corpo cases.docx

8/16/2019 corpo cases.docx

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Corporation.Page1 of Syllabus

Nature of Corporation

Lozano vs De Los Santos ……………………………………………………………….. .2

International Express Travel vs CA ……………………………………………………………… 3

ASSOCIATED BANK (no !NITED O"E#SEAS BANK $%&ILS.')

%etitioner) * vers+s * S%O!SES #A,AEL an- ONALI/A %#ONST#OLLE# ………..0

1.. S!IT &OLDINS) INC.) petitioner)vs.CO!#T O, A%%EALS …………………..

Theory of Concession

Ta4a5 vs Ben5+et Consoli-ate- …………………………………………………………………….67

International Express vs CA ……………………………………………………………………………3

Power to Create Corporation

NDC vs %8ilippines "eterans Ban9 ……………………………………………………………….6:

,eli;iano vs COA …………………………………………………………………………………………..6<

Corporation v Partnership

Li= vs %8ilippine ,is8in5 ear In-+stries ………………………………………………………20

Rights of a Corporation

(Due Process) S=it8 Bell vs Nativi-a- ………………………………………………………....32

(Self !ncri"ination) Bataan S8ip4ar- vs %C …………………………………………….30

(Practice Profession) Al>a>ara vs A;e?e-o Opti;al…………………………………………@7

Cri"inal #iability

est Coast vs &+r- ………………………………………………………………………………………@:

Sia vs CA ……………………………………………………………………………………………………….@<

$hen %&cers "ay be hel' cri"inally liable

(#ea- ALA Arnel !. T4 vs NBI …………………………………………………………………….06

oral Da"ages *war' not proper

ABS*CBN vs CA ………………………………………………………………………………………………0

a=?+lao L+=?er vs %NB …………………………………………………………………………….::

1ar-ine Davies vs CA ………………………………………………………………3

anila Ele;tri; Co=pan4 vs T.E.A. ……………………………………..0

oral Da"ages Speci+c Provision of #aw

,ilipinas Broa-;astin5 Netor9 In;. vs A5o e-i;al………………..


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#ENALDO . LO/ANO) petitioner) vs.&ON. ELIE/E# #. DE LOS SANTOS) %resi-in5 1+-5e) #TC) Br. @) An5elesCit4 an- ANTONIO ANDA) respon-ents.

%!NO) 1.F

T8is petition >or ;ertiorari see9s to ann+l an- set asi-e t8e -e;ision o> t8e #e5ional Trial Co+rt) Bran;8 @)An5eles Cit4 8i;8 or-ere- t8e +ni;ipal Cir;+it Trial Co+rt) a?ala;at an- a5alan5) %a=pan5a to -is=issCivil Case No. 6267 >or la;9 o> G+ris-i;tion.

T8e >a;ts are +n-isp+te-. On De;e=?er 6 t8e Kapatiran5 a?ala;at*An5eles

1eepne4 Drivers Asso;iation) In;. (KAA1DA 8ile respon-ent An-a as t8e presi-ent o> t8e Sa=a8an5An5eles*a?ala;at 1eepne4 Operators an- Drivers Asso;iation) In;. (SAA1ODA in A+5+st 6 a?ala;at) %a=pan5a) petitioner an- private respon-ent a5ree- to;onsoli-ate t8eir respe;tive asso;iations an- >or= t8e !niHe- a?ala;at*An5eles 1eepne4 Operators an-Drivers Asso;iation) In;. (!A1ODA petitioner an- private respon-ent also a5ree- to ele;t one set o> o;ers8o s8all ?e 5iven t8e sole a+t8orit4 to ;olle;t t8e -ail4 -+es >ro= t8e =e=?ers o> t8e ;onsoli-ate-asso;iation ele;tions ere 8el- on O;to?er 2+se- to re;o5nize t8e res+lts o>t8e ele;tion private respon-ent also re>+se- to a?i-e ?4 t8eir a5ree=ent an- ;ontin+e- ;olle;tin5 t8e -+es>ro= t8e =e=?ers o> 8is asso;iation -espite several -e=an-s to -esist. %etitioner as t8+s ;onstraine- to Hlet8e ;o=plaint to restrain private respon-ent >ro= ;olle;tin5 t8e -+es an- to or-er 8i= to pa4 -a=a5es in t8ea=o+nt o> %2@). an- attorne4s >ees o> %@.. 6

%rivate respon-ent =ove- to -is=iss t8e ;o=plaint >or la;9 o> G+ris-i;tion) ;lai=in5 t8at G+ris-i;tion as lo-5e-it8 t8e Se;+rities an- Ex;8an5e Co==ission (SEC. T8e CTC -enie- t8e =otion on ,e?r+ar4


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T8ere is no intra;orporate nor partners8ip relation ?eteen petitioner an- private respon-ent. T8e ;ontrovers4?eteen t8e= arose o+t o> t8eir plan to ;onsoli-ate t8eir respe;tive Geepne4 -rivers an- operatorsasso;iations into a sin5le ;o==on asso;iation. T8is +niHe- asso;iation as) 8oever) still a proposal. It 8a- not?een approve- ?4 t8e SEC) neit8er 8a- its o;ers an- =e=?ers s+?=itte- t8eir arti;les o> ;onsoli-ation isa;;or-an;e it8 Se;tions : an- :< o> t8e Corporation Co-e. Consoli-ation ?e;o=es ee;tive not +pon =erea5ree=ent o> t8e =e=?ers ?+t onl4 +pon iss+an;e o> t8e ;ertiH;ate o> ;onsoli-ation ?4 t8e SEC. 63 8en t8eSEC) +pon pro;essin5 an- exa=inin5 t8e arti;les o> ;onsoli-ation) is satisHe- t8at t8e ;onsoli-ation o> t8e;orporations is not in;onsistent it8 t8e provisions o> t8e Corporation Co-e an- existin5 las) it iss+es a;ertiH;ate o> ;onsoli-ation 8i;8 =a9es t8e reor5anization o;ial. 67 T8e ne ;onsoli-ate- ;orporation ;o=esinto existen;e an- t8e ;onstit+ent ;orporations -issolve an- ;ease to exist. 6@

T8e KAA1DA an- SAA1ODA to 8i;8 petitioner an- private respon-ent ?elon5 are -+l4 re5istere- it8 t8eSEC) ?+t t8ese asso;iations are to separate entities. T8e -isp+te ?eteen petitioner an- private respon-ent isnot it8in t8e KAA1DA nor t8e SAA1ODA. It is ?eteen =e=?ers o> separate an- -istin;t asso;iations.%etitioner an- private respon-ent 8ave no intra;orporate relation =+;8 less -o t8e4 8ave an intra;orporate-isp+te. T8e SEC t8ere>ore 8as no G+ris-i;tion over t8e ;o=plaint.

T8e -o;trine o> ;orporation ?4 estoppel 60 a-van;e- ?4 private respon-ent ;annot overri-e G+ris-i;tionalreJ+ire=ents. 1+ris-i;tion is Hxe- ?4 la anis not s+?Ge;t to t8e a5ree=ent o> t8e parties. 6: It ;annot ?ea;J+ire- t8ro+58 or aive-) enlar5e- or -i=inis8e- ?4) an4 a;t or o=ission o> t8e parties) neit8er ;an it ?e;on>erre- ?4 t8e a;J+ies;en;e o> t8e ;o+rt. 6

Corporation ?4 estoppel is >o+n-e- on prin;iples o> eJ+it4 anis -esi5ne- to prevent inG+sti;e an- +n>airness.6< It applies 8en persons ass+=e to >or= a ;orporation an- exer;ise ;orporate >+n;tions an- enter into?+siness relations it8 t8ir- person. 8ere t8ere is no t8ir- person involve- an- t8e ;oni;t arises onl4 a=on5t8ose ass+=in5 t8e >or= o> a ;orporation) 8o t8ere>ore 9no t8at it 8as not ?een re5istere-) t8ere is no;orporation ?4 estoppel. 2

IN "IE &E#EO,) t8e petition is 5rante- an- t8e -e;ision -ate- April 6) 6or t8e trips o> t8e at8letes an- o;ials o> t8e ,e-Asian a=es in K+ala L+=p+r as ell as vario+s ot8er trips to t8e %eoples #ep+?li; o> total ;ost o> t8e ti;9ets a=o+nte- to %77 6ter) no >+rt8er pa4=ents ere =-e=an-s.

T8is pro=pte- petitioner to Hle a ;ivil ;ase ?e>ore t8e #e5ional Trial Co+rt o> anila. %ein 8is personal ;apa;it4 an- as %resi-ent o> t8e ,e-eration an- i=plea-e- t8e ,e-erat-e>en-ant. %etitioner so+58t to 8ol- &enri Ka8n lia?le >or t8e +npai- ?alan;e >or t8e ti;,e-eration on t8e 5ro+n- t8at &enri Ka8n alle5e-l4 5+arantee- t8e sai- o?li5ation.$0'

&enri Ka8n Hle- 8is anser it8 ;o+nter;lai=. 8ile not -en4in5 t8e alle5ation t8at t8

a=o+nt %2:)@27.2) representin5 t8e +npai- ?alan;e >or t8e plane ti;9ets) 8e averre-no ;a+se o> a;tion a5ainst 8i= eit8er in 8is personal ;apa;it4 or in 8is o;ial ;apa;it4

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,e-eration. &e =aintaine- t8at 8e -i- not 5+arantee pa4=ent ?+t =erel4 a;te- as an a5ent o> t8e ,e-eration8i;8 8as a separate an- -istin;t G+ri-i;al personalit4.$:'

On t8e ot8er 8an-) t8e ,e-eration >aile- to Hle its anser) 8en;e) as -e;lare- in -e>a+lt ?4 t8e trial ;o+rt.$'

In -+e ;o+rse) t8e trial ;o+rt ren-ere- G+-5=ent an- r+le- in >avor o> t8e petitioner an- -e;lare- &enri Ka8npersonall4 lia?le >or t8e +npai- o?li5ation o> t8e ,e-eration. In arrivin5 at t8e sai- r+lin5) t8e trial ;o+rtrationalize-F

De>en-ant &enri Ka8n o+l- 8ave ?een ;orre;t in 8is ;ontentions 8a- it ?een -+l4 esta?lis8e- t8at -e>en-ant,e-eration is a ;orporation. T8e tro+?le) 8oever) is t8at neit8er t8e plainti nor t8e -e>en-ant &enri Ka8n 8asa--+;e- an4 evi-en;e provin5 t8e ;orporate existen;e o> t8e -e>en-ant ,e-eration. In para5rap8 2 o> its;o=plaint) plainti asserte- t8at QDe>en-ant %8ilippine ,oot?all ,e-eration is a sports asso;iation xxx.Q T8is 8asnot ?een -enie- ?4 -e>en-ant &enri Ka8n in 8is Anser. Bein5 t8e %resi-ent o> -e>en-ant ,e-eration) its;orporate existen;e is it8in t8e personal 9nole-5e o> -e>en-ant &enri Ka8n. &e ;o+l- 8ave easil4 -enie-spe;iH;all4 t8e assertion o> t8e plainti t8at it is a =ere sports asso;iation) i> it ere a -o=esti; ;orporation.B+t 8e -i- not.

x x x

A vol+ntar4 +nin;orporate- asso;iation) li9e -e>en-ant ,e-eration 8as no poer to enter into) or to rati>4) a

;ontra;t. T8e ;ontra;t entere- into ?4 its o;ers or a5ents on ?e8al> o> s+;8 asso;iation is not ?in-in5 on) oren>or;ea?le a5ainst it. T8e o;ers or a5ents are t8e=selves personall4 lia?le.

x x x$ Appeals. On 26 De;e=?e;o+rt ren-ere- a -e;ision reversin5 t8e trial ;o+rt) t8e -e;retal portion o> sai- -e;ision

&E#E,O#E) pre=ises ;onsi-ere-) t8e G+-5=ent appeale- >ro= is 8ere?4 #E"E#SED a

anot8er one is ren-ere- -is=issin5 t8e ;o=plaint a5ainst -e>en-ant &enri S. Ka8n.$66

In Hn-in5 >or &enri Ka8n) t8e Co+rt o> Appeals re;o5nize- t8e G+ri-i;al existen;e o> t8erationalize- t8at sin;e petitioner >aile- to prove t8at &enri Ka8n 5+arantee- t8e o?li5as8o+l- not ?e 8el- lia?le >or t8e sa=e as sai- entit4 8as a separate an- -istin;t person

%etitioner Hle- a =otion >or re;onsi-eration an- as an alternative pra4er plea-e- t8at tlia?le >or t8e +npai- o?li5ation. T8e sa=e as -enie- ?4 t8e appellate ;o+rt in its reso6 t8e De;ision ?4 expressl4 -e;larin5t8ereo> t8e %8ilippine ,oot?all ,e-eration (%,, as lia?le >or t8e +npai- o?li5ation) it s8t8at t8e trial ;o+rt -is=isse- t8e ;o=plaint a5ainst t8e %8ilippine ,oot?all ,e-eration)

appeal >ro= t8is -e;ision. &en;e) t8e %8ilippine ,oot?all ,e-eration is not a part4 to t8;onseJ+entl4) no G+-5=ent =a4 ?e prono+n;e- ?4 t8is Co+rt a5ainst t8e %,, it8o+t v;la+se) let alone t8e >a;t t8at t8e G+-5=ent -is=issin5 t8e ;o=plaint a5ainst it) 8a- alvirt+e o> t8e plaintis >ail+re to appeal t8ere>ro=. T8e alternative pra4er is t8ere>ore s

%etitioner no see9s re;o+rse to t8is Co+rt an- alle5es t8at t8e respon-ent ;o+rt ;o=assi5ne- errorsF$63'

A. T&E &ONO#ABLE CO!#T O, A%%EALS E##ED IN &OLDIN T&AT %ETITIONE# &AD DE,OOTBALL ,EDE#ATION (%,, AS A CO#%O#ATE ENTIT AND IN NOT &OLDIN T&AT %#I&EN#I KA&N AS T&E ONE &O #E%#ESENTED T&E %,, AS &A"IN A CO#%O#ATE %E#

B. T&E &ONO#ABLE CO!#T O, A%%EALS E##ED IN NOT &OLDIN %#I"ATE #ES%ONDEN

%E#SONALL LIABLE ,O# T&E OBLIATION O, T&E !NINCO#%O#ATED %,,) &A"IN NE

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%ETITIONE# AND CONT#ACTED T&E OBLIATION IN BE&AL, O, T&E %,,) ADE A %A#TIAL %AENT ANDASS!#ED %ETITIONE# O, ,!LL SETTLIN T&E OBLIATION.

C. ASS!IN A#!ENDO T&AT %#I"ATE #ES%ONDENT KA&N IS NOT %E#SONALL LIABLE) T&E &ONO#ABLECO!#T O, A%%EALS E##ED IN NOT E%#ESSL DECLA#IN IN ITS DECISION T&AT T&E %,, IS SOLEL LIABLE,O# T&E OBLIATION.

T8e resol+tion o> t8e ;ase at ?ar 8in5es on t8e -eter=ination o> t8e existen;e o> t8e %8ilippine ,oot?all

,e-eration as a G+ri-i;al person. In t8e assaile- -e;ision) t8e appellate ;o+rt re;o5nize- t8e existen;e o> t8e,e-eration. In s+pport o> t8is) t8e CA ;ite- #ep+?li; A;t 363@) ot8erise 9non as t8e #evise- C8arter o> t8e%8ilippine A=ate+r At8leti; ,e-eration) an- %resi-ential De;ree No. 07 as t8e las >ro= 8i;8 sai- ,e-eration-erives its existen;e.

As ;orre;tl4 o?serve- ?4 t8e appellate ;o+rt) ?ot8 #.A. 363@ an- %.D. No. 07 re;o5nize- t8e G+ri-i;al existen;eo> national sports asso;iations. T8is =a4 ?e 5leane- >ro= t8e poers an- >+n;tions 5rante- to t8eseasso;iations. Se;tion 67 o> #.A. 363@ provi-esF

SEC. 67. ,+n;tions) poers an- -+ties o> Asso;iations. * T8e National Sports Asso;iation s8all 8ave t8e>olloin5 >+n;tions) poers an- -+tiesF

6. To a-opt a ;onstit+tion an- ?4*las >or t8eir internal or5anization an- 5overn=ent

2. To raise >+n-s ?4 -onations) ?eneHts) an- ot8er =eans >or t8eir p+rposes.

3. To p+r;8ase) sell) lease or ot8erise en;+=?er propert4 ?ot8 real an- personal) >or t8e a;;o=plis8=ent o>t8eir p+rpose

7. To aliate it8 international or re5ional sports Asso;iations a>ter -+e ;ons+ltation it8 t8e exe;+tive;o==ittee

x x x

63. To per>or= s+;8 ot8er a;ts as =a4 ?e ne;essar4 >or t8e proper a;;o=plis8=ent o>in;onsistent it8 t8is A;t.

Se;tion o> %.D. 07) 5rants si=ilar >+n;tions to t8ese sports asso;iationsF

SEC. . ,+n;tions) %oers) an- D+ties o> National Sports Asso;iation. * T8e National spo8ave t8e >olloin5 >+n;tions) poers) an- -+tiesF

6. A-opt a Constit+tion an- B4*Las >or t8eir internal or5anization an- 5overn=ent 8t8e Depart=ent an- an4 a=en-=ent t8ereto s8all ta9e ee;t +pon approval ?4 t8e De8oever) T8at no tea=) s;8ool) ;l+?) or5anization) or entit4 s8all ?e a-=itte- as a votiasso;iation +nless 0 per ;ent o> t8e at8letes ;o=posin5 sai- tea=) s;8ool) ;l+?) or5a,ilipino ;itizens

2. #aise >+n-s ?4 -onations) ?eneHts) an- ot8er =eans >or t8eir p+rpose s+?Ge;t to t8eDepart=ent

3. %+r;8ase) sell) lease) or ot8erise en;+=?er propert4) ?ot8 real an- personal) >or t8t8eir p+rpose

7. Con-+;t lo;al) interport) an- international ;o=petitions) ot8er t8an t8e Ol4=pi; an-pro=otion o> t8eir sport

@. Aliate it8 international or re5ional sports asso;iations a>ter -+e ;ons+ltation it8

x x x

63. %er>or= s+;8 ot8er >+n;tions as =a4 ?e provi-e- ?4 la.

T8e a?ove poers an- >+n;tions 5rante- to national sports asso;iations ;learl4 in-i;ata;J+ire a G+ri-i;al personalit4. T8e poer to p+r;8ase) sell) lease an- en;+=?er proper

onl4 ?e -one ?4 persons) 8et8er nat+ral or artiH;ial) it8 G+ri-i;al ;apa;it4. &oever)

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appellate ;o+rt t8at national sports asso;iations =a4 ?e a;;or-e- ;orporate stat+s) s+;8 -oes nota+to=ati;all4 ta9e pla;e ?4 t8e =ere passa5e o> t8ese las.

It is a ?asi; post+late t8at ?e>ore a ;orporation =a4 a;J+ire G+ri-i;al personalit4) t8e State =+st 5ive its;onsent eit8er in t8e >or= o> a spe;ial la or a 5eneral ena?lin5 a;t. e ;annot a5ree it8 t8e vie o> t8eappellate ;o+rt an- t8e private respon-ent t8at t8e %8ilippine ,oot?all ,e-eration ;a=e into existen;e +pon t8epassa5e o> t8ese las. No8ere ;an it ?e >o+n- in #.A. 363@ or %.D. 07 an4 provision ;reatin5 t8e %8ilippine,oot?all ,e-eration. T8ese las =erel4 re;o5nize- t8e existen;e o> national sports asso;iations an- provi-e-t8e =anner ?4 8i;8 t8ese entities =a4 a;J+ire G+ri-i;al personalit4. Se;tion 66 o> #.A. 363@ provi-esF

SEC. 66. National Sports Asso;iation or5anization an- re;o5nition. * A National Asso;iation s8all ?e or5anize->or ea;8 in-ivi-+al sports in t8e %8ilippines in t8e =anner 8ereina>ter provi-e- to ;onstit+te t8e %8ilippineA=ate+r At8leti; ,e-eration. Appli;ations >or re;o5nition as a National Sports Asso;iation s8all ?e Hle- it8 t8eexe;+tive ;o==ittee to5et8er it8) a=on5 ot8ers) a ;op4 o> t8e ;onstit+tion an- ?4*las an- a list o> t8e=e=?ers o> t8e propose- asso;iation) an- a Hlin5 >ee o> ten pesos.

T8e Exe;+tive Co==ittee s8all 5ive t8e re;o5nition applie- >or i> it is satisHe- t8at sai- asso;iation illpro=ote t8e p+rposes o> t8is A;t an- parti;+larl4 se;tion t8ree t8ereo>. No appli;ation s8all ?e 8el- pen-in5 >or=ore t8an t8ree =ont8s a>ter t8e Hlin5 t8ereo> it8o+t an4 a;tion 8avin5 ?een ta9en t8ereon ?4 t8e exe;+tive;o==ittee. S8o+l- t8e appli;ation ?e reGe;te-) t8e reasons >or s+;8 reGe;tion s8all ?e ;learl4 state- in a ritten;o==+ni;ation to t8e appli;ant. ,ail+re to spe;i>4 t8e reasons >or t8e reGe;tion s8all not ae;t t8e appli;ation8i;8 s8all ?e ;onsi-ere- as +na;te- +ponF %rovi-e-) 8oever) T8at +ntil t8e exe;+tive ;o==ittee 8ereinprovi-e- s8all 8ave ?een >or=e-) appli;ations >or re;o5nition s8all ?e passe- +pon ?4 t8e -+l4 ele;te-=e=?ers o> t8e present exe;+tive ;o==ittee o> t8e %8ilippine A=ate+r At8leti; ,e-eration. T8e sai- exe;+tive

;o==ittee s8all ?e -issolve- +pon t8e or5anization o> t8e exe;+tive ;o==ittee 8erein provi-e-F %rovi-e-)>+rt8er) T8at t8e >+n;tionin5 exe;+tive ;o==ittee is ;8ar5e- it8 t8e responsi?ilit4 o> seein5 to it t8at t8eNational Sports Asso;iations are >or=e- an- or5anize- it8in six =ont8s >ro= an- a>ter t8e passa5e o> t8isA;t.

Se;tion : o> %.D. 07) si=ilarl4 provi-esF

SEC. :. National Sports Asso;iations. * Appli;ation >or a;;re-itation or re;o5nition as a national sportsasso;iation >or ea;8 in-ivi-+al sport in t8e %8ilippines s8all ?e Hle- it8 t8e Depart=ent to5et8er it8) a=on5ot8ers) a ;op4 o> t8e Constit+tion an- B4*Las an- a list o> t8e =e=?ers o> t8e propose- asso;iation.

T8e Depart=ent s8all 5ive t8e re;o5nition applie- >or i> it is satisHe- t8at t8e national sports asso;iation to ?eor5anize- ill pro=ote t8e o?Ge;tives o> t8is De;ree an- 8as s+?stantiall4 ;o=plie- it8 t8e r+les an-

re5+lations o> t8e Depart=entF %rovi-e-) T8at t8e Depart=ent =a4 it8-ra a;;re-itation or re;o5nition >orviolation o> t8is De;ree an- s+;8 r+les an- re5+lations >or=+late- ?4 it.

T8e Depart=ent s8all s+pervise t8e national sports asso;iationF %rovi-e-) T8at t8e lattte;8ni;al ;ontrol over t8e -evelop=ent an- pro=otion o> t8e parti;+lar sport >or 8i;8

Clearl4 t8e a?ove ;ite- provisions reJ+ire t8at ?e>ore an entit4 =a4 ?e ;onsi-ere- as aasso;iation) s+;8 entit4 =+st ?e re;o5nize- ?4 t8e a;;re-itin5 or5anization) t8e %8ilipp,e-eration +n-er #.A. 363@) an- t8e Depart=ent o> o+t8 an- Sports Develop=ent +nre;o5nition) 8oever) &enri Ka8n >aile- to s+?stantiate. In atte=ptin5 to prove t8e G+ri,e-eration) &enri Ka8n atta;8e- to 8is =otion >or re;onsi-eration ?e>ore t8e trial ;o+rt

;onstit+tion an- ?4*las o> t8e %8ilippine ,oot?all ,e-eration. !n>ort+natel4) t8e sa=e,e-eration 8as in-ee- ?een re;o5nize- an- a;;re-ite- ?4 eit8er t8e %8ilippine A=ate+t8e Depart=ent o> o+t8 an- Sports Develop=ent. A;;or-in5l4) e r+le t8at t8e %8ilippis not a national sports asso;iation it8in t8e p+rvie o> t8e a>ore=entione- las an- existen;e o> its on.

T8+s ?ein5 sai-) it >ollos t8at private respon-ent &enr4 Ka8n s8o+l- ?e 8el- lia?le >oo> t8e +nin;orporate- %8ilippine ,oot?all ,e-eration. It is a settle- prin;ipal in ;orporata;tin5 or p+rportin5 to a;t on ?e8al> o> a ;orporation 8i;8 8as no vali- existen;e ass+?e;o=es personall4 lia?le >or ;ontra;t entere- into or >or ot8er a;ts per>or=e- as s+;8o> t8e ,e-eration) &enri Ka8n is pres+=e- to 8ave 9non a?o+t t8e ;orporate existen;,e-eration. e ;annot s+?s;ri?e to t8e position ta9en ?4 t8e appellate ;o+rt t8at even,e-eration as -e>e;tivel4 in;orporate-) t8e petitioner ;annot -en4 t8e ;orporate exis?e;a+se it 8a- ;ontra;te- an- -ealt it8 t8e ,e-eration in s+;8 a =anner as to re;o5nits existen;e.$6@' T8e -o;trine o> ;orporation ?4 estoppel is =ista9enl4 applie- ?4 t8e petitioner. T8e appli;ation o> t8e -o;trine applies to a t8ir- part4 onl4 8en 8e tries to

;ontra;t >ro= 8i;8 8e 8as ?eneHte- on t8e irrelevant 5ro+n- o> -e>e;tive in;orporatio?ar) t8e petitioner is not tr4in5 to es;ape lia?ilit4 >ro= t8e ;ontra;t ?+t rat8er is t8e on;ontra;t.

&E#E,O#E) t8e -e;ision appeale- >ro= is #E"E#SED an- SET ASIDE. T8e -e;ision o>o> anila) Bran;8 3@) in Civil Case No.


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.#. No. 67777

Septe=?er 3) 2<

#ESOL!TION

NAC&!#A) 1.F

,or resol+tion are t8e otion >or #e;onsi-eration$6' Hle- ?4 petitioner Asso;iate- Ban9 (no !nite-Overseas Ban9 $%8ils.' an- otion >or Leave to Intervene$2' Hle- ?4 Spo+ses E-+ar-o an- a. %ilar "a;a(spo+ses "a;a.

A>ter a t8oro+58 exa=ination o> petitionerRs =otion >or re;onsi-eration) to5et8er it8 its vol+=ino+satta;8=ents) it is rea-il4 apparent t8at no ne iss+es are raise- an- t8e ar5+=ents presente- are a =erere8as8 o> 8at 8ave ?een -is;+sse- in its plea-in5s) all o> 8i;8 8ave ?een ;onsi-ere- an- >o+n-+n=eritorio+s in t8e 1+l4 67) 2 De;ision.$3'

Be t8at as it =a4) e o+l- li9e to reiterate t8at t8e se;on- letter*a5ree=ent =o-iHe- t8e Hrst oneentere- into ?4 petitioner) t8ro+58 Att4. 1ose Sol+ta) 1r. (Att4. Sol+ta. In previo+sl4 alloin5 Att4. Sol+ta to enterinto t8e Hrst letter*a5ree=ent it8o+t a ?oar- resol+tion expressl4 a+t8orizin5 8i=) petitioner 8a- ;lot8e- 8i=it8 apparent a+t8orit4 to =o-i>4 t8e sa=e via t8e se;on- letter*a5ree=ent.$7'

As earl4 as 1+ne 6+ll pa4=ent s8o+l- ?e =a-e +pon re;eipt o> t8is Co+rtRs -e;ision ;onHr=in5 petitionerRs ri58t to t8e

s+?Ge;t propert4. Instea- o> a;tin5 on t8e reJ+est) t8e Boar- o> Dire;tors -e>erre- a;tion on it. It as onl4a>ter one 4ear an- a>ter t8e ?an9Rs reor5anization t8at t8e ?oar- reGe;te- respon-entsR reJ+est. e ;annot)t8ere>ore) ?la=e respon-ents >or ?elievin5 t8at t8e se;on- letter*a5ree=ent si5ne- ?4 Att4. Sol+ta aspetitionerRs a;tion on t8eir reJ+est.$@'

e also o+l- li9e to stress t8at t8e Hrst letter*a5ree=ent as not res;in-e- ?4 respon-entsR >ail+re to-eposit in es;ro t8eir >+ll pa4=ent si=pl4 ?e;a+se t8e -ate o> >+ll pa4=ent 8a- alrea-4 ?een =o-iHe- ?4 t8elater a5ree=ent. Neit8er as t8e se;on- letter*a5ree=ent res;in-e- ?4 respon-entsR ne oer ?e;a+se t8eoer as =a-e onl4 to -e=onstrate t8eir ;apa;it4 to p+r;8ase t8e s+?Ge;t propert4.$0'

In o+r De;ision) e ar=e- t8e >a;t+al Hn-in5s o> t8e Co+rt o> Appeals (CA ?e;a+se t8e4 ere a=pl4s+pporte- ?4 t8e evi-en;e on re;or-. ell*esta?lis8e- is t8e r+le t8at i> t8ere is no s8oin5 o> error in t8eappre;iation o> >a;ts ?4 t8e CA) t8is Co+rt treats t8e= as ;on;l+sive. T8e ;on;l+sions o> la t8at t8e appellate;o+rt -re >ro= t8ose >a;ts are li9eise a;;+rate an- ;onvin;in5.$:'

&en;e) e -en4 it8 Hnalit4 petitionerRs =otion >or re;onsi-eration. No >+rt8er entertaine-.

A>ter t8e pro=+l5ation o> t8e 1+l4 67) 2 De;ision) spo+ses "a;a Hle- a otionalle5in5 t8at t8e4 are t8e re5istere- oners o> t8e s+?Ge;t propert4 an- are t8+s real pa-- t8at t8e4 stan- to ?e -eprive- o> t8eir >a=il4 8o=e it8o+t 8avin5 ?een 5iven t8ealso ;onten- t8at t8e Co+rt s8o+l- or-er petitioner to rei=?+rse t8e spo+ses "a;a t8e t8e latter.

T8e otion >or Leave to Intervene =+st ?e -enie-.

Se;tion 2) #+le 6< o> t8e #+les o> Co+rt) provi-esF

SEC. 2. Ti=e to intervene. T8e =otion to intervene =a4 ?e Hle- at an4 ti=e ?e G+-5=ent ?4 t8e trial ;o+rt. A ;op4 o> t8e plea-in5*in*intervention s8all ?e atta;8e- toon t8e ori5inal parties.$'

O?vio+sl4) t8e spo+ses "a;aRs =otion >or leave to intervene ?e>ore t8is Co+rt a

T8e p+rpose o> intervention is to ena?le a stran5er to an a;tion to ?e;o=e a paran- t8e ;o+rt) in;i-entall4) to settle all ;oni;tin5 ;lai=s.$


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In Natalia #ealt4) In;. v. Co+rt o> Appeals)$6' ;itin5 Santia5o Lan- Develop=ent Corporation v. Co+rt o>Appeals)$66' e 8ave r+le- t8atF

$A' trans>eree pen-ente lite o> t8e propert4 in liti5ation -oes not 8ave a ri58t to intervene. e 8el- t8at atrans>eree stan-s exa;tl4 in t8e s8oes o> 8is pre-e;essor*in*interest) ?o+n- ?4 t8e pro;ee-in5s an- G+-5=entin t8e ;ase ?e>ore t8e ri58ts ere assi5ne- to 8i=. It is not le5all4 tena?le >or a trans>eree pen-ente lite to stillintervene. Essentiall4) t8e la alrea-4 ;onsi-ers t8e trans>eree Goine- or s+?stit+te- in t8e pen-in5 a;tion)

;o==en;in5 at t8e exa;t =o=ent 8en t8e trans>er o> interest is per>e;te- ?eteen t8e ori5inal part4*trans>eror an- t8e trans>eree pen-ente lite.$62'

T8at t8e CertiH;ate o> Title ;overin5 t8e s+?Ge;t propert4 is in t8e na=e o> t8e spo+ses "a;a is o> no=o=ent. It is noteort84 t8at a noti;e o> lis pen-ens as ti=el4 annotate- on petitionerRs title. T8is as -oneprior to t8e sale o> t8e propert4 to t8e spo+ses "a;a) t8e ;an;ellation o> petitionerRs title) an- t8e iss+an;e o>t8e ne Trans>er CertiH;ate o> Title in t8e na=e o> t8e spo+ses. B4 virt+e o> t8e noti;e o> lis pen-ens) t8espo+ses "a;a are ?o+n- ?4 t8e o+t;o=e o> t8e liti5ation s+?Ge;t o> t8e lis pen-ens. T8eir interest is s+?Ge;t tot8e in;i-ents or res+lts o> t8e pen-in5 s+it) an- t8eir CertiH;ate o> Title ill aor- t8e= no spe;ial prote;tion.$63'

Lastl4) t8e spo+ses "a;aRs ;lai= >or rei=?+rse=ent) i> an4) =+st ?e ventilate- in a separate a;tion

a5ainst petitioner. To allo t8e intervention o+l- +n-+l4 -ela4 an- preG+-i;e t8e ri58ts espe;iall4 o>respon-ents 8o 8ave ?een -eprive- o> t8e s+?Ge;t propert4 >or so lon5.

IN LI&T O, T&E ,O#EOIN) e -en4 petitionerRs =otion >or re;onsi-eration an- t8e Spo+ses "a;aRs otion>or Intervention.

SO O#DE#ED.

$.#. No. 6272 t8e National overn=ent. Salient provisions o> t8e ASB# stateF

U6.. T8e s+?Ge;t o> t8is Asset %rivatization Tr+st (A%T sale t8ro+58 p+?li; ?i--in

overn=entRs eJ+it4 in %&ILSECO ;onsistin5 o>


9/206


%&ILSECORs o+stan-in5 ;apital sto;9) 8i;8 ill ?e sol- as a 8ole ?lo;9 in a;;or-an;e it8 t8e r+les 8ereinen+=erate-.

x x x x x x x x x

3.. T8is p+?li; ?i--in5 s8all ?e on an In-i;ative %ri;e Bi--in5 ?asis. T8e In-i;ative pri;e set >or t8eNational overn=entRs :.0: eJ+it4 in %&ILSECO is %ESOSF ONE BILLION TEE &!ND#ED ILLION(%6)3))..

x x x x x x x x x

62.. T8e ?i--er s8all ?e solel4 responsi?le >or exa=inin5 it8 appropriate ;are t8ese r+les) t8e o;ial?i- >or=s) in;l+-in5 an4 a--en-a or a=en-=ents t8ereto iss+e- -+rin5 t8e ?i--in5 perio-. T8e ?i--er s8allli9eise ?e responsi?le >or in>or=in5 itsel> it8 respe;t to an4 an- all ;on-itions ;on;ernin5 t8e %&ILSECOS8ares 8i;8 =a4) in an4 =anner) ae;t t8e ?i--erRs proposal. ,ail+re on t8e part o> t8e ?i--er to so exa=inean- in>or= itsel> s8all ?e its sole ris9 an- no relie> >or error or o=ission ill ?e 5iven ?4 A%T or CO%. x x x.V

T8e provisions o> t8e ASB# ere explaine- to t8e intereste- ?i--ers 8o ere notiHe- t8at ?i--in5 o+l- ?e8el- on De;e=?er 2) 6 Sin5apore (Se=?aan5) an- 1+ron5 S8ip4ar- Li=ite- o> ala4sia (1+ron5) as-e;lare- t8e 8i58est ?i--er at %2.3 ?illion. T8e >olloin5 -a4) De;e=?er 3) 6 sto;9 in %&ILSECO to sai- ;onsorti+=. It notiHe- petitioner o> sai-approval Us+?Ge;t to t8e ri58t o> Kaasa9i &eav4 In-+stries) In;.M%8il4ar-s &ol-in5s) In;. to top 1SIRs(petitionerRs ?i- ?4 @ as spe;iHe- in t8e ?i--in5 r+les.V

On De;e=?er 2 Kaasa9i) %8il4ar-s) its+i) Keppel) S ro+p)ICTSI an- Ins+lar Li>e violate- t8e ASB# ?e;a+se t8e last >o+r (7 ;o=panies ere t8e losin5 ?i--ers (>or %6.@2?illion t8ere?4 ;ir;+=ventin5 t8e la an- preG+-i;in5 t8e ea9 innin5 ?i--er (? onl4 Kaasa9i ;o+l-exer;ise t8e ri58t to top (; 5ivin5 t8e sa=e option to top to %&I ;onstit+te- +narrante- ?eneHt to a t8ir-part4 (- no ri58t o> Hrst re>+sal ;an ?e exer;ise- in a p+?li; ?i--in5 or a+;tion sale) an- (e t8e 1 S+==itConsorti+= as not estoppe- >ro= J+estionin5 t8e pro;ee-in5s.

On ,e?r+ar4 2) 6 t8e s+?Ge;t ?i--in5. On ,e?r+ar4 :) 6 =an-a=+s x x x an- a+xiliar4 8et8er or not in ai- o> its appellate G+ris-i;tion)R 8i;8 G+ris-i;tion is ;on;+rrent it8 spe;ial an- i=portant reason >or t8is Co+rt to ass+=e G+ris-i;tion over t8e ;ase in t8e

On 1+l4 6) 6or la;9 o> =erit t8e petition >or =an-a,ernan-ez)$3' it 8el- t8at =an-a=+s is not t8e proper re=e-4 to U;o=pel t8e +n-oin5or t8e ;orre;tion o> a ron5 alrea-4 perpet+ate-) even t8o+58 t8e a;tion ta9en as ;l>+rt8er r+le- t8at it as not t8e proper >or+= >or a U=ere petition >or =an-a=+sV t8at;onstit+tionalit4 or le5alit4 o> t8e ri58t o> Hrst re>+sal an- t8e ri58t to top t8at as exean- t8at t8e =atter =+st ?e ?ro+58t U?4 t8e proper part4 in t8e proper >or+= at t8e po+t in a >+ll ?lon trial.V

A>ter r+lin5 t8at t8e ri58t o> Hrst re>+sal an- t8e ri58t to top are pri=a >a;ie le5al) t8e Cpetitioner to ?e in estoppel >or t8e >olloin5 reasonsF

U@. I> petitioner >o+n- t8e ri58t to top to ?e ille5al) it s8o+l- not 8ave parti;ipaor it s8o+l- 8ave J+estione- t8e le5alit4 o> t8e r+les ?e>ore t8e ;o+rts or Hle- a petitio(#+le 07) #+les o> Co+rt ?e>ore t8e p+?li; ?i--in5 ;o+l- 8ave ta9en pla;e.

B4 parti;ipatin5 in t8e p+?li; ?i--in5) it8 >+ll 9nole-5e o> t8e ri58t to top 5rante- topetitioner is estoppe- >ro= J+estionin5 t8e vali-it4 o> t8e aar- 5iven to %8il4ar-s a>tet8e ri58t to top an- 8a- pai- in >+ll t8e p+r;8ase pri;e o> t8e s+?Ge;t s8ares) p+rs+ant

0. T8e >a;t t8at t8e losin5 ?i--er) Keppel Consorti+= (;o=pose- o> Keppel) S ro+pits+i an- ICTSI appears to 8ave Goine- %8il4ar-s in t8e latterRs eort to raise %2.636 exer;isin5 t8e ri58t to top ?4 @ is a vali- a;tivit4 in >ree enterprise t8at is not ;ontrarp+?li; =orals. It s8o+l- not ?e a ;a+se o> 5rievan;e >or petitioner as it is t8e ver4 essein t8e ?+siness orl-. Ast+te ?+siness=en involve- in t8e p+?li; ?i--in5 in J+estion 9a5ainst. An- 8en t8e4 parti;ipate- in t8e p+?li; ?i--in5 it8 prior 9nole-5e o> t8e

Caelitus Mihi Vires


10/206


it8 >+ll 9nole-5e o> t8e event+alit4 t8at t8e 8i58est ?i--er =a4 still ?e toppe- ?4 Kaasa9iM%8il4ar-s ?4 @.It is a-=itte- ?4 petitioner t8at it li9eise represents a ;onsorti+= ;o=pose- o> 1 S+==it) Se=?aan5Sin5apore an- 1+ron5 o> ala4sia. 84 s8o+l- petitioner t8en expe;t %8il4ar-s to li=it itsel> to its onreso+r;es 8en t8e latter ;an enter into a5ree=ents it8 ot8er entities to 8elp it raise t8e =one4 it nee-e- topa4 t8e >+ll p+r;8ase pri;e as in >a;t it 8a- alrea-4 pai- t8e National overn=ent in t8e a=o+nt o> %2.636?illion as reJ+ire- +n-er t8e ASB#XV$7'

%etitioner Hle- a =otion >or t8e re;onsi-eration o> sai- De;ision 8i;8 as -enie- on ar;8 6@) 6olloin5 ar5+=entsF

I.

T&E CO!#T O, A%%EALS #IE"O!SL E##ED IN &OLDIN T&AT %ETITIONE# 1 S!IT IS LEALL ESTO%%ED,#O C&ALLENIN T&E LEALIT O, T&E #I&T TO TO%) INSE#TED IN T&E BIDDIN #!LES) AS ELL AS T&E#I&T O, ,I#ST #E,!SAL ,#O &IC& T&E #I&T TO TO% AS ADITTEDL SO!#CED) B SI%L STATIN

T&AT T&OSE #I&TS A#E "ALID AND EN,O#CEABLE IT&O!T #!LIN ON AN O, T&E I%O#TANT LEAL ANDCONSTIT!TIONAL #O!NDS #AISED B T&E %ETITIONE# AS ,OLLOSF

(A T&E #I&T O, ,I#ST #E,!SAL) #ANTED TO A 1A%ANESE CO#%O#ATION AT A TIE &EN IT &ELD 7E!IT IN %&ILSECO) A LAND&OLDIN CO#%O#ATION) IS N!LL AND "OID ,O# BEIN CONT#A# TO T&ECONSTIT!TION.

(B T&E #I&T TO TO% AS #ANTED TO T&E 1A%ANESE CO#%O#ATION AT A TIE &EN IT E#EL &ELD2.0 E!IT IN %&ILSECO.

(C T&E #I&T O, ,I#ST #E,!SAL #ANTED TO T&E 1A%ANESE CO#%O#ATION O"E# S&A#ES O, STOCK ISCONT#A# TO T&E CO#%O#ATION CODE.

(D T&E #I&T TO TO% IS CONT#A# TO %!BLIC %OLIC AS IT IS ANAT&EA TO CO%ETITI"E %!BLICBIDDIN ,O# BEIN !ND!L #EST#ICTI"E T&E#EO,) AND) O#EO"E#) IS CONT#A# TO D!E %#OCESS O, LAAS IT IS AAINST T&E BASIC #!DIENTS O, ,AI# %LA.

(E T&E #ANT O, T&E #I&T TO TO% IS A C#IINAL "IOLATION O, T&E ANTI*#A,T LA AS IT I"ES ACLEA#L !NA##ANTED BENE,IT IN ,A"O# O, %&ILA#DS AS S&ON B CLEA# AND !NDIS%!TED

DOC!ENTA# E"IDENCE.

II.

T&E CO!#T O, A%%EALS #IE"O!SL E##ED IN &OLDIN T&AT ANDA!S IS NOT A %CASE.

III.

,OLLOIN ITS ON ,INDINS) T&E CO!#T O, A%%EALS #IE"O!SL E##ED (A IN N T#IAL BE &ELD ON ALLEED ISS!ES O, ,ACT AND (B IN NOT A%%OINTIN AN AIC!S T&E LAE#S IN T&E COISSION ON A!DIT TO DETE#INE T&E A%%LICABILIT O, IT T&E T#ANSACTIONS IN T&IS CASE.$@'

In t8eir ;o==ent on t8e petition) private respon-ent %&I ;onten-s t8at t8e real part4 i8ave Hle- t8e petition >or =an-a=+s is t8e 1 S+==it Consorti+= annot solel4 petit&ol-in5s) In;. 8i;8 is G+st a part o> t8at ;onsorti+=. Sin;e Se=?aan5 an- 1+ron5) t8;onsorti+=) are in-ispensa?le parties to t8e petition)$0' petitionerRs >ail+re to i=plea- arrante- t8e -is=issal o> t8e petition.

%+?li; respon-entsR ;ontention =+st >ail. 8ile it is tr+e t8at #+le 3) Se;tion 2 o> t8e #t8at U(all persons 8avin5 an interest in t8e s+?Ge;t o> t8e a;tion an- in o?tainin5 t8e r

Goine- as plaintis)V petitioner =a4 Hle t8e petition alone. In t8e Hrst pla;e) Se=?aain-ispensa?le parties) s+;8 t8at t8eir non*Goin-er as petitioners ill not ne;essaril4 resat a Hnal -eter=ination o> t8e ;ase.$:' T8e4 =a4 ?e ne;essar4 parties as t8e4 ere =;onsorti+= t8at on t8e p+?li; ?i--in5 prior to t8e exer;ise o> t8e ri58t to top ?4 privapetition =a4 ?e resolve- even it8o+t t8eir a;tive parti;ipation. Se;on-l4) t8ere is a -sai- >orei5n ;orporations are Us+?Ge;t to t8e G+ris-i;tion o> t8e ;o+rt as to ?ot8 servi;e ven+e.V$' T8ir-l4) petitioner =a4 ?e -ee=e- to represent Se=?aan5 an- 1+ron5. T8petitionerRs ;o+nsel t8at sai- >orei5n ;orporations are +n-erritin5 8is an- t8e ot8er ;>a;t.$


11/206


Hnan;ial 5ains arisin5 >ro= t8e aar- o> t8e sale o> %&ILSECO is eno+58 personal sta9e in t8e o+t;o=e o> t8e;ontrovers4 to vest +pon petitioner t8e lo;+s stan-i to Hle t8e petition >or =an-a=+s. Besi-es) it8o+tKaasa9i*%&IRs ri58t to top t8e 8i58est ?i-) petitioner o+l- 8ave ?een aar-e- t8e sale as t8e 8i58est ?i--er.A innin5 ?i--er 8as personalit4 to initiate pro;ee-in5s to prevent settin5 at na+58t 8is ri58t ot8erise) 8isri58t to -+e pro;ess o+l- ?e violate-.$62' As s+;8 innin5 ?i--er) petitioner 8as Ua present s+?stantialinterest)V or s+;8 interest in t8e s+?Ge;t =atter o> a;tion as ill entitle it) +n-er s+?stantive la) to re;over i>t8e evi-en;e is s+;ient.$63'

it8 respe;t to t8e propriet4 o> t8e re=e-4 availe- ?4 petitioner) t8e Co+rt o> Appeals ;orre;tl4 8el- t8at t8espe;ial ;ivil a;tion o> =an-a=+s is not t8e proper re=e-4 to J+estion t8e le5alit4 o> t8e exer;ise o> t8e ri58t to

top ?4 private respon-ent. It -oes not lie to ;o=pel t8e aar- o> a ;ontra;t s+?Ge;t o> ?i--in5 to an+ns+;;ess>+l ?i--er.$67' an-a=+s applies as a re=e-4 onl4 8ere petitionerRs ri58t is >o+n-e- ;learl4 in laan- not 8en it is -o+?t>+l.$6@' T8+sF

UIn or-er t8at a rit o> =an-a=+s =a4 iss+e) it is essential t8at t8e person petitionin5 >or t8e sa=e 8as a ;learle5al ri58t to t8e t8in5 -e=an-e- an- t8at it is t8e i=perative -+t4 o> t8e respon-ent to per>or= t8e a;treJ+ire-. It neit8er ;on>ers poers nor i=poses -+ties anis never iss+e- in -o+?t>+l ;ases. It is si=pl4 a;o==an- to exer;ise a poer alrea-4 possesse- an- to per>or= a -+t4 alrea-4 i=pose-.V$60'

T8e Co+rt o> Appeals ;annot -e;lare petitioner as t8e innin5 ?i--er in t8is ;ase an- -ire;t t8e CO%MA%T toaar- t8e sale to it it8o+t Hrst -eter=inin5 t8e vali-it4 o> t8e ri58t to top stip+late- in t8e ASB#. oreover)t8e sale o> 5overn=ent s8are in %&ILSECO is a >ait a;;o=pli) in vie o> t8e exe;+tion o> t8e Sto;9 %+r;8aseA5ree=ent ?eteen A%T an- %&I. an-a=+s =a4 not ?e availe- to -ire;t t8e exer;ise o> G+-5=ent or-is;retion in a parti;+lar a4 or to retra;t or reverse an a;tion alrea-4 ta9en in t8e exer;ise o> eit8er.$6:'

Be t8at as it =a4) t8e Co+rt o> Appeals erre- 8en it -is=isse- t8e petition on t8e sole 5ro+n- o> t8ei=propriet4 o> t8e spe;ial ;ivil a;tion o> =an-a=+s. It =+st ?e stresse- t8at t8e petition as also one >or;ertiorari) see9in5 to n+lli>4 t8e aar- o> t8e sale to private respon-ent o> t8e %&ILSECO s8ares. "eril4) t8epetition alle5es t8at Urespon-ents CO% an- A%T 8ave ;o==itte- s+;8 a 5rave a?+se o> -is;retion tanta=o+ntto la;9 or ex;ess o> t8eir G+ris-i;tion in insistin5 on aar-in5 t8e ?i- to %8il4ar-s) >or t8e vario+s reasons state-8erein) parti;+larl4 sin;e t8e ri58t o> Hrst re>+sal an- t8e ri58t to top t8e ?i- are +n;onstit+tional) ;ontrar4 tola an- p+?li; poli;4.V$6' %etitionerRs >ail+re to in;l+-e ;ertiorari in its ;aption s8o+l- not ne5ate t8e >a;t t8att8e petition ;8ar5e- p+?li; respon-ent it8 5rave a?+se o> -is;retion in aar-in5 t8e sale to privaterespon-ent. ell*settle- is t8e r+le t8at it is not t8e ;aption o> t8e plea-in5 ?+t t8e alle5ations t8erein t8at-eter=ine t8e nat+re o> t8e a;tion an- t8e Co+rt s8all 5rant relie> arrante- ?4 t8e alle5ations an- t8e proo>even i> no s+;8 relie> is pra4e- >or.$6 %resi-ential De;ree No. 000) 8i;8 provi-e- in;entivess8ip repair in-+str4.

In-ee-) %.D. No. 000 -ate- ar;8 @) 6 provi-e as >ollosF

U- #e5istration reJ+ire- ?+t not as %+?li; !tilit4. T8e ?+siness o> ;onstr+;tior parts t8ereo> s8all not ?e ;onsi-ere- a p+?li; +tilit4 an- no CertiH;ate o> %+?li; ConreJ+ire- t8ere>or. &oever) no s8ip4ar-) 5ravin5 -o;9) =arine raila4 or =arine repairenterprise s8all en5a5e in t8e ;onstr+;tion an-Mor repair o> an4 vessel) or an4 p8ase ovali- CertiH;ate o> #e5istration an- li;ense >or t8is p+rpose >ro= t8e ariti=e In-+str4one- or operate- ?4 t8e Ar=e- ,or;es o> t8e %8ilippines or ?4 >orei5n 5overn=ents pa5ree=ent.V (!n-ers;orin5 s+pplie-.

&oever) Se;tion 6 o> %.D. No. 000 as expressl4 repeale- ?4 Se;tion 2 o> Batas %a=Invest=ent In;entive %oli;4 A;t o> 6 B.%. Bl5. 3 %.D. No. s8ip?+il-in5 an- s8ip repair in-+str4 as a p+?li; +tilit4) as sai- exe;+tive or-er -i- not 8en a la 8i;8 expressl4 repeals a prior la is itsel> repeale-) t8e la Hrst repeale-revive- +nless expressl4 so provi-e-.$23' ConseJ+entl4) 8en t8e A%T -ra>te- t8e ASB%.D. No. 000 no lon5er existe- in o+r stat+te ?oo9s. 8ile it is tr+e t8at t8e repeal o> a

operate to i=pair ri58ts t8at 8ave ?e;o=e veste- or a;;r+e- 8ile t8e stat+te as in >veste- ri58ts o> t8e parties t8at s8o+l- ?e prote;te- in t8e ;ase at ?ar. T8e reason is alrea-4 inexistent 8en t8e ASB# as iss+e-.

A s8ip4ar- s+;8 as %&ILSECO ?ein5 a p+?li; +tilit4 as provi-e- ?4 la) t8e >olloin5 pro> t8e Constit+tion appliesF

USe;. 66. No >ran;8ise) ;ertiH;ate) or an4 ot8er >or= o> a+t8orization >or t8e operation 5rante- ex;ept to ;itizens o> t8e %8ilippines or to ;orporations or asso;iations or5anize%8ilippines at least sixt4 per ;ent+= o> 8ose ;apital is one- ?4 s+;8 ;itizens) nor s8;ertiH;ate) or a+t8orization ?e ex;l+sive in ;8ara;ter or >or a lon5er perio- t8an H>t4 4s+;8 >ran;8ise or ri58t ?e 5rante- ex;ept +n-er t8e ;on-ition t8at it s8all ?e s+?Ge;t toor repeal ?4 t8e Con5ress 8en t8e ;o==on 5oo- so reJ+ires. T8e State s8all en;o+rin p+?li; +tilities ?4 t8e 5eneral p+?li;. T8e parti;ipation o> >orei5n investors in t8e 5o

p+?li; +tilit4 enterprise s8all ?e li=ite- to t8eir proportionate s8are in its ;apital) an- a=ana5in5 o;ers o> s+;8 ;orporation or asso;iation s8all ?e ;itizens o> t8e %8ilippines

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T8e pro5enitor o> t8is ;onstit+tional provision) Arti;le I") Se;tion @ o> t8e 6 0*7 ;apitalization. T8e 1"A ?eteen NIDC an- Kaasa9i entere- into on 1an+ar4 2:)6ests t8e intention o> t8e parties to a?i-e ?4 t8e ;onstit+tional =an-ate on ;apitalization o> p+?li;+tilities.$27' %ara5rap8 6.3 o> t8e 1"A) as a=en-e- ?4 A--en-+= No. 2 -ate- De;e=?er 2) 6ro= ;orporate in;o=e tax.$2:' Consi-ere- =ore o> apartners8ip)$2' a Goint vent+re is 5overne- ?4 t8e las on ;ontra;ts an- on partners8ip. T8e Goint vent+re;reate- ?eteen NIDC an- Kaasa9i >alls it8in t8e p+rvie o> an Uasso;iationV p+rs+ant to Se;tion @ o> Arti;leI" o> t8e 6 Arti;le II o> t8e 6 operatin5 a p+?li; +tilit4) s+;8 as a s8ip4ar-) =+st o?serve t8eproportion o> 0*7 ,ilipino*>orei5n ;apitalization.

Nota?l4) para5rap8 6.7 o> t8e 1"A a;;or-e- t8e parties t8e ri58t o> Hrst re>+sal U+n-er t8e sa=e ter=s.V T8is

p8rase i=plies t8at 8en eit8er part4 exer;ises t8e ri58t o> Hrst re>+sal +n-er para5rap8 6.7) t8e4 ;an onl4 -oso to t8e extent alloe- t8e= ?4 para5rap8s 6.2 an- 6.3 o> t8e 1"A or +n-er t8e proportion o> 0*7 o> t8es8ares o> sto;9. T8+s) s8o+l- t8e NIDC opt to sell its s8ares o> sto;9 to a t8ir- part4) Kaasa9i ;o+l- onl4exer;ise its ri58t o> Hrst re>+sal to t8e extent t8at its total s8ares o> sto;9 o+l- not ex;ee- 7 o> t8e entires8ares o> sto;9 o> SNS or %&ILSECO. T8e NIDC) on t8e ot8er 8an-) =a4 p+r;8ase even ?e4on- 0 o> t8e totals8ares. As a 5overn=ent ;orporation an- ne;essaril4 a 6 ,ilipino*one- ;orporation) t8ere is not8in5 toprevent its p+r;8ase o> sto;9s even ?e4on- 0 o> t8e ;apitalization as t8e Constit+tion ;learl4 li=its onl4>orei5n ;apitalization.

%arent8eti;all4) t8e ariti=e In-+str4 A+t8orit4 (A#INA 8i;8 8as ?een tas9e- to re5+late t8e operation o>s8ip?+il-in5 an- s8ip repair 4ar-s)$2 S8ip?+il-ers) S8ip #epairers)Aoat #epairers) Boat?+il-ers an- S8ip?rea9ers) see=s to exe=pt Goint vent+res re5istere- it8 t8e SEC) t8eBOI an- t8e E%/A >ro= t8e 0 reJ+ire=ent o> ,ilipino oners8ip.$36' T8e sai- provision statesF

UT8e appli;ant =+st ?e a ,ilipino ;itizen or a ;orporationMpartners8ip at least 0 o> t8sto;9 o> 8i;8 is one- ?4 ,ilipino ;itizens ex;ept >or Goint vent+res 8i;8 are re5isteran- Ex;8an5e Co==ission) t8e Boar- o> Invest=ents an-Mor Export %ro;essin5 /one A

T8e ;onstit+tionalit4 o> sai- A#INA 5+i-eline) 8oever) is not in iss+e 8ere. Kaasa9;ontra;t+al o?li5ation +n-er t8e 1"A t8at li=its its ri58t o> Hrst re>+sal to 7 o> t8e tot%&ILSECO. T8+s) Kaasa9i ;annot p+r;8ase ?e4on- 7 o> t8e ;apitalization o> t8e Go?ot8 ;onstit+tional an- ;ontra;t+al pros;riptions.

,ro= t8e >a;ts on re;or-) it appears t8at at t8e o+tset) t8e A%T an- Kaasa9i respe;te;apitalization proportion in %&ILSECO. &oever) A%T s+?seJ+entl4 en;o+ra5e- Kaasp+?li; ?i--in5 o> t8e National overn=entRs s8are8ol-in5s o> :.0: o> t8e total %&ILover an- a?ove t8e 7 li=it o> its s8are8ol-in5s. In so -oin5) t8e A%T ent ?e4on- t

It is ell settle- t8at t8e role o> ;o+rts is to as;ertain 8et8er a ?ran;8 or instr+=entatrans5resse- its ;onstit+tional or stat+tor4 ?o+n-aries. T8e ;o+rts) =+st exa=ine t8oso> provisions o> t8e la. Ot8erise) it o+l- stra4 into t8e real= o> poli;4 -e;ision*=a

%ro;la=ation No. @) ;reatin5 t8e CO% an- t8e A%T) as iss+e- ?4 %resi-ent Corazon Cle5islative poers +n-er t8e %rovisional Constit+tion o> 6 sai- %ro;lait8 t8e >olloin5 poersF

(6 To >or=+late an-) a>ter approval ?4 t8e Co==ittee) i=ple=ent a pro5ra= assets trans>erre- to it +n-er t8is %ro;la=ation) s+;8 pro5ra= to ?e ;o=plete- it8in >ro= t8e -ate o> t8e iss+an;e o> t8is %ro;la=ation

(2 S+?Ge;t to its 8avin5 re;eive- t8e prior ritten approval o> t8e Co==itteepri;e an- on ter=s o> pa4=ent an- to a part4 -is;lose- to t8e Co==ittee) to sell ea;8 t8e Co==ittee to s+;8 part4 an- on s+;8 ter=s as in its -is;retion are in t8e ?est inteovern=ent) an- >or s+;8 p+rpose to exe;+te an- -eliver) on ?e8al> an- in t8e na=e oovern=ent) s+;8 -ee-s o> sale) ;ontra;ts an- ot8er instr+=ents as =a4 ?e ne;essar4;onve4 title to s+;8 assets

x x x x x x x x x

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(: To a-opt its internal r+les an- re5+lations) to a-opt) alter an- +se a seal 8i;8 s8all ?e G+-i;iall4noti;e- to enter into ;ontra;ts to s+e an- ?e s+e-

x x x x x x x x xV

%+rs+ant to t8ese provisions) t8e A%T -ra>te- t8e ASB#. Sin;e t8e A%TRs r+le*=a9in5 a+t8orit4 is =erel4-ele5ate-) t8e ASB# s8o+l- ?e =eas+re- ?4 t8e stan-ar- set ?4 sai- pro;la=ation.$37' Nota?l4) t8e -is;retion5rante- ?4 t8e pro;la=ation to t8e A%T >or t8e sale o> 5overn=ent propert4 is ;ir;+=s;ri?e- onl4 ?4 t8e U?estinterest o> t8e National overn=ent.V

I=pli;itl4 ritten in an4 -ele5ate- le5islative a+t8orit4) s+;8 as t8at provi-e- >or in %ro;la=ation No. @) is t8ereJ+isite t8at t8e r+les an- re5+lations 8i;8 an a-=inistrative ?o-4 a-opts =+st respe;t pertinent provisionso> t8e Constit+tion an- t8e la.$3@' Arti;le II) Se;tion 66 o> t8e Constit+tion provi-in5 >or a 0 ,ilipino;apitalization in or-er t8at p+?li; +tilities =a4 ?e 5rante- a >ran;8ise s8o+l- t8+s ?e -ee=e- a para=o+nt;onsi-eration in -ra>tin5 t8e ASB#. In t8is re5ar-) ort8 notin5 is para5rap8 6@. o> t8e ASB#) 8i;8 provi-est8atF

UIn t8e event t8at t8e innin5 ?i--er is a 6 >orei5n*one- ;orporation) it =a4 na=e its no=inee;orporation to 8o= t8e N s8ares s8all ?e ;onve4e-) provi-e- it ons 7 eJ+it4 in t8e no=inee;orporation) so as not to ae;t %&ILSECORs J+aliH;ation to on real estate properties in t8e %8ilippines.V

T8is r+le is >ra+58t it8 -an5ero+s i=pli;ations. It allos a ;o=pletel4 >orei5n ;orporation to parti;ipate in t8ep+?li; ?i--in5 o> =ore t8an 0 o> t8e total s8ares o> a p+?li; +tilit4 ;orporation it8o+t settin5 a perio- it8in8i;8 t8e >orei5n ?i--er s8o+l- na=e its no=inee. As it is) t8e r+le allos a totall4 >orei5n investor to en5a5ein t8e ?+siness o> operatin5 a p+?li; +tilit4 >or an +nli=ite- perio- o> ti=e in total -isre5ar- o> t8e;onstit+tional pros;ription on t8e per;enta5e o> ,ilipino oners8ip o> ;orporations en5a5e- t8erein. %ara5rap86@. o> t8e ASB# is t8+s -ire;tl4 an- openl4 rep+5nant to t8e Constit+tion ;onsi-erin5 t8at it allos >orei5n;orporations to operate a p+?li; +tilit4 >or an +nli=ite- perio- o> ti=e.

In ;arr4in5 o+t its o?Ge;tive o> -isposin5 o> 5overn=ent propert4) t8e A%T s8o+l- ta9e into a;;o+nt t8epertinent las. Sin;e t8e =et8o- o> -isposin5 t8e %&ILSECO t8at t8e A%T 8a- a-opte- as t8ro+58 p+?li;?i--in5) it as -+t4*?o+n- to >ollo t8e r+les an- re5+lations on ;o=petitive p+?li; ?i--in5) in or-er to +p8ol-t8e ele=entar4 r+le on >airness in s+;8 -isposition. As t8is Co+rt on;e sai-F

Ux x x. A ;o=petitive p+?li; ?i--in5 ai=s to prote;t t8e p+?li; interest ?4 5ivin5 t8e p+?li; t8e ?est possi?lea-vanta5es t8ro+58 open ;o=petition. It is a =e;8anis= t8at ena?les t8e 5overn=ent a5en;4 to avoi- or

pre;l+-e ano=alies in t8e exe;+tion o> p+?li; ;ontra;ts.V$30'

T8e or- U?i--in5V in its ;o=pre8ensive sense =eans =a9in5 an oer$3:' or an invita;ontra;tors 8ere?4 t8e 5overn=ent =ani>ests its intention to =a9e proposals$3' >ors+pplies) =aterials an- eJ+ip=ent >or o;ial ?+siness or p+?li; +se)$3or t8e -isposition o> 5overn=ent assets s8o+l- 8ave t8e sa=e prin;ipleonl4 -ieren;e) i> at all) is t8at in t8e p+?li; ?i--in5 >or p+?li; ;ontra;ts) t8e aar- is 5loest ?i--er 8ile in t8e -isposition o> 5overn=ent assets) t8e aar- is to t8e 8i58esUp+?li; ?i--in5V i=ports a sale to t8e 8i58est ?i--er it8 a?sol+te >ree-o= >or ;o=pet

!n-er Se;tion @7 o> t8e overn=ent A+-itin5 #+les an- #e5+lations) a p+?li; a+;tion-ivest=ent or -isposal o> 5overn=ent propert4) s8all a-8ere to esta?lis8e- =e;8ani;s?i--in5.$73' In s+;8 p+?li; a+;tion sales) t8e presen;e o> a Co==ission on A+-it (COAs8all see to t8e proper o?servan;e o> a+-itin5 r+les is i=perative.$77' In t8is ;ase) t8eCOA representative itnesse- t8e p+?li; a+;tion on De;e=?er 2) 6 Se;retar4 o> ,inan;e an- CO%-e;ision to 5rant Kaasa9i t8e ri58t to top t8e 8i58est ?i- ?e =a-e U9non to t8e Co=appears on re;or- is t8at t8e COA -i- not approve t8e ASB#) spe;iH;all4 t8e provision 8i58est ?i--er. T8+s) t8en COA C8air=an %as;asio S. Banaria) repl4in5 to t8e J+er4 o>8et8er or not t8e COA 8a- approve- t8e ri58t to top t8e 8i58est ?i- ?4 @) state-F

U%er in>or=ation re;eive- >ro= o+r A+-itor at A%T) no prior approval as iss+e- ?4 t8epre>erential option. e 8ave instr+;te- o+r A+-itor t8ereat to a-vise t8is O;e o> t8e t8e CorporationRs pro;e-+res >or t8e sale o> t8e assets in;l+-in5 t8e revie o> t8e ?i--pertainin5 to t8e s+?Ge;t p+?li; ?i--in5 p+rs+ant to t8e provisions o> t8e Co==ission o2 toppin5 t8e 8i58est ?i--er) t8e A%T set asi-e t8e ?asi; r+le it8ere ?e an opport+nit4 >or ;o=petition.

8ile it =a4 ?e ar5+e- t8at t8e ri58t to top as ai=e- at 5ivin5 t8e ?est Hnan;ial a-v5overn=ent) t8e =anner ?4 8i;8 t8at ri58t as ;on;eive- an- arrive- at in t8is ;ase

o> K&I) t8ere?4 ;learl4 ?r+s8in5 asi-e t8e r+le on >air ;o=petition. ore i=portantl4) t8ri58t to top t8e 8i58est ?i--er ;o=pletel4 -isre5ar-e- t8e stip+lation in t8e 1"A ?ete

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;o=pl4 it8 t8e 0*7 ;apitalization arran5e=ent 8ere?4 K&I) t8e >orei5n investor) o+l- ?e a?le toexer;ise its ri58t o> Hrst re>+sal to t8e extent o> onl4 7 o> t8e total ;apitalization o> t8e %&ILSECO. T8+s) K&I)8ose invest=ent expos+re as alrea-4 -i=inis8e- to onl4 2.@ t8e total %&ILSECO s8ares) as 5iven t8eprivile5e) t8ro+58 its no=inee %&I) o> exer;isin5 t8e ri58t to top t8e 8i58est ?i- to :.0: o> t8ose s8ares or-eHnitel4 over an- a?ove its 7 ;ontra;t+al ri58t to %&ILSECO s8ares +n-er t8e 1"A. ConseJ+entl4) t8e A%Tren-ere- n+5ator4 t8e ;onstit+tional an- ;ontra;t+al pros;riptions ;learl4 to >avor a >orei5n investor.

,+rt8er=ore) 8ile t8e ri58t o> Hrst re>+sal entitle- K&I to priorit4 in t8e aar- o> t8e ;ontra;t) t8at ri58t ;annot?ar anot8er ?i--er >ro= s+?=ittin5 a ?i- ?e;a+se) pre;isel4) t8e la reJ+ires p+?li; ?i--in5 in 5overn=ent;ontra;ts.$7:' T8+s) ?4 en5ra>tin5 in t8e provisions o> t8e ASB# t8e ri58t to top) 8i;8 as onl4 an os8oot o>

t8e ri58t o> Hrst re>+sal) t8e A%T ee;tivel4 -i- aa4 it8 p+?i; ?i--in5 inso>ar as K&IM%&I as ;on;erne-. To?e s+re) t8e ri58t to top is -ierent >ro= t8e ri58t to =at;8. In t8e latter) a J+aliHe- ?i--er is 5iven t8eprivile5e o> oerin5 t8e sa=e ?i- as t8at o> t8e 8i58est ?i--er.$7' In t8e >or=er) as provi-e- >or ?4 t8e ASB#)a non*?i--er is a;;or-e- t8e ri58t to top t8e 8i58est ?i-. T8ere is reason) t8ere>ore) >or t8e petitioner to;o=plain t8at t8e A%T =a-e a s8o o> a p+?li; ?i--in5 in or-er to eli;it t8e 8i58est ?i-) onl4 to aar- t8e saleto a non*?i--er. T8e +n>air =anner ?4 8i;8 t8e p+rporte- p+?li; ?i--in5 as ;on-+;te- ?4 t8e A%T is even=a-e =ore ?latant ?4 t8e >a;t t8at a>ter t8e Up+?li; ?i--in5)V K&I exer;ise- t8e ri58t to top t8ro+58 itsno=inee) private respon-ent %&I) 8i;8 8as a=on5 its sto;98ol-ers so=e losin5 ?i--ers.

In -ra>tin5 t8e ASB#) t8e A%T s8o+l- 8ave note- t8e >a;t t8at >orei5n investors ere ;o=petin5 in t8e ?i--in5.8ile it is tr+e t8at >orei5n invest=ent s8o+l- ?e en;o+ra5e- in t8is ;o+ntr4) 8oever) t8e ASB# provision ont8e ri58t to top is +n>air to all ;o=petitors) ?e t8e4 >orei5n or lo;al) in t8e p+?li; a+;tion o> :.0: o> %&ILSECOs8ares as it provi-e- >or a =et8o- t8at o+l- set at na+58t t8e entire p+?li; ?i--in5.

It as t8+s error >or t8e Co+rt o> Appeals to ;on;l+-e t8at petitioner as estoppe- >ro= ;ontestin5 t8e vali-it4o> t8e ASB# an- t8e ?i--in5 pro;e-+re ;on-+;te- p+rs+ant to it. It is ;lear >ro= t8e provisions o> t8e ASB#itsel> t8at t8e ?asi; r+les on >air ;o=petition in p+?li; ?i--in5s 8ave ?een -isre5ar-e-. Alt8o+58 petitioner 8a-t8e opport+nit4 to exa=ine t8e ASB# ?e>ore it parti;ipate- in t8e ?i--in5) it ;annot ?e estoppe- >ro=J+estionin5 t8e +n;onstit+tional) ille5al an- ineJ+ita?le provisions t8ereo>. Estoppel is +navailin5 in t8is ;aseot8erise) it o+l- sta=p vali-it4 to an a;t t8at is pro8i?ite- ?4 la or a5ainst p+?li; poli;4.$7


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possi?l4 prosper. T8e ;8allen5e- or-er represents a response an- expresses a poli;4) to parap8rase,ran9>+rter) arisin5 o+t o> a spe;iH; pro?le=) a--resse- to t8e attain=ent o> spe;iH; en-s ?4 t8e +se o>spe;iH; re=e-ies) it8 >+ll an- a=ple s+pport >ro= le5al -o;trines o> ei58t an- si5niH;an;e.

T8e >a;ts ill explain 84. As set >ort8 in t8e ?rie> o> appellant Ben5+et Consoli-ate-) In;.) I-ona8 Sla-e%er9ins) 8o -ie- on ar;8 2:) 6t a=on5 ot8ers) to sto;9 ;ertiH;ates ;overin5 33)2s8ares o> appellant) t8e ;ertiH;ates ?ein5 in t8e possession o> t8e Co+nt4 Tr+st Co=pan4 o> Ne or9) 8i;8 asnote-) is t8e -o=i;iliar4 a-=inistrator o> t8e estate o> t8e -e;ease-.2 T8en ;a=e t8is portion o> t8e appellants?rie>F QOn A+5+st 62) 6,irst Instan;e o> anila Lazaro A. arJ+ez as appointe- an;illar4 a-=inistrator) an- on 1an+ar4 22) 6 t8e= as entitle- to t8e possession o> t8esto;9 ;ertiH;ates in J+estion. On 1an+ar4 2:) 6 ,irst Instan;e o> anila or-ere- t8e -o=i;iliar4a-=inistrator) Co+nt4 Tr+st Co=pan4) to Qpro-+;e an- -epositQ t8e= it8 t8e an;illar4 a-=inistrator or it8t8e Cler9 o> Co+rt. T8e -o=i;iliar4 a-=inistrator -i- not ;o=pl4 it8 t8e or-er) an- on ,e?r+ar4 66) 6 sto;9s;overin5 t8e 33)2 s8ares iss+e- in t8e na=e o> I-ona8 Sla-e %er9ins ?4 Ben5+et Consoli-ate-) In;.) ?e-e;lare- $or' ;onsi-ere- as lost.Q3

It is to ?e note- >+rt8er t8at appellant Ben5+et Consoli-ate-) In;. a-=its t8at Qit is i==aterialQ as >ar as it is;on;erne- as to Q8o is entitle- to t8e possession o> t8e sto;9 ;ertiH;ates in J+estion appellant oppose- t8epetition o> t8e an;illar4 a-=inistrator ?e;a+se t8e sai- sto;9 ;ertiH;ates are in existen;e) t8e4 are to-a4 in t8epossession o> t8e -o=i;iliar4 a-=inistrator) t8e Co+nt4 Tr+st Co=pan4) in Ne or9) !.S.A....Q7

It is its vie) t8ere>ore) t8at +n-er t8e ;ir;+=stan;es) t8e sto;9 ;ertiH;ates ;annot ?e -e;lare- or ;onsi-ere-as lost. oreover) it o+l- alle5e t8at t8ere as a >ail+re to o?serve ;ertain reJ+ire=ents o> its ?4*las ?e>orene sto;9 ;ertiH;ates ;o+l- ?e iss+e-. &en;e) its appeal.

As as =a-e ;lear at t8e o+tset o> t8is opinion) t8e appeal la;9s =erit. T8e ;8allen5e- or-er ;onstit+tes ane=p8ati; ar=ation o> G+-i;ial a+t8orit4 so+58t to ?e e=as;+late- ?4 t8e il>+l ;on-+;t o> t8e -o=i;iliar4a-=inistrator in re>+sin5 to a;;or- o?e-ien;e to a ;o+rt -e;ree. &o) t8en) ;an t8is or-er ?e sti5=atize- asille5alX

As is tr+e o> =an4 pro?le=s ;on>rontin5 t8e G+-i;iar4) s+;8 a response as ;alle- >or ?4 t8e realities o> t8esit+ation. 8at ;annot ?e i5nore- is t8at ;on-+;t ?or-erin5 on il>+l -eHan;e) i> it 8a- not a;t+all4 rea;8e- it);annot it8o+t +n-+e loss o> G+-i;ial presti5e) ?e ;on-one- or tolerate-. ,or t8e la is not so la;9in5 inexi?ilit4 an- reso+r;e>+lness as to pre;l+-e s+;8 a sol+tion) t8e =ore so as -eeper ree;tion o+l- =a9e;lear its ?ein5 ?+ttresse- ?4 in-isp+ta?le prin;iples an- s+pporte- ?4 t8e stron5est poli;4 ;onsi-erations.

It ;an tr+l4 ?e sai- t8en t8at t8e res+lt arrive- at +p8el- an- vin-i;ate- t8e 8onor o> t8t8at o> t8e ;o+ntr4. T8ro+58 t8is ;8allen5e- or-er) t8ere is t8+s -ispelle- t8e at=osp8e>r+stration ?ro+58t a?o+t ?4 t8e persisten;e o> t8e -o=i;iliar4 a-=inistrator to 8ol- ona>ter it 8a-) as a-=itte-) vol+ntaril4 s+?=itte- itsel> to t8e G+ris-i;tion o> t8e loer ;o+appearan;e t8ro+58 ;o+nsel on 1+ne 2:) 6or relie> >ro= a pre6 8at as previo+sl4 or-aine-

t8+s re=e-ie-) it o+l- 8ave entaile-) inso>ar as t8is =atter as ;on;erne-) not a part;o=plete paral4sis o> G+-i;ial a+t8orit4.

6. Appellant Ben5+et Consoli-ate-) In;. -i- not -isp+te t8e poer o> t8e appelleto 5ain ;ontrol an- possession o> all assets o> t8e -e;e-ent it8in t8e G+ris-i;tion o> t8it. S+;8 a poer is in8erent in 8is -+t4 to settle 8er estate an- satis>4 t8e ;lai=s o> lo;

T+ason spea9in5 >or t8is Co+rt =a-e ;lear) it is a Q5eneral r+le +niversall4 re;o5nize-Q8et8er prin;ipal or an;illar4) ;ertainl4 Qexten-s to t8e assets o> a -e;e-ent >o+n- it8ere it as 5rante-)Q t8e ;orollar4 ?ein5 Qt8at an a-=inistrator appointe- in one statpoer over propert4 in anot8er state or ;o+ntr4.Q0

It is to ?e note- t8at t8e s;ope o> t8e poer o> t8e an;illar4 a-=inistrator as) in an e 1+sti;e al;ol=. T8+sF QIt is o>ten ne;essar4 to 8ave =ore t8an one a-=inistration o> a-ies intestate onin5 propert4 in t8e ;o+ntr4 o> 8is -o=i;ile as ell as in a >orei5n ;o+8a- in ?ot8 ;o+ntries. T8at 8i;8 is 5rante- in t8e G+ris-i;tion o> -e;e-ents last -o=i;prin;ipal a-=inistration) 8ile an4 ot8er a-=inistration is ter=e- t8e an;illar4 a-=inist8e latter is ?e;a+se a 5rant o> a-=inistration -oes not ex proprio vi5ore 8ave an4 eet8e ;o+ntr4 in 8i;8 it is 5rante-. &en;e) an a-=inistrator appointe- in a >orei5n state$%8ilippines'. T8e an;illar4 a-=inistration is proper) 8enever a person -ies) leavin5 int8at o> 8is last -o=i;ile) propert4 to ?e a-=inistere- in t8e nat+re o> assets o> t8e -e;in-ivi-+al -e?ts or to ?e -istri?+te- a=on5 8is 8eirs.Q:

It o+l- >ollo t8en t8at t8e a+t8orit4 o> t8e pro?ate ;o+rt to reJ+ire t8at an;illar4 a-=sto;9 ;ertiH;ates ;overin5 t8e 33)2 s8ares ... stan-in5 in 8er na=e in t8e ?oo9s o> $aConsoli-ate-) In;....Q ?e respe;te- is eJ+all4 ?e4on- J+estion. ,or appellant is a %8ilipp>+ll alle5ian;e an- s+?Ge;t to t8e +nrestri;te- G+ris-i;tion o> lo;al ;o+rts. Its s8ares o> s;onsi-erein an4 ise as i==+ne >ro= la>+l ;o+rt or-ers.

O+r 8ol-in5 in ells ,ar5o Ban9 an- !nion v. Colle;tor o> Internal #even+e Hn-s appli

;ase) t8e a;t+al sit+s o> t8e s8ares o> sto;9 is in t8e %8ilippines) t8e ;orporation ?ein5

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>or;e o> t8e a?ove +n-enia?le proposition) not even appellant is insensi?le. It -oes not -isp+te it. Nor ;o+l- its+;;ess>+ll4 -o so even i> it ere so =in-e-.

2. In t8e >a;e o> s+;8 in;ontroverti?le -o;trines t8at ar5+e in a rat8er ;on;l+sive >as8ion >or t8e le5alit4o> t8e ;8allen5e- or-er) 8o -oes appellant) Ben5+et Consoli-ate-) In;. propose to ;arr4 t8e extre=el4 8eav4?+r-en o> pers+asion o> pre;isel4 -e=onstratin5 t8e ;ontrar4X It o+l- assi5n as t8e ?asi; error alle5e-l4;o==itte- ?4 t8e loer ;o+rt its Q;onsi-erin5 as lost t8e sto;9 ;ertiH;ates ;overin5 33)2 s8ares o> Ben5+et?elon5in5 to t8e -e;ease- I-ona8 Sla-e %er9ins) ...Q< ore spe;iH;all4) appellant o+l- stress t8at t8e Qloer;o+rt ;o+l- not Q;onsi-er as lostQ t8e sto;9 ;ertiH;ates in J+estion 8en) as a =atter o> >a;t) 8is &onor t8e trial

1+-5e 9ne) an- -oes 9no) an- it is a-=itte- ?4 t8e appellee) t8at t8e sai- sto;9 ;ertiH;ates are in existen;e

an- are to-a4 in t8e possession o> t8e -o=i;iliar4 a-=inistrator in Ne or9.Q6

T8ere =a4 ?e an ele=ent o> H;tion in t8e a?ove vie o> t8e loer ;o+rt. T8at ;ertainl4 -oes not s+;e to ;all>or t8e reversal o> t8e appeale- or-er. Sin;e t8ere is a re>+sal) persistentl4 a-8ere- to ?4 t8e -o=i;iliar4a-=inistrator in Ne or9) to -eliver t8e s8ares o> sto;9s o> appellant ;orporation one- ?4 t8e -e;e-ent tot8e an;illar4 a-=inistrator in t8e %8ilippines) t8ere as not8in5 +nreasona?le or ar?itrar4 in ;onsi-erin5 t8e=as lost an- reJ+irin5 t8e appellant to iss+e ne ;ertiH;ates in lie+ t8ereo>. T8ere?4) t8e tas9 in;+=?ent +n-ert8e la on t8e an;illar4 a-=inistrator ;o+l- ?e -is;8ar5e- an- 8is responsi?ilit4 >+lHlle-.

An4 ot8er vie o+l- res+lt in t8e ;o=plian;e to a vali- G+-i;ial or-er ?ein5 =a-e to -epen- on t8e+n;ontrolle- -is;retion o> t8e part4 or entit4) in t8is ;ase -o=i;ile- a?roa-) 8i;8 t8+s >ar 8as s8on t8e+t=ost persisten;e in re>+sin5 to 4iel- o?e-ien;e. Certainl4) appellant o+l- not ?e 8ear- to ;onten- in allserio+sness t8at a G+-i;ial -e;ree ;o+l- ?e treate- as a =ere s;rap o> paper) t8e ;o+rt iss+in5 it ?ein5poerless to re=e-4 its a5rant -isre5ar-.

It =a4 ?e a-=itte- o> ;o+rse t8at s+;8 alle5e- loss as >o+n- ?4 t8e loer ;o+rt -i- not ;orrespon- exa;tl4 it8t8e >a;ts. To ?e =ore ?l+nt) t8e J+alit4 o> tr+t8 =a4 ?e la;9in5 in s+;8 a ;on;l+sion arrive- at. It is to ?ere=e=?ere- 8oever) a5ain to ?orro >ro= ,ran9>+rter) Qt8at H;tions 8i;8 t8e la =a4 rel4 +pon in t8ep+rs+it o> le5iti=ate en-s 8ave pla4e- an i=portant part in its -evelop=ent.Q66

Spea9in5 o> t8e ;o==on la in its earlier perio-) Car-ozo ;o+l- state H;tions Qere -evi;es to a-van;e t8een-s o> G+sti;e) $even i>' ;l+=s4 anat ti=es oensive.Q62 So=e o> t8e= 8ave persiste- even to t8e present)t8at e=inent G+rist) notin5 Qt8e J+asi ;ontra;t) t8e a-opte- ;8il-) t8e ;onstr+;tive tr+st) all o> o+ris8in5vitalit4) to attest t8e e=pire o> Qas i>Q to-a4.Q63 &e li9eise note- Qa ;lass o> H;tions o> anot8er or-er) t8eH;tion 8i;8 is a or9in5 tool o> t8o+58t) ?+t 8i;8 at ti=es 8i-es itsel> >ro= vie till ree;tion an- anal4sis8ave ?ro+58t it to t8e li58t.Q67

8at ;annot ?e -isp+te-) t8ere>ore) is t8e at ti=es in-ispensa?le role t8at H;tions as s+;8 pla4e- in t8e la. T8ere s8o+l- ?e t8en on t8e part o> t8e appellant a >+rt8er reHne=ent in t8e ;at8oli;it4 o> its ;on-e=nation o>

s+;8 G+-i;ial te;8niJ+e. I> ever an o;;asion -i- ;all >or t8e e=plo4=ent o> a le5al H;tioano=alo+s sit+ation o> a vali- G+-i;ial or-er ?ein5 -isre5ar-e- it8 apparent i=p+nit4=ost o?vio+s is t8at t8is parti;+lar alle5e- error -oes not ;arr4 pers+asion.

3. Appellant Ben5+et Consoli-ate-) In;. o+l- see9 to ?olster t8e a?ove ;ontentt8e provisions o> its ?4*las 8i;8 o+l- set >ort8 t8e pro;e-+re to ?e >olloe- in ;ase-estro4e- sto;9 ;ertiH;ate it o+l- stress t8at in t8e event o> a ;ontest or t8e pen-enoners8ip o> s+;8 ;ertiH;ate or ;ertiH;ates o> sto;9 alle5e-l4 lost) stolen or -estro4e-);ertiH;ate or ;ertiH;ates o+l- aait t8e QHnal -e;ision ?4 $a' ;o+rt re5ar-in5 t8e on

S+;8 relian;e is =ispla;e-. In t8e Hrst pla;e) t8ere is no s+;8 o;;asion to appl4 s+;8 ?4t8e >orei5n -o=i;iliar4 a-=inistrator -i- not appeal >ro= t8e or-er no in J+estion. ot8e express a-=ission o> appellant t8at as >ar as it is ;on;erne-) Qit is i==aterial ... 8possession o> t8e sto;9 ;ertiH;ates ...Q Even i> s+;8 ere not t8e ;ase) it o+l- ?e a les+;8 a provision ;on;l+siveness an- Hnalit4. Ass+=in5 t8at a ;ontrariet4 exists ?eteet8e ;o==an- o> a ;o+rt -e;ree) t8e latter is to ?e >olloe-.

It is +n-erstan-a?le) as Car-ozo pointe- o+t) t8at t8e Constit+tion overri-es a stat+te) G+-i;iar4 =+st 4iel- -e>eren;e) 8en appropriatel4 invo9e- an- -ee=e- appli;a?le. It +nort8o-ox) 8oever) i> a ;orporate ?4*la o+l- ?e a;;or-e- s+;8 a 8i58 estate in t8=+st not onl4 ta9e note o> it ?+t 4iel- to its alle5e- ;ontrollin5 >or;e.

T8e >ear o> appellant o> a ;ontin5ent lia?ilit4 it8 8i;8 it ;o+l- ?e sa--le- +nless t8e

asi-e >or its in;onsisten;4 it8 one o> its ?4*las -oes not i=press +s. Its o?e-ien;e to;ertainl4 ;onstit+tes a vali- -e>ense) ass+=in5 t8at s+;8 appre8ension o> a possi?le ;o;o+l- possi?l4 =aterialize. T8+s >ar) not8in5 in t8e ;ir;+=stan;es as t8e4 8ave -evelos+;8 a >ear. ossa=er possi?ilities o> a >+t+re preG+-i;e to appellant -o not s+;e to no> G+-i;ial a+t8orit4.

7. 8at is =ore t8e vie a-opte- ?4 appellant Ben5+et Consoli-ate-) In;. is >raar it8 t8e ?asi; post+lates o> ;orporate t8eor4.

e start it8 t8e +n-enia?le pre=ise t8at) Qa ;orporation is an artiH;ial ?ein5 ;reate- It oes its li>e to t8e state) its ?irt8 ?ein5 p+rel4 -epen-ent on its ill. As Berle so aptl4;orporation as ;on;eive- as an artiH;ial person) oin5 its existen;e t8ro+58 ;reationpoer.Q6: As a =atter o> >a;t) t8e stat+tor4 lan5+a5e e=plo4e- oes =+;8 to C8ie> 1+t8e Dart=o+t8 Colle5e -e;ision -eHne- a ;orporation pre;isel4 as Qan artiH;ial ?ein5) existin5 onl4 in ;onte=plation o> la.Q6

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T8e ell*9non a+t8orit4 ,let;8er ;o+l- s+==arize t8e =atter t8+sF QA ;orporation is not in >a;t an- in realit4a person) ?+t t8e la treats it as t8o+58 it ere a person ?4 pro;ess o> H;tion) or ?4 re5ar-in5 it as an artiH;ialperson -istin;t an- separate >ro= its in-ivi-+al sto;98ol-ers.... It oes its existen;e to la. It is an artiH;ialperson ;reate- ?4 la >or ;ertain spe;iH; p+rposes) t8e extent o> 8ose existen;e) poers an- li?erties is Hxe-?4 its ;8arter.Q6< Dean %o+n-s terse s+==ar4) a G+risti; person) res+ltin5 >ro= an asso;iation o> 8+=an ?ein5s5rante- le5al personalit4 ?4 t8e state) p+ts t8e =atter neatl4.2

T8ere is t8+s a reGe;tion o> ier9es 5enossen;8a>t t8eor4) t8e ?asi; t8e=e o> 8i;8 to J+ote >ro= ,rie-=ann)Qis t8e realit4 o> t8e 5ro+p as a so;ial an- le5al entit4) in-epen-ent o> state re;o5nition an- ;on;ession.Q26 A;orporation as 9non to %8ilippine G+rispr+-en;e is a ;reat+re it8o+t an4 existen;e +ntil it 8as re;eive- t8ei=pri=at+r o> t8e state a;;or-in5 to la. It is lo5i;all4 in;on;eiva?le t8ere>ore t8at it ill 8ave ri58ts an-privile5es o> a 8i58er priorit4 t8an t8at o> its ;reator. ore t8an t8at) it ;annot le5iti=atel4 re>+se to 4iel-o?e-ien;e to a;ts o> its state or5ans) ;ertainl4 not ex;l+-in5 t8e G+-i;iar4) 8enever ;alle- +pon to -o so.

As a =atter o> >a;t) a ;orporation on;e it ;o=es into ?ein5) >olloin5 A=eri;an la still o> pers+asive a+t8orit4in o+r G+ris-i;tion) ;o=es =ore o>ten it8in t8e 9en o> t8e G+-i;iar4 t8an t8e ot8er to ;oor-inate ?ran;8es. Itinstit+tes t8e appropriate ;o+rt a;tion to en>or;e its ri58t. Correlativel4) it is not i==+ne >ro= G+-i;ial ;ontrol int8ose instan;es) 8ere a -+t4 +n-er t8e la as as;ertaine- in an appropriate le5al pro;ee-in5 is ;ast +pon it.

To assert t8at it ;an ;8oose 8i;8 ;o+rt or-er to >ollo an- 8i;8 to -isre5ar- is to ;on>er +pon it nota+tono=4 8i;8 =a4 ?e ;on;e-e- ?+t li;ense 8i;8 ;annot ?e tolerate-. It is to ar5+e t8at it =a4) 8en so=in-e-) overr+le t8e state) t8e so+r;e o> its ver4 existen;e it is to ;onten- t8at 8at an4 o> its 5overn=entalor5ans =a4 la>+ll4 reJ+ire ;o+l- ?e i5nore- at ill. So extrava5ant a ;lai= ;annot possi?l4 =erit approval.

@. One last point. In "iloria v. A-=inistrator o> "eterans Aairs)22 it as s8on t8at in a 5+ar-ians8ippro;ee-in5s t8en pen-in5 in a loer ;o+rt) t8e !nite- States "eterans A-=inistration Hle- a =otion >or t8ere>+n- o> a ;ertain s+= o> =one4 pai- to t8e =inor +n-er 5+ar-ians8ip) alle5in5 t8at t8e loer ;o+rt 8a-previo+sl4 5rante- its petition to ;onsi-er t8e -e;ease- >at8er as not entitle- to 5+erilla ?eneHts a;;or-in5 to a-eter=ination arrive- at ?4 its =ain o;e in t8e !nite- States. T8e =otion as -enie-. In see9in5 are;onsi-eration o> s+;8 or-er) t8e A-=inistrator relie- on an A=eri;an >e-eral stat+te =a9in5 8is -e;isionsQHnal an- ;on;l+sive on all J+estions o> la or >a;tQ pre;l+-in5 an4 ot8er A=eri;an o;ial to exa=ine t8e=atter ane) Qex;ept a G+-5e or G+-5es o> t8e !nite- States ;o+rt.Q23 #e;onsi-eration as -enie-) an- t8eA-=inistrator appeale-.

In an opinion ?4 1+sti;e 1.B.L. #e4es) e s+staine- t8e loer ;o+rt. T8+sF Qe are o> t8e opinion t8at t8e appeals8o+l- ?e reGe;te-. T8e provisions o> t8e !.S. Co-e) invo9e- ?4 t8e appellant) =a9e t8e -e;isions o> t8e !.S."eterans A-=inistrator Hnal an- ;on;l+sive 8en =a-e on ;lai=s propert4 s+?=itte- to 8i= >or resol+tion ?+t

t8e4 are not appli;a?le to t8e present ;ase) 8ere t8e A-=inistrator is not a;tin5 as a G+-5e ?+t as a liti5ant. T8ere is a 5reat -ieren;e ?eteen a;tions a5ainst t8e A-=inistrator (8i;8 =+st ?e Hle- stri;tl4 in

a;;or-an;e it8 t8e ;on-itions t8at are i=pose- ?4 t8e "eterans A;t) in;l+-in5 t8e exStates ;o+rts) an- t8ose a;tions 8ere t8e "eterans A-=inistrator see9s a re=e-4 >ros+?=its to t8eir G+ris-i;tion ?4 Hlin5 a;tions t8erein. O+r attention 8as not ?een ;alle- o+l- =a9e t8e Hn-in5s o> t8e "eterans A-=inistrator) in a;tions 8ere 8e is a part4);o+rts. T8at) in ee;t) o+l- -eprive o+r tri?+nals o> G+-i;ial -is;retion an- ren-er t8einstr+=entalities o> t8e "eterans A-=inistrator.Q

It is ?a- eno+58 as t8e "iloria -e;ision =a-e patent >or o+r G+-i;iar4 to a;;ept as Hnal -eter=inations =a-e ?4 >orei5n 5overn=ental a5en;ies. It is inHnitel4 orse i> t8ro+58;oer;ive poer ?4 o+r ;o+rts over G+ri-i;al persons it8in o+r G+ris-i;tion) t8e >or;e an

or-ers ;o+l- ?e =a-e to -epen- on t8e 8i= or ;apri;e o> alien entities. It is -i;+lt t=ore oensive to t8e -i5nit4 o> t8e ?en;8 or t8e 8onor o> t8e ;o+ntr4.

et t8at o+l- ?e t8e ee;t) even i> +ninten-e-) o> t8e proposition to 8i;8 appellant see=s to ?e Hr=l4 ;o==itte- as s8on ?4 its >ail+re to a;;ept t8e vali-it4 o> t8e or-eits reversal. Certainl4 e =+st at all pains see to it t8at it -oes not s+;;ee-. T8e -eploatten-ant on appellant prevailin5 attest to t8e ne;essit4 o> ne5ative response >ro= +sill 5et.

T8at is all t8en t8at t8is ;ase presents. It is o?vio+s 84 t8e appeal ;annot s+;;ee-. Itextre=e an- even oppressive possi?ilities. T8at is not -e;isive. It -oes not settle t8e isan- ;onvi;tion is t8e res+lt arrive- at) t8e G+st sol+tion o?taine-) 5ro+n-e- in t8e so+nan- -istin5+is8e- ?4 its ;orrespon-en;e it8 8at a sense o> realis= reJ+ires. ,or t8rt8e i=perative reJ+ire=ent o> G+sti;e a;;or-in5 to la is satisHe- an- national -i5nit4

&E#E,O#E) t8e appeale- or-er o> t8e &onora?le Arsenio Santos) t8e 1+-5e o> t8e Co-ate- a4 6) 6


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T8e Co+rt is espe;iall4 -ist+r?e- ?4 Se;tion 7(6 o> t8e -e;ree) J+ote- a?ove) extin5+is8in5 all =ort5a5es an-ot8er liens atta;8in5 to t8e assets o> A#I. It also notes) it8 eJ+al ;on;ern) t8e restri;tion in S+?se;tion (iit8ereo> t8at all Q+nse;+re- o?li5ations s8all not ?ear interestQ an- in S+?se;tion (iii t8at Qall a;;r+e- interests)penalties or ;8ar5es as o> -ate 8ereo> pertainin5 to t8e o?li5ations) 8et8er se;+re- or +nse;+re-) s8all not ?ere;o5nize-.Q

T8ese provisions =+st ?e rea- it8 t8e Bill o> #i58ts) 8ere it is ;learl4 provi-e- in Se;tion 6 t8at Qno persons8all ?e -eprive- o> li>e) li?ert4 or propert4 it8o+t -+e ;o+rse o> la nor s8all an4 person ?e -enie- t8e eJ+alprote;tion o> t8e laQ an- in Se;tion 6 t8at Qno la i=pairin5 t8e o?li5ation o> ;ontra;ts s8all ?e passe-.Q

In -e>en-in5 t8e -e;ree) t8e petitioners ar5+e t8at propert4 ri58ts) li9e all ri58ts) are s+?Ge;t to re5+lation+n-er t8e poli;e poer >or t8e pro=otion o> t8e ;o==on el>are. T8e ;ontention is t8at t8is in8erent poer o>t8e state =a4 ?e exer;ise- at an4 ti=e >or t8is p+rpose so lon5 as t8e ta9in5 o> t8e propert4 ri58t) even i>?ase- on ;ontra;t) is -one it8 -+e pro;ess o> la.

T8is ar5+=ent is an over*si=pliH;ation o> t8e pro?le= ?e>ore +s. T8e poli;e poer is not a pana;ea >or all;onstit+tional =ala-ies. Neit8er -oes its =ere invo;ation ;onG+re an instant an- a+to=ati; G+stiH;ation >orever4 a;t o> t8e 5overn=ent -eprivin5 a person o> 8is li>e) li?ert4 or propert4.

A le5islative a;t ?ase- on t8e poli;e poer reJ+ires t8e ;on;+rren;e o> a la>+l s+?Ge;t an- a la>+l =et8o-. In=ore >a=iliar or-s) a t8e interests o> t8e p+?li; 5enerall4) as -istin5+is8e- >ro= t8ose o> a parti;+lar ;lass)s8o+l- G+sti>4 t8e inter>eren;e o> t8e state an- ? t8e =eans e=plo4e- are reasona?l4 ne;essar4 >or t8ea;;o=plis8=ent o> t8e p+rpose annot +n-+l4 oppressive +pon in-ivi-+als. 2

Appl4in5 t8ese ;riteria to t8e ;ase at ?ar) t8e Co+rt Hn-s Hrst o> all t8at t8e interests o> t8e p+?li; are nots+;ientl4 involve- to arrant t8e inter>eren;e o> t8e 5overn=ent it8 t8e private ;ontra;ts o> A#I. T8e-e;ree spea9s va5+el4 o> t8e Qp+?li;) parti;+larl4 t8e s=all investors)Q 8o o+l- ?e preG+-i;e- i> t8e;orporation ere not to ?e assiste-. &oever) t8e re;or- -oes not state 8o =an4 t8ere are o> s+;8 investors)an- 8o t8e4 are) an- 84 t8e4 are ?ein5 pre>erre- to t8e private respon-ent an- ot8er ;re-itors o> A#Iit8 veste- propert4 ri58ts.F*;rala

T8e p+?li; interest s+ppose-l4 involve- is not i-entiHe- or explaine-. It 8as not ?een s8on t8at ?4 t8e;reation o> t8e Ne A5rix) In;. an- t8e extin;tion o> t8e propert4 ri58ts o> t8e ;re-itors o> A#I) t8e interestso> t8e p+?li; as a 8ole) as -istin5+is8e- >ro= t8ose o> a parti;+lar ;lass) o+l- ?e pro=ote- or prote;te-. T8ein-ispensa?le lin9 to t8e el>are o> t8e 5reater n+=?er 8as not ?een esta?lis8e-. On t8e ;ontrar4) it o+l-appear t8at t8e -e;ree as iss+e- onl4 to >avor a spe;ial 5ro+p o> investors 8o) >or reasons not 5iven) 8ave?een pre>erre- to t8e le5iti=ate ;re-itors o> A#I.

Ass+=in5 t8ere is a vali- p+?li; interest involve-) t8e Co+rt still Hn-s t8at t8e =eans eA#I >all >ar s8ort o> t8e reJ+ire=ent t8at t8e4 s8all not ?e +n-+l4 oppressive. T8e opon t8e >a;e o> t8e -e;ree. T8e ri58t to propert4 in all =ort5a5es) liens) interests) penato t8e ;re-itors o> A#I is ar?itraril4 -estro4e-. No ;onsi-eration is pai- >or t8e extin;ri58ts. T8e a;;r+e- interests an- ot8er ;8ar5es are si=pl4 reGe;te- ?4 t8e -e;ree. T8e-issolve- ?4 le5islative Hat it8o+t re5ar- to t8e private interest violate- an-) orse) private interest.

A =ort5a5e lien is a propert4 ri58t -erive- >ro= ;ontra;t an- so ;o=es +n-er t8e prot#i58ts. So -o interests on loans) as ell as penalties an- ;8ar5es) 8i;8 are also veste

a;;r+e. %rivate propert4 ;annot si=pl4 ?e ta9en ?4 la >ro= one person an- 5iven to a;o=pensation an- an4 9non p+?li; p+rpose. T8is is plain ar?itrariness anis not per=Constit+tion.

An- not onl4 is t8ere ar?itrar4 ta9in5) t8ere is -is;ri=ination as ell. In extin5+is8in5 tliens) t8e -e;ree l+=ps t8e se;+re- ;re-itors it8 t8e +nse;+re- ;re-itors an- pla;es in t8e prose;+tion o> t8eir respe;tive ;lai=s. In t8is respe;t) all o> t8e= are ;onsi-ere-

T8e onl4 ;on;ession 5iven to t8e se;+re- ;re-itors is t8at t8eir loans are alloe- to eao> t8e -e;ree) ?+t t8at still -oes not G+sti>4 t8e ;an;ellation o> t8e interests earne- ?e>interests) 8et8er -+e to t8e se;+re- or t8e +nse;+re- ;re-itors) are all extin5+is8e- ?ass+=in5 s+;8 ;an;ellation to ?e vali-) e still ;annot see 84 all 9in-s o> ;re-itors) rtreate- ali9e.

!n-er t8e eJ+al prote;tion ;la+se) all persons or t8in5s si=ilarl4 sit+ate- =+st ?e treaprivile5es ;on>erre- an- t8e o?li5ations i=pose-. Conversel4) all persons or t8in5s -i

?e treate- -ierentl4. In t8e ;ase at ?ar) persons -ierentl4 sit+ate- are si=ilarl4 treatprin;iple t8at t8ere s8o+l- ?e eJ+alit4 onl4 a=on5 eJ+als.* na-

One =a4 also ell on-er 84 A#I as sin5le- o+t >or 5overn=ent 8elp) a=on5 ot8t8e sto;98ol-ers or investors ere also sin-le-. It is not ;lear 84 ot8er ;o=panies eere not si=ilarl4 treate-. An- s+rel4) t8e sto;98ol-ers o> t8e private respon-ent) 8o?een ;an;elle- an- le5iti=ate ;lai=s to a;;r+e- interests reGe;te-) ere no less -esert8e4 -i- not 5et. T8e -e;ree operate-) to +se t8e or-s o> a ;ele?rate- ;ase) 3 Qit8 a+neven 8an-.Q

On top o> all t8is) Ne A5rix) In;. as ;reate- ?4 spe;ial -e;ree notit8stan-in5 t8e prSe;tion 7 o> t8e 6or;e) t8atF

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SEC. 7. T8e Batasan5 %a=?ansa s8all not) ex;ept ?4 5eneral la) provi-e >or t8e >or=ation) or5anization) orre5+lation o> private ;orporations) +nless s+;8 ;orporations are one- or ;ontrolle- ?4 t8e overn=ent or an4s+?-ivision or instr+=entalit4 t8ereo>. 7

T8e ne ;orporation is neit8er one- nor ;ontrolle- ?4 t8e 5overn=ent. T8e National Develop=entCorporation as =erel4 reJ+ire- to exten- a loan o> not =ore t8an %6)). to Ne A5rix) In;. %en-in5pa4=ent t8ereo>) NDC o+l- +n-erta9e t8e =ana5e=ent o> t8e ;orporation) ?+t it8 t8e o?li5ation o> =a9in5perio-i; reports to t8e A5rix ?oar- o> -ire;tors. A>ter pa4=ent o> t8e loan) t8e sai- ?oar- ;an t8en appoint itson =ana5e=ent. T8e sto;9s o> t8e ne ;orporation are to ?e iss+e- to t8e ol- investors an- sto;98ol-ers o>A#I +pon proo> o> t8eir ;lai=s a5ainst t8e a?olis8e- ;orporation. T8e4 s8all t8en ?e t8e oners o> t8e ne;orporation. Ne A5rix) In;. is entirel4 private an- so s8o+l- 8ave ?een or5anize- +n-er t8e Corporation La ina;;or-an;e it8 t8e a?ove*;ite- ;onstit+tional provision.

T8e Co+rt also >eels t8at t8e -e;ree i=pairs t8e o?li5ation o> t8e ;ontra;t ?eteen A#I an- t8e privaterespon-ent it8o+t G+stiH;ation. 8ile it is tr+e t8at t8e poli;e poer is s+perior to t8e i=pair=ent ;la+se) t8eprin;iple ill appl4 onl4 8ere t8e ;ontra;t is so relate- to t8e p+?li; el>are t8at it ill ?e ;onsi-ere-;on5enitall4 s+s;epti?le to ;8an5e ?4 t8e le5islat+re in t8e interest o> t8e 5reater n+=?er. @ ost present*-a4;ontra;ts are o> t8at nat+re. B+t as alrea-4 o?serve-) t8e ;ontra;ts o> loan an- =ort5a5e exe;+te- ?4 A#Iare p+rel4 private transa;tions an- 8ave not ?een s8on to ?e ae;te- it8 p+?li; interest. T8ere ast8ere>ore no arrant to a=en- t8eir provisions an- -eprive t8e private respon-ent o> its veste- propert4 ri58ts.

It is ort8 notin5 t8at onl4 re;entl4 in t8e ;ase o> t8e Develop=ent Ban9 o> t8e %8ilippines v. NL#C) 0 es+staine- t8e pre>eren;e in pa4=ent o> a =ort5a5e ;re-itor as a5ainst t8e ar5+=ent t8at t8e ;lai=s o>la?orers s8o+l- ta9e pre;e-en;e over all ot8er ;lai=s) in;l+-in5 t8ose o> t8e 5overn=ent. In arrivin5 at t8isr+lin5) t8e Co+rt re;o5nize- t8e =ort5a5e lien as a propert4 ri58t prote;te- ?4 t8e -+e pro;ess an- ;ontra;t

;la+ses notit8stan-in5 t8e ar5+=ent t8at t8e a=en-=ent in Se;tion 66 o> t8e La?or Co-e as a properexer;ise o> t8e poli;e poer.F na-

T8e Co+rt rear=s an- applies t8at r+lin5 in t8e ;ase at ?ar.

O+r Hn-in5) in s+=) is t8at %res. De;ree No. 6:6: is an invali- exer;ise o> t8e poli;e poer) not ?ein5 in;on>or=it4 it8 t8e tra-itional reJ+ire=ents o> a la>+l s+?Ge;t an- a la>+l =et8o-. T8e extin;tion o> t8e=ort5a5e an- ot8er liens an- o> t8e interest an- ot8er ;8ar5es pertainin5 to t8e le5iti=ate ;re-itors o> A#I;onstit+tes ta9in5 it8o+t -+e pro;ess o> la) an- t8is is ;o=po+n-e- ?4 t8e re-+;tion o> t8e se;+re- ;re-itorsto t8e ;ate5or4 o> +nse;+re- ;re-itors in violation o> t8e eJ+al prote;tion ;la+se. oreover) t8e ne;orporation) ?ein5 neit8er one- nor ;ontrolle- ?4 t8e overn=ent) s8o+l- 8ave ?een ;reate- onl4 ?4 5eneralan- not spe;ial la. An- inso>ar as t8e -e;ree also inter>eres it8 p+rel4 private a5ree=ents it8o+t an4-e=onstrate- ;onne;tion it8 t8e p+?li; interest) t8ere is li9eise an i=pair=ent o> t8e o?li5ation o> t8e;ontra;t.

it8 t8e a?ove prono+n;e=ents) e >eel t8ere is no =ore nee- to r+le on t8e a+t8oritpro=+l5ate %res. De;ree No. 6:6: +n-er A=en-=ent No. 0 o> t8e 6all G+st t8e sa=e ?e;a+se o> its violation o> t8e Bill o> #i58t

&E#E,O#E) t8e petition is DISISSED. %res. De;ree No. 6:6: is -e;lare- !NCONSTITrestrainin5 or-er -ate- A+5+st 3) 6or #e;onsi-eration. T8e #an+l>o C. ,eli;ianoRs reJ+est >or COA to ;ease all a+-it servi;es) an- to stop ;8ar5in5etropolitan ater Distri;t (ULDV. T8e COA also -enie- petitionerRs reJ+est >or CO>ees previo+sl4 pai- ?4 LD.

Ante;e-ent ,a;ts

A Spe;ial A+-it Tea= >ro= COA #e5ional O;e No. "III a+-ite- t8e a;;o+nts o> LD.re;eive- a letter >ro= COA -ate- 6< 1+l4 6ees. ALD) petitioner sent a repl4 -ate- 62 O;to?er 6ees. %etitioner ;ite- as ?asis >or 8is a;tion Se;tions 0 an- 6


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On 6< O;to?er 6 all a+-itin5 >eesLD previo+sl4 pai- to COA.

On 60 ar;8 2) petitioner re;eive- COA C8air=an Celso D. an5anRs #esol+tion -ate- 3 1an+ar4 2-en4in5 8is reJ+ests. %etitioner Hle- a =otion >or re;onsi-eration on 36 ar;8 2) 8i;8 COA -enie- on 3

1an+ar4 26.

On 63 ar;8 26) petitioner Hle- t8is instant petition. Atta;8e- to t8e petition ere resol+tions o> t8e "isa4asAsso;iation o> ater Distri;ts ("AD an- t8e %8ilippine Asso;iation o> ater Distri;ts (%AD s+pportin5 t8e

petition.

T8e #+lin5 o> t8e Co==ission on A+-it

T8e COA r+le- t8at t8is Co+rt 8as alrea-4 settle- COARs a+-it G+ris-i;tion over lo;al ater -istri;ts in DavaoCit4 ater Distri;t v. Civil Servi;e Co==ission an- Co==ission on A+-it)$3' as >ollosF

T8e a?ove*J+ote- provision $re>errin5 to Se;tion 3(? %D 6 t8e Constit+tion provi-es >or COARs a+-it G+ris-i;t

SECTION 2. (6 T8e Co==ission on A+-it s8all 8ave t8e poer) a+t8orit4 an- -+t4 to eall a;;o+nts pertainin5 to t8e reven+e an- re;eipts o>) an- expen-it+res or +ses o> >+nor 8el- in tr+st ?4) or pertainin5 to) t8e overn=ent) or an4 o> its s+?-ivisions) a5en;ie

in;l+-in5 5overn=ent*one- an- ;ontrolle- ;orporations it8 ori5inal ;8arters) an- on;onstit+tional ?o-ies) ;o==issions an- o;es t8at 8ave ?een 5rante- Hs;al a+tono=4(? a+tono=o+s state ;olle5es an- +niversities (; ot8er 5overn=ent*one- or ;ontrot8eir s+?si-iaries an- (- s+;8 non*5overn=ental entities re;eivin5 s+?si-4 or eJ+it4) >ro= or t8ro+58 t8e 5overn=ent) 8i;8 are reJ+ire- ?4 la or t8e 5rantin5 instit+tion as a ;on-ition o> s+?si-4 or eJ+it4. &oever) 8ere t8e internal ;ontrol s4ste= o> t8e ina-eJ+ate) t8e Co==ission =a4 a-opt s+;8 =eas+res) in;l+-in5 te=porar4 or spe;iane;essar4 an- appropriate to ;orre;t t8e -eH;ien;ies. It s8all 9eep t8e 5eneral a;;o+nan-) >or s+;8 perio- as =a4 ?e provi-e- ?4 la) preserve t8e vo+;8ers an- ot8er s+ppt8ereto. (E=p8asis s+pplie-

T8e COARs a+-it G+ris-i;tion exten-s not onl4 to 5overn=ent Ua5en;ies or instr+=entaU5overn=ent*one- an- ;ontrolle- ;orporations it8 ori5inal ;8artersV as ell as Uot8;ontrolle- ;orporationsV it8o+t ori5inal ;8arters.

8et8er LDs are %rivate or overn=ent*One-

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an- Controlle- Corporations it8 Ori5inal C8arters

%etitioner see9s to revive a ell*settle- iss+e. %etitioner as9s >or a re*exa=ination o> a -o;trine ?a;9e- ?4 alon5 line o> ;ases ;+l=inatin5 in Davao Cit4 ater Distri;t v. Civil Servi;e Co==ission$@' an- G+st re;entl4reiterate- in De 1es+s v. Co==ission on A+-it.$0' %etitioner =aintains t8at LDs are not 5overn=ent*one-an- ;ontrolle- ;orporations it8 ori5inal ;8arters. %etitioner even ar5+es t8at LDs are private ;orporations.%etitioner as9s t8e Co+rt to ;onsi-er ;ertain interpretations o> t8e appli;a?le las) 8i;8 o+l- 5ive a Uneperspe;tive to t8e iss+e o> t8e tr+e ;8ara;ter o> ater -istri;ts.V$:'

%etitioner t8eorizes t8at 8at %D 6or t8eir >or=ationon an optional or vol+ntar4 ?asis.$' %etitioner a--s t8at t8e operative a;t t8at ;reates an LD is t8e approvalo> t8e San55+nian #esol+tion as spe;iHe- in %D 6ra=eor9 +n-er t8e >+n-a=ental la. T8e Constit+tion re;o5nizes to;lasses o> ;orporations. T8e Hrst re>ers to private ;orporations ;reate- +n-er a 5eneral la. T8e se;on- re>ersto 5overn=ent*one- or ;ontrolle- ;orporations ;reate- ?4 spe;ial ;8arters. Se;tion 60) Arti;le II o> t8eConstit+tion provi-esF

Se;. 60. T8e Con5ress s8all not) ex;ept ?4 5eneral la) provi-e >or t8e >or=ation) or5anization) or re5+lation o> private ;orporations. overn=ent*one- or ;ontrolle- ;orporations =a4 ?e ;reate- or esta?lis8e- ?4 spe;ial;8arters in t8e interest o> t8e ;o==on 5oo- an- s+?Ge;t to t8e test o> e;ono=i; via?ilit4.

T8e Constit+tion e=p8ati;all4 pro8i?its t8e ;reation o> private ;orporations ex;ept ?4 a 5eneral la appli;a?leto all ;itizens.$ t8e ;orporation isprivate) it =+st ne;essaril4 exist +n-er a 5eneral la. State- -ierentl4) onl4 ;orporations ;reate- +n-er a

5eneral la ;an J+ali>4 as private ;orporations. !n-er existin5 las) t8at 5eneral la is t8e Corporation Co-e)$66' ex;ept t8at t8e Cooperative Co-e 5overns t8e in;orporation o> ;ooperatives.$62'

T8e Constit+tion a+t8orizes Con5ress to ;reate 5overn=ent*one- or ;ontrolle- ;orpo;8arters. Sin;e private ;orporations ;annot 8ave spe;ial ;8arters) it >ollos t8at Con5;orporations it8 spe;ial ;8arters onl4 i> s+;8 ;orporations are 5overn=ent*one- or ;

O?vio+sl4) LDs are not private ;orporations ?e;a+se t8e4 are not ;reate- +n-er t8e Care not re5istere- it8 t8e Se;+rities an- Ex;8an5e Co==ission. Se;tion 67 o> t8e Cot8at U$A'll ;orporations or5anize- +n-er t8is ;o-e s8all Hle it8 t8e Se;+rities an- Ex;8arti;les o> in;orporation x x x.V LDs 8ave no arti;les o> in;orporation) no in;orporato=e=?ers. T8ere are no sto;98ol-ers or =e=?ers to ele;t t8e ?oar- -ire;tors o> LDs

;orporations re5istere- it8 t8e Se;+rities an- Ex;8an5e Co==ission. T8e lo;al =a4o5overnor appoints t8e -ire;tors o> LDs >or a Hxe- ter= o> o;e. T8is Co+rt 8as r+le-;reate- +n-er t8e Corporation Co-e) t8+sF

,ro= t8e >ore5oin5 prono+n;e=ent) it is ;lear t8at 8at 8as ?een ex;l+-e- >ro= t8e ;ot8ose ;orporations ;reate- p+rs+ant to t8e Corporation Co-e. Si5niH;antl4) petitionert8e sai- ;o-e) ?+t on t8e ;ontrar4) t8e4 ere ;reate- p+rs+ant to a spe;ial la an- areits provision.$63' (E=p8asis s+pplie-

LDs exist ?4 virt+e o> %D 6ro= t8e Cor-erive t8eir le5al existen;e an- poer >ro= %D 6 %D 6


23/206


(? A -es;ription o> t8e ?o+n-ar4 o> t8e -istri;t. In t8e ;ase o> a ;it4 or =+ni;ipalit4) s+;8 ?o+n-ar4 =a4in;l+-e all lan-s it8in t8e ;it4 or =+ni;ipalit4. A -istri;t =a4 in;l+-e one or =ore =+ni;ipalities) ;ities orprovin;es) or portions t8ereo>.

(; A state=ent ;o=pletel4 trans>errin5 an4 an- all ateror9s an-Mor seera5e >a;ilities =ana5e-)operate- ?4 or +n-er t8e ;ontrol o> s+;8 ;it4) =+ni;ipalit4 or provin;e to s+;8 -istri;t +pon t8e Hlin5 o>resol+tion >or=in5 t8e -istri;t.

(- A state=ent i-enti>4in5 t8e p+rpose >or 8i;8 t8e -istri;t is >or=e-) 8i;8 s8all in;l+-e t8ose

p+rposes o+tline- in Se;tion @ a?ove.

(e T8e na=es o> t8e initial -ire;tors o> t8e -istri;t it8 t8e -ate o> expiration o> ter= o> o;e >or ea;8.

(> A state=ent t8at t8e -istri;t =a4 onl4 ?e -issolve- on t8e 5ro+n-s an- +n-er t8e ;on-itions set >ort8in Se;tion 77 o> t8is Title.

(5 A state=ent a;9nole-5in5 t8e poers) ri58ts an- o?li5ations as set >ort8 in Se;tion 30 o> t8is Title.

Not8in5 in t8e resol+tion o> >or=ation s8all state or in>er t8at t8e lo;al le5islative ?o-4 8as t8e poer to-issolve) alter or ae;t t8e -istri;t ?e4on- t8at spe;iH;all4 provi-e- >or in t8is A;t.

I> to or =ore ;ities) =+ni;ipalities or provin;es) or an4 ;o=?ination t8ereo>) -esire to >or= a sin5le -istri;t) asi=ilar resol+tion s8all ?e a-opte

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