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Case Digest - Business Organization, Moral Damages for juridical persons

PNB vs. RITRATTO GRP

GRN 142616 July 31, 2001

Kapunan, J.:

FACTS:

PNB-IFL, a subsidiary company of PNB extended credit to Ritratto in the amount $300,000 secured by the real estate mortgages on two parcels of land located in Makati. Said credit was increased until April 1998. Respondent’s outstanding obligations up to that time stood at $1,497,274.40. Pursuant to the terms of the mortgage, PNB-IFL thru PNB, foreclosed the property and were subject to public auction.

Respondents filed a complaint for injunction with prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order. PNB filed a motion to dismiss on the grounds of failure to state a cause of action and the absence of any privity between respondents and petitioner. Trial Court issued the writ of preliminary injunction and denied PNB’s motion to dismiss. In the impugned decision, the CA dismissed the petition for certiorari and prohibition.

ISSUE:

Whether or not PNB is privy to the loan contracts entered into by respondent & PNB-IFL.

RULING:
...The contract questioned is one entered into between responded and PNB-IFL. Petitioner was admittedly an agent of the latter who acted as an agent with limited authority and specific duties under a special power of attorney incorporated in the real estate mortgage. It is not privy to the loan contracts entered into by them. Yet, despite the recognition that PNB is a mere agent, the respondents, in their complaint, prayed that PNB be ordered to recompute the scheduling accordance with the terms and conditions in the documents evidencing the credit facilities, and crediting the amount previously paid to PNB by respondent.

The mere fact that a corporation owns all of the stocks of another corporation, taken alone is not sufficient to justify their being treated as one entity. If used to perform legitimate functions, a subsidiary’s separate existence may be respected, and the liability of the parent corporation as well as the subsidiary will be confined to those arising in their respective business. The courts may, in the exercise of judicial discretion, step in to prevent the abuses of separate entity privilege and pierce the veil of corporate entity.

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Filipinas Broadcasting vs. Ago Medical Center

GRN 141994 January 17, 2005

Carpio, J.:

FACTS:

Rima & Alegre were host of FBNI radio program “Expose”. Respondent Ago was the owner of the Medical & Educational center, subject of the radio program “Expose”. AMEC claimed that the broadcasts were defamatory and owner Ago and school AMEC claimed for damages. The complaint further alleged that AMEC is a reputable learning institution. With the supposed expose, FBNI, Rima and Alegre “transmitted malicious imputations and as such, destroyed plaintiff’s reputation. FBNI was included as defendant for allegedly failing to exercise due diligence in the selection and supervision of its employees. The trial court found Rima’s statements to be within the bounds of freedom of speech and ruled that the broadcast was libelous. It ordered the defendants Alegre and FBNI to pay AMEC 300k for moral damages.”

ISSUE:

Whether or not AMEC is entitled to moral damages.

RULING:

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. Nevertheless, AMEC’s claim, or moral damages fall under item 7 of Art – 2219 of the NCC.

This provision expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. Art 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 implied 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. In this case, the broadcasts are libelous per se. thus, AMEC is entitled to moral damages. However, we find the award P500,000 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, we reduce the award of moral damages to P150k.

v JOIN TORT FEASORS are all the persons who command, instigate, promote, encourage, advice countenance, cooperate in, aid or abet the commission of a tort, as who approve of it after it is done, for its benefit.

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Mangila vs. CA/Loreta Guina

GRN – 125027 August 12, 2002

Carpio, J.:

FACTS:

Petitioner Mangila hired the freight service of private respondent Guina for the importation of seafoods to USA. Petitioner failed to pay the services rendered by Air Swift International a business operating under the sole proprietorship of Guina. The latter filed a case for collection of money but summons were unsuccessfully served thus a writ of Preliminary Attachment was issued. Petitioner filed a motion to discharge without submitting herself to the jurisdiction of the court. The CA upheld the validity of the issuance of the writ attachment and sustained the filing of the case in Pasay as the proper venue, despite stipulation in the contract that in case of complaints, cases should be filed in Makati City. Pasay City is the office location of Air Swift.

ISSUE:

Whether or not the venue of the swift was properly laid when it was filed in Pasay City where the sole proprietorship business of the respondent was located.

RULING:

A mere stipulation on the venue of an action is not enough to preclude the parties from bringing a case in other venues. The partiers must be able to show that the stipulation is exclusive. In the present case… there are no qualifying or restrictive words in the invoice that would evince the intention of the parties that Makati is the only or exclusive venue where the action would be instituted. Nevertheless, we hold that Pasay is not the proper venue.

In this case it was established that petitioner resides in Pampanga while respondent resides in ParaƱaque. The case was filed in Pasay where the business is located.

A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the enterprise… The law does not vest a separate legal personality on the sole proprietorship to empower it to file or defend an action in court. Thus, not being vested with legal personality to file this case, the sole proprietorship is not the plaintiff but Guina herself.

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