Stonehill vs Diokno DIGEST

December 21, 2016 ~ vbdiaz

Stonehill vs Diokno

20 SCRA 383

Facts:

Respondents herein secured a total of 42 search warrants against petitioners herein and/or the
corporations of which they were officers, to search “books of accounts, financial records,
vouchers, correspondence, receipts, ledgers, journals, portfolios, credit journals, typewriters, and
other documents and/or papers showing all business transactions including disbursements
receipts, balance sheets and profit and loss statements and Bobbins (cigarette wrappers),” as “the
subject of the offense; stolen or embezzled and proceeds or fruits of the offense,” or “used or
intended to be used as the means of committing the offense,” which is described in the
applications adverted to above as “violation of Central Bank Laws, Tariff and Customs Laws,
Internal Revenue (Code) and the Revised Penal Code.”

The petitioner contended that the search warrants are null and void as their issuance violated the
Constitution and the Rules of Court for being general warrants.

The documents, papers, and things seized under the alleged authority of the warrants in question
may be split into two (2) major groups, namely: (a) those found and seized in the offices of the
aforementioned corporations, and (b) those found and seized in the residences of petitioners
herein.

Issue: Whether petitioners can validly assail the search warrant against the corporation.

Held: No.

As regards the first group, we hold that petitioners herein have no cause of action to assail the
legality of the contested warrants and of the seizures made in pursuance thereof, for the simple
reason that said corporations have their respective personalities, separate and distinct from the
personality of herein petitioners, regardless of the amount of shares of stock or of the interest of
each of them in said corporations, and whatever the offices they hold therein may be. Indeed, it is
well settled that the legality of a seizure can be contested only by the party whose rights have
been impaired thereby, and that the objection to an unlawful search and seizure is purely
personal and cannot be availed of by third parties. Consequently, petitioners herein may not
validly object to the use in evidence against them of the documents, papers and things seized
from the offices and premises of the corporations adverted to above, since the right to object to
the admission of said papers in evidence belongs exclusively to the corporations, to whom the
seized effects belong, and may not be invoked by the corporate officers in proceedings against
them in their individual capacity.
PNB vs CA (83 SCRA 237)FACTS:

Rita Gueco Tapnio (Rita) is indebted to PNB in the sum of P2, 000.00. To secure the loan, she mortgaged
her standing crops and sugar quota allocation to the bank. A bond was also executed by Philamgen, as
surety, infavor of PNB to guarantee the payment of Rita’s account with PNB. Rita and Cecilio Gueco also
executed anindemnity agreement to guarantee payment of whatever amount Philamgen would pay to
PNB. PNB madeseveral demands to Rita but she failed to pay. The bank then wrote a demand letter to
Philamgen which paidthe full amount for Rita. Philamgen, in turn, made several demands to Rita and
Cecilio but to no avail.Philamgen then filed a complaint for recovery of sum of money from Rita and
Cecilio.Rita refused to pay Philamgen. She told Philamgen that she did not consider herself indebted to
PNB at all.She alleged that in order to pay for her debt, she leased her sugar quota allocation for P2,
800.00 to one JacoboTuazon with the knowledge of the bank. But due to the obstacles placed by the
Board of Directors of the bank,Tuazon was forced to rescind the lease agreement. Rita then filed a third-
party complaint against PNB fromwhom Philamgen should recover the sums adjudged against her. She
contended that due to the acts of thedirectors of PNB, she lost the P2, 800.00 which she should have
received from Tuazon and which she couldhave paid to the Bank to cancel off her debts. PNB argued
that being the assignee of the sugar quota, it has theright to approve or disapprove the said lease,
including the right to fix a higher rental price.

ISSUE:

Whether or not PNB is liable for the damage caused.

RULING:

There is no question that Rita’s failure to utilize her sugar quota was due to the disapproval of the lease
by theBoard of Directors of PNB. While PNB had the authority to approve or disapprove the lease, it
cannot escapeits responsibility of observing that degree of care and precaution which the circumstances
justly demand inapproving or disapproving the loan. The law provides that every person must in the
exercise of his rights andin the performance of his duties, act with justice, give everyone his due, and
observe honest and good faith. For PNB’s failure to observe the reasonable care and vigilance which the
surrounding circumstances impose, it isliable for the damages caused to Rita. Art. 21 of the Civil Code
provides that any person who willfully causesloss or injury to another in a manner that is contrary to
morals, good customs, or public policy shallcompensate the latter for damages.

A corporation is civilly liable in the same manner as natural persons for torts. A principal or master
isliable for every tort which he expressly directs or authorizes, and this is just as true of a corporation
asof a natural person. A corporation is liable therefore whenever a tortuous act is committed by an
officeror agent under express direction or authority from the stockholders or members acting as a body,
orfrom the directors as the governing body
EOPLE V. TAN BOON KONG FACTS:

1.

Tan Boon Kong was a manager of a domestic corporation engaged in the purchase and the sale of sugar,
"bayon," coprax, and other native products. 2.

An information was filed against him for illegally declaring in the 1924 tax return of the corporation only
the sum of P2,352,761.94, when he 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. 3.

This resulted in a deficiency tax of P2,960.12. 4.

Under

Sec. 2723 of Act No. 2711,

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. 5.

Lower Court: Sustained the demurrer to the information charging Tan. It the corporation who must be
considered as having committed the offense and NOT Tan Boon Kong.

ISSUE:

W/N Tan Boon Kong, as manager of the corporation, could be held criminally liable if the allegations are
proven.

HELD:

YES.

Tan Boon Kong, as the author of the illegal act, must necessarily answer for its consequences, provided
that the allegations are proven. 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.
The information or complaint alleges that Tan Boon Kong was the manager of the corporation, and as
such manager, he made a false return of the total amount of sales.

Said false return constitutes a violation of law and Tan, as the author of the illegal act, must necessarily
answer for its consequences, provided that the allegation are proven.

In case of State vs. Burnam, the court even held that the manager of a diary corporation was criminally
liable for the violation of a statute by the corporation though he was NOT present when the offense was
committed. NOTE: Court did not find Tan criminally liable YET. The ruling of the lower court sustaining
the demurrer to the complaint is REVERSED, and the case is REMANDED for further proceedings