ALBERT VS UNIVERSITY PUBLISHING CO., INC. (Jan.

30, 1965)
Mariano Albert entered into a contract with University Publishing Co., Inc. through Jose
M. Aruego, its President, whereby University would pay plaintiff for the exclusive right to
publish his revised Commentaries on the Revised Penal Code. The contract stipulated that
failure to pay one installment would render the rest of the payments due. When University failed
to pay the second installment, Albert sued for collection and won. However, upon execution, it
was found that University was not registered with the SEC. Albert petitioned for a writ of
execution against Jose M. Aruego as the real defendant. University opposed, on the ground that
Aruego was not a party to the case.
The Supreme Court found that Aruego represented a non-existent entity and induced not
only Albert but the court to believe in such representation. Aruego, acting as representative of
such non-existent principal, was the real party to the contract sued upon, and thus assumed such
privileges and obligations and became personally liable for the contract entered into or for other
acts performed as such agent.
The Supreme Court likewise held that the doctrine of corporation by estoppel cannot be
set up against Albert since it was Aruego who had induced him to act upon his (Aruego's) willful
representation that University had been duly organized and was existing under the law.

In 1992, ABS-CBN Broadcasting Corporation, through its vice president Charo SantosConcio, requested Viva Production, Inc. to allow ABS-CBN to air at least 14 films produced
by Viva. Pursuant to this request, a meeting was held between Vivas representative
(Vicente Del Rosario) and ABS-CBNs Eugenio Lopez (General Manager) and SantosConcio was held on April 2, 1992. During the meeting Del Rosario proposed a film package
which will allow ABS-CBN to air 104 Viva films for P60 million. Later, Santos-Concio, in a
letter to Del Rosario, proposed a counterproposal of 53 films (including the 14 films initially
requested) for P35 million. Del Rosario presented the counter offer to Vivas Board of
Directors but the Board rejected the counter offer. Several negotiations were subsequently
made but on April 29, 1992, Viva made an agreement with Republic Broadcasting
Corporation (referred to as RBS or GMA 7) which gave exclusive rights to RBS to air 104
Viva films including the 14 films initially requested by ABS-CBN.
ABS-CBN now filed a complaint for specific performance against Viva as it alleged that
there is already a perfected contract between Viva and ABS-CBN in the April 2, 1992
meeting. Lopez testified that Del Rosario agreed to the counterproposal and he (Lopez)
even put the agreement in a napkin which was signed and given to Del Rosario. ABS-CBN
also filed an injunction against RBS to enjoin the latter from airing the films. The injunction
was granted. RBS now filed a countersuit with a prayer for moral damages as it claimed that

its reputation was debased when they failed to air the shows that they promised to their
viewers. RBS relied on the ruling in People vs Manero and Mambulao Lumber vs PNB
which states that a corporation may recover moral damages if it has a good reputation that
is debased, resulting in social humiliation. The trial court ruled in favor of Viva and RBS.
The Court of Appeals affirmed the trial court.
ISSUE:
1.
Whether or not a contract was perfected in the April 2, 1992 meeting between the
representatives
of
the
two
corporations.
2.
Whether or not a corporation, like RBS, is entitled to an award of moral damages
upon grounds of debased reputation.
HELD:
1. No. There is no proof that a contract was perfected in the said meeting. Lopez testimony
about the contract being written in a napkin is not corroborated because the napkin was
never produced in court. Further, there is no meeting of the minds because Del Rosarios
offer was of 104 films for P60 million was not accepted. And that the alleged counter-offer
made by Lopez on the same day was not also accepted because theres no proof of such.
The counter offer can only be deemed to have been made days after the April 2 meeting
when Santos-Concio sent a letter to Del Rosario containing the counter-offer. Regardless,
there was no showing that Del Rosario accepted. But even if he did accept, such
acceptance will not bloom into a perfected contract because Del Rosario has no authority to
do so.
As a rule, corporate powers, such as the power; to enter into contracts; are exercised by the
Board of Directors. But this power may be delegated to a corporate committee, a corporate
officer or corporate manager. Such a delegation must be clear and specific. In the case at
bar, there was no such delegation to Del Rosario. The fact that he has to present the
counteroffer to the Board of Directors of Viva is proof that the contract must be accepted
first by the Vivas Board. Hence, even if Del Rosario accepted the counter-offer, it did not
result to a contract because it will not bind Viva sans authorization.
2. No. The award of moral damages cannot be granted in favor of a corporation because,
being an artificial person and having existence only in legal contemplation, it has no
feelings, no emotions, no senses, It cannot, therefore, experience physical suffering and
mental anguish, which call be experienced only by one having a nervous system. No moral
damages can be awarded to a juridical person. The statement in the case of People vs

Manero and Mambulao Lumber vs PNB is a mere obiter dictum hence it is not binding as a
jurisprudence.

G. R. No. 164317
February 6, 2006
ALFREDO CHING, Petitioner,
vs.
THE SECRETARY OF JUSTICE, ASST. CITY PROSECUTOR ECILYN BURGOSVILLAVERT, JUDGE EDGARDO SUDIAM of the Regional Trial Court, Manila,
Branch 52; RIZAL COMMERCIAL BANKING CORP. and THE PEOPLE OF THE
PHILIPPINES, Respondents.
Lessons Applicable: Corp. Officers or employees, through whose act, default or
omission the corp. commits a crime, are themselves individually guilty of the crime
(Corporate Law)
FACTS:
Sept-Oct 1980: PBMI, through Ching, Senior VP of Philippine Blooming Mills, Inc.
(PBMI), applied with the Rizal Commercial Banking Corporation (RCBC) for the
issuance of commercial letters of credit to finance its importation of assorted goods
RCBC approved the application, and irrevocable letters of credit were issued in favor
of Ching. The goods were purchased and delivered in trust to PBMI. Ching signed
13 trust receipts as surety, acknowledging delivery of the goods
Under the receipts, Ching agreed to hold the goods in trust for RCBC, with authority
to sell but not by way of conditional sale, pledge or otherwise 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 RCBC without any need of demand goods, manufactured products or
proceeds thereof, whether in the form of money or bills, receivables, or accounts
separate and capable of identification - RCBCs property
When the trust receipts matured, Ching failed to return the goods to RCBC, or to
return their value amounting toP6,940,280.66 despite demands.
RCBC filed a criminal complaint for estafa against petitioner in the Office of the City
Prosecutor of Manila.
December 8, 1995: no probable cause to charge petitioner with violating P.D. No.
115, as petitioners liability was only civil, not criminal, having signed the trust
receipts as surety
RCBC appealed the resolution to the Department of Justice (DOJ) via petition for
review

On July 13, 1999: reversed the assailed resolution of the City Prosecutor execution
of said receipts is enough to indict the Ching as the official responsible for violation
of P.D. No. 115
April 22, 2004: CA dismissed the petition for lack of merit and on procedural
grounds. Ching filed a petition for certiorari, prohibition and mandamus with the CA
ISSUE: W/N Ching should be held criminally liable.
HELD: YES. DENIED for lack of merit
There is no dispute that it was the Ching executed the 13 trust receipts. law points
to him as the official responsible for the offense Since a corporation CANNOT be
proceeded against criminally because it CANNOT commit crime in which personal
violence or malicious intent is required, criminal action is limited to the corporate
agents guilty of an act amounting to a crime and never against the corporation
itself
execution by Ching of receipts is enough to indict him as the official responsible for
violation of PD 115
RCBC is estopped to still contend that PD 115 covers only goods which are
ultimately destined for sale and not goods, like those imported by PBM, for use in
manufacture. Moreover, PD 115 explicitly allows the prosecution of corporate
officers without prejudice to the civil liabilities arising from the criminal offense
thus, the civil liability imposed on respondent in RCBC vs. Court of Appeals case is
clearly separate and distinct from his criminal liability under PD 115. Chings being a
Senior Vice-President of the Philippine Blooming Mills does not exculpate him from
any liability
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. The law specifically makes the officers, employees or
other officers or persons responsible for the offense, without prejudice to the civil
liabilities of such corporation and/or board of directors, officers, or other officials or
employees responsible for the offense
RATIONALE : officers or employees are vested with the authority and responsibility
to devise means necessary to ensure compliance with the law and, if they fail to do
so, are held criminally accountable; thus, they have a responsible share in the
violations of the law.
If the crime is committed by a corporation or other juridical entity, the directors,
officers, employees or other officers thereof responsible for the offense shall be
charged and penalized for the crime, precisely because of the nature of the crime
and the penalty therefor. A corporation cannot be arrested and imprisoned; hence,
cannot be penalized for a crime punishable by imprisonment.
However, a
corporation may be charged and prosecuted for a crime if the imposable penalty is
fine. Even if the statute prescribes both fine and imprisonment as penalty, a
corporation may be prosecuted and, if found guilty, may be fined.

When a criminal statute designates an act of a corporation or a crime and

prescribes punishment therefor, it creates a criminal offense which, otherwise,
would not exist and such can be committed only by the corporation. But when a
penal statute does not expressly apply to corporations, it does not create an offense
for which a corporation may be punished. On the other hand, if the State, by
statute, defines a crime that may be committed by a corporation but prescribes the
penalty therefor to be suffered by the officers, directors, or employees of such
corporation or other persons responsible for the offense, only such individuals will
suffer such penalty. Corporate officers or employees, through whose act, default or
omission the corporation commits a crime, are themselves individually guilty of the
crime. The principle applies whether or not the crime requires the consciousness of
wrongdoing. It applies to those corporate agents who themselves commit the crime
and to those, who, by virtue of their managerial positions or other similar relation to
the corporation, could be deemed responsible for its commission, if by virtue of
their relationship to the corporation, they had the power to prevent the act. Benefit
is not an operative fact.