PSPCA vs Commission on Audit G.R. No.

169752 September 25, 2007 Facts: PSPCA was incorporated as a juridical entity by virtue of Act No. 1285 by the Philippine Commission in order to enforce laws relating to the cruelty inflicted upon animals and for the protection of and to perform all things which may tend to alleviate the suffering of animals and promote their welfare. In order to enhance its powers, PSPCA was initially imbued with (1) power to apprehend violators of animal welfare laws and (2) share 50% of the fines imposed and collected through its efforts pursuant to the violations of related laws.On December 1, 2003, an audit team from the Commission on Audit visited petitioners office to conduct a survey. PSPCA demurred on the ground that it was a private entity and not under the CoAs jurisdiction, citing Sec .2(1), Art. IX of the Constitution.

Issues: WON the PSPCA is subject to CoAs Audit Authority. Held: No. The charter test cannot be applied. It is predicated on the legal regime established by the 1935 Constitution, Sec.7, Art. XIII. Since the underpinnings of the charter test had been introduced by the 1935 Constitution and not earlier, the test cannot be applied to PSPCA which was incorporated on January 19, 1905. Laws, generally, have no retroactive effect unless the contrary is provided. There are a few exceptions: (1) when expressly provided; (2) remedial statutes; (3) curative statutes; and (4) laws interpreting others. None of the exceptions apply in the instant case.

The mere fact that a corporation has been created by a special law doesnt necessarily qualify it as a public corporation. At the time PSPCA was formed, the Philippine Bill of 1902 was the applicable law and no proscription similar to the charter test can be found therein. There was no restriction on the legislature to create private corporations in 1903. The amendments introduced by CA 148 made it clear that PSPCA was a private corporation, not a government agency.

Boyer-Roxas vs. Court of Appeals Facts: - Eugenia Roxas originally owned the questioned properties in this case which include among others cottages, houses, buildings, swimming pools, tennis court, restaurants, open pavilions inside the Hidden Valley Springs Resort in Laguna. - When Eugenia died, her heirs among whom were Rebecca Boyer-Roxas and Guillermo Roxas decided to form the corporation, Heirs of Eugenia V. Roxas, Inc. with the inherited properties as capital of the corporation. - This was incorporated with the primary purpose of engaging in agriculture to develop the inherited properties. - The Articles of Incorporation however was amended to allow it to engage in the resort business. - Accordingly, the corporation put up a resort known as Hidden Valley Spring Resort where the questioned properties were located. - Eufrocino Roxas, (husband of Eugenia) during his lifetime together with Eribito Roxas ( husband of Rebecca and father of Guillermo) managed the corporation. - Eriberto and Rebecca occupied the staff house as their residence and converted the recreation hall into a residential house with the blessings of Eufrocino, who was then the majority stockholder of the corporation. - The Board of directors did not object to the actions of Eufrocino. - Rebecca and Guillermo were allowed to stay within the questioned properties until the Board of Directors approved a resolution ejecting them. - Despite demand however, they refused to vacate. - Hence, two separate complaints for recovery of possession was filed. - TrialCourt affirmed by CA, ordered Rebecca and all persons claiming under her to vacate the premises. - Hence, this petition. Issue: Whether or not the petitioner could be ejected? Yes Held: Properties registered in the name of the corporation are owned by it as an entity separate and distinct from its members. While shares of stock constitute personal property, they do not represent property of the corporation. The corporation has property of its own. A share of stock only typifies an aliquot part of the corporation s property or the right to share in its proceeds to that extent when distributed according to law and equity but its holder is not the owner of any part of the capital of the corporation. Nor is he entitled to the possession of any definite portion of its property or assets. The stockholder is not a co-owner or tenant in common of the corporate property. A corporation can therefore sue to recover real property being occupied by its former president (who was also a significant stockholder) for it has a

juridical personality separate and distinct from its stockholders even though in the past the corporation allowed the president to enjoy the possession of the property. Lipat v Pacific Banking Corporation GR 142435 FACTS: Belas Export Trading (BET) was a single proprietorship corporation which was engaged in the manufacture of garments for domestic and foreign consumption. Estilita Lipat, as owner of BET, appointed Teresita Lipat as her attorney-in-fact to obtain loans from Pacific Banking Corporation (Pacific Bank). She also authorized Teresita to mortgage the property she coowned with her husband as a security for the loan. BET was turned into Belas Export Corporation (BEC). BEC defaulted in payment of the obligation. Pacific Bank foreclosed all the mortgaged properties and sold these to a public auction. Spouses Lipat filed a complaint for the annulment of real estate mortgage and the extrajudicial foreclosure arguing that all the transactions of Teresita were ultra vires acts because these were executed without the required board resolution of the Board of Directors by BEC, and that if it were binding to BEC, the same were the corporations sole obligation, it having a personality distinct and separate from spouses Lipat. ISSUE: whether or not the doctrine of piercing the veil of corporate fiction is applicable in this case. HELD: Yes. Both BET and BEC are one and the same and that Teresita was an officer of both corporations was issued a Special Power of Attorney buttress this contention. The latter is a conduit of and merely succeeded the former. DILY DANY NACPIL vs. INTERCONTINENTAL BROADCASTING CORPORATION [G.R. No. 144767. March 21, 2002] FACTS: Nacpil was the Assistant General Manager for Finance and Comptroller of Intercontinental Broadcasting Corporation (IBC). When a new president assumed office, Nacpil was forced to resign due to harassment and humiliation he experienced from the new president. His retirement benefits were not paid, hence, Nacpil filed a complaint for illegal dismissal and non-payment of benefits with the Labor Arbiter. IBC filed a Motion to Dismiss alleging Labor Arbiters lack of jurisdiction because the case involved intra-corporate dispute cognizable by SEC. ISSUE: Whether or not the position of Nacpil was a corporate office, hence, her dismissal is within the jurisdiction of SEC HELD:

Yes. That the position of Comptroller is not expressly mentioned among the officers of the IBC in the by-laws is of no moment, because the IBCs Board of Directors is empowered under Section 25 of the Corporation Code and under the Corporation By-Laws to appoint such other officers as it may deem necessary. Where the corporate office is not specifically indicated in the roster of corporate offices in the by-laws of the corporation, the board of directors may also e empowered under the laws to create additional officers as may be necessary. And where the by-laws authorized the directors to create office, the directors may create the office comptroller. Since the appointment as comptroller required formal action of the board, petitioner is a corporate officer whose dismissal maybe subject of intra-corporate controversy cognizable by the SEC under Section 5 (c) of PD 902-A (now the RTC).

Republic vs Sandiganbayan Facts: ETPI was one of the corporation sequestered by PCGG and among its stockholders were Benedicto and UNIMOLCO. Benedicto entered into a compromise agreement whereby he ceded to the government his 204,000 shares in ETPI and the government withdrew the case filed against Benedicto. Subsequently, UNIMOLCO and Smart Communications executed a Deed of Absolute Sale where UNIMOLCO sold its 196,000 shares to Smart. Prior to the sale, Smart is not a stockholder of ETPI. The petitioner filed a complaint with the Sandiganbayan alleging that the sale was in violation of the right of first refusal to purchase shares of stock of ETPI but the same was denied. Issue: Whether or not the lack of notice in order that petitioner may exercise his preemptive right valid to rescind or annul the sale. Ruling: The purpose of the notice requirement in article 10 of the ETPI Articles of Incorporation is to give the stockholders knowledge of the intended sale of shares of stock of the corporation, in order that they may exercise their preemptive right. Where it is shown that a stockholder had actual knowledge of the intended sale within the period prescribed to exercise the right, the notice requirement had been sufficiently met. In the case at bar, PCGG had actual knowledge of UNIMOLCOs offer to sell its shares of stock, in fact, it issued a resolution enjoining the sale of said shares of stock to Smart G.R. No. 75885 May 27, 1987 BATAAN SHIPYARD & ENGINEERING CO., INC. (BASECO), VS PCGG vs. Facts: When President Corazon Aquino took power, the Presidential Commission on Good Government (PCGG) was formed in order to recover ill gotten wealth allegedly acquired by

former President Marcos and his cronies. Aquino then issued two executive orders in 1986 and pursuant thereto, a sequestration and a takeover order were issued against Bataan Shipyard & engineering Co., Inc. (BASECO). BASECO was alleged to be in actuality owned and controlled by the Marcoses through the Romualdez family, and in turn, through dummy stockholders. The sequestration order issued in 1986 required, among others, that BASECO produce corporate records from 1973 to 1986 under pain of contempt of the PCGG if it fails to do so. BASECO assails this order as it avers, among others, that it is against BASECOs right against self incrimination and unreasonable searches and seizures. ISSUE: Whether or not BASECO is correct. HELD: No. First of all, PCGG has the right to require the production of such documents pursuant to the power granted to it. Second, and more importantly, right against self-incrimination has no application to juridical persons. There is a reserve right in the legislature to investigate the contracts of a corporation and find out whether it has exceeded its powers. It would be a strange anomaly to hold that a state, having chartered a corporation like BASECO to make use of certain franchises, could not, in the exercise of sovereignty, inquire how these franchises had been employed, and whether they had been abused, and demand the production of the corporate books and papers for that purpose. Neither is the right against unreasonable searches and seizures applicable here. There were no searches made and no seizure pursuant to any search was ever made. BASECO was merely ordered to produce the corporate records.

Manila International Airport Authority vs CAGR No. 155650, July 20, 2006, 495 SCRA 591 Facts:Manila International Airport Authority (MIAA) is the operator of the Ninoy International Airpor located at Paranaque City. The Officers of Paranaque City sent notices to MIAA due to real estate tax delinquency. MIAA then settled some of the amount. When MIAA failed to settle the entire amount, the officers of Paranaque city threatened to levy and subject to auction the land and buildings of MIAA, which they did. MIAA sought for a Temporary Restraining Order from the CA but failed to do so withinthe 60 days reglementary period, so the petition was dismissed. MIAA then sought for the TRO with theSupreme Court a day before the public auction, MIAA was granted with the TRO but unfortunately theTRO was received by the Paranaque City officers 3 hours after the public auction. MIAA claims that although the charter provides that the title of the land and building are withMIAA still the ownership is with the Republic of the Philippines. MIAA also contends that it is aninstrumentality of the government and as such exempted from real estate tax. That the land and buildingsof MIAA are of public dominion therefore cannot be subjected to levy and auction sale. On the other hand, the officers of Paranaque City claim that MIAA is a government owned and controlled corporation therefore not exempted to real estate tax. Issues: Whether or not MIAA is an instrumentality of the government and not a government owned and controlled corporation and as such exempted from tax.

Ruling:Under the Localgovernment code, government owned and controlled corpora tions are notexempted from real estate tax. MIAA is not a government owned and controlled corporation, for to become one MIAA should either be a stock or non stock corporation. MIAA is not a stock corporation for its capital is not divided into shares. It is not a non stock corporation since it has no members. MIAA is an instrumentality of the government vested with corporate powers and government functions

FACTS:

1954: Naga Telephone Company (Natelco), Inc. was organized with P100K authorized capital 1974: Natelco decided to increase its authorized capital to P3,000,000.00

That the issuance of the shares of stocks will be for a period of one year from the date hereof, "after which no further issues will be made without previous authority from this Board." Natelco filed its Amended Articles of Incorporation with the SEC April 12, 1977: Without no prior authorization from the BOC (now National Telecommunications Commission) (NTC), Natelco entered into a contract with Communication Services, Inc. (CSI) for the "manufacture, supply, delivery and installation" of telephone equipment. Natelco issued 24K shares of CS to CSI as downpayment. Pedro Lopez Dee (Dee) was unseated as Chairman of the Board and President but was elected as one of the directors, together with his wife, Amelia Lopez Dee CSI was able to gain control when their legal counsel, Atty. Luciano Maggay (Maggay) won a seat in the Board Atty. Maggay became president upon reorganization Among the directors: Mr. Justino de Jesus, Sr., Mr. Pedro Lopez Dee and Mrs Amelia C. Lopez Dee never attended the Maggay Board thereby only Maggay representatives and Atty. Maggay attended Dee having been unseated filed a petition in the SEC questioning the validity of the elections ground: no valid list of stockholders through which the right to vote could be determined Upon elevation to the SC: dismissed the petition for being premature; restraining order was restrained resulted in the unseating of the Maggay group from the BOD in a "hold-over" capacity SEC: ordering the holding of special stockholder' meeting to elect the new members of the BOD based on its findings of who are entitled to vote June 23, 1981: Dee filed a petition for certiorari/appeal with the SEC en banc but dismissed for lack of merit May 22, 1982: controlling majority of the stockholders proceeded with the elections under the supervision of the SEC representatives May 25, 1982: SEC recognized the election and the duly elected directors Lopez Dee group headed by Messrs. Justino De Jesus and Julio Lopez Dee kept insisting no elections were held and refused to vacate their positions May 28, 1982: SEC issued another order directing the hold-over directors and officers to turn over their respective posts and directing the Sheriff of Naga City and other enforcement agencies to enforce its order

ISSUES:

1. W/N SEC has the power and jurisdiction to declare null and void shares of stock issued by

NATELCO to CSI for violation of Sec. 20 (h) of the Public Service Act - NO 2. W/N Natelco stockholders have a right of preemption to the 113,800 shares 3. W/N the May 22, 1982 election was valid
HELD: Dismissed for lack of merit 1. NO

The jurisdiction of the SEC is limited to matters intrinsically connected with the regulation of corporations, partnerships and associations and those dealing with internal affairs of such entities; P.D. 902-A does not confer jurisdiction to SEC over all matters affecting corporations The jurisdiction of the SEC is limited to deciding the controversy in the election of the directors and officers of Natelco The SEC is empowered by P.D. 902-A to decide intra-corporate controversies and that is precisely the only issue in this case. 2. NO There is distinction between: an order to issue shares on or before May 19, 1979; and actual issuance of the shares after May 19, 1979 - CSI was in control of voting shares and the Board The power to issue shares of stocks in a corporation is lodged in the board of directors and no stockholders meeting is required to consider it because additional issuance of shares of stocks does not need approval of the stockholders - no violation of preemptive right
3. YES. Clear from records that it was held

within the jurisdiction of the lower court as it does not involve an intra-corporate matter but merely a claim of a private party of the right to repurchase common shares of stock of Natelco and that the restraining order was not meant to stop the election duly called for by the SEC and a matter purely within the exclusive jurisdiction of the SEC temporary restraining order amounted to an injunctive relief against the SEC since the trial judge in the lower court did not have jurisdiction in issuing the questioned restraining order, disobedience thereto did not constitute contempt

CEMCO HOLDINGS, INC. vs. NATIONAL LIFE INSURANCE COMPANY OF THE PHILIPPINES, INC. GR No. 171815, August 7, 2007 Chico-Nazario, J.

FACTS: Union Cement Corporation (UCC), a publicly-listed company, has two principal stockholders UCHC, a non-listed company, with shares amounting to 60.51%, and petitioner Cemco with 17.03%. Majority of UCHCs stocks were owned by BCI with 21.31% and ACC with 29.69%. Cemco, on the other hand, owned 9% of UCHC stocks. In a disclosure letter, BCI informed the Philippine Stock Exchange (PSE) that it and its subsidiary ACC had passed resolutions to sell to Cemco BCIsstocks in UCHC equivalent to 21.31% and ACCs stocks in UCHC equivalent to 29.69%. Respondent National Life Insurance Company of the Philippines, Inc. filed a complaint with the SEC asking it to reverse its 27 July 2004 Resolution and to declare the purchase agreement of Cemco void and praying that the mandatory tender offer rule be applied to its UCC shares. The SEC ruled in favor of the respondent by reversing and setting aside its 27 July 2004 Resolution and directed petitioner Cemco to make a tender offer for UCC shares to respondent and other holders of UCC shares similar to the class held by UCHC in accordance with Section 9(E), Rule 19 of the Securities Regulation Code. On petition to the Court of Appeals, the CA rendered a decision affirming the ruling of the SEC. It ruled that the SEC has jurisdiction to render the questioned decision and, in any event, Cemcowas barred by estoppel from questioning the SECs jurisdiction. It, likewise, held that the tender offer requirement under the Securities Regulation Code and its Implementing Rules applies to Cemcos purchase of UCHC stocks. Cemcos motion for reconsideration was likewise denied.

ISSUES:

1. Whether or not the rule on mandatory tender offer applies to the indirect acquisition of
shares in a listed company, in this case, the indirect acquisition by Cemco of 36% of UCC, a publicly-listed company, through its purchase of the shares in UCHC, a non-listed company. Held: YES. Tender offer is a publicly announced intention by a person acting alone or in concert with other persons to acquire equity securities of a public company.[12] A public company is defined as a corporation which is listed on an exchange, or a corporation with assets exceeding P50,000,000.00 and with 200 or more stockholders, at least 200 of them holding not less than 100 shares of such company.[13] Stated differently, a tender

offer is an offer by the acquiring person to stockholders of a public company for them to tender their shares therein on the terms specified in the offer.[14] Tender offer is in place to protect minority shareholders against any scheme that dilutes the share value of their investments. It gives the minority shareholders the chance to exit the company under reasonable terms, giving them the opportunity to sell their shares at the same price as those of the majority shareholders.