corpo case2

8/17/2019 Corpo Case2

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Renato Tayag vs Benguet Consolidated, Inc.

26 SCRA 242 – Business Organization – Corporation Law – Domicile of a

Corporation – By Laws ust !iel" #o a Court Or"er – Corporation is an Arti$cia

Being

In March 1960, Idonah Perkins died in New York. She left behind properties here an

abroad. One propert she left behind were two stock certi!cates co"erin# $$,00% shares ostocks of the &en#'et (onsolidated, Inc )&(I*. Said stock certi!cates were in the possessio

of the (o'ntr +r'st (opan of New York )(+(-NY*. (+(-NY was the doiciliar

adinistrator of the estate of Perkins )ob"io'sl in the S/*. Meanwhile, in 196$, enat

+aa# was appointed as the ancillar adinistrator )of the properties of Perkins she lef

behind in the Philippines*.

/ disp'te arose between (+(-NY and +aa# as to who between the is entitled to posses

the stock certi!cates. / case ens'ed and e"ent'all, the trial co'rt ordered (+(-NY to t'rn

o"er the stock certi!cates to +aa#. (+(-NY ref'sed. +aa# then !led with the co'rt

petition to ha"e said stock certi!cates be declared lost and to copel &(I to iss'e new

stock certi!cates in replaceent thereof. +he trial co'rt #ranted +aa#s petition.

&(I assailed said order as it a"erred that it cannot possibl iss'e new stock certi!cate

beca'se the two stock certi!cates declared lost are not act'all lost2 that the trial co'rt a

well +aa# acknowled#ed that the stock certi!cates e3ists and that the are with (+(-NY

that accordin# to &(Is b laws, it can onl iss'e new stock certi!cates, in lie' of lost

stolen, or destroed certi!cates of stocks, onl after co'rt of law has iss'ed a !nal and

e3ec'tor order as to who reall owns a certi!cate of stock.

ISSUE: 4hether or not the ar#'ents of &en#'et (onsolidated, Inc. are correct.

HELD: No. &en#'et (onsolidated is a corporation who owes its e3istence to Philippine laws

It has been #i"en ri#hts and pri"ile#es 'nder the law. (orollar, it also has obli#ation

'nder the law and one of those is to follow "alid le#al co'rt orders. It is not i'ne fro

5'dicial control beca'se it is doiciled here in the Philippines. &(I is a Philippine corporatio

owin# f'll alle#iance and s'b5ect to the 'nrestricted 5'risdiction of local co'rts. Its shares o

stock cannot therefore be considered in an wise as i'ne fro lawf'l co'rt orders

'rther, to allow &(Is opposition is to render the co'rt order a#ainst (+(-NY a ere scrap

of paper. It will lea"e +aa# witho't an reed sipl beca'se (+(-NY, a forei#n entit

ref'ses to copl with a "alid co'rt order. +he !nal reco'rse then is for o'r local co'rts to

create a le#al !ction s'ch that the stock certi!cates in iss'e be declared lost e"en tho'#

in realit the e3ist in the hands of (+(-NY. +his is "alid. /s held tie and a#ain, !ction

which the law a rel 'pon in the p'rs'it of le#itiate ends ha"e plaed an iportan

part in its de"elopent.


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'rther still, the ar#'ent in"oked b &(I that it can onl iss'e new stock certi!cates i

accordance with its blaws is isplaced. It is worth notin# that (+(-NY did not appeal the

order of the co'rt 7 it sipl ref'sed to t'rn o"er the stock certi!cates hence ownership

can be said to ha"e been settled in fa"or of estate of Perkins here. /lso, ass'in# tha

there reall is a con8ict between &(Is blaws and the co'rt order, what sho'ld pre"ail i

the lawf'l co'rt order. It wo'ld be hi#hl irre#'lar if co'rt orders wo'ld ield to the blaw

of a corporation. /#ain, a corporation is not i'ne fro 5'dicial orders.

Man'el +orres, r. "s (o'rt of /ppeals

2%& SCRA %'( – Business Organization – Corporation Law – #ransfer of S)ares o

Stoc*s – Corporate Recor"s

'd#e Man'el +orres, r. owns abo't :1; of the capital stocks of +oril ealt <

=e"elopent (orporation )+=(*. +=( is a sall fail owned corporation and othe

stockholders thereof incl'de 'd#e +orres nieces and nephews. >owe"er, e"en tho'#

'd#e +orres owns the a5orit of +=( and was also the president thereof, he is onl

entitled to one "ote aon# the 9-seat &oard of =irectors, hence, his "ote can be easil

o"erridden b inorit stockholders. So in 19:?, before the re#'lar election of +=(

o@cers, 'd#e +orres assi#ned one share )A'alifin# share* each to B Co'tsidersD for the

p'rpose of A'alifin# the to be elected as directors in the board and thereb stren#the

'd#e +orres power o"er other fail ebers.

>owe"er, the said assi#nent of shares were not recorded b the corporate secretar, Ma

(hristina (arlos )niece* in the stock and transfer book of +=(. 4hen the "alidit of saiassi#nents were A'estioned, 'd#e +orres ratiocinated that it is ipractical for hi to

order (arlos to ake the entries beca'se (arlos is one of his opposition. So what 'd#e

+orres did was to ake the entries hiself beca'se he was keepin# the stock and transfe

book . >e f'rther ratiocinated that he can do what a ere secretar can do beca'se in th

!rst place, he is the president.

Since the other fail ebers were a#ainst the incl'sion of the !"e o'tsiders, the

ref'sed to take part in the election. 'd#e +orres and his !"e assi#nees then decided to

cond'ct the election aon# thesel"es considerin# that the 6 of the constit'te

A'or'.

ISSUE: 4hether or not the incl'sion of the !"e o'tsiders are "alid. 4hether or not the

s'bseA'ent election is "alid.

HELD: No. +he assi#nent of the shares of stocks did not copl with proced'ra

reA'ireents. It did not copl with the b laws of +=( nor did it copl with Section ?E

of the (orporation (ode. Section ?E pro"ides that the stock and transfer book sho'ld be

kept at the principal o@ce of the corporation. >ere, it was 'd#e +orres who was keepin#


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and was brin#in# it with hi. 'rther, his e3c'se of not orderin# the secretar to ake the

entries is 8is. +he proper proced're is to order the secretar to ake the entr of said

assi#nent in the book, and if she ref'ses, 'd#e +orres can coe to co'rt and copel he

to ake the entr. +here are 5'dicial reedies for this. Needless to sa, the s'bseA'en

election is in"alid beca'se the assi#nent of shares is in"alid b reason of proced'ra

in!rit. +he S'pree (o'rt also ephasiFedG all corporations, bi# or sall, 'st abide b

the pro"isions of the (orporation (ode. &ein# a siple fail corporation is not a

e3eption. S'ch corporations cannot ha"e r'les and practices other than those establishe

b law.

Philippine Stock H3chan#e "s (o'rt of /ppeals

2&% SCRA 2(2 – Business Organization – Corporation Law – +,tent of -ower of t)e

Securities an" +,c)ange Commission

P'erto /F'l and, Inc. )P/I* is a corporation en#a#ed in the real estate b'siness. P/I wa

#ranted perission b the Sec'rities and H3chan#e (oission )SH(* to sell its shares t

the p'blic in order for P/I to de"elop its properties.

P/I then asked the Philippine Stock H3chan#e )PSH* to list P/Is stocksJshares to facilitat

e3chan#e. +he PSH &oard of Ko"ernors denied P/Is application on the #ro'nd that there

were 'ltiple clais on the assets of P/I. /pparentl, the Marcoses, ebecco Panlili

)tr'stee of the Marcoses*, and soe other corporations were claiin# assets if no

ownership o"er P/I.

P/I then wrote a letter to the SH( askin# the latter to re"iew PSHs decision. +he SH(

re"ersed PSHs decisions and ordered the latter to ca'se the listin# of P/I shares in the

H3chan#e.

ISSUE: 4hether or not it is within the power of the SH( to re"erse actions done b the PSH

HELD: Yes. +he SH( has both 5'risdiction and a'thorit to look into the decision of PS

p'rs'ant to the e"ised Sec'rities /ct and for the p'rpose of ens'rin# fair adinistration o

the e3chan#e. PSH, as a corporation itself and as a stock e3chan#e is s'b5ect to SH(s

5'risdiction, re#'lation, and control. In order to ins're fair dealin# of sec'rities and a fa

adinistration of e3chan#es in the PSH, the SH( has the a'thorit to look into the r'lin#

iss'ed b the PSH. +he SH( is the entit with the priar sa as to whether or no

sec'rities, incl'din# shares of stock of a corporation, a be traded or not in the stoc

e3chan#e.

>O4HLH, in the case at bar, the S'pree (o'rt ephasiFed that the SH( a onl

re"erse decisions iss'ed b the PSH if s'ch are tainted with bad faith. In this case, ther

was no showin# that PSH acted with bad faith when it denied the application of P/I. &ased


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on the 'ltiple ad"erse clais a#ainst the assets of P/I, PSH deeed that #rantin# P/I

application will onl be contrar to the best interest of the #eneral p'blic. It was reasonabl

for the PSH to e3ercise its 5'd#ent in the anner it dees appropriate for its b'sines

identit, as lon# as no ri#hts are trapled 'pon, and p'blic welfare is safe#'arded.

Feliciano vs. C! "#.R. $o. %&'&(), *anua+y %&, )((&

Facts: (O/ assessed ete Metropolitan 4ater =istrict )M4=* a'ditin# fees. Petitioneeliciano, as Keneral Mana#er of M4=, contended that the water district co'ld not pa thsaid fees on the basis of Sections 6 and %0 of P.=. No. 19: as well as Section 1: of ./. No6?B:. >e priaril claied that M4= is a pri"ate corporation not co"ered b (O/

5'risdiction. Petitioner also asked for ref'nd of all a'ditin# fees M4= pre"io'sl paid t(O/. (O/ (hairan denied petitioners reA'ests. Petitioner !led a otion foreconsideration which (O/ denied. >ence, this petition.

Issue: 4hether a ocal 4ater =istrict )C4=D* created 'nder P= 19:, as aended, is

#o"ernent-owned or controlled corporation s'b5ect to the a'dit 5'risdiction of (O/ or apri"ate corporation which is o'tside of (O/s a'dit 5'risdiction.

Held: Petition lacks erit. +he (onstit'tion 'nder Sec. %)1*, /rticle I-= and e3istin# lawandate (O/ to a'dit all #o"ernent a#encies, incl'din# #o"ernent-owned ancontrolled corporations with ori#inal charters. /n 4= is a KO(( with an ori#inal charter.

+he (onstit'tion reco#niFes two classes of corporations. +he !rst refers to pri"atcorporations created 'nder a #eneral law. +he second refers to #o"ernent-owned ocontrolled corporations created b special charters.nder e3istin# laws, that #eneral law ithe (orporation (ode.

Ob"io'sl, 4=s are not pri"ate corporations beca'se the are not created 'nder the(orporation (ode. 4=s are not re#istered with the Sec'rities and H3chan#e (oissionSection 1E of the (orporation (ode states that Call corporations or#aniFed 'nder this codeshall !le with the SH( articles of incorporation 3 3 3.D 4=s ha"e no articles oincorporation, no incorporators and no stockholders or ebers. +here are no stockholderor ebers to elect the board directors of 4=s as in the case of all corporationre#istered with the SH(. +he local aor or the pro"incial #o"ernor appoints the directorsof 4=s for a !3ed ter of o@ce. +he board directors of 4=s are not co-owners of the4=s. +he board directors and other personnel of 4=s are #o"ernent eploees s'b5ecto ci"il ser"ice laws and anti-#raft laws. (learl, an 4= is a p'blic and not a pri"ate entithence, s'b5ect to (O/s a'dit 5'risdiction.

ep'blic of the Philippine

SURE-E CUR

Manila

HN &/N(

#.R. $o. L))/%0 Dece12e+ ), %0)&


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$!TI$!L C!L C-!$3, plainti-appellee

"s.

THE CLLECTR F I$TER$!L RE4E$UE, defendant-appellant.

Attorney-General Villa-Real for appellant

Perfecto J. Salas Rodriue! for appellee.

*H$S$, ./0

+his action was bro'#ht in the (o'rt of irst Instance of the (it of Manila on the 1?th da

of 'l, 19%$, for the p'rpose of reco"erin# the s' of P1%,0EE.6:, alle#ed to ha"e been

paid 'nder protest b the plainti copan to the defendant, as speci!c ta3 on %E,0:9.

tons of coal. Said copan is a corporation created b /ct No. %?0B of the Philippine

e#islat're for the p'rpose of de"elopin# the coal ind'str in the Philippine Islands and i

act'all en#a#ed in coal inin# on reser"ed lands belon#in# to the Ko"ernent. It claie

e3eption fro ta3es 'nder the pro"ision of sections 1E and 1B of /ct No. %?19, and

praed for a 5'd#ent orderin# the defendant to ref'nd to the plainti said s' oP1%,0EE.6:, with le#al interest fro the date of the presentation of the coplaint, and

costs a#ainst the defendant.

+he defendant answered denin# #enerall and speci!call all the aterial alle#ations o

the coplaint, e3cept the le#al e3istence and personalit of the plainti. /s a specia

defense, the defendant alle#ed )a* that the s' of P1%,0EE.6: was paid b the plainti

witho't protests, and )b* that said s' was d'e and owin# fro the plainti to th

Ko"ernent of the Philippine Islands 'nder the pro"isions of section 1E96 of th

/dinistrati"e (ode and praed that the coplaint be disissed, with costs a#ainst th

plainti.

pon the iss'e th's presented, the case was bro'#ht on for trial. /fter a consideration o

the e"idence add'ced b both parties, the >onorable Pedro (onception, 5'd#e, held tha

the words lands o"ned b an person, etc., in section 1B of /ct No. %?19 sho'ld be

'nderstood to ean lands #eld in lease or 's'fr'ct, in haron with the other pro"isio

of said /ct2 that the coal lands possessed b the plainti, belon#in# to the Ko"ernent, fe

within the pro"isions of section 1B of /ct No. %?192 and that a ta3 of P0.0E per ton of 1,01

kilos on each ton of coal e3tracted therefro, as pro"ided in said section, was the onl ta3

which sho'ld be collected fro the plainti2 and sentenced the defendant to ref'nd to the

plainti the s' of P11,0:1.11 which is the dierence between the ao'nt collected 'nde

section 1E96 of the /dinistrati"e (ode and the ao'nt which sho'ld ha"e been collected'nder the pro"isions of said section 1B of /ct No. %?19. ro that sentence the defendan

appealed, and now akes the followin# assi#nents of errorG

I. +he co'rt below erred in holdin# that section 1B of /ct No. %?19 does not refer to coa

lands owned b persons and corporations.

II. +he co'rt below erred in holdin# that the plainti was not s'b5ect to the ta3 prescribed i

section 1E96 of the /dinistrati"e (ode.


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+he A'estion confrontin# 's in this appeal is whether the plainti is s'b5ect to the ta3e

'nder section 1B of /ct No. %?19, or to the speci!c ta3es 'nder section 1E96 of the

/dinistrati"e (ode.

+he plainti corporation was created on the 10th da of March, 191?, b /ct No. %?0B, fo

the p'rpose of de"elopin# the coal ind'str in the Philippine Island, in haron with the

#eneral plan of the Ko"ernent to enco'ra#e the de"elopent of the nat'ral reso'rces o

the co'ntr, and to pro"ided facilities therefor. & said /ct, the copan was #ranted th

#eneral powers of a corporation and s'ch other powers as a be necessar to enable ito prosec'te the b'siness of de"elopin# coal deposits in the Philippine Island and of inin#

e3tractin#, transportin# and sellin# the coal contained in said deposits. )Sec. %, /ct No

%?0B.* & the sae law )/ct No. %?0B* the Ko"ernent of the Philippine Islands is ad

the a5orit stockholder, e"identl in order to ins're proper #o"ernent s'per"ision an

control, and th's to place the Ko"ernent in a position to render all possibl

enco'ra#eent, assistance and help in the prosec'tion and f'rtherance of the copan

b'siness.

On Ma 1E, 191?, two onths after the passa#e of /ct No. %?0B, creatin# the National (oa

(opan, the Philippine e#islat're passed /ct No. %?19 to pro"ide for the leasin ande$elop%ent of coal lands in the Philippine Islands. On October 1:, 191?, 'pon petition o

the National (oal (opan, the Ko"ernor-Keneral, b Proclaation No. $9, withdrew fro

settleent, entr, sale or other disposition, all coal-bearin# p'blic lands within the Pro"inc

of Qaboan#a, =epartent of Mindanao and S'l', and the Island of Polillo, Pro"ince o

+aabas. /lost iediatel after the iss'ance of said proclaation the National (oa

(opan took possession of the coal lands within the said reser"ation, with an area o

abo't E00 hectares, witho't an f'rther foralit, contract or lease. Of the $0,000 share

of stock iss'ed b the copan, the Ko"ernent of the Philippine Islands is the owner o

%9,:09 shares, that is, of 99 1J$ per cent' of the whole capital stock.

If we 'nderstand the theor of the plainti-appellee, it is, that it clais to be the owner othe land fro which it has ined the coal in A'estion and is therefore s'b5ect to the

pro"isions of section 1B of /ct No. %?19 and not to the pro"isions of the section 1E96 of th

/dinistrati"e (ode. +hat contention of the plainti leads 's to an e3aination of the

e"idence 'pon the A'estion of the ownership of the land fro which the coal in A'estio

was ined. 4as the plainti the owner of the land fro which the coal in A'estion wa

inedR If the e"idence shows the a@rati"e, then the 5'd#ent sho'ld be a@red. If the

e"idence shows that the land does not belon# to the plainti, then the 5'd#ent sho'ld be

re"ersed, 'nless the plaintis ri#hts fall 'nder section $ of said /ct.

+he onl witness presented b the plainti 'pon the A'estion of the ownership of the lanin A'estion was Mr. =alacio (ostas, who stated that he was a eber of the board o

directors of the plainti corporation2 that the plainti corporation took possession of th

land in A'estion b "irt'e of the proclaation of the Ko"ernor-Keneral, known a

Proclaation No. $9 of the ear 191?2 that no doc'ent had been iss'ed in fa"or of the

plainti corporation2 that said corporation had recei"ed no perission fro the Secretar o

/#ric'lt're and Nat'ral eso'rces2 that it took possession of said lands co"erin# an area o

abo't E00 hectares, fro which the coal in A'estion was ined, solel, b "irt'e of said

proclaation )H3hibit &, No. $9*.


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Said proclaation )H3hibit &* was iss'ed b rancis &'rton >arrison, then Ko"erno

Keneral, on the 1:th da of October, 191?, and pro"idedG P'rs'ant to the pro"ision o

section ?1 of /ct No. 9%6, I hereb withdraw fro settleent, entr, sale, or othe

disposition, all coal-bearin# p'blic lands within the Pro"ince of Qaboan#a, =epartent o

Mindanao and S'l', and the Island of Polillo, Pro"ince of +aabas. It will be noted that said

proclaation onl pro"ided that all coal-bearin# p'blic lands within said pro"ince an

island sho'ld be withdrawn fro settleent, entr, sale, or other disposition. +here i

nothin# in said proclaation which a'thoriFes the plainti or an other person to ente

'pon said re"ersations and to ine coal, and no pro"ision of law has been called to o'attention, b "irt'e of which the plainti was entitled to enter 'pon an of the lands s

reser"ed b said proclaation witho't !rst obtainin# perission therefor.

+he plainti is a pri"ate corporation. +he ere fact that the Ko"ernent happens to th

a5orit stockholder does not ake it a p'blic corporation. /ct No. %?0B, as aended b

/ct No. %:%%, akes it s'b5ect to all of the pro"isions of the (orporation aw, in so far a

the are not inconsistent with said /ct )No. %?0B*. No pro"isions of /ct No. %?0B are fo'nd

to be inconsistent with the pro"isions of the (orporation aw. /s a pri"ate corporation, i

has no #reater ri#hts, powers or pri"ile#es than an other corporation which i#ht be

or#aniFed for the sae p'rpose 'nder the (orporation aw, and certainl it was not theintention of the e#islat're to #i"e it a preference or ri#ht or pri"ile#e o"er other le#itiat

pri"ate corporations in the inin# of coal. 4hile it is tr'e that said proclaation No. $9

withdrew fro settleent, entr, sale, or other disposition of coal-bearin# p'blic land

within the Pro"ince of Qaboan#a . . . and the Island of Polillo, it ade no pro"ision for th

occ'pation and operation b the plainti, to the e3cl'sion of other persons or corporation

who i#ht, 'nder proper perission, enter 'pon the operate coal ines.

On the 1Eth da of Ma, 191?, and before the iss'ance of said proclaation, th

e#islat're of the Philippine Island in an /ct for the leasin# and de"elopent of coal land

in the Philippine Islands )/ct No. %?19*, ade liberal pro"ision. Section 1 of said /c

pro"idesG (oal-bearin# lands of the p'blic doain in the Philippine Island shall not b

disposed of in an anner e3cept as pro"ided in this /ct, thereb #i"in# a clear indication

that no coal-bearin# lands of the p'blic doain had been disposed of b "irt'e of said

proclaation.

Neither is there an pro"ision in /ct No. %?0B creatin# the National (oal (opan, nor in

the aendents thereof fo'nd in /ct No. %:%%, which a'thoriFes the National (oa

(opan to enter 'pon an of the reser"ed coal lands witho't !rst ha"in# obtaine

perission fro the Secretar of /#ric'lt're and Nat'ral eso'rces.la"p#i&.net

+he followin# propositions are f'll s'stained b the facts and the lawG

)1* +he National (oal (opan is an ordinar pri"ate corporation or#aniFed 'nder /ct No

%?0B, and has no #reater powers nor pri"ile#es than the ordinar pri"ate corporation

e3cept those entioned, perhaps, in section 10 of /ct No. %?19, and the do not chan#e

the sit'ation here.

)%* It ined on p'blic lands between the onth of 'l, 19%0, and the onths of March

19%%, %E,0:9.$ tons of coal.


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)$* pon deand of the (ollector of Internal e"en'e it paid a ta3 of P0.B0 a ton, as ta3e

'nder the pro"isions of article 19E6 of the /dinistrati"e (ode on the 1Bth da o

=eceber, 19%%.

)E* It is aditted that it is neither the owner nor the lessee of the lands 'pon which said

coal was ined.

)B* +he proclaation of rancis &'rton >arrison, Ko"ernor-Keneral, of the 1:th da o

October, 191?, b a'thorit of section 1 of /ct No. 9%6, withdrawin# fro settleententr, sale, or other dispositon all coal-bearin# p'blic lands within the Pro"ince o

Qaboan#a and the Island of Polillo, was not a reser"ation for the bene!t of the Nationa

(oal (opan, b't for an person or corporation of the Philippine Islands or of the nite

States.

)6* +hat the National (oal (opan entered 'pon said land and ined said coal, so far a

the record shows, witho't an lease or other a'thorit fro either the Secretar o

/#ric'lt're and Nat'ral eso'rces or an person ha"in# the power to #rant a lea"e o

a'thorit.

ro all of the fore#oin# facts we !nd that the iss'e is well de!ned between the plainti

and the defendant. +he plainti contends that it was liable onl to pa the internal re"en'

and other fees and ta3es pro"ided for 'nder section 1B of /ct No. %?192 while th

defendant contends, 'nder the facts of record, the plainti is obli#ed to pa the interna

re"en'e d't pro"ided for in section 1E96 of the /dinistrati"e (ode. +hat bein# the iss'e

an e3aination of the pro"isions of /ct No. %?19 becoes necessar.

/n e3aination of said /ct )No. %?19* discloses the followin# facts iportant fo

consideration hereG

irst. /ll coal-bearin# lands of the p'blic doain in the Philippine Islands shall not bdisposed of in an anner e3cept as pro"ided in this /ct. Second. Pro"isions for leasin# b

the Secretar of /#ric'lt're and Nat'ral eso'rces of 'nreser"ed, 'nappropriated coal

bearin# p'blic lands, and the obli#ation to the Ko"ernent which shall be iposed b said

Secretar 'pon the lessee.la"p#i&.net

+hird. +he internal re"en'e d't and ta3 which 'st be paid 'pon coal-bearin# land

owned b an person, !r, association or corporation.

+o repeat, it will be noted, !rst, that /ct No. %?19 pro"ides an internal re"en'e d't and ta

'pon 'nreser"ed, 'nappropriated coal-bearin# p'blic lands which a be leased b theSecretar of /#ric'lt're and Nat'ral eso'rces2 and, second, that said /ct )No. %?19

pro"ides an internal re"en'e d't and ta3 iposed 'pon an person, !r, association o

corporation, who a be the owner of coal-bearin# lands. / readin# of said /ct clearl

shows that the ta3 iposed thereb is iposed 'pon two classes of persons onl lessee

and owners.

+he lower co'rt had soe tro'ble in deterinin# what was the correct interpretation o

section 1B of said /ct, b reason of what he belie"ed to be soe dierence in th

interpretation of the lan#'a#e 'sed in Spanish and Hn#lish. 4hile there is soe #ro'nd fo


9/31

conf'sion in the 'se of the lan#'a#e in Spanish and Hn#lish, we are pers'aded, considerin

all the pro"isions of said /ct, that said section 1B has reference onl to persons, !rs

associations or corporations which had alread, prior to the e3istence of said /ct, becoe

the owners of coal lands. Section 1B cannot certaint refer to holders or lessees of coa

lands for the reason that practicall all of the other pro"isions of said /ct has reference to

lessees or holders. If section 1B eans that the persons, !rs, associations, or corporatio

entioned therein are holders or lessees of coal lands onl, it is di@c'lt to 'nderstand wh

the internal re"en'e d't and ta3 in said section was ade dierent fro the obli#ation

entioned in section $ of said /ct, iposed 'pon lessees or holders.

ro all of the fore#oin#, it sees to be ade plain that the plainti is neither a lessee no

an owner of coal-bearin# lands, and is, therefore, not s'b5ect to an other pro"isions of /c

No. %?19. &'t, is the plainti s'b5ect to the pro"isions of section 1E96 of the /dinistrati"

(odeR

Section 1E96 of the /dinistrati"e (ode pro"ides that on all coal and coke there shall be

collected, per etric ton, !ft centa"os. Said section )1E96* is a part of article, 6 which

pro"ides for speci!c ta3es. Said article pro"ides for a speci!c internal re"en'e ta3 'pon a

thin#s an'fact'red or prod'ced in the Philippine Islands for doestic sale ocons'ption, and 'pon thin#s iported fro the nited States or forei#n co'ntries. I

ha"in# been deonstrated that the plainti has prod'ced coal in the Philippine Islands and

is not a lessee or owner of the land fro which the coal was prod'ced, we are clearl of th

opinion, and so hold, that it is s'b5ect to pa the internal re"en'e ta3 'nder the pro"isions

of section 1E96 of the /dinistrati"e (ode, and is not s'b5ect to the paent of the

internal re"en'e ta3 'nder section 1B of /ct No. %?19, nor to an other pro"isions of sai

/ct.

+herefore, the 5'd#ent appealed fro is hereb re"oked, and the defendant is hereb

relie"ed fro all responsibilit 'nder the coplaint. /nd, witho't an !ndin# as to costs,

is so ordered.

Street' (alcol%' A$ance)a' Villa%or' *strand and Ro%ualde!' JJ.' concur.

ep'blic of the Philippine

SURE-E CUR

Manila

IS+ =ILISION

#.R. $o. ')5(' Se6te12e+ 0, %00%

-!RIL! 7!TER C$SU-ERS !SSCI!TI$, I$C., petitioners

"s.

I$TER-EDI!TE !ELL!TE CURT, -U$ICI!LIT3 F -!RIL!, BUL!C!$

S!$##U$I!$# B!3!$, -!RIL!, BUL!C!$, and -!RIL! 7!TE

DISTRICT, respondents.


10/31

(atanol +. Guniundo for petitioner.

Prospero A. +rescini for (arilao ,ater istrict.

$!R4!S!, ..: p

In"ol"ed in this appeal is the deterination of which trib'rial has 5'risdiction o"er thdissol'tion of a water district or#aniFed and operatin# as a A'asi-p'blic corporation 'nde

the pro"isions of Presidential =ecree No. 19:, as aended2 % the e#ional +rial (o'rt, or th

Sec'rities < H3chan#e (oission.

P= 19: a'thoriFes the foration, las down the powers and f'nctions, and #o"erns th

operation of water districts thro'#ho't the co'ntr2 it is the so'rce of a'thoriFation and

power to for and aintain a )water* district. Once fored, it sas, a district is s'b5ect to

its pro"isions and is not 'nder the 5'risdiction of an political s'bdi"ision. )

nder P= 19:, water districts a be created b the dierent local le#islati"e bodies b th

passa#e of a resol'tion to this eect, s'b5ect to the ters of the decree. +he priar

f'nction of these water districts is to sell water to residents within their territor, 'nde

s'ch sched'les of rates and char#es as a be deterined b their boards. 8 +he sha

ana#e, adinister, operate and aintain all watersheds within their territoria

bo'ndaries, safe#'ard and protect the 'se of the waters therein, s'per"ise and contro

str'ct'res within their ser"ice areas, and prohibit an person fro sellin# or otherwis

disposin# of water for p'blic p'rposes within their ser"ice areas where district facilities ar

a"ailable to pro"ide s'ch ser"ice. &

+he decree speci!es the ters 'nder which water districts a be fored and operate.

prescribes, partic'larl

a* the nae b which a water district shad be known, which shall be contained in th

enablin# resol'tion, and shall incl'de the nae of the cit, 'nicipalit, or pro"ince, o

re#ion thereof, ser"ed b said sste, followed b the words, 4ater =istrict2 9

b* the n'ber and A'ali!cations of the ebers of the boards of directors, with the dat

of e3piration of ter of o@ce for each2 / the anner of their selection and initia

appointent b the head of the local political s'bdi"ision2 ' their ters of o@ce )whic

shall be in sta##ered periods of two, fo'r and si3 ears*2 5 the anner of !llin# '

"acancies in the board2 0 the copensation and liabilities of ebers of the board. %( +h

resol'tion shall contain a stateent that the district a onl be dissol"ed on the #ro'nd

and 'nder the conditions set forth in Section EE of the law, b't nothin# in the resol'tion o

foration, the decree adds, shall state or infer that the local le#islati"e bod has the

power to dissol"e, alter or aect the district beond that speci!call pro"ided for in thi

/ct. %%

+he 5'ridical entities th's created and or#aniFed 'nder P= 19: are considered A'asi-p'bli

corporations, perforin# p'blic ser"ices and s'pplin# p'blic wants. +he are a'thoriFed

not onl to e3ercise all the powers which are e3pressl #ranted b said decree, and thos


11/31

which are necessaril iplied fro or incidental to said powers, b't also the power o

einent doain, the e3ercise .. )of which* shall howe"er be s'b5ect to re"iew b th

/dinistration )4/*. In addition to the powers #ranted in, and s'b5ect to s'c

restrictions iposed 'nder, the /ct, the a also e3ercise the powers, ri#hts an

pri"ile#es #i"en to pri"ate corporations 'nder e3istin# laws.%)

+he decree also established a #o"ernent corporation attached to the O@ce of th

President, known as the ocal 4ater tilities /dinistration )4/* %8 to f'nction priaril

as a specialiFed lendin# instit'tion for the prootion de"elopent and !nancin# of locawater 'tilities. It has the followin# speci!c powers and d'ties2 %&

)1* prescribe ini' standards and re#'lations in order to ass'r

acceptable standards of constr'ction aterials and s'pplies, aintenance

operation, personnel trainin#, acco'ntin# and !scal practices for local wate

'tilities2

)%* f'rnish technical assistance and personnel trainin# pro#ras for loca

water 'tilities2

)$* onitor and e"al'ate local water standards2 and

)E* eect sstes inte#ration, 5oint in"estent and operations, distric

anne3ation and deanne3ation whene"er econoicall warranted.

It was p'rs'ant to the fore#oin# r'les and nors that the Marilao 4ater =istrict was fore

b esol'tion of the San##'nian# &aan of the M'nicipalit of Marilao dated Septeber 1:

19:%, which resol'tion was thereafter forwarded to the 4/ and d'l !led b it o

October E, 19:% after ascertainin# that it confored to the reA'ireents of the law. %9

+he clai was thereafter ade that the creation of the Marilao 4ater =istrict in the anneaforestated was defecti"e and ille#al. +he clai was ade b a non-stock, non-pro!

corporation known as the Marilao 4ater (ons'ers /ssociation, Inc., in a petition date

=eceber 1%, 19:$ !led with the e#ional +rial (o'rt at Malolos, &'lacan. Ipleaded a

respondents were the Marilao 4ater =istrict, as well as the M'nicipalit of Marilao, &'lacan

its San##'nian# &aan2 and Maor Nicanor L. KIHMO. +he petition praed for th

dissol'tion of the water district on the basis chie8 of the followin# alle#ations, to witG

1* there had been no real, b't onl a farcical p'blic hearin# prior to the creation of the

4ater =istrict2

%* not onl was the waterworks sste t'rned o"er to the 4ater =istrict witho'

copensation. b't a s'bsid was ille#all a'thoriFed for it2

$* the 4ater =istrict was bein# r'n with ne#li#ence, apath, indierence an

isana#eent, and was not pro"idin# adeA'ate and e@cient ser"ice to the co'nit

b't this notwithstandin#, the cons'ers were bein# billed in f'll and threatened wit

disconnection for fail're to pa bills on tie2 in fact, one of the cons'ers who coplaine

had his water ser"ice c't o2


12/31

E* the cons'ers were conseA'entl forced to or#aniFe thesel"es into a corporation las

October $, 19:$ ... for the p'rpose of deandin# adeA'ate and s'@cient s'ppl of wate

and e@cient ana#eent of the waterworks in Marilao, &'lacan. %/

/ctin# on the coplaint, partic'larl on the application for teporar restrainin# order and

preliinar in5'nction set o't therein, the +rial (o'rt iss'ed an Order on =eceber %%

19:$ settin# the application for preliinar hearin#, reA'irin# the respondents to answe

the petition and restrainin# the 'ntil f'rther orders fro collectin# an water bil

disconnectin# an water ser"ice, transferrin# an propert of the waterworks, or disb'rsin#an ao'nt in fa"or of an person. +he order was odi!ed on an'ar 6, 19:E to allow the

respondents to pa the districts o'tstandin# obli#ations to Meralco, b wa of e3ception t

the restrainin# order.

On an'ar 1$, 19:E the Marilao 4ater =istrict !led its /nswer with (op'lsor

(o'nterclai, denin# the aterial alle#ations of the petition and assertin# as a@rati"e

defenses )a* the (o'rts lack of 5'risdiction of the s'b5ect atter, and )b* the fail're of th

petition to state a ca'se of action. +he answer alle#ed that the atter of the wate

districts dissol'tion fell 'nder the ori#inal and e3cl'si"e 5'risdiction of the Sec'rities <

H3chan#e (oission )SH(*2 and the atter of the propriet of water rates, within thepriar adinistrati"e 5'risdiction of the 4/ and the A'asi-5'dicial 5'risdiction of the

National 4ater eso'rces (o'ncil. On the sae date, Marilao 4ater =istrict !led a otio

for adission of its third-part coplaint a#ainst the o@cers and directors of the petitione

corporation, it bein# claied that the had insti#ated the !lin# of the petition sipl

beca'se one of the was a political ad"ersar of the respondent Maor.

+he other respondents also !led their answer thro'#h the Pro"incial iscal of &'lacan

settin# 'p the sae a@rati"e defense of lack of 5'risdiction on the part of the +rial (o'rt

and fail're of the petition to state a ca'se of action since it aditted that it was b

resol'tion of the Marilao San##'nian# &aan that the Marilao 4ater =istrict wa

constit'ted.

+he petitioner the Marilao (ons'ers /ssociation !led a repl, and an answer to th

co'nterclai, on an'ar %6, 19:E. It a"erred that since the Marilao 4ater =istrict had no

been or#aniFed 'nder the (orporation (ode, the SH( had no 5'risdiction o"er a proceedin#

for its dissol'tion2 and that 'nder Section EB of P= 19:, the proceedin# to deterine if th

dissol'tion of the water district is for the best interest of the people, is within th

copetence of a re#'lar co'rt of 5'stice, and neither the 4/ nor the National 4ate

eso'rces (o'ncil is copetent to take co#niFance of the atter of dissol'tion of the wate

district and reco"er of its waterworks sste, or the e3orbitant rates iposed b it. +he

(ons'ers /ssociation also opposed adission of the third-part coplaint on the #ro'nthat its indi"id'al o@cers are not personall aenable to s'it for acts of th

corporation, %' which has a personalit distinct fro theirs.

+he +rial (o'rt fo'nd for the respondents. It disissed the (ons'ers /ssociations s'it b

Order handed down on 'ne :, 19:E which pertinentl reads as followsG

/fter a consideration of the ar#'ents raised b the herein parties, the (o'r

is ore inclined to take the position of the respondents that the Sec'rities an


13/31

H3chan#e (oission has the e3cl'si"e and ori#inal 5'risdiction o"er thi

case.

4>HHOH, the instant petition, the third-part coplaint, and th

cop'lsor co'nterclai !led herein are hereb =ISMISSH=, for lack o

5'risdiction.

Its otion for reconsideration ha"in# been denied, b Order dated Septeber %0, 19:E, th

(ons'ers /ssociation !led with this (o'rt a petition for re"iew on certiorari, which wadocketed as K.. No. 6:?E%. +he case was howe"er referred to the Interediate /ppellate

(o'rt b this (o'rts Second =i"ision, in a esol'tion dated No"eber 19, 19:E, where i

was docketed as /(-K.. S.P. No. 0E:6%.

&'t there in the Interediate /ppellate (o'rt, the (ons'ers /ssociations ca'se also e

with fail're. +he /ppellate (o'rt, in its =ecision pro'l#ated on Septeber 10, 19:B, r'led

that its ca'se co'ld not prosper beca'se

1* it had a"ailed of the wron# reed, i.e., the special ci"il action of certiorari2 the Order o

'ne :, 19:E bein# a !nal order in the sense that it left nothin# else to be done in the casthe proper reed was appeal 'nder 'le E1 of the 'les of (o'rt and not a certiorari s'

'nder 'le 6B2 and

%* e"en if the certiorari action be treated as an appeal, it was 1E 'nerrin#l clear that the

contro"ers ... falls within the copetence of the SH( in "irt'e of P.=. 90%-/ %5 4hic

pro"ides that said a#enc shall ha"e ori#inal and e3cl'si"e 5'risdiction to hear and decide

cases in"ol"in#G

a* 333 333 333

b* (ontro"ersies arisin# o't of intra-corporate or partnership relationsbetween and aon# stockholders, ebers or associates2 between an or a

of the and the corporation, partnership or association of which the ar

stockholders, ebers or associates, respecti"el2 and between s'c

corporation, partnership or association and the state insofar as it concern

their indi"id'al franchise or ri#ht to e3ist as s'ch entit ...

+he /ppellate (o'rt s'bseA'entl denied the petitioners otion for reconsideration, b

esol'tion dated No"eber E, 19:B. >ence, the petition for re"iew on certiorari at bar, i

which re"ersal of the /ppellate +rib'nals decision is so'#ht, the petitioner insistin# that th

reed resorted to b it was correct b't is'nderstood b the I./.(. and that the law doeindeed "est e3cl'si"e 5'risdiction o"er the s'b5ect atter of the case in the e#ional +ria

(o'rt, not the Sec'rities and H3chan#e (oission.

+'rnin# !rst to the ad5ecti"e iss'e, it is A'ite e"ident that the Order of the +rial (o'rt o

'ne :, 19:E, disissin# the action of the (ons'ers /ssociation, is reall a !nal order2

!nall disposed of the proceedin# and left nothin# ore to be done b the (o'rt on the

erits. Now, the !rl settled principle is that the reed a#ainst s'ch a nal order is th

ordinar reed of an appeal, either solel on A'estions of law in which case the appea

a be taken onl to the S'pree (o'rt or A'estions of fact and law in which e"en


14/31

the appeal sho'ld be bro'#ht to the (o'rt of /ppeals. +he e3traordinar reed of a

special ci"il action of certiorari or prohibition is not the appropriate reco'rse beca's

precisel, one of the conditions for a"ailin# of it is that there sho'ld be no appeal, nor an

plain, speed and adeA'ate reed in the ordinar co'rse of law. %0 / resort to the latte

instead of the forer wo'ld ordinaril be fatal, 'nless it sho'ld appear in a #i"en case tha

appeal wo'ld otherwise be an ine@cacio's or inadeA'ate reed. )(

In holdin# that Marilao 4ater =istrict had resorted to the wron# reed a#ainst the +ria

(o'rts order disissin# its s'it, i.e., the special ci"il action of certiorari, instead of aappeal, the Interediate /ppellate (o'rt A'ite o"erlooked the fact, not serio'sl disp'te

b the Marilao 4ater =istrict and its co-respondents, that the forer had in fact a"ailed o

the reed of appeal b certiorari 'nder 'le EB of the 'les of (o'rt, as reA'ired b

para#raph %B of the Interi 'les < K'idelines of this (o'rt, ipleentin# /ata

Pa%bansa /ilan &012 that before doin# so, it had !rst asked for and been #ranted an

e3tension of thirt )$0* das within which to !le a petition for re"iew on certiorari2 b't tha

s'bseA'entl, b esol'tion of this (o'rts Second =i"ision dated No"eber 19, 19:E, th

case was referred to the Interediate /ppellate (o'rt, e"identl beca'se it was felt tha

certain fact'al iss'es had et to be deterined. In an case, all thin#s considered, the

(o'rt is not prepared to ha"e the case at bar !nall deterined on this proced'ral iss'e.

+he 5'ridical entities known as water districts created b P= 19:, altho'#h considered a

A'asi-p'blic corporations and a'thoriFed to e3ercise the powers, ri#hts and pri"ile#es #i"e

to pri"ate corporations 'nder e3istin# laws )% are entirel distinct fro corporation

or#aniFed 'nder the (orporation (ode, P= 90%-/, as aended. +he (orporation (ode ha

nothin# whate"er to do with their foration and or#aniFation, all the ters and condition

for their or#aniFation and operation bein# partic'larl spelled o't in P= 19:. +h

resol'tions creatin# the, their charters, in other words, are !led not with the Sec'ritie

and H3chan#e (oission b't with the 4/. It is these resol'tions 2ua charters, and no

articles of incorporation drawn 'p 'nder the (orporation (ode, which set forth the nae o

the water districts, the n'ber of their directors, the anner of their selection an

replaceent, their powers, etc. +he SH( which is char#ed with enforceent of th

(orporation (ode as re#ards corporations, partnerships and associations fored o

operatin# 'nder its pro"isions, has no power of s'per"ision or control o"er the acti"ities o

water districts. More partic'larl, the SH( has no power of o"ersi#ht o"er s'ch acti"ities o

water districts as sellin# water, f'lin# the rates and char#es therefor )) or the ana#een

adinistration, operation and aintenance of watersheds within their territoria

bo'ndaries, or the safe#'ardin# and protection of the 'se of the waters therein, or th

s'per"ision and control of str'ct'res within the ser"ice areas of the district, and th

prohibition of an person fro sellin# or otherwise disposin# of water for p'blic p'rpose

within their ser"ice areas where district facilities are a"ailable to pro"ide s'cser"ice. )8 +hat f'nction of s'per"ision or control o"er water districts is entr'sted to th

ocal 4ater tilities /dinistration. )& (onseA'entl, as re#ards the acti"ities of wate

districts 5'st entioned, the SH( ob"io'sl can ha"e no clai to an e3pertise.

+he Pro"incial 4ater tilities /ct of 19?$ has a speci!c pro"ision #o"ernin# dissol'tion o

water districts created there'nder +his is Section EB of P= 19: )9 readin# as followsG

SH(. EB. issolution. / district a be dissol"ed b resol'tion of its board o

directors !led in the anner of !lin# the resol'tion forin# the district


15/31

Pro"ided, howe"er, +hat prior to the adoption of an s'ch resol'tionG )1

another p'blic entit has acA'ired the assets of the district and has ass'ed

all obli#ations and liabilities attached thereto2 )%* all bondholders and othe

creditors ha"e been noti!ed and the consent to said transfer and dissol'tion

and )$* a co'rt of copetent 5'risdiction has fo'nd that said transfer an

dissol'tion are in the best interest of the p'blic.

nder this pro"ision, it is the 4/ which is the adinistrati"e bod in"ol"ed in th

"ol'ntar dissol'tion of a water district2 it is with it that the resol'tion of dissol'tion is !lednot the Sec'rities and H3chan#e (oission. /nd this pro"ision is e"identl A'ite distinc

and dierent fro those on dissol'tion of corporations fored or or#aniFed 'nder th

pro"isions of 33 )the (orporation* (ode set o't in Sections 11? to 1%1, incl'si"e, of said

(ode, 'nder which dissol'tion a be "ol'ntar )b "ote of the stockholders or ebers*

#enerall eected b the !lin# of the correspondin# resol'tion with the Sec'rities an

H3chan#e (oission, or in"ol'ntar, coenced b the !lin# of a "eri!ed coplaint als

with the SH(.

/ll these ar#'e a#ainst concedin# 5'risdiction in the Sec'rities and H3chan#e (oissio

o"er proceedin#s for the dissol'tion of water districts. or altho'#h described aA'asip'blic corporations, and #ranted the sae powers as pri"ate corporations, wate

districts are not reall corporations. +he ha"e no incorporators, stockholders or ebers

who ha"e the ri#ht to "ote for directors, or aend the articles of incorporation or b-laws

or pass resol'tions, or otherwise perfor s'ch other acts as are a'thoriFed to stockholder

or ebers of corporations b the (orporation (ode. In a word, there can be no s'ch thin

as a relation of corporation and stockholders or ebers in a water district for the siple

reason that in the latter there are no stockholders or ebers. &etween the water distric

and those who are recipients of its water ser"ices there e3ists not the relationship o

corporation-and-stockholder, b't that of a ser"ice a#enc and 'sers or c'stoers. +here

can therefore be no s'ch thin# in a water district as intra-corporate or partnershi

relations, between and aon# stockholders, ebers or associates )or* between an or a

of the and the corporation, partnership or association of which the are stockholders

ebers or associates, respecti"el, within the conteplation of Section B of th

(orporation (ode so as to brin# contro"ersies in"ol"in# the within the copetence an

co#niFance of the SH(.

+here can be e"en less debate abo't the fact that the SH( has no 5'risdiction o"er the co

respondents of the Marilao 4ater =istrict the M'nicipalit of Marilao, its San##'nian#

&aan and its Maor who are acc'sed of a conspirac with the water district in respec

of the anoalies described in the (ons'er /ssociations petition.)/

+he contro"ers, therefore, between the (ons'ers /ssociation, on the one hand, an

Marilao =istrict and its co-respondents, on the other, is not within the 5'risdiction of th

SH(.

In their answer with co'nterclai in the proceedin#s a 2uo, the respondents ad"ocated th

theor that the case falls within the 5'risdiction of the 4/ andJor the National 4ate

eso'rces (o'ncil.


16/31

+he 4/ does not appear to ha"e an ad5'dicator f'nctions. It is, as alread pointed o't

priaril a specialiFed lendin# instit'tion for the prootion, de"elopent and !nancin# o

local water 'tilities, )' with power to prescribe ini' standards and re#'lation

re#ardin# aintenance, operation, personnel trainin#, acco'ntin# and !scal practices fo

local water 'tilities, to f'rnish technical assistance and personnel trainin# pro#ra

therefor2 onitor and e"al'ate local water standards2 and eect sstes inte#ration, 5oin

in"estent and operations, district anne3ation and deanne3ation whene"er econoicall

warranted. )5 +he 4/ has A'asi-5'dicial power onl as re#ards rates or char#es !3ed b

water districts, which it a re"iew to establish copliance with the pro"isions of P= 19:witho't pre5'dice to appeal bein# taken therefro b a water concessionaire to th

National 4ater eso'rces (o'ncil whose decision thereon shall be appealable to the O@c

of the President. )0 +he rates or char#es established b respondent Marilao 4ater =istric

do not appear to be at iss'e in the contro"ers at bar.

+he National 4ater eso'rces (o'ncil, on the other hand, is conferred ori#inal 5'risdictio

o"er all disp'tes relatin# to appropriation, 'tiliFation, e3ploitation, de"elopent, contro

conser"ation and protection of waters within the eanin# and conte3t of the pro"ision

of ... )the (ode b which said (o'ncil was created, Presidential =ecree No. 106?, otherwis

known as the 4ater (ode of the Philippines*28(

and its decision on water ri#htcontro"ersies a be appealed to the (o'rt of irst Instance of the pro"ince where th

s'b5ect atter of the contro"ers is sit'ated. 8% It also has a'thorit to re"iew A'estions o

anne3ations and deanne3ations )addition to or e3cl'sion fro the district of territor*

/#ain it does not appear that the case at bar is a water ri#hts contro"ers or one in"ol"in#

anne3ation or deanne3ation.

4hat essentiall is so'#ht b the (ons'ers /ssociation is the dissol'tion of the Marila

4ater =istrict, on the #ro'nd that its foration was ille#al and in"alid2 the waterwork

sste had been t'rned o"er to it witho't copensation and a s'bsid ille#all a'thoriFed

for it2 and the 4ater =istrict was bein# r'n with ne#li#ence, apath, indierence and

isana#eent, and was not pro"idin# adeA'ate and e@cient ser"ice to th

co'nit. 8)

Now, as alread abo"e stated, the dissol'tion of a water district is #o"erned b Section EB

of P= 19:, as aended, statin# that it a be dissol"ed b resol'tion of its board o

directors !led in t#e %anner of lin t#e resolution for%in t#e district'3 s'b5ect t

en'erated pre-reA'isites. 88 +he proced're for dissol'tion th's consists of the followin#

stepsG

1* the initiation b the board of directors of the water district %otu proprio or at the relatio

of an interested part, of proceedin#s for the dissol'tion of the water district, incl'din#G

a* the ascertainent b said board that

1* another p'blic entit has acA'ired the assets of the district and has ass'ed a

obli#ations and liabilities attached thereto2 and

%* all bondholders and other creditors ha"e been noti!ed and consent to said transfer and

dissol'tion2


17/31

b* the coenceent b the water district in a co'rt of copetent 5'risdiction of

proceedin# to obtain a declaration that said transfer and dissol'tion are in the bes

interest of the p'blic2

%* after copliance with the fore#oin# reA'isites, the adoption b the board of directors o

the water district of a resol'tion dissol"in# the water district and its s'bission to the

San##'nian# &aan concerned for appro"al2

$* s'bission of the resol'tion of the San##'nian# &aan dissol"in# the water district tothe head of the local #o"ernent concerned for appro"al, and 'ltiatel to the 4/ fo

!nal appro"al and !lin#.

+he (ons'er /ssociations action therefore is, in !ne, in the nat're of a anda's s'it

seekin# to copel the board of directors of the Marilao 4ater =istrict, and its alle#ed co

conspirators, the San##'nian# &aan and the Maor of Marilao to #o thro'#h the proces

abo"e described for the dissol'tion of the water district. In this sense, and indeed, takin

acco'nt of the nat're of the proceedin#s for dissol'tion 5'st described, it sees plain tha

the case does not fall within the liited 5'risdiction of the SH(., b't within the #enera

5'risdiction of e#ional +rial (o'rts.

4>HHOH, the =ecision of the Interediate /ppellate (o'rt of Septeber 10, 19:B

a@rin# that of the e#ional +rial (o'rt of 'ne :, 19:E is HLHSH= and SH+ /SI=H

and the case is reanded to the e#ional +rial (o'rt for f'rther proceedin#s an

ad5'dication in accordance with law. No costs.

SO O=HH=.

+ru! and (edialdea' JJ.' concur.

Gri)o-A2uino' J.' took no part.

HN &/N(

#.R. $o. %&%'89. *une 5, )((9;

S!!RI


18/31

!ndin# petitioner #'ilt of =ishonest in the Perforance of O@cial ='ties andJor (ond'c

Pre5'dicial to the &est Interest of the Ser"ice and disissin# hi fro the ser"ice, and it

esol'tionT%U of 1B =eceber 1999 disissin# petitioners Motion for econsideration.

+he records show that petitioner Sappari V. Sawad5aan was aon# the !rst eploee

of the Philippine /anah &ank )P/&* when it was created b "irt'e of Presidential =ecre

No. %6E on 0% /'#'st 19?$. >e rose thro'#h the ranks, workin# his wa 'p fro his initia

desi#nation as sec'rit #'ard, to settlin# clerk, bookkeeper, credit in"esti#ator, pro5ec

analst, appraiserJ inspector, and e"ent'all, loans analst.T$U

In ebr'ar 19::, while still desi#nated as appraiserJin"esti#ator, Sawad5aan wa

assi#ned to inspect the properties oered as collaterals b (opressed /ir Machineries an

HA'ipent (orporation )(/MH(* for a credit line of i"e Million Pesos )PB,000,000.00*. +h

properties consisted of two parcels of land co"ered b +ransfer (erti!cates of +itle )+(+s

No. N-1$06?1 and No. (-B%B?6. On the basis of his Inspection and /ppraisal eport, TEU th

P/& #ranted the loan application. 4hen the loan at'red on 1? Ma 19:9, (/MH(

reA'ested an e3tension of 1:0 das, b't was #ranted onl 1%0 das to repa the loan.TBU

In the eantie, Sawad5aan was prooted to oans /nalst I on 01 'l 19:9.

T6U

In an'ar 1990, (on#ress passed ep'blic /ct 6:E: creatin# the /II&P and repealin#

P.=. No. %6E )which created the P/&*. /ll assets, liabilities and capital acco'nts of the P/&

were transferred to the /II&P,T?U and the e3istin# personnel of the P/& were to contin'e t

dischar#e their f'nctions 'nless dischar#ed.T:U In the ens'in# reor#aniFation, Sawad5aa

was aon# the personnel retained b the /II&P.

4hen (/MH( failed to pa despite the #i"en e3tension, the bank, now referred to as

the /II&P, disco"ered that +(+ No. N-1$06?1 was sp'rio's, the propert described therei

non-e3istent, and that the propert co"ered b +(+ No. (-B%B?6 had a prior e3istin

ort#a#e in fa"or of one =i"ina Pablico.

On 0: 'ne 199$, the &oard of =irectors of the /II&P created an In"esti#atin

(oittee to look into the (/MH( transaction, which had cost the bank Si3 Million Peso

)P6,000,000.00* in losses.T9U +he s'bseA'ent e"ents, as fo'nd and decided 'pon b th

(o'rt of /ppeals,T10U are as followsG

On 1: 'ne 199$, petitioner recei"ed a eorand' fro Islaic &ank T/II&PU (hairan

oberto . =e Ocapo char#in# hi with =ishonest in the Perforance of O@cial ='tie

andJor (ond'ct Pre5'dicial to the &est Interest of the Ser"ice and pre"enti"el s'spendin#

hi.

In his eorand' dated : Septeber 199$, petitioner infored the In"esti#atin

(oittee that he co'ld not s'bit hiself to the 5'risdiction of the (oittee beca'se o

its alle#ed partialit. or his fail're to appear before the hearin# set on 1? Septeber 199$

after the hearin# of 1$ Septeber 199$ was postponed d'e to the Manifestation of e"en

date !led b petitioner, the In"esti#atin# (oittee declared petitioner in defa'lt and the

prosec'tion was allowed to present its e"idence e4 parte.

http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn5http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn6http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn7http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn8http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn9http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn10http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn5http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn6http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn7http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn8http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn9http://sc.judiciary.gov.ph/jurisprudence/2005/jun2005/141735.htm#_ftn10


19/31

On 0: =eceber 199$, the In"esti#atin# (oittee rendered a decision, the pertinen

portions of which reads as followsG

In "iew of respondent S/4/=//NS ab5ect fail're to perfor his d'ties and assi#ned task

as appraiserJinspector, which res'lted to the pre5'dice and s'bstantial daa#e to the &ank

respondent sho'ld be held liable therefore. /t this 5'nct're, howe"er, the In"esti#atin#

(oittee is of the considered opinion that he co'ld not be held liable for th

adinistrati"e oense of dishonest considerin# the fact that no e"idence was add'ced to

show that he pro!ted or bene!ted fro bein# reiss in the perforance of his d'ties. +herecord is bereft of an e"idence which wo'ld show that he recei"ed an ao'nt i

consideration for his non-perforance of his o@cial d'ties.

+his notwithstandin#, respondent cannot escape liabilit. /s ad"erted to earlier, his fail'r

to perfor his o@cial d'ties res'lted to the pre5'dice and s'bstantial daa#e to th

Islaic &ank for which he sho'ld be held liable for the adinistrati"e oense of (ON=(+

PH=I(I/ +O +>H &HS+ IN+HHS+ O +>H SHLI(H.

Preises considered, the In"esti#atin# (oittee recoends that respondent S/PP/

S/4/=//N be eted the penalt of SI )6* MON+>S and ONH )1* =/Y SSPHNSION froo@ce in accordance with the (i"il Ser"ice (oissions Meorand' (irc'lar No. $0

Series of 19:9.

On 1$ =eceber 199$, the &oard of =irectors of the Islaic &ank T/II&PU adopte

esol'tion No. %$09 !ndin# petitioner #'ilt of =ishonest in the Perforance of O@cia

='ties andJor (ond'ct Pre5'dicial to the &est Interest of the Ser"ice and iposin# th

penalt of =isissal fro the Ser"ice.

On reconsideration, the &oard of =irectors of the Islaic &ank T/II&PU adopted th

esol'tion No. %$$% on %0 ebr'ar 199E red'cin# the penalt iposed on petitioner fro

disissal to s'spension for a period of si3 )6* onths and one )1* da.

On %9 March 199E, petitioner !led a notice of appeal to the Merit Sste Protection &oard

)MSP&*.

On 11 /'#'st 199E, the (S( adopted esol'tion No. 9E-EE:$ disissin# the appeal for lac

of erit and a@rin# esol'tion No. %$09 dated 1$ =eceber 199$ of the &oard o

=irectors of Islaic &ank.

On 11 /pril 199B, the (S( adopted esol'tion No. 9B-%B?E denin# petitioners Motion fo

econsideration.

On 16 'ne 199B, the instant petition was !led with the >onorable S'pree (o'rt on the

followin# assi#nent of errorsG

I. P'blic respondent /l-/anah Islaic In"estent &ank of the Philippines ha

coitted a #ra"e ab'se of discretion ao'ntin# to e3cess or lack of 5'risdiction when i

initiated and cond'cted adinistrati"e in"esti#ation witho't a "alidl pro'l#ated r'les o

proced're in the ad5'dication of adinistrati"e cases at the Islaic &ank.


20/31

II. P'blic respondent (i"il Ser"ice (oission has coitted a #ra"e ab'se o

discretion ao'ntin# to lack of 5'risdiction when it preat'rel and falsel ass'e

5'risdiction of the case not appealed to it, b't to the Merit Sste Protection &oard.

III. &oth the Islaic &ank and the (i"il Ser"ice (oission erred in !ndin# petitione

Sawad5aan of ha"in# deliberatel reportin# false inforation and therefore #'ilt o

=ishonest and (ond'ct Pre5'dicial to the &est Interest of the Ser"ice and penaliFed wit

disissal fro the ser"ice.

On 0E 'l 199B, the >onorable S'pree (o'rt 5n /anc referred this petition to th

>onorable (o'rt p'rs'ant to e"ised /dinistrati"e (irc'lar No. 1-9B, which took eect o

01 'ne 199B.

4e do not !nd erit TinU the petition.

/nent the !rst assi#nent of error, a readin# of the records wo'ld re"eal that petitione

raises for the !rst tie the alle#ed fail're of the Islaic &ank T/II&PU to pro'l#ate r'les o

proced're #o"ernin# the ad5'dication and disposition of adinistrati"e cases in"ol"in# it

personnel. It is a r'le that iss'es not properl bro'#ht and "entilated below a not braised for the !rst tie on appeal, sa"e in e3ceptional circ'stances )+asolita' Sr. $. +our

of Appeals, %?B S(/ %B?* none of which, howe"er, obtain in this case

Krantin# aruendo that the iss'e is of s'ch e3ceptional character that the (o'rt a tak

co#niFance of the sae, still, it 'st fail. Section %6 of ep'blic /ct No. 6:E: )1990

pro"idesG

Section %6. Powers of the &oard. +he &oard of =irectors shall ha"e the broadest po"ers t

%anae t#e Isla%ic /ank , 3 3 3 +he &oard shall adopt polic #'idelines necessar to carr

o't eecti"el the pro"isions of this (harter as well as internal rules an

reulations necessar for the cond'ct of its Islaic bankin# b'siness and all atter

related to personnel orani!ation' o6ce functions and salary ad%inistration. )Italics o'rs*

On the other hand, Ite No. % of H3ec'ti"e Order No. %6 )199%* entitled Prescribin

Proced're and Sanctions to Hns're Speed =isposition of /dinistrati"e (ases directs, a

adinistrati"e a#encies to adopt and incl'de in their respecti"e 'les of Proced'r

pro"isions desi#ned to abbre"iate adinistrati"e proceedin#s.

+he abo"e two )%* pro"isions relied 'pon b petitioner does not reA'ire the Islaic &an

T/II&PU to pro'l#ate r'les of proced're before adinistrati"e discipline a be iposed

'pon its eploees. +he internal r'les of proced'res ordained to be adopted b the &oard

refers to that necessar for the cond'ct of its Islaic bankin# b'siness and all atterrelated to personnel or#aniFation, o@ce f'nctions and salar adinistration. On th

contrar, Section %6 of / 6:E: #i"es the &oard of =irectors of the Islaic &ank th

broadest powers to ana#e the Islaic &ank. +his #rant of broad powers wo'ld be an idl

cereon if it wo'ld be powerless to discipline its eploees.

+he second assi#nent of error 'st likewise fail. +he iss'e is raised for the !rs

tie $ia this petition for certiorari. Petitioner s'bitted hiself to the 5'risdiction of th

(S(. /ltho'#h he co'ld ha"e raised the alle#ed lack of 5'risdiction in his Motion fo

econsideration of esol'tion No. 9E-EE:$ of the (S(, he did not do so. & !lin# the Motio


21/31

for econsideration, he is estopped fro denin# the (S(s 5'risdiction o"er hi, as it i

settled r'le that a part who asks for an a@rati"e relief cannot later on ip'#n the actio

of the trib'nal as witho't 5'risdiction after an ad"erse res'lt was eted to hi. /ltho'#

5'risdiction o"er the s'b5ect atter of a case a be ob5ected to at an sta#e of th

proceedin#s e"en on appeal, this partic'lar r'le, howe"er, eans that 5'risdictional iss'e

in a case can be raised onl d'rin# the proceedin#s in said case and d'rin# the appeal o

said case ) Araon $. +ourt of Appeals, %?0 S(/ 60$*. +he case at bar is a petitio

TforU certiorari and not an appeal.

&'t e"en on the erits the ar#'ent 'st falter. Ite No. 1 of (S( esol'tion No. 9$-%$:

dated %9 'ne 199$, pro"idesG

=ecisions in adinistrati"e cases in"ol"in# o@cials and eploees of the ci"il ser"ic

appealable to the (oission p'rs'ant to Section E? of &ook L of the (ode )i.e

/dinistrati"e (ode of 19:?* incl'din# personnel actions s'ch as contested appointent

shall now be appealed directl to the (oission and not to the MSP&.

In Rubenecia $. +i$il Ser$ice +o%%ission' %EE S(/ 6E0, 6B1, it was cate#oricall heldG

. . . +he f'nctions of the MSP& relatin# to the deterination of adinistrati"e disciplinar

cases were, in other words, re-allocated to the (oission itself.

&e that as it a, )i*t is hornbook doctrine that in order W)t*o ascertain whether a co'rt )i

this case, adinistrati"e a#enc* has 5'risdiction or not, the pro"isions of the law sho'ld b

inA'ired into. 'rtherore, Wthe 5'risdiction of the co'rt 'st appear clearl fro th

stat'te law or it will not be held to e3ist.) A!arcon $. Sandianbayan, %6: S(/ ?E?, ?B?

ro the pro"ision of law abo"ecited, the (i"il Ser"ice (oission clearl has 5'risdictio

o"er the /dinistrati"e (ase a#ainst petitioner.

/nent the third assi#nent of error, we likewise do not !nd erit in petitioners propositiothat he sho'ld not be liable, as in the !rst place, he was not A'ali!ed to perfor th

f'nctions of appraiserJin"esti#ator beca'se he lacked the necessar trainin# and e3pertise

and therefore, sho'ld not ha"e been fo'nd dishonest b the &oard of =irectors of Islai

&ank T/II&PU and the (S(. Petitioner hiself adits that the position of appraiserJinspecto

is one of the ost serio's TandU sensiti"e 5ob in the bankin# operations. >e sho'ld ha"e

been aware that acceptin# s'ch a desi#nation, he is obli#ed to perfor the task at hand b

the e3ercise of ore than ordinar pr'dence. /s appraiserJin"esti#ator, he is e3pected

aon# others, to check the a'thenticit of the doc'ents presented b the borrower b

coparin# the with the ori#inals on !le with the proper #o"ernent o@ce. >e sho'l

ha"e ade it s're that the technical descriptions in the location plan on !le with th&'rea' of ands of Marikina, 5ibe with that indicated in the +(+ of the collateral oered b

(/MH(, and that the ort#a#e in fa"or of the Islaic &ank was d'l annotated at the back

of the cop of the +(+ kept b the e#ister of =eeds of Marikina. +his, petitioner failed t

do, for which he 'st be held liable. +hat he did not pro!t fro his false report is of no

oent. Neither the fact that it was not deliberate or willf'l, detracts fro the nat're o

the act as dishonest. 4hat is apparent is he stated soethin# to be a fact, when he reall

was not s're that it was so.


22/31

4>HHOH, abo"e preises considered, the instant Petition is =ISMISSH=, and th

assailed esol'tions of the (i"il Ser"ice (oission are hereb /IMH=.

On %E March 1999, Sawad5aans co'nsel noti!ed the co'rt a 2uo of his chan#e o

address,T11U b't apparentl ne#lected to notif his client of this fact. +h's, on %$ 'l 1999

Sawad5aan, b hiself, !led a Motion for New +rial T1%U in the (o'rt of /ppeals based on th

followin# #ro'ndsG fra'd, accident, istake or e3c'sable ne#li#ence and newl disco"ere

e"idence. >e claied that he had recentl disco"ered that at the tie his eploent wa

terinated, the /II&P had not et adopted its corporate b-laws. >e attached (erti!cationT1$U b the Sec'rities and H3chan#e (oission )SH(* that it was onl on %

Ma 199% that the /II&P s'bitted its draft b-laws to the SH(, and that its re#istration wa

bein# held in abeance pendin# certain corrections bein# ade thereon. Sawad5aan ar#'e

that since the /II&P failed to !le its b-laws within 60 das fro the passa#e of ep. /ct No

6:E:, as reA'ired b Sec. B1 of the said law, the bank and its stockholders had alread

forfeited its franchise or charter, incl'din# its license to e3ist and operate as a corporationT1EU and th's no lon#er ha"e the le#al standin# and personalit to initiate an adinistrati"

case.

Sawad5aans co'nsel s'bseA'entl adopted his otion, b't reA'ested that it be treatedas a otion for reconsideration.T1BU +his otion was denied b the co'rt a 2uo in it

esol'tion of 1B =eceber 1999.T16U

Still disheartened, Sawad5aan !led the present petition for certiorari 'nder 'le 6B o

the 'les of (o'rt challen#in# the abo"e =ecision and esol'tion of the (o'rt of /ppeal

on the #ro'nd that the co'rt a 2uo erredG i* in i#norin# the facts and e"idences that th

alle#ed Islaic &ank has no "alid b-laws2 ii* in i#norin# the facts and e"idences that the

Islaic &ank lost its 5'ridical personalit as a corporation on 16 /pril 19902 iii* in i#norin

the facts and e"idences that the alle#ed Islaic &ank and its alle#ed &oard of =irector

ha"e no 5'risdiction to act in the anner the did in the absence of a "alid b-laws2 i"* in

not correctin# the acts of the (i"il Ser"ice (oission who erroneo'sl rendered theassailed esol'tions No. 9E-EE:$ and No. 9B-%?BE as a res'lt of fra'd, falsi!cation andJo

isrepresentations coitted b aro'k /. (arpiFo and his #ro'p, incl'din# oberto . de

Ocapo2 "* in a@rin# an 'nconscionabl harsh andJor e3cessi"e penalt2 and "i* in failin

to consider newl disco"ered e"idence and re"erse its decision accordin#l.

S'bseA'entl, petitioner Sawad5aan !led an 54-parte r#ent Motion for /dditiona

H3tension of +ie to ile a epl )to the (oents of espondent /l-/anah In"esten

&ank of the Philippines*,T1?U epl )to espondents (onsolidated (oent,*T1:U and epl )t

the /lle#ed (oents of espondent /l-/anah Islaic &ank of the Philippines*. T19U On 1

October %000, he infored this (o'rt that he had terinated his lawers ser"ices, and, bhiself, prepared and !led the followin#G 1* Motion for New +rial2 T%0U %* Motion to =eclar

espondents in =efa'lt andJor >a"in# 4ai"ed their i#hts to Interpose Ob5ection t

Petitioners Motion for New +rial2T%1U $* 54-Parte r#ent Motions to P'nish /ttornes /ad

=. LaldeF, Hlpidio . Le#a, /lda K. ees, =oinador . Isidoro, r., and Odilon /. =iaF fo

&ein# in (ontept of (o'rt < to Inhibit the fro /ppearin# in this (ase ntil the (an

Present Lalid H"idence of e#al /'thorit2T%%U E* OppositionJepl )to espondent /II&P

/lle#ed (oent*2T%$U B* 54-Parte r#ent Motion to P'nish /tt. enaldo /. Pineda fo

(ontept of (o'rt and the Iss'ance of a (oitent OrderJ4arrant for >is /rrest2 T%EU 6

eplJOpposition )+o the oral Notice of 4ithdrawal of ndersi#ned (o'nsel as e#a

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(o'nsel for the espondent Islaic &ank with Opposition to Petitioners Motion to P'nish

ndersi#ned (o'nsel for (ontept of (o'rt for the Iss'ance of a 4arrant of /rrest*2 T%BU ?

Meorand' for Petitioner2T%6U :* Opposition to SolKens Motion for (lari!cation with Motio

for =efa'lt andJor 4ai"er of espondents to ile their Meorand'2 T%?U 9* Motion fo

(ontept of (o'rt and InhibitionJ=isA'ali!cation with Opposition to OK((s Motion fo

H3tension of +ie to ile Meorand'2T%:U 10* Motion for Hnforceent )In =efense of th

'le of aw*2T%9U 11* Motion and Opposition )Motion to P'nish OK((s /ttornes /ado =

LaldeF, Hfren &. KonFales, /lda K. ees, Odilon /. =iaF and =oinador . Isidoro, r., fo

(ontept of (o'rt and the Iss'ance of a 4arrant for their /rrest2 and Opposition to thei/lle#ed Manifestation and Motion =ated ebr'ar B, %00%*2T$0U 1%* Motion fo

econsideration of Ite )a* of esol'tion dated B ebr'ar %00% with S'ppleental Motion

for (ontept of (o'rt2T$1U 1$* Motion for econsideration of Portion of esol'tion =ated 1%

March %00%2T$%U 1E* H3-Parte r#ent Motion for H3tension of +ie to ile epl Meorand'

)+oG (S( and /II&Ps Meorand'*2T$$U1B* epl Meorand' )+oG (S(s Meorand'* 4it

H3-Parte r#ent Motion for /dditional H3tension of tie to ile epl Meorand' )+o

/II&Ps Meorand'*2T$EU and 16* epl Meorand' )+oG OK((s Meorand' fo

espondent /II&P*.T$BU

Petitioners eorts are 'na"ailin#, and we den his petition for its proced'ral ans'bstanti"e 8aws.

+he #eneral r'le is that the reed to obtain re"ersal or odi!cation of the 5'd#en

on the erits is appeal. +his is tr'e e"en if the error, or one of the errors, ascribed to the

co'rt renderin# the 5'd#ent is its lack of 5'risdiction o"er the s'b5ect atter, or the

e3ercise of power in e3cess thereof, or #ra"e ab'se of discretion in the !ndin#s of fact or o

law set o't in the decision.T$6U

+he records show that petitioners co'nsel recei"ed the esol'tion of the (o'rt o

/ppeals denin# his otion for reconsideration on %? =eceber 1999. +he !fteen da

re#laentar period to appeal 'nder 'le EB of the 'les of (o'rt therefore lapsed on 11 an'ar %000. On %$ ebr'ar %000, o"er a onth after receipt of the resol'tion denin

his otion for reconsideration, the petitioner !led his petition forcertiorari 'nder 'le 6B.

It is settled that a special ci"il action for certiorari will not lie as a s'bstit'te for the los

reed of appeal,T$?U and tho'#h there are instances T$:U where the e3traordinar reed

of certiorari a be resorted to despite the a"ailabilit of an appeal,T$9U we !nd no specia

reasons for akin# o't an e3ception in this case.

H"en if we were to o"erlook this fact in the broader interests of 5'stice and treat this as

a special ci"il action for certiorari 'nder 'le 6B,TE0U

the petition wo'ld ne"ertheless bdisissed for fail're of the petitioner to show #ra"e ab'se of discretion. Petitioner

rec'rrent ar#'ent, ten'o's at its "er best, is preised on the fact that since responden

/II&P failed to !le its b-laws within the desi#nated 60 das fro the eecti"it of ep. /c

No. 6:E:, all proceedin#s initiated b /II&P and all actions res'ltin# therefro are a paten

n'llit. Or, in his words, the /II&P and its o@cers and &oard of =irectors,

. . . T>Ua"e no le#al a'thorit nor 5'risdiction to ana#e 'ch less operate the Islaic

&ank, !le adinistrati"e char#es and in"esti#ate petitioner in the anner the did an

alle#edl passed &oard esol'tion No. %$09 on =eceber 1$, 199$ which is n'll an

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"oid for lack of an )sic7 a'thoriFed and "alid b-laws. +he (ILI SHLI(H (OMMISSION wa

therefore a@rin#, erroneo'sl, a n'll and "oid esol'tion No. %$09 dated =eceber 1$

199$ of the &oard of =irectors of /l-/anah Islaic In"estent &ank of the Philippines in

(S( esol'tion No. 9E-EE:$ dated /'#'st 11, 199E. / otion for reconsideration thereo

was denied b the (S( in its esol'tion No. 9B-%?BE dated /pril 11, 199B. &ot

actsJresol'tions of the (S( are erroneo's, res'ltin# fro fra'd, falsi!cations an

isrepresentations of the alle#ed (hairan and (HO oberto . de Ocapo and the alle#e

=irector aro'k /. (arpiFo and his #ro'p at the alle#ed Islaic &ank. TE1U

Nowhere in petitioners "ol'ino's pleadin#s is there a showin# that the co'rt

2uo coitted #ra"e ab'se of discretion ao'ntin# to lack or e3cess of 5'risdictio

re"ersible b a petition for certiorari. Petitioner alread raised the A'estion of /II&P

corporate e3istence and lack of 5'risdiction in his Motion for New +rialJMotion fo

econsideration of %? Ma 199? and was denied b the (o'rt of /ppeals. =espite the

"ol'e of pleadin#s he has s'bitted th's far, he has added nothin# s'bstantial to hi

ar#'ents.

+he /II&P was created b ep. /ct No. 6:E:. It has a ain o@ce where it cond'ct

b'siness, has shareholders, corporate o@cers, a board of directors, assets, and personnelIt is, in fact, here represented b the O@ce of the Ko"ernent (orporate (o'nsel, th

principal law o@ce of #o"ernent-owned corporations, one of which is respondent bankTE%U /t the "er least, b its fail're to s'bit its b-laws on tie, the /II&P a b

considered a de facto corporationTE$U whose ri#ht to e3ercise corporate powers a not b

inA'ired into collaterall in an pri"ate s'it to which s'ch corporations a be a part.TEEU

Moreo"er, a corporation which has failed to !le its b-laws within the prescribed period

does not ipso facto lose its powers as s'ch. +he SH( 'les on S'spensionJe"ocation of th

(erti!cate of e#istration of (orporations,TEBU details the proced'res and reedies that a

be a"ailed of before an order of re"ocation can be iss'ed. +here is no showin# that s'ch

proced're has been initiated in this case.

In an case, petitioners ar#'ent is irrele"ant beca'se this case is not a corporate

contro"ers, b't a labor disp'te2 and it is an eploers basic ri#ht to freel select o

dischar#e its eploees, if onl as a eas're of self-protection a#ainst acts iniical to it

interest.TE6U e#ardless of whether /II&P is a corporation, a partnership, a sol

proprietorship, or a sari-sari store, it is an 'ndisp'ted fact that /II&P is the petitioner

eploer. /II&P chose to retain his ser"ices d'rin# its reor#aniFation, controlled the ean

and ethods b which his work was to be perfored, paid his wa#es, and, e"ent'all

terinated his ser"ices.TE?U

/nd tho'#h he has had aple opport'nit to do so, the petitioner has not alle#ed tha

he is anthin# other than an eploee of /II&P. >e has neither claied, nor shown, that h

is a stockholder or an o@cer of the corporation. >a"in# accepted eploent fro /II&P

and rendered his ser"ices to the said bank, recei"ed his salar, and accepted the prootio

#i"en hi, it is now too late in the da for petitioner to A'estion its e3istence and its powe

to terinate his ser"ices. One who ass'es an obli#ation to an ostensible corporation a

s'ch, cannot resist perforance thereof on the #ro'nd that there was in fact n

corporation.TE:U

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H"en if we were to consider the facts behind petitioner Sawad5aans disissal fro

ser"ice, we wo'ld be hard pressed to !nd error in the decision of the /II&P.

/s appraiserJin"esti#ator, the petitioner was e3pected to cond'ct an oc'lar inspectio

of the properties oered b (/MH( as collaterals and check the copies of the certi!cates o

title a#ainst those on !le with the e#istr of =eeds. Not onl did he fail to cond'ct these

ro'tine checks, b't he also deliberatel isrepresented in his appraisal report that afte

re"iewin# the doc'ents and cond'ctin# a site inspection, he fo'nd the (/MH( loa

application to be in order. =espite the n'ber of pleadin#s he has !led, he has failed tooer an alternati"e e3planation for his actions.

4hen he was infored of the char#es a#ainst hi and directed to appear and presen

his side on the atter, the petitioner sent instead a eorand' A'estionin# the fairnes

and ipartialit of the ebers of the in"esti#atin# coittee and ref'sin# to reco#niFe

their 5'risdiction o"er hi. Ne"ertheless, the in"esti#atin# coittee resched'led th

hearin# to #i"e the petitioner another chance, b't he still ref'sed to appear before it.

+hereafter, witnesses were presented, and a decision was rendered !ndin# hi #'ilt

of dishonest and disissin# hi fro ser"ice. >e so'#ht a reconsideration of this decisioand the sae coittee whose ipartialit he A'estioned red'ced their recoended

penalt to s'spension for si3 onths and one da. +he board of directors, howe"er, opted

to disiss hi fro ser"ice.

On appeal to the (S(, the (oission fo'nd that Sawad5aans fail're to perfor hi

o@cial d'ties #reatl pre5'diced the /II&P, for which he sho'ld be held acco'ntable. It hel

thatG

. . . )I*t is crstal clear that respondent S/PP/I S/4/=//N was reiss in the perforanc

of his d'ties as appraiserJinspector. >ad respondent perfored his d'ties a

appraiserJinspector, he co'ld ha"e easil noticed that the propert located at &alintawak(aloocan (it co"ered b +(+ No. (-B%B?6 and which is one of the properties oered as

collateral b (/MH( is enc'bered to =i"ina Pablico. >ad respondent re8ected s'ch fact i

his appraisalJinspection report on said propert the IS/MI( &/NV wo'ld not ha"e appro"e

(/MH(s loan of PB00,000.00 in 19:? and (/MH(s PB Million loan in 19::, responden

knowin# f'll well the &anks polic of not acceptin# enc'bered properties as collateral.

espondent S/4/=//Ns reprehensible act is f'rther a##ra"ated when he failed to chec

and "erif fro the e#istr of =eeds of Marikina the a'thenticit of the propert located a

Maaot, /ntipolo, iFal co"ered b +(+ No. N-1$06?1 and which is one of the propertie

oered as collateral b (/MH( for its PB Million loan in 19::. If he onl "isited and "eri!edwith the e#ister of =eeds of Marikina the a'thenticit of +(+ No. N-1$06?1 he co'ld ha"e

easil disco"ered that +(+ No. N-1$06?1 is fake and the propert described therein non

e3istent.

. . .

+his notwithstandin#, respondent cannot escape liabilit. /s ad"erted to earlier, his fail'r

to perfor his o@cial d'ties res'lted to the pre5'dice and s'bstantial daa#e to th


26/31

IS/MI( &/NV for which he sho'ld be held liable for the adinistrati"e oense of (ON=(+

PH=I(I/ +O +>H &HS+ IN+HHS+ O +>H SHLI(H.TE9U

ro the fore#oin#, we !nd that the (S( and the co'rt a 2uo coitted no #ra"

ab'se of discretion when the s'stained Sawad5aans disissal fro ser"ice. Kra"e ab's

of discretion iplies s'ch capricio's and whisical e3ercise of 5'd#ent as eA'i"alent to

lack of 5'risdiction, or, in other words, where the power is e3ercised in an arbitrar o

despotic anner b r

corpo case2

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