Cases on Corpo

8/12/2019 Cases on Corpo

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Stonehill v. Diokno Digest

Stonehill v. Diokno

20 SCRA 283 (1967)

Concepcion, CJ

Facts:

1. Respondent (porsecution) made possible the issuance of 42 search warrants

against the petitioner and the corporation to search persons and premises of

several personal properties due to an alleged violation of Central Bank Laws,Tariff and Custom Laws, Internal Revenue Code and the Revised Penal Code of

the Philippines. As a results, search and seizures were conducted in the both

the residence of the petitioner and in the corporation's premises.

2.The petitioner contended that the search warrants are null and void as their

issuance violated the Constitution and the Rules of Court for being general

warrants. Thus,he filed a petition with the Supreme Court for certiorari,

prohibition, mandamus and injunction to prevent the seized effects from being

introduced as evidence in the deportation cases against the petitioner. The

court issued the writ only for those effects found in the petitioner's residence.

Issue: Whether or not the petitioner can validly assail the legality of the search

and seizure in both premises

RULING: No, he can only assail the search conducted in the residences but not

those done in the corporation's premises. The petitioner has no cause of action

in the second situation since a corporation has a personality separate and

distinct from the personality of its officers or herein petitioner regardless of

the amount of shares of stock or interest of each in the said corporation, and

whatever office they hold therein. Only the party whose rights has been


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impaired can validly object the legality of a seizure--a purely personal right

which cannot be exercised by a third party. The right to object belongs to the

corporation ( for the 1st group of documents, papers, and things seized from

the offices and the premises).

bataan shipyard vs pcgg

150 SCRA 181 Business Organization Corporation Law A Corporation

Cannot Invoke the Right Against Self-Incrimination

When President Corazon Aquino took power, the Presidential Commission on

Good Government (PCGG) was formed in order to recover ill gotten wealth

allegedly acquired by former President Marcos and his cronies. Aquino then

issued two executive orders in 1986 and pursuant thereto, a sequestration and

a takeover order were issued against Bataan Shipyard & engineering Co., Inc.

(BASECO). BASECO was alleged to be in actuality owned and controlled by the

Marcoses through the Romualdez family, and in turn, through dummy

stockholders.

The sequestration order issued in 1986 required, among others, that BASECO

produce corporate records from 1973 to 1986 under pain of contempt of the

PCGG if it fails to do so. BASECO assails this order as it avers, among others,

that it is against BASECOs right against self incrimination and unreasonable

searches and seizures.

ISSUE: Whether or not BASECO is correct.

HELD: No. First of all, PCGG has the right to require the production of such

documents pursuant to the power granted to it. Second, and more

importantly, right against self-incrimination has no application to juridicalpersons. There is a reserve right in the legislature to investigate the contracts


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of a corporation and find out whether it has exceeded its powers. It would be a

strange anomaly to hold that a state, having chartered a corporation like

BASECO to make use of certain franchises, could not, in the exercise of

sovereignty, inquire how these franchises had been employed, and whether

they had been abused, and demand the production of the corporate books and

papers for that purpose.

Neither is the right against unreasonable searches and seizures applicable

here. There were no searches made and no seizure pursuant to any search was

ever made. BASECO was merely ordered to produce the corporate records.

G.R. No. L-27155 May 18, 1978

PHILIPPINE NATIONAL BANK, petitioner,

vs.

THE COURT OF APPEALS, RITA GUECO TAPNIO, CECILIO GUECO and THE

PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC., respondents.

Medina, Locsin, Corua, & Sumbillo for petitioner.

Manuel Lim & Associates for private respondents.

ANTONIO, J.:

Certiorari to review the decision of the Court of Appeals which affirmed thejudgment of the Court of First Instance of Manila in Civil Case No. 34185,

ordering petitioner, as third-party defendant, to pay respondent Rita Gueco

Tapnio, as third-party plaintiff, the sum of P2,379.71, plus 12% interest per

annum from September 19, 1957 until the same is fully paid, P200.00

attorney's fees and costs, the same amounts which Rita Gueco Tapnio was

ordered to pay the Philippine American General Insurance Co., Inc., to be paid

directly to the Philippine American General Insurance Co., Inc. in full

satisfaction of the judgment rendered against Rita Gueco Tapnio in favor of the


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former; plus P500.00 attorney's fees for Rita Gueco Tapnio and costs. The basic

action is the complaint filed by Philamgen (Philippine American General

Insurance Co., Inc.) as surety against Rita Gueco Tapnio and Cecilio Gueco, for

the recovery of the sum of P2,379.71 paid by Philamgen to the Philippine

National Bank on behalf of respondents Tapnio and Gueco, pursuant to an

indemnity agreement. Petitioner Bank was made third-party defendant by

Tapnio and Gueco on the theory that their failure to pay the debt was due to

the fault or negligence of petitioner.

The facts as found by the respondent Court of Appeals, in affirming the

decision of the Court of First Instance of Manila, are quoted hereunder:

Plaintiff executed its Bond, Exh. A, with defendant Rita Gueco Tapnio asprincipal, in favor of the Philippine National Bank Branch at San Fernando,

Pampanga, to guarantee the payment of defendant Rita Gueco Tapnio's

account with said Bank. In turn, to guarantee the payment of whatever

amount the bonding company would pay to the Philippine National Bank, both

defendants executed the indemnity agreement, Exh. B. Under the terms and

conditions of this indemnity agreement, whatever amount the plaintiff would

pay would earn interest at the rate of 12% per annum, plus attorney's fees in

the amount of 15 % of the whole amount due in case of court litigation.

The original amount of the bond was for P4,000.00; but the amount was later

reduced to P2,000.00.

It is not disputed that defendant Rita Gueco Tapnio was indebted to the bank

in the sum of P2,000.00, plus accumulated interests unpaid, which she failed to

pay despite demands. The Bank wrote a letter of demand to plaintiff, as per

Exh. C; whereupon, plaintiff paid the bank on September 18, 1957, the fullamount due and owing in the sum of P2,379.91, for and on account of

defendant Rita Gueco's obligation (Exhs. D and D-1).

Plaintiff, in turn, made several demands, both verbal and written, upon

defendants (Exhs. E and F), but to no avail.

Defendant Rita Gueco Tapnio admitted all the foregoing facts. She claims,

however, when demand was made upon her by plaintiff for her to pay her debt

to the Bank, that she told the Plaintiff that she did not consider herself to be


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indebted to the Bank at all because she had an agreement with one Jacobo-

Nazon whereby she had leased to the latter her unused export sugar quota for

the 1956-1957 agricultural year, consisting of 1,000 piculs at the rate of P2.80

per picul, or for a total of P2,800.00, which was already in excess of her

obligation guaranteed by plaintiff's bond, Exh. A. This lease agreement,

according to her, was with the knowledge of the bank. But the Bank has placed

obstacles to the consummation of the lease, and the delay caused by said

obstacles forced 'Nazon to rescind the lease contract. Thus, Rita Gueco Tapnio

filed her third-party complaint against the Bank to recover from the latter any

and all sums of money which may be adjudged against her and in favor of the

plaitiff plus moral damages, attorney's fees and costs.

Insofar as the contentions of the parties herein are concerned, we quote with

approval the following findings of the lower court based on the evidence

presented at the trial of the case:

It has been established during the trial that Mrs. Tapnio had an export sugar

quota of 1,000 piculs for the agricultural year 1956-1957 which she did not

need. She agreed to allow Mr. Jacobo C. Tuazon to use said quota for the

consideration of P2,500.00 (Exh. "4"-Gueco). This agreement was called a

contract of lease of sugar allotment.

At the time of the agreement, Mrs. Tapnio was indebted to the Philippine

National Bank at San Fernando, Pampanga. Her indebtedness was known as a

crop loan and was secured by a mortgage on her standing crop including her

sugar quota allocation for the agricultural year corresponding to said standing

crop. This arrangement was necessary in order that when Mrs. Tapnio

harvests, the P.N.B., having a lien on the crop, may effectively enforce

collection against her. Her sugar cannot be exported without sugar quota

allotment Sometimes, however, a planter harvest less sugar than her quota, so

her excess quota is utilized by another who pays her for its use. This is the

arrangement entered into between Mrs. Tapnio and Mr. Tuazon regarding the

former's excess quota for 1956-1957 (Exh. "4"-Gueco).

Since the quota was mortgaged to the P.N.B., the contract of lease had to be

approved by said Bank, The same was submitted to the branch manager at San

Fernando, Pampanga. The latter required the parties to raise the consideration


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of P2.80 per picul or a total of P2,800.00 (Exh. "2-Gueco") informing them that

"the minimum lease rental acceptable to the Bank, is P2.80 per picul." In a

letter addressed to the branch manager on August 10, 1956, Mr. Tuazon

informed the manager that he was agreeable to raising the consideration to

P2.80 per picul. He further informed the manager that he was ready to pay

said amount as the funds were in his folder which was kept in the bank.

Explaining the meaning of Tuazon's statement as to the funds, it was stated by

him that he had an approved loan from the bank but he had not yet utilized it

as he was intending to use it to pay for the quota. Hence, when he said the

amount needed to pay Mrs. Tapnio was in his folder which was in the bank, he

meant and the manager understood and knew he had an approved loan

available to be used in payment of the quota. In said Exh. "6-Gueco", Tuazon

also informed the manager that he would want for a notice from the manager

as to the time when the bank needed the money so that Tuazon could sign the

corresponding promissory note.

Further Consideration of the evidence discloses that when the branch manager

of the Philippine National Bank at San Fernando recommended the approval of

the contract of lease at the price of P2.80 per picul (Exh. 1 1-Bank), whose

recommendation was concurred in by the Vice-president of said Bank, J. V.

Buenaventura, the board of directors required that the amount be raised to

13.00 per picul. This act of the board of directors was communicated to

Tuazon, who in turn asked for a reconsideration thereof. On November 19,

1956, the branch manager submitted Tuazon's request for reconsideration to

the board of directors with another recommendation for the approval of the

lease at P2.80 per picul, but the board returned the recommendation unacted

upon, considering that the current price prevailing at the time was P3.00 perpicul (Exh. 9-Bank).

The parties were notified of the refusal on the part of the board of directors of

the Bank to grant the motion for reconsideration. The matter stood as it was

until February 22, 1957, when Tuazon wrote a letter (Exh. 10-Bank informing

the Bank that he was no longer interested to continue the deal, referring to the

lease of sugar quota allotment in favor of defendant Rita Gueco Tapnio. The

result is that the latter lost the sum of P2,800.00 which she should have


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received from Tuazon and which she could have paid the Bank to cancel off her

indebtedness,

The court below held, and in this holding we concur that failure of the

negotiation for the lease of the sugar quota allocation of Rita Gueco Tapnio toTuazon was due to the fault of the directors of the Philippine National Bank,

The refusal on the part of the bank to approve the lease at the rate of P2.80

per picul which, as stated above, would have enabled Rita Gueco Tapnio to

realize the amount of P2,800.00 which was more than sufficient to pay off her

indebtedness to the Bank, and its insistence on the rental price of P3.00 per

picul thus unnecessarily increasing the value by only a difference of P200.00.

inevitably brought about the rescission of the lease contract to the damage

and prejudice of Rita Gueco Tapnio in the aforesaid sum of P2,800.00. The

unreasonableness of the position adopted by the board of directors of the

Philippine National Bank in refusing to approve the lease at the rate of P2.80

per picul and insisting on the rate of P3.00 per picul, if only to increase the

retail value by only P200.00 is shown by the fact that all the accounts of Rita

Gueco Tapnio with the Bank were secured by chattel mortgage on standing

crops, assignment of leasehold rights and interests on her properties, and

surety bonds, aside from the fact that from Exh. 8-Bank, it appears that shewas offering to execute a real estate mortgage in favor of the Bank to replace

the surety bond This statement is further bolstered by the fact that Rita Gueco

Tapnio apparently had the means to pay her obligation fact that she has been

granted several value of almost P80,000.00 for the agricultural years from

1952 to 56. 1

Its motion for the reconsideration of the decision of the Court of Appeals

having been denied, petitioner filed the present petition.

The petitioner contends that the Court of Appeals erred:

(1) In finding that the rescission of the lease contract of the 1,000 piculs of

sugar quota allocation of respondent Rita Gueco Tapnio by Jacobo C. Tuazon

was due to the unjustified refusal of petitioner to approve said lease contract,

and its unreasonable insistence on the rental price of P3.00 instead of P2.80

per picul; and


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(2) In not holding that based on the statistics of sugar price and prices of sugar

quota in the possession of the petitioner, the latter's Board of Directors

correctly fixed the rental of price per picul of 1,000 piculs of sugar quota leased

by respondent Rita Gueco Tapnio to Jacobo C. Tuazon at P3.00 per picul.

Petitioner argued that as an assignee of the sugar quota of Tapnio, it has the

right, both under its own Charter and under the Corporation Law, to safeguard

and protect its rights and interests under the deed of assignment, which

include the right to approve or disapprove the said lease of sugar quota and in

the exercise of that authority, its

Board of Directors necessarily had authority to determine and fix the rental

price per picul of the sugar quota subject of the lease between privaterespondents and Jacobo C. Tuazon. It argued further that both under its

Charter and the Corporation Law, petitioner, acting thru its Board of Directors,

has the perfect right to adopt a policy with respect to fixing of rental prices of

export sugar quota allocations, and in fixing the rentals at P3.00 per picul, it did

not act arbitrarily since the said Board was guided by statistics of sugar price

and prices of sugar quotas prevailing at the time. Since the fixing of the rental

of the sugar quota is a function lodged with petitioner's Board of Directors and

is a matter of policy, the respondent Court of Appeals could not substitute its

own judgment for that of said Board of Directors, which acted in good faith,

making as its basis therefore the prevailing market price as shown by statistics

which were then in their possession.

Finally, petitioner emphasized that under the appealed judgment, it shall suffer

a great injustice because as a creditor, it shall be deprived of a just claim

against its debtor (respondent Rita Gueco Tapnio) as it would be required to

return to respondent Philamgen the sum of P2,379.71, plus interest, which

amount had been previously paid to petitioner by said insurance company in

behalf of the principal debtor, herein respondent Rita Gueco Tapnio, and

without recourse against respondent Rita Gueco Tapnio.

We must advert to the rule that this Court's appellate jurisdiction in

proceedings of this nature is limited to reviewing only errors of law, accepting

as conclusive the factual fin dings of the Court of Appeals upon its own

assessment of the evidence. 2


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The contract of lease of sugar quota allotment at P2.50 per picul between Rita

Gueco Tapnio and Jacobo C. Tuazon was executed on April 17, 1956. This

contract was submitted to the Branch Manager of the Philippine National Bank

at San Fernando, Pampanga. This arrangement was necessary because Tapnio's

indebtedness to petitioner was secured by a mortgage on her standing crop

including her sugar quota allocation for the agricultural year corresponding to

said standing crop. The latter required the parties to raise the consideration to

P2.80 per picul, the minimum lease rental acceptable to the Bank, or a total of

P2,800.00. Tuazon informed the Branch Manager, thru a letter dated August

10, 1956, that he was agreeable to raising the consideration to P2.80 per picul.

He further informed the manager that he was ready to pay the said sum of

P2,800.00 as the funds were in his folder which was kept in the said Bank. Thisreferred to the approved loan of Tuazon from the Bank which he intended to

use in paying for the use of the sugar quota. The Branch Manager submitted

the contract of lease of sugar quota allocation to the Head Office on

September 7, 1956, with a recommendation for approval, which

recommendation was concurred in by the Vice-President of the Bank, Mr. J. V.

Buenaventura. This notwithstanding, the Board of Directors of petitioner

required that the consideration be raised to P3.00 per picul.

Tuazon, after being informed of the action of the Board of Directors, asked for

a reconsideration thereof. On November 19, 1956, the Branch Manager

submitted the request for reconsideration and again recommended the

approval of the lease at P2.80 per picul, but the Board returned the

recommendation unacted, stating that the current price prevailing at that time

was P3.00 per picul.

On February 22, 1957, Tuazon wrote a letter, informing the Bank that he wasno longer interested in continuing the lease of sugar quota allotment. The crop

year 1956-1957 ended and Mrs. Tapnio failed to utilize her sugar quota,

resulting in her loss in the sum of P2,800.00 which she should have received

had the lease in favor of Tuazon been implemented.

It has been clearly shown that when the Branch Manager of petitioner

required the parties to raise the consideration of the lease from P2.50 to P2.80

per picul, or a total of P2,800-00, they readily agreed. Hence, in his letter to theBranch Manager of the Bank on August 10, 1956, Tuazon informed him that


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the minimum lease rental of P2.80 per picul was acceptable to him and that he

even offered to use the loan secured by him from petitioner to pay in full the

sum of P2,800.00 which was the total consideration of the lease. This

arrangement was not only satisfactory to the Branch Manager but it was also

approves by Vice-President J. V. Buenaventura of the PNB. Under that

arrangement, Rita Gueco Tapnio could have realized the amount of P2,800.00,

which was more than enough to pay the balance of her indebtedness to the

Bank which was secured by the bond of Philamgen.

There is no question that Tapnio's failure to utilize her sugar quota for the crop

year 1956-1957 was due to the disapproval of the lease by the Board of

Directors of petitioner. The issue, therefore, is whether or not petitioner is

liable for the damage caused.

As observed by the trial court, time is of the essence in the approval of the

lease of sugar quota allotments, since the same must be utilized during the

milling season, because any allotment which is not filled during such milling

season may be reallocated by the Sugar Quota Administration to other holders

of allotments. 3 There was no proof that there was any other person at that

time willing to lease the sugar quota allotment of private respondents for a

price higher than P2.80 per picul. "The fact that there were isolated

transactions wherein the consideration for the lease was P3.00 a picul",

according to the trial court, "does not necessarily mean that there are always

ready takers of said price. " The unreasonableness of the position adopted by

the petitioner's Board of Directors is shown by the fact that the difference

between the amount of P2.80 per picul offered by Tuazon and the P3.00 per

picul demanded by the Board amounted only to a total sum of P200.00.

Considering that all the accounts of Rita Gueco Tapnio with the Bank weresecured by chattel mortgage on standing crops, assignment of leasehold rights

and interests on her properties, and surety bonds and that she had apparently

"the means to pay her obligation to the Bank, as shown by the fact that she has

been granted several sugar crop loans of the total value of almost P80,000.00

for the agricultural years from 1952 to 1956", there was no reasonable basis

for the Board of Directors of petitioner to have rejected the lease agreement

because of a measly sum of P200.00.


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While petitioner had the ultimate authority of approving or disapproving the

proposed lease since the quota was mortgaged to the Bank, the latter certainly

cannot escape its responsibility of observing, for the protection of the interest

of private respondents, that degree of care, precaution and vigilance which the

circumstances justly demand in approving or disapproving the lease of said

sugar quota. The law makes it imperative that every person "must in the

exercise of his rights and in the performance of his duties, act with justice, give

everyone his due, and observe honesty and good faith, 4 This petitioner failed

to do. Certainly, it knew that the agricultural year was about to expire, that by

its disapproval of the lease private respondents would be unable to utilize the

sugar quota in question. In failing to observe the reasonable degree of care

and vigilance which the surrounding circumstances reasonably impose,petitioner is consequently liable for the damages caused on private

respondents. Under Article 21 of the New Civil Code, "any person who wilfully

causes loss or injury to another in a manner that is contrary to morals, good

customs or public policy shall compensate the latter for the damage." The

afore-cited provisions on human relations were intended to expand the

concept of torts in this jurisdiction by granting adequate legal remedy for the

untold number of moral wrongs which is impossible for human foresight to

specifically provide in the statutes. 5

A corporation is civilly liable in the same manner as natural persons for torts,

because "generally speaking, the rules governing the liability of a principal or

master for a tort committed by an agent or servant are the same whether the

principal or master be a natural person or a corporation, and whether the

servant or agent be a natural or artificial person. All of the authorities agree

that a principal or master is liable for every tort which he expressly directs or

authorizes, and this is just as true of a corporation as of a natural person, A

corporation is liable, therefore, whenever a tortious act is committed by an

officer or agent under express direction or authority from the stockholders or

members acting as a body, or, generally, from the directors as the governing

body." 6

WHEREFORE, in view of the foregoing, the decision of the Court of Appeals is

hereby AFFIRMED.

Fernando, Aquino, Concepcion, Jr., and Santos, JJ., concur.


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MAMBULAO LUMBER COMPANY,

plaintiff-appellant, vs.

PHILIPPINE NATIONAL BANK and ANACLETOHERALDO Deputy Provincial Sheriff

of Camarines Norte,

defendants-appellees.

G.R. No. L-22973,January 30, 1968 ANGELES,

J.:

FACTS:

On May 5, 1956 the plaintiff applied for an industrial loan of P155,000

(approved for a loan of P100,000 only) with the Naga Branch of defendant

PNB. To secure payment, the plaintiff mortgaged aparcel of land, together with

the buildings and improvements existing thereon, situated in the poblacion of

Jose Panganiban (formerly Mambulao), province of Camarines Norte. The PNB

released from the approvedloan the sum of P27,500, and another release of

P15,500.The plaintiff failed to pay the amortization on the amounts released to

and received by it. It was found that the plaintiff had already stopped

operation about the end of 1957 or early part of 1958.The unpaid obligation of

the plaintiff as of September 22, 1961, amounted to P57,646.59,

excludingattorney's fees. A foreclosure sale of the parcel of land, together with

the buildings and improvementsthereon was, held on November 21, 1961, and

the said property was sold to the PNB for the sum of P56,908.00, subject to the

right of the plaintiff to redeem the same within a period of one year.Theplaintiff sent a letter reiterating its request that the foreclosure sale of the

mortgaged chattels bediscontinued on the grounds that the mortgaged

indebtedness had been fully paid and that it could not belegally effected at a

place other than the City of Manila.The trial court sentenced the Mambulao

Lumber Company to pay to the defendant PNB the sum of P3,582.52 with

interest thereon at the rate of 6% per annum. The plaintiff on appeal advanced

that its total indebtedness to the PNB as of November 21, 1961, was only

P56,485.87 and not P58,213.51 as concludedby the court a quo; hence, the


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proceeds of the foreclosure sale of its real property alone in the amount of

P56,908.00 on that date, added to the sum of P738.59 it remitted to the PNB

thereafter was more thansufficient to liquidate its obligation, thereby

rendering the subsequent foreclosure sale of its chattelsunlawful;That for the

acts of the PNB in proceeding with the sale of the chattels, in utter disregard of

plaintiff'svigorous opposition thereto, and in taking possession thereof after

the sale thru force, intimidation,coercion, and by detaining its "man-in-charge"

of said properties,

the PNB is liable to plaintiff fordamages and attorney's fees.

ISSUE:

Whether or not PNB may be held l

iable to plaintiff Corporation for damages and attorneys fees.

HELD:

Herein appellant's claim for moral damages, seems to have no legal or factual

basis. Obviously,

anartificial person like herein appellant corporation cannot experience physical

sufferings, mentalanguish, fright, serious anxiety, wounded feelings, moral

shock or social humiliation which arebasis of moral damages

. A corporation may have a good reputation which, if besmirched, may also be

aground for the award of moral damages. The same cannot be consideredunder the facts of this case,however, not only because it is admitted that

herein appellant had already ceased in its business operationat the time of the

foreclosure sale of the chattels, but also for the reason that whatever adverse

effects of the foreclosure sale of the chattels could have upon its reputation or

business standing would undoubtedlybe the same whether the sale was

conducted at Jose Panganiban, Camarines Norte, or in Manila which is theplace

agreed upon by the parties in the mortgage contract


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asset privatization trust vs ca

300 SCRA 579 Business Organization Corporation Law Corporation

Generally Not Entitled To Moral DamagesPower To Enter Into Contracts

In 1968, the government undertook to support the financing of Marinduque

Mining and Industrial Corporation (MMIC). The government then issued

debenture bonds in favor of MMIC which enable the latter to take out loans

from the Development Bank of the Philippines (DBP) and the Philippine

National Bank (PNB). The loans were mortgaged by MMICs assets. In 1984

however, MMICs indebtedness reached P13.7 billion and P8.7 billion to DPB

and PNB respectively. MMIC had trouble paying and this exposed the

government, because of the debenture bonds, to a P22 billion obligation.

In order to mitigate MMICs loan liability, a financial restructur ing plan (FRP)

was drafted in the presence of MMICs representatives as well as

representatives from DBP and PNB. The two banks however never formally

approved the said FRP. Eventually, the staggering loans became overdue andPNB and DBP chose to foreclose MMICs assets, FRP no longer feasible at that

point. So the assets were foreclosed and were eventually assigned to the Asset

Privatization Trust (APT).

Later, Jesus Cabarrus, Sr., a stockholder of MMIC initiated a derivative suit

against PNB and DBP with APT being impleaded as the successor in interest of

the two banks. The suit basically questioned the foreclosure as Cabarrus

asserted that the foreclosure was invalid because he insisted that the FRP was

adopted by PNB and DBP as a consequence of the presence of the banks

representatives when the said FRP was drafted. Cabarrus asserts that APT

should restore the assets to MMIC and that PNB and DBP should honor the

FRP. The suit was filed in the RTC of Makati but while the case was pending,

the parties agreed to submit the case for arbitration. Hence, Makati RTC

dismissed the case upon motion of the parties.


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The Arbitration Committee (AC) which heard the case ruled in favor of

Cabarrus. The AC granted Cabarrus prayer and at the same time awarded him

P10 million in moral damages. Not only that, the AC also awarded P2.5 billionin moral damages in favor of MMIC to be paid by the government. APTs MFR

was denied. Cabarrus then filed before the Makati RTC a motion to confirm the

arbitration award. APT opposed the same as it alleged that the motion is

improper. Makati RTC denied APTs opposition and confirmed the arbitration

award. The Court of Appeals affirmed the ruling of the RTC.

ISSUE: Whether or not the ruling of the Arbitration Committee as affirmed by

the Regional Trial Court of Makati (Branch 62) and the Court of Appeals is

correct.

HELD: No.

The award of damages in favor of MMIC is improper. First, it was not made a

party to the case. The derivative suit filed by Cabarrus failed to implead MMIC.

So how can an award for damages be awarded to a non-party? Second, even if

MMIC, which is actually a real party in interest, was impleaded, it is not

entitled to moral damages. It is not yet a well settled jurisprudence that

corporations are entitled to moral damages. While the Supreme Court in some

cases did award certain corporations moral damages for besmirched

reputations, such is not applicable in this case because when the alleged

wrongful foreclosure was done, MMIC was already in bad standing hence it has

no good wholesome reputation to protect. So it could not be said that there

was a reputation besmirched by the act of foreclosure. Likewise, the award

of moral damages in favor of Cabarrus is invalid. He cannot have possibly

suffered any moral damages because the alleged wrongful act was committed

against MMIC. It is a basic postulate that a corporation has a personality

separate and distinct from its stockholders. The properties foreclosed


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belonged to MMIC, not to its stockholders. Hence, if wrong was committed in

the foreclosure, it was done against the corporation.

The FRP is not valid hence the foreclosure is valid. The mere presence of DBPs

and PNBs representatives during the drafting of FRP is not constitutive of thebanks formal approval of the FRP. The representatives are personalities

distinct from PNB and DBP. PNB and DBP have their own boards and officers

who may have different decisions. The representatives were not shown to

have been authorized by the respective boards of the two banks to enter into

any agreement with MMIC.

Further, the proceeding is procedurally infirm. RTC Makati had already

dismissed the civil case when the parties opted for arbitration. Hence, it shouldhave never took cognizance of the Cabarrus motion to confirm the AC award.

The same should have been brought through a separate action not through a

motion because RTC Makati already lost jurisdiction over the case when it

dismissed it to give way for the arbitration. The arbitration was a not a

continuation of the civil case filed in Makati RTC.

Case: ABS-CBN BROADCASTING CORP. v

.

CA, REPUBLIC BROADCASTING CORP., VIVA PRODUCTIONS, INC.,and VICENTE

DEL ROSARIO (301 SCRA 589)Date: January 21, 1999Ponente: C.J. Davide,Jr.Facts:

In 1990, ABS-CBN and VIVA executed a Film Exhibition Agreement whereby

VIVA gave ABS-CBN an exclusiveright to exhibit some VIVA films. According to

the agreement, ABS-CBN shall have the right of first refusal to the next 24VIVA

films for TV telecast under such terms as may be agreed upon by the parties,

however, such right shall be exercisedby ABS-CBN from the actual offer in

writing.Sometime in December 1991, VIVA, through Vicente Del Rosario(Executive Producer), offered ABS-CBNthrough VP Charo Santos-Concio, a list


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of 3 film packages from which ABS-CBN may exercise its right of first

refusal.ABS-

CBN, however through Mrs. Concio, tick off only 10 titles they can purchase

among which is the film Maging SinoKa Man which is one of the subjects ofthe present case, therefore, it did not accept the said list as

per the rejection letterauthored by Mrs. Concio sent to Del

Rosario.Subsequently, Del Rosario approached Mrs. Concio with another list

consisting of 52 original movie titles and 104re-runs, proposing to sell to ABS-

CBN airing rights for P60M (P30M in cash and P30M worth of television spots).

DelRosario and ABS-

CBNs General Manager, Eugenio Lopez III, met at the Tamarind Grill

Restaurant in QC to discuss the

package proposal but to no avail.Four days later, Del Rosario and Mr. Graciano

Gozon, Senior VP of Finance of Republic Broadcasting

Corporation (RBS/Channel 7) discussed the terms and conditions of VIVAs

offer. A day after that, Mrs. Concio sent the

draft of the contract between ABS-CBN and VIVA which contained a counter-

proposal covering 53 films for P

35M. VIVAs

Board of Directors rejected the counter-proposal as it would not sell anything

less than the package of 104 films for P60M.After said rejection, ABS-CBN

closed a deal with RBS including the 14 films previously ticked off by ABS-

CBN.Consequently, ABS-CBN filed a complaint for specific performance withprayer for a writ of preliminary injunctionand/or TRO against RBS, VIVA and

Del Rosario. RTC then enjoined the latter from airing the subject films. RBS

posted aP30M counterbond to dissolve the injunction. Later on, the trial court

as well as the CA dismissed the complaint holdingthat there was no meeting of

minds between ABS-CBN and VIVA, hence, there was no basis for ABS-

CBNs demand,


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furthermore, the right of first refusal had previously been exercised.Hence, the

present petition, ABS-CBN argued that an agreement was made during the

meeting of Mr. Lopez and

Del Rosario jotted down on a napkin (this was never produced in court).Moreover, it had yet to fully exercise its right o

ffirst refusal since only 10 titles were chosen from the first list. As to actual,

moral and exemplary damages, there was noclear basis in awarding the same.

Issue:

WON a contract was perfected between ABS-CBN and VIVA and WON moral

damages may be awarded to acorporation

Held:

Both

NO.

Ratio:

Contracts that are consensual in nature are perfected upon mere meeting of

the minds. Once there isconcurrence between the offer and the acceptance

upon the subject matter, consideration, and terms of payment acontract is

produced. The offer must be certain. To convert the offer into a contract, the

acceptance must be absoluteand must not qualify the terms of the offer; it

must be plain, unequivocal, unconditional, and without variance of any

sortfrom the proposal. A qualified acceptance, or one that involves a newproposal, constitutes a counter-offer and is arejection of the original offer.

Consequently, when something is desired which is not exactly what is

proposed in the offer,such acceptance is not sufficient to generate consent

because any modification or variation from the terms of the offerannuls the

offer.After Mr. Del Rosario of Viva met Mr. Lopez of ABS-CBN to discuss the

package of films, ABS-CBN, sent throughMs. Concio, counter-proposal in the

form a draft contract. This counter-proposal could be nothing less than the

counter-offer of Mr. Lopez during his conference with Del Rosario.


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Clearly, there was no acceptance of VIVAs offer, for it was

met by a counter-offer which substantially varied the terms of the offer

Jardine davies vs. CA

Jardine Davies Inc. vs. CA and Far East Mills Supply Corporation; Pure Foods

Corporation vs CA (June 19, 2000)

Corporation entitled to Moral Damages (reputation besmirched)

Facts: In 1992 Purefoods decided to install 2 generators in its food processing

plant in San Roque, Marikina. A bidding for the supply and installation was

held among the bidders was Far East Mills Supply Corporation (FEMSCO).

Thereafter, in a letter addressed to FEMSCO president, Purefoods confirmed

the award of the contract. Immediately FEMSCO submitted the requirements

such as a performance bond and all risk insurance policy as well as purchasing

the necessary materials. However, in another letter, Purefoods unilaterally

cancelled the award citing significant factors which were uncovered andbrought to their attention which dictate the cancellation and warrant a total

review and re-bid of the project. FEMSCO protested the cancellation but

before the matter could be resolve, Purefoods awarded the project with

Jardine Nell, a division of Jardine Davies.

FEMSCO sued both Purefoods and Jardine. The RTC granted Jardines

demurrer to evidence but found in favor of FEMSCO against Purefoods and

order indemnification. FEMSCO appealed the granting of the demurrer filed byJardine and Purefoods appealed the decision of the court. The CA affirmed the

decision of the RTC but ordered Jardine to pay FEMSCO damages for inducing

Purefoods to violate the contract as such, Jardine must pay moral damages. In

addition, Purefoods was also directed to pay FEMSCO moral damages and

exemplary damages Both Purefoods and Jardine filed motions for

reconsideration which were denied.

Issue: Whether or not moral damages may be granted to a corporation?


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Held: The Court has awarded in the past moral damages to a corporation

whose reputation has been besmirched. (Asset Privatization Trust v. CA, 300

SCRA 379) In this case, respondent FEMSCO has sufficiently shown that its

reputation was tarnished after it immediately ordered equipment from its

suppliers on account of the urgency of the project, only to be canceled later.

The Court thus, sustained respondent appellate courts award of moral

damages. However, as there is no showing whatsoever that Jardine induced

Purefoods, the decision of the CA is modified. The order to Jardine Davies to

pay FEMSCO moral damages is reversed and set aside.

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