BENNY HUNG vs BPI FINANCE CORPORATION, GR No. 182398. July 20. 2010
24C rendered a decision ordering deendant B 1 2 3portswear 6istributor, Inc!, to pay the plainti ;BPI< P*,)#0,*0!0 with 0= interest! 4he 24C ruled that the overpa overpayme yment nt o P(,+P(,+-,+* ,+*%!+ %!+( ( was proven proven by
FACT! Guess? Footwear and BPI Express Card Corporation entere entered d into into two two mercha merchant nt agreem agreement ents, s, where whereby by Guess? Footwear agreed to honor validly issued BPI Express Credit Cards presented by cardholders in the purchase o its goods and services! I" #$% #$% &'(s# &'(s# )*(%%+ )*(%%+%"# %"#,, %#'#' %#'#'o" o"%( %( B%""y B%""y Hu"* Hu"* s'* s'*"%- )s o"%( "%( )")"- +)")* )")*%( %( o& Gu%ss/ %ss/ Foo#%)( Foo#%)(.. H% s'*"%s'*"%- #$% s%o"s%o"- )*(%%+%"# )*(%%+%"# )s (%s' (%s'-%" -%"## o& Gu%ss Gu%ss/ / Foo# Foo#%) %)(( $'$ $'$ $% )lso )lso (%&%((%- #o )s B R o(#s%)( E"#%(('s%s. E"#%(('s%s. From From "ay #$$% #$$% to &anuar &anuary y #$$$, #$$$, respon responden dentt BPI BPI mista'enly credited, through ugh ()* chec' ec's, P(,+-,+*%!*( to the account o Guess? Footw Footwear ear!! .hen .hen inorm inormed ed o the overpa overpaym yment ents, s, petitione petitionerr Benny /ung transerre transerred d P$0(,0-+! P$0(,0-+!-( -( rom the ban' account o B 1 2 3portswear Enterprises to BPIs account as partial payment! 4he letter dated (# "ay #$$$ was worded as ollows5 6ear 3ir7"adame 4his is to authori8e BPI 9rtigas Branch to transer the amount o P$0(,0-+!-( rom the account o B 1 2 3portswear Enterprises to the account o BPI Card Corporation! T$% T$% )&o(%+ )&o(%+%"# %"#'o 'o"%"%- )+ou" )+ou"## s$)ll s$)ll (%(%s%"# )(#')l s%##l%+%"# o& ov%()y+%"#s made by BPI Card Corpor Corporati ation on to B 1 2 3port 3portsw swear ear,, pendin pending g ina inall reco reconc ncil ilia iati tion on o exac exactt amou amount nt o overpayment! 4han' you or your usual 'ind cooperation! :ery truly yours, ;3gd!< Benny /ung BPI demanded the balance balance payment payment amounting amounting to P*,)#0,*0!0, but Guess? Footwear ailed to pay! BPI iled a collection suit beore the 24C o "a'ati City nami naming ng as dee deen ndant dant B 1 2 3por portsw tswear ear 6istributor, 6istributor, Inc! Al#$ou*$ #$% )s% )s )*)'"s# B
chec's credited to the account o Guess? Footwear and the P$0(,0 P$0(,0-+! -+!-( -( partia partiall paymen paymentt proved proved that that deendant ought to pay P*,)#0,*0!0more! P*,)#0,*0!0 more! u('" ('"*
#
%$%4% %4%u u#'o" 'o"
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5u-*+ -*+%"#, %"#,
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-'sov%(%- #$)# B R o(#s%)( 's#('u#o(, I"., 's ) "o"6%4's#'"* "o"6%4's#'"* %"#'#y! %"#'#y ! 4hus, the trial court ailed to execute the >udgment Conseuently, respondent iled a "otion to pierce the corporate veil o B 1 2 Footwear 6istributors, Inc! to hold its stoc'holders and oicers, including petitioner Benn Benny y /ung /ung,, perso personal nally ly liabl liable! e! 24C rule ruled d that that petitioner is liable or the satisaction o the >udgment, since since he signed signed the mercha merchant nt agreem agreement ents s in his personal capacity! 4he 4he Cour Courtt o @ppea ppeals ls ai airm rmed ed the the orde orderr and and dismissed petitioners appeal! It ruled that since B 1 2 3portswe 3portswear ar 6istribu 6istributor tor,, Inc! is not a corporati corporation, on, it thereore has no personality separate rom petitioner Benny /ung who induced the respondent BPI and the 24C to believe that it is a corporation! IUE! whether petitioner can be held liable or the satisaction o the 24Cs 6ecision against B 1 2 3portswear 6istributor, Inc!? HE7 HE7!! $%" $%" #$% #$% o( o(o( o()# )#'o 'o" " BB BB o( o(#s #s% %)( )(,, I".: $'$ #$% l)'"#'&& %((o"%ously '+l%)-%- '" ) ol oll%#' %#'o o" )s% )s% )s )s "o# #$% )(#y )(#y #o #$% )#'o")l )#'o")l% % )*(%%+%"# )*(%%+%"# )"- #u("%#u("%- ou# #o % "o# (%*'s# (%*'s#%(% %(%- '#$ '#$ #$% #$% %u(' %u('#'% #'%s s )"- E4$)" E4$)"*% *% Co++'ss'o", #$% 5u-*+%"# +)y s#'ll % %"&o(%)*)'"s# #$% o(o()#'o" BB Foo#%)(, I".: $'$ &'l%- #$% )"s%( )"- )(#'')#%- '" #$% (o%%-'"*s, )s %ll )s '#s o" o"#(oll'"* s$)(%$ol-%( $o s'*"%#$% )#'o")l% )*(% )*(%%+ %+%" %"## '" $'s $'s %(s %(so" o")l )l )) ))'# '#y y )")"- )s ) s'"*l% s'"*l% (o('%# (o('%#o(s$ o(s$' ' -o'"* -o'"* us'"%ss us'"%ss u"-%( u"-%( #$% #()-% ")+% )+% )"- s#yl% o& BB o(#s%)( E"#%(('s%s.
R o( o(#s #s%) %)(( 's# 's#(' ('u u#o #o(, (, I". I".,, '# )s )s B R Foo#%)( 's#('u#o(s, I"., #$)# &'l%- )" )"s%(,
Peti Petiti tion oner er has repr repres esen ente ted d in his his deal dealin ings gs with with
)%)(%- )"- )(#'')#%- '" #$% #(')l.
respondent that Guess? Footwear or B 1 2 Footwear 6istr stribut butors, ors,
Inc! Inc!
is
also also
B
1
2
3por portsw tswear
Enterp Enterpri rises ses!! For For this this reason reason,, the more more comple complete te correction on the name o deendant should be rom B 1 2 3portswear 6istributor, Inc! to B 1 2 Footwear 6istributors, Inc! and Benny /ung. /ung . P%#'#'o"%( 's #$% (o%( -%&%"-)"# %)us% $'s sol% (o('%#o(s$' B R o(# o(#s% s%)( )( E"#%( E"#%((' ('s%s s%s $)s "o 5u('5u('-') ')ll %(so" %(so")l' )l'#y #y ))(# ))(# &(o+ &(o+ $'+! $'+! 2elatedly 2elatedly,, petitione petitioner r cannot complain o nonAservice o summons upon his pers person on!! 3ui uice ce it to say say that that B 1 2 Footw ootwea ear r 6istributors, Inc! or Guess? Footwear which is also B 1 2 3por 3ports tswe wear ar Ente Enterp rpri rise ses s had had answ answer ered ed the the summons and the complaint and participated in the trial! P%#'#' P%#'#'o" o"%( %( 's l')l l')l% % #o (%so (%so""-%"# %"# %)us %)us% % $% s'*"% s'*"%- #$% s%o" s%o"- +%($) +%($)"# "# )*(%%+ )*(%%+%"# %"# '" $'s $'s %(so")l ))'#y. ))'#y. Evidence showed that petitioner treats B 1 2 Footwear 6istributors, Inc! and his single proprietorship B 1 2 3portswear Enterprises as one and the same same entity entity!! Petit Petition ioner er order ordered ed the partia partiall paymen paymentt using using the letterh letterhead ead o B 1 2 Footw Footwear ear 6istributor, Inc! and yet the und transerred belongs to his his sing single le prop propri riet etor orsh ship ip B 1 2 3por 3ports tsw wear ear Enterp Enterpri rises ses!! 4his 4his
act, act,
accord according ing
to
respon responden dent, t,
>ustiies piercing the corporate veil o B 1 2 Footwear 6istributor, 6istributor, Inc! to hold petitioner personally liable!
BOYER6 RO;A vs CA &uly #+, #$$* Euge Eugeni nia a 2oxa 2oxas s orig origin inal ally ly owne owned d the the uest uestio ione ned d properties in this case which include among others cottages, houses, buildings, swimming pools, tennis court, restaurants, open pavilions inside the /idden :alley 3prings 2esort in aguna! $%" Eu*%"') -'%-, $%( $%'(s )+o"* $o+ %(% R%% R%% ) ) Boy% Boy%(6 (6Ro Ro4) 4)s s )")"- Gu'l Gu'll% l%(+ (+o o Ro4) Ro4)s s -%'-%- #o &o(+ #$% o(o()#'o", H%'(s o& Eu*%"') <. Ro4)s Ro4)s,, I". I". '#$ '#$ #$% #$% '"$%( '"$%('#% '#%- (o%( (o%(#'% #'%s s )s )'#)l o& #$% o(o()#'o".
Eurocino Eurocino 2oxas, ;husband o Eugenia< Eugenia< during his liet lietime ime togeth together er with with Eribit Eribito o 2oxas 2oxas ; husban husband d o 2ebe 2ebecc cca a and and ath ather er o Guil Guille lerm rmo< o< mana manage ged d the the corporation! Eriberto and 2ebecca occupied the sta house as their residence and converted the recreation hall hall into into a reside residenti ntial al house house with with the blessi blessings ngs o Eurocino, who was then the ma>ority stoc'holder o the corporation! 4he Board o directors did not ob>ect to the actions o Eurocino! 2ebecca 2ebecca and Guillerm Guillermo o were allowed allowed to stay within the uestioned properties until the Board o 6irectors approved a resolution e>ecting them! 6espit 6espite e demand demand howeve however, r, they they reus reused ed to vacate vacate!! /enc /ence, e, two two sepa separa rate te comp compla lain ints ts or or reco recove very ry o posses possessio sion n was was iled iled!! 4C airm airmed ed by C@, C@, ordere ordered d 2ebecca and all persons claiming under her to vacate the premises! Issue: .hether or not the petitioner could be e>ected? es! Held: Propert erties ies reg regist istered ered in the name ame of the corporation are owned by it as an entity separate and distinct from its members. While While shares shares of stock constitute constitute personal personal property, property, they do not represent property of the corporation. The corporation has property of its own. A share of stock only only typi typifi fies es an aliq aliquo uott part part of the the corp corpor orat atio ion’ n’s s property or the right to share in its proceeds to that extent when distributed according to law and equity but its holder is not the owner of any part of the capital of the corporation. Nor is he entitled to the possession of any definite portion of its property or assets. The The stoc stockh khol olde derr is not not a co-o co-own wner er or tena tenant nt in coon of the corporate property. A corporation can therefore sue to reco!er real property being occupied by its forer president "who was also a significant stockholder# for it has a $uridical personality separate and distinct fro its stockholders e!en though in the past the corporation allowed the president to en$oy the possession of the property. p roperty.
4his was incorporated incorporated with the primary primary purpose o enga engagi ging ng in agri agricu cult ltur ure e to deve develo lop p the the inhe inheri rite ted d properties! 4he @rticles o Incorporation however was amended to allow it to engage in the resort business!
4her 4here e is noth nothin ing g irre irregu gula larr in the the adop adopti tion on o the the 2eso 2esolu luti tion on by the the B96 B96 e>ec e>ecti ting ng peti petiti tion oner ers s or or CorporationDs expansion and improvement program!
@ccordingly, @ccordingly, the corporation put up a resort 'nown as /idden /idden :alley :alley 3pring 2esort 2esort where the uestione uestioned d properties were located!
PetitionerDs stay within the uestioned properties was merely by tolerance o the respondent corporation in deerence to the wishes o Eurocino 2oxas!
4he Corrporation may elect to e>ect petitioners at any time time it wish wishes es or or the the bene benei itt and and inte intere rest st o the the respondent corporation!
RYUICHI YA=A=OTO, vs! NIHINO 7EATHER 7EATHER INUTRIE, INC. F)#s! egotiations subseuently ensued in light o a planned ta'eover by ishino who would buyA out the shares o stoc' o Y) o Y)+)+o#o +)+o#o $o )s )-v's%- #$(ou*$ ) l%##%( #$)# $% +)y #)>% )ll #$% %?u'+%"#@ +)$'"%(y $% $)- o"#('u#%- #o #$% o+)"y &o( $'s o" us% )"- s)l%: (ov'-%- #$)# #$% v)lu% o& su$ +)$'"%s 's -%-u#%- &(o+ #$% )'#)l o"#('u#'o"s $'$ 'll % )'- #o $'+. /owe /oweve verr, the the lett letter er reu reues este ted d that that he give give his his comments on all the above, soonest! 9n the basis o the said letter, letter, amamoto amamoto attempted attempted to recover recover the mach machin iner erie ies s but but ish ishin ino o hind hinder ered ed him him to do so, so, drawing him to ile a .rit o 2eplevin! 4he 4rial Court issued the writ! /owever, on appeal, N's$ N's$'" '"o o l)' l)'+ +%- #$)# #$)# #$% #$% (o (o%( %(#' #'%s %s %'"* %'"* (%ov%(%- %(% o"%- y #$% o(o()#'o" )"- #$% )ov%6s)'- l%##%( )s ) +%(% (oos)l $'$ )s "o# y%# )u#$o('%- y #$% Bo)(- o& '(%#o(s ! Court o @ppeals @ppeals reversed reversed the trial trial courtDs courtDs decision decision despite amamotoDs contention that the company is merely an instrumentality o the ishinos! IUE! .he .hether ther or not not amamot amoto o can recover the properties he contributed to the company in view view o the the 6oct 6octri rine ne o Pier Pierci cing ng the :eil o Corp Corpor orat ate e Fict Fictio ion n and and 6oct 6octri rine ne o Prom Promis isso sory ry Estoppel! HE7! 9ne o the elements determinative o the applicabilit applicability y o the doctrine doctrine o piercing piercing the veil o corporate iction is that control must have been used by the the dee deend ndan antt to comm commit it rau raud d or wrong rong,, to perpetuate the violation o a statutory or other positive legal duty, or dishonest and un>ust act in cont contra rave vent ntio ion n o the the plai plaint nti iD Ds s lega legall righ rights ts!! 4o disr disreg egar ard d the the sepa separa rate te >uri >uridi dica call pers person onal alit ity y o a cor corpor porati ation, on, the the wrong rongdo doiing or un> un>ust ust act act in contra contraven ventio tion n o a plain plainti tiD Ds s legal legal rights rights must must be clearl clearly y and convi convinci ncingl ngly y establ establish ishedH edH it cannot cannot be presumed! .ithout a demonstration that any o the evil evils s soug sought ht to be prev preven ente ted d by the the doct doctri rine ne is present, present, it does not apply! apply! Estoppel Estoppel may arise rom the ma'ing o a promise! /owever, it bears noting that the letter was ollowed by a reuest or amamoto to give his comments on all the above, soonest! .hat was thus proered to amam amamot oto o was was not not a prom promis ise, e, but but a mere mere oe oerr,
sub>ec sub>ectt to his accept acceptanc ance! e! .ithou .ithoutt accept acceptanc ance, e, a mere mere oe oerr prod produc uces es no oblig obligat atio ion! n! 4hus 4hus,, #$% +)$'"%( +)$'"%('%s '%s )"- %?u'+%" %?u'+%"#, #, $'$ $'$ o+('s%o+('s% Y)+)+o#os Y)+)+o#os '"v%s#+%"#, (%+)'"%- )(# o& #$% )'#)l (o%(#y o& #$% o(o()#'o".
PIONEER INURANCE <. CA 1989: &acob im was the owner o 3outhern @ir ines, a sing single le prop propri riet etor orsh ship ip!! In #$0) #$0),, im im conv convin ince ced d Constancio "aglana, "odesto Cervantes, Francisco Cerv Cervan ante tes, s, and and Bord Border er "ach "achin iner ery y and and /eav /eavy y Euipment Euipment Company Company ;B92"@/ ;B92"@/EC9< EC9< to contribute contribute unds and to buy two aircrats which would orm part a corporation which will be the e xpansion o 3outhern @ir ines! "aglana et al then contributed and delivered money to im! Bu# '"s#%)- o& us'"* #$% +o"%y *'v%" #o $'+ #o )y '" &ull #$% )'( )'(() ()&# &#s, s, 7'+, '# '#$ou# #$% #$% >"ol%-*% o& =)*l)") %# )l, +)-% )" )*(%%+%"# '#$ P'o"%%( I"su()"% &o( #$% l)##%( #o '"su(% #$% #o )'(()&#s $'$ %(% (ou*$# (ou*$# '" '"s#)ll+ '"s#)ll+%"# %"# &(o+ J))" o+%s#' o+%s#' A'(l'"%s A'(l'"%s JA: JA: us'"* us'"* s)')'(()&#s )s s%u('#y. s%u('#y. 3o when im deaulted rom paying paying &6@, &6@, the two aircra aircrats ts were were orecl oreclose osed d by Pion Pionee eerr Insu Insura ranc nce e It was est establi ablish shed ed that that no corporati corporation on was ormally ormally ormed ormed between between im and "aglana et al! IUE! .hether or not "aglana et al must share in the loss as general partners! ;.9 there was a de acto corporation to spea' o< HE7! o! 4here was no de acto partnershi partnership! p! O(-'")('ly, $%" o6'"v%s#o(s )*(%%#o -o us'"%ss #$(ou*$ ) o(o()#'o" u# &)'l%- #o '"o(o( '"o(o()#%, )#%, ) -% &)#o &)#o )(#"%(s$ )(#"%(s$' ' ouloul- $)v% %%" &o(+%-, )"- )s su$, )ll +us# s$)(% '" #$% loss%s )"-@o( *)'"s o& #$% v%"#u(% '" (oo(#'o" #o #$%'( o"#('u#'o". Bu# '" #$'s )s%, '# )s s$o" #$)# 7'+ -'- "o# $)v% #$% '"#%"# #o &o(+ ) o(o()#'o" '#$ =)*l)") %# )l. T$'s )" % '"&%((%- &(o+ )#s o& u"'l)#%()lly #)>'"* ou# ) su(%#y &(o+ P'o"%%( I"su()"% )""o# us'"* #$% &u"-s $% *o# &(o+ =)*l)") %# )l ! 4he record shows that im was acting on his own and not in beha behal l o his his other other woul wouldAb dAbe e inco incorp rpor orat ator ors s in transacting the sale o the airplanes and spare parts!
7OANO <. E7O ANTO Facts5 Facts5 Petition Petitioner er 2eynaldo "! o8ano alleged alleged that he was the president o the apatirang "abalacatA @ngeles &eepney 6riversJ @ssociation, @ssociation, Inc! ;@"@&6@< ;@"@&6@< while respondent @nda was the president o the the 3ama 3amaha hang ng @nge @ngele lesA sA"a "aba bala laca catt &eep &eepney ney
9perators orsJ and ;3@"@&96@
6riversJ
@ssociation,
Inc!
neither can it be conerred by the acuiescence o the court!
in @ugust #$$), upon the reuest o the 3angguniang Baya Bayan n o "aba "abala laca cat, t, Pamp Pampan anga ga,, %#'#'o" %#'#'o"%( %( )"('v)#% ('v)#% (%so"-%" (%so"-%"## )*(%%)*(%%- #o o"sol'-)# o"sol'-)#% % #$%'( (%s% (%s%#' #'v% v% )sso' )sso')#' )#'o" o"s s )"- &o(+ &o(+ #$% U"'&' U"'&'%%=)) =))l) l)) )#6 #6A" A"*% *%l% l%s s J%% J%%"% "%y y O%( O%()# )#o( o(sD sD )")"('v%(sD Asso')#'o", I". U=AJOA:
Co(o()#'o" y %s#o%l 's &ou"-%- o" ('"'l%s o& %?u'#y )"- 's -%s'*"%- #o (%v%"# '"5us#'% )"u"&)'(" u"&)'("%ss. %ss. I# )l'%s )l'%s $%" %(so"s %(so"s )ssu+% )ssu+% #o &o(+ &o(+ ) o( o(o o()#' ()#'o o" )")"- %4%( %4%(' 's% s% o( o(o( o()# )#% % &u"#'o"s )"- %"#%( '"#o us'"%ss (%l)#'o"s '#$ #$'(#$'(- %(so"s. %(so"s. $%(% $%(% #$%(% 's "o #$'(#$'(- %(so" %(so" '"volv%- )"- #$% o"&l'# )('s%s o"ly )+o"* #$os% )ssu+'"* #$% &o(+ o& ) o(o()#'o", $o #$%(%&o(% >"o #$)# '# $)s "o# %%" (%*'s#%(%-, #$%(% 's "o o(o()#'o" y %s#o%l.
petitioner and private respondent also agreed to elect one one set set o oi oice cers rs who who shal shalll be give given n the the sole sole authority to collect the daily dues rom the members o the consolidated associationH elections were held on 9ctober 9ctober *$, #$$) #$$) and o#$ %#'#'o"%( )"- ('v)#% (%so"(%so"-%"# %"# ()" &o( &o( (%s'-%"# (%s'-%"# %#'#'o" %#'#'o"%( %( o" ('v)#% (%so"-%"# (o#%s#%- )"-, )ll%*'"* &()u-, (%&us%- #o (%o*"'% #$% (%sul#s o& #$% %l%#'o" privat private e respon responden dentt also also reus reused ed to abide by their agreement and continued collecting the dues rom the members o his association despite several demands to desist! desist! Petition Petitioner er was thus constrain constrained ed to ile the comp compla lain intt to rest restra rain in priv privat ate e resp respon onde dent nt rom rom collecting the dues and to order order him to pay damages! damages! Private respondent moved to dismiss the complaint or lac' o >urisdiction, claiming that >urisdiction was lodged with the 3ecurities and Exchange Commission ;3ECeepn >eepney ey driver driversJ sJ and oper operat ator orsJ sJ asso associ ciat atio ions ns into into a sing single le comm common on association! 4his uniied association was, however, however, still a proposal! T$% T$% A=A A=AJ JA A )"- A=A A=AJO JOA A #o $' $'$ $ %#'#'o"%( )")"- ('v)#% (%so"-%"# (%so"-%"# %lo"* %lo"* )(% -uly (%*'s#%(%- '#$ #$% EC, u# #$%s% )sso')#'o"s )(% #o s%)()#% s%)()#% %"#'#'%s. %"#'#'%s. I# 's %#%%" %#%%" +%+%(s +%+%(s o& s%)()#% s%)()#% )"- -'s#'"# -'s#'"# )sso')#'o"s. )sso')#'o"s. P%#'#'o"%( P%#'#'o"%( )"- ('v)#% ('v)#% (%so"-% (%so"-%"# "# $)v% "o '"#()o( '"#()o(o()# o()#% % (%l)#'o" +u$ l%ss -o #$%y $)v% )" '"#()o(o()#% -'su#%. -'su#%. T$% EC #$%(%&o #$%(%&o(% (% $)s "o 5u('s-'#' 5u('s-'#'o" o" ov%( #$% o+l)'"#. T$% -o#('"% o& o(o()#'o" o(o()#'o" y %s#o%l )-v)"%y ('v)#% (%so so"-%"# %"# )"" )""o# ov%(('-% 5u('s-'#'o")l 5u('s-'#'o")l (%?u'(%+%"#s. &urisdiction is ixed by law and is not sub>ect to the agreement o the parties! It cannot be acuired through or waived, enlarged or dimini diminishe shed d by, by, any act or omissi omission on o the partie partiesH sH
7I= TONG 7I= <. PHI7IPPINE FIHING GEAR INUTRIE, INC. %nder the law on estoppel, those acting on behalf of a corporation and those benefited by it, knowing it to be witho without ut !alid !alid existe existence nce,, are held held liable liable as genera general l partners. Technically, Technically, it is true that petitioner did not directly act on behalf of the corporation. &owe!er, ha!ing reaped the benefits of the contract entered into by persons with who he pre!iously had an existing rela relati tion onsh ship ip,, he is dee deeed ed to be part part of said said asso associ ciat atio ion n and and is co!e co!ere red d by the the scop scope e of the the doctrine of corporation by estoppel. Facts acts55 9n 9n beha behall o K9c 9cea ean n Lues uest Fishi shing Corporati Corporation,K on,K @ntonio @ntonio Chua and Peter Peter ao entered entered into into a Cont Contra ract ct date dated d % Febr Februa uary ry #$$#$$-,, or or the the purcha purchase se o ishin ishing g nets nets o variou various s si8es si8es rom rom the Philippine Fishing Gear Industries, Inc! ;PFGI
Crossclaim and moved or the liting o the .rit o @ttachment!
which he has benefited on the irrele!ant ground of defecti!e incorporation.
7'+ )(*u%s, )+o"* o#$%(s, #$)# u"-%( #$% -o#('"% o& o( o(o( o()# )#'o 'o" " y %s#o %s#o %l %l,, l') l')'l 'l'# '#y y )" )" % '+u#%- o"ly #o C$u) )"- Y)o, )"- "o# #o $'+.
F@C435 F@C435 In #$$, International Express 4ravel 1 4our 4our 3erv 3ervic ices es,, Inc! Inc! ;IE4 ;IE44I 4I<, <, oe oere red d to the the Phil Philip ippi pine ne Football Federation ;PFF< its travel services or the 3outh East @sian Games! PFF, through /enri ahn, its president, president, agreed! agreed! IE44I IE44I then delivered delivered the plane tic'ets to PFF, PFF in turn made a down payment! /owe /oweve verr, PFF PFF was was not not able able to comp comple lete te the the ull ull payment in subseuent installments despite repeated demands rom IE44I! IE44I then sued PFF and ahn was impleaded as a coAdeendant! ahn averred that he should not be impleaded because he merely acted as an agent o PFF which he averred is a corporation with separate and distinct personality rom him!
Issue5 .hether im should be held >ointly liable with Chua and ao! /eld5 In the irst instance, )" u"'"o(o()#%u"'"o(o()#%- )sso')#'o" ) sso')#'o",, $'$ (%(%s%"#%- '#s%l& #o % ) o(o()#'o", 'll % %s#o%- &(o+ -%"y'"* '#s o(o()#% ))'#y '" ) su'# )*)'"s# '# y ) #$'(- %(so" $o (%l'%- '" *oo- &)'#$ o" su$ (%(%s%"#)#'o". It cannot allege lac' o personali ality to be sued to evade its respon responsib sibili ility ty or a contra contract ct it entere entered d into into and by virtue o which it received advantages and beneits! O" #$% o#$%( $)"-, ) #$'(- )(#y $o, >"o'"* )" )sso')#'o )sso')#'o" " #o % u"'"o u"'"o(o( (o()#%)#%-,, "o"%#$%l "o"%#$%l%ss %ss #(%)#%- '# )s ) o(o()#'o" )"- (%%'v%- %"%&'#s &(o+ '#, +)y % )((%- &(o+ -%"y'"* '#s o(o()#% %4's#% %4's#%" "% % '" ) su'# su'# (ou* (ou*$# $# )*)'" )*)'"s# s# #$% #$% )ll%* )ll%*%%o(o()#'o". In such such case case,, all all thos those e who who bene benei ite ted d rom rom the the transa transacti ction on made made by the ostens ostensibl ible e corpor corporati ation, on, despite 'nowledge o its legal deects, may be held liable or contracts they impliedly assented to or too' advantage o! 4here is no dispute that PFGI is entitled to be paid or the nets it sold! sold! 4he only uestion uestion here 's $%#$%( 7'+ s$oul- % $%l- 5o'"#ly l')l% '#$ C$u) )" Y)o. Y)o. im contests such liabilit liability, y, insisting insisting that only thos those e who deal dealtt in the the name name o the oste ostens nsib ible le cor corpor porati ation shou shoulld be hel held liab liablle. Al#$o l#$ou* u*$ $ #%$"')lly '# 's #(u% #$)# 7'+ -'- "o# -'(%#ly )# o" %$)l %$)l&& o& #$% #$% o(o o(o()# ()#'o" 'o" $o%v $o%v%( %(,, $)v'"* $)v'"* (%)%- #$% %"%&'#s o& #$% o"#()# %"#%(%- '"#o y %(so"s '#$ $o+ $% (%v'ously $)- )" %4's#'"* (%l) (%l)#' #'o" o"s$ s$' ',, $% 's -%%+ -%%+%%- #o % )(# )(# o& s)'s)')sso')#'o" )"- 's ov%(%- y #$% so% o& #$% -o#('"% o& o(o()#'o" y %s#o%l.
INTERNATIONA7 E;PRE TRA TRA
4he 4he tria triall cour courtt rule ruled d agai agains nstt ahn ahn and and held held him him person personall ally y liabl liable e or the said said obliga obligatio tion n ;PFF ;PFF was declared declared in deault deault or ailing to ile an answer 5u-'')l "o#'% o& #$% %4's#%"% o& PFF )s ) ")#'o")l so(#s )sso')#'o" #$)# )s su$, PFF 's %+o%(%- #o %"#% %"#%(( '"#o '"#o o"# o"#() ()# #s s #$(o #$(ou* u*$ $ '#s '#s )*%" )*%"#s #s #$)# #$)# PFF 's #$%(%&o( #$%(%&o(% % l')l% l')l% &o( #$% o"#()# o"#()# %"#%(%%"#%(%'"#o y '#s )*%"# )$". )$". 4he C@ urther ruled that IE44 IE44II is in estopp estoppelH elH that it cannot cannot now deny deny the corporate existence o PFF because it had contracted and dealt with PFF in such a manner as to recogni8e and in eect admit its existence! IUE! .het .hethe herr or not not the the Cour Courtt o @ppea ppeals ls is correct! HE7! o! PFF, PFF, upon its creation, is not automatically considered a nati nation onal al spor sports ts asso associ ciat atio ion! n! It must must irs irstt be recogni8ed and accredited by the Philippine @mateur @thletic Federation and the 6epartment o outh and 3ports 6evelopment! 4his his act was neve ever substantiated by ahn! @s such, PFF is considered as an unincorporated sports association! @nd under the law, any person acting or purporting to act on behal o a corp corpor orat atio ion n which hich has has no vali valid d exis existe tenc nce e assume assumes s such such privil privilege eges s and become becomes s person personall ally y liab liable le or or cont contra ract ct ente entere red d into into or or or othe otherr acts acts per peror ormed med as such uch agen agentt! ahn ahn is ther hereor eore e person personall ally y liabl liable e or the contr contract act entere entered d into into by PFF with IE44I! 4here is also no merit on the inding o the C@ that IE44I is in estoppel! 4he application o the doctrine o corporati corporation on by estoppel applies applies to a third third party only when he tries to escape liability on a contract rom which he has beneited on the irrelevant ground o deective incorporation! In the case at bar, IE44I is not
trying to escape liability rom the contract but rather is the one claiming rom the contract!
PEOP7E OF THE PHI7IPPINE < CAR7O GARCIA 'orporation (y )stoppel * +stensible 'orporation In #$$(, #$$(, Carlos Carlos Garcia Garcia,, Patri Patricio cio Boter Botero, o, and uisa uisa "iraples were accused o illegal recruitment! It was allege alleged d that that they they repres represent ented ed themse themselve lves s as the inco incorp rpor orat ator ors s and and oi oice cers rs o 2ico 2icorn rn Phil Philip ippi pine ne Intern Internati ationa onall 3hippi 3hipping ng ines ines,, Inc!H Inc!H that that 2icor 2icorn n is a recrui recruitme tment nt agency agency or seamen seamenHH that that Garcia Garcia is the president, Botero is the viceApresident, and "iraples ;now at large< is the treasurer! It was later discovered that 2icorn was never registered with the 3ecurities and Exchan Exchange ge Commi Commissi ssion on ;3EC ;3EC<< and that that it was was never authori8ed to recruit by the Philippine 9verseas Employment @gency @gency ;P9E@"o'"* '# #o % '#$ou# )u#$o('#y #o -o so s$)ll % l')l% l')l% )s *%"%() *%"%()ll )(#" )(#"%(s %(s &o( )ll #$% #$% -%#s, -%#s, l')'l'#'%s )"- -)+)*%s '"u((%- o( )('s'"* )s ) (%sul# #$%(%o&! P(ov'-%-, $o%v%(, T$)# $%" )"y su$ su$ os#% os#%"s "s' 'l% l% o( o(o( o()# )#'o 'o" " 's su%su%- o" )"y )"y #()"s)#'o" %"#%(%- y '# )s ) o(o()#'o" o( o" )"y #o(# o++'##%- y '# )s su$, '# s$)ll "o# % )llo%- #o us% )s ) -%&%"s% '#s l)> o& o(o()#% %(so")l'#y.
=ACA =ACAA AET ET <. <. FRANC FRANCI ICO CO,, GR NO. 1K9, JUNE , 2013 'orporation by estoppel results when a corporation represented itself to the public as such despite its not being incorporated. A corporation by estoppel ay be ipleaded ipleaded as a party defendant defendant considering considering that it possesses attributes of a $uridical person, otherwise, it cannot be held liable for daages and in$uries it ay inflict to other persons. FACT! 2espondent, a retired police oicer assigned at the .estern Police 6istrict in "anila, sued @bante 4onite, 4onite, a daily daily tabloi tabloid d o genera generall circul circulati ationH onH its Publi Publishe sher r @llen @! "acasaetH its "anaging 6irector icolas :! Lui>anoH Lui>anoH its Circulat Circulation ion "anager "anager Isaias Isaias @lbanoH @lbanoH its Edit Editor ors s &ane &anett Bay Bay, &esu &esus s 2! Gala Galang ng and and 2andy 2andy /ago /agosH sH and and its its Colu Column mnis ist7 t72e 2epo port rter er ily ily 2eye 2eyes s ;pet ;petit itio ioner ners< s<,, clai claimi ming ng dama damage ges s beca becaus use e o an allegedly libelous article petitioners published in the &une 0, *--- issue o @bante 4oniteH summons to be served on each deendant, including @bante 4onit 4onite, e, at thei theirr busi busine ness ss addr addres ess s at "oni "onica ca Publ Publis ishi hing ng Corpor Corporati ation, on, (-#A((-#A(-) ) (rd Floor Floor,, BF Condom Condomini inium um Buildi Building, ng, 3olana 3olana 3treet 3treet corner corner @! 3orian 3oriano o 3tree 3treet, t, Intramuros, "anila 2ega 2egard rdin ing g the the impl implea eadi ding ng o @ban @bante te 4onite nite as deendant, the 24C held, vi85 K@bante 4oniteK 4oniteK is a daily tabloid o general circulation! Peop People le all all over over the the coun countr try y coul could d buy buy a copy copy o K@bant K@bante e 4oniteK niteK and read read it, it, hence, hence, it is or public public consumption! 24C5 24C5 @ll o these these acts imply imply that that LA)"#% To"'#%L &)lls '#$'" #$% (ov's'o" o& A(#. MM 2 o( 3:, N% C'v'l C'v'l Co-%. Co-%. Assu+ Assu+'" '"* * )(*u%" )(*u%"-o -o #$)# #$)# LA)" LA)"#% #% To"'#%L 's "o# (%*'s#%(%- '#$ #$% %u('#'%s )"E4$)"*% Co++'ss'o", '# 's -%%+%- ) o(o()#'o" y %s#o %s#o %l %ls s o"s o"s''-%( %('" '"* * #$)# #$)# '# oss oss%s %ss% s%s s )##('u#%s o& ) 5u('-')l %(so", o#$%('s% '# )""o# % $%l- l')l% &o( -)+)*%s and -)+)*%s and in>uries it may inlict to other persons!
C@5 C@5 @bant bante e 4onite niteDs Ds news newspap paper ers s are are circ circul ulat ated ed nationwide, showing ostensibly its being a corporate entity, entity, thus the doctrine doctrine o corporati corporation on by estoppel estoppel may appropriately apply! @n unincorporated association, which represents itsel itsel to be a corporation, will be estopped rom denying its corporate capacity in a suit against it by a third person who relies in good aith on such representation! 3C5 No"6'"o(o()#'o" o& A)"#% To"'#% '#$ #$% %u('#'%s )"- E4$)"*% Co++'ss'o" )s o& "o o"s%? o"s%?u%" u%"%, %, &o(, &o(, o#$%( o#$%('s 's%, %, $o%v% $o%v%(( o& #$% #$% ul ul' ' $o $o ouloul- su&&%( su&&%( )"y -)+)* -)+)*% % &(o+ &(o+ #$% #$% ul')#'o" o& )(#'l%s '" #$% )*%s o& '#s #)lo'-s oul- % l%&# '#$ou# (%ou(s%.
AAYAAN vs CA #+#%(), &ME , *--)
G!2!
9!
By its failure to submit its by-laws on time, the AIIBP may be considered a de facto corporation corporation whose right to exercise corporate powers may not be inuired into collaterally in any pri!ate suit to whic which h such such corp corpor orat atio ion n may may be a part party y . A corporation which has failed to file its by-laws within the prescr prescribe ibed d period period does does not ipso ipso facto facto lose lose its powers as such. The )' ules on usp uspen ensi sion on/ /e! e!oc ocat atio ion n of the the 'ert 'ertif ific icat ate e of egistration of 'orporations, details the procedures and reedies that ay be a!ailed of before an order of re!ocation can be issued. There is no showing that such a procedure has been initiated in this case. Failur Failure e to submit submit the byAlaw byAlaws s withi within n (- days days rom rom incorp incorpora oratio tion n does does not automa automatic ticall ally y disso dissolve lve the corporation! It is merely a ground or suspension or revo revoca cati tion on o its its char charte terr ate aterr prop proper er noti notice ce and and hearing! 4he corporation is, at the very least, a de act acto o corp corpor orat atio ion n whos whose e exis existe tenc nce e may may not not be collaterally attac'ed!
C/@24E2E6 G9CC 9A C/@24E2E6 G9CC BA7UYOT vs HO7GANA FACT! 6uring a spot audit in #$%%, the auditors rom the Philippine ational 2ed Cross ;P2C< headuarters discovered a case shortage in the unds o its Bohol chapter! 4he chapter administrator, administrator, petitioner Baluyot, Baluyot, was held held accoun accountab table le and therea thereate ter, r, respon responden dentt /olgan8a as member o the board Bohol chapter, iled a comp compla lain intt with with the the 9c! 9c! o the the 9mbu 9mbuds dsma man n or or malversation! Mpon recommenda recommendation tion o respondent respondent "ilitant "ilitante, e, an administratiave administratiave doc'et o dishonesty was also opened against Baluyot! B)luyo# ()'s%- #$% -%&%"s% #$)# #$% O+u-s+)" $)- "o 5u('s-'#'o" )s $% $)- )u#$o('#y o"ly ov%( *ov%("+% *ov%("+%"# "# o"%o"%- o( o"#(oll o"#(oll%%- o(o()# o(o()#'o"s 'o"s $'$ #$% PNRC )s "o#. 3he gives as evidence o its private character #< it does does not not rece receiv ive e budg budget etar ary y supp suppor ortt rom rom the the government and all money given to it by the latter and its instru instrumen mental taliti ities es become become privat private e unds unds o the organi8ation! *< unds or the payment o personnelDs personnelDs salaries and other emoluments come rom yearly und campaigns, private contributions and rentals rom its proper propertie ties! s! (< itit is not audit audited ed by C9@! C9@! P2C, P2C, peti petiti tion oner er clai claims ms all alls s unde underr the the Inte Intern rnat atio iona nall Federation o 2ed Cross, 3wissAbased organi8ation! IUE!
.hether or not P2C is a government owned or controlled corporation!
RU7ING!
YE.
P2C P2C is a gove govern rnme ment nt owne owned d and and cont contrrolle olled d corporation, with an original charter under 2@ o! $), as amended!
T$% #%s# #o -%#%(+'" -%#%(+'"% % $%#$%( $%#$%( ) o(o()# o(o()#'o" 'o" 's *ov%( *ov%("+% "+%"# "# o"%o"%- o( o"#(o o"#(oll ll%%- o( ('v)# ('v)#% % '" ")#u(% ")#u(% 's s'+l%. Is '# (%)#%- y '#s o" $)(#%( $)(#%( &o( &o( #$% #$% %4%( %4%(' 's% s% o& ) ul ul' ' &u" &u"#' #'o" o",, o( y '"o(o()#'o" '"o(o()#'o" u"-%( #$% *%"%()l o(o()#'o" l)/ T$os T$os% % '#$ '#$ s% s%') ')ll $)( $)(#% #%(s (s )(% )(% *ov% *ov%(" ("+% +%"# "# o(o o(o()# ()#'o 'o"s "s su5% su5%# # #o '#s '#s (ov' (ov's'o s'o"s, "s, )"- '#s %+loy%%s )(% u"-%( #$% 5u('s-'#'o" o& #$% C'v'l %(v %(v' '% % Co++ Co++'s 'ss' s'o" o",, )")"- )(% )(% o+ o+ul ulso so(y (y +%+%(s o& #$% GI. 4he P2C was not impliedly converted to a private corporation simply because its charter was amended to vest in it the authority to secure loans, be exempted rom rom paymen paymentt o all duties, duties, taxes, taxes, ees ees and other other charges o all 'inds on all importations and purchases or its exclusive use, on donations or its disaster relie wor' and other services and in its beneits and und raising drives! Cl%)(ly #$%", ul' (%so"-%"# $)s 5u('s-'#'o" 5u('s-'#'o" ov%( #$% #$% +)##%(.
FE7ICIANO <. COA G.R. NO. 1MKM02, 1M JANUARY 200M 'ongre 'ongress ss can not enact a law law creati creating ng a pri!at pri!ate e corporati corporation on with a special special charter. charter. uch legislati legislation on would be unconstitutional. 0ri!ate corporations ay exist only under a general law. 1f the corporation is pri!ate, it ust ust necessarily exist under a general law. law.
2acts C9@ assessed eyte "etropolitan .ater 6istrict ;".6< ;".6< auditin auditing g ees! ees! Petitio Petitioner ner Felician Feliciano, o, as General "anager o ".6, contended that the water district could not pay the said ees on the basis o 3ections 0 and *- o P!6! o! #$ as well as 3ection # o 2!@! o! 0%)! /e primarily claimed that ".6 is a private corporation not covered covered by C9@Js C9@Js >urisdict >urisdiction! ion! Petition Petitioner er also as'e as'ed d or or reu reund nd o all all audi auditi ting ng ees ees ".6 ".6 previously paid to C9@!C9@ Chairman denied petitionerDs reuests! Petitioner iled a motion or reconsideration which C9@ denied! /ence, this petition! 1ssue3 .hether .hether a ocal ocal .ater .ater 6istrict 6istrict ;.6 ;.6<< crea reated ted under P6 #$, as amen mended ded, is a gove governm rnmen entAo tAown wned ed or contr controll olled ed corpo corporat ration ion sub> sub>ec ectt to the the audi auditt >uri >urisd sdic icti tion on o C9@ C9@ or a private private corporat corporation ion which which is outside outside o C9@Ds C9@Ds audit >urisdiction! &eld3 Petition lac's merit! 4he Constitution under 3ec! *;#<, @rticle INA6 and existing laws mandate
C9@ to audit all government agencies, including governmentAowned governmentAowned and controlled corporations with original charters! @n .6 is a G9CC with an original charter! 4he 4he Cons Consti titu tuti tion on reco recogn gni8 i8es es two two clas classe ses s o corp corpo orati ration ons! s! 4he irs irstt re reers to priv rivate corpora corporation tions s created created under under a general general law! 4he second reers to governmentAowned or controlled corporations created by special charters! Mnder existing laws, that general law is the Corporation Code! 9bvious 9bviously ly,, .6Ds .6Ds are not private private corporat corporations ions becau cause they are not crea reated ted under the the Corporation Corporation Code! .6Ds .6Ds are not registered with the the 3ecu 3ecuri riti ties es and and Exch Exchan ange ge Commi Commiss ssio ion! n! 3ection #+ o the Corporation Code states that all corporations organi8ed under this code shall ile with the 3EC articles o incorporation x x x! .6s .6s have have no arti articl cles es o inco incorp rpor orat atio ion, n, no incorporators and no stoc'holders or members! 4here are no stoc'holders or members to elect the board directors o .6s as in the case o all corporations registered with the 3EC! 4he local mayor mayor or the provincial provincial governor governor appoints appoints the directors o .6s or a ixed term o oice! 4he board directors o .6s are not coAowners o the .6s! 4he board directors and other personnel o .6s are government employees sub>ect to civil service laws and antiAgrat laws! Clearly, an .6 is a public and not a private entity, hence, sub>ect to C9@Ds audit >urisdiction!
BOY COUT OF THE PHI7IPPINE <. CO==IION ON AUIT G!2! 9! #%%#(#! &ME %, *-## 4he issue was whether or not the Boy 3couts o the Philippines ;B3P< all under the >urisdiction o the Commission on @udit! 4he B3P contends that it is not a governmentA owned or controlled corporationH neither is it an instrume instrumental ntality ity,, agency agency,, or subdivis subdivision ion o the government! 4he 3upreme Court, however, however, held #$)# "o# )ll o( o(o( o()# )#'o 'o"s "s,, $' $'$ $ )(% )(% "o# "o# *ov% *ov%(" ("+% +%"# "# o"%o"%- o( o"#( o"#(oll oll%%-,, )(% )(% 'so 'so &)#o &)#o #o % o"s' o"s'-% -%(% (%- ('v) ('v)#% #% o(o o(o()# ()#'o" 'o"s s )s #$%(% #$%(% %4's#s )"o#$%( -'s#'"# l)ss o& o(o()#'o"s o( $)(#%(%- '"s#'#u#'o"s $'$ )(% o#$%('s% >"o" )s ul' o(o()#'o"s.
4hes 4hese e corp corpor orat atio ions ns are are trea treate ted d by law law as agencies or instrumentalities o the government which are not sub>ect to the tests o ownership or control and economic viability but to a dierent criteria relating to their public purposes7interests or constitutional policies and ob>ectives and their administrative relationship to the government or any o its departments or oices! @s presently constituted, constituted, the B3P is a public corporation created by law or a public purpose, attached to the 6epartment o Education Culture and and 3por 3ports ts purs pursua uant nt to its its Char Charte terr and and the the @dministrative @dministrative Code o #$%! It is not a private corpo corporat ration ion which which is reuir reuired ed to be owned owned or controlled by the government and be economically viable to >ustiy its existence under a special law! 4he economic viability test would only apply i the corporation is engaged in some economi economic c activity activity or busines business s unctio unction n or the gove govern rnme ment nt,, whic which h is not not the the case case or or B3P B3P! 4hereore, being a public corporation, the unds o the the B3P B3P all all unde underr the the >uri >urisd sdic icti tion on o the the Commission on @udit!
7IBAN < GORON G! 2! 9! #%)()*, &@M@2 #, *-## @lthough the P$'l' P$'l''"% '"% N)#'o")l N)#'o")l R%- C(oss C(oss )s (%)#%- y ) s%')l $)(#%(, '# )" "o# % o"s' "s'-%( -%(%) *ov *ov%("+% ("+%" "#6o #6o"% "%)"o"#(oll%- o(o()#'o" '" #$% )s%"% o& #$% %ss%"#')l %l%+%"#s o& o"%(s$' )"- o"#(ol y #$% *ov%("+%"#.
as a 3enator, such a conclusion does not ipso acto imply that the P2C is a private corpo corpora ratio tion n within within the cont contemp empla latio tion n o the the prov provis isio ion n o the the Cons Consti titu tuti tion on,, that that must must be organi8ed under the Corporation Code! 4he 4he P2C 2C en>oy >oys a spe specia cial statu tatus s as an important ally and auxiliary o the government in the human humanita itaria rian n ield ield in accor accorda dance nce with with its commitments commitments under international international law! 4his Court canno cannott all o a sudden sudden reuse reuse to recog recogni8 ni8e e its exis existe tenc nce, e, espe especi cial ally ly sinc since e the the issu issue e o the the constitutionality o the P2C Charter was never raised by the parties!
CARANANG <. EIERTO G!2! 9! #)(#0#, &@M@2 #*, *-## A go!ernent*owned go!ernent*owned or controlled corporation corporation refers to any agency organi4ed as a stock or non-s non-sto tock ck corpo corporat ration ion !este !ested d with with functi function ons s relating to public needs whether go!ernental go!ernental or proprietary in nature and owned by the go!erne go!ernent nt through through its instrue instruental ntalities ities either either wholl wholly y or where where appli applicab cable le as in the the case case of stock corporation corporation to the extent of at least 567 of its capital stock. When a stockholder ceded to the go!ernent shares representing 89.: 7 of the !oting stock of the corporation but subsequently clarified that it shoul should d be reduce reduced d to ;9.:7 ;9.:7,, the corpo corporat ration ion shall not be considered go!ernent-owned and controlle controlled d until until the quantif quantificat ication ion of shares shares is resol!ed with finality. FACT
It does not have government assets and does not receive any appropriation rom the Philippine Cong Congre ress ss!! It is a nonA nonApr pro oit it,, dono donorA rAun unde ded, d, voluntary organi8ation, whose mission is to bring timely, eective and compassionate humanitarian assi assist stan ance ce or or the the most most vuln vulner erab able le with withou outt cons consid ider erat atio ion n o nati nation onal ality ity,, race race,, reli religi gion on,, gender, social status or political ailiation! 4his does not mean however that the charter o P2C P2C is unco uncons nsti titu tuti tion onal al!! P2C P2C has has a sui sui generis status! @lthough it is neither a subdivision, subdivision, agency, agency, or inst instru rume ment ntal alit ity y o the the gove govern rnme ment nt,, nor nor a governmentAowned or Acontrolled corporation or a subsidia subsidiary ry thereo thereo,, so much so that that Gordon Gordon was was corre correctl ctly y allow allowed ed to hold hold his posit position ion as Chairman thereo concurrently while he served
Peti Petiti tion oner er @nton ntonio io "! Cara Carand ndan ang g ;Car ;Caran anda dang ng<< chal hallenge enges s the >uri urisdic sdicttion over over him o the 9mbu 9mbuds dsma man n and and o the the 3and 3andig igan anba baya yan n on the the ground that he was being held to account or acts committed while he was serving as general manager and and chie chie oper operat atin ing g oi oice cerr o 2adi 2adio o Phil Philip ippi pine nes s etwor', Inc! ;2P<, which was not a governmentA owned or Acontrolled corporationH hence, he was not a public oicial or employee! Bene Benedi dict cto o was was a stoc stoc'h 'hol olde derr o 2P, 2P, a priv privat ate e corporati corporation on duly registered registered with the 3ecuritie 3ecurities s and Excha Exchange nge Commis Commissio sion n ;3EC< ;3EC
PCGG PCGG,, the the 3and 3andig igan anba baya yan n ;3ec ;3econ ond d 6ivi 6ivisi sion on<< directed the president and corporate secretary o 2P to tran trans ser to the PCG PCGG Bened enediictos ctos shar shares es repr epresen esentting %*!+ %*!+= = o the total otal issue ssued d and and outstanding capital stoc' o 2P! /oweve /owever, r, Benedi Benedicto cto moved moved or a recons reconside iderat ration ion,, cont conten endi ding ng that that his his 2P 2P shar shares es cede ceded d to the the Government Government,, through through the PCGG, PCGG, represent represented ed only (*!+= o 2Ps outstanding capital stoc', not %*!+=! Benedictos motion or reconsideration has remained unresolved to this date!
It is clear, thereore, that a corporation is considered a governmentA governmentAowne owned d or Acontroll Acontrolled ed corporatio corporation n only when the Government directly or indirectly owns or controls at least a ma>ority or )#= share o the capital stoc'! @pplying this statutory criterion, the Court ruled in >eyson, ?r. !. +ffice of the +budsan5 +budsan 5
3imilarly, 3imilarly, the law deines what are governmentAowned or Acontr Acontroll olled ed corpor corporati ations ons!! For one, one, 3ectio 3ection n * o Presidential 6ecree o! *-*$ ;
But these >urisprudential rules invo'ed by petitioner in suppor supportt o his claim that the CIIF compan companies ies are government owned and7or controlled corporations are inco incomp mple lete te with withou outt reso resort rtin ing g to the the dei deini niti tion on o gove govern rnme ment nt owne owned d or cont contro roll lled ed corp corpor orat atio ion n contained in par! ;#(<, 3ec!*, Introductory Provisions o the @dministrative Code o #$%, i.e., any agency organi8ed as a stoc' or nonAstoc' corporation vested with with unc uncti tion ons s rela relati ting ng to publ public ic need needs s whet whethe her r governmental or proprietary in nature, and owned by the the gove govern rnme ment nt dire direct ctly ly or indi indire rect ctly ly thro through ugh its its instrumentalities either wholly, or where applicable as in the case o stoc' corporations to the extent o at least ityAone ;)#< percent o its capital stoc'! 4he deinition mentions three ;(< reuisites, namely, irst, any any agen agency cy orga organi ni8e 8ed d as a stoc stoc' ' or nonA nonAst stoc oc' ' corporationH second, vested with unctions relating to public needs whether governmental or proprietary in natureH and, third, owned by the Government directly or through its instrumentalities either wholly, or, where applicable as in the case o stoc' corporations, to the extent o at least ityAone ;)#< o its capital stoc'!
3ect 3ectio ion n *! @ gove govern rnme ment ntAo Aown wned ed or cont contro roll lled ed corpor corporati ation on is a stoc' stoc' or a nonAst nonAstoc' oc' corpor corporati ation, on, wheth whether er peror perormin ming g govern governmen mental tal or propri proprieta etary ry unctions, which is directly chartered by a special law or i organi8ed under the general corporation law is owned or controlled controlled by the government government directly directly,, or indirectly through a parent corporation or subsidiary corporation, #o #$% %4#%"# o& )# l%)s# ) +)5o('#y o& '#s ou#s#)"-'"* )'#)l s#o> o( o& '#s ou#s#)"-'"* vo#'"* )'#)l s#o> s#o>!!
In the the pres presen entt case case,, all all thre three e ;(< ;(< corp corpor orat atio ions ns comprising comprising the CIIF companies companies were organi8ed organi8ed as stoc' corporations! T$% UCPB6CIIF o"s MM.10 o& #$% s$)(%s s$)(%s o& 7EGAPI 7EGAPI OI7, OI7, 444. Ov'ousl Ov'ously, y, #$% %lo %lo 1 1 s$)( s$)(%s %s o& s#o s#o> > '" 7EGA 7EGAP PII OI7 OI7 (%+o (%+ov% v%s s #$'s #$'s &'(+ &'(+ &(o+ &(o+ #$% #$% -%&' -%&'"' "'#' #'o" o" o& ) *ov%("+%"# o"%- o( o"#(oll%- o(o()#'o" ! x x x 4he Court thus concludes that the CIIF are, as ound by public respondent, private corporations not within the scope o its >urisdiction!
It is not not dis disput puted that hat the the 9mbuds budsma man n has has >urisdiction over administrative cases involving grave misconduct committed by the oicials and employees o governmentAowned or Acontrolled corporationsH and that that the 3andig 3andiganb anbaya ayan n has >urisd >urisdict iction ion to try and decide decide criminal criminal actions involving involving violatio violations ns o 2!@! (-#$ committed committed by public public oicial oicials s and employees, employees, includ includin ing g presid president ents, s, direct directors ors and manage managers rs o government governmentAown Aowned ed or Acontroll Acontrolled ed corporati corporations! ons! 4he resp respec ecti tive ve >uri >urisd sdic icti tion ons s o the the resp respon onde dent nts s are are expressly deined and delineated by the law!
3ection * ;#(< o Execu ecutive 9rder o! *$* ; Adinistrati!e Adinistrati!e 'ode of #$ of #$%< %< rend render ers s a simi simila lar r dei deini niti tion on o gover governm nmen entA tAow owne ned d or Acon Acontr trol olle led d corporations5 3ection *! =eneral Ters o(o()#'o"s #o #$% %4#%"# o& )# l%)s# 1 o& '#s )'#)l s#o>! s#o> !
Conseuently, Conseuently, 2P was neither a governmentAowned nor nor a cont contro rollled corpo orpora rati tion on becau ecaus se o the the Governments total share in 2Ps capital stoc' being only (*!+=! Paren arenttheti hetica callly, ly, alt althoug hough h it is true true that hat the 3and 3andig igan anba baya yan n ;3ec ;3econ ond d 6ivi 6ivisi sion on<< orde ordere red d the the trans transe err to the the PCGG PCGG o Bene Benedi dict ctos os shar shares es that that represented %*!+= o the total issued and outstanding capi apital stoc' oc' o 2P, such such uan uantii tiic catio ation n o Benedictos shareholding cannot be controlling in view o Bene enedic dictos timely iling o a motion or reconsideration whereby he clariied and insisted that the shares ceded to the PCGG had accounted or only (*!+=, not %*!+=, o 2Ps outstanding capital stoc'! .ith the extent o Benedictos holdings in 2P remaining unresolved with inality, concluding that the Government held the ma>ority o 2Ps capital stoc'
as to ma'e 2P a governmentAowned or Acontrolled corporation would be beret o any actual and legal basis!
FUNA vs vs =EC =ECO ;"anila ;"anila Economic Economic and Cultural 9ice< G2 #$(+0*, Feb +, *-#+ Because the Philippines subscribes to the 9ne China Policy o the PeopleDs 2epublic o China, it ended its diplomatic relations with 4aiwan! /owe /oweve verr it cont contin inued ued to main mainta tain in an uno unoi ici cial al relationsh relationship ip with with 4aiwan aiwan through through the "EC9! "EC9! Funa as'ed as'ed C9@ to urnis urnish h him with with inanc inancial ial and audit audit reports o C9@Ds audit o "EC9! C9@ initially said that "EC9 was not under its audit >urisdiction! 4his prompted Funa to ile this petition or mand mandam amus us!! C9@ C9@ subs subse eue uent ntly ly sent sent audi audito tors rs to 4aiwan! Funa argues that "EC9 is a G9CC or at least a governmental entity sub>ect to the audit >urisdiction o C9@! "EC9 argues that it is not a G9CC nor is it a governmental instrumentality and to categori8e it as such would violate the one china policy o P29C! C9@ conc oncedes edes that hat "EC9 EC9 is under nder its audi udit >urisdiction because o certain ees that "EC9 handles which are receivables o 69E but insists that the case is moot because because it already already sent a team to audit "EC9! 3C ruled that the case was not moot since it alls under the exceptions! 4hat "EC9 is not a G9CC nor is it a govern governmen mental tal entity entity!! "EC9 is in act act a sui generis entity! /owever certain transactions o "EC9 are sub>ect to the audit >urisdiction o C9@ particularly particularly its collection o :eriication ees and Consular ees! "#$%&I'( I'(. 4he "EC9 is not a G9CC or government instrumentality! It is a sui generis private entity especially entrusted by the government with the acilitat acilitation ion o unoici unoicial al relations relations with the people in 4aiwan iwan witho without ut >eopar >eopardi8 di8ing ing the countr countryD yDs s aith aithul ul commitment to the 9ne China policy o the P29C! /owever, despite its nonAgovernmental character, the "EC9 handles government unds in the orm o the Kveriication eesK it collects on behal o the 69E and the Kconsular eesK it collects under 3ection *;0< o E9 o! #), s! *--#! /ence, under existing laws, the accounts o the "EC9 pertaining to its collection o such Kveriication eesK and Kconsular eesK should be audited by the C9@ )$: )$: *($# *($# is not not a +# +#$$ $$ or +o!e +o!ern rnme ment ntal al Instrumentality
Gov%("+%"# '"s#(u+%"#)l'#'%s '"s#(u+%"#)l'#'%s are agencies o the national government that, by reason o some Kspecial unction or >urisdictionK they perorm or exercise, are allo allott tted ed Kope Kopera rati tion onal al auto autono nomy myKK and and are are Knot Knot integrated integrated within within the department department ramewor'! ramewor'! 4hey include5 #!re #!regu gula lato tory ry agen agenci cies esHH *!ch *!char arte tere red d inst instit itut utio ions nsHH (!gov (!gover ernm nmen entt corp corpor orat ate e enti entiti ties es or gove govern rnme ment nt instrumentalities with corporate powers ;GCE7GICP% )" %"#'#y ) GOCC GO CC!! &'(s#, &'(s#, '#s o(*)" o(*)"') ')#'o #'o" " )s s#o> s#o> o( "o"6 "o"6 s#o> o(o()#'o" s%o"-, #$% ul' $)()#%( o& '#s &u"#'o" &u"#'o" )"- #$'(-, #$'(-, *ov%("+% *ov%("+%"# "# o"%(s$' o"%(s$' ov%( #$% s)+%. Possession s)+%. Possession o all three attributes is necessary to deem an entity a G9CC "EC9 is ) "o"6s#o> "o"6s#o> o(o()#'o" o(o()#'o" based based on the records and based on the act that its earnings are not distributed as dividends to its members "EC9 %(&o(+s %(&o(+s &u"#'o &u"#'o"s "s '#$ ) Pul' Pul' As%#! As%#! "EC9 "EC9 was was Kaut Kautho hori ri8e 8edK dK by the the Philip Philippin pine e govern governmen mentt to peror perorm m certai certain n Kconsular Kconsular and other unctionsK unctionsK relating relating to the prom promot otio ion, n, prot protec ecti tion on and and aci acili lita tati tion on o Philippine interests in 4aiwan! 4he unctions o the the "EC9 "EC9 are are o the the 'ind 'ind that that would ould otherwis otherwise e be perormed perormed by the Philippin PhilippinesD esD own diplo diplomat matic ic and consul consular ar organs organs,, i not only or the governmentDs acuiescence that they instead be exercised by the "EC9! 4he =ECO Is No# O"%- o( Co"#(oll%- y #$% Gov%("+%"# Gov%("+%"#! 4he Kdesire lettersK that the President transmits are merely recommendatory and not binding on it! Mnder its byAlaws, byAlaws, the election o its directors directors are done by the members themselves, its oicers are elected by the directors and members are admi admitt tted ed throu hroug gh a unani nanim mous ous boar board d reso resolu luti tion on!! one one o the the inco incorp rpor orat ator ors s o "EC9 were government oicials and up to this day, none o the members, directors or oicers are government appointees or public oicers designated by reason o their oice! )$: it is a sui generis entity 3ince "EC9 is not a G9CC, it cannot also be either o the other government government instrumen instrumentali talities ties primaril primarily y because these instrumentalities are creatures o law ;meaning an actual law was passed or their creation< while "EC9 was incorporated under the Corporation code!
4he reason behind it being under the supervision o the the 64I 64I is beca becaus use e its its unc uncti tion ons s may may resu result lt in it engage engaged d in deali dealings ngs or activi activitie ties s that that can direct directly ly contradict contradict the Philippi PhilippinesD nesD commitment commitment to the 9ne Chin China a Poli Policy cy!! 4his his scen scenar ario io can can be avoi avoide ded d i theExecutive exercises some sort o supervision over it! it! But But this this aspe aspect ct was not not ues uesti tion oned ed by the the petitioner, so this was deemed irrelevant to the issue by the 3C! $ertain accounts may be audited by the $#A "EC9 should be sub>ected to the auditing o C9@ as regards its collection o veriication and consular ees! Pertinent is the provision o the @dministrative Code, 3ection #+;#<, Boo' : thereo, which authori8es the C9@ to audit accounts o nonOgovernmental entities required to pay xxx or ha!e go!ernent share share but only only with with resp respec ectt to fund funds s xxx xxx coin coing g fro fro or through the go!ernent ! ! 4he said ees collected by "EC9 are receivables o 69E! As #o #$% #$% v%(' v%('&' &')# )#'o 'o" " &%%s &%%s;K ;Kse serv rvic ice e ee ee or or the the veri verii ica cati tion on o over overse seas as empl employ oyme ment nt cont contra ract cts, s, recru ecruiitmen ment agr agreem eement ent or spec specia iall power owers s o attorneyK<5 Mnder 3ection % o E9 o! #-**, 69E has the author authority ity to collec collectt verii veriicat cation ion ees! ees! But it entered entered into a series series o "o@ with "EC9 authori8in authori8ing g
the latter to collect such ees since the P/ does not have an oicial post in 4aiwan! As #o #$% #$% o"s o"sul ul)( )( &%%s &%%s55 4he 4he auth author orit ity y behi behind nd consular fees fees is 3ection *;0< o E9 o! #), s! *--#! 4he 4he said said sectio section n author authori8e i8es s the "EC9 "EC9 to collec collectt reasonable reasonable fees fees or or its its per peror orma manc nce e o cons consul ular ar unctions! Evidently, and >ust li'e the peculiarity that atte attends nds the the 69E 69E !erificat !erification ion fees, fees, ther here is no consular oice or the collection o the consular fees! fees! 4hus, 4hus, the the auth author orit ity y or or the the "EC9 "EC9 to coll collec ectt the the reasonable reasonable fees, fees, vested vested unto it by the executiv executive e order ;E9 o! #), s! *--#< '#%(). &ust in case sIr as's who 6ennis @B FM@ is, Funa is the chair o the Civil 3ervice Commission appointed by then president G"@! But this act wasnDt mentioned in this case! /is reuest with C9@ was was not done in his capacit capacity y as the the C3C C3C chair chair!! /e >ust >ust appeared out o nowhere as'ing or the records!
