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L-23145
DISPOSITION OF
PROPERTIES IN
CUSTODIA LEGIS AND
WHICH FORM PART OF
NAVAL/MILITARY
RESERVATION; AND
IV. THE FULL
DISCLOSURE OF THE
SEC WAS NOT
PROPERLY
PROMULGATED AND
ITS IMPLEMENTATION
AND APPLICATION IN
THIS CASE VIOLATES
THE DUE PROCESS
CLAUSE OF THE
CONSTITUTION.
On June 4, 1996, PALI filed its Comment to the Petition
for Review and subsequently, a Comment and Motion
to Dismiss. On June 10, 1996, PSE fled its Reply to
Comment and Opposition to Motion to Dismiss.
On June 27, 1996, the Court of Appeals promulgated its
Resolution dismissing the PSE's Petition for Review.
Hence, this Petition by the PSE.
The appellate court had ruled that the SEC had both
jurisdiction and authority to look into the decision of
the petitioner PSE, pursuant to Section 3 3 of the
Revised Securities Act in relation to Section 6(j) and
6(m) 4 of P.D. No. 902-A, and Section 38(b) 5 of the
Revised Securities Act, and for the purpose of ensuring
fair administration of the exchange. Both as a
corporation and as a stock exchange, the petitioner is
subject to public respondent's jurisdiction, regulation
and control. Accepting the argument that the public
respondent has the authority merely to supervise or
regulate, would amount to serious consequences,
considering that the petitioner is a stock exchange
whose business is impressed with public interest.
Abuse is not remote if the public respondent is left
without any system of control. If the securities act
vested the public respondent with jurisdiction and
control over all corporations; the power to authorize
the establishment of stock exchanges; the right to
supervise and regulate the same; and the power to
alter and supplement rules of the exchange in the
listing or delisting of securities, then the law certainly
granted to the public respondent the plenary authority
over the petitioner; and the power of review
necessarily comes within its authority.
All in all, the court held that PALI complied with all the
requirements for public listing, affirming the SEC's
ruling to the effect that:
. . . the Philippine Stock Exchange has
acted in an arbitrary and abusive
manner in disapproving the application
of PALI for listing of its shares in the
face of the following considerations:
1. PALI has clearly and admittedly
complied with the Listing Rules and full
disclosure requirements of the
Exchange;
GANCAYCO, J.:
A corporation is an entity separate and distinct from its
stockholders. While not in fact and in reality a person,
the law treats a corporation as though it were a person
by process of fiction or by regarding it as an artificial
person distinct and separate from its individual
stockholders. 1
However, the corporate fiction or the notion of legal
entity may be disregarded when it "is used to defeat
public convenience, justify wrong, protect fraud, or
defend crime" in which instances "the law will regard
the corporation as an association of persons, or in case
of two corporations, will merge them into one." The
corporate fiction may also be disregarded when it is
the "mere alter ego or business conduit of a
person." 2 There are many occasions when this Court
pierced the corporate veil because of its use to protect
fraud and to justify wrong. 3 The herein petition for
review of a. resolution of the Intermediate Appellate
Court dated February 8, 1984 seeking the reversal
thereof and the reinstatement of its earlier decision
dated June 30, 1983 in AC-G.R. No. 68496-R 4 calls for
the application of the foregoing principles.
In the latter part of December, 1977 the board of
directors of Akron Customs Brokerage Corporation
(hereinafter referred to as Akron), composed of
petitioner Jose Remo, Jr., Ernesto Baares, Feliciano
Coprada, Jemina Coprada, and Dario Punzalan with
Lucia Lacaste as Secretary, adopted a resolution
authorizing the purchase of thirteen (13) trucks for use
in its business to be paid out of a loan the corporation
may secure from any lending institution. 5
Feliciano Coprada, as President and Chairman of Akron,
purchased thirteen trucks from private respondent on
January 25, 1978 for and in consideration of
P525,000.00 as evidenced by a deed of absolute
sale. 6 In a side agreement of the same date, the
parties agreed on a downpayment in the amount of
P50,000.00 and that the balance of P475,000.00 shall
be paid within sixty (60) days from the date of the
execution of the agreement. The parties also agreed
that until said balance is fully paid, the down payment
PANGANIBAN, J.:
May corporate treasurer, by herself and without any
authorization from he board of directors, validly sell a
parcel of land owned by the corporation?. May the veil
of corporate fiction be pierced on the mere ground that
almost all of the shares of stock of the corporation are
owned by said treasurer and her husband?
The Case
These questions are answered in the negative by this
Court in resolving the Petition for Review
on Certioraribefore us, assailing the March 18, 1997
Decision 1 of the Court of Appeals 2 in CA GR CV No.
46801 which, in turn, modified the July 18, 1994
Decision of the Regional Trial Court of Makati, Metro
Manila, Branch 63 3 in Civil Case No. 89-3511. The RTC
dismissed both the Complaint and the Counterclaim
filed by the parties. On the other hand, the Court of
Appeals ruled:
WHEREFORE, premises considered, the
appealed decision is AFFIRMED WITH
MODIFICATION ordering defendantappellee Nenita Lee Gruenberg to
REFUND or return to plaintiff-appellant
the downpayment of P100,000.00
which she received from plaintiff-
45
A Yes, sir.
51
CRUZ, J.:
The Philippine Veterans Bank was created in 1963 with
the hope that it would ensure the economic future and
perhaps even prosperity of the hundreds of thousands
of war veterans who were to be its stockholders. For a
while the vision grew, but in time it dimmed and finally
faded as the Bank found itself enmeshed in financial
difficulties that threatened its very survival. Now the
dream is in tatters. Efforts are at present being taken
to piece together its severed sinews but it is doubtful if
the Bank will ever be whole again.
I
The trouble began when on April 10, 1983, the Bank
was placed under receivership by virtue of Resolution
No. 334 of the Monetary Board of the Central Bank. The
reason was the precarious condition of the Bank. A
year later, on April 26, 1984, the Philippine Veterans
Bank Employees Union questioned the retrenchment
and reorganization program of the Bank and, on the
ground of security of tenure, prayed that the said
program be prohibited. In its petition, which was
docketed as G.R. No. 67125, the Union also asked for a
temporary restraining order, which was issued on May
9, 1984. Subsequently, while the case was pending,
the Monetary Board ordered the liquidation of the Bank
by Resolution No. 612 dated June 7, 1985, after finding
that the Bank had incurred an outstanding liability of
P540,835,860.79. This order was opposed by the Union
in a supplemental petition for prohibition with
preliminary injunction filed on September 25, 1985. On
November 26,1985, the Veterans Federation of the
Philippines entered the picture and filed with leave of
court a petition in intervention which, besides echoing
the original petition in opposing the liquidation,
asserted the additional claim that it was in the process
of formulating plans for the rehabilitation and eventual
II
The Court has purposely delayed resolution of these
cases in the hope that it would not be necessary to do
so in view of the efforts being taken by the Executive
Department for the rehabilitation of the Bank. The
agency in charge of this matter is the Special
Presidential Committee on the Philippine Veterans
Bank, which was created by Adm. Order No. 29 dated
July 10, 1987, and renewed by Adm. Order No. 62
dated February 23, 1988 and by Adm. Order No. 90
dated September 2, 1988, to study the financial
condition of the Bank and determine the feasibility of
its rehabilitation. However, although we may assume
that the Committee has been assiduously pursuing its
objectives and while there are optimistic statements
every now and then that the Bank will be reopening
soon, that prospect does not really seem to be in sight
yet. We have therefore decided to finally resolve these
cases, applying a judicial solution which, when all is
said and done, will still be less acceptable than a
practical administrative settlement.
III
The basic issue in these petitions is whether the
Central Bank has the power to liquidate the Philippine
Veterans Bank.
The petitioners dispute this authority. In G.R. No.
67125, they claim that as the Bank was created by a
special law, a contractual relationship now exists
between the Government and the stockholders of the
Bank that cannot be disturbed without violation of the
impairment clause. The acceptance of the benefits of
that law by the petitioners had conferred a vested right
on them that cannot now be withdrawn without their
consent as this would constitute a deprivation of their
property without due process of law. Assuming that
such benefits could be validly revoked, this cannot be
done by the Central Bank only but by the legislature
itself which conferred the franchise on the Bank in the
first place. Moreover, the Central Bank cannot exercise
any authority over the Bank because the latter is itself
also a government bank with the same status as the
Development Bank of the Philippines, the Land Bank of
the Philippines, and the Philippine National Bank. The
Central Bank has no control over these government
lending institutions.
We sustain the position of the respondents that these
arguments are not well-taken.
The mere fact that the Bank was created by special law
does not confer upon it extraordinary privileges over
and above those granted similar charters like the
Development Bank of the Philippines and the Land
Bank of the Philippines. As a lending institution, it is
part of the banking system and therefore covered by
the regulatory power exercised over such entities by
the Central Bank. Such authority is expressly provided
for in the Central Bank Act, as follows:
Sec. 25. Creation of the appropriate
departments. In order to assure the
observance of this Act and of other
pertinent laws, and of the rules and
regulations of the Monetary Board, the
Central Bank shall have appropriate
supervising and examining
FACTS.
Smith, Bell & Co., (Ltd.), is a corporation organized and
existing under the laws of the Philippine Islands. A
majority of its stockholders are British subjects. It is the
owner of a motor vessel known as the Bato built for it
in the Philippine Islands in 1916, of more than fifteen
tons gross The Bato was brought to Cebu in the
present year for the purpose of transporting plaintiff's
merchandise between ports in the Islands. Application
was made at Cebu, the home port of the vessel, to the
Collector of Customs for a certificate of Philippine
registry. The Collector refused to issue the certificate,
giving as his reason that all the stockholders of Smith,
Bell & Co., Ltd., were not citizens either of the United
States or of the Philippine Islands. The instant action is
the result.
LAW.
The Act of Congress of April 29, 1908, repealing the
Shipping Act of April 30, 1906 but reenacting a portion
of section 3 of this Law, and still in force, provides in its
section 1:
That until Congress shall have authorized the
registry as vessels of the United States of
vessels owned in the Philippine Islands, the
Government of the Philippine Islands is hereby
authorized to adopt, from time to time, and
enforce regulations governing the
transportation of merchandise and passengers
between ports or places in the Philippine
Archipelago. (35 Stat. at L., 70; Section 3912,
U. S. Comp Stat. [1916]; 7 Pub. Laws, 364.)
The Act of Congress of August 29, 1916, commonly
known as the Jones Law, still in force, provides in
section 3, (first paragraph, first sentence), 6, 7, 8, 10,
and 31, as follows.
EN BANC
[G.R. No. L-32409. February 27, 1971.]
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.
San Juan, Africa, Gonzales & San Agustin,
for Petitioners.
Solicitor General Felix Q. Antonio, Assistant Solicitor
General Crispin V . Bautista, Solicitor Pedro A. Ramirez
and Special Attorney Jaime M. Maza for Respondents.
DECISION
VILLAMOR, J.:
PADILLA, J.:
The facts in this ease are not disputed. As stated by
the Court of Appeals in its assailed decision, * dated 29
November 1974, rendered in CA-G.R. No. 12602-CR,
they are as follows:
... on October 31, 1963 Jose O. Sia
(appellant herein), President and
General Manager of the Metal
Manufacturing of the Philippines, Inc.
for and in its behalf, applied for and
was granted a Letter of Credit (Exhibit
"A") with the Continental Bank, Manila
to cover the importation of One
MALCOLM, J.:
By telegrams and a letter of confirmation to the
manager of the Aparri branch of the Philippine National
Bank, Venancio Concepcion, President of the Philippine
National Bank, between April 10, 1919, and May 7,
1919, authorized an extension of credit in favor of
"Puno y Concepcion, S. en C." in the amount of
P300,000. This special authorization was essential in
view of the memorandum order of President
Concepcion dated May 17, 1918, limiting the
discretional power of the local manager at Aparri,
Cagayan, to grant loans and discount negotiable
documents to P5,000, which, in certain cases, could be
increased to P10,000. Pursuant to this authorization,
credit aggregating P300,000, was granted the firm of
"Puno y Concepcion, S. en C.," the only security
required consisting of six demand notes. The notes,
together with the interest, were taken up and paid by
July 17, 1919.
"Puno y Concepcion, S. en C." was a copartnership
capitalized at P100,000. Anacleto Concepcion
contributed P5,000; Clara Vda. de Concepcion, P5,000;
Miguel S. Concepcion, P20,000; Clemente Puno,
P20,000; and Rosario San Agustin, "casada con Gral.
Venancio Concepcion," P50,000. Member Miguel S.
Concepcion was the administrator of the company.
On the facts recounted, Venancio Concepcion, as
President of the Philippine National Bank and as
member of the board of directors of this bank, was
charged in the Court of First Instance of Cagayan with a
violation of section 35 of Act No. 2747. He was found
guilty by the Honorable Enrique V. Filamor, Judge of
First Instance, and was sentenced to imprisonment for
one year and six months, to pay a fine of P3,000, with
subsidiary imprisonment in case of insolvency, and the
costs.
Section 35 of Act No. 2747, effective on February 20,
1918, just mentioned, to which reference must
hereafter repeatedly be made, reads as follows: "The
National Bank shall not, directly or indirectly, grant
loans to any of the members of the board of directors
of the bank nor to agents of the branch banks." Section
49 of the same Act provides: "Any person who shall
violate any of the provisions of this Act shall be
punished by a fine not to exceed ten thousand pesos,
or by imprisonment not to exceed five years, or by
both such fine and imprisonment." These two sections
were in effect in 1919 when the alleged unlawful acts
took place, but were repealed by Act No. 2938,
approved on January 30, 1921.
Counsel for the defense assign ten errors as having
been committed by the trial court. These errors they
have argued adroitly and exhaustively in their printed
brief, and again in oral argument. Attorney-General
Villa-Real, in an exceptionally accurate and
notes fell due; and (2) they were single-name and not
double-name paper.
3.
4.
5.
6.
BELLOSILLO, J.:
This was gruesome murder in a main thoroughfare an
hour before sundown. A hapless foreign religious
minister was riddled with bullets, his head shattered
into bits and pieces amidst the revelling of his
executioners as they danced and laughed around their
quarry, chanting the tune "Mutya Ka Baleleng", a
popular regional folk song, kicking and scoffing at his
prostrate, miserable, spiritless figure that was gasping
its last. Seemingly unsatiated with the ignominy of
their manslaughter, their leader picked up pieces of the
splattered brain and mockingly displayed them before
horrified spectators. Some accounts swear that acts of
cannibalism ensued, although they were not
sufficiently demonstrated. However, for their
outrageous feat, the gangleader already earned the
monicker "cannibal priest-killer" But, what is
indubitable is that Fr. Tulio Favali 1 was senselessly
killed for no apparent reason than that he was one of
the Italian Catholic missionaries laboring in heir
vineyard in the hinterlands of Mindanao. 2
In the aftermath of the murder, police authorities
launched a massive manhunt which resulted in the
capture of the perpetrators except Arsenio Villamor, Jr.,
and two unidentified persons who eluded arrest and
still remain at large.
Informations for Murder, 3 Attempted Murder 4 and
Arson 5 were accordingly filed against those responsible
for the frenzied orgy of violence that fateful day of 11
April 1985. As these cases arose from the same
occasion, they were all consolidated in Branch 17 of
the Regional Trial Court of Kidapawan, Cotabato. 6
as he is (sic) an Italian
and if they could not
kill the persons they
like to kill they will (sic)
make Reynaldo
Deocades as their
sample.
That appellants and their co-accused reached a
common understanding to kill another Italian priest in
the event that Fr. Peter Geremias could not be spotted
was elucidated by Bantolo thus 29
Q Who suggested that
Fr. Peter be the first to
be killed?
A All of them in the
group.
Q What was the
reaction of Norberto
Manero with respect to
the plan to kill Fr.
Peter?
A He laughed and even
said, "amo ina"
meaning "yes, we will
kill him ahead."
xxx xxx xxx
Q What about Severino
Lines? What was his
reaction?
A He also laughed and
so conformed and
agreed to it.
Q Rudy Lines.
A He also said "yes".
Q What do you mean
"yes"?
A He also agreed and
he was happy and said
"yes" we will kill him.
xxx xxx xxx
Q What about Efren
Pleago?
A He also agreed and
even commented
laughing "go ahead".
Q Roger Bedao, what
was his reaction to that
suggestion that should
they fail to kill Fr. Peter,
they will (sic) kill
anybody provided he is
an Italian and if not,
they will (sic) make
Reynaldo Deocades an
example?
A He also agreed
laughing.
Conspiracy or action in concert to achieve a criminal
design being sufficiently shown, the act of one is the
act of all the other conspirators, and
the precise extent or modality of participation of each
of them becomes secondary. 30
The award of moral damages in the amount of
P100,000.00 to the congregation, the Pontifical
Institute of Foreign Mission (PIME) Brothers, is not
proper. There is nothing on record which indicates that
the deceased effectively severed his civil relations with
his family, or that he disinherited any member thereof,
when he joined his religious congregation. As a matter
of fact, Fr. Peter Geremias of the same congregation,
who was then a parish priest of Kidapawan, testified
that "the religious family belongs to the natural family
of origin." 31 Besides, as We already held, 32 a juridical
person is not entitled to moral damages because, not
being a natural person, it cannot experience physical
suffering or such sentiments as wounded feelings,
serious anxiety, mental anguish or moral shock. It is
only when a juridical person has a good reputation that
is debased, resulting in social humiliation, that moral
damages may be awarded.
Neither can We award moral damages to the heirs of
the deceased who may otherwise be lawfully entitled
thereto pursuant to par. (3), Art. 2206, of the Civil
Code, 33 for the reason that the heirs never presented
any evidence showing that they suffered mental
anguish; much less did they take the witness stand. It
has been held 34 that moral damages and their causal
relation to the defendant's acts should be satisfactorily
proved by the claimant. It is elementary that in order
that moral damages may be awarded there must be
proof of moral suffering. 35 However, considering that
the brutal slaying of Fr. Tulio Favali was attended with
abuse of superior strength, cruelty and ignominy by
deliberately and inhumanly augmenting the pain and
anguish of the victim, outraging or scoffing at his
person or corpse, exemplary damages may be awarded
to the lawful heirs, 36 even though not proved nor
expressly pleaded in the complaint, 37 and the amount
of P100,000.00 is considered reasonable.
With respect to the civil indemnity of P12,000.00 for
the death of Fr. Tulio Favali, the amount is increased to
P50,000.00 in accordance with existing jurisprudence,
which should be paid to the lawful heirs, not the PIME
as the trial court ruled.
WHEREFORE, the judgment appealed from being in
accord with law and the evidence is AFFIRMED with the
modification that the civil indemnity which is increased
from P12,000.00 to P50,000.00 is awarded to the lawful
heirs of the deceased plus exemplary damages of
P100,000.00; however, the award of moral damages is
deleted.
Dear Vic,
SO ORDERED.
16
as grant Viva
commercial slots worth
P19,950,000.00. We
had already earmarked
this P16, 050,000.00.
which gives a total consideration of P36
million (P19,950,000.00 plus
P16,050,000.00. equals
P36,000,000.00).
On cross-examination Mr. Lopez
testified:
Q. What was written in
this napkin?
A. The total price, the
breakdown the known
Viva movies, the 7
blockbuster movies and
the other 7 Viva movies
because the price was
broken down
accordingly. The none
[sic] Viva and the
seven other Viva
movies and the sharing
between the cash
portion and the
concerned spot portion
in the total amount of
P35 million pesos.
xxx
xxx
xxx
xxx
QUIASON, J.:
This is a petition under Rule 65 of the Revised Rules of
Court to prohibit respondents from further
implementing and enforcing the "Revised and Restated
Agreement to Build, Lease and Transfer a Light Rail
Transit System for EDSA" dated April 22, 1992, and the
"Supplemental Agreement to the 22 April 1992 Revised
and Restated Agreement To Build, Lease and Transfer a
Light Rail Transit System for EDSA" dated May 6, 1993.
Petitioners Francisco S. Tatad, John H. Osmena and
Rodolfo G. Biazon are members of the Philippine
Senate and are suing in their capacities as Senators
and as taxpayers. Respondent Jesus B. Garcia, Jr. is the
incumbent Secretary of the Department of
Transportation and Communications (DOTC), while
private respondent EDSA LRT Corporation, Ltd. is a
private corporation organized under the laws of
Hongkong.
I
In 1989, DOTC planned to construct a light railway
transit line along EDSA, a major thoroughfare in
Metropolitan Manila, which shall traverse the cities of
Pasay, Quezon, Mandaluyong and Makati. The plan,
referred to as EDSA Light Rail Transit III (EDSA LRT III),
was intended to provide a mass transit system along
EDSA and alleviate the congestion and growing
transportation problem in the metropolis.
On March 3, 1990, a letter of intent was sent by the Eli
Levin Enterprises, Inc., represented by Elijahu Levin to
DOTC Secretary Oscar Orbos, proposing to construct
the EDSA LRT III on a Build-Operate-Transfer (BOT)
basis.
On March 15, 1990, Secretary Orbos invited Levin to
send a technical team to discuss the project with
DOTC.
On July 9, 1990, Republic Act No. 6957 entitled "An Act
Authorizing the Financing, Construction, Operation and
Maintenance of Infrastructure Projects by the Private
Sector, and For Other Purposes," was signed by
President Corazon C. Aquino. Referred to as the BuildOperate-Transfer (BOT) Law, it took effect on October 9,
1990.
Republic Act No. 6957 provides for two schemes for the
financing, construction and operation of government
projects through private initiative and investment:
Build-Operate-Transfer (BOT) or Build-Transfer (BT).
(e) Build-lease-and-transfer A
contractual arrangement whereby a
project proponent is authorized to
finance and construct an infrastructure
or development facility and upon its
completion turns it over to the
government agency or local
government unit concerned on a lease
arrangement for a fixed period after
which ownership of the facility is
automatically transferred to the
government unit concerned.
Section 5-A of the law, which expressly allows direct
negotiation of contracts, provides:
Direct Negotiation of Contracts.
Direct negotiation shall be resorted to
when there is only one complying
bidder left as defined hereunder.
(a) If, after advertisement, only one
contractor applies for prequalification
and it meets the prequalification
requirements, after which it is required
to submit a bid proposal which is
subsequently found by the
agency/local government unit (LGU) to
be complying.
(b) If, after advertisement, more than
one contractor applied for
prequalification but only one meets the
prequalification requirements, after
which it submits bid/proposal which is
found by the agency/local government
unit (LGU) to be complying.
(c) If, after prequalification of more
than one contractor only one submits a
bid which is found by the agency/LGU
to be complying.
(d) If, after prequalification, more than
one contractor submit bids but only
one is found by the agency/LGU to be
complying. Provided, That, any of the
disqualified prospective bidder [sic]
may appeal the decision of the
implementing agency, agency/LGUs
prequalification bids and awards
committee within fifteen (15) working
days to the head of the agency, in case
of national projects or to the
Department of the Interior and Local
Government, in case of local projects
from the date the disqualification was
made known to the disqualified bidder:
Provided, furthermore, That the
implementing agency/LGUs concerned
should act on the appeal within fortyfive (45) working days from receipt
thereof.
Petitioners' claim that the BLT scheme and direct
negotiation of contracts are not contemplated by the
BOT Law has now been rendered moot and academic
by R.A. No. 7718. Section 3 of this law authorizes all
government infrastructure agencies, governmentowned and controlled corporations and local
April 9, 1948