Stonehill vs Diokno seizure of books of accounts, ledgers, etc..

Ruling: Thus, the documents, papers, and things seized under the alleged authority of the
warrants in question may be split into two (2) major groups, namely: (a) those found and seized
in the offices of the aforementioned corporations, and (b) those found and seized in the
residences of petitioners herein.
As regards the first group, 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.8 Indeed, it
is well settled that the legality of a seizure can be contested only by the party whose rights have
been impaired thereby,9 and that the objection to an unlawful search and seizure is purely
personal and cannot be availed of by third parties. 10 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 belongsexclusively 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.
PNB vs CA disapproval of lease of sugar quota by PNB resulted in a loss to Ms. Tuazon
A corporation is civilly liable in the same manner as natural persons for torts, because "generally
speaking, the rules governing the liability of a principal or master for a tort committed by an
agent or servant are the same whether the principal or master be a natural person or a
corporation, and whether the servant or agent be a natural or artificial person. All of the
authorities agree that a principal or master is liable for every tort which he expressly directs or
authorizes, and this is just as true of a corporation as of a natural person, A corporation is liable,
therefore, whenever a tortious act is committed by an officer or agent under express direction or
authority from the stockholders or members acting as a body, or, generally, from the directors as
the governing body.
Philippine vs Tan Boon Kong violation of tax laws.
Apparently, the court below based the appealed ruling on the ground that the offense charged
must be regarded as committed by the corporation and not by its officials or agents. This view is
in direct conflict with the great weight of authority. a corporation can act only through its officers
and agent s, and where the business itself involves a violation of the law, the correct rule is that
all who participate in it are liable (Grall and Ostrand's Case, 103 Va., 855, and authorities there
cited.)
In case of State vs. Burnam (17 Wash., 199), the court went so far as to hold that the manager of
a diary corporation was criminally liable for the violation of a statute by the corporation through
he was not present when the offense was committed.
In the present case the information or complaint alleges that he defendant was the manager of a
corporation which was engaged in business as a merchant, and as such manager, he made a
false return, for purposes of taxation, of the total amount of sale made by said false return
constitutes a violation of law, the defendant, as the author of the illegal act, must necessarily
answer for its consequences, provided that the allegation are proven.
Mambulao Lumber vs PNB foreclosure of real and chattel mortgages
Ruling: Herein appellant's claim for moral damages, however, seems to have no legal or factual
basis. 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. 21 A corporation may have a good reputation
which, if besmirched, may also be a ground for the award of moral damages. The same cannot
be considered under the facts of this case, however, not only because it is admitted that herein
appellant had already ceased in its business operation at the time of the foreclosure sale of the
chattels, but also for the reason that whatever adverse effects of the foreclosure sale of the
chattels could have upon its reputation or business standing would undoubtedly be the same

whether the sale was conducted at Jose Panganiban, Camarines Norte, or in Manila which is the
place agreed upon by the parties in the mortgage contract.
But for the wrongful acts of herein appellee bank and the deputy sheriff of Camarines Norte in
proceeding with the sale in utter disregard of the agreement to have the chattels sold in Manila
as provided for in the mortgage contract, to which their attentions were timely called by herein
appellant, and in disposing of the chattels in gross for the miserable amount of P4,200.00, herein
appellant should be awarded exemplary damages in the sum of P10,000.00. The circumstances
of the case also warrant the award of P3,000.00 as attorney's fees for herein appellant.
Asset privatization vs CA ratification of FRP by PNB/DBM representatives
As a rule, a corporation exercises its powers, including the power to enter into contracts, through
its board of directors. While a corporation may appoint agents to enter into a contract in its
behalf, the agent should not exceed his authority. 54 In the case at bar, there was no showing
that the representatives of PNB and DBP in MMIC even had the requisite authority to enter into a
debt-for-equity swap. And if they had such authority, there was no showing that the banks,
through their board of directors, had ratified the FRP.
Settled is the doctrine that in a derivative suit, the corporation is the real party in interest while
the stockholder filing suit for the corporation's behalf is only a nominal party. The corporation
should be included as a party in the suit.
An individual stockholder is permitted to institute a derivative suit on behalf of the corporation
wherein he holds stock in order to protect or vindicate corporate rights, whenever the officials of
the corporation refuse to sue, or are the ones to be sued or hold the control of the corporation. In
such actions, the suing stockholder is regarded as a nominal party, with the corporation as the
real party in interest. . . . . 56
It is a condition sine qua non that the corporation be impleaded as a party because
. . . Not only is the corporation an indispensable party, but it is also the present rule that it must
be served with process. The reason given is that the judgment must be made binding upon the
corporation in order that the corporation may get the benefit of the suit and may not bring a
subsequent suit against the same defendants for the same cause of action. In other words the
corporation must be joined as party because it is its cause of action that is being litigated and
because judgment must be a res ajudicata against it. 57
The reasons given for not allowing direct individual suit are:
(1) . . . "the universally recognized doctrine that a stockholder in a corporation has no title legal
or equitable to the corporate property; that both of these are in the corporation itself for the
benefit of the stockholders." In other words, to allow shareholders to sue separately would
conflict with the separate corporate entity principle;
(2) . . . that the prior rights of the creditors may be prejudiced. Thus, our Supreme Court held in
the case of Evangelista v. Santos, that "the stockholders may not directly claim those damages
for themselves for that would result in the appropriation by, and the distribution among them of
part of the corporate assets before the dissolution of the corporation and the liquidation of its
debts and liabilities, something which cannot be legally done in view of section 16 of the
Corporation Law . . .;
(3) the filing of such suits would conflict with the duty of the management to sue for the
protection of all concerned;
(4) it would produce wasteful multiplicity of suits; and
(5) it would involve confusion in a ascertaining the effect of partial recovery by an individual on
the damages recoverable by the corporation for the same act. 58
If at all an award was due MMIC, which it was not, the same should have been given sans
deduction, regardless of whether or not the party liable had equity in the corporation, in view of
the doctrine that a corporation has a personality separate and distinct from its individual
stockholders or members. DBP's alleged equity, even if it were indeed 87%, did not give it
ownership over any corporate property, including the monetary award, its right over said
corporate property being a mere expectancy or inchoate right. 59 Notably, the stipulation even
had the effect of prejudicing the other creditors of MMIC.

ABS-CBN vs CA unapproved contract for the airing of Viva films

Ruling: Under Corporation Code, 46 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, 47
Delegation to officers makes the latter agents of the corporation; accordingly, the general rules
of agency as to the bindings effects of their acts would apply. 48 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 following findings of the trial court are instructive:
On the issue of moral and exemplary damages:
The award of moral damages cannot be granted in favor of a corporation because, being an
artificial person and having existence only in legal contemplation, it has no feelings, no
emotions, no senses, It cannot, therefore, experience physical suffering and mental anguish,
which call be experienced only by one having a nervous system. 65 The statement in People v.
Manero 66 and Mambulao Lumber Co. v. PNB 67 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.
It may be reiterated that the claim of RBS against ABS-CBN is not based on contract, quasicontract, delict, or quasi-delict, Hence, the claims for moral and exemplary damages can only be
based on Articles 19, 20, and 21 of the Civil Code.
The elements of abuse of right under Article 19 are the following: (1) the existence of a legal
right or duty, (2) which is exercised in bad faith, and (3) for the sole intent of prejudicing or
injuring another. Article 20 speaks of the general sanction for all other provisions of law which do
not especially provide for their own sanction; while Article 21 deals with acts contra bonus
mores, and has the following elements; (1) there is an act which is legal, (2) but which is contrary
to morals, good custom, public order, or public policy, and (3) and it is done with intent to injure.
72
Verily then, malice or bad faith is at the core of Articles 19, 20, and 21. Malice or bad faith
implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral
obliquity. 73 Such must be substantiated by evidence.