The trial court, however, ruled that the option to sell is not valid

Yao Ka Sin Trading v. Court of Appeals, because it is not supported by any consideration distinct from
the price; it was exercised before compliance with the original
G.R. No. 53820, [June 15, 1992], 285 contract by PWCC; and the repudiation of the original contract
by PWCC was deemed a withdrawal of the option before
PHIL 345-371 acceptance by the petitioner.

FACTS: Constancio B. Maglana is the President and Court of Appeals Ruling:

Chairman of the Board of private respondent Prime White Maglana's signing the letter-offer prepared for him in the
Cement Corporation (PWCC). Solidbank was made clearly upon the condition that it was
subject to the approval of the board of directors of defendant
Petitioner, Yao Ka Sin Trading (YKS), describes itself as "a corporation. CA found consistency herein because according
business concern of single proprietorship," and is represented to the Corporation Law, and the By-Laws of defendant
by its manager, Mr. Henry Yao. corporation, all corporate commitments and business are
conducted by, and contracts entered into through, the express
PWCC sent an undated letter-offer to YKS on 7 June 1973 authority of the Board of Directors. Since Maglana was not
which was prepared, typed and signed in the office of Mr. authorized by the Board of Directors of defendant corporation
Teodoro Catindig, Senior Vice-President of the Consolidated nor was his actuation ratified by the Board, the agreement is
Bank and Trust Corporation (Solid Bank). unenforceable.

23 days after the signing of the letter-offer, the Board of ISSUE:

Directors of PWCC disapproved the same, which said rejection 1. WON petitioner has the capacity to sue.
is evidenced by the Minutes of the meeting. 2. WON defendant corporation's president can bind the
corporation with his own act.
On 5 July 1973, PWCC wrote a letter to YKS informing it of the
disapproval of the letter-offer. Pursuant, however, to its RULING:
decision with respect to the 10,000 bags of cement, it issued 1. NONE. Under Section 1, Rule 3 of the Rules of Court, only
the corresponding delivery Order and Official Receipt No. 0394 natural or juridical persons or entities authorized by law may be
for the payment of the same in the amount of P243,000.00 and parties in a civil action. In Juasing Hardware vs. Mendoza, 44
was received and acknowledged by Maglana. YKS accepted this Court held that a single proprietorship is neither a natural
without protest both the Delivery and Official Receipts. person nor a juridical person under Article 44 of the Civil Code;
it is not an entity authorized by law to bring suit in court.
YKS received the 4,150 bags of cement out of the 10,000 bags
of cement that it paid. On 10 September 1973, YKS, through 2. NO. Exhibit "A" is an unenforceable contract under Article
Henry Yao, wrote a letter 9 to PWCC as a follow-up to the 1317 of the Civil Code.
letter of 15 August 1973; YKS insisted on the delivery of
45,000 bags of white cement. A corporation, such as the private respondent, can act only
through its officers and agents, "all acts within the powers of
On 12 September 1973, Henry Yao sent a letter to PWCC said corporation may be performed by agents of its selection;
calling the latter's attention to the statement of delivery dated and, except so far as limitations or restrictions may be imposed
24 August 1973, particularly the price change from P23.30 to by special charter, by-law, or statutory provisions, the same
P24.30 per 94 lbs. bag net FOB Asturias, Cebu. general principles of law which govern the relation of agency
for a natural person govern the officer or agent of a
On 2 November 1973, YKS sent a telegram to PWCC insisting corporation, of whatever status or rank, in respect to his power
on the full compliance with the terms of Exhibit "A" and to act for the corporation; and agents when once appointed, or
informing the letter that it is exercising the option therein members acting in their stead, are subject to the same rules,
stipulated. liabilities and incapacities as are agents of individuals and
private persons." 51 Moreover, ". . . a corporate officer or agent
“It is understood that in the event of a delay in may represent and bind the corporation in transactions with
our shipment, you hold the option to discount third persons to the extent that authority to do so has been
any price differential resulting from a lower conferred upon him, and this includes powers which have been
market price vis-a-vis the contract price.” intentionally conferred, and also such powers as, in the usual
course of the particular business, are incidental to, or may be
As of 7 December 1973, PWCC had delivered only 9,775 bags implied from, the powers intentionally conferred, powers added
of white cement. by custom and usage, as usually pertaining to the particular
officer or agent, and such apparent powers as the corporation
On 9 February 1974, YKS wrote PWCC a letter requesting, for has caused persons dealing with the officer or agent to believe
the last time, compliance by the latter with its obligation under that it has conferred."
Exhibit letter-offer.
While there can be no question that Mr. Maglana was an
On 27 February 1974, PWCC sent an answer to the officer — the President and Chairman — of private respondent
aforementioned letter of 9 February 1974; PWCC reiterated the corporation at the time he signed Exhibit "A", the above
unenforceability of letter-offer. provisions of said private respondent's By-Laws do not in any
way confer upon the President the authority to enter into
On 4 March 1974, YKS filed with the then Court of First contracts for the corporation independently of the Board of
Instance of Leyte a complaint for Specific Performance with Directors. That power is exclusively lodged in the latter.
Damages against PWCC. Nevertheless, to expedite or facilitate the execution of the
contract, only the President — and not all the members of the
The trial court ruled in favor of the petitioner, but the Board, or so much thereof as are required for the act — shall
respondent Court held otherwise. sign it for the corporation. This is the import of the words
Trial Court Ruling: through the president in Exhibit "8-A" and the clear intent of the
no evidence that the board had set a prior limitation upon the power of the chairman "to execute and sign for and in behalf of
exercise of such judgment and discretion; it further ruled that the corporation all contracts and agreements which the
the By-Laws does not require that the letter-offer be approved corporation may enter into" in Exhibit "I-1". Both powers
by the Board of Directors. Finally, in the light of the Chairman's presuppose a prior act of the corporation exercised through the
power to "execute and sign for and in behalf of the corporation Board of Directors. No greater power can be implied from such
all contracts or agreements which the corporation may enter express, but limited, delegated authority. Neither can it be
into", it concluded that Mr. Maglana merely followed the By- logically claimed that any power greater than that expressly
Laws "presumably both as president and chairman of the conferred is inherent in Mr. Maglana's position as president
board thereof." Hence, the letter-offer was validly entered into and chairman of the corporation.
by Maglana and thus binds the corporation.

1
SC notes that the private corporation has a general manager
who, under its By-Laws has, inter alia, the following powers: The joint enterprise thus entered into by the Filipino investors
"(a) to have the active and direct management of the business and the American corporation prospered. Unfortunately, with
and operation of the corporation, conducting the same the business successes, there came a deterioration of the
according to the order, directives or resolutions of the Board of initially harmonious relations between the two groups.
Directors or of the president." It goes without saying then that According to the Filipino group, a basic disagreement was due
Mr. Maglana did not have a direct and active hand in the to their desire to expand the export operations of the company
management of the business and operations of the to which ASI objected as it apparently had other subsidiaries of
corporation. Besides, no evidence was adduced to show that joint venture groups in the countries where Philippine exports
Mr. Maglana had, in the past, entered into contracts similar to were contemplated. On March 8, 1983, the annual
that of Exhibit "A" either with the petitioner or with other parties. stockholders' meeting was held. The meeting was presided by
Baldwin Young. The minutes were taken by the Secretary,
Petitioner's last refuge then is his alternative proposition, Avelino Cruz. After disposing of the preliminary items in the
namely, that private respondent had clothed Mr. Maglana with agenda, the stockholders then proceeded to the election of the
the apparent power to act for it and had caused persons members of the board of directors. The ASI group nominated
dealing with it to believe that he was conferred with such three persons. The Philippine investors nominated six. The
power. The rule is of course settled that "[a]lthough an officer chairman, Baldwin Young ruled the last two nominations out of
or agent acts without, or in excess of, his actual authority if he order on the basis of section 5 (a) of the Agreement, the
acts within the scope of an apparent authority with which the consistent practice of the parties during the past annual
corporation has clothed him by holding him out or permitting stockholders' meetings to nominate only nine persons as
him to appear as having such authority, the corporation is nominees for the nine-member board of directors, and the legal
bound thereby in favor of a person who deals with him in good advice of Saniwares' legal counsel.
faith in reliance on such apparent authority, as where an officer
is allowed to exercise a particular authority with respect to the The meeting was in complete chaos due to the disagreement
business, or a particular branch of its continuously and regarding the nomination of the directors of Saniwares which
publicly, for a considerable time.” resulted to the exclusion of the 56% of shares represented by
the stockholders thereof.
Petitioner miserably failed to do that. Upon the other hand,
private respondent's evidence overwhelmingly shows that ISSUE: The main issue hinges on who were the duly elected
no contract can be signed by the president without first directors of Saniwares for the year 1983 during its annual
being approved by the Board of Directors; such approval stockholders' meeting held on March 8, 1983.
may only be given after the contract passes through, at least,
the comptroller, who is the NIDC representative, and the legal RUING:
counsel. The ASI Group and petitioner Salazar (G.R. Nos. 75975-76)
contend that the actual intention of the parties should be
this Court found sufficient evidence, based on the conduct and viewed strictly on the "Agreement" dated August 15, 1962
actuations of the corporations concerned, of apparent authority wherein it is clearly stated that the parties' intention was to
conferred upon the officer involved which bound the form a corporation and not a joint venture.
corporations on the basis of ratification. In the first case, it was
established that the offer of compromise made by plaintiff in Contrary to ASI Group's stand, the Lagdameo and Young
the letter, Exhibit "A", was validly accepted by the GSIS. The Group pleaded in their Reply and Answer to Counterclaim in
terms of the offer were clear, and over the signature of SEC Case No. 2417 that the Agreement failed to express the
defendant's general manager, Rodolfo Andal, plaintiff was true intent of the parties and that While certain provisions of
informed telegraphically that her proposal had been accepted. the Agreement would make it appear that the parties thereto
It was sent by the GSIS' Board Secretary and defendant did disclaim being partners or joint venturers such disclaimer is
not disown the same. directed at third parties and is not inconsistent with, and does
not preclude, the existence of two distinct groups of
Petitioner had in fact agreed to a new transaction involving stockholders in Saniwares one of which (the Philippine
only 10,000 bags of white cement when it accepted the letter of Investors) shall constitute the majority, and the other (ASI)
notification sent by PWCC thereby rejecting the letter-offer shall constitute the minority stockholder. In any event, the
entered into by Maglana and YKS. evident intention of the Philippine Investors and ASI in entering
into the Agreement is to enter into a joint venture enterprise,
The letter-offer being unenforceable, the option to renew it and if some words in the Agreement appear to be contrary to
would have no leg to stand on. Article 1324 of the Civil Code is the evident intention of the parties, the latter shall prevail over
then controlling in this case. the former.

The examination of the SC of important provisions of the

Agreement as well as the testimonial evidence presented by
Aurbach v. Sanitary Wares the Lagdameo and Young Group shows that the parties agreed
to establish a joint venture and not a corporation.
Manufacturing Corp., G.R. Nos.
It is pertinent to note that the provisions of the Agreement
75875, 75951 & 75975-76, requiring a 7 out of 9 votes of the board of directors for certain
actions, in effect gave ASI (which designates 3 directors under
[December 15, 1989], 259 PHIL 606- the Agreement) an effective veto power. Furthermore, the
grant to ASI of the right to designate certain officers of the
627 corporation; the super-majority voting requirements for
amendments of the articles and by-laws; and most significantly
FACTS: Saniwares, a domestic corporation was incorporated to the issues of this case, the provision that ASI shall designate
for the primary purpose of manufacturing and marketing 3 out of the 9 directors and the other stockholders shall
sanitary wares. One of the incorporators, Mr. Baldwin Young designate the other 6, clearly indicate that — 1) there are two
went abroad to look for foreign partners. On August 15, 1962, distinct groups in Saniwares, namely ASI, which owns 40% of
ASI, a foreign corporation domiciled in Delaware, United States the capital stock and the Philippine National stockholders who
entered into an Agreement with Saniwares and some Filipino own the balance of 60%, and that 2) ASI is given certain
investors whereby ASI and the Filipino investors agreed to protections as the minority stockholder.
participate in the ownership of an enterprise which would
engage primarily in the business of manufacturing in the ASI in its communications referred to the enterprise as joint
Philippines and selling here and abroad vitreous china and venture. Baldwin Young also testified that Section 16(c) of the
sanitary wares. The parties agreed that the business Agreement that "Nothing herein contained shall be construed
operations in the Philippines shall be carried on by an to constitute any of the parties hereto partners or joint
incorporated enterprise and that the name of the corporation venturers in respect of any transaction hereunder" was merely
shall initially be "Sanitary Wares Manufacturing Corporation.” to obviate the possibility of the enterprise being treated as
partnership for tax purposes and liabilities to third parties.

2
 exercising his profession for taxable years 2001 to 2003 under
As correctly held by the SEC Hearing Officer: 6 trade names and registration addresses respctively.

"'It is said that participants in a joint venture, in organizing the In his defense, the petitioner admitted that he has been
joint venture deviate from the traditional pattern of corporation operating as a single proprietor under these trade names in
management. A noted authority has pointed out that just as in Quezon City, Makati, Dagupan and San Fernando. However,
close corporations, shareholders' agreements in joint venture he countered that he did not file his income tax returns in these
corporations often contain provisions which do one or more of places because his business establishments were registered
the following: (1) require greater than majority vote for only in 2003 at the earliest; thus, these business
shareholder and director action; (2) give certain shareholders establishments were not yet in existence at the time of his
or groups of shareholders power to select a specified number alleged failure to file his income tax return.
of directors; (3) give to the shareholders control over the
selection and retention of employees; and (4) set up a State Prosecutor Juan Pedro Navera found probable cause
procedure for the settlement of disputes by arbitration against petitioner for non-filing of income tax returns for taxable
years 2001 and 2002 and for failure to supply correct and
paragraph 2 of Sec. 100 of the Corporation Code does not accurate information as to his true income for taxable year
necessarily imply that agreements regarding the exercise of 2003, in violation of the National Internal Revenue Code. 8
voting rights are allowed only in close corporations. As Accordingly an Information 9 was filed with the CTA charging
Campos and Lopez-Campos explain: the petitioner with violation of Section 255 of Republic Act No.
8424 (Tax Reform Act of 1997).
Paragraph 2 refers to pooling and voting agreements in
particular. Does this provision necessarily imply that these The accused was arraigned and pleaded not guilty on March 5,
agreements can be valid only in close corporations as defined 2007. On May 4, 2007, the prosecution filed a "Motion to
by the Code? Suppose that a corporation has twenty-five Amend Information with Leave of Court". However, petitioner
stockholders, and therefore cannot qualify as a close failed to file his comment to the motion within the required
corporation under section 96, can some of them enter into an period; thus on June 12, 2007, the CTA First Division granted
agreement to vote as a unit in the election of directors? It is the prosecution's motion. 15 The CTA ruled that the
submitted that there is no reason for denying stockholders of prosecution's amendment is merely a formal one as it "merely
corporations other than close ones the right to enter into voting states with additional precision something already contained in
or pooling agreements to protect their interests, as long as they the original information." 16 The petitioner failed to show that
do not intend to commit any wrong, or fraud on the other the defenses applicable under the original information can no
stockholders not parties to the agreement. Of course, voting or longer be used under the amended information since both the
pooling agreements are perhaps more useful and more often original and the amended information charges the petitioner
resorted to in close corporations. But they may also be found with the same offense (violation of Section 255).
necessary even in widely held corporations. Moreover, since
the Code limits the legal meaning of close corporations to The petitioner filed the present petition after the CTA denied
those which comply with the requisites laid down by section 96, his motion for reconsideration.
it is entirely possible that a corporation which is in fact a close
corporation will not come within the definition. In such case, its ISSUE: WON the inclusion of the phrase "doing business
stockholders should not be precluded from entering into under the name and style of Mendez Medical Group" after
contracts like voting agreements if these are otherwise valid. petitioner’s preliminary investigation and arraignment deprives
him of the right to question the existence of this "entity”.
In short, even assuming that sec. 5(a) of the Agreement
relating to the designation or nomination of directors restricts RULING:
the right of the Agreement's signatories to vote for directors, The petitioner however has not drawn our attention to any of
such contractual provision, as correctly held by the SEC, is his related operations that actually possesses its own juridical
valid and binding upon the signatories thereto, which include personality. In the original information, petitioner is described
appellants. as "sole proprietor of Weigh Less Center". A sole
proprietorship is a form of business organization conducted for
On the right of ASI Group and petitioner Salazar to vote their profit by a single individual, and requires the proprietor or
additional equity owner thereof, like the petitioner-accused, to secure licenses
and permits, register the business name, and pay taxes to the
SC held that the ASI Group's argument is correct within the national government without acquiring juridical or legal
context of Section 24 of the Corporation Code. The point of personality of its own. 39
query, however, is whether or not that provision is applicable to
a joint venture with clearly defined agreements: In the amended information, the prosecution additionally
alleged that petitioner is "doing business under the name and
The resolution of the question of whether or not the ASI Group style of 'Weigh Less Center'/Mendez Medical Group'". Given
may vote their additional equity lies in the agreement of the the nature of a sole proprietorship, the addition of the phrase
parties. "doing business under the name and style" is merely
descriptive of the nature of the business organization
Necessarily, the appellate court was correct in upholding the established by the petitioner as a way to carry out the practice
agreement of the parties as regards the allocation of director of his profession. As a phrase descriptive of a sole
seats under Section 5 (a) of the "Agreement," and the right of proprietorship, the petitioner cannot feign ignorance of the
each group of stockholders to cumulative voting in the process "entity" "Mendez Medical Group" because this entity is nothing
of determining who the group's nominees would be under more than the shadow of its business owner — petitioner
Section 3(a) (1) of the "Agreement." As pointed out by SEC, himself.
Section 5(a) of the Agreement relates to the manner of
nominating the members of the board of directors while At any rate, we agree with the prosecution that petitioner has
Section 3 (a) (1) relates to the manner of voting for these no reason to complain for the inclusion of the phrase "Mendez
nominees. Medical Group". In the Reply-Affidavit it submitted during the
preliminary investigation, the prosecution has attached copies
of petitioner's paid advertisements making express reference
Mendez v. People, G.R. No. 179962, to "Mendez Medical Group".
[June 11, 2014], 736 PHIL 181-200\

FACTS: The Bureau of Internal Revenue (BIR) filed a

complaint-affidavit 4 with the Department of Justice against the
petitioner. The BIR alleged that the petitioner had been
operating as a single proprietor doing business and/or

3
Narra Nickel Mining & Development petitioners McArthur, Tesoro and Narra are not Filipino since
MBMI, a 100% Canadian corporation, owns 60% or more of
Corp. v. Redmont Consolidated their equity interests. Such conclusion is derived from
grandfathering petitioners' corporate owners, namely: MMI,
Mines Corp., G.R. No. 195580, [April SMMI and PLMDC. Going further and adding to the picture,
MBMI's Summary of Significant Accounting Policies statement
21, 2014], 733 PHIL 365-490 — regarding the "joint venture" agreements that it entered into
with the "Olympic" and "Alpha" groups — involves SMMI,
FACTS: Sometime in December 2006, respondent Redmont Tesoro, PLMDC and Narra. Noticeably, the ownership of the
Consolidated Mines Corp., a domestic corporation organized "layered" corporations boils down to MBMI, Olympic or
and existing under Philippine laws, took interest in mining and corporations under the "Alpha" group wherein MBMI has joint
exploring certain areas of the province of Palawan. After venture agreements with, practically exercising majority control
inquiring with the Department of Environment and Natural over the corporations mentioned. In effect, whether looking at
Resources (DENR), it learned that the areas where it wanted the capital structure or the underlying relationships between
to undertake exploration and mining activities were already and among the corporations, petitioners are NOT Filipino
covered by Mineral Production Sharing Agreement (MPSA) nationals and must be considered foreign since 60% or more
applications of petitioners Narra, Tesoro and McArthur. of their capital stocks or equity interests are owned by MBMI.

On January 2, 2007, Redmont filed before the Panel of

Arbitrators (POA) of the DENR 3 separate petitions for the
Ren Transport Corp. v. National
denial of petitioners’ applications for MPSA. In the petitions,
Redmont alleged that at least 60% of the capital stock of Labor Relations Commission, G.R.
McArthur, Tesoro and Narra are owned and controlled by
MBMI Resources, Inc. (MBMI), a 100% Canadian corporation. Nos. 188020 & 188252, [June 27,
Redmont reasoned that since MBMI is a considerable
stockholder of petitioners, it was the driving force behind 2016]
petitioners’ filing of the MPSAs over the areas covered by
applications since it knows that it can only participate in mining FACTS: Samahan ng Manggagawa sa Ren Transport
activities through corporations which are deemed Filipino (SMART) is a registered union, which had a five-year collective
citizens. Redmont argued that given that petitioners’ capital bargaining agreement (CBA) with Ren Transport Corp. (Ren
stocks were mostly owned by MBMI, they were likewise Transport) set to expire on 31 December 2004. 3 The 60-day
disqualified from engaging in mining activities through MPSAs, freedom period of the CBA passed without a challenge to
which are reserved only for Filipino citizens. SMART's majority status as bargaining agent. 4 SMART
In determining the nationality of petitioners, the CA looked into thereafter conveyed its willingness to bargain with Ren
their corporate structures and their corresponding common Transport, to which it sent bargaining proposals. Ren
shareholders. Using the grandfather rule, the CA discovered Transport, however, failed to reply to the demand. 5
that MBMI in effect owned majority of the common stocks of
the petitioners as well as at least 60% equity interest of other Subsequently, two members of SMART wrote to the
majority shareholders of petitioners through joint venture Department of Labor and Employment — National Capital
agreements. The CA found that through a "web of corporate Region (DOLE-NCR). The office was informed that a majority
layering, it is clear that one common controlling investor in all of the members of SMART had decided to disaffiliate from their
mining corporations involved x x x is MBMI." Thus, it mother federation to form another union, Ren Transport
concluded that petitioners McArthur, Tesoro and Narra are also Employees Association (RTEA). 6 SMART contested the
in partnership with, or privies-in-interest of, MBMI. alleged disaffiliation through a letter dated 4 April 2005. 7

Petitioners claim that the CA erred in applying Sec. 29, Rule During the pendency of the disaffiliation dispute at the DOLE-
130 of the Rules by stating that "by entering into a joint NCR, Ren Transport stopped the remittance to SMART of the
venture, MBMI have a joint interest" with Narra, Tesoro and union dues that had been checked off from the salaries of
McArthur. They challenged the conclusion of the CA which union workers as provided under the CBA. 8 Further, on 19
pertains to the close characteristics of "partnerships" and "joint April 2005, Ren Transport voluntarily recognized RTEA as the
venture agreements." Further, they asserted that before this sole and exclusive bargaining agent of the rank-and-file
particular partnership can be formed, it should have been employees of their company. 9
formally reduced into writing since the capital involved is more
than three thousand pesos (PhP 3,000). Being that there is no On 6 July 2005, SMART filed with the labor arbiter a complaint
evidence of written agreement to form a partnership between for unfair labor practice against Ren Transport.
petitioners and MBMI, no partnership was created.
The labor arbiter rendered a decision 11 finding Ren Transport
ISSUE: The main issue is centered on petitioners' nationality, guilty of acts of unfair labor practice. The former explained that
whether Filipino or foreign. since the disaffiliation issue remained pending, SMART
continued to be the certified collective bargaining agent; hence,
RULING: Ren Transport's refusal to send a counter-proposal to SMART
Basically, there are two acknowledged tests in determining the was not justified. The labor arbiter also held that the company's
nationality of a corporation: the control test and the grandfather failure to remit the union dues to SMART and the voluntary
rule. recognition of RTEA were clear indications of interference with
the employees' exercise of the right to self-organize.
"shares belonging to corporations or partnerships at least 60%
of the capital of which is owned by Filipino citizens shall be Both parties elevated the case to the National Labor Relations
considered as of Philippine nationality," pertains to the control Commission (NLRC). SMART contested only the failure of the
test or the liberal rule. On the other hand, the second part of labor arbiter to award damages.
the DOJ Opinion which provides, "if the percentage of the
Filipino ownership in the corporation or partnership is less than Ren Transport challenged the entire Decision. The CA
60%, only the number of shares corresponding to such rendered a decision 17 partially granting the petition. It deleted
percentage shall be counted as Philippine nationality," pertains the award of moral damages to SMART, but affirmed the
to the stricter, more stringent grandfather rule. NLRC decision on all other matters. The CA ruled that SMART,
as a corporation, was not entitled to moral damages.
Court finds that this case calls for the application of the
grandfather rule since, as ruled by the POA and affirmed by ISSUE: WON SMART, as a corporation, was entitled to moral
the OP, doubt prevails and persists in the corporate ownership damages.
of petitioners. Also, as found by the CA, doubt is present in the
60-40 Filipino equity ownership of petitioners Narra, McArthur RULING: No. Supreme Court held that the CA correctly
and Tesoro, since their common investor, the 100% Canadian dropped the NLRC's award of moral damages to SMART.
corporation — MBMI, funded them.

4
Indeed, a corporation is not, as a general rule, entitled to moral
damages. Being a mere artificial being, it is incapable of
experiencing physical suffering or sentiments like wounded
feelings, serious anxiety, mental anguish or moral shock. 35

Although this Court has allowed the grant of moral damages to

corporations in certain situations. 36 it must be remembered
that the grant is not automatic. The claimant must still prove
the factual basis of the damage and the causal relation to the
defendant's acts. 37 In this case, while there is a showing of
bad faith on the part of the employer in the commission of acts
of unfair labor practice, there is no evidence establishing the
factual basis of the damage on the part of SMART.

Cebu Bionic Builders Supply, Inc. v.

Development Bank of the Phils., G.R.
No. 154366, [November 17, 2010],
649 PHIL 292-330
FACTS: On June 2, 1981, the spouses Rudy R. Robles, Jr.
and Elizabeth R. Robles entered into a mortgage contract 7
with DBP in order to secure a loan from the said bank in the
amount of P500,000.00. The properties mortgaged were a
parcel of land situated in Tabunoc, Talisay, Cebu, which was
then covered by Transfer Certificate of Title (TCT) No. T-47783
of the Register of Deeds of Cebu, together with all the existing
improvements, and the commercial building to be constructed
thereon 8 (subject properties). Upon completion, the
commercial building was named the State Theatre Building.

On October 28, 1981, Rudy Robles executed a contract of

lease in favor of petitioner Cebu Bionic Builders Supply, Inc.
(Cebu Bionic),a domestic corporation engaged in the
construction business, as well as the sale of hardware
materials.