s group.
ormed Union and Bayer agreed to sign a new CBA. Dispositive:
response, EUBP immediately filed an urgent motion for the
ance of a restraining order/injunction before the NLRC and the WHEREFORE, the petition for review on certiorari is PARTLY
against respondents. The Decision dated December 15, 2003 and the Resolution date
or Arbiter (LA): Dismissed the Union’s second unfair labor 2004 of the Court of Appeals in CA-G.R. SP No. 73813 are MO
ctice complaint for lack of jurisdiction. follows:
RC: Denied EUBP’s appeal.
Sustained both LA and the NLRCs rulings. 1) Respondents Bayer Phils., Dieter J. Lonishen and
Amistoso are found LIABLE for Unfair Labor Practic
hereby ORDERED to remit to petitioners the amount of P
representing the collected union dues previously turn
N the LA and the NLRC have jurisdiction. - YES Avelina Remigio and Anastacia Villareal. They a
N the instant case involves an intra-union dispute. - NO ORDERED to pay petitioners nominal damages in the
N the company committed an act of unfair labor practice. - YES P250,000.00 and attorneys fees equivalent to 10% of th
award; and

2) The complaint, as against respondents Remigio and

LA and the NLRC have jurisdiction over the unfair labor
mplaint filed against Bayer.
wever, EUBP’s unfair labor practice complaint cannot prosper as
inst respondents Remigio et al. because the issue, as against
m, essentially involves an intra-union dispute.
se at bar is not about an intra-union dispute.
issues raised by petitioners do not fall under any of the
umstances constituting an intra-union dispute.
e importantly, the EUBP does not seek a determination of
ether it is the Facundo group (EUBP) or the Remigio group
formed Union) which is the true set of union officers.
DISMISSED due to the lack of jurisdiction of the Labor
the NLRC, the complaint being in the nature of an
dispute.
Reference:
● Employees Union of Bayer (EUBP) is the Collective
Agent (CBA) of Bayer headed by Facundo.
● There was a breakaway group named Reformed E
Union headed by Remigio.
● The union dues collected by Bayer was then remi
Reformed Union despite the existence of a CBA b
company and EUBP.
CORP 2-D
BP then filed an unfair labor practice complaint against Bayer and
migio.
er was found guilty of unfair labor practice.
case against Remigio was dismissed because the rift between
undo’s group and Remigio’s group is an intra-union dispute.
E DOCTRINE.

CORP 2-D
 4. West Coast Life Ins. Co. v. Hurd
G.R. No. L-8527 | March 30, 1914 | Moreland, J.
Digest by: CAPACITE
: West Coast Life Insurance Co. (West Coast)
nts: Geo Hurd, Judge of CFI
corporation into court criminally requires many additions to the
minal procedure.
y be said to be the duty of courts to see to it that criminals are
is no less their duty to follow prescribed forms of procedure
go out upon unauthorized ways or act in an unauthorized
st Coast is a corporation duly organized under the laws of the
e of California, doing business regularly in the Philippines
suant to its laws.
. 16, 1912 - Asst prosecuting atty of Manila filed an information in
CFI against defendants West Coast, John Northcott (general
nt of West Coast for the Phils), and Manuel Grey (treasurer of the
st Coast branch in the Phils) for the crime of libel.
○ that during the months of Sept and Oct, said defendants
printed circulars and distributed to policy holders (and
prospective holders) of Insular Life Insurance Company a
1
malicious defamation in Spanish that Insular Life was in a
dangerous financial condition and on the point of going into
insolvency
. 17, 1912 - Hurd as judge of the CFI issued a process (in the
m of a summons) for the defendants to appear on the 18th.
me time past various rumors are current to the effect that the Insular Life
mpany is not in as good a condition as it should be at the present time, and that
d shape. Nevertheless, the investigations made by the representative of the
failed fully to confirm these rumors. It is known that the Insular Auditor has
books of the company and has found that its capital has diminished, and that by
said official the company has decided to double the amount of its capital, and
eserve fund. All this is true.'
● Defendants filed a motion to quash the summons and
thereof on the ground that the court had no jurisdiction
Coast, there being no authority in the court for the issu
process.
○ that the order under which the process was issue
○ CFI denied
Writ of prohibition case
● West Coast prayed that a writ of prohibition be issued
desist from further proceedings against the former in
case.
○ that the CFI has no power or authority to procee
corporation criminally to bring it to court for the
making it amenable to the criminal laws
○ that issuance and service of the process were au
no law and thus void
○ that the process was a mixture of civil and crimin
not properly signed, did not direct an arrest, an
form required by law
Issue/s:
1. W/N the court may, of itself, create not only a pro
procedure by which the process may be made effective -
Ratio:
1.
● Courts have only such authority in criminal matters as
conferred upon them by statute or which it is necessary to
such authority in order to carry out fully the authority confe
○ CFIs have no authority to create new procedu
processes in criminal law.
● Even though there are various penal laws in the P
corporations may violate, still the courts are not authoriz
the extent of creating special procedure and special pr
the purpose of carrying out those penal statutes, when th
itself has neglected to do so.
○ To bring a corporation into court criminally req
additions to the present criminal procedure.
CORP 2-D
 ○ While it may be said to be the duty of courts to see to it that
criminals are punished, it is no less their duty to follow
prescribed forms of procedure and not to go out upon
unauthorized ways or act in an unauthorized manner.
courts here have no common law jurisdiction or powers.
○ If they have any powers not conferred by statute, expressly
or impliedly, they would naturally come from Spanish and not
from common law sources.
■ Under the Spanish criminal law and procedure, a
corporation could not have been proceeded against
criminally, as such, it could not have committed a
crime in which a willful purpose or a malicious intent
was required.
■ Criminal actions would have been restricted or
limited, under that system, to the officials of such
corporations and never would have been directed
against the corporation itself.

:
ed that the Court of First Instance of the city of Manila be and it is
ined and prohibited from proceeding further in the criminal cause
fore us in this proceeding, entitled United States vs. West Coast
ce Company, a corporation, John Northcott and Manuel C. Grey,
aid proceedings relate to the said West Coast Life Insurance
corporation, the plaintiff in the case.

re are many cases cited by counsel for the defendant (Hurd)

ch show that corporations have been proceeded against
minally by indictment and otherwise and have been punished as
efactors by the courts.
○ In those cases, the statute, by express words or by
necessary intendment, included corporations within the
persons who could offend against the criminal laws; and the
legislature, at the same time established a procedure
applicable to corporations.

CORP 2-D
 5. Philippine National Bank (PNB) v. Court of Appeals
G.R. No. L-27155 | May 18, 1978 | Antonio, J.
Digest by: CASAMA
: Philippine National Bank
nts: CA, Rita Gueco Tapnio, Cecilio Gueco and Phil. American
urance Company Inc. (Philamgen)
on is civilly liable in the same manner as natural persons for
use "generally speaking, the rules governing the liability of a
master for a tort committed by an agent or servant are the
her the principal or master be a natural person or a corporation,
r the servant or agent be a natural or artificial person.
uthorities agree that a principal or master is liable for every tort
xpressly directs or authorizes, and this is just as true of a
as of a natural person, A corporation is liable, therefore,
tortious act is committed by an officer or agent under express
authority from the stockholders or members acting as a body,
y, from the directors as the governing body."
amgen executed a bond with Rita as principal in favor of PNB
nch at San Fernando Pampanga to guarantee the payment of
’s account with PNB rental acceptable is P2.80 per picul.
turn, Rita and Cecilio executed an indemnity agreement to
rantee the payment of whatever amount the bonding company
uld pay to PNB
original amount of the bond was 4k but was reduced to 2k
was indebted to the bank in the sum of 2k plus accumulated
rest unpaid which she failed to pay despite demands
bank wrote a letter of demand to Philamgen and Philamgen paid
bank
claims however that when demand was made upon her by
amgen for her to pay her debt to the bank, she told Philamgen
she did not consider herself to be indebted to the bank at all
ause she had an agreement with Jacobo-Nazon whereby she
leased to the latter her unused export sugar quota for the 1956-
1957 agricultural year for a total of P2,800 which was
excess of her obligation guaranteed by Philamgen’s bond
- She further claims that this was done with the kn
the bank but the bank has placed obstac
consummation of the lease and the delay cause
rescind the lease contract
- Rita filed then her third-party complaint again
recover all sums of money which may be adjud
her and in favor of Philamgen
● The lower court found based on evidence that Rita ha
sugar quota of 1k piculs for the agri year 1956-1957 wh
not need so she allowed Jacobo Tuazon to use sai
P2,500 (Contract of lease of sugar allotment)
● At the time of the agreement, Rita was indebted to PN
indebtedness was known as a crop loan and was se
mortgage on her standing crop including her sugar quot
for the agricultural year corresponding to said standin
means that PNB has a lien on the harvests of Rita)
● Her sugar cannot be exported without sugar quota allotm
she harvests less sugar than her quota, her excess quo
by another (Jacobo)
● Since the quota was mortgaged to PNB, the contract of l
be approved by the bank but the bank required the par
the consideration to P2,800 informing them that the min
● Mr. Jacobo agreed to raising the consideration and was
said amount as the funds were in his folder which was
bank
● Mr. Jacobo explained regarding the funds that he had a
loan from the bank but he had not yet utilized it as he wa
to use it to pay for the quota.
● Hence, when Mr. Jacobo said the amount needed to pay
his folder which was in the bank, he meant and the ba
understood and knew he had an approved loan available
in payment of the quota.
● However, when the bank manager recommended the app
contract of lease, the board of directors of PNB requir
amount be raised to P3 per picul
● Mr. Jacobo asked for reconsideration but it was unacted u
CORP 2-D
 ause of this, he was no longer interested to continue the lease so to morals, good customs, and public policy shall comp
lost the sum of P2,800 which could be the payment for her latter for the damage
ebtedness ● DOCTRINE
wer courts ruled in favor of Rita Dispositive:
WHEREFORE, in view of the foregoing, the decision of the Cour
is hereby AFFIRMED.
ether PNB is liable for the damage caused? YES

e is of the essence in the approval of the lease of sugar quota

tments, since the same must be utilized during the milling
son, because any allotment which is not filled during such milling
son may be reallocated by the Sugar Quota Administration to
er holders of allotments.
unreasonableness of the position adopted by the petitioner's
rd of Directors is shown by the fact that the difference between
amount of P2.80 per picul offered by Tuazon and the P3.00 per
ul demanded by the Board amounted only to a total sum of
0.00.
nsidering that all the accounts of Rita Gueco Tapnio with the Bank
e secured by chattel mortgage on standing crops, assignment of
sehold rights and interests on her properties, and surety bonds
that she had apparently "the means to pay her obligation to the
k, as shown by the fact that she has been granted several sugar
p loans of the total value of almost P80,000.00 for the agricultural
rs from 1952 to 1956", there was no reasonable basis for the
rd of Directors of petitioner to have rejected the lease agreement
ause of a measly sum of P200.00.
ough PNB had the ultimate authority of approving or
approving the proposed lease, the latter cannot escape its
ponsibility of observing, for the protection of the interest of private
pondents, that degree of care, precaution and vigilance which the
umstances justly demand in approving the lease of said sugar
ta.
B acted in bad faith because it knew that the agricultural year was
ut to expire and that by its disapproval of the lease, private
pondents would be unable to utilize the sugar quota
B is liable for damages under Article 21 of NCC, any person who
ully causes loss or injury to another in a manner that is contrary
CORP 2-D
 6. Sergio F. Naguiat v. NLRC
G.R. No. 116123 | March 13, 1997 | Panganiban, J.
Digest by: CHANG
: Sergio F. Naguiat doing business under the name and style
aguiat Ent., Inc., & Clark Field Taxi, Inc. (CFTI)
nts: National Labor Relations Commission (NLRC), National
n Of Workingmen And Its Members, Leonardo T. Galang, et al.
he Court here finds no application to the rule that a corporate
ot be held solidarity liable with a corporation in the absence of
at he had acted in bad faith or with malice. In the present case,
uiat is held solidarily liable for corporate tort because he had
gaged in the management and operation of CFTI, a close
d a concessionaire's contract with the Army Air Force Exchange
(AAFES) for the operation of taxi services within Clark Air Base.
. Naguiat was CFTI's president, while Antolin T. Naguiat was its
sident. Like Sergio F. Naguiat Enterprises, Incorporated (Naguiat
es), a trading firm, it was a family-owned corporation.
l respondents were previously employed by CFTI as taxicab
However, in their complaint, they alleged that they were regular
es of Naguiat Enterprises, although their individual applications
oyment were approved by CFTI. (Note, that CFTI and Naguiat
different, but both are owned by Sergio.)
he phase-out of the US military bases in the Philippines, from
ark Air Base was not spared, the AAFES was dissolved, and the
of individual respondents were officially terminated on November
. involved at all in the taxi business.
ers' Union and CFTI held negotiations and they arrived at an
nt that the separated drivers will be given P500.00 for every year
e as severance pay. Most of the drivers accepted said amount in
er 1991 and January 1992. However, individual respondents
fused to accept theirs.
l respondents disaffiliated themselves from the drivers' union
ugh the National Organization of Workingmen ("NOWM"), a labor
tion, filed a complaint against Sergio Naguiat and CFTI for
payment of separation pay due to termination/phase-out. (The
be paid P1,200.00 instead of P500.00)
Issue/s:
● W/N Sergio F. Naguiat Enterprises, Inc. is a separate
juridical entity which cannot be held jointly and severally l
obligations of CFTI? YES, Naguiat Enterprises is not liabl
● W/N Sergio F. Naguiat was merely an officer and sto
CFTI and, thus, could not be held personally acco
corporate debts? NO, he is solidarily liable.
Ratio:
Naguiat Enterprises Not Liable
● From the evidence proffered by both parties, there is no
basis to hold that Naguiat Enterprises is an indirect e
individual respondents much less a labor only contractor.
● On the contrary, petitioners submitted documents su
drivers' applications for employment with CFTI, and so
remittances and payroll of Naguiat Enterprises showing t
the individual respondents were its employees.
● Private respondents failed to substantiate their claim t
Enterprises managed, supervised and controlled their em
appears that they were confused on the personalities o
Naguiat as an individual who was the president of CFTI,
F. Naguiat Enterprises, Inc., as a separate corporate e
separate business.
● A closer look at the records show that Sergio F.
supervising the drivers and determining their employment
rather carrying out his responsibilities as president of C
Naguiat Enterprises as a separate corporation does not a
CFTI president solidarily liable
● In the case A.C. Ransom Labor Union-CCLU vs. NLRC
asked that officers and agents of the company be held
liable for payment of the backwages. This was granted
arbiter and was further upheld by the SC.
○ Mme. Justice Melencio-Herrera, ratiocinated this wa
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 How can the foregoing Arts 265 and 273 of the Labor Code
visions be implemented when the employer is a corporation?
answer is found in Article 212(c) of the Labor Code which
vides:
'Employer' includes any person acting in the interest of an
ployer, directly or indirectly. The term shall not include any
or organization or any of its officers or agents except when
ng as employer.'
foregoing was culled from Section 2 of RA 602, the
imum Wage Law. Since RANSOM is an artificial person, it
st have an officer who can be presumed to be the employer,
ng the 'person acting in the interest of (the) employer'
NSOM. The corporation, only in the technical sense, is the
ployer.
responsible officer of an employer corporation can be held
sonally, not to say even criminally, liable for nonpayment of
k wages. That is the policy of the law. x x x
If the policy of the law were otherwise, the corporation
ployer can have devious ways for evading payment of back
ges. x x x
The record does not clearly identify 'the officer or officers' of
NSOM directly responsible for failure to pay the back wages
he 22 strikers. In the absence of definite proof in that regard,
believe it should be presumed that the responsible officer is
President of the corporation who can be deemed the chief
ration officer thereof.Thus, in RA 602, criminal responsibility
ith the 'Manager or in his default, the person acting as such.'
RANSOM, the President appears to be the Manager."
jurisprudence is wanting as to the definite scope of "corporate
" Essentially, "tort" consists in the violation of a right given or the
ssion of a duty imposed by law. Simply stated, tort is a breach of
gal duty. Article 283 of the Labor Code mandates the employer to
nt separation pay to employees in case of closure or cessation of
rations of establishment or undertaking not due to serious
iness losses or financial reverses, which is the condition
aining at bar. CFTI failed to comply with this law-imposed duty or
gation. Consequently, its stockholder who was actively
engaged in the management or operation of the
should be held personally liable.
● A corporation, being a juridical entity, may act only
directors, officers and employees. Obligations incurre
acting as such corporate agents, are not theirs but
accountabilities of the corporation they represent.
● True, solidary liabilities may at times be incurred but
exceptional circumstances warrant such as, genera
following cases: . . . 4. When a director, trustee or officer
specific provision of law, personally liable for his corporate
● The Corporation Code specifically imposes personal liabi
stockholder actively managing or operating the business
of the close corporation. The Court here finds no applic
rule that a corporate officer cannot be held solidarity l
corporation in the absence of evidence that he had acted
or with malice. In the present case, Sergio Naguiat is he
liable for corporate tort because he had actively enga
management and operation of CFTI, a close corporation.
Antolin Naguiat not personally liable
● Although he carried the title of "general manager" and w
president, it had not been shown that he had acted in suc
● Furthermore, no evidence on the extent of his particip
management or operation of the business was proffered.
he cannot be held solidarily liable for the obligations o
Sergio Naguiat to the private respondents.
Dispositive:
WHEREFORE, the foregoing premises considered, the petition is PARTLY G
assailed February 28, 1994 Resolution of the NLRC is hereby MODIFIED as follow
(1) Petitioner Clark Field Taxi, Incorporated, and Sergio F. Naguiat, president
thereof, are ORDERED to pay, jointly and severally, the individual respondents t
pay computed at US$120.00 for every year of service, or its peso equivalent
payment or satisfaction of the judgment;
(2) Petitioner Sergio F. Naguiat Enterprises, Incorporated, and Antolin T
ABSOLVED from liability in the payment of separation pay to individual responden
SO ORDERED.
7. Republic Gas Corp. v. Petron Corp.
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 G.R. No. | Date | Ponente
Digest by: CORPUS
: Republic Gas Corporation, Arnel U. Ty, Mari Antonette N. Ty,
yes, Ferrer Suazo and Alvin U. Ty
nts: Petron Corporation, Pilipinas Shell Petroleum Corporation,
ternational Petroleum Company Limited
Corporate officers and/or directors, through whose act, default
n the corporation commits a crime, may themselves be
held answerable for the crime. The existence of the corporate
not shield from prosecution the corporate agent who knowingly
nally caused the corporation to commit a crime.
ron Corporation and Pilipinas Shell are two of the largest bulk
pliers and producers of LPG in the Philippines.
a) Petron is the registered owner in the Philippines of the
trademarks GASUL and GASUL cylinders used for its LGP
products.
b) Pilipinas Shell is the authorized user in the Philippines of the
tradename, trademarks, symbols or designs of its principal,
Shell International Petroleum Company Limited, including
the marks SHELLANE and SHELL device in connection with
the production, sale and distribution of SHELLANE LPGs.
GASCO is engaged in the business of refilling, buying, selling,
ributing and marketing at wholesale and retail of LPG.
G Dealers Associations received reports that certain entities were
aged in the unauthorized refilling, sale and distribution of LPG
nders bearing the registered tradenames and trademarks of the
ron and Shell. They filed a letter-complaint in the NBI regarding
alleged illegal trading of petroleum products and/or underdelivery
nderfilling in the sale of LPG products.
conducted investigations which showed that several persons
/or establishments, including REGASCO, were suspected of
ing violated provisions of B.P. 33.
a) REGASCO LPG Refilling Plant in Malabon was engaged in
the refilling and sale of LPG cylinders bearing the registered
marks of the Petron and Shell without authori
latter.
5) Subsequently, the NBI lodged a complaint in the DOJ
corporate officers of REGASCO for alleged violations
155 and 168 of Republic Act (RA) No. 8293, otherwise kn
Intellectual Property Code of the Philippines.
6) The Assistant City Prosecutor recommended the dism
complaint, finding that there was no proof introduced by
Shell that would show that REGASCO was engaged
petitioner’s products or that it imitated and reproduced th
trademarks of the petitioners.
7) On appeal, the DOJ Secretary affirmed the prosecutor’s
the complaint in a Resolution
a) Refilling the empty cylinders is by no means an
itself – it being the legitimate business of Regasc
in the refilling and marketing of liquefied petroleum
did not pass off the goods as those of complain
other act was done other than to refill them in
course of its business.
b) A corporation has a personality separate and dist
stockholders. To sustain the allegations, the acts
of must be shown to have been committed by res
their individual capacity by clear and convincing e
8) Petron and Shell sought recourse to the CA through a
certiorari. CA granted the petition and set aside the DOJ R
9) REGASCO then filed a motion for reconsideration, which
by the CA. Hence, this petition
Issue/s:
● Whether probable cause exists to hold INDIVIDUAL PE
liable for the offense charged. - YES!
.Ratio:
● The Court found that REGASCO has actually committed
infringement and unfair competition.
○ Trademark infringement - when they refilled,
respondents’ consent, the LPG containers b
registered marks of the respondents. REGASCO
inevitably confuse the consuming public, since th
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 way of knowing that the gas contained in the LPG tanks
bearing respondents’ marks is in reality not the latter’s LPG
product after the same had been illegally refilled.
○ Unfair competition – by refilling and selling LPG cylinders
bearing their registered marks, petitioners are selling goods
by giving them the general appearance of goods of another
manufacturer.
Court also found that there is sufficient evidence to warrant the
secution of REGASCO’s corporate officers, considering that
GASCO, being a corporation, possesses a personality separate
distinct from the person of its officers, directors and
ckholders.
○ Being corporate officers and/or directors, through whose act,
default or omission the corporation commits a crime, may
themselves be individually held answerable for the crime.
Being in direct control and supervision in the management
and conduct of the affairs of the corporation, these officers
must have known or are aware that the corporation is
engaged in the act of refilling LPG cylinders bearing the
marks of Petron and Shell without authority or consent from
the latter.
○ The existence of the corporate entity does not shield from
prosecution the corporate agent who knowingly and
intentionally caused the corporation to commit a crime. Thus,
petitioners cannot hide behind the cloak of the separate
corporate personality of the corporation to escape criminal
liability. A corporate officer cannot protect himself behind a
corporation where he is the actual, present and efficient
actor.

:
RE, premises considered, the petition is hereby DENIED and the
ted July 2, 2010 and Resolution dated October 11, 2010 of the
peals in CA-G.R. SP No. 106385 are AFFIRMED.

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 8. People v. Tan Boon Kong
G.R. No. L-35262| March 15, 1930 | Ostrand J.
Digest by: CRUZ
: The People of the Philippine Islands
nts: Tan Boon Kong
A corporation can act only through its officers and agents, and
usiness itself involves a violation of the law, the correct rule is
participate in it are liable
ple appealed the grant of demurrer to an information charging
Tan Boon Kong with the violation of section 1458 of Act No. 2711
amended.
information reads as follows: That on and during the four
rters of the year 1924, in the municipality of Iloilo, Province of
o, Philippine Islands, the said accused, as corporation organized
er the laws of the Philippine Islands and engaged in the purchase
the sale of sugar, "bayon," coprax, and other native products
as such object to the payment of internal-revenue taxes upon its
es, did then and there voluntarily, illegally, and criminally declare
924 for the purpose of taxation only the sum of P2,352,761.94,
en in truth and in fact, and the accused well knew that the total
ss sales of said corporation during that year amounted to
543,303.44, thereby failing to declare for the purpose of taxation
amount of P190,541.50, and voluntarily and illegally not paying
Government as internal-revenue percentage taxes the sum of
960.12, corresponding to 1½ per cent of said undeclared sales.
N information sets forth facts rendering the Tan Boon Kong, as
nager of the corporation liable criminally - YEEEEssssss
C. 1458. Payment of percentage taxes — Quarterly reports of
nings. — The percentage taxes on business shall be payable at
end of each calendar quarter in the amount lawfully due on the
iness transacted during each quarter; and it shall be on the duty
of every person conducting a business subject to
within the same period as is allowed for the paym
quarterly installments of the fixed taxes without
make a true and complete return of the amount of the
earnings of his business during the preceeding quarter a
tax due thereon. . . . (Act No. 2711.)
● SEC. 2723. Failure to make true return of receipts and sa
person who, being required by law to make a re
amount of his receipts, sales, or business, shall fail o
make such return within the time required, shall be pun
fine not exceeding two thousand pesos or by imprisonme
not exceeding one year, or both.
● And any such person who shall make a false or fraud
shall be punished by a fine not exceeding ten thousand
imprisonment for a term not exceeding two years, or bo
2711.)
● The court below based the appealed ruling on the grou
offense charged must be regarded as committed by the
and not by its officials or agents.
● A corporation can act only through its officers and agents
the business itself involves a violation of the law, the co
that all who participate in it are liable
● In the present case the information or complaint alleg
defendant was the manager of a corporation which was
business as a merchant, and as such manager, he m
return, for purposes of taxation, of the total amount of sale
●
Dispositive: The ruling of the court below sustaining the dem
complaint is therefore reversed, and the case will be returned t
for further proceedings not inconsistent with our view as herein
Without costs. So ordered.
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 9. People v. Chowdury 34) Chowdury testified that he worked as an interviewer at C
G.R. No. | Date | Ponente an employee he followed the instructions given by his su
Digest by: CUA Emmanuel Geslani, the agency’s President and Gener
and Mr. Utkal Chowdury, the agency’s Managing D
:People of the Philippines
conducted interviews and submitted forms based on th
nts: Bulu Chowdury
responses to Mr. Utkal Chowdury. He claimed to
received money from applicants.
35) Trial court found Chowdury guilty
shown that the employee was merely acting under the direction
36) Chowdury appealed
iors and was unaware that his acts constituted a crime, he may
a) He contends that he may not be held liable as he
d criminally liable for an act done for and in behalf of his
an employee of Craftrade and he only performe
assigned by his superiors. He argues that the off
control, management and direction of the agenc
liable
u Chowdury and Josephine Ong were charged with illegal Issue/s:
uitment in large scale ● W/N Chowdury is guilty of large scale recruitment? NO
y were likewise charged with three counts of estafa against
ate complainants but the charges against Chosdury were Ratio:
missed and an amended information indicted only Ong for the ● Elements of illegal recruitment in large scale:
nse (1) The accused undertook any recruitment activity de
owdury was arraigned while Ong remained at large. Chowdury Article 13 (b) or any prohibited practice enumerated unde
aded not guilty to the charge of recruitment in large scale of the Labor Code;
secution presented four witnesses private complainants Aser (2) He did not have the license or authority to lawfully en
is, Estrella Alleja and Melvin Miranda and Labor Employment recruitment and placement of workers; and
cer Abbelyn Caguitla (3) He committed the same against three or mor
is, Alleja and Miranda testified that they were all interviewed by individually or as a group.
owdury for employment at Craftrade Overseas Developer in South ● Sec 6 RA 8042: The persons criminally liable for the abo
ea as factory workers. They had to submit various documents are the principals, accomplices and accessories. In case
ssport, NBI clearance, passport picture and medical certificate) persons, the officers having control, management o
had to pay fees. Sasis paid 16k to Craftrade as processing fee. of their business shall be liable
ja paid 20k as placement fee. Miranda paid 25k as processing ● An employee of a company or corporation engage
recruitment may be held liable as principal, togeth
or Employment officer Abbelyn Caguitla testified that she employer, if it is shown that he actively and c
pared a certificate saying Chowdury and Ong were not in their participated in illegal recruitment
sonal capacities licensed recruiters nor were they connected with ● Evidence shows that accused appellant interview
licensed agency. Craftrade was previously licensed to recruit complainants at Craftrade’s office. At the time he was e
kers from abroad but it had expired. Temporary license was given interviewer, Craftrade was also then operating under
POEA later suspended it. authority given by the POEA pending renewal of its licens

CORP 2-D
 was convicted based on the fact that he was not registered with
EA as employee of Craftrade nor in his personal capacity licensed
ecruit overseas workers.
tion 10 Rule II Book II of the Rules and Regulation Governing
erseas Employment (1991) requires that every change,
mination or appointment of officers, representatives and personnel
icensed agencies be registered with the POEA. Agents or
esentatives appointed by a licensed recruitment agency whose
ointments are not previously approved by the POEA are
sidered "non-licensee " or "non-holder of authority" and therefore
authorized to engage in recruitment activity
secution failed to prove that accused appellant was aware of
ftrade’s failure to register his name with the POEA and that he
vely engaged to recruit despite this knowledge
obligation to register personnel with POEA belongs to the
cers of the agency as a mere employee cannot be expected to
w the legal requirements.
dence shows that accused appellant carried out his duties as
rviewer believing that the agency was duly licensed by the
EA.
merely interviewed applicants and informed them of
uirements. He never received money as payments were received
he agency’s cashier, Josephine Ong. His tasks furthermore were
er supervision of its president and managing director.
J may still file a complaint against the officers having control,
nagement or direction of the business so long as the offense has
yet prescribed.

:
WHEREOF, the assailed decision of the Regional Trial Court is
D and SET ASIDE. Accused-appellant is hereby ACQUITTED.
r of the Bureau of Corrections is ordered to RELEASE accused-
nless he is being held for some other cause, and to REPORT to
ompliance with this order within ten (10) days from receipt of this
et a copy of this Decision be furnished the Secretary of the
of Justice for his information and appropriate action.

CORP 2-D
 10. Ching v. Secretary of Justice
G.R. No.164317 | Feb. 6,2006 | CALLEJO SR., J.
Digest by: DA SILVA
: Alfredo Ching
nts: Secretary of Justice, Rizal Commercial Banking Corp.
e crime is committed by a corporation of other juridical entities,
directors, officers, employees or other officers responsible for
offense shall be penalized for the crime. A corporation cannot
arrested and imprisoned, and cannot be penalized for a crime
ishable by imprisonment. A corporation however, may charged
prosecuted for a crime if the imposable penalty is fine only. In
e the penalty is both fine and imprisonment, a corporation may
prosecuted, and if found guilty, it may be fined.
ally, when a criminal statute does not expressly apply to
porations, it does may not be applied against corporations.
en the law provides a crime which may be committed by
porations, but states that the officers, among others, who are
ponsible for the crime, then only said individuals will suffer the
alty prescribed if found guilty.
tioner Alfredo Ching was the Senior Vice-President of Philippine
oming Mills, Inc. (PBMI)
a) Signing as Vice-President of PBMI, he applied with Rizal
Commercial Banking Corporation for issuance of commercial
letters of credit to finance its importation of assorted goods.
b) Respondent bank approved said application.
goods for importation were then purchased and delivered in trust
BMI.
a) Ching, as Vice-President of PBMI, signed 13 trust receipts
as surety acknowledging the delivery of the imported goods.
b) Petitioner agreed to hold the goods in trust for the bank, with
authority to sell but not by way of conditional sale, pledge or
otherwise; and in case such goods were sold, to turn over
the proceeds as soon as received to apply
relative acceptances and payment of indebtednes
3) When the trust receipts matured, petitioner failed to retur
to the respondent bank, or to return their value amoun
6,940,280.66
4) Respondent filed a complaint for Estafa with the City P
Manila. (in case sir asks):
a) Prosecutor found probable cause
b) Petitioner appealed to Minister of justice - denied
c) Petitioner filed a Motion for Reconsideration - gra
i) Minister ordered prosecutor to file a
withdrawal
d) Bank filed a motion for reconsideration with
Justice - denied
e) RTC granted petitioner’s subsequent Motion to
Information on the ground that the material allega
amount to estafa.
5) The SC rendered judgment in Allied Banking Corporation
during the pendency of this case.
a) here it was ruled that PD 115 (Trust Rec
encompasses any act violative of an obligation
the trust receipt; it is not limited to transaction
goods to be sold.
b) It was also ruled here that non-payment of
covered by a trust receipt is violative of the oblig
entrustee to pay.
6) Because of said ruling, respondent re-filed the complaint
a) Prosecutor found no probable cause since
liability was only civil and not criminal
b) DOJ on petition for review reversed the findings
Prosecutor, and found probable cause to indict p
violation of PD 115.
7) Petitioner thus contends that the Secretary of Justice
grave abuse of discretion in issuing the resolution
a) Petitioner alleged that the transaction between
Rizal Banking Commercial Corporation does no
PD 115.
b) He further alleged that he merely signed as S
PBMI, and had no physical possession of the
CORP 2-D
 therefore, should not be prosecuted. He alleges, as a result,
that PBMI, as a corporation, is the entrustee, and therefore,
he should not be prosecuted for PBMI’s failure to perform its
obligation under the trust receipts law.
N The Secretary of Justice committed grave abuse of discretion
en he found probable cause to indict petitioner under PD 115 –
and prosecuted for a crime if the imposable penalty is
case the penalty is both fine and imprisonment, a corpora
prosecuted, and if found guilty, it may be fined.
Finally, when a criminal statute does not expressl
corporations, it does may not be applied against corpora
the law provides a crime which may be committed by c
but states that the officers, among others, who are res
the crime, then only said individuals will suffer the penalty
if found guilty.

Dispositive:
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED
The transaction between petitioner and respondent falls under the merit. Costs against the petitioner.
t receipt transactions contemplated by PD 115. Under said law, SO ORDERED.
failure of a person to turn over the proceeds of the sale of goods
ered by a trust receipts, or to return said goods if not sold, is a NOTE: This case began during the Marcos era, hence the term
lic nuisance to be abated by the imposition of penal sanctions. of Justice,”
Court likewise ruled in Allied Banking v Ordonez that the law
lies to any act violative of an obligation covered by the trust
eipt; it is not limited to transactions involving goods to be sold.
hermore, it also applies to non-payment of the amount covered
a trust receipt, and is considered by the law as violative of the
gation of the entrustee to pay.
Though petitioner signed the trust receipts as Senior VP of PBMI,
cannot avoid prosecution. Though the entrustee is a corporation,
law specifically makes the officers, employees or other officers or
sons responsible for the offense without prejudice to the civil
lities of the corporation and/or board of directors. This is because
d officers are vested with the authority and responsibility to devise
ans necessary to ensure compliance with the law, and their
gations under the trust receipts. Failure to do so renders them
minally liable.

e crime is committed by a corporation of other juridical entities,

directors, officers, employees or other officers responsible for the
nse shall be penalized for the crime. A corporation cannot be
sted and imprisoned, and cannot be penalized for a crime
ishable by imprisonment. A corporation however, may charged
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