West coast life vs hurd G.R. No. L-8527.

March 30, 1914 Lessons Applicable: Corporate Criminal Liability (Corporate Law)

FACTS:

West Coast Life Insurance, a foreign life insurance corporation doing business regularly and legally in the Philippine Islands pursuant to its laws Plaintiff in CFI criminal action together with:

1. John Northcott - general agent and manager for the Philippines 2. Manuel C. Grey - was an agent and employees and acting in the capacity of treasurer of the branch Charged for printing, publish and distributing a large number of circulars to policy holders and prospective policy holders of Insular Life Insurance Co. stating that the rumor about it is true regarding it being in a bad shape and it capital has diminished ISSUE: W/N West Coast Life Insurance should also be criminally charged. HELD: NO.

Provisions clearly indicate that the maker of the code of Criminal Procedure had no intention that corporations would be included Court only authorized to issue order of arrest; Court derives no authority to bring corporations before them in criminal actions nor to issue processes for that purpose Corporation = lack of malicious intent

Sia vs people Strange and exceptional G.R. No. L-30896. April 28, 1983. Lessons Applicable: Corporate Criminal Liability (Criminal Procedure) FACTS: Sia was the President and General Manager of the Metal Manufacturing of the Philippines Inc. (MEMAP) He obtained 150 M/T Cold Rolled Sheets consigned to Continental Bank and converted it into personal used instead of selling it and turning over the proceeds It resulted to a damage of 46,819 php, interest of 28,736.47 php and forfeited deposit of 71,023.60 php ISSUE: W/N Sia can be criminally charged.

HELD: NO. Acquit.

Sia did not act for and on behalf of MEMAP For crimes committed by corp. officers criminally charged, existence of criminal liability for which the petition is being prosecuted must be clear and certain, here it may not be said to be beyond reasonable doubt Allegation v. evidence = strictly in harmony The merchandise was manufactured before sold but although the bank was aware of this, it was not in the trust agreement

MORAL DAMAGES COMMERCIAL LAW: CORPORATION CIVIL LAW: DAMAGES MAMBULAO LUMBER CO. VS. PNB 22 SCRA 359 An artificial person like herein appellant corporation cannot experience physical sufferings, mental anguish, fright, serious anxiety, wounded feelings, moral shock or social humiliation which are basis or moral damages. A Corporation may have a good reputation if besmirched, may also be a ground for the award of moral damages. NB: Regarded only as an obiter dicta * SOLID HOMES INC VS CA In Solid Homes, Inc., et al. v. IAC, et al., G.R. No. 74269; Solid Homes, Inc., et al. v. CA, et al.,G.R. No. 92137, November 27, 2006, (Tinga, J), there was an action for rescission of a contract due to the failure to reserve lots intended to be purchased. The trial court ordered the defendant to return the amount of P16, 938.00 with interest and damages. The CA affirmed and awarded 12% interest per annum, but did not provide an explanation why it imposed 12% interest. ABS CBN Broadcasting Corporation vs. CA [301 SCRA 572 (Jan 21 1999)] Power of the Board of Directors Delegation to Executive Committee Facts: In 1990, ABS CBN and Viva executed a Film Exhibition Agreement whereby Viva gave ABS CBN an exclusive right to exhibit some Viva films. Said agreement contained a stipulation that ABS shall have the right of first refusal to the next 24 Viva films for TV telecast, provided that such right shall be exercised by ABS from the actual offer in writing. Hence, through this agreement, Viva offered ABS a list of 36 films from which ABS may

exercise its right of first refusal. ABS however, through VP Concio, did not accept the list since she could only tick off 10 films. This rejection was embodied in a letter. In 1992, Viva again approached ABS with a list consisting of 52 original films where Viva proposed to sell these airing rights for P60M. Vivas Vic del Rosario and ABS general manager Eugenio Lopez III met at the Tamarind Grill to discuss this package proposal. What transcribed at that meeting was subject to conflicting versions. According to Lopez, he and del Rosario agreed that ABS was granted exclusive film rights to 14 films for P36M, and that this was put in writing in a napkin, signed by Lopez and given to del Rosario. On the other hand, del Rosario denied the existence of the napkin in which Lopez wrote something, and insisted that what he and Lopez discussed was Vivas film package of the 52 original films for P60M stated above, and that Lopez refused said offer, allegedly signifying his intent to send a counter proposal. When the counter proposal arrived, Vivas BoD rejected it, hence, he sold the rights to the 52 original films to RBS. Thus, ABS filed before RTC a complaint for specific performance with prayer for TRO against RBS and Viva. RTC issued the TRO enjoining the airing of the films subject of controversy. After hearing, RTC rendered its decision in favor of RBS and Viva contending that there was no meeting of minds on the price and terms of the offer. The agreement between Lopez and del Rosario was subject to Viva BoD approval, and since this was rejected by the board, then, there was no basis for ABS demand that a contract was entered into between them. That the 1990 Agreement with the right of first refusal was already exercised by Ms. Concio when it rejected the offer, and such 1990 Agreement was an entirely new contract other than the 1992 alleged agreement at the Tamarind Grill. CA affirmed. Hence, this petition for certiorari with SC. Lopez claims that it had not fully exercised its right of first refusal over 24 films since it only chose 10. He insists that SC give credence to his testimony that he and del Rosario discussed the airing of the remaining 14 films under the right of first refusal agreement in Tamarind Grill where there was a contract written in the alleged napkin. Issue: Whether or not there was a perfected contract between Lopez and del Rosario. Held: NO. A contract is a meeting of minds between 2 persons whereby one binds himself to give something or to render some service to another for a consideration. There is no contract unless the following requisites concur: (1) consent of the contracting parties (2) object certain which is the subject of the contract (3) cause of the obligation, which is established. Contracts that are consensual in nature are perfected upon mere meeting of the minds. Once there is concurrence between the offer and the acceptance upon the subject matter, consideration, and terms of payment, a contract is produced. The offer must be certain. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance of any sort from the proposal. A qualified acceptance, or one that involves a new proposal, constitutes a counter offer and is a rejection of the original offer. Consequently, when something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer annuls the offer. In the case at bar, when del Rosario met with Lopez at the Tamarind Grill, the package of 52 films was Vivas offer to enter into a new Exhibition Agreement. But ABS, through its counter proposal sent to Viva, actually made a counter offer. Clearly, there was no acceptance. The

acceptance should be unqualified. When Vivas BoD rejected the counter proposal, then no contract could have been executed. Assuming arguendo that del Rosario did enter into a contract with Lopez at Tamarind Grill, this acceptance did not bind Viva since there was no proof whatsoever that del Rosario had specific authority to do so. Under the Corporation Code, unless otherwise provided by said law, corporate powers, such as the power to enter into contracts, are exercised by the BoD. However, the board may delegate such powers to either an executive committee or officials or contracted managers. The delegation, except for the executive committee, must be for specific purposes. Delegation to officers makes the latter agents of the corporation, and accordingly, the general rules of agency ad to the binding effects of their acts would apply. For such officers to be deemed fully clothed by the corporation to exercise a power of the Board, the latter must specially authorize them to do so. That del Rosario did not have the authority to accept ABS counter offer was best evidenced by his submission of the counter proposal to Vivas BoD for the latters approval. In any event, there was no meeting of the minds between del Rosario and Lopez. The contention of Lopez that their meeting in Tamarind Grill was a continuation of their right of first refusal agreement over the remaining 14 films is untenable. ABS right of first refusal had already been exercised when Ms. Concio wrote to Viva choosing only 10 out of the 36 films offered by del Rosario. It already refused the 26 films. Jardine Davies Inc. vs. CA and Far East Mills Supply Corporation; Pure Foods Corporation vs CA (June 19, 2000) Corporation entitled to Moral Damages (reputation besmirched) Facts: In 1992 Purefoods decided to install 2 generators in its food processing plant in San Roque, Marikina. A bidding for the supply and installation was held among the bidders was Far East Mills Supply Corporation (FEMSCO). Thereafter, in a letter addressed to FEMSCO president, Purefoods confirmed the award of the contract. Immediately FEMSCO submitted the requirements such as a performance bond and all risk insurance policy as well as purchasing the necessary materials. However, in another letter, Purefoods unilaterally cancelled the award citing significant factors which were uncovered and brought to their attention which dictate the cancellation and warrant a total review and re-bid of the project. FEMSCO protested the cancellation but before the matter could be resolve, Purefoods awarded the project with Jardine Nell, a division of Jardine Davies. FEMSCO sued both Purefoods and Jardine. The RTC granted Jardines demurrer to evidence but found in favor of FEMSCO against Purefoods and order indemnification. FEMSCO appealed the granting of the demurrer filed by Jardine and Purefoods appealed the decision of the court. The CA affirmed the decision of the RTC but ordered Jardine to pay FEMSCO damages for inducing Purefoods to violate the contract as such, Jardine must pay moral damages. In addition, Purefoods was also directed to pay FEMSCO moral damages and exemplary damages Both Purefoods and Jardine filed motions for reconsideration which were denied. Issue: Whether or not moral damages may be granted to a corporation? Held: The Court has awarded in the past moral damages to a corporation whose reputation has been besmirched. (Asset Privatization Trust v. CA, 300 SCRA 379) In this case, respondent

FEMSCO has sufficiently shown that its reputation was tarnished after it immediately ordered equipment from its suppliers on account of the urgency of the project, only to be canceled later. The Court thus, sustained respondent appellate courts award of moral damages. However, as there is no showing whatsoever that Jardine induced Purefoods, the decision of the CA is modified. The order to Jardine Davies to pay FEMSCO moral damages is reversed and set aside.

ABS-CBN V CA (REPUBLICBROADCASTING CORP, VIVA FILMS) DAVIDE; January 21, 1999 FACTS - ABS-CBN, by virtue of contract with VIVA, had anexclusive right to exhibit some Viva films. ABS-CBN hada right of first refusal. VIVA gave ABS-CBN 3 packages(36 titles) to choose from. VP for ABS Charo Santos-Concio wrote VIVA that they are not accepting the listbecause there were only 10 titles there that they couldpotentially purchase. ABS asked for another list, sayingthey had quite an attractive offer to make.- VIVA gave ABS a new list: 52 original movie titles(never before aired on TV) and 104 reruns. VIVAsproposal was P60M (P30M cash, P30M TV spots) for 52originals and 52 reruns.- Del Rosario (VIVAs rep) and Eugenio Lopez III had amtg re this in Tamarind Grill Restaurant. Accdg toABSCBN, the mtg culminated in Del Rosario acceptingABSCBNs offer of P35M for 52 of the films VIVA wasselling for P60M plus Maging Sino Ka Man.- VIVA said this wasnt their agreement and that theyrefuse to sell anything less the 104-movie package forP60M. In the meantime, RBS bought the 104filmpackage (which included Maging Sino Ka Man) forP60M. There were ads in the newspapers for the airingof the movie on Channel 7.- ABSCBN filed a case in RTC to enjoin RBS from airing14 VIVA films, including Maging Sino Ka Man. RTCgranted a preliminary injunction; but lifted the sameafter RBS put up a counterbond.- ABSCBN filed a petition in the CA to challenge theRTC decision. CA granted TRO, but eventuallydismissed ABSCBNs petition and made them pay foractual, moral and exemplary damages and attys feesto RBS, and attys fees to VIVA. ISSUE WON RBS may recover damages from ABSCBN HELD NO ACTUAL DAMAGES - Except as provided by law or by stipulation, one isentitled to compensation for actual damages only forsuch pecuniary loss suffered by him as he has dulyproved. The indemnification shall comprehend not onlythe value of the loss suffered, but also that of theprofits that the obligee failed to obtain. In contracts andquasi-contracts the damages which may be awardedare dependent on whether the obligor acted with goodfaith or otherwise. In case of good faith, the damagesrecoverable are those which are the natural andprobable consequences of the breach of the obligationand which the parties have foreseen or could havereasonably foreseen at the time of the constitution of the obligation. If the obligor acted with fraud, bad faith,malice, or wanton attitude, he shall be responsible forall damages which may be reasonably attributed to thenonperformance of the obligation. In crimes and quasi-delicts, the defendant shall be liable for all damageswhich are the natural and probable consequences of the act or omission complained of, whether or not suchdamages have been foreseen or could have reasonablybeen foreseen by the defendant.- Actual damages may likewise be recovered

for lossor impairment of earning capacity in cases of temporary or permanent personal injury, or for injury tothe plaintiff's business standing or commercial credit.- RBS claims actual damages based on Arts 19-21 forthe injunction for having to put up a counterbond. TheSC said that since ABS had not posted a bond and wasin fact still challenging it, RBS didnt have to put up thecounterbond.- RBS also claims actual damages for theadvertisements for the airing of Maging Sino Ka Man. The SC said that ABS is not liable for lack of sufficientbasis. The prelim injunction was lifted by RTC upon RBSpaying the counterbond, and not on any legal andfactual basis. ATTYS FEES - As regards attorney's fees, the law is clear that inthe absence of stipulation, attorney's fees may berecovered as actual or compensatory damages underany of the circumstances provided for in Article 2208 of the Civil Code.- The general rule is that attorney's fees cannot berecovered as part of damages because of the policythat no premium should be placed on the right tolitigate. They are not to be awarded every time a partywins a suit. The power of the court to award attorney'sfees under Article 2208 demands factual, legal, andequitable justification. Even when a claimant iscompelled to litigate with third persons or to incurexpenses to protect his rights, still attorney's fees maynot be awarded where no sufficient showing of badfaith could be reflected in a party's persistence in acase other than an erroneous conviction of therighteousness of his cause. MORAL DAMAGES - Moral damages are in the category of an awarddesigned to compensate the claimant for actual injurysuffered and not to impose a penalty on the wrongdoer. The award is not meant to enrich the complainant atthe expense of the defendant, but to enable the injuredparty to obtain means, diversion, or amusements thatwill serve to obviate the moral suffering he hasundergone. It is aimed at the restoration, within thelimits of the possible, of the spiritual status quo ante,and should be proportionate to the suffering inflicted.- The award of moral damages cannot be granted infavor of a corporation because, being an artificialperson and having existence only in legalcont emplation, it has no feelings, no emotions, nosenses. It cannot, therefore, experience physicalsuff ering and mental anguish which can be experiencedonly by one having a nervous system. The award fordamages must be set aside, since RBS is a corporation. EXEMPLARY DAMAGES - These are imposed by way of example or correctionfor the public good, in addition to moral, temperate,liquidated, or compensatory damages. They arerecoverable in criminal cases as part of the civil liabilitywhen the crime was committed with one or moreaggravating circumstances; in quasi-delicts, if thedefendant acted with gross negligence; and incontracts and quasi-contracts, if the defendant acted ina wanton, fraudulent, reckless, oppressive, ormalevolent manner.- The claim of RBS against ABS-CBN is not based oncontract, quasi-contract, delict, or quasidelict. Theclaims for moral and exemplary damages can only bebased on Articles 19, 20, and 21 of the Civil Code.- Arts 19-21 have at their very core the commonelement of malice or bad faith. Such intentional designto do a wrongful act must be proved by evidence. Here,ABSCBN was honestly convinced of the merits of itscause after it had undergone serious negotiationsculminating in its formal submission of a draft contract.Settled is the rule that the adverse result of an actiondoes not per se make the action wrongful and subjectthe actor to damages, for the law could not have meantto impose a

penalty on the right to litigate. If damagesresult from a person's exercise of a right, it is damnumabsque injuria. Disposition Petition Granted. CA decision reversed,except to unappealed award of Attys damages of VivaFilms. NPC v PHILIPP BROTHERS OCEANIC 369 SCRA 629SANDOVAL-GUTIERREZ; November 20, 2001 NATURE Appeal by certioriari to review and set aside thedecision of the Court of Appeals FACTS - The National Power Corporation (NAPOCOR) issuedinvitations to bid for the supply and delivery of 120,000metric tons of imported coal for its Batangas Coal-Fired Thermal Power Plant in Calaca, Batangas. The PhilippBrothers Oceanic, Inc. (PHIBRO) prequalified and wasallowed to participate as one of the bidders. After thepublic bidding was conducted, PHIBRO's bid wasaccepted. NAPOCOR's acceptance was conveyed in aletter. PHIBRO sent word to NAPOCOR that industrialdisputes might soon plague Australia, the shipment'spoint of origin, which could seriously hamper PHIBRO'sability to supply the needed coal. PHIBRO againapprised NAPOCOR of the situation i n Australia,particularly informing the latter that the ship ownerstherein are not willing to load cargo unless a "strike-free" clause is incorporated in the charter party or thecontract of carriage. In order to hasten the transfer of coal, PHIBRO proposed to NAPOCOR that they equallyshare the burden of a "strike-free" clause. NAPOCORrefused.- Subsequently, PHIBRO received from NAPOCOR aconfirmed and workable letter of credit. Instead of delivering the coal on or before the thirtieth day afterreceipt of the Letter of Credit, as agreed upon by theparties in the July contract, PHIBRO effected its firstshipment only on November 17, 1987.- Consequently, in October 1987, NAPOCOR once moreadvertised for the delivery of coal to its Calaca thermalplant. PHIBRO participated anew in this subsequentbidding. On November 24, 1987, NAPOCORdisapproved PHIBRO's application for pre-qualificationto bid for not meeting the minimum requirements.Upon further inquiry, PHIBRO found that the real reasonfor the disapproval was its purported failure to satisfyNAPOCOR's demand for damages due to the delay inthe delivery of the first coal shipment.- This prompted PHIBRO to file an action for damageswith application for injunction against NAPOCOR withthe Regional Trial Court, Branch 57, Makati City. In itscomplaint, PHIBRO alleged that NAPOCOR's act of disqualifying it in the October 1987 bidding and in allsubsequent biddings was tainted with malice and badfaith. PHIBRO prayed for actual, moral and exemplarydamages and attorney's fees.- In its answer, NAPOCOR averred that the strikes inAustralia could not be invoked as reason for the delayin the delivery of coal because PHIBRO itself admittedthat as of July 28, 1987 those strikes had alreadyceased. And, even assuming that the strikes were stillongoing, PHIBRO should have shouldered the burden of a "strike-free" clause because their contract was "C andF Calaca, Batangas, Philippines," meaning, the cost andfreight from the point of origin until the point of destination would be for the account of PHIBRO.Furthermore, NAPOCOR claimed that due to PHIBRO'sfailure to deliver the coal on time, it was compelled topurchase coal from ASEA at a higher price. NAPOCORclaimed for actual damages in the amount of P12,436,185.73, representing the

increase in the priceof coal, and a claim of P500,000.00 as litigationexpenses.- Thereafter, trial on the merits ensued. The trial courtdecided in favor of PHIBRO. Unsatisfied, NAPOCORelevated the case to the Court of Appeals. The Court of Appeals rendered a Decision affirming in toto theDecision of the Regional Trial Court. ISSUE WON PHIBRO is entitled to damages HELD NO- NAPOCOR was not bound under any contract toapprove PHIBRO's prequalification requirements. Infact, NAPOCOR had expressly reserved its right toreject bids. And where the government as advertiser,availing itself of that right, makes its choice in rejectingany or all bids, the losing bidder has no cause tocomplain nor right to dispute that choice unless anunfairness or injustice is shown.- Owing to the discretionary character of the rightinvolved in this case, the propriety of NAPOCOR's actshould therefore be judged on the basis of the generalprinciples regulating human relations, the forefrontprovision of which is Article 19 of the Civil Code whichprovides that "every person must, in the exercise of hisrights and in the performance of his duties, act with justice, give everyone his due, and observe honestyand good faith." Accordingly, a person will be protectedonly when he acts in the legitimate exercise of his right,that is, when he acts with prudence and in good faith;but not when he acts with negligence or abuse. 3- NAPOCOR's act of disapproving PHIBRO's applicationfor pre-qualification to bid was without any intent toinjure or a purposive motive to perpetrate damage.Apparently, NAPOCOR acted on the strong convictionthat PHIBRO had a "seriously-impaired" track record.NAPOCOR cannot be faulted from believing so. Wecannot fault NAPOCOR if it mistook PHIBRO'sunexpected offer a mere attempt on the latter's part toundercut ASEA or an indication of PHIBRO'sinconsistency. The circumstances warrant suchco ntemplation.- One who acted pursuant to the sincere belief thatanother willfully committed an act prejudicial to theinterest of the government cannot be considered tohave acted in bad faith. Bad faith has always been aquestion of intention. It is that corrupt motive thatoperates in the mind. As understood in law, itcontemplates a state of mind affirmatively operatingwith furtive design or with some motive of self-interestor ill-will or for ulterior purpose. While confined in therealm of thought, its presence may be ascertainedthrough the party's actuation or through circumstantialevidence. The circumstances under which NAPOCORdisapproved PHIBRO's pre-qualification to bid do notshow an intention to cause damage to the latter. Themeasure it adopted was one of selfprotection.Consequently, we cannot penalize NAPOCOR for thecourse of action it took. NAPOCOR cannot be madeliable for actual, moral and exemplary damages.- Basic is the rule that to recover actual damages, theamount of loss must not only be capable of proof butmust actually be proven with reasonable degree of certainty, premised upon competent proof or bestevidence obtainable of the actual amount thereof. Acourt cannot merely rely on speculations, conjectures,or guesswork as to the fact and amount of damages. Thus, while indemnification for damages shallcomprehend not only the value of the loss suffered, butalso that of the profits which the obligee failed toobtain, it is imperative that the basis of the allegedunearned profits is not too speculative and conjecturalas to show the actual damages which may be sufferedon a future period.- The award of moral damages

is likewise improper. Toreiterate, NAPOCOR did not act in bad faith. Moreover,moral damages are not, as a general rule, granted to acorporation. While it is true that besmirched reputationis included in moral damages, it cannot cause mentalanguish to a corporation, unlike in the case of a naturalperson, for a corporation has no reputation in the sensethat an individual has, and besides, it is inherentlyimpossible for a corporation to suffer mental anguish.- Neither can we award exemplary damages underArticle 2234 of the Civil Code. Before the court mayconsider the question of whether or not exemplarydamages should be awarded, the plaintiff must showthat he is entitled to moral, temperate, orcompensatory damages.- This Court has also laid down the rule that in theabsence of stipulation, a winning party may be awardedattorney's fees only in case plaintiff's action ordefendant's stand is so untenable as to amount togross and evident bad faith. This cannot be said of thecase at bar. NAPOCOR is justified in resisting PHIBRO'sclaim for damages. Case Digest in Evidence (Remedial Law): SEAOIL Petroleum Corp. vs. AUTOCORP SEAOIL PETROLEUM CORPORATION VS. AUTOCORP GROUP AND PAUL Y. RODRIGUEZ G.R. No. 164326, October 17, 2008 FACTS:Petitioner Seaoil Petroleum Corporation purchased one unit of ROBEX 200 LC Excavator, Model 1994 from respondent Autocorp Group. The sales agreement was embodied in the Vehicle Sales Invoice No. A-0209 and Vehicle Sales Confirmation No. 258. Seaoil issued 12 checks as payment therefor; however 10 checks were not honored by the bank since Seaoil requested that payment be stopped. Autocorp filed a complaint for recovery of personal property with damages and replevin in the Regional Trial Court. Seaoil claims that Seaoil and Autocorp were only utilized as conduits to settle the obligation of one foreign entity named Uniline Asia, in favor of another foreign entity, Focus Point International, Incorporated. The real transaction is that Uniline, through Rodriguez, owed money to Focus. In lieu of payment, Uniline instead agreed to convey the excavator to Focus. This was to be paid by checks issued by Seaoil but which in turn were to be funded by checks issued by Uniline. Petitioner Seaoil in sum alleges that the written agreement failed to express the true intent and agreement of the parties, thus parol evidence is admissible. ISSUE: Whether or not parol evidence rule is applicable in this case. HELD: No. Although parol evidence is admissible to explain the meaning of a contract, it cannot serve the purpose of incorporating into the contract additional contemporaneous conditions which are not mentioned at all in the writing unless there has been fraud or mistake. Evidence of a prior or contemporaneous verbal agreement is generally not admissible to vary, contradict or defeat the operation of a valid contract. The Vehicle Sales Invoice is the best evidence of the transaction. The terms of the subject sales

invoice are clear. They show that Autocorp sold to Seaoil one unit Robex 200 LC Excavator paid for by checks issued by one Romeo Valera. MATUGINA WOOD PRODUCTS VS CA Due Process Not Being Party to a Case In 1973, license was issued to Milagros Matuguina to operate logging businesses under her group Matuguina Logging Enterprises. MIWPI was established in 1974 with 7 stockholders. Milagros Matuguina became the majority stockholder later on. Milagros later petitioned to have MLE be transferred to MIWPI. Pending approval of MLEs petition, Davao Enterprises Corporation filed a complaint against MLE before the District Forester (Davao) alleging that MLE has encroached upon the area allotted for DAVENCORs timber concession. The Investigating Committee found MLE guilty as charged and had recommended the Director to declare that MLE has done so. MLE appealed the case to the Ministry of Natural Resources. During pendency, Milagrosa withdrew her shares from MIWPI. Later, MNR Minister Ernesto Maceda found MLE guilty as charged. Pursuant to the finding, DAVENCOR and Philip Co requested Maceda to order MLE and/or MIWPI to comply with the ruling to pay the value in pesos of 2352.04 m3 worth of timbers. The Minister then issued a writ of execution against MIWPI. MIWPI filed a petition for prohibition before the Davao RTC. The RTC ruled in favor of MIWPI and has ordered to enjoin the Minister from pursuing the execution of the writ. DAVENCOR appealed and the CA reversed the ruling of the RTC. MIWPI averred that it is not a party to the original case (as it was MLE that was sued a separate entity). That the issuance of the order of execution by the Minister has been made not only without or in excess of his authority but that the same was issued patently without any factual or legal basis, hence, a gross violation of MIWPIs constitutional rights under the due process clause. ISSUE: Whether or not MIWPIs right to due process has been violated. HELD: The SC ruled in favor of MIWPI. Generally accepted is the principle that no man shall be affected by any proceeding to which he is a stranger, and strangers to a case not bound by judgment rendered by the court. In the same manner an execution can be issued only against a party and not against one who did not have his day in court. There is no basis for the issuance of the Order of Execution against the MIWPI. The same was issued without giving MIWPI an opportunity to defend itself and oppose the request of DAVENCOR for the issuance of a writ of execution against it. In fact, it does not appear that MIWPI was at all furnished with a copy of DAVENCORs letter requesting for the Execution of the Ministers decision against it. MIWPI was suddenly made liable upon the order of execution by the respondent Secretarys expedient conclusions that MLE and MIWPI are one and the same, apparently on the basis merely of DAVENCORs letter requesting for the Order, and without hearing or impleading MIWPI. Until

the issuance of the Order of execution, MIWPI was not included or mentioned in the proceedings as having any participation in the encroachment in DAVENCORs timber concession. This action of the Minister disregards the most basic tenets of due process and elementary fairness. The liberal atmosphere which pervades the procedure in administrative proceedings does not empower the presiding officer to make conclusions of fact before hearing all the parties concerned. (1996 Oct 24)