MIAA v.

Court of Appeals
G.R. No. 155650, July 20, 2006
Facts:
The Manila International Airport Authority (MIAA) operates the Ninoy
Aquino International Airport (NAIA) Complex in Paraaque City under
Executive Order No. 903 (MIAA Charter), as amended. As such operator, it
administers the land, improvements and equipment within the NAIA
Complex. In March 1997, the Office of the Government Corporate Counsel
(OGCC) issued Opinion No. 061 to the effect that the Local Government Code
of 1991 (LGC) withdrew the exemption from real estate tax granted to MIAA
under Section 21 of its Charter.
Thus, MIAA paid some of the real estate tax already due. In June 2001,
it received Final Notices of Real Estate Tax Delinquency from the City of
Paraaque for the taxable years 1992 to 2001. The City Treasurer
subsequently issued notices of levy and warrants of levy on the airport lands
and buildings.
At the instance of MIAA, the OGCC issued Opinion No. 147 clarifying
Opinion No. 061, pointing out that Sec. 206 of the LGC requires persons
exempt from real estate tax to show proof of exemption. According to the
OGCC, Sec. 21 of the MIAA Charter is the proof that MIAA is exempt from real
estate tax. MIAA, thus, filed a petition with the Court of Appeals seeking to
restrain the City of Paraaque from imposing real estate tax on, levying
against, and auctioning for public sale the airport lands and buildings, but
this was dismissed for having been filed out of time.
Hence, MIAA filed this petition for review, pointing out that it is exempt
from real estate tax under Sec. 21 of its charter and Sec. 234 of the LGC. It
invokes the principle that the government cannot tax itself as a justification
for exemption, since the airport lands and buildings, being devoted to public
use and public service, are owned by the Republic of the Philippines. On the
other hand, the City of Paraaque invokes Sec. 193 of the LGC, which
expressly withdrew the tax exemption privileges of government-owned and
controlled corporations (GOCC) upon the effectivity of the LGC.
It asserts that an international airport is not among the exceptions
mentioned in the said law. Meanwhile, the City of Paraaque posted and
published notices announcing the public auction sale of the airport lands and
buildings. In the afternoon before the scheduled public auction, MIAA applied
with the Court for the issuance of a TRO to restrain the auction sale. The
Court issued a TRO on the day of the auction sale, however, the same was
received only by the City of Paraaque three hours after the sale.

Issue:
Whether or not the airport lands and buildings of MIAA are exempt
from real estate tax?
Held:
The airport lands and buildings of MIAA are exempt from real estate tax
imposed by local governments. Sec. 243(a) of the LGC exempts from real
estate tax any real property owned by the Republic of the Philippines. This
exemption should be read in relation with Sec. 133(o) of the LGC, which
provides that the exercise of the taxing powers of local governments shall
not extend to the levy of taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities.
These provisions recognize the basic principle that local governments
cannot tax the national government, which historically merely delegated to
local governments the power to tax.
The rule is that a tax is never presumed and there must be clear
language in the law imposing the tax. This rule applies with greater force
when local governments seek to tax national government instrumentalities.
Moreover, a tax exemption is construed liberally in favor of national
government instrumentalities.
MIAA is not a GOCC, but an instrumentality of the government.
The Republic remains the beneficial owner of the properties. MIAA itself
is owned solely by the Republic. At any time, the President can transfer back
to the Republic title to the airport lands and buildings without the Republic
paying MIAA any consideration. As long as the airport lands and buildings are
reserved for public use, their ownership remains with the State. Unless the
President issues a proclamation withdrawing these properties from public
use, they remain properties of public dominion. As such, they are inalienable,
hence, they are not subject to levy on execution or foreclosure sale, and they
are exempt from real estate tax.
However, portions of the airport lands and buildings that MIAA leases
to private entities are not exempt from real estate tax. In such a case, MIAA
has granted the beneficial use of such portions for a consideration to a
taxable person.
Times Transportation Company, Inc. v. Santos Sotelo, et al.
G.R. No. 163786. February 16, 2005
FACTS:

Times Transportation Company, Inc. (Times) is a corporation engaged

in the business of land transportation. Prior its closure, Times Employees
Union (TEU) was formed and issued a certificate of union registration. Times
challenged the legitimacy of TEU by filing a petition for the cancellation of its
union registration. TEU held a strike in response to Times alleged attempt to
form a rival union and its dismissal of the employees identified to be active
union members. The Labor Secretary assumed jurisdiction over the case and
referred the matter to the NLRC for compulsory arbitration. A return-to- work
order was likewise issued. In a certification election, TEU was certified as the
sole and exclusive collective bargaining agent in Times. Consequently, TEUs
president wrote the management of Times and requested for collective
bargaining. Times refused. TEU filed a Notice of Strike. Another
conciliation/mediation proceeding was conducted for the purpose of settling
the brewing dispute.
Times management implemented a retrenchment program and
notices of retrenchment were sent to some of its employees. TEU held a
strike vote on grounds of unfair labor practice on the part of Times. For
alleged participation in an illegal strike, Times terminated all the 123 striking
employees. The DOLE Secretary issued the second return-to-work order
certifying the dispute to the NLRC. While the strike was ended, the
employees were no longer admitted back to work. Mencorp Transport
Systems, Inc. (Mencorp) had acquired ownership over Times Certificates of
Public Convenience and a number of its bus units by virtue of several deeds
of sale. Mencorp is controlled and operated by Mrs. Virginia Mendoza,
daughter of Santiago Rondaris, the majority stockholder of Times.
Meanwhile, the NLRC rendered a decision declaring the first strike LEGAL and
the second ILLEGAL. Times and TEU both appealed the decision of the NLRC,
which CA affirmed. Upon denial of its motion for reconsideration, Times filed
a petition for review on certiorari.
After the closure of Times, the retrenched employees filed cases for
illegal dismissal, money claims and unfair labor practices against Times
before the Regional Arbitration Branch in San Fernando City, La Union. The
employees withdrew their complaints with leave of court and filed a new set
of cases before the National Capital Region Arbitration Branch, impleading
Mencorp and the Spouses Mendoza. Times sought the dismissal of these
cases on the ground of litis pendencia and forum shopping.
The Labor Arbiter ruled that the dismissals of complainants Times,
effected, participated in, authorized or ratified by Rondaris constituted the
prohibited act of unfair labor practice and hence, illegal and that the sale of
said respondent company to respondents Mencorp Transport Systems
Company, Inc. and/or Virginia Mendoza and Reynaldo Mendoza was
simulated and/or effected in bad faith. Times, Mencorp and the Spouses
Mendoza submitted their respective memorandum of appeal to the NLRC.
NLRC rendered its decision remanding the records of the consolidated cases
to the Arbitration Branch of origin for disposition and for the conduct of
appropriate proceedings. NLRC denied the Motion for Reconsideration. Thus,

the employees appealed to the CA by way of a petition for certiorari, which

granted the petition and set aside the decision of the NLRC. Times, Mencorp
and the Spouses Mendoza filed Motions for Reconsideration, which were
denied. Hence, this petition for review on certiorari.
ISSUE: Whether or not piercing the corporate veil in this case was proper.
HELD:
Yes. We have held that piercing the corporate veil is warranted only in
cases when the separate legal entity is used to defeat public convenience,
justify wrong, protect fraud, or defend crime, such that in the case of two
corporations, the law will regard the corporations as merged into one. It may
be allowed only if the following elements concur: (1) controlnot mere stock
control, but complete dominationnot only of finances, but of policy and
business practice in respect to the transaction attacked; (2) such control
must have been used to commit a fraud or a wrong to perpetuate the
violation of a statutory or other positive legal duty, or a dishonest and an
unjust act in contravention of a legal right; and (3) the said control and
breach of duty must have proximately caused the injury or unjust loss
complained of.
In this case, the sale was transferred to a corporation controlled by
Mendoza, the daughter of Rondaris of Times where she is/was also a director.
All of the stockholders/incorporators of Mencorp are all relatives of S.
Rondaris. The timing of the sale evidently was to negate the
employees/complainants/members right to organization as it was effected
when their union (TEU) was just organized/requesting Times to bargain.
Mencorp never obtained a franchise since its supposed incorporation but at
present, all the buses of Times are already being run/operated by Mencorp,
the franchise of Times having been transferred to it. The sale of Times
franchise as well as most of its bus units to a company owned by Rondaris
daughter and family members, right in the middle of a labor dispute, is
highly suspicious. It is evident that the transaction was made in order to
remove Times remaining assets from the reach of any judgment that may be
rendered in the unfair labor practice cases filed against it.
WILLIAM C. YAO, SR vs People | G.R. No. 168306
DOCTRINE: corporation is an entity separate and distinct from its
stockholders, directors or officers. However, when the notion of legal entity is
used to defeat public convenience, justify wrong, protect fraud, or defend
crime, the law will regard the corporation as an association of persons, or in
the case of two corporations merge them into one. Where the separate
corporate entity is disregarded, the corporation will be treated merely as an
association of persons and the stockholders or members will be considered
as the corporation, that is, liability will attach personally or directly to the
officers and stockholders.

FACTS:
Petitioners are incorporators and officers of MASAGANA GAS CORPORATION
(MASAGANA), an entity engaged in the refilling, sale and distribution of LPG
products. Private respondents Petron Corporation (Petron) and Pilipinas Shell
Petroleum Corporation (Pilipinas Shell) are two of the largest bulk suppliers
and producers of LPG in the Philippines. Petron is the registered owner in
the Philippines of the trademarks GASUL and GASUL cylinders used for its
LPG products. It is the sole entity in the Philippines authorized to
allow refillers and distributors to refill, use, sell, and distribute GASUL LPG
containers, products and its trademarks. Pilipinas Shell, on the other hand, is
the authorized user in the Philippines of the tradename, trademarks,
symbols, or designs of its principal, Shell International Petroleum Company
Limited (Shell International), including the marks SHELLANE and SHELL
device in connection with the production, sale and distribution of
SHELLANE LPGs. It is the only corporation in the Philippinesauthorized to
allow refillers and distributors to refill, use, sell and distribute SHELLANE LPG
containers
and
products.
On
3
April
2003,
(NBI)
agent Ritche N. Oblanca (Oblanca) filed two applications for search warrant
with the RTC, Cavite City, against petitioners and other occupants of the
MASAGANA compound for alleged violation of Section 155, in relation to
Section 170 of The Intellectual Property Code of the Philippines. The two
applications for search warrant uniformly alleged that per information, belief,
and personal verification of Oblanca, the petitioners are actually producing,
selling, offering for sale and/or distributing LPG products using steel cylinders
owned by, and bearing the tradenames, trademarks, and devices
of Petron and Pilipinas Shell, without authority and in violation of the rights of
the said entities. MASAGANA, as third party claimant, filed with the RTC a
Motion for the Return of Motor Compressor and LPG Refilling Machine. [15] It
claimed that it is the owner of the said motor compressor and LPG refilling
machine; that these items were used in the operation of its legitimate
business; and that their seizure will jeopardize its business interests. RTC
resolved that MASAGANA cannot be considered a third party claimant whose
rights were violated as a result of the seizure since the evidence disclosed
that petitioners are stockholders of MASAGANA and that they conduct their
business through the same juridical entity. CA affirmed RTCs decision
Issue:
Whether or not CA ERRED IN RULING THAT THE COMPLAINT IS DIRECTED
AGAINST MASAGANA GAS CORPORATION, ACTING THROUGH ITS OFFICERS

AND DIRECTORS, HENCE MASAGANA GAS CORPORATION MAY NOT BE

CONSIDERED AS THIRD PARTY CLAIMANT WHOSE RIGHTS WERE VIOLATED AS
A RESULT OF THE SEIZURE
Held:
No. It is an elementary and fundamental principle of corporation law that a
corporation is an entity separate and distinct from its stockholders, directors
or officers. However, when the notion of legal entity is used to defeat public
convenience, justify wrong, protect fraud, or defend crime, the law will
regard the corporation as an association of persons, or in the case of two
corporations merge them into one. [46] In other words, the law will not
recognize the separate corporate existence if the corporation is being used
pursuant to the foregoing unlawful objectives. This non-recognition is
sometimes referred to as the doctrine of piercing the veil of corporate entity
or disregarding the fiction of corporate entity. Where the separate corporate
entity is disregarded, the corporation will be treated merely as an association
of persons and the stockholders or members will be considered as the
corporation, that is, liability will attach personally or directly to the officers
and stockholders. As we now find, the petitioners, as directors/officers of
MASAGANA, are utilizing the latter in violating the intellectual property rights
ofPetron and Pilipinas Shell. Thus, petitioners collectively and MASAGANA
should be considered as one and the same person for liability purposes.
Consequently, MASAGANAs third party claim serves no refuge for
petitioners. The law does not require that the property to be seized should be
owned by the person against whom the search warrants is directed.
Ownership, therefore, is of no consequence, and it is sufficient that the
person against whom the warrant is directed has control or possession of the
property sought to be seized. Hence, even if, as petitioners claimed, the
properties seized belong to MASAGANA as a separate entity, their seizure
pursuant to the search warrants is still valid.
Further, it is apparent that the motor compressor, LPG refilling machine and
the GASUL and SHELL LPG cylinders seized were the corpusdelicti, the body
or substance of the crime, or the evidence of the commission of trademark
infringement. These were the very instruments used or intended to be used
by the petitioners in trademark infringement. It is possible that, if returned to
MASAGANA, these items will be used again in violating the intellectual
property rights of Petron and Pilipinas Shell
SEVENTH
DAY
ADVENTIST CONFERENCE CHURCH OF
SOUTHERN PHILIPPINES, INC., and/or represented by MANASSEH C.

ARRANGUEZ, BRIGIDO P. GULAY, FRANCISCO M. LUCENARA,

DIONICES O. TIPGOS, LORESTO C. MURILLON, ISRAEL C. NINAL,
GEORGE G. SOMOSOT, JESSIE T. ORBISO, LORETO PAEL and JOEL
BACUBAS, petitioners vs. NORTHEASTERN MINDANAO MISSION OF
SEVENTH DAY ADVENTIST, INC., and/or represented by JOSUE A.
LAYON, WENDELL M. SERRANO, FLORANTE P. TY and JETHRO
CALAHAT and/or SEVENTH DAY ADVENTIST CHURCH [OF]
NORTHEASTERN MINDANAO MISSION, Respondents
G.R. No. 150416

July 21, 2006

FACTS: This case involves two supposed transfers of the lot previously owned
by the spouses Cosio. The first transfer was a donation to petitioners alleged
predecessors-in-interest in 1959 while the second transfer was through a
contract of sale to respondents in 1980. A TCT was later issued in the name
of respondents. Claiming to be the alleged donees successors-in-interest,
petitioners filed a case for cancellation of title, quieting of ownership and
possession, declaratory relief and reconveyance with prayer for preliminary
injunction and damages against respondents. Respondents, on the other
hand, argued that at the time of the donation, petitioners predecessors-ininterest has no juridical personality to accept the donation because it was
not yet incorporated. Moreover, petitioners were not members of the local
church then.
The RTC upheld the sale in favor of respondents, which was affirmed by
the Court of Appeals, on the ground that all the essential requisites of a
contract were present and it also applied the indefeasibility of title.
ISSUE: Whether or not the donation was void.
HELD: Yes, the donation was void because the local church had neither
juridical personality nor capacity to accept such gift since it was inexistent at
the time it was made.
The Court denied petitioners contention that there exists a de facto
corporation. While there existed the old Corporation Law (Act 1459), a law
under which the local church could have been organized, petitioners
admitted that they did not even attempt to incorporate at that time nor the
organization was registered at the Securities and Exchange Commission.
Hence, petitioners obviously could not have claimed succession to an entity

that never came to exist. And since some of the representatives of petitioner
Seventh Day Adventist Conference Church of Southern Philippines, Inc. were
not even members of the local church then, it necessarily follows that they
could not even claim that the donation was particularly for them.
Coastal Pacific Trading, Inc. vs. Southern Rolling Mills Co.
G.R. No. 118692
July 28, 2006
FACTS: Southern Rolling Mills was renamed into Visayan Integrated Steel
Corp (VISCO). On Dec. 11, 1961-VISCO obtained a loan from DBP amounting
to P836,000. It was secured by a Real Estate Mortgage covering VISCO's 3
parcels of land including the machinery and equipments therein. Second
Loan: VISCO entered a Loan Agreement with respondent banks ( referred as
"Consortium") to finance its importation for various raw materials. VISCO
executed a second mortgage over the previous properties mentioned,
however they were unrecorded VISCO was unable to pay its second
mortgage with the consortium, which resulted in the latter acquiring 90% of
the equity of VISCO giving the Consortium the control and management of
VISCO. Despite the acquisition, VISCO still remained indebted to the
Consortium.
Transaction to Coastal: Between 1964 to 1965, VISCO entered a processing
agreement with Coastal wherein Coastal delivered 3,000 metric tons of hot
rolled steel coils which VISCO would process into block iron sheets. However,
VISCO was only able to return 1,600 metric tons of those sheets.
On the loan to DBP: To pay its first mortgage with DBP, VISCO sold 2 of its
generators to FILMAG Phils, Inc. DBP executed a Deed of Assignment of the
mortgage in favor of the consortium. The Consortium foreclosed the
mortgage and was the highest bidder in an auction sale of VISCO's
properties. The Consortium later sold the properties in favor of National Steel
Corporation.
Coastal files a civil action for Annulment or Rescission of Sale, Damages with
Preliminary Injunction. Coastal imputes bad faith on the action of the
Consortium, the latter being able to sell the properties of VISCO despite the
attachment of the properties, placing them beyond the reach of VISCO's
other creditors.
The lower court ruled in favor of VISCO, declaring the sale valid and legal.
The CA affirmed this.
ISSUE 1: Whether the consortium disposed VISCO's assets in fraud of
creditors?

HELD: Yes. What the consortium did was to pay to them the proceeds from
the sale of the generator sets which in turn they used to pay DBP. Due to the
Deed of Assignment issued by DBP, the respondent banks recovered what
they remitted to DBP & it allowed the Consortium to acquire DBP's primary
lien on the mortgaged properties. Allowing them as unsecured creditors ( as
the mortgage was unrecorded) to foreclose on the assets of the corporation
without regard to inferior claims
ISSUE 2: Whether petitioner is entitled to moral damages?
No. As a rule, a corporation is not entitled to moral damages because, not
being a natural person, it cannot experience physical suffering or sentiments
like wounded feelings, serious anxiety, mental anguish and moral shock. The
only exception to this rule is when the corporation has a good reputation that
is debased, resulting in its humiliation in the business realm. In the present
case, the records do not show any evidence that the name or reputation of
petitioner has been sullied as a result of the Consortium's fraudulent acts.
Accordingly, moral damages are not warranted.
Petitioner was able to recover exemplary damages.

Ching v The Secretary of Justice G. R. No. 164317 February

6, 2006
The failure of person to turn over the proceeds of the sale of the
goods covered by the trust receipt to the entruster or to return said
goods, if not sold, is a public nuisance to be abated by the
imposition of penal sanctions
Facts: Ching was the Senior Vice-President of Philippine Blooming Mills, Inc.
(PBMI). Sometime in September to October 1980, PBMI, through petitioner,
applied with the Rizal Commercial Banking Corporation (respondent bank) for
the issuance of commercial letters of credit to finance its importation of
assorted goods. Under the receipts, petitioner agreed to hold the goods in
trust for the said 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 thereof as soon as received, to apply against the relative
acceptances and payment of other indebtedness to respondent bank. In case
the goods remained unsold within the specified period, the goods were to be
returned to respondent bank without any need of demand. Thus, said
goods, manufactured products or proceeds thereof, whether in the form of
money or bills, receivables, or accounts separate and capable of

identification were respondent banks property. When the trust receipts

matured, petitioner failed to return the goods to respondent bank, or to
return their value amounting to P6,940,280.66 despite demands. Thus, the
bank filed a criminal complaint for estafa 6 against petitioner in the Office of
the City Prosecutor of Manila.
Issue: Whether or not Ching is liable for Estafa
Held: In the case at bar, the transaction between petitioner and respondent
bank falls under the trust receipt transactions envisaged in P.D. No. 115.
Respondent bank imported the goods and entrusted the same to PBMI under
the trust receipts signed by petitioner, as entrustee, with the bank as
entruster. The failure of person to turn over the proceeds of the sale of the
goods covered by the trust receipt to the entruster or to return said goods, if
not sold, is a public nuisance to be abated by the imposition of penal
sanctions.It must be stressed that P.D. No. 115 is a declaration by
legislative authority that, as a matter of public policy, the failure of person to
turn over the proceeds of the sale of the goods covered by a trust receipt or
to return said goods, if not sold, is a public nuisance to be abated by the
imposition of penal sanctions.
Failure of the entrustee to turn over the proceeds of the sale of the goods
covered by the trust receipts to the entruster or to return said goods if they
were not disposed of in accordance with the terms of the trust receipt is a
crime under P.D. No. 115, without need of proving intent to defraud.In
Colinares v. Court of Appeals, the Court declared that there are two possible
situations in a trust receipt transaction. The first is covered by the provision
which refers to money received under the obligation involving the duty to
deliver it (entregarla) to the owner of the merchandise sold. The second is
covered by the provision which refers to merchandise received under the
obligation to return it (devolvera) to the owner. Thus, failure of the entrustee
to turn over the proceeds of the sale of the goods cov- ered by the trust
receipts to the entruster or to return said goods if they were not disposed of
in accordance with the terms of the trust receipt is a crime under P.D. No.
115, without need of proving intent to defraud. The law punishes dishonesty
and abuse of confidence in the handling of money or goods to the prejudice
of the entruster, regardless of whether the latter is the owner or not. A mere
failure to deliver the proceeds of the sale of the goods, if not sold, constitutes
a criminal offense that causes prejudice, not only to another, but more to the
public interest.
P.D. No. 115 is malum prohibitum but is classified as estafa under paragraph
1(b), Article 315 of the Revised Penal Code, or estafa with abuse of
confidence.The crime defined in P.D. No. 115 is malum prohibitum but is
classified as estafa under paragraph 1(b), Article 315 of the Revised Penal

Code, or estafa with abuse of confidence. It may be committed by a

corporation or other juridical entity or by natural persons. However, the
penalty for the crime is imprisonment for the periods provided in said Article
315.