province of Zamboanga, Department of Mindanao and Sulu, and the island of
Polillo, Province of Tayabas. Almost immediately after the issuance of said
NATIONAL COAL VS CIR (46 PHIL 583)
National Coal Company vs Collector of Internal Revenue
46 Phil 583 [GR No. L-22619 December 2, 1924]
Facts: The plaintiff corporation was created on the 10th day of March 1917, by Act
No. 2705, for the purpose of developing the coal industry in the Philippine Islands ,
in harmony with the general plan of the government to encourage the development of
natural resources of the country, and to provide facilities therefore. By the said act,
the company was granted the general powers of a corporation and such other powers
as may be necessary to enable it to prosecute the business of developing coal
deposits in the Philippine Islands of mining, extracting, transporting, and selling the
coal contained in said deposits. By the same law, the government of the Philippine
Islands is made the majority stockholder, evidently in order to ensure proper
government supervision and control and thus to place the government in a position to
render all possible encouragement, assistance, and help in the prosecution and
furtherance of the company’s business. On May 14, 1917, two months after the
passage of Act no. 2705, creating the national coal company, the Philippine
legislature passed Act 2719, “to provide for the leasing and development of coal
lands in the Philippine islands.” On October 18, 1917, upon petition of the national
coal company, the governor-general, by proclamation no. 39, withdrew from
settlement, entry, sale or other deposition, all coal-bearing public lands within the
PHILIPPINE SOCIETY FOR THE PREVENTION
OF CRUELTY TO ANIMALS vs COMMISSION ON AUDIT
(G.R. No. 169752)
Facts:
The petitioner was incorporated as a juridical entity over one hundred
years ago by virtue of Act No. 1285, enacted on January 19, 1905, by
the Philippine Commission. The petitioner, at the time it was created,
was composed of animal aficionados and animal propagandists. The
objects of the petitioner, as stated in Section 2 of its charter, shall be to
enforce laws relating to cruelty inflicted upon animals or the protection
of animals in the Philippine Islands, and generally, to do and perform
proclamation the national coal company took possession of the coal lands within the
said reservation with an area of about 400 hectares, without any further formality,
contract of lease. Of the 30,000 shares of stock issued by the company, the
government of the Philippine islands is the owner of 29,809 shares, that is, of 99 1/3
per centum of the whole capital stock.
Issue: Whether or not plaintiff is a private corporation.
Held: Yes. The plaintiff is a private corporation. The mere fact that the government
happens to the majority stockholder does not make it a public corporation. Act 2705,
as amended by Act 2822, makes it subject to all the provisions of the corporation
law, in so far as they are not inconsistent with said act. No provisions of Act 2705
are found to be inconsistent with the provisions of the corporation law. As a private
corporation, it has no greater rights, powers or privileges than any other corporation
which might be organized for the same purpose under the corporation law, and
certainly it was not the intention of the legislature to give it a preference or right or
privilege over other legitimate private corporations in the mining of coal. While it is
true that said proclamation no. 39 withdrew from settlement entry, sale or other
disposition of coal-bearing public lands within the province of Zamboanga, and the
islands of Polillo, it made no provision for the occupation and operation by the
plaintiff, to the exclusion of other persons or corporations who might under proper
permission, enter upon to operate the coal mines.
all things which may tend in any way to alleviate the suffering of
animals and promote their welfare. The petitioner was initially imbued
under its charter with the power to apprehend violators of animal
welfare laws. In addition, the petitioner was to share one-half (1/2) of
the fines imposed and collected through its efforts for violations of the
laws related thereto. Subsequently, however, the power to make
arrests as well as the privilege to retain a portion of the fines collected
for violation of animal-related laws were recalled by virtue of
Commonwealth Act (C.A.) No. 148. An audit team from COA wanted
to conduct an audit survey but petitioner refused saying that it is a
private corporation and not a public one.
Issue:
Whether or not petitioner is a private corporation.
Held:
Yes. A reading of petitioner’s charter shows that it is not subject to
control or supervision by any agency of the State, unlike government-
owned and -controlled corporations. No government representative
sits on the board of trustees of the petitioner. Like all private
corporations, the successors of its members are determined voluntarily
and solely by the petitioner in accordance with its by-laws, and may
exercise those powers generally accorded to private corporations, such
as the powers to hold property, to sue and be sued, to use a common
seal, and so forth. It may adopt by-laws for its internal operations: the
petitioner shall be managed or operated by its officers “in accordance
with its by-laws in force.”
The employees of the petitioner are registered and covered by the
Social Security System at the latter’s initiative, and not through the
Government Service Insurance System, which should be the case if the
employees are considered government employees. This is another
indication of petitioner’s nature as a private entity.
The fact that a certain juridical entity is impressed with public interest
does not, by that circumstance alone, make the entity a public
corporation, inasmuch as a corporation may be private although its
charter contains provisions of a public character, incorporated solely
for the public good. This class of corporations may be considered
quasi-public corporations, which are private corporations that render
public service, supply public wants, or pursue other eleemosynary
objectives. While purposely organized for the gain or benefit of its
members, they are required by law to discharge functions for the
public benefit.
The true criterion, therefore, to determine whether a corporation is
public or private is found in the totality of the relation of the
corporation to the State. If the corporation is created by the State as
the latter’s own agency or instrumentality to help it in carrying out its
governmental functions, then that corporation is considered public;
otherwise, it is private. Applying the above test, provinces, chartered
cities, and barangays can best exemplify public corporations. They are
created by the State as its own device and agency for the
accomplishment of parts of its own public works.
REGISTER OF DEEDS vs UNG SIU SI TEMPLE
GR. No. L-6776 May 21,1955
FACTS:
A Filipino citizen executed a deed of donation in favor of the Ung Siu Si
Temple, an unregistered religious organization that operated through three
trustees all of Chinese nationality. The Register of Deeds refused to record the
deed of donation executed in due form arguing that the Consitution provides that
acquisition of land is limited to Filipino citizens, or to corporations or
associations at least 60% of which is owned by such citizens.
ISSUE:
Whether a deed of donation of a parcel of land executed in favor of a religious
organization whose founder, trustees and administrator are Chinese citizens
should be registered or not.
RULING:
Sec. 5, Art. 13 of the Constitution provides that save in cases of hereditary
succession, no private agricultural land shall be transferred or assigned
except to individuals, corporations, or associations qualified to hold lands of
the public domain in the Philippines. The Constitution does not make any
exception in favor of religious associations.

The fact that appellant has no capital stock does not exempt it from the
Constitutional inhibition, since its member are of foreign nationality. The
purpose of the 60% requirement is to ensure that corporations or associations
allowed to acquire agricultural lands or to exploit natural resources shall be
controlled by Filipinos; and the spirit of the Constitution demands that in the
absence of capital stock, controlling membership should be composed of
Filipino citizens.
As to the complaint that the disqualification under Art. 13 of the Constitution
violated the freedom of religion, the Court was not convinced that land tenure is
indispensable to the free exercise and enjoyment of religious profession or
worship.
People v. Quasha (1953)
G.R. No. L-6055
June 12, 1953
FACTS:
 William H. Quasha
 a member of the Philippine bar, committed a crime of falsification
of a public and commercial document for causing it to appear that
Arsenio Baylon, a Filipino citizen, had subscribed to and was the
owner of 60.005 % of the subscribed capital stock of Pacific
Airways Corp. (Pacific) when in reality the money paid belongs to
an American citizen whose name did not appear in the article of
incorporation,
o to circumvent the constitutional mandate that no corp. shall be
authorize to operate as a public utility in the Philippines unless
60% of its capital stock is owned by Filipinos.
 Found guilty after trial and sentenced to a term of imprisonment and
a fine
 Quasha appealed to this Court
 Primary purpose: to carry on the business of a common carrier by air,
land or water
 Baylon did not have the controlling vote because of the difference in
voting power between the preferred shares and the common shares
ISSUE: For a corporation to be entitled to operate a public utility is it
necessary that it be organized with 60 per cent of its capital owned by
Filipinos from the start?
HELD: No. For a corporation to be entitled to operate a public utility it is not
necessary that it be organized with 60 per cent of its capital owned by
Filipinos from the start. A corporation formed with capital that is entirely
alien may subsequently change the nationality of its capital through transfer
of shares to Filipino citizens. Conversely, a corporation originally formed
with Filipino capital may subsequently change the national status of said
capital through transfer of shares to foreigners. What need is there then for a
corporation that intends to operate a public utility to have, at the time of its
formation, 60 per cent of its capital owned by Filipinos alone? That condition
may anytime be attained thru the necessary transfer of stocks. The moment
for determining whether a corporation is entitled to operate as a public utility
is when it applies for a franchise, certificate, or any other form of
authorization for that purpose. And that can be done after the corporation has
already come into being and not while it is still being formed. And at that
moment, the corporation must show that it has complied not only with the
requirement of the Constitution as to the nationality of its capital, but also
with the requirements of the Civil Aviation Law if it is a common carrier by
air, the Revised Administrative Code if it is a common carrier by water, and
the Public Service Law if it is a common carrier by land or other kind of
public service.
Corporate Law Case Digest: People V. Quasha (1953)
G.R. No. L-6055 June 12, 1953
Lessons Applicable: Public Utilities (Corporate Law)
FACTS:
William H. Quasha
a member of the Philippine bar, committed a crime of falsification of a
public and commercial document for causing it to appear that Arsenio
Baylon, a Filipino citizen, had subscribed to and was the owner of 60.005 %
of the subscribed capital stock of Pacific Airways Corp. (Pacific) when in
reality the money paid belongs to an American citizen whose name did not
appear in the article of incorporation,
to circumvent the constitutional mandate that no corp. shall be authorize to
operate as a public utility in the Philippines unless 60% of its capital stock is
owned by Filipinos.
Found guilty after trial and sentenced to a term of imprisonment and a fine
Quasha appealed to this Court
Primary purpose: to carry on the business of a common carrier by air, land
or water
Baylon did not have the controlling vote because of the difference in voting
power between the preferred shares and the common shares
ART. 171. Falsification by public officer, employee, or notary or ecclesiastic
minister. — The penalty of prision mayor and a fine not to exceed 5,000
pesos shall be imposed upon any public officer, employee, or notary who,
taking advantage of his official position, shall falsify a document by
committing any of the following acts:
4. Making untruthful statements in a narration of facts.
ART. 172. Falsification by private individuals and use of falsified documents.
— The penalty of prision correccional in its medium and maximum period
and a fine of not more than 5,000 pesos shall be imposed upon:
1. Any private individual who shall commit any of the falsifications
enumerated in the next preceding
article in any public or official document or letter of exchange or any
other kind of commercial
document.
ISSUE: W/N Quasha should be criminally liable
HELD: NO. Acquitted.
falsification consists in not disclosing in the articles of incorporation that
Baylon was a mere trustee ( or dummy as the prosecution chooses to call
him) of his American co-incorporators, thus giving the impression that
Baylon was the owner of the shares subscribed to by him
For the mere formation of the corporation such revelation was not
essential, and the Corporation Law does not require it
The moment for determining whether a corporation is entitled to operate
as a public utility is when it applies for a franchise, certificate, or any other
form of authorization for that purpose.
that can be done after the corporation has already come into being and not
while it is still being formed
so far as American citizens are concerned, the said act has ceased to be an
offense within the meaning of the law, so that defendant can no longer be
held criminally liable therefor.
FILIPINAS COMPANIA DE SEGUROS vs. CHRISTERN
HUENEFELD and CO. DIGEST
DECEMBER 21, 2016 ~ VBDIAZ
FILIPINAS COMPANIA DE SEGUROS vs. CHRISTERN
HUENEFELD and CO., INC. 89 Phil 54
FACTS:
On October 1, 1941, the respondent corporation, Christern
Huenefeld and Co., Inc., after payment of corresponding
premium, obtained from the petitioner, Filipinas Cia de
Seguros fire policy covering merchandise contained in a
building located at Binondo, Manila. On February 27, 1942 or
during the Japanese military occupation, the building and
insured merchandise were burned. In due time, the respondent
submitted to the petitioner its claim under the policy. The
petitioner refused to pay the claim on the ground that the
policy in favor of the respondent that ceased to be a force on
the date the United States declared war against Germany, the
respondent corporation (through organized under and by virtue
of the laws of Philippines) being controlled by German
subjects and the petitioner being a company under American
jurisdiction when said policy was issued on October 1, 1941.
The theory of the petitioner is that the insured merchandise
was burned after the policy issued in 1941 had ceased to be
effective because the outbreak of the war between United
States and Germany on December 10, 1941, and that the
payment made by the petitioner to the respondent corporation
during the Japanese military occupation was under pressure.
ISSUE:
Whether or not the respondent corporation is a corporation of
public enemy.
RULING:
Since the majority of stockholders of the respondent
corporation were German subjects, the respondent became an
enemy of the state upon the outbreak of the war between US
and Germany. The English and American cases relied upon by
the Court of Appeals lost in force upon the latest decision of
the Supreme Court of US in which the control test has adopted.
Since World War I, the determination of enemy nationality of
corporations has been discussed in many countries, belligerent
and neutral. A corporation was subject to enemy legislation
when it was controlled by enemies, namely managed under the
influence of individuals or corporations themselves considered
as enemies…
The Philippine Insurance Law (Act No 2427, as amended), in
Section 8, provides that “anyone except a public enemy may
be insured”. It stands to reason that an insurance policy ceases
to be allowable as soon as an insured becomes a public enemy.
The respondent having an enemy corporation on December 10,
1941, the insurance policy issued in its favor on October 1,
1941, by the petitioner had ceased to be valid and enforceable,
and since the insured good were burned during the war, the
respondent was not entitled to any indemnity under said policy
from the petitioner. However, elementary rule of justice (in the
absence of specific provisions in the Insurance Law) require
that the premium paid by the respondent for the period covered
by its policy from December 11, 1941, should be returned by
the petitioner.
 o If so, W/N the fire insurance policy is enforceable against an
Filipinas Compania de Seguros v. Christern Huenefeld
o
o HELD:
G.R. No. L-2294, May 25, 1951
o A corporation borrows its citizenship from the citizenship of
majority of its stockholders, regardless of the country under
whose laws it was organized and created.
FACTS:
Christern Huenefeld Corporation bought a fire insurance policy
from Filipinas Compania de Seguros to cover merchandise
contained in a building. During the Japanese military
occupation, this same merchandise and the building were
burned, so Huenefeld filed a claim under the policy.
Filipinas Compania refused to pay, alleging that the policy had
ceased to be in force when the US declared war against
Germany. Filipinas Compania contended that Huenefeld,
although organized and created under Philippine laws, is a
German subject, and hence, a public enemy, since majority of
its stockholders are Germans. On the other hand, Filipinas
Compania is under American jurisdiction.
However, the Director of Bureau of Financing, Philippine
Executive Commission ordered Filipinas Compania to pay, so
Filipinas Compania did pay. The case at bar is about the
recovery of that sum paid.
ISSUES:
o W/N Christern Huenefeld is a German subject because majority
of its stockholders are under German jurisdiction, despite the
fact that it was organized and created under Philippine laws
enemy state
The Court of Appeals ruled that a private corporation is a citizen
of the country or state by and under the laws of which it was
created or organized. It rejected the theory that nationality of a
private corporation is determined by the character or citizenship
of its controlling stockholders.
But the Supreme Court held that Christern Huenefeld is an
enemy corporation since majority of its stockholders are
German subjects. The two American cases relied up by the
Court of Appeals have lost their force in view of a newer case
where the control test was adopted.
The Philippine Insurance Law provides that anyone, except a
public enemy, may be insured. It stands to reason that an
insurance policy ceases to be allowable as soon as the insured
becomes a public enemy.
Since Christern Huenefeld became a public enemy on Dec. 10,
1941, then the policy has ceased to be enforcible and therefore
Huenefeld is not entitled to indemnity. However, elementary
rules of justice require that the premium paid from Dec. 11,
1941 should be returned.
Thus, Filipinas Compania is allowed to recover the sum paid but
only its equivalent in actual Philippine currency, minus the
premium that Huenefeld paid after Dec. 11.