HARRY S. STONEHILL, ROBERT P. BROOKS, JOHN J.

BROOKS and KARL BECK, petitioners,

vs.
HON. JOSE W. DIOKNO, in his capacity as SECRETARY OF JUSTICE; JOSE LUKBAN, in his capacity
as Acting Director, National Bureau of Investigation; SPECIAL PROSECUTORS PEDRO D. CENZON,
EFREN I. PLANA and MANUEL VILLAREAL, JR. and ASST. FISCAL MANASES G. REYES; JUDGE
AMADO ROAN, Municipal Court of Manila; JUDGE ROMAN CANSINO, Municipal Court of
Manila; JUDGE HERMOGENES CALUAG, Court of First Instance of Rizal-Quezon City Branch, and
JUDGE DAMIAN JIMENEZ, Municipal Court of Quezon City, respondents.

G.R. No. L-19550. June 19, 1967.

FACTS:

Stonehill et al, herein petitioners, and the corporations they form were
alleged to have committed acts in “violation of Central Bank Laws, Tariff and
Customs Laws, Internal Revenue (Code) and Revised Penal Code.”

Respondents issued, on different dates, 42 search warrants against

petitioners personally, and/or corporations for which they are officers
directing peace officers to search the persons of petitioners and premises of
their offices, warehouses and/or residences to search for personal
properties “books of accounts, financial records, vouchers, correspondence,
receipts, ledgers, journals, portfolios, credit journals, typewriters, and other
documents showing all business transactions including disbursement
receipts, balance sheets and profit and loss statements and Bobbins
(cigarette wrappers)” as the subject of the offense for violations of Central
Bank Act, Tariff and Customs Laws, Internal Revenue Code, and Revised
Penal Code.

  The documents, papers, and things seized under the alleged authority of the
warrants in question may be split into (2) major groups, namely:

(a) those found and seized in the offices of the aforementioned

corporations and

(b) those found seized in the residences of petitioners herein.

On March 20, 1962, said petitioners filed with the Supreme Court this
original action for certiorari, prohibition, mandamus and injunction, and
prayed that, pending final disposition of the present case, a writ of
preliminary injunction be issued restraining Respondents, their agents
and /or representatives from using the effects seized.

Petitioners averred that the warrant is null and void for being violative of the
constitution and the Rules of court by:

(1) not describing with particularity the documents, books and things to

be seized;

(2) money not mentioned in the warrants were seized;

(3) the warrants were issued to fish evidence for deportation cases filed
against the petitioner;

(5) the documents paper and cash money were not delivered to the
issuing courts for disposal in accordance with law.

The prosecution counters that the search warrants are valid and issued in
accordance with law; The defects of said warrants were cured by petitioners’
consent; and in any event, the effects are admissible regardless of the
irregularity.

On March 22, 1962, the Court granted the petition and issued the writ of
preliminary injunction. However, by a re solution, the writ was partially
lifted, dissolving insofar as paper and things seized from the offices of the
corporations.

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

RULING: No. The petitioners cannot assail the validity of the search warrant
issued against their corporation because petitioners are not the proper party.
As regards the first group, those found and seized in the offices of the
aforementioned corporations, we hold that petitioners herein have no cause
of action to assail the legality of the contested warrants and of the seizures
made in pursuance thereof, for the simple reason that said corporations
have their respective personalities, separate and distinct from the
personality of herein petitioners, regardless of the amount of shares of stock
or of the interest of each of them in said corporations, and whatever the
offices they hold therein may be. 

With respect to the documents, papers and things seized in the residences of petitioners herein,
the aforementioned resolution of June 29, 1962, lifted the writ of preliminary injunction
previously issued by this Court, 12 thereby, in effect, restraining herein Respondents-Prosecutors
from using them in evidence against petitioners herein.

Indeed, it is well settled that the legality of a seizure can be

contested only by the party whose rights have been impaired thereby, and
that the objection to an unlawful search and seizure is purely personal and
cannot be availed of by third parties. Consequently, petitioners herein may
not validly object to the use in evidence against them of the documents,
papers and things seized from the offices and premises of the corporations
adverted to above, since the right to object to the admission of said papers
in evidence belongs exclusively to the corporations, to whom the seized
effects belong, and may not be invoked by the corporate officers in
proceedings against them in their individual capacity. 

In the case of Remus vs. United States, it was ruled that “the Government's
action in gaining possession of papers belonging to the corporation did not
relate to nor did it affect the personal defendants. If these papers were
unlawfully seized and thereby the constitutional rights of or any one were
invaded, they were the rights of the corporation and not the rights of the
other defendants.”

Furthermore, the same decision was made in the case of A Guckenheimer &
Bros. Co. vs. United States which stated that “the question of the
admissibility of the evidence based on an alleged unlawful search and
seizure does not extend to the personal defendants but
embraces only the corporation whose property was taken.”
BACHE & CO. (PHIL.), INC. and FREDERICK E. SEGGERMAN,
Petitioners, v. HON. JUDGE VIVENCIO M. RUIZ, MISAEL P. VERA, in
his capacity as Commissioner of Internal Revenue, ARTURO
LOGRONIO, RODOLFO DE LEON, GAVINO VELASQUEZ, MIMIR
DELLOSA, NICANOR ALCORDO, JOHN DOE, JOHN DOE, JOHN DOE,
and JOHN DOE, Respondents.

G.R. No. L-32409. February 27, 1971.

Facts:

On 24 February 1970, Misael P. Vera, Commissioner of Internal Revenue,

wrote a letter addressed to Judge Vivencio M. Ruiz requesting the issuance
of a search warrant against Bache & Co. (Phil.), Inc. and Frederick E.
Seggerman for violation of Section 46(a) of the National Internal Revenue
Code (NIRC), in relation to all other pertinent provisions thereof, particularly
Sections 53, 72, 73, 208 and 209, and authorizing Revenue Examiner
Rodolfo de Leon to make and file the application for search warrant which
was attached to the letter.

In the afternoon of the following day, De Leon and his witness, Arturo
Logronio, went to the Court of First Instance (CFI) of Rizal. They brought
with them the following papers: Vera’s letter-request; an application for
search warrant already filled up but still unsigned by De Leon; an affidavit of
Logronio subscribed before De Leon; a deposition in printed form of Logronio
already accomplished and signed by him but not yet subscribed; and a
search warrant already accomplished but still unsigned by Judge.

At that time the Judge was hearing a certain case; so, by means of a note,
he instructed his Deputy Clerk of Court to take the depositions of De Leon
and Logronio.

After the session had adjourned, the Judge was informed that the
depositions had already been taken. The stenographer, upon request of the
Judge, read to him her stenographic notes; and thereafter, the Judge asked
Logronio to take the oath and warned him that if his deposition was found to
be false and without legal basis, he could be charged for perjury.

The Judge signed de Leon’s application for search warrant and Logronio’s
deposition. Search Warrant 2-M-70 was then signed by Judge and
accordingly issued. Three days later (a Saturday), the BIR agents served the
search warrant to the corporation and Seggerman at the offices of the
corporation on Ayala Avenue, Makati, Rizal.

The corporation’s lawyers protested the search on the ground that no formal
complaint or transcript of testimony was attached to the warrant. The agents
nevertheless proceeded with their search which yielded 6 boxes of
documents.

COURT OF FIRST INSTANCE

On 3 March 1970, the corporation and Seggerman filed a petition with the
Court of First Instance (CFI) of Rizal praying that the search warrant be
quashed, dissolved or recalled, that preliminary prohibitory and mandatory
writs of injunction be issued, that the search warrant be declared null and
void, and that Vera, Logronio, de Leon, et. al., be ordered to pay the
corporation and Seggerman, jointly and severally, damages and attorney’s
fees.

After hearing and on 29 July 1970, the court issued an order dismissing the
petition for dissolution of the search warrant. In the meantime, or on 16
April 1970, the Bureau of Internal Revenue made tax assessments on the
corporation in the total sum of P2,594,729.97, partly, if not entirely, based
on the documents thus seized.

Hence, the corporation and Seggerman filed an action for certiorari,

prohibition, and mandamus.

ISSUE: Whether the corporation has the right to contest the legality of the
seizure of documents from its office.

RULING: Yes.

The Supreme Court cited the case of Hale v. Henkel and ruled that “we are
of the opinion that an officer of a corporation which is charged with a
violation of a statute of the state of its creation, or of an act of Congress
passed in the exercise of its constitutional powers, cannot refuse to produce
the books and papers of such corporation, we do not wish to be understood
as holding that a corporation is not entitled to immunity… against
unreasonable searches and seizures. A corporation is, after all, but an
association of individuals under an assumed name and with a distinct legal
entity. In organizing itself as a collective body it waives no constitutional
immunities appropriate to such body. Its property cannot be taken without
compensation. It can only be proceeded against by due process of law, and
is protected… , against unlawful discrimination…”

The distinction between the Stonehill case and the present case is that: in
the former case, only the officers of the various corporations in whose offices
documents, papers and effects were searched and seized were the
petitioners; while in the latter, the corporation to whom the seized
documents belong, and whose rights have thereby been impaired, is itself a
petitioner. On that score, the corporation herein stands on a different footing
from the corporations in Stonehill.

Moreover, herein, the search warrant was void inasmuch as;

First, there was no personal examination conducted by the Judge of the

complainant (De Leon) and his witness (Logronio). (Required under Rule
126, Sec. 4 A search warrant shall not issue except upon probable cause in connection
with one specific offense to be determined personally by the judge after examination under
oath or affirmation of the complainant and the witnesses he may produce, and particularly
describing the place to be searched and the things to be seized which may be anywhere in
the Philippines.)

Second, the search warrant was issued for more than one specific offense.
The search warrant was issued for at least 4 distinct offenses under the Tax
Code.

Lastly, the search warrant does not particularly describe the things to be
seized. Search Warrant No. 2-M-70 tends to defeat the major objective of
the Bill of Rights, i.e., the elimination of general warrants, for the language
used therein is so all-embracing as to include all conceivable records of the
corporation, which, if seized, could possibly render its business inoperative.

Thus, Search Warrant 2-M-70 is null and void.

BATAAN SHIPYARD & ENGINEERING CO., INC. (BASECO), petitioner,

vs.

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, CHAIRMAN

JOVITO SALONGA, COMMISSIONER MARY CONCEPCION BAUTISTA,
COMMISSIONER RAMON DIAZ, COMMISSIONER RAUL R. DAZA,
COMMISSIONER QUINTIN S. DOROMAL, CAPT. JORGE B. SIACUNCO,
et al., respondents.

By virtue of E.O.s 1 and 2, respondent PCGG issued a sequestration order over

petitioner corporation among various other companies. As a result, Petitioner’s
president and other officers were directed to surrender various company documents,
PCGG officers exercised management and ownership rights over petitioner and its
assets, various contracts were entered into, altered, cancelled, or not honored in the
petitioner’s name, and the corporation would eventually be placed under a provisional
takeover with all officers recommended to be terminated.

Petitioner corporation was previously pointed out as having been under the control of
the Marcos Regime and possibly used in securing his ill-gotten wealth.

Among other defenses, petitioner corporation claims the order to surrender various
documents pertaining to its business dealings during the Marcos Regime infringed on its
constitutional right against self-incrimination. Furthermore, they claim such E.O.s
constitute a bill of attainder as they believe the orders painted them as guilty and
penalized them for alleged connections to ill-gotten wealth without the benefit of a
judicial proceeding.

Petitioner now asks the court to declare E.O. 1 and 2 unconstitutional, and annul the
sequestration order as well as other orders based thereon.

Issues

1.) Whether or not E.O. 1 and 2, as well as the sequestration order are valid
2.) Whether or not the sequestration and takeover orders were justified
3.) Whether or not the E.O.s constitute a bill of attainder
4.) Whether or not the PCGG violated petitioner corporation’s right against self-
incrimination

Ruling
1

Yes, the Court held that there can be no debate about the validity and eminent
propriety of the Government's plan "to recover all ill-gotten wealth." Assuming the
factual premises for implementation of the executive orders are demonstrable by
proper evidence. The recovery from Marcos, his family and his dominions of the
assets and properties involved, is not only a right but a duty on the part of
Government.

However, the factual premises of the Executive Orders cannot simply be assumed.
They will have to be duly established by adequate proof in each case, in a proper
judicial proceeding.

In this case, evidence submitted to the Court by the Solicitor General proves that
President Marcos not only exercised control over BASECO, but also that he actually
owns well nigh one hundred percent of its outstanding stock. Such evidence
included deeds of assignment by various corporations over shares in petitioner
corporation being found in Malacanang when Marcos fled the palace.

Yes, the orders were justified. The Court held that there was affirmative showing that
the officers and stockholders of petitioner corporation were mere "dummies,"
nominees or alter egos of President Marcos; at any rate, that they are no longer
owners of any shares of stock in the corporation, the conclusion cannot be avoided
that said stockholders and directors have no basis and no standing whatever to
cause the filing and prosecution of the instant proceeding.

Therefore, the situation justified the sequestration as well as the provisional takeover
of the corporation in the public interest, in accordance with the terms of Executive
Orders No. 1 and 2.

No, the executive orders do not constitute a bill of attainder. In the first place,
nothing in the executive orders can be reasonably construed as a determination or
declaration of guilt. On the contrary, the executive orders, inclusive of Executive
Order No. 14, make it perfectly clear that any judgment of guilt in the amassing or
acquisition of "ill-gotten wealth" is to be handed down by a judicial tribunal, in this
case, the Sandiganbayan. In the second place, no punishment is inflicted by the
executive orders, as the merest glance at their provisions will immediately make
apparent.

No, It is elementary that the right against self-incrimination has no application to

juridical persons. While an individual may lawfully refuse to answer incriminating
questions unless protected by an immunity statute, it does not follow that a
corporation, vested with special privileges and franchises, may refuse to show its
hand when charged with an abuse of such privileges.

The corporation is a creature of the state. It is presumed to be incorporated for the

benefit of the public. It received certain special privileges and franchises, and holds
them subject to the laws of the state and the limitations of its charter. Its powers are
limited by law. It can make no contract not authorized by its charter. Its rights to act
as a corporation are only preserved to it so long as it obeys the laws of its creation.
There is a reserve right in the legislature to investigate its contracts and find out
whether it has exceeded its powers.

Corporations are not entitled to all of the constitutional protections which private
individuals have. It is also settled that an officer of the company cannot refuse to
produce its records in its possession upon the plea that they will either incriminate
him or may incriminate it.
 Professional Service, Inc., vs CA

Facts: Petitioner Professional Services, Inc. (PSI) seeks to modify the

January 31, 2007 decision of the Supreme Court en banc affirming its
vicarious and direct liability for damages to respondents Enrique Agana and
heirs of Natividad Egana. To recall the salient facts, PSI, together with Dr.
Miguel Ampil (Ampil) and Dr. Juan Fuentes, was impleaded by Enrique
Agana and Natividad Agana, in a complaint, for the injuries suffered by
Natividad when Dr. Ampil and Dr. Fuentes neglected to remove from her
body two gauzes which were used in the surgery they performed on her at
the Medical City General Hospital. PSI was impleaded as owner, operator
and manager of the hospital.

The Supreme Court premised its 2007 decision as to the direct liability of the
PSI to the Aganas on the following facts and law:

First, there was an employer-employee relationship that existed between PSI

and Dr. Ampil. This conclusion was based on the decision in Ramos vs CA
that “for purposes of allocating responsibility in medical negligence cases,
employer-employee relationship exists between hospitals and their
consultants.” Although the Court in Ramos reversed its earlier decision on
the existence of an employment relationship between hospital and doctor, a
similar reversal was not warranted in the present case because the defense
raised by PSI is a mere general denial of control over the actions of Dr.
Ampil.
Second, PSI created a public impression that Dr. Ampil was its agent when it
accredited and advertised the latter’s qualifications. Enrique testified that it
was due to the accredition of Dr. Ampil with PSI that he conferred with said
doctor his wife’s (Natividad’s) condition. The spouses ended up availing Dr.
Ampil’s services with the belief that the latter was a staff member of a
prestigious hospital. Thus, under the doctrine of apparent authority applied
in the case of Nogales, et al. vs Capitol Medicare Center, et al., PSI was
liable for negligence of Dr. Ampil.

Finally, PSI being the owner and operator of Medical City General Hospital,
was bound by its duty to provide comprehensive medical services to
Natividad Agana, to exercise reasonable care to protect her from harm, and
to take active steps in fixing any form of negligence committed within its
hospital. When PSI failed to conduct and immediate investigation into the
reported missing gauzes, it had committed a serious breach of corporate
duty.

Issue: Whether PSI is liable to the Aganas under the priniciple of corporate
negligence for its failure to perform its duties as a hospital.

Ruling: Yes, PSI is liable to the Aganas under the priniciple of corporate
negligence for its failure to perform its duties as a hospital. The Supreme
Court notes that PSI made the following admission in its Motion for
Reconsideration:

In addition to noting the missing gauzes, regular

check-ups were made and no signs of complications
were exhibited during her stay at the hospital, which
could have alerted petitioner PSI's hospital to render
and provide post-operation services to and tread on Dr.
Ampil's role as the doctor of Mrs. Agana. The
absence of negligence of PSI from the patient's
admission up to her discharge is borne by the
finding of facts in this case. Likewise evident therefrom
is the absence of any complaint from Mrs. Agana after
her discharge from the hospital which had she brought
to the hospital's attention, could have alerted petitioner
PSI to act accordingly and bring the matter to Dr.
Ampil's attention. But this was not the case. Ms. Agana
 complained ONLY to Drs. Ampil and Fuentes, not the
hospital. How then could PSI possibly do something to
fix the negligence committed by Dr. Ampil when it was
not informed about it at all. 

PSI reiterated its admission when it stated that had Natividad Agana
"informed the hospital of her discomfort and pain, the hospital would have
been obliged to act on it."

The significance of the foregoing statements is critical.

First, they constitute judicial admission by PSI that while it had no power to
control the means or method by which Dr. Ampil conducted the surgery on
Natividad Agana, it had the power to review or cause the
review of what may have irregularly transpired within its walls strictly for
the purpose of determining whether some form of negligence may have
attended any procedure done inside its premises, with the ultimate
end of protecting its patients.

Second, it is a judicial admission that, by virtue of the nature of its

business as well as its prominence in the hospital industry, it assumed a
duty to "tread on" the "captain of the ship" role of any doctor rendering
services within its premises for the purpose of ensuring the safety of the
patients availing themselves of its services and facilities.

Third, by such admission, PSI defined the standards of its corporate

conduct under the circumstances of this case, specifically: (a) that it had a
corporate duty to Natividad even after her operation to ensure her safety
as a patient; (b) that its corporate duty was not limited to having its
nursing staff note or record the two missing gauzes and (c) that its
corporate duty extended to determining Dr. Ampil's role in it, bringing the
matter to his attention, and correcting his negligence. 

And finally, by such admission, PSI barred itself from arguing in its second
motion for reconsideration that the concept of corporate responsibility was
not yet in existence at the time Natividad underwent treatment; and that if
it had any corporate responsibility, the same was limited to reporting the
missing gauzes and did not include "taking an active step in fixing the
negligence committed." An admission made in the pleading cannot be
controverted by the party making such admission and is conclusive as to
him, and all proofs submitted by him contrary thereto or inconsistent
therewith should be ignored, whether or not objection is interposed by a
party. 

Given the standard of conduct that PSI defined for itself, the next

relevant inquiry is whether the hospital measured up to it. 

PSI excuses itself from fulfilling its corporate duty on the ground that Dr.
Ampil assumed the personal responsibility of informing Natividad about the
two missing gauzes.  Dr. Ricardo Jocson, who was part of the
group of doctors that attended to Natividad, testified that toward the
end of the surgery, their group talked about the missing gauzes but Dr.
Ampil assured them that he would personally notify the patient about
it. Furthermore, PSI claimed that there was no reason for it to act on the
report on the two missing gauzes because Natividad Agana showed no
signs of complications. She did not even inform the hospital about her
discomfort.

The excuses proffered by PSI are totally unacceptable.

To begin with, PSI could not simply wave off the problem and nonchalantly
delegate to Dr. Ampil the duty to review what transpired during the
operation. The purpose of such review would have been to pinpoint when,
how and by whom two surgical gauzes were mislaid so that necessary
remedial measures could be taken to avert any jeopardy to Natividad's
recovery. Certainly, PSI could not have expected that purpose to be
achieved by merely hoping that the person likely to have mislaid the
gauzes might be able to retrace his own steps. By its own
standard of corporate conduct, PSI's duty to initiate the review was non-
delegable.

While Dr. Ampil may have had the primary responsibility of notifying

Natividad about the missing gauzes, PSI imposed upon itself the separate
and independent responsibility of initiating the inquiry into the missing
gauzes. The purpose of the first would have been to apprise
Natividad of what transpired during her surgery, while the purpose of the
second would have been to pinpoint any lapse in procedure that led to the
gauze count discrepancy, so as to prevent a recurrence thereof and to
determine corrective measures that would ensure the safety of Natividad.
That Dr. Ampil negligently failed to notify Natividad did not release PSI
from its self-imposed separate responsibility.

Corollary to its non-delegable undertaking to review potential

incidents of negligence committed within its premises, PSI had the duty to
take notice of medical records prepared by its own staff and submitted to
its custody, especially when these bear earmarks of a surgery gone awry.
Thus, the record taken during the operation of Natividad which reported a
gauze count discrepancy should have given PSI sufficient reason to initiate
a review. It should not have waited for Natividad to complain. HDIATS

As it happened, PSI took no heed of the record of operation and

consequently did not initiate a review of what transpired during Natividad's
operation. Rather, it shirked its responsibility and passed it on to others —
to Dr. Ampil whom it expected to inform Natividad, and to Natividad herself
to complain before it took any meaningful step. By its inaction, therefore,
PSI failed its own standard of hospital care. It committed corporate
negligence.

It should be borne in mind that the corporate negligence ascribed to PSI is

different from the medical negligence attributed to Dr. Ampil. The
duties of the hospital are distinct from those of the doctor-consultant
practicing within its premises in relation to the patient; hence, the
failure of PSI to fulfill its duties as a hospital corporation gave rise to a
direct liability to the Aganas distinct from that of Dr. Ampil.
Espiritu vs. Petron Corp.

G.R. No. 170891, Nov. 24, 2009

FACTS:

Petron Corporation (PETRON) sold and distributed liquefied petroleum gas (LPG) in
cylinder tanks that carried its trademark Gasul. Respondent Carmen J. Doloiras owned and
operated Kristina Patricia Enterprises (KPE), the exclusive distributor of Gasul LPGs in the
whole of Sorsogon. Jose Nelson Doloiras (Jose) served as KPE’s manager. Bicol Gas Refilling
Plant Corporation (Bicol Gas) was also in the business of selling and distributing LPGs in
Sorsogon but theirs carried the trademark "Bicol Savers Gas." Petitioner Audie Llona managed
Bicol Gas.

Due to trade and competition, any given distributor of LPGs at times acquired possession
of LPG cylinder tanks belonging to other distributors operating in the same area, and called these
“captured cylinders”.

According to Jose, on April 2001, Bicol Gas agreed with KPE for the swapping of
"captured cylinders" since one distributor could not refill captured cylinders with its own brand
of LPG. In the course of implementing this arrangement, Jose visited the BICOL GAS refilling
plant and noticed several Gasul tanks in Bicol Gas possession. Jose requested a swap but Audie
Llona said that he first needed to ask the permission of the Bicol Gas owners. When the said
permission was given, they had a swap involving around 30 Gasul tanks held by Bicol Gas in
exchange for assorted tanks held by KPE. However, Jose noticed that Bicol Gas still had a
number of Gasul tanks in its yard and offered to make a swap for these but Llona declined saying
that Bicol Gas owners wanted to send those tanks to Batangas. Jose observed on almost a daily
basis that Bicol Gas trucks carried a load of Gasul tanks and had noted that KPEs volume of
sales dropped significantly from June to July 2001. On August 4, 2001, Jose saw a particular
Bicol Gas truck on the Maharlika Highway and that while the truck carried mostly Bicol Savers
LPG tanks, it als had on it one unsealed 50-kg Gasul tank and one 50-kg Shellane tank. Jose
followed the truck until it stopped at a store and asked. The driver, Jun Leorena, and the Bicol
Gas sales representative, Jerome Misal, admitted that the Gasul and Shellane tanks on their truck
belonged to a customer who had them filled up by Bicol Gas.

Because of the incident, KPE filed a complaint for violations of R.A. 623 (illegally filling
up registered cylinder tanks), as amended, and Sections 155 (infringement of trade marks)
and169.1 (unfair competition) of the Intellectual Property Code (R.A. 8293).

PROVINCIAL PROSECUTOR RULING:

There was a probable cause only for violation of R.A. 623 (unlawfully filling up
registered tanks), but only for the four Bicol Gas employees, Mirabena, Misal, Leorena, and
petitioner Llona. The charge against the other petitioners who were the stockholders and
directors of the company was dismissed.

OFFICE OF THE REGIONAL STATE PROSECUTOR, REGION V (Petron and KPE filed
a petition for review—Initially denied the petition but partially granted it on motion for
reconsideration):

Ordered the filing of additional information against the four employees of Bicol Gas for
unfair competition, however, ruled that no case for trade mark infringement was present.

SECRETARY OF JUSTICE:

Denied the appeal of Petron and KPE and their motion for reconsideration.

COURT OF APPEALS (Petron and KPE filed a special civil action for certiorari) :

The Court of Appeals reversed the Secretary of Justice’s ruling. Unfair competition does
not necessarily absorb trademark infringement. Consequently, the court ordered the filing of
additional charges of trademark infringement against the concerned Bicol Gas employees as
well. Since the Bicol Gas employees presumably acted under the direct order and control of its
owners, the Court of Appeals also ordered the inclusion of the stockholders of Bicol Gas in the
various charges, bringing to 16 the number of persons to be charged, now including petitioners
Manuel C. Espiritu, Jr., Freida F. Espiritu, Carlo F. Espiritu, Rafael F. Espiritu, Rolando M.
Mirabuna, Hermilyn A. Mirabuna, Kim Roland A. Mirabuna, Kaye Ann A. Mirabuna, Ken Ryan
A. Mirabuna, Juanito P. de Castro, Geronima A. Almonite, and Manuel C. Dee (together with
Audie Llona)

ISSUE:

Whether or not the facts of the case warranted the filing of charges against the Bicol Gas
people for: 1.) Filling up the LPG tanks registered to another manufacturer without the latter’s
consent in violation of R.A. 623, as amended; 2.) Trademark infringement consisting in Bicol
Gas’ use of a trademark that is confusingly similar to Petron’s registered "Gasul" trademark in
violation of section 155 also of R.A. 8293; and, 3.) Unfair competition consisting in passing off
Bicol Gas-produced LPGs for Petron-produced Gasul LPG in violation of Section 168.3 of R.A.
8293.

HELD:

The Court REVERSES and SETS ASIDE the Decision of the Court of Appeals.

R.A. 623, as amended, punishes any person who, without the written consent of the
manufacturer or seller of gases contained in duly registered steel cylinders or tanks, fills the steel
cylinder or tank, for the purpose of sale, disposal or trafficking, other than the purpose for which
the manufacturer or seller registered the same. This was what happened in this case, assuming
the allegations of KPE’s manager to be true. Bicol Gas employees filled up with their firm’s gas
the tank registered to Petron and bearing its mark without the latter’s written authority.
Consequently, they may be prosecuted for that offense.

As for the crime of trademark infringement, Section 155 of R.A. 8293, KPE and Petron
have to show that the alleged infringer, the responsible officers and staff of Bicol Gas, used
Petron’s Gasul trademark or a confusingly similar trademark on Bicol Gas tanks with intent to
deceive the public and defraud its competitor as to what it is selling. The allegations in the
complaint do not show that Bicol Gas painted on its own tanks Petron’s Gasul trademark or a
confusingly similar version of the same to deceive its customers and cheat Petron. Indeed, in this
case, the one tank bearing the mark of Petron Gasul found in a truck full of Bicol Gas tanks was
a genuine Petron Gasul tank, more of a captured cylinder belonging to competition. No proof has
been shown that Bicol Gas has gone into the business of distributing imitation Petron Gasul
LPGs.

As to the charge of unfair competition, Section 168.3 (a) of R.A. 8293 (also in relation to
Section 170), Essentially, what the law punishes is the act of giving one’s goods the general
appearance of the goods of another, which would likely mislead the buyer into believing that
such goods belong to the latter. There is no showing that Bicol Gas has been giving its LPG
tanks the general appearance of the tanks of Petron’s Gasul. As already stated, the truckf ull of
Bicol Gas tanks that the KPE manager arrested on a road in Sorsogon just happened to have
mixed up with them one authentic Gasul tank that belonged to Petron.

THE LIABILITY OF THE STOCKHOLDERS AND MEMBERS OF THE BOARD OF

DIRECTORS OF BICOL GAS WITH RESPECT TO THE CHARGE OF
UNLAWFULLY FILLING UP A STEEL CYLINDER OR TANK THAT BELONGED TO
PETRON

The "owners" of a corporate organization are its stockholders and they are to be
distinguished from its directors and officers. The petitioners here, with the exception of Audie
Llona, are being charged in their capacities as stockholders of Bicol Gas. But the Court of
Appeals forgets that in a corporation, the management of its business is generally vested in its
board of directors, not its stockholders. Stockholders are basically investors in a corporation.
They do not have a hand in running the day-to-day business operations of the corporation unless
they are at the same time directors or officers of the corporation. Before a stockholder may be
held criminally liable for acts committed by the corporation, therefore, it must be shown that he
had knowledge of the criminal act committed in the name of the corporation and that he took part
in the same or gave his consent to its commission, whether by action or inaction.

Although the KPE manager heard petitioner Llona say that he was going to consult the
owners of Bicol Gas regarding the offer to swap additional captured cylinders, no indication was
given as to which Bicol Gas stockholders Llona consulted. It would be unfair to charge all the
stockholders involved, some of whom were proved to be minors. No evidence was presented
establishing the names of the stockholders who were charged with running the operations of
Bicol Gas. The complaint even failed to allege who among the stockholders sat in the board of
directors of the company or served as its officers.

The Court of Appeals of course specifically mentioned petitioner stockholder Manuel C.

Espiritu, Jr. as the registered owner of the truck that the KPE manager brought to the police for
investigation because that truck carried a tank of Petron Gasul. But the act that R.A. 623
punishes is the unlawful filling up of registered tanks of another. It does not punish the act of
transporting such tanks. And the complaint did not allege that the truck owner connived with
those responsible for filling up that Gasul tank with Bicol Gas LPG.
 ALFREDO CHING vs. THE SECRETARY OF JUSTICE et. al

G.R No. 164317

CALLEJO, SR. J. February 6, 2006

FACTS Petitioner is the Senior Vice President of Philippine

Blooming Mills, Inc. In October 1980, petitioner applied
for the issuance of commercial letter of credit with the
Rizal Commercial Banking Corporation for the importation
of assorted goods.

The application was approved and the respondent bank

issued the irrevocable letters of credit and the petitioner
signed 13 trust receipts a surety acknowledging the
goods.

On the said trust receipts, the 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.
When the goods were sold, the proceeds shall be turned
over to the respondent bank. Thus, to apply against the
relative acceptances and payment of other indebtedness.
In cases where the goods remain to be unsold within the
specified period the goods were to be returned to the
respondent bank.
 Petitioner failed to return the goods or return its value to
the respondent bank when the trust receipts matured
amounting to P 6,940,280.66 despite demands.

The respondent bank filed a criminal complaint for estafa.

The City Prosecutor found a probable cause under
paragraph 1 of the RPC and PD 115 otherwise known as
the trust receipts law. Thirteen (13) informations were
filed against the petitioner. The petitioner appealed the
said resolution by way of a motion for reconsiderations to
the City Prosecutor and then to the Minister of Justice.

The Minister of Justice granted the motion reversing the

resolution of the City Prosecutor and was ordered to
withdraw the informations.

The Respondent bank re-filed the criminal complaint

against the Petitioner assailing that there was no criminal
liability but only civil liability. The Respondent appealed
with the Secretary of Justice and the latter granted the
petition reversing the ruling of the City Prosecutor.

The Secretary of Justice, justified that the respondent

bound himself under the terms of the trust receipts not
only as a corporate official of the PBMI but also as its
surety and can be proceeded into two (2) ways: First, as
surety and as the corporate official responsible for the
offense under PD 115. Thus, according to the Justice
Secretary the civil liability imposed is clearly separate
and distinct from the criminal liability of the accused
under PD 115.

ISSUE/S Whether or not Alfredo Ching should be held criminally

 liable for estafa.

RTC Ruling The cases where docketed as Criminal Cases No. 99-
178596 to 99-178608. Petitioner filed for a motion for
reconsideration which the Secretary of Justice denied.

CA Ruling On April 22, 2004, the Court of Appeals rendered a

decision dismissing the petition for lack of merit on the
following grounds (1) certification of non-forum of
shopping was not executed and (2) petition for certiorari,
prohibition and mandamus was not the proper remedy
for the petitioner.

The assailed resolutions of the Court of Appeals were

correctly issued for the following reasons: (1) The
petitioner being the Senior-Vice President of PBMI and
the signatory to the trust receipts, is criminally liable, (2)
the issue raised by the petitioner, on whether or not by
his actuations had already been resolved and laid to rest
in Allied Bank Corporation vs. Ordonez, and (3) petitioner
was estopped from raising the delay of the City
Prosecutor in the final disposition of the preliminary
investigation because he failed to do so.

SC Ruling The Supreme Court agrees with the ruling of the CA that
the certification of non-forum of shopping petitioner
incorporated in his petition before the appellate court is
defective. Compliance with the certification against forum
shopping is mandatory. Failure of the petitioner to
comply with such requirement is a ground for dismissal.

The status of the case at bar falls under the trust receipt
transactions. It must be stressed that PD 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 and goods covered by a trust receipt
law is a public nuisance to be abated by the imposition of
penal sanctions.

In the case of Colinares vs. Court of Appeals it is highlighted

that the failure of the Entrustee to turn over the proceeds of
the goods covered by the trust receipts to the entruster or to
return the said goods if they were not disposed of in
accordance with the terms of the trust receipt is a crime under
the PD No. 115, without need of proving intent to defraud. The
law punished 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.

The crime in PD 115 is malum prohibitum but is classified

as estafa under paragraph 1 (b) of Article 315 of the RPC
or estafa by abuse of confidence.

If a crime was committed by a corporation, the law

specially makes the officers, employees or other officers
or persons responsible for the offense, without prejudice
on the civil liabilities of the corporation and the board of
directors or other officers and officials responsible for the
offense.

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 if the penalty is only a fine. Even the
statute prescribes that the penalties are fine and
imprisonment, a corporation may be prosecution and if
found guilty may be fined.
 In this case, petitioner signed the trust receipts in
question. He cannot, thus, hide behind the cloak of the
separate corporate personality of PBMI. In the words of
Chief Justice Earl Warren, a corporate officer cannot
protect himself behind a corporation where he is the
actual, present and efficient actor.

Ration Though the entrustee is a corporation, nevertheless, the

Decendi 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. The rationale is
that such 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.

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
 IDELFONSO S. CRISOLOGO vs. PEOPLE OF THE PHILIPPINES

G.R No. 199481

PERLAS-BERNABE, J., December 3, 2012

FACTS On January and February 1989 as the President of

Novachemical Industries, Inc. applied for commercial
letters of credit from private respondent China Banking
Corporation to finance the purchase of 1,600 kgs of
Amoxicillin Trihydrate micronized from Hyundai Chemical
Company based on Seoul, South Korea and glass
containers from San Miguel Corporation (SMC).
Chinabank issued Letters of Credit on the amount of US
114,400.00 with a Peso equivalent of P 2, 139,119.80
and P1,712,289.90. After the petitioner received the
goods the petitioner executed the corresponding trust
receipts agreements dated May 24, 1989 and August 31,
1989 in favor of Chinabank.

On January 28, 2004 the Respondent Private Bank

through its Staff Assistant Ms. Maria Rosario De Mesa
filed a complaint affidavit with the City Prosecutor’s Office
against the Petitioner for the violation of PD 115 in
relation to Article 315 (b) of the RPC for his failure to
return the value of the goods or the subsequent goods
despite repeated demands. It averred that the Petitioner,
with intent to defraud, and with unfaithfulness and abuse
of confidence, misapplied, misappropriated and converted
the goods subject of the trust agreement, to its damage
and prejudice.
 Petitioner Crisologo claims that as a regular client of
Chinabank, Novachem was granted a credit line and
letters of credit secure by the trust receipts agreements.
Thus, the subject Letters of Credit were included in the
special term-payment agreement mutually agreed by
both parties and payable in installments. In the course of
its business, Novachem would normally give instructions
to Chinabank as to what particular Letters of Credit or
Trust Receipt the said obligation its payments would be
applied. The petitioner further alleges that the
respondent private bank deviated from the special
arrangement and misapplied the payments intended to
the subjected Letters of Credit and exacted
unconscionably high interests and penalty charges.

The City Prosecutor found probable cause to indict the

petitioner and filed the foregoing information before the
RTC of Manila.

ISSUE/S Whether or not Idelfonso Crisologo is criminally liable for

the crime of Estafa?

RTC Ruling RTC rendered a decision acquitting the petitioner of the

criminal charges for failure of the prosecution to prove his guilt
beyond reasonable doubt. However, the petitioner was
adjudged civilly liable to the Chinabank, without a need for a
separate civil action for the amounts of P1,843,567.90 and
P879,166.81 under L/C Nos. 89/0301 and DOM-33041,
respectively, less the payment of P500,000.00 made during
the preliminary investigation, with legal interest from the filing
of the informations on October 27, 1994 until full payment,
and for the costs.

CA Ruling On the appeal of the civil aspect the CA Affirmed the

Decision of the RTC holding the petitioner civilly liable.
Thus, it further justified that the petitioner signed the
“Guarantee Clause” of the trust receipt agreements in his
personal capacity and even waived the benefit of
excussion against Novachem. As such, he is personally
 and solidarily liable with Novachem.

SC Ruling The petition is slightly meritorious

Petitioner was acquitted of the charge for violation of the

Trust Receipts Law in relation to Article 315 1(b) of the
RPC. With such, he is relieved of the corporate criminal
liability as well as the corresponding civil liability arising
therefrom. As correctly found by the CA and the RTC, he
may still be liable for the Trust Receipts and Letters of
Credit transactions he had entered into in behalf of
Novachem.

Petitioner only signed the guarantee clauses of the Trust

Receipt dated May 24, 1989 and the corresponding Application
and Agreement for Commercial Letter of Credit No. L/C No.
89/0301. With respect to the Trust Receipt17 dated August 31,
1989 and Irrevocable Letter of Credit. In relation thereto,
Chinabank stipulated  before the CA that the second page of
the August 31, 1989 Trust Receipt attached to the complaint
before the court a quo would serve as the missing page. A
perusal of the said page, however, reveals that the same does
not bear the signature of the petitioner in the guarantee
clause. Hence, it was error for the CA to hold petitioner
likewise liable for the obligation secured by the said trust
receipt (L/C No. DOM-33041). Neither was sufficient evidence
presented to prove that petitioner acted in bad faith or with
gross negligence as regards the transaction that would have
held him civilly liable for his actions in his capacity as
President of Novachem

Ration
Decendi

JAIME U. GOSIACO, Petitioner,
vs.
LETICIA CHING and EDWIN CASTA, Respondents.
 G.R. No. 173807, April 16, 2009

FACTS

Jaime Gosiaco, on February 16, 2000, invested ₱8,000,000.00 with ASB

Holdings, Inc. (ASB) by way of loan. The money was loaned to ASB for a period of 48
days with interest at 10.5% which is equivalent to ₱112,000.00. In exchange, ASB
through Ching (its Business Development Operation Group manager) issued two (2)
DBS checks for ₱8,000,000.00 and ₱112,000.00. The checks which were both signed
by Ching, were drawn against DBS Bank Makati Head Office branch.

Upon maturity of the ASB checks, Gosiaco went to the DBS Bank San Juan
Branch to deposit the two (2) checks but upon presentment, the checks were
dishonored, and payments were refused because of a stop payment order and for
insufficiency of funds. Gosiaco informed respondents that the checks were dishonored
and demanded replacement checks or the return of the money placement but to no
avail. Thus, petitioner filed a criminal complaint for violation of B.P. Blg. 22.

Ching denied liability and claimed that she was a mere employee of ASB. MTC
acquitted Ching of criminal liability but it did not absolve her from civil liability. The MTC
ruled that Ching was civilly liable since she was a signatory to the checks as a corporate
officer of ASB.

Ching filed her notice of appeal to the RTC on the ground that she should not be
held civilly liable for the bouncing checks because they were contractual obligations of
ASB. RTC exonerated Ching from civil liability and ruled that the subject obligation fell
squarely on ASB.

The Court of Appeals affirmed the decision of the RTC and stated that the
amount petitioner sought to recover was a loan made to ASB and not to Ching.
Moreover, CA ruled that ASB cannot be impleaded in a B.P. Blg. 22 case since it is not
a natural person. Lastly, the Court of Appeals ruled that there was no need to pierce the
corporate veil of ASB since none of the requisites were present.

ISSUES

1) Whether or not a corporate officer who signed a bouncing check civilly liable
under B.P. Blg. 22.

2) Whether or not a corporation be impleaded in a B.P. Blg. 22 case.

RULING

The petition is DENIED, without prejudice to the right of petitioner Jaime U.

Gosiaco to pursue an independent civil action against ASB Holdings Inc. for the amount
of the subject checks.

1) Section 1 of B.P. Blg. 22 provides where the check is drawn by a corporation,

company or entity, the person or persons, who actually signed the check on behalf
of such drawer shall be liable. B.P. Blg. 22 punishes the act of making and issuing
bouncing checks. It is the act itself of issuing the checks which is considered  malum
prohibitum. When a corporate officer issues a worthless check in the corporate name,
he may be held personally liable for violating a penal statute. The personal liability of the
corporate officer is predicated on the principle that he cannot shield himself from liability
from his own acts on the ground that it was a corporate act and not his personal act.

The general rule is that a corporate officer who issues a bouncing corporate
check can only be held civilly liable when he is convicted. In the recent case of Bautista
v. Auto Plus Traders Inc., the Supreme Court ruled decisively that the civil liability of a
corporate officer in a B.P. Blg. 22 case is extinguished with the criminal liability. The rule
of stare decisis precludes S C to discharge Ching of any civil liability arising from
the B.P. Blg. 22 case against her, on account of her acquittal in the criminal charge.

2) The records clearly show that it is ASB that is civilly obligated to Gosiaco. In
the various stages of this case, Gosiaco has been proceeding from the premise that he
is unable to pursue a separate civil action against ASB itself for the recovery of the
amounts due from the subject checks. From this, petitioner sought to implead ASB as a
defendant to the B.P. Blg. 22 case, even if such case is criminal in nature.

Nowhere in B.P. Blg. 22 is it provided that a juridical person may be impleaded

as an accused or defendant in the prosecution for violations of that law, even in the
litigation of the civil aspect thereof. Nonetheless, the substantive right of a creditor to
recover due and demandable obligations against a debtor-corporation cannot be denied
or diminished by a rule of procedure.

B.P. Blg. 22 imposes a distinct civil liability on the signatory of the check which is
distinct from the civil liability of the corporation for the amount represented from the
check. The civil liability attaching to the signatory arises from the wrongful act of signing
the check despite the insufficiency of funds in the account, while the civil liability
attaching to the corporation is itself the very obligation covered by the check or the
consideration for its execution.

The civil liability attaching to the signatory arises from the wrongful act of signing
the check despite the insufficiency of funds in the account, while the civil liability
attaching to the corporation is itself the very obligation covered by the check or the
consideration for its execution. Yet these civil liabilities are mistaken to be indistinct. The
confusion is traceable to the singularity of the amount of each.

AMBASSADOR HOTEL, INC., Petitioner, v. SOCIAL SECURITY SYSTEM, Respondent.

Facts:

Respondent SSS filed a complaint with the City Prosecutor’s office against Petitioner
Ambassador Hotel and its officers of the non-remittance of SSS contributions and penalty
liabilities from June 1999 to March 2001. After a preliminary investigation, the prosecutor’s
office filed an information against the officers of petitioner corporation. Yolanda Chan, the
president, was subsequently arrested and charged for violations of R.A. 1161.

According to the prosecution, an agent of the SSS named De Ocampo was assigned to
investigate the various deficiencies. Upon request and despite repeated demands, petitioner
failed to provide records of their previous SSS payments. On July 4, 2001, a representative of
petitioner would pay the unpaid contributions. Upon De Ocampo’s return, petitioner
corporation requested that the delinquency payments be made in installments. The hotel,
however, failed to tender such installment payments.

The defense claimed that, although Yolanda Chan was the president from April 25, 1998, she
was in fact prevented from assuming office and performing her functions by the previous
president and Yolanda’s own father Simeon Chan. Yolanda would subsequently file a case for
grave coercion and grave threats against Simeon while Simeon would file for the nullity of the
corporate meeting declaring Yolanda as president. She would eventually win the case and
assume office on April 10, 2001.

Accordingly, Yolanda argued that because she was not performing the functions as the
President of Ambassador Hotel from April 25, 1998 until April 10, 2001, she could not be held
criminally liable for the non-payment of SSS contributions from June 1999 to March 2001.

The RTC ruled in favor of Yolanda stating that she was not liable for the non-payments during
the period from June 1999 to March 2001. However, the Court upheld the civil liability of
petitioner corporation and ordered them to pay the deficiency as well as the penalties
amounting to ₱584,804.00.

Petitioner appealed this ruling stating that the RTC did not have jurisdiction over the
corporation as it was not a party to the case between Yolanda and the SSS.
The CA affirmed the ruling of the RTC

Petitioner corporation elevate the case to the SC claiming that it has a distinct personality from
its officers such as Yolanda, it was never a party in such case nor was summoned, and it was
deprived due process.

Issue:

Whether or not petitioner corporation was validly held liable in the judgement.

Ruling

Yes. R.A. 8282 includes juridical entities in what it defines as employers. Prompt remittance of
SSS contributions by such employers is mandatory. Petitioner Ambassador Hotel, as a juridical
entity, is still bound by the provisions of R.A. No. 8282.

Even when the employer is a corporation, it shall still be held liable for the non-remittance of
SSS contributions. It is, however, the head, directors or officers that shall suffer the personal
criminal liability. Although a corporation is invested by law with a personality separate and
distinct from that of the persons composing it, the corporate veil is pierced when a director,
trustee or officer is made personally liable by specific provision of law. In this case, R.A. 8282
explicitly provides for such personal liability. Thus, a corporation cannot invoke its separate
judicial entity to escape its liability for non-payment of SSS contributions

To acquire jurisdiction over the corporation in a criminal case, its head, directors or partners
must be served with a warrant of arrest. An arrest on its representative is sufficient to acquire
jurisdiction over it. In this case, Yolanda, as President of Ambassador Hotel, was arrested and
brought before the R TC. Consequently, the trial court acquired jurisdiction over the person of
Yolanda and of Ambassador Hotel as the former was its representative. No separate service of
summons is required for the hotel because the law simply requires the arrest of its agent for
the court to acquire jurisdiction over it in the criminal action.

G.R. No. 182147 December 15, 2010

ARNEL U. TY, MARIE ANTONETTE TY, JASON ONG, WILLY DY, and ALVIN TY,
Petitioners, vs. NBI SUPERVISING AGENT MARVIN E. DE JEMIL, PETRON GASUL
DEALERS ASSOCIATION, and TOTALGAZ DEALERS ASSOCIATION,
Respondents.

FACTS:

Joaquin Guevara Adarlo & Caoile Law Offices (JGAC Law Offices) sent a letter to the
NBI expressing that their clients Shellane Dealers Association, Inc., Petron Gasul
Dealers Association, Inc., and Totalgaz Dealers Association, Inc. requested to conduct
a surveillance, investigation, and apprehension of persons or establishments in Pasig
that are allegedly trading petroleum products and underfilling the LPG cylinders which
violates BP 33, as amended by PD 1865.

Agents De Jemil and Kawada attested to conducting surveillance of Omni and doing a
test-buy. They brought eight branded LPG cylinders of Shellane, Petron Gasul,
Totalgaz, and Superkalan Gaz to Omni for refilling. LPG Inspector Noel N. Navio of the
Liquefied Petroleum Gas Industry Association (LPGIA) inspected the eight branded
LPG cylinders which were refilled. He found that them to be without LPG valve seals
and one of the cylinders was actually underfilled.

The NBI’s test-buy yielded positive results for violations of BP 33, Section 2(a) in
relation to Secs. 3(c) and 4, i.e., refilling branded LPG cylinders without authority; and
Sec. 2(c) in relation to Sec. 4, i.e., underdelivery or underfilling of LPG cylinders.

Search warrants were filed and served which resulted to the seizure of several items
from Omni’s premises duly itemized in the NBI’s Receipt/Inventory of Property/Item
Seized, namely:

Quantity/Unit Description

7LPG cylinders Totalgaz, 11.0 kg [filled]

1LPG cylinder Petron Gasul, 11.0 kg [filled]

1LPG cylinder Shellane, 11.0 kg [filled]

29 LPG cylinders Superkalan Gaz, 2.7 kg [empty]

17 LPG cylinders Petron Gasul, 11.0 kg [emptly]

8LPG cylinders Marked as Omnigas with Shell emboss, 11.0 kg [empty]

5LPG cylinders Marked as Omnigas with Totalgaz emboss, 11.0 kg [empty]

23 LPG cylinders Shellane, 11.0 kg [empty]

3LPG cylinders Marked as Omnigas with Gasul emboss, 11.0 kg [empty]

 21 LPG cylindersTotalgaz, 11.0 kg [empty]

OFFICE OF THE CHIEF STATE PROSECUTOR’ RULING

The office found probable cause and recommended that the case be filed against the
petitioners. They found evidence that were submitted by Agent De Jemil which
debunked the contention by the then respondents (Ty) that the branded LPG cylinders
are already owned by consumers who are free to do with them as they please. That the
law is clear and the stamped markings on the LPG cylinders show who are the real
owners thereof and they cannot be refilled sans authority from Pilipinas Shell, Petron or
Total, as the case may be.

DOJ SECRETARY RULING

The Office of the Secretary of Justice issued a resolution which reversed and set aside
the ruling of the office of the Chief of State Prosecutor.

As per the said office, the underfilling of the one out of the eight LPG cylinders was an
isolated incident which cannot conclude that they practice deliberate underfilling. There
is also no proof that the branded LPG cylinders seized from Omni belong to another
company or firm, that the markings or stamps of other petroleum producers found in the
LPG cylinders are not sufficient basis to prove ownership.

COURT OF APPEALS RULING

The decision rendered by the Office of the Secretary of Justice was revoked by the CA
and reinstated the decision given by the Office of the Chief State Prosecutor.

That under the law on underfilling, Sec. 1 (1) and (3) of BP 33, as amended the act
does not have to be substantial or deliberate. Thus, the act does fall under the
prohibition of the law.

Further, according to the CA, there is strong probable violation of the law under Sec. 3
(c) of BP 33, as amended on refilling of LPG cylinders of another company without their
written authorization.

ISSUES:

I. WON there is probable cause against petitioners for the violation of BP Blg.
33, as amended

II. WON petitioners may be held liable under BP Blg. 33, as amended, for the
violation thereof, despite not being in charge of the management of the
corporation’s affairs

RULING: PETITION IS PARTIALLY GRANTED

I. YES, there exists a probably cause against petitioners for the violation of BP
Blg. 33

On the seized items; Probable Violation of Section 2 (a) of BP Blg 33, as amended

The criminal complaints filed by Agent De Jemil against petitioners is not only
evidenced by the seized items pursuant to the search warrant, they also conducted
a test-buy which showed that there was clear violation of Sec. 2 (a) in relation to
Sections 3 and 4 of BP Blg. 33, as amended.

There were also written certifications from the companies which showed that there
was no written authority given to Omni to refill the LPG Cylinders that were
embossed, marked or stamped by their specific brands. The contention of the
petitioners that these items were seized when they were already loaded on customer
trucks lacks merit. The fact that these LPG cylinders were refilled shows that Omni
has indeed refilled the cylinders without the written authorization of the companies’
Total, Petron and Pilipinas Shell.

That despite the LPG cylinders being owned by the customers, it does not change
the fact that Omni is not authorized to refill these branded LPC Cylinders. Ownership
of the branded LPC Cylinders is not a condition sine qua non for the commission of
the offenses involving petroleum and petroleum products. Further, as per the DOE,
brand owners are deemed owners of their duly embossed, stamped and marked
LPG cylinders even if these are possessed by customers or consumers. And such
right is recognized by the Court pursuant to certain law enacted in the Philippines.

On the underfilling of a lone container; Probable Violation of Section 2 (c) of BP Blg

33, as amended

The petitioners argue that it was only one cylinder out of the eight which was
underfilled, however it is important to note that a single underfilling still violates the
provisions of BP Blg 33 as amended and is considered as a criminal offense.

Under BP Blg 33 illegal trading, adulteration, underfilling, hoarding, and overpricing

of petroleum products are all considered as criminal offenses. And the said criminal
acts are perpetrated by not having authorized LPG seals, underfilling LPG cylinders,
and tampering LPG cylinders.

II. PARTIALLY HELD

Sec. 4 of BP 33 provides for the penalties and persons that may be held criminally
liable in the event that there are violations of the law. The contention of the
petitioners is partially with merit since under Sec. 4, par. 3, only the president, the
general manager, managing partner, or such other officer charged with the
management of the business affairs thereof, or employee responsible for the
violation shall be criminally liable. The law is not applicable to the petitioners, except
for Arnel U. Ty who is the President of Omni.

Members of the board are not included in the enumeration given above as to who
may be held liable as corporate violators of BP Blg. 33. The corporate powers
reposed in the board of directors under Section 23 of the Corporation Code it is still
known that they are not directly engaged or charged with the running of the business
affairs of the corporation.
G.R. No. 128690 January 21, 1999

ABS-CBN BROADCASTING CORPORATION, petitioner,

vs.
HONORABLE COURT OF APPEALS, REPUBLIC BROADCASTING CORP, VIVA
PRODUCTION, INC., and VICENTE DEL ROSARIO, respondents.

Facts:

In 1990, ABS-CBN and VIVA executed a Film Exhibition Agreement whereby VIVA gave
ABS-CBN an exclusive right to exhibit some VIVA films. According to the agreement, ABS-
CBN shall have the right of first refusal to the next 24 VIVA films for TV telecast under such
terms as may be agreed upon by the parties, however, such right shall be exercised by ABS-CBN
from the actual offer in writing.

Sometime in December 1991, VIVA, through Vicente Del Rosario (Executive Producer), offered
ABS-CBN through VP Charo Santos-Concio, a list of 3 film packages from which ABS-CBN
may exercise its right of first refusal. ABS-CBN, however through Mrs. Concio, tick off only 10
titles they can purchase among which is the film “Maging Sino Ka Man” which is one of the
subjects of the present case, therefore, ABS-CBN did not accept the said list as per the rejection
letter authored by Mrs. Concio sent to Del Rosario.

Subsequently, Del Rosario approached Mrs. Concio with another list consisting of 52 original
movie titles and 104 re-runs, proposing to sell to ABS-CBN airing rights for P60M (P30M in
cash and P30M worth of television spots).

Del Rosario and ABS-CBN’s General Manager, Eugenio Lopez III, met at the Tamarind Grill
Restaurant in QC to discuss the package proposal but to no avail. Mr. Lopez testified that he and
Mr. Del Rosario allegedly agreed that ABS-CBN was granted exclusive film rights to fourteen
(14) films for a total consideration of P36 million; that he allegedly put this agreement as to the
price and number of films in a "napkin'' and signed it and gave it to Mr. Del Rosario.

On the other hand, Del Rosario denied having made any agreement with Lopez regarding the 14
Viva films; denied the existence of a napkin in which Lopez wrote something; and insisted that
what he and Lopez discussed at the lunch meeting was Viva's film package offer of 104 films (52
originals and 52 re-runs) for a total price of P60 million.

Four days later, Del Rosario and Mr. Graciano Gozon, Senior VP of Finance of Republic
Broadcasting Corporation (RBS/Channel 7) discussed the terms and conditions of VIVA’s offer.
A day after that, Mrs. Concio sent the draft of the contract between ABS-CBN and VIVA which
contained a counter-proposal covering 53 films for P35M. VIVA’s Board of Directors rejected
the counter-proposal as it would not sell anything less than the package of 104 films for P60M.
After said rejection, VIVA closed a deal with RBS including the 14 films previously ticked off
by ABS-CBN.
Consequently, ABS-CBN filed a complaint for specific performance with prayer for a writ of
preliminary injunction and/or TRO against RBS, VIVA and Del Rosario. RTC then enjoined the
latter from airing the subject films. RBS posted a P30M counterbond to dissolve the injunction.
Later on, the trial court as well as the CA dismissed the complaint holding that there was no
contract perfected between ABS-CBN and VIVA, hence, there was no basis for ABS-CBN’s
demand, furthermore, the right of first refusal had previously been exercised. ABS-CBN was
ordered to pay P5 million pesos as and by way of moral damages and P5 million pesos as and by
way of exemplary damages.

Hence, the present petition, ABS-CBN argued that an agreement was made during the meeting of
Mr. Lopez and Del Rosario jotted down on a “napkin” (this was never produced in court).
Moreover, it had yet to fully exercise its right of first refusal since only 10 titles were chosen
from the first list. As to actual, moral and exemplary damages, there was no clear basis in
awarding the same.

Issue:

Whether or not (1) a contract was perfected between ABS-CBN and VIVA and whether or not (2)
moral damages may be awarded to a corporation

Ruling:

The first issue should be resolved against ABS-CBN because there was no contract perfected
between ABS-CBN and VIVA.

A contract is a meeting of minds between two persons whereby one binds himself to give
something or to render some service to another for a consideration. there is no contract unless the
following requisites concur: (1) consent of the contracting parties; (2) object certain which is the
subject of the contract; and (3) cause of the obligation, which is established.

Contracts that are consensual in nature are perfected upon mere meeting of the minds. A
qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is a
rejection of the original offer.

After Mr. Del Rosario of Viva met Mr. Lopez of ABS-CBN to discuss the package of films,
ABS-CBN, sent through Ms. Concio, counter-proposal in the form a draft contract. This counter-
proposal could be nothing less than the counter- offer of Mr. Lopez during his conference with
Del Rosario. Clearly, there was no acceptance of VIVA’s offer, for it was met by a counter-offer
which substantially varied the terms of the offer.

In the case at bar, VIVA through its Board of Directors, rejected such counter-offer. Even
if it be conceded arguendo that Del Rosario had accepted the counter-offer, the acceptance
did not bind VIVA, as there was no proof whatsoever that Del Rosario had the specific
authority to do so.

Under the Corporation Code, unless otherwise provided by said Code, corporate powers,
such as the power to enter into contracts, are exercised by the Board of Directors.
However, the Board may delegate such powers to either an executive committee or officials
or contracted managers. The delegation, except for the executive committee, must be for
specific purposes. Delegation to officers makes the latter agents of the corporation; accordingly,
the general rules of agency as to the binding effects of their acts would apply. For such officers
to be deemed fully clothed by the corporation to exercise a power of the Board, the latter must
specially authorize them to do so. That Del Rosario did not have the authority to accept ABS-
CBN’s counter-offer was best evidenced by his submission of the draft contract to VIVA’s
Board of Directors for the latter’s approval. In any event, there was between Del Rosario
and Lopez III no meeting of minds.

The testimony of Mr. Lopez and the allegations in the complaint are clear admissions that what
was supposed to have been agreed upon at the Tamarind Grill between Mr. Lopez and Del
Rosario was not a binding agreement. It is as it should be because corporate power to enter
into a contract is lodged in the Board of Directors. (Sec. 23, Corporation Code). Without
such board approval by the Viva board, whatever agreement Lopez and Del Rosario
arrived at could not ripen into a valid contact binding upon Viva.

II

However, the Court find for ABS-CBN on the issue of damages. Moral damages are in the
category of an award designed to compensate the claimant for actual injury suffered and not to
impose a penalty on the wrongdoer. 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 can be experienced only by one having a
nervous system. The statement that a corporation may recover moral damages if it “has a good
reputation that is debased, resulting in social humiliation” is an obiter dictum. On this score
alone the award for damages must be set aside, since RBS is a corporation.

NOTE

Section 23. The board of directors or trustees. – Unless otherwise provided in this Code, the
corporate powers of all corporations formed under this Code shall be exercised, all business
conducted and all property of such corporations controlled and held by the board of directors or
trustees to be elected from among the holders of stocks, or where there is no stock, from among
the members of the corporation, who shall hold office for one (1) year until their successors are
elected and qualified. (28a)
Every director must own at least one (1) share of the capital stock of the corporation of which he
is a director, which share shall stand in his name on the books of the corporation. Any director
who ceases to be the owner of at least one (1) share of the capital stock of the corporation of
which he is a director shall thereby cease to be a director. Trustees of non-stock corporations
must be members thereof. A majority of the directors or trustees of all corporations organized
under this Code must be residents of the Philippines.

FILIPINAS BROADCASTING NETWORK, INC., v. AGO MEDICAL AND

EDUCATIONAL CENTER-BICOL CHRISTIAN COLLEGE OF MEDICINE,
(AMEC-BCCM) and ANGELITA F. AGO

G.R. NO. 141994 January 17, 2005

FACTS:

"Exposé" is a radio documentary program, airing every morning over DZRC-

AM which is owned by Filipinas Broasting Network, Inc. ("FBNI"). It is
broadcasted over Legazpi City, the Albay municipalities and other Bicol
areas.

On December 14 and 15 of the year 1989, the hosts, Carmelo 'Mel' Rima
("Rima") and Hermogenes 'Jun' Alegre ("Alegre"), exposed various alleged
complaints from students, teachers and parents against Ago Medical and
Educational Center-Bicol Christian College of Medicine ("AMEC") and its
administrators. AMEC and its Dean of the College of Medicine, Angelita Ago,
claimed that the broadcasts were defamatory for the malicious and libelous
remarks and filed a complaint for damages.

The Regional Trial Court ruled in favor of the respondents finding FBNI and
Alegre liable for libel except Rima. The trial court held that the broadcasts
are libelous per se. The trial court rejected the broadcasters' claim that their
utterances were the result of straight reporting because it had no factual
basis. The broadcasters did not even verify their reports before airing them
to show good faith. In holding FBNI liable for libel, the trial court found that
FBNI failed to exercise diligence in the selection and supervision of its
employees. In absolving Rima from the charge, the trial court ruled that
Rima's only participation was when he agreed with Alegre's exposé. The trial
court found Rima's statement within the "bounds of freedom of speech,
expression, and of the press."
Subsequently both the petitioners and respondents appealed to the Court of
Appeals. To which the Court affirmed the decision of the RTC with
modification, finding Rima solidarily liable with FBNI and Alegre. The Court of
Appeals found Rima also liable for libel since he remarked that "(1) AMEC-
BCCM is a dumping ground for morally and physically misfit teachers; (2)
AMEC obtained the services of Dean Justita Lola to minimize expenses on its
employees' salaries; and (3) AMEC burdened the students with unreasonable
imposition and false regulations."

It further held that FBNI failed to exercise due diligence in the selection and
supervision of its employees for allowing Rima and Alegre to make the radio
broasts without the proper KBP accreditation. The Court of Appeals denied
Ago's claim for damages and attorney's fees because the libelous remarks
were directed against AMEC, and not against her.

The Court of Appeals rendered in favor of the respondent, awarding moral

damages to it(AMEC) but not to its owners. Hence, this petition of the FBNI
to the Supreme Court, contending that AMEC being a corporation is not
entitled to moral damages.

ISSUE: Whether or not AMEC is entitled to moral damages

RULING:

YES. A juridical person is generally not entitled to moral damages because,

unlike a natural person, it cannot experience physical suffering or such
sentiments as wounded feelings, serious anxiety, mental anguish or moral
shock. The Court of Appeals cites Mambulao Lumber Co. v. PNB, et al. to
justify the award of moral damages. However, the Court's statement in
Mambulao that "a corporation may have a good reputation which, if
besmirched, may also be a ground for the award of moral damages" is an
obiter dictum.

Nevertheless, AMEC's claim for moral damages falls under item 7 of Article
2219(7) of the Civil Code. This provision expressly authorizes the recovery
of moral damages in cases of libel, slander or any other form of defamation.
Article 2219(7) does not qualify whether the plaintiff is a natural or juridical
person. Therefore, a juridical person such as a corporation can validly
complain for libel or any other form of defamation and claim for moral
damages.

Moreover, where the broast is libelous per se, the law implies damages. In
such a case, evidence of an honest mistake or the want of character or
reputation of the party libeled goes only in mitigation of damages. Neither in
such a case is the plaintiff required to introduce evidence of actual damages
as a condition precedent to the recovery of some damages. In this case, the
broasts are libelous per se. Thus, AMEC is entitled to moral damages.

However, we find the award of P300,000 moral damages unreasonable. The

record shows that even though the broasts were libelous per se, AMEC has
not suffered any substantial or material damage to its reputation. Therefore,
we reduce the award of moral damages from P300,000 to P150,000.
 HERMAN C. CRYSTAL, LAMBERTO C. CRYSTAL, ANN GEORGIA C.
SOLANTE, and DORIS C. MAGLASANG, as Heirs of Deceased SPOUSES
RAYMUNDO I. CRYSTAL and DESAMPARADOS C. CRYSTAL, vs.BANK
OF THE PHILIPPINE ISLANDS

G.R. No. 172428 November 28, 2008

FACTS:

On March 28, 1978, spouses Raymundo and Desamparados Crystal obtained

a Php 300,000 loan in behalf of the Cebu Contractors Consortium Co.
(CCCC) from BPI-Butuan. The loan was secured by a chattel mortgage on
heavy equipment and machinery of CCCC. They also executed in favor of
BPI-Butuan a Continuing Suretyship, bounding themselves as surety of
CCCC in the aggregate principal sum not exceeding Php 300,000.

On March 29, 1979, Raymundo executed a promissory note for the amount
of Php 300,000 still in favor of BPI-Butuan. That in August, CCCC renewed a
previous loan from BPI Cebu City. CCCC having no real property to offer as
security for the loan, the spouses executed a real estate mortgage over their
own real property. Subsequently, they executed another real estate
mortgage over the same lot in favor of BPI-Cebu City to secure another Php
20,000 loan of CCCC.

When the loans became due, CCCC failed to pay for such to both BPI Butuan
and Cebu City branches. CCCC and the spouses failed to pay the obligations
despite the demands.

BPI resorted to the foreclosure of the chattel and real estate mortgages. The
foreclosure sale on the chattel mortgage was initially stalled and done. BPI
then filed a complaint against CCCC and the spouses for the recovery of the
deficiency of the loan with BPI-Butuan before the RTC.

Before the Court, petitioners who are the heirs of the spouses argue that the
failure of the spouses to pay the BPI-Cebu City loan of P120,000.00 was due
to BPI’s illegal refusal to accept payment for the loan unless the
P300,000.00 loan from BPI-Butuan would also be paid. Consequently, in
view of BPI’s unjust refusal to accept payment of the BPI-Cebu City loan, the
loan obligation of the spouses was extinguished, petitioners contend. CA
denied both the appeal and the MR filed by the spouses, hence this instant
petition.

ISSUE: Whether or not BPI is entitled to moral damages.

RULING:

NO. A juridical person is generally not entitled to moral damages because,

unlike a natural person, it cannot experience physical suffering or such
sentiments as wounded feelings, serious anxiety, mental anguish or moral
shock.32 The Court of Appeals found BPI as "being famous and having gained
its familiarity and respect not only in the Philippines but also in the whole
world because of its good will and good reputation must protect and defend
the same against any unwarranted suit such as the case at bench." 33 In
holding that BPI is entitled to moral damages, the Court of Appeals relied on
the case of People v. Manero (a 1993 case), wherein the Court ruled that
"[i]t is only when a juridical person has a good reputation that is debased,
resulting in social humiliation, that moral damages may be awarded." 35

We do not agree with the Court of Appeals. A statement similar to that made
by the Court in Manero can be found in the case of Mambulao Lumber Co. v.
PNB, et al.(a 1968 case), thus:

x x x Obviously, an artificial person like herein appellant corporation

cannot experience physical sufferings, mental anguish, fright, serious
anxiety, wounded feelings, moral shock or social humiliation which are
basis of moral damages. A corporation may have good reputation
which, if besmirched may also be a ground for the award of
moral damages.

Nevertheless, in the more recent cases of ABS-CBN Corp. v. Court of

Appeals, et al., and Filipinas Broadcasting Network, Inc. v. Ago Medical and
Educational Center-Bicol Christian College of Medicine (AMEC-BCCM), the
Court held that the statements in Manero and Mambulao were mere obiter
dicta, implying that the award of moral damages to corporations is not a
hard and fast rule. Indeed, while the Court may allow the grant of moral
damages to corporations, it is not automatically granted; there must still be
proof of the existence of the factual basis of the damage and its causal
relation to the defendant’s acts. This is so because moral damages, though
incapable of pecuniary estimation, are in the category of an award designed
to compensate the claimant for actual injury suffered and not to impose a
penalty on the wrongdoer.39

The spouses’ complaint against BPI proved to be unfounded, but it does not
automatically entitle BPI to moral damages. Although the institution of a
clearly unfounded civil suit can at times be a legal justification for an award
of attorney's fees, such filing, however, has almost invariably been held not
to be a ground for an award of moral damages. The rationale for the rule is
that the law could not have meant to impose a penalty on the right to
litigate. Otherwise, moral damages must every time be awarded in favor of
the prevailing defendant against an unsuccessful plaintiff. BPI may have
been inconvenienced by the suit, but we do not see how it could have
possibly suffered besmirched reputation on account of the single suit alone.
Hence, the award of moral damages should be deleted.

The awards of exemplary damages and attorney’s fees, however, are proper.
Bar Matter No. 553 June 17, 1993

MAURICIO C. ULEP, petitioner,
vs.
THE LEGAL CLINIC, INC., respondent.

Facts:

Petitioner Mauricio Ulep prays this Court "to order the respondent to cease and desist from
issuing advertisements similar to or of the same tenor as that of annexes "A" and "B" (of said
petition) and to perpetually prohibit persons or entities from making advertisements pertaining to
the exercise of the law profession other than those allowed by law."

It is the submission of petitioner, a member of the legal profession himself, that the
advertisements above reproduced are champterous, unethical, and demeaning of the law
profession.

In its answer to the petition, respondent admits the fact of publication of said advertisement at its
instance, but claims that it is not engaged in the practice of law but in the rendering of "legal
support services" through paralegals with the use of modern computers and electronic machines.

Respondent further argues that assuming that the services advertised are legal services, the act of
advertising these services should be allowed supposedly in the light of the case of John R. Bates
and Van O'Steen vs. State Bar of Arizona.

Issue:
Whether or not the services offered by respondent, The Legal Clinic, Inc., as advertised by it
constitutes practice of law and, in either case, whether the same can properly be the subject of
the advertisements herein complained of.

Ruling:

The services offered by Respondent constitute practice of law.

In Cayetano vs. Monsod, the Supreme Court defines practice of law as the rendition of services
requiring the knowledge and the application of legal principles and technique to serve the interest
of another with his consent. It is not limited to appearing in court, or advising and assisting in the
conduct of litigation, but embraces the preparation of pleadings, and other papers incident to
actions and special proceedings, conveyancing, the preparation of legal instruments of all kinds,
and the giving of all legal advice to clients. It embraces all advice to clients and all actions taken
for them in matters connected with the law.

The practice of law, therefore, covers a wide range of activities in and out of court. Applying the
aforementioned criteria to the case at bar, we agree with the perceptive findings and observations
of the aforestated bar associations that the activities of respondent, as advertised, constitute
"practice of law."

Respondent corporation gives out legal information to laymen and lawyers. Its contention that
such function is non-advisory and non-diagnostic is more apparent than real. In providing
information, for example, about foreign laws on marriage, divorce and adoption, it strains the
credulity of this Court that all the respondent corporation will simply do is look for the law,
furnish a copy thereof to the client, and stop there as if it were merely a bookstore. With its
attorneys and so-called paralegals, it will necessarily have to explain to the client the intricacies
of the law and advise him or her on the proper course of action to be taken as may be provided
for by said law. That is what its advertisements represent and for the which services it will
consequently charge and be paid. That activity falls squarely within the jurisprudential definition
of "practice of law."

The ruling in the case of Bates, et al. vs. State Bar of Arizona, 45 which is repeatedly invoked and
constitutes the justification relied upon by respondent, is obviously not applicable to the case at
bar. Foremost is the fact that the disciplinary rule involved in said case explicitly allows a
lawyer, as an exception to the prohibition against advertisements by lawyers, to publish a
statement of legal fees for an initial consultation or the availability upon request of a written
schedule of fees or an estimate of the fee to be charged for the specific services. No such
exception is provided for, expressly or impliedly, whether in our former Canons of Professional
Ethics or the present Code of Professional Responsibility.
NOTE THAT SC DID NOT DECIDE ON THE LEGALITY OF THE CREATION OF
LEGAL CLINIC AS A CORPORATION

While we deem it necessary that the question as to the legality or illegality of the purpose/s for
which the Legal Clinic, Inc. was created should be passed upon and determined, we are
constrained to refrain from lapsing into an obiter on that aspect since it is clearly not within the
adjudicative parameters of the present proceeding which is merely administrative in nature. It is,
of course, imperative that this matter be promptly determined, albeit in a different proceeding
and forum, since, under the present state of our law and jurisprudence, a corporation cannot be
organized for or engage in the practice of law in this country. This interdiction, just like the rule
against unethical advertising, cannot be subverted by employing some so-called paralegals
supposedly rendering the alleged support services.

COMMENTS OF OTHER BAR ASSOCIATIONS ON THE ISSUE

The Supreme Court required the (1) Integrated Bar of the Philippines (IBP), (2) Philippine Bar
Association (PBA), (3) Philippine Lawyers' Association (PLA), (4) U.P. Womens Lawyers'
Circle (WILOCI), (5) Women Lawyers Association of the Philippines (WLAP), and (6)
Federacion International de Abogadas (FIDA) to submit their position papers on the issue.

According to the IBP: (a) A. The use of the name "The Legal Clinic, Inc." gives the impression
that respondent corporation is being operated by lawyers and that it renders legal services. (b)
The advertisements in question are meant to induce the performance of acts contrary to law,
morals, public order and public policy. By simply reading the questioned advertisements, it is
obvious that the message being conveyed is that Filipinos can avoid the legal consequences of a
marriage celebrated in accordance with our law, by simply going to Guam for a divorce. 

According to the Phil. Bar. Assoc.: It is apt to recall that only natural persons can engage in the
practice of law, and such limitation cannot be evaded by a corporation employing competent
lawyers to practice for it. Obviously, this is the scheme or device by which respondent "The
Legal Clinic, Inc." holds out itself to the public and solicits employment of its legal services. It is
an odious vehicle for deception, especially so when the public cannot ventilate any grievance
for malpractice against the business conduit. Precisely, the limitation of practice of law to
persons who have been duly admitted as members of the Bar (Sec. 1, Rule 138, Revised Rules of
Court) is to subject the members to the discipline of the Supreme Court. 

PLA, WILOCI, WLAP, and FIDA’s position papers were also in agreement that the Legal
Clinic, Inc. was engaged in the practice of law and that its advertisements were contrary to the
Code of Professional Responsibility.
 SAMAHAN SA OPTEMTRIST SA PILIPINAS
VS
ACEBEDO INTERNATIONAL CORPORATION
GR. NO. 117097 MARCH 21, 1997

FACTS: February 22, 1991 – ACEBEDO INTERNATION CORPORATION (Private

Respondents) filed an application w/ the Mayor’s Office of Candon, Ilocos Sur, for issuance of
permit for the opening and operation of branch of Abecedo Optical Shop.

The application was opposed by the Samahan Optometrist sa Pilipinas. They argued that
Abecedo is a juridical entity and not qualified to practice optometry.

March 6, 1991 – ABECEDO filed its answer. They argued that it is not a corporation, but the
optometrist employed by it, who would be practicing optometry.

April 17, 1991 – The mayor created a committee composed of public respondents to pass on
private respondent’s application.

September 26, 1991 – the committee denied the application – Mayor’s Permit and ordered to
close the establishment within 15 days from receipt.

November 14, 1991 – Acebedo moved for Motion for Reconsideration but was denied. Ordered
to close establishment within 10 days from receipt.

December 9, 1991 – Acebedo filed with CA petition for certiorari questioning decision of
committee. Petition was referred to the court que. Petition dismissed. Then appealed to the CA.

CA – reversed the decision of the court.

Petitioner filed a motion for reconsideration which was denied by respondent appellate court.

ISSUE: W/N CA ERRED IN DECLARING PRIVATE RESPONDENTS (ACEBEDO INTERNATION CORP)

DOES NOT VIOLATE THE OPTOMETRY LAW WHEN IT EMPLOYS OPTOMETRISTS TOP ENGAGED
IN THE PRACTICE UNDER ITS NAME AND ITS BEHALF

RULING: No. The CA is correct in declaring that private respondents does not violate the
optometry law.
The petition lacks merit. The contentions of petitioners is untenable. The fact that private
respondent hires optometrists who practice their profession in the course of their employment
in private respondent's optical shops, does not translate into a practice of optometry by private
respondent itself. Private respondent is a corporation created and organized for the purpose of
conducting the business of selling optical lenses or eyeglasses, among others. The clientele of
private respondent under stably, would largely be composed of persons with defective vision
and thus need the proper lenses to correct the same and enable them to gain normal vision.
The determination of the proper lenses to sell to private respondent's clientele entails the
employment of optometrists who have been precisely trained for that purpose. Private
respondent's business is not the determination itself of the proper lenses needed by persons
with defective vision. Private respondent's business, rather, is the buying and importing of
eyeglasses and lenses and other similar or allied instruments from suppliers thereof and selling
the same to consumers.

There is no evidence in RA No. 1998 that prohibits a corporation from hiring optometrist. Even
in RA No. 8050, there is no prohibition against the hiring by corporation of optometrist.

All told, there is no law that prohibits the hiring by corporations of optometrists or considers
the hiring by corporations of optometrists as a practice by the corporation itself of the
profession of optometry.

Petition is hereby DISMISSED.

 ACEBEDO
VS
CA
GR NO. 100152 MARCH 31, 2000

FACTS: ACEBEDO applied for a business permit with the office of the City mayor of Iligan. Permit was granted
with the following conditions. 1st- Since it is a corporation, IT cannot put up an optical clinic but only a commercial
store. 2nd - cannot examine and/or prescribe reading and similar optical glasses for patients, because these are
functions of optical clinics. 3rd - cannot sell reading and similar eyeglasses without a prescription having first been
made by an independent optometrist (not its employee) or independent optical clinic. It can only sell directly to the
public, without need of a prescription, Ray-Ban and similar eyeglasses. 4 th - cannot advertise optical lenses and
eyeglasses, but can advertise Ray-Ban and similar glasses and frames. 5 th - is allowed to grind lenses but only upon
the prescription of an independent optometrist.

December 5, 1988 – private respondents (SOP) Samahan ng Optometrist - Iligan Chapter, lodged a complaint
alleging Acebedo had violated the conditions in its business permit.

June 12, 1989 investigation was conducted by the legal officer. Petitioner found guilty

July 19, 1989 – City Mayor sent a notice of resolution and cancellation of business permit

October 17, 1989 – petitioner brought up petition for certiorari, prohibition and mandamus w/ prayer for restraining
order/preliminary injunction against respondents. Alleged – denied due process because they were not given the
opportunity to present evidence during the investigation, denied equal protection clause of the laws, City mayor had
no authority to impose special conditions on its business permit and the city legal officer had no authority to conduct
an investigation.

Respondent interposed Motion to dismissed but on Nov. 24, 1989, the presiding judge deferred the resolution of
such motion until after trial of the case on merits. Prayer for writ of preliminary injunction was granted. SOP filed
its answer.

May 30, 1990 - trial court dismissed the petition for failure to exhaust administrative remedies, and dissolved the
writ of preliminary injunction it earlier issued.

June 28, 1990 – Motion for recon by petitioner was denied.

October 30, 1990 – instead of an appeal, petitioner filed a petition for certiorari, prohibition and mandamus with the
Court of Appeals seeking to set aside the questioned Order of Dismissal, branding the same as tainted with grave
abuse of discretion on the part of the trial court.

January 4, 1991 – CA dismissed petition for lack of merit. Motion for recon was denied.

ISSUE: W/N THE MAYOR BEYOND AUTHORITY IN IMPOSING SUNCTIONS

RULING: The petition is impressed with merit.

Although petitioner agrees with the finding of the Court of Appeals that respondent City Mayor acted beyond the
scope of his authority in imposing the assailed conditions in subject business permit, it has excepted to the ruling of
the Court of Appeals that the said conditions nonetheless became binding on petitioner, once accepted, as a private
agreement or contract. Distinction must be made between the grant of a license or permit to do business and the
issuance of a license to engage in the practice of a particular profession. The first is usually granted by the local
authorities and the second is issued by the Board or Commission tasked to regulate the particular profession. A
business permit authorizes the person, natural or otherwise, to engage in business or some form of commercial
activity. A professional license, on the other hand, is the grant of authority to a natural person to engage in the
practice or exercise of his or her profession. In the case at bar, what is sought by petitioner from respondent City
Mayor is a permit to engage in the business of running an optical shop. It does not purport to seek a license to
engage in the practice of optometry as a corporate body or entity, although it does have in its employ, persons who
are duly licensed to practice optometry by the Board of Examiners in Optometry.

In the case at bar, what is sought by petitioner from respondent City Mayor is a permit to engage in the business of
running an optical shop. It does not purport to seek a license to engage in the practice of optometry as a corporate
body or entity, although it does have in its employ, persons who are duly licensed to practice optometry by the
Board of Examiners in Optometry.

In the present case, the objective of the imposition of subject conditions on petitioner's business permit could be
attained by requiring the optometrists in petitioner's employ to produce a valid certificate of registration as
optometrist, from the Board of Examiners in Optometry.

A business permit is issued primarily to regulate the conduct of business and the City Mayor cannot, through the
issuance of such permit, regulate the practice of a profession, like that of optometry.

Wherefore, petition granted, Decision of CA is reversed. Respondent Mayor is hereby ordered to reissue petitioner’s
business permit.