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COURT OF APPEALS
G.R. No. 155650
FACTS:
Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino
International Airport (NAIA) Complex in Paraaque City under Executive Order No. 903,
otherwise known as the Revised Charter of the Manila International Airport Authority ("MIAA
Charter"). The OGCC opined that the Local Government Code of 1991 withdrew the exemption
from real estate tax granted to MIAA under Section 21 of the MIAA Charter. MIAA received Final
Notices of Real Estate Tax Delinquency from the City of Paraaque for the taxable years 1992
to 2001. Thereafter, the City of Paraaque, through its City Treasurer, issued notices of levy and
warrants of levy on the Airport Lands and Buildings. The Mayor of the City of Paraaque
threatened to sell at public auction the Airport Lands and Buildings should MIAA fail to pay the
real estate tax delinquency. MIAA filed with the Court of Appeals an original petition for
prohibition and injunction, with prayer for preliminary injunction or temporary restraining order.
The Court of Appeals dismissed the petition because MIAA filed it beyond the 60-day
reglementary period.
ISSUE:
Whether the Airport Lands and Buildings of MIAA are exempt from real estate tax.
HELD:
The Court held that MIAAs Airport Lands and Buildings are exempt from real estate tax
imposed by local governments. First, MIAA is not a government owned or controlled corporation
but an instrumentality of the National Government and thus exempt from local taxation.
Second, the real properties of MIAA are owned by the Republic of the Philippines and thus
exempt from real estate tax. There is no dispute that a government-owned or controlled
corporation is not exempt from real estate tax. However, MIAA is not a government-owned or
controlled corporation. A government-owned or controlled corporation must be "organized as a
stock or non-stock corporation." MIAA is not organized as a stock or non-stock corporation.
MIAA is not a stock corporation because it has no capital stock divided into shares. MIAA has no
stockholders or voting shares. Hence, MIAA is not a stock corporation. MIAA is also not a nonstock corporation because it has no members. A non-stock corporation must have members.
Even if we assume that the Government is considered as the sole member of MIAA, this will not
make MIAA a non-stock corporation. Non-stock corporations cannot distribute any part of their
income to their members. Section 11 of the MIAA Charter mandates MIAA to remit 20% of its
annual gross operating income to the National Treasury.This prevents MIAA from qualifying as a
non-stock corporation. Since MIAA is neither a stock nor a non-stock corporation, MIAA does
not qualify as a government-owned or controlled corporation. MIAA is a government
instrumentality vested with corporate powers to perform efficiently its governmental
functions. MIAA is like any other government instrumentality, the only difference is that MIAA is
vested with corporate powers. When the law vests in a government instrumentality corporate
powers, the instrumentality does not become a corporation. Unless the government
instrumentality is organized as a stock or non-stock corporation, it remains a government
instrumentality exercising not only governmental but also corporate powers.
MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic.
Section 48, Chapter 12, Book I of the Administrative Code allows instrumentalities like MIAA to
hold title to real properties owned by the Republic.
Section 234(a) of the Local Government Code exempts from real estate tax any "real
property owned by the Republic of the Philippines. This exemption should be read in relation
with Section 133(o) of the same Code, which prohibits local governments from imposing
"[t]axes, fees or charges of any kind on the National Government, its agencies and
instrumentalities x x x."
Section 234(a) of the Local Government Code states that real property owned by the
Republic loses its tax exemption only if the "beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person." MIAA, as a government instrumentality, is
not a taxable person under Section 133(o) of the Local Government Code. Thus, even if we
assume that the Republic has granted to MIAA the beneficial use of the Airport Lands and
Buildings, such fact does not make these real properties subject to real estate tax.
However, portions of the Airport Lands and Buildings that MIAA leases to private
entities are not exempt from real estate tax.
Magsaysay-Labrador
180 SCRA 267
19
Fernan,
C.J.:
Court
December
of
Appeals
1989
Facts:
Petitioner avers that the executive orders are unconstitutional. While BASECO
concedes that sequestration without judicial action may be made within the context
of the executive orders, however when the Freedom Constitution was promulgated it
ceased to be acceptable. This is because the Freedom Constitution adopted the Bill
of Rights embodied in the 1973 Constitution. BASECO argues that the assailed order
to produce corporate records infringed on their constitutional right against self
incrimination and unreasonable searches and seizures.
Issue:
Whether or not the right against self incrimination and the right against
unreasonable searches and seizures available to BASECO and juridical entity?
Ruling:
The right against self incrimination has no application to juridical persons. While an
individual (person) may lawfully refuse to answer incriminating questions, it does
not follow that a person vested with special privileges and franchises may
refuse to show its hand when charged with abuse of such privileges
There is a reserve right on the legislature to investigate its contracts and find out
whether it exceeded its powers.
It would be strange to hold that a state having chartered a corporation could not in
the exercise of sovereignty inquire how these franchises had been employed and
whether they had been abused and demand production of the corporate books for
that purpose.
MARTINEZ, J.:
FACTS:
Petitioner Aida M. Posadas and her two (2) minor children co-owned property
in Muntinlupa, which was occupied by squatters. Petitioner Posadas entered into
negotiations with private respondent Jaime T. Bravo regarding the development of
the said property into a residential subdivision, authorizing private respondent to
negotiate with the squatters to leave the said property.
Meanwhile, on December 11, 1989, petitioner Posadas and her two (2)
children, through a Deed of Assignment, assigned the said property to petitioner
Luxuria Homes, Inc., purportedly for organizational and tax avoidance purposes.
Respondent Bravo signed as one of the witnesses to the execution of the Deed of
Assignment and the Articles of Incorporation of petitioner Luxuria Homes, Inc.
Then sometime in 1992, the harmonious and congenial relationship of
petitioner Posadas and respondent Bravo turned sour when the former supposedly
could not accept the management contracts to develop the property into a
residential subdivision, the latter was proposing. In retaliation, respondent Bravo
demanded payment for services rendered in connection with the development of
the land, i.e., relocation of squatters, preparation of the architectural design and
site development plan, survey and fencing. Petitioner Posadas refused to pay the
amount demanded. Thus, private respondents instituted a complaint for specific
performance before the trial court against petitioners Posadas and Luxuria Homes,
Inc. Private respondents contend that petitioner Posadas surreptitiously formed
Luxuria Homes, Inc., and transferred the subject parcel of land to it to evade
payment and defraud creditors.
ISSUE:
Can petitioner Luxuria Homes, Inc., be held liable to private respondents for the
transactions supposedly entered into between petitioner Posadas and private
respondents?
HELD:
NO. To disregard the separate juridical personality of a corporation, the
wrongdoing must be clearly and convincingly established. It cannot be presumed.
The separate personality of the corporation may be disregarded only when the
corporation is used as a cloak or cover for fraud or illegality , or to work injustice, or
where necessary for the protection of creditors. The issuance of the Articles of
Incorporation of the Luxuria Homes and the transfer was made at the time the
relationship between the parties was supposedly very pleasant. It cannot be said
that the incorporation of Luxuria Homes and the eventual transfer of the subject
property to it were in fraud of private respondents as such were done with the full
knowledge of Bravo himself. Besides, Posadas is not the majority stockholder of
Luxuria Homes, Inc. as she only owns approximately 33% of the capital stock.
Hence cannot be considered as an alter ego of Luxuria Homes, Inc.
CONCEPT BUILDERS, INC., petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION,
(First Division); and Norberto Marabe, Rodolfo Raquel, Cristobal Riego, Manuel Gillego, Palcronio
Giducos, Pedro Aboigar, Norberto Comendador, Rogello Salut, Emilio Garcia, Jr., Mariano Rio,
Paulina Basea, Aifredo Albera, Paquito Salut, Domingo Guarino, Romeo Galve, Dominador Sabina,
Felipe Radiana, Gavino Sualibio, Moreno Escares, Ferdinand Torres, Felipe Basilan, and Ruben
Robalos, respondents.
FACTS:
Petitioner Concept Builders, Inc. is a domestic corporation engaged in construction business and
herein private respondents are their laborers, carpenters and riggers. On November 1980, the private
respondents were issued by the petitioner, individual termination letters indicating that their services were
no longer needed and that the project was already finished. Private respondents later found out that such
was not the case and that petitioner engaged the services of a subcontractor. This now led, respondents
to file a case with the Labor Arbiter against petitioner for illegal dismissal, unfair labor practices and nonpayment of wages. The Labor Arbiter decided in favor of respondents.
An Alias Writ of Execution was issued by the Labor Arbiter directing the sheriff to to execute the
decision and a second one for collection of the balance of the judgment award. Such writ was not
executed because petitioner stopped its operation. A break-open order was sought by the respondents
but Dennis Cuyegkeng, the Vice-President of Hydro Pipes Philippines, Inc. (HPPI) filed a third party
complaint, alleging that the properties to be auctioned by the sheriff were theres and not of petitioners.
Private respondents then averred that HPPI and Concept Builders are the same and such intervention
and defense of HPPI was merely to avoid the performance of Concept Builders obligation, as proof they
presented the certificates issued by SEC to both corporations. HPPI argued then that they are two distinct
and separate entities. NLRC issued the break-open order and denied petitioners motion for
reconsideration, hence this petition.
ISSUE:
Whether or not there was an intention of the petitioners to evade their liability against private
respondents through the intervention of HPPI.
HELD:
Yes. It is very obvious that the second corporation seeks the protective shield of a corporate
fiction whose veil in the present case could, and should, be pierced as it was deliberately and maliciously
designed to evade its financial obligation to its employees.
The corporate mask may be lifted and the corporate veil may be pierced when a corporation is just
but the alter ego of a person or of another corporation. Where badges of fraud exist; where public
convenience is defeated; where a wrong is sought to be justified thereby, the corporate fiction or the
notion of legal entity should come to naught. The law in these instances will regard the corporation as a
mere association of persons and, in case of two corporations, merge them into one.
Thus, where a sister corporation is used as a shield to evade a corporations subsidiary liability for
damages, the corporation may not be heard to say that it has a personality separate and distinct from the
other corporation. The piercing of the corporate veil comes into play.
FACTS: Jose Villarama was an operator of a bus transportation, under the business
name of Villa Rey Transit, pursuant to certificates of public convenience granted him
by the Public Service Commission (PSC). He sold the two certificates of public
convenience to the Pangasinan Transportation Company, Inc. (Pantranco), with the
condition that the seller "shall not for a period of 10 years from the date of this sale,
apply for any TPU service identical or competing with the buyer."
Barely three months thereafter, a corporation called Villa Rey Transit, Inc.
(Corporation) was organized with Natividad Villarama (wife of Jose) as one of the
incorporators including the brother and sister-in-law of Jose. Natividad was also the
treasurer of the corporation. The Corporation, bought five certificates of public
convenience, forty-nine buses, tools and equipment from one Valentin Fernando.
However, the Sheriff of Manila, levied on two of the five certificates of public
convenience involved therein, pursuant to a writ of execution issued by the CFI of
Pangasinan in a Civil Case in favor of Eusebio Ferrer, the judgment creditor of
Valentin Fernando, judgment debtor. A public sale was conducted of the two
certificates and Ferrer was the highest bidder. Thereafter, Ferrer sold the two
certificates of public convenience to Pantranco.
The Corporation filed a complaint for the annulment of the sheriff's sale of the two
certificates of public convenience. Pantranco, on its part, filed a third-party
complaint against Jose, alleging that Jose and the Corporation, are one and the
same; that Jose and/or the Corporation was disqualified from operating the two
certificates by virtue of the agreement between them, which stipulated that Jose
"shall not for a period of 10 years apply for any TPU service identical or competing
with the buyer."
HELD: The evidence has that the finances of the Corporation were manipulated and
disbursed as if they were the private funds of Jose, in such a way and extent that
Jose appeared to be the actual owner-treasurer of the business without regard to the
rights of the stockholders. It also shows that the initial cash capitalization of the
corporation was mostly financed by Jose. Further, when the Corporation was in its
initial months of operation, Jose purchased and paid with his personal checks Ford
trucks for the Corporation. Copies of ledger entries and vouchers also prove that
Jose had co-mingled his personal funds and transactions with those made in the
name of the Corporation. It appears that Jose supplied the organization expenses
and the assets of the Corporation, such as trucks and equipment and that Jose
made use of the money of the Corporation and deposited them to his private
accounts; and the Corporation paid his personal accounts.
The foregoing circumstances are strong persuasive evidence showing that Jose has
been too much involved in the affairs of the Corporation to altogether negative the
claim that he was only a part-time general manager. They show beyond doubt that
the Corporation is his alter ego. While he was not the Treasurer of the Corporation
he admitted not only having held the corporate money but that he advanced and
lent funds for the Corporation, and yet there was no Board Resolution allowing it.
Villarama's explanation on the matter of his involvement with the corporate affairs
of the Corporation only renders more credible Pantranco's claim that his control over
the corporation, especially in the management and disposition of its funds, was so
extensive and intimate that it is impossible to segregate and identify which money
belonged to whom. The interference of Villarama in the complex affairs of the
corporation, and particularly its finances, are much too inconsistent with the ends
and purposes of the Corporation law, which, precisely, seeks to separate personal
responsibilities from corporate undertakings. It is the very essence of incorporation
that the acts and conduct of the corporation be carried out in its own corporate
name because it has its own personality.
The doctrine that a corporation is a legal entity distinct and separate from the
members and stockholders who compose it is recognized and respected in all cases
which are within reason and the law. When the fiction is urged as a means of
perpetrating a fraud or an illegal act or as a vehicle for the evasion of an existing
obligation, the circumvention of statutes, the achievement or perfection of a
monopoly or generally the perpetration of knavery or crime, the veil with which the
law covers and isolates the corporation from the members or stockholders who
Upon the foregoing considerations, We are of the opinion, and so hold, that the
preponderance of evidence have shown that the Villa Rey Transit, Inc. is an alter ego
of Jose Villarama, and that the restrictive clause in the contract entered into by the
latter and Pantranco is also enforceable and binding against the said Corporation.
For the rule is that a seller or promisor may not make use of a corporate entity as a
means of evading the obligation of his covenant. Where the Corporation is
substantially the alter ego of the covenantor to the restrictive agreement, it can be
enjoined from competing with the covenantee.
"The de facto doctrine thus effects a compromise between two conflicting public interest[s]the one
opposed to an unauthorized assumption of corporate privileges; the other in favor of doing justice to the
parties and of establishing a general assurance of security in business dealing with corporations."
Generally, the doctrine exists to protect the public dealing with supposed corporate entities, not to favor
the defective or non-existent corporation.
In view of the foregoing, petitioners arguments anchored on their supposed de facto status hold no water.
We are convinced that there was no donation to petitioners or their supposed predecessor-in-interest.
transaction entered by it as a corporation or on any tort committed by it as such, it shall not be allowed to
use as a defense its lack of corporate personality.
One who assumes an obligation to an ostensible corporation as such, cannot resist performance thereof
on the ground that there was in fact no corporation.
Batch 1 case 13
International Express Travel & Tour vs. CA & Henri Kahn, Philippine Football Federation
Facts:
Batch 1 Case 14
Filipinas Broadcasting Network vs AMEC-BCCM
Facts:
It started with a radio program titled Expose hosted by Carmelo Mel Rima (Rima) and
Hermogenes Jun Alegre (Alegre). Expose is aired every morning over DZRC-AM which is
owned by Filipinas Broadcasting Network, Inc. (FBNI). Expose is heard over Legazpi City
and other places in Bicol. 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.it was claimed 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 exposes, FBNI, Rima and Alegre
transmitted malicious imputations, and as such, destroyed plaintiffs. 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,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 AMECan institution imbued with public interest. 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 broadcasters.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 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. Hence, FBNI filed the petition for review.
Issue: WON AMEC IS ENTITLED TO MORAL DAMAGES?
Held:
A juridical person like AMEC 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 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.
feelings, serious anxiety, mental anguish and moral shock. The only exception to
this rule is when the corporation has a good reputation that is debased, resulting in
its humiliation in the business realm. In the present case, the records do not show
any evidence that the name or reputation of petitioner has been sullied as a result
of the Consortium's fraudulent acts. Accordingly, moral damages are not warranted.
Petitioner was able to recover exemplary damages