1. Tayag v.
Benguet Consolidated Issue/s:
No. L-23145. | Nov. 29, 1968 | Fernando, J.
Digest by: AVILLON
Petitioners: Testate Estate of Idonah Slade Perkins, Renato Tayag
Respondents: Benguet Consolidated, Inc.
Doctrine: A corporation as known to Philippine jurisprudence is a
creature without any existence until it has received the imprimatur of the
state according to law. It is logically inconceivable therefore that it will
have rights and privileges of a higher priority than that of its creator. More
than that, it cannot legitimately refuse to yield obedience to acts of its
state organs, certainly not excluding the judiciary, whenever called upon
to do so.
Facts:
1. Idonah Slade Perkins died in NY City and left two stock certificates
covering 33,002 shares of Benguet Consolidated Inc.
2. The certificates were in the possession of County Trust Company of
New York, which is the domiciliary administrator of the estate of the
deceased.
3. Ancillary administration proceedings were instituted in the CFI
Manila and Renato Tayag was appointed the ancillary
administrator.
4. A dispute arose between the domiciliary administrator in New York
(County Trust) and the ancillary administrator in the Philippines
(Tayag) as to which of them was entitled to the possession of the
stock certificates.
5. The CFI ordered County Trust to produce and deposit the
certificates with Tayag.
6. County Trust refused to comply, which moved Tayag to pray that
the CFI issue an order declaring the certificates as lost.
7. The CFI declared the certificates as lost and cancelled and directed
Benguet Consolidated to issue new certificates to Tayag or to the
court.
8. Benguet Consolidated argued that:
a. the certificates are not actually lost since they are with
County Trust
b. the issuing of new certificates would violate its by-laws
c. in the event of a contest or the pendency of an action
regarding ownership of such certificate or certificates of
stock allegedly lost, stolen or destroyed, the issuance of a
new certificate would await the final decision by a court
regarding the ownership thereof.
1
 W/N Benguet Consolidated should issue the certificates - YES
Ratio:
 The Constitution overrides a statute, to which, however, the
judiciary must yield deference, when appropriately invoked and
deemed applicable. It would be most highly unorthodox, however, if
a corporate by-law would be accorded such a high estate in the
jural order that a court must not only take note of it but yield to its
alleged controlling force.
 A corporation as known to Philippine jurisprudence is a creature
without any existence until it has received the imprimatur of the
state according to law. It is logically inconceivable therefore that it
will have rights and privileges of a higher priority than that of its
creator. More than that, it cannot legitimately refuse to yield
obedience to acts of its state organs, certainly not excluding the
judiciary, whenever called upon to do so.
 A corporation once it comes into being comes more often within the
ken of the judiciary. It institutes the appropriate court action to
enforce its rights. It is not immune from judicial control in those
instances, where a duty under the law as ascertained in an
appropriate legal proceeding is cast upon it.
Dispositive:
WHEREFORE, the appealed order of the Honorable Arsenio Santos, the
Judge of the Court of First Instance, dated May 18, 1964, is affirmed. With
costs against oppositor-appelant Benguet Consolidated, Inc.
2. Villa Rey Transit, Inc. v. Ferrer
G.R. No. L-23893 | October 29, 1968 | Angeles, J.
Digest by: BALAGTAS
Petitioners: VILLA REY TRANSIT, INC.
Respondents: EUSEBIO E. FERRER, PANGASINAN
TRANSPORTATION CO., INC., and PUBLIC SERVICE COMMISSION
Doctrine:
When the fiction is urged as a means of perpetrating a fraud or an illegal
act or as a vehicle for the evasion of an existing obligation, the
circumvention of statutes, the achievement or perfection of a monopoly or
generally the perpetration of knavery or crime, the veil with which the law

covers and isolates the corporation from the members or stockholders
who compose it will be lifted to allow for its consideration merely as an
aggregation of individuals.
(Basically piercing of the corporate veil)
Facts: (DISCLAIMER: Ang dami talagang facts guys sorry)
1. Jose M. Villarama was an operator of a bus transportation, under
the business name Villa Rey Transit.
a. Pursuant to 2 Certificates of Public Convenience (CPC)
granted by the Public Service Commission (PSC), he was
authorized to operate 32 units.
2. Villarama then sold the 2 CPCs to Pangasinan Transportation
Company, Inc (Pantranco).
. With the condition that Villarama shall not apply for any TPU
service identical or competing with Pantranco within 10 years.
3. 3 months after, a corporation called Villa Rey Transit, Inc. (VRTI)
was organized.
. The incorporators were all family members of Jose Villarama.
4. VRTI was then registered in the SEC.
. Then bought 5 CPCs and 49 buses from a certain Valentin
Fernando.
5. VRTI and Fernando then applied with the PSC for its approval.
. The PSC provisionally approved the CPCs.
i.Subject to the condition that "it may be modified or revoked by the
Commission at any time, shall be subject to whatever action that may be
taken on the basic application and shall be valid only during the pendency of
said application."
6. The Sheriff of Manila then levied on 2 of the 5 CPCs.
. Pursuant to a writ of execution issued by the Pangasinan CFI in
favor of Eusebio Ferrer against Valentin Fernando.
7. Ferrer then sold the 2 CPCs to Pantranco.
. Ferrer and Pantranco then applied for approval in the PSC.
8. PSC then jointly heard the applications of VRTI and Pantranco for
the 2 CPCs.
. PSC provisionally awarded it to Pantranco.
a. VRTI appealed to the SC
.Ruled that ownership of the 2 CPCs must be properly settled first in the
proper court, and until then, VRTI should be the one to operate the routes
provisionally.
9. VRTI then filed in the CFI a complaint for annulment of the sheriff’s
sale of the 2 CPCs to Ferrer, and the sale of the latter to Pantranco.
10. Ferrer and Pantranco said that VRTI had no valid title to the CPCs.
2
. Because the contract pursuant to which VRTI acquired them from
Fernando was subject to a suspensive condition:
.Which was the approval of the PSC
which has not yet been fulfilled.
11. Pantranco also filed a third-party complaint against Jose Villarama
a. Alleging that Villarama and VRTI is one and the same.
b. That Villarama and VRTI was disqualified from operating the 2
CPCs due to the prior agreement between Villarama and Pantranco.
i.that Villarama "shall not for a period of 10 years from the date of this sale,
apply for any TPU service identical or competing with the buyer."
12. The CFI then declared VRTI to be the lawful owner of the 2 CPCs.
. Also held that VRTI is a distinct and separate entity from Jose
Villarama .
a. Also held that the restriction against Villarama was void for being an
invalid restraint against trade.
Issue/s:
 W/N VRTI is a distinct and separate entity from Jose Villarama -
NO.
Ratio:
1. The evidence has disclosed that:
a. Villarama, albeit was not an incorporator or stockholder of the
Corporation, alleging that he did not become such, because he did not have
sufficient funds to invest, his wife, however, was an incorporator with the
least subscribed number of shares, and was elected treasurer of the
Corporation.
b. The finances of the Corporation which, under all concepts in the
law, are supposed to be under the control and administration of the treasurer
keeping them as trust fund for the Corporation, were, nonetheless,
manipulated and disbursed as if they were the private funds of Villarama, in
such a way and extent that Villarama appeared to be the actual owner-
treasurer of the business without regard to the rights of the
stockholders.
c. The evidence further show that the initial cash capitalization of the
corporation of P105,000.00 was mostly financed by Villarama.
i.Of the P105,000.00 deposited in the First National City Bank of New York,
representing the initial paid-up capital of the Corporation, P85,000.00 was
covered by Villarama's personal check.
ii.The deposit slip for the said amount of P105,000.00 shows that P20,000.00
was paid in cash and P85,000.00 thereof was covered by a Check from the
First National City Bank of New York.
1. The testimonies of 2 employees of said
bank, have proved that the drawer of the
check was Jose Villarama himself.
 d. Another witness, the accountant of the Corporation, testified that
while in the books of the corporation there appears an entry that the
treasurer received P95,000.00 as second installment of the paid-in
subscriptions, and, subsequently, also P100,000.00 as the first installment of
the offer for second subscriptions worth P200,000.00 from the original
subscribers, yet Villarama directed him (accountant) to make vouchers
liquidating the sum.
.Thus, it was made to appear that the P95,000.00 was delivered to Villarama
in payment for equipment purchased from him, and the P100,000.00 was
loaned as advances to the stockholders.
i.The said accountant, however, testified that he was not aware of any amount
of money that had actually passed hands among the parties involved, and
actually the only money of the corporation was the P105,000.00 covered by
the deposit slip which, as mentioned above, P85,000.00 was paid by
Villarama's personal check.
e. Further, the evidence show that when the Corporation was in its
initial months of operation, Villarama purchased and paid with his personal
checks Ford trucks for the Corporation.
f. Photostatic copies of ledger entries and vouchers showing that
Villarama had co-mingled his personal funds and transactions with those
made in the name of the Corporation, are also very illuminating evidence.
2. Taking account of the foregoing evidence, it would appear that:
. Villarama supplied the organization expenses and the assets of the
Corporation, such as trucks and equipments;
a. there was no actual payment by the original subscribers of the
amounts of P95,000.00 and P100,000.00 as appearing in the books;
b. Villarama made use of the money of the Corporation and deposited
them to his private accounts;
c. and the Corporation paid his personal accounts.
3. The foregoing circumstances are strong persuasive evidence
showing that Villarama has been too much involved in the affairs of
the Corporation to altogether negative the claim that he was only a
part-time general manager.
. They show beyond doubt that the Corporation is his alter ego.
a. It is significant that not a single one of the acts enumerated above
as proof of Villarama's oneness with the Corporation has been denied by
him.
.On the contrary, he has admitted them with offered excuses.
b. Villarama's explanation on the matter of his involvement with the
corporate affairs of the Corporation only renders more credible Pantranco's
claim that his control over the corporation, especially in the management and
disposition of its funds, was so extensive and intimate that it is impossible to
segregate and identify which money belonged to whom.
4. The interference of Villarama in the complex affairs of the
corporation, and particularly its finances, are much too inconsistent
3
with the ends and purposes of the Corporation Law, which,
precisely, seeks to separate personal responsibilities from
corporate undertakings.
. It is the very essence of incorporation that the acts and conduct of
the corporation be carried out in its own corporate name because it has its
own personality.
5. The doctrine that a corporation is a legal entity distinct and separate
from the members and stockholders who compose it is recognized
and respected in all cases which are within reason and the law.
. When the fiction is urged as a means of perpetrating a fraud or an
illegal act or as a vehicle for the evasion of an existing obligation, the
circumvention of statutes, the achievement or perfection of a monopoly or
generally the perpetration of knavery or crime, the veil with which the law
covers and isolates the corporation from the members or stockholders who
compose it will be lifted to allow for its consideration merely as an
aggregation of individuals.
6. The preponderance of evidence have shown that the Villa Rey
Transit, Inc. is an alter ego of Jose M. Villarama, and that the
restrictive clause in the contract entered into by Villarama and
Pantranco is also enforceable and binding against the said
Corporation.
. For the rule is that a seller or promissor may not make use of a
corporate entity as a means of evading the obligation of his
covenant. Where the Corporation is substantially the alter ego of the
covenantor to the restrictive agreement, it can be enjoined from competing
with the covenantee.
Dispositive:
PREMISES CONSIDERED, the judgment appealed from is hereby modified
as follows:
1. The sale of the two certificates of public convenience in question by
Valentin Fernando to Villa Rey Transit, Inc. is declared preferred over that
made by the Sheriff at public auction of the aforesaid certificate of public
convenience in favor of Eusebio Ferrer;
2. Reversed, insofar as it dismisses the third-party complaint led by
Pangasinan Transportation Co. against Jose M. Villarama, holding that Villa
Rey Transit, Inc. is an entity distinct and separate from the personality of
Jose M. Villarama, and insofar as it awards the sum of P5,000.00 as
attorney's fees in favor of Villa Rey Transit, Inc.;
3. The case is remanded to the trial court for the reception of evidence in
consonance with the above findings as regards the amount of damages
suffered by Pantranco; and
4. On equitable considerations, without costs.
So ordered.
3. Employees Union of Bayer Phils. V. Bayer Phils., Inc.
G.R. No. 162943 | December 6, 2010 | VILLARAMA, JR., J.
Digest by: BULATAO
Petitioners: EMPLOYEES UNION OF BAYER PHILS., FFW and
JUANITO S. FACUNDO, in his capacity as President
Respondents: BAYER PHILIPPINES, INC., DIETER J. LONISHEN
(President), ASUNCION AMISTOSO (HRD Manager), AVELINA
REMIGIO AND ANASTACIA VILLAREAL
Doctrine:
An intra-union dispute refers to any conflict between and among union
members, including grievances arising from any violation of the rights and
conditions of membership, violation of or disagreement over any provision
of the union’s constitution and by-laws, or disputes arising from chartering
or disaffiliation of the union.
A Collective Bargaining Agreement (CBA) is entered into in order to
foster stability and mutual cooperation between labor and capital.
An employer should not be allowed to rescind unilaterally its CBA with the
duly certified bargaining agent it had previously contracted with, and
decide to bargain anew with a different group if there is no legitimate
reason for doing so and without first following the proper procedure.
If such behavior would be tolerated, bargaining and negotiations between
the employer and the union will never be truthful and meaningful, and no
CBA forged after arduous negotiations will ever be honored or be relied
upon.
Facts:
1. Petitioner Employees Union of Bayer Philippines (EUBP) is the
exclusive bargaining agent of all rank-and-file employees of Bayer
Philippines, and is an affiliate of the Federation of Free Workers
(FFW).
4
2. In 1997, EUBP, headed by its president Facundo, negotiated with
Bayer for the signing of a Collective Bargaining Agreement
(CBA).
3. During the negotiations, the Union rejected Bayer’s 9.9% wage-
increase proposal resulting in a bargaining deadlock.
4. EUBP staged a strike, prompting the Secretary of DOLE to assume
jurisdiction over the dispute.
5. Pending the resolution of the dispute, respondent Remigio and 27
other union members, without any authority from their union
leaders, accepted Bayer’s wage-increase proposal.
6. The DOLE Secretary issued an arbitral award ordering EUBP and
Bayer to execute a CBA.
7. Meanwhile, the rift between Facundo’s leadership and Remigio’s
group broadened.
8. Six (6) months from the signing of the new CBA, Remigio solicited
signatures from union members in support of a resolution
containing the decision of the signatories to:
1. Disaffiliate from FFW,
2. Rename the union as Reformed Employees Union of
Bayer Philippines (Reformed Union),
3. Adopt a new constitution and by-laws for the union,
4. Abolish all existing officer positions in the union and elect
a new set of interim officers, and
5. Authorize Reformed Union to administer the CBA between
the Union and Bayer. The said resolution was signed by
147 of the 257 local union members.
9. Both groups sought recognition from Bayer and demanded
remittance of the union dues collected from its rank-and-file members.
10. Bayer responded by deciding not to deal with either of the two
groups, and by placing the union dues collected in a trust account until the
conflict between the two groups is resolved.
11. EUBP filed a complaint for unfair labor practice (first unfair labor
practice case) against Bayer for non-remittance of union dues.
12. While the case was still pending and despite EUBP’s repeated
request for a grievance conference, Bayer decided to turn over the collected
union dues to Reformed Union.
13. Consequently, EUBP lodged a complaint against Remigio’s group
before the Industrial Relations Division of the DOLE praying for their
expulsion from the Union for commission of "acts that threaten the life of the
union."
14. The Labor Arbiter (LA) dismissed this complaint for lack of
jurisdiction.
15. EUBP filed the second unfair labor practice complaint against
the respondents.
16. EUBP complained that Bayer refused to remit the collected union
dues to them despite several demands sent to the management and that the
latter opted to negotiate instead with Remigio’s group.
17. Reformed Union and Bayer agreed to sign a new CBA.
18. In response, EUBP immediately filed an urgent motion for the
issuance of a restraining order/injunction before the NLRC and the LA
against respondents.
19. Labor Arbiter (LA): Dismissed the Union’s second unfair labor
practice complaint for lack of jurisdiction.
20. NLRC: Denied EUBP’s appeal.
21. CA: Sustained both LA and the NLRCs rulings.
Issue/s:
1. W/N the LA and the NLRC have jurisdiction. - YES
2. W/N the instant case involves an intra-union dispute. - NO
3. W/N the company committed an act of unfair labor practice. - YES
Ratio:
YES, the LA and the NLRC have jurisdiction over the unfair labor
practice complaint filed against Bayer.
 However, EUBP’s unfair labor practice complaint cannot prosper as
against respondents Remigio et al. because the issue, as against
them, essentially involves an intra-union dispute.
NO, the case at bar is not about an intra-union dispute.
 The issues raised by petitioners do not fall under any of the
circumstances constituting an intra-union dispute.
 More importantly, the EUBP does not seek a determination of
whether it is the Facundo group (EUBP) or the Remigio group
(Reformed Union) which is the true set of union officers.
 The issue raised pertain only to the validity of the acts of
management.
YES, the acts of the company constituted an unfair labor practice.
 When an employer proceeds to negotiate with a splinter union
despite the existence of its valid CBA with the duly certified and
exclusive bargaining agent, the former indubitably abandons its
recognition of the latter and terminates the entire CBA.
5
Dispositive:
WHEREFORE, the petition for review on certiorari is PARTLY GRANTED.
The Decision dated December 15, 2003 and the Resolution dated March 23,
2004 of the Court of Appeals in CA-G.R. SP No. 73813 are MODIFIED as
follows:
1. Respondents Bayer Phils., Dieter J. Lonishen and Asuncion
Amistoso are found LIABLE for Unfair Labor Practice, and are
hereby ORDERED to remit to petitioners the amount of
P254,857.15 representing the collected union dues previously
turned over to Avelina Remigio and Anastacia Villareal. They are
likewise ORDERED to pay petitioners nominal damages in the
amount of P250,000.00 and attorneys fees equivalent to 10% of the
monetary award; and
2. The complaint, as against respondents Remigio and Villareal. is
DISMISSED due to the lack of jurisdiction of the Labor Arbiter and the
NLRC, the complaint being in the nature of an intra-union dispute.
Reference:
 Employees Union of Bayer (EUBP) is the Collective Bargaining
Agent (CBA) of Bayer headed by Facundo.
 There was a breakaway group named Reformed Employees’
Union headed by Remigio.
 The union dues collected by Bayer was then remitted to the
Reformed Union despite the existence of a CBA between the
company and EUBP.
 EUBP then filed an unfair labor practice complaint against Bayer
and Remigio.
 Bayer was found guilty of unfair labor practice.
 The case against Remigio was dismissed because the rift between
Facundo’s group and Remigio’s group is an intra-union dispute.
 SEE DOCTRINE.
4. West Coast Life Ins. Co. v. Hurd
G.R. No. L-8527 | March 30, 1914 | Moreland, J.
Digest by: CAPACITE
Petitioners: West Coast Life Insurance Co. (West Coast)
Respondents: Geo Hurd, Judge of CFI

Doctrine:
To bring a corporation into court criminally requires many additions to the
present criminal procedure.
While it may be said to be the duty of courts to see to it that criminals are
punished, it is no less their duty to follow prescribed forms of procedure
and not to go out upon unauthorized ways or act in an unauthorized
manner.
Facts:
Libel case
 West Coast is a corporation duly organized under the laws of the
State of California, doing business regularly in the Philippines
pursuant to its laws.
 Dec. 16, 1912 - Asst prosecuting atty of Manila filed an information
in the CFI against defendants West Coast, John Northcott (general
agent of West Coast for the Phils), and Manuel Grey (treasurer of
the West Coast branch in the Phils) for the crime of libel.
o that during the months of Sept and Oct, said defendants
printed circulars and distributed to policy holders (and
prospective holders) of Insular Life Insurance Company a
malicious defamation in Spanish that Insular Life was in a
dangerous financial condition and on the point of going
into insolvency
 Dec. 17, 1912 - Hurd as judge of the CFI issued a process (in the
form of a summons) for the defendants to appear on the 18th.
 Defendants filed a motion to quash the summons and the service
thereof on the ground that the court had no jurisdiction over West
Coast, there being no authority in the court for the issuance of the
process.
o that the order under which the process was issued was
void
o CFI denied
Writ of prohibition case
 West Coast prayed that a writ of prohibition be issued for Hurd to
desist from further proceedings against the former in the criminal
case.
o that the CFI has no power or authority to proceed against
a corporation criminally to bring it to court for the purpose
of making it amenable to the criminal laws
o that issuance and service of the process were authorized
by no law and thus void
6
o that the process was a mixture of civil and criminal
process, not properly signed, did not direct an arrest, and
not in the form required by law
Issue/s:
1. W/N the court may, of itself, create not only a process but a
procedure by which the process may be made effective - NO
Ratio:
1.
 Courts have only such authority in criminal matters as is expressly
conferred upon them by statute or which it is necessary to imply
from such authority in order to carry out fully the authority
conferred.
o CFIs have no authority to create new procedure and new
processes in criminal law.
 Even though there are various penal laws in the Phils which
corporations may violate, still the courts are not authorized to go to
the extent of creating special procedure and special processes for
the purpose of carrying out those penal statutes, when the
legislature itself has neglected to do so.
o To bring a corporation into court criminally requires many
additions to the present criminal procedure.
o While it may be said to be the duty of courts to see to it
that criminals are punished, it is no less their duty to follow
prescribed forms of procedure and not to go out upon
unauthorized ways or act in an unauthorized manner.
 The courts here have no common law jurisdiction or powers.
o If they have any powers not conferred by statute,
expressly or impliedly, they would naturally come from
Spanish and not from common law sources.
 Under the Spanish criminal law and procedure, a
corporation could not have been proceeded
against criminally, as such, it could not have
committed a crime in which a willful purpose or a
malicious intent was required.
 Criminal actions would have been restricted or
limited, under that system, to the officials of such
corporations and never would have been directed
against the corporation itself.
Dispositive:
It is adjudged that the Court of First Instance of the city of Manila be and it is
hereby enjoined and prohibited from proceeding further in the criminal cause
which is before us in this proceeding, entitled United States vs. West Coast
Life Insurance Company, a corporation, John Northcott and Manuel C. Grey,
so far as said proceedings relate to the said West Coast Life Insurance
Company, a corporation, the plaintiff in the case.
Notes:
 There are many cases cited by counsel for the defendant (Hurd)
which show that corporations have been proceeded against
criminally by indictment and otherwise and have been punished as
malefactors by the courts.
o In those cases, the statute, by express words or by
necessary intendment, included corporations within the
persons who could offend against the criminal laws; and
the legislature, at the same time established a procedure
applicable to corporations.
5. Philippine National Bank (PNB) v. Court of Appeals
G.R. No. L-27155 | May 18, 1978 | Antonio, J.
Digest by: CASAMA
Petitioners: Philippine National Bank
Respondents: CA, Rita Gueco Tapnio, Cecilio Gueco and Phil.
American General Insurance Company Inc. (Philamgen)
Doctrine:
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."
Facts:
7
22. Philamgen executed a bond with Rita as principal in favor of PNB
Branch at San Fernando Pampanga to guarantee the payment of Rita’s
account with PNB
23. In turn, Rita and Cecilio executed an indemnity agreement to
guarantee the payment of whatever amount the bonding company would pay
to PNB
24. The original amount of the bond was 4k but was reduced to 2k
25. Rita was indebted to the bank in the sum of 2k plus accumulated
interest unpaid which she failed to pay despite demands
26. The bank wrote a letter of demand to Philamgen and Philamgen
paid the bank
27. Rita claims however that when demand was made upon her by
Philamgen for her to pay her debt to the bank, she told Philamgen that she
did not consider herself to be indebted to the bank at all because she had an
agreement with Jacobo-Nazon whereby she had leased to the latter her
unused export sugar quota for the 1956-1957 agricultural year for a total of
P2,800 which was already an excess of her obligation guaranteed by
Philamgen’s bond.
 She further claims that this was done with the knowledge
of the bank but the bank has placed obstacles to the
consummation of the lease and the delay caused Nazon to
rescind the lease contract
 Rita filed then her third-party complaint against PNB to
recover all sums of money which may be adjudged against
her and in favor of Philamgen
 The lower court found based on evidence that Rita had an export
sugar quota of 1k piculs for the agri year 1956-1957 which she did
not need so she allowed Jacobo Tuazon to use said quota for
P2,500 (Contract of lease of sugar allotment)
 At the time of the agreement, Rita was indebted to PNB and this
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
means that PNB has a lien on the harvests of Rita)
 Her sugar cannot be exported without sugar quota allotment so
when she harvests less sugar than her quota, her excess quota is
utilized by another (Jacobo)
 Since the quota was mortgaged to PNB, the contract of lease had
to be approved by the bank but the bank required the parties to
raise the consideration to P2,800 informing them that the minimum
lease rental acceptable is P2.80 per picul.
 Mr. Jacobo agreed to raising the consideration and was read to pay
said amount as the funds were in his folder which was kept in the
bank
  Mr. Jacobo explained regarding the funds 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 Mr. Jacobo said the amount needed to pay Rita was
in his folder which was in the bank, he meant and the bank
manager understood and knew he had an approved loan available
to be used in payment of the quota.
 However, when the bank manager recommended the approval of
the contract of lease, the board of directors of PNB required that the
amount be raised to P3 per picul
 Mr. Jacobo asked for reconsideration but it was unacted upon.
 Because of this, he was no longer interested to continue the lease
so Rita lost the sum of P2,800 which could be the payment for her
indebtedness
 Lower courts ruled in favor of Rita
Issue/s:
 Whether PNB is liable for the damage caused? YES
Ratio:
 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.
 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.
 Although PNB had the ultimate authority of approving or
disapproving the proposed lease, the latter cannot escape its
responsibility of observing, for the protection of the interest of
private respondents, that degree of care, precaution and vigilance
8
which the circumstances justly demand in approving the lease of
said sugar quota.
 PNB acted in bad faith because it knew that the agricultural year
was about to expire and that by its disapproval of the lease, private
respondents would be unable to utilize the sugar quota
 PNB is liable for damages under Article 21 of NCC, any person who
willfully causes loss or injury to another in a manner that is contrary
to morals, good customs, and public policy shall compensate the
latter for the damage
 DOCTRINE
Dispositive:
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals
is hereby AFFIRMED.
6. Sergio F. Naguiat v. NLRC
G.R. No. 116123 | March 13, 1997 | Panganiban, J.
Digest by: CHANG
Petitioners: Sergio F. Naguiat doing business under the name and style
Sergio F. Naguiat Ent., Inc., & Clark Field Taxi, Inc. (CFTI)
Respondents: National Labor Relations Commission (NLRC), National
Organization Of Workingmen And Its Members, Leonardo T. Galang, et
al.
Doctrine: The Court here finds no application to the rule that a corporate
officer cannot be held solidarity liable with a corporation in the absence of
evidence that he had acted in bad faith or with malice. In the present
case, Sergio Naguiat is held solidarily liable for corporate tort because he
had actively engaged in the management and operation of CFTI, a close
corporation.
Facts:
1. CFTI held a concessionaire's contract with the Army Air Force Exchange
Services (AAFES) for the operation of taxi services within Clark Air Base.
Sergio F. Naguiat was CFTI's president, while Antolin T. Naguiat was its
vice-president. Like Sergio F. Naguiat Enterprises, Incorporated (Naguiat
Enterprises), a trading firm, it was a family-owned corporation.
2. Individual respondents were previously employed by CFTI as taxicab
drivers. However, in their complaint, they alleged that they were regular
employees of Naguiat Enterprises, although their individual applications
for employment were approved by CFTI. (Note, that CFTI and Naguiat
Ent, are different, but both are owned by Sergio.)
3. Due to the phase-out of the US military bases in the Philippines, from
which Clark Air Base was not spared, the AAFES was dissolved, and the
services of individual respondents were officially terminated on
November 26, 1991.
4. The Drivers' Union and CFTI held negotiations and they arrived at an
agreement that the separated drivers will be given P500.00 for every year
of service as severance pay. Most of the drivers accepted said amount in
December 1991 and January 1992. However, individual respondents
herein refused to accept theirs.
5. Individual respondents disaffiliated themselves from the drivers' union
and, through the National Organization of Workingmen ("NOWM"), a
labor organization, filed a complaint against Sergio Naguiat and CFTI for
payment of separation pay due to termination/phase-out. (They wanted
to be paid P1,200.00 instead of P500.00)
Issue/s:
 W/N Sergio F. Naguiat Enterprises, Inc. is a separate and distinct
juridical entity which cannot be held jointly and severally liable for
the obligations of CFTI? YES, Naguiat Enterprises is not liable.
 W/N Sergio F. Naguiat was merely an officer and stockholder of
CFTI and, thus, could not be held personally accountable for
corporate debts? NO, he is solidarily liable.
Ratio:
Naguiat Enterprises Not Liable
 From the evidence proffered by both parties, there is no substantial
basis to hold that Naguiat Enterprises is an indirect employer of
individual respondents much less a labor only contractor.
 On the contrary, petitioners submitted documents such as the
drivers' applications for employment with CFTI, and social security
remittances and payroll of Naguiat Enterprises showing that none of
the individual respondents were its employees.
 Private respondents failed to substantiate their claim that Naguiat
Enterprises managed, supervised and controlled their employment.
It appears that they were confused on the personalities of Sergio F.
Naguiat as an individual who was the president of CFTI, and Sergio
F. Naguiat Enterprises, Inc., as a separate corporate entity with a
separate business.
 A closer look at the records show that Sergio F. Naguiat, in
supervising the drivers and determining their employment terms,
was rather carrying out his responsibilities as president of CFTI.
Hence, Naguiat Enterprises as a separate corporation does not
appear to be involved at all in the taxi business.
9
CFTI president solidarily liable
 In the case A.C. Ransom Labor Union-CCLU vs. NLRC the union
asked that officers and agents of the company be held personally
liable for payment of the backwages. This was granted by the labor
arbiter and was further upheld by the SC.
o Mme. Justice Melencio-Herrera, ratiocinated this way:
"(b) How can the foregoing Arts 265 and 273 of the Labor
Code provisions be implemented when the employer is a
corporation? The answer is found in Article 212(c) of the Labor
Code which provides:
'(c) 'Employer' includes any person acting in the interest of an
employer, directly or indirectly. The term shall not include any
labor organization or any of its officers or agents except when
acting as employer.'
The foregoing was culled from Section 2 of RA 602, the
Minimum Wage Law. Since RANSOM is an artificial person, it
must have an officer who can be presumed to be the
employer, being the 'person acting in the interest of (the)
employer' RANSOM. The corporation, only in the technical
sense, is the employer.
The responsible officer of an employer corporation can be
held personally, not to say even criminally, liable for
nonpayment of back wages. That is the policy of the law. x x x
(c) If the policy of the law were otherwise, the corporation
employer can have devious ways for evading payment of
back wages. x x x
(d) The record does not clearly identify 'the officer or officers'
of RANSOM directly responsible for failure to pay the back
wages of the 22 strikers. In the absence of definite proof in
that regard, we believe it should be presumed that the
responsible officer is the President of the corporation who can
be deemed the chief operation officer thereof.Thus, in RA
602, criminal responsibility is with the 'Manager or in his
default, the person acting as such.' In RANSOM, the
President appears to be the Manager."
 Our jurisprudence is wanting as to the definite scope of "corporate
tort." Essentially, "tort" consists in the violation of a right given or
the omission of a duty imposed by law. Simply stated, tort is a
breach of a legal duty. Article 283 of the Labor Code mandates the
employer to grant separation pay to employees in case of closure
or cessation of operations of establishment or undertaking not due
to serious business losses or financial reverses, which is the
condition obtaining at bar. CFTI failed to comply with this law-
 imposed duty or obligation. Consequently, its stockholder who
was actively engaged in the management or operation of the
business should be held personally liable.
 A corporation, being a juridical entity, may act only through its
directors, officers and employees. Obligations incurred by them,
acting as such corporate agents, are not theirs but the direct
accountabilities of the corporation they represent.
 True, solidary liabilities may at times be incurred but only when
exceptional circumstances warrant such as, generally, in the
following cases: . . . 4. When a director, trustee or officer is made,
by specific provision of law, personally liable for his corporate
action."
 The Corporation Code specifically imposes personal liability upon
the stockholder actively managing or operating the business and
affairs of the close corporation. The Court here finds no application
to the rule that a corporate officer cannot be held solidarity liable
with a corporation in the absence of evidence that he had acted in
bad faith or with malice. In the present case, Sergio Naguiat is held
solidarily liable for corporate tort because he had actively engaged
in the management and operation of CFTI, a close corporation.
Antolin Naguiat not personally liable
 Although he carried the title of "general manager" and was the vice
president, it had not been shown that he had acted in such
capacity.
 Furthermore, no evidence on the extent of his participation in the
management or operation of the business was proffered. In this
light, he cannot be held solidarily liable for the obligations of CFTI
and Sergio Naguiat to the private respondents.
Dispositive:
WHEREFORE, the foregoing premises considered, the petition is PARTLY
GRANTED. The assailed February 28, 1994 Resolution of the NLRC is
hereby MODIFIED as follows:
(1) Petitioner Clark Field Taxi, Incorporated, and Sergio F. Naguiat,
president and co-owner thereof, are ORDERED to pay, jointly and severally,
the individual respondents their separation pay computed at US$120.00 for
every year of service, or its peso equivalent at the time of payment or
satisfaction of the judgment;
(2) Petitioner Sergio F. Naguiat Enterprises, Incorporated, and Antolin T.
Naguiat are ABSOLVED from liability in the payment of separation pay to
individual respondents.
SO ORDERED.
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7. Republic Gas Corp. v. Petron Corp.
G.R. No. | Date | Ponente
Digest by: CORPUS
Petitioners: Republic Gas Corporation, Arnel U. Ty, Mari Antonette N.
Ty, Orlando Reyes, Ferrer Suazo and Alvin U. Ty
Respondents: Petron Corporation, Pilipinas Shell Petroleum Corporation,
And Shell International Petroleum Company Limited
Doctrine: Corporate officers and/or directors, through whose act, default
or omission the corporation commits a crime, may themselves be
individually held answerable for the crime. The existence of the corporate
entity does not shield from prosecution the corporate agent who
knowingly and intentionally caused the corporation to commit a crime.
Facts:
1. Petron Corporation and Pilipinas Shell are two of the largest bulk
suppliers and producers of LPG in the Philippines.
a. Petron is the registered owner in the Philippines of the trademarks
GASUL and GASUL cylinders used for its LGP products.
b. Pilipinas Shell is the authorized user in the Philippines of the
tradename, trademarks, symbols or designs of its principal, Shell
International Petroleum Company Limited, including the marks SHELLANE
and SHELL device in connection with the production, sale and distribution of
SHELLANE LPGs.
2. REGASCO is engaged in the business of refilling, buying, selling,
distributing and marketing at wholesale and retail of LPG.
3. LPG Dealers Associations received reports that certain entities
were engaged in the unauthorized refilling, sale and distribution of
LPG cylinders bearing the registered tradenames and trademarks
of the Petron and Shell. They filed a letter-complaint in the NBI
regarding the alleged illegal trading of petroleum products and/or
underdelivery or underfilling in the sale of LPG products.
4. NBI conducted investigations which showed that several persons
and/or establishments, including REGASCO, were suspected of
having violated provisions of B.P. 33.
. REGASCO LPG Refilling Plant in Malabon was engaged in the
refilling and sale of LPG cylinders bearing the registered marks of the Petron
and Shell without authority from the latter.
5. Subsequently, the NBI lodged a complaint in the DOJ against the
corporate officers of REGASCO for alleged violations of Sections
155 and 168 of Republic Act (RA) No. 8293, otherwise known as
the Intellectual Property Code of the Philippines.
 6. The Assistant City Prosecutor recommended the dismissal of the
complaint, finding that there was no proof introduced by Petron and
Shell that would show that REGASCO was engaged in selling
petitioner’s products or that it imitated and reproduced the
registered trademarks of the petitioners.
7. On appeal, the DOJ Secretary affirmed the prosecutor’s dismissal
of the complaint in a Resolution
. Refilling the empty cylinders is by no means an offense in itself – it
being the legitimate business of Regasco to engage in the refilling and
marketing of liquefied petroleum gas. They did not pass off the goods as
those of complainants’ as no other act was done other than to refill them in
the normal course of its business.
a. A corporation has a personality separate and distinct from its
stockholders. To sustain the allegations, the acts complained of must be
shown to have been committed by respondents in their individual capacity by
clear and convincing evidence.
8. Petron and Shell sought recourse to the CA through a petition for
certiorari. CA granted the petition and set aside the DOJ
Resolution.
9. REGASCO then filed a motion for reconsideration, which was
denied by the CA. Hence, this petition
Issue/s:
 Whether probable cause exists to hold INDIVIDUAL PETITIONERS
liable for the offense charged. - YES!
.Ratio:
 The Court found that REGASCO has actually committed trademark
infringement and unfair competition.
o Trademark infringement - when they refilled, without the
respondents’ consent, the LPG containers bearing the
registered marks of the respondents. REGASCO’s acts
will inevitably confuse the consuming public, since they
have no way of knowing that the gas contained in the LPG
tanks bearing respondents’ marks is in reality not the
latter’s LPG product after the same had been illegally
refilled.
o Unfair competition – by refilling and selling LPG cylinders
bearing their registered marks, petitioners are selling
goods by giving them the general appearance of goods of
another manufacturer.
 The Court also found that there is sufficient evidence to warrant the
prosecution of REGASCO’s corporate officers, considering that
REGASCO, being a corporation, possesses a personality separate
11
and distinct from the person of its officers, directors and
stockholders.
o Being corporate officers and/or directors, through whose
act, default or omission the corporation commits a crime,
may themselves be individually held answerable for the
crime. Being in direct control and supervision in the
management and conduct of the affairs of the corporation,
these officers must have known or are aware that the
corporation is engaged in the act of refilling LPG cylinders
bearing the marks of Petron and Shell without authority or
consent from the latter.
o The existence of the corporate entity does not shield from
prosecution the corporate agent who knowingly and
intentionally caused the corporation to commit a crime.
Thus, petitioners cannot hide behind the cloak of the
separate corporate personality of the corporation to
escape criminal liability. A corporate officer cannot protect
himself behind a corporation where he is the actual,
present and efficient actor.
Dispositive:
WHEREFORE, premises considered, the petition is hereby DENIED and the
Decision dated July 2, 2010 and Resolution dated October 11, 2010 of the
Court of Appeals in CA-G.R. SP No. 106385 are AFFIRMED.
8. People v. Tan Boon Kong
G.R. No. L-35262| March 15, 1930 | Ostrand J.
Digest by: CRUZ
Petitioners: The People of the Philippine Islands
Respondents: Tan Boon Kong
Doctrine: A corporation can act only through its officers and agents, and
where the business itself involves a violation of the law, the correct rule is
that all who participate in it are liable
Facts:
1. People appealed the grant of demurrer to an information charging
the Tan Boon Kong with the violation of section 1458 of Act No.
2711 as amended.
2. The information reads as follows: That on and during the four
quarters of the year 1924, in the municipality of Iloilo, Province of
Iloilo, Philippine Islands, the said accused, as corporation organized
under the laws of the Philippine Islands and engaged in the
 purchase and the sale of sugar, "bayon," coprax, and other native
products and as such object to the payment of internal-revenue
taxes upon its sales, did then and there voluntarily, illegally, and
criminally declare in 1924 for the purpose of taxation only the sum
of P2,352,761.94, when in truth and in fact, and the accused well
knew that the total gross sales of said corporation during that year
amounted to P2,543,303.44, thereby failing to declare for the
purpose of taxation the amount of P190,541.50, and voluntarily and
illegally not paying the Government as internal-revenue percentage
taxes the sum of P2,960.12, corresponding to 1½ per cent of said
undeclared sales.
Issue/s:
 W/N information sets forth facts rendering the Tan Boon Kong, as
manager of the corporation liable criminally - YEEEEssssss
Ratio:
 SEC. 1458. Payment of percentage taxes — Quarterly reports of
earnings. — The percentage taxes on business shall be payable at
the end of each calendar quarter in the amount lawfully due on the
business transacted during each quarter; and it shall be on the
duty of every person conducting a business subject to such
tax, within the same period as is allowed for the payment of
the quarterly installments of the fixed taxes without penalty, to
make a true and complete return of the amount of the receipts
or earnings of his business during the preceeding quarter and pay
the tax due thereon. . . . (Act No. 2711.)
 SEC. 2723. Failure to make true return of receipts and sales. —
Any person who, being required by law to make a return of the
amount of his receipts, sales, or business, shall fail or neglect to
make such return within the time required, shall be punished by a
fine not exceeding two thousand pesos or by imprisonment for a
term not exceeding one year, or both.
 And any such person who shall make a false or fraudulent return
shall be punished by a fine not exceeding ten thousand pesos or by
imprisonment for a term not exceeding two years, or both. (Act No.
2711.)
 The court below based the appealed ruling on the ground that the
offense charged must be regarded as committed by the corporation
and not by its officials or agents.
 A corporation can act only through its officers and agents, and
where the business itself involves a violation of the law, the correct
rule is that all who participate in it are liable
 In the present case the information or complaint alleges that he
defendant was the manager of a corporation which was engaged in
12
business as a merchant, and as such manager, he made a false
return, for purposes of taxation, of the total amount of sale

Dispositive: The ruling of the court below sustaining the demurrer to the
complaint is therefore reversed, and the case will be returned to said court
for further proceedings not inconsistent with our view as hereinafter stated.
Without costs. So ordered.
9. People v. Chowdury
G.R. No. | Date | Ponente
Digest by: CUA
Petitioners:People of the Philippines
Respondents: Bulu Chowdury
Doctrine:
Where it is shown that the employee was merely acting under the
direction of his superiors and was unaware that his acts constituted a
crime, he may not be held criminally liable for an act done for and in
behalf of his employer.
Facts:
28. Bulu Chowdury and Josephine Ong were charged with illegal
recruitment in large scale
29. They were likewise charged with three counts of estafa against
private complainants but the charges against Chosdury were dismissed and
an amended information indicted only Ong for the offense
30. Chowdury was arraigned while Ong remained at large. Chowdury
pleaded not guilty to the charge of recruitment in large scale
31. Prosecution presented four witnesses private complainants Aser
Sasis, Estrella Alleja and Melvin Miranda and Labor Employment Officer
Abbelyn Caguitla
32. Sasis, Alleja and Miranda testified that they were all interviewed by
Chowdury for employment at Craftrade Overseas Developer in South Korea
as factory workers. They had to submit various documents (passport, NBI
clearance, passport picture and medical certificate) and had to pay fees.
Sasis paid 16k to Craftrade as processing fee. Alleja paid 20k as placement
fee. Miranda paid 25k as processing fee.
33. Labor Employment officer Abbelyn Caguitla testified that she
prepared a certificate saying Chowdury and Ong were not in their personal
capacities licensed recruiters nor were they connected with any licensed
agency. Craftrade was previously licensed to recruit workers from abroad but
it had expired. Temporary license was given but POEA later suspended it.
34. Chowdury testified that he worked as an interviewer at Craftrade.
As an employee he followed the instructions given by his superiors Mr.
Emmanuel Geslani, the agency’s President and General Manager and Mr.
Utkal Chowdury, the agency’s Managing Director. He conducted interviews
and submitted forms based on the applicant responses to Mr. Utkal
Chowdury. He claimed to never have received money from applicants.
35. Trial court found Chowdury guilty
36. Chowdury appealed
a. He contends that he may not be held liable as he was merely an
employee of Craftrade and he only performed the tasks assigned by his
superiors. He argues that the officers having control, management and
direction of the agency should be liable
Issue/s:
 W/N Chowdury is guilty of large scale recruitment? NO
Ratio:
 Elements of illegal recruitment in large scale:
(1) The accused undertook any recruitment activity defined under
Article 13 (b) or any prohibited practice enumerated under Article
34 of the Labor Code;
(2) He did not have the license or authority to lawfully engage in the
recruitment and placement of workers; and
(3) He committed the same against three or more persons,
individually or as a group.
 Sec 6 RA 8042: The persons criminally liable for the above
offenses are the principals, accomplices and accessories. In case
of juridical persons, the officers having control, management
or direction of their business shall be liable
 An employee of a company or corporation engaged in illegal
recruitment may be held liable as principal, together with his
employer, if it is shown that he actively and consciously
participated in illegal recruitment
 Evidence shows that accused appellant interviewed private
complainants at Craftrade’s office. At the time he was employed as
interviewer, Craftrade was also then operating under temporary
authority given by the POEA pending renewal of its license.
 He was convicted based on the fact that he was not registered with
POEA as employee of Craftrade nor in his personal capacity
licensed to recruit overseas workers.
 Section 10 Rule II Book II of the Rules and Regulation Governing
Overseas Employment (1991) requires that every change,
termination or appointment of officers, representatives and
13
personnel of licensed agencies be registered with the POEA.
Agents or representatives appointed by a licensed recruitment
agency whose appointments are not previously approved by the
POEA are considered "non-licensee " or "non-holder of authority"
and therefore not authorized to engage in recruitment activity
 Prosecution failed to prove that accused appellant was aware of
Craftrade’s failure to register his name with the POEA and that he
actively engaged to recruit despite this knowledge
 The obligation to register personnel with POEA belongs to the
officers of the agency as a mere employee cannot be expected to
know the legal requirements.
 Evidence shows that accused appellant carried out his duties as
interviewer believing that the agency was duly licensed by the
POEA.
 He merely interviewed applicants and informed them of
requirements. He never received money as payments were
received by the agency’s cashier, Josephine Ong. His tasks
furthermore were under supervision of its president and managing
director.
 DOJ may still file a complaint against the officers having control,
management or direction of the business so long as the offense has
not yet prescribed.
Dispositive:
IN VIEW WHEREOF, the assailed decision of the Regional Trial Court is
REVERSED and SET ASIDE. Accused-appellant is hereby ACQUITTED.
The Director of the Bureau of Corrections is ordered to RELEASE accused-
appellant unless he is being held for some other cause, and to REPORT to
this Court compliance with this order within ten (10) days from receipt of this
decision. Let a copy of this Decision be furnished the Secretary of the
Department of Justice for his information and appropriate action.
10. Ching v. Secretary of Justice
G.R. No.164317 | Feb. 6,2006 | CALLEJO SR., J.
Digest by: DA SILVA
Petitioners: Alfredo Ching
Respondents: Secretary of Justice, Rizal Commercial Banking Corp.
Doctrine:
If the crime is committed by a corporation of other juridical
entities, the directors, officers, employees or other officers

responsible for the offense shall be penalized for the crime. A
corporation cannot be arrested and imprisoned, and cannot be
penalized for a crime punishable by imprisonment. A corporation
however, may charged and prosecuted for a crime if the
imposable penalty is fine only. In case the penalty is both fine
and imprisonment, a corporation may be prosecuted, and if
found guilty, it may be fined.
Finally, when a criminal statute does not expressly apply to
corporations, it does may not be applied against corporations.
When the law provides a crime which may be committed by
corporations, but states that the officers, among others, who are
responsible for the crime, then only said individuals will suffer the
penalty prescribed if found guilty.
Facts:
1. Petitioner Alfredo Ching was the Senior Vice-President of Philippine
Blooming Mills, Inc. (PBMI)
a. Signing as Vice-President of PBMI, he applied with Rizal
Commercial Banking Corporation for issuance of commercial letters of credit
to finance its importation of assorted goods.
b. Respondent bank approved said application.
2. The goods for importation were then purchased and delivered in
trust to PBMI.
. Ching, as Vice-President of PBMI, signed 13 trust receipts as
surety acknowledging the delivery of the imported goods.
a. Petitioner agreed to hold the goods in trust for the bank, with
authority to sell but not by way of conditional sale, pledge or otherwise; and
in case such goods were sold, to turn over the proceeds as soon as received
to apply against the relative acceptances and payment of indebtedness.
3. When the trust receipts matured, petitioner failed to return the
goods to the respondent bank, or to return their value amounting to
Php 6,940,280.66
4. Respondent filed a complaint for Estafa with the City Prosecutor of
Manila. (in case sir asks):
. Prosecutor found probable cause
a. Petitioner appealed to Minister of justice - denied
b. Petitioner filed a Motion for Reconsideration - granted
i.Minister ordered prosecutor to file a motion for withdrawal
c. Bank filed a motion for reconsideration with Minister of Justice -
denied
d. RTC granted petitioner’s subsequent Motion to Quash the
Information on the ground that the material allegations do not amount to
estafa.
14
5. The SC rendered judgment in Allied Banking Corporation v.
Ordonez during the pendency of this case.
. here it was ruled that PD 115 (Trust Receipts Law) encompasses
any act violative of an obligation covered by the trust receipt; it is not limited
to transactions involving goods to be sold.
a. It was also ruled here that non-payment of the amount covered by a
trust receipt is violative of the obligation of the entrustee to pay.
6. Because of said ruling, respondent re-filed the complaint for estafa
. Prosecutor found no probable cause since petitioner’s liability was
only civil and not criminal
a. DOJ on petition for review reversed the findings of the City
Prosecutor, and found probable cause to indict petitioner for violation of PD
115.
7. Petitioner thus contends that the Secretary of Justice committed
grave abuse of discretion in issuing the resolution
. Petitioner alleged that the transaction between PBMI and Rizal
Banking Commercial Corporation does not fall under PD 115.
a. He further alleged that he merely signed as Senior VP of PBMI, and
had no physical possession of the goods, and therefore, should not be
prosecuted. He alleges, as a result, that PBMI, as a corporation, is the
entrustee, and therefore, he should not be prosecuted for PBMI’s failure to
perform its obligation under the trust receipts law.
Issue/s:
 W/N The Secretary of Justice committed grave abuse of discretion
when he found probable cause to indict petitioner under PD 115 –
NO
Ratio:
 A. The transaction between petitioner and respondent falls under
the trust receipt transactions contemplated by PD 115. Under said
law, the failure of a person to turn over the proceeds of the sale of
goods covered by a trust receipts, or to return said goods if not
sold, is a public nuisance to be abated by the imposition of penal
sanctions. The Court likewise ruled in Allied Banking v Ordonez that
the law applies to any act violative of an obligation covered by the
trust receipt; it is not limited to transactions involving goods to be
sold. Furthermore, it also applies to non-payment of the amount
covered by a trust receipt, and is considered by the law as violative
of the obligation of the entrustee to pay.
 B. Though petitioner signed the trust receipts as Senior VP of
PBMI, he cannot avoid prosecution. Though the entrustee is a
 corporation, the law specifically makes the officers, employees or
other officers or persons responsible for the offense without
prejudice to the civil liabilities of the corporation and/or board of
directors. This is because said officers are vested with the authority
and responsibility to devise means necessary to ensure
compliance with the law, and their obligations under the trust
receipts. Failure to do so renders them criminally liable.

If the crime is committed by a corporation of other juridical entities,

the directors, officers, employees or other officers responsible for
the offense shall be penalized for the crime. A corporation cannot
be arrested and imprisoned, and cannot be penalized for a crime
punishable by imprisonment. A corporation however, may charged
and prosecuted for a crime if the imposable penalty is fine only. In
case the penalty is both fine and imprisonment, a corporation may
be prosecuted, and if found guilty, it may be fined.

Finally, when a criminal statute does not expressly apply to

corporations, it does may not be applied against corporations.
When the law provides a crime which may be committed by
corporations, but states that the officers, among others, who are
responsible for the crime, then only said individuals will suffer the
penalty prescribed if found guilty.

Dispositive:
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of
merit. Costs against the petitioner.
SO ORDERED.

NOTE: This case began during the Marcos era, hence the term
“Minister of Justice,”

15