CASES SEPT 10, 2011

SPECIAL CORPORATION
ROMAN CATHOLIC APOSTOLIC ADM OF DAVAO INC VS LAND REG COMM ET
AL
Facts: 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 in favor of the Roman Catholic
Apostolic Administrator of Davao nc.(Roman), a corporation sole organized and
existing in accordance with Philippine Laws, with Msgr. Clovis Thibault, a Canadian
citizen, as actual incumbent.
O The Register of Deeds of Davao for registration, having in mind a previous
resolution of the CF in Carmelite Nuns of Davao were made to prepare an
affidavit to the effect that 60% of the members of their corp. were Filipino citizens
when they sought to register in favor of their congregation of deed of donation of
a parcel of land, required it to submit a similar affidavit declaring the same.
O :3e 28, 1954: Roman in the letter expressed willingness to submit an affidavit but
not in the same tenor as the Carmelite Nuns because it had five incorporators
while as a corporation sole it has only one and it was ownership through donation
and this was purchased
O 8 the Regi8ter oI the La3/ Regi8tratio3 Commi88io3er (LRC) : Dee/8 ha8 8ome /o:bt8
a8 to the regi8terability, the matter wa8 reIerre/ to the La3/ Regi8tratio3
Commi88io3er e3 co38:lta Ior re8ol:tio3 (8ectio3 4 oI Rep:blic ct No. 1151)
O LRC:
4 3 view oI the provi8io38 oI Sectio3 1 a3/ 5 oI rticle X oI the Philippi3e
Co38tit:tio3, the ve3/ee wa8 3ot q:aliIie/ to acq:ire private la3/8 i3 the
Philippi3e8 i3 the ab8e3ce oI prooI that at lea8t 60 per ce3t:m oI the capital,
property, or a88et8 oI the Roma3 Catholic po8tolic /mi3i8trator oI Davao, 3c.,
wa8 act:ally ow3e/ or co3trolle/ by Filipi3o citize38, there bei3g 3o q:e8tio3 that
the pre8e3t i3c:mbe3t oI the corporatio3 8ole wa8 a Ca3a/ia3 citize3
4 or/ere/ the Regi8tere/ Dee/8 oI Davao to /e3y regi8tratio3 oI the /ee/ oI 8ale i3
the ab8e3ce oI prooI oI complia3ce with 8:ch co3/itio3
O actio3 Ior ma3/am:8 wa8 i38tit:te/ by Roma3 allegi3g the la3/ i8 hel/ i3 tr:e Ior the
be3eIit oI the Catholic pop:latio3 oI a place
$$& W/N Roma3 i8 q:aliIie/ to acq:ire private agric:lt:ral la3/8 i3 the Philippi3e8 p:r8:a3t
to the provi8io38 oI rticle X oI the Co38tit:tio3

: YES. Regi8ter oI Dee/8 oI the City oI Davao i8 or/ere/ to regi8ter the /ee/ oI 8ale
O corporatio3 8ole co38i8t8 oI o3e per8o3 o3ly, a3/ hi8 8:cce88or8 (who will alway8 be
o3e at a time), i3 8ome partic:lar 8tatio3, who are i3corporate/ by law i3 or/er to give
them 8ome legal capacitie8 a3/ a/va3tage8, partic:larly that oI perpet:ity, which i3 their
3at:ral per8o38 they co:l/ 3ot have ha/.
4 3 thi8 8e38e, the ki3g i8 a 8ole corporatio3 8o i8 a bi8hop, or /e38, /i8ti3ct Irom
their 8everal chapter8
O corporatio3 8ole
1. compo8e/ oI o3ly o3e per8o38, :8:ally the hea/ or bi8hop oI the /ioce8e, a :3it which i8
3ot 8:bject to expa38io3 Ior the p:rpo8e oI /etermi3i3g a3y perce3tage what8oever
2. o3ly the a/mi3i8trator a3/ 3ot the ow3er oI the temporalitie8 locate/ i3 the territory
compri8e/ by 8ai/ corporatio3 8ole a3/ 8:ch temporalitie8 are a/mi3i8tere/ Ior a3/ o3
behalI oI the IaithI:l re8i/i3g i3 the /ioce8e or territory oI the corporatio3 8ole
3. ha8 3o 3atio3ality a3/ the citize38hip oI the i3c:mbe3t a3/ or/i3ary ha8 3othi3g to /o
with the operatio3, ma3ageme3t or a/mi3i8tratio3 oI the corporatio3 8ole, 3or eIIect8 the
citize38hip oI the IaithI:l co33ecte/ with their re8pective /ioce8e8 or corporatio3 8ole.
O Co38tit:tio3 /ema3/8 that i3 the ab8e3ce oI capital 8tock, the co3trolli3g member8hip
8ho:l/ be compo8e/ oI Filipi3o citize38. (Regi8ter oI Dee/8 oI Rizal v8. U3g S:i Si
Temple)
O :3/e3iable prooI that the member8 oI the Roma3 Catholic po8tolic Iaith withi3 the
territory oI Davao are pre/omi3a3tly Filipi3o citize38
4 pre8e3te/ evi/e3ce to e8tabli8h that the clergy a3/ lay member8 oI thi8 religio3
I:lly cover8 the perce3tage oI Filipi3o citize38 req:ire/ by the Co38tit:tio3
O Iact that the law th:8 expre88ly a:thorize8 the corporatio38 8ole to receive beq:e8t8 or
giIt8 oI real propertie8 (which were the mai3 8o:rce that the Iriar8 ha/ to acq:ire their big
hacie3/a8 /:ri3g the Spa3i8h regime), i8 a clear i3/icatio3 that the req:i8ite that beq:e8t8
or giIt8 oI real e8tate be Ior charitable, be3evole3t, or e/:catio3al p:rpo8e8, wa8, i3 the
opi3io3 oI the legi8lator8, co38i/ere/ 8:IIicie3t a3/ a/eq:ate protectio3 agai38t the
revitalizatio3 oI religio:8 la3/hol/i3g8.
O a8 i3 re8pect to the property which they hol/ Ior the corporatio3, they 8ta3/ i3 po8itio3 oI
TRUSTEES a3/ the co:rt8 may exerci8e the 8ame 8:pervi8io3 a8 i3 other ca8e8 oI tr:8t
DIRECTOR OF LANDS VS CA
Facts:
O Land situated in Obando, Bulacan
O May 10, 1976: The Valerianos claimed that they are the co-owners in fee simple
of the land applied for partly through:
4 inheritance - 1918; and
4 purchase - May 2, 1958
O Republic of the Philippines, represented by the Director of the Bureau of Forest
Development opposed the application on the principal ground that the land
applied for is within the unclassified region of Obando, Bulacan, per BF Map LC
No. 637 dated March 1, 1927; and that areas within the unclassified region are
denominated as forest lands and do not form part of the disposable and alienable
portion of the public domain
O Land was found to be an Unclassified Region of Obando, Bulacan per BF LC
Map No. 637, certified March 1, 1927. However, on-the-spot inspection
conducted by a representative of this Office, disclosed that the same was devoid
of any forest growth and forms part of a well-developed and 100 percent
producing fishponds. 2 houses of light materials were erected within the area for
the caretakers temporary dwelling.
O CA Affirmed RTC: in favor of the Valerianos
ISSUES:
1. W/N the Courts can reclassify public land - NO
2. W/N the Valerianos are entitled to judicial confirmation of title - NO
HELD: CA reverse

1. NO
O n effect, what the Courts a quo have done is to release the subject property from
the unclassified category, which is beyond their competence and jurisdiction
4 The classification of public lands is an exclusive prerogative of the
Executive Department of the Government and not of the Courts.
4 n the absence of such classification, the land remains as unclassified land
until it is released therefrom and rendered open to disposition.
2. NO
O Regalian doctrine: all lands of the public domain belong to the State, and that the
State is the source of any asserted right to ownership in land and charged with
the conservation of such patrimony.
O if land is w/in the jurisdiction of the Bureau of Forest Development, it would be
beyond the jurisdiction of the Cadastral Court to register it under the Torrens
System
O Since the subject property is still unclassified, whatever possession Applicants
may have had, and, however long, cannot ripen into private ownership
4 The conversion of subject property into a fishpond by Applicants, or the
alleged titling of properties around it, does not automatically render the
property as alienable and disposable.
O Applicants' remedy lies in the release of the property from its present
classification
4 . n fairness to Applicants, and it appearing that there are titled lands
around the subject property, petitioners-officials should give serious
consideration to the matter of classification of the land in question.
O In Director of Lands v. IAC, the Court allowed the land registration proceeding
filed by Acme Plywood Veneer Co., nc. (Acme) for five parcels of land with an
area of 481,390 square meters, or 48.139 hectares, which Acme acquired from
members of the Dumagat tribe.
O
O The issue in that case was whether the title could be confirmed in favor of Acme
when the proceeding was instituted after the effectivity of the 1973 Constitution
which prohibited private corporations or associations from holding alienable lands
of the public domain except by lease not to exceed 1,000 hectares. The Court
ruled that the Iand was aIready private Iand when Acme acquired it from its
owners in 1962, and thus Acme acquired a registrable title. Under the 1935
Constitution, private corporations could acquire public agricultural lands not
exceeding 1,024 hectares while individuals could acquire not more than 144
hectares.

n Director of Lands, the Court further ruled that open, exclusive, and undisputed
possession of alienable land for the period prescribed by law created the legal
fiction whereby the land, upon completion of the requisite period, ipso jure and
without the need of judicial or other sanction ceases to be public land and
becomes private property. The Court ruled:
O
O Nothing can more clearly demonstrate the logical inevitability of considering
possession of public land which is of the character and duration prescribed by
statute as the equivalent of an express grant from the State than the dictum of
the statute itself that the possessor(s) "x x x shall be conclusively presumed to
have performed all the conditions essential to a Government grant and shall be
entitled to a certificate of title x x x." No proof being admissible to overcome a
conclusive presumption, confirmation proceedings would, in truth be little more
than a formality, at the most limited to ascertaining whether the possession
claimed is of the required character and length of time; and registration
thereunder would not confer title, but simply recognize a title already vested. The
proceedings would not originally convert the land from public to private land, but
only confirm such a conversion already effected by operation of law from the
moment the required period of possession became complete.

x x x [A]lienable public land held by a possessor, personally or through his
predecessors-in-interest, openly, continuously and exclusively for the prescribed
statutory period of (30 years under The Public Land Act, as amended) is
converted to private property by the mere lapse or completion of said period, ipso
jure. Following that rule and on the basis of the undisputed facts, the Iand
subject of this appeaI was aIready private property at the time it was
acquired from the InfieIs by Acme. Acme thereby acquired a registrabIe
titIe, there being at the time no prohibition against said corporation's holding or
owning private land. x x x.
O Director of Lands is not applicable to the present case. n Director of Lands, the
"Iand x x x was aIready private property at the time it was acquired x x x by
Acme." n this case, respondent acquired the land on 8 August 1997 from
Porting, who, along with his predecessors-in-interest, has not shown to have
been, as of that date, in open, continuous, and adverse possession of the land
for 30 years since 12 June 1945. n short, when respondent acquired the land
from Porting, the land was not yet private property.

For Director of Lands to apply and enable a corporation to file for registration of
alienable and disposable land, the corporation must have acquired the land when
its transferor had already a vested right to a judicial confirmation of title to the
land by virtue of his open, continuous and adverse possession of the land in the
concept of an owner for at least 30 years since 12 June 1945.
REPUBLIC OF THE PHILIPPINES VS IAC
Facts: On February 2, 1979, the Roman Catholic Bishop of Lucena, represented by
Msgr. Jose T. Sanchez, filed an application for confirmation of title to 4 parcels of land.
As basis for the application, the applicant claimed title to the various properties through
either purchase or donation. Other requirements such as publication, postings, and
service of copies of notice of hearing were complied with.
On April 20, 1979, the Solicitor General opposed and alleged among others that
the applicant did not have an imperfect title or title in fee simple to the parcel of land
being applied for.
After evaluating the applicant's proof's, the court a quo concluded that the
corporation sole had adequately shown title to the parcels of land being claimed.
Contesting the decision, the SG argued that as a private corporation it is
disqualified from acquiring alienable lands for the public domain and that the application
was filed after the effectivity of the new constitution on January 17, 1973.
On February 2, 1979, the Roman Catholic Bishop of Lucena, represented by Msgr. Jose
T. Sanchez, filed an application for confirmation of title to 4 parcels of land. As basis for
the application, the applicant claimed title to the various properties through either
purchase or donation. Other requirements such as publication, postings, and service of
copies of notice of hearing were complied with.
On April 20, 1979, the Solicitor General opposed and alleged among others that
the applicant did not have an imperfect title or title in fee simple to the parcel of land
being applied for.
After evaluating the applicant's proof's, the court a quo concluded that the
corporation sole had adequately shown title to the parcels of land being claimed.
Contesting the decision, the SG argued that as a private corporation it is
disqualified from acquiring alienable lands for the public domain and that the application
was filed after the effectivity of the new constitution on January 17, 1973.

DISSOLUTION
PHILIPPINE NATIONAL BANK VS CFI
Facts: Private respondents are the registered owners of three parcels of land in Pasig.
On March 1, 1954, private respondents entered into a contract of lease with Philippine
Blooming Mills Co., nc whereby the letter shall lease parcels of land as factory site.
PBM was duly organized and incorporated on January 19, 1952 with a corporate term of
25 years. This leasehold right of PBM covering the parcels of land was duly annotated
at the back of the certificates of title.
The contract of lease provides that the term of the lease is for 20 years beginning from
the date of the contract and is extendable for another term of 20 years at the option of
the lessee should its term of existence be extended in accordance with law. The
contract also states that the lessee agrees to use the property as factory site and for
that purpose to construct whatever buildings or improvements may be necessary or
convenient and/or for any purpose it may deem fit, and before the termination of the
lease to remove all such buildings and improvements.
n accordance with the contract, PBM introduced on the land, buildings, machineries
and other useful improvements. These constructions and improvements were
registered with the RD of Rizal and annotated at the back of the respondents'
certificates of title.
On October 11, 1963, PBM executed in favor of PNB a deed of assignment, conveying
and transferring all its rights and interests under the contract of lease which it executed
with private respondents. The assignment was for and in consideration of the loans
granted by PNB to PBM. The deed of assignment was registered and annotated at the
back of the private respondents' certificates of title.
On November 6, 1963 and December 23, 1963, PBM executed in favor of PNB a real
estate mortgage for a loan of P100,000 and an addendum to real estate mortgage for
another loan of P1,590,000 covering all the improvements constructed by PBM on the
leased premises. These mortgages were registered and annotated at the back of
respondents' certificates.
PBM filed a petition for registration of improvements in the titles of real property owned
by private respondents. On October 7, 1981, private respondents filed a motion on the
same proceedings. The motion sought to cancel the annotations on respondents'
certificates of title pertaining to the assignment by PBM to PNB of the former's
leasehold rights, inclusion of improvements and the real estate mortgages made by
PBM in favor of PNB on the ground that the contract of lease entered into between PBM
and respondents-movants had already expired by the failure of PBM and/or its assignee
to exercise the option to renew the second 20-year lease commencing on March 1,
1974 and also by the failure of PBM to extend its corporate existence in accordance
with law. The motion also states that since PBM failed to remove its improvements on
the leased premises before the expiration of the contract of lease, such improvements
shall accrue to respondents as owners of the land.
Respondent court issued an order directing the cancellation of the inscriptions on
respondents' certificates of title. PNB filed a motion for reconsideration but was denied.
On August 25, 1982, private respondents filed a motion for entry of final judgment and
issuance of a writ of execution of the order. On September 14, 1982, respondent court
granted the motion for entry of final judgment and ordered the RD of Pasig, Rizal to
cancel the entries on respondents' certificates of title stated in the order.
Petitioner filed an omnibus to set aside the entry of judgment on the ground that it has
no prior notice or knowledge of the order of respondent court which denied its motion for
reconsideration and that while there was a certification from the Bureau of Posts that
three registry were sent to petitioner's counsel, there was no allegation or certification
whatsoever that said notices were actually received by the addressee.
The respondent court denied the omnibus motion. Hence, this petition
Issue: Whether or not the court acted capriciously and arbitrarily in issuing the orders
of Sept 14, 1982 and January 12, 1983 which considered its previous order of April 22,
1982 as having become final on the ground that it had no notice or knowledge that the
order of June 28, 1982 denying its motion for reconsideration was issued
HeId: The petition is dismissed and the assailed orders of respondent court dated April
22, 1982, Sept 14, 1982 and January 12, 1983 are affirmed.
The Court finds that respondent court did not act with grave abuse of discretion in
directing the cancellation of entries on private respondents' certificates of title as set
forth in the questioned order.
The contract of lease expressly provides that the term of the lease shall be 20 years
from the execution of the contract but can be extended for another period of 20 years at
the option of the lessee should the corporate term be extended in accordance with law.
Clearly, the option of the lessee to extend the lease for another period of 20 years can
be exercised only if the lessee as corporation renew or extends its corporate term of
existence in accordance with the Corporation Code which is the applicable law.
Contracts are to be interpreted according to their literal meaning and should not be
interpreted beyond their obvious intendment. Thus, in the instant case, the initial term
of the contract of lease which commenced on March 1, 1954 ended on March 1, 1974.
PBM as lessee continued to occupy the leased premises beyond the date with the
acquiescence and consent of the respondents as lessor. Records show however, that
PBM as a corporation had a corporate life of only 25 years which ended on January 19,
1977. t should be noted however that PBM allowed its corporate term to expire without
complying with the requirements provided by law for the extension of its corporate term
of existence.
Section 11 of Corporation Code provides that a corporation shall exist for a period not
exceeding fifty (50) years from the date of incorporation unless sooner dissolved or
unless said period is extended. Upon the expiration of the period fixed in the articles of
incorporation in the absence of compliance with the legal requisites for the extension of
the period, the corporation ceases to exist and is dissolved ipso facto (16 Fletcher 671
cited by Aguedo F. Agbayani, Commercial Laws of the Philippines, Vol. 3, 1988 Edition
p. 617). When the period of corporate life expires, the corporation ceases to be a body
corporate for the purpose of continuing the business for which it was organized. But it
shall nevertheless be continued as a body corporate for three years after the time when
it would have been so dissolved, for the purpose of prosecuting and defending suits by
or against it and enabling it gradually to settle and close its affairs, to dispose of and
convey its property and to divide its assets (Sec. 122, Corporation Code). There is no
need for the institution of a proceeding for quo warranto to determine the time or date of
the dissolution of a corporation because the period of corporate existence is provided in
the articles of incorporation. When such period expires and without any extension
having been made pursuant to law, the corporation is dissolved automatically insofar as
the continuation of its business is concerned. The quo warranto proceeding under Rule
66 of the Rules of Court, as amended, may be instituted by the Solicitor General only for
the involuntary dissolution of a corporation on the following grounds: a) when the
corporation has offended against a provision of an Act for its creation or renewal; b)
when it has forfeited its privileges and franchises by non-user; c) when it has committed
or omitted an act which amounts to a surrender of its corporate rights, privileges or
franchises; d) when it has mis-used a right, privilege or franchise conferred upon it by
law, or when it has exercised a right, privilege or franchise in contravention of law.
Hence, there is no need for the SEC to make an involuntary dissolution of a corporation
whose corporate term had ended because its articles of incorporation had in effect
expired by its own limitation.
Considering the foregoing in relation to the contract of lease between the parties herein,
when PBM's corporate life ended on January 19, 1977 and its 3-year period for winding
up and liquidation expired on January 19, 1980, the option of extending the lease was
likewise terminated on January 19, 1977 because PBM failed to renew or extend its
corporate life in accordance with law. From then on, the respondents can exercise their
right to terminate the lease pursuant to the stipulations in the contract.
The rights of the lessor and the lessee over the improvements which the latter
constructed on the leased premises are governed by Article 1678 of the Civil Code. The
provision gives the lessee the right to remove the improvements if the lessor chooses
not to pay one half of the value thereof. However, in the case at bar the law will not
apply because the parties herein have stipulated in the contract their own terms and
conditions concerning the improvements before the termination of the lease. Petitioner
PNB as assignee of PBM succeeded to the obligation of the latter under the contract of
lease. t could not possess rights more than what PBM had as lessee under the
contract. Hence, petitioner was duly bound to remove the improvements before the
expiration of the period of lease. ts failure to do so when the lease was terminated was
tantamount to a waiver of its rights and interest over the improvements on the leased
premise.
GOVERNMENT VS PHILIPPINE SUGAR ESTATE
Facts: The complaint alleged that the defendant was a corporation duly organized
under the laws of the Philippine slands, that for a period of 18 months previous to the
filing of the complaint, it had continuously offended against the laws of the Philippine
slands and had misused its corporate authority, franchise, and privileges and had
assumed privileges and franchises not granted; that it had engaged in the business of
buying and selling real estate; that on May 31, 1913, it entered into a contract with the
Tayabas Land Company for the purpose of engaging in the business of purchasing
lands along the right of way of the Manila Railroad Company through the province of
Tayabas with a view to reselling the same to the Manila Railroad Company at a profit.
A copy of the contract was made part of the complaint. The plaintiff alleged, that by the
acts and omissions of the defendant, it had forfeited its corporate rights, privileges,
powers and franchise and prayed that the court render judgment depriving it of all
corporate rights, privileges and franchise, dissolving it as a corporation.
The arguments of the appellant are the following:
1. Defendant corp by its charter was authorized to buy shares and to engage in any
mercantile or industrial enterprise; and with no other restrictions than those provided
by law, place funds of the corporation in hypothecary or pignorative loans, in public
securities of the United States in stocks or shares issued by firms, corp or
companies that are legally organized and operated and in rural and urban property
2. The powers are necessarily limited by sec 75 of the act of congress
Issue: Whether or not the lower court erred in not declaring that the defendant has
forfeited its charter
HeId: it is hereby ordered and decreed that the franchise granted to the defendant by
which it was permitted to exist and do business as a corporation be withdrawn and
annulled and that it be disallowed to do and to continue doing business in the Philippine
slands unless it shall be within a period of 6 months after final decision, liquidate,
dissolve and separate absolutely in every respect and in all of its relations complained
of in the petition.
When in any such action, it is found and adjudged that a corporation has by any act
done or omitted, surrendered, or forfeited its corporate rights, privileges and franchise,
or has not used the same during the term of 5 years, judgment shall be entered that it
be ousted and excluded and that it be dissolved. But when it is found and adjudged that
a corporation has offended in any matter or manner which does not by law work as a
surrender or forfeiture, or has manner which does not by law work as a surrender or
forfeiture or has misused a franchise or exercised a power not conferred by law, but not
of such a character as to work a surrender or forfeiture of its franchise, judgment shall
be rendered that it be ousted from the continuance of such offense or the exercise of
such power.
The scope of the remedy furnished is to forfeit the franchise of a corporation for mis-
user or non-user. The mis-user must be such as to work or threaten a substantial injury
to the public or such as to amount to a violation of the fundamental conditions of the
contract by which the franchise were granted and thus defeat the purpose of the grant,
then the power of the courts should be exercise for the protection of the people.
Every additional dollar of increase in the price of the land purchased by the railroad
company added that much to the cost of construction and thereby increased the burden
imposed upon the people. The very and sole purpose of the intervention of the
defendant in the additional taxation of the defendant in the additional taxation. The
purpose of intervention of the defendant in the transactions in question, was to enrich
itself at the expense of the taxpayers of the Phil slands. The conduct of the defendant
in the premise merits the severest condemnation of the law.
GOVERNMENT OF THE PHIL ISLANDS VS EL HOGAR FILIPINO
Facts: n this case, the complaint enumerates 17 distinct causes of action, to all of
which the defendant has answered upon the merits, first admitting the averments of the
1
st
paragraph in the statement of the first cause of action, wherein it is alleged that the
defendant was organized in the year 1911 as a building and loan association under the
laws of the Philippine slands, and that, since its organization, the corporation has been
doing business in the Philippine slands, with its principal office in the City of Manila.
The first cause of action is based upon the alleged illegal holding by the respondent of
the title to real property for a period in excess of five years after the property had been
bought in by the respondent at one of its own foreclosure sales. The relevant provision
of law on the matter is found in sec 75 of Act of Congress of July 1, 1902. n both of
these provisions it is in substance declared that while corporations may loan funds upon
real estate securities and purchase real estate when necessary for the collection of
loans, they shall dispose of real estate so obtained within 5 years after receiving the
title.
Issue: Whether or not
HeId: Upon consideration of facts, the strict letter of the law was violated by the
respondent, but it is equally obvious that its conduct has not been characterized by
obduracy or pertinacity in contempt of the law. t has been held that a purchaser of land
registered under the Torrens system cannot acquire the status of an innocent purchaser
for value unless his vendor is able to place in his hands an owner's duplicate showing
the title of such land to be in the vendor. El Hogar Filipino was not really in a position to
pass an indefeasible title to any purchaser. A fair interpretation of these provisions
would seem to indicate that the date of the receiving of the title in this case was the
date, when the respondent received the owner's certificate or May 7, 1921, for it was
only after that date the respondent had an unequivocal and unquestionable power to
pass a complete title. The failure of the respondent to receive the certificate sooner was
not due in any wise to its fault, but to unexplained delay on the part of the register of
deeds. For this delay the respondent cannot be held accountable.
Corporation has not been shown to have offended against the law in a manner that
should entail a forfeiture of its charter.
When it is found and adjudged that a corporation has offended in any matter or manner
which does not by law work as a surrender or forfeiture, or has mis-used a franchise or
exercised a power not conferred by law, but not of such a character as to work a
surrender or forfeiture of its franchise, judgment shall be rendered that it be ousted from
the continuance of such offense or the exercise of such power.
Respondent appear to have rid itself of the San Clemente property many months prior
to the institution of this action. t is evident from this that the dissolution of the
respondent would not be an appropriate remedy in this case.
Under the third cause of action, it has reference to the administration and management
of properties belonging to delinquent shareholders of the association.
El Hogar has undertaken the management of some parcels of improved real estate
situated in Manila not under mortgage to it, but owned by shareholders. El Hogar
receives compensation in the form of commissions upon the gross receipts from such
properties. The administration of property, it is more benefitting to the business of a real
estate agent or trust company than to the business of a building and loan association.
HeId: Corporations possess only such express powers as are actually conferred and
such implied powers as are reasonably necessary to the exercise of the express
powers. t has been clearly extended itself beyond the legitimate range of its powers. t
does not result that the dissolution of the corporation is in order and it will merely be
enjoined from further activities of this sort.
n 4
th
COA, it is empowered to cancel shares and to return to the owner the balance
resulting from the liquidation whenever, by reason of their conduct or for any other
motive, the continuation as members of the owners of such shares is not desirable.
HeId: the by-laws is of course a patent nullity, since it is in direct conflict with the latter
part of sec 187 of the Corporation Law, which expressly declares that the board of
directors shall not have the power to force the surrender and withdrawal of unmatured
stock except in case of liquidation of the corporation or of forfeiture of the stock
delinquency. The exercise of this article among the by-laws of the association is a
misdemeanor on the part of the respondent which justifies its dissolution. n this view we
are unable to concur. The obnoxious by-law, it is a mere nullity and could not be
enforced even if the directors were to attempt to do so.
REPUBLIC VS SECURITY CREDIT AND ACCEPTANCE CORP. ET AL
Facts: This is an original quo warranto proceeding, initiated by the Solicitor General, to
dissolve the Security and Acceptance Corporation for allegedly engaging in banking
operations without the authority required therefore by the General Banking Act.
The record shows that the Articles of ncorporation of defendant corporation were
registered with the Securities and Exchange Commission on March 27, 1961. On
September 14, 1962, the Monetary Board promulgated its Resolution No. 1095
declaring that the corporation is performing banking operations without having first
complied with the provisions of Sections 2 and 6 of RA No. 337. The corporation was
advised of the resolution, but the corporation as well as the members of its Board of
Directors and the officers of the corporation have been and still are performing the
functions and activities which had been declared to constitute illegal banking operations.
The corporation had established 74 branches in principal cities and towns throughout
the Philippines and that through a systematic and vigorous campaign undertaken by the
corporation, the same had managed to induce the public to open 59,463 savings
deposit accounts with an aggregate deposit of P1,689.74.
HeId: The defendant corporation has not secured the requisite authority to engage in
banking, defendants deny that its transaction partake of the nature of banking
operations. t is clear that these transactions partake of the nature of banking, as the
term is used in Sec 2 of the General Banking Act.
Defendant corporation has violated the law by engaging in banking without securing the
administrative authority required in Republic Act No. 337. That the illegal transactions
thus undertaken by defendant corporation warrant its dissolution is apparent from the
fact that the foregoing mis-user of the corporate funds and franchise affects the essence
of its business, that it is willful and has been repeated 59,463 times, and that its
continuance inflicts injury upon the public, owing to the number of persons affected
thereby.
REPUBLIC VS BISAYA LAND TRANSPORTATION CO., INC
Facts: Bisaya Land Transportation Company is a corporation organized on or about
June 10, 1935 for the purpose of engaging in the business of land and water
transportation, having its domicile and principal place of business in Cebu City.
Republic of the Philippines, through the then Solicitor General Edilberto Barot, filed a
petition for quo warranto for the dissolution of the Bisaya Land Transportation
Company.
The acts allegedly committed by the corporation are embodied in 9 causes of action,
which are as follows:
1. To conceal its illegal transactions, respondent corporation falsely reconstituted its
articles of incorporation in July 1948 by adding new purposes not originally included
2. Respondent adopted a resolution authorizing it to acquire 1024 hectares of public
land in Zamboanga and 10,000 hectares of timber concessions in Mindanao in
violation of Sec 6, Act No 143
3. Respondent officials passed a resolution authorizing the corporation to lease a
pasture land of 2000 hectares of cattle ranch on a public land in Bayawan, Negros
Occidental
4. Respondent corporation operated a general merchandise store, a business which is
neither necessary for nor incidental to the accomplishment of its principal business
for which it was organized
5. Respondent corp allowed Mariano Cuenco and Manuel Cuenco to act as president in
1945 to 1948 and 1953 to 1954 when at that time neither of them owned a single
stock
6. n violation of its charter and articles of incorporation, it engaged in mining by
organizing the Josep Velez Coal Mines and allowing said corporatin to use the
facilities and assets of respondent corp
7. t imported and sold black market prices to third persons truck spare parts
8. t paid its laborers and employees wages below the minimum wage law manipulating
its books and records so as to make it appear that its laborers and employees were
and have been paid their salaries and wages in accordance with the minimum wage
law
9. t deliberately failed to maintain accurate and faithful stock and transfer books since
1945 up to filing of the petition enabling it to defraud the state, mislead the general
public, its creditors, investors and its stockholders by not accurately and faithfully
making. (a. adequate, accurate and complete record of dividend; b) adequate,
accurate and complete record of transfer of its stock)
Issue: Whether or not the lower court is correct in not dissolving the corporation
HeId: After a very careful and deliberate consideration of the evidence, that the same
did not really warrant a quo warranto by the State that could truly justify to decapitate
corporate life, and that the corporate acts or omission complained of had not resulted in
substantial injury to the public nor were they willful and clearly obdurate.
The controversy between the parties was more personal than anything else and did not
at all affect public interest.
The Solicitor General himself asserts that the only purpose of his motion for the
dismissal of this quo warranto is to take the State out of an unnecessary court litigation,
so that the dismissal of the case would result in the disposition solely of the quo
warranto by and between petitioner RP and the respondents named therein. Other
interested parties who might feel aggrieved, would not be without their remedies since
they can still maintain whatever claims they may have against each other. t has been
held that relief by dissolution will be awarded only where no other adequate remedy is
available and is not available where the rights of the stockholders can be or are
protected in some other way.
FINANCING CORP OF THE PHILS VS TEODORO
Facts: Minority stockholders of the Finance corp of the Phils filed a complaint against
said corp and J. Amado Araneta, its president and general manager, claiming among
other things alleged gross mismanagement and fraudulent conduct of the corporate
affairs of the defendant corporation by J. Amado Araneta, and asking that the
corporation be dissolved, that J. Amado be declared personally accountable for the
amounts of the unauthorized and fraudulent disbursements and disposition of assets
made by him, and that he be required to account for said assets a receiver be
appointed.
The trial court granted the petition for the appointment of a receiver.
Issue: Whether or not said appointment is merely an auxiliary remedy; that the principal
remedy sought by the respondents in the action in Negros Occidental was the
dissolution of the Financing Corp of the Phils; that according to the law a suit for the
dissolution of a corp can be brought and maintained only by the State through its legal
counsel; and that respondents have no right or personality to maintain the action for
dissolution
HeId: the general rule is that minority stockholders of a corporation cannot use and
demand its dissolution. f it is unable to obtain redress and protection of their rights
within the corp, must not and should not be left without redress and remedy.
As a rule, minority stockholders of a corp may not ask for its dissolution in a private suit,
and that such action should be brought by the Gov't through its legal officers in a
exceptional cases wherein the intervention of the State for one reason or another
cannot be obtained as when the State is not interested because the complaint is strictly
a matter between the stockholders and does not involve, in the opinion of the legal
officer of the Gov't any of the acts or omissions warranting quo warranto proceeding in
which minority stockholders are entitled to have such dissolution. The trial court has
jurisdiction and may or may not grant the prayer. t is subject to review by the appellate
tribunal. Having such jurisdiction, the appointment of a receiver pendent lite is left to the
sound discretion of the trial court.
Any stockholder or member of a corporation can institute a dissolution proceeding
against his own corporation before the proper forum. Special Commercial courts, shall
hear and decide cases involving intra-corporate dispute or partnership relations
between and among stockholders members or associates, between any or all of them
and the corporation, partnership or association of which they are stockholders,
members or associates, respectively; and between such corporation, partnership or
association and the State as it concerns their individual franchise or right to exist as
such entity. Of note however, is that under Sec 5m of RA 8799, the SEC appears to
have concurrent jurisdiction.
t has thus been held as early as 1950 that even the existence of a de jure corp may be
determined in a private suit for its dissolution between stockholders, without the
intervention of the state. Likewise, in a close corp, a petition for the dissolution of the
corp may be instituted by any one individual shareholder on the ground, even by mere
dishonesty.


















EFFECTS OF DISSOLUTION
BUENAFLOR VS CAMARINES SUR INDUSTRY CORP
Facts: On August 25, 1957, Buenaflor filed his said application and another to establish
a cold storage and refrigeration service of about 6000 cubic feet capacity. The
Commission set the application for hear requiring applicant to publish them in two
newspapers and to serve copy to igo Daza and Camarines Sur ndustry Corporation.
The Camarines Corporation submitted to the Commissiion its own application, one for
authority to construct and manage a 5-ton ice plant, and another for cold storage and
refrigeration system, both in Sabang too. t registered opposition to Buenaflor's
proposed ice business on the ground that it was the pioneer distributor of the
commodity in that particular locality. Buenaflor presented a motion to dismiss the
Camarines Sur Corp's application challenging its personality, inasmuch as its life had
expired in November 1953. Counsel of Camarines Corp asked and was granted time to
answer on October 30, 1957, and registered on October 31, 1957, new articles or
incorporation of Camarines Sur ndustry Corp and at the same time, notarized a deed of
conveyance assigning to the new corporation all the assets of the expired corporation,
together with its existing certificate of public convenience to operate ice factories in
Naga and Magarao.
The corporators of defunct corporation and the newly organized corporation petitioned
the Public Service Commission for the approval of the conveyance and on November 7,
1957, the Commission provisionally approved the transfer of assets, plus the certificate
of public convenience.
HeId: Revoking the appealed decision in so far as it awarded the certificate to said
Corporatio, we hereby approve Buenaflor's application for five-tons, instead of one ton,
subject to the usual conditions imposed by the Public Service Commission on ice plant
establishment.
t elected to deny Buenaflor's application, even as it awarded the privilege to the new
Camarines Corp on the ground that it had been serving ice in Sabang up to the time to
Buenaflor's application, and was consequently the pioneer operator there.
The old corporation had been illegally plying its business of selling ice because under
the Corporation Law, Sec 77, after November 1953, it could only continue to exist for
three years for the purpose of prosecuting and defending suits by or against it, and of
enabling it to gradually settle and close its affairs, to dispose and convey its property
and to divide its capital stock.
t could not, without violating the law, continue to sell ice. And yet the Commission
awarded the certificate on the basis of such service and distribution of iceapplying the
prior operator rule. n other words, the new Camarines Corporation is rewarded,
precisely because the old corporation, its predecessor, had violated the law during that
period.
Camarines Corp ceased to exist as a corporation and could not sue nor apply for
certificate for it was incapable of receiving a grant. t was not even a corporation de
facto. And then there is no application subscribed by the new corporation.
Remembering the Camarines Corp, automatic cessation in November 1956, we must
decline to regard the new Camarines Corp as a continuation of the old. At most, it is the
transferee of the properties of the old corporation (or more properly, the assets of the
stockholders) plus the certificate of public convenience to operate the ice plant in Naga
and Magarao. And yet, as stated the new corporation has not filed any application for
certificate of public convenience in Sabang, and has not published such application.
GONZALES VS SUGAR REGULATORY ADMINISTRATION
Facts: Petitioner spouses filed a complaint seeking cancellation of a mortgage and
recovery of a sum of money against the Republic Planters Bank, Philippine Sugar
Commission and SRA. The complaint alleged that on May 13, 1980, petitioners
obtained a loan from the RP Bank in the amount of P176,000.00 secured by a real
estate mortgage. The RP Bank is owned and controlled by the Philsucom.
On the basis of the promissory notes and the list of repayments made, it appeared that
petitioners had received the total amount of P1041610.55 in loan funds from the RP
Bank and that petitioners had repaid thereon the total amount of P1051296.77, in other
words, petitioners had already more than fully repaid their loan. The complaint further
averred that Philsucom had deducted from the export sugar proceeds of petitioners the
amount of P421517.32 without the authority and consent of petitioners with the result
that petitioners had overpaid the RP Bank by P289,260.88.
Petitioenrs assailed the constitutionality of EO No. 18. Petitioners urged the abolition of
the Philsucom by EO No. 18 in effect destroyed the petitioner's right to recover from
Philsucom what petitioners claim in their complaint is due to them. Petitioners hence
asserts 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 SRA could be made a party-respondent liable to the claim of the
petitioners
HeId: 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.
Assets and records that as determined by the SRA are required in its operation are
hereby transferred to the SRA.
Although the Philsucom is abolished, it shall nevertheless continue as a juridical entity
for three years after the time when it would have been so abolished, 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, but not for the
purpose of continuing the function for which it was established, under the supervision of
the SRA.
We conclude that the dismissal of petitioners' complaint against respondent SRA was
clearly premature. Petitioners have a cause of action against SRA to the extent that
they are able to prove lawful claims against Philsucom, which claims Philsucom is or
may be unable to satisfy and to the extent respondent SRA did, or does in fact take over
all or some of the assets of Philsucom.
To avoid such a result, we believe and so hold that should the assets of Philsucom
remaining at the time of its abolition not be adequate to pay for all lawful claims against
Philsucom, respondent 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. To this extent, claimants against Philsucom do have a right to follow Philsucom's
assets in the hands of SRA or any other agency for that matter.
The right of those who have previously contracted with or otherwise acquired lawful
claims against, Philsucom, to have the assets of Philsucom applied to the satisfaction of
those claims, is a substantive right and not merely a procedural remedy.