SMITH, BELL & COMPANY (LTD.), petitioner, vs.

which in turn was merely a reflection of

JOAQUIN NATIVIDAD, Collector of the statutory language of the first
Customs of the port of Cebu, respondent. American Congress,

Registration of a corporation cannot be ID.; ID.; ID. ; ID.—Without any

compelled by mandamus subterfuge, the apparent purpose of
the Philippine Legislature is seen to be
to enact an antialien shipping act. The
ID.; COMMERCE; UNITED STATES
'ultimate purpose of the Legislature is to
COASTWISE TRADE.—The power to
encourage Philippine ship-building.
regulate commerce, expressly
delegated to the Congress by the
ID.; ID. ; ID.; ID.—The Philippine
Constitution, includes the power to
Legislature made up entirely of
nationalize ships built and owned in the
Filipinos, representing the mandate of
United States by registries and
the Filipino people and the guardian of
enrollments, and the recording of the
their rights, acting under practically
muniments of title of American vessels.
autonomous powers, and imbued with
a strong sense of Philippinism, has
ID.; ID.; ID.—Under the Acts of Congress
desired for these Islands safety from
of December 31, 1792, and February
foreign interlopers, the use of the
18, 1793 (1 Stat. at L., 287, 305) in case
common property exclusively by its
of alienation to a foreigner, all the
citizens and the citizens of the United
privileges of an American bottom were
States, and protection for the common
ipso facto forfeited. No vessel in which
good of the people.
a foreigner was directly or indirectly
interested could lawfully be registered
ID.; ID. ; ID. ; ID.—Act No. 2761 of the
as a vessel of the United States.
Philippine Legislature, limiting'
certificates of the Philippine registry to
ID.; ID.; ID.—The Act of Congress of
vessels of domestic ownership vested
May 28, 1895 (29 Stat. at L., 188) in some one or more of the following
extended the privileges of registry from
classes of persons: (a) citizens or
vessels wholly owned by a citizen or
native inhabitants of the Philippine
citizens of the United States to
Islands;
corporations created under the laws of
(b) citizens of the United States residing
any of the states thereof. This law made
in the Philippine Islands;
it possible for a domestic corporation
(c) any corporation or company
to obtain the registry or enrollment of its
composed wholly of citizens of the
vessels even though some stock of the
Philippine Islands or of the United States
corporation was owned by aliens.
or both, is authorized by the Act of
Congress of April 29, 1908, with its
ID. ; ID. ; PHILIPPINE COASTWISE TRADE;
specific delegation of authority to the
ACT No. 2761, VALIDITY.—The history of
Government of the Philippine Islands to
the different laws which have
regulate the transportation of
concerned the Philippine coastwise
merchandise and passengers
trade is set out in the opinion. The last
between ports or places therein, and
Act on the subject, No. 2761, has
by the grant by the Act of Congress of
returned to the restrictive idea of the
original Customs Administrative Act
 August 29, 1916, of general legislative
power to the Philippine Legislature.
ID. ; ID. ; ID. ; ID.—While the plaintiff, a
corporation having alien stockholders,
is entitled to the protection afforded by
the due process of law and equal
protection of the laws clause of the
Philippine Bill of Rights, yet Act No.
2761, in denying to corporations such
as the plaintiff the right to register
vessels in the Philippine coastwise
trade, does not belong to that vicious
species of class legislation which must
always be condemned, but falls within
authorized exceptions, notably, within
the purview of the police power.
ID. ; ID.; ID. ; ID.—Act No. 2761 does not
violate the provisions of paragraph 1 of
section 3 of the Act of Congress of
August 29, 1916, providing "that no law
shall be enacted in said Islands which
shall deprive any person of life, liberty,
or property without due process of law,
or deny to any person therein the
equal protection of the laws."
Gist of the case: A writ of mandamus is
prayed for by Smith, Bell & Co. (Ltd.),
against Joaquin Natividad, Collector of
Customs of the port of Cebu, Philippine
Islands, to compel him to issue a
certificate of Philippine registry to the
petitioner for its motor vessel Bato. The
question, flatly presented, is, whether
Act. No. 2761 of the Philippine Legislature
is valid — or, more directly stated,
whether the Government of the
Philippine Islands, through its Legislature,
can deny the registry of vessels in its
coastwise trade to corporations having
alien stockholders.
FACTS:
1. Smith, Bell & Co., (Ltd.), is a
corporation organized and
existing under the laws of the
Philippine Islands.
2. A majority of its stockholders are
British subjects.
3. 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.
4. Application was made at Cebu,
the home port of the vessel, to the
Collector of Customs for a
certificate of Philippine registry.
5. 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.
Issue:
1. W/N the Government of the
Philippine Islands, through its
Legislature, can deny the registry
of vessel in its coastwise trade to
corporations having alien
stockholders .
Held:
1. While Smith, Bell & Co. Ltd., a
corporation having alien
stockholders, is entitled to the
protection afforded by the due-
process of law and equal
protection of the laws clause of
 the Philippine Bill of Rights,
nevertheless, Act No. 2761 of the
Philippine Legislature, in denying
to corporations such as Smith, Bell
&. Co. Ltd., the right to register
vessels in the Philippines coastwise
trade, does not belong to that
vicious species of class legislation
which must always be
condemned, but does fall within
authorized exceptions, notably,
within the purview of the police
power, and so does not offend
against the constitutional
provision.
2. The power to regulate
commerce, expressly delegated
to the Congress by the
Constitution, includes the power
to nationalize ships built and
owned in the United States by
registries and enrollments, and the
recording of the muniments of title
of American vessels. The Congress
"may encourage or it may entirely
prohibit such commerce, and it
may regulate in any way it may
see fit between these two
extremes."
These laws
continued in force
without contest,
although possibly
the Act of March 3,
1825, may have
affected them, until
amended by the
Act of May 28, 1896
(29 Stat. at L., 188)
which extended the
privileges of registry
from vessels wholly
owned by a citizen
or citizens of the
United States to
corporations
created under the
laws of any of the
states thereof. The
law, as amended,
made possible the
deduction that a
vessel belonging to
a domestic
corporation was
entitled to registry or
enrollment even
though some stock
of the company be
owned by aliens.
The right of
ownership of stock
in a corporation was
thereafter distinct
from the right to
hold the property by
the corporation
(Humphreys vs. McK
issock [1890], 140
U.S., 304;
Queen vs. Arnaud
[1846], 9 Q. B., 806;
29 Op. Atty.-Gen.
[U.S.],188.)
3. Provisions such as those in Act No.
2761, which deny to foreigners the
right to a certificate of Philippine
registry, are thus found not to be
as radical as a first reading would
make them appear.
4. Purpose of the Philippine
Legislature: To encourage
Philippine ship-building. This,
without doubt, has, likewise, been
the intention of the United States
Congress in passing navigation or
tariff laws on different occasions.
The object of such a law, the
United States Supreme Court
once said, was to encourage
American trade, navigation, and
ship-building by giving American
 ship-owners exclusive privileges. 6. The limitation of domestic
(Old Dominion Steamship ownership for purposes of
Co. vs.Virginia [1905], 198 U.S., obtaining a certificate of
299; Kent's Commentaries, Vol. 3, Philippine registry in the coastwise
p. 139.) trade to citizens of the Philippine
Islands, and to citizens of the
5. The United States Congress in United States, does not violate the
assuming its grave responsibility of provisions of paragraph 1 of
legislating wisely for a new section 3 of the Act of Congress of
country did so imbued with a spirit August 29, 1916 No treaty right
of Americanism. Domestic relied upon Act No. 2761 of the
navigation and trade, it decreed, Philippine Legislature is held valid
could only be carried on by and constitutional .
citizens of the United States. If the
representatives of the American
Stonehill v. Diokno (1967)
people acted in this patriotic
manner to advance the national G.R. No. L-19550 | 1967-06-19
policy, and if their action was
accepted without protest in the
courts, who can say that they did
not enact such beneficial laws
under the all-pervading police
Right Against Unlawful Search is
power, with the prime motive of
Personal
safeguarding the country and of
promoting its prosperity? Quite
1. As regards the warrants issued to the
similarly, the Philippine Legislature
corporations, we hold that petitioners
made up entirely of Filipinos,
herein have no cause of action to
representing the mandate of the
assail the legality of the contested
Filipino people and the guardian
warrants and of the seizures made in
of their rights, acting under
pursuance thereof, for the simple
practically autonomous powers,
reason that said corporations have
and imbued with a strong sense of
their respective personalities, separate
Philippinism, has desired for these
and distinct from the personality of
Islands safety from foreign
herein petitioners, regardless of the
interlopers, the use of the
amount of shares of stock or of the
common property exclusively by
interest of each of them in said
its citizens and the citizens of the
corporations, and whatever the offices
United States, and protection for
they hold therein may be.
the common good of the people.
Who can say, therefore,
2. Indeed, it is well settled that
especially can a court, that with
the legality of a seizure can be
all the facts and circumstances
contested only by the party whose
affecting the Filipino people
rights have been impaired thereby,
before it, the Philippine Legislature
and that the objection to an unlawful
has erred in the enactment of Act
search and seizure is purely personal
No. 2761.
 and cannot be availed of by third
parties.
Facts:
1. Several judges issued 42 search
warrants against Stonehill and other
petitioners to seize “books of accounts,
financial records, vouchers,
correspondence, receipts, ledgers,
journals, portfolios, credit journals,
typewriters,and other documents and/or
papers showing all business
transactions including disbursements
receipts, balance sheets and profit and
loss statements and Bobbins (cigarette
wrappers),” claiming violations of
“Central Bank Laws, Tariff and Customs
Laws, Internal Revenue (Code) and
Revised Penal Code.”
2. The documents were seized from two
locations:
(1) their corporate offices and
(2) the personal residences of the
petitioners.
3. The respondent-judges claim that the
warrants were valid, and any possible
defects are cured by Stonehill’s
consent.
Held:
Right Against Unlawful Search is Personal
1. As regards the warrants issued to the
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.
2. 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.
Bache & Co. (Phil), Inc. vs. Ruiz (1971)
G.R. No. L-32409 | 1971-02-27
Right of a corporation to object
against unreasonable searches
and seizures
In Stonehill vs. Diokno, this Court
impliedly recognized the right of
a corporation to object against
unreasonable searches and
seizures. In the Stonehill case
only the officers of the various
corporations in whose offices
documents, papers and effects
were searched and seized. It
was said that the corporations
therein herein had 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 [its individual
officers], regardless of the
amount of shares of stock or the
interest of each of them in said
corporations.
In the case at bar, the
corporation to whom the seized
documents belong, and whose
rights have thereby been
impaired, is itself a petitioner.
On that score, petitioner
corporation (Bache and Co.)
here stands on a different
footing from the corporations in
Stonehill.
Facts:
1. Misael P. Vera, Commissioner of
Internal Revenue, wrote a letter to CFI
Judge Ruiz requesting the issuance of a
search warrant against petitioners Bache
& Co. (Phil.), Inc. and its President,
Frederick E. Seggerman, for violation of
Section 46(a) of the National Internal
Revenue Code (NIRC), 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.
2. On February 25, 1970, De Leon
and his witness, Arturo Logronio,
went to the sala of Judge Ruiz,
bringing with them their
supporting documents for the
application of the search
warrrant.
3. At that time, Judge Ruiz 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.
4. After the session had adjourned,
Judge Ruiz was informed that the
depositions had already been
taken. The stenographer, upon
request of Judge Ruiz, read to him
her stenographic notes, and
thereafter, Judge Ruiz 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.
5. Judge Ruiz signed De Leon's
application for search warrant
and Logronio's deposition. Search
Warrant No. 2-M-70 was then sign
by Judge Ruiz and accordingly
issued.
6. Three days later, or on February
28, 1970, which was a Saturday,
the BIR agents served the search
warrant at the offices of petitioner
Bache & Co. on Ayala Avenue,
Makati, Rizal.
7. Petitioners' 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 six boxes of
documents.
8. Petitioners filed a petition with the
CFI praying that the search
warrant be quashed. The petition
was dismissed by Judge Ruiz.
9. In the meantime, the Bureau of
Internal Revenue made tax
assessments on Bache & Co. for BATAAN SHIPYARD & ENGINEERING CO.,
P2,594,729.97, partly, if not INC. (BASECO), petitioner, vs.
entirely, based on the documents PRESIDENTIAL COMMISSION ON GOOD
thus seized. Petitioners thus came GOVERNMENT, CHAIRMAN JOVITO
to the Supreme Court to declare SALONGA, COMMISSIONER MARY
null and void Search Warrant. CONCEPCION BAUTISTA, COMMISSIONER
RAMON DIAZ, COMMISSIONER RAUL R.
Held: DAZA, COMMISSIONER QUINTIN S.
DOROMAL, CAPT. JORGE B. SIACUNCO,
1. In Stonehill vs. Diokno, this Court et al., respondents.
impliedly recognized the right of a
corporation to object against
unreasonable searches and
seizures. In the Stonehill case only
Same; Same; Same; Right against self-
the officers of the various
incrimination has no application to
corporations in whose offices
juridical persons and the constitutional
documents, papers and effects safeguard against unreasonable
were searched and seized. It was searches and seizures finds no
said that the corporations therein application to the case at bar either.—
herein had no cause of action to BASECO also contends that its right
assail the legality of the contested against self-incrimination and
warrants and of the seizures made unreasonable searches and seizures
in pursuance thereof, for the had been transgressed by the Order of
simple reason that said April 18,1986 which required it "to
corporations have their produce corporate records from 1973
respective personalities, separate to 1986 under pain of contempt of the
Commission if it fails to do so." The
and distinct from the personality
order was issued upon the authority of
of [its individual officers],
Section 3 (e) of Executive Order No. 1,
regardless of the amount of shares treating of the PCGG's power to "issue
of stock or the interest of each of subpoenas requiring * * the production
them in said corporations. of such books, papers, contracts,
records, statements of accounts and
2. In the case at bar, the other documents as may be material
corporation to whom the seized to the investigation conducted by the
documents belong, and whose Commission," and paragraph (3),
rights have thereby been Executive Order No. 2 dealing with its
impaired, is itself a petitioner. On power to "(r)equire all persons in the
that score, petitioner corporation Philippines holding * * (alleged "ill-
(Bache and Co.) here stands on a gotten") assets or properties, whether
located in the Philippines or abroad, in
different footing from the
their names as nominees, agents or
corporations in Stonehill.
trustees, to make full disclosure of the
same **." The contention lacks merit. 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. * *" At any rate, Executive
Order No. 14-A, amending Section 4 of
Executive Order No. 14 assures
protection to individuals required to
produce evidence before the PCGG
against any possible violation of his
right against self-incrimination. It gives
them immunity from prosecution on
the basis of testimony or information he
is compelled to present. As amended,
said Section 4 now provides that—"* * *
* 'The witness may not refuse to comply
with the order on the basis of his
privilege against self-incrimination; but
no testimony or other information
compelled under the order (or any
information directly or indirectly
derived from such testimony, or other
information) may be used against the
witness in any criminal case, except a
prosecution for perjury, giving a false
statement, or otherwise failing to
comply with the order." The
constitutional safeguard against
unreasonable searches and seizures
finds no application to the case at bar
either. There has been no search
undertaken by any agent or
representative of the PCGG, and of
course no seizure on the occasion
thereof.
MAMBULAO LUMBER COMPANY, plaintiff-
appellant, vs. PHILIPPINE NATIONAL BANK
and ANACLETO HERALDO, Deputy
Provincial Sheriff of Camarines Norte,
defendants-appellees.
Damages; Moral damages; Award of
damage to juridical persons.—An
artificial person cannot experience
physical sufferingS; mental anguish,
fright, serious anxiety, wounded
feelings, moral -shock or social
humiliation which are the basis of
moral damage. A corporation may
have a good reputation which, if
besmirched, may also be a ground for
the award of moral damages.
Facts:
1. On May 5, 1956 the plaintiff
applied for an industrial loan of
P155,000 with the Naga Branch of
defendant PNB and the former
offered real estate, machinery,
logging and transportation
equipments as collaterals.
2. The application, however, was
approved for a loan of P100,000
only.
3. To secure the payment of the
loan, the plaintiff mortgaged to
defendant PNB a parcel of land,
together with the buildings and
improvements existing thereon,
situated in the poblacion of Jose
Panganiban (formerly
Mambulao), province of
Camarines Norte, and covered
by Transfer Certificate of Title No.
381 of the land records of said
province, as well as various
sawmill equipment, rolling unit
and other fixed assets of the
plaintiff, all situated in its
compound in the
aforementioned municipality.
4. On August 2, 1956, the PNB
released from the approved loan
the sum of P27,500, for which the
plaintiff signed a promissory note
wherein it promised to pay to the
PNB the said sum in five equal
yearly installments at the rate of
P6,528.40 beginning July 31, 1957,
and every year thereafter, the last
of which would be on July 31,
1961.
5. On October 19, 1956, the PNB
made another release of P15,500
as part of the approved loan
granted to the plaintiff and so on
the said date, the latter executed
another promissory note wherein it
agreed to pay to the former the
said sum in five equal yearly
installments at the rate of
P3,679.64 beginning July 31, 1957,
and ending on July 31, 1961.
6. The plaintiff failed to pay the
amortization on the amounts
released to and received by it.
Repeated demands were made
upon the plaintiff to pay its
obligation but it failed or
otherwise refused to do so. Upon
inspection and verification made
by employees of the PNB, it was
found that the plaintiff had
already stopped operation about
the end of 1957 or early part of
1958.
7. On September 27, 1961, the PNB
sent a letter to the Provincial
 Sheriff of Camarines Norte
requesting him to take possession
of the parcel of land, together
with the improvements existing
thereon, covered by Transfer
Certificate of Title No. 381 of the
land records of Camarines Norte,
and to sell it at public auction in
accordance with the provisions of
Act No. 3135, as amended, for the
satisfaction of the unpaid
obligation of the plaintiff, which as
of September 22, 1961, amounted
to P57,646.59, excluding attorney's
fees.
8. In compliance with the request,
on October 16, 1961, the
Provincial Sheriff of Camarines
Norte issued the corresponding
notice of extra-judicial sale and
sent a copy thereof to the plaintiff.
According to the notice, the
mortgaged property would be
sold at public auction at 10:00
a.m. on November 21, 1961, at the
ground floor of the Court House in
Daet, Camarines Norte.
9. On November 6, 1961, the PNB
sent a letter to the Provincial
Sheriff of Camarines Norte
requesting him to take possession
of the chattels mortgaged to it by
the plaintiff and sell them at public
auction also on November 21,
1961, for the satisfaction of the
sum of P57,646.59, plus 6% annual
interest therefore from September
23, 1961, attorney's fees
equivalent to 10% of the amount
due and the costs and expenses
of the sale. On the same day, the
PNB sent notice to the plaintiff that
the former was foreclosing
extrajudicially the chattels
mortgaged by the latter and that
the auction sale thereof would be
held on November 21, 1961,
between 9:00 and 12:00 a.m., in
Mambulao, Camarines Norte,
where the mortgaged chattels
were situated.
10. On November 8, 1961, Deputy
Provincial Sheriff Anacleto
Heraldo took possession of the
chattels mortgaged by the
plaintiff and made an inventory
thereof in the presence of a PC
Sergeant and a policeman of the
municipality of Jose Panganiban.
On November 9, 1961, the said
Deputy Sheriff issued the
corresponding notice of public
auction sale of the mortgaged
chattels to be held on November
21, 1961, at 10:00 a.m., at the
plaintiff's compound situated in
the municipality of Jose
Panganiban, Province of
Camarines Norte.
11. On November 19, 1961, the
plaintiff sent separate letters,
posted as registered air mail
matter, one to the Naga Branch
of the PNB and another to the
Provincial Sheriff of Camarines
Norte, protesting against the
foreclosure of the real estate and
chattel mortgages on the grounds
that they could not be effected
unless a Court's order was issued
against it (plaintiff) for said
purpose and that the foreclosure
proceedings, according to the
terms of the mortgage contracts,
should be made in Manila. In said
letter to the Naga Branch of the
PNB, it was intimated that if the
public auction sale would be
suspended and the plaintiff would
be given an extension of ninety
 (90) days, its obligation would be
settled satisfactorily because an
important negotiation was then
going on for the sale of its "whole
interest" for an amount more than
sufficient to liquidate said
obligation.
12. Upon the foregoing facts, the trial
court rendered the decision
appealed from which, as stated in
the first paragraph of this opinion,
sentenced the Mambulao
Lumber Company to pay to the
defendant PNB the sum of
P3,582.52 with interest thereon at
the rate of 6% per annum from
December 22, 1961 (day following
the date of the questioned
foreclosure of plaintiff's chattels)
until fully paid, and the costs.
Mambulao Lumber Company
interposed the instant appeal.
13. That appellant vigorously
objected to the foreclosure of its
chattel mortgage after the
foreclosure of its real estate
mortgage on November 21, 1961,
can not be doubted, as shown
not only by its letter to the PNB on
November 19, 1961, but also in its
letter to the provincial sheriff of
Camarines Norte on the same
date. These letters were followed
by another letter to the appellee
bank on December 14, 1961,
wherein herein appellant, in no
uncertain terms, reiterated its
objection to the scheduled sale of
its chattels on December 21, 1961
at Jose Panganiban, Camarines
Norte for the reasons therein
stated that: (1) it had settled in full
its total obligation to the PNB by
the sale of the real estate and its
subsequent remittance of the
amount of P738.59; and (2) that
the contemplated sale at Jose
Panganiban would violate their
agreement embodied under
paragraph (i) in the Chattel
Mortgage which provides as
follows:
(i) In case of both judicial and
extra-judicial foreclosure under
Act 1508, as amended, the parties
hereto agree that the
corresponding complaint for
foreclosure or the petition for sale
should be filed with the courts or
the sheriff of the City of Manila, as
the case may be; and that the
Mortgagor shall pay attorney's
fees hereby fixed at ten per cent
(10%) of the total indebtedness
then unpaid but in no case shall it
be less than P100.00, exclusive of
all costs and fees allowed by law
and of other expenses incurred in
connection with the said
foreclosure. [Emphasis supplied]
Notwithstanding the abovequoted
agreement in the chattel mortgage
contract, and in utter disregard of the
objection of herein appellant to the sale
of its chattels at Jose Panganiban,
Camarines Norte and not in the City of
Manila as agreed upon, the PNB
proceeded with the foreclosure sale of
said chattels. The trial court, however,
justified said action of the PNB in the
decision appealed from in the following
rationale:
While it is true that it was stipulated
in the chattel mortgage contract
that a petition for the extra-
judicial foreclosure thereof should
be filed with the Sheriff of the City
of Manila, nevertheless, the effect
thereof was merely to provide
 another place where the
mortgage chattel could be sold in
addition to those specified in the
Chattel Mortgage Law. Indeed, a
stipulation in a contract cannot
abrogate much less impliedly
repeal a specific provision of the
statute. Considering that Section
14 of Act No. 1508 vests in the
mortgagee the choice where the
foreclosure sale should be held,
hence, in the case under
consideration, the PNB had three
places from which to select,
namely: (1) the place of
residence of the mortgagor; (2)
the place of the mortgaged
chattels were situated; and (3) the
place stipulated in the contract.
The PNB selected the second and,
accordingly, the foreclosure sale
held in Jose Panganiban,
Camarines Norte, was legal and
valid.
Issue: W/N Mambulao’s claim for
damages may be sustained.
Held: No. It cannot be sustained.
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.
WHEREFORE AND CONSIDERING ALL THE
FOREGOING, the decision appealed
from should be, as hereby, it is set aside.
The Philippine National Bank and the
Deputy Sheriff of the province of
Camarines Norte are ordered to pay,
jointly and severally, to Mambulao
Lumber Company the total amount of
P56,000.73, broken as follows: P150.73
overpaid by the latter to the PNB,
P42,850.00 the value of the chattels at
the time of the sale with interest at the
rate of 6% per annum from December 21,
1961, until fully paid, P10,000.00 in
exemplary damages, and P3,000.00 as
attorney's fees. Costs against both
appellees.
Concepcion, C.J., Reyes, J.B.L., Dizon,
Makalintal, Zaldivar, Sanchez, Castro
and Fernando, JJ., concur.
Bengzon, J.P. J., took no part.
ABS-CBN BROADCASTING
CORPORATION, petitioners,
vs. HONORABLE COURT OF APPEALS,
REPUBLIC BROADCASTING CORP., VIVA
PRODUCTIONS, INC., and VICENTE DEL
ROSARIO, respondents.
CORPORATION LAW; BOARD OF
DIRECTORS; POWER TO ENTER INTO
CONTRACTS; DELEGATION; VALIDITY
THEREOF. 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, did not have the
authority to accept ABS-CBNs counter-
offer was best evidenced by his
submission of the draft contract to
VIVAS Board of Directors for the latters
approval. In any event, there was
between Del Rosario and Lopez III no
meeting of minds.
ID.; ID.; ID.; MORAL DAMAGES;
ELABORATED. As to moral damages the
law is Section 1, Chapter 3, Title XVIII,
Book IV of the Civil Code. Article 2217
thereof defines what are included in
moral damages, while Article 2219
enumerates the cases where they may
be recovered. Article 2220 provides
that moral damages may be
recovered in breaches of contract
where the defendant acted
fraudulently or in bad faith. 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 is not meant to
enrich the complainant at the expense
of the defendant, but to enable the
injured party to obtain means,
diversion, or amusements that will
serve to obviate the moral suffering he
has undergone. It is aimed at the
restoration, within the limits of the
possible, of the spiritual status quo
ante, and should be proportionate to
the suffering inflicted. Trial courts must
then guard against the award of
exorbitant damages; they should
exercise balanced restrained and
measured objectivity to avoid
suspicion that it was due to passion,
prejudice, or corruption on the part of
the trial court.
ID.; ID.; ID.; ID.; CASE AT BAR. RBSs
claim for moral damages could
possibly fall only under item (10) of
Article 2219, thereof which reads:
(10) Acts and actions referred to in
Articles 21, 26, 27, 28, 29, 30, 32, 34,
and 35. However, 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 in People v. Manero
 and Mambulao Lumber Co. v. PNB
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.
Facts:
1. In 1990, ABS-CBN and VIVA
executed a Film Exhibition
Agreement whereby the latter
gave the former an exclusive right
to exhibit 24 VIVA Films for TV
telecast.
2. Later, VIVA, through respondent
Vincent del Rosario, offered ABS-
CBN a list of 3 film packages (36
titles) from which the latter may
exercise its right of first refusal
under their agreement.
3. ABS-CBN ticked off 10 titles
therefrom. Thereafter, in February
1992, Del Rosario offered ABS-CBN
airing rights over a package of
104 movies for P60 million.
4. In April, 1992, Del Rosario, and
Eugenio Lopez of ABS-CBN, met at
a restaurant to discuss the
package proposal.
5. According to Lopez, however,
what they agreed upon was ABS-
CBNs exclusive film rights to 14
films for P36 million. Del Rosario
denied the same. He insisted that
the discussion was on VIVAs offer
of 104 films for P60 million, to which
ABSCBN later made
counterproposal but rejected by
VIVAs Board of Directors.
6. Hence, VIVA later granted RBS the
exclusive right to air the 104 VIVA
films, including the 14 films
supposedly granted to ABS-CBN.
7. ABS-CBN then filed a complaint
for specific performance with
prayer for injunction.
8. The RTC granted the prayer and
required ABS-CBN post a P35
million bond.
9. But while ABS-CBN was moving for
reduction of the bond, RBS
offered to put up a counterbond
and was allowed to post P30
million.
10. Later, the RTC rendered a
decision in favor of RBS and VIVA,
ordering ABS-CBN to pay RBS the
amount it paid for the print
advertisement and premium on
the counterbond, moral
damages, exemplary damages
and attorneys fee.
11. ABS-CBN appealed to the Court
of Appeals. Viva and Del Rosario
also appealed seeking moral and
exemplary damages and
additional attorneys fees.
12. The Court of Appeals affirmed the
RTC decision and sustained the
monetary awards, VIVAs and Del
Rosarios appeals were denied.
Issues:
1. Whether there was a perfected
contract between VIVA and ABS-CBN;
and
2. Whether RBS is entitled to damages
and attorneys fees.
Held:
a
In the case at bar, ABS-CBN made
no unqualified acceptance of VIVAs
offer hence, they underwent period of
bargaining. ABS-CBN then formalized its
counter-proposals or counter-offer in a
draft contract. VIVA through its Board of napkin. However, Exhibit C
Directors, rejected such counter- contains numerous provisions which
offer. Even if it be were not discussed at the Tamarind Grill,
conceded arguendo that Del Rosario if Lopez testimony was to be believed nor
had accepted the counter-offer, the could they have been physically written
acceptance did not bind VIVA, as there on a napkin. There was even doubt as to
was no proof whatsoever that Del whether it was a paper napkin or cloth
Rosario had the specific authority to do napkin. In short what were written in
so. Exhibit C were not discussed, and
therefore could not have been agreed
Under the Corporation
upon, by the parties. How then could this
Code, unless otherwise provided by
[46]
court compel the parties to sign Exhibit C
said Code, corporate powers, such as
when the provisions thereof were not
the power to enter into contracts, are
previously agreed upon?
exercised by the Board of
Directors. However, the Board may
SECOND, Mr. Lopez claimed that what
delegate such powers to either an
was agreed upon as the subject matter
executive committee or officials or
of the contract was 14 films. The
contracted managers. The delegation,
complaint in fact prays for delivery of 14
except for the executive committee,
films. But Exhibit C mentions 53 films as its
must be for specific
subject matter. Which is which? If Exhibit
purposes. Delegation
[47] to officers
C reflected the true intent of the parties,
makes the latter agents of the
then ABS-CBNs claim for 14 films in its
corporation; accordingly, the general
complaint is false or if what it alleged in
rules of agency as to the binding effects
the complaint is true, then Exhibit C did
of their acts would apply.[48] For such
not reflect what was agreed upon by the
officers to be deemed fully clothed by
parties. This underscores the fact that
the corporation to exercise a power of
there was no meeting of the minds as to
the Board, the latter must specially
the subject matter of the contract, so as
authorize them to do so. that Del Rosario
to preclude perfection thereof. For
did not have the authority to accept
settled is the rule that there can be no
ABS-CBNs counter-offer was best
contract where there is no object certain
evidenced by his submission of the draft
which is its subject matter (Art. 1318,
contract to VIVAs Board of Directors for
NCC).
the latters approval. In any event, there
was between Del Rosario and Lopez III no
THIRD, Mr. Lopez [sic] answer to question
meeting of minds. The following findings
29 of his affidavit testimony (Exh. D)
of the trial court are instructive:
States:
A number of considerations militate
We were able to reach an
against ABS-CBNs claim that a contract
agreement. VIVA gave us the exclusive
was perfected at that lunch meeting on
license to show these fourteen (14) films,
April 02, 1992 at the Tamarind Grill.
and we agreed to pay Viva the amount
of P16,050,000.00 as well as grant Viva
FIRST, Mr. Lopez claimed that what was
commercial slots
agreed upon at the Tamarind Grill
worth P19,950,000.00. We had already
referred to the price and the number of
earmarked this P16,050,000.00.
films, which he wrote on a
which gives a total consideration of P36
million (P19,951,000.00
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.
Now, which is which? P36 million or P35
million? This weakens ABS-CBNs claim.
FOURTH. Mrs. Concio, testifying for ABS-
CBN stated that she transmitted Exhibit C
to Mr. Del Rosario with a handwritten
note, describing said Exhibit C as a
draft. (Exh. 5 Viva; tsn pp. 23-24, June 08,
1992). The said draft has a well defined
meaning.
Since Exhibit C is only a draft, or a
tentative, provisional or preparatory
writing prepared for discussion, the terms
and conditions thereof could not have
been previously agreed upon by ABS-
CBN and Viva.Exhibit C could not
therefore legally bind Viva, not having
agreed thereto. In fact, Ms. Concio
admitted that the terms and conditions
embodied in Exhibit C were prepared by
ABS-CBNs lawyers and there was no
discussion on said terms and conditions.
As the parties had not yet discussed the
proposed terms and conditions in Exhibit
C, and there was no evidence
whatsoever that Viva agreed to the
terms and conditions thereof, said
document cannot be a binding
contract. The fact that Viva refused to
sign Exhibit C reveals only two [sic] well
that it did not agree on its terms and
conditions, and this court has no
authority to compel Viva to agree
thereto.
FIFTH. Mr. Lopez understand [sic] that
what he and Mr. Del Rosario agreed
upon at the Tamarind Grill was only
provisional, in the sense that it was
subject to approval by the Board of
Directors of Viva. He testified:
Q Now, Mr. Witness, and after that
Tamarinf meeting the second
meeting wherein you claimed
that you have the meeting of the
minds between you and Mr. Vic
del Rosario, what happened?
A Vic Del Rosario was supposed to call
us up and tell us specifically the
result of the discussion with the
Board of Directors.
Q And you are referring to the so-
called agreement which you
wrote in [sic] a piece of paper?
A Yes, sir.
Q So, he was going to forward that to
the board of Directors for
approval?
A Yes, sir (Tsn, pp. 42-43, June 8, 1992)
Q Did Mr. Del Rosario tell you that he
will submit it to his Board for
approval?
A Yes, sir. (Tsn, p. 69, June 8, 1992).
The above testimony of Mr. Lopez shows
beyond doubt that he knew Mr. Del
Rosario had no authority to bind Viva to
a contract with ABS-CBN until and unless
its Board of Directors approved it. The
complaint, in fact, alleges that Mr. Del
Rosario is the Executive Producer of
defendant Viva which is a corporation.
(par. 2, complaint). As a mere agent of
Viva, Del Rosario could not bind Viva
unless what he did is ratified by its
Directors. (Vicente vs.Geraldez, 52 SCRA
210; Arnold vs. Willets and Paterson, 44
Phil. 634). As a mere agent, recognized
as such by plaintiff, Del Rosario could not
be held liable jointly and severally with
Viva and his inclusion as party defendant
has no legal basis. (Salonga vs. Warner
Barnes [sic],COLTA, 88 Phil. 125; Salmon
vs. Tan, 36 Phil. 556).
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 binding upon Viva (Yao Ka Sin
Trading vs. Court of Appeals, 209 SCRA
763). The evidence adduced shows that
the Board of Directors of Viva rejected
Exhibit C and insisted that the film
package for 104 films be maintained
(Exh. 7-1 Cica).[49]
The contention that ABS-CBN had
yet to fully exercise its right of first refusal
over twenty-four films under the 1990 Film
Exhibition Agreement and that the
meeting between Lopez and Del Rosario
was a continuation of said previous
contract is untenable. As observed by
the trial court, ABS-CBNs right of first
refusal had already been exercised
when Ms. Concio wrote to Viva ticking
off ten films.Thus:
[T]he subsequent negotiation with
ABS-CBN two (2) months after this
letter was sent, was for an entirely
different package. Ms. Concio
herself admitted on cross-
examination to having used or
exercised the right of first refusal. She
stated that the list was not
acceptable and was indeed not
accepted by ABS-CBN, (Tsn, June 8,
1992, pp. 8-10). Even Mr. Lopez
himself admitted that the right of first
refusal may have been already
exercised by Ms. Concio (as she
had). (TSN, June 8, 1992, pp. 71-
75). Del Rosario himself knew and
understand [sic] that ABS-CBN has
lost its right of first refusal when his list
of 36 titles were rejected (Tsn, June 9,
1992, pp. 10-11).[50]
SO ORDERED.
Manila Electric Company vs.
T.E.A.M. Electronics Corporation, 540
SCRA 62, G.R. No. 131723 December
13, 2007
Same; Corporation Law; As a rule, a
corporation is not entitled to moral
damages because, not being a
natural person, it cannot experience
physical suffering or sentiments like
wounded feelings, serious anxiety,
mental anguish and moral shock, the
only exception to this rule is when the
corporation has a reputation that is
debased, resulting in its humiliation in
the business realm.—We, however,
deem it proper to delete the award of
moral damages. TEC’s claim was
premised allegedly on the damage to
its goodwill and reputation. As a rule, a
corporation is not entitled to moral
damages because, not being a
natural person, it cannot experience
physical suffering or sentiments like
wounded feelings, serious anxiety,
mental anguish and moral shock. The
only exception to this rule is when the
corporation has a reputation that is
debased, resulting in its humiliation in
the business realm. But in such a case,
it is imperative for the claimant to
present proof to justify the award. It is
essential to prove the existence of the
factual basis of the damage and its
causal relation to petitioner’s acts. In
the present case, the records are
bereft of any evidence that the name
or reputation of TEC/TPC has been
debased as a result of petitioner’s acts.
Besides, the trial court simply awarded
moral damages in the dispositive
portion of its decision without stating
the basis thereof.
Facts:
1. Petitioner and NS Electronics
(Philippines), Inc., the
predecessor-in-interest of
respondent TEC, were parties to
two separate contracts
denominated as Agreements for
the Sale of Electric Energy.
2. Under the aforesaid agreements,
petitioner undertook to supply
TECs building known as Dyna Craft
International Manila (DCIM) with
electric power.
3. Another contract was entered
into for the supply of electric
power to TECs NS Building.
4. In September 1986, TEC, under its
former name National Semi-
Conductors (Phils.) entered into a
Contract of Lease[5] with
respondent Ultra Electronics
Industries, Inc. (Ultra) for the use of
the formers DCIM building for a
period of five years or until
September 1991.
a. Ultra was, however,
ejected from the premises
on February 12, 1988 by
virtue of a court order, for
repeated violation of the
terms and conditions of the
lease contract.
5. On September 28, 1987, a team of
petitioners inspectors conducted
a surprise inspection of the
electric meters installed at the
DCIM building, witnessed by
Ultras[6] representative, Mr. Willie
Abangan. The findings of the
inspectors were as follows:
a. The two meters covered by
account numbers 09341-
1322-16 and 09341-1812-13,
were found to be allegedly
tampered with and did not
register the actual power
consumption in the
building.
b. The results of the inspection
were reflected in the
Service Inspection
Reports[7] prepared by the
team.
6. In a letter, petitioner informed TEC
of the results of the inspection and
demanded from the latter the
payment of P7,040,401.01
representing its unregistered
consumption from February 10,
1986 until September 28, 1987, as
a result of the alleged tampering
of the meters.[8]
7. Since Ultra was in possession of the
subject building during the
covered period, TECs Managing
Director, Mr. Bobby Tan, referred
the demand letter to
Ultra which, in turn, informed TEC
[9]
that its Executive Vice-President
had met with petitioners
representative.
8. TEC demanded from petitioner
the reconnection of electrical
service, claiming that it had
nothing to do with the alleged
tampering but the latter refused
to heed the demand.
9. Hence, TEC filed a complaint
on May 27, 1988 before the
Energy Regulatory Board (ERB)
praying that electric power be
restored to the DCIM building.[11]
10. Meanwhile, on April 25, 1988,
petitioner conducted another
inspection, this time, in TECs NS
Building. The inspection allegedly
revealed that the electric meters
were not registering the correct
power consumption.
11. Petitioner, thus, sent a letter
dated June 18, 1988 demanding
payment of P280,813.72
representing the differential
billing.[13]
12. TEC denied petitioners
allegations and claim in a letter
dated June 29, 1988.[14]
13. Petitioner, thus, sent TEC another
letter demanding payment of the
aforesaid amount, with a warning
that the electric service would be
disconnected in case of
continued refusal to pay the
differential billing.[15]
14. To avert the impending
disconnection of electrical
service, TEC paid the above
amount, under protest.[16]
15. TEC and TPC filed a complaint for
damages against petitioner and
Ultra[17] before the Regional Trial
Court (RTC) of Pasig.
16. TEC’s Claim: Premised allegedly
on the damage to its goodwill
and reputation.
Issue: W/N the award of moral damages
was proper in this case.
Held: No, it’s not proper.
We, however, deem it proper to delete
the award of moral damages.
TECs claim was premised allegedly on
the damage to its goodwill and
reputation.[50] As a rule, a corporation is
not entitled to moral damages because,
not being a natural person, it cannot
experience physical suffering or
sentiments like wounded feelings, serious
anxiety, mental anguish and moral
shock. The only exception to this rule is
when the corporation has a reputation
that is debased, resulting in its humiliation
in the business realm.[51] But in such a
case, it is imperative for the claimant to
present proof to justify the award. It is
essential to prove the existence of the
factual basis of the damage and its
causal relation to petitioners acts.[52] In
the present case, the records are bereft
of any evidence that the name or
reputation of TEC/TPC has been debased
as a result of petitioners acts. Besides, the
trial court simply awarded moral
damages in the dispositive portion of its
decision without stating the basis thereof.
WHEREFORE, the petition is DENIED. The
Decision of the Court of Appeals in CA-
G.R. CV No. 40282 dated June 18, 1997
and its Resolution dated December 3,
1997 are AFFIRMED with the
following MODIFICATIONS: (1) the award
of P150,000.00 per month for five months
as reimbursement for the rentals of the
generator set is REDUCED to P150,000.00;
and (2) the award of P500,000.00 as
moral damages is hereby DELETED.
SO ORDERED.
Facts:
Employees Union of Bayer Phils., FFW vs.
Bayer Philippines, Inc., 636 SCRA 472,
G.R. No. 162943 December 6, 2010
Corporation Law; Damages; As a
general rule, a corporation cannot
suffer nor be entitled to moral
damages; Mental suffering can be
experienced only by one having a
nervous system and it flows from real
ills, sorrows, and griefs of life—all of
which cannot be suffered by an
artificial, juridical person.—On the
matter of damages prayed for by the
petitioners, we have held that as a
general rule, a corporation cannot
suffer nor be entitled to moral
damages. A corporation, and by
analogy a labor organization, being an
artificial person and having existence
only in legal contemplation, has no
feelings, no emotions, no senses;
therefore, it cannot experience
physical suffering and mental anguish.
Mental suffering can be experienced
only by one having a nervous system
and it flows from real ills, sorrows, and
griefs of life—all of which cannot be
suffered by an artificial, juridical
person. A fortiori, the prayer for
exemplary damages must also be
denied. Nevertheless, we find it in
order to award (1) nominal damages in
the amount of P250,000.00 on the basis
of our ruling in De La Salle University v.
De La Salle University Employees
Association (DLSUEA-NAFTEU), 584
SCRA 592 (2009), and Article 2221, and
(2) attorney’s fees equivalent to 10% of
the monetary award. The remittance to
petitioners of the collected union dues
previously turned over to Remigio and
Villareal is likewise in order.
1. Petitioner Employees Union of
Bayer Philippines[3] (EUBP) is the
exclusive bargaining agent of all
rank-and-file employees of Bayer
Philippines (Bayer), and is an
affiliate of the Federation of Free
Workers (FFW). In 1997, EUBP,
headed by its president Juanito S.
Facundo (Facundo), negotiated
with Bayer for the signing of a
collective bargaining agreement
(CBA). During the negotiations,
EUBP rejected Bayers 9.9% wage-
increase proposal resulting in a
bargaining deadlock.
Subsequently, EUBP staged a
strike, prompting the Secretary of
the Department of Labor and
Employment (DOLE) to assume
jurisdiction over the dispute.
2. In November 1997, pending the
resolution of the dispute,
respondent Avelina Remigio
(Remigio) and 27 other union
members, without any authority
from their union leaders,
accepted Bayers wage-increase
proposal. EUBPs grievance
committee questioned Remigios
action and reprimanded Remigio
and her allies.
3. On January 7, 1998, the DOLE
Secretary issued an arbitral award
ordering EUBP and Bayer to
execute a CBA retroactive
to January 1, 1997 and to be
made effective until December
31, 2001. The said CBA[4] was
registered on July 8, 1998 with the
Industrial Relations Division of the
DOLE-National Capital Region
(NCR).[5]
4. Meanwhile, the rift between
Facundos leadership and
Remigios group broadened. On
August 3, 1998, barely six months
from the signing of the new CBA,
during a company-sponsored
seminar,[6] Remigio solicited
signatures from union members in
support of a resolution containing
the decision of the signatories to:
(1) disaffiliate from FFW, (2)
rename the union as Reformed
Employees Union of Bayer
Philippines (REUBP), (3) adopt a
new constitution and by-laws for
the union, (4) abolish all existing
officer positions in the union and
elect a new set of interim officers,
and (5) authorize REUBP to
administer the CBA between EUBP
and Bayer.[7] The said resolution
was signed by 147 of the 257 local
union members. A subsequent
resolution was also issued
affirming the first resolution.[8]
5. A tug-of-war then ensued
between the two rival groups, with
both seeking recognition from
Bayer and demanding
remittance of the union dues
collected from its rank-and-file
members. On September 8, 1998,
Remigios splinter group wrote
Facundo, FFW and Bayer
informing them of the decision of
the majority of the union members
to disaffiliate from FFW.[9] This was
followed by another letter
informing Facundo, FFW and
Bayer that an interim set of REUBP
executive officers and board of
directors had been appointed,
 and demanding the remittance
of all union dues to
REUBP. Remigio also asked Bayer
to desist from further transacting
with EUBP. Facundo, meanwhile,
sent similar requests to
Bayer requesting
[10] for the
remittance of union dues in favor
of EUBP and accusing the
company of interfering with purely
union matters.[11] Bayer
responded by deciding not to
deal with either of the two groups,
and by placing the union dues
collected in a trust account until
the conflict between the two
groups is resolved.
Issue: W/N a labor organization (by
analogy similar to a corporation) is
entitled to moral damages in this case.
Held: No, it is not entitled to moral
damages.
On the matter of damages prayed for by
the petitioners, we have held that as a
general rule, a corporation cannot suffer
nor be entitled to moral damages.
A corporation, and by analogy a labor
organization, being an artificial person
and having existence only in legal
contemplation, has no feelings, no
emotions, no senses; therefore, it cannot
experience physical suffering and
mental anguish. Mental suffering can be
experienced only by one having a
nervous system and it flows from real ills,
sorrows, and griefs of life all of which
cannot be suffered by an artificial,
juridical person.[59] A fortiori, the prayer
for exemplary damages must also be
denied.[60] Nevertheless, we find it in
order to award (1) nominal damages in
the amount of P250,000.00 on the basis
of our ruling in De La Salle University v. De
La Salle University Employees Association
(DLSUEA-NAFTEU)[61] and Article
2221,[62] and (2) attorneys fees
equivalent to 10% of the monetary
award. The remittance to petitioners of
the collected union dues previously
turned over to Remigio and Villareal is
likewise in order.
WHEREFORE, the petition for review on
certiorari is PARTLY GRANTED. The
Decision dated December 15, 2003 and
the Resolution dated March 23, 2004 of
the Court of Appeals in CA-G.R. SP No.
73813 are MODIFIED as follows:
1) Respondents Bayer Phils., Dieter
J. Lonishen and Asuncion Amistoso are
found LIABLE for Unfair Labor Practice,
and are hereby ORDERED to remit to
petitioners the amount of P254,857.15
representing the collected union dues
previously turned over to Avelina
Remigio and Anastacia Villareal. They
are likewise ORDERED to pay petitioners
nominal damages in the amount
of P250,000.00 and attorneys fees
equivalent to 10% of the monetary
award; and
2) The complaint, as against
respondents Remigio and Villareal.
is DISMISSED due to the lack of
jurisdiction of the Labor Arbiter and the
NLRC, the complaint being in the nature
of an intra-union dispute.
No pronouncement as to costs.
SO ORDERED.
 San Fernando Regala Trading, Inc. vs.
Cargill Philippines, Inc., 707 SCRA 187,
G.R. No. 178008 October 9, 2013
Same; Damages; Moral Damages;
Corporations; As a rule, moral
damages are not awarded to a
corporation unless it enjoyed good
reputation that the offender debased
and besmirched by his actuations.―As
a rule, moral damages are not
awarded to a corporation unless it
enjoyed good reputation that the
offender debased and besmirched by
his actuations. San Fernando failed to
prove by sufficient evidence that it fell
within this exception. Besides, moral
damages are, as a rule, also not
recoverable in culpa contractual
except when bad faith had been
proved. San Fernando failed to show
that Cargill was motivated by bad faith
or ill will when it failed to deliver the
molasses as agreed.
Facts:
1. These cases pertain to the
reciprocal obligations of the
parties in a contract of sale to
deliver the goods, receive them,
and pay the price as stipulated
and the consequent effects of
breach of such obligations.
2. Cargill Philippines, Inc. (Cargill)
and San Fernando Regala
Trading, Inc. (San Fernando) were
cane molasses traders that did
business with each other for
sometime. The present
controversy arose when San
Fernando claimed that Cargill
reneged on its contractual
obligations to deliver certain
quantities of molasses. Cargill
denied this, insisting that San
Fernando actually refused to
accept the delivery of the goods.
This enmity resulted in Cargill’s
filing on March 2, 1998 a
complaint for sum of money and
damages against San Fernando
before the Regional Trial Court
(RTC) of Makati City.
Issue: W/N moral damages is warranted
in this case.
Held: No, moral damages is not
warranted in this case.
The Court concurs with the CA’s deletion
of the RTC’s award of moral damages to
San Fernando.
As a rule, moral damages are not
awarded to a corporation unless it
enjoyed good reputation that the
offender debased and besmirched by
his actuations.13 San Fernando failed to
prove by sufficient evidence that it fell
within this exception. Besides, moral
damages are, as a rule, also not
recoverable in culpa contractual except
when bad faith had been proved.14 San
Fernando failed to show that Cargill was
motivated by bad faith or ill will when it
failed to deliver the molasses as agreed.
WHEREFORE, the Court PARTIALLY
GRANTS the petitions and MODIFIES the
Court of Appeals Decision on January 19,
2007 in CA-G.R. CV 81993 as
follows:chanroblesvirtualawlibrary
1. San Fernando Regala Trading, Inc.
is ORDERED to pay Cargill Philippines, Inc.
(a) P892,732.50 representing the
demurrage that the latter incurred and
(b) P2,451,405.59 representing its
unrealized profit on the rejected delivery
of 1,174 mt of molasses, both under
Contract 5026, for a total of
P3,344,138.09, with interest at 6% per
annum computed from the date of the
filing of the complaint until the same is
fully paid; and
2. Cargill Philippines, Inc. is ORDERED to
pay San Fernando Regala Trading, Inc.
the latter’s unrealized profits of
P2,531,250.00 for the breach of Contract
5026 and P11,000,000.00 for the breach
of Contract 5047, for a total of
P13,531,250.00, with interest at 6% per
annum computed from the date of the
filing of the answer with counterclaim
until the same is fully paid.
The Court of Appeals’ deletion of the
awards of moral and exemplary
damages, attorney’s fees, and costs of
litigation stands.
SO ORDERED.
San Fernando Regala Trading, Inc. vs.
Cargill Philippines, Inc., 707 SCRA 187,
G.R. No. 178008 October 9, 2013
Same; Damages; Moral Damages;
Corporations; As a rule, moral
damages are not awarded to a
corporation unless it enjoyed good
reputation that the offender debased
and besmirched by his actuations.―As
a rule, moral damages are not
awarded to a corporation unless it
enjoyed good reputation that the
offender debased and besmirched by
his actuations. San Fernando failed to
prove by sufficient evidence that it fell
within this exception. Besides, moral
damages are, as a rule, also not
recoverable in culpa contractual
except when bad faith had been
proved. San Fernando failed to show
that Cargill was motivated by bad faith
or ill will when it failed to deliver the
molasses as agreed.
Facts:
1. The five stockholders of the F.
Guanzon and Sons, Inc. executed a
certificate of liquidation of the
assets of the corporation reciting,
among other things, that:
a. By virtue of a resolution of
the stockholders adopted
on September 17, 1960,
dissolving the corporation,
they have distributed
among themselves in
proportion to their
shareholdings, as liquidating
dividends, the assets of said
corporation, including real
properties located in Manila.
2. The certificate of liquidation, when
presented to the Register of Deeds
of Manila, was denied registration
on seven grounds, of which the
following were disputed by the
stockholders.
3. Contention of Appellants: That the
certificate of liquidation is not a
conveyance or transfer but merely
a distribution of the assets of the
corporation which has ceased to
exist for having been dissolved.
a. This is apparent in the
minutes for dissolution
attached to the document.
b. Not being a conveyance the
certificate need not contain
 a statement of the number of
parcel of land involved in
the distribution in the
acknowledgment
appearing therein.
c. Hence the amount of
documentary stamps to be
affixed thereon should only
be P0.30 and not P940.45, as
required by the register of
deeds. Neither is it correct to
require appellants to pay
the amount of P430.50 as
registration fee.
4. Commissioner of Land Registration
Contention: He concurred in the
view expressed by the register of
deed to the effect that the
certificate of liquidation in question,
though it involves a distribution of
the corporation's assets, in the last
analysis represents a transfer of said
assets from the corporation to the
stockholders. Hence, in substance it
is a transfer or conveyance.
Issue: W/N The ROD was right in this case.
Held: Yes. A corporation is a juridical
person distinct from the members
composing it.
Properties registered in the name of the
corporation are owned by it as an entity
separate and distinct from its members.
While shares of stock constitute personal
property they do not represent property
of the corporation. The corporation has
property of its own which consists chiefly
of real estate (Nelson v. Owen, 113 Ala.,
372, 21 So. 75; Morrow v. Gould, 145 Iowa
1, 123 N.W. 743). A share of stock only
typifies an aliquot part of the
corporation's property, or the right to
share in its proceeds to that extent when
distributed according to law and equity
(Hall & Faley v. Alabama Terminal, 173
Ala 398, 56 So., 235), but its holder is not
the owner of any part of the capital of
the corporation (Bradley v. Bauder 36
Ohio St., 28). Nor is he entitled to the
possession of any definite portion of its
property or assets (Gottfried v. Miller, 104
U.S., 521; Jones v. Davis, 35 Ohio St., 474).
The stockholder is not a co-owner or
tenant in common of the corporate
property (Halton v. Hohnston, 166 Ala
317, 51 So 992).
On the basis of the foregoing authorities,
it is clear that the act of liquidation made
by the stockholders of the F. Guanzon
and Sons, Inc. of the latter's assets is not
and cannot be considered a partition of
community property, but rather a transfer
or conveyance of the title of its assets to
the individual stockholders. Indeed,
since the purpose of the liquidation, as
well as the distribution of the assets of the
corporation, is to transfer their title from
the corporation to the stockholders in
proportion to their shareholdings, — and
this is in effect the purpose which they
seek to obtain from the Register of Deeds
of Manila, — that transfer cannot be
effected without the corresponding deed
of conveyance from the corporation to
the stockholders. It is, therefore, fair and
logical to consider the certificate of
liquidation as one in the nature of a
transfer or conveyance.
WHEREFORE, we affirm the resolution
appealed from, with costs against
appellants.
Traders Royal Bank vs. Court of Appeals,
269 SCRA 15, G.R. No. 93397 March 3,
1997
 Corporation Law; Piercing the Veil of
Corporate Fiction; Piercing the veil of
corporate entity requires the court to
see through the protective shroud
which exempts its stockholders from
liabilities that ordinarily, they could be
subject to, or distinguishes one
corporation from a seemingly
separate one, were it not for the
existing corporate fiction.—Petitioner
cannot put up the excuse of piercing
the veil of corporate entity, as this is
merely an equitable remedy, and may
be awarded only in cases when the
corporate fiction is used to defeat
public convenience, justify wrong,
protect fraud or defend crime or where
a corporation is a mere alter ego or
business conduit of a person. Piercing
the veil of corporate entity requires the
court to see through the protective
shroud which exempts its stockholders
from liabilities that ordinarily, they
could be subject to, or distinguishes
one corporation from a seemingly
separate one, were it not for the
existing corporate fiction. But to do this,
the court must be sure that the
corporate fiction was misused, to such
an extent that injustice, fraud, or crime
was committed upon another,
disregarding, thus, his, her, or its rights.
It is the protection of the interests of
innocent third persons dealing with the
corporate entity which the law aims to
protect by this doctrine.
Facts:
1. Filriters Guaranty Assurance
Corporation (Filriters) executed a
"Detached Assignment" . . .,
whereby Filriters, as registered
owner, sold, transferred, assigned
and delivered unto Philippine
Underwriters Finance Corporation
(Philfinance) all its rights and title
to Central Bank Certificates of
Indebtedness of PESOS: FIVE
HUNDRED THOUSAND (P500,000)
and having an aggregate value
of PESOS: THREE MILLION FIVE
HUNDRED THOUSAND
(P3,500,000.00);
2. The aforesaid Detached
Assignment contains an express
authorization executed by the
transferor intended to complete the
assignment through the registration
of the transfer in the name of
PhilFinance, which authorization is
specifically phrased as follows:
'(Filriters) hereby irrevocably
authorized the said issuer (Central
Bank) to transfer the said
bond/certificates on the books of its
fiscal agent;
3. Petitioner entered into a
Repurchase Agreement with
PhilFinance . . ., whereby, for and in
consideration of the sum of P500,
000.00, PhilFinance sold, transferred
and delivered to petitioner CBCI 4-
year, 8th series, Serial No. D891 with
a face value of P500,000.00 . . .,
which CBCI was among those
previously acquired by PhilFinance
from Filriters as averred in
paragraph 3 of the Petition;
4. Pursuant to the aforesaid
Repurchase AgreementPhilfinance
agreed to repurchase CBCI Serial
No. D891 (Annex "C"), at the
stipulated price of PESOS: FIVE
HUNDRED NINETEEN THOUSAND
THREE HUNDRED SIXTY-ONE & 11/100
(P519,361.11) on April 27, 1981;
5. PhilFinance failed to repurchase the
CBCI on the agreed date of
maturity, April 27, 1981, when the
 checks it issued in favor of petitioner
were dishonored for insufficient
funds;
6. Owing to the default of PhilFinance,
it executed a Detached Assignment
in favor of the Petitioner to enable
the latter to have its title completed
and registered in the books of the
respondent. And by means of said
Detachment, Philfinance
transferred and assigned all, its
rights and title in the said CBCI to
petitioner and, furthermore, it did
thereby "irrevocably authorize the
said issuer (respondent herein) to
transfer the said bond/certificate on
the books of its fiscal agent." . . .
7. Petitioner presented the CBCI,
together with the two (2)
aforementioned Detached
Assignments, to the Securities
Servicing Department of the
respondent, and requested the
latter to effect the transfer of the
CBCI on its books and to issue a
new certificate in the name of
petitioner as absolute owner
thereof;
8. Respondent failed and refused to
register the transfer as requested,
and continues to do so
notwithstanding petitioner's valid
and just title over the same and
despite repeated demands in
writing, the latest of which is hereto
attached as and made an integral
part hereof;
9. The express provisions governing
the transfer of the CBCI were
substantially complied with the
petitioner's request for registration,
to wit:
"No transfer thereof shall be valid
unless made at said office (where the
Certificate has been registered) by
the registered owner hereof, in
person or by his attorney duly
authorized in writing, and similarly
noted hereon, and upon payment of
a nominal transfer fee which may be
required, a new Certificate shall be
issued to the transferee of the
registered holder thereof." and,
without a doubt, the Detached
Assignments presented to
respondent were sufficient
authorizations in writing executed by
the registered owner, Filriters, and its
transferee, PhilFinance, as required
by the above-quoted provision;
10. Upon such compliance with the
aforesaid requirements, the
ministerial duties of registering a
transfer of ownership over the CBCI
and issuing a new certificate to the
transferee devolves upon the
respondent;
11. Upon these assertions, TRB prayed
for the registration by the Central
Bank of the subject CBCI in its
name.
12. Petitioner’s Contention: The
transfer of the subject CBCI to TRB
must upheld, as the respondent
Filriters and Philfinance, though
separate corporate entities on
paper, have used their corporate
fiction to defraud TRB into
purchasing the subject CBCI,
which purchase now is refused
registration by the Central Bank.
Says the petitioner;
Since Philfinance own about 90% of Filriters and the two
companies have the same corporate officers, if the
principle of piercing the veil of corporate entity were to
be applied in this case, then TRB's payment to
Philfinance for the CBCI purchased by it could just as well
be considered a payment to Filriters, the registered
owner of the CBCI as to bar the latter from claiming, as
it has, that it never received any payment for that CBCI
sold and that said CBCI was sold without its authority.
xxx xxx xxx
We respectfully submit that, considering that the Court
of Appeals has held that the CBCI was merely borrowed
by Philfinance from Filriters, a sister corporation, to
guarantee its (Philfinance's) financing operations, if it
were to be consistent therewith, on the issued raised by
TRB that there was a piercing a veil of corporate entity,
the Court of Appeals should have ruled that such veil of
corporate entity was, in fact, pierced, and the payment
by TRB to Philfinance should be construed as payment to
Filriters.
Issue: W/N the piercing of the corporate
veil is proper in this case.
Held: No. It’s not proper.
Petitioner cannot put up the excuse of
piercing the veil of corporate entity, as
this merely an equitable remedy, and
may be awarded only in cases when the
corporate fiction is used to defeat public
convenience, justify wrong, protect
fraud or defend crime or where a
corporation is a mere alter ego or
business conduit of a person. 18
Peiercing the veil of corporate entity
requires the court to see through the
protective shroud which exempts its
stockholders from liabilities that ordinarily,
they could be subject to, or distinguished
one corporation from a seemingly
separate one, were it not for the existing
corporate fiction. But to do this, the court
must be sure that the corporate fiction
was misused, to such an extent that
injustice, fraud, or crime was committed
upon another, disregarding, thus, his, her,
or its rights. It is the protection of the
interests of innocent third persons
dealing with the corporate entity which
the law aims to protect by this doctrine.
The corporate separateness between
Filriters and Philfinance remains, despite
the petitioners insistence on the contrary.
For one, other than the allegation that
Filriters is 90% owned by Philfinance, and
the identity of one shall be maintained as
to the other, there is nothing else which
could lead the court under
circumstance to disregard their
corporate personalities.
Though it is true that when valid reasons
exist, the legal fiction that a corporation
is an entity with a juridical personality
separate from its stockholders and from
other corporations may be
disregarded, in the absence of such
19
grounds, the general rule must upheld.
The fact that Filfinance owns majority
shares in Filriters is not by itself a ground to
disregard the independent corporate
status of Filriters. In Liddel &
Co., Inc. vs. Collector of Internal
Revenue, 20 the mere ownership by a
single stockholder or by another
corporation of all or nearly all of the
capital stock of a corporation is not of
itself a sufficient reason for disregarding
the fiction of separate corporate
personalities.
In the case at bar, there is sufficient
showing that the petitioner was not
defrauded at all when it acquired the
subject certificate of indebtedness from
Philfinance.
On its face the subject certificates states
that it is registered in the name of Filriters.
This should have put the petitioner on
notice, and prompted it to inquire from
Filriters as to Philfinance's title over the
same or its authority to assign the
certificate. As it is, there is no showing to
the effect that petitioner had any
dealings whatsoever with Filriters, nor did
it make inquiries as to the ownership of
the certificate.
Thus, the anauthorized use or distribution
of the same by a corporate officer of
Filriters cannot bind the said corporation,
not without the approval of its Board of
Directors, and the maintenance of the
required reserve fund.
Consequently, the title of Filriters over the
subject certificate of indebtedness must
be upheld over the claimed interest of
Traders Royal Bank.
ACCORDINGLY, the petition is DISMISSED
and the decision appealed from dated
January 29, 1990 is hereby AFFIRMED.
SO ORDERED.
Good Earth Emporium, Inc. vs. Court of
Appeals, 194 SCRA 544, G.R. No. 82797
February 27, 1991
Corporation Law; A corporation has a
personality distinct and separate from
its individual stockholders or
members.—A corporation has a
personality distinct and separate from
its individual stockholders or members.
Being an officer or stockholder of a
corporation does not make one’s
property also of the corporation, and
vice-versa, for they are separate
entities (Traders Royal Bank v. CA, G.R.
No. 78412, September 26, 1989; Cruz v.
Dalisay, 152 SCRA 482). Shareowners
are in no legal sense the owners of
corporate property (or credits) which is
owned by the corporation as a distinct
legal person.
Same; Same; The corporate debt or
credit is not the debt or credit of the
stockholder nor is the stockholder’s
debt or credit that of the corporation.—
As a consequence of the separate
juridical personality of a corporation,
the corporate debt or credit is not the
debt or credit of the stockholder, nor is
the stockholder’s debt or credit that of
the corporation.
Facts:
1. A Lease Contract, dated October
16, 1981, was entered into by and
between ROCES-REYES REALTY,
INC., as lessor, and GOOD EARTH
EMPORIUM, INC., as lessee, for a
term of three years beginning
November 1, 1981 and ending
October 31, 1984 at a monthly
rental of P65,000.00.
2. From March 1983, up to the time
the complaint was filed, the lessee
had defaulted in the payment of
rentals, as a consequence of
which, private respondent
ROCES-REYES REALTY, INC.,
(hereinafter designated as ROCES
for brevity) filed on October 14,
1984, an ejectment case
(Unlawful Detainer) against herein
petitioners, GOOD EARTH
EMPORIUM, INC. and LIM KA PING.
3. After the latter had tendered their
responsive pleading, the lower
court (MTC, Manila) on motion of
Roces rendered judgment on the
pleadings dated April 17, 1984,
the dispositive portion of which
states:
Judgment is hereby rendered ordering defendants
(herein petitioners) and all persons claiming title under
him to vacate the premises and surrender the same to
the plaintiffs (herein respondents); ordering the
defendants to pay the plaintiffs the rental of P65,000.00
a month beginning March 1983 up to the time
defendants actually vacate the premises and deliver
possession to the plaintiff; to pay attorney's fees in the
amount of P5,000.00 and to pay the costs of this suit.
(Rollo, p. 111; Memorandum of Respondents)
4. On May 16, 1984, Roces filed a
motion for execution which was
opposed by GEE on May 28, 1984
simultaneous with the latter's filing
of a Notice of Appeal (Rollo, p.
112, Ibid.). On June 13, 1984, the
trial court resolved such motion
ruling:
After considering the motion for the issuance of a writ of
execution filed by counsel for the plaintiff (herein
respondents) and the opposition filed in relation thereto
and finding that the defendant failed to file the
necessary supersedeas bond, this court resolved to
grant the same for being meritorious. (Rollo, p. 112)
5. On June 14, 1984, a writ of
execution was issued by the lower
court.
6. In the case at bar, the supposed
payments were not made to
Roces-Reyes Realty, Inc. or to its
successor in interest nor is there
positive evidence that the
payment was made to a person
authorized to receive it. No such
proof was submitted but merely
inferred by the Regional Trial Court
from Marcos Roces having signed
the Lease Contract as President
which was witnessed by Jesus
Marcos Roces. The latter,
however, was no longer President
or even an officer of Roces-Reyes
Realty, Inc. at the time he
received the money (Exhibit "1")
and signed the sale with pacto de
retro. He, in fact, denied being in
possession of authority to receive
payment for the respondent
corporation nor does the receipt
show that he signed in the same
capacity as he did in the Lease
Contract at a time when he was
President for respondent
corporation.
7. On the other hand, Jesus Marcos
Roces testified that the amount of
P1 million evidenced by the
receipt is the payment for a loan
extended by him and Marcos
Roces in favor of Lim Ka Ping. The
assertion is home by the receipt
itself whereby they
acknowledged payment of the
loan in their names and in no other
capacity.
Issue:
Held:
A corporation has a personality distinct
and separate from its individual
stockholders or members. Being an
officer or stockholder of a corporation
does not make one's property also of the
corporation, and vice-versa, for they are
separate entities (Traders Royal Bank v.
CA-G.R. No. 78412, September 26, 1989;
Cruz v. Dalisay, 152 SCRA 482).
Shareowners are in no legal sense the
owners of corporate property (or credits)
which is owned by the corporation as a
distinct legal person (Concepcion
Magsaysay-Labrador v. CA-G.R. No.
58168, December 19, 1989). As a
consequence of the separate juridical
personality of a corporation, the
corporate debt or credit is not the debt or
credit of the stockholder, nor is the
stockholder's debt or credit that of the
corporation (Prof. Jose Nolledo's "The
Corporation Code of the Philippines, p. 5,
1988 Edition, citing Professor Ballantine).
The absence of a note to evidence the PREMISES CONSIDERED, the petition is
loan is explained by Jesus Marcos Roces hereby DENIED and the Decision of the
who testified that the IOU was Respondent court is hereby AFFIRMED,
subsequently delivered to private reinstating the April 8, 1985 Resolution of
respondents (Rollo, pp. 97-98). Contrary the Metropolitan Trial Court of Manila.
to the Regional Trial Court's premise that
SO ORDERED.
it was incumbent upon respondent
corporation to prove that the amount
was delivered to the Roces brothers in
the payment of the loan in the latter's
favor, the delivery of the amount to and
the receipt thereof by the Roces brothers
in their names raises the presumption that
the said amount was due to
them.1âwphi1 There is a disputable
presumption that money paid by one to
the other was due to the latter (Sec. 5(f)
Rule 131, Rules of Court). It is for GEE and
Lim Ka Ping to prove otherwise. In other
words, it is for the latter to prove that the
payments made were for the satisfaction
of their judgment debt and not vice
versa.

The fact that at the time payment was

made to the two Roces brothers, GEE
was also indebted to respondent
corporation for a larger amount, is not
supportive of the Regional Trial Court's
conclusions that the payment was in
favor of the latter, especially in the case
at bar where the amount was not
receipted for by respondent corporation
and there is absolutely no indication in
the receipt from which it can be
reasonably inferred, that said payment
was in satisfaction of the judgment debt.
Likewise, no such inference can be made
from the execution of the pacto de
retro sale which was not made in favor of
respondent corporation but in favor of
the two Roces brothers in their individual
capacities without any reference to the
judgment obligation in favor of
respondent corporation.