TANADA V. TUVERARepublic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No. L-!"#$ Ap%il &'( #")$LOREN*O M. TA+A,A( ABRA-AM .. SARM/ENTO( an0 MO1EMENT O. ATTORNE2S .OR BROT-ER-OO,( /NTEGR/T2 AN, NAT/ONAL/SM( /NC. 3MAB/N/4( petitione%s( 5s.-ON. 6UAN C. TU1ERA( in his capacit7 as E8ecuti5e Assistant to the P%esi0ent( -ON. 6OA9U/N 1ENUS( in his capacit7 as ,eput7 E8ecuti5e Assistant to the P%esi0ent ( MEL9U/A,ES P. ,E LA CRU*( in his capacit7 as ,i%ecto%( Malaca:an; Reco%0s Oin; the people?s %i;ht to be info%@e0 on @atte%s of public conce%n( a %i;ht %eco;niAe0 in Section ( A%ticle /1 of the #"B! Philippine Constitution( # as Cell as the p%inciple that laCs to be 5ali0 an0 enfo%ceable @ust be publishe0 in the O a C%it of @an0a@us to co@pel %espon0ent public oen Cith JualiFcations. The actual e8istence of a statute( p%io% to such a 0ete%@ination( is an ope%ati5e fact an0 @a7 ha5e conseJuences Chich cannot Iustl7 be i;no%e0. The past cannot alCa7s be e%ase0 b7 a neC Iu0icial 0ecla%ation. The eDect of the subseJuent %ulin; as to in5ali0it7 @a7 ha5e to be consi0e%e0 in 5a%ious aspects-Cith%espect to pa%ticula% con0uct( p%i5ate an0 oee( 6.=# People 5s. 0e ,ios( G.R. No. ##GG!( Au;. !l( #"$"( pe% the late Chief 6ustice Pa%as.& Notes in b%ac>ets supplie0.! Respon0ents= co@@ent( pp. #'-#$.Plana( 6.=R See e.;.( Misconsin Constitution( A%t. B( Sec. = KThe le;islatu%e shall p%o5i0epublication of all statute laCs ... an0 no ;ene%al laC shall be in fo%ce until publishe0.K See also S ate e8 %el. Mhite 5s. G%an0 Supe%io% Ct.( B# ALR #!$'( citin; Constitution of /n0iana( U.S.A.P-/L 5s. COAG.R. No. 132593 June 25, 1999PHILIPPINE INTERNATIONAL TRADING CORPORATION, petitioner, vs.COMMISSION ON AUDIT, respondent. GONZAGA-REES, J.:This is a petition for certiorari under Rule 64 of the 1997 Rules of Civil Procedure to annul Decision No. 2447 dated ul! 27, 1992 of the Co""ission on #udit $C%#& den!in' Philippine (nternational Tradin' Corporation)s $P(TC& appeal fro" the disallo*ances "ade +! the resident C%# auditor on P(TC)s car plan +enefits, and Decision No. 9-./4- dated anuar! 27, 199- of the C%# den!in' P(TC)s "otion for reconsideration.The follo*in' facts are undisputed0The P(TC is a 'overn"ent.o*ned and controlled corporation created under Presidential Decree $PD& No. 212 on ul! 21, 1972 1, pri"aril! for the purpose of pro"otin' and developin' Philippine trade in pursuance of national econo"ic develop"ent. %n %cto+er 19, 19--, the P(TC 3oard of Directors approved a Car Plan Pro'ra" for 4ualified P(TC officers. 2 5nder such car plan pro'ra", an eli'i+le officeris entitled to purchase a vehicle, fift! percent $1/6& of the value of *hich shall +e shouldered +! P(TC *hile the re"ainin' fift! percent $1/6& *ill +e shouldered +! the officer throu'h salar! deduction over a period of five $1& !ears. 7a8i"u" value of the vehicle to +e purchased ran'es fro" T*o 9undred Thousand Pesos $P2//,///.//& to Three 9undred and :ift! Thousand Pesos $P21/,///.//&, dependin' on the position of the officer in the corporation. (n addition, P(TC *ill rei"+urse the officer concerned fift! percent $1/6& of the annual car re'istration, insurance pre"iu"s and costs of re'istration of the chattel "ort'a'e over the car for a period of five $1& !ears fro" the date the vehicle *as purchased. The ter"s and conditions of the car plan are e"+odied in a ;Car ec. 12, R# 671-, reads A>ec. 12. Consolidation of #ll #llo*ances and Co"pensation. A #ll allo*ances, e8cept for representation and transportation allo*ances, clothin' and laundr! allo*ances, su+sistence allo*ance of "arine officers and cre* on +oard 'overn"entvessels and hospital personnel, ha@ard pa!, allo*ances of forei'n service personnel stationed a+road, and such other additional co"pensation not other*ise specified herein as "a! +e deter"ined +! the D37, shall +e dee"ed included in the standardi@ed salar! rates herein prescri+ed. >uch other additional co"pensation, *hether in cash or in =ind, +ein' received +! incu"+ents onl! as of ul! 1, 19-9 not inte'rated into the standardi@ed salar! rates shall continue to +e authori@ed.To i"ple"ent R# 671-, the Depart"ent of 3ud'et and 7ana'e"ent $D37& issued Corporate Co"pensation Circular No. 1/ $D37.CCC No. 1/&. Para'raph 1.6 of D37.CCC No. 1/ discontinuedeffective Nove"+er 1, 19-9, all allo*ances and frin'e +enefits 'ranted on top of +asic salar!, not other*ise enu"erated under para'raphs 1.4 and 1.1 thereof.Para'raph 1.6 of D37.CCC No. 1/ provides01.6 Pa!"ent of other allo*ancesBfrin'e +enefits and all other for"s of co"pensation 'ranted on top of +asic salar!, *hether in cash or in =ind, not "entioned in >u+.para'raphs 1.4 and 1.1 " a+ove shall +e discontinued effective Nove"+er 1, 19-9. Pa!"ent "ade for such allo*anceBfrin'e +enefits after said date shall +e considered as ille'al dis+urse"ent of pu+lic funds.%n post audit, the pa!"entBrei"+urse"ent of the a+ove."entioned e8penses $1/6 of the !earl! carre'istration and insurance pre"iu"s and 1/6 of the costs of re'istration of the chattel "ort'a'e over the car& "ade after Nove"+er 1, 19-9 *as disallo*ed +! the resident C%# auditor. The disallo*ance *as "ade on the 'round that the su+Cect car plan +enefits *ere not one of the frin'e +enefits or for" of co"pensation allo*ed to +e continued after said date under the afore4uoted para'raph 1.6 of D37.CCC No. 1/ #, in relation to Para'raphs 1.4 and 1.1 thereof.P(TC, on its +ehalf, and that of the affected P(TC officials, appealed the decision of the resident C%#auditor to the C%#. %n ul! 27, 1992, C%# denied P(TC)s appeal and affir"ed the disallo*ance of the said car plan e8penses in the assailed Decision No. 2447 dated ul! 27, 1992. Relevant portionsof the decision read thus05pon circu"spect evaluation thereof, this Co""ission finds the instant appeal to +e devoid of "erit. (t should +e noted that the rei"+urse"entBpa!"ent of e8penses in 4uestion is +ased on the Car Plan +enefit 'ranted under 3oard Resolution No. 1/.--./2 adopted +! the P(TC 3oard of Directors on %cto+er 19, 19--. The Car Plan is undenia+l! a frin'e +enefit as appearin' in P(TC)s ;Co"pensation Polic! under the headin' ;2. %ther :rin'e 3enefits;, particularl! (te" No. 2.12 thereof. (nas"uch as P(TC is a 'overn"ent.o*ned andBor controlled corporation, the 'rant of the Car Plan $+ein' a frin'e +enefit& should +e 'overned +! the provisions of Corporate Co"pensation Circular No. 1/, i"ple"entin' R# 671-. 5nder su+.para'raph 1.6 of said Circular, it e8plicitl! provides0888 888 888>ince the Car Plan +enefit is not one of those frin'e +enefits or other for"s of co"pensation "entioned in >u+.para'raphs 1.4 and 1.1 of CCC No. 1/, conse4uentl! the rei"+urse"ent of the 1/6 share of P(TC in the !earl! re'istration and insurance pre"iu" of the cars purchased under said Car Plan +enefit should not+e allo*ed. . . . $P(TC)s "otion for reconsideration *as denied +! the C%# in its Resolution dated anuar! 27, 199-. 99ence, the instant petition on the follo*in' 'rounds01. That the le'islature did not intend to revo=e e8istin' +enefits +ein' received +! incu"+ent 'overn"ent e"plo!ees as of ul! 1, 19-9 $includin' su+Cect car plan +enefits& *hen R# 671- *as passed,2. That the Car ection 12, R# 671-, this Court said0No*, under the second sentence of >ection 12, first para'raph, the R#T# enCo!ed +!these PP# officials shall continue to +e authori@ed onl! if the! are ;+ein' received +! incu"+ents onl! as of ul! 1, 19-9.; R# 671- has therefore, to this e8tent, a"ended ection 17 refers to salaries and additional co"pensation or frin'e +enefits, +oth sections are intended to protect incu"+ents *ho are receivin' said salaries andBor allo*ances at the ti"e R# 671- too= effect. 13 $D"phasis supplied.&3ased on the fore'oin' pronounce"ent, petitioner correctl! pointed out that there *as no intention on the part of the le'islature to revo=e e8istin' +enefits +ein' enCo!ed +! incumbents of 'overn"ent positions at the ti"e of the virtue of >ections 12 and 17 thereof. There is no dispute that the P(TC officials *ho availed of the su+Cect car plan +enefits *ere incu"+ents of their positions as of ul! 1, 19-9. Thus, it *as le'al and proper for the" to continue enCo!in' said +enefits *ithin the five !ear period fro" date of purchase of the vehicle allo*ed +! their Car ection 22 1# of R# 671- "andatin' the said a'enc! to issue the necessar! 'uidelines to i"ple"ent R# 671- has +een declared +! this Court in De Jesus, et al. vs. Commission on Audit, et al. 1$ as of no force and effect due to the a+sence of pu+lication thereof in the %fficial ?a@ette or in a ne*spaper of 'eneral circulation. >alient portions of said decision read0%n the need pu+lication of su+Cect D37.CCC No. 1/, *e rule in the affir"ative. :ollo*in' the doctrine enunciated in Tanada 19, pu+lication in the %fficial ?a@ette or in ane*spaper of 'eneral circulation in the Philippines is re4uired since D37.CCC No. 1/ is in the nature of an ad"inistrative circular the purpose of *hich is to enforce or i"ple"ent an e8istin' la*. >tated differentl!, to +e effective and enforcea+le, D37.CCC No. 1/ "ust 'o throu'h the re4uisite pu+lication in the %fficial ?a@ette or in a ne*spaper of 'eneral circulation in the Philippines.(n the present case under scrutin!, it is decisivel! clear that D37.CCC No. 1/, *hich co"pletel! disallo*s pa!"ent of allo*ances and other additional co"pensation to 'overn"ent officials and e"plo!ees, startin' Nove"+er 1, 19-9, is not a "ere interpretative or internal re'ulation. (t is so"ethin' "ore than that. #nd *h! not, *hen it tends to deprive 'overn"ent *or=ers of their allo*ances and additional co"pensation sorel! needed to =eep +od! and soul to'ether. #t the ver! least, +efore the circular under attac= "a! +e per"itted to su+stantiall! reduce their inco"e, the 'overn"ent officials and e"plo!ees concerned should +e apprised and alerted +! the pu+lication of said circular in the %fficial ?a@ette or in a ne*spaper or 'eneral circulation in the Philippines A to the end that the! +e 'iven a"plest opportunit! to voice out *hatever opposition the! "a! have, and to ventilate their stance on the "atter. This approach is "ore in =eepin' *ith de"ocratic precepts andrudi"ents of fairness and transparenc!.(n the case at +ar, the disallo*ance of the su+Cect car plan +enefits *ould ha"per the officials in the perfor"ance of their functions to pro"ote and develop trade *hich re4uires "o+ilit! in the perfor"ance of official +usiness. (ndeed, the car plan +enefits are supportive of the i"ple"entation of the o+Cectives and "ission of the a'enc! relative to the nature of its operation and responsive to the e8i'encies of the service.(t has co"e to our =no*led'e that D37.CCC No. 1/ has +een re.issued in its entiret! and su+"ittedfor pu+lication in the %fficial ?a@ette per letter to the National Printin' %ffice dated 7arch 9, 1999. Eould the su+se4uent pu+lication thereof cure the defect and retroact to the ti"e that the a+ove."entioned ite"s *ere disallo*ed in auditFThe ans*er is in the ne'ative, precisel!, for the reason that pu+lication is re4uired as a condition precedent to the effectivit! of a la* to infor" the pu+lic of the contents of the la* or rules and re'ulations +efore their ri'hts and interests are affected +! the sa"e. :ro" the ti"e the C%# disallo*ed the e8penses in audit up to the filin' of herein petition the su+Cect circular re"ained in le'al li"+o due to its non.pu+lication. #s *as stated in Tanada vs.Tuvera, 21, ;prior pu+lication of la*s +efore the! +eco"e effective cannot +e dispensed *ith, for the reason that such o"ission *ould offend due process insofar as it *ould den! the pu+lic =no*led'e of the la*s that are supposed to 'overn it.(n vie* of the nullit! of D37.CCC No. 1/ relied upon +! the C%# as +asis for the disallo*ance of thesu+Cect car plan +enefits, *e dee" it unnecessar! to discuss the second issue raised in the instant petition.Ee dee" it necessar! thou'h to resolve the third issue as to *hether P(TC is e8e"pt fro" R# 9-1 22 as su+se4uentl! a"ended +! R# 671-. #ccordin' to petitioner, P(TC)s Revised Charter, PD 1/71 dated anuar! 21, 1977, as a"ended +! D% 716 dated Dece"+er 29, 19-1, and further a"ended +! D% 1/67 dated Nove"+er 21, 19-1, e8pressl! e8e"pted P(TC fro" the %ffice of the Co"pensation and Position Classification $%CPC& rules and re'ulations. Petitioner cites >ection 2- of P.D. 1/71 23, >ection 6 of D% 716 2!, and >ection 2 of D% 1/67. 25#ccordin' to the C%# in its Decision No. 9-./4- dated anuar! 27, 199-, the e8e"ption 'ranted to the P(TC has +een repealed and revo=ed +! the repealin' provisions of R# 671-, particularl! >ection 16 thereof *hich provides0>ec. 16. Repeal of >pecial >alar! !ste", includin' the proviso under >ection 2 and >ection 16 of PD No. 9-1 are here+! repealed.To this, petitioner ar'ues that R# 671- *hich is a la* of 'eneral application cannot repeal provisionsof the Revised Charter of P(TC and its a"endator! la*s e8pressl! e8e"ptin' P(TC fro" %CPC covera'e +ein' special la*s. %ur rules on statutor! construction provide that a special la* cannot +erepealed, a"ended or altered +! a su+se4uent 'eneral la* +! "erei"plication 2", that a statute, 'eneral in character as to its ter"s and application, is not to +e construed as repealin' a special or specific enact"ent, unless the le'islative purpose to do so is "anifested 2#, that if repeal of particular or specific la* or la*s is intended, the proper step is to so e8press it. 2$(n the case at +ar, the repeal +! >ection 16 of R# 671- of ;all corporate charters that e8e"pt a'encies fro" the covera'e of the >!ste"; *as clear and e8pressed necessaril! to achieve the purposes for *hich the la* *as enacted, that is, the standardi@ation of salaries of all e"plo!ees in 'overn"ent o*ned andBor controlled corporations to achieve ;e4ual pa! for su+stantiall! e4ual *or=;. 9enceforth, P(TC should no* +e considered as covered +! la*s prescri+in' a co"pensation and position classification s!ste" in the 'overn"ent includin' R# 671-. This is *ithout preCudice, ho*ever, as discussed a+ove, to the non.di"inution of pa! of incu"+ents as of ul! 1, 19-9 as provided in >ections 12 and 17 of said la*.E9DRD:%RD, the Petition is here+! ?R#NTDD, the assailed Decisions of the Co""ission on #uditare >DT #>(DD.>% %RDDRDD.Davide, Jr., C.J., Romero, Bellosillo, Melo, Puno, Vitu, !apunan, Mendo"a, #uisumbin, Purisima, Pardo and $nares%&antiao, JJ., concur.Pananiban and Buena, JJ., are on leave.&oo'no'e(1 #"ended +! PD 1/71 on anuar! 19, 1977, later +! D8ecutive %rder $D%& No. 716 on Dece"+er 29, 19-1, and D% No. 1/67 on Nove"+er 21, 19-1.2 Resolution No. 1/.--./2.2 Rollo, p. 12.4 'bid., p. 42.1 'd.6 1.4 The rates of the follo*in' allo*ancesBfrin'e +enefits *hich are not inte'rated into the +asic salar! and *hich are allo*ed to +e continued after une 2/, 19-9 shall +e su+Cect to the condition that the 'rant of such +enefits is covered +! statutor! authorit!01.4.1 Representation and Transportation #llo*ances $R#T#& of incu"+ent of the position authori@ed to receive the sa"e at the hi'hest a"ount le'all! authori@ed as of une 2/, 19-9 for the level of his position *ithin the particular ?%CCB?:(,.1.4.2 5nifor" and Clothin' #llo*ance at a rate as previousl! authori@ed,1.4.2 9a@ard pa! as authori@ed +! la*,1.4.4 9onorariaBadditional co"pensation for e"plo!ees on detail *ithspecial proCects or inter.a'enc! underta=in's,1.4.1 9onoraria for services rendered +! researchers, e8perts and specialists *ho are of ac=no*led'ed authorities in their fields of speciali@ation,1.4.6 9onoraria for lecturers and resource personsBspea=ers,1.4.7 %verti"e pa! in accordance to 7e"orandu" %rder No. 22-,1.4.- Clothin'Blaundr! allo*ances and su+sistence allo*ance of "arine officers and cre* on +oard ?%CCsB?:(s o*ned vessels and used in their operations, and of hospital personnel *ho attend directl!to patients and *ho +! nature of their duties are re4uired to *ear unifor"s,1.4.9 Guarters #llo*ance of officials and e"plo!ees *ho are presentl! entitled to the sa"e,1.4.1/ %verseas, taff of colle'ial +odies and Co""ittee, and,1.4.11 Per DiemsB#llo*ances of officials and e"plo!ees on official forei'n and local travel outside of their official station.1.1 %ther allo*ancesBfrin'e +enefits not li=e*ise inte'rated into the +asic salar! and allo*edto +e continued onl! for incu"+ents as of une 2/, 19-9 su+Cect to the condition that the 'rant of sa"e is *ith appropriate authori@ation either fro" the D37, %ffice of the President or le'islative issuances areas follo*s01.1.1 Rice >u+sid!1.1.2 >u'ar >u+sid!1.1.2 Death 3enefits other than those 'ranted +! the ?>(>,1.1.4 7edicalBdentalBoptical allo*ancesB+enefits,1.1.1 Children)s allo*ance,1.1.6 >pecial Dut! Pa!B#llo*ance,1.1.7 7eal >u+sid!,1.1.- CR# 612.12 Drectors, (nc. vs. National CR# 629.12 &ee note 11, p. 66/.14 Rollo, p. 29.11 'bid., pp. 49.1/.16 Rules and Re'ulations for the ("ple"entation of the Revised Co"pensation and PositionClassification >!ste" Prescri+ed 5nder R.#. No. 671- for ?overn"ent %*ned #ndB%r Controlled Corporations $?%CC)s& and ?overn"ent :inancial (nstitutions $?:(s&.17 >ec. 22. Dffectivit!. A Thin #ct shall ta=e effect ul! 1, 19-9. The D37 shall *ithin si8t! $6/& da!s after its approval allocate all positions in their appropriate position titles and salar! 'rades and prepare and issue the necessar! 'uidelines to i"ple"ent the sa"e.1- ?.R. No. 1/9/22, #u'ust 12, 199-.19 Referrin' to Tanada vs. Tuvera, 146 >CR# 412.2/ &upra, at pp. 7.-.21 supra.22 ;# Decree Revisin' The Position Classification and Co"pensation >!ste"s (n The National ?overn"ent, #nd (nte'ratin' The >a"e; issued on #u'ust 22, 1976, to standardi@ethe co"pensation of 'overn"ent officials and e"plo!ees, includin' those in 'overn"ent.o*ned andBor controlled corporations.22 >ec. 2-. Personnel Recruit"ent A The corporation shall adopt a special recruit"ent and e"plo!"ent sche"e that is responsive to the co""ercial nature of its operations. :urther, the corporation is here+! authori@ed to e8tend per"anent appoint"ent to, or contract the services of, trained and e8perienced persons, even *ithout civil eli'i+ilit!, for its "anpo*er +uildin' as a co"petin' tradin' fir". (n vie* of the pioneerin' nature of its operation, the Corporation shall continue to +e e8e"pt fro" the %CPC rules and re'ulations.24 >ec. 6. D8e"ption fro" %CPC A (n reco'nition of the special nature of its operations, theCorporation shall continue to +e e8e"pt fro" the application of the rules and re'ulations of the %ffice of the Co"pensation and Position Classification or an! other si"ilar a'encies that "a! +e esta+lished hereafter as provided under Presidential Decree 1/71. . . .21 >ec. 2. Co"pensation Policies. A The co"pensation policies includin' allo*ances, "erit increases and other e"plo!ee +enefits for all officers and e"plo!ees adopted +! the 3oard of Directors are here+! approved in accordance *ith P.D. Nos. 1177 and 1197. #n! future chan'es approved +! the 3oard that "a! +e dee"ed necessar! shall not re4uire an! referral to or approval of an! other authorit!, a'enc! or office.()*phi (.n+t26 CR# 17.Phil 5ete%ans ban> e@plo7ees 5 1EGAPHILIPPINE VETERANS BANK EMPLOYEES UNION-N.U.B.E. andPERFECTO V. FERNANDEZ, petitioners, vs. HONORABLEBENJAMIN VEGA, Pr!"d"n# J$d# %& Bran'( )* %& +( REGIONALTRIAL COURT %& Man",a, +( CENTRAL BANK OF THEPHILIPPINES and THE LI-UIDATOR OF THE PHILIPPINEVETERANS BANK, respondentsD E C I S I O NKAPUNAN, J.:MayaliquidationcourtcontinuewithliquidationproceedingsofthePhilippine VeteransBank (PVB) when Congress had mandated its rehabilitation and reopening?his is the sole issue raised in the instant Petition for Prohibition with Petition forPreliminary !n"unction and application for #$ Parte emporary %estraining &rder'he antecedent facts of the case are as follows()ometime in *+,-. the Central Bank of the Philippines (Central Bank. for bre/ity) filed withBranch 0+ of the %egional rial Court of Manila a Petition for 1ssistance in the 2iquidation ofthe Philippine Veterans Bank. the same docketed as Case 3o' )P4050**' hereafter. thePhilipppine Veterans Bank #mployees 6nion43'6'B'#'. herein petitioner. represented bypetitioner PerfectoV'7ernande8. filedclaims for accruedandunpaidemployeewages andbenefits with said court in )P4050**'9*:1fter lengthy proceedings. partial payment of the sums due to the employees weremade' ;owe/er. due to the piecemeal hearings on the benefits. many remain unpaid'95:&n March ,. *++*. petitioners mo/ed to disqualify the respondent "udge from hearing theabo/e case on grounds of bias and hostility towards petitioners'90:&n:@espite the legislati/e mandate for rehabilitation and reopening of PVB. respondent"udge continued with the liquidation proceedings of the bank' Moreo/er. petitioners learned thatrespondentsweresettoorderthepaymentandreleaseofemployeebenefitsuponmotionofanother lawyer. while petitioners claims ha/e been fro8en to their pre"udice';ence. the instant petition'Petitioners argue that with the passage of %'1' =*>+. the liquidation court became functusofficio. and no longer had the authority to continue with liquidation proceedings'!na%esolution. dated- of the %ules of Court in connection with theissuance by respondent "udge of se/eral orders in/ol/ing acts of liquidation of PVB e/en aftertheeffecti/ityof%'1' 3o' =*>+' PVBfurtherallegesthat respondent "udgeclearlyactedine$cess of or without "urisdiction when he issued the questioned orders'Be find for the petitioners'%epublic1ct 3o' =*>+entitled1n1ct o%ehabilitatehePhilippineVeterans BankCreated6nder%epublic 1ct 3o' 0-*,. Pro/iding heMechanismsherefor. 1nd7or&therPurposes. which was signed into law by President Cora8on C' 1quino on +. as well as the subsequent de/elopmentshas renderedthe liquidationcourt functus officio. Consequently. respondent "udge has beenstripped of the authority to issue orders in/ol/ing acts of liquidation'2iquidation. in corporation law. connotes a winding up or settling with creditors and debtors'9+: !t is the winding up of a corporation so that assets are distributed to those entitled to recei/ethem' !t is the process of reducing assets to cash. discharging liabilities and di/iding surplus orloss'&nthe opposite endof the spectrumis rehabilitationwhichconnotes a reopeningorreorgani8ation' %ehabilitation contemplates a continuance of corporate life and acti/ities in aneffort to restore and reinstate the corporation to its former position of successful operation andsol/ency'9*C:!t is crystal clear that the concept of liquidation is diametrically opposed or contrary to theconcept of rehabilitation. such that both cannot be undertaken at the same time' o allow theliquidation proceedings to continue would seriously hinder the rehabilitation of the sub"ect bank'1nent the claim of respondents Central Bank and 2iquidator of PVB that %'1' 3o' =*>+became effecti/e only on March *C. *++5 or fifteen (*-) days after its publication in the &fficialEa8etteD and. the contention of inter/enors V&P )ecurity. et' al' that the effecti/ity of said law isconditioned on the appro/al of a rehabilitation plan by the Monetary Board. among others. theCourt is of the /iew that both contentions are bereft of merit'Bhile as a rule. laws take effect after fifteen (*-) days following the completion of theirpublication in the &fficial Ea8ette or in a newspaper of general circulation in the Philippines. thelegislature has the authority to pro/ide for e$ceptions. as indicated in the clause unless otherwisepro/ided'!n the case at bar. )ection *C of %'1' 3o' =*>+ pro/ides()ec' *C' Effectivity' 4 his 1ct shall take effect upon its appro/al';ence. it is clear that the legislature intended to make the law effecti/e immediately upon itsappro/al' !t isundisputedthat %'1' 3o' =*>+wassignedintolawbyPresident Cora8onC'1quino on in the association ha0 been subsc%ibe0 to the a@ount of P#$G(GGG of Chich the su@ of P#G(&G ha0 been pai0 in. Un0e% the laC as it then stoo0( the capital of the Association Cas not pe%@itte0 to e8cee0 P!(GGG(GGG( but b7 Act No. &G"&( passe0 ,ece@be% &!( #"##( the statute Cas so a@en0e0 as to pe%@it the capitaliAation of buil0in; an0 loan associations to the a@ount of ten @illions. Soon the%eafte% the association too> a05anta;e of this enact@ent b7 a@en0in; its a%ticles so as to p%o5i0e that the capital shoul0 be in an a@ount not e8cee0in; the then laCful li@it. .%o@ the ti@e of its F%st o%;aniAation the nu@be% of sha%ehol0e%s has constantl7 inc%ease0( Cith the %esult that on ,ece@be% !#( #"&$( the association ha0 $()& sha%ehol0e%s hol0in; #&$(B$G sha%es( Cith a total pai0-up 5alue of P)(BG!(G&.&$. ,u%in; the pe%io0 of its e8istence p%io% to the 0ate last abo5e-@entione0 the association pai0 to Cith0%aCin; stoc>hol0e%s the a@ount of PB(#)(&$B(.B&N an0 in the sa@e pe%io0 it 0ist%ibute0 in the fo%@ of 0i5i0en0s a@on; its stoc>hol0e%s the su@ of PB(($$.)#..i%st cause of action. L The F%st cause of action is base0 upon the alle;e0 ille;al hol0in; b7 the %espon0ent of the title to %eal p%ope%t7 fo% a pe%io0 in e8cess of F5e 7ea%s afte% the p%ope%t7 ha0 been bou;ht in b7 the %espon0ent at one of its oCn fo%eclosu%e sales. The p%o5ision of laC %ele5ant to the @atte% is foun0 in section B$ of Act of Con;%ess of 6ul7 #( #"G& O%epeate0 in subsection $ of section #! of the Co%po%ation LaC.P /n both of these p%o5isions it is in substance 0ecla%e0 that Chile co%po%ations @a7 loan fun0s upon %eal estate secu%it7 an0 pu%chase %eal estate Chen necessa%7 fo% the collection of loans( the7 shall 0ispose of %eal estate so obtaine0 Cithin F5e 7ea%s afte% %ecei5in; the title./n this connection it appea%s that in the 7ea% #"&G El -o;a% .ilipino Cas the hol0e% of a %eco%0e0 @o%t;a;e upon a t%act of lan0 in the @unicipalit7 of San Cle@ente( P%o5ince of Ta%lac( as secu%it7 fo% a loan of P&'(GGG to the sha%ehol0e%s of El -o;a% .ilipino Cho Ce%e the oCne%s of sai0 p%ope%t7. The bo%%oCe%s ha5in; 0efaulte0 in thei% pa7@ents( El -o;a% .ilipino fo%eclose0 the @o%t;a;e an0 pu%chase0 the lan0 atthe fo%eclosu%e sale fo% the net a@ount of the in0ebte0ness( na@el7( the su@ of P&!(B''.#). The auction sale of the @o%t;a;e0 p%ope%t7 too> place No5e@be% #)( #"&G( an0 the 0ee0 con5e7in; the p%ope%t7 to El -o;a% .ilipino Cas e8ecute0 an0 0eli5e%e0 ,ece@be% &&( #"&G. On ,ece@be% &B( #"&G( the 0ee0 con5e7in; the p%ope%t7 to El -o;a% .ilipino Cas sent to the %e;iste% of 0ee0s of the P%o5ince of Ta%lac( Cith the %eJuest that the ce%tiFcate of title then stan0in; in the na@e of the fo%@e% oCne%s be cancelle0 an0 that a neC ce%tiFcate of title be issue0 in the na@e of El -o;a% .ilipino. Sai0 0ee0 Cas %ecei5e0 in the o A-#G of the %e;iste% of o%i;inal ce%tiFcate. Ta%lac( Ta%lac( 6anua%7 #&( #". OS;0.P S/L1/NO LOPE* ,E 6ESUS( Re;iste% of ,ee0s..o% @onths no %epl7 Cas %ecei5e0 b7 El -o;a% .ilipino f%o@ the %e;iste% of 0ee0s of Ta%lac( an0 lette%s Ce%e C%itten to hi@ b7 El -o;a% .ilipino on the subIect in Ma%ch an0 Ap%il( #"( %eJuestin; action. No ansCe% ha5in; been %ecei5e0 to these lette%s(a co@plaint Cas @a0e b7 El -o;a% .ilipino to the Chief of the Gene%al Lan0 Re;ist%ation Oes necessa%7 to e8a@ine the Act last abo5e-@entione0 Cith so@e ca%e. Upon %efe%%in; the%eto( Ce Fn0 that it consists of th%ee sections un0e% the folloCin; st7le=No. &B"&. L An Act to a@en0 ce%tain sections of the Co%po%ation LaC( Act Nu@be%e0 .ou%teen hun0%e0 an0 Fft7-nine( p%o5i0in; fo% the publication of the assets an0 liabilities of co%po%ations %e;iste%in; in the Bu%eau of Co@@e%ce an0 /n0ust%7( 0ete%@inin; the liabilit7 of the o o% bonus( establishin; penalties fo% ce%tain thin;s( an0 fo% othe% pu%poses.The F%st tCo section contain a@en0@ents to the Co%po%ation LaC Cith %espect to @atte%s Cith Chich Ce a%e not he%e concu%%e0. The thi%0 section contains aneC enact@ent to be inse%te0 as section #"G OAP in the co%po%ation LaC i@@e0iatel7 folloCin; section #"G. This neC section %ea0s as folloCs=SEC. #"G. OAP. Penalties. L The 5iolation of an7 of the p%o5isions of this Act an0 its a@en0@ents not othe%Cise penaliAe0 the%ein( shall be punishe0 b7 a Fne of not @o%e than one thousan0 pesos( o% b7 i@p%ison@ent fo% not @o%e than F5e 7ea%s( o% both( in the 0isc%etion of the cou%t. /f the 5iolation bein; p%o5e0( be 0issol5e0 b7 Juo Ca%%anto p%ocee0in;s institute0 b7 the Atto%ne7-Gene%al o% b7 an7 p%o5incial Fscal( b7 o%0e% of sai0 Atto%ne7-Gene%al= P%o5i0e0( That nothin; in this section p%o5i0e0 shall be const%ue0 to %epeal the othe% causes fo% the 0issolution of co%po%ation p%esc%ibe0 b7 e8istin; laC( an0 the %e@e07 p%o5i0e0 fo% in this section shall be consi0e%e0 as a00itional to the %e@e0ies al%ea07 e8istin;.The contention fo% the plaintiD is to the eDect that the secon0 sentence in this enact@ent has enti%el7 ab%o;ate0 the 0isc%etion of this cou%t Cith %espect to the application of the %e@e07 of Jou Ca%%anto( as e8p%esse0 in section & of the Co0e of Ci5il P%oce0u%e( an0 that it is noC @an0ato%7 upon us to 0issol5e0 an7 co%po%ation Chene5e% Ce Fn0 that it has co@@itte0 an7 5iolation of the Co%po%ationLaC( hoCe5e% t%i5ial. /n ou% opinion in this %a0ical 5ieC of the @eanin; of the enact@ent is untenable. Mhen the statute sa7s( K/f the 5iolation is co@@itte0 b7 a co%po%ation( the sa@e shall( upon such 5iolation bein; p%o5e0( be 0issol5e0 b7 Juo Ca%%anto p%ocee0in;s . . .(K the intention Cas to in0icate that the %e@e07 a;ainst the co%po%ation shall be b7 action of Juo Ca%%anto. The%e Cas no intention to 0eFne the p%inciples ;o5e%nin; sai0 %e@e07( an0 it @ust be un0e%stoo0 that in appl7in; the %e@e07 the cou%t is still cont%olle0 b7 the p%inciples establishe0 in i@@e@o%ial Iu%isp%u0ence. The inte%p%etation place0 upon this lan;ua;e in the b%ief of the Atto%ne7-Gene%al Coul0 be 0an;e%ous in the e8t%e@e( since it Coul0 actuall7 place the life of all co%po%ate in5est@ents in the oeep a stoc> boo> an0 a t%ansfe% boo> in Chich the na@es of stoc>hol0e%s shall >ept in alphabetical o%0e%. A;ain( un0e% section "'( %ail%oa0 co%po%ations a%e %eJui%e0 to cause all e@plo7ees Co%>in; on passen;e% t%ains o% at a station fo% passen;e%s to Cea% a ba0;e on his cap o% hat Chich Cill in0icate his oe% 5s. Lebanon an0 M. St. R7. Co.( O#)) Pa.( ')'P( the Sup%e@e Cou%t of Penns7l5ania ha0 un0e% consi0e%ation a statute p%o5i0in; as folloCs=/t shall be the 0ut7 of the cou%t . . . to e8a@ine( inJui%e an0 asce%tain Chethe% such co%po%ation 0oes in fact posses the %i;ht o% f%anchise to 0o the act f%o@ Chich such alle;e0 inIu%7 to p%i5ate %i;hts o% to the %i;hts an0 f%anchises of othe% co%po%ations %esultsN an0 if such %i;hts o% f%anchises ha5e not been confe%%e0 upon such co%po%ations( such cou%ts( it e8e%cisin; eJuitable poCe%( shall( b7 inIunction( at suit of the p%i5ate pa%ties o% othe% co%po%ations( %est%ain such inIu%ious acts./n an action base0 on this statute the plaintiD clai@e0 inIuncti5e %elief as a @atte% of %i;ht. But this Cas 0enie0 the cou%t sa7in;=NotCithstan0in;( the%efo%e( the use of the i@pe%ati5e KshallK the inIunction is not to be ;%ante0 unless a p%ope% case fo% inIunction be @a0e out( in acco%0ance Cith the p%inciples an0 p%actice of eJuit7. The Co%0 KshallK Chen use0 b7 the le;islatu%e to a cou%t( is usuall7 a ;%ant of autho%it7 an0 @eans K@a7K( an0 e5en if it be inten0e0 to be @an0ato%7 it @ust be subIect to the necessa%7 li@itation that a p%ope% case has been @a0e out fo% the e8e%cise of the poCe%.Othe% autho%ities a@pl7 sustain this 5ieC OPeople 5s. Nusebau@(N. 2. Supp.( #&"(#!!N Mest Misconsin R. Co. 5s. .ole7( "' U. S.( #GG( #G!N &' LaC. E0.( B#N Clanc7 5s. McEl%o7( !G Mash.( $BN BG Pac.( #G"$N State 5s. Mest( ! Ohio State( $G"( $##N /n %e Lent( 'G N. 2. Supp.( $BG( $B&N # Misc. Rep.( GN Lu0loC 5s. Lu0loC?s E8ecuto%s( ' N. 6. LaC 3# Sotha%04( !)B( !"'N Mhipple 5s. E007( ## /ll.( ##'N'! N. E.( B)"( B"GN Bo%>hei@ 5s. .i%e@an?s .un0 /ns. Co.( !) Cal.( $G$( $GN Beasle7 5s. People( )" /ll.( $B#( $B$N ,onnell7 5s. S@ith( #&) /oCa( &$BN #G! N. M.( BBP.But section ! of Act No. &B"& is challen;e0 b7 the %espon0ent on the ;%oun0 that the subIect-@atte% of this section is not e8p%esse0 in the title of the Act( Cith the %esult that the section is in5ali0. This c%iticis@ is in ou% opinion Cell foun0e0. Section! of ou% o%;anic laC O6ones BillP 0ecla%es( a@on; othe% thin;s( that KNo bill Chich @a7 be enacte0 into laC shall e@b%ace @o%e than one subIect( an0 that subIect shall be e8p%esse0 in the title of the bill.K An7 laC o% pa%t of a laC passe0 b7 the Philippine Le;islatu%e since this p%o5ision Cent into eDect an0 oDen0in; a;ainst its %eJui%e@ent is necessa%il7 5oi0.Upon e8a@inin; the enti%e Act ONo. &B"&P( Ce Fn0 that it is 0i%ecte0 to th%ee en0s Chich a%e successi5el7 0ealt Cith in the F%st th%ee sections of the Act. But it Cill be note0 that these th%ee @atte%s all %elate to the Co%po%ation LaCN an0 it is at once appa%ent that the7 @i;ht p%ope%l7 ha5e been e@bo0ie0 in a sin;le Act if a title of suin; a st%uctu%e of fou% sto%ies e8cept in one co%ne% Che%e an a00itional sto%7 Cas place( @a>in; it F5e sto%ies hi;h o5e% an a%ea of ##B.$& sJua%e @ete%s. /t is a0@itte0 in the plaintiDs b%ief that this Knoble an0 i@posin; st%uctu%eK L to use the Co%0s of the Atto%ne7-Gene%al L Khas ;%eatl7 i@p%o5e0 the aspect of the ban>in; an0 co@@e%cial 0ist%ict of Manila an0 has ;%eatl7 cont%ibute0 to the @o5e@ent an0 ca@pai;n fo% the Manila Beautiful.K /t is also a0@itte0 that the co@pete0 buil0in; is %easonabl7 p%opo%tionate in 5alue an0 %e5enue p%o0ucin; capacit7 to the 5alue of the lan0 upon Chich it stan0s. The total outla7 of the %espon0ent fo% the lan0 an0 the i@p%o5e@ents the%eon Cas P"G(GGG an0 at this 5aluation the p%ope%t7 is ca%%ie0 on the boo>s of the co@pan7( Chile the assesse0 5aluation of the lan0 an0 i@p%o5e@ents is at PB)('B).Since the neC buil0in; Cas co@plete0 the %espon0ent has use0 about !&' sJua%e @ete%s of Soo% space fo% its oCn ohol0e% sou;ht to enIoin the ban> f%o@ buil0in; a si8-sto%7 buil0in; oCne0 b7 the ban> in the co@@e%cial 0ist%ict of -a;e%stoCn of Chich onl7 the F%st sto%7 Cas to be use0 b7 the ban>( the %e@ainin; sto%ies to be %ente0 out fo% oin; act conFnin; such co%po%ations to the hol0in;( onl7( of such %eal estate Kas shall be necessa%7 fo% its i@@e0iate acco@@o0ation in the t%ansaction of its business.KThe inIunction Cas 0enie0( the cou%t a0optin; the opinion of the loCe% cou%t in Chich the folloCin; Cas sai0=?The othe% ;%oun0 u%;e0 b7 the co@plainant is that the p%opose0 action is 5iolati5e of the %est%iction Chich pe%@its a national ban> to hol0 onl7 such %eal estate as shallbe necessa%7 fo% its i@@e0iate acco@@o0ation in the t%ansaction of its business( an0 that( the%efo%e( the e%ection of a buil0in; Chich Cill contain o is not pe%@itte0 b7 the laC( althou;h that @etho0 of i@p%o5in; the lot @a7 be the @ost beneFcial use that can be @a0e of it. /t is @atte% of co@@on >noCle0;e that the actual p%actice of national ban>s is to the cont%a%7. Mhe%e ;%oun0 is 5aluable( it @a7 p%obabl7 be t%ul7 sai0 that the @aIo%it7 of national ban> buil0in;s a%e built Cith acco@@o0ations in e8cess of the nee0s of the ban> fo% the pu%pose of lessenin; the ban>?s e8pense b7 %entin; out the unuse0 po%tion. /f that Ce%e not alloCable( @an7 s@alle% ban>s in cities Coul0 be 0%i5en to beco@e tenants as the ;%eat cost of the lot Coul0 be p%ohibiti5e of usin; it e8clusi5el7 fo% the ban>in; acco@@o0ation of a sin;le ban>. As in0icati5e ofthe inte%p%etation of the laC co@@onl7 %ecei5e0 an0 acte0 upon( %efe%ence @a7 be @a0e to the %epl7 of the Co@pt%olle% of the Cu%%enc7 to the inIu%7 b7 the ban> in this case as>in; Chethe% the laC fo%bi0s the ban> const%uctin; such a buil0in; as Cas conte@plate0.?The %epl7 Cas folloCs= K2ou% lette% of the "th instant %ecei5e0( statin; that the 0i%ecto%s conte@plate @a>in; i@p%o5e@ents in the ban> buil0in; an0 inJui%in; if the%e is an7thin; in the national ban>in; laCs p%ohibitin; the const%uction of a buil0in; Chich Cill contain Soo%s fo% o as Cell as the ban>in; %oo@. 2ou% attention is calle0 to the case of B%oCn 5s. Schleie%( ##) .e0.( ")# 3$$ C. C. A( 'B$4( in Chich the cou%t hel0 that= ?/f the lan0 Chich a nationalban> pu%chases o% leases fo% the acco@@o0ation of its business is 5e%7 5aluable it @a7 e8e%cise the sa@e %i;hts that belon; to othe% lan0oCne%s of i@p%o5in; it in a Ca7 that Cill 7iel0 the la%;est inco@e( lessen its oCn %ent( an0 %en0e% that pa%t of itsfun0s Chich a%e in5este0 in %ealt7 @ost p%o0ucti5e.?K This see@s to be the co@@on sense inte%p%etation of the act of Con;%ess an0 is the one Chich p%e5ails.?/t Coul0 see@ to be unnecessa%7 to e8ten0 the opinion b7 len;th7 citations upon the point un0e% consi0e%ation( but B%oCn 5s. Schleie% O##) .e0.( ")#P( @a7 be cite0 as bein; in ha%@on7 Cith the fo%e;oin; autho%ities. /n 0ealin; Cith the poCe%s of a national ban> the cou%t( in this case( sai0=Mhen an occasion a%ises fo% an in5est@ent in %eal p%ope%t7 fo% eithe% of the pu%poses speciFe0 in the statute the national ban> act pe%@its ban>in; associationsto act as an7 p%u0ent pe%son Coul0 act in @a>in; an in5est@ent in %eal estate( an0 to e8e%cise the sa@e @easu%e of Iu0;@ent an0 0isc%etion. The act ou;ht not to be const%ue0 in such as Ca7 as to co@pel a national ban>( Chen it acJui%es %eal p%ope%t7 fo% a le;iti@ate pu%pose( to 0eal Cith it othe%Cise than a p%u0ent lan0 oCne% Coul0 o%0ina%il7 0eal Cith such p%ope%t7./n the b%ief of the Atto%ne7-Gene%al %eliance is place al@ost enti%el7 upon tCo /llinoiscases( na@el7 Af%icani -o@e Pu%chase an0 Loan Association 5s. Ca%%oll O&B /ll.( !)GP( an0 .i%st Metho0ist Episcopal Chu%ch of Chica;o 5s. ,i8on O#B) /ll.( &GP. /n ou% opinion these cases a%e eithe% 0istin;uishable f%o@ that noC befo%e us( o% the7 %eSect a 5ieC of the laC Chich is inco%%ect. At an7 %ate the Cei;ht of Iu0icial opinion is so o5e%Chel@in;l7 in fa5o% of sustainin; the 5ali0it7 of the acts alle;e0 in the secon0 cause of action to ha5e been 0one b7 the %espon0ent in e8cess of its poCe%sthat Ce %ef%ain f%o@ co@@entin; at an7 len;th upon sai0 cases. The ;%oun0 state0 in the secon0 cause of action is in ou% opinion Cithout @e%it.Thi%0 cause of action. L Un0e% the thi%0 cause of action the %espon0ent is cha%;e0 Cith en;a;in; in acti5ities fo%ei;n to the pu%poses fo% Chich the co%po%ation Cas c%eate0 an0 not %easonable necessa%7 to its le;iti@ate en0s. The speciFcations un0e% this cause of action %elate to th%ee 0iDe%ent so%ts of acti5ities. The F%st consist of the a0@inist%ation of the oen appea%s to us to be not open to 0oubt. The secon0 speciFcation un0e% this cause of action is the%efo%e Cithout @e%it( as Cas t%ue of the F%st.The thi%0 speciFcation un0e% this cause of action %elates to ce%tain acti5ities Chich a%e 0esc%ibe0 in the folloCin; pa%a;%aphs containe0 in the a;%ee0 state@ents of facts=.El -o;a% .ilipino has un0e%ta>en the @ana;e@ent of so@e pa%cels of i@p%o5e0 %eal estate situate0 in Manila not un0e% @o%t;a;e to it( but oCne0 b7 sha%ehol0e%s( an0 has hel0 itself out b7 a05e%tise@ent as p%epa%e0 to 0o so. The nu@be% of p%ope%ties so @ana;e0 0u%in; the 7ea%s #" to #"&$( inclusi5e( Cas as folloCs=#" ei;ht p%ope%ties#"&& si8 p%ope%ties#"&! ten p%ope%ties#"&' fou%teen p%ope%ties#"&$ fou%teen p%ope%ties.This se%5ice is li@ite0 to sha%ehol0e%sN but so@e of the pe%sons Chose p%ope%ties a%e so @ana;e0 fo% the@ beca@e sha%ehol0e%s onl7 to enable the@ to ta>e a05anta;e the%eof.The se%5ices %en0e%e0 in the @ana;e@ent of such i@p%o5e0 %eal estate b7 El -o;a% .ilipino consist in the %entin; of the sa@e( the pa7@ent of %eal estate ta8es an0 insu%ance fo% the account of the oCne%( causin; the necessa%7 %epai%s fo% up>eep to be @a0e( an0 collectin; %ents 0ue f%o@ tenants. .o% the se%5ices so %en0e%e0 in the @ana;e@ent of such p%ope%ties El -o;a% .ilipino %ecei5es co@pensation in the fo%@ of co@@issions upon the ;%oss %eceipts f%o@ such p%ope%ties at %ates 5a%7in; f%o@ tCo an0 one-half pe% centu@ to F5e pe% centu@ of the su@s so collecte0( acco%0in; to the location of the p%ope%t7 an0 the eDo%t in5ol5e0 in its @ana;e@ent.The Co%> of @ana;in; %eal estate belon;in; to non-bo%%oCin; sha%ehol0e%s a0@iniste%e0 b7 El -o;a% .ilipino is ca%%ie0 on b7 the sa@e @e@be%s of the staD Cho atten0 to the 0etails of the @ana;e@ent of p%ope%ties a0@iniste%e0 b7 the @ana;e% of El -o;a% .ilipino un0e% the p%o5isions of pa%a;%aph ) of the stan0a%0 @o%t;a;e fo%@( an0 of p%ope%ties bou;ht in on fo%eclosu%e of @o%t;a;e.The p%actice 0esc%ibe0 in the passa;e abo5e Juote0 f%o@ the a;%ee0 facts is in ou% opinion unautho%iAe0 b7 laC. Such Cas the 5ieC ta>en b7 the ban> e8a@ine% of the T%easu%7 Bu%eau in his %epo%t to the /nsula% T%easu%e% on ,ece@be% ( #"&$( Che%ein the p%actice in Juestion Cas c%iticiAe0. The a0@inist%ation of p%ope%t7 in the@anne% 0esc%ibe0 is @o%e beFttin; to the business of a %eal estate a;ent o% t%ust co@pan7 than to the business of a buil0in; an0 loan association. The p%actice to Chich this c%iticis@ is 0i%ecte0 %elates of cou%se solel7 to the @ana;e@ent an0 a0@inist%ation of p%ope%ties Chich a%e not @o%t;a;e0 to the association. The ci%cu@stance that the oCne% of the p%ope%t7 @a7 ha5e been %eJui%e0 to subsc%ibe to one o% @o%e sha%es of the association Cith a 5ieC to Jualif7in; hi@ to %ecei5e thisse%5ice is of no si;niFcance. /t is a ;ene%al %ule of laC that co%po%ations possess onl7such e8p%ess poCe%s. The @ana;e@ent an0 a0@inist%ation of the p%ope%t7 of the sha%ehol0e%s of the co%po%ation is not e8p%essl7 autho%iAe0 b7 laC( an0 Ce a%e unable to see that( upon an7 fai% const%uction of the laC( these acti5ities a%e necessa%7 to the e8e%cise of an7 of the ;%ante0 poCe%s. The co%po%ation( upon the point noC un0e% the c%iticis@( has clea%l7 e8ten0e0 itself be7on0 the le;iti@ate %an;e of its poCe%s. But it 0oes not %esult that the 0issolution of the co%po%ation is ino%0e%( an0 it Cill @e%el7 be enIoine0 f%o@ fu%the% acti5ities of this so%t..ou%th cause of action. L /t appea%s that a@on; the b7 laCs of the association the%eis an a%ticle ONo. #GP Chich %ea0s as folloCs=The boa%0 of 0i%ecto%s of the association( b7 the 5ote of an absolute @aIo%it7 of its @e@be%s( is e@poCe%e0 to cancel sha%es an0 to %etu%n to the oCne% the%eof the balance %esultin; f%o@ the liJui0ation the%eof Chene5e%( b7 %eason of thei% con0uct( o% fo% an7 othe% @oti5e( the continuation as @e@be%s of the oCne%s of such sha%es is not 0esi%able.This b7-laC is of cou%se a patent nullit7( since it is in 0i%ect conSict Cith the latte% pa%t of section #)B of the Co%po%ation LaC( Chich e8p%essl7 0ecla%es that the boa%0 of 0i%ecto%s shall not ha5e the poCe% to fo%ce the su%%en0e% an0 Cith0%aCal of un@atu%e0 stoc> e8cept in case of liJui0ation of the co%po%ation o% of fo%feitu%e of the stoc> fo% 0elinJuenc7. /t is a;%ee0 that this p%o5ision of the b7-laCs has ne5e% been enfo%ce0( an0 in fact no atte@pt has e5e% been @a0e b7 the boa%0 of 0i%ecto%sto @a>e use of the poCe% the%ein confe%%e0. /n No5e@be%( #"&!( the Actin; /nsula% T%easu%e% a00%esse0 a lette% to El -o;a% .ilipino( callin; attention to a%ticle #G of its b7-laCs an0 e8p%essin; the 5ieC that sai0 a%ticle Cas in5ali0. /t Cas the%efo%e su;;este0 that the a%ticle in Juestion shoul0 be eli@inate0 f%o@ the b7-laCs. At the ne8t @eetin; of the boa%0 of 0i%ecto%s the @atte% Cas calle0 to thei% attention an0 itCas %esol5e0 to %eco@@en0 to the sha%ehol0e%s that in thei% ne8t annual @eetin; the a%ticle in Juestion be ab%o;ate0. /t appea%s( hoCe5e%( that no annual @eetin; ofthe sha%ehol0e%s calle0 since that 0ate has been atten0e0 b7 a suin; it a @is0e@eano% to inco%po%ate an in5ali0 p%o5ision in the b7-laCs of a co%po%ationN an0if the%e Ce%e such( the haAa%0s inci0ent to co%po%ate eDo%t Coul0 ce%tainl7 be la%;el7 inc%ease0. The%e is no @e%it in this cause of action..ifth cause of action. L /n section !# of the Co%po%ation LaC it is 0ecla%e0 that( Kat all elections of 0i%ecto%s the%e @ust be p%esent( eithe% in pe%son o% b7 %ep%esentati5eautho%iAe0 to act b7 C%itten p%o87( the oCne%s of the @aIo%it7 of the subsc%ibe0 capital stoc> entitle0 to 5ote. . . .K Confo%@abl7 Cith this %eJui%e@ent it is 0ecla%e0 in a%ticle # of the b7-laCs of El -o;a% .ilipino that( Kthe atten0ance in pe%son o% b7 p%o87 of sha%ehol0e%s oCnin; one-half plus one of the sha%ehol0e%s shall be necessa%7 to constitute a Juo%u@ fo% the election of 0i%ecto%s. At the ;ene%al annual@eetin;s of the El -o;a% .ilipino hel0 in the 7ea%s #"## an0 #"#&( the%e Cas a Juo%u@ of sha%es p%esent o% %ep%esente0 at the @eetin;s an0 0i%ecto%s Ce%e 0ul7 electe0 acco%0in;l7. As the co%po%ation has ;%oCn( hoCe5e%( it has been fon0 inc%easin;l7 0inoCn a00%ess( to;ethe% Cith a blan> fo%@ of p%o87 to be use0 in the e5ent the sha%ehol0e% coul0 not pe%sonall7 atten0 the @eetin;. NotCithstan0in; these special eDo%ts the @eetin; Cas atten0e0 onl7 b7 sha%ehol0e%s( in pe%son an0 b7 p%o87( %ep%esentin; !())" sha%es( out of a total of #G('"# then outstan0in; an0 entitle0 to 5ote.OCin; to the failu%e of a Juo%u@ at @ost of the ;ene%al @eetin;s since the %espon0ent has been in e8istence( it has been the p%actice of the 0i%ecto%s to Fll 5acancies in the 0i%ecto%ate b7 choosin; suitable pe%sons f%o@ a@on; the stoc>hol0e%s. This custo@ Fn0s its sanction in a%ticle B# of the b7-laCs( Chich %ea0s as folloCs=ART. B#. The 0i%ecto%s shall elect f%o@ a@on; the sha%ehol0e%s @e@be%s to Fll the 5acancies that @a7 occu% in the boa%0 of 0i%ecto%s until the election at the ;ene%al @eetin;.The pe%son thus chosen to Fll 5acancies in the 0i%ecto%ate ha5e( it is a0@itte0( unifo%@l7 been e8pe%ience0 an0 successful business an0 p%ofessional @en of @eans( enIo7in; ea%ne0 inco@es of f%o@ P#&(GGG to P$G(GGG pe% annu@( Cith an annual a5e%a;e of P!G(GGG in a00ition to such inco@e as the7 0e%i5e f%o@ thei% p%ope%ties. Mo%eo5e%( it appea%s that se5e%al of the in0i5i0uals constitutin; the o%i;inal 0i%ecto%ate an0 pe%sons chosen to suppl7 5acancies the%ein belon; to p%o@inent .ilipino fa@ilies( an0 that the7 a%e @o%e o% less %elate0 to each othe% b7 bloo0 o% @a%%ia;e. /n a00ition to this it appea%s that it has been the polic7 of the 0i%ecto%ate to >eep the%eon so@e @e@be% o% anothe% of a sin;le p%o@inent A@e%ican laC F%@ in the cit7./t is suppose0 in the state@ent of the Ffth cause of action in the co@plaint that the failu%e of the co%po%ation to hol0 annual @eetin;s an0 the Fllin; of 5acancies in the 0i%ecto%ate in the @anne% 0esc%ibe0 constitute @is0e@eano%s on the pa%t of the %espon0ent Chich Iustif7 the %esu@ption of the f%anchise b7 the Go5e%n@ent an0 0issolution of the co%po%ationN an0 in this connection it is cha%;e that the boa%0 of 0i%ecto%s of the %espon0ent has beco@e a pe%@anent an0 self pe%petuatin; bo07 co@pose0 of Cealth7 @en instea0 of Ca;e ea%ne%s an0 pe%sons of @o0e%ate @eans. Me a%e unable to see the sli;htest @e%it in the cha%;e. No fault can be i@pute0 to the co%po%ation on account of the failu%e of the sha%ehol0e%s to atten0 the annual @eetin;sN an0 thei% non-atten0ance at such @eetin;s is 0oubtless to be inte%p%ete0 in pa%t as e8p%essin; thei% satisfaction of the Ca7 in Chich thin;s ha5e been con0ucte0. Upon failu%e of a Juo%u@ at an7 annual @eetin; the 0i%ecto%ate natu%all7 hol0s o5e% an0 continues to function until anothe% 0i%ecto%ate is chosen an0 JualiFe0. Unless the laC o% the cha%te% of a co%po%ation e8p%essl7 p%o5i0es that an ohol0e%s a%e 0ul7 p%otecte0. The steps ta>en b7 the 0i%ecto%ate to cu%tail the inSu8 of unnecessa%7 capital into the association?s coDe%s( as @entione0 abo5e( %e5eals hoC the @en at ;%asp the situation an0 to appl7 the necessa%7 %e@e07 as the ci%cu@stances Ce%e foun0 in the sa@e e8cellent con0ition as in the p%e5ious e8a@ination./n so fa% as this cou%t is conce%ne0 the Juestion he%e befo%e us is not one conce%nin; the p%op%iet7 an0 Cis0o@ of the @easu%e of co@pensation a0opte0 b7 the %espon0ent but %athe% the Juestion of the 5ali0it7 of the @easu%e. Upon this point the%e can( it see@s to us( be no 0iDe%ence of intelli;ent opinion. The Co%po%ation LaC 0oes not un0e%ta>e to p%esc%ibe the %ate of co@pensation fo% the 0i%ecto%s of co%po%ations. The poCe% to F8e0 the co@pensation the7 shall %ecei5e( if an7( is left to the co%po%ation( to be 0ete%@ine0 in its b7-laCsOAct No. #'$"( sec. P.Pu%suant to this autho%it7 the co@pensation fo% the 0i%ecto%s of El -o;a% .ilipino hasbeen F8e0 in section "& of its b7-laCs( as al%ea07 state0. The Iustice an0 p%ope%t7 ofthis p%o5ision Cas a p%ope% @atte% fo% the sha%ehol0e%s Chen the b7-laCs Ce%e f%a@e0N an0 the ci%cu@stance that( Cith the ;%oCth of the co%po%ation( the a@ount pai0 as co@pensation to the 0i%ecto%s has inc%ease0 be7on0 Chat Coul0 p%obabl7 be necessa%7 to secu%e a0eJuate se%5ice f%o@ the@ is @atte% that cannot be co%%ecte0 in this actionN no% can it p%ope%l7 be @a0e a basis fo% 0ep%i5in; the %espon0ent of its f%anchise( o% e5en fo% enIoinin; it f%o@ co@pliance Cith the p%o5isions of its oCn b7-laCs. /f a @ista>e has been @a0e( o% the %ule a0opte0 in theb7-laCs @eetin; to chan;e the %ule. The %e@e07( if an7( see@s to lie %athe% in publicit7 an0 co@petition( %athe% than in a cou%t p%ocee0in;. The si8th cause of action is in ou% opinion Cithout @e%it.Se5enth cause of action. L /t appea%s that the p%o@ote% an0 o%;aniAe% of El -o;a% .ilipino Cas M%. Antonio Melian( an0 in the ea%l7 sta;es of the o%;aniAation of the association the boa%0 of 0i%ecto%s autho%iAe0 the association to @a>e a cont%act Cith hi@ Cith %e;a%0 to the se%5ices hi@ the%efo%. Pu%suant to this autho%it7 the p%esi0ent of the co%po%ation( on 6anua%7 ##( #"##( ente%e0 into a C%itten a;%ee@ent Cith M%. Melian( Chich is %ep%o0uce0 in the a;%ee0 state@ent of facts an0 of Chich the i@po%tant clauses a%e these=#. The co%po%ation KEl -o;a% .ilipino Socie0a0 Mutua 0e Const%uccion 7 P%esta@os(K an0 on its behalf its p%esi0ent( ,on Antonio R. Ro8as( he%eb7 confe%s on ,on AntonioMelian the oes to pa7 fo% his oCn account( all the e8penses incu%%e0 in the o%;aniAation of the co%po%ation.'. ,on Antonio Melian fu%the% un0e%ta>es to len0 to the co%po%ation( Cithout inte%estthe su@ of si8 thousan0 pesos OP(GGGP( Philippine Cu%%enc7( fo% the pu%pose of @eetin; the e8pense of %ent( oin; these pu%chases the association has alCa7s bi0 the full a@ount 0ue to it f%o@ the 0ebto%( afte% 0e0uctin; the Cith0%aCal 5alue of the sha%es ple0;e0 as collate%al( Cith the %esult that in no case has the sha%ehol0e% been calle0 upon to pa7 a 0eFcienc7 Iu0;e@ent on fo%eclosu%e.El -o;a% .ilipino places %eal estate so pu%chase0 in its in5ento%7 at actual cost( as 0ete%@ine0 b7 the a@ount bi0 on fo%eclosu%e saleN an0 the%eafte% until sol0 the boo> 5alue of such %eal estate is 0ep%eciate0 at the %ate F8e0 b7 the 0i%ecto%s in acco%0ance Cith thei% Iu0;@ent as to each pa%cel( the annual a5e%a;e 0ep%eciation ha5in; 5a%ie0 f%o@ nothin; to a @a8i@u@ of #'.#!) pe% cent. The sales the%eof( butsales a%e @a0e fo% the best p%ices obtainable( Chethe% ;%eate% o% less than the boo>5alue./t is alle;e0 in the co@plaint that 0ep%eciation is cha%;e0 b7 the association at the %ate of #G pe% centu@ pe% annu@. The a;%ee0 state@ent of facts on this point shoCs that the annual a5e%a;e 5a%ies f%o@ nothin; to a @a8i@u@ of so@ethin; o5e% #' pe% centu@. Me a%e thus left in the 0a%> as to the p%ecise 0ep%eciation alloCe0 f%o@ 7ea% to 7ea%. /t is not clai@e0 fo% the Go5e%n@ent that the association is Cithout poCe% to alloC so@e 0ep%eciationN an0 it is Juite clea% that the boa%0 of 0i%ecto%s possesses a 0isc%etion in this @atte%. The%e is no positi5e p%o5ision of laC p%ohibitin; the association f%o@ C%itin; oD a %easonable a@ount fo% 0ep%eciation on its assets fo% the pu%pose of 0ete%@inin; its %eal p%oFtsN an0 a%ticle B' of its b7-laCs e8p%essl7 autho%iAes the boa%0 of 0i%ecto%s to 0ete%@ine each 7ea% the a@ount to be C%itten 0oCn upon the e8penses of installation an0 the p%ope%t7 of the co%po%ation. The%e can be no Juestion that the poCe% to a0opt such a b7-laC is e@b%ace0 Cithin the poCe% to @a>e b7-laCs fo% the a0@inist%ation of the co%po%ate aDai%s of the association an0 fo% the @ana;e@ent of its business( as Cell as the ca%e( cont%ol an0 0isposition of its p%ope%t7 OAct No. #'$"( sec. #! 3B4P. But the Atto%ne7-Gene%al Juestions the e8e%cise of the 0i%ection conF0e0 to the boa%0N an0 it is insiste0 that the e8cessi5e 0ep%eciation of the p%ope%t7 of the association is obIectionable in se5e%al %espects( but @ainl7 because it ten0s to inc%ease un0ul7 the %ese%5es of the association( the%eb7 f%ust%atin; the %i;ht of the sha%ehol0e%s to pa%ticipate annuall7 an0 eJuall7 in the ea%nin;s of the association.This count fo% the co@plaint p%ocee0s( in ou% opinion( upon an e%%oneous notion as to Chat a cou%t @a7 0o in 0ete%@inin; the inte%nal polic7 of a business co%po%ation. /f the c%iticis@ containe0 in the b%ief of the Atto%ne7-Gene%al upon the p%actice of the %espon0ent association Cith %espect to 0ep%eciation be Cell foun0e0( the Le;islatu%e shoul0 suppl7 the %e@e07 b7 0eFnin; the e8tent to Chich 0ep%eciation @a7 be alloCe0 b7 buil0in; an0 loan associations. Ce%tainl7 this cou%t cannot un0e%ta>e to cont%ol the 0isc%etion of the boa%0 of 0i%ecto%s of the association aboutan a0@inist%ati5e @atte% as to Chich the7 ha5e le;iti@ate poCe% of action. The tenth cause of action is the%efo%e not Cell foun0e0.Ele5enth an0 tCelfth causes of action. L The sa@e co@@ent is app%op%iate Cith %espect to the ele5enth an0 tCelfth causes of action( Chich a%e t%eate0 to;ethe% in the b%iefs( an0 Cill be he%e co@bine0. The speciFcation in the ele5enth cause of action is that the %espon0ent @aintains e8cessi5e %ese%5e fun0s( an0 in the tCelfth cause of action that the boa%0 of 0i%ecto%s has settle0 upon the unlaCful polic7 of pa7in; a st%ai;ht annual 0i5i0en0 of #G pe% centu@( %e;a%0less of losses suDe%e0 an0 p%oFts @a0e b7 the co%po%ation an0 in cont%a5ention of the %eJui%e@ents of section #)) of the Co%po%ation LaC. The facts %elatin; to these tCo counts in the co@plaint( as set fo%th in the stipulation( a%e these=/n a%ticle "& of the b7-laCs of El -o;a% .ilipino it is p%o5i0e0 that $ pe% centu@ of thenet p%oFts ea%ne0 each 7ea%( as shoCn b7 the annual balance sheet shall be ca%%ie0 to a %ese%5e fun0. The fun0 so c%eate0 is calle0 the Gene%al Rese%5e. A%ticle "! of the b7-laCs autho%iAes the 0i%ecto%s to ca%%7 fun0s to a special %ese%5e( Chene5e% inthei% Iu0;@ent it is a05isable to 0o so( p%o5i0e0 that the annual 0i5i0en0 in the 7ea%in Chich fun0s a%e ca%%ie0 to special %ese%5e e8cee0s ) pe% centu@. /t appea%s to ha5e been the polic7 of the boa%0 of 0i%ecto%s fo% se5e%al 7ea%s past to place in the special %ese%5e an7 balance in the p%oFt an0 loss account afte% the satisfaction of p%efe%ential cha%;es an0 the pa7@ent of a 0i5i0en0 of #G pe% centu@ to all special an0 o%0ina%7 sha%es OCith accu@ulate0 0i5i0en0sP. As thin;s stoo0 in #"& the ;ene%al %ese%5e containe0 an a@ount eJui5alent to about $ pe% centu@ of the pai0-in 5alue of sha%e0. This fun0 has ne5e% been 0%aCn upon fo% the pu%pose of @aintainin; the %e;ula% annual 0i5i0en0N but %ecou%se has been ha0 to the special %ese%5e on th%ee 0iDe%ent occasions to @a>e ;oo0 the a@ount necessa%7 to pa7 0i5i0en0s. /t appea%s that in the last F5e 7ea%s the %ese%5es ha5e 0ecline0 f%o@ so@ethin; o5e% " pe% cent to so@ethin; o5e% B./t is insiste0 in the b%ief of the Atto%ne7-Gene%al that the @aintenance of %ese%5e fun0s is unnecessa%7 in the case of buil0in; an0 loan associations( an0 at an7 %ate the >eepin; of %ese%5es is inconsistent Cith section #)) of the Co%po%ation LaC. Mo%eo5e%( it is sai0 that the p%actice of the association in 0ecla%in; %e;ula%l7 a #G pe% cent 0i5i0en0 is in eDect a ;ua%ant7 b7 the association of a F8e0 0i5i0en0 Chichis cont%a%7 to the intention of the statute.Upon ca%eful consi0e%ation of the Juestions in5ol5e0 Ce Fn0 no %eason to 0oubt the %i;ht of the %espon0ent to @aintain these %ese%5es. /t is t%ue that the co%po%ation laC 0oes not e8p%essl7 ;%ant this poCe%( but Ce thin> it is to be i@plie0. /t is a fact of co@@on obse%5ation that all co@@e%cial ente%p%ises encounte% pe%io0s Chen ea%nin;s fall beloC the a5e%a;e( an0 the p%u0ent @ana;e% @a>es p%o5ision fo% such contin;encies. To %e;a%0 all su%plus as p%oFt is to ne;lect one of the p%i@a%7 canons of ;oo0 business p%actice. Buil0in; an0 loan associations( thou;h a@on; the @ost soli0 of Fnancial institutions( a%e ne5e%theless subIect to 5icissitu0es. .luctuations inthe 0i5i0en0 %ate a%e hi;hl7 0et%i@ental to an7 Fscal institutions( Chile unifo%@it7 inthe pa7@ents of 0i5i0en0s( continue0 o5e% lon; pe%io0s( supplies the su%est foun0ations of public conF0ence.The Juestion noC un0e% consi0e%ation is not neC in Iu%isp%u0ence( fo% the A@e%ican cou%ts ha5e been calle0 upon @o%e than once to consi0e% the le;alit7 of the @aintenance of %ese%5es b7 institutions of this o% si@ila% cha%acte%./n G%eeD 5s. EJuitable Life Assu%ance Societ7( the cou%t ha0 un0e% consi0e%ation a cha%te% p%o5ision of a life insu%ance co@pan7( o%;aniAe0 on the @utual plan( in its %elation to the poCe% of the co@pan7 to p%o5i0e %ese%5es. The%e the statute p%o5i0e0 that Kthe ohol0e%s a;ainst losses. /ts pu%pose is not unli>e that of the 5a%ious fo%@s of insu%ance noC in such co@@on use. This cont%ibution is as le;iti@ate an ite@ of e8pense as a%e the p%e@iu@s pai0 on an7 insu%ance polic7. OSee Cla%>s an0 Chase( Buil0in; an0 Loan Association( footnote( pa;e !''.P/n co@@entin; on the necessit7 of such fun0s( Sun0hei@ sa7s=/t is optional Cith the association Chethe% to @aintain such a fun0 o% not( but Iusticean0 ;oo0 business polic7 see@ to %eJui%e it. The %eti%in; stoc>hol0e% @ust be pai0 the 5alue of his stoc> in cash an0 lea5e fo% those %e@ainin; a la%;e nu@be% of secu%ities an0 pe%haps so@e %eal estate pu%chase0 to p%otect the associations inte%est. -oC @uch Cill be %ealiAe0 on these secu%ities( o% %eal estate( no hu@an fo%esi;ht can tell. .u%the%( the %ealiAin; on these secu%ities @a7 entail consi0e%able liti;ation an0 e8pense. The%e a%e @an7 othe% contin;encies Chich @i;ht cause a sh%in>a;e in the association?s assets( such as 0efecti5e titles( un0isclose0 0efalcations on the pa%t of an oone0 Cithin the con0uctof hu@an aDai%s.The contin;ent fun0 is @e%el7 insu%ance a;ainst possible loss. That losses @a7 occu% f%o@ ti@e to ti@e see@s al@ost ine5itable an0 it is( the%efo%e( ineJuitable that the %e@ainin; stoc>hol0e%s shoul0 be co@pelle0 to accept all secu%ities at pa%( so( to sa7 the least( the @aintenance of this fun0 is IustiFe0. The association teaches the 0ut7 of p%o5i0in; fo% the p%o5e%bial %ain7 0a7. Mh7 shoul0 it not p%o5i0e fo% the hou% of a05e%sit7T The %ese%5e fun0 has p%otecte0 the @atu%in; o% Cith0%aCin; @e@be% 0u%in; the pe%io0 of his @e@be%ship. /n case of loss it has o% Coul0 ha5e %ei@bu%se0 hi@ an0( at all ti@es( it has p%otecte0 hi@ an0 ;i5en st%en;th an0 stan0in; to the association. Losses @a7 occu%( afte% his @e@be%ship ceases( that a%ose f%o@ so@e @ista>e o% @is@ana;e@ent co@@itte0 0u%in; the pe%io0 of his @e@be%ship( an0 in fai%ness an0 eJuit7 the %e@ainin; @e@be%s shoul0ha5e so@e p%otection a;ainst this. OSun0hei@( LaC of Buil0in; an0 Loan Association( sec. $!.PThe ;o5e%n@ent insists( Ce thin;( upon an inte%p%etation of section #)) of the Co%po%ation LaC that is alto;ethe% too st%ict an0 lite%al. .%o@ the fact that the statute p%o5i0es that p%oFts an0 losses shall be annuall7 appo%tione0 a@on; the sha%ehol0e%s it is a%;ue0 that all ea%nin;s shoul0 be 0ist%ibute0 Cithout ca%%7in; an7thin; to the %ese%5e. But it Cill be note0 that it is p%o5i0e0 in the sa@e section that the p%oFts an0 losses shall be 0ete%@ine0 b7 the boa%0 of 0i%ecto%s= an0 this @eans that the7 shall e8e%cise the usual 0isc%etion of ;oo0 business@en in allocatin; a po%tion of the annual p%oFts to pu%poses nee0ful to the Celfa%e of the association. The laC conte@plates the 0ist%ibution of ea%nin;s an0 losses afte% othe%le;iti@ate obli;ations ha5e been @et.Ou% conclusion is that the %espon0ent has the poCe% to @aintain the %ese%5es c%iticiAe0 in the ele5enth an0 tCelfth counts of the co@plaintN an0 at an7 %ate( if it be suppose0 that the %ese%5es %efe%%e0 to ha5e beco@e e8cessi5e( the %e@e07 is in the han0s of the Le;islatu%e. /t is no p%ope% function of the cou%t to a%%o;ate to itselfthe cont%ol of a0@inist%ati5e @atte%s Chich ha5e been conF0e0 to the 0isc%etion of the boa%0 of 0i%ecto%s. The causes of action un0e% 0iscussion @ust be p%onounce0 to be Cithout @e%it.Thi%teenth cause of action. L The speciFcation un0e% this hea0 is( in eDect( that the%espon0ent association has @a0e loans Chich( to the >noCle0;e of the associations oe a05anta;e of ce%tain p%o5isions of its b7-laCs autho%iAin; thepostpone@ent of the pa7@ent of clai@s %esultin; f%o@ Cith0%aCals( Che%eas p%e5iousl7 the association ha0 alCa7s settle0 these clai@s p%o@ptl7 f%o@ cu%%ent fun0s. At no ti@e Cas the%e appa%entl7 an7 0ela7 in the pa7@ent of @atu%e0 sha%esNbut in fou% o% F5e cases the%e Cas as @uch as ten @onths 0ela7 in the pa7@ent of Cith0%aCal applications.The%e is little that can be sai0 upon the le;al aspects of this cause of action. /n so fa%( as it %elates to the pu%poses fo% Chich these loans Ce%e @a0e( the @atte% is co5e%e0 b7 Chat Cas sai0 abo5e Cith %efe%ence to the thi%teenth cause of actionN an0 in so fa% as it %elates to the pe%sonalit7 of the bo%%oCe%s( the Juestion belon;s @o%e 0i%ectl7 to the 0iscussion un0e% the si8teenth cause of action( Chich Cill be foun0 beloC. The point( then( Chich %e@ains fo% consi0e%ation he%e is Chethe% it is a suici0al act on the pa%t of a buil0in; an0 loan association to @a>e loans in la%;e a@ount. /f the loans Chich a%e he%e the subIect of c%iticis@ ha0 been @a0e upon ina0eJuate secu%it7( especiall7 in case of the la%;est tCo( the conseJuences ce%tainl7 Coul0 ha5e been 0isast%ous to the association in the e8t%e@eN but no such fact is alle;e0N an0 it is to be assu@e0 that none of the ten bo%%oCe%s ha5e 0efaulte0 in thei% cont%acts.NoC( it @ust be a0@itte0 that tCo of these loans at least a%e of a 5e%7 la%;e siAe( consi0e%in; the a5e%a;e %an;e of Fnancial t%ansaction in this count%7N an0 the @a>in; of the la%;est loan Cas folloCe0( as Ce ha5e al%ea07 see( Cith unpleasant conseJuences to the association in 0ealin; Cith cu%%ent clai@s. Ne5e%theless the a;%ee0 state@ent of facts shoes that all of the loan %efe%%e0 to a%e onl7 ten out of a total of F5e hun0%e0 fo%t7-fou% outstan0in; on ,ece@be% !#( #"&$N an0 the a5e%a;eof all the loans ta>en to;ethe% is @o0est enou;h. /t appea%s that the chief e8a@ine% of ban>s an0 co%po%ations of the Philippine T%easu%7( afte% his e8a@ination of El -o;a% .ilipino at the en0 of the 7ea% #"&$( @a0e a %epo%t conce%nin; this association as of 6anua%7 !#( #"&( in Chich he c%iticiAe0 the PaciFc Ma%ehouse Co@pan7 loan as bein; so la%;e that it te@po%a%il7 c%ipple0 the len0in; poCe% of the association fo% so@e ti@e. This c%iticis@ Cas appa%entl7 IustiFe0 as p%ope% co@@ent on the acti5ities of the associationN but the Juestion fo% use he%e to 0eci0eis Chethe% the @a>in; of this an0 the othe% la%;e loans constitutes such a @isuse% of the f%anchise as Coul0 Iustif7 us in 0ep%i5in; the association of its co%po%ate life. This Juestion appea%s to us to be so si@ple as al@ost to ansCe% itself. The laC states no li@it Cith %espect to the siAe of the loans to be @a0e b7 the association. That @atte% is conF0e0 to the 0isc%etion of the boa%0 of 0i%ecto%sN an0 this cou%t cannot a%%o;ate to itself a cont%ol o5e% the 0isc%etion of the chosen o to the suppose0 @is0e@eano% of the %espon0ent in @aintainin; its %ese%5e fun0s( L a @atte% al%ea07 0iscusse0 un0e% the ele5enth an0 tCelfth causes of action. Un0e% the Ffteenth cause of action it is clai@e0 that upon the e8pi%ation of the f%anchise of theassociation th%ou;h the eXu8ion of ti@e( o% ea%lie% liJui0ation of its business( the accu@ulate0 %ese%5es an0 othe% p%ope%ties Cill acc%ue to the foun0e%( o% his hei%s( an0 the then 0i%ecto%s of the co%po%ation an0 to those pe%sons Cho @a7 at that ti@eto be hol0e%s of the o%0ina%7 an0 special sha%es of the co%po%ation. /n this connection Ce note that a%ticle "$ of the b7-laCs %ea0s as folloCs=ART. "$. The fun0s obtaine0 b7 the liJui0ation of the association shall be applie0 in the F%st place to the %epa7@ent of sha%es an0 the balance( if an7( shall be 0ist%ibutein acco%0ance Cith the s7ste@ establishe0 fo% the 0ist%ibution of annual p%oFts./t Cill be note0 that the cause of action Cith Chich Ce a%e noC conce%ne0 is not 0i%ecte0 to an7 positi5e @is0e@eano% suppose0 to ha5e been co@@itte0 b7 the association. /t has e8clusi5e %elation to Chat @a7 happen so@e thi%t7-F5e 7ea%s hence Chen the f%anchise e8pi%es( supposin; of cou%se that the co%po%ation shoul0 not be %eo%;aniAe0 an0 continue0 afte% that 0ate. The%e is nothin; in a%ticle "$ of the b7-laCs Chich is( in ou% opinion( subIect to c%iticis@. The %eal point of c%iticis@ isthat upon the Fnal liJui0ation of the co%po%ation 7ea%s hence the%e @a7 be in e8istence a %ese%5e fun0 out of all p%opo%tion to the %eJui%e@ents that @a7 then fall upon it in the liJui0ation of the co@pan7. /t see@s to us that this is @atte% that @a7 be left to the p%e5ision of the 0i%ecto%s o% to le;islati5e action if it shoul0 be 0ee@e0e8pe0ient to %eJui%e the ;%a0ual supp%ession of the %ese%5e fun0s as the ti@e fo% 0issolution app%oaches. /t is no @atte% fo% Iu0icial inte%fe%ence( an0 @uch less coul0 the %esu@ption of the f%anchise on this ;%oun0 be IustiFe0. The%e is no @e%it in the Ffteenth cause of action.Si8teenth cause of action. L This pa%t of the co@plaint assi;ns as cause of action that 5a%ious loans noC outstan0in; ha5e been @a0e b7 the %espon0ent to co%po%ations an0 pa%tne%ships( an0 that these entities ha5e in so@e instances subsc%ibe0 to sha%es in the %espon0ent fo% the sole pu%pose of obtainin; such loans. /n this connection it appea%s f%o@ the stipulation of facts that of the $()& sha%ehol0e%s of El -o;a% .ilipino( Chich co@pose0 its @e@be%ship on ,ece@be% !#(#"&$( tCent7-ei;ht a%e Iu%i0ical entities( co@p%isin; si8teen co%po%ations an0 fou%teen pa%tne%shipsN Chile of the F5e hun0%e0 fo%t7-fou% loans of the association outstan0in; on the sa@e 0ate( nine ha0 been @a0e to co%po%ations an F5e to pa%tne%ships. /t is also a0@itte0 that so@e of these Iu%i0ical entities beca@e sha%ehol0e%s @e%el7 fo% the pu%pose of Jualif7in; the@sel5es to ta>e loans f%o@ theassociation( an0 the sa@e is sai0 Cith %espect to @an7 natu%al pe%sons Cho ha5e ta>en sha%es in the association. Nothin; is sai0 in the a;%ee0 state@ent of facts on the point Chethe% the co%po%ations an0 pa%tne%ships that ha5e ta>en loans f%o@ the %espon0ent a%e JualiFe0 b7 laC ;o5e%nin; thei% oCn o%;aniAation to ente% into thesecont%acts Cith the %espon0ent./n section #B! of the Co%po%ation LaC it is 0ecla%e0 that Kan7 pe%sonK @a7 beco@e astoc>hol0e% in buil0in; an0 loan associations. The Co%0 Kpe%sonK appea%s to be he%euse0 in its ;ene%al sense( an0 the%e is nothin; in the conte8t to in0icate that the e8p%ession is use0 in the %est%icte0 sense of both natu%al an0 a%tiFcial pe%sons( as in0icate0 in section & of the A0@inist%ati5e Co0e. Me Coul0 not sa7 that the Co%0 Kpe%sonK o% pe%sons(K is to be ta>en in this b%oa0 sense in e5e%7 pa%t of the Co%po%ation LaC. .o% instance( it Coul0 see@ %easonable to sa7 that the inco%po%ato%s of a co%po%ation ou;ht to be natu%al pe%sons( althou;h in sectionit is sai0 that F5e o% @o%e Kpe%sonsK( althou;h in sectionit is sai0 that F5e o% @o%e Kpe%sons(K not e8cee0in; Ffteen( @a7 fo%@ a p%i5ate co%po%ation. But the conte8t the%e( as Cell as the co@@on sense of the situation( su;;ests that natu%al pe%sons a%e @eant. Mhen it is sai0( hoCe5e%( in section #B!( that Kan7 pe%sonK @a7 beco@e a stoc>hol0e% in a buil0in; an0 loan association( no %eason is seen Ch7 the ph%ase @a7 not be ta>en in its p%ope% b%oa0 sense of eithe% a natu%al o% a%tiFcial pe%son. At an7 %ate the Juestion Chethe% these loans an0 the atten0ant subsc%iptions Ce%e p%ope%l7 @a0e in5ol5es a consi0e%ation of the poCe% of the subsc%ibin; co%po%ationsan0 pa%tne%ships to oCn the stoc> an0 ta>e the loansN an0 it is not alle;e0 in the co@plaint that the7 Ce%e Cithout poCe% in the p%e@ises. Of cou%se the @e%e @oti5eCith Chich subsc%iptions a%e @a0e( Chethe% to Jualif7 the stoc>hol0e%s to ta>e a loan o% fo% so@e othe% %eason( is of no @o@ent in 0ete%@inin; Chethe% the subsc%ibe%s Ce%e co@petent to @a>e the cont%acts. The %esult is that Ce Fn0 nothin; in the alle;ations of the si8teenth cause of action( o% in the facts 0e5elope0 in connection the%eCith( that Coul0 Iustif7 us in ;%antin; the %elief.Se5enteenth cause of action. L Un0e% the se5enteenth cause of action( it is cha%;e0 that in 0isposin; of %eal estates pu%chase0 b7 it in the collection of its loans( the 0efen0ant has no 5a%ious occasions sol0 so@e of the sai0 %eal estate on c%e0it( t%ansfe%%in; the title the%eto to the pu%chase%N that the p%ope%ties sol0 a%e then @o%t;a;e0 to the 0efen0ant to secu%e the pa7@ent of the pu%chase p%ice( sai0 a@ount bein; consi0e%e0 as a loan( an0 ca%%ie0 as such in the boo>s of the 0efen0ant( an0 that se5e%al such obli;ations a%e still outstan0in;. /t is fu%the% cha%;e0 that the pe%sons an0 entities to Chich sai0 p%ope%ties a%e sol0 un0e% the con0ition cha%;e0 a%e not @e@be%s o% sha%ehol0e%s no% a%e the7 @a0e @e@be%s o% sha%ehol0e%s of the 0efen0ant.This pa%t of the co@plaint is base0 upon a @e%e technicalit7 of boo>>eepin;. The cent%al i0ea in5ol5e0 in the 0iscussion is the p%o5ision of the Co%po%ation LaC %eJui%in; loans to be stoc>hol0e%s onl7 an0 on the secu%it7 of %eal estate an0 sha%esin the co%po%ation( o% of sha%es alone. /t see@s to be suppose0 that( Chen the %espon0ent sells p%ope%t7 acJui%e0 at its oCn fo%eclosu%e sales an0 ta>es a @o%t;a;e to secu%e the 0efe%%e0 pa7@ents( the obli;ation of the pu%chase% is a t%ue loan( an0 hence p%ohibite0. But in %eJui%in; the %espon0ent to sell %eal estate Chich it acJui%es in connection Cith the collection of its loans Cithin F5e 7ea%s afte% %ecei5in; title to the sa@e( the laC 0oes not p%esc%ibe that the p%ope%t7 @ust be sol0 fo% cash o% that the pu%chase% shall be a sha%ehol0e% in the co%po%ation. Such sales can of cou%se be @a0e upon te%@s an0 con0itions app%o5e0 b7 the pa%tiesN an0 Chen the association ta>es a @o%t;a;e to secu%e the 0efe%%e0 pa7@ents( the obli;ation of the pu%chase% cannot be fai%l7 0esc%ibe0 as a%isin; out of a loan. No% 0oes the fact that it is ca%%ie0 as a loan on the boo>s of the %espon0ent @a>e it a loan on the boo>s of the %espon0ent @a>e it a loan in laC. The contention of the Go5e%n@ent un0e% this hea0 is untenable./n conclusion( the %espon0ent is enIoine0 in the futu%e f%o@ a0@iniste%in; %eal p%ope%t7 not oCne0 b7 itself( e8cept as @a7 be pe%@itte0 to it b7 cont%act Chen a bo%%oCin; sha%ehol0e% 0efaults in his obli;ation. /n all othe% %espects the co@plaint is 0is@isse0( Cithout costs. So o%0e%e0.A5ance:a( C. 6.( 6ohnson( 1illa@o% an0 1ila-Real( 66.( concu%.Sepa%ate OpinionsMALCOLM( 6.( Cith Cho@ concu% OSTRAN, an0 6O-NS( 66.( 0issentin;=.o% the secon0 ti@e in the histo%7 of the cou%t L so counsel fo% plaintiD info%@ us L Ce @ust t%7 a co%po%ation fo% the 5iolation of a laC Chich ca%%ies Cith it a 0eath Ca%%ant L so counsel fo% 0efen0ant inti@ates. That the co%po%ation at ba% is Cealth7 an0 poCe%ful shoul0 neithe% p%eIu0ice us a;ainst it no% cause us to c%in;e befo%e its @i;ht. The cou%t has a 0ut7 to pe%fo%@ an0 shoul0 pe%fo%@ it Cith fai%nessto the co%po%ation an0 Cith Iustice to the public( Chose inte%ests a%e in5ol5e0. El -o;a% .ilipino( 0ese%5es e8actl7 the sa@e consi0e%ation as an7 othe% liti;ant. No @o%e( no less.The p%ocee0in; is one of Juo Ca%%anto( be;un b7 the Go5e%n@ent of the Philippine /slan0s un0e% autho%it7 of section #"G-A of the Co%po%ation LaC( an0 of sections #"B-( $#" of the Co0e of Ci5il P%oce0u%e. The co@plaint contains se5enteen causes of action. To all of the@( the 0efen0ant has @a0e ansCe%. The facts ha5e been co5e%e0 b7 stipulation. The ;o5e%n@ent as>s fo% an o%0e% of 0issolution. ,efen0ant tenaciousl7 %esists.El -o;a% 0e .ilipino is a co%po%ation o%;aniAe0 as a @utual buil0in; an0 loan association un0e% the p%o5isions of the Co%po%ation LaC OAct No. #'$"P. The laC last @entione0( it @a7 %ecalle0( is 0i5i0e0 into tCo pa%ts. Chapte% one is entitle0 KGene%al P%o5isions.K /n chapte% tCo is entitle0 KSpecial P%o5isionsK. /n chapte% tCo( section #B# to #"G( inclusi5e( a%e foun0 the special p%o5isions pe%tainin; to buil0in; an0 loan co%po%ations. Section #B# the%eof is in0icati5e of the le;islati5e pu%pose. /t p%o5i0es=All co%po%ations Chose capital stoc> is %eJui%e0 o% is pe%@itte0 to be pai0 in b7 the stoc>hol0e%s in %e;ula%( eJual( pe%io0ical pa7@ents an0 Chose pu%pose is to accu@ulate the sa5in;s of its stoc>hol0e%s( to %epa7 to sai0 stoc>hol0e% thei% accu@ulate0 sa5in;s an0 p%oFts upon su%%en0e% of thei% stoc>( to encou%a;e in0ust%7( f%u;alit7( an0 ho@e buil0in; a@on; its stoc>hol0e%s( an0 to loan its fun0s an0 fun0s bo%%oCe0 fo% the pu%pose to stoc>hol0e%s on the secu%it7 of unencu@be%e0 %eal estate an0 the ple0;e of sha%es of capital stoc> oCne0 b7 the stoc>hol0e%s as collate%al secu%it7( shall be >noCn as buil0in; an0 loan co%po%ation( an0 the Co%0s @utual buil0in; an0 loan association shall fo%@ pa%t of the na@e of e5e%7 such co%po%ation.The a%ticles of inco%po%ation of El -o;a% .ilipino shoC that the pu%pose of the co%po%ation a%e= O#P The accu@ulation of the sa5in;s of its sha%ehol0e%sN O&P the %etu%n to sai0 sha%ehol0e%s of thei% accu@ulate0 sa5in;s an0 p%oFts upon the su%%en0e% an0 cancellation of thei% sha%esN O!P the encou%a;e@ent of in0ust%7( f%u;alit7( an0 ho@e buil0in; a@on; its sha%ehol0e%sN O'P the loan of its fun0s an0 fun0s bo%%oCe0 fo% the pu%pose to its sha%ehol0e%s on the secu%it7 of unencu@be%e0%eal estate an0 the ple0;e of sha%es of capital stoc> of the co@pan7 oCne0 b7 its sha%ehol0e%s as collate%al secu%it7N an0 O$P the bo%%oCin; of @one7 upon the c%e0it of the co%po%ation an0 the issuance of bon0s o% othe% 0ocu@ents e5i0encin; the e8istence of such obli;ations. The capital of the co%po%ation is @a0e not to e8cee0 P#G(GGG(GGG. At the en0 of #"&$ it ha0 $()& sha%ehol0e%s hol0in; #&$(B$G sha%es( the total pai0 up 5alue of Chich Cas P)(BG!(G&.&$.El -o;a% .ilipino ha5in; been inco%po%ate0 un0e% Philippine laC as a @utual buil0in;an0 loan association( the p%i@a%7 inJui%7 shoul0 natu%all7 be as to the natu%e( pu%poses( an0 ope%ations of @utual buil0in; an0 loan associations./n the case of El -o;a% .ilipino 5s. RaDe%t7 O3#"#)4 !B Phil.( ""$P(this cou%t ha0 p%esente0 the Juestion of Chethe% El -o;a% .ilipino( as a buil0in; an0 loan association( Cas %elie5e0 f%o@ the necessit7 of pa7in; an inco@e ta8. /t Cas hel0 that it Cas. M%. 6ustice 6ohnson( spea>in; fo% the cou%t( sai0=A buil0in; an0 loan association is an o%;aniAation c%eate0 fo% the pu%pose of accu@ulatin; a fun0 b7 the @onthl7 subsc%iption o% sa5in; of its @e@be%s( to assistthe@ in buil0in; o% pu%chasin; fo% the@sel5es 0Cellin;s o% %eal estate( b7 loanin; tothe@ the %eJuisite @one7 f%o@ the fun0s of the societ7. To all pa%ticula% intent it @a7 be sai0 to be to enable a nu@be% of associates to ha5e an0 in5est thei% sa5in;sto @utual a05anta;e( so that( f%o@ ti@e to ti@e( an7 in0i5i0ual a@on; the@ @a7 %ecei5e( out of the accu@ulation of the pittances Chich each cont%ibutes pe%io0icall7( a su@( b7 Ca7 of loan( Che%eCith to buil0 o% pa7 fo% a ho@e( an0 ulti@atel7 @a>in; it absolutel7 his oCn b7 the pa7@ent of such s@all a@ounts f%o@ti@e to ti@e. ORho0es 5s. Missou%i Sa5in;s H Loan Co.( #B! /ll.( N '& L. R. A.( "!.PThe sa@e opinion Juote0 f%o@ En0lich on Buil0in; Associations( section B( Cho Cas te%@e0 a lea0in; autho%it7 upon such associations( on the subIect of the p%i@a%7 0esi;ns an0 ;ene%al ope%ation of buil0in; associations( the folloCin;=The i0ea Chich F%st ;a5e %ise to the institution of buil0in; associations( Chich fu%nishe0 thei% ostensible an0 le;iti@ate %aison 0?et%e( an0 Chich secu%e0 to the@ thei% popula%it7 an0 thei%( in @an7 %espects( e8ceptionall7 fa5o%e0 position befo%e the laC( is that of enablin; pe%sons belon;in; to a class Chose ea%nin; a%e s@all( an0 Cith Cho@ the sloCness of the accu@ulation 0iscou%a;es the eDo%t( to beco@e b7 a p%ocess of ;%a0ual an0 co@pulso%7 sa5in;s( eithe% at the en0 of a ce%tain pe%io0( o% b7 anticipation of it( the oCne%s of ho@estea0s. The ope%ation of the sche@e @a7 be easil7 un0e%stoo0.The sa@e opinion Juote0 f%o@ Tho%nton an0 Blac>le0;e in thei% Co%> on Buil0in; an0 Loan Associations( at pa;ethe folloCin;=Societies( >noCn as buil0in;( loan fun0( an0 sa5in;s association( a%e noC %eco;niAe0 as i@po%tant facto%s in the social an0 econo@ic 0e5elop@ent of this count%7. The cont%ollin; i0ea is the @assin; of the sepa%ate ea%nin;s of Ca;e-Co%>e%s( an0 the sa5in;s of pe%sons of s@all @eans( in such a @anne% as to ai0 the@ in p%ocu%in; ho@es. /t is the o%;aniAation of th%ift an0 self-helpN a p%actical application of the @a8i@ that in Kunion the%e is st%en;th.K The eDect of such a @o5e@ent is to 0i;nif7 the ho@eN to foste% @o%alit7( an0 to @a>e thou;htful( Cise( an0 %esponsible citiAens. /t is fo% such %eason that the laC an0 the cou%ts( Che%e such associations ha5e been p%ope%l7 con0ucte0( ha5e loo>e0 upon the@ Cith fa5o%.Mhethe% the7 shall %etain the fa5o%able esti@ation of le;islatu%es an0 cou%ts Cill 0epen0 in la%;e @easu%e upon the Cise fo%ecast an0 0ete%@ine0 pu%pose of those Cho cont%ol such institutions. Those 0epa%tu%es f%o@ the o%i;inal i0ea( inten0e0 to enhance the p%oFts of in5esto%s( Cithout in an7 0e;%ee ai0in; those Cho a%e en0ea5o%in; to buil0 ho@es( ha5e been( an0 in the futu%e p%obabl7 Cill be( se5e%el7 censu%e0 b7 the cou%ts./n the case of LopeA an0 6a5elona 5s. El -o;a% .ilipino an0 Re;ist%a% of ,ee0s of Occi0ental Ne;%os O3#"&$4( 'B Phil.( &'"P( the p%incipal issue ha0 to 0o Cith the %elation of El -o;a% .ilipino to the Usu%7 LaC pe%@ittin; it to cha%;e a hi;he% %ate of inte%est than pe%sons o% entities( cha%;e than si@ila%l7 o%;aniAe0 @utual buil0in; an0 loan associations. M%. 6ustice 6ohns( in a 5i;o%ous 0issentin; opinion( sai0=The%e @ust be an0 is 5ali0 %eason fo% the e8ception @a0e in the statute Chich pe%@its buil0in; an0 loan associations to cha%;e an0 %ecei5e #) pe% cent pe% annu@as inte%est( an0 Chich li@its all othe% loans @a0e b7 an7 othe% pe%son( F%@ o% co%po%ation to inte%est at #& pe% cent pe% annu@.All buil0in; an0 loan associations a%e foun0e0( an0 e8ceptions @a0e in thei% fa5o% as to the %ate of inte%est( upon the theo%7 that the7 Cill enable a pe%son Cith s@all @eans o% s@all inco@e Cho has a fa@il7 to suppo%t( to buil0 a ho@e in Chich to li5ean0 to i@p%o5e his p%ope%t7 an0 0e5elop the count%7. Mhen the e8ception Cas @a0eb7 the Le;islatu%e( it Cas ne5e% inten0e0 that the El -o;a% .ilipino o% an7 othe% co%po%ation( un0e% the ;uise of a buil0in; an0 loan association( shoul0 @a>e a loan upon a su;a% plantation of the natu%e of the one in Juestion.8 8 8 8 8 8 8 8 8/t Cill be note0 that the e8ception @a0e in the statute abo5e Juote0 is fo% @utual buil0in; an0 loan societies inco%po%ate0 un0e% the Co%po%ation Act. The use of the Co%0 @utual is si;niFcant an0 i@po%tant. Un0e% the statute( it is not sus of En0lich( an0 Tho%nton an0 Blac>le0;e on the pu%poses of @utual buil0in; an0 loan associations. .letche%( C7clope0ia of Co%po%ation( 5olu@e #( pa;e #!( Cas also Juote0 f%o@ as folloCs=An inco%po%ate0 buil0in; an0 loan association is a co%po%ation fo% the pu%pose of %aisin;( b7 pe%io0ical subsc%iptions of @e@be%s( a stoc> o% fun0 to assist @e@be%s b7 a05ances o% loans( ;ene%all7 on @o%t;a;e secu%it7( in buil0in; o% pu%chasin; ho@es. Such co%po%ations a%e 0iDe%ent f%o@ co%po%ations fo%@e0 fo% pecunia%7 p%oFt.The te%@ Obuil0in; an0 loan associationP 0oes not ;ene%all7 inclu0e co%po%ations unless thei% pu%pose is to accu@ulate fun0s an0 len0 the sa@e to @e@be%s to assists the@ in pu%chasin; o% buil0in; ho@es . . . OCases cite0.P /t 0oes not inclu0e aco%po%ation . . . fo% the pu%pose of pu%chasin; an0 i@p%o5in; %eal estate an0 a05ancin; @one7 on @o%t;a;es . . . o% a co%po%ation @e%el7 fo% the pu%pose of loanin; @one7./n the sa@e 0issent( %efe%ence Cas @a0e to Chat Co%pus 6u%is( 5olu@e "( pa;e "&G( contains on the subIect of the obIect an0 pu%pose of buil0in; an0 loan associations( na@el7=As it is so@eti@es state0 in the statutes %elatin; to( an0 in the cha%te%s an0 constitutions of( buil0in; an0 loan associations( the p%incipal obIect of a buil0in; an0loan association is to c%eate a loan fun0 fo% the beneFt of its bo%%oCin; @e@be%s( the un0e%l7in; i0ea bein; that( b7 @eans of the s7ste@ of s@all pe%io0ical pa7@ents p%o5i0e0( people of li@ite0 @eans Cill be enable0 to beco@e the oCne%s of ho@es( an0 th%ift( econo@7( an0 ;oo0 citiAenship Cill the%eb7 be p%o@ote0. B7 %eason of the fa5o%able %esults atten0in; the ope%ation of these associations( an0 thei% beneFcent pu%poses( the7 ha5e( especiall7 befo%e the7 attaine0 thei% p%esent t%e@en0ous ;%oCth( been fa5o%e0 an0 ;%ante0 special p%i5ile;es b7 the 5a%ious le;islatu%es( such as pe%@ission to cha%;e hi;h %ates of inte%est an0 e8e@ption f%o@ta8ation. . . .K /n lieu of aste%is> the ne8t succee0in; sentence f%o@ Co%pus 6u%is coul0 also ha5e been app%op%iatel7 use0= K-oCe5e%( Cith the ;%oCth of these o%;aniAations( e5ils ha5e c%ept in( the p%i5ile;es ;%ante0 ha5e in @an7 instances been abuse0 b7 unsc%upulous oin; of the pu%poses fo% Chich loans can be @a0e b7 buil0in; an0 loan associations( Rosenthal( in his Co%> on Buil0in;( Loan an0 Sa5in;s Associations( thi%0 e0ition( pa;e #G)( sa7s=/n ou% opinion( the obIect of buil0in;( loan an0 sa5in;s associations is to fu%nish fun0s fo% ho@es %athe% than fo% @e%cantile o% @anufactu%in; i@p%o5e@ents. So@e of the la%;e% associations ha5e ;%ante0 loans of this cha%acte%( an0 Ce consi0e% it a 0an;e%ous 0epa%tu%e f%o@ the pu%poses fo% Chich these associations Ce%e c%eate0.Tho@pson on Buil0in; Associations( pa;e $( &!( &'( &!& an0 $$)( sa7s=The buil0in; association as noC e8istin; is a p%i5ate co%po%ation 0esi;ne0 fo% the accu@ulation( b7 the @e@be%s( of thei% @one7( b7 pe%io0ical pa7@ents into its t%easu%7( to be in5este0 f%o@ ti@e to ti@e in loans to the @e@be%s upon %eal estate fo% ho@e pu%poses(The buil0in; association is a ho@e buil0e%. The @e@be% b7 its s7ste@ is enable0 to acJui%e a ho@e( an0 to pa7 fo% it he ple0;es his futu%e sa5in;s. . . . /t enfo%ces econo@7( an0 aCa>ens thou;hts of citiAenship in its bette% sense of oDe%in; ho@es.This is the F%st pu%pose of these institutions. The lan;ua;e of the Sup%e@e Cou%t of Geo%;ia is ti@el7= KThe the7 ha5e i@p%o5e0 ou% toCns b7 lea0in; to the e%ection of anu@be% of neC buil0in;s( fu%nishe0 @an7 fa@ilies Cith ho@es of thei% oCn( that coul0 not othe%Cise ha5e possesse0 the( ;i5en a consi0e%able i@pulse to @echanical ente%p%ise( an0 in @an7 othe% Ca7s p%o@ote0 the p%ospe%it7 an0 Celfa%e of the co@@unities Che%e the7 e8ist( is un0oubte0l7 t%ue. But Chethe% the7 Cill continue to be entitle0 to the epithet of the Kpoo% @an?s e8cheJue%(K an0 Chethe% the7 Cill( as the7 p%o@ise to 0o( enable e5e%7 @an to beco@e his oCn lan0lo%0( Cill 0epen0 enti%el7 upon the @anne% in Chich the7 con0uct thei% business . . .KThese institutions a%e Cell >noCn all o5e% the Unite0 States to be 0eposito%ies of @one7 sa5in;s( an0 in5esto%s of those sa5in;s in ho@es fo% @e@be%s. The le;islatu%e has c%eate0 the@ in the inte%est of ;oo0 citiAenship( to enable the peopleto sa5e thei% @one7 an0 acJui%e ho@es an0 beco@e stea07 citiAens. The ulti@ate le;islati5e pu%pose is ho@e-buil0in;. /f it Cas @e%el7 a 0eposito%7 of sa5in;s it Coul0 ha5e no st%on; %eason fo% e8istence( because the sa5in;s ban>s fu%nish thatN but it ;oes fu%the%( an0 is 0esi;ne0 b7 laC to use those sa5in;s in p%ocu%in; ho@es fo% its @e@be%s. An0 the cou%ts shoul0 p%o@ptl7 cu%b an7 0isposition to 0epa%t f%o@the co%po%ate pu%poses.. . . But a buil0in; association is not an o%0ina%7 co%po%ationN in fact( it e8e%cises so@e e8t%ao%0ina%7 p%i5ile;es( pa%ticula%l7 in not bein; a@enable to the usu%7 laCs. /t is c%eate0 fo% the 0ecla%e0 pu%poses of accu@ulatin; @one7 an0 len0in; the accu@ulation to @e@be%s to buil0 o% acJui%e ho@es fo% the@sel5es. The le;islatu%e 0e5ise0 this plan of coope%ati5e accu@ulations fo% the pu%pose of assistin; each @e@be% to beco@e his oCn lan0lo%0. The state has a selFsh @oti5e in the p%o@otion of a buil0in; association( as th%ou;h its Co%>in;s it is plantin; 0eepl7 the %oots of citiAenship. The 0%iftin;( th%iftless classes a%e oDe%e0 a school of econo@7( an0 the ea%nest an0 econo@ical classes a%e ;i5en an oppo%tunit7. The%e is( then( thefo%@ation of a stea07( ene%;etic an0 accu@ulatin; citiAen. The ca%es of the state a%e lessene0 b7 0ec%easin; po5e%t7( an0 its p%ospe%it7 is inc%ease0 b7 ;%oCin; @ate%ial Cealth. Me @a7 clea%l7 concei5e( then( that the intention of the le;islatu%e in the c%eation of buil0in; associations is( F%st( to encou%a;e sa5in;sN secon0( to secu%e ho@es fo% the sa5e%s./n the case of Man0lin 5s. A@e%ican Sa5in;s an0 Loan Association O3#)"4(! Minn.( !$)P( the cou%t sai0=So-calle0 Kbuil0in; societies(K ope%ate0 on the plan of the 0efen0ant( ha5e so often beco@e the inst%u@ent of opp%ession an0 e8to%tion as to call 0oCn the censu%e of so@e e@inent cou%ts. The o%i;inal pu%pose of buil0in; societies( 5iA.( to enable people of s@all @eans to buil0 o% bu7 ho@es( is enti%el7 Cantin;.KSuch a bo07K sa7s .ollet( 6.( in Seibel 5s. 1icto%ia Buil0in; Association O'! Ohio St.( !B#( p. !B!P( Ke8ists fo% the eJual beneFt of all its @e@be%s( Cho a%e p%esu@e0 to be pe%sons Chose ea%nin;s a%e s@all( an0 Cho see> to use Cee>l7 sa5in;s in p%ocu%in; suitable ho@estea0s. E5e%7 @e@be% is p%esu@e0 to beco@e afte% so@eti@e a bo%%oCe% to the e8tent of his inte%est. Buil0in; associations a%e not inten0e0 to enable @one7 len0e%s to obtain e8t%ao%0ina%7 inte%est( but the7 a%e inten0e0 to help in secu%in; ho@es Cith the ai0 of s@all inco@es.K OBa%%7 LaC of Buil0in; Societies( p. !( sec. '.P/n case of No%th A@e%ican Buil0in; Associaton 5s. Sutton O3#)G4( !$ Pa.( '!P( the cou%t sai0=/t is Cell >noCn that the o%i;inal 0esi;n of the le;islatu%e Cas to encou%a;e the e%ection of buil0in;s. The @oti5e fo% the ;%ant of the f%anchise Cas public i@p%o5e@ent. But the p%actical Co%>in; of the associations fo%@e0 un0e% the laC has not been Chat Cas anticipate0. Thou;h calle0 Kbuil0in; societies(K the7 a%e( in t%uth( onl7 a;encies b7 Chich a ;%eate% than le;al inte%est is obtaine0 f%o@ the necessitous an0 unCa%7./n the case of Continental National Buil0in; an0 Loan Association 5s. Mille% O3#"G&4( '' .la.( B$BP( the cou%t sai0=Mhen local in thei% ope%ations an0 p%u0entl7 @ana;e0 the7 ha5e se%5e0 a useful pu%pose enablin; the @an of s@all @eans to buil0 his @o0est ho@es o% to @a>e a safe an0 p%oFtable in5est@ent of his @ea;e% ea%nin;sN but Chen the7 b%anch out an0 fo%;et the o%i;inal pu%poses an0 li@itations that ha5e ;i5en the@ this fa5o%e0 position( t%ouble not inf%eJuentl7 a%ises./n the case of St. 6oseph an0 Qansas Loan an0 Buil0in; Association 5s. Tho@pson O3#)BB4( #" Qansas( !P( the cou%t sai0=/t Cas ne5e% inten0e0 that these co%po%ations( o%;aniAe0 as this one Cas fo% the pu%pose of ;i5in; to its @e@be%s th%ou;h thei% sa5in;s an eas7 Ca7 to 0ischa%;e encu@b%ances an0 to buil0 ho@es( shoul0 loan thei% fun0s to othe%s than thei% oCn @e@be%s./n case of Pa%>e% 5s. .ulton Loan an0 Buil0in; Association O3#)B&4(' Ga.( #P( the cou%t sai0=Mhethe% such a cont%act thou;h le;al upon its face( Cas( in fact( ille;al( Coul0 0epen0 upon the obIect of the association. /f it Ce%e( in t%uth( a @e%e 0e5ise to e5a0e the usu%7 laCs( then it Coul0 0epen0 upon the obIect of the association. /f it Ce%e( in t%uth( a @e%e 0e5ise to e5a0e the usu%7 laCs( then it Coul0 be ille;al( if in fact @o%e Cas ta>en fo% the use of @one7 than B pe% cent pe% annu@. But if the o%;aniAation Ce%e in fact an0 bona F0e a plan Cith the %eal intent an0 obIect of accu@ulatin; a fun0 b7 @onthl7 subsc%iptions o% sa5in;s of the @e@be%s the%eof( toassist the@ in p%ocu%in; fo% the@sel5es such %eal estates as the7 @a7 0ee@ p%ope%(? then it Coul0 not be ille;al.The p%actical application of the %esou%ces of these institutions Obuil0in; an0 loan associationsP to the buil0in; of ho@es an0 ai0in; thei% @e@be%s to chan;e thei% con0itions f%o@ %ent-pa7in; tenants to ho@e-oCnin; citiAens has been %eco;niAe0 as a Co%> of 5ital i@po%tance an0 of the hi;hest helpfulness to the inte%est of the state an0 nation. ORosenthal C7c. of Buil0in;( Loan H Sa5in;s Association( p. B!.PThe ai@ an0 pu%pose of a buil0in; association is to ai0 an0 encou%a;e its @e@be%s to lea%n an0 p%actice th%ift b7 %e;ula% s7ste@atic sa5in;( an0 to p%o5i0e Ca7s an0 @eans so that e5e%7 fa@il7 @a7 p%ocu%e ho@e. ORosenthal C7c. of Buil0in;( Loan H Sa5in;s Association( p. ".PThe fun0s of the F%st associations Ce%e applie0 to ai0 its @e@be%s to p%ocu%e ho@es. This Cas in fact the one outstan0in; featu%e of the plan an0 the hi;h pu%pose fo% Chich the