HOME INSURANCE COMPANY v s . E A S T E R N S H I P P I N G G. R. L-34382, July 20, 1983 FACTS: On or about January 13, 1967, S. Kajikita & Co.

on board the SS ‗Eastern Jupiter,‘ which is owned by the respondent, from Osaka, Japan coils of ―Black Hot Rolled Copper Wires Rods.‖ The shipment was covered by Bill of Lading with arrival notice to the Phelps Dodge Copper Products Corporation, the consignee. It was also insured with the plaintiff against all risks in the amount of P1,580,105.06. The coils discharged from the vessel were in bad order, consisting of loose and partly cut coils which had to be considered scrap. The plaintiff paid the consignee under insurance the amount of P3,260.44 for the loss/damage suffered by the cargo. Plaintiff, a foreign insurance company duly authorized to do business in the Philippines, made demands for payment of the aforesaid amount against the carrier and transportation company for reimbursement of the aforesaid amount, but each refused to pay the same. The Eastern Shipping Lines filed its answer and denied the allegations of Paragraph I which refer to the plaintiff‘s capacity to sue for lack of knowledge or information sufficient to form a belief as to the truth thereof. Angel Jose Transportation, on the other hand, admitted the jurisdictional averments in paragraphs 1, 2 and 3 of the heading parties. The Court of First Instance dismissed the complaint on the ground that the appellant had failed to prove its capacity to sue. The petitioner then filed a petition for review on certiorari. ISSUE: Whether or not that the trial court erred in dismissing the finding that plaintiff-appellant has no capacity to sue? RULING: The court held that the objective of the law is to subject the foreign corporation to the jurisdiction of our court. The Corporation Law must be given reasonable, not an unduly harsh interpretation which does not hamper the development of trade relations and which fosters friendly commercial intercourse among countries. Counsel for appellant contends that at the time of the service of summons, the appellant had not yet been authorized to do business. But, the lack of capacity at the time of the execution of the contracts was cured by the subsequent registration is also strengthened by the procedural aspects of the case. The court find the general denials inadequate to attack the foreign corporations lack of capacity to sue in the light of its positive averment that it is authorized to do so. Section 4, Rule 8 requires that "a party desiring to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued in a representative capacity shall do so by specific denial, which shall include such supporting particulars as are particularly within the pleader's knowledge. At the very least, the private respondents should have stated particulars in their answers upon which a specific denial of the petitioner's capacity to sue could have been based or which could have supported its denial for lack of knowledge. And yet, even if the plaintiff's lack of capacity to sue was not properly raised as an issue by the answers, the petitioner introduced documentary evidence that it had the authority to engage in the insurance business at the time it filed the complaints. The Supreme Court granted the petition, reversing the decision of the lower court.

Benguet will receive from Balatoc shares of a par value of P600. then president and general manager of the Benguet Company. as a corporation. L-37331. Beam. in conformity with the provisions of the Corporation Law (Act No.15. was organized in June. 1. A contract was entered into wherein Benguet will (1) construct a milling plant for the Balatoc mine. No. The contract. To improve its operations. and later by the Philippine Legislature.417. has been performed on both sides. The defendant Benguet Company has committed no civil wrong against the plaintiffs. 2.000 shares of the stock of the Balatoc Company was given to Benguet and the excess value was paid to Benguet by Balatoc in cash. and with an extraction of at least 85 per cent of the gold content. A certificate for 600.000 shares to Benguet with the success of the development. assuming the first question to be answered in the affirmative.HARDEN v BENGUET CONSOLIDATED MINING COMPANY G. and if a public wrong has been committed. The total cost incurred by Benguet in developing Balatoc was P1. which was organized as a sociedad anonima. of a capacity of 100 tons of ore per day. Balatoc capital stock consists of one million shares of the par value of one peso (P1) each. 1933 FACTS: Benguet Consolidated Mining Co. Both were organized for mining of gold and their respective properties are located only a few miles apart in Benguet. RULING: 1st Issue: NO. the Benguet Company. March 18. . questioned the transfer of 600. 2nd Issue: Having shown that the plaintiffs in this case have no right of action against the Benguet Company for the infraction of law supposed to have been committed. is a corporation within the meaning of the language used by the Congress of the United States. Due to the improvements made by Benguet. the directors of the Balatoc Company. as a sociedad anonima in conformity with the provisions of Spanish law. Balatoc Mining Co. W. and the plaintiff Harden himself. W/N. When the Balatoc was first organized. ISSUES: Is it unlawful for Benguet Company to hold any interest in a mining corporation. to secure the capital necessary to the development of the Balatoc property.000. 1459). Harden. the owner of thousands of shares of Balatoc. the value of shares of Balatoc increased in the market (from P1 to more than P11) and dividends enriched its stockholders. the company‘s committee approached A.952. (2) erect an appropriate power plant. In return. we forego any discussion of the further question whether a sociedad anonima created under Spanish law. prohibiting a mining corporation from becoming interested in another mining corporation. 1903. such as the Benguet Company. was organized in December 1925. were the active inducers of the commission of that wrong. supposing it to have been unlawful in fact.R. its properties were largely undeveloped.

1902 (Philippine Bill). In section 75 of the Corporation Law. Moreover. A sociedad anonima is something very much like the English joint stock company. The provision in Section 75 of the Act Congress of July 1. 3518 of the Philippine Legislature. is the same word that is used in that language to designate other forms of partnership.is a corporation within the meaning of the prohibitory provision already so many times mentioned. generally prohibiting corporations engaged in mining and members of such from being interested in any other corporation engaged in mining. the explicit prohibition against the holding by any corporation (except for irrigation) of an interest in any other corporation engaged in agriculture or in mining was so modified as to limit the restriction to corporations organized for the purpose of engaging in agriculture or in mining. with features resembling those of both the partnership is shown in the fact that sociedad. a provision is found making the sociedad anonima subject to the provisions of the Corporation Law "so far as such provisions may be applicable". Thus. and giving to the sociedades anonimas previously created in the Islands the option to continue business as such or to reform and organize under the provisions of the Corporation Law. the inhibition contained in the original provision against members of a corporation engaged in agriculture or mining from being interested in other corporations engaged in agriculture or in mining was so modified as merely to prohibit any such member from holding more than fifteen per centum of the outstanding capital stock of another such corporation. approved by Congress March 1. was amended by section 7 of Act No. 1929. the generic component of its name in Spanish. . and in its organization it is constructed along the same general lines as the ordinary partnership. The change in the law effected by this amendment was in the direction of liberalization.

535. aware of sufficient facts to put them on notice of the need of inquiring into the regularity of the transactions and the title of the opposed vendors. EFFECT OF UNREGISTERED TRANSFER. 1948. said shares of stock were bought by Vicente Madrigal. STOCKHOLDERS.. . with branch office in the Philippines. and that.000 shares from Carl Hess. 1942. they can not validly claim. with his blank 2. because the holder thereof takes them without prejudice to such rights or defenses as the registered owner or creditor may have under the law. the statue of purchasers in good faith. 4.000 shares of stock in dispute was.. However. at the time of the alleged sales in their favor of the shares stock in question. RIGHTS OF REGISTERED STOCKHOLDERS SUPERIOR TO THAT OF PURCHASER ON NOTICE OF FACTS INDICATING NEED OF INQUIRING INTO REGULARLY OF SALES. the transfer shall not be valid. No. he bought 800. but. 1955 1. Inc. — Although shares of stock are sometimes regarded as quasi-negotiable. until it is entered and noted upon the books of the corporation. — The principal or beneficiary of the registered owner of shares of stock is entitled to invoke such rights as the registered stockholders may have under the law. the Philippine Alien Property Administration made by said Committee and decreed that "title to the shares in question shall remain in the name of the Philippine Alien Property Administrator. 1942. CORPORATION LAW. the Mitsui Bussan Kaisha (hereinafter referred to as the "Mitsuis"). that on or before March. S. in the sense that they may be transferred endorsement. S." dated March 9. they are non-negotiable. with such dividends. (Section 35. except as between the parties. By virtue of vesting P-12. this time for the account and benefit of Astraquillo. upon personal review. in Manila. against the registered stockholder. coupled with its delivery.000 shares from Carl Hess. (hereinafter referred to as the Property Custodian) as Japanese property.000 shares of stock of the Lepanto Consolidated Mining Co. title to the 1. Corporation Law). vs. Hence. February 28. a corporation organized in accordance with the laws of Japan. allowing said claims. REPUBLIC OF THE PHILIPPINES.000 shares from Juan Campos. PRINCIPAL OF REGISTERED OWNER ENJOYS SAME RIGHTS OF REGISTERED STOCKHOLDER. Attorney General of the U. early in December. except insofar as such rights or defenses are subject to the limitations imposed by the principles governing estoppel. the true owner thereof. — Where the plaintiffs were. G. in trust for. FACTS: This action involves the title to 1. NATURE AND TRANSFER OF. the Vested Property Claims Committee of the Philippine Alien Property Administration made a "determination. plaintiffs filed their respective claims with the Property Custodian.600. dated February 18. before Christmas of 1942. that he bought 300. contends that prior to the outbreak of the war in the Pacific. The defendant herein. plaintiffs instituted the present action to establish title to the aforementioned shares of stock and pray that judgment be rendered declaring them lawful owners of said shares of stock. successor to the "Administrator". In due course. however. L-4818. coupled with delivery. which were considered and heard jointly as Claim No." Consequently. vested in the Alien Property Custodian of the U. QUASI-NEGOTIABILITY AND NON-NEGOTIABILITY OF SHARES OF STOCK. Madrigal delivered the corresponding stock certificates.ASTRAQUILLO.R. and for the benefit of. and sentencing the former to pay the costs.600. 1945. Plaintiffs contend that De los Santos bought 55. — Shares of stock are personal property and may be transferred by endorsement of the corresponding stock certificate. profits and rights as may have accrued thereto. requiring the defendant to render accounts and to transfer said shares of stock to plaintiffs' names. SHARES OF STOCK. 3.

with all its imperfections — to abandon what the dissenting opinion characterizes as the "civil law standpoint. In this connection." refutes said claim and confirms the non-negotiable character of stock certificates in the absence of said Unifrom Act. we find. and that the stock certificates aforementioned must have been stolen or looted. the issue is based. the aforementioned Uniform Act is not in force in the Philippines. clear proof of the unwillingness of our department to change the policy set forth in section 35 of Act No. for. until the liberation of the latter by the American forces early in 1945. which "gives full negotiability to certificates of stock. it should be noted that this special piece of legislation was adopted in some states of the union as early as the year 1910. therefore. in lieu thereof. the Roman Law concept has not given way in the Philippines to the Common Law approach. and at present enjoyed by. the commercial viewpoint. The status of quasi-negotiability generally accorded to. and its application. under the Philippine law. Instead of sustaining appellees' claim. although not a part of the law of the land. therefore. 1459. to our mind. this fact negates our authority — which is limited to the interpretation of the law. negotiability to an instrument already possessing this attribute prior thereto. to the Mitsuis. Thus. Upon a review of the record. obviously. during the emergency resulting from said liberation. Needless to say. said shares of stock.indorsement thereon. except when there is explicit statutory provision to the contrary. the same could not have given. which kept said certificates. Indeed. is. apart from being distinct from the general Corporation Law. Judgment was rendered in favor of the plaintiffs Issue: Held: NO It appears from the evidence presented that the only evidence on the alleged sale of the shares of stock in question to the plaintiffs — the main issue in the case at bar — is the testimony of Apolinario de los Santos. or otherwise disposed of. who now claims to be the sole owner thereof. and must stand or fall. section 5 of the uniform Stock Transfer Act. even in matters generally considered as falling within "commercial territory". upon the uncorroborated testimony of plaintiff Apolinario de los Santos. is in itself a recognition of the fact that the certificates are non-negotiable. that said testimony is highly improbable and inherently weak. Again. The failure of the Philippine government to incorporate its provisions in our statute books. and the credence and weight that may be given thereto. certificates of stock." and substitute. that the Mitsuis had never sold. by applying said section 5 of the Uniform Stock Transfer Act. for a period of almost 45 years. however. in the files of its office in Manila. Whether plaintiffs had purchased the shares of stock in question? .

force majeure and legitimate business reverses. it has to contend not only with Einstein‘s observation but also with the vast and well-established jurisprudence in support of the plenary powers of Congress to impose taxes. Domestic corporations owe their corporate existence and their privilege to do business to the government. 160756 March 9. For sure. It was devised as a relatively simple and effective revenue-raising instrument compared to the normal income tax which is more difficult to control and enforce. Since the tax base was broader. the imposition of the MCIT commences only on the fourth taxable year immediately following the year in which the corporation commenced its operations. the law allows the carrying forward of any excess of the MCIT paid over the normal income tax which shall be credited against the normal income tax for the three immediately succeeding years. They contravene the equal protection clause as well because the CWT is being levied upon real estate enterprises but not on other business enterprises. It is a means to ensure that everyone will make some minimum contribution to the support of the public sector. It came about as a result of the perceived inadequacy of the selfassessment system in capturing the true income of corporations. the following safeguards were incorporated into the law: First.CREBA vs. like the MCIT. is an association of real estate developers and builders in the Philippines. To further emphasize the corrective nature of the MCIT. Issue: Whether or not the imposition of the MCIT on domestic corporations is unconstitutional? Held: No. the government collects income tax even when the net income has not yet been determined. No. since certain businesses may be incurring genuine repeated losses. It is therefore fair for the government to require them to make a reasonable contribution to the public expenses. The primary purpose of any legitimate business is to earn a profit." When a party questions the constitutionality of an income tax measure. it prevents tax evasion and minimizes tax avoidance schemes achieved through sophisticated and artful manipulations of deductions and other stratagems. while having large turn-overs. It assails the validity of the imposition of minimum corporate income tax (MCIT) on corporations and creditable withholding tax (CWT) on sales of real properties classified as ordinary assets. As a tax on gross income. They also benefit from the efforts of the government to improve the financial market and to ensure a favorable business climate. Continued and repeated losses after operations of a corporation or consistent reports of minimal net income render its financial statements and its tax payments suspect.R. the law authorizes the Secretary of Finance to suspend the imposition of MCIT if a corporation suffers losses due to prolonged labor dispute. Inc. Conclusion The renowned genius Albert Einstein was once quoted as saying "[the] hardest thing in the world to understand is the income tax. . report minimal or negative net income resulting in minimal or zero income taxes year in and year out. ROMULO G. through under-declaration of income or over-deduction of expenses otherwise called tax shelters. recognizing the birth pangs of businesses and the reality of the need to recoup initial major capital expenditures. The MCIT serves to put a cap on such tax shelters. Second. more particularly those in the manufacturing sector. the tax rate was lowered. This grace period allows a new business to stabilize first and make its ventures viable before it is subjected to the MCIT. Congress intended to put a stop to the practice of corporations which. The MCIT on domestic corporations is a new concept introduced by RA 8424 to the Philippine taxation system. Petitioner has miserably failed to discharge its burden of convincing the Court that the imposition of MCIT and CWT is unconstitutional. Third. 2010 Facts: Petitioner Chamber of Real Estate and Builders‘ Associations. certain tax avoidance schemes resorted to by corporations are allowed in our jurisdiction. Petitioner also asserts that the enumerated provisions of the subject revenue regulations violate the due process clause because.

ISSUE: HELD: No. CCC -QC willingly closed down and transferred its assets to CCC and thereafter changed its name to GCC in order to avoid its responsibilities from its creditors. such as that inflicted in this case. Meanwhile. When the mother corporation and its subsidiary cease to act in good faith and honest business judgment. the law steps in to remedy the problem. Reynoso withdrew his own funds from CCC-QC. a branch of Commercial Credit Corporation (CCC). GCC opposed the writ as it argued that it is a separate and distinct corporation from CCC and CCC-QC. GCC and CCC are one and the same. The writ was opposed by CCC-QC as it now claims that it has already closed and that its assets were taken over by the mother company. it raises the defense of corporate fiction. Whether or not GCC is correct? . Eventually. When that happens. they are engaged in the same line of business and single transaction process. like CCC-QC. the corporate character is not necessarily abrogated. This prompted CCC-QC to file criminal cases for estafa and qualified theft against Reynoso. It continues for legitimate objectives. The criminal cases were dismissed and Reynoso was exonerated and at the same time CCC-QC was ordered to pay Reynoso‘s counterclaims which amounted to millions. in short. It is obvious that CCC‘s change of name to GCC was made in order to avoid liability. It was alleged that Reynoso was opposed to certain questionable commercial practices being facilitated by CCC which caused its branches. i. A writ of execution was issued against CCC-QC. The veil of corporate fiction must be pierced. when the corporate device is used by the parent to avoid its liability for legitimate obligations of the subsidiary. it is pierced in order to remedy injustice. CCC changed its name to General Credit Corporation (GCC). to rack up debts. Reynoso then filed a petition for an alias writ of execution. However. CCC. finance and investment.e.Bibiano Reynoso IV vs Court of Appeals 345 SCRA 335 Business Organization – Corporation Law – Piercing the Veil of Corporate Fiction Facts: Reynoso was the branch manager of Commercial Credit Corporation – Quezon City (CCC-QC). and when the corporate fiction is used to perpetrate fraud or promote injustice.

Renato Tayag was appointed as the ancillary administrator of the properties of Perkins she left behind in the Philippines. ISSUE: HELD: No. are correct? . It is worth noting that CTC-NY did not appeal the order of the court – it simply refused to turn over the stock certificates hence ownership can be said to have been settled in favor of estate of Perkins here. it also has obligations under the law and one of those is to follow valid legal court orders. It is not immune from judicial control because it is domiciled here in the Philippines. Further. It would be highly irregular if court orders would yield to the bylaws of a corporation. Also. Further still. Said stock certificates were in the possession of the Country Trust Company of New York (CTC-NY). that the trial court as well Tayag acknowledged that the stock certificates exists and that they are with CTC-NY. to allow BCI‘s opposition is to render the court order against CTC-NY a mere scrap of paper. 26 SCRA 242 Business Organization – Corporation Law – Domicile of a Corporation – By Laws Must Yield To a Court Order – Corporation is an Artificial Being Facts: In March 1960. CTC-NY refused. only after court of law has issued a final and executory order as to who really owns a certificate of stock. She left behind properties here and abroad. or destroyed certificates of stocks. Benguet Consolidated is a corporation who owes its existence to Philippine laws. Idonah Perkins died in New York. a foreign entity refuses to comply with a valid court order.Renato Tayag vs Benguet Consolidated. The final recourse then is for our local courts to create a legal fiction such that the stock certificates in issue be declared lost even though in reality they exist in the hands of CTC-NY. This is valid.002 shares of stocks of the Benguet Consolidated. The trial court granted Tayag‘s petition. it can only issue new stock certificates. A dispute arose between CTC-NY and Tayag as to who between them is entitled to possess the stock certificates. Again. Inc (BCI). a corporation is not immune from judicial orders. Its shares of stock cannot therefore be considered in any wise as immune from lawful court orders. A case ensued and eventually. One property she left behind were two stock certificates covering 33. what should prevail is the lawful court order. in 1963. that according to BCI‘s by laws. fictions which the law may rely upon in the pursuit of legitimate ends have played an important part in its development. BCI assailed said order as it averred that it cannot possibly issue new stock certificates because the two stock certificates declared lost are not actually lost. the argument invoked by BCI that it can only issue new stock certificates in accordance with its bylaws is misplaced. Inc. stolen. assuming that there really is a conflict between BCI‘s bylaws and the cour t order. Inc. in lieu of lost. Corollary. Whether or not the arguments of Benguet Consolidated. CTC-NY was the domiciliary administrator of the estate of Perkins in the USA. Tayag then filed with the court a petition to have said stock certificates be declared lost and to compel BCI to issue new stock certificates in replacement thereof. BCI is a Philippine corporation owing full allegiance and subject to the unrestricted jurisdiction of local courts. It will leave Tayag without any remedy simply because CTC-NY. Meanwhile. As held time and again. the trial court ordered CTCNY to turn over the stock certificates to Tayag. It has been given rights and privileges under the law.

is not automatically considered a national sports association. Kahn is therefore personally liable for the contract entered into by PFF with IETTI. agreed. Kahn averred that he should not be impleaded because he merely acted as an agent of PFF which he averred is a corporation with separate and distinct personality from him. IETTI then delivered the plane tickets to PFF. The trial court ruled against Kahn and held him personally liable for the said obligation (PFF was declared in default for failing to file an answer). However. Inc. (IETTI). upon its creation. Whether or not the Court of Appeals is correct? . that it cannot now deny the corporate existence of PFF because it had contracted and dealt with PFF in such a manner as to recognize and in effect admit its existence. PFF is empowered to enter into contracts through its agents. PFF. As such. that as such. It must first be recognized and accredited by the Philippine Amateur Athletic Federation and the Department of Youth and Sports Development. This fact was never substantiated by Kahn. The Court of Appeals however reversed the decision of the trial court. The CA further ruled that IETTI is in estoppel. The application of the doctrine of corporation by estoppel applies to a third party only when he tries to escape liability on a contract from which he has benefited on the irrelevant ground of defective incorporation. PFF is considered as an unincorporated sports association. PFF was not able to complete the full payment in subsequent installments despite repeated demands from IETTI. International Express Travel & Tour Services. IETTI then sued PFF and Kahn was impleaded as a co-defendant. through Henri Kahn. And under the law. Inc. any person acting or purporting to act on behalf of a corporation which has no valid existence assumes such privileges and becomes personally liable for contract entered into or for other acts performed as such agent. In the case at bar. The Court of Appeals took judicial notice of the existence of PFF as a national sports association. IETTI is not trying to escape liability from the contract but rather is the one claiming from the contract. The trial court ruled that Kahn failed to prove that PFF is a corporation.International Express Travel & Tour Services. PFF. offered to the Philippine Football Federation (PFF) its travel services for the South East Asian Games. PFF in turn made a down payment. its president. There is also no merit on the finding of the CA that IETTI is in estoppel. that PFF is therefore liable for the contract entered into by its agent Kahn. ISSUE: HELD: No. vs Court of Appeals 343 SCRA 674 Business Organization – Corporation Law – Corporation by Estoppel – When Applied Facts: In 1989.

The corporation's creditor's committee protested against such amount. HELD: Yes. Nothing shows that such was formally ratified or approved by the corporation. Whenever necessary for the interests of the public or for the protection or enforcement of the rights of the membership. and Willits. It must be noted that this separate existence is for particular purposes. entered into a contract by which plaintiff was appointed agent for a period of 5 years. A statement of the corporation's account showed that there was due and owing the plaintiff a sum of money.G. Ltd. and it was not until the 23d of March. The proposition that a corporation has an existence separate and distinct from its membership has its limitations. He became exclusive owner except for a few stocks (nominal shares to qualify the directors) for organizational purposes. 1921. . Previous financial statements show upon their face that the account of plaintiff was credited with several small items on the same basis. Statements of account were made and prepared by the accountant on the assumption that the document was in full force and effect as between the plaintiff and the defendant. that any objection was ever made by anyone. Willits argued that the document was signed without the authority of the defendant corporation and also filed a counterclaim. Willits then organized a corporation. It must also be remembered that there can be no corporate existence without persons to compose it. C. LTD 44 Phil 634 (1923) FACTS: Arnold and Willits and Patterson. ISSUE: Whether plaintiff may collect from defendant corporation. ARNOLD vs. It was a one man corporation. Such defined and specified the compensation of Arnold. as the owner of all of the stock. there can be no association without associates. courts will disregard this legal fiction and operate upon both the corporation and the persons composing it. and there never was any dispute between plaintiff and Willits upon that question. Another instrument was executed between Arnold and Willits. A dispute arose as to the amount which plaintiff should receive for his services. He continued his employment and rendered his services after the corporation was organized and the second document was signed just the same as he did before. and both corporations recognized and accepted his services. After the document was signed it was recognized by Willits that the plaintiff's services were to be performed and measured by its term and provisions. Arnold filed suit to collect. WILLITS & PATTERSON. Patterson retired and Willits became the sole owner of the assets of the firm. was the force and dominant power which controlled them. This separate existence is to a certain extent a legal fiction.

and half of the profits of the oil business and other businesses. Later. which the accountant said. After. Thus the corp is bound by the contract. Arnold would receive $400/mth. CFI ordered Arnold to return the 10.Arnold vs. Willits.1K was due to him thus he owed 10. provided if the business was at a loss. the new corp dealt with and treated Arnold as its agent in the same manner as the previous corp had. Willits was the owner of all the capital stock. W&P argues that the 2nd contract was signed without authority. Arnold filed this complaint to recover 106K from W&P. there was dispute with regard to the construction of the contract as a result. would be over 160K. a 1% brokerage fee from all purchases and sales of merchandise.1K to W&P.1K. Willits was the owner of all the capital stock. Arnold entitled to 68K plus half of 75K. Willits organized a new Corp in San Francisco which took over and acquired all assets of the Firm Willits & Patterson. Patterson retired and Willits acquired all interests of the business. Issue: Is the CFI correct? Held: No. . organized a new Corporation here in the PI to take over all the business and assets of the firm here in the PI. representing PNs. After the 2nd contract was signed it was recognized by Willits that Arnold‘s services were to be performed by its terms and there never was any dispute between Arnold and Willits. In fact. In 1922. Willits and Patterson Facts: In 1916. The statements of account showed that 106K was due and owing to Arnold. the Firm Willits & Patterson in San Francisco entered into a contract with Arnold whereby Arnold was to be employed for a period of five years as the agent of the firm here in the PI to operate an oil mill for which he was to receive a minimum salary of $200/mth. New corp had the same name. Willits signed this. W&P Corp was in financial trouble and all assets were turned over to a creditor‘s committee. Although a new corp was created. a new contract in the form of a letter was entered into. And as counterclaim alleged that Arnold took 30K from the Corp but only 19. thus the new corp is bound by the contract which the old firm made. Later. Both Corp‘s organized by Willits were a One Man Corporation. Where a stock of a corporation is owned by one person whereby the corp functions only for the benefit of such individual owner. The SC reverses. the 2nd contract protected Willits from a larger claim. the corp and the individual should be deemed to be the same.

The PSE Board of Governors denied PALI‘s application on the ground that there were multiple claims on the assets of PALI.Philippine Stock Exchange vs Court of Appeals 287 SCRA 232 Business Organization – Corporation Law – Extent of Power of the Securities and Exchange Commission Facts: Puerto Azul Land. including shares of stock of a corporation. The SEC has both jurisdiction and authority to look into the decision of PSE pursuant to the Revised Securities Act and for the purpose of ensuring fair administration of the exchange. as a corporation itself and as a stock exchange is subject to SEC‘s jurisdiction. may be traded or not in the stock exchange. The SEC reversed PSE‘s decisions and ordered the latter to cause the listing of PALI shares in the Exchange. Rebecco Panlilio (trustee of the Marcoses). Based on the multiple adverse claims against the assets of PALI. PALI then asked the Philippine Stock Exchange (PSE) to list PALI‘s stocks/shares to facilitate exchange. In order to insure fair dealing of securities and a fair administration of exchanges in the PSE. Inc. Apparently. regulation. the Marcoses. PSE. ISSUE: Whether or not it is within the power of the SEC to reverse actions done by the PSE? HELD: Yes. the Supreme Court emphasized that the SEC may only reverse decisions issued by the PSE if such are tainted with bad faith. In this case. PALI then wrote a letter to the SEC asking the latter to review PSE‘s decision. It was reasonable for the PSE to exercise its judgment in the manner it deems appropriate for its business identity. HOWEVER. (PALI) is a corporation engaged in the real estate business. there was no showing that PSE acted with bad faith when it denied the application of PALI. PALI was granted permission by the Securities and Exchange Commission (SEC) to sell its shares to the public in order for PALI to develop its properties. and control. in the case at bar. and some other corporations were claiming assets if not ownership over PALI. the SEC has the authority to look into the rulings issued by the PSE. . The SEC is the entity with the primary say as to whether or not securities. as long as no rights are trampled upon. PSE deemed that granting PALI‘s application will only be contrary to the best interest of the general public. and public welfare is safeguarded.

Laguna. Judge Francisco Ma. NDC and AGRIX says: PVB estopped since they filed claims in Claims Committee(cited another case Mendoza vs Agrix) ISSUE: WON New Agrix. Guerrero annulled not only the challenged provision. RATIO: The Court is especially disturbed by Section 4(1) of the decree extinguishing all mortgages and other liens attaching to the assets of AGRIX. The two cases were consolidated. AGRIX went bankrupt then Pres. The motion for reconsideration of this decision having been denied. viz. Sec." Agrix Marketing (AGRIX) executed in favor of Phil. Sec. Neither does its mere invocation conjure an instant and automatic . being neither owned nor controlled by the Government. Veterans Bank REM on July 7. the private respondent took steps to extra judicially foreclose the mortgage. vs. Marcos issued PD 1717 to salvage the company. the present petition was filed. 1717 on the grounds that: (1)the presidential exercise of legislative power was a violation of the principle of separation of powers. shall not be recognized. 4 (1) of the decree. PVB filed claim with the Claims Comittee In the meantime. should have been created only by general and not special law. but the entire Pres. and the National Development Company. 4(1) thereof providing that "all mortgages and other liens presently attaching to any of the assets of the dissolved corporations are hereby extinguished. filed a petition with the Regional Trial Court of Calamba.ordered the rehabilitation of the Agrix Group of Companies to be administered mainly by the National Development Company. Agrix companies had a Claims Committee to process claims. with equal concern. the restriction in Subsection (ii) thereof that all "unsecured obligations shall not bear interest" and in Subsection (iii) that "all accrued interests. invoking Sec. INC. Inc was validly constituted NO new corporation. penalties or charges as of date hereof pertaining to the obligations. For its part..NATIONAL DEVELOPMENT COMPANY AND NEW AGRIX. for the cancellation of the mortgage lien in favor of the private respondent." On constitutionality of PD (Bill of Rights) "no person shall be deprived of life. liberty or property without due course of law nor shall any person be denied the equal protection of the law" Sec 10 "no law impairing the obligation of contracts shall be passed. whether secured or unsecured. PHILIPPINE VETERANS BANK 192 SCRA 257 FACTS: PD 1717 . Laguna. and (3) the decree violated the equal protection clause.1978 over 3 parcels of land in LB. the New Agrix. Decree No. 4 (1). (2) the law impaired the obligation of contracts. petitioners herein. prompting the petitioners to file a second case with the same court to stop the foreclosure."Defense: Property rights subject to regulation under Police Power for the promotion of common welfare Court says: The police power is not a panacea for all constitutional maladies. Inc. It also notes.

The National Development Corporation was merely required to extend a loan of not more thanP10. The Batasang Pambansa shall not. Assuming there is valid public interest. No PD issued by Marcos that time was declared unconstitutional Mendoza case was not the same. Filed with Claims Committee during Marcos time when Pres Marcos was absolute ruler and nobody questions him. that: SEC.000. organization. was created by special decree notwithstanding the provision of Article XIV. but with the obligation of making periodic reports to the Agrix board of directors. There was arbitrary taking of property (Mortgage lien -property right) The decree operated. unless such corporations are owned or controlled by the Government or any subdivision or instrumentality thereof. They shall then be the owners of the new corporation. "with an evil eye and an uneven hand. On creation of New Agrix New Agrix. Inc. liberty or property. Inc. Inc. NDC would undertake the management of the corporation. Public interest not identited and link to welfare of greater number not established. or regulation of private corporations. among other corporations where the stockholders or investors were also swindled. The new corporation is neither owned nor controlled by the government. a) the interests of the public generally. to use the words of a celebrated case. as distinguished from those of a particular class. the said board can then appoint its own management.justification for every act of the government depriving a person of his life. and b) the means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals." AGRIX was singled out for government help. should justify the interference of the state. then in force. New Agrix. The Decree impairs the obligation of the contract between AGRIX and the private respondent without justification. provide for the formation. method is oppressive since there was no consideration pain on the extinction of mortgage rights. 4. since Mendoza received settlement of stocks P40. A legislative act based on the police power requires the concurrence of a lawful subject anda lawful method.Section 4 of the 1973 Constitution.000. After payment of the loan. Futile.00 to New Agrix. Pending payment thereof. Decree was issued to favour only special group of investors. except by general law.Here PVB did not receive single centavo .000. is entirely private and so should have been organized under the Corporation Law in accordance with the above-cited constitutional provision. In more familiar words. On estoppel Philippine Veterans Bank not estopped. The stocks of the new corporation are to be issued to the old investors and stockholders of AGRIX upon proof of their claims against the abolished corporation.

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