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Tayag vs Benguet

 Idonah Slade Perkins died

 2 stock certificates of Benguet Consolidated possessed by County Trust Company of New York (the domiciliary
administrator of the deceased).

 dispute between the domiciary administrator in New York and Renato Tayag (the ancillary administrator in the
Philippines) as to which of them was entitled to the possession of the stock certificates in question.

 CFI ordered Country Trust to deliver the certificates to Tayag or the court = NOT COMPLY

 Tayag petitioned the court that the certificates be declared / considered as lost.

 Court granted petition. Declare, Cancel and deliver.

 Benguet Consolidated appealed = the said stock certificates are with County Trust
= allege that there was a failure to observe certain requirements of its by-laws
before new stock certificates could be issued

WON = Court has jurisdiction to order cancellation and delivery of the stocks?

YES. An administrator appointed in a foreign state has no authority in the [Philippines]. It would follow then that the
authority of the probate court to require that ancillary administrator's right to the stock be respected is equally
beyond question. Thereby, the task incumbent under the law on the ancillary administrator could be discharged
and his responsibility fulfilled.

For appellant is a Philippine corporation owing full allegiance and subject to the unrestricted jurisdiction of local
courts. Its shares of stock cannot therefore be considered in any wise as immune from lawful court orders.

**** A corporation as known to Philippine jurisprudence is a creature without any existence until it has received
the imprimatur of the state according to law. Therefore
1. It cannot have rights and privileges of a higher priority than that of its creator.
2. It cannot legitimately refuse to yield obedience to acts of its state organs ( Ex: Judiciary )

The fear of appellant of a contingent liability for its inconsistency with one of its by-laws does not impress the
court. Its obedience to a lawful court order certainly constitutes a valid defense.

 Ang Pue and Tan Siong organized partnership for 5 years for buying and selling lumber and hardwares

 Republic Act No. 1180 was enacted to regulate the retail business. Provision states partnership not wholly formed
by Filipinos could continue to engage in the retail business until the expiration of its term.

 Prior to: Expiration and RA 1180. They agreed to extend the term of life of the partnership to another five years.

 Amended + Presented for registration to SEC = REFUSED

 Lower Court Dismissed. Hence Appeal.

WON = SEC deny extension?

YES. To organize a corporation or a partnership that could claim a juridical personality is not a matter of absolute
right but a privilege which may be enjoyed only under such terms as the State may deem necessary to

Therefore when the partners amended the articles of partnership, the provisions of Republic Act 1180 were
already in force. Hence violation of the clear intent and purpose of the law.

 President Marcos enacted PD 1717 = which ordered the rehabilitation of the Agrix Group of Companies to be
administered mainly by the National Development Company AND providing that "all mortgages and other liens
presently attaching to any of the assets of the dissolved corporations are hereby extinguished."

 AGRIX executed real estate mortgage w/ Philippine Veterans Bank

 AGRIX went bankrupt therefore unable to pay the loan

 NDC invoked Sec. 4 (1) of PD 1717 and filed for the cancellation of the mortgage lien in favor of PVB

 PVB took steps to extrajudicially foreclose the mortgage. Hence NDC filed for injunction.

 Judge Guerrero annulled PD 1717 for violation of obli con and equal protection clause. MR also denied.

 Since constitutional questions were involved it was transferred to the Court en banc.

WON = PD 1717 is unconstitutional?

YES. New Agrix, Inc. was created by special decree notwithstanding the provision of Article 15, Section 4 of the 1973
Constitution.The Batasang Pambansa shall not, except by general law, provide for the formation, organization,
or regulation of private corporations, unless such corporations are owned or controlled by the Government or
any subdivision or instrumentality thereof.

The new corporation is neither owned nor controlled by the government. The NDC was merely required to
extend a loan to New AGRIX. NDC would undertake the management of the corporation until payment of the
loan and thereafter give back the management to NEW AGRIX. New Agrix, Inc. is entirely private and so should
have been organized under the Corporation Law in accordance with the above-cited constitutional provision.
 J. R. Da Silva = President of the J.R.S. duly franchised by the Congress of the Philippines, to conduct a messenger
and delivery express service.

 Imperial Insurance, Inc filed claims against JRS in court. Hence COMPROMISE AGREEMENT

 Failed to pay. Imperial Insurance Inc., filed a "Motion for the Insurance of a Writ of Execution"

 Notices of Sale were sent out for the auction of the personal properties of the petitioner J.R.S. Business
Corporation. INCLUDING Levy on the Capital Stock, Business Name and Right to Operate

 JRS presented an "Urgent Petition for Postponement of Auction Sale and for Release of Levy on the Business
Name and Right to Operate of Defendant JRS Business Corporation"
DEFENSE = right to operate under the franchise, was not transferable and could not be considered a
personal or immovable, property, subject to levy and sale

 Denied. Auctioned. Sold to Imperial as Highest bidder then TOOK OVER. HENCE APPEAL.

WON = Capital Stock, Business Name and Right to Operate could be subject of levy?

NO. Primary Franchise = vested "in the individuals who compose the corporation and not in the corporation itself"
Secondary franchise = vested in the corporation and may ordinarily be conveyed or mortgaged under a general
power granted to a corporation to dispose of its property ( Except = charged with a public use )
*** Right to operate by virtue of a legislative enactment, is admittedly a secondary franchise. R.A. No. 3260

UNDER Sec. 56, Corp. Law said franchise can be sold under execution, when such sale is especially decreed and
ordered in the judgment and it becomes effective only when the sale is confirmed by the Court after due notice
*** Since compromise agreement and judgment (X) Include = inclusion has no justification


 JM Tuason amended three times = extent and description of the land ( to be recovered )
 Due to several contentions made by Bolanos about the mistakes of the surveyor of the land

 Bolanos moved to dismiss the case due to his OCEN Possession of the land

 Trial Court ruled in favor of Tuason. HENCE APPEAL

WON: The trial court erred in not dismissing the case on the ground that the case was not brought by the real
property in interest. ( RELEVANT CONTENTION of our topic )

YES. Rule 2 Sec 2 = Rules of Court require is that an action be brought in the name of, but not necessarily by, the real
party in interest ( complaint is signed by the law firm of Araneta and Araneta)

Contention: Gregorio Araneta, Inc. cannot act as managing partner for plaintiff = illegal for two corporations to
enter into a partnership
1. Rule: Corp (X) enter into a partnership BUT may enter into a joint venture
2. There is nothing against one corporation being represented by another person, natural or juridical, in a
suit in court.
 Mr. Baldwin Young went abroad to look for foreign partners

 American Standard Inc. entered into an Agreement with Saniwares

 Agreement on Management
1. vested in a Board of Directors = 9 members
2. American-Standard shall own at least 30% of the outstanding stock
3. 3 = designated by American-Standard ----- 6 designated by the other stockholders of the Corporation
4. STOCKS 40% = ASI 60% = Filipino

 A basic disagreement = expand export operations to which ASI objected as it apparently had other subsidiaries of
joint venture groups in the countries where Philippine exports were contemplated

 Annual stockholders' meeting = election of the members of the board of directors

* ASI nominated = Aurbach, Griffin, Whittingham and 6 other Filipino nominees

 Two others were nominated. Young ruled the last two nominations out of order because there should only be 9

 The Chairman then instructed the Corporate Secretary to cast all the votes present and represented by proxy
equally for the 6 nominees of the Philippine Investors and the 3 nominees of ASI.

 The representative of ASI then moved to recess the meeting which was duly seconded. There was also a motion
to adjourn WHICH WAS ACCEPTED by the chairman and declared the meeting adjourned.

 Mr. Jaqua the ASI representative, stated that the meeting was not adjourned but only recessed
** The continued meeting was presided by Luciano E. Salazar another election was held.
4 = ASI and 6 = Filipino BOARD MEMBERS

 Filed with SEC. Upheld the 1st election. Appealed in IAC which ordered the remand of the case to SEC and with
the directive that a new stockholders' meeting of Saniwares be ordered convoked as soon as possible

WON: who were the duly elected directors of Saniwares?

 Smith, Bell & Co. = owner of motor vessel known as the Bato

 Bato was brought to Cebu = APPLICATION for REGISTRATION

 JOAQUIN NATIVIDAD ( Collector of Customs of the port of Cebu ) = REFUSED TO ISSUE Certificate
 all the stockholders of Smith, Bell & Co., Ltd., were not citizens either of the United States or of the
Philippine Islands.
 Prohibited by Act No. 2761

 Counsel argues that Act No. 2761 denies to petitioner = the equal protection and due process of the law
a) classification of corporations based on the citizenship of one or more of their stockholders
b) automatically deprived of every beneficial attribute of ownership in the Bato

WON: Act 2761 denies equal protection and due process of the law?

No. While Smith, Bell & Co. Ltd., a corporation having alien stockholders, is entitled to the protection afforded by the
due-process of law and equal protection of the laws clause of the Philippine Bill of Rights, nevertheless, Act No. 2761 of
the Philippine Legislature, in denying to corporations such as Smith, Bell &. Co. Ltd., the right to register vessels in the
Philippines coastwise trade, does not belong to that vicious species of class legislation which must always be condemned,
but does fall within authorized exceptions, notably, within the purview of the police power, and so does not offend
against the constitutional provision. ( Promotes prosperity of Filipinoes )

Respondents-Prosecutors issued 42 search warrants against the petitioners' and the corporation that they were in for
violation of Bank Laws, Tariff and Internal Revenue Code ( Diokno = DOJ Secretary )

Search and seize certain documents such as books of account, financial records and other documents and/or papers
showing all business transactions

Petitioners Contend that the aforementioned search warrants are null and void:
1) they do not describe with particularity the documents, books and things to be seized
2) The search and seizure was issued to FISH evidence against petitioners
3) " " " " " done illegally since they seized things not included in the warrant

Respondents-prosecutors alleged: " Moncado case "

the effects seized are admissible = regardless of the alleged illegality of the aforementioned searches and seizures.

WON: Issuance and execution of the Search and seizure valid?

Court issued injuction against = found and seized in the RESIDENCE
BUT NOT against those = found and seized in the CORPORATION

REASON of the Judge:

1) legality of a seizure can be contested only by the party whose rights have been impaired thereby
2) objection to an unlawful search and seizure is purely personal and cannot be availed of by third parties.

THEREFORE petitioners herein may not validly object to the use in evidence against them of those seized from the
corporations, since the right to object to the admission of said papers in evidence belongs exclusively to the corporations,
and may not be invoked by the corporate officers in proceedings against them in their individual capacity.

Misael Vera requested Judge Vivencio Ruiz issuance of search warrant = violation of NIRC

Judge Ruiz was hearing a certain case THEREFORE

1) authorized his Deputy Clerk of Court to take the depositions
2) made them take the OATH
3) Warned them that --> w/o basis = perjury

BIR agents served the search warrant

Petitioners Contested that = No formal complaint or transcript of testimony was attached to the warrant.

Respondents answerd = corporation is not entitled to protection against unreasonable search and seizures.

Petitioners filed a petition to declare the warrant null and void. The court Dismissed the petition.

Bureau of Internal Revenue made tax assessments based on the said documents seized.

WON: the issuance of writ valid?

Held: No.
1. Respondent Judge failed to personally examine the complainant and his witness.
 The examination of the complainant and the witnesses he may produce should be conducted by the judge himself and
not by others ( Consti and Rules of Court )
Personal examination by the judge of the complainant and his witnesses is necessary to enable him to determine the
existence or non-existence of a probable cause
Judicial appraisal of facts and should not be allowed to be delegated

Listening to the stenographer’s readings of her notes, to a few words of warning against the commission of perjury, and
to administering the oath to the complainant and his witness. This did not constitute sufficient compliance with personal

2. The search warrant was issued for more than one specific offense.
** The search warrant in question was issued for at least four distinct offenses under the Tax Code.
1) the filing of income tax returns
2) withholding of income taxes at source
3) unlawful pursuit of business or occupation
4) failure to make a return of receipts, sales, business or gross value of output actually removed or to pay the tax
due thereon

3. The search warrant does not particularly describe the things to be seized.
** Seize all effect WON LEGAL OR ILLEGAL

** In the Stonehill case only the officers of the various corporations in whose offices documents, papers and effects were
searched and seized were the petitioners. In the case at bar, the corporation to whom the seized documents belong, and
whose rights have thereby been impaired, is itself a petitioner. On that score, petitioner corporation here stands on a
different footing from the corporations in Stonehill.

BASECO = a shiprepair and shipbuilding company

EO 1 & 2 was promulgated by Pres. Corazon Aquino = SEQUESTRATION ORDER of Marcos controlled corporation which
among other the BASECO's Engineering Island Shipyard and Mariveles Shipyard

The problem arose when thesequestration order was initiated = ordered by the PCGG to produce certain documents
such as Articles of incorporation , Financial Statements, List of Stockholders and others

Petitioners REFUSED and now prays to the Court to:

*** declare unconstitutional and void EOs Numbered 1 and 2 and annul the sequestration order
CONTENDING AMONG OTHERS that the production of certain document infringed the right against self-incrimination


1. Whether or not the order of production of documents would be self-incriminating to BASECO

2. Whether or not a corporation can avail the right against self-incrimination


No. The Court held that the right against self-incrimination has no application to corporations

The corporation is a creature of the state. There is a reserve right in the legislature to investigate its contracts and find
out whether it has exceeded its powers. Therefore to demand the production of thecorporate books and papers for that
purpose are justifiable.
Individual = Allowed to invoke Corporation = (X) allowed to invoke
" Wilson vs United States"

Partnerships' attributes mainly mutual agency, delectus personae and unlimited liability on the part of the partners, that
places a close identity between the persons of the partners and that of the partnership. Corporations where stockholders
who do not have participation in management of corporate affairs and acts through a professional group of managers
and agents called the Board of Directors.