1. Marc II Marketing Inc. and Lucila Joson v. Alfredo Joson , G.R. 171993, Dec.

12,
2011

Facts:

Petitioner Marc II Marketing Inc. (Marc II) is a corporation duly organized

under Philippine laws with. Marc II took over the business operations of
Marc Marketing Inc., which was made non-operational following its
incorporation. Lucila was the President and majority stockholder of both the
present and defunct corporations.
Alfredo Joson (Alfredo) was the General manager (GM), incorporator,
director and stockholder of Marc II. Lucila, under a management contract,
already engaged Alfredo as GM in the defunct Marc Marketing while in its
winding up stage and pending incorporation of Marc II. Alfredo continued
holding the position of GM when Marc II was formally organized.
For occupying the said position, Alfredo was among its corporate officers by
the express provision of Section 1, Article IV of its by-laws1, this was
evidenced by an undated Secretarys Certificate appointing him to such
position by a BOD resolution.
After 3 yrs of operation, Marc II decided to stop its business due to poor sales.
It concomitantly terminated Alfredos services. This prompted Alfredo to file
an illegal dismissal case against the Labor Arbiter(LA).
Marc II filed a motion to dismiss assailing the jurisdiction of LA, it contended
that it was an intra-corporate controversy since Alfredo was a corporate
officer at the time of his dismissal, hence jurisdiction is with the RTC.

Issue: WoN the case is an intra-corporate controversy?

Held: Alfredo is not a corporate officer for the following reasons:

Section 25 of the Corporation Code specifically enumerates who are

corporate officers, to wit: (1) president; (2) secretary; (3) treasurer; and
(4) such other officers as may be provided for in the by-laws. The Court
has interpreted number (4) to include only those positions which the by-laws
expressly mentions in order to be considered as a corporate office. Thus, the
creation of an office pursuant to or under a [b]y-[l]aw enabling provision is
not enough to make a position a corporate office.
Here, the position of GM was not among those expressly mentioned in the by-
laws of the corporation. It is however under par.2 which is by virtue of this
enabling provision the office of GM was formed.

1 Section 1, Article IV of petitioner corporations by-laws, its corporate officers are as

follows: Chairman, President, one or more Vice-President(s), Treasurer and
Secretary. Its Board of Directors, however, may, from time to time, appoint
such other officers as it may determine to be necessary or proper.
 The Board Resolution creating the position GM in favor of Alfredo, to the
mind of the court, was not enough to bestow the position with a character of
a corporate office. What Marc II could have done is to amend its by-laws to
include the position and not a simple resolution.
Noticeably, Alfredos compensation as General Manager was set, fixed and
determined not by the BOD but simply by its President Lucila. The same was
not subject to the approval of the BOD. This is an indication that Alfredo was
an employee and not a corporate officer.
The fact that Alfredo was also a director and stockholder of Marc II does not
make it automatically an intra-corporate controversy. Factors such as status
or relationship of the parties and the nature of the question that is the
subject of the controversy must be considered in determining whether the
dispute involves corporate matters. Here, no evidence submitted to show
that Alfredos removal as General Manager carried with it his removal as its
director and stockholder.
In addition, it was not shown by Marc II that the position of General Manager
was offered to Alfredo on account of his being a director and stockholder.
Furthermore, Alfredos dismissal was not subjected to the approval of the
BOD but merely by Lucile, the President. All these taken into consideration
concludes that Alfredo is a mere employee and not a corporate officer.

2. Secosa et.al. vs. Heirs of Erwin Suarez Francisco , G.R No. 160039, January 29,
2004

Facts:

Francisco was traveling along Radial 10 Avenue in his motorcycle, behind

him was a sand and gravel truck, which in turn was being tailed by an Isuzu
truck driven by Secosa and owned by Dassad Warehousing and Port Services,
Inc. The three vehicles were traversing the southbound lane at a fairly high
speed. When Secosa overtook the sand and gravel truck, he bumped the
motorcycle causing Francisco to fall. The rear wheels of the Isuzu truck then
ran over Francisco, which resulted in his instantaneous death.
The parents Francisco, thus filed an action for damages against Raymond
Odani Secosa (driver), Dassad Warehousing and Port Services, Inc.(owner of
the isuzu) and Dassads president, El Buenasucenso Sy.
It was found by the court that Dassad Warehousing and Port Services Inc. is
solidarily liable to the aggrieved party for failing to show that it exercised
due diligence of a good father of a family in the selection and supervision of
its employee Secosa.

Issue: WoN El Buenasucenso Sy is also solidarily liable with his co-petitioners?

 Held: No, veil of corporate fiction treats as separate and distinct the affairs of a
corporation and its officers and stockholders. As a general rule, a corporation
will be looked upon as a legal entity, unless and until sufficient reason to the
contrary appears, i.e when legal entity is used to defeat public convenience,
justify wrong, protect fraud, or defend crime.

Here, the records are bereft of any evidence that will justify the piercing of the
veil of corporate fiction and hold El Buenasucenso Sy liable. The Isuzu cargo
truck which ran over Erwin Francisco was registered in the name of Dassad
Warehousing and Port Services, Inc., and not in the name of El Buenasenso
Sy.Raymundo Secosa is an employee of Dassad Warehousing and Port Services,
Inc. and not of El Buenasenso Sy. All these things, when taken collectively, point
toward El Buenasenso Sys exclusion from liability for damages arising from the
death of Erwin Francisco

3. PNB vs. Aznar , G.R No. 171805 , May 30,2011

Facts:

Rural Insurance and Surety Company, Inc. (RISCO) ceased operation due to
business reverses. Plaintiffs Aznar et. al contributed P212,720.00 to purchase
3 parcels of land in order to rehabilitate RISCO.
After purchasing the land, the amounts contributed by plaintiffs were
annotated in the TCT thereof which constituted liens and encumbrances in
plaintiffs favor. Such annotation was made pursuant to the Minutes of the
Special Meeting of the Board of Directors of RISCO.
Thereafter, various subsequent annotations were made thereon, including
attachments and executions in favor of PNB. As a result, a Certificate of Sale
was issued in favor of PNB as the lone bidder of the disputed lots.
This prompted plaintiffs to file a complaint seeking the quieting of their
supposed title to the subject properties, declaratory relief, cancellation of
TCT and reconveyance with temporary restraining order and preliminary
injunction.
Defendant PNB asserts that plaintiffs have no right of action for quieting of
title because as mere stockholders of RISCO, they do not have any legal or
equitable right over the properties of the corporation. Not being owners of
the land, they have no right to bring the action for quieting of title.
The RTC decided and ruled against PNB on the basis that there was an
express trust created over the subject properties whereby RISCO was the
trustee and the stockholders, Aznar, et al., were the beneficial owners or the
cestui que trust.

Issue: WoN the agreement contained in the Minutes of the Meeting created a Trust
between plaintiffs and RISCO therefore granting plaintiffs a relief to quieting of title?
Held: No, it is not a Trust. The SC agreed with the CA when the latter opined that the
monetary contributions made by Aznar, et al., to RISCO can only be characterized as
a loan secured by a lien on the subject lots, rather than an express trust.

The court ratiocinated that the word Lien as used in the Minutes are taken to be in
its clear and literal meaning - as a discharge on property usually for the payment of
some debt or obligation. Hence, the annotation of their lien serves only as collateral
and does not in any way vest ownership of property to plaintiffs.

The Court was not persuaded that a Trust was formed by the agreement since there
is no indication in the words of the Minutes, expressly or impliedly, that the parties
intended for RISCO to hold the property in trust for the benefit of the plaintiffs.

Indeed Aznar et al. has no right to ask for quieting of title because they have no legal
and/or equitable rights over the properties that are derived from RISCO. A
corporation is an artificial being which has a separate personality from those of its
stockholders.

The interest of the stockholders over the properties of the corporation is merely
inchoate and therefore does not entitle them to intervene in litigation involving
corporate property. It is merely a sheer expectancy in the management of the
corporation and to share in the profits thereof and in the properties and assets
thereof on dissolution, after payment of the corporate debts and obligations. Here,
there is no allegation that RISCOs existence has ceased and corporate property
liquidated. The records only show that SEC merely suspended RISCOs certificate for
failure to operate for 5 yrs straight.

At most, Aznar et al. has a right to be repaid the amount loaned to RISCO.
Unfortunately, the right to seek repayment is already barred by prescription since
10 yrs had already passed when the Minutes (considered as written contract) was
executed.

4. Gamboa vs. Teves , G.R No. 176579, June 8,2011 and October 9, 2012

Facts:

This case springs from a Motion for Reconsideration of a case decided last 28
June 2011.

Issue: How is capital as provided Sec.11, Art XII of the Constitution determined for
purposes of ascertaining a corporations nationality in public utilities?

This became a dispute when movants alleged that the 28 June 2011 decision
would disturb a long-standing interpretation of capital in Sec.11 Art XII of
the Constitution. But the Court reminded them that there has been no such
interpretation ever, even in the 2 other Constitutions. Opinions made by SEC
legal officers, and which are heavily regarded by movants are void for being
 are ultra vires, being issued without authority. Only SEC en banc may issue
opinons. The same are not rules and regulations.
To satisfy the 60-40 requirement of the constitution regarding nationality,
the Court finds that both Voting Control Test and Beneficial Ownership Test
must be applied, to wit Full beneficial ownership of 60 percent of the
outstanding capital stock, coupled with 60 percent of the voting rights, is
required.
Beneficial ownership also dictates that the 60-40 ownership requirement in
favor of Filipino citizens must apply separately to each class of shares,
whether common, preferred non-voting, preferred voting or any other class
of shares. Take note that the Corp. Code still allows non-voting shares to vote
in certain circumstances in the law.
The Court also makes use of the grandfather rule to accurately determine the
actual participation, both direct and indirect, of foreigners in a corporation
engaged in a nationalized activity or business.

Issue: Who is a Philippine National allowed to operate public utilities in the

country?

Section 3 of the R.A No. 7042 Foreign Investments Act of 1991, as well
as other predecessor legislation constantly provides that a. The term
"Philippine national" shall meanor a corporation organized under the
laws of the Philippines of which at least sixty percent (60%) of the capital
stock outstanding and entitled to vote is owned and held by citizens of
the Philippines

5. Narra Nickel Mining Dev. Corp. v. Redmont Consolidated Mines Corp.

Facts:

Redmont is a domestic corporation interested in the mining and exploration of some

areas in Palawan. Upon learning that those areas were covered by MPSA
applications of other three (allegedly Filipino) corporations Narra, Tesoro, and
MacArthur, it filed a petition before the Panel of Arbitrators (POA) of DENR seeking
to deny their permits on the ground that these corporations are in reality foreign-
owned. MBMI, a 100% Canadian corporation, owns 40% of the shares of PLMC
(which owns 5,997/10,000 shares of Narra), 40% of the shares of MMC (which
owns 5,997/10,000 shares of McArthur) and 40% of the shares of SLMC (which, in
turn, owns 5,997/10,000 shares of Tesoro).

Aside from the MPSA, the three corporations also applied for FTAA with the Office of
the President. In their answer, they countered that (1) the liberal Control Test must
be used in determining the nationality of a corporation as based on Sec 3 of the
Foreign Investment Act which as they claimed admits of corporate layering
schemes, and that (2) the nationality question is no longer material because of their
subsequent application for FTAA.
ISSUE: Should the Control test be used or the grandfather rule?

Held: In this case, the Court used the Grandfather rule. Paragraph 7 of the 1967 SEC
Rules admits of two test: Control Test (more liberal) (s)hares belonging to
corporations or partnerships at least 60% of the capital of which is owned by
Filipino citizens shall be considered as of Philippine nationality., and the
Grandfather Rule (stricter) - "but if the percentage of Filipino ownership in the
corporation or partnership is less than 60%, only the number of shares
corresponding to such percentage shall be counted as of Philippine nationality."

The Grandfather Rule applies when the 60-40 Filipino-foreign equity ownership is
in doubt. Petitioners contention is wrong when they said that doubt only exists
when the stockholdings are less than 60%, such situation is only an instance of
doubt and there can be a lot of other instances where doubt may be entertained.

Using the grandfather rule, the court found that all of the three mining corporations
stocks were majorly owned by MBMI. Aside from MBMIs ownership of 40% of the
stocks of these three investee corporation, on its face, the Canadian corporation
actually owns some stocks in the investing corporations (PLMC, MMC, SLMC) which
comprised the 60% of these investee corporations. In other words, MBMI actually
owns more than 60% of the stocks of these three corporations. Hence they are not
Filipino corporations as contemplated under the constitution.

6. Bataan Shipyard v. PCGG

Challenged in this special civil action of certiorari and prohibition by a private

corporation known as the Bataan Shipyard and Engineering Co., Inc. are: (1)
Executive Orders Numbered 1 and 2, promulgated by President Corazon C. Aquino
on February 28, 1986 and March 12, 1986, respectively, and (2) the sequestration,
takeover, and other orders issued, and acts done, in accordance with said executive
orders by the Presidential Commission on Good Government and/or its
Commissioners and agents, affecting said corporation.

The sequestration order which, in the view of the petitioner corporation, initiated
all its misery was issued on April 14, 1986 by Commissioner Mary Concepcion
Bautista.

On the strength of the above sequestration order, Mr. Jose M. Balde, acting for the
PCGG, addressed a letter dated April 18, 1986 to the President and other officers of
petitioner firm, reiterating an earlier request for the production of certain
documents such as Stock Transfer Book and other Legal documents (Articles of
Incorporation, By-Laws, etc.)

Orders were also issued in connection with the sequestration and takeover, such as
termination of Contract for Security Services and abortion of contract for
Improvement of Wharf at Engineer Island; Change of Mode of Payment of Entry
Charges; Operation of Sesiman Rock Quarry, Mariveles, Bataan; disposal of scrap,
etc.; and the provisional takeover by the PCGG of BASECO, the Philippine Dockyard
Corporation and all their affiliated companies.

While BASECO concedes that sequestration without resorting to judicial action,

might be made within the context of Executive Orders Nos. 1 and 2 before March 25,
1986 when the Freedom Constitution was promulgated, under the principle that the
law promulgated by the ruler under a revolutionary regime is the law of the land, it
ceased to be acceptable when the same ruler opted to promulgate the Freedom
Constitution on March 25, 1986 wherein under Section I of the same,y Article IV
(Bill of Rights) of the 1973 Constitution was adopted providing, among others, that
No person shall be deprived of life, liberty and property without due process of law.
(Const., Art. I V, Sec. 1).

It declares that its objection to the constitutionality of the Executive Orders as well
as the Sequestration Order * * and Takeover Order * * issued purportedly under the
authority of said Executive Orders, rests on four fundamental considerations: First,
no notice and hearing was accorded * * (it) before its properties and business were
taken over; Second, the PCGG is not a court, but a purely investigative agency and
therefore not competent to act as prosecutor and judge in the same cause; Third,
there is nothing in the issuances which envisions any proceeding, process or remedy
by which petitioner may expeditiously challenge the validity of the takeover after
the same has been effected; and Fourthly, being directed against specified persons,
and in disregard of the constitutional presumption of innocence and general rules
and procedures, they constitute a Bill of Attainder.

It argues that the order to produce corporate records from 1973 to 1986, which it
has apparently already complied with, was issued without court authority and
infringed its constitutional right against self-incrimination, and unreasonable search
and seizure.

BASECO further contends that the PCGG had unduly interfered with its right of
dominion and management of its business affairs.

ISSUE

Whether or not the sequestration order and all other orders subsequently issued
and acts done on the basis thereof, inclusive of the takeover order and the
termination of the services of the BASECO executives are valid?

HELD

Yes. The petition cannot succeed. The writs of certiorari and prohibition prayed for
will not be issued. Other evidence submitted to the Court by the Solicitor General
proves that President Marcos not only exercised control over BASECO, but also that
he actually owns well nigh one hundred percent of its outstanding stock.

Executive Orders Not a Bill of Attainder In the first place, nothing in the executive
orders can be reasonably construed as a determination or declaration of guilt. On
the contrary, the executive orders, inclusive of Executive Order No. 14, make it
perfectly clear that any judgment of guilt in the amassing or acquisition of ill-gotten
wealth is to be handed down by a judicial tribunal, in this case, the Sandiganbayan,
upon complaint filed and prosecuted by the PCGG. In the second place, no
punishment is inflicted by the executive orders, as the merest glance at their
provisions will immediately make apparent. In no sense, therefore, may the
executive orders be regarded as a bill of attainder.

No Violation of Right against Self-Incrimination and Unreasonable Searches and

Seizures It is elementary that the right against self-incrimination has no
application to juridical persons. While an individual may lawfully refuse to answer
incriminating questions unless protected by an immunity statute, it does not follow
that a corporation, vested with special privileges and franchises, may refuse to show
its hand when charged with an abuse of such privileges * *

Scope and Extent of Powers of the PCGG PCGG cannot exercise acts of dominion
over property sequestered, frozen or provisionally taken over. AS already earlier
stressed with no little insistence, the act of sequestration; freezing or provisional
takeover of property does not import or bring about a divestment of title over said
property; does not make the PCGG the owner thereof.

The PCGG may thus exercise only powers of administration over the property or
business sequestered or provisionally taken over, much like a court-appointed
receiver, such as to bring and defend actions in its own name; receive rents; collect
debts due; pay outstanding debts; and generally do such other acts and things as
may be necessary to fulfill its mission as conservator and administrator.

Powers over Business Enterprises Taken Over by Marcos or Entities or Persons

Close to him; Limitations Thereon Now, in the special instance of a business
enterprise shown by evidence to have been taken over by the government of the
Marcos Administration or by entities or persons close to former President Marcos,
the PCGG is given power and authority, as already adverted to, to provisionally take
(it) over in the public interest or to prevent * * (its) disposal or dissipation; and
since the term is obviously employed in reference to going concerns, or business
enterprises in operation, something more than mere physical custody is connoted;
the PCGG may in this case exercise some measure of control in the operation,
running, or management of the business itself. But even in this special situation, the
intrusion into management should be restricted to the minimum degree necessary
to accomplish the legislative will, which is to prevent the disposal or dissipation of
the business enterprise.

Voting of Sequestered Stock; Conditions Therefor So, too, it is within the

parameters of these conditions and circumstances that the PCGG may properly
exercise the prerogative to vote sequestered stock of corporations, granted to it by
the President of the Philippines through a Memorandum dated June 26, 1986. In the
case at bar, there was adequate justification to vote the incumbent directors out of
office and elect others in their stead because the evidence showed prima facie that
the former were just tools of President Marcos and were no longer owners of any
stock in the firm, if they ever were at all.

No Sufficient Showing of Other Irregularities -As to the other irregularities

complained of by BASECO, i.e., the cancellation or revision, and the execution of
certain contracts, inclusive of the termination of the employment of some of its
executives, this Court cannot, in the present state of the evidence on record, pass
upon them. It is not necessary to do so. The issues arising therefrom may and will be
left for initial determination in the appropriate action.