G.R. No.

91925 April 16, 1991

EDUARDO M. COJUANGCO, JR., MANUEL M. COJUANGCO and RAFAEL G. ABELLO, petitioners,
vs.
ANTONIO J. ROXAS, JOSE L. CUISIA, JR., OSCAR HILADO, Presidential Commission on Good
Government (PCGG), SAN MIGUEL CORPORATION (SMC) and SANDIGANBAYAN (First
Division),respondents.
G.R. No. 93005 April 16, 1991
EDUARDO M. COJUANGCO, JR., ENRIQUE M. COJUANGCO and MANUEL M. COJUANGCO, petitioners,
vs.
ADOLFO AZCUNA, EDISON COSETENG, PATRICIO PINEDA, Presidential Commission on Good
Government (PCGG), and SAN MIGUEL CORPORATION (SMC), respondents.

Facts:
Petitioners are stockholders of SMC. On April 18, 1989, the annual meeting of shareholders of SMC was
held. Among the matters taken up was the election of fifteen (15) members of the board of directors for
the ensuing year. Petitioners were among the twenty four (24) nominees to the board.
On the date of the annual meeting, there were 140,849,970 shares outstanding, of which 133,224,130
shares, or 94.58%, were present at the meeting, either in person or by proxy. Because of PCGG's claim
that the shares of stock were under sequestration, PCGG was allowed to represent and vote the shares
of stocks of shareholders.
Representatives of the corporate shares present at the meeting claimed that the shares are not under
sequestration; or that if they are under sequestration, the PCGG had no right to vote the same. They
were overruled.
The PCGG claimed it represented 85,756,279 shares at the meeting including the corporate shares which
corresponded to 1,286,744,185 votes which in turn were distributed equally among the fifteen (15)
candidates who were declared elected.
Petitioners allege that the 27,211,770 shares or a total of 408,176,550 votes representing the corporate
shares, were illegally cast by PCGG.
The petitioners assert that is they were allowed to vote their corresponding shares accordingly, then
they would obtain enough votes to be elected.
On May 31, 1989, petitioners filed with the Sandiganbayan a petition for quo warranto impleading as
respondents the fifteen (15) candidates who were declared elected members of the board of directors
of SMC for the year 1989-1990. Summons was issued only as to respondents Antonio J. Roxas, Jose L.
Cuisia, Jr. and Oscar T. Hilado whose election will be affected by the claim of petitioners if the same
were upheld.
In due course, a resolution was rendered by the Sandiganbayan on November 16, 1989, affirming its
jurisdiction over the petition but dismissing it for lack of cause of action on the ground that the PCGG
has the right to vote sequestered shares.
Hence, this petition for certiorari, the main thrust of which is that the right to vote sequestered shares
of stock is vested in the actual shareholders not in the PCGG.

Issue:
Whether or not the Presidential Commission on Good Government (PCGG) may vote the sequestered
shares of stock of San Miguel Corporation (SMC) and elect its members of the board of directors.

Ruling:
No. Nothing is more settled than the ruling of this Court in BASECO VS. PCGG, that the PCGG cannot
exercise acts of dominion over property sequestered. It may not vote sequestered shares of stock or
elect the members of the board of directors of the corporation concerned. The PCGG may thus exercise
only powers of administration over the property or business sequestered or provisionally taken over.

The Supreme Court finds and so holds that the PCGG has no right to vote the sequestered shares of
petitioners including the sequestered corporate shares. Only their owners, duly authorized
representatives or proxies may vote the said shares. Consequently, the election of private respondents
Adolfo Azcuna, Edison Coseteng and Patricio Pineda as members of the board of directors of SMC for
1990-1991 should be set aside.
However, petitioners cannot be declared duly elected members of the board of directors thereby. An
election for the purpose should be held where the questioned shares may be voted by their owners
and/or their proxies. Such election may be held at the next shareholders' meeting in April 1991 or at
such date as may be set under the by-laws of SMC.
Private respondents in both cases are hereby declared to be de facto officers who in good faith assumed
their duties and responsibilities as duly elected members of the board of directors of the SMC. They are
thereby legally entitled to the emoluments of the office including salary, fees and other compensation
attached to the office until they vacate the same.
It is through the right to vote that the stockholder participates in the management of the corporation.
The right to vote, unlike the rights to receive dividends and liquidating distributions, is not a passive
thing because management or administration is, under the Corporation Code, vested in the board of
directors, with certain reserved powers residing in the stockholders directly. The board of directors and
executive committee (or management committee) and the corporate officers selected by the board may
make it very difficult if not impossible for the PCGG to carry out its duties as conservator if the Board or
officers do not cooperate, are hostile or antagonistic to the conservator's objectives.


Mobilia Products Inc. vs. Umezawa
452 SCRA 736, March 4, 2005

Facts:

While Hajime Umezawa was employed as the President and General Manager of Mobilia Products, Inc.
Manufacturer and exporter of furnitures, he established another company, Astem
Philippines Corporation, with his wife and sister without the knowledge of the Mobilia. Astem Company
engaged in the same business as Mobilia Products. They also recruited the former Production Manager
of Mobilia Products to work in their company.

Umezawa and others wanted to accelerate the market potentials of Astem by participating in a
Furniture Fair in Singapore. The fair required that the furniture for the exhibits arrive at a certain date
before the exhibit. Pressed with time, as Astem had yet no equipment and machinery, no staff and no
ready personnel, Umezawa, stole prototype furniture from Mobilia for the exhibit with a total value of
Three Million Pesos. Mobilia then filed a case of qualified theft and also filed a motion for a writ of
preliminary attachment on Umezawas properties before the RTC. Umezawa filed a petition with the
SEC for the nullification of the board resolution authorizing the filing of criminal complaints against him
because he was just Mobilias employee.

RTC dismissed the case for lack of jurisdiction. The dispute between the private complainant and the
accused over the ownership of the properties subject of the charges is intra corporate in nature, and
was within the exclusive jurisdiction of the SEC.

On appeal, CA ruled that the issue of ownership of the properties subject of the Information was not an
intra-corporate dispute, Umezawa, although president, was not a joint owner or co-owner of the
personal properties subject of the charges.

Mobilia filed a MFR, CA affirmed the RTC decision that the court does not have jurisdiction and SEC
should try the case. Hence, this petition.

Issue:
Whether the RTC had jurisdiction over the crime charged in the said Informations.

Yes. Based on the material allegations of the Informations in the three cases, RTC had exclusive
jurisdiction over the crimes charged. Umezawa was the president and general manager of the
petitioner corporation when the crimes charged were allegedly committed and was then a stockholder
thereof does not in itself deprive the court of its exclusive jurisdiction over the crimes charged. The
property of the corporation is not the property of the stockholders or members or of its officers who are
stockholders.
The Informations state all the essential elements of estafa and qualified theft.It was adequately alleged
that respondent Umezawa, being the President and General Manager of petitioner MPI, stole and
misappropriated the properties of his employer, more specifically, petitioner MPI.

Ownership of the properties subject of the Information was not an intra-corporate dispute. Umezawa,
although president, was not a joint owner or co-owner of the personal properties subject of the charges.

Rural Bank of Salinas v CA

Facts:
Guerrero, the President of the Rural bank of Salinas, executed an SPA in favor of his wife Melania,
authorizing the latter to sell or dispose or mortgage 473 shares of stock of the Bank, registered in the
name of Guerrero. Pursuant to this, the shares were assigned by Melania to Anico, Rosales and Guerrero
Jr. 2 days before Guerrero died, Melania executed another assignment for the remaining 1 share of
stock to Guerrero Sr. the 2 deeds of assignment were presented to the Bank to obtain new certificates
of shares of stock in the name of the assignees. This was denied by the Bank. Melania thereafter filed
with the SEC an action for mandamus to compel the Bank to accept the deeds of assignment and issue
new certificates for the assignees. The writ of Mandamus was granted by the SEC hearing officer, and
was affirmed by the SEC en banc. A petition for review was filed by the Bank with the CA, but the latter
affirmed the previous decisions of the SEC.

Issue: Whether the Bank could validly deny the registration of the assignment and deny the issuance of
new certificates of stock.

Held:
No. Section 63 of the corporation code provides that Shares of stock so issued are personal property
and may be transferred by delivery of the certificate/s by the owner or by his attorney-in-fact or other
person legally authorized to make the transfer. No transfer, however, shall be valid, except as between
the parties, until the transfer is recorded in the books of the corporation. The only limitation in the said
section is when the corporation holds any unpaid claim against the shares intended to be transferred,
which is absent in the instant case. A corporation, either by its board, by-laws, or the acts of its officers
cannot create restrictions in stock transfers. The right of a transferee/assignee to have stocks
transferred to his name is an inherent right flowing from his ownership of the stocks. And, whenever a
corporation refuses to transfer and register stock, mandamus will lie to compel the officers of the
corporation to transfer said stocks in the books of the corporation. This obligation of the corporation is
ministerial.
G.R. No. 169914 March 24, 2008
ASIA'S EMERGING DRAGON CORPORATION, Petitioner,
vs.
DEPARTMENT OF TRANSPORTATION AND COMMUNICATION, SECRETARY LEANDRO R. MENDOZA and
MANILA INTERNATIONAL AIRPORT AUTHORITY, Respondents.
G.R. No. 174166
REPUBLIC OF THE PHILIPPINES, Represented by the DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS and MANILA INTERNATIONAL AIRPORT AUTHORITY, Petitioner,
vs.
COURT OF APPEALS and SALACNIB BATERINA, Respondents.
Facts:
MHC seeks to intervene in the consolidated cases of G.R. Nos. 169914 and 174166 alleging that it has a
legal interest in the matter in litigation. It avers that it purchased 20% of PIATCOs shares from the
latters two stockholders, namely, SB Airport Investments, Inc. and Sojitz Corporation on August 23,
2005 and August 24, 2005, respectively. On August 26, 2005, it also entered into an agreement with
Fraport AG Frankfurt Airport Services Worldwide to purchase the latters 30% direct shareholdings and
31.44% indirect shareholdings
1
in PIATCO.
MHC claims that it has a legal interest in the issues raised in G.R. 169914 and the early and complete
compliance with the December 19, 2005 decision in G.R. No. 166429 of this Court. Thus it prays that (1)
AEDCs petition be dismissed; (2) its (MHCs) proposed alternative manner of implementing the
December 19, 2005 decision be approved and (3) it be allowed to manage and operate the NAIA IPT III
for 25 years.
Issue:
Does MHCs motion for intervention a proper remedy?
Ruling:
No. MHCs motion for intervention is an improper remedy. Intervention is a remedy by which a third
party, not originally impleaded in the proceedings, becomes a litigant therein to enable him, her or it to
protect or preserve a right or interest which may be affected by such proceedings. The pertinent rule is
Rule 19, Section 1 of the Rules of Court which states:
SEC. 1. Who may intervene. A person who has a legal interest in the matter in litigation, or in the
success of either of the parties, or an interest against both, or is so situated as to be adversely affected
by a distribution or other disposition of property in the custody of the court or of an officer thereof may,
with leave of court, be allowed to intervene in the action. The court shall consider whether or not the
intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and
whether or not the intervenor's rights may be fully protected in a separate proceeding.
MHC asserts that because of its substantial stockholdings in PIATCO, it has a legal interest in the matter
in litigation. However, it conveniently fails to state its legal basis for the intervention. The interest
contemplated by law must be actual, substantial, material, direct and immediate, and not simply
contingent or expectant. It must be of such direct and immediate character that the intervenor will
either gain or lose by the direct legal operation and effect of the judgment. Here, the interest, if it exists
at all, of petitioners-movants is indirect, contingent, remote, conjectural, consequential and collateral.
At the very least, their interest is purely inchoate, or in sheer expectancy of a right in the management
of the corporation and to share in the profits thereof and in the properties and assets thereof on
dissolution, after payment of the corporate debts and obligations.
While a share of stock represents a proportionate or aliquot interest in the property of the corporation,
it does not vest the owner thereof with any legal right or title to any of the property, his interest in the
corporate property being equitable or beneficial in nature. Shareholders are in no legal sense the
owners of corporate property, which is owned by the corporation as a distinct legal person.
In this case, the matter in controversy is the NAIA IPT III. MHC has no connection at all to this structure.
It is merely a stockholder of PIATCO, the builder of NAIA IPT III.

Ernesto M. Apodaca, petitioner vs. NLRC, JOSE M. MIRASOL and INTRANS PHILS., INC., respondents.

Facts:
Apocada was employed in Jose Mirasols corporation. On August 28, 1985, respondent Mirasol
persuaded petitioner to subscribe to 1, 500 shares of the respondents corporation at 100 pesos share
or total of 150, 000 pesos. He made an initial of 37, 500 pesos. On September 11, Apocada was
appointed President and General Manager, however resigned on January 2, 1986.On December 19,
1986, Apocada instituted with the NLRC a complaint for the payments of his unpaid wages, his cost of
living allowance, the balance of his gasoline and representation of expenses and his bonus. Private
respondents admitted that the amount of P17,060.07 is due to petitioner but this was applied to the
unpaid balance of his subscription in the amount of 95,439.93. Apocada questioned the set off but the
NLRC ruled in favor of Mirasol.

Issue:
Whether or not the respondent company is allowed to set-off or deduct the unpaid stock subscription
against money claims of the petitioner.
Ruling:
No. The unpaid subscription is not due and payable until a call is made by the corporation for payment.
Private respondents have not presented resolution of the board of directors of the corporation calling
for the payment of the unpaid subscription. No doubt that such set-off or deduction was without lawful
basis, if not premature. As there was no notice or call for payment of the unpaid subscriptions, the same
is not yet due and payable. Article 113 of the labor code allows deduction only:
1. In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer the amount paid by him as premium on the insurance;
2. For union dues, in cases where the right of the worker or his union check-off has been recognized by
the employer or authorized in writing by the individual worker concerned; and
3. In cases where the employer is authorized bylaw or regulations issued by the Secretary of Labor.


[G.R. No. 154973. June 21, 2005]
THE PRESIDENT OF PHILIPPINE DEPOSIT INSURANCE CORPORATION AS LIQUIDATOR OF PACIFIC
BANKING CORPORATION, petitioner, vs.HON. WILFREDO D. REYES, Pairing Judge, RTC
Manila, Branch 31; ANG ENG JOO; ANG KEONG LAN; and E.J. ANG INTERNATIONAL, LTD.,
represented by FORNIER & FORNIER LAW, respondents.

FACTS:
On 5 July 1985, pursuant to Resolution No. 699 of the Monetary Board of the Central Bank of the Philippines,
the PaBC was placed under receivership on the ground of insolvency. Subsequently, it was placed under
liquidation, and a liquidator was designated. The Central Bank of the Philippines, through the Office of the
Solicitor General, filed with the Regional Trial Court (RTC) of Manila, Branch 31, a petition for assistance in the
liquidation of PaBC. Vitaliano N. Naagas, President of the PDIC, was appointed by the Central Bank as
Liquidator.
On 26 June 1992, Ang Eng Joo, Ang Keong Lan, and E.J. Ang International Ltd. (hereafter Singaporeans),
then represented by their attorney-in-fact Gonzalo C. Sy, filed their claim before the liquidating court. Citing
Republic Act No. 5186, otherwise known as the Investment Incentives Act, they claimed to be preferred
creditors and prayed for the return of their equity investment in the amount of US$2,531,632.18 with interest
until the closure of the PaBC. After due hearing or on 11 September 1992, the liquidation court, through
Presiding Judge Regino Veridiano II, issued an order. The Liquidator of PaBC is ordered to pay claimants
through their Attorney-in-Fact Gonzalo C. Sy, their total investment of US$2,531,632.18 as preferred creditors.
Dividends and/or interest that accrued in favor of claimants is hereby deferred pending study by the Liquidator
who is hereby ordered to submit his report and recommendation within thirty (30) days from receipt of this
Order. The Liquidator thus filed a petition for certiorari before the Court of Appeals, which was, however,
dismissed on the ground that the notice of appeal was correctly dismissed by the liquidation court for having
been filed out of time. The Liquidator also filed an urgent motion to prohibit the Singaporeans from withdrawing
the money from their account with the LBP.

ISSUe:
May an investment in a corporation, whose existence has been terminated, be entitled to an interest in the
concept of actual and compensatory damages from the time such investment was made until the closure of the
corporation?

Ruling:
Yes. An "investment" is an expenditure to acquire property or other assets in order to produce revenue. It is the
placing of capital or laying out of money in a way intended to secure income or profit from its employment. "To
invest" is to purchase securities of a more or less permanent nature, or to place money or property in business
ventures or real estate, or otherwise lay it out, so that it may produce a revenue or income.
Thus, unlike a deposit of money or a loan that earns interest, the investment of the Singaporeans cannot be
assured of a dividend or an interest on the amount invested. For, interests or dividends are granted only after
profits or gains are generated. The amount of US$2,531,632.18 remitted by the Singaporeans to PaBC was not
a loan or forbearance of money in favor of PaBC. Thus, the award of 6% interest on the Singaporeans equity
investment as actual or compensatory damages from the date of its remittance until the closure of PaBC has
no leg to stand on and must, therefore, be deleted.
However, the grant of the said interest does not bar the Singaporeans from claiming liquidating dividends which
may have accrued from their equity investment after being determined by the Liquidator. In the liquidation of a
corporation, after the payment of all corporate debts and liabilities, the remaining assets, if any, must be
distributed to the stockholders in proportion to their interests in the corporation. The share of each stockholder
in the assets upon liquidation is what is known as liquidating dividend. Verily, the Singaporeans are entitled to
11% of the total liquidating dividend, this being in proportion to their 11% interest of the total subscribed capital
stock of PaBC.
G.R. No. 88404 October 18, 1990
PHILIPPINE LONG DISTANCE TELEPHONE CO. [PLDT], petitioner,
vs.
THE NATIONAL TELECOMMUNICATIONS COMMISSION AND CELLCOM, INC., (EXPRESS
TELECOMMUNICATIONS CO., INC. [ETCI]), respondents.

FACTS:
In 1958, Felix Alberto & Co., Inc (FACI) was granted by Congress a franchise to build radio stations (later
construed as to include telephony). FACI later changed its name to Express Telecommunications Co., Inc.
(ETCI). In 1987, ETCI was granted by the National Telecommunications Commission a provisional authority to
build a telephone system in some parts of Manila. Philippine Long Distance Telephone Co. (PLDT) opposed
the said grant as it avers, among others, that ETCI is not qualified because its franchise has already been
invalidated when it failed to exercise it within 10 years from 1958; that in 1987, the Albertos, owners of more
than 40% of ETCIs shares of stocks, transferred said stocks to the new stockholders (Cellcom, Inc.? not
specified in the case); that such transfer involving more than 40% shares of stocks amounted to a transfer of
franchise which is void because the authorization of Congress was not obtained. The NTC denied PLDT. PLDT
then filed a petition for certiorari and prohibition against the NTC.

ISSUE: Whether or not PLDTs petition should prosper.

HELD:
No. PLDT cannot attack ETCIs franchise in a petition for certiorari. It cannot be collaterally attacked. It should
be directly attacked through a petition for quo warranto which is the correct procedure. A franchise is a property
right and cannot be revoked or forfeited without due process of law. The determination of the right to the
exercise of a franchise, or whether the right to enjoy such privilege has been forfeited by non-user, is more
properly the subject of the prerogative writ of quo warranto. Further, for any violation of the franchise, it should
be the government who should be filing a quo warranto proceeding because it was the government who
granted it in the first place.

The transfer of more than 40% of the shares of stocks is not tantamount to a transfer of franchise. There is a
distinction here. There is no need to obtain authorization of Congress for the mere transfer of shares of stocks.
Shareholders can transfer their shares to anyone. The only limitation is that if the transfer involves more than
40% of the corporations stocks, it should be approved by the NTC. The transfer in this case was shown to
have been approved by the NTC. What requires authorization from Congress is the transfer of franchise; and
the person who shall obtain the authorization is the grantee (ETCI). A distinction should be made between
shares of stock, which are owned by stockholders, the sale of which requires only NTC approval, and the
franchise itself which is owned by the corporation as the grantee thereof, the sale or transfer of which requires
Congressional sanction. Since stockholders own the shares of stock, they may dispose of the same as they
see fit. They may not, however, transfer or assign the property of a corporation, like its franchise. In other
words, even if the original stockholders had transferred their shares to another group of shareholders, the
franchise granted to the corporation subsists as long as the corporation, as an entity, continues to exist. The
franchise is not thereby invalidated by the transfer of the shares. A corporation has a personality separate and
distinct from that of each stockholder. It has the right of continuity or perpetual succession.
G.R. No. 108576 January 20, 1999
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
THE COURT OF APPEALS, COURT OF TAX APPEALS and A. SORIANO CORP., respondents.


FACTS:
Don Andres Soriano (American), founder of A. Soriano Corp. (ASC) had a total shareholdings of 185,154
shares. Broken down, the shares comprise of 50,495 shares which were of original issue when the corporation
was founded and 134,659 shares as stock dividend declarations. So in 1964 when Soriano died, half of the
shares he held went to his wife as her conjugal share (wifes legitime) and the other half (92,577 shares,
which is further broken down to 25,247.5 original issue shares and 82,752.5 stock dividend shares) went to the
estate. For sometime after his death, his estate still continued to receive stock dividends from ASC until it grew
to at least 108,000 shares.

In 1968, ASC through its Board issued a resolution for the redemption of shares from Sorianos estate
purportedly for the planned Filipinization of ASC. Eventually, 108,000 shares were redeemed from the
Soriano Estate. In 1973, a tax audit was conducted. Eventually, the Commissioner of Internal Revenue (CIR)
issued an assessment against ASC for deficiency withholding tax-at-source. The CIR explained that when the
redemption was made, the estate profited (because ASC would have to pay the estate to redeem), and so ASC
would have withheld tax payments from the Soriano Estate yet it remitted no such withheld tax to the
government.

ASC averred that it is not duty bound to withhold tax from the estate because it redeemed the said shares for
purposes of Filipinization of ASC and also to reduce its remittance abroad.

ISSUE: Whether or not ASCs arguments are tenable.

HELD:
No. The reason behind the redemption is not material. The proceeds from a redemption is taxable and ASC is
duty bound to withhold the tax at source. The Soriano Estate definitely profited from the redemption and such
profit is taxable, and again, ASC had the duty to withhold the tax. There was a total of 108,000 shares
redeemed from the estate. 25,247.5 of that was original issue from the capital of ASC. The rest (82,752.5) of
the shares are deemed to have been from stock dividend shares. Sale of stock dividends is taxable. It is also to
be noted that in the absence of evidence to the contrary, the Tax Code presumes that every distribution of
corporate property, in whole or in part, is made out of corporate profits such as stock dividends.
It cannot be argued that all the 108,000 shares were distributed from the capital of ASC and that the latter is
merely redeeming them as such. The capital cannot be distributed in the form of redemption of stock dividends
without violating the trust fund doctrine wherein the capital stock, property and other assets of the
corporation are regarded as equity in trust for the payment of the corporate creditors. Once capital, it is always
capital. That doctrine was intended for the protection of corporate creditors.
G.R. No. 146667 January 23, 2007
JOHN F. McLEOD, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (First Division), FILIPINAS SYNTHETIC FIBER
CORPORATION (FILSYN), FAR EASTERN TEXTILE MILLS, INC., STA. ROSA TEXTILES, INC., (PEGGY
MILLS, INC.), PATRICIO L. LIM, and ERIC HU, Respondents.
FACTS:
Petitioner impleaded the chairman and president of the corporation in his claim for unpaid portion of salary and
retirement and other benefits against said corporation.

ISSUE: When can a corporate officer be personally liable for corporate liabilities?

HELD: Personal liability of corporate directors, trustees or officers attaches only when (1) they assent to a
patently unlawful act of the corporation, or when they are guilty of bad faith or gross negligence in directing its
affairs, or when there is a conflict of interest resulting in damages to the corporation, its stockholders or other
persons; (2) they consent to the issuance of watered down stocks or when, having knowledge of such
issuance, do not forthwith file with the corporate secretary their written objection; (3) they agree to hold
themselves personally and solidarily liable with the corporation; or (4) they are made by specific provision
of law personally answerable for their corporate action. Considering that petitioner failed to prove any of
the foregoing exceptions in the present case, he cannot hold the president solidarily liable with the corporation.
G.R. No. 150711 August 10, 2006
CALTEX (PHILIPPINES), INC., Petitioner,
vs.
PNOC SHIPPING AND TRANSPORT CORPORATION, Respondent.

FACTS:
PSTC and Luzon Stevedoring Corporation ("LUSTEVECO") entered into an Agreement of Assumption of
Obligations ("Agreement").

A mo n g t h e a c t i o n s e n u me r a t e d i n t h e A n n e x e s i s Cal t ex ( Phi l s. ) , I nc. v. Luzon St
evedor i ng Corporation whi ch at t hat t i me was pendi ng bef or e t he t hen I nt er medi at e
Appel l at e Cour t ( I AC) directing LUSTEVECO to pay Caltex. The Decision of the IAC became final and
executory. The Regi onal Tr i al Cour t of Mani l a, i ssued a wr i t of execut i on i n f avor of
Cal t ex. However , t he judgment was not satisfied because of the prior foreclosure of LUSTEVECOs
properties.
Cal t ex subsequent l y l ear ned of t heAgr eement bet ween PSTC and LUSTEVECO. Cal t ex

Sent successi ve demands to PSTC aski ng for the sati sfacti on of the j udgment rendered by the
CFI. PSTC informed Caltex that it was not a party to the prior case and thus, PSTC would not pay

LUSTEVECOs judgment debt. PSTC advised Caltex to demand satisfaction of the judgment directly fromLUST
EVECO.Caltex filed a complaint for sum of money against PSTC.

Issue: Whether PSTC is bound by the Agreement when it assumed all the obligations of LUSTEVECO

Ruling:
Cal tex may recover the j udgment debt from PSTC not because of a sti pul ati on i n Cal tex s favor
but because the Agreement provides that PSTC shall assume all the obligations of
LUSTEVECO.I n t hi s case, LUSTEVECO t r ansf er r ed, conveyed and assi gned t o PSTC al l
of LUSTEVECO s business, properties and assets pertaining to its tanker and bulk business "together with
all theobligations relating to the said business, properties and assets."
Wh e n PS T C a s s u me d a l l t h e p r o p e r t i e s , b u s i n e s s a n d a s s e t s o f L US T E VE CO
p e r t a i n i n g t o LUSTEVECO s tanker and bul k busi ness, PSTC al so assumed al l
of LUSTEVECO s obl i gati ons pertaining to such business.

The Agreement specifically mentions the case between LUSTEVECOand Caltex, docketed as AC-G.R.
CV No. 62613, then pending before the IAC . The
Agreement provides that PSTC may demand and receive any claim out of counter-suits
or counterclaims arisingfrom the actions enumerated in the Annexes.
[G.R. No. 112546. March 13, 1996]
NORTH DAVAO MINING CORPORATION and ASSET PRIVATIZATION TRUST, petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ANTONIO M. VILLANUEVA
and WILFREDO GUILLEMA, respondents.

FACTS:
North Davao Mining Corporation (North Davao) was incorporated in 1974 as a 100% privately-owned
company. Later, the Philippine National Bank (PNB) became part owner thereof as a result of a conversion
into equity of a portion of loans obtained by North Davao from said bank. Wilfredo Guillema is one among
several employees of North Davao who were separated by reason of the companys closure on May 31, 1992,
and who were the complainants in the cases before the respondent labor arbiter.
North Davao completely ceased operations due to serious business reverses. From 1988 until its closure
in 1992, North Davao suffered net losses averaging three billion pesos (P3,000,000,000.00) per year, for each
of the five years prior to its closure.
Subsequently, a complaint was filed with respondent Labor Arbiter by respondent Wilfredo Guillema and
271 other separated employees for: (1) additional separation pay of 17.5 day for every year of service; (2) back
wages equivalent to two days a month; (3) transportation allowance; (4) hazard pay; (5) housing allowance; (6)
food allowance; (7) post-employment medical clearance; and (8) future medical allowance all of which
amounted to P58,022, 878.31 as computed.

Issue:
Whether or not an employer whose business operations ceased due to serious business losses or financial
reverses is obliged to pay separation pay to its employees separated by reason of such closure.

Ruling:
Art. 283 governs the grant of separation benefits "in case of closures or cessation of operation" of business
establishments "NOT due to serious business losses or financial reverses . . .." Where, however, the closure
was due to business losses as in the instant case, in which the aggregate losses amounted to over P20
billion the Labor Code does not impose any obligation upon the employer to pay separation benefits, for
obvious reasons. There is no need to belabor this point. Even the public respondents, in their Comment 10 filed
by the Solicitor General, impliedly concede this point.
In the case of North Davao, it gave 30-days separation pay to its employees when it was still a going concern
even if it was already losing heavily. As a going concern, its cash flow could still have sustained the payment of
such separation benefits. But when a business enterprise completely ceases operations, i.e. upon its death as
a going business concern, its vital life blood its cashflow literally dries up. Therefore, the fact that less
separation benefits were granted when the company finally met its business death cannot be characterized as
discrimination. Such action was dictated not by a discriminatory management option but by its complete
inability to continue its business life due to accumulated losses. Indeed, one cannot squeeze blood out of a dry
stone. Nor water out of parched land.
At this juncture, we note that the Solicitor General in his Comment challenges the petitioners assertion that
North Davao, having closed down, no longer has the means to pay for the benefits. The obligation of North
Dabao cannot be considered the obligation of the national government, hence, whether the latter be solvent or
not is not material to the instant case. The respondents have not shown that this case constitutes one of the
instances where the corporate veil may be pierced. From another angle, the national government is not the
employer private respondent and his co-complainants, so there is no reason to expect any kind of bailout by
the national government under existing law and jurisprudence.

G.R. No. 171681 September 11, 2009
Abrera, et. al vs Barza

FACTS:
CAP was incorporated on February 14, 1980 for the purpose of engaging in the sale of pre-need educational
plans. Initially, it sold open-ended educational plans which guaranteed the payment of tuition and other
standard school fees to the planholder irrespective of the cost at the time of availment. Later, it engaged in the
sale of fixed value plans which guaranteed the payment of a predetermined amount to the planholder. In 1982,
CAP was among the countrys top 2000 corporations. It started sending its scholars to college in 1984 and saw
its first batch of graduates in 1988. However, it subsequently suffered financial difficulties. CAP filed a Petition
for Corporate Rehabilitation

Issue:
Whether or not respondent Judge committed grave abuse of discretion amounting to lack or excess of
jurisdiction in issuing the Order staying enforcement of all claims against CAP and the Order giving due course
to CAPs petition for rehabilitation.

Ruling:
Under Section 6, Rule 4 of the latter Interim Rules, respondent Judge has the authority to appoint a
rehabilitation receiver after finding the petition for rehabilitation to be sufficient in form and substance.
Absent any provision in the Interim Rules, as amended, or P.D. No. 902-A exempting claims arising from pre-
need contracts from a court order staying enforcement of all claims against the debtor/pre-need company, the
Court holds that respondent Judge did not commit grave abuse of discretion in enforcing the Stay Order
against petitioners.
In addition, respondent Judge did not gravely abuse its discretion in giving due course to the petition for
rehabilitation. In the Order dated December 16, 2005, the RTC considered the comments of the SEC and
CAPs creditors before resolving the petition. It explained its decision, thus: The Court has carefully evaluated
the Petition and the comments filed by the various parties relative thereto, and hereby resolves to give due
course to the petition. Even as the Court notes the substantial questions posed by the SEC and some creditors
on the solvency of the corporation, it finds the interests of the planholder/investing public as an overriding
consideration which cannot be summarily or injudiciously dismissed without a thorough evaluation by the
Rehabilitation Receiver of the corporations chances of being restored to a successful operation and solvency if
given the opportunity and considering particularly the adverse results to the planholders of a liquidation
scenario as against its proposed rehabilitation under which they may possibly recover 100% of their
contributions.

G.R. No. 183140 August 2, 2010
NORTH BULACAN CORPORATION, Petitioner,
vs.
PHILIPPINE BANK OF COMMUNICATIONS, Respondent.

Facts:
North Bulacan Corporation (NBC) is engaged in the business of developing low and medium-cost housing
projects. Its parent company, Centro Ville, Inc. (CVI), entered into a joint venture agreement (JVA) with First
Sarmiento Property Holdings, Inc. (FSPHI) to develop the latters 15.5-hectare property into low and medium-
cost housing projects. FSPHI will supply the land and CVI will develop it. The parties amended the JVA on April
26, 2001 to enable NBC to substitute for CVI.

At the onset, the Land Bank of the Philippines (Land Bank) offered P100 million to finance the construction of
the houses. Later, however, respondent Philippine Bank of Communications (PBCom) offered to finance the
whole project and immediately provide NBC a P100 million loan facility on the condition that the Pag-
IBIG/Home Development Mutual Fund (Pag-IBIG) directly paid PBCom for the houses upon completion of
construction, whether or not these had been sold. However, PBCom discontinued its financial support to NBC
reportedly because Bangko Sentral ng Pilipinas (BSP) had issued a cease-and-desist order against the bank.

NBC filed a petition for corporate rehabilitation with the Mandaluyong Regional Trial Court (RTC). the RTC,
presided over by the latter judge, issued an order giving due course to NBCs petition for rehabilitation. PBCom
filed a petition for certiorari before the Court of Appeals (CA) to challenge the RTC order. This prompted NBC
to take recourse to this Court.
Issue:
Whether or not the CA erred in dismissing NBCs action for corporate rehabilitation.

Ruling:
The Court enacted the Interim Rules of Procedure on Corporate Rehabilitation to provide a remedy for
summary and non-adversarial rehabilitation proceedings of distressed but viable corporations. The intent is
consistent with the commercial nature of rehabilitation, which seeks to expedite its resolution for the benefit, not
only of the petitioner-corporation, but of all the parties involved and the economy in general. These rules are to
be construed liberally to obtain for the parties a just, expeditious, and inexpensive disposition of the case.

The
parties may not, however, invoke such liberality if it will result in the utter disregard of the rules or cause
needless delay in the administration of justice.

NBC violated several rules on corporate rehabilitation. The Schedule of Debts and Liabilities

did not show the
creditors addresses and, although it reflected the principal amount of each debt, nowhere did it state the
amount of accrued interests, the penalties, the nature of the obligation, and any pledge, lien, mortgage
judgment, or other security given for the debt. Additionally, the NBCs Inventory of Assets

failed to state the
nature of its assets, their location and condition. NBC did not likewise disclose the encumbrances, liens, or
claims on its properties and the identities as well as the addresses of the lien holders or claimants. Claims were
taken into consideration, it would readily be apparent that NBC's liabilities were far greater than its claimed
properties. Obviously, its continued operation would no longer be viable. There would be no need to go that far
when the petitioning corporation declined to comply with the simple rules of rehabilitation, when the
documentation of its assets were inadequate, and when the creditors opposition offered insurmountable basis
for shelving the entire effort.


G.R. No. 84606 June 28, 1989
SPOUSES RAMON A. GONZALES and LILIA Y. GONZALES, petitioners,
vs.
SUGAR REGULATORY ADMINISTRATION, respondent.
Facts:
Ramon A. Gonzales and Lilia Y. Gonzales, filed a complaint seeking cancellation of a mortgage and recovery
of a sum of money against the Republic Planters Bank ("RPBank"), Philippine Sugar Commission
("Philsucom") and the SRA. The RPBank, Philsucom and herein respondent SRA moved to dismiss the
complaint upon the ground of lack of cause of action. Philsucom and respondent SRA through the Solicitor
General, denied any obligation on the part of the Philsucom to return any amount to petitioners on account of
allegedly unauthorized deductions from the proceeds of petitioners' sugar sold by the Philsucom. For its part,
the SRA also noted that while the deductions complained of were made by the Philsucom during the period
from 1980 to 1984, the SRA itself had been created by Executive Order No. 18 only on 18 May 1986 and that it
was not a party to the real estate mortgage between petitioners and the RPBank. Petitioners urged that the
abolition of the Philsucom by Executive Order No. 18 in effect destroyed the petitioners' right to recover from
Philsucom what petitioners claim in their complaint is due to them. Petitioners hence assert that they had been
deprived of property without due process of law and that the abolition of Philsucom and the transfer of assets
from Philsucom to respondent SRA are unconstitutional and ineffective.

Issue:
Whether or not a a corporation loses its juridical personality after termination of corporate life.

Ruling:
Petitioners' argument on unconstitutionality is too impressionistic and needs to be more sharply focused. One
who asserts a claim against a juridical entity has no constitutional right to the perpetual existence of such entity.
Juridical persons, whether incorporated or not, whether owned by the government or the private sector, may
come to an end at one time or another for a variety of reasons, e.g., the fulfillment or the abandonment of the
business purposes for which a corporation was set up. Thus, the Corporation Code provides for termination of
corporate life, the dissolution of the corporation, the winding up of its operations, the liquidation of its assets,
the payment of its obligations and distribution of any residual assets to its stockholders. The termination of the
life of a juridical entity does not by itself imply the diminution or extinction of rights demandable against such
juridical entity.
Executive Order No. 18, promulgated on 28 May 1986, abolished the Philsucom, created the SRA and
authorized the transfer of assets from Philsucom to SRA. We note that Executive Order No. 18 did not provide
for universal succession, as it were, of SRA to Philsucom, or more specifically to the assets and liabilities of
Philsucom. Under the second paragraph of Section 13 quoted above, the SRA has been authorized to
determine which of the assets and records of Philsucom are required for the carrying out of the activities which
the SRA is to carry on or undertake. The succession of the SRA to the assets and records of the Philsucom is
thus limited in nature; the extent of such succession is left to the discretionary determination of the SRA itself.
More importantly, Executive Order No. 18 is silent as to the liabilities of Philsucom; it does not speak of
assumption of such liabilities by the SRA.
G.R. No. 139256 December 27, 2002
REPUBLIC OF THE PHILIPPINES, represented by Sugar Regulatory Administration, petitioner,
vs.
SULPICIO TANCINCO, respondent
Facts:
The National Sugar Trading Corporation (NASUTRA), a domestic corporation created for the purpose of
engaging in the trading of sugar, and a subsidiary of the Philippine Sugar Commission (Philsucom), an entity
owned and controlled by the Philippine government, leased the warehouse of Sulpicio Tancinco in Cagayan de
Oro City. The contract was for a period of 3 months starting November 23, 1984 renewable for another 3 years.

On December 29, 1984, the eastern wall of the warehouse collapsed causing death and injuries to several
persons and damage to houses within the area. Tancinco was constrained to incur expenses for the repair and
restoration of the warehouse and indemnity for the victims. Due to NASUTRAs refusal to reimburse Tancinco,
the latter filed on March 28, 1985 a complaint for Damages with the Regional Trial Court of Cagayan de Oro
City (Branch 23). NASUTRA filed its Answer disclaiming any liability.
In the meantime, NASUTRA was converted into a private corporation called the Philippine Sugar Marketing
Corporation (Philsuma), the sole marketing agency for the sugar industry to be owned completely by sugar
producers. Thereafter, Philsucom was phased out by Executive Order No. 18 in 1986, at same time creating
petitioner SRA.

NASUTRA substituted petitioner SRA and filed on February 8, 1988, an Answer putting up the
defenses that it cannot be liable for NASUTRAs obligation as it was created after the incident took place and
that it is a separate and distinct entity from the former. On May 17, 1990, Tancinco died and he was substituted
by his heirs. On January 10, 1991, the trial court received Tancincos evidence ex parte as SRA was declared
in default.
SRA insists that the ruling in the Gonzales case sets a condition upon which it may assume liability, i.e.., that
respondent must show that SRA is holding Philsucoms assets which could answer for NASUTRAs
liability.Moreover, SRA also maintains that E.O. No. 18 did not make it the liquidator of Philsucom nor jointly
and solidarily liable with NASUTRA.
Issue:
Whether Tancinco or his heirs may recover NASUTRAs adjudged liability from SRA.

Ruling:
There is no question that Executive Order No. 18 abolished the Philippine Sugar Commission (Philsucom) and
created the Sugar Regulatory Administration (SRA). However, the abolition of NASUTRA and eventually
Philsucom did not abate the pendency of the suits filed against them. The termination of the life of a juridical
entity does not by itself cause the extinction or diminution of the rights and liabilities of such entity; specially in
this case where, pursuant to the transitory provision of E.O. No. 18, Philsucom, under the supervision of SRA,
was allowed to continue as a juridical entity for 3 years for the purpose of prosecuting and defending suits by or
against it and enabling it to settle and close its affairs, to dispose of and convey its property; and to distribute its
assets.

It being the trustee, SRA must therefore continue the legal personality of the defunct NASUTRA and Philsucom
until final judgment and execution stage of the case. SRA cannot be made jointly and severally liable for
NASUTRAs obligation. It is merely a trustee of NASUTRA/Philsucoms assets, and as such, its liability under
the arrangement should merely be co-extensive with the amount of assets it took over from
NASUTRA/Philsucom. As stated in the Gonzales case, SRA must be held liable for such claims against
Philsucom "to the extent of the fair value of assets actually taken over by the SRA from Philsucom, if any".