You are on page 1of 10

National Coal Co.

vs Collector of Internal Revenue 46 Phil 583

DOCTRINE: The plaintiff is a private corporation. The mere fact that the Government
happens to the majority stockholder does not make it a public corporation. Act No.
2705, as amended by Act No. 2822, makes it subject to all of the provisions of the
Corporation Law, in so far as they are not inconsistent with said Act (No. 2705). As a
private corporation, it has no greater rights, powers or privileges than any other
corporation which might be organized for the same purpose under the Corporation Law,
and certainly it was not the intention of the Legislature to give it a preference or right or
privilege over other legitimate private corporations in the mining of coal.

FACTS: The National Coal Company was created by Act No. 2705 and was granted the
general powers of a corporation "and such other powers as may be necessary to enable
it to prosecute the business of developing coal deposits in the Philippine Island and of
mining, extracting, transporting and selling the coal contained in said deposits." Two
months later, the Philippine Legislature passed Act No. 2719 to provide for the leasing
and development of coal lands in the Philippine Islands. Seven months after the
company’s creation, the National Coal Company took possession of coal lands within a
reservation in the Zambaonaga Peninsula. Plaintiff harvested coal on public lands
between 1920 and 1922 collecting a total of 24,089.3 tons of coal.

Appellant CIR then subjected the mined coal to a specific tax of P0.50 per metric ton
under Act 1496 which subjected coal collected by non-owners of land for P12,044.68.
Plaintiff claimed a refund from the CIR arguing exemption from taxes under the
provision of sections 14 and 15 of Act No. 2719, and prayed for a judgment ordering the
defendant to refund to the plaintiff said sum of P12, 044.68, with legal interest from the
date of the presentation of the complaint, and costs against the defendant.

The trial court decided in favor of Plaintiff extending the definition of ownership and
should be understood to mean "lands held in lease or usufruct” and should be taxed
only P0.04 per ton of coal under Section 15 of Act No. 2719.

ISSUE: Whether the plaintiff is subject to the taxes under section 15 of Act No. 2719, or
to the specific taxes under section 1496 of the Administrative Code?

HELD: Plaintiff is liable for the taxes imposed under Section 1496 of the Administrative

Plaintiff is neither a lessee nor an owner of coal-bearing lands, and is, therefore, not
subject to any other provisions of Act No. 2719. It having been demonstrated that the
plaintiff has produced coal in the Philippine Islands and is not a lessee or owner of the
land from which the coal was produced, we are clearly of the opinion, and so hold, that
it is subject to pay the internal revenue tax under the provisions of section 1496 of the
Administrative Code, and is not subject to the payment of the internal revenue tax under
section 15 of Act No. 2719, nor to any other provisions of said Act.

April 22, 1991

MARCELINO GARCIA, respondents.

Julio Lopez as Petitioner.

Doctrine: It thus appears that the BSP may be regarded as both a "government
controlled corporation with an original charter" and as an "instrumentality" of the
Government within the meaning of Article IX (B) (2) (1) of the Constitution. It follows that
the employees of petitioner BSP are embraced within the Civil Service and are
accordingly governed by the Civil Service Law and Regulations.

Private respondents Fortunato C. Esquerra, Roberto O. Malaborbor, Estanislao M.

Misa, Vicente N. Evangelista and Marcelino P. Garcia, had all been rank-and-file
employees of petitioner Boy Scouts of the Philippines ("BSP"). At the time of termination
of their services, private respondents were stationed at the BSP Camp in Makiling, Los
Baños, Laguna.The Sec Gen of BSP issued special orders addressed separately to the
5 respondents informing them to be transferred from the BSP Camp in Makiling to the
BSP Land Grant in Asuncion, Davao del Norte. Private respondents opposed and
appealed the matter to the BSP National Pres. Petitioner BSP conducted a pre-transfer
briefing at its National Headquarters in Manila. Private respondents were there assured
that their transfer to Davao del Norte would not involve any diminution in salary, and
that each of them would receive a relocation allowance equivalent to one month's basic
pay. However, it failed to persuade private respondents to abandon their opposition. A
complaint for illegal transfer was filed by Private Respondents with the then Ministry of
Labor and Employment, Sub-Regional Arbitration Branch IV, San Pablo City, Laguna to
enjoin implementation of Special Orders, alleging that said orders were "indubitable and
irrefutable action[s] prejudicial not only to [them] but to [their] families and [would]
seriously affect [their] economic stability and solvency considering the present cost of
living." The BSP National President said that their refusal to comply with the Special
Orders was not sufficiently justified and constituted rank disobedience. Memoranda
subsequently issued by the BSP Secretary-General stressed that such refusal as well
as the explanations proffered therefor, were unacceptable and could altogether result in
termination of employment with petitioner BSP. Still, private respondents continued to
disobey the disputed transfer orders. A five-day suspension was imposed on the 5
private respondents. Subsequently, by Special Order issued by the BSP Secretary-
General, private respondents' services were ordered terminated. The private
respondents then amended their complaint to include charges of illegal dismissal and
unfair labor practice against petitioner BSP. The Labor Arbiter ordered the dismissal of
private respondents' complaint for lack of merit. However, the ruling of the Labor Arbiter
was reversed by public respondent, NLRC. Solicitor General on behalf of public
respondent NLRC; private respondents stated in their Appeal Memorandum 11 with the
NLRC that petitioner BSP is "by mandate of law a Public Corporation"

ISSUE: Whether or not the BSP is embraced within the Civil Service as that term is
defined in Article IX (B) (2) (1) of the 1987 Constitution (The Civil Service embraces all
branches, subdivisions, instrumentality mentalities and agencies of the Government,
including government-owned or controlled corporations with original charters.) --- will
determine whether or not private respondent NLRC had jurisdiction to render the
Decision and Resolution which are here sought to be nullified.

HELD: While the BSP may be seen to be a mixed type of entity, combining aspects of
both public and private entities, we believe that considering the character of its
purposes and its functions, it thus appears that the BSP may be regarded as both a
"government controlled corporation with an original charter" and as an "instrumentality"
of the Government within the meaning of Article IX (B) (2) (1) of the Constitution. It
follows that the employees of petitioner BSP are embraced within the Civil Service and
are accordingly governed by the Civil Service Law and Regulations. The Administrative
Code of 1987 designates the BSP as one of the attached agencies of the Department of
Education, Culture and Sports ("DECS"). An "agency of the Government" is defined as
referring to any of the various units of the Government including a department, bureau,
office, instrumentality, government-owned or-controlled corporation, or local government
or distinct unit therein.
We hold that both the Labor Arbiter and public respondent NLRC had no jurisdiction
over the complaint filed by private respondents in NLRC Case No. 1637-84; neither
labor agency had before it any matter which could validly have been passed upon by it
in the exercise of original or appellate jurisdiction. The appealed Decision and
Resolution in this case, having been rendered without jurisdiction, vested no rights and
imposed no liabilities upon any of the parties here involved. That neither party had
expressly raised the issue of jurisdiction in the pleadings poses no obstacle to this ruling
of the Court, which may motu proprio take cognizance of the issue of existence or
absence of jurisdiction and pass upon the same. Both decisions are hereby set aside.
CALLEJA G.R. No. 80887 September 30, 1994

DOCTRINE: A corporation is created by operation of law. It acquires a judicial

personality either by special law or a general law. The general law under which a private
corporation may be formed or organized is the Corporation Code, the requirements of
which must be complied with by those wishing to incorporate. Only upon such
compliance will the corporation come into being and acquire a juridical personality, thus
giving rise to is right to exist and act as a legal entity. On the other hand, a government
corporation is normally created by special law, referred to often as a charter.


Petitoner BDCEU-SDM is a duly registered labor union. It filed with the Department
of Labor, National Capital Region, a petition for certification election of private
respondent Bliss Development Corporation (BDC).

Med-Arbiter Fernando dismissed the petition for lack of jurisdiction stating that the
majority of BDC’s stocks is owned by the Human Settlement Development Corporation
(HSDC), a wholly-owned government corporation. Therefore, BDC is subject to Civil
Service law, rules and regulations. Its employees therefore, are prohibited to join or
form labor organization.

Petitioner then filed an appeal with Bureau of Labor Relations.

In the meantime, President Corazon Aquino issued Executive Order No. 180, extending
to government employees the right to organize and bargain collectively.

Respondent Director Calleja (BLR) issued an order dismissing the appeal ruling that
Bliss Development Corporation which is under the then Ministry of Human Settlement,
is a government Corporation where the workers are prohibited from organizing and
joining labor unions.

However, with the issuance of EO 180 (government employees are now given the right
to bargain), the BLR enjoins the petitioner to register in accordance with the provisions
in said executive order.


W/N BDC is a government-owned controlled corporation subject to Civil Service

Laws, rules and regulations. Corollary to this issue is the question of W/N petitioner is
covered by Executive Order No. 180 and must register as a precondition for filing a
petition for certification election.

In determining whether a corporation created under the Corporation Code is
government owned or controlled or not, the rule applied is the ownership test whereby a
corporation will be deemed owned by the government if the majority of its voting stocks
are owned by the government.

It appearing that Human Settlement Development Corporation (HSDC), which is a

wholly-owned government corporation, owns a majority of the stocks of Bliss
Development Corporation (BDC), our conclusion is that BDC is a government-owned
corporation subject to the coverage of the Civil Service law, rules and

Section 1 of Executive Order No. 180 expressly limits its application to only
government-owned or controlled corporations with original charters. Hence, public
respondent's order dated August 7, 1987 requiring petitioner to register in accordance
with Section 7 of executive Order No. 180 is without legal basis.

A government-owned corporation could create several subsidiary corporations.

Conceivably, all government-owned or controlled corporations could be created, no
longer by special charters, but through incorporations under the general law.

The Civil Service embraces government-owned or controlled corporations with original

charter; and, therefore, by clear implication, the Civil Service does not include
government-owned or controlled corporations which are organized as subsidiaries of
government-owned or controlled corporations under the general corporation law.

A corporation is created by operation of law. It acquires a judicial personality either by

special law or a general law. The general law under which a private corporation may be
formed or organized is the Corporation Code, the requirements of which must be
complied with by those wishing to incorporate. Only upon such compliance will the
corporation come into being and acquire a juridical personality, thus giving rise to its
right to exist and act as a legal entity. On the other hand, a government corporation is
normally created by special law, referred to often as a charter.

BDC is a government-owned corporation created under the Corporation Law. It is

without a charter hence, Executive Order No. 180 does not apply to it.

Consequently, public respondent committed grave abuse of discretion in ordering

petition to register under Section 7, of Executive Order No. 180 as a precondition for
filing a petition for certification election.
Roman Catholic Apostolic Administrator of Davao, Inc. v. The Land Registration
Commission and the Register of Deeds of Davao City, G.R. No. L-8451, December

Doctrine: A corporation sole consists of one person only, and his successors (who will
always be one at a time), in some particular station, who are incorporated by law in
order to give them some legal capacities and advantages, particularly that of perpetuity,
which in their natural persons they could not have had. In this sense, the king is a sole
corporation; so is a bishop, or dens, distinct from their several chapters

On October 4, 1954, Mateo L. Rodis, a Filipino citizen and resident of the City of Davao,
executed a deed of sale of a parcel of land located in the same city covered by Transfer
Certificate No. 2263, in favor of the Roman Catholic Apostolic Administrator of Davao
Inc.,(RCADI) is corporation sole organized and existing in accordance with Philippine
Laws, with Msgr. Clovis Thibault, a Canadian citizen, as actual incumbent. Registry of
Deeds Davao (RD) required RCADI to submit affidavit declaring that 60% of its
members were Filipino Citizens. As the RD entertained some doubts as to the
registerability of the deed of sale, the matter was referred to the Land Registration
Commissioner (LRC) en consulta for resolution. LRC hold that pursuant to provisions of
sections 1 and 5 of Article XII of the Philippine Constitution, RCADI is not qualified to
acquire land in the Philippines in the absence of proof that at leat 60% of the capital,
properties or assets of the RCADI is actually owned or controlled by Filipino citizens.
LRC also denied the registration of the Deed of Sale in the absence of proof of
compliance with such requisite. RCADI’s Motion for Reconsideration was denied.
Aggrieved, the latter filed a petition for mandamus.

Whether or not the Universal Roman Catholic Apostolic Church in the Philippines, or
better still, the corporation sole named the Roman Catholic Apostolic Administrator of
Davao, Inc., is qualified to acquire private agricultural lands in the Philippines pursuant
to the provisions of Article XIII of the Constitution.

RCADI is qualified.
While it is true and We have to concede that in the profession of their faith, the Roman
Pontiff is the supreme head; that in the religious matters, in the exercise of their belief,
the Catholic congregation of the faithful throughout the world seeks the guidance and
direction of their Spiritual Father in the Vatican, yet it cannot be said that there is a
merger of personalities resultant therein. Neither can it be said that the political and civil
rights of the faithful, inherent or acquired under the laws of their country, are affected by
that relationship with the Pope. The fact that the Roman Catholic Church in almost
every country springs from that society that saw its beginning in Europe and the fact
that the clergy of this faith derive their authorities and receive orders from the Holy See
do not give or bestow the citizenship of the Pope upon these branches. Citizenship is a
political right which cannot be acquired by a sort of “radiation”. We have to realize that
although there is a fraternity among all the catholic countries and the dioceses therein
all over the globe, the universality that the word “catholic” implies, merely characterize
their faith, a uniformity in the practice and the interpretation of their dogma and in the
exercise of their belief, but certainly they are separate and independent from one
another in jurisdiction, governed by different laws under which they are incorporated,
and entirely independent on the others in the management and ownership of their
temporalities. To allow theory that the Roman Catholic Churches all over the world
follow the citizenship of their Supreme Head, the Pontifical Father, would lead to the
absurdity of finding the citizens of a country who embrace the Catholic faith and become
members of that religious society, likewise citizens of the Vatican or of Italy. And this is
more so if We consider that the Pope himself may be an Italian or national of any other
country of the world. The same thing be said with regard to the nationality or citizenship
of the corporation sole created under the laws of the Philippines, which is not altered by
the change of citizenship of the incumbent bishops or head of said corporation sole.
We must therefore, declare that although a branch of the Universal Roman Catholic
Apostolic Church, every Roman Catholic Church in different countries, if it exercises its
mission and is lawfully incorporated in accordance with the laws of the country where it
is located, is considered an entity or person with all the rights and privileges granted to
such artificial being under the laws of that country, separate and distinct from the
personality of the Roman Pontiff or the Holy See, without prejudice to its religious
relations with the latter which are governed by the Canon Law or their rules and
It has been shown before that: (1) the corporation sole, unlike the ordinary corporations
which are formed by no less than 5 incorporators, is composed of only one persons,
usually the head or bishop of the diocese, a unit which is not subject to expansion for
the purpose of determining any percentage whatsoever; (2) the corporation sole is only
the administrator and not the owner of the temporalities located in the territory
comprised by said corporation sole; (3) such temporalities are administered for and on
behalf of the faithful residing in the diocese or territory of the corporation sole; and (4)
the latter, as such, has no nationality and the citizenship of the incumbent Ordinary has
nothing to do with the operation, management or administration of the corporation sole,
nor effects the citizenship of the faithful connected with their respective dioceses or
corporation sole.
In view of these peculiarities of the corporation sole, it would seem obvious that when
the specific provision of the Constitution invoked by respondent Commissioner (section
1, Art. XIII), was under consideration, the framers of the same did not have in mind or
overlooked this particular form of corporation. If this were so, as the facts and
circumstances already indicated tend to prove it to be so, then the inescapable
conclusion would be that this requirement of at least 60 per cent of Filipino capital was
never intended to apply to corporations sole, and the existence or not a vested right
becomes unquestionably immaterial.
Benguet Electric Cooperative, Inc. vs National Labor Relations Commission
In 1982, Peter Cosalan, then general manager of the Benguet Electric Cooperative
(BENECO), received an audit report from the National Electrification Administration
(NEA). The said audit advised Cosalan of certain irregularities in the management of the
funds of BENECO. Cosalan then sought to address the issue by introducing reforms
recommended by the NEA as well as by the auditing body, Commission on Audit.
However, the Board Members of BENECO reacted to these reforms by issuing a series
of resolutions which first reduced Cosalan’s salary and allowances, then he was
excluded from his work, and eventually, he was suspended indefinitely.
Cosalan then filed a complaint for illegal dismissal against the BENECO Board
Members, he later impleaded BENECO itself. The Labor Arbiter (LA) ruled in favor of
Cosalan. The National Labor Relations Commission (NLRC) affirmed the decision of the
LA but modified it so as to absolve the Board Members from liability as it held that the
Board Members merely acted in their official capacity. BENECO, being the only party
adjudged to be liable, then appealed said decision.
ISSUE: Whether or not the National Labor Relations Commission is correct.
HELD: No. The act of the Board Members is ultra vires. There was no legal basis for
them to suspend Cosalan indefinitely for under the Implementing Rules of the Labor
Code the maximum period form preventive suspension should not go beyond 30 days.
Further, it was found that Cosalan was never informed of the charges against him nor
was he afforded the opportunity to present his case. He was deprived of due process.
Nor was Cosalan’s suspension approved by the NEA, which is also required for due
process purposes.
These acts by the Board Members are tainted with bad faith. A very strong presumption
arises that the Board Members are acting in reprisal against the reforms sought to be
introduced by Cosalan in order to address the irregularities within BENECO. The Board
Members are therefore liable for damages under Section 31 of the Corporation Code.
And even though BENECO is a cooperative, it is still covered by the Corporation Code
because under PD 269, cooperatives are considered as corporations.
The Supreme Court ruled that BENECO and the BENECO Board Members are liable
for the damages caused against Cosalan. However BENECO can seek reimbursement
from the Board Members so as not to unduly penalize the innocent members of