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FILIPINAS BROADCASTING NETWORK, INC., petitioner, vs. AGO G.R. No.

176579 October 9, 2012


MEDICAL AND EDUCATIONAL CENTER-BICOL CHRISTIAN
COLLEGE OF MEDICINE, (AMEC-BCCM) and ANGELITA F. HEIRS OF WILSON P. GAMBOA,* Petitioners,
AGO,respondents. G.R. No. 141994. January 17, 2005 vs.
FINANCE SECRETARYMARGARITO B. TEVES, FINANCE
Facts: UNDERSECRETARYJOHN P. SEVILLA, AND COMMISSIONER RICARDO
Rima & Alegre were host of FBNI radio program “Expose”. Respondent Ago ABCEDE OF THE PRESIDENTIAL COMMISSION ON GOOD
was the owner of the Medical & Educational center, subject of the radio program GOVERNMENT(PCGG) IN THEIR CAPACITIES AS CHAIR AND MEMBERS,
“Expose”. AMEC claimed that the broadcasts were defamatory and owner Ago and RESPECTIVELY, OF THE PRIVATIZATION COUNCIL, CHAIRMAN
school AMEC claimed for damages. The complaint further alleged that AMEC is a ANTHONI SALIM OF FIRST PACIFIC CO., LTD. IN HIS CAPACITY AS
reputable learning institution. With the supposed expose, FBNI, Rima and Alegre DIRECTOR OF METRO PACIFIC ASSET HOLDINGS INC., CHAIRMAN
“transmitted malicious imputations and as such, destroyed plaintiff’s reputation. MANUEL V. PANGILINAN OF PHILIPPINE LONG DISTANCE TELEPHONE
FBNI was included as defendant for allegedly failing to exercise due diligence in the COMPANY (PLDT) IN HIS CAPACITY AS MANAGING DIRECTOR OF FIRST
selection and supervision of its employees. The trial court found Rima’s statements PACIFIC CO., LTD., PRESIDENT NAPOLEON L. NAZARENO OF PHILIPPINE
to be within the bounds of freedom of speech and ruled that the broadcast was LONG DISTANCE TELEPHONE COMPANY, CHAIR FE BARIN OF THE
libelous. It ordered the defendants Alegre and FBNI to pay AMEC 300k for moral SECURITIES AND EXCHANGE COMMISSION, and PRESIDENT FRANCIS
damages.” LIM OF THE PHILIPPINE STOCK EXCHANGE, Respondents.
ISSUE: Whether or not AMEC is entitled to moral damages.
FACTS:
RULING: YES.
Petitioner is an educational institution duly registered with the SEC since
A juridical person is generally not entitled to moral damages because, unlike a
Sept 1950. Before the case at bar, Petitioner commenced a proceeding
natural person, it cannot experience physical suffering or such sentiments as
against Lyceum of Baguio with the SEC to require it to change its corporate
wounded feelings, serious anxiety, mental anguish or moral shock. Nevertheless,
name and adopt a new one not similar or identical to the Petitioner. SEC
AMEC’s claim, or moral damages fall under item 7 of Art – 2219 of the NCC.
granted noting that there was substantial because of the dominant word
This provision expressly authorizes the recovery of moral damages in cases of
“Lyceum”. CA and SC affirmed. Petitioner filed similar complaint against
libel, slander or any other form of defamation. Art 2219 (7) does not qualify whether
other schools and obtain a favorable decision from the hearing officer. On
the plaintiff is a natural or juridical person. Therefore, a juridical person such as a
appeal, SEC En banc reversed the decision and held that the word Lyceum
corporation can validly complain for libel or any other form of defamation and claim
have not become so identified with the petitioner and that the use thereof will
for moral damages. Moreover, where the broadcast is libelous per se, the law
cause confusion to the general public.
implied damages. In such a case, evidence of an honest mistake or the want of
character or reputation of the party libeled goes only in mitigation of damages. In
this case, the broadcasts are libelous per se. thus, AMEC is entitled to moral
damages. However, we find the award P500,000 moral damages unreasonable. The
record shows that even though the broadcasts were libelous, per se, AMEC has not Issue No.1: WON the corporate names of the parties are identical with or
suffered any substantial or material damage to its reputation. Therefore, we reduce deceptively similar to that of the petitioner. NO
the award of moral damages to P150k.
Held: The corporate names of the parties carry the word “Lyceum” but
confusion and deception are precluded by the appending of geographic
names. Lyceum generally refers to a school or an institution of learning and
it is natural to use this word to designate an entity which is organized and
operating as an educational institution.
Thus, we do not believe that the "Lyceum of Aparri" can be mistaken by the Lyceum" is in fact as generic in character as the word "university." In the
general public for the Lyceum of the Philippines, or that the "Lyceum of name of the petitioner, "Lyceum" appears to be a substitute for "university;"
Camalaniugan" would be confused with the Lyceum of the Philippines. in other places, however, "Lyceum," or "Liceo" or "Lycee" frequently denotes
a secondary school or a college.
Issue No. 2: WON the use by the Lyceum of the Philippines of the word
Lyceum in its corporate name has been for such length of time and with
such exclusivity as to have become associated or identified with the
petitioner institution in the mind of the general public. (Doctrine of Secondary
meaning). NO

Held: Doctrine of Secondary meaning is a word of phrase originally


incapable of exclusive appropriation, might nevertheless have been used so
long and so exclusively by one producer with reference to his article that, in G.R. No. 101897. March 5, 1993.
trade and to that branch of the purchasing public, the word or phrase has
come to mean that the article was his product. LYCEUM OF THE PHILIPPINES, INC., petitioner, vs. COURT OF
APPEALS, LYCEUM OF APARRI, LYCEUM OF CABAGAN, LYCEUM OF
Lyceum of the Philippines has not gained exclusive use of “Lyceum” by long CAMALANIUGAN, INC., LYCEUM OF LALLO, INC., LYCEUM OF TUAO,
passage of time. The number alone of the private respondents suggests INC., BUHI LYCEUM, CENTRAL LYCEUM OF CATANDUANES, LYCEUM
strongly that the use of Lyceum has not been attended with the exclusivity OF SOUTHERN PHILIPPINES, LYCEUM OF EASTERN MINDANAO, INC.
essential for the applicability of the doctrine. It may be noted that one of the and WESTERN PANGASINAN LYCEUM, INC., respondents.
respondents – Western Pangasinan Lyceum used such term 17 years
before the petitioner registered with the SEC. Moreover, there may be other
FACTS:
schools using the name but not registered with the SEC because they have
not adopted the corporate form of organization. Petitioner is an educational institution duly registered with the SEC since
Sept 1950. Before the case at bar, Petitioner commenced a proceeding
DOCTRINE: against Lyceum of Baguio with the SEC to require it to change its corporate
Doctrine of secondary meaning can be extended to corporation name but name and adopt a new one not similar or identical to the Petitioner. SEC
must comply with the requirement that it has been used so long and so granted noting that there was substantial because of the dominant word
exclusively by one and that the said name has come to mean that it is “Lyceum”. CA and SC affirmed. Petitioner filed similar complaint against
referred to as that corporation. other schools and obtain a favorable decision from the hearing officer. On
appeal, SEC En banc reversed the decision and held that the word Lyceum
Western Pangasinan Lyceum — 27 October 1950 have not become so identified with the petitioner and that the use thereof will
Lyceum of Cabagan — 31 October 1962 cause confusion to the general public.
Lyceum of Lallo, Inc. — 26 March 1972
Lyceum of Aparri — 28 March 1972
Lyceum of Tuao, Inc. — 28 March 1972
Lyceum of Camalaniugan — 28 March 1972
Issue No.1: WON the corporate names of the parties are identical with or
Etymologically, the word "Lyceum" is the Latin word for the Greek lykeion deceptively similar to that of the petitioner. NO
which in turn referred to a locality on the river Ilissius in ancient Athens
"comprising an enclosure dedicated to Apollo and adorned with fountains Held: The corporate names of the parties carry the word “Lyceum” but
and buildings erected by Pisistratus, Pericles and Lycurgus frequented by confusion and deception are precluded by the appending of geographic
the youth for exercise and by the philosopher Aristotle and his followers for names. Lyceum generally refers to a school or an institution of learning and
teaching." it is natural to use this word to designate an entity which is organized and
operating as an educational institution.
Thus, we do not believe that the "Lyceum of Aparri" can be mistaken by the Lyceum" is in fact as generic in character as the word "university." In the
general public for the Lyceum of the Philippines, or that the "Lyceum of name of the petitioner, "Lyceum" appears to be a substitute for "university;"
Camalaniugan" would be confused with the Lyceum of the Philippines. in other places, however, "Lyceum," or "Liceo" or "Lycee" frequently denotes
a secondary school or a college.
Issue No. 2: WON the use by the Lyceum of the Philippines of the word
Lyceum in its corporate name has been for such length of time and with
such exclusivity as to have become associated or identified with the
petitioner institution in the mind of the general public. (Doctrine of Secondary
meaning). NO Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus vs Iglesia ng Dios kay
Cristo Jesus, Haligi at Suhay ng Katotohanan Case Digest
Held: Doctrine of Secondary meaning is a word of phrase originally Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus, HSK sa Bansang
incapable of exclusive appropriation, might nevertheless have been used so Pilipinas Inc. vs. Iglesia ng Dios kay Cristo Jesus, Haligi at Suhay ng
long and so exclusively by one producer with reference to his article that, in Katotohanan
trade and to that branch of the purchasing public, the word or phrase has
come to mean that the article was his product. [GR 137592, 12 December 2001]
Lyceum of the Philippines has not gained exclusive use of “Lyceum” by long
passage of time. The number alone of the private respondents suggests
strongly that the use of Lyceum has not been attended with the exclusivity
essential for the applicability of the doctrine. It may be noted that one of the Facts: The Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng
respondents – Western Pangasinan Lyceum used such term 17 years Katotohanan (IDCJ-HSK; Church of God in Christ Jesus, the Pillar and
before the petitioner registered with the SEC. Moreover, there may be other Ground of Truth), is a non-stock religious society or corporation registered in
schools using the name but not registered with the SEC because they have 1936. Sometime in 1976, one Eliseo Soriano and several other members of
not adopted the corporate form of organization. said corporation disassociated themselves from the latter and succeeded in
registering on 30 March 1977 a new non-stock religious society or
DOCTRINE:
corporation, named Iglesia ng Dios Kay Kristo Hesus, Haligi at Saligan ng
Doctrine of secondary meaning can be extended to corporation name but
must comply with the requirement that it has been used so long and so Katotohanan (IDKJ-HSK). On 16 July 1979, IDCJ-HSK filed with the SEC a
exclusively by one and that the said name has come to mean that it is petition to compel IDKJ-HSK to change its corporate name (SEC Case
referred to as that corporation. 1774). On 4 May 1988, the SEC rendered judgment in favor of IDCJ-HSK,
ordering IDKJ-HSK to change its corporate name to another name that is not
Western Pangasinan Lyceum — 27 October 1950 similar or identical to any name already used by a corporation, partnership or
Lyceum of Cabagan — 31 October 1962
association registered with the Commission. No appeal was taken from said
Lyceum of Lallo, Inc. — 26 March 1972
Lyceum of Aparri — 28 March 1972 decision.
Lyceum of Tuao, Inc. — 28 March 1972
Lyceum of Camalaniugan — 28 March 1972 During the pendency of SEC Case 1774, Soriano, et al., caused the
registration on 25 April 1980 of Ang Mga Kaanib sa Iglesia ng Dios Kay
Etymologically, the word "Lyceum" is the Latin word for the Greek lykeion Kristo Hesus, H.S.K, sa Bansang Pilipinas (AK[IDKH-HSK]BP). The
which in turn referred to a locality on the river Ilissius in ancient Athens acronym "H.S.K." stands for Haligi at Saligan ng Katotohanan. On 2 March
"comprising an enclosure dedicated to Apollo and adorned with fountains 1994, IDCJ-HSK filed before the SEC a petition (SEC Case 03-94-4704),
and buildings erected by Pisistratus, Pericles and Lycurgus frequented by
praying that AK[IDKH-HSK]BP be compelled to change its corporate name
the youth for exercise and by the philosopher Aristotle and his followers for
teaching." and be barred from using the same or similar name on the ground that the
same causes confusion among their members as well as the public. KIDKH- amended name." Corollary thereto, the pertinent portion of the SEC
HSK-BP filed a motion to dismiss on the ground of lack of cause of action. Guidelines on Corporate Names states that "(d) If the proposed name
The motion to dismiss was denied. Thereafter, for failure to file an answer, contains a word similar to a word already used as part of the firm name or
AK[IDKH-HSK]BP was declared in default and IDCJ-HSK was allowed to style of a registered company, the proposed name must contain two other
present its evidence ex parte. On 20 November 1995, the SEC rendered a words different from the name of the company already registered; Parties
decision ordering AK[IDKH-HSK]BP to change its corporate name. organizing a corporation must choose a name at their peril; and the use of a
AK[IDKH-HSK]BP appealed to the SEC En Banc (SEC-AC 539). In a name similar to one adopted by another corporation, whether a business or
decision dated 4 March 1996, the SEC En Banc affirmed the above decision, a nonprofit organization, if misleading or likely to injure in the exercise of its
upon a finding that AK[IDKH-HSK]BP's corporate name was identical or corporate functions, regardless of intent, may be prevented by the
confusingly or deceptively similar to that of IDCJ-HSK's corporate name. corporation having a prior right, by a suit for injunction against the new
AK[IDKH-HSK]BP filed a petition for review with the Court of Appeals. On 7 corporation to prevent the use of the name. Herein, the additional words
October 1997, the Court of Appeals rendered the decision affirming the "Ang Mga Kaanib " and "Sa Bansang Pilipinas, Inc." in AK[IDKH-HSK]BP's
decision of the SEC En Banc. AK[IDKH-HSK]BP's motion for reconsideration name are merely descriptive of and also referring to the members, or kaanib,
was denied by the Court of Appeals on 16 February 1992. AK[IDKH-HSK]BP of IDCH-HSK who are likewise residing in the Philippines. These words can
filed the petition for review. hardly serve as an effective differentiating medium necessary to avoid
confusion or difficulty in distinguishing AK[IDKH-HSK]BP from IDCH-HSK.
This is especially so, since both AK[IDKH-HSK]BP and IDCH-HSK are using
the same acronym — H.S.K.; not to mention the fact that both are espousing
Issue: religious beliefs and operating in the same place. Parenthetically, it is well to
mention that the acronym H.S.K. used by AK[IDKH-HSK]BP stands for
1. Whether the corporate names of AK[IDKH-HSK]BP and
"Haligi at Saligan ng Katotohanan." Then, too, the records reveal that in
IDCH-HSK are confusingly similar.
holding out their corporate name to the public, AK[IDKH-HSK]BP highlights
2. Whether the generic word rule would apply to support
the dominant words "IGLESIA NG DIOS KAY KRISTO HESUS, HALIGI AT
AK[IDKH-HSK]BP’s cause.
SALIGAN NG KATOTOHANAN," which is strikingly similar to IDCH-HSK's
corporate name, thus making it even more evident that the additional words
Held:
"Ang Mga Kaanib" and "Sa Bansang Pilipinas, Inc.", are merely descriptive
of and pertaining to the members of IDCH-HSK. Significantly, the only
difference between the corporate names of AK[IDKH-HSK]BP and IDCH-
1. The SEC has the authority to de-register at all times and under all HSK are the words SALIGAN and SUHAY. These words are synonymous —
circumstances corporate names which in its estimation are likely to spawn both mean ground, foundation or support. Hence, this case is on all fours
confusion. It is the duty of the SEC to prevent confusion in the use of with Universal Mills Corporation v. Universal Textile Mills, Inc., 22 where the
corporate names not only for the protection of the corporations involved but Court ruled that the corporate names Universal Mills Corporation and
more so for the protection of the public. Section 18 of the Corporation Code Universal Textile Mills, Inc., are undisputably so similar that even under the
provides that "No corporate name may be allowed by the Securities and test of "reasonable care and observation" confusion may arise.
Exchange Commission if the proposed name is identical or deceptively or
confusingly similar to that of any existing corporation or to any other name
already protected by law or is patently deceptive, confusing or is contrary to
2. The wholesale appropriation by AK[IDKH-HSK]BP of IDCH-HSK's
existing laws. When a change in the corporate name is approved, the
corporate name cannot find justification under the generic word rule. A
Commission shall issue an amended certificate of incorporation under the
contrary ruling would encourage other corporations to adopt verbatim and Donation is undeniably one of the modes of acquiring ownership of real
register an existing and protected corporate name, to the detriment of the property. Likewise, ownership of a property may be transferred by tradition
public. The fact that there are other non-stock religious societies or as a consequence of a sale.
corporations using the names Church of the Living God, Inc., Church of God
Jesus Christ the Son of God the Head, Church of God in Christ & By the Donation is an act of liberality whereby a person disposes gratuitously of a
Holy Spirit, and other similar names, is of no consequence. It does not thing or right in favor of another person who accepts it. The donation could
authorize the use by AK[IDKH-HSK]BP of the essential and distinguishing not have been made in favor of an entity yet inexistent at the time it was
feature of IDCH-HSK's registered and protected corporate name. made. Nor could it have been accepted as there was yet no one to accept it.

The deed of donation was not in favor of any informal group of SDA
members but a supposed SPUM-SDA Bayugan (the local church) which, at
the time, had neither juridical personality nor capacity to accept such gift.

Seventh Day Adventist Conference Church of Southern Philippines vs. (With questions regarding de facto corporation and law of sales.)
North Eastern Mindanao Mission of Seventh Day Adventist, Inc. (496
SCRA 215)
Petition Denied.
FACTS:
Spouses Felix Cosio and Felisa Cuysona donate a parcel of land to South
Philippine [Union] Mission of Seventh Day Adventist Church, and was
received by Liberato Rayos, an elder of the Seventh Day Adventist Church,
on behalf of the donee.
JOHN F. MCLEOD vs. NATIONAL LABOR RELATIONS COMMISSION (FIRST
DIVISION), FILIPINAS SYNTHETIC FIBER CORPORATION (FILSYN), FAR EASTERN
However, twenty years later, the spouses sold the same land to the Seventh
TEXTILE MILLS, INC., STA. ROSA TEXTILES, INC., (PEGGY MILLS, INC.), PATRICIO L.
Day Adventist Church of Northeastern Mindanao Mission.
LIM, AND ERIC HU G.R. NO. 146667 January 23, 2007 Ponente: CARPIO, J.
Claiming to be the alleged donee’s successors-in-interest, petitioners
FACTS: On February 2, 1995, John F. McLeod filed a complaint for: 1. retirement
asserted ownership over the property. This was opposed by respondents
benefits 2. vacation and sick leave benefits 3. non-payment of unused airline
who argued that at the time of the donation, SPUM-SDA Bayugan could not
tickets 4. holiday pay 5. underpayment of salary 6. 13th month pay 7. moral and
legally be a donee because, not having been incorporated yet, it had no
juridical personality. Neither were petitioners members of the local church exemplary damages 8. attorney’s fees plus interest, against Filipinas Synthetic
then, hence, the donation could not have been made particularly to them. Corporation (FILSYN), Far Eastern Textile Mills, Inc., Sta. Rosa Textiles, Inc. (SRTI),
Patricio Lim (President of PMI) and Eric Hu. Complainant was the Vice President
ISSUE: and Plant Manager of the plant of Peggy Mills, Inc. (PMI) at Sta. Rosa, Laguna.
Should the Seventh Day Adventist Church of Northeastern Mindanao Filsyn sold Peggy Mills, Inc. to Far Eastern Textile Mills, Inc. and this was renamed
Mission's ownership of the lot be upheld? as Sta. Rosa Textile (SRTI) with Patricio Lim as Chairman and President. The owners
of Far Eastern Textiles decided for cessation of operations of Sta. Rosa Textiles. On
HELD: two occasions, complainant wrote letters to Patricio Lim requesting for his
We answer in the affirmative. retirement and other benefits. In the last quarter of 1994 respondents offered
complainant compromise settlement of only P300,000.00 which complainant HALL vs. PICCIO DIGEST
rejected. The Labor Arbiter held all respondents as jointly and solidarily liable for
complainant’s money claims. The NLRC reversed and set aside the ruling of the
Labor Arbiter and a new one was entered ordering only respondent Peggy Mills, DECEMBER 21, 2016 ~ VBDIAZ
Inc. (PMI) to pay the money claims. All other claims were dismissed for lack of
merit. The Court of Appeals affirmed the decision of the NLRC with modification. It ARNOLD HALL vs. EDMUNDO PICCIO
held Patricio Lim as jointly and solidarily liable with Peggy Mills, Inc. (PMI) to pay
the money claims to McLeod. ISSUE: Whether or not Patricio Lim, as President of G.R. No. L-2598 / June 29, 1950
PMI, could be held jointly and solidarily liable with PMI. HELD: No, Patricio Lim is FACTS:
absolved from personal liability. A corporation is a juridical entity with legal
personality separate and distinct from those acting for and in its behalf and, in
general, from the people comprising it. The rule is that obligations incurred by the
On May 28, 1947, the petitioners C. Arnold Hall and Bradley P. Hall, and the
corporation, acting through its directors, officers, and employees, are its sole
liabilities. Personal liability of corporate directors, trustees or officers attaches only respondents Fred Brown, Emma Brown, Hipolita D. Chapman and Ceferino S.
when: (1) they assent to a patently unlawful act of the corporation, or when they
are guilty of bad faith or gross negligence in directing its affairs, or when there is a Abella, signed and acknowledged in Leyte, the articles of incorporation of the Far
conflict of interest resulting in damages to the corporation, its stockholders or
Eastern Lumber and Commercial Co., Inc., organized to engage in a general lumber
other persons; (2) they consent to the issuance of watered down stocks or when,
having knowledge of such issuance, do not forthwith file with the corporate business to carry on as general contractors, operators and managers, etc. Attached to
secretary their written objection; (3) they agree to hold themselves personally and
the articles was an affidavit of the treasurer stating that 23,428 shares of stock had
solidarily liable with the corporation; or (4) they are made by specific provision of
law personally answerable for their corporate action. Considering that McLeod been subscribed and fully paid with certain properties transferred to the corporation
failed to prove any of the foregoing exceptions in the present case, McLeod cannot
hold Patricio solidarily liable with PMI. The records are bereft of any evidence that described in a list appended thereto.
Patricio acted with malice or bad faith. Bad faith is a question of fact and is
Immediately after the execution of said articles of incorporation, the corporation
evidentiary. Bad faith does not connote bad judgment or negligence. It imports a
dishonest purpose or some moral obliquity and conscious wrongdoing. It means proceeded to do business with the adoption of by-laws and the election of its
breach of a known duty through some ill motive or interest. It partakes of the
nature of fraud. In the present case, there is nothing substantial on record to show officers. On December 2, 1947, the said articles of incorporation were filed in the
that Patricio acted in bad faith in terminating McLeod’s services to warrant office of the Securities and Exchange Commission for the issuance of the
Patricio’s personal liability. PMI had no other choice but to stop plant operations.
The work stoppage therefore was by necessity. The company could no longer corresponding certificate of incorporation.
continue with its plant operations because of the serious business losses that it had
On March 22, 1948, pending action on the articles of incorporation by the
suffered. The mere fact that Patricio was president and director of PMI is not a
ground to conclude that he should be held solidarily liable with PMI for McLeod’s SEC, respondents Fred Brown, Emma Brown, Hipolita D. Chapman and Ceferino
money claims.
S. Abella filed a suit against petitioners before the Court of First Instance of Leyte
alleging among other things that the Far Eastern Lumber and Commercial Co. was be ordered in a quo warranto proceeding instituted in accordance with section 19 of

an unregistered partnership; that they wished to have it dissolved because of bitter the Corporation Law.

dissension among the members, mismanagement and fraud by the managers and Under our statute it is to be noted that it is the issuance of a certificate of

heavy financial losses. incorporation by the Director of the Bureau of Commerce and Industry which calls a

The defendants in the suit, namely, C. Arnold Hall and Bradley P. Hall, filed a corporation into being. The immunity of collateral attack is granted to corporations

motion to dismiss, contesting the court’s jurisdiction and the sufficiency of the cause ‘claiming in good faith to be a corporation under this act.’

of action. Further, this is not a suit in which the corporation is a party. This is a litigation

After hearing the parties, the Hon. Edmundo S. Piccio ordered the dissolution of the between stockholders of the alleged corporation, for the purpose of obtaining its

company; and at the request of plaintiffs, appointed the respondent Pedro A. dissolution. Even the existence of a de jure corporation may be terminated in a

Capuciong as receiver of the properties thereof, upon the filing of a P20,000 bond. private suit for its dissolution between stockholders, without the intervention of the

The defendants therein (petitioners herein) offered to file a counter-bond for the state.
WHEREFORE, the petition is dismissed.
discharge of the receiver, but the respondent judge refused to accept the offer and to

discharge the receiver.

Hence, this petition.

ISSUE:

Loyola Grand Villas Homeowners (South) Association Inc. vs. CA


[G.R. No. 117188. August 07, 1997]
Whether or not the trial court has jurisdiction over the case?

HELD: 15AUG

Ponente: ROMERO, J.
No. The court had no jurisdiction in civil case No. 381 to decree the dissolution of FACTS:

the company, because it being a de facto corporation, dissolution thereof may only [T]his is a petition for review on certiorari of the Decision of the Court of
Appeals affirming the decision of the Home Insurance and Guaranty
Corporation (HIGC). This quasi-judicial body recognized Loyola Grand Villas
Homeowners Association (LGVHA) as the sole homeowners’ association in Corporation Code reveals the legislative intent to attach a directory, and not
Loyola Grand Villas, a duly registered subdivision in Quezon City and mandatory, meaning for the word “must” in the first sentence thereof.
Marikina City that was owned and developed by Solid Homes, Inc. For Note should be taken of the second paragraph of the law which allows the
unknown reasons, however, LGVHAI did not file its corporate by-laws. filing of the by-laws even prior to incorporation. This provision in the same
LGVHAI was informed by HIGC that they had been automatically dissolved. section of the Code rules out mandatory compliance with the requirement of
LGVHAI lodged a complaint with the HIGC. They questioned the revocation filing the by-laws “within one (1) month after receipt of official notice of the
of LGVHAI’s certificate of registration without due notice and hearing and issuance of its certificate of incorporation by the Securities and Exchange
concomitantly prayed for the cancellation of the certificates of registration of Commission.” It necessarily follows that failure to file the by-laws within that
the North and South Associations by reason of the earlier issuance of a period does not imply the “demise” of the corporation. By-laws may be
certificate of registration in favor of LGVHAI. After due notice and hearing, necessary for the “government” of the corporation but these are subordinate
private respondents obtained a favorable ruling from HIGC recognizing them to the articles of incorporation as well as to the Corporation Code and
as the duly registered and existing homeowners association for Loyola related statutes.
Grand Villas homeowners and declaring the Certificates of Registration of [I]f the languages of a statute considered as a whole and with due regard to
Loyola Grand Villas Homeowners (North) Association, Inc. and Loyola its nature and object reveals that the legislature intended to use the
Grand Villas Homeowners (South) Association, Inc. as hereby revoked or words “shall” and “must” to be directory, they should be given that
cancelled. meaning.
The South Association appealed to the Appeals Board of the HIGC but was
dismissed for lack of merit. Rebuffed, the South Association in turn appealed
to the Court of Appeals, but it simply reiterated HIGC’s ruling.

ISSUE:
Whether or not the failure of a corporation to file its by-laws within one month
from the date of its incorporation, as mandated by Section 46 of the
Corporation Code, result in its automatic dissolution.

HELD:
NO. Petition DENIED. Decision of the Court of Appeals AFFIRMED.

RATIO:
[U]nder the principle that the best interpreter of a statute is the statute itself
(optima statuli interpretatix est ipsum statutum), Section 46 of the
Hacienda Luisita Inc. (HLI) v. Presidential Agrarian Reform Council qualified FWBs should now be allowed to sell their land interests in
(PARC), et al., G.R. No. 171101, November 22, 2011 Hacienda Luisita to third parties, whether they have fully paid for the lands or
not?
RESOLUTION (6) THE CRUCIAL ISSUE: Should the ruling in the July 5, 2011 Decision that
the qualified FWBs be given an option to remain as stockholders of HLI be
VELASCO, JR., J.: reconsidered?

I. THE FACTS III. THE RULING

On July 5, 2011, the Supreme Court en banc voted unanimously [The Court PARTIALLY GRANTED the motions for reconsideration
(11-0) to DISMISS/DENY the petition filed by HLI and AFFIRM with of respondents PARC, et al. with respect to the option granted to the original
MODIFICATIONS the resolutions of the PARC revoking HLI’s Stock farmworkers-beneficiaries (FWBs) of Hacienda Luisita to remain with
Distribution Plan (SDP) and placing the subject lands in Hacienda Luisita petitioner HLI, which option the Court thereby RECALLED and SET ASIDE.
under compulsory coverage of the Comprehensive Agrarian Reform It reconsidered its earlier decision that the qualified FWBs should be given
Program (CARP) of the government. an option to remain as stockholders of HLI, and UNANIMOUSLY directed
immediate land distribution to the qualified FWBs.]
The Court however did not order outright land distribution. Voting 6-
5, the Court noted that there are operative facts that occurred in the interim 1. YES, the operative fact doctrine is applicable in this case.
and which the Court cannot validly ignore. Thus, the Court declared that the
revocation of the SDP must, by application of the operative fact principle, [The Court maintained its stance that the operative fact doctrine is
give way to the right of the original 6,296 qualified farmworkers-beneficiaries applicable in this case since, contrary to the suggestion of the minority, the
(FWBs) to choose whether they want to remain as HLI stockholders or doctrine is not limited only to invalid or unconstitutional laws but also applies
[choose actual land distribution]. It thus ordered the Department of Agrarian to decisions made by the President or the administrative agencies that have
Reform (DAR) to “immediately schedule meetings with the said 6,296 FWBs the force and effect of laws. Prior to the nullification or recall of said
and explain to them the effects, consequences and legal or practical decisions, they may have produced acts and consequences that must be
implications of their choice, after which the FWBs will be asked to manifest, respected. It is on this score that the operative fact doctrine should be
in secret voting, their choices in the ballot, signing their signatures or placing applied to acts and consequences that resulted from the implementation of
their thumbmarks, as the case may be, over their printed names.” the PARC Resolution approving the SDP of HLI. The majority stressed that
the application of the operative fact doctrine by the Court in its July 5, 2011
The parties thereafter filed their respective motions for reconsideration decision was in fact favorable to the FWBs because not only were they
of the Court decision. allowed to retain the benefits and homelots they received under the stock
distribution scheme, they were also given the option to choose for
II. THE ISSUES themselves whether they want to remain as stockholders of HLI or not.]

(1) Is the operative fact doctrine available in this case? 2. NO, Sec. 31 of RA 6657 NOT unconstitutional.
(2) Is Sec. 31 of RA 6657 unconstitutional?
(3) Can’t the Court order that DAR’s compulsory acquisition of Hacienda Lusita [The Court maintained that the Court is NOT compelled to rule on
cover the full 6,443 hectares allegedly covered by RA 6657 and previously the constitutionality of Sec. 31 of RA 6657, reiterating that it was not raised
held by Tarlac Development Corporation (Tadeco), and not just the 4,915.75 at the earliest opportunity and that the resolution thereof is not the lis
hectares covered by HLI’s SDP? mota of the case. Moreover, the issue has been rendered moot and
(4) Is the date of the “taking” (for purposes of determining the just compensation academic since SDO is no longer one of the modes of acquisition under RA
payable to HLI) November 21, 1989, when PARC approved HLI’s SDP? 9700. The majority clarified that in its July 5, 2011 decision, it made no ruling
(5) Has the 10-year period prohibition on the transfer of awarded lands under RA in favor of the constitutionality of Sec. 31 of RA 6657, but found nonetheless
6657 lapsed on May 10, 1999 (since Hacienda Luisita were placed under that there was no apparent grave violation of the Constitution that may justify
CARP coverage through the SDOA scheme on May 11, 1989), and thus the the resolution of the issue of constitutionality.]
became subject of the agrarian reform coverage through the stock
3. NO, the Court CANNOT order that DAR’s compulsory acquisition of distribution scheme only upon the approval of the SDP, that is, on November
Hacienda Lusita cover the full 6,443 hectares and not just the 4,915.75 21, 1989. Such approval is akin to a notice of coverage ordinarily issued
hectares covered by HLI’s SDP. under compulsory acquisition. On the contention of the minority (Justice
Sereno) that the date of the notice of coverage [after PARC’s revocation of
[Since what is put in issue before the Court is the propriety of the the SDP], that is, January 2, 2006, is determinative of the just compensation
revocation of the SDP, which only involves 4,915.75 has. of agricultural land that HLI is entitled to receive, the Court majority noted that none of the cases
and not 6,443 has., then the Court is constrained to rule only as regards the cited to justify this position involved the stock distribution scheme. Thus, said
4,915.75 has. of agricultural land.Nonetheless, this should not prevent the cases do not squarely apply to the instant case. The foregoing
DAR, under its mandate under the agrarian reform law, from subsequently notwithstanding, it bears stressing that the DAR's land valuation is only
subjecting to agrarian reform other agricultural lands originally held by preliminary and is not, by any means, final and conclusive upon the
Tadeco that were allegedly not transferred to HLI but were supposedly landowner. The landowner can file an original action with the RTC acting as
covered by RA 6657. a special agrarian court to determine just compensation. The court has the
right to review with finality the determination in the exercise of what is
However since the area to be awarded to each FWB in the July 5, admittedly a judicial function.]
2011 Decision appears too restrictive – considering that there are roads,
irrigation canals, and other portions of the land that are considered 5. NO, the 10-year period prohibition on the transfer of awarded lands
commonly-owned by farmworkers, and these may necessarily result in the under RA 6657 has NOT lapsed on May 10, 1999; thus, the qualified
decrease of the area size that may be awarded per FWB – the Court FWBs should NOT yet be allowed to sell their land interests in
reconsiders its Decision and resolves to give the DAR leeway in adjusting Hacienda Luisita to third parties.
the area that may be awarded per FWB in case the number of actual
qualified FWBs decreases. In order to ensure the proper distribution of the [Under RA 6657 and DAO 1, the awarded lands may only be
agricultural lands of Hacienda Luisita per qualified FWB, and considering transferred or conveyed after 10 years from the issuance and registration of
that matters involving strictly the administrative implementation and the emancipation patent (EP) or certificate of land ownership award (CLOA).
enforcement of agrarian reform laws are within the jurisdiction of the DAR, it Considering that the EPs or CLOAs have not yet been issued to the qualified
is the latter which shall determine the area with which each qualified FWB FWBs in the instant case, the 10-year prohibitive period has not even
will be awarded. started. Significantly, the reckoning point is the issuance of the EP or CLOA,
and not the placing of the agricultural lands under CARP coverage.
On the other hand, the majority likewise reiterated its holding Moreover, should the FWBs be immediately allowed the option to sell or
that the 500-hectare portion of Hacienda Luisita that have been validly convey their interest in the subject lands, then all efforts at agrarian reform
converted to industrial use and have been acquired by intervenors Rizal would be rendered nugatory, since, at the end of the day, these lands will
Commercial Banking Corporation (RCBC) and Luisita Industrial Park just be transferred to persons not entitled to land distribution under CARP.]
Corporation (LIPCO), as well as the separate 80.51-hectare SCTEX lot
acquired by the government, should be excluded from the coverage of the 6. YES, the ruling in the July 5, 2011 Decision that the qualified FWBs be
assailed PARC resolution. The Court however ordered that the unused given an option to remain as stockholders of HLI should be
balance of the proceeds of the sale of the 500-hectare converted land and of reconsidered.
the 80.51-hectare land used for the SCTEX be distributed to the FWBs.]
[The Court reconsidered its earlier decision that the qualified FWBs
4. YES, the date of “taking” is November 21, 1989, when PARC approved should be given an option to remain as stockholders of HLI, inasmuch as
HLI’s SDP. these qualified FWBs will never gain control [over the subject lands] given
the present proportion of shareholdings in HLI. The Court noted that the
[For the purpose of determining just compensation, the date of share of the FWBs in the HLI capital stock is [just] 33.296%. Thus, even if all
“taking” is November 21, 1989 (the date when PARC approved HLI’s SDP) the holders of this 33.296% unanimously vote to remain as HLI stockholders,
since this is the time that the FWBs were considered to own and possess which is unlikely, control will never be in the hands of the FWBs. Control
the agricultural lands in Hacienda Luisita. To be precise, these lands means the majority of [sic] 50% plus at least one share of the common
shares and other voting shares. Applying the formula to the HLI
stockholdings, the number of shares that will constitute the majority is
295,112,101 shares (590,554,220 total HLI capital shares divided by 2 plus
one [1] HLI share). The 118,391,976.85 shares subject to the SDP
approved by PARC substantially fall short of the 295,112,101 shares needed
by the FWBs to acquire control over HLI.]