Stonehill vs Diokno (20 SCRA 383) Posted by taxcasesdigest on Tuesday, July 14, 2009 Labels: constitutional law, corporation,

general warrant, search and seizure Facts: 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(cigarettes) as the subject of the offense for violations of Central Bank Act, Tariff and Customs Laws, Internal Revenue Code, and Revised Penal Code.

Upon effecting the search in the offices of the aforementioned corporations and on the respective residences of the petitioners, there seized documents, papers, money and other records. Petitioners then were subjected to deportation proceedings and were constrained to question the legality of the searches and seizures as well as the admissibility of those seized as evidence against them.

On March 20, 1962, the SC issued a writ of preliminary injunction and partially lifted the same on June 29, 1962 with respect to some documents and papers.

Held:

Search warrants issued were violative of the Constitution and the Rules, thus, illegal or being general warrants. There is no probable cause and warrant did not particularly specify the things to be seized. The purpose of the requirement is to avoid placing the sanctity of the domicile and the privacy of communication and correspondence at the mercy of the whims, caprice or passion of peace officers. Document seized from an illegal search warrant is not admissible in court as a fruit of a poisonous tee. However, they could not be returned, except if warranted by the circumstances.

Petitioners were not the proper party to question the validity and return of those taken from the corporations for which they acted as officers as they are treated as personality different from that of the corporation.

PNB vs. CA

Leave a comment GR L-26001, 29 October 1968 FACTS One Augusto Lim deposited in his current account with PCI Bank (Padre Faura Branch) a GSIS check drawn against PNB. The signatures of the General Manager and Auditor of GSIS were forged. PCIBank stamped at the back of the check All prior indorsements or lack of indorsements guaranteed, PCI Bank. PCIBank sent the check to PNB through the Central Bank. PNB did not return the check to PCIBank; and thus PCIBank credited Lims account. As GSIS has informed PNB that the check was lost two months before said transaction, its account was recredited by PNB upon its demand (due to the forged check). PNB requested for refund with PCI Bank. The latter refused. ISSUE Who shall bear the loss resulting from the forged check. HELD The collecting bank is not liable as the forgery existing are those of the drawers and not of the indorsers. The indorsement of the intermediate bank does not guarantee the signature of the drawer. PNBs failure to return the check to the collecting bank implied that the check was good. In fact, PNB even honored the check even if GSIS has reported two months earlier that the check was stolen and the bank thus should stop payment. PNBs negligence was the main and proximate cause for the corresponding loss. PNB thus should bear such loss. Upon payment by PNB, as drawee, the check ceased to be a negotiable instrument, and became a mere voucher or proof of payment.

Philippine Products Company vs Primateria Societe Anonyme Pour Le Commerce Exterieur

on November 19, 2012

15 SCRA 301 Business Organization Corporation Law Liability of Foreign Corporations and their Agents

Primateria Societe Anonyme Pour Le Commerce Exterieur (Primateria Zurich, a sociedad anonima formed in Zurich), through Alexander Baylin, entered into an agreement with Philippine Products Company (PPC) whereby it was agreed that from 1951 to 1953, PPC shall ship copra products abroad. Apparently, Primateria Zurich was not licensed by the Securities and Exchange Commission to do business in the Philippines. Primateria Zurich also failed to pay its obligations amounting to P31,009.71. PPC sued Primateria Zurich and it impleaded Baylin, Primateria Philippines, and one Jose Crame, the latter three being impleaded as agents of Primateria Zurich. The lower court ruled in favor PPC but it absolved Baylin, Crame, and Primateria Philippines. PPC appealed as it insists that Baylin et al should be liable as agents because under Section 68 and 69 of the Corporation Law, the agents of foreign corporations not licensed to transact in the Philippines shall be personally liable for contracts made in their (foreign corporat ions) behalf. ISSUE: Whether or not PPC is correct. HELD: No. PPC was not able to prove that Primateria Zurich, a sociedad anonima, is a foreign corporation. And as a sociedad anonima, Primateria Zurich is not a corporation under our Corporation Law. As such, Sections 68 and 69 cannot be invoked in order to make the alleged agents of Primateria Zurich be liable. PPC will have to enforce the judgment against Primateria Zurich alone.

Philippine Commercial International Bank vs Court of Appeals

on March 9, 2012

Negotiable Instruments Law Rights of the Holder 350 SCRA 446 What Constitutes a Holder in Due Course Negligence of the Collecting Bank and the Drawee Bank
There are three cases consolidated here: G.R. No. 121413 (PCIB vs CA and Ford and Citibank), G.R. No. 121479 (Ford vs CA and Citibank and PCIB), and G.R. No. 128604 (Ford vs Citibank and PCIB and CA).

G.R. No. 121413/G.R. No. 121479

In October 1977, Ford Philippines drew a Citibank check in the amount of P4,746,114.41 in favor of the Commissioner of the Internal Revenue (CIR). The check represents Fords tax payment for the third quarter of 1977. On the face of the check was written Payees account only which means that the check cannot be encashed and can only be deposited with the CIRs savings account (which is with Metrobank).

The said check was however presented to PCIB and PCIB accepted the same. PCIB then indorsed the check for clearing to Citibank. Citibank cleared the check and paid PCIB P4,746,114.41. CIR later informed Ford that it never received the tax payment. An investigation ensued and it was discovered that Fords accountant Godofredo Rivera, when the check was deposited with PCIB, recalled the check since there was allegedly an error in the computation of the tax to be paid. PCIB, as instructed by Rivera, replaced the check with two of its managers checks. It was further discovered that Rivera was actually a member of a syndicate and the managers checks were subsequently deposited with the Pacific Banking Corporation by other members of the syndicate. Thereafter, Rivera and the other members became fugitives of justice.

G.R. No. 128604

In July 1978 and in April 1979, Ford drew two checks in the amounts of P5,851,706.37 and P6,311,591.73 respectively. Both checks are again for tax payments. Both checks are for Payees account only or for the CIRs bank savings account only with Metrobank. Again, these checks never reached the CIR. In an investigation, it was found that these checks were embezzled by the same syndicate to which Rivera was a member. It was established that an employee of PCIB, also a member of the syndicate, created a PCIB account under a fictitious name upon which the two checks, through high end manipulation, were deposited. PCIB unwittingly endorsed the checks to Citibank which the latter cleared. Upon clearing, the amount was withdrawn from the fictitious account by syndicate members. ISSUE: What are the liabilities of each party? HELD: G.R. No. 121413/G.R. No. 121479 PCIB is liable for the amount of the check (P4,746,114.41). PCIB, as a collecting bank has been negligent in verifying the authority of Rivera to negotiate the check. It failed to ascertain whether or not Rivera can validly recall the check and have them be replaced with PCIBs managers checks as in fact, Ford has no knowledge and did not authorize such. A bank (in this case PCIB) which cashes a check drawn upon another bank (in this case Citibank), without requiring proof as to the identity of persons presenting it, or making inquiries with regard to them, cannot hold the proceeds against the drawee when the proceeds of the checks were afterwards diverted to the hands of a third party. Hence, PCIB is liable for the amount of the embezzled check.

G.R. No. 128604

PCIB and Citibank are liable for the amount of the checks on a 50-50 basis. As a general rule, a bank is liable for the negligent or tortuous act of its employees within the course and apparent scope of their employment or authority. Hence, PCIB is liable for the fraudulent act of its employee who set up the savings account under a fictitious name. Citibank is likewise liable because it was negligent in the performance of its obligations with respect to its agreement with Ford. The checks which were drawn against For ds account with Citibank clearly states that they are payable to the CIR only yet Citibank delivered said payments to PCIB. Citibank however argues that the checks were indorsed by PCIB to Citibank and that the latter has nothing to do but to pay it. The Supreme Court cited Section 62 of the Negotiable Instruments Law which mandates the Citibank, as an acceptor of the checks, to engage in paying the checks according to the tenor of the acceptance which is to deliver the payment to the payees account only. But the Supreme Court ruled that in the consolidated cases, that PCIB and Citibank are not the only negligent parties. Ford is also negligent for failing to examine its passbook in a timely manner which could have avoided further loss. But this negligence is not the proximate cause of the loss but is merely contributory. Nevertheless, this mitigates the liability of PCIB and Citibank hence the rate of interest, with which PCIB and Citibank is to pay Ford, is lowered from 12% to 6% per annum. Naguiat v. NLRC (1997) / Panganiban Facts CFTI [Sergio as President; Antolin as VP] held a concessionaire's contract with AAFES for the operation of taxi services in Clark Air Base. Respondents were previously employed by CFTI as taxi drivers. However, AAFES was dissolved as a result of the US military bases phase-out. During the negotiations between AAFES Taxi Drivers Association and CFTI re: separation benefits, it was agreed that separated drivers will be given P500/year of service. Other drivers accepted the amount, but respondents refused to accept it. The respondents, through NOWM, filed a complaint against S. Naguiat (NE), AAFES, and AAFES TDA. They alleged that they were hired by CFTI and then assigned to NE which managed, controlled, and supervised their employment. They averred that they were entitled to separation pay based on their earnings of $15 for working 16 days/month. CFTI's defense that the cessation of business was due to financial losses and lost business opportunity. Labor Arbiter ruled in favor of the respondents, ordering CFTI to pay respondents P1,200/year of service for humanitarian consideration. NLRC affirmed LA's decision with modification by granting separation pay $120/year of service, and held that Naguiat Enterprises, S. Naguiat, and A. Naguiat are jointly and severally liable with CFTI. NLRC issued a second resolution denying the MfR of the petitioners. Issues and Holding

1.

Amount of separation pay 1. Labor Arbiter correctly found that CFTI stopped the taxi business because of the phase-out of the US military bases, and NOT due to great financial loss as the business was earning profitably at the time of closure. 2. LC 283: separation pay = 1 month pay or at least 1/2 month pay/year of service, whichever is higher 3. NLRC did not commit GAD in ruling that respondents were entitled to separation pay of $120 (half of $240 monthly pay) per year of service

2. 3.

Liability of NE, CFTI and officers NE not liable 1. LA found that respondents were employees of CFTI as they received salary from said office, etc. (upheld by SC) 2. S. Naguiat was presumed to be managing and controlling taxi business on behalf of NE; S. Naguiat, in supervising taxi drivers, was carrying out his responsibilities as CFTI 3. NE is a separate corporation completely (trading business); it is neither respondents' indirect employer nor labor-only contractor 4. Constitution of CFTI-AAFES TDA provided that members are CFTI employees and that for collective bargaining purposes, the definite employer is CFTI

4.

CFTI president solidarily liable [S. Naguiat] 1. A.C. Ransom Labor Union-CCLU v. NLRC - family-owned corporation filed application for clearance to cease operations. Backwages were computed; however, none of the motions for execution could be implemented for failure to find leviable assets. LA granted union's prayer that officers and agents be personally held liable for payment of backwages. NLRC however said that officers of a corporation are not personally liable for official acts unless they exceeded scope of authority. SC however reversed NLRC and upheld LA, saying that if the policy of the law were otherwise, the employer can have ways for evading payment of backwages. 2. Employer - any person acting in the interest of an employer, directly or indirectly (LC 212c) 3. Applying the ruling on A.C. Ransom, S. Naguiat falls within the meaning of "employer" who may be held jointly and severally liable for the obligations of the corporation to the dismissed employees 4. Both CFTI and NE were close family corporations (Corp. Code Sec. 100, par. 5) [To the extent that the stockholders are actively engaged in the management or operation of the business [...] Said stockholders shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability insurance] 5. cf. MAM Realty Development v. NLRC: director / officer may still be held solidarily liable with a corporation by a specific provision of law 1. WON there was corporate tort. YES 2. TORT - violation of a right given or the omission of a duty imposed by law; breach of legal duty 6. S. Naguiat is solidarily liable for corporate tort because he actively engaged in CFTI's management or operation

5.

CFTI VP not personally liable [A. Naguiat] 1. Was not shown that he acted in the capacity of a GM 2. No evidence on the extent of his participation in the management, operation of business

6.

NOWM's personality to represent respondents 1. Petitioners held in estoppel for not raising issue before LA or NLRC

7. No denial of due process since the Naguiats availed of the chance to present positions before LA

West Coast Life Insurance vs Geo Hurd

on November 20, 2012

27 Phil 401 Business Organization Corporation Law No Criminal Actions Against A Corporation
In 1912, West Coast Life Insurance caused the distribution of printed materials which impressed among the readers thereof that Insular Life Insurance Company is in bad shape. Insular Life then filed a criminal case for libel against West Coast Insurance. Judge Geo Hurd took cognizance of the case. West Coast Insurance opposed the same as it alleged that it the filing is against prevailing rules of criminal procedure. ISSUE: Whether or not West Coast Life Insurance is correct. HELD: Yes. There is no provision in the prevailing rules of criminal procedure to support the said criminal case filed against West Coast Life Insurance. A corporation cannot be proceeded against criminally in court primarily because a corporation cannot possibly commit a crime absent the essential element of malicious intent. The rule is to proceed against the officials of the corporation and not the corporation itself.

Sergio Naguiat vs National Labor Relations Commission

on November 20, 2012

269 SCRA 564 - Business Organization Corporation Law Close Corporation Liability for Tort

Sergio Naguiat was the president of Clark Field Taxi, Inc. (CFTI) which supplied taxi services to Clark Air Base. At the same time, Naguiat was a director of the Sergio F. Naguiat Enterprises, Inc. (SFNEI), their family owned corporation along with CFTI. In 1991, CFTI had to close due to great financial losses and lost business opportunity resulting from the phase-out of Clark Air Base brought about by the Mt. Pinatubo eruption and the expiration of the RP-US military bases agreement. CFTI then came up with an agreement with the drivers that the latter be entitled to a separation pay in the amount of P500.00 per every year of service. Most of the drivers accepted this but some drivers did not. The drivers who refused to accept the separation pay offered by CFTI instead sued the latter before the labor arbiter. The labor arbiter ruled in favor of the taxi drivers. The National Labor Relations Commission affirmed the labor arbiter. It was established that when CFTI closed, it was in profitable standing and was not incurring losses. It ruled that the drivers are entitled to $120.00 per every year of service subject to exchange rates prevailing that time. The NLRC likewise ruled that SFNEI as well as CFTIs president and vice president Sergio Naguiat and Antolin Naguiat should be held jointly and severally liable to pay the drivers. The NLRC ruled that SFNEI actively managed CFTI and its business affairs hence it acted as the employer of the drivers. ISSUE: Whether or not the ruling of the NLRC is correct. HELD: It is only partially correct. 1. It is correct when it ruled that the Sergio Naguiat is jointly and severally liable to pay the drivers the award of separation pay in the amount so determined. As president of CFTI, Sergio Naguiat is considered an employer of the dismissed employees who is therefore liable for the obligations of the corporation to its dismissed employees. Moreover, CFTI, being a close family corporation, is liable for corporate torts and stockholders thereof shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability insurance (par. 5, Section 100, Close Corporations, Corporation Code). Antolin Naguiat is absolved because there was insufficient evidence as against him. 2. SFNEI is not liable jointly or severally with CFTI. SFNEI has nothing to do with CFTI. There is no sufficient evidence to prove that it actively managed CFTI especially so when even the drivers

testified that their employer is CFTI and that their payroll comes from CFTI. Further, SFNEI was into trading business while CFTI was into taxi services.