ONG YONG, JUANITA TAN ONG, WILSON T. ONG, ANNA L. ONG, WILLIAM T. ONG, WILLIE T.

ONG, and JULIE ONG ALONZO, petitioners, vs. DAVID S. TIU, CELY Y. TIU, MOLY YU GAW, BELEN SEE YU, D. TERENCE Y. TIU, JOHN YU, LOURDES C. TIU, INTRALAND RESOURCES DEVELOPMENT CORP., MASAGANA TELAMART, INC., REGISTER OF DEEDS OF PASAY CITY, and th SECURITIES AND E!CHANGE COMMISSION, respondents. DAVID S. TIU, CELY Y. TIU, MOLY YU GAW, BELEN SEE YU, D. TERENCE Y. TIU, JOHN YU, LOURDES C. TIU, and INTRALAND RESOURCES DEVELOPMENT CORP., petitioners, vs. ONG YONG, JUANITA TAN ONG, WILSON T. ONG, ANNA L. ONG, WILLIAM T. ONG, WILLIE T. ONG, and JULIA ONG ALONZO,respondents. RESOLUTION CORONA, J." Before us are the (1) motion for reconsideration, dated March 15, 2002, of petitioner movants Ong Yong, Juanita Tan Ong, i!son Ong, "nna Ong, i!!iam Ong, i!!ie Ong and Ju!ia Ong "!on#o (the Ongs)$ (2) motion for partia! reconsideration, dated March 15, 2002, of petitioner movant i!!ie Ong see%ing a reversa! of this &ourt's (ecision, )1* dated +e,ruar- 1, 2002, in ./0/ 1os/ 122234 and 122425 affirming 6ith modification the decision)2* of the &ourt of "ppea!s, dated Octo,er 5, 1555, 6hich in turn uphe!d, !i%e6ise 6ith modification, the decision of the 78& en banc, dated 7eptem,er 11, 1559$ and (:) motion for issuance of 6rit of e;ecution of petitioners (avid 7/ Tiu, &e!- Y/ Tiu, Mo!- Yu .o6, Be!en 7ee Yu, (/ Terence Y/ Tiu, John Yu and <ourdes &/ Tiu (the Tius) of our +e,ruar- 1, 2002 (ecision/ " ,rief recapitu!ation of the facts sho6s that= >n 1552, the construction of the Masagana &itima!! in ?asa- &it- 6as threatened 6ith stoppage and incomp!etion 6hen its o6ner, the +irst <and!in% "sia (eve!opment &orporation (+<"(&), 6hich 6as o6ned ,- the Tius, encountered dire financia! difficu!ties/ >t 6as heavi!- inde,ted to the ?hi!ippine 1ationa! Ban% (?1B) for ?150 mi!!ion/ To stave off forec!osure of the mortgage on the t6o !ots 6here the ma!! 6as ,eing ,ui!t, the Tius invited Ong Yong, Juanita Tan Ong, i!son T/ Ong, "nna </ Ong, i!!iam T/ Ong and Ju!ia Ong "!on#o (the Ongs), to invest in +<"(&/ @nder the ?reA7u,scription "greement the- entered into, the Ongs and the Tius agreed to maintain eBua! shareho!dings in +<"(&= the Ongs 6ere to su,scri,e to 1,000,000 shares at a par va!ue of ?100/00 each 6hi!e the Tius 6ere to su,scri,e to an additiona! 525,900 shares at ?100/00 each in addition to their a!read- e;isting su,scription of 250,200 shares/ +urthermore, the- agreed that the Tius 6ere entit!ed to nominate the CiceA?resident and the Treasurer p!us five directors 6hi!e the Ongs 6ere entit!ed to nominate the ?resident, the 7ecretar- and si; directors (inc!uding the chairman) to the ,oard of directors of +<"(&/ Moreover, the Ongs 6ere given the right to manage and operate the ma!!/ "ccording!-, the Ongs paid ?100 mi!!ion in cash for their su,scription to 1,000,000 shares of stoc% 6hi!e the Tius committed to contri,ute to +<"(& a fourAstore- ,ui!ding and t6o parce!s of !and respective!- va!ued at ?20 mi!!ion (for 200,000 shares), ?:0 mi!!ion (for :00,000 shares) and ?25/9 mi!!ion (for 25,900 shares) to cover their additiona! 525,900 stoc% su,scription therein/ The Ongs paid in another ?30 mi!!ion):* to +<"(& and ?20 mi!!ion to the Tius over and a,ove their ?100 mi!!ion investment, the tota! sum of 6hich (?150 mi!!ion) 6as used to sett!e the?150 mi!!ion mortgage inde,tedness of +<"(& to ?1B/ The ,usiness harmon- ,et6een the Ongs and the Tius in +<"(&, ho6ever, 6as short!ived ,ecause the Tius, on +e,ruar- 2:, 1554, rescinded the ?reA7u,scription "greement/ The Tius accused the Ongs of (1) refusing to credit to them the +<"(& shares covering their rea! propertcontri,utions$ (2) preventing (avid 7/ Tiu and &e!- Y/ Tiu from assuming the positions of and performing their duties as CiceA?resident and Treasurer, respective!-, and (:) refusing to give them the office spaces agreed upon/ "ccording to the Tius, the agreement 6as for (avid 7/ Tiu and &e!- 7/ Tiu to assume the positions and perform the duties of CiceA?resident and Treasurer, respective!-, ,ut the Ongs prevented them from doing so/ +urthermore, the Ongs refused to provide them the space for their e;ecutive offices as CiceA?resident and Treasurer/ +ina!!-, and most serious of a!!, the Ongs refused to give them the shares corresponding to their propert- contri,utions of a fourAstor- ,ui!ding, a 1,502/:0 sBuareAmeter !ot and a 151 sBuareAmeter !ot/ Dence, the- fe!t the- 6ere Eustified in setting aside their ?reA7u,scription "greement 6ith the Ongs 6ho a!!eged!- refused to comp!- 6ith their underta%ings/ >n their defense, the Ongs said that (avid 7/ Tiu and &e!- Y/ Tiu had in fact assumed the positions of CiceA?resident and Treasurer of +<"(& ,ut that it 6as the- 6ho refused to comp!- 6ith the corporate duties assigned to them/ >t 6as the contention of the Ongs that the- 6anted the Tius to sign the chec%s of the corporation and underta%e their management duties ,ut that the Tius shied a6a- from he!ping them manage the corporation/ On the issue of office space, the Ongs pointed out that the Tius did in fact a!read- have e;isting e;ecutive offices in the ma!! since theo6ned it 100F ,efore the Ongs came in/ hat the Tius rea!!- 6anted 6ere new offices 6hich 6ere an-6a- su,seBuent!- provided to them/ On the most important issue of their a!!eged fai!ure to credit the Tius 6ith the +<"(& shares commensurate to the Tius' propert- contri,utions, the Ongs asserted that, a!though the Tius e;ecuted a deed of assignment for the 1,502/:0 sBuareAmeter !ot in favor of +<"(&, the- (the Tius) refused to pa- ? 530,450 for capita! gains ta; and documentar- stamp ta;/ ithout the pa-ment thereof, the 78& 6ou!d not approve the va!uation of the Tius' propert- contri,ution (as opposed to cash contri,ution)/ This, in turn, 6ou!d ma%e it impossi,!e to secure a ne6 Transfer &ertificate of Tit!e (T&T) over the propert- in +<"(&'s name/ >n an- event, it 6as eas- for the Tius to simp!- pa- the said transfer ta;es and, after the ne6 T&T 6as issued in +<"(&'s name, the- cou!d then ,e given the corresponding shares of stoc%s/ On the 151 sBuareAmeter propert-, the Tius never e;ecuted a deed of assignment in favor of +<"(&/ The Tius initia!!- c!aimed that the- cou!d not as -et surrender the T&T ,ecause it 6as Gsti!! ,eing reconstitutedH ,- the <ichaucos from 6hom the Tius ,ought it/ The Ongs !ater on discovered that +<"(& had in rea!it- o6ned the propert- a!! a!ong, even ,efore their ?reA7u,scription "greement 6as e;ecuted in 1552/ This meant that the 151 sBuareAmeter propert- 6as at that time a!read- the corporate propertof +<"(& for 6hich the Tius 6ere not entit!ed to the issuance of ne6 shares of stoc%/ The controvers- fina!!- came to a head 6hen this case 6as commenced )2* ,- the Tius on +e,ruar- 23, 1554 at the 7ecurities and 8;change &ommission (78&), see%ing confirmation of their rescission of the ?reA7u,scription "greement/ "fter hearing, the 78&, through then Dearing Officer 0o!ando ./ "nda-a, Jr/, issued a decision on Ma- 15, 1553 confirming the rescission sought ,- the Tius, as fo!!o6s= D808+O08, Eudgment is here,- rendered confirming the rescission of the ?reA7u,scription "greement, and conseBuent!- ordering= (a) The cance!!ation of the 1,000,000 shares su,scription of the individua! defendants in +<"(&$ (,) +<"(& to pa- the amount of ?130,000,000/00 to the individua! defendants representing the return of their contri,ution for 1,000,000 shares of +<"(&$

( c) The p!aintiffs to su,mit 6ith (sic) the 7ecurities and 8;change &ommission amended artic!es of incorporation of +<"(& to conform 6ith this decision$ (d) The defendants to surrender to the p!aintiffs T&T 1os/ 1:225:, 1:2252, 1:2044 (former!- 15593), 1:5:25 and 1:2202 and an- other tit!e or deed in the name of +<"(&, fai!ing in 6hich said tit!es are dec!ared void$ (e) The 0egister of (eeds to issue ne6 certificates of tit!es in favor of the p!aintiffs and to cance! the annotation of the ?reA7u,scription "greement dated 15 "ugust 1552 on T&T 1o/ 1:2044 (former!- 15593)$ (f) The individua! defendants, individua!!- and co!!ective!-, their agents and representatives, to desist from e;ercising or performing anand a!! acts pertaining to stoc%ho!der, director or officer of +<"(& or in an- manner intervene in the management and affairs of +<"(&$ (g) The individua! defendants, Eoint!- and severa!!-, to return to +<"(& interest pa-ment in the amount of ?9,944,445/00 and a!! interest pa-ments as 6e!! as an- pa-ments on principa! received from the ?30,000,000/00 ine;istent !oan, p!us the !ega! rate of interest thereon from the date of their receipt of such pa-ment unti! fu!!- paid$ (h) The p!aintiff (avid Tiu to pa- individua! defendants the sum of ?20,000,000/00 representing his !oan from said defendants p!us !ega! interest from the date of receipt of such amount/ 7O O0(808(/)5* On motion of ,oth parties, the a,ove decision 6as partia!!- reconsidered ,ut on!- insofar as the Ongs' ?30 mi!!ion 6as dec!ared not as a premium on capita! stoc% ,ut an advance (!oan) ,- the Ongs to +<"(& and that the imposition of interest on it 6as correct/ )4* Both parties appea!ed)3* to the 78& en banc 6hich rendered a decision on 7eptem,er 11, 1559, affirming the Ma- 15, 1553 decision of the Dearing Officer/ The 78& en banc confirmed the rescission of the ?reA7u,scription "greement ,ut reverted to c!assif-ing the ?30 mi!!ion paid ,- the Ongs as premium on capita! and not as a !oan or advance to +<"(&, hence, not entit!ed to earn interest/ )9* On appea!, the &ourt of "ppea!s (&") rendered a decision on Octo,er 5, 1555, thus= D808+O08, the Order dated 7eptem,er 11, 1559 issued ,- the 7ecurities and 8;change &ommission 8n Banc in 78& "& &"78 1O7/ 559 and 401 confirming the rescission of the ?reA7u,scription "greement dated "ugust 15, 1552 is here,- "++>0M8(, su,Eect to the fo!!o6ing MO(>+>&"T>O17= 1/ The Ong and Tiu .roups are ordered to !iBuidate +irst <and!in% "sia (eve!opment &orporation in accordance 6ith the fo!!o6ing cash and propert- contri,utions of the parties therein/ (a) Ong .roup I ?100,000,000/00 cash contri,ution for one (1) mi!!ion shares in +irst <and!in% "sia (eve!opment &orporation at a par va!ue of ?100/00 per share$ (,) Tiu .roup= 1) ?25,020,000/00 origina! cash contri,ution for 250,200 shares in +irst <and!in% "sia (eve!opment &orporation at a par va!ue of ?100/00 per share$ 2) " fourAstore- ,ui!ding descri,ed in Transfer &ertificate of Tit!e 1o/ 15593 in the name of >ntra!and 0esources and (eve!opment &orporation va!ued at ?20,000,000/00 for 200,000 shares in +irst <and!in% "sia (eve!opment &orporation at a par va!ue of ?100/00 per share$ :) " 1,502/:0 sBuareAmeter parce! of !and covered ,- Transfer &ertificate of Tit!e 1o/ 15593 in the name of Masagana Te!amart, >nc/ va!ued at ?:0,000,000/00 for :00,000 shares in +irst <and!in% "sia (eve!opment &orporation at a par va!ue of ?100/00 per share/ 2) hatever remains of the assets of the +irst <and!in% "sia (eve!opment &orporation and the management thereof is (sic) here,ordered transferred to the Tiu .roup/ :) +irst <and!in% "sia (eve!opment &orporation is here,- ordered to pa- the amount of ?30,000,000/00 that 6as advanced to it ,the Ong .roup upon the fina!it- of this decision/ 7hou!d the former incur in de!a- in the pa-ment thereof, it sha!! pa- the !ega! interest thereon pursuant to "rtic!e 2205 of the 1e6 &ivi! &ode/ 2) The Tius are here,- ordered to pa- the amount of ?20,000,000/00 !oaned them ,- the Ongs upon the fina!it- of this decision/ 7hou!d the former incur in de!a- in the pa-ment thereof, it sha!! pa- the !ega! interest thereon pursuant to "rtic!e 2205 of the 1e6 &ivi! &ode/ 7O O0(808(/)5* "n interesting side!ight of the &" decision 6as its description of the rescission made ,- the Tius as the Gheight of ingratitudeH and as Gpu!!ing a fast oneH on the Ongs/ The &" moreover found the Tius gui!t- of 6ithho!ding +<"(& funds from the Ongs and diverting corporate income to their o6n M"TT80&O account/)10* These 6ere findings !ater on affirmed in our o6n +e,ruar- 1, 2002 (ecision 6hich is the su,Eect of the instant motion for reconsideration/)11* But there 6as a!so a strange aspect of the &" decision/ The &" conc!uded that ,oth the Ongs and the Tius 6ere in pari delicto (6hich 6ou!d not have !ega!!- entit!ed them to rescission) ,ut, Gfor practica! considerations,H that is, their ina,i!it- to 6or% together, it 6as ,est to separate the t6o

groups ,- rescinding the ?reA7u,scription "greement, returning the origina! investment of the Ongs and a6arding practica!!- ever-thing e!se to the Tius/ Their motions for reconsideration having ,een denied, ,oth parties fi!ed separate petitions for revie6 ,efore this &ourt/ >n their petition doc%eted as ./0/ 1o/ 122234, Ong et al. vs. Tiu et al. , the Ongs argued that the Tius ma- not proper!- avai! of rescission under "rtic!e 1151 of the &ivi! &ode considering that the ?reA7u,scription "greement did not provide for reciprocit- of o,!igations$ that the rights over the su,Eect matter of the rescission (capita! assets and properties) had ,een acBuired ,- a third part- (+<"(&)$ that the- did not commit a su,stantia! and fundamenta! ,reach of their agreement since the- did not prevent the Tius from assuming the positions of CiceA?resident and Treasurer of +<"(&, and that the fai!ure to credit the :00,000 shares corresponding to the 1,502/:0 sBuareAmeter propert- covered ,- T&T 1o/ 1:2044 (former!15593) 6as due to the refusa! of the Tius to pa- the reBuired transfer ta;es to secure the approva! of the 78& for the propert- contri,ution and, thereafter, the issuance of tit!e in +<"(&'s name/ The- a!so argued that the !iBuidation of +<"(& ma- not !ega!!- ,e ordered ,- the appe!!ate court even for so ca!!ed Gpractica! considerationsH or even to prevent Gfurther sBua,,!es and numerous !itigations,H since the same are not va!id grounds under the &orporation &ode/ Moreover, the Ongs ,e6ai!ed the fai!ure of the &" to grant interest on their ?30 mi!!ion and ?20 mi!!ion advances to +<"(& and (avid 7/ Tiu, respective!-, and to a6ard costs and damages/ >n their petition doc%eted as ./0/ 1o/ 122425, Tiu et al. vs. Ong et al. , the Tius, on the other hand, contended that the rescission shou!d have ,een !imited to the restitution of the parties' respective investments and not the !iBuidation of +<"(& ,ased on the erroneous perception ,- the court that= the Masagana &itima!! 6as threatened 6ith incomp!etion since +<"(& 6as in financia! distress$ that the Tius invited the Ongs to invest in +<"(& to sett!e its ?150 mi!!ion !oan from ?1B$ that the- vio!ated the ?reA7u,scription "greement 6hen it 6as the <ichaucos and not the Tius 6ho e;ecuted the deed of assignment over the 151 sBuareAmeter propert- commensurate to 25,900 shares in +<"(& there,- fai!ing to pa- the price for the said shares$ that the- did not turn over to the Ongs the entire amount of +<"(& funds$ that the- 6ere diverting renta!s from !ease contracts due to +<"(& to their o6n M"TT80&O account$ that the ?30 mi!!ion paid ,- the Ongs 6as an advance and not a premium on capita!$ and that, ,rescinding the ?reA7u,scription "greement, the- 6anted to 6rest!e a6a- the management of the ma!! and prevent the Ongs from enEo-ing the profits of their ?150 mi!!ion investment in +<"(&/ On +e,ruar- 1, 2002, this &ourt promu!gated its (ecision (the su,Eect of the instant motions), affirming the assai!ed decision of the &ourt of "ppea!s ,ut 6ith the fo!!o6ing modifications= 1/ the ?20 mi!!ion !oan e;tended ,- the Ongs to the Tius sha!! earn interest at t6e!ve percent (12F) per annum to ,e computed from the time of Eudicia! demand 6hich is from "pri! 2:, 1554$ 2/ the ?30 mi!!ion advanced ,- the Ongs to the +<"(& sha!! earn interest at ten percent (10F) per annum to ,e computed from the date of the +<"(& Board 0eso!ution 6hich is June 15, 1554$ and :/ the Tius sha!! ,e credited 6ith 25,900 shares in +<"(& for their propert- contri,ution, specifica!!-, the 151 sB/ m/ parce! of !and/ This &ourt affirmed the fact that ,oth the Ongs and the Tius vio!ated their respective o,!igations under the ?reA7u,scription "greement/ The Ongs prevented the Tius from assuming the positions of CiceA?resident and Treasurer of the corporation/ On the other hand, the (ecision esta,!ished that the Tius fai!ed to turn over +<"(& funds to the Ongs and that the Tius diverted renta!s due to +<"(& to their M"TT80&O account/ &onseBuent!-, it he!d that rescission 6as not possi,!e since ,oth parties 6ere in pari delicto/ Do6ever, this &ourt agreed 6ith the &ourt of "ppea!s that the remed- of specific performance, as espoused ,- the Ongs, 6as not practica! and sound either and 6ou!d on!- !ead to further GsBua,,!es and numerous !itigationsH ,et6een the parties/ On March 15, 2002, the Tius fi!ed ,efore this &ourt a Motion for >ssuance of a rit of 8;ecution on the grounds that= (a) the 78& order had ,ecome e;ecutor- as ear!- as 7eptem,er 11, 1559 pursuant to 7ections 1 and 12, 0u!e 2: of the 0u!es of &ourt$ (,) an- further de!a- 6ou!d ,e inEurious to the rights of the Tius since the case had ,een pending for more than si; -ears$ and (c) the 78& no !onger had BuasiAEudicia! Eurisdiction under 0" 9355 (7ecurities 0egu!ation &ode)/ The Ongs fi!ed their opposition, contending that the (ecision dated +e,ruar- 1, 2002 6as not -et fina! and e;ecutor-$ that no good reason e;isted to issue a 6arrant of e;ecution$ and that, pursuant to 7ection 5/2 of 0" 9355, the 78& retained Eurisdiction over pending cases invo!ving intraAcorporate disputes a!read- su,mitted for fina! reso!ution upon the effectivit- of the said !a6/ "side from their opposition to the Tius' Motion for >ssuance of rit of 8;ecution, the Ongs fi!ed their o6n GMotion for 0econsideration$ "!ternative!-, Motion for Modification (of the +e,ruar- 1, 2002 (ecision)H on March 15, 2002, raising t6o main points= (a) that specific performance and not rescission 6as the proper remed- under the premises$ and (,) that, assuming rescission to ,e proper, the su,Eect decision of this &ourt shou!d ,e modified to entit!e movants to their proportionate share in the ma!!/ On their first point (specific performance and not rescission 6as the proper remed-), movants Ong argue that their a!!eged ,reach of the ?reA 7u,scription "greement 6as, at most, casua! 6hich did not Eustif- the rescission of the contract/ The- stress that providing appropriate offices for (avid 7/ Tiu and &e!- Y/ Tiu as CiceA?resident and Treasurer, respective!-, had no ,earing on their o,!igations under the ?reA7u,scription "greement since the said o,!igation (to provide e;ecutive offices) pertained to +<"(& itse!f/ 7uch o,!igation arose from the re!ations ,et6een the said officers and the corporation and not an- of the individua! parties such as the Ongs/ <i%e6ise, the a!!eged fai!ure of the Ongs to credit shares of stoc% in favor of the Tius for their propert- contri,utions a!so pertained to the corporation and not to the Ongs/ Just the same, it cou!d not ,e done in vie6 of the Tius' refusa! to pa- the necessar- transfer ta;es 6hich in turn resu!ted in the ina,i!it- to secure 78& approva! for the propertcontri,utions and the issuance of a ne6 T&T in the name of +<"(&/ Besides, according to the Ongs, the principal objective of both parties in entering into the Pre-Subscription Agreement in !!" was to raise the P !# million desperatel$ needed for the pa$ment of %&A'()s loan to P*B / Dence, in this !ight, the a!!eged fai!ure to provide office space for the t6o corporate officers 6as no more than an inconseBuentia! infringement/ +or rescission to ,e Eustified, the !a6 reBuires that the ,reach of contract shou!d ,e so Gsu,stantia! or fundamenta!H as to defeat the primar- o,Eective of the parties in ma%ing the agreement/ "t an- rate, the Ongs c!aim that it 6as the Tius 6ho 6ere gui!t- of fundamenta! vio!ations in fai!ing to remit funds due to +<"(& and diverting the same to their M"TT80&O account/ The Ongs a!so a!!ege that, in vie6 of the findings of the &ourt that ,oth parties 6ere gui!t- of vio!ating the ?reA7u,scription "greement, neither of them cou!d resort to rescission under the princip!e of pari delicto/ >n addition, since the cash and other contri,utions no6 sought to ,e returned a!read- ,e!ong to +<"(&, an innocent third part-, said remed- ma- no !onger ,e avai!ed of under the !a6/ On their second point (assuming rescission to ,e proper, the Ongs shou!d ,e given their proportionate share of the ma!!), movants Ong vehement!- ta%e e;ception to the second item in the dispositive portion of the Buestioned (ecision insofar as it decreed that 6hatever remains of the assets of +<"(& and the management thereof (after !iBuidation) sha!! ,e transferred to the Tius/ The- point out that the ma!! itse!f, 6hich 6ou!d have ,een forec!osed ,- ?1B if not for their time!- investment of ?150 mi!!ion in 1552 and 6hich is no6 6orth a,out ?1 ,i!!ion main!- ,ecause of their efforts, shou!d ,e inc!uded in an- partition and distri,ution/ The- (the Ongs) shou!d not mere!- ,e given interest on their capita!

investments/ The said portion of our (ecision, according to them, amounted to the unEust enrichment of the Tius and ran contrar- to our o6n pronouncement that the act of the Tius in uni!atera!!- rescinding the agreement 6as Gthe height of ingratitudeH and an attempt Gto pu!! a fast oneHas it 6ou!d prevent the Ongs from enEo-ing the fruits of their ?150 mi!!ion investment in +<"(&/ >t a!so contravenes this &ourt's assurance in the Buestioned (ecision that the Ongs and Tius G6i!! have a ,ountifu! return of their respective investments derived from the profits of the corporation/H i!!ie Ong fi!ed a separate GMotion for ?artia! 0econsiderationH dated March 9, 2002, pointing out that there 6as no vio!ation of the ?reA 7u,scription "greement on the part of the Ongs$ that, after more than seven -ears since the ma!! ,egan its operations, rescission had ,ecome not on!- impractica! ,ut 6ou!d a!so adverse!- affect the rights of innocent parties$ and that it 6ou!d ,e highl$ ine+uitable and unfair to simpl$ return the P ## million investment of the Ongs and give the remaining assets now amounting to about P billion to the Tius. The Tius, in their opposition to the Ongs' motion for reconsideration, counter that the arguments therein are a mere reAhash of the contentions in the Ongs' petition for revie6 and previous motion for reconsideration of the &ourt of "ppea!s' decision/ The Tius compare the arguments in said p!eadings to prove that the Ongs do not raise ne6 issues, and, ,ased on 6e!!Asett!ed Eurisprudence, )12* the Ongs' present motion is thereforeproforma and did not prevent the (ecision of this &ourt from attaining fina!it-/ On Januar- 25, 200:, the 7pecia! 7econd (ivision of this &ourt he!d ora! arguments on the respective positions of the parties/ On +e,ruar- 23, 200:, (r/ i!!ie Ong and the rest of the movants Ong fi!ed their respective memoranda/ On +e,ruar- 29, 200:, the Tius su,mitted their memorandum/ e grant the Ongs' motions for reconsideration/ This is not the first time that this &ourt has reversed itse!f on a motion for reconsideration/ >n Philippine (onsumers %oundation, ,nc. vs. *ational Telecommunications (ommission,- ./ this &ourt, through then &hief Justice +e!i; C/ Ma%asiar, said that its mem,ers ma- and do change their minds, after a reAstud- of the facts and the !a6, i!!uminated ,- a mutua! e;change of vie6s/ )12* "fter a thorough reAe;amination of the case, 6e find that our (ecision of +e,ruar- 1, 2002 over!oo%ed certain aspects 6hich, if not corrected, 6i!! cause e;treme and irrepara,!e damage and preEudice to the Ongs, +<"(& and its creditors/ The procedura! ru!e on pro-forma motions pointed out ,- the Tius shou!d not ,e ,!ind!- app!ied to meritorious motions for reconsideration/ "s !ong as the same adeBuate!- raises a va!id ground )15* (i/e/, the decision or fina! order is contrar- to !a6), this &ourt has to eva!uate the merits of the arguments to prevent an unEust decision from attaining fina!it-/ >n Securit$ Ban0 and Trust (ompan$ vs. (uenca,- 1/ 6e ru!ed that a motion for reconsideration is not pro-forma for the reason a!one that it reiterates the arguments ear!ier passed upon and reEected ,- the appe!!ate court/ e e;p!ained there that a movant ma- raise the same arguments, if on!- to convince this &ourt that its ru!ing 6as erroneous/ Moreover, the ru!e (that a motion is pro-forma if it on!- repeats the arguments in the previous p!eadings) 6i!! not app!- if said arguments 6ere not sBuare!- passed upon and ans6ered in the decision sought to ,e reconsidered/ ,n the case at bar, no ruling was made on some of the petitioner Ongs) arguments / +or instance, no c!ear ru!ing 6as made on 6h- an order distri,uting corporate assets and propert- to the stoc%ho!ders 6ou!d not vio!ate the statutorpreconditions for corporate disso!ution or decrease of authori#ed capita! stoc%/ Thus, it 6ou!d serve the ends of Eustice to entertain the su,Eect motion for reconsideration since some important issues therein, a!though mere repetitions, 6ere not considered or c!ear!- reso!ved ,- this &ourt/ .oing no6 to the merits, 6e reso!ve 6hether the Tius cou!d !ega!!- rescind the ?reA7u,scription "greement/ e ru!e that the- cou!d not/

+<"(& 6as origina!!- incorporated 6ith an authori#ed capita! stoc% of 500,000 shares 6ith the Tius o6ning 250,200 shares representing the paidAup capita!/ hen the Tius invited the Ongs to invest in +<"(& as stoc%ho!ders, an increase of the authori#ed capita! stoc% ,ecame necessarto give each group eBua! (50A50) shareho!dings as agreed upon in the ?reA7u,scription "greement/ The authori#ed capita! stoc% 6as thus increased from 500,000 shares to 2,000,000 shares 6ith a par va!ue of ?100 each, 6ith the Ongs su,scri,ing to 1,000,000 shares and the Tius to 525,900 more shares in addition to their 250,200 shares to comp!ete 1,000,000 shares/ Thus, the su,Eect matter of the contract 6as the 1,000,000 unissued shares of +<"(& stoc% a!!ocated to the Ongs/ 7ince these 6ere unissued shares, the parties' ?reA7u,scription "greement 6as in fact a su,scription contract as defined under 7ection 40, Tit!e C>> of the &orporation &ode= "n- contract for the acBuisition of unissued stoc0 in an e2isting corporation or a corporation sti!! to ,e formed sha!! ,e deemed a su,scription 6ithin the meaning of this Tit!e, not6ithstanding the fact that the parties refer to it as a purchase or some other contract (>ta!ics supp!ied). " su,scription contract necessari!- invo!ves the corporation as one of the contracting parties since the su,Eect matter of the transaction is propert- o6ned ,- the corporation I its shares of stoc%/ Thus, the su,scription contract (denominated ,- the parties as a ?reA7u,scription "greement) 6here,- the Ongs invested ?100 mi!!ion for 1,000,000 shares of stoc% 6as, from the vie6point of the !a6, one ,et6een the Ongs and +<"(&, not ,et6een the Ongs and the Tius/ Other6ise stated, the Tius did not contract in their persona! capacities 6ith the Ongs since the- 6ere not se!!ing an- of their o6n shares to them/ >t 6as +<"(& that did/ &onsidering therefore that the rea! contracting parties to the su,scription agreement 6ere +<"(& and the Ongs a!one, a civi! case for rescission on the ground of ,reach of contract fi!ed ,- the Tius in their persona! capacities 6i!! not prosper/ "ssuming it had va!id reasons to do so, on!- +<"(& (and certain!- not the Tius) had the !ega! persona!it- to fi!e suit rescinding the su,scription agreement 6ith the Ongs inasmuch as it 6as the rea! part- in interest therein/ "rtic!e 1:11 of the &ivi! &ode provides that Gcontracts ta%e effect on!- ,et6een the parties, their assigns and heirsJH Therefore, a part- 6ho has not ta%en part in the transaction cannot sue or ,e sued for performance or for cance!!ation thereof, un!ess he sho6s that he has a rea! interest affected there,-/ )13* >n their +e,ruar- 29, 200: Memorandum, the Tius c!aim that there are t6o contracts em,odied in the ?reA7u,scription "greement= a shareho!der's agreement ,et6een the Tius and the Ongs defining and governing their re!ationship and a su,scription contract ,et6een the Tius, the Ongs and +<"(& regarding the su,scription of the parties to the corporation/ The- point out that these t6o component parts form one 6ho!e agreement and that their terms and conditions are intrinsica!!- re!ated and dependent on each other/ Thus, the ,reach of the shareho!ders' agreement, 6hich 6as a!!eged!- the consideration for the su,scription contract, 6as a!so a ,reach of the !atter/ "side from the fact that this is an entire!- ne6 ang!e never raised in an- of their previous p!eadings unti! after the ora! arguments on Januar25, 200:, 6e find this argument too strained for comfort/ >t is o,vious!- intended to remed- and cover up the Tius' !ac% of !ega! persona!it- to rescind an agreement in 6hich the- 6ere persona!!- not partiesAinAinterest/ "ssuming arguendo that there 6ere t6o Gsu,AagreementsH em,odied in the ?reA 7u,scription "greement, this &ourt fai!s to see ho6 the shareho!ders agreement ,et6een the Ongs and Tius can, 6ithin the ,ounds of reason, ,e interpreted as the consideration of the su,scription contract ,et6een +<"(& and the Ongs/ There 6as nothing in the ?reA7u,scription "greement even remote!- suggesting such a!!eged interdependence/ Be that as it ma-, ho6ever, the Tius are neverthe!ess not the proper parties to raise this point ,ecause the- 6ere not parties to the su,scription contract ,et6een +<"(& and the Ongs/ Thus, the- are not in a position to c!aim that the shareho!ders agreement ,et6een them and the Ongs 6as 6hat induced +<"(& and the Ongs to enter into the su,scription contract/ >t is the Ongs

a!one 6ho can sa- that/ Though +<"(& 6as represented ,- the Tius in the su,scription contract, +<"(& had a separate Euridica! persona!it- from the Tius/ The case ,efore us does not 6arrant piercing the vei! of corporate fiction since there is no proof that the corporation is ,eing used Gas a c!oa% or cover for fraud or i!!ega!it-, or to 6or% inEustice/H )19* The Tius a!so argue that, since the Ongs represent +<"(& as its management, ,reach ,- the Ongs is ,reach ,- +<"(&/ This must a!so fai! ,ecause such an argument disregards the separate Euridica! persona!it- of +<"(&/ The Tius a!!ege that the- 6ere prevented from participating in the management of the corporation/ There is evidence that the Ongs did prevent the rightfu!!- e!ected Treasurer, &e!- Tiu, from e;ercising her function as such/ The records sho6 that the ?resident, i!son Ong, supervised the co!!ection and receipt of renta!s in the Masagana &itima!!$ )15* that he ordered the same to ,e deposited in the ,an%$ )20* and that he he!d on to the cash and properties of the corporation/ )21* 7ection 25 of the &orporation &ode prohi,its the ?resident from acting concurrent!- as Treasurer of the corporation/ The rationa!e ,ehind the provision is to ensure the effective monitoring of each officer's separate functions/ Do6ever, a!though the Tius 6ere adverse!- affected ,- the Ongs' un6i!!ingness to !et them assume their positions, rescission due to ,reach of contract is definite!- the 6rong remed- for their persona! grievances/ Th C#$%#$at&#n C#d , SEC $'( ) and * n th R'( ) #+ C#'$t %$#*&d +#$ a%%$#%$&at and ad ,'at &nt$a-.#$%#$at $ / d& ), #th $ than $ ).&))&#n, &n )&t'at&#n) (&0 th&). 0escission is certain!- not one of them, specia!!- if the part- as%ing for it has no !ega! persona!it- to do so and the reBuirements of the !a6 therefor have not ,een met/ " contrar- doctrine 6i!! tread on e;treme!- dangerous ground ,ecause it 6i!! a!!o6 Eust an- stoc%ho!der, for Eust a,out an- rea! or imagined offense, to demand rescission of his su,scription and ca!! for the distri,ution of some part of the corporate assets to him 6ithout comp!-ing 6ith the reBuirements of the &orporation &ode/ Dence, the Tius, in their persona! capacities, cannot see% the u!timate and e;traordinar- remed- of rescission of the su,Eect agreement ,ased on a !ess than su,stantia! ,reach of su,scription contract/ 1ot on!- are the- not parties to the su,scription contract ,et6een the Ongs and +<"(&$ the- a!so have other avai!a,!e and effective remedies under the !a6/ "!! this not6ithstanding, granting ,ut not conceding that the Tius possess the !ega! standing to sue for rescission ,ased on ,reach of contract, said action 6i!! neverthe!ess sti!! not prosper since rescission 6i!! vio!ate the Trust +und (octrine and the procedures for the va!id distri,ution of assets and propert- under the &orporation &ode/ The Trust +und (octrine, first enunciated ,- this &ourt in the 152: case of Philippine Trust (o. vs. 3ivera,)22* provides that su,scriptions to the capita! stoc% of a corporation constitute a fund to 6hich the creditors have a right to !oo% for the satisfaction of their c!aims/ )2:* This doctrine is the under!-ing princip!e in the procedure for the distri,ution of capita! assets, em,odied in the &orporation &ode, 6hich a!!o6s the distri,ution of corporate capita! on!- in three instances= (1) amendment of the "rtic!es of >ncorporation to reduce the authori#ed capita! stoc%, )22* (2) purchase of redeema,!e shares ,- the corporation, regard!ess of the e;istence of unrestricted retained earnings, )25* and (:) disso!ution and eventua! !iBuidation of the corporation/ +urthermore, the doctrine is articu!ated in 7ection 21 on the po6er of a corporation to acBuire its o6n shares )24*and in 7ection 122 on the prohi,ition against the distri,ution of corporate assets and propert- un!ess the stringent reBuirements therefor are comp!ied 6ith/ )23* The distri,ution of corporate assets and propert- cannot ,e made to depend on the 6hims and caprices of the stoc%ho!ders, officers or directors of the corporation, or even, for that matter, on the earnest desire of the court a +uo Gto prevent further sBua,,!es and future !itigationsH un!ess the indispensa,!e conditions and procedures for the protection of corporate creditors are fo!!o6ed/ Other6ise, the Gcorporate peaceH !auda,!hoped for ,- the court 6i!! remain nothing ,ut a dream ,ecause this time, it 6i!! ,e the creditors' turn to engage in GsBua,,!es and !itigationsH shou!d the court order an un!a6fu! distri,ution in ,!atant disregard of the Trust +und (octrine/ >n the instant case, the rescission of the ?reA7u,scription "greement 6i!! effective!- resu!t in the unauthori#ed distri,ution of the capita! assets and propert- of the corporation, there,- vio!ating the Trust +und (octrine and the &orporation &ode, since rescission of a su,scription agreement is not one of the instances 6hen distri,ution of capita! assets and propert- of the corporation is a!!o6ed/ &ontrar- to the Tius' a!!egation, rescission 6i!!, in the fina! ana!-sis, resu!t in the premature !iBuidation of the corporation 6ithout the ,enefit of prior disso!ution in accordance 6ith 7ections 113, 119, 115 and 120 of the &orporation &ode/ )29* The Tius maintain that rescinding the su,scription contract is not s-non-mous to corporate !iBuidation ,ecause a!! rescission 6i!! entai! 6ou!d ,e the simp!e restoration of the status +uo ante and a return to the t6o groups of their cash and propert- contri,utions/ e 6ish it 6ere that simp!e/ Cer- noticea,!e is the fact that the Tius do not e;p!ain 6h- rescission in the instant case 6i!! not effective!- resu!t in !iBuidation/ The Tius mere!- refer in cava!ier fashion to the endAresu!t of rescission (6hich incidenta!!- is 100F favora,!e to them) ,ut turn a ,!ind e-e to its unfair, ineBuita,!e and disastrous effect on the corporation, its creditors and the Ongs/ >n their Memorandum dated +e,ruar- 29, 200:, the Tius c!aim that rescission of the agreement 6i!! not resu!t in an unauthori#ed !iBuidation of the corporation ,ecause their case is actua!!- a petition to decrease capita! stoc% pursuant to 7ection :9 of the &orporation &ode/ 7ection 122 of the !a6 provides that G(e);cept ,- decrease of capita! stoc%J, no corporation sha!! distri,ute an- of its assets or propert- e;cept upon !a6fu! disso!ution and after pa-ment of a!! its de,ts and !ia,i!ities/H The Tius c!aim that their case for rescission, ,eing a petition to decrease capita! stoc%, does not vio!ate the !iBuidation procedures under our !a6s/ "!! that needs to ,e done, according to them, is for this &ourt to order (1) +<"(& to fi!e 6ith the 78& a petition to issue a certificate of decrease of capita! stoc% and (2) the 78& to approve said decrease/ This ne6 argument has no merit/ The Tius' case for rescission cannot va!id!- ,e deemed a petition to decrease capita! stoc% ,ecause such action never comp!ied 6ith the forma! reBuirements for decrease of capita! stoc% under 7ection :: of the &orporation &ode/ 1o maEorit- vote of the ,oard of directors 6as ever ta%en/ 1either 6as there an- stoc%ho!ders meeting at 6hich the approva! of stoc%ho!ders o6ning at !east t6oAthirds of the outstanding capita! stoc% 6as secured/ There 6as no revised treasurer's affidavit and no proof that said decrease 6i!! not preEudice the creditors' rights/ On the contrar-, a!! their p!eadings contained 6ere a!!eged acts of vio!ations ,- the Ongs to Eustif- an order of rescission/ +urthermore, it is an improper Eudicia! intrusion into the interna! affairs of the corporation to compe! +<"(& to fi!e at the 78& a petition for the issuance of a certificate of decrease of stoc%/ (ecreasing a corporation's authori#ed capita! stoc% is an amendment of the "rtic!es of >ncorporation/ >t is a decision that on!- the stoc%ho!ders and the directors can ma%e, considering that the- are the contracting parties thereto/ ,n this case, the Tius are actuall$ not just as0ing for a review of the legalit$ and fairness of a corporate decision. The$ want this (ourt to ma0e a corporate decision for %&A'(/ e dec!ine to intervene and order corporate structura! changes not vo!untari!- agreed upon ,- its stoc%ho!ders and directors/ Truth to te!!, a Eudicia! order to decrease capita! stoc% 6ithout the assent of +<"(&'s directors and stoc%ho!ders is a vio!ation of the G,usiness Eudgment ru!eH 6hich states that=

;;; ;;; ;;; (&)ontracts intra vires entered into ,- the ,oard of directors are ,inding upon the corporation and courts 6i!! not interfere un!ess such contracts are so unconsciona,!e and oppressive as to amount to 6anton destruction to the rights of the minorit-, as 6hen p!aintiffs aver that the defendants (mem,ers of the ,oard), have conc!uded a transaction among themse!ves as 6i!! resu!t in serious inEur- to the p!aintiffs stoc%ho!ders/ )25* The reason ,ehind the ru!e is apt!- e;p!ained ,- (ean &esar </ Ci!!anueva, an esteemed author in corporate !a6, thus= &ourts and other tri,una!s are 6ont to override the ,usiness Eudgment of the ,oard main!- ,ecause, courts are not in the ,usiness of ,usiness, and the laisse4 faireru!e or the free enterprise s-stem prevai!ing in our socia! and economic setAup dictates that it is ,etter for the 7tate and its organs to !eave ,usiness to the ,usinessmen$ especia!!- so, 6hen courts are i!!AeBuipped to ma%e ,usiness decisions/ More important!-, the socia! contract in the corporate fami!- to decide the course of the corporate ,usiness has ,een vested in the ,oard and not 6ith courts/ ):0* "pparent!-, the Tius do not rea!i#e the i!!ega! conseBuences of see%ing rescission and contro! of the corporation to the e;c!usion of the Ongs/ 7uch an act infringes on the !a6 on reduction of capita! stoc%/ Ordering the return and distri,ution of the Ongs' capita! contri,ution 6ithout disso!ving the corporation or decreasing its authori#ed capita! stoc% is not on!- against the !a6 ,ut is a!so preEudicia! to corporate creditors 6ho enEoa,so!ute priorit- of pa-ment over and a,ove an- individua! stoc%ho!der thereof/ 7tripped to its ,arest essentia!s, the issue of rescission in this case is not difficu!t to understand/ >f rescission is denied, 6i!! inEustice ,e inf!icted on an- of the partiesK The ans6er is no ,ecause the financia! interests of ,oth the Tius and the Ongs 6i!! remain intact and safe 6ithin +<"(&/ On the other hand, if rescission is granted, 6i!! an- of the parties suffer an inEusticeK (efinite!- -es ,ecause the Ongs 6i!! find themse!ves out in the streets 6ith nothing ,ut the mone- the- had in 1552 6hi!e the Tius 6i!! not on!- enEo- a 6indfa!! estimated to ,e an-6here from ?250 mi!!ion to ?500 mi!!ion):1* ,ut 6i!! a!so ta%e over an e;treme!- profita,!e ,usiness 6ithout much effort at a!!/ "nother ver- important point fo!!o6s/ The &ourt of "ppea!s and, !ater on, our (ecision dated +e,ruar- 1, 2002, stated that ,oth groups 6ere in pari delicto, meaning, that ,oth the Tius and the Ongs committed ,reaches of the ?reA7u,scription "greement/ This ma- ,e true to a certain e;tent ,ut, Eudging from the comparative gravit- of the acts separate!- committed ,- each group, 6e find that the Ongs' acts 6ere re!ative!- tame visA LAvis those committed ,- the Tius in not surrendering +<"(& funds to the corporation and diverting corporate income to their o6n M"TT80&O account/ The Ongs 6ere right in not issuing to the Tius the shares corresponding to the fourAstor- ,ui!ding and the 1,502/:0 sBuareAmeter !ot ,ecause no tit!e for it cou!d ,e issued in +<"(&'s name, o6ing to the Tius' refusa! to pa- the transfer ta;es/ "nd as far as the 151 sBuareAmeter !ot 6as concerned, 6h- shou!d +<"(& issue additiona! shares to the Tius for propert- a!read- o6ned ,- the corporation and 6hich, in the fina! ana!-sis, 6as a!read- factored into the shareho!dings of the Tius ,efore the Ongs came inK e are appa!!ed ,- the attempt ,- the Tius, in the 6ords of the &ourt of "ppea!s, to Gpu!! a fast oneH on the Ongs ,ecause that 6as 6here the pro,!em precise!- started/ >t is c!ear that, 6hen the finances of +<"(& improved considera,!- after the eBuit- infusion of the Ongs, the Tius started p!anning to ta%e over the corporation again and e;c!ude the Ongs from it/ >t appears that the Tius' refusa! to pa- transfer ta;es might not have rea!!,een at a!! unintentiona! ,ecause, ,- fai!ing to pa- that re!ative!- sma!! amount 6hich the- cou!d easi!- afford, the Tius shou!d have e;pected that the- 6ere not going to ,e given the corresponding shares/ >t 6as, from ever- ang!e, the perfect e;cuse for ,!ac%,a!!ing the Ongs/ >n other 6ords, the Tius created a pro,!em then used that same pro,!em as their prete;t for sho6ing their partners the door/ >n the process, the- stood to ,e re6arded 6ith a ,onan#a of an-6here ,et6een ?250 mi!!ion to ?500 mi!!ion in assets (from an investment of on!- ?25 mi!!ion 6hich 6as near!- forec!osed ,?1B), to the e;treme and irrepara,!e damage of the Ongs, +<"(& and its creditors/ "fter a!! is said and done, no one can c!ose his e-es to the fact that the Masagana &itima!! 6ou!d not ,e 6hat it has ,ecome toda- 6ere it not for the time!- infusion of ?150 mi!!ion ,- the Ongs in 1552/ There are no ifs or ,uts a,out it/ ithout the Ongs, the Tius 6ou!d have !ost ever-thing the- origina!!- invested in said ma!!/ >f on!- for this and the fact that this 0eso!ution can tru!- pave the 6a- for ,oth groups to enEo- the fruits of their investments M assuming good faith and honest intentions M 6e cannot a!!o6 the rescission of the su,Eect su,scription agreement/ The Ongs' shortcomings 6ere far from serious and certain!- !ess than su,stantia!$ the- 6ere in fact remedia,!e and correcta,!e under the !a6/ >t 6ou!d ,e tota!!- against a!! ru!es of Eustice, fairness and eBuit- to deprive the Ongs of their interests on pett- and tenuous grounds/ WHEREFORE, the motion for reconsideration, dated March 15, 2002, of petitioners Ong Yong, Juanita Tan Ong, i!son Ong, "nna Ong, i!!iam Ong, i!!ie Ong and Ju!ie Ong "!on#o and the motion for partia! reconsideration, dated March 15, 2002, of petitioner i!!ie Ong are here,.0"1T8(/ The ?etition for &onfirmation of the 0escission of the ?reA7u,scription "greement doc%eted as 78& &ase 1o/ 02A54A5245 is here,(>7M>778( for !ac% of merit/ The uni!atera! rescission ,- the Tius of the su,Eect ?reA7u,scription "greement, dated "ugust 15, 1552, is here,dec!ared as nu!! and void/ The motion for the issuance of a 6rit of e;ecution, dated March 15, 2002, of petitioners (avid 7/ Tiu, &e!- Y/ Tiu, Mo!- Yu .o6, Be!en 7ee Yu, (/ Terence Y/ Tiu, John Yu and <ourdes &/ Tiu is here,- (81>8( for ,eing moot/ "ccording!-, the (ecision of this &ourt, dated +e,ruar- 1, 2002, affirming 6ith modification the decision of the &ourt of "ppea!s, dated Octo,er 5, 1555, and the 78& en banc, dated 7eptem,er 11, 1559, is here,- 08C8078(/ &osts against the petitioner Tius/ SO ORDERED.

G.R. N#. 123456

A%$&( 17, 4335

RYUICHI YAMAMOTO, petitioner, vs/ NISHINO LEATHER INDUSTRIES, INC. and I8UO NISHINO, respondents/ DECISION CARPIO MORALES, J." >n 159:, petitioner, 0-uichi Yamamoto (Yamamoto), a Japanese nationa!, organi#ed under ?hi!ippine !a6s a%o 8nterprises Mani!a, >ncorporated ( "NO), a corporation engaged principa!!- in !eather tanning, no6 %no6n as 1ishino <eather >ndustries, >nc/ (1<>>), one of herein respondents/ >n 1593, Yamamoto and the other respondent, >%uo 1ishino (1ishino), a!so a Japanese nationa!, forged a Memorandum of "greement under 6hich the- agreed to enter into a Eoint venture 6herein 1ishino 6ou!d acBuire such num,er of shares of stoc% eBuiva!ent to 30F of the authori#ed capita! stoc% of "NO/ 8ventua!!-, 1ishino and his ,rother1 Yoshino,u 1ishino (Yoshino,u) acBuired more than 30F of the authori#ed capita! stoc% of "NO, reducing Yamamoto's investment therein to, ,- his c!aim, 10F, 2 !ess than 10F according to 1ishino/: The corporate name of "NO 6as !ater changed to, as ref!ected ear!ier, its current name 1<>>/

1egotiations su,seBuent!- ensued in !ight of a p!anned ta%eover of 1<>> ,- 1ishino 6ho 6ou!d ,u-Aout the shares of stoc% of Yamamoto/ >n the course of the negotiations, Yoshino,u and 1ishino's counse! "tt-/ 8mmanue! ./ (oce ("tt-/ (oce) advised Yamamoto ,- !etter dated Octo,er :0, 1551, the pertinent portions of 6hich fo!!o6= Dereunder is a simp!e memorandum of the su,Eect matters discussed 6ith me ,- Mr/ Yoshino,u 1ishino -esterda-, Octo,er 25 th, ,ased on the !etter of Mr/ >%uo 1ishino from Japan, and 6hich > am no6 transmitting to -ou/ 2 ;;;; 12/ Machiner- and 8Buipment= The fo!!o6ing machiner-OeBuipment have ,een contri,uted ,- -ou to the compan-=

7p!itting machine 7amming machine +or%!ift (rums Togg!ing machine

A A A A A

1 unit 1 unit 1 unit 2 units 2 units

0egarding the a,ove machines, -ou ma- ta%e them out 6ith -ou (for -our o6n use and sa!e) if -ou 6ant,provided, the va!ue of such machines is deducted from -our and a%o's capita! contri,utions, 6hich 6i!! ,e paid to -ou/ 8&nd(9 ( t / 0n#: #+ 9#'$ .#// nt) #n a(( th a;#* , )##n )t. ; ; ; ;5 (8mphasis and underscoring supp!ied) On the ,asis of such !etter, Yamamoto attempted to recover the machineries and eBuipment 6hich 6ere, ,- Yamamoto's admission, part of his investment in the corporation,4 ,ut he 6as frustrated ,- respondents, dra6ing Yamamoto to fi!e on Januar- 15, 1552 ,efore the 0egiona! Tria! &ourt (0T&) of Ma%ati a comp!aint3 against them for rep!evin/ Branch 25 of the Ma%ati 0T& issued a 6rit of rep!evin after Yamamoto fi!ed a ,ond/ 9 >n their "ns6er 6ith &ounterc!aim,5 respondents c!aimed that the machineries and eBuipment su,Eect of rep!evin form part of Yamamoto's capita! contri,utions in consideration of his eBuit- in 1<>> and shou!d thus ,e treated as corporate propert-$ and that the a,oveAsaid !etter of "tt-/ (oce to Yamamoto 6as mere!- a proposa!, Pconditioned on )Yamamoto's* se!!Aout to / / / 1ishino of his entire eBuit-,P10 6hich proposa! 6as -et to ,e authori#ed ,- the stoc%ho!ders and Board of (irectors of 1<>>/

B- 6a- of &ounterc!aim, respondents, a!!eging that the- suffered damage due to the sei#ure via the imp!ementation of the 6rit of rep!evin over the machineries and eBuipment, pra-ed for the a6ard to them of mora! and e;emp!ar- damages, attorne-'s fees and !itigation e;penses, and costs of suit/ The tria! court, ,- (ecision of June 5, 1555, decided the case in favor of Yamamoto, 11 disposing thus= D808+O08, Eudgment is here,- rendered= (1) dec!aring p!aintiff as the rightfu! o6ner and possessor of the machineries in Buestion, and ma%ing the 6rit of sei#ure permanent$ (2) ordering defendants to pa- p!aintiff attorne-'s fees and e;penses of !itigation in the amount of +ift- Thousand ?esos (?50,000/00), ?hi!ippine &urrenc-$ (:) dismissing defendants' counterc!aims for !ac% of merit$ and (2) ordering defendants to pa- the costs of suit/ 7O O0(808(/12 (@nderscoring supp!ied) On appea!,1: the &ourt of "ppea!s he!d in favor of herein respondents and according!- $ * $) d the 0T& decision and dismissed the comp!aint/12 >n so ho!ding, the appe!!ate court found that the machineries and eBuipment c!aimed ,- Yamamoto are corporate propert- of 1<>> and ma- not thus ,e retrieved 6ithout the authorit- of the 1<>> Board of (irectors$ 15 and that petitioner's argument that 1ishino and Yamamoto cannot hide ,ehind the shie!d of corporate fiction does not !ie,14 nor does petitioner's invocation of the doctrine of promissor- estoppe!/ 13 "t the same time, the &ourt of "ppea!s found no ground to support respondents' &ounterc!aim/ 19 The &ourt of "ppea!s having denied15 his Motion for 0econsideration,20 Yamamoto fi!ed the present petition,21fau!ting the &ourt of "ppea!s "/ ; ; ; >1 DO<(>1. TD"T TD8 C8>< O+ &O0?O0"T8 +>&T>O1 7DO@<( 1OT B8 ?>80&8( >1 TD8 &"78 "T B"0/ B/ ; ; ; >1 DO<(>1. TD"T TD8 (O&T0>18 O+ ?0OM>77O0Y 87TO??8< (O87 1OT "??<Y TO TD8 &"78 "T B"0/ &/ ; ; ; >1 DO<(>1. TD"T 087?O1(81T7 "08 1OT <>"B<8 +O0 "TTO018Y'7 +887/ 22 The reso!ution of the petition hinges, in the main, on 6hether the advice in the !etter of "tt-/ (oce that Yamamoto ma- retrieve the machineries and eBuipment, 6hich admitted!- 6ere part of his investment, ,ound the corporation/ The &ourt ho!ds in the negative/ >ndeed, 6ithout a Board 0eso!ution authori#ing respondent 1ishino to act for and in ,eha!f of the corporation, he cannot ,ind the !atter/ @nder the &orporation <a6, un!ess other6ise provided, corporate po6ers are e;ercised ,- the Board of (irectors/ 2: @rging this &ourt to pierce the veil of corporate fiction, Yamamoto argues, vi4= (uring the negotiations, the issue as to the o6nership of the Machiner)ies* never came up/ 1either did the issue on the proper procedure to ,e ta%en to e;ecute the comp!ete ta%eAover of the &ompan- come up since >%uo, Yoshino,u, and Yamamoto 6ere the o6ners thereof, the presence of other stoc%ho!ders ,eing on!- for the purpose of comp!-ing 6ith the minimum reBuirements of the !a6/ hat course of action the &ompan- decides to do or not to do depends not on the Pother mem,ers of the Board of (irectorsP/ It d % nd) #n :hat I0'# and Y#)h&n#;' d .&d . Th C#/%an9 &) ;'t a / $ &n)t$'/ nta(&t9 #+ I0'# <and= Y#)h&n#;'.22 ;;;; ; ; ; The &ompan- hard!- ho!ds ,oard meetings/ >t has an inactive ,oard, the directors are directors in name on!- and are there to do the ,idding of the 1ish)i*nos, nothing more/ >ts minutes are paper minutes/ ; ; ; 25 ;;;; The fact that the parties started at a 30A:0 ratio and Yamamoto's percentage dec!ined to 10F does not mean the 20F 6ent to others/ ; ; ; The 20F 6ent to no one e!se ,ut >%uo himse!f/ ; ; ; Y#)h&n#;' &) th 9#'n> $ ;$#th $ #+ I0'# and ha) n# )a9 at a(( &n th ;')&n )). On(9 I0'# /a0 ) th d .&)&#n). Th $ : $ , th $ +#$ , n# #th $ / /; $) #+ th B#a$d :h# ha* n#t >&* n th &$ a%%$#*a(.24(8mphasis and underscoring supp!ied) hi!e the vei! of separate corporate persona!it- ma- ,e pierced 6hen the corporation is mere!- an adEunct, a ,usiness conduit, or a!ter ego of a person,23 the mere o6nership ,- a sing!e stoc%ho!der of even a!! or near!- a!! of the capita! stoc%s of a corporation is not ,- itse!f a sufficient ground to disregard the separate corporate persona!it-/ 29 The e!ements determinative of the app!ica,i!it- of the doctrine of piercing the vei! of corporate fiction fo!!o6= 5 . (ontrol, not mere majorit$ or complete stoc0 control, but complete domination, not onl$ of finances but of polic$ and business practice in respect to the transaction attac0ed so that the corporate entit$ as to this transaction had at the time no separate mind, will or e2istence of its own6

7. Such control must have been used b$ the defendant to commit fraud or wrong, to perpetuate the violation of a statutor$ or other positive legal dut$, or dishonest and unjust act in contravention of the plaintiff)s legal rights6 and .. The aforesaid control and breach of dut$ must pro2imatel$ cause the injur$ or unjust loss complained of. The absence of any one of these elements prevents "piercing the corporate veil .5 ,n appl$ing the 8instrumentalit$) or 8alter ego) doctrine, the courts are concerned with realit$ and not form, with how the corporation operated and the individual defendant)s relationship to that operation.525 (>ta!ics in the origina!$ emphasis and underscoring supp!ied) >n re!ation to the second e!ement, to disregard the separate Euridica! persona!it- of a corporation, the 6rongdoing or unEust act in contravention of a p!aintiff's !ega! rights must ,e c!ear!- and convincing!- esta,!ished$ it cannot ,e presumed/ :0 ithout a demonstration that an- of the evi!s sought to ,e prevented ,- the doctrine is present, it does not app!-/ :1 >n the case at ,ar, there is no sho6ing that 1ishino used the separate persona!it- of 1<>> to unEust!- act or do 6rong to Yamamoto in contravention of his !ega! rights/ Yamamoto argues, in another vein, that promissor$ estoppel !ies against respondents, thus= @nder the doctrine of promissor- estoppe!, ; ; ; estoppe! ma- arise from the ma%ing of a promise, even though 6ithout consideration, if it 6as intended that the promise shou!d ,e re!ied upon and in fact it 6as re!ied upon, and if a refusa! to enforce it 6ou!d ,e virtua!!- to sanction the perpetration of fraud or 6ou!d resu!t in other inEustice/ ; ; ; >%uo and Yoshino,u 6anted Yamamoto out of the &ompan-/ +or this purpose negotiations 6ere had ,et6een the parties/ Daving e;press!- given Yamamoto, through the <etter and through a su,seBuent meeting at the Mani!a ?eninsu!a 6here >%uo himse!f confirmed that Yamamoto ma- ta%e out the Machiner- from the &ompan- an-time, respondents shou!d not ,e a!!o6ed to turn around and do the e;act opposite of 6hat the- have represented the- 6i!! do/ >n paragraph t6e!ve (12) of the <etter, Yamamoto 6as e;press!- advised that he cou!d ta%e out the Machiner- if he 6anted to so, provided that the va!ue of said machines 6ou!d ,e deducted from his capita! contri,ution ; ; ;/ ;;;; 0espondents cannot no6 argue that the- did not intend for Yamamoto to re!- upon the <etter/ That 6as the purpose of the <etter to ,egin 6ith/ ?etitioner)s* in fact, re!ied upon said <etter and such re!iance 6as further strengthened during their meeting at the Mani!a ?eninsu!a/ To sanction respondents' attempt to evade their o,!igation 6ou!d ,e to sanction the perpetration of fraud and inEustice against petitioner/:2 (@nderscoring supp!ied) >t ,ears noting, ho6ever, that the aforementioned paragraph 12 of the !etter is fo!!o6ed ,- a reBuest for Yamamoto to give his Pcomments on a!! the a,ove, soonest/P:: hat 6as thus proffered to Yamamoto 6as not a promise, ,ut a mere offer, su,Eect to his acceptance/ no o,!igation/:2 ithout acceptance, a mere offer produces

Thus, under "rtic!e 1191 of the &ivi! &ode, P)i*n conditiona! o,!igations, the acBuisition of rights, as 6e!! as the e;tinguishment or !oss of those a!read- acBuired, sha!! depend upon the happening of the event 6hich constitutes the condition/P >n the case at ,ar, there is no sho6ing of comp!iance 6ith the condition for a!!o6ing Yamamoto to ta%e the machineries and eBuipment, name!-, his agreement to the deduction of their va!ue from his capita! contri,ution due him in the ,u-Aout of his interests in 1<>>/ Yamamoto's a!!egation that he agreed to the condition :5remained Eust that, no proof thereof having ,een presented/ The machineries and eBuipment, 6hich comprised Yamamoto's investment in 1<>>, :4 thus remained part of the capita! propert- of the corporation/ :3 >t is sett!ed that the propert- of a corporation is not the propert- of its stoc%ho!ders or mem,ers/ :9 @nder the trust fund doctrine, the capita! stoc%, propert-, and other assets of a corporation are regarded as eBuit- in trust for the pa-ment of corporate creditors 6hich are preferred over the stoc%ho!ders in the distri,ution of corporate assets/ :5The distri,ution of corporate assets and propert- cannot ,e made to depend on the 6hims and caprices of the stoc%ho!ders, officers, or directors of the corporation un!ess the indispensa,!e conditions and procedures for the protection of corporate creditors are fo!!o6ed/20 WHEREFORE, the petition is DENIED/ &osts against petitioner/ SO ORDERED/

PHILIPPINE NATIONAL BAN8, p!aintiffAappe!!ee, vs/ BITULO8 SAWMILL, INC., DINGALAN LUMBER CO., INC., SIERRA MADRE LUMBER CO., INC., NASIPIT LUMBER CO., INC., WOODWOR8S, INC., GONZALO PUYAT, TOMAS B. MORATO, FINDLAY MILLAR LUMBER CO., INC., ET AL., INSULAR LUMBER CO., ANA8AN LUMBER CO., AND CANTILAN LUMBER CO., INC., defendantsAappe!!ees/ FERNANDO, J.: >n the face of a statutor- norm, 6hich, as interpreted in a uniform !ine of decisions ,- this &ourt, spea%s uneBuivoca!!- and is free from dou,t, the !o6er court 6ith fu!! recognition that the case for the p!aintiff creditor, ?hi!ippine 1ationa! Ban%, Pis meritorious strict!- from the !ega! standpointP 1 ,ut apparent!- una,!e to Pc!ose its e-es to the eBuit- of the caseP 2 dismissed nine (5) cases fi!ed ,- it, see%ing Pto recover from the defendant !um,er producers )Bitu!o% 7a6mi!!, >nc/$ (inga!an <um,er &o/, >nc/, 7ierra Madre <um,er &o/, >nc/$ 1asipit <um,er &o/, >nc/$ ood6or%s, >nc/$ .on#a!o ?u-at$ Tomas B/ Morato$ +ind!a- Mi!!ar <um,er &o/, >nc/$ >nsu!ar <um,er &o/, >nc/$ "na%an <um,er &o/, >nc/$ and &anti!an <um,er &o/, >nc/* the ,a!ance of their stoc% su,scriptions to the ?hi!ippine <um,er (istri,uting "genc-, >nc/P : >n essence then, the crucia! Buestion posed ,- this appea! from such a decision of the !o6er court is adherence to the ru!e of !a6/ Other6ise stated, 6ou!d nonAcomp!iance 6ith a p!ain statutor- command, considering the persuasiveness of the p!ea that defendantsAappe!!ees 6ou!d Pnot have su,scri,ed to )the* capita! stoc%P of the ?hi!ippine <um,er (istri,uting "genc- P6ere it not for the assurance of the )then* ?resident of the 0epu,!ic of the ?hi!ippines that the .overnment 6ou!d ,ac% )it* up ,investing ?5/00 for ever- pesoP 2 su,scri,ed, a condition 6hich 6as not fu!fi!!ed, such commitment not having ,een comp!ied 6ith, ,e EustifiedK The ans6er must ,e in the negative/ >t cannot ,e other6ise even if an e!ement of unfairness and inEustice cou!d ,e predicated, as the !o6er court, in a rather s-mpathetic mood, did find in the p!aintiff ,an%, as creditor, compe!!ing defendant !um,er producers under the a,ove circumstances to pa- the ,a!ance of their su,scriptions/ +or a p!ain and statutor- command, if app!ica,!e, must ,e respected/ The ru!e of !a6 cannot ,e satisfied 6ith an-thing !ess/ The appea! must ,e sustained/ >n these various suits decided Eoint!-, the ?hi!ippine 1ationa! Ban%, as creditor, and therefore the rea! part- in interest, 6as a!!o6ed ,- the !o6er court to su,stitute the receiver of the ?hi!ippine <um,er (istri,uting "genc- in these respective actions for the recover- from defendant !um,er producers the ,a!ance of their stoc% su,scriptions/ The amount sought to ,e co!!ected from defendantsAappe!!ees Bitu!o% 7a6mi!!, >nc/, (inga!an <um,er &o/, >nc/, and 7ierra Madre <um,er &o/, >nc/, is ?5,000/00, defendantsAappe!!ees having made a partia! pa-ment of ?15,000/00 of their tota! su,scription 6orth ?20,000/00$ from defendantAappe!!ee 1asipit <um,er &o/, >nc/, the sum of ?10,000/00, defendantAappe!!ee having made a partia! pa-ment of ?10,000/00 of its tota! su,scription 6orth ?20,000/00$ from defendantAappe!!ee ood6or%s, >nc/, the sum of ?10,994/00, defendantAappe!!ee having made a partia! pa-ment of ?5,112/00 of its tota! su,scription 6orth ?20,000/00$ from defendantAappe!!ee .on#a!o ?u-at the sum of ?10,000/00, defendantAappe!!ee having made a partia! pa-ment of ?10,000/00 of his tota! su,scription 6orth ?20,000/00$ from defendantAappe!!ee Tomas Morato the sum of ?10,000/00, defendantAappe!!ee having made a partia! pa-ment of ?10,000/00 of his tota! su,scription 6orth ?20,000/00$ from defendantA appe!!ee +ind!a- Mi!!ar <um,er &o/, >nc/, the sum of ?10,000/00, defendantAappe!!ee having made a partia! pa-ment of ?10,000/00 of its tota! su,scription 6orth ?20,000/00$ from defendantAappe!!ee >nsu!ar <um,er &o/, >nc/, the sum of ?5,000/00, defendantAappe!!ee having made a partia! pa-ment of ?15,000/00 of its tota! su,scription 6orth ?20,000/00$ from defendantAappe!!ee "na%an <um,er &o/, >nc/, the sum of ?15,000/00, defendantAappe!!ee having made a partia! pa-ment of ?5,000/00 of its tota! su,scription 6orth ?20,000/00$ and from defendantAappe!!ee &anti!an <um,er &o/, >nc/, the sum of ?3,500/00, defendantAappe!!ee having made a partia! pa-ment of ?2,500/00 of its tota! su,scription 6orth ?10,000/00, p!us interest at the !ega! rate from the fi!ing of the suits and the costs of the suits in a!! the nine (5) cases/ The ?hi!ippine <um,er (istri,uting "genc-, >nc/, according to the !o6er court, P6as organi#ed sometime in the ear!- part of 1523 upon the initiative and insistence of the !ate ?resident Manue! 0o;as of the 0epu,!ic of the ?hi!ippines 6ho for the purpose, had ca!!ed severa! conferences ,et6een him and the su,scri,ers and organi#ers of the ?hi!ippine <um,er (istri,uting "genc-, >nc/P 5 The purpose 6as praise6orth-, to insure a steadsupp!- of !um,er, 6hich cou!d ,e so!d at reasona,!e prices to ena,!e the 6ar sufferers to reha,i!itate their devastated homes/ The decision continues= PDe convinced the !um,er producers to form a !um,er cooperative and to poo! their sources together in order to 6rest, particu!ar!-, the retai! trade from a!iens 6ho 6ere acting as midd!emen in the distri,ution of !um,er/ "t the ,eginning, the !um,er producers 6ere re!uctant to organi#e the cooperative agenc- as the- ,e!ieved that it 6ou!d not ,e eas- to e!iminate from the retai! trade the a!ien midd!emen 6ho had ,een in this ,usiness from time immemoria!, ,ut ,ecause the !ate ?resident 0o;as made it c!ear that such a cooperative agenc- 6ou!d not ,e successfu! 6ithout a su,stantia! 6or%ing capita! 6hich the !um,er producers cou!d not entire!- shou!der, and as an inducement he promised and agreed to finance the agenc- ,- ma%ing the .overnment invest ?5/00 ,- 6a- of counterpart for ever- peso that the mem,ers 6ou!d invest therein,////P 4 This 6as the assurance re!ied upon according to the decision, 6hich stated that the amount thus contri,uted ,- such !um,er producers 6as not enough for the operation of its ,usiness especia!!- having in mind the primar- purpose of putting an end to a!ien domination in the retai! trade of !um,er products/ 1or 6as there an- appropriation ,- the !egis!ature of the counterpart fund to ,e put up ,- the .overnment, name!-, ?5/00 for everpeso invested ,- defendant !um,er producers/ "ccording!-, Pthe !ate ?resident 0o;as instructed the Don/ 8mi!io ",e!!o, then 8;ecutive 7ecretarand &hairman of the Board of (irectors of the ?hi!ippine 1ationa! Ban%, for the !atter to grant said agenc- an overdraft in the origina! sum of ?250,000/00 6hich 6as !ater increased to ?:50,000/00, 6hich 6as approved ,- said Board of (irectors of the ?hi!ippine 1ationa! Ban% on Ju!- 29, 1523, pa-a,!e on or ,efore "pri! :0, 1559, 6ith interest at the rate of 4F per annum, and secured ,- the chatte! mortgages on the stoc% of !um,er of said agenc-/P 3 The ?hi!ippine .overnment did not invest the ?5/00 for ever- peso coming from defendant !um,er producers/ The !oan e;tended to the ?hi!ippine <um,er (istri,uting "genc- ,- the ?hi!ippine 1ationa! Ban% 6as not paid/ Dence, these suits/ +or the !o6er court, the a,ove facts sufficed for their dismissa!/ To its mind Pit is gross!- unfair and unEust for the p!aintiff ,an% no6 to compe! the !um,er producers to pa- the ,a!ance of their su,scriptions //// >ndeed, 6hen the !ate ?resident 0o;as made representations to the p!aintiff ,an%, thru the Don/ 8mi!io ",e!!o, 6ho 6as then the 8;ecutive 7ecretar- and &hairman of its Board of (irectors, to grant said overdraft to the agenc-, it 6as the on!- 6a- ,- 6hich ?resident 0o;as cou!d ma%e good his commitment that the .overnment 6ou!d invest in said agenc- to the e;tent a!readmentioned ,ecause, according to said !ate ?resident 0o;as, the !egis!ature had not appropriated an- amount for such counterpart/ &onseBuent!-,

vie6ing from a!! considerations of eBuit- in the case, the &ourt finds that p!aintiff ,an% shou!d not co!!ect an- more from the defendants the ,a!ance of their su,scriptions to the capita! stoc% of the ?hi!ippine <um,er (istri,uting "genc-, >nc/P 9 8ven 6ith the case for defendant !um,er producers ,eing put forth in its strongest possi,!e !ight in the appea!ed decision, the p!aintiff creditor, the ?hi!ippine 1ationa! Ban%, shou!d have ,een the prevai!ing part-/ On the !a6 as it stands, the Eudgment reached ,- the !o6er court cannot ,e sustained/ The appea!, as ear!ier made c!ear, possesses merit/ >n Philippine Trust (o. v. 3ivera, 5 citing the !eading case of 9elasco v. Poi4at, 10 this &ourt he!d= P>t is esta,!ished doctrine that su,scriptions to the capita! of a corporation constitute a fund to 6hich creditors have a right to !oo% for satisfaction of their c!aims and that the assignee in inso!venc- can maintain an action upon an- unpaid stoc% su,scription in order to rea!i#e assets for the pa-ment of its de,t//// " corporation has no po6er to re!ease an origina! su,scri,er to its capita! stoc% from the o,!igation of pa-ing for his shares, 6ithout a va!ua,!e consideration for such re!ease$ and as against creditors a reduction of the capita! stoc% can ta%e p!ace on!- in the manner and under the conditions prescri,ed ,- the statute or the charter or the artic!es of incorporation/ Moreover, strict comp!iance 6ith the statutor- regu!ations is necessar-////P The ?oi#at doctrine found acceptance in !ater cases/ 11One of the !atest cases, &inga$en :ulf ;lectric Power v. Balta4ar, 12 7pea%s to this effect= P>n the case of 9elasco v. Poi4at, 1: the corporation invo!ved 6as inso!vent, in 6hich case a!! unpaid stoc% su,scriptions ,ecome pa-a,!e on demand and are immediate!- recovera,!e in an action instituted ,- the assignee/P >t 6ou!d ,e un6arranted to ascri,e to the !ate ?resident 0o;as the vie6 that the pa-ment of the stoc% su,scriptions, as thus reBuired ,- !a6, cou!d ,e condoned in the event that the counterpart fund to ,e invested ,- the .overnment 6ou!d not ,e avai!a,!e/ 8ven if such 6ere the case, ho6ever, and such a promise 6ere in fact made, to further the !auda,!e purpose to 6hich the proposed corporation 6ou!d ,e devoted and the possi,i!it- that the !um,er producers 6ou!d !ose mone- in the process, sti!! the p!ain and specific 6ording of the app!ica,!e !ega! provision as interpreted ,- this &ourt must ,e contro!!ing/ >t is a 6e!!Asett!ed princip!e that 6ith a!! the vast po6ers !odged in the 8;ecutive, he is sti!! devoid of the prerogative of suspending the operation of an- statute or an- of its terms/ The emphatic and categorica! !anguage of an "merican decision cited ,- the !ate Justice <aure!, in People v. 9era,12 comes to mind= PB- the t6entieth artic!e of the dec!aration of rights in the constitution of this common6ea!th, it is dec!ared that the po6er of suspending the !a6s, or the e;ecution of the !a6s, ought never to ,e e;ercised ,ut ,- the !egis!ature, or ,- authorit- derived from it, to ,e e;ercised in such particu!ar cases on!as the !egis!ature sha!! e;press!- provide for////P 1or cou!d it ,e other6ise considering that the &onstitution specifica!!- enEoins the ?resident to see to it that a!! !a6s ,e faithfu!!- e;ecuted/ 15 There ma- ,e a discretion as to 6hat a particu!ar !ega! provision reBuires$ there can ,e none 6hatsoever as to the enforcement and app!ication thereof once its meaning has ,een ascertained/ hat it decrees must ,e fo!!o6ed$ 6hat it commands must ,e o,e-ed/ >t must ,e respected, the 6ishes of the ?resident, to the contrar- not6ithstanding, even if impe!!ed ,- the most 6orth- of motives and the most persuasive eBuita,!e considerations/ To repeat, such is not the case here/ +or at no time did ?resident 0o;as ever give defendant !um,er producers to understand that the fai!ure of the .overnment for an- reason to put up the counterpart fund cou!d terminate their statutor- !ia,i!it-/ 7uch is not the !a6/ @nfortunate!-, the !o6er court 6as of a different mind/ That is not to pa- homage to the ru!e of !a6/ >ts decision then, one it is to ,e repeated inf!uenced ,- 6hat it considered to ,e the PeBuit- of the caseP, is not !ega!!- impecca,!e/ D808+O08, the decision of the !o6er court is reversed and the cases remanded to the !o6er court for Eudgment according to !a6, 6ith fu!! consideration of the !ega! defenses raised ,- defendantsAappe!!ees, Bitu!o% 7a6mi!!, >nc/$ (inga!an <um,er &o/, >nc/$ 7ierra Madre <um,er &o/, >nc/$ 1asipit <um,er &o/, >nc/$ ood6or%s, >nc/$ .on#a!o ?u-at$ Tomas B/ Morato$ +ind!a- Mi!!ar <um,er &o/, >nc/$ "na%an <um,er &o/, >nc/$ and &anti!an <um,er &o/, >nc/ 1o pronouncement as to costs/