28.First Lepanto-Taisho Insurance v. Chevron Facts: FLT issued a surety bond (in the amt of P15.7M) in favor of Fumitechniks.

This was to guarantee the payment of the fuelproducts obtained from Chevron. Fumitechniks defaulted in its obligation so Chevron claimed the payment from FLT. FLT asked for the copy of the written agreement but the same could not be produced, there being none. FLT denied Chevrons claim because of this. It said that the written agreement has to be presented to prove execution of contract. Chevron sued FLT, claiming that the written agreement is only for evidentiary purposes and because FLT already issued the bond despite the lack of written agreement, FLT is already estopped. Issue: WON a surety is liable to the creditor in the absence of a written contract with the principal Held: No, not liable. A surety contract is merely a collateral one, its basis is the principal contract or undertaking which it secures. Necessarily, the stipulations in such principal agreement must at least be communicated or made known to the surety particularly in this case where the bond expressly guarantees the payment of Chevrons fuel products withdrawn by Fumitechniks in accordance with the terms and conditions of their agreement. Supreme Courts findings: A reading of Surety Bond shows that it secures the payment of purchases on credit by Fumitechniks in accordance with the terms and conditions of the agreement it entered into with Chevron. Agreement refers to the distributorship agreement, the principal contract and by implication included the credit agreement mentioned in the rider. However, it turned out that Chevron has executed Written agreements only with its direct customers but not distributors like Fumitechniks and it also never relayed the terms and conditions of its distributorship agreement to FLT after the delivery of the bond. This was admitted by Chevrons Mktg Coordinator, Alden Casas Fajardo in his testimony. A surety contract is based on a principal contract/undertaking. The law is clear that a surety contract should be read and interpreted together with the contract entered into between the creditor and the principal: Sec. 176. The liability of the surety or sureties shall be joint and several with the obligor and shall be limited to the amount of the bond. It is determined strictly by the terms of the contract of suretyship in relation to the principal contract between the obligor and the obligee. A surety contract is merely a collateral one, its basis is the principal contract or undertaking which it secures. Necessarily, the stipulations in such principal agreement must at least be communicated or made known to the surety particularly in this case where the bond expressly guarantees the payment of Chevrons fuel products withdrawn by Fumitechniks in accordance with the terms and conditions of their agreement. The bond specifically makes reference to a written agreement. It is basic that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control. Moreover, being an onerous undertaking, a surety agreement is strictly construed against the creditor, and every doubt is resolved in favor of the solidary debtor. Having accepted the bond, Chevron as creditor must be held bound by the recital in the surety bond that the terms and conditions of its distributorship contract be reduced in writing or at the very least communicated in writing to the surety. Such non-compliance by the creditor (Chevron) impacts not on the validity or legality of the surety contract but on the creditors right to demand performance. Section 175 of the Insurance Code defines a suretyship as a contract or agreement whereby a party, called the surety, guarantees the performance by another party, called the principal or obligor, of an obligation or undertaking in favor of a third party, called the obligee. It includes official recognizances, stipulations, bonds or undertakings issued under Act 536, as amended. Suretyship arises upon the

solidary binding of a person deemed the surety with the principal debtor, for the purpose of fulfilling an obligation. Such undertaking makes a surety agreement an ancillary contract as it presupposes the existence of a principal contract. Although the contract of a surety is in essence secondary only to a valid principal obligation, the surety becomes liable for the debt or duty of another although it possesses no direct or personal interest over the obligations nor does it receive any benefit therefrom. And notwithstanding the fact that the surety contract is secondary to the principal obligation, the surety assumes liability as a regular party to the undertaking. First Lepanto-Taisho Insurance Corporation (now known as FLT Prime Insurance Corporation) vs. Chevron Philippines, inc. (formerly known as Caltex Philippines, Inc.),

29.Filipinas Broadcasting Network Inc. vs. Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC-BCCM) [GR 141994, 17 January 2005] Facts: Expos is a radio documentary program hosted by Carmelo Mel Rima (Rima) and Hermogenes Jun Alegre (Alegre). Expos is aired every morning over DZRC-AM which is owned by Filipinas Broadcasting Network, Inc. (FBNI). Expos is heard over Legazpi City, the Albay municipalities and other Bicol areas. In the morning of 14 and 15 December 1989, Rima and Alegre exposed various alleged complaints from students, teachers and parents against Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC) and its administrators. Claiming that the broadcasts were defamatory, AMEC and Angelita Ago (Ago), as Dean of AMECs College of Medicine, filed a complaint for damages against FBNI, Rima and Alegre on 27 February 1990. The complaint further alleged that AMEC is a reputable learning institution. With the supposed exposs, FBNI, Rima and Alegre transmitted malicious imputations, and as such, destroyed plaintiffs (AMEC and Ago) reputation. AMEC and Ago included FBNI as defendant for allegedly failing to exercise due diligence in the selection and supervision of its employees, particularly Rima and Alegre. On 18 June 1990, FBNI, Rima and Alegre, through Atty. Rozil Lozares, filed an Answer alleging that the broadcasts against AMEC were fair and true. FBNI, Rima and Alegre claimed that they were plainly impelled by a sense of public duty to report the goings-on in AMEC, [which is] an institution imbued with public interest. Thereafter, trial ensued. During the presentation of the evidence for the defense, Atty. Edmundo Cea, collaborating counsel of Atty. Lozares, filed a Motion to Dismiss on FBNIs behalf. The trial court denied the motion to dismiss. Consequently, FBNI filed a separate Answer claiming that it exercised due diligence in the selection and supervision of Rima and Alegre. FBNI claimed that before hiring a broadcaster, the broadcaster should (1) file an application; (2) be interviewed; and (3) undergo an apprenticeship and training program after passing the interview. FBNI likewise claimed that it always reminds its broadcasters to observe truth, fairness and objectivity in their broadcasts and to refrain from using libelous and indecent language. Moreover, FBNI requires all broadcasters to pass the Kapisanan ng mga Brodkaster sa Pilipinas (KBP) accreditation test and to secure a KBP permit. On 14 December 1992, the trial court rendered a Decision finding FBNI and Alegre liable for libel except Rima. The trial court held that the broadcasts are libelous per se. The trial court rejected the broadcasters claim that their utterances were the result of straight reporting because it had no factual basis. The broadcasters did not even verify their reports before airing them to show good faith. In holding FBNI liable for libel, the trial court found that FBNI failed to exercise diligence in the selection and supervision of its employees. In absolving Rima from the charge, the trial court ruled that Rimas only participation was when he agreed with Alegres expos. The trial court found Rimas statement within the bounds of freedom of speech, expression, and of the press. Both parties, namely, FBNI, Rima and Alegre, on one hand, and AMEC and Ago, on the other, appealed the decision to the Court of Appeals. The Court of Appeals affirmed the trial courts judgment with modification. The appellate court made Rima solidarily liable with FBNI and Alegre. The appellate court denied Agos claim

for damages and attorneys fees because the broadcasts were directed against AMEC, and not against her. FBNI, Rima and Alegre filed a motion for reconsideration which the Court of Appeals denied in its 26 January 2000 Resolution. Hence, FBNI filed the petition for review. Issue: Whether AMEC is entitled to moral damages. Held: A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. The Court of Appeals cites Mambulao Lumber Co. v. PNB, et al. to justify the award of moral damages. However, the Courts statement in Mambulao that a corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral damages is an obiter dictum. Nevertheless, AMECs claim for moral damages falls under item 7 of Article 2219 of the Civil Code. This provision expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. Article 2219(7) does not qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical person such as a corporation can validly complain for libel or any other form of defamation and claim for moral damages. Moreover, where the broadcast is libelous per se, the law implies damages. In such a case, evidence of an honest mistake or the want of character or reputation of the party libeled goes only in mitigation of damages. Neither in such a case is the plaintiff required to introduce evidence of actual damages as a condition precedent to the recovery of some damages. In this case, the broadcasts are libelous per se. Thus, AMEC is entitled to moral damages. However, the Court found the award of P300,000 moral damages unreasonable. The record shows that even though the broadcasts were libelous per se, AMEC has not suffered any substantial or material damage to its reputation. Therefore, the Court reduced the award of moral damages from P300,000 to P150,000.

30. THE REGISTER OF DEEDS OF RIZAL vs.UNG SIU SI TEMPLE G.R. No. L-6776, May 21, 1955 Facts: The Register of Deeds for the province of Rizal refused to accept for record a deed of donation executed in due form on January 22, 1953, by Jesus Dy, a Filipino citizen, conveying a parcel of residential land, in Caloocan, Rizal, known as lot No. 2, block 48-D, PSD-4212, G.L.R.O. Record No. 11267, in favor of the unregistered religious organization "Ung Siu Si Temple", operating through three trustees all of Chinese nationality. The donation was duly accepted by Yu Juan, of Chinese nationality, founder and deaconess of the Temple, acting in representation and in behalf of the latter and its trustees. The refusal of the Registrar was elevated en Consultato the IVth Branch of the Court of First Instance of Manila. On March 14, 1953, the Court upheld the action of the Rizal Register of Deeds.The record of the Consulta showed that UNG SIU SI TEMPLE is a religious organization whose deaconess, founder, trustees and administrator are all Chinese citizens, this Court is of the opinion and so hold that in view of the provisions of the sections 1 and 5 of Article XIII of the Constitution of the Philippines limiting the acquisition of land in the Philippines to its citizens, or to corporations or associations at least sixty per centum of the capital stock of which is owned by such citizens adopted after the enactment of said Act No. 271, and the decision of the Supreme Court in the case of Krivenko vs. the Register of Deeds of Manila, the deed of donation in question should not be admitted for admitted for registration. Not satisfied with the ruling of the CFI, counsel for the donee Uy Siu Si Temple has appealed to this Court, claiming: (1) that the acquisition of the land in question, for religious purposes, is authorized and permitted by Act No. 271 of the old Philippine Commission, providing as follows: SECTION 1. It shall be lawful for all religious associations, of whatever sort or denomination, whether incorporated in the Philippine Islands or in the name of other country, or not incorporated at all, to hold

land in the Philippine Islands upon which to build churches, parsonages, or educational or charitable institutions. SEC. 2. Such religious institutions, if not incorporated, shall hold the land in the name of three Trustees for the use of such associations; and (2) that the refusal of the Register of Deeds violates the freedom of religion clause of our Constitution [Art. III, Sec. 1(7)]. Issue: whether a deed of donation of a parcel of land executed in favor of a religious organization whose founder, trustees and administrator are Chinese citizens should be registered or not. Held: No. The court said that in view of the absolute terms of section 5, Title XIII, of the Constitution, the provisions of Act No. 271 of the old Philippine Commission must be deemed repealed since the Constitution was enacted, in so far as incompatible therewith. In providing that, Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to individuals, corporations or associations qualified to acquire or hold lands of the public domain in the Philippines,the Constitution makes no exception in favor of religious associations. Neither is there any such saving found in sections 1 and 2 of Article XIII, restricting the acquisition of public agricultural lands and other natural resources to "corporations or associations at least sixty per centum of the capital of which is owned by such citizens" (of the Philippines). The fact that the appellant religious organization has no capital stock does not suffice to escape the Constitutional inhibition, since it is admitted that its members are of foreign nationality. The purpose of the sixty per centum requirement is obviously to ensure that corporations or associations allowed to acquire agricultural land or to exploit natural resources shall be controlled by Filipinos; and the spirit of the Constitution demands that in the absence of capital stock, the controlling membership should be composed of Filipino citizens. To permit religious associations controlled by non-Filipinos to acquire agricultural lands would be to drive the opening wedge to revive alien religious land holdings in this country. We can not ignore the historical fact that complaints against land holdings of that kind were among the factors that sparked the revolution of 1896. As to the complaint that the disqualification under article XIII is violative of the freedom of religion guaranteed by Article III of the Constitution, we are by no means convinced (nor has it been shown) that land tenure is indispensable to the free exercise and enjoyment of religious profession or worship; or that one may not worship the Deity according to the dictates of his own conscience unless upon land held in fee simple. The resolution appealed from is affirmed, with costs against appellant.

31. Roman Catholic Apostolic Adm. Of Davao, Inc. v. Land Registration Commission Facts:On October 4, 1954, Mateo L. Rodis, a Filipino citizen and resident of the City of Davao, executed a deed of sale of a parcel of land located in the same city in favor of the Roman Catholic Administrator of Davao, Inc., (RCAD) a corporation sole organized and existing in accordance with Philippine laws, with Msgr. Clovis Thibault, a Canadian citizen, as actual incumbent.

The Commissioner of the LRC denied RCADs request to register the parcel of land in its name, holding that in view of the provisions of Sections 1 and 5 of Article XIII of the Philippine Constitution, RCAD was not qualified to acquire private lands in the Philippines in the absence of proof that at least 60 per centum of the capital, property, or assets of the Roman Catholic Administrator of Davao, Inc., was actually owned or controlled by Filipino citizens, there being no question that the present incumbent of the corporation sole was a Canadian citizen. The RCAD argued that a corporation sole, irrespective of the citizenship of its incumbent, is not prohibited or disqualified to acquire and hold real properties. The Corporation Law and the Canon Law are explicit in their provisions that a corporation sole or "ordinary" is not the owner of the properties that he may acquire but merely the administrator thereof. The Canon Law also specified that church temporalities are owned by the Catholic Church as a "moral person" or by the dioceses as minor "moral persons" with the ordinary or bishop as administrator and elaborating on the composition of the Catholic Church in the Philippines, RCAD explained that as a religious society or organization, it is made up of 2 elements or divisions the clergy or religious members and the faithful or lay members. The 1948 figures of the Bureau of Census and Statistics showed that there were 277,551 Catholics in Davao and aliens residing therein numbered 3,465. Even granting that all these foreigners are Catholics, RCAD contends that Filipino citizens form more than 80 per cent of the entire Catholics population of that area. Issue: Whether or not the LRC may be compelled to register the land in RCADs name Held: YES. Lands held in trust for specific purposes may be subject of registration, and the capacity of a corporation sole, like RCAD, to register lands belonging to it is acknowledged, and title thereto may be issued in its name. The bishops or archbishops, as the case may be, as corporation's sole are merely administrators of the church properties that come to their possession, and which they hold in trust for the church. Through this legal fiction, church properties acquired by the incumbent of a corporation sole pass, by operation of law, upon his death not to his personal heirs but to his successor in office. Although a branch of the Universal Roman Catholic Apostolic Church, every Roman Catholic Church in different countries, if it exercises its mission and is lawfully incorporated in accordance with the laws of the country where it is located, is considered an entity or person with all the rights and privileges granted to such artificial being under the laws of that country, separate and distinct from the personality of the Roman Pontiff or the Holy See, without prejudice to its religious relations with the latter which are governed by the Canon Law or their rules and regulations. When the specific provision of the Constitution invoked by respondent Commissioner (section 1, Art. XIII), was under consideration, the framers of the same did not have in mind corporations sole (prohibition limited to foreign corporation).The corporation sole by reason of their peculiar constitution and form of operation have no designed owner of its temporalities, although by the terms of the law it can be safely implied that they ordinarily hold them in trust for the benefit of the Roman Catholic faithful of their respective locality or diocese. They cannot be considered as aliens because they have no nationality at all. In determining, therefore, whether the constitutional provision requiring 60 per centum Filipino capital is applicable to corporations sole, the nationality of the constituents of the diocese, and not the nationality of the actual incumbent of the parish, must be taken into consideration. In the present case, even if the question of nationality be considered, the aforesaid constitutional requirement is fully met and satisfied, considering that the corporation sole in question is composed of an overwhelming majority of Filipinos.

33.Wilson P. Gamboa v. Finance Secretary Margarito Teves, et al., G.R.No. 176579, June 28, 2011 Facts: PLDT was granted a franchise to engage in the telecommunications business in 1928 through Act. No. 3436. During Martial Law 26 percent of the outstanding common shares were sold byGeneral Telephone and Electronics Corporation (GTE) (an American company) to Philippine Telecommunications Investment Corporation (PTIC), who in turn assigned 111,415 shares of stock of PTIC (46 percent of outstanding capital stock) to Prime Holdings Inc. (PHI). These shares of PTIC were later sequestered by

PCGG and adjudged by the court to belong to theRepublic.54 percent of PTIC shares were sold to Hong Kong-based firm First Pacific, and the remaining 46 percent was sold through public bidding by the InterAgency Privatization Council, andeventually ended up being bought by First Pacific subsidiary Metro Pacific Asset Holdings Inc. (MPAH)after the corporation exercised its right of first refusal. The transaction was an indirect sale of 12 million shares or 6.3 percent of the outstanding common shares of PLDT, making First Pacifics common shareholdings of PLDT to 37 percent and the total common shareholdings of foreigners in PLDT to 81.47 percent. Japanese NTT Do Co Mo owns 51.56 percent of the other foreign shareholdings/equity. Petitioner Gamboa, alleged that the sale of 111,415 shares to MPAH violates Sec. 11 of Art. XII of the Constitution, which limits foreign ownership of the capital of a public utility to not more than 40 percent.

Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines. (Emphasis supplied) ISSUE: Does the term capital in Section 11, Article XII of the Constitution refer to the total common shares only, or to the total outstanding capital stock (combined total of common and non-voting preferred shares) of PLDT, a public utility? Held: (1) foreigners own 64.27% of the common shares of PLDT, which class of shares exercises the sole right to vote in the election of directors, and thus exercise control over PLDT; (2) Filipinos own only 35.73% of PLDTs common shares, constituting a minority of the voting stock, and thus do not exercise control over PLDT; (3) preferred shares, 99.44% owned by Filipinos, have no voting rights; (4) preferred shares earn only 1/70 of the dividends that common shares earn; (5) preferred shares have twice the par value of common shares; and (6) preferred shares constitute 77.85% of the authorized capital stock of PLDT and common shares only 22.15%. This kind of ownership and control of a public utility is a mockery of the Constitution. Incidentally, the fact that PLDT common shares with a par value of P5.00 have a current stock market value of P2,328.00 per share, while PLDT preferred shares with a par value of P10.00 per share have a current stock market value ranging from only P10.92 to P11.06 per share, is a glaring confirmation by the market that control and beneficial ownership of PLDT rest with the common shares, not with the preferred shares.

WHEREFORE, we PARTLY GRANT the petition and rule that the term capital in Section 11, Article XII of the 1987 Constitution refers only to shares of stock entitled to vote in the election of directors, and thus in the present case only to common shares, and not to the total outstanding capital stock (common and non-voting preferred shares). Respondent Chairperson of the Securities and Exchange Commission is DIRECTED to apply this definition of the term capital in determining the extent of allowable foreign ownership in respondent Philippine Long Distance Telephone Company, and if there is a violation of Section 11, Article XII of the Constitution, to impose the appropriate sanctions under the law.