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

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 juridical persons. There is a reserve right in the legislature to investigate the contracts

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 the judgment 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

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 as principal, 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 full amount 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

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

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 per picul (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

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 to Tuazon 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 she was 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

(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 private respondents 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

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. This referred 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 was no 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 the Branch Manager of the Bank on August 10, 1956, Tuazon informed him that

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 were secured 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.

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.

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.The plaintiff 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

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 considered under 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

asset privatization trust vs ca 300 SCRA 579 Business Organization Corporation Law Corporation Generally Not Entitled To Moral Damages Power 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 restructuring 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 and PNB 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.

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 billion in 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

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 the banks 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 should have 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

of 3 film packages from which ABS-CBN may exercise its right of first refusal.ABSCBN, 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 of the 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 ABSCBN airing rights for P60M (P30M in cash and P30M worth of television spots). DelRosario and ABSCBNs 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 counterproposal 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 ABSCBN.Consequently, ABS-CBN filed a complaint for specific performance with prayer 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 ABSCBNs demand,

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 new proposal, 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.

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 and brought 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 by Jardine 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?

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.