Corporation Cases 1 Digest

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Corporation Cases 1 Digest
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  Renato Tayag vs Benguet Consolidated, Inc. 26 SCRA 242 – Business Organization – Corporation Law – Domicile of aCorporation – By Laws ust !iel #o a Court Or er – Corporation is an Artificial Being  In March 1960, Idonah Perkins died in New York. She left behind propertieshere and abroad. One propert she left behind were two stock certificatesco!erin ##,00$ shares of stocks of the %en &et 'onsolidated, Inc (%'I).Said stock certificates were in the possession of the 'o&ntr *r&st 'o+panof New York ('*'NY). '*'NY was the do+iciliar ad+inistrator of theestate of Perkins (ob!io&sl in the -S). Meanwhile, in 196#, /enato *aa was appointed as the ancillar ad+inistrator (of the properties of Perkins sheleft behind in the Philippines).  disp&te arose between '*'NY and *aa as to who between the+ isentitled to possess the stock certificates.  case ens&ed and e!ent&all, thetrial co&rt ordered '*'NY to t&rn o!er the stock certificates to *aa . '*'NY ref&sed. *aa then filed with the co&rt a petition to ha!e said stockcertificates be declared lost and to co+pel %'I to iss&e new stock certificatesin replace+ent thereof. *he trial co&rt ranted *aa s petition.%'I assailed said order as it a!erred that it cannot possibl iss&e new stockcertificates beca&se the two stock certificates declared lost are not act&alllost that the trial co&rt as well *aa acknowled ed that the stock certificatese2ists and that the are with '*'NY that accordin to %'Is b laws, it canonl iss&e new stock certificates, in lie& of lost, stolen, or destroedcertificates of stocks, onl after co&rt of law has iss&ed a final and e2ec&tororder as to who reall owns a certificate of stock. ISSUE: 3hether or not the ar &+ents of %en &et 'onsolidated, Inc. arecorrect. HELD: No. %en &et 'onsolidated is a corporation who owes its e2istence toPhilippine laws. It has been i!en ri hts and pri!ile es &nder the law.'orollar, it also has obli ations &nder the law and one of those is to follow!alid le al co&rt orders. It is not i++&ne fro+ 4&dicial control beca&se it isdo+iciled here in the Philippines. %'I is a Philippine corporation owin f&llalle iance and s&b4ect to the &nrestricted 4&risdiction of local co&rts. Itsshares of stock cannot therefore be considered in an wise as i++&ne fro+lawf&l co&rt orders. 5&rther, to allow %'Is opposition is to render the co&rtorder a ainst '*'NY a +ere scrap of paper. It will lea!e *aa witho&t anre+ed si+pl beca&se '*'NY, a forei n entit ref&ses to co+pl with a!alid co&rt order. *he final reco&rse then is for o&r local co&rts to create ale al fiction s&ch that the stock certificates in iss&e be declared lost e!entho& h in realit the e2ist in the hands of '*'NY. *his is !alid. s held ti+eand a ain, fictions which the law +a rel &pon in the p&rs&it of le iti+ateends ha!e plaed an i+portant part in its de!elop+ent.5&rther still, the ar &+ent in!oked b %'I that it can onl iss&e new stockcertificates in accordance with its blaws is +isplaced. It is worth notin that'*'NY did not appeal the order of the co&rt  it si+pl ref&sed to t&rn o!er the stock certificates hence ownership can be said to ha!e been settled infa!or of estate of Perkins here. lso, ass&+in that there reall is a conflictbetween %'Is blaws and the co&rt order, what sho&ld pre!ail is the lawf&lco&rt order. It wo&ld be hi hl irre &lar if co&rt orders wo&ld ield to theblaws of a corporation.  ain, a corporation is not i++&ne fro+ 4&dicialorders. 1  NDC v Agrix G.R. Nos. 84132-33 December 10, 1990 Facts 7Pres. 8ecree No. 11, which ordered the rehabilitation of the  ri2:ro&p of 'o+panies to be ad+inistered +ainl b theNational 8e!elop+ent 'o+pan, o&tlined the proced&re for filin clai+sa ainst the  ri2 co+panies and created a 'lai+s 'o++ittee to processthese clai+s.;speciall rele!ant to this case is Sec. <(1) thereof pro!idin that =all+ort a es and other liens presentl attachin to an of the assets of thedissol!ed corporations are hereb e2tin &ished.=%efore this, the  ri2 Marketin had e2ec&ted in fa!or of petitioner Philippine >eterans %ank a real estate +ort a e dated ?&l , 19@, o!er three (#) parcels of land sit&ated in Aos %aBos, Aa &na. 8&rin thee2istence of the +ort a e, :/IC went bankr&pt. It was for thee2pressed p&rpose of sal!a in this and the other  ri2 co+panies thatthe afore+entioned decree was iss&ed b President Marcos.Petitioner filed a clai+ with the :/IC 'lai+s 'o++ittee for the pa+entof its loan credit. In the +eanti+e, the New  ri2, Inc. and theNational 8e!elop+ent 'o+pan, in!okin Sec. < (1) of the decree, fileda petition with the /e ional*rial 'o&rt of 'ala+ba, Aa &na, for thecancellation of the +ort a e lien in fa!or of Philippine >eterans.5or its part, the Philippine >eterans took steps to e2tra4&diciall foreclosethe +ort a e, pro+ptin  ri2 to file a second case with the sa+e co&rtto stop the foreclos&re.In the trial co&rt, the 4&d e ann&lled not onl the challen ed pro!ision of Sec. < (1), b&t the entire Pres. 8ecree No. 11 on the ro&nds that7 (1)the presidential e2ercise of le islati!e power was a !iolation of theprinciple of separation of powers ($) the law i+paired the obli ation of contracts and (#) the decree !iolated the eD&al protection cla&se.*he +otion for reconsideration of this decision ha!in been denied, thepresent petition was filed in the S&pre+e 'o&rt.*he petitioners contend that the pri!ate respondent is now estopped fro+contestin the !alidit of the decree. *he cited MendoEa !.  ri2Marketin , Inc.,1 where the constit&tionalit of Pres. 8ecree No. 11was also raised b&t not resol!ed.Moreo!er the clai+s co++ittee dis+issed the filin of the petition bPhilippine >eterans on the ro&nd of the afore+entioned estoppel.*he petitioners stress that in that the pri!ate respondent also in!oked thepro!isions of Pres. 8ecree No. 11 b filin a clai+ with the :/IC'lai+s 'o++ittee. 5ailin to et res&lts, it so& ht to foreclose the realestate +ort a e e2ec&ted b :/IC in its fa!or, which had beene2tin &ished b the decree. It was onl when thepetitioners challen ed the foreclos&re on the basis of Sec. < (1) of thedecree, that the pri!ate respondent attacked the !alidit of the pro!ision. t that sta e, howe!er, consistent with MendoEa, the petitioners alle edthat pri!ate respondent was alread estopped fro+ D&estionin theconstit&tionalit of the decree. Issues 7 1. Is estoppel applicableF$. Is P8 11 constit&tionalF Held 7 No. Yes. petition dis+issed Ratio: 1. *o r&le now that the pri!ate respondent is estopped for ha!in abidedwith the decree instead of boldl assailin it is to close o&r ees to acnical fact of life d&rin the Marcos ti+e.*his case +&st be distin &ished fro+ MendoEa, where the petitioners,after filin their clai+s with the :/IC 'lai+s 'o++ittee, recei!ed insettle+ent shares of stock !al&ed at P<0,000.00 witho&t protestor reser!ation.*he pri!ate respondent has not been paid a sin le centa!o on its clai+,which was kept pendin for +ore than se!en ears for alle ed lack of s&pportin papers. Si nificantl, the !alidit of that clai+ was notD&estioned b the petitioner when it so& ht to restrain the e2tra4&dicialforeclos&re of the +ort a e b the pri!ate respondent. *he petitioner  2  li+ited itself to the ar &+ent that the pri!ate respondent was estoppedfro+ D&estionin the decree beca&se of its earlier co+pliance with itspro!isions.$. *he 'o&rt is especiall dist&rbed b Section <(1) of the decree, D&otedabo!e, e2tin &ishin all +ort a es and other liens attachin to the assetsof :/IC. It also notes, the restriction in S&bsection (ii) thereof that all=&nsec&red obli ations shall not bear interest= and in S&bsection (iii) that=all accr&ed interests, penalties or char es as of date hereof pertainin tothe obli ations, whether sec&red or &nsec&red, shall not be reco niEed.=*hese pro!isions +&st be read with the %ill of /i hts, where it is clearlpro!ided in Section 1 that =no person shall be depri!ed of life, libert or propert witho&t d&e co&rse of law nor shall an person be denied theeD&al protection of the law= and in Section 10 that =no law i+pairin theobli ation of contracts shall be passed.Petitioners ar &e that propert ri hts, like all ri hts, are s&b4ect tore &lation &nder the police power for the pro+otion of the co++onwelfare. Gence 4&stification of the pro!ision.'o&rt *he police power is not a panacea for all constit&tional +aladies.Neither does its +ere in!ocation con4&re an instant and a&to+atic 4&stification for e!er act of the o!ern+ent depri!in a person of his life,libert or propert.  le islati!e act based on the police power reD&ires the conc&rrence of alawf&l s&b4ect and a lawf&l +ethod. In +ore fa+iliar words, a) theinterests of the p&blic enerall, as distin &ished fro+ those of apartic&lar class, sho&ld 4&stif the interference of the state and b) the+eans e+ploed are reasonabl necessar for the acco+plish+ent of the p&rpose and not &nd&l oppressi!e &pon indi!id&als*he case is not applicable to these reD&ire+ents beca&se the interests of the p&blic are not s&fficientl in!ol!ed to warrant the interference of the o!ern+ent with the pri!ate contracts of :/IC. *he decree speaks!a &el of the =p&blic, partic&larl the s+all in!estors,= who wo&ld bepre4&diced if the corporation were not to be assisted. *here was norecord of these in!estors. lso, there was no p&blic interest to beprotected. *he decree was to the benefit of an e2cl&si!e set of in!estors.*he oppressi!eness is patent on the face of the decree to rehabilitate  ri2. No consideration is paid for the e2tinction of the +ort a e ri hts.*he accr&ed interests and other char es are si+pl re4ected b thedecree.  +ort a e lien is a propert ri ht deri!ed fro+ contract and so co+es&nder the protection of the %ill of /i hts. Pri!ate propert cannot si+plbe taken b law fro+ one person and i!en to another witho&tco+pensation and an known p&blic p&rpose. *his is plain arbitrarinessand is not per+itted &nder the 'onstit&tion. nd not onl is there arbitrar takin , there is discri+ination as well. Ine2tin &ishin the +ort a e and other liens, the decree l&+ps thesec&red creditors with the &nsec&red creditors and places the+ on thesa+e le!el in the prosec&tion of their respecti!e clai+s.-nder the eD&al protection cla&se, all persons or thin s si+ilarl sit&ated+&st be treated alike, both in the pri!ile es conferred and the obli ationsi+posed. 'on!ersel, all persons or thin s differentl sit&ated sho&ld betreated differentl. In the case at bar, persons differentl sit&ated aresi+ilarl treated, in disre ard of the principle that there sho&ld be eD&alitonl a+on eD&als.One +a also well wonder wh :/IC was sin led o&t for o!ern+enthelp, a+on other corporations where the stockholders or in!estors werealso swindled. It is not clear wh other co+panies entitled to si+ilar concern were not si+ilarl treated.On top of all this, New  ri2, Inc. was created b special decreenotwithstandin the pro!ision of rticle CI>, Section < of the 19#'onstit&tion, then in force, that7S;'. <. *he %atasan Pa+bansa shall not, e2cept b eneral law,pro!ide for the for+ation, or aniEation, or re &lation of pri!ate corporations, &nless s&ch corporations are owned or controlledb the :o!ern+ent or an s&bdi!ision or instr&+entalit thereof.*he new corporation is neither owned nor controlled b the o!ern+ent. The Court also feels that the decree impairs the obligation of thecontract beteen ! RI# and the pri$ate respondent ithout %ustification&  3hile it is tr&e that the police power is s&perior to the 3  i+pair+ent cla&se, the principle will appl onl where the contract is sorelated to the p&blic welfare that it will be considered con enitalls&sceptible to chan e b the le islat&re in the interest of the reater n&+ber.It can be seen that the contracts of loan and +ort a e e2ec&ted b :/IC are p&rel pri!ate transactions and ha!e not been shown to beaffected with p&blic interest.  J.R.S. Business Corporation vs. Imperial InsuranceInc Facts: Petitioner is JR Da Silva, president of JRS BusinessCorporation, an establishment duly franchised by theConress of the Philippines, to conduct a messener anddelivery e!press service #he respondent, $mperial $nsurance$nc , presented %ith the C&$ of 'anila a complaint for the sumof money aainst the petitioner corporation (fter thesubmission of the ans%er of the defendants, a compromiseareement %as entered into by the parties %ith the follo%inprovisions) 1#he Defendants *JRS Business Corporation+ admit andconfess their oint and solidary indebtedness to thePlainti- in the sum of P.1, 1/2 32+ 2#he Defendants bind themselves, ointly and severally,and hereby promise to pay the obliation to plainti- attheir business address located at 0scolta 'anila %ithinsi!ty *.+ days from 'arch 1., 1.2 or on or before'ay 1, 1.2 3$n the event the defendants fail to pay in full the totalamount mentioned above, for (45 reason %hatsoever,Plainti- shall be entitled, as a matter of riht, to movefor the e!ecution of the decision rendered in theabove6entitled case by the honorable court based onthe Compromise (reement 7n 'arch 1/, the court approved the compromise areementand rendered udment enoinin the parties to complyfaithfully and strictly %ith the terms and conditions thereof,%ithout special pronouncements as to the cost 7n 'ay 18, 1.2, the debt %as not paid %hich prompted$mperial $nsurance $nc to 9le a 'otion for the $nsurance of a:rit of 0!ecution 7n 'ay 23, 1.2, a :rit of 0!ecution %asissued by the Sheri- of 'anila and on 'ay 2., a 4otice of Sale %as sent out for the auction of the personal propertiesof JRS Business Corporation 7n June 2, a 4otice of Sale of the %hole capital stoc;s of thedefendants JRS Business Corporation, the business name,riht of operation, the %hole assets, furniture and e<uipment,the total liabilities, and 4et :orth, boo;s of accounts, etc of the petitioner corporation %as handed do%n JRS 9led an=rent Petition for Postponement of (uction Sale and Releaseof >evy in the Business 4ame and Riht to 7perate $naddition, the counsel of petitioner 9led a Supplemental'otion for Release of 0!ecution claimin that capital stoc;scannot be levied upon and sold under e!ecution (nother?ery =rent 'otion for Postponement of (uction Sale %as9led #he auction sale %as set for June 21, 1.2@ ho%ever,respondents opposed and the lo%er court denied the motionfor postponement $n the sale, all the properties of the corporation %ere bouhtby the respondent $mperial $nsurance $nc for ten thousandpesos %hich %as the hihest bid $mmediately after the sale,respondent $nsurance company too; possession of theproperties and started runnin the a-airs and operatin thebusiness of JRS Business Corporation Issues: a:A4 the respondent ude acted %ithout or in e!cessof his urisdiction or %ith rave abuse of discretion 
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