YUTIVO

Facts: Yutivo, a domestic corporation incorporated in 1916 under Philippine laws, was engaged in the
importation and sale of hardware supplies and equipment. After the first world war, it resumed its
business and bought a number of cars and trucks from General Motors(GM), an American Corporation
licensed to do business in the Philippines.

On June 13, 1946, the Southern Motors Inc,(SM) was organized to engage in the business of selling cars,
trucks and spare parts. One of the subscribers of stocks during its incorporation was Yu Khe Thai, Yu Khe
Siong and Hu Kho Jin, who are sons of Yu Tiong Yee, one of Yutivos founders.

After SMs incorporation and until the withdrawal of GM from the Philippines, the cars and trucks
purchased by Yutivo from GM were sold by Yutivo to SM which the latter sold to the public.

Yutivo was appointed importer for Visayas and Mindanao by the US manufacturer of cars and trucks
sold by GM. Yutivo paid the sales tax prescribed on the basis of selling price to SM. SM paid no sales tax
on its sales to the public.

An assessment was made upon Yutivo for deficiency sales tax. The Collector of Internal Revenue,
contends that the taxable sales were the retail sales by SM to the public and not the sales at wholesale
made by Yutivo to the latter inasmuch as SM and Yutivo were one and the same corporation, the former
being a subsidiary of the latter.

The assessment was disputed by petitioner. After reinvestigation, a second assessment was made,
sustaining the validity of the first assessment. Yutivo contested the second assessment, alleging that
there is no valid ground to disregard the corporate personality of SM and to hold that it is an adjunct of
petitioner.

Issue: Whether or not the corporate personality of SM could be disregarded.

Held: Yes. A corporation is an entity separate and distinct from its stockholders and from other
corporations to which it may be connected. However, when the notion of legal entity is used to defeat
public convenience, justify 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. When the
corporation is a mere alter ego or business conduit of a person, it may be disregarded.

SC ruled that CTA was not justified in finding that SM was organized to defraud the Government. SM
was organized in June 1946, from that date until June 30, 1947, GM was the importer of the cars and
trucks sold to Yutivo, which in turn was sold to SM. GM, as importer was the one solely liable for sales
taxes. Neither Yutivo nor SM was subject to the sales taxes. Yutivos liability arose only until July 1, 1947
when it became the importer. Hence, there was no tax to evade.

However, SC agreed with the respondent court that SM was actually owned and controlled by
petitioner. Consideration of various circumstances indicate that Yutivo treated SM merely as its
department or adjunct:

a. The founders of the corporation are closely related to each other by blood and affinity.

b. The object and purpose of the business is the same; both are engaged in sale of vehicles, spare parts,
hardware supplies and equipment.

c. The accounting system maintained by Yutivo shows that it maintained high degree of control over SM
accounts.

d. Several correspondences have reference to Yutivo as the head office of SM. SM may even freely use
forms or stationery of Yutivo.

e. All cash collections of SMs branches are remitted directly to Yutivo.

f. The controlling majority of the Board of Directors of Yutivo is also the controlling majority of SM.

g. The principal officers of both corporations are identical. Both corporations have a common
comptroller in the person of Simeon Sy, who is a brother-in-law of Yutivos president, Yu Khe Thai.

h. Yutivo, financed principally the business of SM and actually extended all the credit to the latter not
only in the form of starting capital but also in the form of credits extended for the cars and vehicles
allegedly sold by Yutivo to SM.


Good Earth Emporium Inc and Lim Ka Ping, petitioners
v.
CA and Roces-Reyes Realty Inc., respondents

This is a petition for review on certiorari of the decision CAreversing the decision of respondent Judge
RTC of Manila, which reversed the resolution of the Metropolitan Trial Court Of Maniladenying herein
GEEs motion to quash the alias writ of execution issued against them.

Facts:
A lease contract was entered into between ROCES and GEE. A five-storey building was the subject of
which, upon failure of the latter to pay its rentals, ROCES filed an ejectment case against the petitioner.
The MTC of Mlarendered a decision ordering GEE and all persons under him to vacate the premises and
surrender the same to ROCES and pay the plaintiffs the rental.

GEE filed a motion to quash the writ of execution but the same was denied by the MTC for lack of merit.
In 1987 the RTC of Manila reversed the decision of the MTC finding that the amount of P1 million
evidenced by Exhibit "I" and another P1 million evidenced by the pacto de retro sale instrument were in
full satisfaction of the judgment obligation.

On further appeal, the CA reversed the decision of the RTC and reinstated the Resolution of the MTC of
Manila. GEEs m/r was denied, hence this petition.

Issue:
Whether or not there was full satisfaction of the judgment debt in favor of respondent corporation
which would justify the quashing of the Writ of Execution

Ruling:
The fact that at the time payment was made to the two Roces brothers, GEE was also indebted to
respondent corporation for a larger amount, is not supportive of the Regional Trial Court's conclusions
that the payment was in favor of the latter, especially where the amount was not receipted for by
respondent corporation and there is absolutely no indication in the receipt from which it can be
reasonably inferred, that said payment was in satisfaction of the judgment debt. Likewise, no such
inference can be made from the execution of the pacto de retro sale which was not made in favor of
respondent corporation but in favor of the two Roces brothers in their individual capacities without any
reference to the judgment obligation in favor of respondent corporation.

Respondent court was correct in stating that it "cannot go beyond what appears in the documents
submitted by petitioners themselves in the absence of clear and convincing evidence" that would
support its claim that the judgment obligation has indeed been fully satisfied which would warrant the
quashal of the Alias Writ of Execution.

It has been an established rule that when the existence of a debt is fully established by the evidence
(which has been done in this case), the burden of proving that it has been extinguished by payment
devolves upon the debtor who offers such a defense to the claim of the plaintiff creditor.


Mambulao Lumber Company, plaintiff-appellant
vs.
Philippine Natl. Bank and AnacletoHeraldo, Deputy Provincial Sheriff of Cam-
Norte, def-appellees

This is an appeal from the decision of the CFI of Manila dismissing the complaint against both
defendants and sentencing the plaintiff to pay the defendant the sum of P3,582.52 with
interest thereon at the rate of 6% per annum from Dec. 22,1961 until fully paid and the costs of
the suit.

Facts:
In seeking the reversal of the decision, the plaintiff contended that its total indebtedness to the
PNB has been paid by the proceeds of the foreclosure sale of its real property and the
additional amount remitted by it to the Bank.
On the belief that the proceeds of the above-stated sale is insufficient to cover the Plaintiffs
debt, PNB sent a letter to the Provincial Sheriff of Cam-Norte requesting him to take possession
of the chattels mortgaged to it by the plaintiff and sell them at public auction.
Plaintiff alleged that the auction sale of the chattels mortgaged is void for being violative of the
agreement provided in the mortgage contract:
in cases of both judicial and extra-judicial foreclosure under Act 1508, as amended, the
corresponding complaint for foreclosure or the petition for sale should be filed with the courts or
the Sheriff of Manila, as the case may be
Herein appellant claims moral damages on account of the said violation.

Issue:
Whether Mambulao can validly claim for moral damages

Ruling:
No. An artificial person like herein appellant corporation cannot experience physical sufferings,
mental anguish, fright, serious anxiety, wounded feelings, moral shock or social humiliation
which are basis of moral damages
A corporation may have a good reputation which, if besmirched, may also be a ground 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
operation at 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 undoubtedly be the same whether the sale was conducted at Jose
Panganiban, CamarinesNorte, or in Manila which is the place agreed upon by the parties in the
mortgage contract.


ACME
In June 1978, Acme Shoe, Rubber & Plastic Corporation executed a chattel mortgage in favor of
Producers Bank of the Philippines in consideration of a loan in the amount of P3 million. The loan
was paid. Thereafter, Producers Bank extended another P2.7 million loan to Acme. The same was
paid. In 1984, Producers Bank extended a P1 million loan to Acme. This time, Acme was unable to
pay and eventually, Producers Bank foreclosed the property subject of the chattel mortgage
executed in June 1978.
Acme opposed the foreclosure as it alleged that the 1984 loan was no longer covered by the chattel
mortgage of 1978. Acme is also asking for moral damages (worth P3 million) for the groundless
foreclosure done by Producers Bank.
ISSUE: Whether or not Acme Shoe is entitled to moral damages.
HELD: No. It is true that the chattel mortgage executed in 1978 for the initial P3 million loan only
covers the initial loan and not the 1984 P1 million loan. However, Acme Shoes is not entitled to
moral damages. Moral damages are granted in recompense for physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injury. A corporation, being an artificial person and having existence only in legal
contemplation, has no feelings, no emotions, no senses; therefore, it cannot experience physical
suffering and mental anguish. Mental suffering can be experienced only by one having a nervous
system and it flows from real ills, sorrows, and griefs of life all of which cannot be suffered by
Acme Shoes as an artificial person.

BPI VS. CASA MONTESSORI INTERNATIONAL

FACTS: On November 8, 1982, CASA Montessori International opened Current AccouNT with BPI with
CASAs President Lebron as one of its authorized signatories. In 1991, after conducting an investigation,
plaintiff discovered that nine of its checks had been encashed by a certain Sonny D. Santos since 1990 in
the total amount of P782,000.00. It turned out that Santos with account at BPI Greenbelt Branch was a
fictitious name used by third party defendant Leonardo T. Yabut who worked as external auditor of CASA.
Third party defendant voluntarily admitted that he forged the signature of Lebron and encashed the
checks. In 1991, plaintiff filed Complaint for Collection with Damages against defendant bank praying that
the latter be ordered to reinstate the amount of P782,500.00 with interest. RTC rendered decision in
favor of the plaintiff. CA modified decision holding CASA as contributory negligent hence ordered Yabut
to reimburse BPI half the total amount claimed and CASA, the other half. It also disallowed attorneys fees
and moral and exemplary damages.
ISSUE: W/N moral and exemplary damages and attorneys fees should be awarded.
RULING: Moral and exemplary damages denied but atty.s fees granted.
In the absence of a wrongful act or omission, or of fraud or bad faith, moral damages cannot be awarded.
The adverse result of an action does not per se make the action wrongful, or the party liable for it.CASA
was unable to identify the particular instance upon which its claim for moral damages is predicated.
Neither bad faith nor negligence so gross that it amounts to malice can be imputed to BPI.
Imposed by way of correction for the public good, exemplary damages cannot be recovered as a matter of
right. There is no bad faith on the part of BPI for paying the checks of CASA upon forged signatures.
Therefore, the former cannot be said to have acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. The latter, having no right to moral damages, cannot demand exemplary damages.
When the act or omission of the defendant has compelled the plaintiff to incur expenses to protect the
latters interest, or where the court deems it just and equitable, attorneys fees may be recovered. In the
present case, BPI persistently denied the claim of CASA under the NIL to recredit the latters account for
the value of the forged checks. This denial constrained CASA to incur expenses and exert effort for more
than ten years in order to protect its corporate interest in its bank account.