Espiritu vs Petron Corp. 605 SCRA 245

DOCTRINE:

Corporate officers or employees, through whose act, default or omission the corporation commits a crime, may themselves be individually held answerable for the crime: The "owners" of a corporate organization are its stockholders and they are to be distinguished from its directors and officers.

In a corporation, the management of its business is generally vested in its board of directors, not its stockholders. Stockholders are basically investors in a corporation. They do not have a hand in running the day-to-day business operations of the corporation unless they are at the same time directors or officers of the corporation. Before a stockholder may be held criminally liable for acts committed by the corporation, therefore, it must be shown that he had knowledge of the criminal act committed in the name of the corporation and that he took part in the same or gave his consent to its commission, whether by action or inaction.


FACTS:

Petron sold and distributed LPG in cylinder tanks that carried its trademark "Gasul." Respondent Carmen J. Doloiras owned and operated Kristina Patricia Enterprises (KPE), the exclusive distributor of Gasul LPGs in the whole of Sorsogon. Jose Nelson Doloiras (Jose) served as KPE’s manager. Bicol Gas Refilling Plant Corporation (Bicol Gas) was also in the business of selling and distributing LPGs in Sorsogon but theirs carried the trademark "Bicol Savers Gas." Petitioner Audie Llona managed Bicol Gas.

According to Jose, KPE’s manager, in April 2001 Bicol Gas agreed with KPE for the swapping of "captured cylinders" since one distributor could not refill captured cylinders with its own brand of LPG. At one time, in the course of implementing this arrangement, KPE’s Jose visited the Bicol Gas refilling plant and noticed several Gasul tanks in Bicol Gas’ possession. He requested a swap but Audie Llona of Bicol Gas replied that he first needed to ask the permission of the Bicol Gas owners which was given and they had a swap involving around 30 Gasul tanks held by Bicol Gas in exchange for assorted tanks held by KPE.

KPE’s Jose noticed, however, that Bicol Gas still had a number of Gasul tanks in its yard. He offered to make a swap for these but Llona declined, saying the Bicol Gas owners wanted to send those tanks to Batangas. Later Bicol Gas told Jose that it had no more Gasul tanks left in its possession. Jose observed on almost a daily basis, however, that Bicol Gas’ trucks which plied the streets of the province carried a load of Gasul tanks. He noted that KPE’s volume of sales dropped significantly from June to July 2001.

On August 4, 2001 KPE’s Jose saw a particular Bicol Gas truck on the Maharlika Highway. While the truck carried mostly Bicol Savers LPG tanks, it had on it one unsealed 50-kg Gasul tank and one 50-kg Shellane tank. Jose followed the truck and when it stopped at a store, he asked the driver, Jun Leorena, and the Bicol Gas sales representative, Jerome Misal, about the Gasul tank in their truck. They said it was empty but, when Jose turned open its valve, he noted that it was not. Misal and Leorena then admitted that the Gasul and Shellane tanks on their truck belonged to a customer who had them filled up by Bicol Gas. Misal then mentioned that his manager was a certain Rolly Mirabena.

Because of the above incident, KPE filed a complaint for violations of R.A. 623 (illegally filling up registered cylinder tanks).

ISSUE:

WON the facts of the case warranted the filing of charges against the Bicol Gas people for:

a) Trademark infringement consisting in Bicol Gas’ use of a trademark that is confusingly similar to Petron’s registered "Gasul" trademark in violation of section 155 also of R.A. 8293; and

b) Unfair competition consisting in passing off Bicol Gas-produced LPGs for Petron-produced Gasul LPG in violation of Section 168.3 of R.A. 8293.

HELD:

Here, however, the allegations in the complaint do not show that Bicol Gas painted on its own tanks Petron’s Gasul trademark or a confusingly similar version of the same to deceive its customers and cheat Petron. Indeed, in this case, the one tank bearing the mark of Petron Gasul found in a truck full of Bicol Gas tanks was a genuine Petron Gasul tank, more of a captured cylinder belonging to competition. No proof has been shown that Bicol Gas has gone into the business of distributing imitation Petron Gasul LPGs.

As to the charge of unfair competition, what the law punishes is the act of giving one’s goods the general appearance of the goods of another, which would likely mislead the buyer into believing that such goods belong to the latter. Here, there is no showing that Bicol Gas has been giving its LPG tanks the general appearance of the tanks of Petron’s Gasul. As already stated, the truckfull of Bicol Gas tanks that the KPE manager arrested on a road in Sorsogon just happened to have mixed up with them one authentic Gasul tank that belonged to Petron.

The only point left is the question of the liability of the stockholders and members of the board of directors of Bicol Gas with respect to the charge of unlawfully filling up a steel cylinder or tank that belonged to Petron. Bicol Gas is a corporation. As such, it is an entity separate and distinct from the persons of its officers, directors, and stockholders. It has been held, however, that corporate officers or employees, through whose act, default or omission the corporation commits a crime, may themselves be individually held answerable for the crime.

The petitioners here, with the exception of Audie Llona, are being charged in their capacities as stockholders of Bicol Gas. But the Court of Appeals forgets that in a corporation, the management of its business is generally vested in its board of directors, not its stockholders.

Although the KPE manager heard petitioner Llona say that he was going to consult the owners of Bicol Gas regarding the offer to swap additional captured cylinders, no indication was given as to which Bicol Gas stockholders Llona consulted. It would be unfair to charge all the stockholders involved, some of whom were proved to be minors.

Cometa vs CA 301 SCRA 459

DOCTRINE:

It is true that a criminal case can only be filed against the officers of a corporation and not against the corporation itself. It does not follow from this, however, that the corporation cannot be a real-party-in-interest for the purpose of bringing a civil action for malicious prosecution.


FACTS:

Petitioner State Investment Trust, Inc extended loans in various amounts to Guevent Industrial Development Corp which the latter failed to pay on the dates they became due. For this reason, a rehabilitation plan was agreed upon for GIDC under which it mortgaged several parcels of land to petitioner SITI. Among those mortgaged was a Mandaluyong lot. However, GIDC again defaulted. Hence, SITI foreclosed the mortgages and, in the foreclosure sale, acquired the properties as highest bidder.

Alleging irregularities in the foreclosure of the mortgages and the sale of properties to SITI, GIDC filed a case in the RTC Pasig. The case was eventually settled through a compromise agreement which became the basis of the trial courts judgment. A dispute later arose concerning the interpretation of the compromise agreement, as respondent Honeycomb Builders, Inc. offered to purchase from GIDC the lot and the latter agreed but SITI (the mortgagee) refused to give its consent to the sale and release its lien on the property. For this reason, GIDC asked the trial court for a clarification of its decision.

Subsequently, the trial court directed SITI to accept the offer of HBI to purchase the property. SITI appealed the order to the Court of Appeals which affirmed the same.

HBI applied to the Housing and Land Use Regulatory Board for a permit to develop the property in question. Its application was granted, on account of which HBI built a condominium. When HBI applied for a license to sell the condominium units it was required by the HLURB to submit an Affidavit of Undertaking which in effect stated that the mortgagee (SITI) of the property to be developed agrees to release the mortgage on the said property as soon as the full purchase price of the same is paid by the buyer. Respondent HBI submitted the required affidavit.

Petitioner Cometa as president of SITI denied as supported by NBI finding Cometa’s signature to be a forgery on the basis of which a complaint for falsification of public document was filed against HBI president Guevara. Following the dismissal of the criminal case against him, private respondents Reynaldo S. Guevara and HBI filed a complaint for malicious prosecution against petitioners Cometa and SITI.


ISSUE:

WON the complaint filed by private respondents against petitioners in the Regional Trial Court states a cause of action.


HELD:

NO. the decision of the criminal court in the present case indicates that there was not even prima facie evidence to prove the alleged guilt of the accused. Consequently, a trial was in fact unnecessary and the criminal court dismissed the case against private respondent Guevara on the basis of a demurrer to evidence. Lack of probable cause is an element separate and distinct from that of malice. It follows, therefore, that one cannot be held liable in damages for maliciously instituting a prosecution where he acted with probable cause.

It is contended that HBI is not a real-party-in-interest, whatever interest it may have being purely speculative. On this point, we think the Court of Appeals correctly ruled:

Section 11 of Rule 3 of the Rules of Court provides:

Misjoinder and non-joinder of parties. Misjoinder of parties is not a ground for dismissal of an action. Parties may be dropped or added by order of the court or on motion of any party or on its own initiative at any stage of the action and on such terms as are just.

Given (1) the foregoing rule, (2), the fact that Guevara, in his capacity as president of HBI, filed HBIs application to sell at the HLURB and it was in the same capacity and in connection with the application that he was criminally charged, and (3) the allegations in the complaint including that stating that by the filing of the criminal case against Guevara, the application of HBI with the HLURB for a regular license to sell the condominium units . . . had been delayed, resulting in the corresponding delay in the sale thereof on account of which plaintiffs incurred over runs in development, marketing and financial costs and charges, resulting in actual damages, the deferral by public respondent of petitioners motion to drop HBI as party plaintiff cannot be said to have been attended with grave abuse of discretion. It bears emphasis that the phraseology of Section 11 of Rule 3 is that parties may be dropped . . . at any stage of the action.

It is true that a criminal case can only be filed against the officers of a corporation and not against the corporation itself. It does not follow from this, however, that the corporation cannot be a real-party-in-interest for the purpose of bringing a civil action for malicious prosecution.

Lastly, the statement of the judge in the assailed order of May 30, 1994 that [t]he defense of lack of cause of action and that the defendants are not the real parties in interest .... are matters of defense was correctly held by the appellate court as mere dictum, said judge having earlier stated in the same order that there are sufficient allegations of causes of action in the Complaint.

Times Inc. vs Reyes 39 SCRA 303

DOCTRINE:

Respondents rely on section 69 of the Corporation law, which provides:

SEC. 69. No foreign corporation or corporations formed, organized, or existing under any laws other than those of the Philippines shall be permitted to ... maintain by itself or assignee any suit for the recovery of any debt, claim, or demand whatever, unless it shall have the license prescribed in the section immediately preceding. ..."

A foreign corporation may, by writ of prohibition, seek relief against the wrongful assumption of jurisdiction. And a foreign corporation seeking a writ of prohibition against further maintenance of a suit, on the ground of want of jurisdiction in which jurisdiction is not bound by the ruling of the court in which the suit was brought, on a motion to quash service of summons, that it has jurisdiction.


FACTS:

Antonio J. Villegas and Juan Ponce Enrile seek to recover from the herein petitioner damages upon an alleged libel arising from a publication of Time (Asia Edition) magazine, in its issue of 18 August 1967, of an essay, entitled "Corruption in Asia" which talks about the investigation of Manila Mayor Villegas due to the discovery of his excessive and unreasonable resources. More specifically, the complaint alleges that Time Magazine published a libelous article, publicly, falsely and maliciously imputing to Plaintiffs the commission of the crimes of graft, corruption and nepotism; that said publication particularly referred to Plaintiff Mayor as a case in point in connection with graft, corruption and nepotism in Asia; that said publication without any doubt referred to co-plaintiff Enrile as the high government official who helped under curious circumstances Plaintiff Mayor in lending the latter approximately P30,000.00 ($7,700.00) without interest because he was the Mayor's compadre; that the purpose of said Publications is to cause the dishonor, discredit and put in public contempt the Plaintiffs.

At the time of the publication of the allegedly offending essay, private respondents Antonio Villegas and Juan Ponce Enrile were the Mayor of the City of Manila and Undersecretary of Finance and concurrently Acting Commissioner of Customs, respectively, with offices in the City of Manila.

On motion of the respondents-plaintiffs, the respondent judge, on 25 November 1967, granted them leave to take the depositions "of Mr. Anthony Gonzales, Time-Life international", and "Mr. Cesar B. Enriquez, Muller & Phipps (Manila) Ltd.", in connection with the activities and operations in the Philippines of the petitioner, and, on 27 November 1967, issued a writ of attachment on the real and personal estate of Time, Inc.

Petitioner received the summons and a copy of the complaint at its offices in New York on 13 December 1967 and, on 27 December 1967, it filed a motion to dismiss the complaint for lack of jurisdiction and improper venue, relying upon the provisions of Republic Act 4363.


ISSUE:

WON Republic Act 4363 is applicable to action against a foreign corporation or non-resident defendant.


HELD:

The assertion that a foreign corporation or a non-resident defendant is not inconvenienced by an out-of-town suit is irrelevant and untenable, for venue and jurisdiction are not dependent upon convenience or inconvenience to a party; and moreover, venue was fixed under Republic Act No. 4363, pursuant to the basic policy of the law that is, as previously stated, to protect the interest of the public service when the offended party is a public officer, by minimizing as much as possible any interference with the discharge of his duties.

That respondents-plaintiffs could not file a criminal case for libel against a non-resident defendant does not make Republic Act No. 4363 incongruous of absurd, for such inability to file a criminal case against a non-resident natural person equally exists in crimes other than libel. It is a fundamental rule of international jurisdiction that no state can by its laws, and no court which is only a creature of the state, can by its judgments or decrees, directly bind or affect property or persons beyond the limits of the state.5 Not only this, but if the accused is a corporation, no criminal action can lie against it,6 whether such corporation or resident or non-resident. At any rate, the case filed by respondents-plaintiffs is case for damages.

The dismissal of the present petition is asked on the ground that the petitioner foreign corporation failed to allege its capacity to sue in the courts of the Philippines. Respondents rely on section 69 of the Corporation law. Petitioner's failure to aver its legal capacity to institute the present petition is not fatal.

It is also advanced that the present petition is premature, since respondent court has not definitely ruled on the motion to dismiss, nor held that it has jurisdiction, but only argument is untenable. The motion to dismiss was predicated on the respondent court's lack of jurisdiction to entertain the action; and the rulings of this Court are that writs of certiorari or prohibition, or both, may issue in case of a denial or deferment of action on such a motion to dismiss for lack of jurisdiction.

West Coast Life Ins. Co. vs Hurd 27 Phil 401

Doctrine:

To bring a corporation into court criminally requires many additions to the present criminal procedure. While it may be said to be the duty of courts to see to it that criminals are punished, it is no less their duty to follow prescribed forms of procedure and to go out upon unauthorized ways or act in an unauthorized manner.


FACTS:

The petitioner is a foreign life-insurance corporation, duly organized under and by virtue of the laws of the State of California, doing business regularly and legally in the Philippine Islands pursuant to its laws. West Coast Life Insurance Company, John Northcott, and Manuel C. Grey, conspiring and confederating together, and to the damage of the Insular Life Insurance Company, a domestic corporation and doing business in the Philippine Islands, and with intent to cause such damage and to expose the said Insular Life Insurance Company to public hatred, contempt, and ridicule, compose and print, and cause to be printed a large number of circulars, and, in numerous printings in the form of said circulars, did publish and distribute, and cause to be published and distributed, among other persons, to policy holders and prospective policy holders of the said Insular Life Insurance Company, among other things, a malicious defamation and libel in the Spanish language.

That the said Insular Life Insurance Company was then and there in a dangerous financial condition and on the point of going into insolvency, to the detriment of the policy holders of the said Insular Life Insurance Company, and of those with whom the said Insular Life Insurance Company have and have had business transactions.

ISSUE:

WON West Coast Life Insurance should also be criminally charged.


HELD:

NO. There are many cases cited by counsel for the defendant which show that corporations have been proceeded against criminally by indictment and otherwise and have been punished as malefactors by the courts. Of this, of course, there can be no doubt; but it is clear that, in those cases, the statute, by express words or by necessary intendment, included corporations within the persons who could offend against the criminal laws; and the legislature, at the same time established a procedure applicable to corporations. No case has been cited to us where a corporation has been proceeded against under a criminal statute where the court did not exercise its common law powers or where there was not in force a special procedure applicable to corporations.

The courts of the Philippine Islands are creatures of statute and, as we have said, have only those powers conferred upon them by statute and those which are required to exercise that authority fully and adequately. The courts here have no common law jurisdiction or powers. If they have any powers not conferred by statute, expressly or impliedly, they would naturally come from Spanish and not from common law sources. It is undoubted that, under the Spanish criminal law and procedure, a corporation could not have been proceeded against criminally, as such, if such an entity as a corporation in fact existed under the Spanish law, and as such it could not have committed a crime in which a willful purpose or a malicious intent was required. Criminal actions would have been restricted or limited, under that system, to the officials of such corporations and never would have been directed against the corporation itself. This was the rule with relation to associations or combinations of persons approaching, more or less, the corporation as it is now understood, and it would undoubtedly have been the rue with corporations. From this source, then, the courts derive no authority to bring corporations before them in criminal actions, nor to issue processes for that purpose.

Professional Services Inc. vs CA 611 SCRA 282

Doctrine:

While in theory a hospital as a juridical entity cannot practice medicine, in reality it utilizes doctors, surgeons and medical practitioners in the conduct of its business of facilitating medical and surgical treatment. Within that reality, three legal relationships crisscross: (1) between the hospital and the doctor practicing within its premises; (2) between the hospital and the patient being treated or examined within its premises and (3) between the patient and the doctor. The exact nature of each relationship determines the basis and extent of the liability of the hospital for the negligence of the doctor.

It should be borne in mind that the corporate negligence ascribed to PSI is different from the medical negligence attributed to Dr. Ampil. The duties of the hospital are distinct from those of the doctor-consultant practicing within its premises in relation to the patient; hence, the failure of PSI to fulfill its duties as a hospital corporation gave rise to a direct liability to the Aganas distinct from that of Dr. Ampil.


FACTS:

There existed between PSI and Dr. Ampil an employer-employee relationship as contemplated in the December 29, 1999 decision in Ramos v. Court of Appeals that "for purposes of allocating responsibility in medical negligence cases, an employer-employee relationship exists between hospitals and their consultants."

By accrediting Dr. Ampil and advertising his qualifications, PSI created the public impression that he was its agent. Enrique testified that it was on account of Dr. Ampil's accreditation with PSI that he conferred with said doctor about his wife's (Natividad's) condition. After his meeting with Dr. Ampil, Enrique asked Natividad to personally consult Dr. Ampil. In effect, when Enrique and Natividad engaged the services of Dr. Ampil, at the back of their minds was that the latter was a staff member of a prestigious hospital. Thus, under the doctrine of apparent authority applied in Nogales, et al. v. Capitol Medical Center, et al., PSI was liable for the negligence of Dr. Ampil.

As owner and operator of Medical City General Hospital, PSI was bound by its duty to provide comprehensive medical services to Natividad Agana, to exercise reasonable care to protect her from harm, to oversee or supervise all persons who practiced medicine within its walls, and to take active steps in fixing any form of negligence committed within its premises. PSI committed a serious breach of its corporate duty when it failed to conduct an immediate investigation into the reported missing gauzes


ISSUE:

WON petitioner be held liable under doctrine of corporate negligence since the proximate cause of the injury was the negligence of Dr. Ampil, which is an element of the principle.


HELD:

YES. Here, there was insufficient evidence that PSI exercised the power of control or wielded such power over the means and the details of the specific process by which Dr. Ampil applied his skills in the treatment of Natividad. Consequently, PSI cannot be held vicariously liable for the negligence of Dr. Ampil under the principle of respondeat superior.

There is, however, ample evidence that the hospital (PSI) held out to the patient (Natividad) that the doctor (Dr. Ampil) was its agent. Present are the two factors that determine apparent authority: first, the hospital's implied manifestation to the patient which led the latter to conclude that the doctor was the hospital's agent; and second, the patient’s reliance upon the conduct of the hospital and the doctor, consistent with ordinary care and prudence.

While Dr. Ampil may have had the primary responsibility of notifying Natividad about the missing gauzes, PSI imposed upon itself the separate and independent responsibility of initiating the inquiry into the missing gauzes. The purpose of the first would have been to apprise Natividad of what transpired during her surgery, while the purpose of the second would have been to pinpoint any lapse in procedure that led to the gauze count discrepancy, so as to prevent a recurrence thereof and to determine corrective measures that would ensure the safety of Natividad. That Dr. Ampil negligently failed to notify Natividad did not release PSI from its self-imposed separate responsibility.

As it happened, PSI took no heed of the record of operation and consequently did not initiate a review of what transpired during Natividad’s operation. Rather, it shirked its responsibility and passed it on to others – to Dr. Ampil whom it expected to inform Natividad, and to Natividad herself to complain before it took any meaningful step. By its inaction, therefore, PSI failed its own standard of hospital care. It committed corporate negligence.

All this notwithstanding, we make it clear that PSI’s hospital liability based on ostensible agency and corporate negligence applies only to this case, pro hac vice. It is not intended to set a precedent and should not serve as a basis to hold hospitals liable for every form of negligence of their doctors-consultants under any and all circumstances. The ruling is unique to this case, for the liability of PSI arose from an implied agency with Dr. Ampil and an admitted corporate duty to Natividad.