1. Tayag v.

Benguet Consolidated
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.

Issue/s:
● 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).
a) 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.
a) The incorporators were all family members of Jose Villarama.
4) VRTI was then registered in the SEC.
a) Then bought 5 CPCs and 49 buses from a certain Valentin Fernando.
5) VRTI and Fernando then applied with the PSC for its approval.
a) 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.
a) 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.
a) 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.
a) PSC provisionally awarded it to Pantranco.
b) VRTI appealed to the SC
i) 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.
a) Because the contract pursuant to which VRTI acquired them from Fernando was subject to a suspensive condition:
i) 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.
a) Also held that VRTI is a distinct and separate entity from Jose Villarama .
b) 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.
i) 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.
ii) 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:
a) Villarama supplied the organization expenses and the assets of the Corporation, such as trucks and equipments;
b) 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;
c) Villarama made use of the money of the Corporation and deposited them to his private accounts;
d) 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.
a) They show beyond doubt that the Corporation is his alter ego.
b) 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.
i) On the contrary, he has admitted them with offered excuses.
c) 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 with the ends and purposes of the Corporation Law, which, precisely, seeks to separate personal
responsibilities from corporate undertakings.
 a) 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.
a) 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.
a) 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).
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.

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.
○ 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 Spanish1 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.
○ that the order under which the process was issued was void
○ 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.
○ 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
○ that issuance and service of the process were authorized by no law and thus void
○ 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.
○ 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.
○ To bring a corporation into court criminally requires many additions to the present criminal procedure.

1 'First. For some time past various rumors are current to the effect that the Insular Life Insurance Company is not in as good a condition as it should be
at the present time, and that really it is in bad shape. Nevertheless, the investigations made by the representative of the "Bulletin" have failed fully to
confirm these rumors. It is known that the Insular Auditor has examined the books of the company and has found that its capital has diminished, and that
by direction of the said official the company has decided to double the amount of its capital, and also to pay its reserve fund. All this is true.'
 ○ 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.
○ 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.
○ 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:
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 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.

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.
○ 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.
 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.
a) 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
a) 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.
b) 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.
○ 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.
 ○ 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 and distinct from the person of its
officers, directors and stockholders.
○ 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.
○ 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 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 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.
a) Ching, as Vice-President of PBMI, signed 13 trust receipts as surety acknowledging the delivery of the imported
goods.
b) 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):
a) Prosecutor found probable cause
b) Petitioner appealed to Minister of justice - denied
c) Petitioner filed a Motion for Reconsideration - granted
i) Minister ordered prosecutor to file a motion for withdrawal
d) Bank filed a motion for reconsideration with Minister of Justice - denied
e) RTC granted petitioner’s subsequent Motion to Quash the Information on the ground that the material allegations
do not amount to estafa.
5) The SC rendered judgment in Allied Banking Corporation v. Ordonez during the pendency of this case.
a) 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.
b) 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
a) Prosecutor found no probable cause since petitioner’s liability was only civil and not criminal
b) 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
a) Petitioner alleged that the transaction between PBMI and Rizal Banking Commercial Corporation does not fall
under PD 115.
 b) 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,”