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130998, Pursuant to the consultancy agreement, respondent

2001-08-10 claimed a commission of six percent (6%) of the total
contract price, or a total of P6,000,000.00, or in the
Facts: alternative, that he be paid the same amount by way of
damages or as the reasonable value of the services he
Petitioner Marubeni is a foreign corporation organized and
existing under the laws of Japan. It was doing business in rendered to petitioners, and further claimed twenty
percent (20%) of the amount recoverable as attorney's
the Philippines through its duly licensed, wholly owned
subsidiary, Marubeni Philippines Corporation. Petitioners fees and the costs of suit. Petitioners denied the
Ryoichi Tanaka, Ryohei Kimura and Shoichi One were consultancy agreement.
officers of Marubeni assigned to its Philippine branch. Petitioner Ryohei Kimura did not have the authority to
On January 27, 1989, respondent Lirag filed with the enter into such agreement in behalf of Marubeni. Only Mr.
Regional Trial Court a complaint for specific performance Morihiko Maruyama, the general manager, upon issuance
and damages claiming that petitioners owed him the sum of a special power of attorney by the principal... office in
of P6,000,000.00 representing commission pursuant to an Tokyo, Japan, could enter into any contract in behalf of the
corporation. Mr. Maruyama did not discuss with
oral consultancy... agreement with Marubeni.
respondent Lirag any of the matters alleged in the
Lirag claimed that on February 2, 1987, petitioner Ryohei complaint, nor agreed to the payment of commission.
Kimura hired his consultancy group for the purpose of
obtaining government contracts of various projects. Thus, petitioners moved for the dismissal of the complaint.

Petitioners promised to pay him six percent (6%) During the pre-trial conferences held on September 18
consultancy fee based on the total costs of the projects and October 16, 1989 and on January 24, March 15 and
May 17, 1990, no amicable settlement was reached. Trial
on the merits ensued.
The consultancy agreement was not reduced into writing
because of the mutual trust between Marubeni and the On April 29, 1993, the trial court promulgated a decision
and ruled that respondent is entitled to a commission.
Lirag family.
Respondent was led to believe that there existed an oral
Their close business and personal relationship dates back consultancy agreement. Hence, he performed his part of
to 1960, when respondent's family was engaged in the the agreement and helped petitioners get the project.
textile fabric manufacturing business, in which Marubeni
supplied the needed machinery, equipment, spare parts On May 26, 1993, petitioners interposed an appeal from
and raw materials. the decision to the Court of Appeals.

After due proceedings, on October 9, 1997, the Court of

In compliance with the agreement, respondent Lirag made
representations with various government officials, Appeals promulgated a decision affirming the decision of
arranged for meetings and conferences, relayed pertinent the trial court. The Court of Appeals ruled that
information as well as submitted feasibility studies and preponderance of evidence favored the existence of a
project proposals, including pertinent documents required consultancy agreement between the parties. It upheld the
factual... findings of the trial court
by petitioners.

One of the projects handled by respondent Lirag, the Issues: WON respondent is entitled to receive a
Bureau of Post project, amounting to P100,000,000.00 was commission if there was, in fact, a consultancy...
awarded to the "Marubeni-Sanritsu tandem."

Despite respondent's repeated formal verbal demands for Ruling: We find the appeal meritorious.
payment of the agreed consultancy fee petitioners did not An assiduous scrutiny of the testimonial and documentary
pay. In response to the first demand letter, petitioners evidence extant leads us to the conclusion that the
promised to reply within fifteen (15) days, but they did not evidence could not support a solid conclusion that a
do so.
consultancy agreement, oral or written, was agreed and Banco De Oro (BDO), they have adopted the corporate
between petitioners and respondent. name Banco De Oro.

In civil cases, he who alleges a fact has the burden of Petitioners were client-depositors of EPCIB for more than
proving it; a mere allegation is not evidence. 12 years. Petitioners alleged that sometime in mid-1999,
the branch manager of EPCIB offered a loan to the
He must establish his cause by a preponderance of petitioners under its Own-a-Home Loan
evidence which respondent failed to establish in the Program. Petitioners applied for a loan of P4,000,000.00
instant case. and were informed of the approval of the same.
Assuming for the sake of argument that an oral To secure the payment of the loan, petitioners executed
consultancy agreement has been perfected between the an REM over their land in Quezon City. Petitioners
parties, respondent Lirag could not still claim fees on the asserted that even if the loan documents were signed in
project that has not been awarded to Marubeni. blank, it was understood that they executed the REM in
Respondent tried to justify his commission of roughly favor of EPCIB.
about P6,000,000.00 in the guise that Marubeni and Respondent Bank then released a total amount
Sanritsu are sister corporations, thereby implying the need of P3,600,000.00 in four installments, while the balance
to pierce the veil of corporate fiction. Respondent claimed of P400,000.00 was not drawn by petitioners. On the other
that Marubeni as the supplier and real contractor of the hand, petitioners started to pay their monthly
project hired and sub-contracted the project to Sanritsu. amortizations.
To disregard the separate juridical personality of a Petitioners made repeated requests to EPCIB to furnish
corporation, the wrongdoing must be clearly and them their copies of the loan documents which were made
convincingly established. It cannot be presumed. The verbally and also evidenced by letters from the petitioner
separate personality of the corporation may be requesting their copies of the loan documents. They
disregarded only when the corporation is used as a cloak further claimed that they purposely did not draw the
or cover for fraud or illegality, or to work injustice, or remaining balance of the loan in the amount
where necessary for the protection of creditors. of P400,000.00 and stopped paying their loan
amortizations to protest EPCIBs continued failure to
Any agreement entered into because of the actual or
provide them copies of the loan documents and its
supposed influence which the party has, engaging him to
influence executive officials in the discharge of their duties, imposition of an interest rate higher than that agreed
which contemplates the use of personal influence and upon.
solicitation rather than an appeal to the judgment of... the In reply to the petitioners letter, the VP of EPCIB, Gary
official on the merits of the object sought is contrary to Vargas explained that as a matter of practice, their clients
public policy. were given original copies of the loan documents only
upon full release of the amount loaned. EPCIB clarified
Consequently, the agreement, assuming that the parties
agreed to the consultancy, is null and void as against that since petitioners loan had not been fully released, the
public policy. original documents were not yet sent to them.

In the meantime, respondent, through counsel, also sent

Therefore, it is unenforceable before a court of justice.
a letter to the petitioners demanding payment for their
BORROMEO VS CA obligation amounting to P4,097,261.04, inclusive of
interest and other charges.
FACTS: Respondent Equitable Savings Bank is a domestic
savings bank corporation with principal office and place of Finally, petitioners received copies of the loan documents
business at EPCIB Tower in Makati City. At the time the which they had earlier signed in blank. According to
dispute began, it was a subsidiary of Equitable PCI Bank petitioners, they were surprised to find out that the Loan
(EPCIB), a domestic universal banking corporation with Agreement and REM designated respondent ESB as lender
principal office in Makati City. After the merger of EPCIB
and mortgagor, instead of EPCIB with whom they allegedly the five check payments made in the name of ESB, it fails
entered into the agreement. to categorically state that ESB and not EPCIB is the real
creditor-mortgagor in this loan and mortgage
When the petitioners failed to pay for the loan in full by 30 transaction. This Court finds the position taken by the
September 2003, respondent sought to extra-judicially petitioners to be more credible. The four Promissory Notes
foreclose the REM. However, petitioners filed with the designate EPCIB as the lender.[39] In a letter dated 19
RTC a Complaint for Injunction, Annulment of Mortgage December 2002, addressed to Home Guaranty
with Damages and with Prayer for Temporary Restraining Corporation, EPCIB Vice President Gary Vargas even
Order and Preliminary and Mandatory Injunction against specified petitioners loan as one of its housing loans for
EPCIB and respondent. The petitioners alleged that the which it sought insurance coverage.[40] Records also show
loan documents failed to reflect the true agreement that petitioners repeatedly dealt with EPCIB. When the
between the parties. Firstly, the agreement was between petitioners complained of not receiving the loan
the petitioners and EPCIB and, consequently, respondent documents and the allegedly excessive interest charges,
had no interest in the REM. they addressed their letter dated 3 August 2003 to the
ISSUE: WHETHER OR NOT THE PRIVATE RESPONDENT president of EPCIB.[41] The response, which explained the
loan transactions in detail in a letter dated 27 August 2003,
was written by Gary Vargas, EPCIB Vice President.[42] Of
RULING: The petition is meritorious. almost three years amortizations, the checks were issued
by petitioners in the name of EPCIB, except only for five
In this case, petitioners rights to their property is restricted checks which were issued in respondents name.[43]
by the REM they executed over it. Upon their default on
the mortgage debt, the right to foreclose the property Respondent, although a wholly-owned subsidiary of
would be vested upon the creditor- EPCIB, has an independent and separate juridical
mortgagee. Nevertheless, the right of foreclosure cannot personality from its parent company. The fact that a
be exercised against the petitioners by any person other corporation owns all of the stocks of another corporation,
than the creditor-mortgagee or its assigns. According to taken alone, is not sufficient to justify their being treated
the pertinent provisions of the Civil Code: as one entity. If used to perform legitimate functions, a
subsidiarys separate existence shall be respected, and
Art. 1311. Contracts take effect only between the parties, the liability of the parent corporation, as well as the
their assigns and heirs, except in case where the rights and subsidiary, shall be confined to those arising from their
obligations arising from the contract are not transmissible respective businesses. A corporation has a separate
by their nature, or by stipulation or by provision of personality distinct from its stockholders and other
law. The heir is not liable beyond the value of the property corporations to which it may be conducted.[44] Any claim
he received from the decedent. or suit of the parent corporation cannot be pursued by
the subsidiary based solely on the reason that the former
If a contract should contain some stipulation in favor of a
owns the majority or even the entire stock of the latter.
third person, he may demand its fulfillment provided he
communicated his acceptance to the obligor before its From a perusal of the records, petitioners did not enter
revocation. A mere incidental benefit or interest of a into a Loan Agreement and REM with
person is not sufficient. The contracting parties must have respondent. Respondent, therefore, has no right to
clearly and deliberately conferred a favor upon a third foreclose the subject property even after default, since
person. (Emphasis ours.) this right can only be claimed by the creditor-mortgagor,
EPCIB; and, consequently, the extrajudicial foreclosure of
An extrajudicial foreclosure instituted by a third party to
the REM by respondent would be in violation of
the Loan Agreement and the REM would, therefore, be a
petitioners property rights.
violation of petitioners rights over their property.
In the instant case, petitioners assert that their creditor-
mortgagee is EPCIB and not respondent. While ESB claims
that petitioners have had transactions with it, particularly
Facts: Petitioner Mambulao Lumber applied for an bargaining proposals. Ren Transport, however, failed to
industrial loan with herein respondent PNB and was reply to the demand.
approved with its real estate, machinery and equipments
Subsequently, two members of SMART wrote to the
as collateral. PNB released the approved loan but Department of Labor and Employment - National Capital
petitioner failed to pay and was later discovered to have Region (DOLE-NCR). The office was informed that a
already stopped in its operation. PNB then moved for the majority of the members of SMART had decided to
foreclosure and sale of the mortgaged properties. The disaffiliate from their mother federation to form another
properties were sold and petitioner sent a bank draft to union, Ren Transport Employees Association
(RTEA). SMART contested the alleged disaffiliation through
PNB to settle the balance of the obligation. PNB however
a letter dated 4 April 2005.
alleges that a remaining balance stands and a foreclosure
sale would still be held unless petitioner remits said During the pendency of the disaffiliation dispute at the
amount. The foreclosure sale proceeded and petitioner’s DOLE-NCR, Ren Transport stopped the remittance to
properties were taken out of its compound. Petitioner SMART of the union dues that had been checked off from
filed actions before the court and claims among others, the salaries of union workers as provided under the
CBA. Further, on 19 April 2005, Ren Transport voluntarily
moral damages.
recognized RTEA as the sole and exclusive bargaining
agent of the rank-and-file employees of their company.
Issue: Whether or not petitioner corporation, who has
already ceased its operation, may claim for moral damages. On 6 July 2005, SMART filed with the labor arbiter a
complaint for unfair labor practice against Ren Transport.
Ruling: NO.
LA RULING: Ren Transport is guilty of acts of unfair labor
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 NLRC RULING: affirmed the labor arbiter's finding of unfair
experience physical sufferings, mental anguish, fright, labor practice on the part of Ren Transport. Union dues
serious anxiety, wounded feelings, moral shock or social were ordered remitted to SMART.
humiliation which are basis of moral damages. A The NLRC also awarded moral damages to SMART, saying
corporation may have a good reputation which, if that Ren transport's refusal to bargain was inspired by
besmirched, may also be a ground for the award of moral malice or bad faith. The precipitate recognition of RTEA
damages. The same cannot be considered under the facts evidenced such bad faith, considering that it was done
of this case, however, not only because it is admitted that despite the pendency of the disaffiliation dispute at the
herein appellant had already ceased in its business
operation at the time of the foreclosure sale of the CA RULING: deleted the award of moral damages to
chattels, but also for the reason that whatever adverse SMART, but affirmed the NLRC decision on all other
effects of the foreclosure sale of the chattels could have matters. The CA ruled that SMART, as a corporation, was
upon its reputation or business standing would not entitled to moral damages.
undoubtedly be the same whether the sale was conducted ISSUE: WON SMART is entitled to moral damages.
at Jose Panganiban, Camarines Norte, or in Manila which is
the place agreed upon by the parties in the mortgage RULING: SMART is not entitled to an award of moral
contract. damages.

REN TRANSPORT CORP vs. NLRC Indeed, a corporation is not, as a general rule, entitled to
moral damages. Being a mere artificial being, it is
FACTS: Samahan ng Manggagawa sa Ren Transport incapable of experiencing physical suffering or sentiments
(SMART) is a registered union, which had a five-year like wounded feelings, serious anxiety, mental anguish or
collective bargaining agreement (CBA) with Ren Transport moral shock.
Corp. (Ren Transport). The 60-day freedom period of the
CBA passed without a challenge to SMART'S majority Although this Court has allowed the grant of moral
status as bargaining agent. SMART thereafter conveyed its damages to corporations in certain situations, it must be
willingness to bargain with Ren Transport, to which it sent remembered that the grant is not automatic. The claimant
must still prove the factual basis of the damage and the
causal relation to the defendant's acts.[37] In this case, recalled, that preliminary prohibitory and mandatory writs
while there is a showing of bad faith on the part of the of injunction be issued, that the search warrant be
employer in the commission of acts of unfair labor practice, declared null and void, and that Vera, Logronio, de Leon,
there is no evidence establishing the factual basis of the et. al., be ordered to pay the corporation and Seggerman,
damage on the part of SMART. jointly and severally, damages and attorney’s fees.

Bache & Co Inc vs. Ruiz GR L-32409, 27 February 1971 After hearing and on 29 July 1970, the court issued an
order dismissing the petition for dissolution of the search
Facts: On 24 February 1970, Misael P. Vera, Commissioner warrant. In the meantime, or on 16 April 1970, the Bureau
of Internal Revenue, wrote a letter addressed to Judge of Internal Revenue made tax assessments on the
Vivencio M. Ruiz requesting the issuance of a search corporation in the total sum of P2,594,729.97, partly, if
warrant against Bache & Co. (Phil.), Inc. and Frederick E. not entirely, based on the documents thus seized.
Seggerman for violation of Section 46(a) of the National
Internal Revenue Code (NIRC), in relation to all other The corporation and Seggerman filed an action for
pertinent provisions thereof, particularly Sections 53, 72, certiorari, prohibition, and mandamus.
73, 208 and 209, and authorizing Revenue Examiner
Issue: Whether the corporation has the right to contest
Rodolfo de Leon to make and file the application for
the legality of the seizure of documents from its office.
search warrant which was attached to the letter.
Held: The legality of a seizure can be contested only by the
In the afternoon of the following day, De Leon and his
party whose rights have been impaired thereby, and that
witness, Arturo Logronio, went to the Court of First
the objection to an unlawful search and seizure is purely
Instance (CFI) of Rizal. They brought with them the
personal and cannot be availed of by third parties. In
following papers: Vera’s letter-request; an application for
Stonehill, et al. vs. Diokno, et al. (GR L-19550, 19 June
search warrant already filled up but still unsigned by De
1967; 20 SCRA 383) the Supreme Court impliedly
Leon; an affidavit of Logronio subscribed before De Leon; a
recognized the right of a corporation to object against
deposition in printed form of Logronio already
unreasonable searches and seizures; holding that the
accomplished and signed by him but not yet subscribed;
corporations have their respective personalities, separate
and a search warrant already accomplished but still
and distinct from the personality of the corporate officers,
unsigned by Judge. At that time the Judge was hearing a
regardless of the amount of shares of stock or the interest
certain case; so, by means of a note, he instructed his
of each of them in said corporations, whatever, the offices
Deputy Clerk of Court to take the depositions of De Leon
they hold therein may be; and that the corporate officers
and Logronio.
therefore may not validly object to the use in evidence
After the session had adjourned, the Judge was informed against them of the documents, papers and things seized
that the depositions had already been taken. The from the offices and premises of the corporations, since
stenographer, upon request of the Judge, read to him her the right to object to the admission of said papers in
stenographic notes; and thereafter, the Judge asked evidence belongs exclusively to the corporations, to whom
Logronio to take the oath and warned him that if his the seized effects belong, and may not be invoked by the
deposition was found to be false and without legal basis, corporate officers in proceedings against them in their
he could be charged for perjury. individual capacity.

The Judge signed de Leon’s application for search warrant The distinction between the Stonehill case and the present
and Logronio’s deposition. Search Warrant 2-M-70 was case is that: in the former case, only the officers of the
then signed by Judge and accordingly issued. 3 days later various corporations in whose offices documents, papers
(a Saturday), the BIR agents served the search warrant to and effects were searched and seized were the
the corporation and Seggerman at the offices of the petitioners; while in the latter, the corporation to whom
corporation on Ayala Avenue, Makati, Rizal. the seized documents belong, and whose rights have
thereby been impaired, is itself a petitioner.
The corporation’s lawyers protested the search on the
ground that no formal complaint or transcript of testimony On that score, the corporation herein stands on a different
was attached to the warrant. The agents nevertheless footing from the corporations in Stonehill. Moreover,
proceeded with their search which yielded 6 boxes of herein, the search warrant was void inasmuch as First,
documents. there was no personal examination conducted by the
Judge of the complainant (De Leon) and his witness
On 3 March 1970, the corporation and Seggerman filed a (Logronio).
petition with the Court of First Instance (CFI) of Rizal
praying that the search warrant be quashed, dissolved or
The Judge did not ask either of the two any question the The same articles identify the incorporators, numbering
answer to which could possibly be the basis for fifteen. By 1986, however, of these fifteen incorporators,
determining whether or not there was probable cause six had ceased to be stockholders. As of 1986, there were
against Bache & Co. and Seggerman. The participation of twenty stockholders listed in BASECO's Stock and Transfer
the Judge in the proceedings which led to the issuance of Book.
Search Warrant 2-M-70 was thus limited to listening to the
stenographer’s readings of her notes, to a few words of When EO 1 & 2 was promulgated by Pres. Corazon
warning against the commission of perjury, and to Aquino and respectively the sequestration, takeover and
administering the oath to the complainant and his witness. other orders in relation to the EO done by the PCGG to the
This cannot be consider a personal examination. alleged Marcos controlled corporation which is BASECO.
The problem arose when the sequestration order was
Second, the search warrant was issued for more than one initiated. The sequestration order was directed to 3
specific offense. The search warrant was issued for at least commissioners of the PCGG directing them to sequester
4 distinct offenses under the Tax Code. The first is the the following:
violation of Section 46(a), Section 72 and Section 73 (the
filing of income tax returns), which are interrelated. The 1. Bataan Shipyard and Engineering Co., Inc. (Engineering
second is the violation of Section 53 (withholding of Island Shipyard and
income taxes at source).
Mariveles Shipyard)
The third is the violation of Section 208 (unlawful pursuit
2. Baseco Quarry
of business or occupation); and the fourth is the violation
of Section 209 (failure to make a return of receipts, sales, 3. Philippine Jai-Alai Corporation
business or gross value of output actually removed or to
pay the tax due thereon). Even in their classification the 6 4. Fidelity Management Co., Inc.
provisions are embraced in 2 different titles: Sections 46(a),
53, 72 and 73 are under Title II (Income Tax); while 5. Romson Realty, Inc.
Sections 208 and 209 are under Title V (Privilege Tax on
Business and Occupation). 6. Trident Management Co.

Lastly, the search warrant does not particularly describe 7. New Trident Management
the things to be seized. Search Warrant No. 2-M-70 tends
8. Bay Transport
to defeat the major objective of the Bill of Rights, i.e., the
elimination of general warrants, for the language used 9. And all affiliate companies of Alfredo "Bejo" Romualdez
therein is so all-embracing as to include all conceivable
records of the corporation, which, if seized, could possibly And were ordered to do the following:
render its business inoperative. Thus, Search Warrant 2-M-
70 is null and void. 1. To implement this sequestration order with a minimum
disruption of these companies' business activities.
Bataan Shipyard VS. PCGG
2. To ensure the continuity of these companies as going
GR NO. 75885, MAY 27, 1987 concerns, the care and maintenance of these assets until
such time that the Office of the President through the
Facts: BASECO describes itself in its petition as "a ship Commission on Good Government should decide
repair and ship building company incorporated as a otherwise.
domestic private corporation on Aug. 30, 1972 by a
consortium of Filipino ship owners and shipping executives. 3. To report to the Commission on Good Government
Its main office is at Engineer Island, Port Area, Manila, periodically.
where its Engineer Island Shipyard is housed, and its main
shipyard is located at Mariveles Bataan." Further, you are authorized to request for
Military/Security Support from the
Its Articles of Incorporation disclose that its authorized
capital stock is Php60,000,000.00 divided into 60,000 Military/Police authorities, and such other acts essential to
shares, of which 12,000 shares with a value of the achievement of this sequestration order.
Php12,000,000.00 have been subscribed, and on said
Thereafter, the corporation was ordered by the PCGG to
subscription, the aggregate sum of Php3,035,000.00 has
been paid by the incorporators. produce certain documents such as:

1. Stock Transfer Book

2. Legal documents, such as: Argument of BASECO: First, no notice and hearing was
accorded to it before its properties and business were
2.1. Articles of Incorporation taken over; Second, the PCGG is not a court, but a purely
investigative agency and therefore not competent to act
2.2. By-Laws
as prosecutor and judge in the same cause; Third, there is
2.3. Minutes of the Annual Stockholders Meeting from nothing in the issuances which envisions any proceeding,
1973 to 1986 process or remedy by which petitioner may expeditiously
challenge the validity of the takeover after the same has
2.4. Minutes of the Regular and Special Meetings of the been effected; and Fourthly, being directed against
Board of Directors from specified persons, and in disregard of the constitutional
presumption of innocence and general rules and
1973 to 1986 procedures, they constitute a Bill of Attainder."

2.5. Minutes of the Executive Committee Meetings from Issues:

1973 to 1986
1. Whether or not the order of production of documents
2.6. Existing contracts with suppliers/contractors/others. would be self-incriminating to BASECO

3. Yearly list of stockholders with their corresponding 2. Whether or not a corporation can avail the right against
share/stockholdings from 1973 to 1986 duly certified by self-incrimination
the Corporate Secretary.
Held: ISSUES 1 & 2:
4. Audited Financial Statements such as Balance Sheet,
Profit & Loss and others from 1973 to December 31, 1985. The Court held that the right against self-incrimination has
no application to corporations. Every corporation is a
5. Monthly Financial Statements for the current year up to direct creature of the law and receives an individual
March 31, 1986. franchise from the State. But a partnership, although is
deemed to be a juridical person by grant of the State,
6. Consolidated Cash Position Reports from January to becomes a juridical person through a private contract of
April 15, 1986. partnership between and among the partners, without
needing to register its existence with the State or any of its
7. Inventory listings of assets up dated up to March 31,
organs. More importantly, the partnership “person” is a
fiction of law given more for the convenience of the
8. Updated schedule of Accounts Receivable and Accounts partners, and thus can be dissolved by the will of the
Payable. partners or by the happening of an event that would
constitute the termination of the contractual relationship,
9. Complete list of depository banks for all funds with the whereas, no corporation can be dissolved without the
authorized signatories for withdrawals thereof. consent of the State, and only after due notice and hearing.
Likewise, the other features of the partnership, mainly
10. Schedule of company investments and placements. mutual agency, delectus personae and unlimited liability
on the part of the partners, that places a close identity
Petitioner now prays to the Court to:
between the persons of the partners and that of the
1) declare unconstitutional and void Executive Orders partnership. This is unlike in corporate setting, where the
Numbered 1 and 2; stockholders do not own corporate properties, have no
participation in management of corporate affairs, and
2) annul the sequestration order dated April- 14, 1986, and enjoy personal immunity from the debts and liabilities of
all other orders subsequently issued and acts done on the the corporation, and where basically the corporation “is its
basis thereof, inclusive of the takeover order of July 14, own person,” and acts through a professional group of
1986 and the termination of the services of the BASECO managers and agents called the Board of Directors.
While therefore it is understandable that a corporation,
3) the production of certain document infringed the right that has no heart, feels pain, and has no soul that can be
against self-incrimination damned, cannot be expected to be entitled to the
constitutional right against self-incrimination, it is quite
4) and that PCGG unduly interfered with its management different in the case of the partnership, since its person is
and affairs and right of dominion. merely an extension of the group of partners, who having
come together in business, and acting still for such
business enterprise, could not be presumed to have for the damage.” The afore-cited provisions on human
waived their individual rights against self-incrimination. relations were intended to expand the concept of torts in
this jurisdiction by granting adequate legal remedy for the
PNB vs CA untold number of moral wrongs which is impossible for
human foresight to specifically provide in the statutes.
Facts: Rita Tapnio owes PNB an amount of P2,000.00. The
amount is secured by her sugar crops about to be A corporation is civilly liable in the same manner as natural
harvested including her export quota allocation worth persons for torts, because “generally speaking, the rules
1,000 piculs. The said export quota was later dealt by governing the liability of a principal or master for a tort
Tapnio to a certain Jacobo Tuazon at P2.50 per picul or a committed by an agent or servant are the same whether
total of P2,500. Since the subject of the deal is mortgaged the principal or master be a natural person or a
with PNB, the latter has to approve it. The branch manager corporation, and whether the servant or agent be a
of PNB recommended that the price should be at P2.80 natural or artificial person. All of the authorities agree that
per picul which was the prevailing minimum amount a principal or master is liable for every tort which it
allowable. Tapnio and Tuazon agreed to the said amount. expressly directs or authorizes, and this is just as true of a
And so the bank manager recommended the agreement to corporation as of a natural person, a corporation is liable,
the vice president of PNB. The vice president in turn therefore, whenever a tortious act is committed by an
recommended it to the board of directors of PNB. officer or agent under express direction or authority from
the stockholders or members acting as a body, or,
However, the Board of Directors wanted to raise the price
generally, from the directors as the governing body.”
to P3.00 per picul. This Tuazon does not want hence he
backed out from the agreement. This resulted to Tapnio Time Inc. vs. Judge Reyes
not being able to realize profit and at the same time
rendered her unable to pay her P2,000.00 crop loan which Facts: In Time’s Asian Edition Magazine, Manila Mayor
would have been covered by her agreement with Tuazon. Antonio Villegas was accused of having coffers containing
“far more pesos than seemed reasonable in the light of his
Eventually, Tapnio was sued by her other creditors and income.” Juan Ponce Enrile was dragged onto the article
Tapnio filed a third party complaint against PNB where she because he allegedly lent Villegas 30,000 pesos as he was
alleged that her failure to pay her debts was because of his compadre and at that time, Enrile was the Secretary of
PNB’s negligence and unreasonableness. Finance.
ISSUE: Whether or not Tapnio is correct. Villegas and Enrile sought to recover damages from Time
Magazine, an American Corporation, so they filed a
HELD: Yes. In this type of transaction, time is of the
complaint in the CFI of Rizal.
essence considering that Tapnio’s sugar quota for said
year needs to be utilized ASAP otherwise her allotment Petitioner received the summons and a copy of the
may be assigned to someone else, and if she can’t use it, complaint at its offices in New York on 13 December 1967
she won’t be able to export her crops. It is unreasonable and, on 27 December 1967, it filed a motion to dismiss the
for PNB’s board of directors to disallow the agreement complaint for lack of jurisdiction and improper venue,
between Tapnio and Tuazon because of the mere relying upon the provisions of Republic Act 4363.
difference of 0.20 in the agreed price rate. What makes it
more unreasonable is the fact that the P2.80 was The judge deferred the proceedings for the reason that
recommended both by the bank manager and PNB’s VP "the rule laid down under Republic Act. No. 4363,
yet it was disapproved by the board. Further, the P2.80 amending Article 360 of the Revised Penal Code, is not
per picul rate is the minimum allowable rate pursuant to applicable to actions against non-resident defendants, and
prevailing market trends that time. This unreasonable because questions involving harassment and
stand reflects PNB’s lack of the reasonable degree of care inconvenience, as well as disruption of public service do
and vigilance in attending to the matter. PNB is therefore not appear indubitable.
Issue/s: 1. WON under the provisions of Republic Act No.
In failing to observe the reasonable degree of care and 4363 the respondent Court of First Instance of Rizal has
vigilance which the surrounding circumstances reasonably jurisdiction to take cognizance of the civil suit for damages
impose, petitioner is consequently liable for the damages arising from an allegedly libelous publication, considering
caused on private respondents. Under Article 21 of the that the action was instituted by public officers whose
New Civil Code, “any person who wilfully causes loss or offices were in the City of Manila at the time of the
injury to another in a manner that is contrary to morals, publication; if it has no jurisdiction, whether or not its
good customs or public policy shall compensate the latter erroneous assumption of jurisdiction may be challenged by
a foreign corporation by writ of certiorari or prohibition. – 3. The intent, of the law is clear: a libeled public official
NO and YES might sue in the court of the locality where he holds office,
in order that the prosecution of the action should interfere
2. WON Republic Act 4363 is applicable to action against a as little as possible with the discharge of his official duties
foreign corporation or non-resident defendant – NO and labors. The only alternative allowed him by law is to
prosecute those responsible for the libel in the place
Ruling: GRANTED.
where the offending article was printed and first published.
Ratio: Here, the law tolerates the interference with the libeled
officer's duties only for the sake of avoiding unnecessary
1. Art 360, RA 4363 reads in part: The criminal and civil harassment of the accused. Since the offending
action for damages in cases of written defamations as publication was not printed in the Philippines, the
provided for in this chapter, shall be filed simultaneously alternative venue was not open to respondent Mayor
or separately with the court of first instance of the Villegas of Manila and Undersecretary of Finance Enrile,
province or city where the libelous article is printed and who were the offended parties.
first published or where any of the offended parties
actually resides at the time of the commission of the 4. That respondents-plaintiffs could not file a criminal case
offense; for libel against a non-resident defendant does not make
Republic Act No. 4363 incongruous of absurd, for such
Provided, however, That where one of the offended inability to file a criminal case against a non-resident
parties is a public officer whose office is in the City of natural person equally exists in crimes other than libel. It is
Manila at the time of the commission of the offense, the a fundamental rule of international jurisdiction that no
action shall be filed in the Court of First Instance of the state can by its laws, and no court which is only a creature
City of Manila or of the city or province where the libelous of the state, can by its judgments or decrees, directly bind
article is printed and first published, and in case such or affect property or persons beyond the limits of the state.
public officer does not hold office in the City of Manila, the Not only this, but if the accused is a corporation, no
action shall be filed in the Court of First Instance of the criminal action can lie against it, whether such corporation
province or city where he held office at the time of the or resident or non-resident. At any rate, the case filed by
commission of the offense or where the libelous article is respondents-plaintiffs is case for damages.
printed and first published and in case one of the offended
parties is a private individual, the action shall be filed in 5. 50 Am. Jur. 2d 659 differentiates the "multiple
the Court of First Instance of the province or city where he publication" and "single publication" rules (invoked by
actually resides at the time of the commission of the private respondents) to be as follows: The common law
offense or where the libelous matter is printed and first rule as to causes of action for tort arising out of a single
published; publication was to the effect that each communication of
written or printed matter was a distinct and separate
Provided,further, That the civil action shall be filed in the publication of a libel contained therein, giving rise to a
same court where the criminal action is filed and vice separate cause of action. This rule ('multiple publication'
versa; rule) is still followed in several American jurisdictions, and
seems to be favored by the American Law Institute. Other
Provided, furthermore, That the court where the criminal jurisdictions have adopted the 'single publication' rule
action or civil action for damages is first filed, shall acquire which originated in New York, under which any single
jurisdiction to the exclusion of other courts; And provided integrated publication, such as one edition of a newspaper,
finally, That this amendment shall not apply to cases of book, or magazine, or one broadcast, is treated as a unit,
written defamations, the civil and/or criminal actions giving rise to only one cause of action, regardless of the
which have been filed in court at the time of the effectivity number of times it is exposed to different people.
of the law…
6. These rules are not pertinent in the present scheme
2. The complaint lodged in the court of Rizal by because the number of causes of action that may be
respondents does not allege that the libelous article was available to the respondents-plaintiffs is not here in issue.
printed and first published in the province of Rizal and, The court is confronted by a specific venue statute,
since the respondents-plaintiffs are public officers with conferring jurisdiction in cases of libel against Public
offices in Manila at the time of the commission of the officials to specified courts, and no other. The rule is that
alleged offense, it is clear that the only place left for them where a statute creates a right and provides a remedy for
wherein to file their action, is the Court of First Instance of its enforcement, the remedy is exclusive; and where it
Manila. confers jurisdiction upon a particular court, that
jurisdiction is likewise exclusive, unless otherwise provided.
Hence, the venue provisions of Republic Act No. 4363
should be deemed mandatory for the party bringing the
action, unless the question of venue should be waived by
the defendant, which was not the case here. Only thus can
the policy of the Act be upheld and maintained. Nor is
there any reason why the inapplicability of one alternative
venue should result in rendering the other alternative, also

7. Petitioner's failure to aver its legal capacity to institute

the present petition is not fatal, for A foreign corporation
may, by writ of prohibition, seek relief against the
wrongful assumption of jurisdiction. And a foreign
corporation seeking a writ of prohibition against further
maintenance of a suit, on the ground of want of
jurisdiction in which jurisdiction is not bound by the ruling
of the court in which the suit was brought, on a motion to
quash service of summons, that it has jurisdiction.

8. It is also advanced that the present petition is

premature, since respondent court has not definitely ruled
on the motion to dismiss, nor held that it has jurisdiction,
but only argument is untenable. The motion to dismiss
was predicated on the respondent court's lack of
jurisdiction to entertain the action; and the rulings of this
Court are that writs of certiorari or prohibition, or both,
may issue in case of a denial or deferment of action on
such a motion to dismiss for lack of jurisdiction.