MANILA INTERNATIONAL AIRPORT AUTHORITY vs.

COURT OF APPEALS
G.R. No. 155650 July 20 2006
FACTS!
Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino
International Airport (NAIA) Complex in Paraaque City under Executive Order No !"#$
other%ise &no%n as the 'evised Charter o( the Manila International Airport Authority ()MIAA
Charter)) *he O+CC opined that the ,ocal +overnment Code o( -!!- %ithdre% the exemption
(rom real estate tax .ranted to MIAA under /ection 0- o( the MIAA Charter MIAA received 1inal
Notices o( 'eal Estate *ax 2elinquency (rom the City o( Paraaque (or the taxa3le years -!!0
to 0""- *herea(ter$ the City o( Paraaque$ throu.h its City *reasurer$ issued notices o( levy
and %arrants o( levy on the Airport ,ands and 4uildin.s *he Mayor o( the City o( Paraaque
threatened to sell at pu3lic auction the Airport ,ands and 4uildin.s should MIAA (ail to pay the
real estate tax delinquency MIAA (iled %ith the Court o( Appeals an ori.inal petition (or
prohi3ition and in5unction$ %ith prayer (or preliminary in5unction or temporary restrainin. order
*he Court o( Appeals dismissed the petition 3ecause MIAA (iled it 3eyond the 6"7day
re.lementary period
ISSUE!
8hether the Airport ,ands and 4uildin.s o( MIAA are exempt (rom real estate tax
HEL"!
*he Court held that MIAA9s Airport ,ands and 4uildin.s are exempt (rom real estate tax
imposed 3y local .overnments 1irst$ MIAA is not a .overnment o%ned or controlled corporation
3ut an #$s%&u'($%)l#%y o* %+( N)%#o$)l Gov(&$'($% and thus exempt (rom local taxation
/econd$ the real properties o( MIAA are o,$(- .y %+( R(/u.l#0 o* %+( P+#l#//#$(s and thus
exempt (rom real estate tax *here is no dispute that a .overnment7o%ned or controlled
corporation is not exempt (rom real estate tax :o%ever$ MIAA is not a .overnment7o%ned or
controlled corporation A .overnment7o%ned or controlled corporation must 3e )or.ani;ed as a
stoc& or non7stoc& corporation) MIAA is not or.ani;ed as a stoc& or non7stoc& corporation
MIAA is not a stoc& corporation 3ecause it has no capital stoc& divided into shares MIAA has
no stoc&holders or votin. shares :ence$ MIAA is not a stoc& corporation MIAA is also not a
non7stoc& corporation 3ecause it has no mem3ers A non7stoc& corporation must have
mem3ers Even i( %e assume that the +overnment is considered as the sole mem3er o( MIAA$
this %ill not ma&e MIAA a non7stoc& corporation Non7stoc& corporations cannot distri3ute any
part o( their income to their mem3ers /ection -- o( the MIAA Charter mandates MIAA to remit
0"< o( its annual .ross operatin. income to the National *reasury*his prevents MIAA (rom
quali(yin. as a non7stoc& corporation /ince MIAA is neither a stoc& nor a non7stoc&
corporation$ MIAA does not quali(y as a .overnment7o%ned or controlled corporation MIAA #s )
1ov(&$'($% #$s%&u'($%)l#%y v(s%(- ,#%+ 0o&/o&)%( /o,(&s to per(orm e((iciently its
.overnmental (unctions MIAA is li&e any other .overnment instrumentality$ the only di((erence
is that MIAA is vested %ith corporate po%ers 8hen the la% vests in a .overnment
instrumentality corporate po%ers$ the instrumentality does not 3ecome a corporation =nless the
.overnment instrumentality is or.ani;ed as a stoc& or non7stoc& corporation$ it remains a
.overnment instrumentality exercisin. not only .overnmental 3ut also corporate po%ers
MIAA is merely holdin. title to the Airport ,ands and 4uildin.s in trust (or the 'epu3lic
/ection >?$ Chapter -0$ 4oo& I o( the Administrative Code allo%s instrumentalities li&e MIAA to
hold title to real properties o%ned 3y the 'epu3lic
/ection 0#>(a) o( the ,ocal +overnment Code exempts (rom real estate tax any )real
property o%ned 3y the 'epu3lic o( the Philippines@ *his exemption should 3e read in relation
%ith /ection -##(o) o( the same Code$ %hich prohi3its local .overnments (rom imposin.
)AtBaxes$ (ees or char.es o( any &ind on the National +overnment$ its a.encies and
#$s%&u'($%)l#%#(s x x x)
/ection 0#>(a) o( the ,ocal +overnment Code states that real property o%ned 3y the
'epu3lic loses its tax exemption only i( the )3ene(icial use thereo( has 3een .ranted$ (or
consideration or other%ise$ to a taxa3le person) MIAA )s ) 1ov(&$'($% #$s%&u'($%)l#%y #s
$o% ) %)2).l( /(&so$ under /ection -##(o) o( the ,ocal +overnment Code *hus$ even i( %e
assume that the 'epu3lic has .ranted to MIAA the 3ene(icial use o( the Airport ,ands and
4uildin.s$ such (act does not ma&e these real properties su35ect to real estate tax
:o%ever$ portions o( the Airport ,ands and 4uildin.s that MIAA l()s(s %o /&#v)%(
($%#%#(s are not exempt (rom real estate tax
Magsaysay-Labrador v Court of Appeals
180 SCRA 267 19 Dee!ber 1989
"er#a#$ C%&%'
"ats' Adelaida Rodriguez-Magsaysay, widow and special administratix of the estate of the late
senator Genaro Magsaysay, brought before the CF of !longapo, an action against Artemio
"anganiban, #$%C, F&MA'%A'(, and the Register of )eeds of *ambales+ #he alleged that
in ,-./, she and her husband ac0uired through con1ugal funds, a parcel of land with
impro2ements, 3nown as 4"e0ue5a sland67 that after the death of her husband, she disco2ered
an annotation at the bac3 of 8C8 'o 9:./ that 4the land was ac0uired by her husband from his
separate capital6, the Registration of )eed of Assignment purportedly executed by the late
#enator in fa2or of #$%C was cancelled and 8C8 'o+ ::;9, issued in the name of #$%C7 and
the registration of )eed of Mortgage executed by #$%C in fa2or of F&MA'%A'(7 that the
foregoing acts were 2oid and done in attempt to defraud con1ugal partnership considering that
the land is con1ugal, her marital consent to the annotation was not obtained+ #he prayed that the
)eed of Mortgage and the )eed of Assignment be annulled and that the Register of )eeds be
ordered to cancel 8C8 'o ::;9, and to issue a new title in her fa2or+
<erein petitioners, sisters of late senator, filed a Motion for nter2ention on the ground
that their brother con2eyed to them one-half of his shareholdings in #$%C ad as assignees of
around ;,= of the total outstanding shares of such stoc3s in #$%C+
8he court denied the Motion for nter2ention, and ruled that petitioners ha2e no legal
interest+ !n appeal, the respondent CA found no factual or legal 1ustification to disturb the
findings of the lower court+
"etitioners strongly argue that their ownership of ;,+>>= of the entire capital stoc3 of
#$%C entitles them to a significant 2ote in the corporate affairs7 that they are affected by the
action of the widow of their late brother for it concerns only tangible assets of the corporation
and it appears that they are ore 2itally interested in the outcome of the case than #$%C+
(ssue' )*et*er pet+t+o#ers *ave legal +#terest +# t*e sub,et !atter +# l+t+gat+o#
Rul+#g' -o% "etitioners ha2e no legal interest in the sub1ect matter in litigation so as to entitle
them to inter2ene+ As clearly stated in section :, Rule ,: of the Rules of Court, to be permitted
to inter2ene in a pending action, the party must ha2e legal interest in the matter in litigation+
8he words 4an interest o2er the sub1ect6 mean a direct interest in the cause of action as
pleaded and which would put the inter2enor in a legal position to litigate a fact alleged in the
complaint, without establishment of which plaintiff could not reco2er+
<ence, the interest of petitioner-mo2ants is indirect, contingent, remote, con1ectural,
conse0uential, and collateral+ At the 2ery least, their interest is purely inchoate, or in sheer
expectancy of a right in the management of the corporation and to share in the profits thereof
and in the properties and assets thereof or dissolution, after payment of the corporate debts and
obligations+
?hile a share of stoc3 represents a proportionate or ali0uot interest in the property of the
corporation, it does not 2est the owner thereof with any legal right or title to any of the property,
his interest in the corporate property being e0uitable or beneficial in nature+ #hareholders are in
no legal sense the owners of corporate property, which is owned by the corporation as a distinct
legal person+
#ulo ng %ayan 2s+ Araneta @GR &-9,A>,, ,B August ,-B>C
FactsD
!n :> April ,->>, #ulo ng %ayan, nc+ filed an accion de re2indicacion with the Court of First
nstance of %ulacan, Fifth Eudicial )istrict, Falenzuela, %ulacan, against Gregorio Araneta nc+
GGAH, "aradise Farms nc+, 'ational ?aterwor3s I #ewerage Authority G'A?A#AH, <acienda
Caretas nc+, and the Register of )eeds of %ulacan to reco2er the ownership and possession of
a large tract of land in #an Eose del Monte, %ulacan, containing an area of :B,-/:,:.A s0+ ms+,
more or less, registered under the 8orrens #ystem in the name of GA, et+ al+Js predecessors-in-
interest Gwho are members of the corporationH+ !n : #eptember ,->>, GA filed a motion to
dismiss the amended complaint on the grounds that G,H the complaint states no cause of action7
and G:H the cause of action, if any, is barred by prescription and laches+ "aradise Farms, nc+
and <acienda Caretas, nc+ filed motions to dismiss based on the same grounds+ 'A?A#A did
not file any motion to dismiss+ <owe2er, it pleaded in its answer as special and affirmati2e
defenses lac3 of cause of action by #ulo ng %ayan nc+ and the barring of such action by
prescription and laches+ !n :; Eanuary ,->B, the trial court issued an !rder dismissing the
GamendedH complaint+ !n ,; February ,->B, #ulo ng %ayan filed a motion to reconsider the
!rder of dismissal, arguing among others that the complaint states a sufficient cause of action
because the sub1ect matter of the contro2ersy in one of common interest to the members of the
corporation who are so numerous that the present complaint should be treated as a class suit+
8he motion was denied by the trial court in its !rder dated :: February ,->B+ #ulo ng %ayan
appealed to the Court of Appeals+ !n 9 #eptember ,->-, the Court of Appeals, upon finding
that no 0uestion of fact was in2ol2ed in the appeal but only 0uestions of law and 1urisdiction,
certified the case to the #upreme Court for resolution of the legal issues in2ol2ed in the
contro2ersy+
ssueD
?hether the corporation Gnon-stoc3H may institute an action in behalf of its indi2idual members
for the reco2ery of certain parcels of land allegedly owned by said members, among others+
<eldD
t is a doctrine well-established and obtains both at law and in e0uity that a corporation is a
distinct legal entity to be considered as separate and apart from the indi2idual stoc3holders or
members who compose it, and is not affected by the personal rights, obligations and
transactions of its stoc3holders or members+ 8he property of the corporation is its property and
not that of the stoc3holders, as owners, although they ha2e e0uities in it+ "roperties registered
in the name of the corporation are owned by it as an entity separate and distinct from its
members+ Con2ersely, a corporation ordinarily has no interest in the indi2idual property of its
stoc3holders unless transferred to the corporation, Ke2en in the case of a one-man corporation+K
8he mere fact that one is president of a corporation does not render the property which he owns
or possesses the property of the corporation, since the president, as indi2idual, and the
corporation are separate similarities+ #imilarly, stoc3holders in a corporation engaged in buying
and dealing in real estate whose certificates of stoc3 entitled the holder thereof to an allotment
in the distribution of the land of the corporation upon surrender of their stoc3 certificates were
considered not to ha2e such legal or e0uitable title or interest in the land, as would support a
suit for title, especially against parties other than the corporation+ t must be noted, howe2er,
that the 1uridical personality of the corporation, as separate and distinct from the persons
composing it, is but a legal fiction introduced for the purpose of con2enience and to subser2e
the ends of 1ustice+ 8his separate personality of the corporation may be disregarded, or the 2eil
of corporate fiction pierced, in cases where it is used as a cloa3 or co2er for fraud or illegality, or
to wor3 -an in1ustice, or where necessary to achie2e e0uity+ t has not been claimed that the
members ha2e assigned or transferred whate2er rights they may ha2e on the land in 0uestion to
the corporation+ Absent any showing of interest, therefore, a corporation, has no personality to
bring an action for and in behalf of its stoc3holders or members for the purpose of reco2ering
property which belongs to said stoc3holders or members in their personal capacities+
%ataan #hipyard and Lngineering Co+ G%A#LC!H
Fs
"residential Commission on Good Go2ernment G"CGGH
FactsD
%A#LC! challenges Lxecuti2e !rders 'os+ , and :, promulgated by former "resident Corazon
C+ A0uino and the se0uestration, ta3eo2er, and acts done pursuant to the executi2e orders by
the "CGG+
!n the strength on the se0uestration order issued by Commissioner Mary Concepcion %autista,
Eose %alde acting for the "CGG addressed a letter to the "resident and officers of %A#LC!
re0uesting for the production of certain documents+ 8he letter closed with a warning that if the
documents are not submitted within . days, the officers would be cited for conptempt+
"etitioner a2ers that the executi2e orders are unconstitutional+ ?hile %A#LC! concedes that
se0uestration without 1udicial action may be made within the context of the executi2e orders,
howe2er when the Freedom Constitution was promulgated it ceased to be acceptable+ 8his is
because the Freedom Constitution adopted the %ill of Rights embodied in the ,-B9 Constitution+
%A#LC! argues that the assailed order to produce corporate records infringed on their
constitutional right against self incrimination and unreasonable searches and seizures+
ssueD
?hether or not the right against self incrimination and the right against unreasonable searches
and seizures a2ailable to %A#LC! and 1uridical entityM
RulingD
8he right against self incrimination has no application to 1uridical persons+ ?hile an indi2idual
GpersonH may lawfully refuse to answer incriminating 0uestions, it does not follow that a person
2ested with spe+al pr+v+leges a#d fra#*+ses may refuse to show its hand when charged with
abuse of such pri2ileges
8he corporation is a reature of t*e state+ t is presumed to be +#orporated for the be#ef+t of
the publ+% t recei2ed spe+al pr+v+leges a#d fra#*+ses and holds them sub1ect to the la.s
of the state and limitations of its *arter+
8here is a reser2e right on the legislature to in2estigate its contracts and find out .*et*er +t
e/eeded +ts po.ers+
t would be strange to hold that a state ha2ing chartered a corporation could not in the exercise
of so2ereignty in0uire how these franchises had been employed and whether they had been
abused and demand production of the corporate boo3s for that purpose+
L010R(A 23M4S$ (-C%$ a#d5or A(DA M% 63SADAS vs% 23-3RA7L4 C30R8 3"
A664ALS$ &AM4S 70(LD4R C3-S8R0C8(3- a#d5or &A(M4 8% 7RA93
:%R% -o% 12;986% &a#uary 28$ 1999 MAR8(-4<$ &%'
"AC8S'
"etitioner Aida M+ "osadas and her two G:H minor children co-owned property in
Muntinlupa, which was occupied by s0uatters+ "etitioner "osadas entered into negotiations
with pri2ate respondent Eaime 8+ %ra2o regarding the de2elopment of the said property into a
residential subdi2ision, authorizing pri2ate respondent to negotiate with the s0uatters to lea2e
the said property+
Meanwhile, on )ecember ,,, ,-/-, petitioner "osadas and her two G:H children, through
a )eed of Assignment, assigned the said property to petitioner &uxuria <omes, nc+, purportedly
for organizational and tax a2oidance purposes+ Respondent %ra2o signed as one of the
witnesses to the execution of the )eed of Assignment and the Articles of ncorporation of
petitioner &uxuria <omes, nc+
8hen sometime in ,--:, the harmonious and congenial relationship of petitioner
"osadas and respondent %ra2o turned sour when the former supposedly could not accept the
management contracts to de2elop the property into a residential subdi2ision, the latter was
proposing+ n retaliation, respondent %ra2o demanded payment for ser2ices rendered in
connection with the de2elopment of the land, i+e+, relocation of s0uatters, preparation of the
architectural design and site de2elopment plan, sur2ey and fencing+ "etitioner "osadas refused
to pay the amount demanded+ 8hus, pri2ate respondents instituted a complaint for specific
performance before the trial court against petitioners "osadas and &uxuria <omes, nc+ "ri2ate
respondents contend that petitioner "osadas surreptitiously formed &uxuria <omes, nc+, and
transferred the sub1ect parcel of land to it to e2ade payment and defraud creditors+
(SS04'
Can petitioner &uxuria <omes, nc+, be held liable to pri2ate respondents for the transactions
supposedly entered into between petitioner "osadas and pri2ate respondentsM
24LD'
'!+ 8o disregard the separate 1uridical personality of a corporation, the wrongdoing
must be clearly and con2incingly established+ t cannot be presumed+ 8he separate personality
of the corporation may be disregarded only when the corporation is used as a cloa3 or co2er for
fraud or illegality , or to wor3 in1ustice, or where necessary for the protection of creditors+ 8he
issuance of the Articles of ncorporation of the &uxuria <omes and the transfer was made at the
time the relationship between the parties was supposedly 2ery pleasant+ t cannot be said that
the incorporation of &uxuria <omes and the e2entual transfer of the sub1ect property to it were
in fraud of pri2ate respondents as such were done with the full 3nowledge of %ra2o himself+
%esides, "osadas is not the ma1ority stoc3holder of &uxuria <omes, nc+ as she only owns
approximately 99= of the capital stoc3+ <ence cannot be considered as an alter ego of &uxuria
<omes, nc+
3G.R. No. 104567. M)y 28 18869
CONCEPT :UIL"ERS INC. petitioner vs. THE NATIONAL LA:OR RELATIONS COMMISSION
;F#&s% "#v#s#o$<= )$- No&.(&%o M)&).( Ro-ol*o R)>u(l C&#s%o.)l R#(1o M)$u(l G#ll(1o P)l0&o$#o
G#-u0os P(-&o A.o#1)& No&.(&%o Co'($-)-o& Ro1(llo S)lu% E'#l#o G)&0#) J&. M)&#)$o R#o
P)ul#$) :)s() A#*&(-o Al.(&) P)>u#%o S)lu% "o'#$1o Gu)&#$o Ro'(o G)lv( "o'#$)-o& S).#$)
F(l#/( R)-#)$) G)v#$o Su)l#.#o Mo&($o Es0)&(s F(&-#$)$- To&&(s F(l#/( :)s#l)$ )$- Ru.($
Ro.)los respondents.
1AC*/C
Petitioner Concept 4uilders$ Inc is a domestic corporation en.a.ed in construction 3usiness and
herein private respondents are their la3orers$ carpenters and ri..ers On Novem3er -!?"$ the private
respondents %ere issued 3y the petitioner$ individual termination letters indicatin. that their services %ere
no lon.er needed and that the pro5ect %as already (inished Private respondents later (ound out that such
%as not the case and that petitioner en.a.ed the services o( a su3contractor *his no% led$ respondents
to (ile a case %ith the ,a3or Ar3iter a.ainst petitioner (or ille.al dismissal$ un(air la3or practices and non7
payment o( %a.es *he ,a3or Ar3iter decided in (avor o( respondents
An Alias 8rit o( Execution %as issued 3y the ,a3or Ar3iter directin. the sheri(( to to execute the
decision and a second one (or collection o( the 3alance o( the 5ud.ment a%ard /uch %rit %as not
executed 3ecause petitioner stopped its operation A D3rea&7open order@ %as sou.ht 3y the respondents
3ut 2ennis Cuye.&en.$ the Eice7President o( :ydro Pipes Philippines$ Inc (:PPI) (iled a third party
complaint$ alle.in. that the properties to 3e auctioned 3y the sheri(( %ere there9s and not o( petitioners
Private respondents then averred that :PPI and Concept 4uilders are the same and such intervention
and de(ense o( :PPI %as merely to avoid the per(ormance o( Concept 4uilders9 o3li.ation$ as proo( they
presented the certi(icates issued 3y /EC to 3oth corporations :PPI ar.ued then that they are t%o distinct
and separate entities N,'C issued the D3rea&7open order@ and denied petitioner9s motion (or
reconsideration$ hence this petition
I//=EC
8hether or not there %as an intention o( the petitioners to evade their lia3ility a.ainst private
respondents throu.h the intervention o( :PPI
:E,2C
Fes It is very o3vious that the second corporation see&s the protective shield o( a corporate
(iction %hose veil in the present case could$ and should$ 3e pierced as it %as deli3erately and maliciously
desi.ned to evade its (inancial o3li.ation to its employees
*he corporate mas& may 3e li(ted and the corporate veil may 3e pierced %hen a corporation is 5ust
3ut the alter e.o o( a person or o( another corporation 8here 3ad.es o( (raud existG %here pu3lic
convenience is de(eatedG %here a %ron. is sou.ht to 3e 5usti(ied there3y$ the corporate (iction or the
notion o( le.al entity should come to nau.ht *he la% in these instances %ill re.ard the corporation as a
mere association o( persons and$ in case o( t%o corporations$ mer.e them into one
*hus$ %here a sister corporation is used as a shield to evade a corporation9s su3sidiary lia3ility (or
dama.es$ the corporation may not 3e heard to say that it has a personality separate and distinct (rom the
other corporation *he piercin. o( the corporate veil comes into play
9+llarey
=ao$ Sr% vs% 6eople of t*e 6*+l+pp+#es
:%R% 168>06 &u#e 19$ 2007
"etitioners are incorporators and officers of MA#AGA'A GA# C!R"!RA8!', an entity
engaged in refilling, sale and distribution of &"G "roducts+ "ri2ate respondent "etron
Corporation G"etronH and "ilipinas #hell "etroleum Corporation G#hellH are two of largest
bul3 suppliers and producers of &"G in the "hilippines, and their &"G are sold under the
mar3s GA#$& and #<L&&A'L respecti2ely+
t was alleged that petitioners are actually producing, selling, offering for sale andNor
distributing &"G products using steel cylinders, owned by, and bearing the trademar3s and
de2ices of "etron and #hell+ 8he '% filed applications for search warrant against
petitioners and the occupants of the MA#AGA'A Compound for the alleged 2iolation of the
ntellectual "roperty Code of the "hilippines+ As a result of the ser2ice of search warrants,
&"G Cylinders bearing the tradename of #hell and "etron, and trademar3s and other
de2ices owned by #hell and "etron, as well as refilling machines, were seized
"etitioners mo2ed for the return of the seized item for the properties are owned by
MA#AGA'A as a separate entity
##$LD ?!' there is a separate legal entity as to warrant the return of the seized item
<L&)D '!
?hen the notion of legal entity is used to defeat public con2enience, 1ustify wrong, protect
fraud, or defend crime, the law will regard the corporation as an association of persons or in
the case of two corporations merge them into one+ n other words, the law will not recognize
the separate corporate existence if the corporation is being used pursuant to unlawful
ob1ecti2es+
"etitioners as directors of MA#AGA'A, are using the latter in 2iolation of intellectual
property rights of "etron and #hell+ 8hus "etitioners and MA#AGA'A should be considered
as one and the same for liability purposes
L2en if the separate personality of MA#AGA'A and petitioners is to be sustained, the effect
would be the same+ 8he law does not re0uire that the property to be seized should be
owned by the person against whom search warrants is directed+ t is sufficient that the
person against whom the warrant is directed has control or possession of the property
sought to be seized+ L2en if the properties seized belong to MA#AGA'A, the seizures
pursuant to the warrants are still 2alid+
G.R. No. 150716 July 21 2006
SE?ENTH "AY A"?ENTIST CONFERENCE CHURCH OF SOUTHERN PHILIPPINES INC. )$-@o&
&(/&(s($%(- .y MANASSEH C. ARRANGUEA :RIGI"O P. GULAY FRANCISCO M. LUCENARA
"IONICES O. TIPGOS LORESTO C. MURILLON ISRAEL C. NINAL GEORGE G. SOMOSOT
JESSIE T. OR:ISO LORETO PAEL )$- JOEL :ACU:AS petitioners$
vs
NORTHEASTERN MIN"ANAO MISSION OF SE?ENTH "AY A"?ENTIST INC. )$-@o& &(/&(s($%(-
.y JOSUE A. LAYON BEN"ELL M. SERRANO FLORANTE P. TY )$- JETHRO CALAHAT )$-@o&
SE?ENTH "AY A"?ENTIST CHURCH 3OF9 NORTHEASTERN MIN"ANAO MISSION
H
'espondents
2 E C I / I O N
CORONA J.:
FACTS!
*his case involves a lot covered 3y 4ayu.an$ A.usan del /ur ori.inally o%ned 3y 1elix Cosio and his
%i(e$ 1elisa Cuysona *he spouses Cosio donated the land to the /outh Philippine =nion Mission o(
/eventh 2ay Adventist Church o( 4ayu.an Esperan;a$ A.usan (/P=M7/2A 4ayu.an)
*he donation %as alle.edly accepted 3y one ,i3erato 'ayos$ an elder o( the /eventh 2ay Adventist
Church$ on 3ehal( o( the donee
*%enty7one years later$ ho%ever$ the same parcel o( land %as sold 3y the spouses Cosio to the /eventh
2ay Adventist Church o( Northeastern Mindanao Mission (/2A7NEMM)Claimin. to 3e the alle.ed
donee9s successors7in7interest$ petitioners asserted o%nership over the property *his %as opposed 3y
respondents %ho ar.ued that at the time o( the donation$ /P=M7/2A 4ayu.an could not le.ally 3e a
done 3ecause$ not havin. 3een incorporated yet$ it had no 5uridical personality Neither %ere petitioners
mem3ers o( the local church then$ hence$ the donation could not have 3een made particularly to them
ISSUE!
Is the donation valid considerin. that the Church is not yet incorporatedI
HEL"!
8e a.ree %ith the appellate court that the alle.ed donation to petitioners %as void
2onation is an act o( li3erality %here3y a person disposes .ratuitously o( a thin. or ri.ht in (avor
o( another person %ho accepts it *he donation could not have 3een made in (avor o( an entity yet
inexistent at the time it %as made Nor could it have 3een accepted as there %as yet no one to accept it
*he deed o( donation %as not in (avor o( any in(ormal .roup o( /2A mem3ers 3ut a supposed /P=M7
/2A 4ayu.an (the local church) %hich$ at the time$ had neither 5uridical personality nor capacity to accept
such .i(t
2eclarin. themselves a de facto corporation$ petitioners alle.e that they should 3ene(it (rom the donation
4ut there are strin.ent requirements 3e(ore one can quali(y as a de facto corporationC
(a) the existence o( a valid la% under %hich it may 3e incorporatedG
(3) an attempt in .ood (aith to incorporateG and
(c) assumption o( corporate po%ers
*he (ilin. o( articles o( incorporation and the issuance o( the certi(icate o( incorporation are essential (or
the existence o( a de facto corporation 8e have held that an or.ani;ation not re.istered %ith the
/ecurities and Exchan.e Commission (/EC) cannot 3e considered a corporation in any concept$ not
even as a corporation de facto Petitioners themselves admitted that at the time o( the donation$ they
%ere not re.istered %ith the /EC$ nor did they even attempt to or.ani;e

to comply %ith le.al
requirements
)*he de (acto doctrine thus e((ects a compromise 3et%een t%o con(lictin. pu3lic interestAsBJthe one
opposed to an unauthori;ed assumption o( corporate privile.esG the other in (avor o( doin. 5ustice to the
parties and o( esta3lishin. a .eneral assurance o( security in 3usiness dealin. %ith corporations)
+enerally$ the doctrine exists to protect the pu3lic dealin. %ith supposed corporate entities$ not to (avor
the de(ective or non7existent corporation
In vie% o( the (ore.oin.$ petitioners9 ar.uments anchored on their supposed de facto status hold no %ater
8e are convinced that there %as no donation to petitioners or their supposed predecessor7in7interest
G.R. No. 136448. November 3, 1999.*
LIM TONG LIM, petitioner, vs. PHILIPPIN !I"HING G#R IN$%"TRI", IN&., respon'ent.
P#NG#NI(#N, ).*
!+,ts*
On be-+./ o/ 0O,e+n 12est !is-in3 &orpor+tion,4 #ntonio &-2+ +n' Peter 5+o p2r,-+se' /is-in3 nets
+n' /.o+ts /rom t-e P-i.ippine !is-in3 Ge+r In'2stries, In,. 6-erein respon'ent7. T-e8 ,.+ime' t-+t t-e8
9ere en3+3e' in + b2siness vent2re 9it- Petitioner Lim Ton3 Lim, 9-o -o9ever 9+s not + si3n+tor8 to
t-e +3reement.
T-e b28ers, -o9ever, /+i.e' to p+8: -en,e, priv+te respon'ent /i.e' + ,o..e,tion s2it +3+inst &-2+, 5+o
+n' Petitioner Lim Ton3 Lim 9it- + pr+8er /or + 9rit o/ pre.imin+r8 +tt+,-ment.
T-e s2it 9+s bro23-t +3+inst t-e t-ree in t-eir ,+p+,ities +s 3ener+. p+rtners, on t-e +..e3+tion t-+t 0O,e+n
12est !is-in3 &orpor+tion4 9+s + none;istent ,orpor+tion +s s-o9n b8 + &erti/i,+tion /rom t-e "e,2rities
+n' ;,-+n3e &ommission.
Petitioner ,ontests s2,- .i+bi.it8, insistin3 t-+t on.8 t-ose 9-o 'e+.t in t-e n+me o/ t-e ostensib.e
,orpor+tion s-o2.' be -e.' .i+b.e. "in,e -is n+me 'oes not +ppe+r on +n8 o/ t-e ,ontr+,ts +n' sin,e -e
never 'ire,t.8 tr+ns+,te' 9it- t-e respon'ent ,orpor+tion, er3o, -e ,+nnot be -e.' .i+b.e.
Iss2e*
<-et-er petitioner m+8 be -e.' .i+b.e /or t-e /is-in3 nets +n' /.o+ts p2r,-+se' /rom respon'ent
He.'* 5es
It is 'i//i,2.t to 'is+3ree 9it- t-e RT& +n' t-e &# t-+t Lim, &-2+ +n' 5+o 'e,i'e' to /orm + ,orpor+tion.
#.t-o23- it 9+s never .e3+..8 /orme' /or 2n=no9n re+sons, t-is /+,t +.one 'oes not pre,.2'e t-e .i+bi.ities
o/ t-e t-ree +s ,ontr+,tin3 p+rties in represent+tion o/ it. &.e+r.8, 2n'er t-e .+9 on estoppe., t-ose +,tin3
on be-+./ o/ + ,orpor+tion +n' t-ose bene/ite' b8 it, =no9in3 it to be 9it-o2t v+.i' e;isten,e, +re -e.'
.i+b.e +s 3ener+. p+rtners.
Te,-ni,+..8, it is tr2e t-+t petitioner 'i' not 'ire,t.8 +,t on be-+./ o/ t-e ,orpor+tion. Ho9ever, -+vin3
re+pe' t-e bene/its o/ t-e ,ontr+,t entere' into b8 persons 9it- 9-om -e previo2s.8 -+' +n e;istin3
re.+tions-ip, -e is 'eeme' to be p+rt o/ s+i' +sso,i+tion +n' is ,overe' b8 t-e s,ope o/ t-e 'o,trine o/
,orpor+tion b8 estoppe..
%n>2estion+b.8, petitioner bene/ite' /rom t-e 2se o/ t-e nets /o2n' insi'e F/B Lourdes, t-e bo+t 9-i,-
-+s e+r.ier been proven to be +n +sset o/ t-e p+rtners-ip. He in /+,t >2estions t-e +tt+,-ment o/ t-e nets,
be,+2se t-e <rit -+s e//e,tive.8 stoppe' -is 2se o/ t-e /is-in3 vesse..
0"e,. ?1. &orpor+tion b8 estoppe..@#.. persons 9-o +ss2me to +,t +s + ,orpor+tion =no9in3 it to be
9it-o2t +2t-orit8 to 'o so s-+.. be .i+b.e +s 3ener+. p+rtners /or +.. 'ebts, .i+bi.ities +n' '+m+3es in,2rre'
or +risin3 +s + res2.t t-ereo/* Provi'e' -o9ever, T-+t 9-en +n8 s2,- ostensib.e ,orpor+tion is s2e' on
+n8 tr+ns+,tion entere' b8 it +s + ,orpor+tion or on +n8 tort ,ommitte' b8 it +s s2,-, it s-+.. not be
+..o9e' to 2se +s + 'e/ense its .+,= o/ ,orpor+te person+.it8.
0One 9-o +ss2mes +n ob.i3+tion to +n ostensib.e ,orpor+tion +s s2,-, ,+nnot resist per/orm+n,e t-ereo/
on t-e 3ro2n' t-+t t-ere 9+s in /+,t no ,orpor+tion.4
4atch - case -#
International Express *ravel K *our vs CA K :enri Lahn$ Philippine 1oot3all 1ederation
1actsC
Petitioner is a travel a.ency o( Philippine 1oot3all Association
Petitioner secured airline tic&ets (or the athletes and o((icials o( the 1ederation to the /outh East Asian
+ames as %ell as trips to China and 4ris3ane *he total cost (or the airline tic&ets amounted to
P>>!$6M>?# /everal payments %ere made and A chec& %as personally issued 3y :enri Lahn$ President
o( the 1ederation$ in the amount o( PM"$""" 2espite these payments$ a 3alance o( P06M$?>!##
remained As a result$ Petitioner sued :enri in his personal capacity and as President$ and included the
1ederation as alternative de(endant
'*C o( Manila ruled in (avor o( petitioner %hile it %as reversed on appeal 3y CA :ence$ this case
IssueC 8ON the 1ederation has esta3lished corporate personality
:eldC
No 4e(ore a corporation may acquire 5uridical personality$ the /tate must .ive its consent throu.h a
special la% or .eneral ena3lin. act 'A #-#M and P2 6"> merely reco.ni;e the existence o( national
sports associations and the manner 3y %hich these entities acquire personality *hese la%s require
accreditation (rom the Phil Amateur Athletic 1ederation and the 2ept o( Fouth and /ports 2evelopment
=n(ortunately$ private respondent (ailed to su3stantiate this *here(ore$ a person actin. on 3ehal( o( a
corporation %hich has no valid existence assumes privile.es and 3ecomes personally lia3le (or contracts
entered into or acts per(ormed as a.ent
*he doctrine o( corporation 3y estoppel cannot 3e applied in this case since it only applies to a third party
tryin. to escape lia3ility (rom %hich he 3ene(itted In this case$ petitioner is not tryin. to escape lia3ility
(rom the contract 3ut the one claimin. (rom it
4atch - Case ->
1ilipinas 4roadcastin. Net%or& vs AMEC74CCM
1actsC
It started %ith a radio pro.ram titled DExposeN@ hosted 3y Carmelo OMel9 'ima (D'ima@) and :ermo.enes
OPun9 Ale.re (DAle.re@) ExposeN is aired every mornin. over 2Q'C7AM %hich is o%ned 3y 1ilipinas
4roadcastin. Net%or&$ Inc (D14NI@) DExposeN@ is heard over ,e.a;pi City and other places in 4icol In the
mornin. o( -> and -M 2ecem3er -!?!$ 'ima and Ale.re exposed various alle.ed complaints (rom
students$ teachers and parents a.ainst A.o Medical and Educational Center74icol Christian Colle.e o(
Medicine (DAMEC@) and its administratorsit %as claimed that the 3roadcasts %ere de(amatory$ AMEC and
An.elita A.o (DA.o@)$ as 2ean o( AMEC9s Colle.e o( Medicine$ (iled a complaint (or dama.es a.ainst
14NI$ 'ima and Ale.re on 0R 1e3ruary -!!" *he complaint (urther alle.ed that AMEC is a reputa3le
learnin. institution 8ith the supposed exposeNs$ 14NI$ 'ima and Ale.re Dtransmitted malicious
imputations$ and as such$ destroyed plainti((s AMEC and A.o included 14NI as de(endant (or alle.edly
(ailin. to exercise due dili.ence in the selection and supervision o( its employees$ particularly 'ima and
Ale.re On -? Pune -!!"$ 14NI$ 'ima and Ale.re$(iled an Ans%er alle.in. that the 3roadcasts a.ainst
AMEC %ere (air and true 14NI$ 'ima and Ale.re claimed that they %ere plainly impelled 3y a sense o(
pu3lic duty to report the D.oin.s7on in AMECan institution im3ued %ith pu3lic interest@ 2urin. the
presentation o( the evidence (or the de(ense$ Atty Edmundo Cea$ colla3oratin. counsel o( Atty ,o;ares$
(iled a Motion to 2ismiss on 14NI9s 3ehal( *he trial court denied the motion to dismiss Consequently$
14NI (iled a separate Ans%er claimin. that it exercised due dili.ence in the selection and supervision o(
3roadcastersOn -> 2ecem3er -!!0$ the trial court rendered a 2ecision (indin. 14NI and Ale.re lia3le (or
li3el except 'ima *he trial court held that the 3roadcasts are li3elous per se *he trial court re5ected the
3roadcasters9 claim that their utterances %ere the result o( strai.ht reportin. 3ecause it had no (actual
3asis *he Court o( Appeals a((irmed the trial court9s 5ud.ment %ith modi(ication *he appellate court
made 'ima solidarily lia3le %ith 14NI and Ale.re *he appellate court denied A.o9s claim (or dama.es
and attorney9s (ees 3ecause the 3roadcasts %ere directed a.ainst AMEC$ and not a.ainst her 14NI$
'ima and Ale.re (iled a motion (or reconsideration %hich the Court o( Appeals denied :ence$ 14NI (iled
the petition (or revie%
IssueC 8ON AMEC I/ EN*I*,E2 *O MO'A, 2AMA+E/I
:eldC
A 5uridical person li&e AMEC is .enerally not entitled to moral dama.es 3ecause$ unli&e a natural person$
it cannot experience physical su((erin. or such sentiments as %ounded (eelin.s$ serious anxiety$ mental
an.uish or moral shoc& *he Court o( Appeals cites Da corporation may have a .ood reputation %hich$ i(
3esmirched$ may also 3e a .round (or the a%ard o( moral dama.es@ is an o3iter dictum Nevertheless$
AMEC9s claim (or moral dama.es (alls under item R o( Article 00-! o( the Civil Code *his provision
expressly authori;es the recovery o( moral dama.es in cases o( li3el$ slander or any other (orm o(
de(amation Article 00-!(R) does not quali(y %hether the plainti(( is a natural or 5uridical person *here(ore$
a 5uridical person such as a corporation can validly complain (or li3el or any other (orm o( de(amation and
claim (or moral dama.es Moreover$ %here the 3roadcast is li3elous per se$ the la% implies dama.es In
such a case$ evidence o( an honest mista&e or the %ant o( character or reputation o( the party li3eled
.oes only in miti.ation o( dama.es Neither in such a case is the plainti(( required to introduce evidence o(
actual dama.es as a condition precedent to the recovery o( some dama.es In this case$ the 3roadcasts
are li3elous per se *hus$ AMEC is entitled to moral dama.es
Coastal "acific 8rading, nc+ 2s+ #outhern Rolling Mills Co+
G+R+ 'o+ ,,/>-:
Euly :/, :AA>
FAC8#D
Respondent #outhern Rolling Mills Co+, nc+ was organized in ,-.- for the purpose of engaging
in a steel processing business+ t was later renamed Fisayan ntegrated #teel Corporation
GF#C!H+ n ,->,, F#C! obtained a loan from )%" amounting to "/9>,AAA+ t was secured by
a Real Lstate Mortgage co2ering F#C!Js 9 parcels of land including the machinery and
e0uipment therein+ A second loan was then entered by F#C! with respondent ban3s G referred
as KConsortiumKH to finance its importation for 2arious raw materials+ F#C! executed a second
mortgage o2er the pre2ious properties mentioned, howe2er they were unrecorded+ F#C! was
unable to pay its second mortgage with the consortium, which resulted in the latter ac0uiring
-A= of the e0uity of F#C! gi2ing the Consortium the control and management of F#C!+
)espite the ac0uisition, F#C! still remained indebted to the Consortium+ %etween ,->; to
,->., F#C! entered a processing agreement with Coastal wherein Coastal deli2ered 9,AAA
metric tons of hot rolled steel coils which F#C! would process into bloc3 iron sheets+
<owe2er, F#C! was only able to return ,,>AA metric tons of those sheets+ 8o pay its first
mortgage with )%", F#C! sold : of its generators to F&MAG "hils, nc+ )%" executed a
)eed of Assignment of the mortgage in fa2or of the consortium+ 8he Consortium foreclosed the
mortgage and was the highest bidder in an auction sale of F#C!Js properties+ 8he Consortium
later sold the properties in fa2or of 'ational #teel Corporation+ Coastal files a ci2il action for
Annulment or Rescission of #ale, )amages with "reliminary n1unction+ Coastal imputes bad
faith on the action of the Consortium, the latter being able to sell the properties of F#C!
despite the attachment of the properties, placing them beyond the reach of F#C!Js other
creditors+ 8he lower court ruled in fa2or of F#C!, declaring the sale 2alid and legal+ 8he CA
affirmed this+
##$L ,D ?hether the consortium disposed F#C!Js assets in fraud of creditorsM
<L&)D
Oes+ ?hat the consortium did was to pay to them the proceeds from the sale of the generator
sets which in turn they used to pay )%"+ )ue to the )eed of Assignment issued by )%", the
respondent ban3s reco2ered what they remitted to )%" I it allowed the Consortium to ac0uire
)%"Js primary lien on the mortgaged properties+ Allowing them as unsecured creditors G as the
mortgage was unrecordedH to foreclose on the assets of the corporation without regard to
inferior claims
(SS04 2' )*et*er pet+t+o#er +s e#t+tled to !oral da!ages?
'o+ As a rule, a corporation is not entitled to moral damages because, not being a natural
person, it cannot experience physical suffering or sentiments li3e wounded feelings, serious
anxiety, mental anguish and moral shoc3+ 8he only exception to this rule is when the
corporation has a good reputation that is debased, resulting in its humiliation in the business
realm+ n the present case, the records do not show any e2idence that the name or reputation of
petitioner has been sullied as a result of the ConsortiumJs fraudulent acts+ Accordingly, moral
damages are not warranted+ "etitioner was able to reco2er exemplary damages