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5. De Castro vs.

CA Ruling employee relationship between the principal and


the dismissed employees arises by operation of
The respondents do not deny that Nuvoland and law. Silvericon being merely an agent, its
Silvericon shared the same officers and employees: employees were in fact those of Nuvoland. Stated
respondents Bienvenida and Martinez were differently, Nuvoland was the principal employer of
stockholders and incorporators thereof while De the petitioners.
Castro was the President and majority stockholder
of Silvericon. At the same time, Bienvenida was a As it had been determined that Silvericon was a
principal stockholder and member of the Board of mere subterfuge for Nuvoland's sales and
Directors of Nuvoland while Martinez was marketing activities, the circumstances surrounding
Nuvoland's President. Admittedly, this fact alone
the nature of De Castro's hiring and the very nature
does not give rise to an inference that Nuvoland
and Silvericon are one and the same. It effectively of his claims must be fully considered to determine
sows doubt, however, when taken together with jurisdiction. It must be remembered that De Castro
the other indicators of labor-only contracting, as was hired by Martinez and Bienvenida to be the
previously discussed. President and COO of Silvericon. This appears in
the SMA, which the Court has interpreted as a ruse
If Nuvoland and Silvericon were indeed separate to conceal Nuvoland's labor-contracting activities.
entities, out of all other Nuvoland officers, why did
As previously discussed, the contrived cancellation
Bienvenida, as an incorporator of both
corporations, choose to authorize the purported of the SMA was, in effect, a termination of its
termination of the SMA without at least calling for personnel assigned to Silvericon.
an investigation of the incident? As a stockholder
of Silvericon, he possessed an interest in the said Corporate Directors and Officers,
corporation. Curiously though, Nuvoland's decision Not Liable
to part with Silvericon as expressed in Bienvenida's
letter was reached without consultation or, at the
A corporation, being a juridical entity, may act only
least, a preliminary notice. Had there really been a
breach of contract, Nuvoland would have through its directors, officers and employees.
demanded an explanation from Silvericon before Obligations incurred by them, acting as such
barring the personnel's entry in their work corporate agents, are not theirs but the direct
premises to think that the latter was engaged in an accountabilities of the corporation they
important aspect of its business. represent.[42] Pursuant to this principle, a director,
officer or employee of a corporation is generally
The conclusion that Silvericon was a mere labor-
only contractor and a business conduit of Nuvoland not held personally liable for obligations incurred
warrants the piercing of its corporate veil. by the corporation; it is only in exceptional
circumstances that solidary liability will attach to
Consequently, the piercing of the corporate veil them.[43] Thus, in labor cases, the Court has held
disregards the seemingly separate and distinct that corporate directors and officers are solidarity
personalities of Nuvoland and Silvericon with the
liable with the corporation for the employee's
aim of preventing the anomalous situation
abhorred by prevailing labor laws. termination only when the same is done with
malice or in bad faith.[44]
In the interest of justice and equity, that veil of
corporate fiction must be pierced, and Nuvoland The records are bereft of any evidence at all that
and Silvericon be regarded as one and the same
respondents Martinez and Bienvenida acted with
entity to prevent a denial of what the petitioners
are entitled to. In a situation like this, an employer- malice, ill will or bad faith when the SMA was
terminated. Hence, the said individual officers CAGLI, through its Chief Executive Officer Bob D.
cannot be held solidarity liable for the money Gothong and Executive Vice President for Engineering
claims due the petitioners (herein respondent) Benjamin D. Gothong. On its
second page, Annex SL-V bore the signatures of Bob D.
Gothong and respondent Benjamin D. Gothong by way
of a conforme on behalf of CAGLI.
19. ABOITIZ EQUITY VENTURES, INC., Petitioner,
vs. Annex SL-V confirmed WLI’s commitment to acquire
VICTOR S. CHIONGBIAN, BENJAMIN D. GOTHONG, and certain inventories of CAGLI. These inventories would
CARLOS A. GOTHONG LINES, INC. (CAGLI), have a total aggregate value of, at most, ₱400 million,
Respondents. "as determined after a special examination of the
[i]nventories."9 Annex SL-V also specifically stated that
such acquisition was "pursuant to the Agreement."10
Facts:
The entirety of Annex SL-V’s substantive portion reads:
On January 8, 1996, Aboitiz Shipping Corporation
We refer to the Agreement among William Lines, Inc.
("ASC"), principally owned by the Aboitiz family, CAGLI,
("Company C"), Aboitiz Shipping Corporation
principally owned by the Gothong family, and William
("Company A") and Carlos A. Gothong Lines, Inc.
Lines, Inc.("WLI"), principally owned by the Chiongbian
("Company B") regarding the transfer of various assets
family, entered into anagreement (the "Agreement"),4
of Company A and Company B to Company C in
whereby ASC and CAGLI would transfer their shipping
exchange for shares of capital stock of Company C.
assets to WLI in exchange for WLI’s shares of stock.5
Terms defined in the Agreement are used herein as
WLI, in turn, would run their merged shipping
therein defined.
businesses and, henceforth, be known as WG&A, Inc.
("WG&A").6 This will confirm our commitment to acquire certain
spare parts and materials inventory (the "Inventories")
Sec. 11.06 of the Agreement required all disputes
of Company B pursuant to the Agreement.
arising out of or in connection with the Agreement to
be settled by arbitration: The total aggregate value of the Inventories to be
acquired shall not exceed ₱400 Million as determined
11.06 Arbitration
after a special examination of the Inventories as
All disputes arising out of or in connection with this performed by SGV & Co. to be completed on or before
Agreement including any issue as to this Agreement’s the Closing Date under the agreed procedures
validity or enforceability, which cannot be settled determined by the parties.
amicably among the parties, shall be finally settled by
Subject to documentation acceptable to both parties,
arbitration in accordance with the Arbitration Law
the Inventories to be acquired shall be determined not
(Republic Act No. 876) by an arbitration tribunal
later than thirty (30) days after the Closing Date and the
composed of four (4) arbitrators. Each of the parties
payments shall be made in equal quarterly instalments
shall appoint one (1) arbitrator, the three (3) to appoint
over a period of two years with the first payment due
the fourth arbitrator who shall act as Chairman. Any
on March 31, 1996.11
award by the arbitration tribunal shall be final and
binding upon the parties and shall be enforced by Pursuant to Annex SL-V, inventories were transferred
judgment of the Courts of Cebu or Metro Manila.7 from CAGLI to WLI. These inventories were assessed to
have a value of 514 million, which was later adjusted to
Among the attachments to the Agreement was Annex
558.89 million.12 Of the total amount of 558.89 million,
SL-V.8 This was a letter dated WLI, through its President
"CAGLI was paid the amount of 400 Million."13 In
(herein respondent) Victor S. Chiongbian addressed to
addition to the payment of 400 million,petitioner
Aboitiz Equity Ventures ("AEV") noted that WG&A In response, AEV filed a motion to dismiss. AEV argued
shares with a book value of 38.5 million were that CAGLI failed to state a cause of action as there was
transferred to CAGLI.14 no agreement to arbitrate between CAGLI and AEV.43
Specifically, AEV pointed out that: (1) AEV was never a
As there was still a balance, in2001, CAGLI sent WG&A
party to the Agreement or to its Annex SL-V;44 (2) while
(the renamed WLI) demand letters "for the return of or AEV is a party to the SPA and Escrow Agreement,
the payment for the excess [i]nventories."15 AEV CAGLI's claim had no connection to either agreement;
alleged that to satisfy CAGLI’s demand, WLI/WG&A and (3) CAGLI did not say how WLI/WG&A/ATSC's
returned inventories amounting to 120.04 million.16 As obligation to return the excess inventories can be
proof of this, AEV attached copies of delivery receipts charged to AEV.
signed by CAGLI’s representatives as Annex "K" of the
present petition.17 The RTC dismissed the first complaint with respect to
AEV. It sustained AEV’s assertion that there was no
Sometime in 2002, the Chiongbian and Gothong agreement binding AEV and CAGLI to arbitrate CAGLI’s
families decided to leave the WG&A enterprise and sell claim.47 Whether by motion for reconsideration, appeal
their interest in WG&A to the Aboitiz family. As such, a or other means, CAGLI did not contest this dismissal.
share purchase agreement18 ("SPA") was entered into
by petitioner AEV and the respective shareholders On September 1, 2010, while the first complaint was
groups of the Chiongbians and Gothongs. In the SPA, still pending ,CAGLI joined by respondent Benjamin D.
AEV agreed to purchase the Chiongbian group's 40.61% Gothong, filed a second application for arbitration also
share and the Gothong group's 20.66% share in WG&A’s in view of the return of the same excess inventories
issued and outstanding stock.19 subject of the first complaint.

As part of the SPA, the parties entered into an Escrow On October 28, 2010, AEV filed a motion to dismiss54
Agreement22 whereby ING Bank N.V.-Manila Branch the second complaint on the following grounds:55 (1)
was to take custody of the shares subject of the SPA.23 forum shopping; (2) failure to state a cause of action;
(3) res judicata; and (4) litis pendentia. The RTC in the
As a result of the SPA, AEV became a stockholder of
first two orders denied AEV’s motion to dismiss.
WG&A. Subsequently, WG&A was renamed Aboitiz
Transport Shipping Corporation ("ATSC").25 The RTC dismissed AEV’s claim that it was not a party to
the SPA, as "already touching on the merits of the
Petitioner AEV alleged that in2008, CAGLI resumed case"61 and therefore beyond its duty "to determine if
making demands despite having already received they should proceed to arbitration or not."
120.04 million worth of excess inventories. As alleged
by AEV, however, CAGLI subsequently resorted to a Aggrieved, AEV filed the present petition.64 It asserts
"shotgun approach"28 and directed its subsequent that it is not bound by an agreement to arbitrate with
demand letters to AEV29 as well as to FCLC30 (a CAGLI and that, even assuming that it may be required
company related to respondent Chiongbian). to arbitrate, it is being ordered to do so under terms
that are "manifestly contrary to the . . . agreements on
AEV responded to CAGLI’s demands through several which CAGLI based its demand for arbitration."66
letters. AEV rebuffed CAGLI's demands noting that it
was not a party to CAGLI's claim as it had a personality Issue: Whether or not Aboitiz Equity Ventures, Inc., is
distinct from WLI/WG&A/ATSC. bound by an agreement to arbitrate with Carlos A.
Gothong Lines, Inc., with respect to the latter’s claims
Its claims not having been satisfied, CAGLI filed on for unreturned inventories delivered to William Lines,
November 6, 2008 the first of two applications for
Inc./WG&A, Inc./Aboitiz Transport System Corporation
arbitration ("first complaint")41 against respondent
Chiongbian, ATSC, ASC, and petitioner AEV. Ruling:
The complaint in Civil Case valid, enforceable and irrevocable, save upon such
No. CEB-37004 constitutes grounds as exist at law for the revocation of any
forum shopping and is barred contract. . . . (Emphasis ours)
by res judicata
The foregoing provision speaks of two modes of
Even as the second complaint alleges that Benjamin D. arbitration: (a) an agreement to submit to arbitration
Gothong "is . . . suing in his personal capacity,"88 some future dispute, usually stipulated upon in a civil
Gothong failed to show any personal interest in the contract between the parties, and known as an
reliefs sought by the second complaint. Ultimately, agreement to submit to arbitration, and (b) an
what is at stake in the second complaint is the extent to agreement submitting an existing matter of difference
which CAGLI may compel AEV and Chiongbian to to arbitrators, termed the submission agreement.
arbitrate in order that CAGLI may then recover the Article XX of the milling contract is an agreement to
value of its alleged unreturned inventories. This claim submit to arbitration because it was made in
for recovery is pursuant to the agreement evinced in anticipation of a dispute that might arise between the
Annex SL-V. Annex SL-V was entered into by CAGLI and parties after the contract’s execution.
not by Benjamin D. Gothong. While it is true that
Benjamin D. Gothong, along with Bob D. Gothong, Except where a compulsory arbitration is provided by
signed Annex SL-V, he did so only in a representative, statute, the first step toward the settlement of a
and not in a personal, capacity. As such, Benjamin D. difference by arbitration is the entry by the parties into
a valid agreement to arbitrate.An agreement to
Gothong cannot claim any right that personally accrues
to him on account of Annex SL-V. From this, it follows arbitrate is a contract, the relation ofthe parties is
that Benjamin D. Gothong is not a real party in interest contractual, and the rights and liabilities of the parties
— "one who stands to be benefitted or injured by the are controlled by the law of contracts. In an agreement
judgment in the suit or the party entitled to the avails of for arbitration, the ordinary elements of a valid contract
the suit"89 — and that his inclusion in the second must appear, including an agreement toarbitrate some
specific thing, and an agreement to abide by the award,
complaint is an unnecessary superfluity.
either in express language or by implication.114
There is no agreement (Emphasis supplied)
binding AEV to arbitrate
with CAGLI on the latter’s
claims arising from Annex SL-V In this petition, not one of the parties — AEV, CAGLI,
For arbitration to be proper, it is imperative thatit be Victor S. Chiongbian, and Benjamin D. Gothong — has
grounded on an agreement between the parties. This alleged and/or shown that the controversy is properly
was adequately explained in Ormoc Sugarcane Planters’ the subject of "compulsory arbitration [as] provided by
statute."115 Thus, the propriety of compelling AEV to
Association,Inc. v. Court of Appeals:113
submit itself to arbitration must necessarilybe founded
Section 2 of R.A. No. 876 (the Arbitration Law) on contract.
pertinently provides:
Four (4) distinct contracts have been cited in the
Sec. 2. Persons and matterssubject to arbitration. – Two present petition:
or more persons or parties may submit to the
arbitration of one or more arbitrators any controversy 1. The January 8, 1996 Agreement in which ASC, CAGLI,
existing between them at the time of the submission and WLI merged their shipping enterprises, with WLI
and which may be the subject of an action, or the (subsequently renamed WG&A) as the surviving entity.
parties to any contract may in such contract agree to Section 11.06 of this Agreement provided for arbitration
settle by arbitration a controversy thereafter arising as the mechanism for settling all disputes arising out of
between them. Such submission or contract shall be or in connection with the Agreement.
2. Annex SL-V of the Agreement between CAGLI and Agreement; (2) WG&A, the name taken by WLI in the
WLI (and excluded ASC and any other Aboitiz-controlled wake of the Agreement; and (3) ATSC, the name taken
entity), and which confirmed WLI’s commitment to by WLI/WG&A inthe wake of the SPA. As such, it is now
acquire certain inventories, worth not more than 400 ATSC that is liable under Annex SL-V.
million, of CAGLI. Annex SL-V stated that the acquisition
was "pursuant to the Agreement."116 It did not contain Pursuant to the January 8, 1996 Agreement, the Aboitiz
an arbitration clause. group (via ASC) and the Gothong group (viaCAGLI)
became stockholders of WLI/WG&A, along with the
3. The September 23, 2003 Share Purchase Agreement Chiongbian group (which initially controlled WLI). This
or SPA in which AEV agreed to purchasethe Chiongbian continued until, pursuant to the SPA, the Gothong
and Gothong groups' shares in WG&A’s issued and group and the Chiongbian group transferred their
outstanding stock. Section 6.5 of the SPA provided for shares to AEV. With the SPA, AEV became a stockholder
arbitration as the mode of settling any dispute arising of WLI/WG&A, which was subsequently renamed ATSC.
from the SPA. Section 6.8 of the SPA further provided Nonetheless, AEV’s status as ATSC’s stockholder does
that the Agreement of January 8, 1996 shall be deemed not subject it to ATSC’s obligations
terminatedexcept its Annex SL-V.
It is basic that a corporation has a personality separate
4. The Escrow Agreement whereby ING Bank was to and distinct from that of its individual stockholders.
take custody of the shares subject of the SPA. Section Thus, a stockholder does not automatically assume the
14.7 of the Escrow Agreement provided that all disputes liabilities of the corporation of which he is a
arising from it shall be settled via arbitration. stockholder. As explained in Philippine National Bankv.
Hydro Resources Contractors Corporation:118
The obligation for WLI to acquire certain inventories of
CAGLI and which is the subject of the present petition A corporation is an artificial entity created by operation
was contained in Annex SL-V. It is therefore this of law. It possesses the right of succession and such
agreement which deserves foremost consideration. As powers, attributes, and properties expressly authorized
to this particular agreement, Annex SL-V is only by law or incident to its existence. It has a personality
between WLI and CAGLI. separate and distinct from that of its stockholders and
from that of other corporations to which it may be
Annex SL-V is only between WLI and CAGLI — it
connected. As a consequence of its status as a distinct
necessarily follows that none but WLI/WG&A/ATSC and legal entity and as a result of a conscious policy decision
CAGLI are bound by the terms of Annex SL-V. It is to promote capital formation, a corporation incurs its
elementary that contracts are characterized by relativity own liabilities and is legally responsible for payment of
or privity, that is, that "[c]ontracts take effect only its obligations. In other words, by virtue of the separate
between the parties, their assigns and heirs."117 As juridical personality ofa corporation, the corporate debt
such, one who is not a party to a contract may not seek or credit is not the debt or credit of the stockholder.
relief for such contract’s breach. Likewise, one who is
This protection from liability for shareholders is the
not a party to a contract may not be held liable for principle of limited liability.119
breach of any its terms.
AEV’s status as ATSC’s stockholder is, in and of itself,
While the principle of privity or relativity of contracts insufficient to make AEV liable for ATSC’s obligations.
acknowledges that contractual obligations are Moreover, the SPA does not contain any stipulation
transmissible to a party’s assigns and heirs, AEV is not which makes AEV assume ATSC’s obligations. It is true
WLI’s successor-in-interest. In the period relevant to that Section 6.8 of the SPA stipulates that the rights and
this petition, the transferee of the inventories obligations arising from Annex SL-V are not terminated.
transferred by CAGLI pursuant to Annex SL-V assumed But all that Section 6.8 does is recognize that the
three (3) names: (1) WLI, the original name of the entity obligations under Annex SL-V subsist despite the
that survived the merger under the January 8, 1996
termination of the January 8, 1996 Agreement. At no
point does the text of Section 6.8 support the position G.R. No. 195795
that AEV steps into the shoes of the obligor under
Annex SL-V and assumes its obligations. REPUBLIC OF THE PHILIPPINES, represented by the
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT,
Neither does Section 6.5 of the SPAsuffice to compel Petitioner,
AEV to submit itself to arbitration. While it is true that vs.
Section 6.5 mandates arbitration as the mode for HON. SANDIGANBAYAN, PALM A VENUE REALTY and
settling disputes between the parties to the SPA, DEVELOPMENT CORPORATION and PALM AVENUE
Section 6.5 does not indiscriminately cover any and all HOLDING COMPANY, INC., Respondents.
disputes which may arise between the parties to the
SPA. Rather, Section 6.5 is limited to "dispute[s] arising
between the parties relating tothis Agreement [i.e., the Facts:
SPA]."122 To be labor the point, the obligation which is
subject of the present dispute pertains to Annex SL-V, Through a writ of sequestration the Presidential
not to the SPA. That the SPA, in Section 6.8, recognizes Commission on Good Government (PCGG) sequestered
the subsistence of Annex SL-V is merely a factual all the assets, properties, records, and documents of the
recognition. It does not create new obligations and does Palm Companies. Said sequestered assets included
not alter or modify the obligations spelled out in Annex 16,237,339 Benguet Corporation shares of stock,
SL-V. registered in the name of the Palm Companies. The
PCGG had relied on a letter from the Palm Companies’
AEV was drawn into the present controversy on account Attorney-in-Fact, Jose S. Sandejas, specifically
of its having entered into the SPA. This SPA made AEV a identifying Benjamin "Kokoy" Romualdez, a known
stockholder of WLI/WG&A/ATSC. Even then, AEV crony of former President Ferdinand E. Marcos, as the
retained a personality separate and distinct from beneficial owner of the Benguet Corporation shares in
WLI/WG&A/ATSC. The SPA did not render AEV the Palm Companies’ name.
personally liable for the obligations of the corporation
whose stocks it held. AEV was never a party to Annex The Republic, represented by the PCGG, filed a
SL-V. Rather than pertaining to AEV, Annex SL-V complaint with the Sandiganbayan but did not initially
pertained to a different entity: WLI (renamed WG&A implead the Palm Companies as defendants. However,
then renamed ATSC). AEV is, thus, not bound by Annex the Sandiganbayan issued a Resolution dated where it
SL-V. ordered said companies to be impleaded. The Court
subsequently affirmed this order to implead.

In the meantime, the Palm Companies filed an Urgent


Motion to Lift the Writ of Sequestration, but was
20. G.R. No. 173082 August 6, 2014 denied.

PALM AVENUE HOLDING CO., INC., and PALM A VENUE They filed a Motion for Reconsideration, but the same
REALTY AND DEVELOPMENT CORPORATION, was likewise denied. Hence, the Palm Companies filed
Petitioners, the petition in G.R. No. 173082.
vs. On September 22, 2006, the Palm Companies filed a
SANDIGANBAYAN 5TH Division, REPUBLIC OF THE Motion to Release Sequestered Funds with the
PHILIPPINES, represented by the PRESIDENTIAL Sandiganbayan. In a Resolution, the Sandiganbayan
COMMISSION ON GOOD GOVERNMENT (PCGG), granted said motion and ordered the release of the
Respondent. sequestered funds for the purchase of additional shares
in Benguet Corporation, and appointed a comptroller
x-----------------------x
for this purpose.
On August 5, 2008, the Palm Companies filed a Motion proceeding shall be commenced within six months from
to Order Payment of Interest on Balance of the the issuance thereof.
Sequestered Funds. Later, the Sandiganbayan granted
the Palm Companies’ motion to dismiss and dismissed The sequestration or freeze order is deemed
automatically lifted if no judicial action or proceeding is
the Republic’s complaint as to them. The
Sandiganbayan also granted the Palm Companies’ commenced as herein provided.11
Motion to Order Payment of Interest on Balance of the The aforesaid provision mandates the Republic to file
Sequestered Funds on October 28, 2009. the corresponding judicial action or proceedings within
Thereafter, the Palm Companies filed another motion to a six-month period (from its ratification on February 2,
order the PCGG to release all the companies’ shares of 1987)in order to maintain sequestration, non-
stock and funds in its custody. The Sandiganbayan then compliance with which would result in the automatic
issued its Resolution, granting the companies’ foregoing lifting of the sequestration order. The Court’s ruling in
Presidential Commission on Good Government v.
motion.
Sandiganbayan,12 which remains good law, reiterates
Upon denial of the Republic’s motion for the necessity of the Republic to actuallyimplead
reconsideration, it filed the petition in G.R. No. 195795. corporations as defendants in the complaint, out of
recognition for their distinct and separate personalities,
In G.R. No. 173082, the Palm Companies present this failure to do so would necessarily be denying such
lone issue to be resolved by the Court: entities their right to due process.13 Here, the writ of
[WHETHER OR NOT] RESPONDENT COURT ACTED WITH sequestration issued against the assets of the Palm
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF Companies is not valid because the suit against
JURISDICTION IN DENYING PETITIONERS’ MOTION TO Benjamin Romualdez as shareholder in the Palm
LIFT THE WRIT OF SEQUESTRATION NOTWITHSTANDING Companies is not a suit against the latter. The Court has
THE FACT [THAT] SAID WRIT SHOULD BE DEEMED held, contrary to the assailed Sandiganbayan Resolution
AUTOMATICALLY LIFTED PURSUANT TO SECTION 26, that failure to implead these corporations as
ARTICLE XVIII OF THE 1987 CONSTITUTION FOR FAILURE defendants and merely annexing a list of such
TO IMPLEAD PETITIONERS WITHIN THE PERIOD OF SIX corporations to the complaints is a violation of their
(6) MONTHS PRESCRIBED IN THE SAID CONSTITUTION.9 right to due process for it would be, in effect,
disregarding their distinct and separate personality
without a hearing.14 Here, the Palm Companies were
merely mentioned as Item Nos. 47 and 48, Annex A of
Ruling:
the Complaint,as among the corporations where
Section 26, Article XVIII of the 1987 Constitution defendant Romualdez owns shares of stocks.
provides: Furthermore, while the writ of sequestration was
issued, the Palm Companies were impleaded in the case
xxxx only in 1997, or already a decade from the ratification
of the Constitution in 1987, way beyond the prescribed
A sequestration or freeze order shall be issued only
period.
upon showing of a prima facie case. The order and the
list of the sequestered or frozen properties shall The argument that the beneficial owner of these
forthwith be registered with the proper court. For corporations was, anyway, impleaded as party-
orders issued before the ratification of this Constitution, defendant can only be interpreted as a tacit admission
the corresponding judicial action or proceeding shall be of the failure to file the corresponding judicial action
filed within six months from its ratification. For those against said corporations pursuant to the constitutional
issued after such ratification, the judicial action or mandate.15 The sequestration order issued against the
Palm Companies is therefore deemed automatically
lifted due to the failure of the Republic to commence filed. Petitioner is the counsel for Ampatuan, Jr., the
the proper judicial action or to implead them therein principal accused in the murder cases.
within the period under the Constitution.16
In November 2010, Atty. Quinsayas, et al. filed a
Since the Republic did not originallyinclude the Palm disbarment complaint against petitioner. The
Companies, the Sandiganbayan issued a Resolution disbarment case is still pending.
ordering said companies to be impleaded, which was
affirmed by the Court. The Court declared in said case Petitioner alleged that GMA News TV internet website
that the Palm Companies are real parties-in-interest, posted an article, written by Dedace, entitled
because they still appear to be the registered owners of "Mangudadatu, others seek disbarment of Ampatuan
the remaining disputed shares. lawyer.”

On even date, Inquirer.net, the website of PDI, also


published an article, written by Torres, which according
25. G.R. No. 194578 February 13, 2013 to petitioner also stated details of the disbarment case
such as “Respondent Atty. Fortun had astutely
PHILIP SIGFRID A. FORTUN, Petitioner, embarked in an untiring quest to obstruct, impede and
vs. degrade the administration of justice," the petitioners
PRIMA JESUSA B. QUINSAYAS, MA. GEMMA said.6
OQUENDO, DENNIS AYON, NENITA OQUENDO,
ESMAEL MANGUDADATU, JOSE PAVIA, MELINDA Petitioner further alleged that on 23 November 2010,
QUINTOS DE JESUS, REYNALDO HULOG, REDMOND PhilStar published an article, written by Punay, which
BATARIO, MALOU MANGAHAS, DANILO GOZO, GMA gave details of the disbarment allegations.
NETWORK INC., through its new editors Raffy Jimenez
and Victor Sollorano, SOPHIA DEDACE, ABS-CBN Further, petitioner alleged that on 23 November 2010,
CORPORATION, through the Head of its News Group, Channel 23 aired on national television a program
Maria Ressa, CECILIA VICTORIA OREÑA-DRILON, entitled "ANC Presents: Crying for Justice: the
PHILIPPINE DAILY INQUIRER, INC. represented by its Maguindanao Massacre." Drilon, the program’s host,
Editor-in-Chief Letty Jimenez Magsanoc, TETCH asked questions and allowed Atty. Quinsayas to discuss
TORRES, PHILIPPINE STAR represented by its Editor-in- the disbarment case against petitioner, including its
Chief Isaac Belmonte, and EDU PUNAY, Respondents. principal points. Petitioner was allegedly singled out and
identified in the program as the lead counsel of the
Ampatuan family.

Facts: Petitioner alleged that Atty. Quinsayas, et al. actively


disseminated the details of the disbarment complaint
On 23 November 2009, a convoy of seven vehicles against him in violation of Rule 139-B of the Rules of
carrying the relatives of then Maguindanao vice-mayor Court on the confidential nature of disbarment
Esmael "Toto" Mangudadatu, as well as lawyers and proceedings. Petitioner further alleged that respondent
journalists, was on their way to the Commission on media groups and personalities conspired with Atty.
Elections office in Shariff Aguak to file Mangudadatu’s Quinsayas, et al. by publishing the confidential materials
Certificate of Candidacy1 when they were accosted by a on their respective media platforms. Petitioner pointed
group of about 100 armed men at a checkpoint.2 The out that Drilon discussed the disbarment complaint
group was taken hostage and brought to a hilly and with Atty. Quinsayas in a television program viewed
sparsely-populated part of Maguindanao. The hostages nationwide
were systematically killed by shooting them at close
range with automatic weapons, and their bodies and Petitioner alleged that the public circulation of the
vehicles were dumped in mass graves and covered with disbarment complaint against him exposed this Court
the use of a backhoe. Criminal cases for Murder were and its investigators to outside influence and public
interference. Petitioner alleged that opinion writers SNN and ABS-CBN have interlocking directors. ABS-CBN
wrote about and commented on the disbarment and Drilon alleged that the presentation and hosting of
complaint which opened his professional and personal the program were not malicious as there was no
reputation to attack. criminal intent to violate the confidentiality rule in
disbarment proceedings.
In its Comment, GMA Network alleged that it has no
newspaper or any publication where it could have Issue:
printed the article. It alleged that it did not broadcast
the disbarment complaint on its television station. GMA The only issue in this case is whether respondents
Network alleged that the publication had already been violated the confidentiality rule in disbarment
done and completed when Atty. Quinsayas distributed proceedings, warranting a finding of guilt for indirect
copies of the disbarment complaint and thus, the contempt of court.
members of the media who reported the news and the Ruling:
media groups that published it on their website,
including GMA Network, did not violate the First, the contempt charge filed by petitioner is in the
confidentiality rule. GMA Network further alleged that nature of a criminal contempt. In People v. Godoy,12 this
Dedace, a field reporter for the judiciary, acted in good Court made a distinction between criminal and civil
faith and without malice when she forwarded the news contempt. The Court declared:
to the news desk. GMA News also acted in good faith in
A criminal contempt is conduct that is directed against
posting the news on its website. GMA Network denied
the dignity and authority of the court or a judge acting
that it conspired with the other respondents in
judicially; it is an act obstructing the administration of
publishing the news. GMA Network alleged that it
justice which tends to bring the court into disrepute or
posted the disbarment complaint, without any unfair,
disrespect. On the other hand, civil contempt consists in
critical, and untruthful comment, and only after it was
failing to do something ordered to be done by a court in
"published" by Atty. Quinsayas, et al. who furnished
a civil action for the benefit of the opposing party
copies of the disbarment complaint to the media
therein and is, therefore, an offense against the party in
reporters
whose behalf the violated order is made.
PDI alleged in its Comment that it shares content with
A criminal contempt, being directed against the dignity
the Inquirer.net website through a syndication but the
and authority of the court, is an offense against
latter has its own editors and publish materials that are
organized society and, in addition, is also held to be an
not found on the broadsheet. It alleged that Philippine
offense against public justice which raises an issue
Daily Inquirer, Inc. and Inquirer Interactive, Inc. are two
between the public and the accused, and the
different corporations, with separate legal personalities,
proceedings to punish it are punitive. On the other
and one may not be held responsible for the acts of the
hand, the proceedings to punish a civil contempt are
other.
remedial and for the purpose of the preservation of the
Torres in her comment, alleged that the writing of the right of private persons. It has been held that civil
story was an independent act and she did not conspire contempt is neither a felony nor a misdemeanor, but a
with any of the other respondents. power of the court.

ABS-CBN and Drilon filed a joint Comment. ABS-CBN It has further been stated that intent is a necessary
alleged that ABS-CBN News Channel, commonly known element in criminal contempt, and that no one can be
as ANC, is maintained and operated by Sarimanok punished for a criminal contempt unless the evidence
Network News (SNN) and not by ABS-CBN. SNN, which makes it clear that he intended to commit it. On the
produced the program "ANC Presents: Crying for contrary, there is authority indicating that since the
Justice: the Maguindanao Massacre," is a subsidiary of purpose of civil contempt proceedings is remedial, the
ABS-CBN but it has its own juridical personality although defendant’s intent in committing the contempt is
immaterial. Hence, good faith or the absence of intent
to violate the court’s order is not a defense in civil
contempt.13

The records of this case showed that the filing of the


disbarment complaint against petitioner had been
published and was the subject of a televised broadcast
by respondent media groups and personalities.

We shall discuss the defenses and arguments raised by


respondents.

Philippine Daily Inquirer, Inc.

PDI averred that it only shares its contents with


Inquirer.net through a syndication. PDI attached a
photocopy of the syndication page stating that "[d]ue to
syndication agreements between PDI and Inquirer.net,
some articles published in PDI may not appear in
Inquirer.net."14

A visit to the website describes Inquirer.net as "the


official news website of the Philippine Daily Inquirer,
the Philippines’ most widely circulated broadsheet, and
a member of the Inquirer Group of Companies."15 PDI
was not able to fully establish that it has a separate
personality from Inquirer.net.

ABS-CBN Corporation

ABS-CBN alleged that SNN is its subsidiary and although


they have interlocking directors, SNN has its own
juridical personality separate from its parent company.
ABS-CBN alleged that SNN controls the line-up of shows
of ANC.

We agree with ABS-CBN on this issue. We have


ruled that a subsidiary has an independent and separate
juridical personality distinct from that of its parent
company and that any suit against the the latter does
not bind the former and vice-versa.16 A corporation is
an artificial being invested by law with a personality
separate and distinct from that of other corporations to
which it may be connected.17 Hence, SNN, not ABS-CBN,
should have been made respondent in this case.

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